According to Richard Keith, founder, CEO and owner of Private Escapes, the destination club industry features Exclusive Resorts as the hare, racing to gain market share, fueled by Steve Case’s cash, and his own club as the tortoise, slowly building solid momentum. His numbers seems to back him up – 250 members and growing.

Like others, Keith was a member of Tanner & Haley Private Retreats for two and half years, before then becoming its COO – and it was that experience that he has leveraged to start his own club. In an extensive interview this month, he outlined his plan for building the club – some highlights:

• 100% membership deposit return (most clubs return 80%, and use the 20% they do not return to fund club operations and marketing). Keith says that by keeping his operating expense low he can offer the 100% back.
• manages his real estate acquisition so that club has “positive net worth” at all times – meaning that if all homes were sold, the club could cover all bank debt for the homes and return all member desposits). In fact, he plans to publish an audit in the spring, showing that if the club were to wind down, he could return 100% of the member deposits.
• tries to manage new member expectations from the outset to avoid disappointment later – for example, they know that if a prospect expects Thanksgiving or Christmas availability every year, then they are probably not a good fit for his club – or the destination club model in general.

We found Keith to be conservative, experienced (he did hold a C-level position at a competitor) and realistic about how to manage his club. The club is owned 100% by him (no outside investors that we know of), so we think that any potential member should get very comfortable with his philosophy. He was smart to focus on what we describe as the “value” segment of the market, since it differentiated his club while others were focused on a higher price point product.

Private Escapes offers a “real estate appreciation participation program” (our mouthful, not his, but we prefer the description to “equity model”, which we think is very different) – in our upcoming Decision Guide we’ll review that program in more detail (as well as Ultimate Resort’s Membership Appreciation Program and others).