DC4MS

I heard something interesting from a Destination Club today that they actually had several "new" members join during the past week as a direct result of the 2008 Stock Market crisis.

The new members simply felt that "investing" money into a Destination Club offered a safe spot for their money and that they could actually enjoy the "dividends" of travel vs keeping the money in the market and losing 30% or more.

This may seem an odd statement to make, but after 9-11, I vividly remember several NYC executives that decided that family, travel, life enjoyment, and less stress was more important than working 60 hours per week and sacrificing everything just to increase their personal net worth.

I am not advising anyone to liquidate their accounts to join a DC, but it makes perfect sense to view joining a club in terms of a well-balanced lifestyle. The person who dies with them most amount of money in the bank is still dead.

Jack

If you have the money, a DC (depending on their deposit policy) is a great way to diversify your portfolio.
IMO

LTTravel

Just think, DC's were 30% cheaper a year ago than now if you had sold your equities to buy into one. That's not counting any price increases in DC's.

TarheelTraveler

Halogen Guides | How Is The Credit Crunch Impacting Destination Clubs?

Halogen article on DCs and the credit crisis.

Kagehitokiri

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Veras Group Jim

Good to see clubs adopting Baron Rothschild's quote of "buy when there's blood in the streets." There is no doubt that the credit crisis and resulting economic slowdown will "prune" some of the fat off the industry, but strong clubs should be doing just this--looking harder for good buys.

__________________
Jim Pippin
Co-Founder & Managing Partner
The Veras Group, LLC

DC4MS

Here are some interesting quotes:

Ben Addoms, Quintess
“All credit lines in place remain in place. Terms have actually improved slightly as interest rates are tied to LIBOR, which has dropped this year.”

Jim Tousignant, Ultimate Escapes
“We have not seen any direct impact to our business as a result of the credit crisis, including no impact on lines of credit, property acquisitions, etcetera.”

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FYI - The Quintess, LRW property in West Caicos will be awesome when it gets built, but they have not even cleared the land or even created roads on that part of the island yet. Also, I have not heard how they made out from the Hurricane.

juancho

I believe that LIBOR has gone up dramatically the last few weeks. I understand that this is precisely one of the key issues of the credit crisis, i.e., banks trying to hoard cash and not willing to lend to each other.

TravelGuy

Actually, the LIBOR rate has come down in the last year. The "call money" rate is close to half what it was a year ago, although this is not the rate tied to mortgages.

You are correct that the banks are NOT lending to each other at true LIBOR. The problem is that the true inter-bank lending rate is LIBOR plus a substantial premium.

If Quintess has mortgages tied to LIBOR, they could save as much as .9 point vs. the one-year LIBOR rate last year.

Then again, there are numerous LIBOR rates .......

TarheelTraveler

This is definitely going to be a period of slow growth for DCs, as I think many prospects will simply sit on the sidelines until the markets stabilize. Even a stalwart like ER supposedly only added 18 members last month, and I suspect this month will be worse. From what I understand, they are hoping for flat revenue for the year (reduced member numbers hopefully offset by increased membership fees and upgrades). Nevertheless, depending on how you look at it, a flat year in this economy is probably pretty good.

I suspect the end of 2008 and beginning of 2009 could be the period where a few over extended DCs pack it in, and the ones that weather the storm will have that much less competition between mergers, failures, and increased barriers to entry.

On a more personal note, I was talking to my wife the other day and we both made the comment that this has been a rough year, with the stock market, economy in general, political environment and gas shortages, but our DC membership has been practically the lone bright spot. I feel very good about the security of the membership deposit and the club's management, and it has been money well spent. We've had many incredible times with friends and family, celebrated some great moments, and it absolutely has led to a more well-balanced, reprioritized lifestyle for our family.

TravelGuy

I believe there are four schools of thought regarding Destination Club purchases during the current market conditions:

1) Those prospective DC members who are paralyzed by the current financial events, or at least the media and political representations of those events, and will not take action on DC membership until they conquer their fear of discretionary expenditure.

2) Those prospective DC members who would have normally purchased a second or third vacation home in the Bull market but have now realized the value of a Destination Club membership in lieu of the luxury home ownership headaches and loss of property value.

3) Those prospective DC members who are unaffected by the current economic crisis (both real and as portrayed on TV) and are buying a DC membership for the same positive reasons that all us became DC members.

4) Those prospective DC members who have given up on the investment markets, liquidated their portfolios, and are purchasing goods and experiences that have "real" value to them. (Like a new DC membership).

I base my unscientific hypothesis on several recent conversations I've had with prospective DC members and my years of owning a high-end luxury consumer electronics retail chain during recessions in the 1980s through the tech bubble burst of the early 2000s. You'd be amazed by the vast majority of luxury purchasers that are not as affected by the economic news as those of use who are market watchers. As long as there are Americans, there will exist the sales of high-end discretionary luxury goods and experiences.