NeilGoBlue

I firmly believe the 'recession' will tremendously impact the DC industry...

While growth wont be negative...it will slow down...and the slowdown coupled with the rising cost of capital will make a huge difference... Whether clubs go under or not or just keep merging is unclear to me.. but I think 18 months from now the industry will be drastically different...

DC4MS

Here is an interesting chart. Notice the trend of the Home Prices vs the S&P and Jobs charts.

Steamboat Bill

I am not sure if I agree with that as High Country Club is targeted to a much larger demographic than any other Destination Club and their entry point requires significantly less out of pocket costs.

Yes, a recession may hurt (or even help) the DC industry as nobody knows for sure. Either way, I still think DCs represent a new paradigm in upscale travel and is an excellent alternative to buying a second home or Fractional property. I also think DCs offer better consistency that what most people can rent from VRBO or eBay.

The funny thing about the stock market is that most people have most of their stock holdings in retirement accounts, thus the daily or monthly swings are minimized over a lifetime. Also, the real estate market really doesn't affect anyone until the have to sell or want to sell.

Kagehitokiri

DC4MS, in the above chart, its interesting that the drop in home prices was first this time.

bill, isnt it more about the mortgage/finance connections to RE? plus lessors.

NavisGroup, as an employee of Private Escapes, perhaps you can comment on their membership growth lately?

DC4MS

Halogen Guides has an excellent article on the difficulty of PRCs, fractionals, and condo-hotels getting mortgages.

Mortgage Meltdown Hits Fractional Lender | Helium Report - Luxury 2.0 Guides and Reviews

First Fractional Funding, a Greenwood Village, Colo.-based mortgage company that specializes in consumer loans for fractional properties, announced that its lending partner, the National Bank of Kansas City pulled out of the fractional mortgage business.

Banks are creating "Black Lists" of condominium projects, including condo-hotel developments that are no longer eligible for buyers to take out mortgages.

Several condo-hotel projects, including Blue Heron in Orlando, Fla., Fallridge in Vail, Colo. and several properties in Mammoth Lakes, Calif. are among the developments that Washington Mutual is no longer funding.

TravelGuy

I think it's a guess on how the economic down-turn affects membership growth of ALL Destination Clubs as investors of ALL economic strata are feeling the physiological effects of the market. However, the area that will have the most immediate affect on DCs is the loss of liquidity in the credit markets. No credit means no growth and limited profits (or extended losses).

Without getting into detail, I know from some recent High Country Club due diligence that they have unique solutions to credit and financing along with a capital reserve that should insulate them, somewhat, from the current market difficulties.

One other thing that I learned in my previous life as a high-end luxury retailer is that wealthy consumers buy-down in hard economic times but they do keep buying. They buy "down" to the Benz instead of the Maybach, etc. This may mean that DCs like High County Club, PE and UR will continue to do well in this environment. We'll see....

pwrshift

It would be interesting to know how many HCC members there are now since they burst through the 300 member level before the last price increase. Wonder if they regret raising prices when they did as the world has changed muchly since then?

Quintess Michael

Bottom line question...

Are YOU going to stop travelling because of a recession?


Of course not.

A solid, well funded company, with a highly diversified portfolio of INTERNATIONAL real estate assets, would use a recession to BUY assets. Especially in areas that are having fire sales now, but still are high on members destination priority list.

__________________
Michael Aumock
Director, Membership Development
Quintess, The Leading Residences of the World

Jack

unless we are heading into a depression... the DC market should have no real downtime, if anything homes will become cheaper. Members of DC clubs are in that top tier of wealth and that is not hit as hard as someone in the middle/upper class.

DC4MS

Agreed. There are a lot of bargains out there (as compared to previous prices) and DCs should view this as a buying opportunity.

The bottom line is joining a DC is an alternative to buying a second home and this analogy is getting better all the time.