Last week, LUSSO CEO Steve Greer sent a letter to the destination club’s members addressing the Tanner & Haley bankruptcy. The club provided a copy to Helium Report which you can download here (76KB, PDF). We found LUSSO’s approach to the issue to be thoughtful and deliberate, much like the way Greer opted to launch the club in stealth mode before a public unveiling.

The letter covers five major points, listed below. We’ve included some notable excerpts from the three-page letter:

1. Member access to properties

“[T]here are significant differences between the ‘unlimited’ access model used by Tanner & Haley and that used by LUSSO. The most significant difference between the two membership usage models is that LUSSO’s unlimited access is subject to availability…whereas Tanner & Haley offers unlimited access with a 51 weeks per year ‘anytime, anywhere guarantee’...”

2. Use of short-term rental properties

“LUSSO only engages in short-term rental properties on a very limited basis and for specific reasons, not as a general business practice. We currently only have two properties which are short term (interim) retnal properties…”

3. Ratio of members to properties

“Tanner & Haley’s court filings state that its clubs…had in aggregate 874 members and only 67 homes, a ratio of 13 members per property… LUSSO covenants in its Membership Agreement never to exceed a ratio of 5.5 members per property…”

4. Use and security of membership deposits

“LUSSO has mado no distributions to any of its investors and will not do so unitl the Club is substantially developed…relative to its ultimate target of 550 Members and 100 properties, and only then on th ebasis that the financial viability of the Club would not be impaired by any such distribution.”

“As of June 2006, the estimated market value of the net assets of the Club, if realized, was sufficent to cover Membership Deposists in excess of 1.4x.”

5. Corporate governanace and financial transparency

“From December 2006 onwards, the Club’s annual financial statements will be subject to an independent audit.”

Over the past month, we’ve published several letters from destination club executives to members reacting to the announcement of Tanner & Haley’s bankruptcy. We’ll continue to keep you informed of how clubs are addressing the issue and demonstrating the differences in their business models from Tanner & Haley’s.