DC4MS

Robb Report Vacation Homes

Self Regulation

By: Kim Fredericks

04/01/2007

Self Regulation | Vacation Homes Magazine

When Rob McGrath, one of the founding fathers of the destination club industry, filed for Chapter 11 bankruptcy last year—leaving nearly 900 members of Tanner & Haley in limbo—other clubs looked to each other for support. Quintess, Dream Catcher Retreats and Leading Residences of the World merged in an attempt to gain strength and an edge over the dozen or so other clubs in the industry, while Ultimate Resort stepped up and purchased Tanner & Haley’s assets, offering the defunct club’s members a chance to join without paying additional membership fees, and thereby securing their position as the second-largest club behind industry leader Exclusive Resorts.

Comprised of six clubs, the Destination Club Association (DCA) aims to establish itself as a governing body for the industry.

Bad publicity, paired with decreasing consumer confidence, left the burgeoning industry in need of a change. Adam Wegner, the general counsel of Exclusive Resorts, decided to remedy the situation by holding meetings. Industry leaders gathered many times over several months, and the Destination Club Association (DCA) was born. The newly formed or-ganization, which currently consists of six clubs (Exclusive Resorts, Ultimate Resort, Parallel, Private Escapes, Quintess and High Country Club), aims to establish it-self as a governing body for the industry.

“There was confusion about what a destination club is and how it differs from other vacation alternatives,” says Wegner, who serves as DCA’s president. The new club strives to educate both prospective members and clubs through an established list of tenets. “These best practices are fundamental operating principles that each company in our industry should be following,” he notes. Number one on the list is disclosure, followed by financial responsibility, appropriate marketing and sales practices, and responsible growth. “We have to make it clear to members exactly what they are signing onto and how the program works. Clubs must structure themselves in a way that they can make good on their promises and make sure that they are not taking risks with their members’ deposits.”

Wegner explains that in the industry’s early days, some companies were making promises that they could not keep—like vacations anywhere, anytime. “What Tanner & Haley had promised its members was too good to be true—their business model never could have worked,” he notes. Since then, clubs have become more realistic. For example, Private Escapes recently changed its deposit refund from 100 percent to 80 percent. Wegner expects companies to adopt more realistic and responsible practices as the industry matures, tactics he believes are necessary for companies to succeed. “You have to deliver on your promises and make a great vacation experience for your members over and over again. If you do, they will refer their friends.”