DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022

Page created by Philip Howell
 
CONTINUE READING
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                        A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

                                                2022
                        GUIDE FOR PROSPECTIVE MEMBERS

DESTINATION CLUBS & RESIDENCE FUNDS
© 2022 SHERPAREPORT | www.sherpareport.com			                                          1
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                                                                                   A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

Table of Contents
1. What Are Destination Clubs?......................................................................................... 4                          4.2 Luxury Hotel................................................................................................... 19
2. Features & Benefits......................................................................................................... 5                  4.3 Private Residence Clubs/Fractional Ownership................................................ 19
          2.1 Services........ ..................................................................................................... 5             4.4 Villa Rentals.................................................................................................... 19
		 2.1.1 Vacation Planning & Pre-trip Services........................................................ 5                                 5. Are they Right for You.................................................................................................. 21
		 2.1.2 During-trip Services.................................................................................... 5                      6. Due Diligence Questions.............................................................................................. 21
		 2.1.3 Partnership Services..................................................................................... 6                     7. Summary ....................................................................................................................23
          2.2 The Homes & Residences................................................................................. 6                  8. Appendix .....................................................................................................................24
		 2.2.1 Locations..................................................................................................... 7                          8.1 Glossary........................................................................................................... 24
		 2.2.2 Furnishings and Amenities.......................................................................... 8                                     8.2 Snapshots of Leading Clubs............................................................................. 26
          2.3 Other Travel Experiences................................................................................... 9                        8.3 Assessment Notes............................................................................................. 33
3. How They Work.......................................................................................................... 10
          3.1 Membership Structure..................................................................................... 10
		 3.1.1 Rental Clubs............................................................................................. 10
		 3.1.2 Equity Clubs............................................................................................. 11
          3.2 Membership Plans........................................................................................... 11
		 3.2.1 Prepaid Plans............................................................................................ 12
		 3.2.2 Points Based Plans.................................................................................... 12
		 3.2.3 Pay as You Stay Plans................................................................................ 12
		 3.2.4 Corporate Plans......................................................................................... 13
          3.3 Reservation Types............................................................................................ 14
		 3.3.1 Days Usage............................................................................................... 14
          3.4 Occupancy & Reservations.............................................................................. 14
		 3.4.1 Occupancy Rate........................................................................................ 15
		 3.4.2 Making Reservations................................................................................. 15
          3.5 Trial Memberships........................................................................................... 15
          3.6 Costs................................................................................................................ 15
		 3.6.1 Cost-per-night Analysis............................................................................. 16
             3.6.2 Initial Membership Fee & Ave Home Value............................................. 17
4. Comparing the Alternatives.......................................................................................... 17
                                                                                                                                         Above: Chamonix, France
          4.1 Second Home Ownership................................................................................ 17
                                                                                                                                         Cover: Inspirato, Punta de Mita, Mexico
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                                                                                                                                2
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                          A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

 Dear Reader,

 I am pleased to present SherpaReport’s comprehensive “Guide for Prospective Members” of
 luxury destination clubs. This user-friendly report features information and analysis compiled
 from numerous sources, including club executives and members, club literature, third-party
 narratives, and our own examination of how the clubs have evolved over the last few years. This
 is now the 16th annual edition of the Guide.

 For discriminating families and corporations, destination clubs are an increasingly popular
 alternative to second homes, luxury hotels and villa rentals. The clubs report high member
 satisfaction rates and receive a large number of new members through referrals from other
 members –– all indicating that members are happy with their joining decision.

 However they are not right for everyone; for instance, to enjoy the full value of a destination
 club, you need to travel for at least a couple of weeks a year.

 Our aim in producing this Guide is to give you the information that will help you make sound
 decisions about joining a destination club. By reading the report you’ll know more about the
 clubs, how they work, how much they cost, and the key questions to ask prior to joining.
 The properties offered and prices charged by destination clubs can change over time. Please
 check www. sherpareport.com for the latest information. SherpaReport is widely recognized
 as a source for information on luxury decision making. We have been reported and quoted in
 the Wall Street Journal, New York Times and the Financial Times as well as many other leading
 publications.

 If you have any questions or comments concerning SherpaReport or any of the material in this
 report please e-mail me at guide@sherpareport.com.

 Nick Copley

 President, SherpaReport
 guide@sherpareport.com

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                            3
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                        A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

1. What Are
                                                               Shared Access                                          Members of destination clubs join by paying a
Destination Clubs?                                                                                                    one- time membership fee that starts from around
                                                               Members can use a portfolio of upscale vacation        $10,000 for rental based clubs to over $500,000
Destination club members have access to a                      homes and residences in prime city, beach-front,       for high tiers at equity clubs. For equity clubs this
portfolio of multi-bedroom, private, luxury                    slopeside and other leisure locations. These homes,    is an investment in the clubs realestate and money
homes around the world, and receive five-                      which are often only available to members, can be      will be repaid when a member resigns. Members
star services for all their vacation travel needs.             reserved through flexible booking systems.             also pay annual dues ranging from $1,500 to over
Membership operates in a similar way to an                                                                            $60,000.
exclusive country club membership. The clubs
provide a comprehensive vacation solution by                   Multiple Bedroom Residences
combining some of the best aspects of five-star                                                                       Affluent Members, Hassle Free
hotels, villa rentals and second home ownership.               The fully furnished homes have chef ’s kitchens,       Vacations
                                                               sumptuous bathrooms and the latest in
One confusing part of understanding these                      entertainment and communication technology.            Significant groups that are members of these
organizations is that they all use different terms.            The sizes of the homes vary between 2,000 and          clubs include:
Some refer to themselves as a destination club,                6,000 square feet – although they may be smaller         • Affluent families who want to enjoy the
other use residence fund or luxury vacation                    apartments in major cities – and have 3, 4, 5              spaciousness of a vacation home, but do
residence fund, some may mention shared or                     or more bedrooms, providing enough room for                not want the hassle of maintaining a second
fractional ownership in their description, and                 vacations with families, relatives, and friends.           home.
others may refer to luxury vacation club or travel                                                                      • Successful professionals and entrepreneurs
club.                                                                                                                     who plan to enjoy the personalized services
                                                                                                                          and spacious, luxury accommodations offered
                                                                                                                          by the clubs.
                                                                                                                        • Corporations that want to use the homes for
                                                                                                                          incentive programs to reward key clients and
                                                                                                                          employees.
                                                                                                                        • Retirees who plan to travel, especially with
                                                                                                                          friends or family.

Left: Solstice, St Barth; Right: Inspirato, Beaver Creek, CO
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                                    4
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                    A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

2. Features & Benefits

2.1 Services
                                                       The member services manager helps club                     2.1.2 During-trip Services
                                                       members with the following:
                                                                                                                  During-trip services include all amenities provided
Destination clubs offer elevated standards             •   Determining the most desirable locations i.e.,         to members during their stay. Member services
of services that are both high-end and high-               whether it’s beach, desert, mountain, city or          managers work closely with the destination
tech, ranging from five-star hotel amenities to            countryside.                                           concierge (sometimes called the “local host”),
personalized tasteful offerings at each of their       •   Planning the dates and duration of stay.               who is a local resident of the destination club
destinations. These complete services are a key
                                                       •   Deciding the number of guests to visit the             location, to arrange an itinerary of services and
part of the destination club offering; ensuring
                                                           location, i.e., family, relatives, friends.            activities.
that members are fully looked after, both before
and during their trips and in some cases offering      •   Finalizing, booking and confirming each
                                                           mode of transport from the member’s home               Almost all the clubs provide concierge services. A
other non-travel related concierge services as well.
                                                           to the destination club residence and back,            concierge takes care of the guests, their luggage,
                                                           i.e., including air, rail, or limo tickets, etc.       and any other local services they need. These
2.1.1 Vacation Planning &                              •   Providing information about the destination
                                                                                                                  can include arrangements for local vehicles,
                                                                                                                  local travel, private chef, food and beverages,
                                                           and activities that can be undertaken there –
Pre-trip Services                                                                                                 reservations for dinner, movies, event tickets, spa
                                                           sports and leisure activities, cultural activities,
                                                                                                                  times as well as arrangements for tee times, tennis
Pre-trip services involve all aspects of vacation          events and amenities as well as sightseeing.
                                                                                                                  courts, lift tickets and any other activities.
planning, coordination and organization.               •   Making reservations, i.e., finding the
Destination club staff (variously called service           availability and making bookings in clubs,
managers, escape planners, personal member                 resorts, restaurants, etc.
experience managers, personal travel assistants,       •   Ensuring timely confirmations.
member service representatives, etc.) help their       •   Helping a member to choose any other
members in planning a hassle free vacation and             preferred services.
ensure that the process is extremely smooth and
efficient.

                                                                                                                  Kocomo, Tulum, Mexico

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                              5
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                             A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

One of the most common and popular services is        •   Personal Chefs: Private chefs can either make    2.1.3 Partnership Services
pre-arrival grocery shopping whereby the shelves          special meals or serve every meal. Some
are stocked with your favorite food and wine              clubs offer chef-prepared meals on the day of    Most destination clubs have partnered with
before you arrive, and in some cases your favorite        arrival.                                         other companies to increase the level of services
fresh cut flowers are waiting for you.                •   Personalized Lessons: Clubs will arrange         provided to members.
                                                          personalized lessons in golf, skiing or other
All the homes have housekeeping services, which           sports and can arrange tutors for children.      These services cover a wide range of facilities such
may be weekly or daily depending on the club.                                                              as jet travel, five star dining, golf tournaments or
Some concierges will meet you at the local airport.                                                        coaching, financial services, spas, car travel, and
Most clubs have arranged memberships in, or                                                                health assessments.
preferred access to, resorts, leisure clubs, spas
and golf courses located close to their residences.
These allow members to enjoy special pricing on
local services. They are also given privileges that
                                                                                                           2.2 The Homes & Residences
are normally available only to full-time residents.                                                        Destination clubs offer portfolios of
                                                                                                           multimillion- dollar properties around the globe.
Other services that the clubs can                                                                          Sometimes the homes have classic architecture
provide include:                                                                                           and sometimes they have modern architecture;
                                                                                                           they may have private swimming pools, be on
•   Shipping of Luggage: As well as personal air                                                           golf courses, may be situated in vibrant cities or
    travel, the clubs will also arrange shipping of                                                        nestled in the countryside. The size, style, and
    luggage to and from airports.                                                                          locations of the residences are some of the key
•   Insurance: Some clubs will insure members’                                                             factors that help people to look for the most
    luggage.                                                                                               suitable destination clubs.
•   Wine Services: Some of the clubs have wine
    experts to assist members in their selections,
    both for the club and at their primary
    homes.

                                                      Hideaways, Majorca, Spain

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                        6
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

2.2.1 Locations
Most clubs offer a wide mix of locations both
geographically and in terms of beach, city,
mountain and leisure locations. Some examples
of the most popular locations include:

BEACH: Turks & Caicos, Cabo San Lucas, Amelia
Island, Hawaii, Florida, Kiawah Island, etc.
                                                     Equity Residences, Park City, UT                         Exclusive Resorts, Paris, France
MOUNTAIN: Aspen, Deer Valley, French Alps,
Jackson Hole, Steamboat Springs, Stowe, Vail, etc.
                                                     The distribution of properties across these locations    Home values vary from under $1 million to
                                                     varies from one club to another; therefore as part       several million dollars depending on the club. This
METROPOLITAN: London, Paris, New York,
                                                     of your due diligence ensure that the locations          difference in home values is primarily reflected in
Chicago, etc.
                                                     suit your travel plans. A list of the locations for      the size and location of homes (proximity to the
                                                     some of the leading clubs is provided in section         beach, the fairway, or ski slopes), rather than in
GOLF & LEISURE: Scottsdale, Napa Valley, La
                                                     7.3 at the back of this Guide. For an up-to-date         the amenities and furnishings provided. All homes
Quinta, Pinehurst, Tuscany, etc.
                                                     list of club locations visit www.sherpareport.com/       are very well equipped and very nicely furnished.
                                                     homes.
North America, the Caribbean and Europe are
the main locations, but there are also clubs with
homes in Asia, Africa and Australasia.

                                                     Destination M, Costa Rica                                Inspirato, Tuscany, Italy
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                          7
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

2.2.2 Furnishings and Amenities                         Amenities Provided at the Properties
Examples of the types of furnishings and
amenities provided include:                                               Amenities                                          Technology
•   Gourmet kitchens with professional-grade
                                                          •   Spa-like bathrooms                              •   High-speed Internet access
    refrigerators, dishwashers, fine dishes and
    glassware, high-grade counter top appliances,         •   Hot tubs                                        •   High definition TVs
    wine cellars.                                         •   Designer decorated bedrooms                     •   Home theater systems
•   First-rate electronics, high definition               •   Custom designed furniture                       •   Game systems
    televisions, state-of-the-art home theater            •   Fireplaces                                      •   Printers
    systems, streaming services, digital music            •   Digital picture frames with personal            •   Personal Computer
    channels, video game consoles.                            pictures of members
•   Home office with computer, high-speed                 •   Fine dishes and glassware
    internet connection, fax machine, copier,
                                                          •   Professional grade appliances
    printer.
                                                          •   Stocked wine cellars
•   Spa-like bathrooms, luxury brand name bath
    products, high thread count sheets and linens
    of the highest quality.                                            Entertainment                                           Outdoor
•   Exclusive furnishing, custom-made fabrics,
    beautiful rugs, digital art systems (where
                                                          •   Streaming services and games                    •   Barbecue and wet bars
    personal digital photos can be displayed).
                                                          •   Game rooms                                      •   Outdoor kitchen
•   Infinity edge private pools, hot tubs, outdoor
    kitchens, and fire pits in landscaped gardens         •   Access to golf courses, skiing, spas, health    •   Open-air fire pit
    with private patios and verandahs.                        clubs, etc.                                     •   Private swimming pools
                                                          •   Equipment, such as golf accessories,            •   Balconies and patios
Most clubs have some homes in resort areas and                bicycles, tennis racquets, etc.                 •   Hot tubs
provide access to all the resort facilities including                                                         •   Landscaped gardens
spas, golf, private dining and more.

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                  8
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                   A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

2.3 Other Travel Experiences
Many of the clubs offer their members both                                                                         Several clubs have partnerships with hotels,
special unique travel packages and/or the                                                                          other homes and yachts to give their members
opportunity to use their membership nights                                                                         a wider selection of locations to visit. For
at certain hotel or other residence partners. By                                                                   example:
providing these additional travel options the                                                                      •   The shareholders of Solstice open some of
clubs can be a single source for all their members’                                                                    their personal properties to the members of
vacation travel needs.                                                                                                 the club.
                                                                                                                   •   Inspirato has hotel partnerships throughout
Examples include:                                                                                                      the world in cities and resort locations.
•   Exclusive Resorts offers “Once in a                                                                            •   Ritz-Carlton Destination Club members
    Lifetime” trips to such places as the                                                                              can use some of their points for stays at
    Galapagos Islands, Bhutan in the                                                                                   some Ritz-Carlton hotels.
    Himalayas and the Antarctic. The fees vary
    by trip.                                                                                                       Several clubs have formed mutual partnerships
•   Inspirato members can travel on adventures                                                                     with other clubs. So the members have access
    to Patagonia, Africa, the Galapagos,                                                                           to homes in both of the clubs. For instance:
    Machu Pichu and more.                                                                                          •   Equity Estates is partnered with the
                                                                                                                       Hideaways Club
                                                                                                                   •   Destination M is partnered with Rocksure.
                                                                                                                   •   Equity Residences is partnered with the
                                                                                                                       Elite Alliance for additional locations.

                                                      Some clubs offer unique travel tours such as African
                                                      Safaris through their partnerships. Many clubs offer stays
                                                      through thier partners in four & five-star hotels.
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                           9
DESTINATION CLUBS & RESIDENCE FUNDS - 2022 GUIDE FOR PROSPECTIVE MEMBERS SHERPAREPORT 2022
SHERPAREPORT 2022 							                                                                                   A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3. How They Work
The destination club market has been evolving            3.1.1 Rental Clubs
and the clubs continue to roll out new features and
new services. The main features and characteristics      In this structure, members have the right to use
that you’ll find in the clubs are covered below.         all the club’s properties and services but do not
                                                         have any share of ownership in the club or in the
                                                         loss or gain of the property value of the club.

3.1 Membership Structure                                 Most of the rental based clubs, have a lower fee to
                                                                                                                 Ownership Structure of
                                                         join, sometimes much lower, but none of this fee
There are two broad membership structures.                                                                       Destination Clubs
                                                         is refundable on resignation.
In some destination clubs the members are
essentially customers and the ownership of the
                                                         There are two variations on usage plans for these
club remains with the investors and founders –
                                                         clubs i) a pre-paid annual fee for a set number of
these are known as rental based or non-equity
                                                         nights each year – Solstice and Exclusive Resorts                        Rental
clubs. In other clubs, members are also owners
                                                         offer these plans or ii) members pay as they use the
and have an equity position in the club and/or it’s
                                                         properties on a discounted rental basis. Inspirato
real estate – these are referred to as offering equity
                                                         is the largest example of a club in this group.                          Rental
membership.
                                                                                                                                 Prepaid
                                                         Members of these clubs regard their membership
There is no right or wrong structure for a club
                                                         as buying access to an exclusive portfolio of luxury
to adopt. As a potential member you should
                                                         homes and related services.
consider the membership structure along with the
                                                                                                                            Equity Ownership
homes, the services, the locations, the costs and        Most of the memberships are lifetime
all the other characteristics. For most members          memberships, but some clubs have introduced a
the principal decision to join a club is a lifestyle     variety of shorter term prepaid memberships for
decision – you want to enjoy the spacious homes          periods from two to ten years.
and private, carefree vacations.

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                     10
SHERPAREPORT 2022 							                                                                                  A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.1.2 Equity Clubs                                                                                              3.2 Membership Plans
As well as having access to the club’s homes,           they can only talk to accredited investors. This has    Nearly all clubs have several types or tiers of
members of equity clubs own shares in the               meant that the equity clubs have not grown as fast      membership plans.
company, partnership, or trust that owns the            as some of the other clubs that do not have any
club and/or its properties. Members can benefit         marketing restrictions.                                 For clubs with prepaid memberships, the main
from an increase in the property value of club                                                                  differences between the plans are the number of
homes – or may lose if the property prices drop.        Other clubs often refer to themselves as “equity”       days of access that they provide and the types of
The equity owners have their investment spread          clubs, but they don’t issue registered securities.      reservations that can be made. Membership plans
across multiple homes in multiple locations, so         The club members do have a secure interest over         offered by these clubs can be broadly classified
are effectively distributing their investment across    the clubs properties, so that their membership          into four categories – introductory, standard,
multiple property markets.                              deposits are backed by the clubs real estate.           premium and corporate. In the past few years
                                                        Members also receive a share of any increase or         clubs have tended to offer a wider array of plans to
Some of these clubs issue shares (registered            decrease in value if they sell their membership         provide more flexible alternatives to prospective
securities) to their owner members, so that the         interest. The exact legal structure varies from         members.
members are also shareholders in the company            club to club, but the net effect is very similar.
that owns the properties – essentially the owners       Destination M and Ritz-Carlton Destination              Some of the rental based clubs typically offer just
are investing in a property company. Clubs with         Club have adopted this model.                           one level of plan, since all usage is based on a first
an equity structure like this include 21-5, Equity                                                              come , first served, pay as you use it model.
Estates, Equity Residences, My 5 Homes and
Luxus Vacation Properties.                                                                                      Most of the clubs, and certainly the larger clubs,
                                                                                                                now allow family members to use plan nights
Since they are issuing shares, these clubs need to                                                              without the primary member being present. This
comply with relevant securities laws. In the USA                                                                family usage allows siblings, adult children and
this generally means that members must also be                                                                  parents to use the club homes and effectively this
“accredited investors” (qualified to assess the risks                                                           means that a family can share a membership.
of investment), and have a net worth of more
than US$ 1 million, or have earned at least US$
200,000 in each of the last two years. The US
securities laws also make it harder for the clubs
to market themselves to potential members, since        Equity Residences, Turks & Caicos

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                               11
SHERPAREPORT 2022 							                                                                                 A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.2.1 Prepaid Plans                                                                                                 3.2.2 Points Based Plans
For clubs with prepaid plans – where a member          Premium Plans: These plans offer the highest                 These are variations on the prepaid plans. Rather
has a set number of nights each year – the             levels of usage (usually 40+ days), the most                 than paying for a set number of nights each year,
membership plans can be broadly classified as:         flexible reservation selections, and charge the              a member is allocated a set number of points
                                                       highest annual dues. Despite the higher fees, the            each year. Different homes have different point
Introductory Plans: These plans have the lowest        actual cost per night under these plans comes out            values that may vary depending on the size of the
membership fees and annual dues, and offer the         at the lowest of the 3 individual plan types (See            home and the time of year. So peak holiday times
lowest number of days and the most limited             Section 3.6.1 for more on cost per night). The               require more points than quieter, non-peak, off-
reservation types. The number of days of usage is      Premium Plans make sense if you know you will                season times.
in the range of 7 – 21, meaning you can stay at        be traveling a lot as a member.
club residences for 7 to 21 days a year. Different
clubs may have different names for this plan or        Premium plans feature:                                       3.2.3 Pay as You Stay Plans
may just refer to it by the number of days.            • The maximum days of usage at any of their                  As the name suggests members pay for the nights
                                                          club destinations.                                        they reserve, as they book them. Pricing for the
•   In some cases, members under these plans may       • The most holiday usage and flexible usage at               nights varies by residence, by location, by time
    not be given priority holiday reservations and        any time of the year.                                     of year. So for example larger homes in prime
    will usually have fewer advance reservations.
                                                       • The longest window for “Space Available”                   locations at peak times command the highest
                                                          reservations. For example a Premium Plan may              nightly rates.
Standard Plans: The membership fee, annual
                                                          offer space available reservations up to 90 days
dues, and the number of days of use and
                                                          ahead (whereas a standard plan member could
reservation types under this plan are higher than
                                                          only reserve space available 60 days ahead).
                                                                                                                    3.2.4 Corporate Plans
the introductory plan. The number of days usually
is in the range of 22 – 44.                                                                                         Many of the clubs offer “Corporate” or “Group”
                                                                                                                    plans. These are designed to have multiple
Standard plans feature:                                                                                             individuals who can make reservations and stay
• More “Advance” and “Holiday” reservations                                                                         at the club’s homes as members. Companies
   than Introductory Plans                                                                                          may use these memberships for executives or as
• Longer reservation window for “Space                                                                              incentives for staff, partners or customers. These
   Available,” potentially longer reservation window                                                                plans usually allow members the ability to reserve
   for “Advance” and “Holiday” reservations.                                                                        more than one residence on the same day.
                                                                                            Destination M, Hawaii
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                               12
SHERPAREPORT 2022 							                                                                              A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.2.5 Subscription Plans
In 2019, Inspirato launched a $2,500 per            For prepaid plans each membership has certain           the same as for advance reservations – so, between 2
month plan, Inspirato Pass. Subscribers can         reservation rights, which are typically broken          months and 2 years depending on the club. Holiday
gain unlimited access to exclusive vacation         down into the following types:                          reservations may also have limits on the maximum
properties, five-star hotel rooms and unique                                                                number of days that you can stay during a holiday
travel experiences, all for one set monthly fee,    Advance Reservations: This allows members to            time. For example an “advance reservation” may
with no additional taxes or hidden charges. The     plan their vacations well in advance and gives          allow up to 14 consecutive days to be reserved, but
$2,500 level allows for one active reservation to   them plenty of time to confirm availability of          only 7 consecutive days for a “holiday reservation”.
be held at any time.                                their relatives or friends. Under this reservation
                                                    type, a member can typically book a desired             Some of the clubs charge an extra membership fee
                                                    residence between 2 months and 2 years in               for you to buy more peak reservations – this is useful
                                                    advance depending on the club. The number of            if you know you will travel a lot during peak times.
                                                    advance reservations typically varies from 1 to 5       Other clubs use a points system with peak periods
                                                    depending on the membership plan.                       having a higher point charge.

                                                    Peak/Holiday Reservations: Most clubs have a            Space Available Reservations: Booking under this
                                                    separate category for holiday reservations in order     type is made on the basis of space available at the desired
                                                    to alot usage at these peak periods. All the clubs      location. Members typically file for reservations within
                                                    apply these reservation types to the obvious peak       0-90 days of departure, although the reservations could
                                                    demand times such as Christmas/New Year, but            be as far as 180 days in advance depending on the club
                                                    some clubs have a broader definition of holiday         and the membership plan. While the advance booking
Equity Residences, Big Island, Hawaii
                                                    than others. So, as part of your due diligence, it’s    often has to be for a minimum number of days, the
                                                    worth asking which days of the year are covered         space available option usually offers a lower minimum
                                                    by the holiday reservation type (Sherpareport.          stay. These types of bookings are very useful for short
3.3 Reservation Types                               com includes occasional articles listing out the        notice, short duration trips such as weekend getaways,
                                                    holiday dates for the leading clubs).                   as well as for longer duration vacations. Some clubs
Most clubs let members reserve up to one or
                                                                                                            count these reservations towards a members number of
two years in advance. For pay as you stay plans,    The number of holiday reservations that you can have    included days under their plan, other clubs and plans
members can simply reserve residences whenever      open, again, varies depending on the membership         have a separate limit for space available reservations, and
they want to.                                       plan, with the typical numbers between 0 and 2. The     other clubs have unlimited usage, with the only limit
                                                    window for making these reservations is normally        being the number of open reservations at any one time.
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                               13
SHERPAREPORT 2022 							                                                                                A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.3.1 Days Usage                                                                                              the reservations into various types and giving
                                                                                                              members a certain number of reservations, or a
Depending on their prepaid membership plan,                                                                   certain number of reserved days, that they can
members can enjoy between 7 and 75+ days of                                                                   have open at any one time. This is defined by the
usage by booking the reservation types above.                                                                 types and quantity of membership plans sold.
Some clubs offer unlimited space available usage
and some limit the number of days or the number                                                               The other factor that affects the occupancy
of reservations of a given type. The key thing                                                                percentage is the ratio of members to homes. In
                                                       Barcelona, Spain
is to match the plan you buy to your expected                                                                 simple terms the more members there are per
number of days of travel and to make sure that                                                                home (that the club has in its portfolio) the greater
your membership agreement will let you easily          3.4 Occupancy & Reservations                           will be the demand from members on each home
upgrade or downgrade between plans. Several                                                                   in the portfolio, and so the higher the occupancy.
                                                       The clubs experience the highest demand and
clubs let you change your prepaid plan level and                                                              As you’ll see in the next section, the clubs target
                                                       therefore the highest occupancy levels during
days of usage each year, giving you flexibility to                                                            an average of 50-75% occupancy across the whole
                                                       holidays, including Christmas, New Year’s
suit different travel plans. Some clubs also let you                                                          portfolio over a year.
                                                       week, President’s Day, Spring Break/ Easter,
purchase additional days at short notice.
                                                       Independence Day, Thanksgiving etc. Similarly,
                                                       in locations such as ski destinations, there is
                                                       heavy demand in the winter but this drops off          Seasonal Impact on the Occupancy
                                                       significantly in the spring and fall. The occupancy
                                                                                                              Rates of Destination Clubs
                                                       rate refers to the amount of time that a home
                                                       or all the homes are occupied by members. It
                                                       is expressed as a percentage. For instance, 40%
                                                       occupancy means that the homes are occupied
                                                       40% of the time and are empty, and available,
                                                       60% of the time.

                                                       As discussed above, the clubs with prepaid
Equity Residences, Longboat Key                        plans balance out this demand by splitting

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                            14
SHERPAREPORT 2022 							                                                                                  A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.4.1 Occupancy Rate                                     3.4.2 Making Reservations                              3.5 Trial Memberships
Clubs usually have average occupancy rates of 50-        The booking process for making reservations in         Several of the clubs offer trial memberships to
75%, which increase to around 80-95% for specific        destination clubs is very simple and can be carried    enable you to try out the club prior to joining as a
properties during peak seasons. This seasonal            out in any of the following ways:                      full member. It’s well worth asking the club if you
variation is shown in the diagram on the prior           • By calling your member service representative.       can try before you buy, since some will arrange
page. Most of the clubs plan for an average annual       • By sending an e-mail to your member service          this and others won’t.
occupancy rate around 70%, which means they                  representative.
are occupied 70% of the time and vacant 30% of
                                                         • By booking online via the club’s member
the time. This appears to allow enough flexibility
                                                             website.
and vacancy within the reservation system, and                                                                  3.6 Costs
for instance means that there is availability for
                                                         Members are provided a unique membership               The clubs offer a variety of membership structures
short term “space available” reservations.
                                                         identification, with which they can access             and plans, so comparing them financially takes a
                                                         any information related to reservations, space         bit of thought. You need to consider what you’re
The occupancy rate affects the reservation
                                                         availability, etc., either online or with their        getting for your money – so the homes and their
procedure as it is the opposite of space availability.
                                                         member services representative. The member             typical value and the services the clubs provide.
In other words, a lower occupancy rate ensures
                                                         service representative can also answer any queries     Then compare this to the initial fees, annual dues
greater availability of homes for a member to book
                                                         about a specific home or location and the              and any nightly charges.
at their desired locations. A lower occupancy rate
                                                         amenities and facilities or local actvities.
can also mean that annual dues are higher to cover
these empty periods. As a club grows, it needs to
                                                         Reservation procedures, space availability, and
add homes at a fast enough pace to ensure that
                                                         booking related information are some of the
there is sufficient occupancy across its portfolio.
                                                         key issues that a member should understand
The club must balance the number of members
                                                         and inquire about in detail before joining any
and the type of membership plans, and therefore
                                                         particular club. In particular it’s worth walking
the potential days of use, against the number of
                                                         through the booking process and looking at the
homes, and therefore the total days available.
                                                         space availability prior to joining.

Section 6 of this report includes several questions
for you to ask about a club’s occupancy rate.
                                                                                                                Inspirato, Vail, CO

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                             15
SHERPAREPORT 2022 							                                                                                        A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.6.1 Cost-per-night Analysis
This cost-per-night calculation enables you to make       For clubs that use pay as you stay plans, we’ve
a financial comparison of the clubs – particularly        taken the average nightly rates provided by the
the clubs with large initial membership fees and          clubs, for peak periods and non-peak periods,
prepaid annual dues. It also allows you to compare        and used these in the model. Obviously the actual
destination clubs with other alternative vacation         rates paid by any given member may vary a lot
options. Once you have this calculation, you              depending on where and when they stay.
can easily compare destination clubs with luxury
hotels, house or villa rentals. (See Section 4 for a      An electronic version of this cost-per-night spreadsheet
more detailed discussion on alternatives to Destination   is available at:
Clubs.)                                                   www.sherpareport.com/images/dccostnight.xls.

The analysis calculates the effective amount paid         With the electronic version you can see the
by a member for a night’s stay at a destination           calculation in detail, adjust any of the amounts for
club. The calculation takes into account the              recent adjustments by the clubs, or adjust any of the
initial membership deposit, annual dues, and              assumptions in the calculation. The online version
any nightly fees that a member pays for a given           also includes two alternative methods of calculating
membership plan.                                          the cost per night, including one version with a Net
                                                          Present Value calculation.
In our model we use a 4% opportunity cost
applied to the initial membership fee, since the          Note if you’re not financially or mathematically
capital used to pay the initial fee could instead be      inclined then the details of the calculation may be
invested to earn an annual return. For the analysis,      a bit too in depth.
we have assumed that the average membership
period is 10 years. For clubs that offer a potential      In summary the typical full cost per night varies
increase in the initial fee on resignation, we            between $500 and $2,800 depending on the
have not considered any increase as there is no           club, membership level and for rental based clubs
guarantee of such an occurrence (particularly             the properties you use for vacations.
where this is tied to property values).                                                                               Top: Turks & Caicos
                                                                                                                      Bottom: Destination M, Paradise Valley, AZ

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                                      16
SHERPAREPORT 2022 							                                                                                 A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

3.6.2 Initial Membership Fee & Average Home Value                                                              4. Comparing the
                                                                                                               Alternatives
There are a wide range of initial membership fees depending on the club you join and the membership
plan you choose. In the table below, a sample of the clubs are split into two groups based on whether          There are several alternatives to destination clubs
they are rental clubs or equity clubs. The table shows the initial fee, the average home values and the        that affluent families can use for their vacations.
cost per night.                                                                                                These traditional alternatives include luxury hotels,
                                                                                                               villa and house rentals, second home ownership,
                                                                                                               and more recently condo hotels and luxury
                                             Membership             Avg Home   Cost per   Membership           fractionals.
            Clubs
                                             Plans                  Values     Night      Fee

            Quintess                         Prepaid                $4m        $1,961     $20,000+
                                                                                                               4.1 Second Home Ownership
            Exclusive Resorts                Prepaid                $3m        $2,945     $150,000
   RENTAL

            Solstice Collection              Prepaid                $5m        $2,183     $15,000              As a vacation home owner you can select
            Inspirato                        Pay as you go          $3.5m      Varies     $12,000              furnishings, appliances, décor and customize the
                                                                                                               home to suit your own personal tastes. On the
                                                                                                               flip side, as the owner you are responsible for
            Equity Estates                   Prepaid                $3m        $2,102     $299,950+
                                                                                                               all expenses related to maintenance, repairs and
            Ritz Carlton                     Prepaid                $2m        Varies     $135,000+            operation, including mortgages, taxes, insurance,
            Destination M                    Prepaid                $2m        C$814      C$127,500+           utilities, cleaning, etc. and also have the hassles of
            Equity Residences                Prepaid                $2.5m      $1,089     $164,500+            managing and running the property.
   EQUITY

            Luxus Vacation Properties        Prepaid                $2.5m      $1,210     $165,000+
                                                                                                               Owners of second homes tend to have a large
            My 5 Homes                       Prepaid                $3m        $1,170     $395,000+
                                                                                                               amount of capital (both emotional capital and
                                                                                                               monetary capital) invested in them, so there is
Notes: Exclusive Resorts membership fee is for ten years.
Cost per night is based on the analysis discussed in 3.6.1 above.
                                                                                                               often a feeling that vacations should be spent at
                                                                                                               the second home, rather than traveling to new
                                                                                                               locations. Sometimes this can even produce a
                                                                                                               sense of guilt, when second home owners spend
                                                                                                               their vacations elsewhere, but at the same time

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                              17
SHERPAREPORT 2022 							                                                                                  A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

know their vacation home is empty and costing            value (NPV) of the cash flow for club membership       When compared to both home ownership
them money. Overall this leads to some levels            compared to second home ownership. The                 scenarios, the destination club membership has
of inflexibility as owners tend to spend their           calculation has two scenarios for second home          a less negative NPV and so is a better value than
vacations in the one location (at their second           ownership:                                             home ownership. A simple representation of the
home). Several destination clubs have reported that      •   Home Values Equal: The first comparison            same is provided in the table below.
some members have sold their second (or third or             assumes that instead of joining a club a person
fourth) home upon joining the club in order to               buys a house of equivalent value to the ones       The full spreadsheet along with the assumptions and
fully enjoy the wide flexibility that clubs offer.           in the club.                                       calculation details is available at:
                                                         •   Down Payment Equal: The second assumes             http://www.sherpareport.com/images/dc2ndhomenpv.xls.
As a second home owner, you are totally on your
                                                             that the club membership fee is equivalent to
own in regards to services, travel planning, etc.,                                                              Within the electronic spreadsheet you can adjust
                                                             the 20% down payment on a house purchase.
whereas the destination club members receive full                                                               the assumptions and see how this affects the NPV
                                                             The value of the purchased house would be
five-star services for all aspects of their vacations.                                                          calculation. Most notably if you assume that house
                                                             lower than under the first scenario.
                                                                                                                prices will rise at 8% per year over the 10 year period
From a purely financial aspect, the membership                                                                  then the NPV of home ownership becomes more
                                                         The calculation assumes a 10-year ownership
deposit to join a destination club is less than the                                                             favorable.
                                                         or membership period and assumes joining a
20% down payment that you would need to buy an
                                                         club with US$ 3m homes with a US$ 325,000
equivalent second home. The annual membership
                                                         membership plan and annual dues of US $
dues for a destination club are significantly lower
                                                         27,500, giving you 28 days of use (the equivalent
than the annual costs of running and maintaining
                                                         amount of days most people use their second
a comparable home. However, with second home
                                                         homes).
ownership, you do have the potential upside (or
downside) of changes in the value of your home,
whereas only equity destination clubs offer this
                                                             Option                                                  Net Present Value (NPV)
potential.
                                                             Destination Club                                                         ($376,587)
The calculation to the right compares the long-
term value of being a member of a destination                2nd Home Ownership - Equivalent Value                                   ($1,246,874)
club compared to the value of owning a second                2nd Home Ownership - Equivalent Down Payment                             ($676,675)
home. This is done by calculating the net present

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                               18
SHERPAREPORT 2022 							                                                                                 A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

4.2 Luxury Hotel                                     used for between 4-12 weeks in a year, depending          company. They enable multiple people to own one
                                                     on the size of the member’s share. The properties         home and split all the costs amongst them without
With a wide variety of locations, luxury hotels      are typically 2-3 bedroom condominium units               the fuss and hassle normally involved. Some of these
can provide a high degree of flexibility in terms    and so are usually smaller than destination club          management companies, like Kocomo, allow owners
of destinations. Guests enjoy consistent five-star   homes, although some PRCs do offer 4 bedroom              to rent out extra time and to exchange time in other
services and amenities, such as valet services,      properties. They usually offer five-star services to      homes.
concierge service (albeit shared amongst all the     their owners/ members. As owners have a shared
hotel guests), restaurants, swimming pools,          interest, they can use the property, but cannot
                                                     select the interior decoration of the homes.              4.4 Villa Rentals
fitness centers, etc. However, guests may not
have complete privacy as they have to share all                                                                Renting a home or a villa provides access to a
common areas with other guests in the hotel.         Usage systems vary, with some fractionals offering
                                                                                                               variety of locations, and offers accommodation of
Only a few luxury hotels are designed for family     use for fixed periods. For example, an owner has
                                                                                                               a similar size to homes in destination clubs. With
travel as they lack appropriate-sized rooms or       Christmas week every year, and some offering
                                                                                                               this spacious accommodation, family and friends
units. Booking multiple rooms is an option but       a floating booking system, where owners must
                                                                                                               can travel together and enjoy vacations together.
such an arrangement lacks the spaciousness of        book ahead for their required occupancy weeks. A
                                                                                                               One of the biggest drawbacks of using rental
a home and also significantly increases the cost.    management company maintains the properties,
                                                                                                               homes is the hassle of finding an appropriate home
Most hotel rooms are 300-600 sq ft, whereas          and also manages the owner reservation process.
                                                                                                               in a particular location. It can take quite a bit of
destination club homes typically provide 2,000-      Several luxury hotel brands, such as Four Seasons
                                                                                                               searching to locate the ideal home. As a result,
4,000 sq ft of space.                                and Fairmont, have developed their own Private
                                                                                                               families may rent the same home for several years,
                                                     Residence Clubs. Many private residence clubs
                                                                                                               simply because they know what they are getting
                                                     are independently developed and managed.
                                                                                                               and they don’t want to spend the time looking for
                                                                                                               alternatives. When you do look around for rental
4.3 Private Residence Clubs/                         This is a good option for the vacationer that likes
                                                                                                               homes, you find that there is no consistency in
                                                     to go to the same location time after time.
Fractional Ownership                                                                                           terms of furnishings, amenities, support, etc., and
                                                     Owners buy a share of one property in one destination,    generally, no concierge or service is offered either
                                                     but there may be some opportunities to trade for          before or during the trip.
These are commonly known as ‘fractionals’ or
‘PRCs’ and combine the services offered by           other destinations either through the management
                                                     company or through independent exchanges.                 The growth of clubs such as Inspirato has been
luxury hotel chains with some of the amenities of
                                                                                                               driven by people wanting the flexibility of rentals,
a second home. Fractional owners buy a share of      A newer rapidly growing version is co-ownership           with the consistency and assurance of a club
a property (normally between 1/12 and ¼.) This       of individual luxury vacation homes, with all the         structure.
deeded interest in a property means that it can be   administration taken care of by a management
© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                            19
SHERPAREPORT 2022 							                                                                           A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

Overview of Alternatives in the Second Home Market

                                                              Always       Sometimes        Never

                     Destination    2nd Home            Luxury          Luxury           Villa
                                                                                                           Summary
                       Clubs        Ownership            Hotel         Fractional       Rental             If you enjoy vacationing in the same
                                                                                                           location each year, want to benefit from
Many Locations
                                                                                                           house price appreciation, and want
3+ Bedrooms                                                                                                100% availability, but do not mind the
                                                                                                           overhead costs and effort to maintain
Hassle Free                                                                                                another property, then a second home
                                                                                                           may be better for you. If you like one
Travel Services
                                                                                                           location, enjoy excellent service, have
Concierge Services                                                                                         some flexibility on when you travel, and
                                                                                                           prefer to keep your costs low, then look
Consistency                                                                                                at luxury fractionals and private residence
Ownership/Equity
                                                                                                           clubs.

Personalized                                                                                               If you prefer to travel to various locations,
                                                                                                           enjoy traveling with your friends and
Resort Amenities
                                                                                                           family, enjoy high service levels and have
Initial Cost          $10k-$600k+     20% Deposit         None         $100k-$1m+         None             some degree of flexibility or do not mind
                                                                                                           planning ahead, then a destination club
                                    Mortgage/Insure/
Annual Cost            $5k-$50k                        $500++/night     $5k-$30k       $5k++/week          could be the answer.
                                      Maintain/etc

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                       20
SHERPAREPORT 2022 							                                                                               A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

5. Are they Right for You?                                                        6. Things to Consider
By thinking through the questions below about your vacation preferences,          Before joining a destination club we recommend doing some research to
you’ll be better prepared to decide if a destination club is for you and your     select the club that meets your requirements. All the clubs offer fabulous
family, and to identify the clubs that meet your preferences.                     homes and high levels of service, but there are differences in locations, prices
                                                                                  and structure. Use the questions below to guide this research process. All
                                                                                  the questions below are not relevant to every club and some questions may
Questions to Ask Yourself                                                         not be relevant for you, but overall, if you go through them with the clubs
                                                                                  you’re really interested in, you’ll get a good idea which club is a “fit” for your
•   Does my family like to visit one location or how much do we prefer to
                                                                                  vacation plans.
    visit multiple destinations?
•   When do we take our vacations – are they all at holiday times or peak
                                                                                  Membership & Fees
    times, are they spread throughout the year? (Helps you in looking at the
    reservation systems and rules for each club/plan)                             •   What are the different membership levels and how do they work?
•   How much do we typically spend on vacations each year? (If it’s under         •   How much do you charge as a membership fee for each different
    $5,000 per year, then you may want to look at alternative, cheaper options)       membership level?
•   How many and how long are our usual vacations each year? (This helps you      •   Is the membership fee refundable? Under what circumstances?
    identify the clubs and the membership plans that may fit)                     •   How many members does the club currently have, by membership level?
•   Who normally comes on the vacations? Do I want to travel alone, in            •   Are there any additional fees for booking any of the properties, (Special
    small groups, with friends and family? (If you normally travel alone, then        properties, special dates such as holidays, etc.)?
    destination clubs may not be the answer)
                                                                                  •   How is the annual fee planned to increase and what are the limits on this
•   Which locations do we like to visit, and would we like to visit? (Visit           increase?
    www.sherpareport.com/homes/ for the latest information)
                                                                                  •   Are there any other fees or any extra charges? eg overnight fees, cleaning
•   What level of luxury are we seeking in a vacation option ? (This helps you        fees etc.
    identify the clubs and plans that may fit your needs. Different clubs offer
                                                                                  •   How do I leave the club or fund?
    homes with values from under US$ 1m to around $4m.)
                                                                                  •   Who can use the membership? Who is it transferable to and under what
•   What level of services are we looking for, what are the minimum services
                                                                                      circumstances?
    that we want from our vacation/travel arrangements? (Destination clubs
    offer full service travel options)                                            •   Are there currently any special membership offers?
                                                                                  •   What surveys of members has the club carried out in the last year?
                                                                                  •   What do the surveys show? How was member satisfaction?

© 2022 SHERPAREPORT | www.sherpareport.com
                                                                                  •   Which members can I talk to prior to joining?                       21
SHERPAREPORT 2022 							                                                                                   A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

Destinations & Properties                                                              Services
•   How many homes do you currently offer to members?                                  •   What are the various pre-trip services that you offer? See section 2.1 for
•   Can members use any other properties (e.g. are there any reciprocity                   some of the typical services.
    agreements with other clubs or agreements with hotels, etc.)? How does this        •   What information do you provide to members before they arrive at their
    reciprocity work?                                                                      destination?
                                                                                       •   What types of things can the local concierge help with? Are there any
•   How do you select the destinations?
                                                                                           things that the local concierge can’t help with?
•   What input do members get to provide on the selection of locations and
                                                                                       •   Which local services are included and which are extra?
    properties?
                                                                                       •   How often do you provide housekeeping services, daily, weekly?
•   What is the average size of the homes (square feet, number of bedrooms,            •   If applicable ask, What does the club do to accommodate children, and
    baths, etc.)?                                                                          what services and facilities are provided for children? Are these available
•   Can I see pictures and location for all of the homes?                                  at all locations?

Reservations
                                                                                       Club Structure & Financials
•   How does your reservation mechanism work?
•   What is your planned occupancy rate? (The percent of time that the homes           •   What is the background of the key management?
    are occupied by members)                                                           •   Who are the members of the board of directors of the club?
                                                                                       •   Does the club have an advisory committee? Who are the members of that
•   What was the actual occupancy rate last year and how did it vary over the year?
                                                                                           committee?
•   Can I see the reservation system, try it out and check availability?               •   Are the members involved in the clubs strategy and decision making?
•   Can members reserve multiple locations at the same time? (This would be            •   Does the club rent out any of its properties?
    important if for instance one wanted to do a father/son golfing trip at the same
    time as a mother/daughter spa trip.)                                               If you are writing a six figure check to join, it’s worth asking the following:
•   How far in advance can reservations be made (usually 1 or 2 years)?                • Are financial statements available to club members? Can I see both historic
•   How many reservations have been made and how many trips to club                         and projected financial statements?
    homes have members made?                                                           • How often are they available?
                                                                                       • When will the annual dues alone cover all the operating costs for the club?
•   What is the club’s strategy to help facilitate reservations in high demand
                                                                                       • What sort of assurances do you provide for any membership fee refunds?
    locations during peak travel times?

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                               22
SHERPAREPORT 2022 							                                                                                        A GUIDE TO CHOOSING THE RIGHT DESTINATION CLUB

7. Summary
Six Reasons Not to Join a Club                                                            Seven Reasons to Join a Destination Club
1. You Travel Alone: If you only travel alone or as a couple, a club probably isn’t       1. Variety: A destination club gives you access to multiple homes in stunning
   right for you. The clubs typically offer large spacious vacation homes with 3, 4          geographical locales across the globe. You can spend time in a tropical paradise
   or 5 bedrooms­­­– great for families or larger groups of friends.                         in a home at the beach, or you might prefer jetting off to a home set in a winter
2. You Do All Exotic or Adventure Travel: If all your vacations are either unique            wonderland with the ski slopes at your door. You get to choose.
   adventures or exotic escapades to remote and unusual places, then a club isn’t         2. Service: In a destination club every detail is taken care of so that the member
   for you. The club homes are nearly all in world-class resorts and major cities            doesn’t have to worry. Prior to arrival, the kitchen is stocked with the member’s
   including: Aspen, Vail, New York, London, Los Cabos, Bahamas, Maui, Tuscany,              preferred groceries and beverages. Local concierges will arrange for restaurant
   etc. Yes, some clubs do provide remote adventure travel, such as Galapagos cruises        bookings, tickets and help plan and reserve for any activities.
   and African safaris, but they are only supplements to the core vacation homes.         3. No Worries: Clubs maintain a high level of quality assurance over their homes’
3. You Can’t Commit to Regular Vacations: If you’re a workaholic and can’t stand             interiors, upkeep and service. There’s no worrying about burst pipes, what it will
   to be away from the office for too long; or you’re a homebody and prefer to just          look like, or what condition will the home be in. Members don’t have the same
   relax in your own four walls, then clubs won’t be the answer. Part of being a             concerns as renters or second home owners.
   club member is committing (to yourself and to your family and friends) to take         4. Reconnecting with Family: Joining a club is a way to commit to travel, enjoy
   regular vacations and enjoy relaxing time away with friends and family.                   quality friends and family time, and make unforgettable memories now – before
4. You Like & Have The Time to Organize & Research: If you like organizing                   time gets away from you.
   your own trips and don’t mind searching for the ideal flights, accommodation,          5. Lots of Space: Club homes provide plenty of space with lots of room to stretch
   theatre tickets, restaurant bookings, ideas for kids activities etc, then membership      out, relax and entertain. Even in big cities accommodations include typical floor
   may not be for you. The clubs are truly full-service. They will arrange as much or        space of around 1,500 square feet in 2 or 3 bedroom apartments; rural retreats,
   as little as you want and can save you a lot of time and energy.                          with more land, may have up to 6,000 square feet.
5. You like One Location If you find yourself frequenting one or maybe two                6. Privacy: Compared to hotels, guests will enjoy much more privacy without the
   favorite locations, then a destination club probably isn’t the ideal vacation             common areas of a typical hotel. Scenic and beach front retreats are typically
   option. You’ll be better off buying a vacation home, a fractional or a private            surrounded by beautifully landscaped gardens that are secluded enough to offer
   residence club. That way you can return time after time, leave belongings and             a true sense of privacy.
   even personalize the home.
                                                                                          7. No Guilt: Those who own a second home often feel obligated to spend all of
6. Price: A typical nights stay at a club residence will work out to be around               their vacation time there – ultimately defeating the purpose of a vacation in the
   $1,000. Yes there are clubs where the cost per night is lower, and clubs where            first place: to reduce stress, not add to it.
   the cost per night is much more, but $1,000 is an easy number to have in mind.

© 2022 SHERPAREPORT | www.sherpareport.com			                                                                                                                        23
You can also read