DC4MS

The luxury club
Sunday, July 30, 2006 - By Richard Curran

The luxury club: ThePost.ie

Despite 14 years as a senior executive at the K Club, Paul Crowe always knew he wanted to run his own business, one in which he would have a stake.

That opportunity came last December when he became chief executive of The Oyster Circle, a start-up company based on a totally new idea for the Irish market.

Backed by a group of investors including CBT Systems founder Bill McCabe, The Oyster Club is a private members’ destination club.

Basically, the company buys a range of luxury private properties in stylish and exclusive locations around the world and members get access to them for a set number of days each year. The concept has already turned into a $2.2 billion industry in the US.

Crowe’s venture is up-and-running and he has ambitious plans for the future of the business on this side of the Atlantic. The Oyster Circle has already bought houses in Andalucia in Spain, Cannes in France, New York and the French Alps.

By the end of next year, it will own properties in Cape Town, the Swiss and Austrian Alps, Mauritius, San Francisco, Napa, Barbados, Sardinia, Majorca, Crete, Lake Garda in Italy, and Paris.

The idea is a little like golf club membership in that people pay a once-off fee, and then annual fees to cover the maintenance, service and kit-out of these luxury homes.

In return, members can stay at the houses for up to 35 days per year.

‘‘A large part of the concept is service,” said Crowe. ‘‘Each member will be assigned a personal assistant with no more than 20 members to one personal assistant.

“That person will keep in regular contact and organise anything that needs to be done, from flights, to car hire, to any special needs.”

Crowe said that the company will have a concierge at each location to meet the members when they arrive at the airport and make contact with them every day during their stay to ensure they are fully taken care of.

The club has a fee structure which is typical of similar clubs operating in the US. Members who join pay a once-off fee of €300,000.

After the first 50 members are signed up, this will increase for new members to €350,000.

The lump sum is non-refundable in the first year and 80 per cent refundable between the second and fourth years if people wish to leave.

After the fourth year, the membership fee is fully refundable if people want out, or they can receive 80 per cent of the market value of the member’s fee, whichever is the highest.

Once the members have paid up, it costs €20,000 per year for access to the houses for 28 days in that year, or €24,000 for 35 days.

‘‘Most people seem to want 35 days,” said Crowe. He has already signed up over a dozen members, even though he only began selling memberships in the last four weeks.

‘‘The properties have an average value of €3 million and we spend up to €200,000 on refurbishment and decoration,” he said.

Ownership of the properties remains with the company, not the members. According to Crowe, the scheme is not a money-making investment but a lifestyle and holiday decision.

He rejected the suggestion that the charges were high.

‘‘When you look at what it would cost to buy one of these homes, €300,000 would just pay the deposit,” he said. ‘‘Typically, these kinds of homes in these locations would cost around €15,000 per week to rent.”

Crowe had all his figures carefully worked out. He said a €2.5million home would incur €125,000 a year in interest payments and up to €60,000 per year in maintenance and servicing bills. This works out at €185,000 per year to own one of these homes.

The Oyster Circle wants to build up its portfolio to 67 homes and 400 members.

‘‘This would ensure the properties were only used 50 per cent of the time,” he said. For Crowe, this membership to homes ratio would ensure that people had access to whatever homes they wanted, whenever they wanted them.

He gave the example of how one member recently arrived at one of the houses and was delighted to discover that all the shopping for the family had been bought and stocked in the house.

‘‘There is no one type of person we are targeting as members,” he said. ‘‘But imagine someone who can’t afford to spend €3 million on a holiday home and if they did, it would just give them one location for a break.

‘‘Or imagine the person who has a place in Spain. The kids are all grown up and they are bored with going there.”

So far, he has signed up a varied group. ‘‘In some cases they are people who have made money and have a lot of time on their hands. They want to travel but don’t want the hassle of owning a second home abroad,” he said.

In rural settings, the houses typically have five bedrooms. The member or their partner can bring as many people as they want to the house, subject to the number of bedrooms.

So up to ten people could stay at one of the rural houses.

‘‘The Tuscany property, due to be ready in August, has eight bedrooms,” said Crowe. They also have corporate membership where five people are nominated for full member access to the houses.

One question is whether the concept will work in Ireland. It has already worked in the US, where the biggest player is a company called Exclusive Resorts.

Set up in 2003, the company has 2,000 members, 280 houses and a further 110 in development.

In 2004, AOL founder and chairman Steve Close bought a majority stake in the company and became chairman. Its property portfolio is valued at $1 billion.

Exclusive Resorts’ pricing structure is almost identical to The Oyster Circle, in terms of membership and annual fees.

As well as Crowe, Bill McCabe’s other shareholders in the venture include former CBT executives Bill Beamish and TG Marsh, former Farrell Grant Sparks accountant Martin Scully and former Gunne Estate Agents executive Ken McCullagh.

If they manage to secure 67 properties with an average value of €3 million, they will have put €200million into the project.

Originally from Cavan Town, Crowe describes himself as ‘‘a reformed accountant’’. After spending four years working for BDO Simpson Xavier, he joined the K Club in 1991 as its financial controller.

Over a 14-year career with the golf and country club, he held a number of positions, including deputy chief executive and director of golf from 1995.

‘‘Being there at the start of the K Club was very exciting. It was the country’s first real world-class golf resort,” he said. Michael Smurfit always took a very hands-on role and Crowe said he first met him when he was being hired. ‘‘He built that place with the Ryder Cup in mind,” he said.

For Crowe, leaving less than a year before the club hosted the Ryder Cup was a difficult decision.

‘‘But I had been involved with ten European tour competitions and had done all of that, although I don’t think people fully appreciate here yet just how big the Ryder Cup is going to be,” he said.

He said the K Club would provide a perfect setting and course for the competition, despite some criticism from American sportswriter Bruce Selcraig about the venue.

‘‘That article was unfair. The K Club is a fantastic golf course. Both [the courses at the club] are tremendous courses. I thought that was a poor article,” he said.