What attracted us to DCs and Lusso

NorCal62 · 09-01-2008, 04:51 PM

I was inspired to write of our experience after reading the previous posting for DHH.

We are a family of five, who love ski and beach vacations, and look forward to traveling to Europe with the family in the next couple of years. Our story is similar to many other families we know.

We began to be frustrated with the rising costs of all forms of lodging for our family. A few years ago we were able to stay in nice places near ski lifts, or luxury hotels in Hawaii, for $250 - $500 per night. Now, with our larger family needing more space, and with escalating costs, it became nearly impossible to find anything comfortable for under $1,000 per night, and to really enjoy ourselves, it was more like $1,500 and up per night. This was especially true during holiday weeks, which is when we are most able to travel with school schedules. Good deals became nearly impossible to find.

We also became increasingly uncomfortable in hotel rooms and rental homes. Hotels felt cramped, we hated hallways and elevators, and tired quickly of eating all of our meals in restaurants. We were also disappointed many times in rental homes and villas, which we typically found after dozens of hours searching on vrbo. They were often disappointing either for being poorly equipped, providing terrible beds, being poorly cleaned and maintained, or being poorly located. We tired of doing all the grocery shopping and cleaning during our stay.

These frustrations led us to our first search into investing in a second home. We thought it might make more financial sense to be the rentee rather than the renter. We searched Hawaii and Lake Tahoe, which are the two destinations we travel to the most. We figured we would use them a few weeks a year, and rent them the other weeks. A quick review of properties available as whole ownership made us realize that we would need to invest nearly $2 million to get a property we would enjoy. The realities of the time and money associated with maintaining this type of property set in, and we widened our search to include fractionals and other shared ownership options.

We looked at many of the new fractional properties at Lake Tahoe (Northstar specifically). We ran detailed spreadsheets, and looked at a dozen properties. We particularly liked the ones which offered trades to other destinations. But, we came to the conclusion that $250 - $500K to purchase 6 weeks a year didn't make sense. Looking at the calendar, we realized we would probably get 2 weeks and a couple of weekends during prime time each year, with the rest being during shoulder seasons when it is difficult for us to travel. It seemed that it would be difficult to trade time for other locations, and many properties would not allow us to rent weeks we could not use. This reality, coupled with historical resale values of fractionals and the annual fees began to look unappealing to us.

During our search of fractionals at Northstar, we had the good fortune of being able to see the Lusso unit at Great Bear Lodge. It was much larger and more beautifully decorated than any of the fractional properties available for sale. At this point in our search, we were familar with DCs through our friends who are members at Quintess. I had had the opportunity to go on two Quintess trips as a guest, to Tahoe and to Paris, and I was quite impressed. However, our impression at the time was that this was a luxury we couldn't afford.

Still, we began to run the numbers, and we began talking to Lusso, and realized that it was a more affordable option than we thought. We did a detailed analysis of the opportunity costs over 10 years based on the membership fee (100% refundable at Lusso), and the cost per night based on the annual dues, and decided that Lusso gave us a HUGE increase in our level of travel, for not a lot more money than we were already spending on hotel rooms and rental homes.

We joined in December '07 and have been thrilled with our decision so far. My husband and I like to say that the "shlep and stress factors" of traveling with the family are gone. It is such a luxury to arrive at the residence, and be able to instantly relax. The heat is on, the fire is roaring, the kitchen is stocked with our favorite foods, lift tickets are purchased, reservations made, and everyone has room to spread out and be comfortable.

The added luxuries that Lusso offers with free airport transportation (in luxury town cars) and the use of a new Lincoln Navigator at most homes, is icing on the cake.

We have visited Tahoe, Cabo, New York and La Jolla this year. All of the properties have the "wow" factor. The homes feel like a real luxury home, with incredible bedding and linens, state of the art electronics, computers with internet access, high end kitchens, great locations....everything you would want in your own home. Lusso does a great job making the homes all equally appealing and consistent, so we could travel to any of the residences and know that we'll have a great experience.

The other remarkable thing is that we have been able to ski during President's week, and visit beach locations over spring break and July 4 weeks without a problem. Availability over school holidays was HUGE for us, and we have been very satisfied in that regard.

We feel lucky that we joined Lusso when we did. Their prices were a bit better than other clubs, as they are a newer club, and their portfolio of homes is smaller in comparison to some others. But they had the destinations we needed, so it fit for us. Our hope is that Lusso will add more Hawaii and California destinations, which are on their forcast. We also eagerly await a European destination which we hope will be announced this fall.

We are big fans of the DC concept, and encourage anyone to investigate the options for their own familes.

LTTravel · 09-01-2008, 06:31 PM

Norcal62

Thank you for your post. Just curious as to why you didn't consider Quintess after vacationing twice with friends at Quintess destinations

NorCal62 · 09-01-2008, 07:40 PM

The main reasons we joined Lusso instead of Quintess:

1) Lusso offered 100% refundable membership fee + 50% appreciation (when we joined) compared to 80% refundable w/no appreciation with Quintess.

2) Cost per night (based on annual fees) was less with Lusso.

3) Lusso offers airport transfers and luxury vehicles.

4) Lusso properties were in the same $3.5 million range as Quintess, and offered the locations we needed.

5) It appeared to us that availability for our locations and dates might be better with Lusso, (and we have been very pleased with availabilty so far).

NorCal62 · 09-02-2008, 02:46 PM

I might also add that we looked at all of the clubs that had properties at Lake Tahoe, and ran spreadsheets on all of them - ER, Quintess, Crescendo/Bellehavens (now A & K), HCC, and a few others. Lusso just seemed to give us the biggest bang for our buck - and they did a wonderful job investing time with us during our investigation.

Initially we were very interested in the equity club concept, but began to wonder if the goals of the club could conflict, i.e. what becomes more important, providing a fabulous vacation destination/experience, or providing the highest return on investment? These two goals could be mutually exclusive. Has this model gone by the wayside?

TarheelTraveler · 09-02-2008, 04:20 PM

Great summary on why you chose Lusso. I'm glad you're enjoying it. I ran into many of the same issues as you before deciding on a DC as the preferred mode of travel. I've been thrilled with it since. It's hard to convey to people just how life changing it is.

The "investment" equity model still exists with Equity Estates (very similar to the Crescendo model). However, both equity and non-equity DCs have the same goal of maximizing investment returns, it just might not be stated openly and the investment return might not be for your benefit (i.e., the return is for the benefit of managment in most non-equity situations). In other words, with a non-equity club, the real estate investment returns are just as important (and probably more important), because it is such a large component of how non-equity DC investors will receive their returns (and helps justify some of the subsidization of the members by the investors with some DCs). There is absolutely less of a conflict in an equity situation, because both parties at least are on the same side and both have a chance to gain (i.e., it is a sharing arrangement (maybe 70-30 member/management)). With a non-equity club, management is typically receiving 100% of the return, without a split. No matter what is said about being focused 100% on members receiving the best vacation experiences, I can guarantee you that potential investment returns are one of the critical components in choosing locations when 100% of any returns are going to management/investors. It may be couched in terms like such and such is a better buy or the exchange rates are bad right now so we won't go there now, but it's definitely just as important of an issue for them.

As a side note, A&K has chosen a hybrid model to truly try to eliminate any conflicts of interest. Ownership of the portfolio's real estate by the members (rather than management) to get the interests aligned, but less emphasis on the investment side of things (i.e., no sale of assets down the road just to realize gains for members or DC investors). In other words, if members own the real estate, you do what the membership wants to do with the real estate as a group, rather than potentially looking out for what makes most sense for the management/investors as owners of the real estate porfolio that members utilize. You will understandably hear the contrary from the non-equity clubs themselves (i.e., we are always looking out for our members, we are member driven, we do surveys of desired destinations, etc.). However, the reality is that there are absolutely some destinations that get picked and held more for the investment returns or how much they have to put into it to provide another house than because it was such a hot location that members were desperate to get added.

Practically speaking though, I think you can pick locations that offer both potential returns and great experiences and for the most part this is followed in picking destinations, no matter the type of club.

Frankly, I think I'd be more concerned about the results of other conflicts of interest that you are starting to see pop up on this forum as a result of most DCs being for profit and non-equity, unlike most country clubs that are used for comparisions (for example, mergers that are not agreed to by members and might not be in their best interests, changing contract terms and revaluations).

Mods - Sorry about the long post. Just kind of hit on a nerve. Feel free to move this to another forum if desired.

Kagehitokiri · 09-02-2008, 06:05 PM

thorough answer TarheelTraveler.

there are still a number of clubs that give you various options for a return on your deposit.

NorCal62 · 09-02-2008, 06:34 PM

Thanks for your response Tarheel Traveler.

The A & K "hybrid" model makes more sense to me than the investment model that Crescendo had.

It seems that whether or not a club is "equity in real estate" or "equity in club", either way the club management must always face the challenge of balancing the financial return with member satisfaction, in every decision. Given the speculative and subjective nature of real estate investment, where and when to buy and sell property would seem to be one of the greatest challenges of running a DC - no matter what the business model is. As we all know, it is difficult to please everyone, and there are many factors to consider when buying real estate.

I am curious what others think is the best method for a club to make real estate buying/selling decisions.

Quintess Michael · 09-02-2008, 08:21 PM

Quote:

Originally Posted by NorCal62

The main reasons we joined Lusso instead of Quintess:

1) Lusso offered 100% refundable membership fee + 50% appreciation (when we joined) compared to 80% refundable w/no appreciation with Quintess.

2) Cost per night (based on annual fees) was less with Lusso.

3) Lusso offers airport transfers and luxury vehicles.

4) Lusso properties were in the same $3.5 million range as Quintess, and offered the locations we needed.

5) It appeared to us that availability for our locations and dates might be better with Lusso, (and we have been very pleased with availabilty so far).

Gotta correct you on a couple of things, Norcal.

Quintess is 100% refundable for first year and after 5th year.

Q homes were in the $4M range, not $3.5...that extra half mil buys an extra bedroom.

3DH · 09-02-2008, 08:35 PM

Quote:

Originally Posted by Quintess Michael

Q homes were in the $4M range, not $3.5...that extra half mil buys an extra bedroom.

...not always!

I don't know, but would guess that the majority of Quintess properties are 4 bedroom.

pwrshift · 09-02-2008, 08:39 PM

Quote:

Originally Posted by Quintess Michael

Gotta correct you on a couple of things, Norcal.

Quintess is 100% refundable for first year and after 5th year.

Q homes were in the $4M range, not $3.5...that extra half mil buys an extra bedroom.

Michael...that's very objective of you, almost admitting that Lusso is a better deal than Quintess.

NorCal ... how does the 50% appreciation work - I wasn't aware of that attractive advantage? Thanks for posting your thoughts on this as it was valuable info - also makes you wonder why Lusso's competitors haven't been able to put together a better package.

Kagehitokiri · 09-02-2008, 08:40 PM

im not sure i would emphasize a difference in stated average value, between lusso and quintess. the thing quintess (and ER) offer that does go beyond is the buying in bulk at a potentially very large discount. lusso on the other hand can be more selective.

lusso no longer offers +50%. HCC/PE (at least) had similar initial offerings.

Quintess Michael · 09-02-2008, 08:41 PM

Quote:

Originally Posted by 3DH

...not always!

I don't know, but would guess that the majority of Quintess properties are 4 bedroom.

Our overall average is over 4.25 BR per home...

3DH · 09-02-2008, 08:42 PM

Quote:

Originally Posted by Quintess Michael

Hey...aren't you running for Vice President?

Our overall average is over 4.25 BR per home...

Absolutely... can I count on your vote?

And, I want to see that .25 bedroom -- is that the "time out" room?

Quintess Michael · 09-02-2008, 08:45 PM

Quote:

Originally Posted by pwrshift

michael...that's very objective of you, almost admitting that lusso is a better deal than quintess.

almost.....

Kagehitokiri · 09-02-2008, 08:49 PM

i dont recall Quintess Michael ever claiming quintess is "a better deal" than another club. i do recall other posters who shall remain nameless making all sorts of claims like that.

different people value different things a different amount.

09-01-2008, 04:51 PM	#1
NorCal62 Junior Member Join Date: Aug 2008 Posts: 18 Club: LUSSO Collection	What attracted us to DCs and Lusso I was inspired to write of our experience after reading the previous posting for DHH. We are a family of five, who love ski and beach vacations, and look forward to traveling to Europe with the family in the next couple of years. Our story is similar to many other families we know. We began to be frustrated with the rising costs of all forms of lodging for our family. A few years ago we were able to stay in nice places near ski lifts, or luxury hotels in Hawaii, for $250 - $500 per night. Now, with our larger family needing more space, and with escalating costs, it became nearly impossible to find anything comfortable for under $1,000 per night, and to really enjoy ourselves, it was more like $1,500 and up per night. This was especially true during holiday weeks, which is when we are most able to travel with school schedules. Good deals became nearly impossible to find. We also became increasingly uncomfortable in hotel rooms and rental homes. Hotels felt cramped, we hated hallways and elevators, and tired quickly of eating all of our meals in restaurants. We were also disappointed many times in rental homes and villas, which we typically found after dozens of hours searching on vrbo. They were often disappointing either for being poorly equipped, providing terrible beds, being poorly cleaned and maintained, or being poorly located. We tired of doing all the grocery shopping and cleaning during our stay. These frustrations led us to our first search into investing in a second home. We thought it might make more financial sense to be the rentee rather than the renter. We searched Hawaii and Lake Tahoe, which are the two destinations we travel to the most. We figured we would use them a few weeks a year, and rent them the other weeks. A quick review of properties available as whole ownership made us realize that we would need to invest nearly $2 million to get a property we would enjoy. The realities of the time and money associated with maintaining this type of property set in, and we widened our search to include fractionals and other shared ownership options. We looked at many of the new fractional properties at Lake Tahoe (Northstar specifically). We ran detailed spreadsheets, and looked at a dozen properties. We particularly liked the ones which offered trades to other destinations. But, we came to the conclusion that $250 - $500K to purchase 6 weeks a year didn't make sense. Looking at the calendar, we realized we would probably get 2 weeks and a couple of weekends during prime time each year, with the rest being during shoulder seasons when it is difficult for us to travel. It seemed that it would be difficult to trade time for other locations, and many properties would not allow us to rent weeks we could not use. This reality, coupled with historical resale values of fractionals and the annual fees began to look unappealing to us. During our search of fractionals at Northstar, we had the good fortune of being able to see the Lusso unit at Great Bear Lodge. It was much larger and more beautifully decorated than any of the fractional properties available for sale. At this point in our search, we were familar with DCs through our friends who are members at Quintess. I had had the opportunity to go on two Quintess trips as a guest, to Tahoe and to Paris, and I was quite impressed. However, our impression at the time was that this was a luxury we couldn't afford. Still, we began to run the numbers, and we began talking to Lusso, and realized that it was a more affordable option than we thought. We did a detailed analysis of the opportunity costs over 10 years based on the membership fee (100% refundable at Lusso), and the cost per night based on the annual dues, and decided that Lusso gave us a HUGE increase in our level of travel, for not a lot more money than we were already spending on hotel rooms and rental homes. We joined in December '07 and have been thrilled with our decision so far. My husband and I like to say that the "shlep and stress factors" of traveling with the family are gone. It is such a luxury to arrive at the residence, and be able to instantly relax. The heat is on, the fire is roaring, the kitchen is stocked with our favorite foods, lift tickets are purchased, reservations made, and everyone has room to spread out and be comfortable. The added luxuries that Lusso offers with free airport transportation (in luxury town cars) and the use of a new Lincoln Navigator at most homes, is icing on the cake. We have visited Tahoe, Cabo, New York and La Jolla this year. All of the properties have the "wow" factor. The homes feel like a real luxury home, with incredible bedding and linens, state of the art electronics, computers with internet access, high end kitchens, great locations....everything you would want in your own home. Lusso does a great job making the homes all equally appealing and consistent, so we could travel to any of the residences and know that we'll have a great experience. The other remarkable thing is that we have been able to ski during President's week, and visit beach locations over spring break and July 4 weeks without a problem. Availability over school holidays was HUGE for us, and we have been very satisfied in that regard. We feel lucky that we joined Lusso when we did. Their prices were a bit better than other clubs, as they are a newer club, and their portfolio of homes is smaller in comparison to some others. But they had the destinations we needed, so it fit for us. Our hope is that Lusso will add more Hawaii and California destinations, which are on their forcast. We also eagerly await a European destination which we hope will be announced this fall. We are big fans of the DC concept, and encourage anyone to investigate the options for their own familes.

09-01-2008, 06:31 PM	#2
LTTravel Super Moderator Join Date: Nov 2007 Posts: 1,031 Club: ER, HCC Corporate, DHH Lite, Bud Lite (A few too many)	Re: What attracted us to DCs and Lusso Norcal62 Thank you for your post. Just curious as to why you didn't consider Quintess after vacationing twice with friends at Quintess destinations

09-01-2008, 07:40 PM	#3
NorCal62 Junior Member Join Date: Aug 2008 Posts: 18 Club: LUSSO Collection	Re: What attracted us to DCs and Lusso The main reasons we joined Lusso instead of Quintess: 1) Lusso offered 100% refundable membership fee + 50% appreciation (when we joined) compared to 80% refundable w/no appreciation with Quintess. 2) Cost per night (based on annual fees) was less with Lusso. 3) Lusso offers airport transfers and luxury vehicles. 4) Lusso properties were in the same $3.5 million range as Quintess, and offered the locations we needed. 5) It appeared to us that availability for our locations and dates might be better with Lusso, (and we have been very pleased with availabilty so far).

09-02-2008, 02:46 PM	#4
NorCal62 Junior Member Join Date: Aug 2008 Posts: 18 Club: LUSSO Collection	Re: What attracted us to DCs and Lusso I might also add that we looked at all of the clubs that had properties at Lake Tahoe, and ran spreadsheets on all of them - ER, Quintess, Crescendo/Bellehavens (now A & K), HCC, and a few others. Lusso just seemed to give us the biggest bang for our buck - and they did a wonderful job investing time with us during our investigation. Initially we were very interested in the equity club concept, but began to wonder if the goals of the club could conflict, i.e. what becomes more important, providing a fabulous vacation destination/experience, or providing the highest return on investment? These two goals could be mutually exclusive. Has this model gone by the wayside?

09-02-2008, 04:20 PM	#5
TarheelTraveler Senior Member Join Date: Nov 2007 Posts: 542 Club: A&K Residence Club	Re: What attracted us to DCs and Lusso Great summary on why you chose Lusso. I'm glad you're enjoying it. I ran into many of the same issues as you before deciding on a DC as the preferred mode of travel. I've been thrilled with it since. It's hard to convey to people just how life changing it is. The "investment" equity model still exists with Equity Estates (very similar to the Crescendo model). However, both equity and non-equity DCs have the same goal of maximizing investment returns, it just might not be stated openly and the investment return might not be for your benefit (i.e., the return is for the benefit of managment in most non-equity situations). In other words, with a non-equity club, the real estate investment returns are just as important (and probably more important), because it is such a large component of how non-equity DC investors will receive their returns (and helps justify some of the subsidization of the members by the investors with some DCs). There is absolutely less of a conflict in an equity situation, because both parties at least are on the same side and both have a chance to gain (i.e., it is a sharing arrangement (maybe 70-30 member/management)). With a non-equity club, management is typically receiving 100% of the return, without a split. No matter what is said about being focused 100% on members receiving the best vacation experiences, I can guarantee you that potential investment returns are one of the critical components in choosing locations when 100% of any returns are going to management/investors. It may be couched in terms like such and such is a better buy or the exchange rates are bad right now so we won't go there now, but it's definitely just as important of an issue for them. As a side note, A&K has chosen a hybrid model to truly try to eliminate any conflicts of interest. Ownership of the portfolio's real estate by the members (rather than management) to get the interests aligned, but less emphasis on the investment side of things (i.e., no sale of assets down the road just to realize gains for members or DC investors). In other words, if members own the real estate, you do what the membership wants to do with the real estate as a group, rather than potentially looking out for what makes most sense for the management/investors as owners of the real estate porfolio that members utilize. You will understandably hear the contrary from the non-equity clubs themselves (i.e., we are always looking out for our members, we are member driven, we do surveys of desired destinations, etc.). However, the reality is that there are absolutely some destinations that get picked and held more for the investment returns or how much they have to put into it to provide another house than because it was such a hot location that members were desperate to get added. Practically speaking though, I think you can pick locations that offer both potential returns and great experiences and for the most part this is followed in picking destinations, no matter the type of club. Frankly, I think I'd be more concerned about the results of other conflicts of interest that you are starting to see pop up on this forum as a result of most DCs being for profit and non-equity, unlike most country clubs that are used for comparisions (for example, mergers that are not agreed to by members and might not be in their best interests, changing contract terms and revaluations). Mods - Sorry about the long post. Just kind of hit on a nerve. Feel free to move this to another forum if desired. Last edited by TarheelTraveler; 09-02-2008 at 04:52 PM.

09-02-2008, 06:05 PM	#6
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,652	Re: What attracted us to DCs and Lusso thorough answer TarheelTraveler. there are still a number of clubs that give you various options for a return on your deposit.

09-02-2008, 06:34 PM	#7
NorCal62 Junior Member Join Date: Aug 2008 Posts: 18 Club: LUSSO Collection	Re: What attracted us to DCs and Lusso Thanks for your response Tarheel Traveler. The A & K "hybrid" model makes more sense to me than the investment model that Crescendo had. It seems that whether or not a club is "equity in real estate" or "equity in club", either way the club management must always face the challenge of balancing the financial return with member satisfaction, in every decision. Given the speculative and subjective nature of real estate investment, where and when to buy and sell property would seem to be one of the greatest challenges of running a DC - no matter what the business model is. As we all know, it is difficult to please everyone, and there are many factors to consider when buying real estate. I am curious what others think is the best method for a club to make real estate buying/selling decisions.

09-02-2008, 08:40 PM	#11
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,652	Re: What attracted us to DCs and Lusso im not sure i would emphasize a difference in stated average value, between lusso and quintess. the thing quintess (and ER) offer that does go beyond is the buying in bulk at a potentially very large discount. lusso on the other hand can be more selective. lusso no longer offers +50%. HCC/PE (at least) had similar initial offerings.

09-02-2008, 08:49 PM	#15
Kagehitokiri Super Moderator Join Date: Nov 2007 Posts: 1,652	Re: What attracted us to DCs and Lusso i dont recall Quintess Michael ever claiming quintess is "a better deal" than another club. i do recall other posters who shall remain nameless making all sorts of claims like that. different people value different things a different amount.

09-02-2008, 08:51 PM	#16
Quintess Michael Senior Member Join Date: May 2008 Location: Denver Posts: 147 Club: Qui