The consolidations continue, as two more destination clubs decide to stop competing and join forces. This time it’s two of the ultra-luxury clubs, Solstice and Parallel. Combined, the new club will have close to 80 members (equivalent to about 50 full-time equivalent members), 40 of which came from the original Solstice and 25+ from newcomer Parallel. The new club will operate under the Solstice brand.

We’ve consistently been impressed with Solstice, a small boutique club that had been able to grow in a measured way to about 40 members, mostly by referral and word-of-mouth. The homes are very luxe, as are the cost of entry and annual dues. Our sense is that as the club reached 40 members, founders Graham Kos and Jeff Scult realized that the club needed more infrastructure and service to support its discerning members.

That’s where Parallel appears to come in. An ultra-luxury club that launched last year, Parallel scaled its team and operations with executives from other destination clubs and the hospitality industry. The club closed out its charter phase with the involvement and endorsement of Andrew Harper. The ultra-luxury club was marketing memberships at the same time as the Tanner and Haley meltdown, which may have caused high-net-worth prospects to become more cautious.

The combined club will be run by Chad Morse, who was co-founder and CEO of Parallel. Much of the Parallel team will take over day-to-day operations. His team will now be under the spotlight to not only deliver the level of service that its members want, but also continue to grow the club. In an interview this week, Graham Kos implied that he would like to see the new Solstice at about 100 full-time equivalent members by the end of ‘07.

Helium Report Perspective

In general, consolidation appears to be good for the clubs involved as well as the industry. Combined clubs should have more strength, capital, and reduced expenses competing with each other for members.

For existing members, there should be immediate benefits when clubs merge. In this case, Parallel brings two new homes to the merger: one in Aspen and the other in London. The long term result is less clear, of course. Once the honeymoon is over, execution will count. According to Jeff Scult, the combined club is financially stable and break-even operationally. Therefore, the club will now focus on adding new members and homes.

The ultra-luxury end of the market now has a “growth stage” player (50+ members) – the new Solstice, with the capital and foundation to compete with newcomer Ciel and perhaps others.