Ben Scott

We are currently bringing to market a new Destination Club that I thought may interest this board. In order to effectively market our new concept I would like to hear your thoughts and opinions as we are still figuring out how to best reach our target market.

Please forgive the format, it is difficult to present an idea without it looking like a sales pitch. (If you’re interested however…)
Here it goes:

The owner/developer of this concept is a Canadian hotel owner and former Chairman of the Hotel Association of Canada. Over the course of his career he has established close relationships with many other hoteliers and has leveraged those relationships to build this Club.

Here is a quick breakdown of the club:

• Members pay lump sum deposit of $165,000, and pay annual dues of $2,700

• Initial payment will increase as membership targets are reached; the club will be fully subscribed at 500 members.

• After 5 years early joiners will be able to sell their membership back to the club at 70% of market value, which we project to be $325,000. Those who join later will receive 70% of the amount they paid.

• The company finances will be monitored by an independent security indenture; members will have access to financial statements whenever they choose.

• Memberships can be used for family, friends, clients or perfect strangers if you’re feeling generous.

• 2,500 points a year to be used towards 4, 5 and even 6 star resorts worldwide. Current affiliates include: Ritz-Carlton, Fairmont, Pan-Pacific, Orient-Express, Four Seasons and many more.

• We currently have around 100 properties. That number is growing.

• Points used depend on hotel, room size and season. There are no costs, taxes or fees. Depending on these factors use may vary from 12-50 days of travel per year.

• Unused points will be rolled into the next year, for a maximum of 3 years.

• Our services also include private aircraft and yachts, luxury train and once in a lifetime experiences such as trips to the Arctic Circle, Barge Tours through Amsterdam and we’re working on an African Safari.

• Our portfolio will constantly evolve to reflect market trends and member preferences.

• Membership is for life and can be passed down one generation.

I know that people are going to say that this is not a “traditional” Destination Club, but that’s the idea. Our research has shown that there is a large market of individuals with smaller families who feel that large homes or villas are usually too large for their needs.

I look forward to your feedback.

-Ben

Kagehitokiri

welcome to the forum Ben,

got some questions for you >

1. members pay about $1 per point (annually, excluding deposit) - what does 1 point buy at an affiliate? "12>50 days" = about $50>$200 per day?

2. bscott@sothebysrealty.ca you're currently employed by sotheby's realty? in what capacity? ah, The Residences at the Oak Bay Beach Hotel ?

the owner/developer >
Kevin Walker

the club's site >
The Discovery Club
Walker

list of affiliate properties >
The Discovery Club

comparables >

onekey is like a jet charter card, and offers at least 2 four seasons suites at about a 50% discount.

"the discovery club" is basically a rental broker for (mainly) hotels. kind of like some "destination clubs" that are villa rental brokers, and "vacation clubs" which are usually timeshare rental brokers.

Ben Scott

Thank you.

1. The points vary on the resort and are based more about the contract than an actual point/$ basis.
Some examples of high/low end points per night, based on a club suite (not a standard room) could be:

Bellagio- 175 pts, high season. 113, low season.

Beverly Wilshire, Four Seasons- 118 all year.

Rome Cavalieri (Rome)- 158-212 (Stunning Hotel).

Hilton, Los Cabos (Mexico)- 47-105

These are the points for suites with the best views, etc. If a member were to opt for a smaller suite with, say, a garden vs. ocean view the points needed would be less.
There are some other benefits as well; a personal trip specialist will ensure that any member requests are taken care of and members can expect 1st class treatment from the hotel staff.
e.g. We had a member travel to the Bellagio with a co-worker. When the room was not as requested they were upgraded to an executive suite at no charge.

2. I am a launch specialist for Sotheby's. Our focus is to take this business model and market it at a level that we feel suits this exclusive, luxury product.

3. Good job with the detective work.

Ben Scott

Unlike a timeshare, however, members will have access to all the properties whenever they like. There is no pooling, no blackouts.

Kagehitokiri

i was not making a comparison to timeshares.

i was talking about the structure / business model of these entities >

- "the discovery club" brokers hotel rooms

- "destination clubs" which broker villa rentals (and are therefore not destination clubs)

- "vacation clubs" usually broker timeshare rentals

versus

- onekey, which is also brokering villa rentals / hotel suites, but on a prepaid nightly basis

versus

- destination clubs, which allow (only) members to use owned properties (some properties are leased, and some clubs also allow you to spend your annual allotment on other travel options as well)

puffpuff

initial deposit at 5% opp cost plus annual dues = 10950 per year.
2500 points at ave 150 pts per night = 17 nights.
10950 / 17 nights = $644 per night for a studio / small suite in hotel .

dont want to be negative but does not sound like a deep value play.

Ben Scott

Ahh, I see what you are saying and agree. I have had a few people, mistakenly, compare the club to timeshares so I thought I would address that.

Kagehitokiri

re usage, for me personally to consider joining, i would need to know what the exact value of the points were, so i could see the exact discount i would be getting on the hotel.

for example >
if you pay $2700 a year and get $3600 worth of travel thatd be 25% off
if you pay $2700 a year and get $5400 worth of travel thatd be 50% off

also, unless upgrades were guaranteed upon availability at checkin, i personally would not consider them a benefit.

Ben Scott

Ah yes, the value issue.
Since I used the Rome Cavalieri above I'll use it again. For 158 pts you can book a suite at this great hotel. That same suite would cost about $1,500usd plus taxes and misc. fees.

One should also consider the possibility of selling the membership at a higher price in the future, or the luxury of being able to go where they want when they want.

The Discovery Club was developed to provide luxury travel experiences in a seamless, hassle free environment. We don’t shop for the least expensive hotels, but the best, and negotiate to ensure our contracts reflect the best rates offered to any wholesaler in the travel business. We have many systems and checks to ensure that the contract terms are honoured and that includes regular scouring of our affiliate’s rate structures to be sure our members have the benefit of us monitoring the marketplace daily, and passing that value proposition on to them.

TarheelTraveler

It seems like this might be attractive to some people if (i) it actually reduced the costs of staying at the properties in the designated pool, and (ii) your deposit was guaranteed or close to it. Since the club doesn't own any properties, I don't really liken it to a DC (perhaps if it owned hotel suites that would be different). Ben - What are the deposits used for if you're not buying properties?

Economically, if I'm doing my math right, the $165K deposit might make sense, but I don't see how you could get 325K. $325K X .05% (assumed lost opportunity cost) = $16,250 + $2,700 in dues = $18,950 /12-50 nights = $1,579 - $379 night. The $1,579 per night would make your club as expensive as Exclusive Resorts, but with lesser properties in my opinion. The $379/night puts you in the ballpark of HCC, and I would think that HCC's properties would soundly beat the properties that a member could get 50 nights on.

As a DC member currently with only one child, I can tell you that I would take a DC property over a hotel property in almost every case now that I've gotten used to it. Some of the 6,000 sq. ft. houses are definitely overkill when we travel without extended family or friends, but we much prefer, as an example, the 2BR 1,350 sq. ft. NY penthouse as compared to a hotel room or suite.

I'm trying not to be discouraging, but I personally am having a hard time seeing the benefit.

Kagehitokiri

im seeing an 'alcove suite' for ~$1365 (all in, low season) @ the Cavalieri Hilton

if thats the suite you get for 158 points >
pay $170.64 for $1365 = 87.5% off...

i have a hard time believing that is correct, and/or representative.
(whereas i do not have a hard time with such discounts at destination clubs or banyan tree private collection, because they own the properties)

87.5% off = pay $2700 get $21,600...

thatd certainly be nice.

personally, i am always interested in exploring things which offer benefits (hotel upgrades/discounts; or in the case of destination clubs - property usage; etc) for a fee.

DC4MS

FYI -

Ben sent me a personal e-mail about this opportunity and I told him that we are mainly interested in Destination Clubs as an alternative to buying or renting a second home (i.e. larger properties like our own homes) but some members may be very interested in his concept as it is pretty unique in the scale and scope of the "quality resorts" and could be a great buy for a business or couple that travels frequently.

I checked their web site and they seem to have an excellent management team put together.

I like the concept of a points system and like the ability to bank points.

One of my questions would be - Are you targeting people that normally stay in hotel rooms (i.e. 500 sq foot single bedrooms and single bathrooms) or do you have the ability to get larger 2-3 bedroom suites?

Ben Scott

I thank you all for your responses, the following is an example of a vacation a current member booked:

The Marriott Desert Springs Villa II. Marriott's Desert Springs Villas II: For a memorable vacation in Palm Desert

"The member requested 28 nights next February(2009) at this hotel and Our Member Services Rep was able to get them a 1 bedroom villa, overlooking either the golf course or the pool (their preference), for a total of 1520 points.

We went on line to "price" this out, and the cost was $16,500, and that included a 10% AAA discount."

Now to be honest, I do not have full access to how many points gets a member what and when but our business model requires exceptional value. Our club is targeting successful, discerning individuals who are looking at value the same way you are.

The above is an absolute, true story of a member's experience.

Ben Scott

DC4MS: We have full access to any of the hotels on our list. If the member wants a luxury suite overlooking the water they can book it. If, however, the member wants to let their, say, 19 year old son and friends use the membership they can book the 500 sq unit overlooking the parking lot and use fewer points.

BTW, thank you for the above comment. While we are very confident in our product, this board is proving to be a very useful tool in determining potential member feedback.

Steamboat Bill

I would love to see your complete list as this is an IMPRESSIVE group of hotels


This is NOT very impressive.

I would STRONGLY suggest that you provide another example as the Marriott Desert Springs Villa II is a Marriott TIMESHARE property that anyone can easily rent a 1 bedroom for 28 nights for less than $6,000.

If you want to differentiate yourself from II or RCI, you MUST provide places that they can't. Avoid any TIMESHARE property like Marriott, Hyatt, Hilton, Disney, Worldmark, etc.

Ben Scott

Conde Nast released a list of the top 100 resorts based on a readers poll. 30 were on our list.
Our list also includes hotels like the Hilton and and the Marriott to appeal to a larger demographic. These are still great hotels but cost fewer points and will allow members more nights of travel per year.
The full list will be available when we re-launch the product.

More examples to follow.

mjs

Here is what is available at this moment for the Winter -09 through Interval International. Certainly there will be other weeks available if I check tomorrow or next week, as Timeshare owners realize. Using my lock-offs, I can get 4 weeks using my 2 weeks which I paid $2000 each(total $4000 compared to $165,000). My yearly fees, lock-off fees, and II fees will total about $2000.

Marriott Desert Springs villa II

Jan 01 2009 - Jan 08 2009 1 4 4 144
Jan 01 2009 - Jan 08 2009 2 6 8 268
Jan 02 2009 - Jan 09 2009 0 2 4 024
Jan 02 2009 - Jan 09 2009 1 4 4 144
Jan 02 2009 - Jan 09 2009 2 6 8 268
Jan 03 2009 - Jan 10 2009 0 2 4 024
Jan 03 2009 - Jan 10 2009 1 4 4 144
Jan 03 2009 - Jan 10 2009 2 6 8 268
Jan 04 2009 - Jan 11 2009 0 2 4 024
Jan 04 2009 - Jan 11 2009 1 4 4 144
Jan 04 2009 - Jan 11 2009 2 6 8 268
Jan 05 2009 - Jan 12 2009 0 2 4 024
Jan 05 2009 - Jan 12 2009 2 6 8 268
Jan 08 2009 - Jan 15 2009 0 2 4 024
Jan 08 2009 - Jan 15 2009 2 6 8 268
Jan 09 2009 - Jan 16 2009 0 2 4 024
Jan 09 2009 - Jan 16 2009 1 4 4 144
Jan 09 2009 - Jan 16 2009 2 6 8 268
Jan 10 2009 - Jan 17 2009 0 2 4 024
Jan 10 2009 - Jan 17 2009 1 4 4 144
Jan 10 2009 - Jan 17 2009 2 6 8 268
Jan 11 2009 - Jan 18 2009 0 2 4 024
Jan 11 2009 - Jan 18 2009 1 4 4 144
Jan 11 2009 - Jan 18 2009 2 6 8 268
Jan 12 2009 - Jan 19 2009 2 6 8 268
Jan 15 2009 - Jan 22 2009 2 6 8 268
Jan 16 2009 - Jan 23 2009 2 6 8 268
Jan 17 2009 - Jan 24 2009 0 2 4 024
Jan 18 2009 - Jan 25 2009 0 2 4 024
Jan 19 2009 - Jan 26 2009 0 2 4 024
Jan 19 2009 - Jan 26 2009 1 4 4 144
Jan 22 2009 - Jan 29 2009 2 6 8 268
Jan 23 2009 - Jan 30 2009 0 2 4 024
Jan 23