There was no shortage of activity in the destination club industry during the first six months of 2008. Industry leader Exclusive Resorts revamped its membership offering into an à la carte selection of six plans, with holiday bookings running extra. Ultimate Escapes formed, the result of a merger between Ultimate Resort and Private Escapes, while Abercrombie & Kent bought two clubs, Crescendo and BelleHavens, and prepared to launch a new club product this fall. There was one big stumble in the form of the Portofino Club entering into involuntary Chapter 7 bankruptcy proceedings, following months of uncertainty about the club’s future.

So what lies ahead? Here’s Halogen Guides’ predictions for the remainder of the year.

Ritz-Carlton will launch a destination club.

We still believe that the industry has room for another major player. The best bet would be the entrant of a major hotel company like Ritz-Carlton, which has a collection of both whole and fractional residences around the word. A destination club product for a company like Ritz would allow them to package any excess real estate inventory into a club product and add in stays at Ritz-Carlton hotels and resorts. Ritz is even already comparing its fractional, Ritz-Carlton Club product against non-equity destination clubs on its website. As destination clubs like Exclusive Resorts, Ultimate Escapes, Quintess, LRW, and Abercrombie & Kent Residence Club look to widen their travel portfolios with hotel stays and tours, Ritz-Carlton, with an established brand, could actually be well-positioned to compete in the industry.

If Abercrombie & Kent can successfully address its Tanner & Haley connection, the Abercrombie & Kent Residence Club will be one of the top players in the destination club market.

One piece of big news this year was the entrance of Abercrombie & Kent into the destination club market. It’s not the first time the brand has entered the space. The A&K name was associated with a club that eventually morphed into the failed destination club, Tanner & Haley. In fact, there is still a lingering lawsuit involving Abercrombie & Kent and this club. We’ve talked extensively to club management about this issue and have been impressed with their candor and willingness to address questions about the brand’s association with Tanner & Haley. Clearly, of course, they are looking to focus more on the new club product launching this fall. We recently got a sneak preview of the club and its plans. The offering looks to be competitive with the biggest players. It won’t have the property portfolio to match an Exclusive Resorts or Ultimate Escapes right out of the gate, but the brand name and extensive portfolio of tours available, make it one to watch.

Clubs will reign in holiday reservations.

When Exclusive Resorts repackaged its membership plans into a buffet of six options with holiday bookings available separately, it was one of the first acknowledgements by clubs that securing holiday reservations can be a volatile issue with members. By positioning these as a separate option, Exclusive Resorts is essentially reigning in control of holiday reservations and working to better ensure that their members can book the homes they want, when they want them. If the strategy works, expect other clubs to follow.

Entry-level membership options will grow.

In a recession, even the affluent begin to trim expenses. For instance, Wall Street bonuses are likely to be a fraction of what they were last year. More destination clubs are offering entry-level plans with a limited number of nights. Quintess has an offering, Exclusive Resorts has a ten-night plan and Ultimate Escapes’ plans start at 14-nights. High Country Club even offers a seven-night plan. Such entry-level options may become an even bigger part of club’s membership portfolio if promoted as a way for potential members to dip their toes into the market.

Clubs will target potential members overseas.

Destination club executives should start learning conversational Russian. After all, it is these newly minted millionaires in Russia, and also the Middle East and China, that present a wide open market for destination club membership. Toss in European buyers who have been taking their strong Euro on a shopping spree in the U.S. over the last few years, and the market opportunity expands even more. Already more destination clubs are eyeing members outside of the U.S. Abercrombie & Kent Residence Club is looking at building a property portfolio that will attract members with home bases in Europe and the Middle East, as well as U.S. members. When Quintess announced its $210 million equity infusion, founder and executive vice president Ben Addoms told us that the money could be used to start other Quintess clubs overseas. (Note to Steve Case: Exclusive Resorts Europe has a nice ring to it, doesn’t it?) The U.S. may be entering a recession, but clubs rightly see the global opportunity. As US destination clubs look to expand overseas they’ll face competition from European based destination clubs like the Oyster Circle and Botiga.

The real estate downturn will force destination clubs to tighten deposit refunds.

The real estate downturn is a real concern for clubs. If prices continue to fall, clubs could find themselves overly leveraged. That said, most destination clubs have spread their property portfolio to enough places around the world that they can withstand a decrease in some locations.

The real impact of the real estate downturn will be to force clubs to better prepare for these market freefalls, by ensuring their financial models can withstand a rollercoaster. It’s easy for a club to promise 100 percent deposit returns when property values are seeing double digit annual increases; it’s a much tougher financial proposition when home values in some parts of the country, including resort areas in Arizona, Florida, and California, are down more than 20 percent. Worse yet, some economists predict that the price drop isn’t over. We are already seeing some tightening of financial belts. This year, Exclusive Resorts’ moved to a 75 percent deposit refund. Brent Handler, Exclusive Resort’s president, told us in an interview this spring, “Membership deposits are debt.” The less debt on the books, he said, “the better for the company and the better for all of the members. We are a stronger club with less debt.”

And while other club’s don’t necessarily follow Exclusive Resorts every lead, they certainly watch this market bellwether. If the move to 75 percent doesn’t impact Exclusive Resorts membership efforts (early signs show no impact, as the club is on track to hit another membership milestone this year), and the real estate market continues to contract, other clubs may begin to look at their own deposit refund structure.