Global Destination Clubs

Global Destination Clubs

Destination clubs offer the use of multimillion-dollar houses around the world, without the burdens of ownership. Shane Mitchell goes undercover to investigate. PLUS A look at other trends and projects changing the vacation-home world.

Groucho Marx once said, "I don’t care to belong to any club that will have me as a member." Frankly, I’m with Groucho—with a possible exception for destination clubs. After a freak accident trashed my family’s weekend home, resulting in frustrating battles with an AWOL contractor and a recalcitrant insurance adjuster, I started to flirt idly with the idea of dumping my bricks and mortar for the latest carefree-vacation real-estate concept.

The first destination club was launched in 1998, when Connecticut-based Private Retreats, subsequently renamed Tanner & Haley, enticed affluent buyers with the promise of multimillion-dollar houses in settings from Cabo to Cannes. Instead of owning a single property, members would share a portfolio of residences; in addition to a hefty one-time fee (generally refundable, at least in part, if a member leaves), there would be annual dues to cover upkeep, mortgages, homeowners’ association charges, housekeeping, and concierge services.

The concept’s originators speculated that investors would be willing to pay $200,000 or more for membership—far less than the cost of one luxury dwelling—even though their investment wouldn’t give them the equity stake they’d get with a fractional or condominium. They were right: The idea took off like a house on fire and continues to gather steam as more clubs enter the market. Some of these have aligned themselves with established travel brands like Abercrombie & Kent (Tanner & Haley) and Andrew Harper’s Hideaway Report (Parallel); there are also niche clubs that focus on golf, yachting, and fly-fishing. As competition has grown stiffer, other perks, such as alliances with private-jet companies, have been added.

Too good to be true?Maybe: last year, the destination-club industry suffered a series of highly publicized rollups and the bankruptcy of what was then the second-largest club. (Tanner & Haley filed for Chapter 11 protection in July 2006, and the group’s assets were purchased by another club, Ultimate Resort.)

So is the destination club really a viable alternative to second-home ownership?To find out, I’ve decided to play "prospective member," and contact four top outfits.

"It’s like joining a private country club," says David Tuverson, a membership director at Quintess (800/550-0324;, the first of my undercover calls. This burgeoning destination club merged with Dream Catcher Retreats last September and just announced another partnership, with the Leading Residences of the World, an affiliate of the Leading Hotels of the World. Quintess, with 49 properties in 26 locales, has about 300 members and intends to cap ranks at one thousand. Quintess and Leading Residences also plan to develop ventures at Leading Hotels properties. (Imagine, someday, a condo apartment at Paris’s Hôtel de Crillon.) Tuverson tells me that the average Quintess house measures 4,000 square feet and is valued at around $4 million. He is quick to assure me of financial transparency and, as long as I agree to sign a nondisclosure statement, will make available the company’s balance sheet. Even so, I’ll be forking over $185,000 for basic membership, plus $14,500 in annual dues for the right to use properties for up to 15 days each year. Plus, it will be impossible to obtain mortgage financing.

My next question regards the shifting policy on a money-back guarantee. First- generation destination clubs offered a full refund to resigning members—one of the factors in Tanner & Haley’s collapse. Since then, the "get out" clause has come under serious scrutiny and most destination clubs now pledge actual assets (i.e., fully owned real estate) against debt obligations or possible liquidation. Presently, top clubs offer an 80 to 90 percent refund and are placing additional restrictions on the timing of departure. (Beware the "three in, one out" clause, stipulating that before a resigning member receives a refund, three new members must join.)

When I cold-call Solstice (877/727-5535;, managing director Mark Cibik spends over an hour explaining the financial ins and outs of destination clubs before he even begins telling me how pretty the houses are. "This is a big purchase," he says. "People shouldn’t take it lightly; don’t just get caught up in the sexiness of joining." Cibik admits that Solstice lacks a colorful promotional brochure; instead, he promises me a third party-audited financial statement and a full refund option, valid after two years of membership. The starting price: $535,000, plus dues and surcharges for the right to use 10 properties (one of them a 90-foot yacht) for 14 days each year, with additional "space-available" usage for an unlimited number of days.

And what about those pretty houses?Nothing remains constant in the real estate market except the old saying, Location, location, location. Know what $4 million gets you on Maui these days?Hint: the Pacific won’t be visible from your front door. Solstice has some tempting stand-alone residences, such as a fresco-filled apartment in Florence and a two-story flat on the Île St.-Louis in Paris. But most clubs opt for the safety of cookie-cutter developments. On the plus side, resorts offer value-added services—spa, golf, tennis, pools, restaurants, security—that would be prohibitively expensive for a club to provide independently.

Steve Healy of Ultimate Resort (877/955-1900; mentions that among his company’s 100 properties are houses at three Baja California developments: Palmilla, Esperanza, and Cabo del Sol. He answers my initial inquiry about membership by saying, "You couldn’t have called at a better time." (During our conversation, he juggles several calls.) He is also a little eager to suggest that the club might go into a "waiting list phase" soon. Healy explains that the application requires background and credit checks and personal and professional references. While my application is being reviewed, I will be allowed to talk to members about their experiences. Among the clubs I’ve called, Ultimate Resort is the only one to suggest I "test-drive" a residence—but not, Healy is quick to add, during a holiday. If I like what I see, a basic membership will be $125,000 with $10,000 in annual dues; this entitles me to 14 days at club properties.

Joining doesn’t guarantee I’ll be staying in my dream house, however, especially during major holidays. Tiered membership means there is no level playing field—some entry-level plans black out holidays. With Exclusive Resorts (866/863-2688;, at 2,500 members the largest club, Elite status ($425,000) guarantees four advance reservations; Affiliate members ($225,000) receive only two. The more you pay, the more choices you’ll have during Christmas week. At the moment, Exclusive Resorts has 300 residences, and more than 100 will be added over the next two years, including estates in Tuscany, Anguilla, and Maui.

Among all the clubs I contact, Exclusive Resorts has the most eager sales pitch. After my initial call, I am passed to Peter Hannesson, a regional director based in New York City, who overnights me a large portfolio containing a contract, extensive financial data, and a persuasive DVD of interviews with satisfied members. He offers to make the four-hour drive to my home upstate to take me out to dinner and discuss the benefits of joining. (Later, he even sends me a Christmas card.) Finally, when we talk terms, Hannesson extends a $15,000 discount voucher. If I had an American Express Centurion Card, my discount would be $32,000, plus a bonus of one million Membership Rewards points. (Note: American Express, which has partnered with Exclusive Resorts on various offerings, is the publisher of Travel+Leisure.)

So: Deal or no deal?Despite being assured by sales representatives that a new generation of time-starved people craves bonding experiences in fabulous locations, I still wonder whom destination clubs are really targeting. The super-wealthy don’t share homes. Couples don’t need that much square footage. Independent travelers rarely sit still in one place. Dropping my role as a potential member, I seek straight answers from industry boosters. Jim Tousignant, CEO of Ultimate Resort, suggests that those accustomed to leasing jets and Jags will find the concept appealing. "Owning a multimillion-dollar home means always working on your property," he explains. "We see consumers who think it’s great not to have to worry about the costs of ownership." Michael Beindorff, COO of Exclusive Resorts, says, "This is not designed to be an investment, it’s supposed to be a lifestyle return." I may remain an antisocial skeptic who actually prefers to vacation in the same weather-beaten cottage every year, but sumptuous destination clubs continue to attract the interest and capital of others. Texas oil magnate Ray L. Hunt just purchased a sizable chunk of BelleHavens, and AOL founder Steve Case owns a majority share of Exclusive Resorts. In the end, maybe I’m just too Groucho for these guys.

Robert J. Webb, senior partner in the hospitality practice at the Orlando offices of the law firm Baker Hostetler, and Jason Gamel, vice president and in-house counsel at the American Resort Development Association, explain the questions that you should ask before you sign anything.

Should people be concerned about reports of a "softening" of the real estate market?

Gamel The state of the market varies from location to location. In some of the most popular areas, where second homes simply aren’t available—like Beaver Creek or Bachelor Gulch—we won’t see dips. In some other, less expensive vacation markets, there are more opportunities; it’s a buyer’s market.

What questions should someone ask before joining a destination club?

Webb There are serious consumer protection concerns, although so far regulators have left these clubs alone, as there have been few complaints. Find out how they guarantee refunds for members who leave and how many properties are leased rather than owned.

Gamel Inquire about refunds and leased homes (leasing can make sense as a short-term strategy for a club to test a destination). Also check how willing a club is to share financial data, how many members share how many homes, and what the annual dues cover. Find out how much say you will have over the direction of the club.

What are the pros and cons of different vacation-home alternatives?

Gamel Consumers are familiar with time- shares, and there is an incredible variety in terms of destinations. The disadvantage is that services can be limited and the block of time is small. Fractionals are more exclusive, but the cost and maintenance fees can be high. Condo- hotels are a true real-estate investment, with the advantages of whole ownership and the opportunity for rental income.

Webb I see these options as a continuum, with hotels at one end and whole ownership at the other. Hotels require no commitment; second homes do—a significant investment and expense. The advantages of fractionals and time-shares is that you are paying for the time you’ll realistically use and are sharing the expenses with others.

What advice would you give to someone considering properties in the Caribbean or Mexico?

Gamel I know many people who have had positive experiences purchasing in the Caribbean and Mexico, but I’ve also heard of instances that weren’t as great. My best advice is to retain a local attorney. It’s a different market and different legal system, and local counsel can help buyers navigate it.

A variety of real estate options—from condo-hotels to fractional ownerships— has changed the world of vacation homes. Here, a comparison of destination clubs and four other popular choices.—Hannah Wallace

Destination Club

Cost Up to $1.7 million to join, plus annual dues of up to $30,000
What it gets you Use of homes for between one and nine weeks a year
Advantages A portfolio of homes to choose from, usually with housekeeping
Drawbacks You’re not buying, so you don’t build equity
Financing Not available. More like a country club membership; there’s nothing to mortgage
Best for Well-heeled vacationers who seek both exclusivity and variety


Cost A one-time payment averaging $16,000
What it gets you Use of a unit, generally within a resort, for one fixed or floating week a year, in perpetuity
Advantages Affordability and a wide array of destinations
Drawbacks Your allotted time is often fixed and can be hard to trade
Financing Generally not available, though sometimes offered through developers
Best for Travelers who want to return to one place at the same time each year

Fractional Ownership

Cost Generally between $60,000 and $650,000
What it gets you Depending on the fraction, the right to use a home for one to two months each year
Advantages You have a deeded stake (with 6 to 12 others)
Drawbacks You have no say in the décor and may not always get the weeks you want
Financing Developers will often provide financing, and some banks also offer mortgages
Best for People who want more time and nicer properties than time-shares generally offer

Condo-hotel Unit

Cost Anywhere from $300,000 to over $1 million
What it gets you Ownership of a room or suite within a hotel, which you may rent out
Advantages You own the unit outright and get all the amenities of a hotel
Drawbacks You only get a portion (usually 50 percent) of fees from rentals when you’re not in-house
Financing Financing is available
Best for Rock stars (and mere mortals) used to luxury hotels and looking to invest

Private Residence at a Resort

Cost From the low six figures to beyond $10 million
What it gets you A house at a resort development to use whenever you want
Advantages You own the property outright and get all the amenities of a hotel
Drawbacks High cost, property taxes, and maintenance fees
Financing Financing is available
Best for Those who don’t need rental income and don’t like to share

Celebrities know about posh digs and coddling service, so it’s no surprise that many are trying to cash in on the second-home market. But a boldface name doesn’t guarantee success: George Clooney saw his condo-hotel project in Vegas go bust before builders broke ground. Here, four aspiring moguls on the hospitality bandwagon.

Fairmont Tamarack

Who’s Behind It Andre Agassi and Steffi Graf
What It Is The tennis duo’s latest venture is a condo-hotel flagship in Idaho’s Payette River Mountains. The nine-story contemporary chalet has 294 units—from 600-square-foot hotel rooms to 3,000-square-foot penthouse suites—priced between $700,000 and $4 million. Construction of the lodge should be completed by 2009. Whitewater, a mid-mountain complex with a ski lodge, restaurant, and pool, offering two-, three-, and four-bedroom condos from $1.5 million, will also open in 2009.
The Draw The retreat includes its own ski mountain with more than 80 trails, a 17,000-square-foot spa, and a Robert Trent Jones—designed golf course.
Contact 877/826-7376;

Trump Soho

Who’s Behind It Donald Trump, Jr.
What It Is Following in his father’s footsteps, the real estate investor-turned-reality TV star has partnered with architect David Rockwell to create a new condo-hotel in SoHo. The 45-story glass-tower will house 413 condominium hotel units, ranging from 480 to 890 square feet. Although serious controversy has surrounded Junior’s pet project—the next tallest building in the neighborhood is 12 stories—construction has forged ahead. Condos are slated to open in 2009; prices will likely be in the $2 million range.
The Draw Besides its location, the tower will house Manhattan’s largest spa (at 50,000 square feet), a library spanning the entire second floor, and a pool with private cabanas open year-round.
Contact 877/878-6700;

Cipriani Ocean Resort and Club Residences

Who’s Behind It Giuseppe Cipriani
What It Is Restaurateur Giuseppe Cipriani is bringing his family’s trademark elegance to South Beach. The landmark 1948 Saxony Hotel—on three oceanfront acres off Collins Avenue—will be converted to a 209-room condo-hotel with one-, two-, and three-bedroom suites starting at $700,000. (A new 19-story tower will house 65 private residences.)
The Draw Michele Bonan, interior designer for Italy’s Ferragamo hotels, is the brains behind the interiors. On-site amenities include a spa and signature restaurant.
Contact 888/233-8700;

Stirling Kelso and Meeghan Truelove

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