After the debacle at Tanner and Haley, it’s clear that the destination club industry needs to step up its own efforts to assure and guarantee consumers that member deposits are safe and will be returned when the member asks. According to Richard Keith, the founder and CEO of Private Escapes, that’s exactly what the new Destination Club Association (DCA) intends to do.

Over nine months ago, the association started to take shape and has now been formed with seven founding members: Exclusive Resorts, Private Escapes, Quintess, Ultimate Resorts, Dream Catcher Retreats, High Country Club and Parallel.

We expect other clubs to join as they get membership traction and assuming they are able to comply with the association’s Model Act. Keith described the Model Act as having “real teeth” and compliance to it will be required for any club that wants to join the Association.

For example, the Act is expected to include disclosures on the number of leased homes in the portfolio, how many members have redeemed their membership, and the longest wait for a member to receive their deposit refund. Keith also said that the Act would have a specific set of financial requirements, including a third party certified “Net asset test,” demonstrating the club’s ability to repay all debt and member obligations.

Some sort of “fair advertising” requirement would also be included, so that clubs are very clear about what homes they actually own or are under contract to purchase – perhaps putting an end to the long lists of “Coming Soon” homes that are featured in marketing materials.

Many of the disclosures read like the due diligence questions that we have consistently encouraged prospective members to ask over the past six months. It seems that the industry understands that well-informed and savvy consumers are the best prospective members.

Clearly, the DCA hopes to take a lead in shaping any regulation that might come from the more activist states, hopefully finding the right balance of protecting the consumer and supporting the growth of a viable new industry. Yesterday, the American Resort Development Association (ARDA) issued a press release calling for destination clubs to “either comply with existing timeshare regulations or support alternative regulations which must include a third party independent financial guarantee of the membership refund promise and comprehensive disclosures.”

We expect that all serious destination clubs are going to want to join the Association – as that “seal of approval” will be the first endorsement that any prospect should look for. As we have said many times before, if a club won’t answer a question like “what was the average wait this year to redeem a membership?” then we think you should consider other clubs.