DC4MS

Exclusive Resorts, the leader in the Destination Club industry has fired a shot across the bows of every Destination Club by announcing that they will be lowering their refundable membership deposit to 75% vs the previous 80% (and defacto industry standard they help create).

This is either good or bad news depending on how you look at it.

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.

This is possibly good news for competing clubs like LUSSO, Quintess, Ultimate Resort as this may make their clubs have a advantageous "cost per night" in comparisson.

What do you think?

TarheelTraveler

I guess if anyone can do that, ER can. It seems like they have some great sales momentum going that no one else to date has come close to matching. I would think the other clubs would stick with 80% or better as a clear differentiator.

I actually like the new membership plans. They are more customizable and provide some lower entry points. What's surprising to me is the 8 - 29% increase in dues. I suspect they are trying to get the dues in line with the actual costs.

DJTraveler

Halogen is a bit weak at the knee's on reasearch - or has one hand tied behind their back..... MAKE THAT FROM 50 to 75%!!!
On the new ER plans, pretty much a copy of Q's plan structure except that they are now offering non-holiday plans and you have to add on the extras for additional non-refundable one time "fees" like any holidays and family access!
Example is the ER 40 night plan with 4 advance reservations (7 nights max.) = 28 base nights non-holiday ($339,900 refundable at 75%) plus the 1 Peak Holiday ($59,000 fee) plus family use ($19,000 fee) ((not to mention 10% annual dues surcharge for family use) = $417,900 - which is identical to their old Elite Plan which was priced at $459,000 + $10,000 per extended family designee on the web. Except there are 5 fewer space available nights included..... hmmmm - any comments on these findings?

So ER is dropped their deposit pricing by 10%. Dues are now $39,900 for the 40 which is an increase of $5,000 or 12.5%/ with family use $43,890 for 40 nights. BTW - this means deposit refund for this plan is really $254,925 (75% of $339,900) or 61% of the $417,900 a member would pay. BTW - a Q5 with 2 holidays and extended family use is $425K - so apples to apples with ER40 would need one select holiday added +$39K to = $456,900 in which case the deposit return is still $254,925 but percentage drops to 56%. That is a $200K exit - can this be serious and why would.....??? Math is really just that.....

Bourne

Is is good or bad? I beleive the change is good.

I am a big proponent of price and dues increases. During the initial stage, a DC has to market the product based on future expectations. The sooner they align themselves to real cost, the better it is in the long run for the club and DC industry.

The members who bought in early will be glad that they paid a lower price. The prospective members will be glad that the product is finally aligned to their risk level.

The new version of the plan gives the members a chance to customize their plan based on needs but it comes at a cost. For ER, it is a win because the holiday week charge is non refundable.. i.e. they are only liable for 75% of the core deposit. The lesser the debt on the books, the better.

To someone, the change may look bad. Remember, none of the DCs will change a plan to a price point they cannot market.

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