It’s probably time to bury the concept of “member to home ratio,” a term that was and still is used extensively in destination club marketing materials and by salespeople. We have discussed before the limitations of this metric.

The typical ratio was 6:1, meaning for every six members, the club acquired another home. It was a handy metric to compare clubs and a ratio that clubs used to assure members and prospects that there would be enough homes for all the members that joined. So, on one hand, it was a quick, meaningful data point.

But the member to home ratio is also severely flawed. Tanner and Haley boasted a member-to-home ratio of 3:1, but we now know that was because of excessive use of leased homes. The model created a financial house of cards.

Also, it is hard to understand one half of the equation, in terms of defining what a “member” is, now that clubs have different levels of memberships, including corporate and group memberships that create different useage burdens.

Occupancy

So, in our opinion, the ratio is useful as a guide to indicate what level of real estate investment the club is making, but it does not provide a meaningful answer to one of the key questions that most prospects have when considering joining a club:

“What is home availability like?”

Last year, Exclusive Resorts started to publish occupancy rates, suggesting that their club was running at about 70% availability year-round, leaving about 30% of homes available for “space available” or last minute reservations. We thought it was a step in the right direction (see interview with COO), but of course it’s not a perfect measurement either. System-wide availability represents just that – availability across all homes, in all seasons. Thus, the occupancy metric will count homes in Scottsdale in July as available, yet not necessarily that desireable for travel.

Still, the new metric is a strong step in the right direction and availability reflects more accurately the core of the value proposition for members: their ability to get access to the homes, often a key selling point when they joined. In fact, for 2006, Exclusive Resorts has published that their availability was 67%.

Reservation Success Rate

Now, Richard Keith, the founder and CEO of Private Escapes, intends to take this a step further by introducing the concept of “Reservation Success Rate” across his luxury vacation club’s home portfiolio and for individual homes. Private Escapes is telling their members their goals and then measuring themselves against those goals:

• For reservations made under 90 days, a 50% success rate
• For reservations made 90-180 days out, a 75% success rate
• For reservations made 180 or more days out, 85% + success rate

Keith, in an interview earlier this month, also said that he is planning an occupancy rate of 70% for his club across all properties. We are impressed with his willingness to be transparent and to provide meaningful expectations that prospects and members can evaluate.

Does it mean that Private Escapes members have a 50% chance of booking a ski house, three months before ski week? Probably not, as all destination clubs probably have 100% occupancy during ski week – reservations that are booked at least six to twelve months prior to the holiday. But now Private Escape members have a clear understanding of what their chances are and how much those chances improve by planning their travel ahead of time.

Helium Report Perspective

Any single ratio or statistic will be flawed in some way or at least open to interpretation. You can rely on the competitive salespeople to point that out. But the leading clubs are attempting to communicate more accurately what availability will be like as the destination clubs mature and better understand the usage patterns of its members.

At the end of the day, we still think that availability rates or booking success rates are good indications. As a member, you are trusting the management of the club to balance member satisfaction (which is probably most influenced by availability) with financial responsibility (a club can’t buy or lease an unlimited number of homes). Destination clubs are still finding that balance as they grow and as they offer different levels of memberhsip plans. Look for clubs that are realistic about availability, who are willing to publish availability information and who you think you can trust.

In our Decision Guide to Destination Clubs, we explain the realities of making holiday reservations and what to expect. Click here to download a free copy of the guide.