DC4MS

Because Exclusive Resorts is the world’s largest Destination Club, it is reasonable to assume that when they make a change in their membership fees, other clubs may either follow their lead or try to use that change as a point of difference with their offerings.

According to an interview with Halogen Guides - “Membership deposits are debt,” said Brent Handler (Exclusive Resorts president). The less debt on the books, he said, “the better for the company and the better for all of the members. We are a stronger club with less debt.” Handler insisted that the drop in the percentage of the deposit refunded would be seen as negligible in the eyes of new members.

While most of the online media and web site discussions assumed that Exclusive Resorts simply lowered their refundable membership deposit from 80% to 75%, a full analysis using the DestiantionClubForums.com – Exclusive Resorts Comprehensive Membership Analysis tool reveals that this may be much lower than anyone expected. In fact, there are scenarios where the drop in the percentage is FAR from “negligible.”

One important detail that is often overlooked by individuals evaluating Exclusive Resorts is the three optional fees (Peak holiday access, Select holiday access, and Extended family sharing) are “100% non-refundable.”

***** New calculations inserted on 5-23-08 to correct my mistake *****

20 day membership analysis --- If someone joins Exclusive Resorts 20 day plan and does not add any options, then their membership fee is refunded 75%.

However, if they add an “optional” Priority Peak Holiday access fee ($59,000) then their refundable membership fee drops to 58%.

If they also add an “optional” extended family sharing plan fee ($19,000) then their refundable membership fee drops to 54%.

-----

40 day membership analysis --- If someone joins Exclusive Resorts 40 day plan and does not add any options, then their membership fee is refunded 75%.

However, if they add TWO (2) “optional” Priority Peak Holiday access fee ($118,000) then their refundable membership fee drops to 56%.

If they also add an “optional” extended family sharing plan fee ($19,000) then their refundable membership fee drops to 53%.

-----

60 day membership analysis --- If someone joins Exclusive Resorts 60 day plan and does not add any options, then their membership fee is refunded 75%.

However, if they add THREE (3) “optional” Priority Peak Holiday access fee ($177,000) then their refundable membership fee drops to 55%.

If they also add an “optional” extended family sharing plan fee ($19,000) then their refundable membership fee drops to 53%.

-----

Therefore, it is entirely possible that a member would only receive a 53-58% membership fee refund vs the previous 80% refund. Fortunately this would only occur if a member resigns from the club.

By making the optional fees 100% non-refundable, Exclusive Resorts has certainly figured out a way to lower their debt, unfortunately it is being done at the expense of their members.

Kagehitokiri

they established this precedent with the ultra plan's upgrade option not being refundable.

Tedpilot

Uh....ouch!! I guess we'll see if this holds out as "negligible" per Handler.

DC4MS

Let me be very clear with this thread....Exclusive Resorts has been significantly smarter than any other destination club (in the past) and the evidence is their 3,500 members, 350 homes, and huge growth last year. They are smoking the competition.

Obviously they are executing their business plan very well and have probably put a lot of thought and research into their new pricing model. However, their recent price changes (specifically in reference to the non-refundable optional fees) dramatically changes the "cost-per-night" as compared to their previous plans or their current plans without adding any options.

I think most people joining at a 30 to 60 night plan would have some desire to travel during a holiday period and will have to buy the "number of reservations" that think they will need (they are priced per each number of reservations desired). I think the optional prices are "fair and reasonable" and if they were refunded 75% (like the membership fee) then this thread would never have been created.

My delimma with reference to the Exclusive Resorts new optional prices is that I don't like the 100% non-refundable nature of the optional fees and this may become a "deal breaker" for many people.....only time will tell.

Here is a comparison of the old prices with the new prices:

Old Executive membership - 25 days - $349,000 - 1 select holiday
20% non-refundable fee = $69,800

New 20 day plan with 1 select holiday - $258,800
37% non-refundable fee = $88,975

New 30 day plan with 1 select holiday - $338,800
34% non-refundable fee = $106,475

---------------------

Old Affiliate membership - 45 days - $439,000 - 1 peak holiday
20% non-refundable fee = $87,800

New 40 day plan with 1 peak holiday - $438,800
36% non-refundable fee = $143,975

New 50 day plan with 1 peak holiday - $518,800
34% non-refundable fee = $161,475

LTTravel

I agree that the refundable portion of the membership fee in some cases has dropped dramatically. In addition, the yearly dues no longer decrease on a per day basis as you add more days, which I think is even more concerning.
The explanation given by ER is as follows:
1. Their marketing research has shown that Potential members are more concerned about the amount of the membership deposit than they are of the refundable portion of the deposit. If they would have to continue to raise membership prices, that would be more detrimental to growth than decreasing the refundable portion of the deposit. (probably true)
2. The cost per day to run a property is the same whether or not you have a 10 day plan or 60 day plan. Therefore they feel that the daily fee should the same per day, regardless of how many days you have in the plan, though the membership fee on a per day basis is less as you add more days (I disagree with this and I think that they should have a slight discount as you add more days)

Just for clarification, you can only add one Holiday token for every 20 days in your plan. So you cannot get a Holiday token in the 10 day plan. You can get one Holiday token for the 20 day plan, two for the 40 day plan and three for the 60 day plan. You have to pay for each one of those as non refundable deposits.

Bourne

I am for the change.

I have always advocated that the risk is higher for the member during the early stages and it should be offset by a lower "buy in" price.

Once the club matures, the risk is lower and the members have to pay extra for the same. Because that is how the club with a non-equity model would eventually be profitable.

Members cannot have it cheap at both ends of the risk spectrum. There is no free lunch.

__________________
The Nile is a river in Egypt......

DestiFan

This might be a very stupid question, but we all talk about DC's being like Country Clubs. That you are joining for the right to "play" but you like the fact you don't own the course and have to deal with upkeep.

One thought that occurred to me today is that all DC's that I know of are for-profit enterprises that are driving to make money for shareholders (I believe). My Country Club iss not run that way - it is run to only benefit members - and if we make a little money, fantastic. Now, obviously, shortfalls are covered by members, but just wanted to throw that out there and see if people had any thoughts.

Kagehitokiri

number of investors / shareholders would be another interesting comparison.

DC4MS

Thanks for this clarification....it was NOT stated this clearly on the ER website.

Thus, the example in Post #1 is moot as optional holiday access can't be added with a 10 night plan.

I have EDITED my original post #1 to insert the correct analysis figures.