Halogen Guides Real Estate

Bermuda Readies for More Fractional Properties

2008-08-21T14:43:16-07:00

More fractional residences are poised to open their doors on the island of Bermuda, which is good news for second home buyers unable to meet the country’s restrictive foreign ownership laws.

The Reefs Club, a fractional development on the property of a five-star resort in Southampton, will open next spring, while the second phase of shared ownership villas at the Residence Club at Tucker’s Point is wrapping up construction this year. Fractional units are also slated for Ariel Sands, an older hotel that is being demolished and replaced with shared-ownership residences.

Buying property overseas often comes with restrictions, but Bermuda’s laws are among the most limiting for foreign buyers. Non-Bermudians cannot purchase undeveloped land, with few exceptions. Foreigners can only purchase most existing homes and condominiums if they are being sold by a non-Bermudian or are in a development that has been designated for foreign-ownership. There are a limited number of single-family homes that can be purchased by foreigners, and real estate brokerages in Bermuda often maintain separate listings of homes and condos that non-Bermudians are permitted to buy.

The restrictions are likely the primary reason for the lack of destination clubs with homes in Bermuda. One exception is One Key, which leases the homes in its portfolio, rather than purchasing residences, a factor that enables the club to have a presence on the island.

These new fractional properties are designated for foreign-ownership. In mid-2009, the Reefs Club will roll out one-tenth shares of two- and three-bedroom units. The 1,606 square foot, two-bedroom shares start at $350,000, while the three-bedroom units, spread across 2,028 square feet, are selling for $410,000.

The Tucker’s Point Club opened its first fractional units in 2005, but it is adding 14 more units at a development called Harbor Court this year. It is selling one-tenth shares of two- and three-bedroom units that entitle buyers to three weeks a year of use. Prices range from $355,000 to $455,000. The fractional purchase also includes a membership at the Tucker’s Point Club and access to the golf course, a membership that typically sells for nearly $100,000. The development also includes several new whole ownership villas with price tags starting at $3.2 million. An 88-room hotel with a 12,000 square foot spa will also open its doors on the property in the spring of 2009.

Both fractional projects are a part of the Elite Alliance, an exchange network of fractional owners that includes Seven Canyons in Sedona, Ariz. and the Residence Club at PGA West in La Quinta, Calif., among others.

Learn more about purchasing a fractional vacation home by downloading our Decision Guide to Fractional Residences.

Destination Clubs Push Late Summer Incentives, Look Towards Price Increases

2008-08-20T12:23:49-07:00

Earlier this year, destination clubs rolled out a slew of incentives to attract new members, including free leased BMWs and a week-long cruise aboard a yacht. As the fall approaches, destination clubs are taking a more low-key approach to their third quarter membership push, instead emphasizing getting in ahead of looming membership price increases and an incentive that has a broad appeal for all travelers: Free frequent flier miles.

The Lusso Collection announced that members who join by the end of September will receive one frequent flier mile for every dollar spent on a membership deposit. Miles can be used on any of seven airlines, including Delta Air Lines, U.S. Airways and American Airlines. Members who join Lusso’s $325,000, 21-day plan will receive 325,000 miles, while the unlimited plan members will earn 425,000 miles.

In recent months, several airlines have announced changes to their frequent flier redemption programs, including adding fuel charges to award tickets or charging fees to book award travel, but these mileage awards are still a potentially attractive draw for new members, even if booking the tickets may now involve nominal fees. For instance, the mile perk for the Lusso 21 plan could cover two round-trip, first-class tickets to Europe on American Airlines for 250,000 miles (the kids could fly in coach for as low as 40,000 miles a pop), while the unlimited plan mileage jump could be redeemed for four first-class tickets to Hawaii worth 380,000 miles on American.

Other clubs are looking to price increases at the end of the month to act as an incentive for destination club fence-sitters to join. Exclusive Resorts is set to increase the prices on its six plans at the end of the month by $20,000 each, and is promoting the price jump as, well, a reason to join now. One Key will increase prices for its three travel cards on August 31. Prices will jump by $5,000 for the 15-night card, $10,000 for the 25-night offering and $15,000 for the 45-night plan.

Destination club Distinctive Holiday Homes is also preparing to raise prices and will be adding a new 63-day plan and additional entry level offerings that we will detail in the upcoming week. Expect price jumps and new member perks at other clubs as well this fall, as these incentive pushes often peak towards the end of the year.

The Presnell Sporting Collection Plans Destination Club for Avid Outdoorsmen

2008-08-18T13:57:07-07:00

Destination clubs have always promised luxurious homes in beautiful locations, but now clubs are increasingly focusing on experiential travel. One new club, the Presnell Sporting Collection, is targeting its offering to the avid outdoorsman who wants to fly fish in Montana, go sport fishing off the coast of Guatemala, or shoot dove at an Argentine estancia.

Launching this fall, the Presnell Sporting Collection aims to offer its members access to high-end sporting travel experiences. According to club founder and avid sportsman Kevin Presnell, who has a background in commercial real estate, the impetus to start the club comes from a common predicament among hunters and fishermen. “There’s been no way to tell whether a particular lodge was really worth going to,” said Presnell. “You’ve had to rely on word of mouth. We are here to provide members with a consistently excellent experience.”

The Presnell Sporting Collection differs from the traditional destination club not just in its vacation offerings, but in its structure as well. Instead of acquiring properties it buys blocks of time in hunting and fishing lodges around the world. The club vets each lodge before it enters the collection, judging a destination by its quality and abundance of game, the level of comfort and hospitality at the residences, and the natural beauty of the surrounding areas.

Vacation time at each of lodge is priced in “privileges”. Membership fees start at $125,000 and secure 100,000 privileges. A $225,000 payment gets members 200,000 privileges, while a $300,000 fee secures 300,000 privileges. Members who plan to use more than 300,000 privileges per year craft their own membership plan priced at a rate of $75,000 for each additional block of 100,000 privileges.

Trip costs vary by location and only assume double occupancy. A seven-night trip hunting game in the African plains costs 65,000 privileges and a four-night trip to the Bahamas for bone fishing goes for 17,000 privileges. Members also have the opportunity to exchange a portion of their privileges for time in more traditional resorts and properties featured in the Registry Collection, a real estate exchange network.

In addition to the membership fees, members should expect to pay dues of $36,950 to $110,850 for the first year depending on the plan. Dues at that level rank among the highest of any destination club. Dues for subsequent years are determined by the club on an annual basis and it makes no guarantee for the rates at which it will increase dues.

Unlike traditional destination clubs that offer deposit refunds of anywhere from 75 percent to more than 100 percent, the Presnell Sporting Club decreases the amount refunded the longer members are a part of the club. During the first five years, members can secure a 75 percent refund. After the fifth year the refund drops to 50 percent and then to 25 percent after the first decade of membership. After 15 years there is no refund. The sliding membership refund, along with potentially high fees, can dramatically increase the cost-per-night of the club over the years.

Ahead of its launch on September 15, the club says it has a firm base of 17 members. It will look to expand on that in the months and years ahead as it targets the discriminating outdoorsmen.

Considering a destination club? Learn to evaluate the real cost of a club membership by downloading our Decision Guide to Destination Clubs

Readers, weigh in. Is there a market opportunity for specialized destination clubs? Leave a comment below.

New Rosewood Hotel and Residences Break Ground in San Miguel de Allende

2008-08-13T17:05:35-07:00

Luxury hotel company Rosewood has started construction on a 63-room hotel and residence project in the historic town of San Miguel de Allende, 180 miles northwest of Mexico City. The colonial-era town, which was designated a UNESCO World Heritage Site last month, has both an historic center and a thriving art scene which have made it popular with American second home owners and tourists alike.

The property’s residential component, the Artesana Rosewood Residences, features units ranging in size from two- to five-bedrooms spread across floor plans that cover 1,800 to 7,500 square feet. Homes will have local architectural touches such as hand wrought iron details and arches carved from area limestone quarries. Outdoor spaces, featuring large patios and rooftop decks, will be an important part of the homes. Owners will be able to use the amenities at the Rosewood resort, including the spa, and secure local property management through the development.

Prices start at just under $1 million and go up to $3 million. Residences will be complete in the fall of 2010—delayed from a 2009 estimate announced earlier this year due to time spent acquiring final permits.

As San Miguel de Allende has become a destination for vacation home buyers, home prices have also risen. There are few fractional real estate options, so buyers will most likely be considering whole ownership. Homes start at $250,000 and residences close to the town’s centro are $500,000 and up. While the Rosewood residences will be among the most expensive real estate in the town, there are other multi-million dollar homes currently on the market. Some of the most expensive real estate in the city is made up of grand homes with large outdoor living spaces that are either historically significant or simply designed to echo the towns’ colonial past.

Ritz-Carlton Adds Fractionals in the Bahamas

2008-08-13T14:49:50-07:00

Ritz-Carlton, a hotelier with an extensive collection of second home real estate projects, announced that it is adding 16 fractional residences at the Abaco Club on Winding Bay, a 534-acre development in the Bahamas.

Ownership at the Ritz-Carlton Club will differ slightly from the brand’s shared ownership options in San Francisco and other cities. Unlike typical fractionals, where an owner purchases, say, a one-eighth share of a two-bedroom residence securing six weeks of use a year, a buyer at Ritz’s Abaco project will select from three levels of membership that come with a set number of points annually to redeem for stays.

The select plan includes 500 points, the preferred level has 1,000 points and premium membership carries 1,500 points. Points can be traded for stays at residences of various sizes, each of which carries a different point value. According to a company-issued release, a two-week stay in a cottage in the prime winter season would go for 1,190 points while a one-week summer vacation would cost just 280 points. There will be four home types to choose from, including small cabanas, two- to four-bedroom oceanview cottages, four-bedroom golf-side villas, and 2,250 square foot, three-bedroom beachfront homes. Prices start at $100,000, and the first residences will be completed in December.

Though the membership is points-based, ownership does include deeded interest in a real estate trust. The use of this points system is notable because it shows that the company is looking at various ways that members may want to use homes in a destination and also considering that owners may need homes of different sizes. The company continues to tout that members can swap their time for stays at other Ritz-Carlton Club properties.

Earlier this year, Halogen Guides predicted that a major hotel player like Ritz-Carlton would enter the destination club industry. The brand now compares its fractional product against destination clubs on its website. While destination clubs don’t typically have points-based plans, the new Abaco project may be just one more signal that Ritz-Carlton’s equity-based fractional model could be easily adapted to fit the destination club market.

Learn more about fractional ownership by downloading our Decision Guide to Fractional Residences. To decipher the ins and outs of destination clubs, and decide for yourself if Ritz-Carlton could enter this market, download our Decision Guide to Destination Clubs.

Destination Clubs In New York: What Members Can Expect in the Big Apple

2008-08-12T18:43:10-07:00

Any Manhattanite will tell you that there is nothing quite like August in New York—humidity soaked days and sauna-like subway platforms are enough to send the locales scrambling to the East End of Long Island or upstate. The end of the month however, marks the start of the reasons that make New York a favorite tourist destination and even keep the locals in town. The U.S Open tennis tournament kicks off Aug. 25 and the Metropolitan Opera begins its season next month, while the waning summer brings more moderate temperatures and a bright fall palette to the city. It’s no surprise that destination clubs have more residences in New York than in any other location in the U.S. With some ten clubs owning their own piece of the Big Apple, here’s what current, or potential, club members can expect.

Number of destination clubs

Ten. The big five including Exclusive Resorts, Ultimate Escapes, Quintess, LRW, High Country Club and the Lusso Collection all have residences in New York, and most have multiple homes. Exclusive Resorts has 28 units alone, many adjacent to Central Park. Other clubs with property here include Solstice, One Key and Abercrombie & Kent Residence Club, among others.

Location

Most club homes are located in midtown. In fact, many clubs share the same address, 1600 Broadway, just north of Times Square. Destination clubs owning, or leasing, units in the same buildings can be chalked up to New York’s notoriously tough co-op boards that are not likely to smile upon a destination club buyer that will bring a string of different faces to the building’s hallways. Condominiums, while more expensive than co-ops, tend to have more relaxed rules regarding usage. Destination club residences are located in full-service, high-rise buildings that are typically within walking distance to Central Park. Solstice Collection is one exception. This ultra-luxury club has two properties in the West Village.

Size

One- and two-bedroom units are the norm. Ultimate Escapes’s Premiere residences, which average $1 million in value, are one-bedroom units (we reviewed one in June), while its Signature and Elite clubs include two-bedroom homes.

High Country Club also has a one-bedroom condo, while Exclusive Resorts, Lusso Collection and Quintess have collections of two-bedroom residences. We reviewed
one of Quintess’ New York residences last December. Solstice has a three-bedroom unit in the West Village, but don’t expect clubs to add larger residences their portfolios any time soon. The New York real estate market has remained robust and the median price of a three-bedroom condo topped $3 million in mid-2008, according to New York-based real estate agency, the Corcoran Group.

Fractional options

While destination clubs have made New York a staple of their property portfolios, fractional developments remain a much smaller segment of the market. There are just a handful of fractional buildings in New York. The Phillips Club is selling one-eighth shares of studio, one- and two-bedroom units in its development near Lincoln Square. The project rolled out its second phase
earlier this year. Elite Destination Homes also has a New York residence and the St. Regis Residence Club makes its home on several floors of the namesake hotel on East 55th St.

There is also the newly reopened Plaza Hotel, now selling whole ownership, multi-million dollar condominiums. But even if you aren’t an owner, you can get a taste of life at the renowned hotel by grabbing a drink at the new Rose Club lounge or at the Oak Room, which is reopening its doors in early fall.

The Top Five Questions to Ask Before Buying a Fractional Residence

2008-08-12T15:00:27-07:00

Despite the rocky real estate market, fractional residences continue to attract the attention of developers and the media. A recent article in the New York Times pointed to the virtual fractional bonanza in Italy, where at least three such projects are opening their doors. New shared ownership developments continue to roll out stateside. In San Francisco for example, the Ritz-Carlton recently opened its fractional residences near the city’s Union Square shopping district, while Fairmont is putting the finishing touches on its Fairmont Heritage Place fractionals in Ghirardelli Square.

If you are eyeing this market, here are five key due diligence questions to cover before you buy, as well as the answers you should get.

1. How much are annual dues and is there a cap on their yearly increase?

Dues at fractional residences can be high, easily topping $10,000 a year at most projects and exceeding $30,000 annually at the most lavish developments. You should not only know the size of the annual dues, but how much they can be raised each year and who has the power to institute such increases. If there is not a homeowners’ association, increases in the near term may be left to the developer or management company.

2. How easy is it to secure a holiday reservation?

Depending on the location of a fractional, you could have a difficult time booking during the prime holiday seasons, including Christmas, New Year’s and President’s Day. Projects in ski areas can see the biggest holiday reservation crunch because the prime vacation season is short. Projects that allow rentals may also see an availability crunch. Get the specifics on how holiday bookings work at a given development. A property may rotate weeks among owners, or simply promise that you’ll get, say, two weeks in the winter. If the project is already open, ask to speak to current owners about their experience booking reservations. If there is an acute lack of availability, you’ll hear about it.

3. How is my deposit secured?

Several condo-hotel projects from Las Vegas to Lake Tahoe have halted construction in recent months due to financing issues. While the tight credit markets have yet to hit fractional projects with the same headline-making impact, any prudent preconstruction buyer should ask careful questions about how their deposit is secured. You should also know the terms under which you may be able to get that deposit refunded. For instance, can you get it back if the project completion date is delayed by more than a year?

4. Are there any resales?

It can take years for a developer to completely sell out of its initial inventory. Even so, there may be resales on the market. Aspen, a relatively mature fractional market with several completed projects, has an active fractional resale market with local realtors holding listings for units at the Ritz-Carlton, St. Regis and Hyatt fractional properties, among others. Prices vary widely, even within projects. Ask a developer if there are resales and also look at the open market.

5. What’s the investment upside?

If a developer makes any promises regarding future price increases, look at other projects. We’ve always advocated that fractionals are a lifestyle investment, but at a time when home prices have dropped some 20 percent in a number of markets, this mantra is even more important to remember. Purchase a fractional because you love the location and the property, not to make money.

Are you considering purchasing a fractional unit? Download our Decision Guide to Fractional Residences for a complete list of due diligence questions.

Destination Clubs' Holiday Reservations: How to Get the Home You Want During the Peak Travel Seasons

2008-08-12T13:59:22-07:00

Summer is winding down, but with rising airfares, most travelers are already looking towards the holidays. Similarly, destination club members need to think about holiday plans far in advance, often booking stays at homes up to two years prior to traveling.

Holiday reservations have been the Achilles’ heel of the destination club industry. After all, clubs target their plans to families, who often want to travel during the same school holidays. Exclusive Resorts acknowledged this capacity crunch when it revamped its plans this spring and began to sell holidays à la carte.

Each destination club tackles the holiday challenge differently. Most offer a larger number of advanced holiday reservations to those members with more expensive plans, but the specific details of securing a home in the prime travel seasons vary by club. If you are on the hunt for a destination club and want to use your plan over the holidays, use this cheat sheet to guide you through the various offerings.

Exclusive Resorts

The basics: The largest destination club, Exclusive Resorts, now sells holiday reservations as an add-on to plans. A one-time fee of $79,000 will secure the right to book one week a year over any holiday, including Christmas, New Year’s and President’s Day weeks. A $49,000 fee allows you to book one week annually over spring break, the Fourth of July or Thanksgiving.
Timing: Bookings can be made up to two years in advance and are done on a first-come, first-served basis according to Exclusive Resorts’ director of communications, Christina Schleicher. The one exception are newer properties, which are handed out on a lottery system.
Bottom line: Holidays are at a premium and you’ll pay extra for that access.

Ultimate Escapes

The basics: Each of Ultimate Escapes’ mix of 15 different plans include either one or two advanced holiday reservations. Members with the entry-level, 14-day Bronze level plans get one advanced holiday reservation every other year.
Timing: Bookings can be made up to two years in advance and cover trips that last from three to seven days. Reservations are first-come, first-served. If the trip includes a Saturday stay, the club requires that the vacation start or end on a Saturday. Trips that cover a holiday but include a stay of longer than seven days will require a member to use a regular advanced reservation in addition to an advanced holiday reservation.
Bottom Line: Straightforward booking process, but to conserve those advanced reservations plan on seven-night trips that start on a Saturday.

Quintess, LRW

The basics: Quintess uses a lottery system covering primary and secondary holidays to divide its reservations.
Timing: Lotteries for primary holidays, like Christmas, are conducted 13 months in advance of the date of the holiday, while the lottery for secondary holiday reservations is conducted once a year in January and determines reservations for the following calendar year (i.e. a stay during Thanksgiving 2010 would be scheduled in January 2009).
Bottom line: Good for long-term planners. You will know where you are going at least a year in advance and in some cases more than a year and a half ahead of the trip.

High Country Club

The basics: Reservations are handed out on a first-come, first-served basis. How far in advance a member can book a holiday reservation is directly linked to their plan. Also, members can only snag the same holiday every third year, so members who booked Christmas in 2007, would not be able to do so again until 2010.
Timing: The highest-level Private plan, with a membership deposit of $80,000, allows members to book holiday trips up to a year in advance. Members with the $60,000 Affiliate plan can arrange a holiday trip six months out, while the two entry-level Associate and Companion plans can only book holidays four months in advance.
Bottom line: Since you can’t book the same holiday every year, flexibility is key.

The Lusso Collection

The basics: This boutique destination club divides holidays into three groups and gives members priority access to a different set each year. Groupings consist of Christmas and New Year’s weeks; President’s Day and the four spring break weeks; and Thanksgiving and the summer holidays (including Memorial Day, the Fourth of July and Labor Day). When members join the club, they are assigned priority status in one group and rotate through the others in the following years.
Timing: Reservations are made six months in advance. The priority group gets first dibs on reservations for a given holiday cluster—picks are made by lottery—before it is opened up to the rest of the membership.
Bottom line: Dividing up the holidays ensures that all members will get a holiday trip at least once a year, but don’t count on getting that same holiday year after year.

Distinctive Holiday Homes

The basics: With six plans, Distinctive Holiday Homes doles out its holiday reservations on a first-come, first-served basis.
Timing: Bookings can be made up to two years in advance, but if you want to book a holiday reservation this far out, you will have to use two advanced reservations. Homes can also be booked with a space available reservation closer to the date. Additionally, you can’t book the same home over the same holiday for more than two years in a row.
Bottom line: Since holidays can require using up to two advanced reservations, a member’s cache can go fast. However since Distinctive Holiday Homes is still a small club (it topped 50 members this year), with fewer members jostling for the same homes, space available reservations can still be a good bet.

Solstice

The basics: The club, which offers three levels of membership, runs a lottery to distribute its holiday reservations.
Timing: The lottery takes place once a year. The next, in October 2008, will determine 2009 holiday bookings. Unlike other, larger clubs, Solstice designates fewer weeks as holidays. Only Thanksgiving, Christmas, New Year’s and Spring Break weeks are considered holidays. Members submit their top four choices, which can be for the same home over four separate holidays, different homes over the same holiday or any mix of the two. The picks of members with higher-end plans are weighted, so they are more likely to get their first or second choices each year. Jeffrey Scult, Solstice’s co-founder, said that in the last lottery, all members got one of their picks. After the lottery, any unclaimed holiday weeks go into the open reservation pool.
Bottom line: With fewer weeks designated as holidays, prime weeks like President’s Day and the Fourth of July are fair game to all members.

Abercrombie and Kent Residence Club

The basics: Depending on the plan, members will get a specific number of holidays reservations each year. When a member joins, they will be assigned to one of two booking groups. First dibs on holiday reservations shifts from one group to the next each year, a system that essentially gives a member holiday booking priority every other year.
Timing: The club will conduct holiday bookings twice a year, in the spring and fall. The club has been testing out the new system with legacy members from BelleHavens and Crescendo.
In spring of 2008, the club was booking holidays for the first four months of 2009. This fall’s booking period will cover the remaining holidays in 2009, starting with Memorial Day. Members in the 2009 priority group may submit up to five choices. A computer-based system makes the matches. If a member doesn’t get their picks, they move on to the second round of holiday matching, which is also opened up to non-priority members. There is a third round as well, which operates on a first-come, first-served basis.
Bottom line: The system sounds confusing (the club has dedicated a one page fact sheet to explaining its details), but club executives say that early testing has gone well. “We conducted it a few weeks ago,” said Darin Gilson, the club’s senior vice president of sales and business development. “ Eighty-five percent received their first request and 15 percent had their second request fulfilled.”

The Value Options Part Two: The Cheapest Way into the Biggest Destination Clubs

2008-08-11T15:26:58-07:00

In part one of this article we discussed the recent trend in the destination club industry of clubs offering lower-cost plans aimed at potential members who want to try the concept on for size before making a bigger financial commitment. Here’s an overview of entry-level options at seven large clubs. We’ve excluded Solstice, where deposits start at $615,000, as well as the new Abercrombie & Kent Residence Club, which has not yet released pricing ahead of its launch next month.

Club: Exclusive Resorts

Entry-level plan: Ten nights for a $140,000 deposit (that figure includes the club’s $35,000 initiation fee) and annual dues of $13,900.

Cost-per-night: $1,740

What you get: Access to the home portfolio of the largest destination club. Residences are located in some 35 locations and average $3 million in value.

What you sacrifice: Holiday access. Holiday reservations are sold on an à la carte basis, but you need to buy a plan with at least 20 nights in order to be considered eligible.

Club: Ultimate Escapes

Entry-level plan: 14 nights for a $70,000 deposit and annual dues of $8,000.

Cost-per-night: $671

What you get: The club’s Premiere Bronze plan gives access to a collection of homes in more than 25 locations, with an average value of $1 million.

What you sacrifice: Bigger homes. Homes in Ultimate Escapes’ higher-level Elite and Signature clubs tend to have more bedrooms and more square footage. Homes in the Premiere club are typically 2,000 square feet, with two- to four-bedrooms. Additionally, advanced holiday reservations at the Premiere Bronze level are available only every other year.

Club: Quintess, LRW

Entry Level Plan: 10 nights for a $98,000 deposit and annual dues of $12,000.

Cost-per-night: $1,445

What you get: Stays at the club’s portfolio of residences which average $4.25 million in value. One week can be reserved up to six months in advance, while the remaining three days can be booked within three months.

What you sacrifice: A higher deposit refund. In addition to forgoing holiday reservations, members at this level will receive a deposit refund of 75 percent instead of the 80 or 100 percent that Quintess members at other plan levels are guaranteed.

Club: High Country Club

Entry-level plan: Seven days for $30,000 and annual dues of $2,300.

Cost-per-night: $414

What you get: Members with an entry-level Companion membership can book stays at the club’s full collection of homes in some 29 locations. Most homes are 1,500 to 2,500 square feet, with two- to four-bedrooms.

What you sacrifice: Advanced holiday planning. Long-term holiday reservations that are booked up to a year in advance are only guaranteed to those with higher-levels of membership. Members at this level can only book holidays within four months.

Club: The Lusso Collection

Entry-level plan: 21 days for a $325,000 deposit and annual dues of $21,000.

Cost-per-night: $1,000

What you get: Holiday reservations and full access to the club’s residences in 16 locations.

What you sacrifice: Vacation days, but not much else. Lusso executives were careful to not strip this entry-level membership of the perks that come with the unlimited membership. One difference? Members at this level can have only one advanced reservation on the books at a time, versus two for the unlimited plan.

Club: One Key

Entry-level plan: 15 days for a $34,900 fee that is not refundable.

Cost-per-night: $2,327, however this can vary because the club’s points-based reservation system may yield more, or less, than 15 actual days of vacation.

What you get: Bookings at the club’s portfolio of 450 homes in 30 locations. The club has properties ranging from two- to six-bedrooms in most destinations.

What you sacrifice: Multiple vacations, if you use the plan in prime locations during the holidays. The club’s recent switch to a points-based system puts a premium on home size, location and holiday usage, so it is possible that a 15-day plan could be used up by a single, seven-day vacation.

Club: Distinctive Holiday Homes

Entry-level plan: Seven days for a $59,000 deposit and annual dues of $5,900.

Cost-per-night: $1,011

What you get: : Access to a diverse collection of residences in Europe, North America, Australia and New Zealand.

What you sacrifice : Multiple advanced reservations. The plan allows for just one advance booking to be made up to two years in advance, but given that most of the homes are located outside of the U.S., you might spend the full seven days at a single residence. Extra days can be booked for $900 a piece—a price that comes down to as low as $450 a night on higher-level plans.

Do you want to learn more about these destination clubs? Download our Decision Guide to Destination Clubs

The Value Options Part One: Destination Clubs Expand Entry-Level Plans

2008-08-11T15:04:38-07:00

Multi-million dollar homes are seeing price slashes, five-star hotels are throwing in freebie nights and even Whole Foods—the store that earned the moniker—“whole paycheck”—is looking at adding lower-priced items to sit alongside those $40 a pound goat cheeses. As consumers curb their discretionary spending, destination clubs are also widening their offerings to include lower-cost plans.

Last month, the Lusso Collection rolled out a plan that was priced $100,000 lower than its standard plan. Earlier this spring, Ultimate Escapes offered its Ultimate Discovery membership, with limited plans offering 15, 30 and 45 days of vacations starting at $13,500 with no deposit. The plans were aimed at those looking to test-drive the club before making a bigger financial commitment. While Ultimate Escapes is no longer offering that plan, it does have a “Preview Membership” in the works, according to a company spokesperson. Pricing and usage details have not yet been released.

Opting for an entry-level option at a club is one way to try out membership with a comparatively small upfront layout. There are some sacrifices, however. Depending on the club, these plans can include fewer advanced reservations, may not offer holiday reservations or will simply give you access to a portfolio of smaller homes with amenities like ocean views, instead of beach frontage. Additionally, while these plans have smaller annual dues and deposits, members should expect that the actual cost-per-night on entry-level plans will come in higher the nightly costs of higher-priced plans that offer greater access and more nights.

While destination clubs are exploring the entry-level market, they are quick to point out that members can upgrade to a plan with more nights at any time. To upgrade, the amount of the current plan deposit is applied to the new plan, and members simply pay the difference. Annual dues will also be pro-rated, if necessary.

In part two of this article, we’ll provide a club by club rundown of entry-level options being offered by the bigger players in the destination club industry.

Do you want to learn more about joining a destination club, regardless of the price? Download our Decision Guide to Destination Clubs

A Look at Obama's Hawaiian Vacation Options

2008-08-08T11:45:34-07:00

Presumptive Democratic presidential nominee Barack Obama is taking the week off, heading to Hawaii today for some much needed R&R. The nine-day vacation marks the Illinois Senator’s first time off the campaign trail since he clinched the primary in June. Obama is said to be spending the vacation on the island of Oahu, where he grew up. The Obamas have likely booked their accomodations, but we wonder if they have considered all of the vacation options in the islands.

Destination club Exclusive Resorts, has homes on the Kohala Coast on the Big Island. The three- and four-bedroom Balinese-style residences with sweeping ocean views would be the perfect place to write his nomination speech for the upcoming Democratic convention.

Obama, who has earned a rock-star reputation for filling up auditoriums with enthusiastic supporters, may feel like really getting away from it all. In that case, he might consider Resort Equities’ 4,000-square foot Crestview property on Maui.

Or, better yet, he could take advantage of a special offer from the Four Seasons Resort on Lana’i (stay four nights, get the fifth night free) for some real isolation. The island of Lana’i is one of Hawaii’s most sparsely populated, with a little over 3,000 residents.

Of course Obama might want stay in one of the Hilton group’s many hotels throughout the islands. Paris Hilton, scion of the famous hotel clan, recently appeared in a web video in which she mocked Obama’s opponent John McCain, after his campaign used Hilton’s image in a video attacking Obama’s “celebrity” status.

And because even Presidents need vacation time, and we just don’t see Obama as a Camp David kind of guy, he might consider buying a fractional in Hawaii for the long term. The Ritz-Carlton Club’s Kauai development, is scheduled to open in 2009.

In the end we can’t really fault Obama if he decides to stay on Oahu to visit with his family and friends. He could always just crash on a buddy’s couch, right? With the race tightening, he’ll need to keep all the campaign cash he can. Just go easy on the poi.

Everlands Looks to Change Destination Club Model

2008-08-07T15:42:58-07:00

Just as the travel industry is taking a greater focus on so-called experiential trips, some destination clubs are now looking at ways to offer vacations that go beyond lounging by the pool. One new club, Everlands, is focusing on combining environmental conservation with its members’ vacations.

Destination club Everlands, which launched last year, highlights conservation, stewardship, and reverence for nature as part of its mandate. Unlike most destination clubs, Everlands properties are not private residences. Instead, members share access to private resorts and vacation together. Locations include lodges in Alaska, upstate New York, and New Zealand. There is also a spa property in Arizona, a ranch in Montana, a Bahamanian beach resort, and a homestead in Martha’s Vineyard.

Unlike other destination clubs that often purchase new construction in prime resort areas, Everlands aims to buy existing properties with both historical significance and natural beauty. “We’re conservationists, not developers,” said Taly Yaniv, Everland’s marketing director.

Mixing conservation with vacations

The club also founded the Everlands Conservation Prize, a $1 million annual award to be given to individuals or groups that work on environmental initiatives. Five percent of the club’s membership fees will go towards funding the prize each year.

With a $1 million deposit and annual dues of $40,000, Everlands is in the highest strata of the destination club market. Members share an equity investment in the club and its properties. Deposits secure an unlimited amount of vacation days. At the properties, members can expect meet each other and even share meals and activities together, much like a country club.

The Halogen Guides take

While Everlands’ property acquisition strategy is ambitious, there are some challenges. The club eventually plans to limit use of each of the resorts to its members. However, until the membership base reaches a sufficient size, the resorts lack any exclusivity and, in fact, are open for booking by the general public.

Everlands is also betting that a shared love of the outdoors, conservation, and adventure will make members fast friends, but this emphasis on community stands in contrast to most destination clubs that highlight the benefit of additional privacy.

Finally, while ecological and conservation interests are spreading widely, particularly among the affluent, the question remains whether a dedicated environmentalist would view a destination club membership as part of a conservation strategy.

That said, Everlands is making some inroads on its membership numbers. Yaniv said the club is approaching its goal of 50 members for 2008. Everlands plans to add a new property for every 40 members and cap membership at 1,800, a figure that would require securing $1.8 billion worth of membership deposits and, by today’s market measures, make it the second largest destination club in the industry. Other ultra-luxury destination clubs, including Yellowstone Club World and Ciel, have struggled in this end of the market, so we’ll be watching how Everlands continues to build its membership base in these environmentally-aware, yet economically sensitive times.

In the hunt for a destination club? Download our Decision Guide to Destination Clubs

What do you think the prospects are for a conservationist destination club? Sound off in the comments section.

Destination Club One Key Changes to Points-Based System, Raises Prices

2008-08-06T15:37:05-07:00

One Key, a destination club that does not require membership deposits, has revamped pricing across its three-levels of plans and switched to a points-based system for reservations.

Instead of requiring members to pay a partially refundable deposit along with annual dues, One Key sells three levels of plans that include 15, 25 or 45 “One Key nights” to be used for stays in the club’s portfolio of 450 homes in 30 locations.

With the switch to a points-based system, the club no longer has a one for one exchange policy for nights. Depending on the location of the home, the size of the residence and the time of year, a single “One Key night” will get you more, or less, than a night’s stay in a home. For instance, a week’s stay at one of the club’s homes on Kiawah Island, S.C., requires anywhere from six to 11 membership nights. The club’s homes range from three- to six-bedrooms, and members will pay a premium for larger residences and also peak holiday season reservations.

Jay Sapovits, One Key’s founder and chief executive officer, said the changes reflect the fact that a week in Stowe, Vt., for instance, should not cost the same as a week in Aspen, Colo. By switching to a points system, premium locations will cost more at peak travel times than during the off-season. The move towards adding homes of various sizes at each location, he said, ensures that members don’t end up with more house than they need. “We have given them the option to not over-buy,” he said.

In addition to holiday trips, Sapovits said that homes in areas with short seasons, such as Nantucket, will also carry a premium. In some areas, the largest home at the peak season may require more than two membership nights for every night’s stay. For example, a seven-night stay at one of the club’s portfolio of two- to six-bedroom homes in Maui will require anywhere from six to 19 One Key nights.

While the shift to a points system will give travelers the option to maximize their plan nights by opting for smaller homes or trips in the off-season, the change makes it difficult to calculate the cost-per-night of a One Key plan, given that a 15-night plan may yield more, or less, than 15 nights of vacation.

In addition to the shift to a points-based system, One Key will raise plan prices by $5,000 to $15,000 on August 31. The 15-, 25- and 45-night plans will run $39,900, $59,900 and $99,900, respectively. In addition to rolling out homes in Kiawah Island, the club recently announced new residences in Pebble Beach, Calif. and Sonoma County.

One Key Promotion a Golfer's Dream Come True: A Round with Jim Furyk

2008-08-06T15:20:36-07:00

On the list of golfer’s fantasies, the chance to play a round with one of the game’s greats, is likely right up there with sinking a hole-in-one. Destination club One Key is now offering one golfer and his friends the chance to live out one of those dreams, by hosting a contest for a round of golf with U.S. Open Champion Jim Furyk.

Furyk, a former number two ranked golfer in the world, who also happens to be a One Key member, will host a round of golf with the winner at TPC Sawgrass in Jacksonville, Fla. In addition to golf, the winner will also receive a stay in a One Key residence for the weekend. The promotion runs through the end of the FedExCup in September.

The contest is open to the general public with registration available at the One Key website. According to One Key founder and CEO, Jay Sapovits, the decision to open up the contest was designed to provide maximum exposure to the club. “Right now,” he said, “the number one thing this industry needs is awareness.”

One Key isn’t the first destination club to use a celebrity member for promotional purposes. Earlier this year when the Boston Celtics won the NBA championship, Ultimate Escapes proudly featured coach and longtime member Doc Rivers on its website.

Considering joining a destination club? Learn more about One Key and other club offerings in our Decision Guide to Destination Clubs.

Readers, do you think the destination club industry can benefit from more celebrity endorsements?

Airbus A380 Arrival in U.S. Makes Dubai Real Estate Easier to Reach in Style

2008-08-06T11:40:03-07:00

When the Airbus A380 landed in New York last week, media and road warriors alike swooned over the double-decker jumbo jet’s first class suites (complete with private bars), on-board showers and entertainment systems featuring 1,200 channels of video and music. Emirates, the airline with the first A380 to start service from the U.S., will begin regular flights on this aircraft from New York’s John F. Kennedy airport to Dubai next week. It will also kick off direct flights from Los Angeles and San Francisco later this year on a Boeing 777 that still has first class suites, but manages to look downright puny next to the A380.

These new flights may be good news for the slew of real estate developments now going up in Dubai, many of which are aiming their residences at second home buyers. Last month, St. Regis announced that it would open a new hotel and residences in Dubai in 2012, including some 80 full-ownership units. Tiger Woods is building his first branded development, the Tiger Woods Dubai, consisting of a hotel, residences and an 18-hole championship golf course.

There are also two fractional residences in the works. The Fairmont Heritage Place, Kingdom of Sheba on Dubai’s man-made Palm Jumeirah island, is set for a 2010 opening. The one-tenth shares of two-, three- and four-bedroom units start around $165,000. Earlier this summer, the VH Dubai, an operator of luxury apartments on the Palm Jumeirah teamed up with timeshare exchange company RCI to develop a fractional offering, the VH Residence Club. It will consist of two-bedroom, shared-ownership residences on the island, which will eventually be home to some 32 hotels and thousands of private villas. With Dubai’s three man-made, palm-shaped islands, there is nothing understated about real estate development here. And with service on an airline that counts multiple lounges and showers among its on-board amenities, there is now nothing understated about making the trek over there.

Want to learn more about buying a fractional development in Dubai or in other corners of the globe? Download our Decision Guide to Fractional Residences

Do you think Dubai has potential to become a destination for American second home buyers?

Where the Homes Are: A Cheat Sheet to Destination Clubs' Overseas Portfolios

2008-08-05T11:40:18-07:00

Destination clubs are quick to point out that their residences outside of the U.S. are among the most sought after homes and, often, the toughest to book. When you are considering a destination club, you’ll likely sift through the property portfolios of numerous clubs. Here’s a cheat sheet to exploring clubs’ overseas property portfolios.

Mexico

Number of destination club homes: 98

Number of clubs: 9

Destination clubs to watch: It’s a toss up. All of the big clubs have homes here. Exclusive Resorts and Ultimate Escapes, not surprisingly, have the greatest number of homes, located in both Cabo San Lucas and in, or near, Puerto Vallarta. High Country Club also has homes in those towns, as well as in Playa del Carmen, just south of Cancun, where most destination clubs don’t have residences.

The bottom line: The majority of destination clubs have made big development pushes in Cabo San Lucas, so be surprised if you find a club that doesn’t have at least one home here, or several in development.

The Caribbean and Central America

Number of destination club homes: : 114

Number of clubs: 11

Destination clubs to watch: Ultimate Escapes has homes in seven locations in the Caribbean and Central America, one more locale than Exclusive Resorts. The Lusso Collection and Quintess also have homes in multiple locations in this region.

The bottom line: The Bahamas, Turks and Caicos and Costa Rica are all becoming destination club staples, but each club has its own niche in these regions. Exclusive Resorts is building multiple residences on Anguilla, an island where Lusso Collection currently has residences. Ultimate Escapes has seven homes on Nevis. High Country Club is eyeing St. Lucia and St. Martin, while the Lusso Collection is building a residence in the Panamanian archipelago of Bocas del Toro. Clubs seem to be focusing much of their international expansion in this area. We’ll chalk that up to the region’s proximity to the Eastern seaboard as well as the weak dollar, which has undoubtedly made real estate shopping in Europe less attractive over the last 18 months. Look for clubs to continue to roll out properties in the Caribbean and Central America.

Europe

Number of destination club homes: 90

Number of clubs: 10

Destination clubs to watch: For the most part, destination club properties are concentrated in three countries: France, England and Italy. However, European-based Oyster Circle has a greater mix of residences on the continent, with retreats in Spain, the French Alps, Austria and six other locations. Among U.S.-based clubs, Quintess has a presence in five European locations, while Exclusive Resorts has residences in six.

The bottom line: Homes tend to be clustered in Paris, London and Italy’s Tuscany region. Beyond that, there are a handful of unique properties. Quintess, LRW has a house in Scotland, for instance, while Exclusive Resorts has homes in the English countryside. U.S.-based clubs, for the most part, tend to stick to the traditional tourist favorites, so if you crave real variety on this continent, consider a smaller club based in Europe or check out the options at Abercrombie and Kent Residence Club when it launches this fall. The club already has a good mix of villas in France, Spain, Italy and Croatia.

Canada

Number of homes: 8

Number of Clubs: 3

Destination clubs to watch: Canadian club M Private Residences, not surprisingly, has the largest mix of locations, but Exclusive Resorts has the most homes here.

The bottom Line: Few clubs have expanded north to Canada. The few destination club homes now open are concentrated in the ski resort of Whistler. One Key has a residence in Quebec, but for the most part, the cosmopolitan centers of Toronto and Montreal, ideal for weekend escapes from New York and Boston, are off clubs’ radar. As the Canadian dollar has strengthened, real estate in Canada isn’t the bargain it once was, so don’t expect new property announcements here.

Rest of the World

There are very few destination club homes in Asia, South America and Australia, so if having a retreat in one of these far flung areas is of interest to you, you’ll need to seek out specific clubs. Distinctive Holiday Homes has the biggest presence in Australia, New Zealand and the South Pacific. Solstice is set to open a residence in Brazil. Everlands is planning a truly global portfolio with potential properties throughout Africa.

Evaluating a club’s property portfolio is just part of the evaluation process. For more tips on finding the right club for your family, download our Decision Guide to Destination Clubs

Where would you like to see destination clubs open homes? Leave a comment below.

The Halogen Guides Take: Is Ritz-Carlton Testing the Destination Club Waters?

2008-08-04T12:18:11-07:00

In our mid-year look into the destination club industry crystal ball, Halogen Guides predicted the entrance of a major resort company.

Ritz-Carlton, a hotelier with a strong network of vacation real estate developments, is one company in a prime position to dive into the destination club market. But a recent look at the website for the Ritz-Carlton Club, the hotelier’s fractional real estate arm, reveals that this hotel giant seems already to be dabbling in the space by comparing membership (read: ownership) in its Ritz Club against traditional destination clubs.

The Ritz compares (see screenshot from their website below) its fractional product to what it calls a “non-equity destination club” on several factors, including home maintenance and amenities. Some of the comparisons seem moot. For instance, Ritz notes that its club features “resort style” amenities and services, and points out that the services at a traditional destination club home can vary.

In fact, many destination clubs have a local concierge available to vacationers, similar to the on-site concierges at the Ritz-Carlton Club locations, and some destination clubs, including Quintess, LRW and Exclusive Resorts, even have homes or residences in development at Ritz-Carlton properties.

Beyond deeded real estate ownership, which is the cornerstone of the fractional real estate model, membership in the Ritz-Carlton Club, with its multiple locations and the option to trade time at other resorts, seems to have more in common with so-called non-equity destination clubs than the Ritz site lays out.

We made a handful of suggestions earlier this year about how a hotel company, such as Ritz-Carlton, might begin to enter this space. There are currently seven Ritz-Carlton Club locations now open, from St. Thomas to San Francisco, and four locations in the works, including a development located mid-mountain at the Northstar Resort in Lake Tahoe.

Eleven locations would make a slim destination club portfolio, so Ritz could consider incorporating some of its whole ownership residences into the mix. It has residences in 15 states and Canada, as well as Mexico and the Caribbean. The residences, including those in development, hit the high points of the most popular destination club locations including Cabo San Lucas, New York, and Paradise Valley, Ariz., near Scottsdale. Toss in access to Ritz’s network of hotels and resorts, and tie in the company’s hotel loyalty program to add an extra layer of perks, and the Ritz-Carlton could have a club product appealing enough to go head-to-head with the biggest players in the destination club industry.

The Ritz-Carlton Club may be extolling the ways its fractional club differs from traditional destination clubs now, but with fractional sales slowing in some resort areas, perhaps they’ll be taking a cue from the market forces before too long: If you can’t beat ‘em, join ‘em.

How to Avoid Five Risks of Joining a Destination Club

2008-08-01T16:10:56-07:00

Oceanfront homes in the Caribbean. Slope-side retreats in tony Colorado ski towns. Multi-million dollar homes that can accommodate three generations of the same family in luxury. Destination clubs can promise, and deliver, big vacations. But beyond those glossy brochures, remember that joining a destination club is nothing less than a major financial commitment, typically requiring a deposit of more than $100,000 and dues topping $10,000 year.

While the destination club industry continues to mature and stabilize, joining a club does carry some risks. As outlined in our Decision Guide to Destination Clubs, there are a handful of pitfalls that potential club members should be aware of. The good news is, with proper due diligence and close consideration of the full range of club options, these risks can be easily avoided.

Risk 1: You can’t get the ski house you want over Christmas week.
How to avoid it: Suss out a club’s reservation track record before joining.

Destination clubs face the most reservation pressure over the holidays. Most families with school-aged children want to travel at the same time. And who doesn’t want to ring in the new year curled up in front of a fireplace in Aspen or lounging poolside in Cabo San Lucas?

Clubs typically offer more holiday reservations to members with higher-priced plans, but some clubs take different approaches to managing reservation demand. Exclusive Resorts now sells holiday reservations as an à la carte extra. The Lusso Collection aims for a geographically disparate membership group, and even has a cap on members with school-aged children, to better ensure availability during school holidays.

The best way to evaluate a club’s holiday availability, however, is to talk to current members about their experiences. If slots during peak times are consistently tough to book, you’ll hear about it. Asking clubs you’re considering for provisional access to their booking database is another smart route.

The best advice of all, however, may be to remain flexible. It is unrealistic to expect to get the same ski home each President’s Day week. If it’s one location you are after, you might be better off with fractional ownership.

Risk 2: The club’s property portfolio isn’t growing as fast as you expected.
How to avoid it: Look carefully at the destination club’s planned roll out of properties.

Many clubs are quick to tout the locations in their development pipeline, but remember that it can take years for a club to acquire new residences (especially if new construction is part of the plan) and open their doors to members. While you should look at what a club has in the works in the near future, make sure you are joining a club because you like the current mix of homes it has to offer.

Risk 3: You think you are paying too much in annual dues.
How to avoid it: Look at the annual increase cap on dues before joining.

Annual dues typically cover a club’s operations, from insurance to property management fees. These fees can, and frequently do, rise yearly. Before you join a club, ask how much annual dues have gone up each year. Ask if there is a cap placed on the amount that dues can rise each year. Then, do the math. Assume that such dues will rise to that maximum each year.

Risk 4: You are underutilizing your plan.
How to avoid it: Consider membership plans with a limited number of days.

Most destination clubs now offer a suite of plans, many with as few as seven or 10 nights per year. Even the Lusso Collection introduced a 21-day plan to compliment its unlimited offering. These plans are one way to get into the destination club market with a smaller upfront commitment.

One key factor in the cost-per-night of a destination club plan is whether or not you actually use all of the nights allotted. For instance, a member with Exclusive Resorts’ 60-night plan will effectively see a cost-per-night of $2,384 if they only use 30 nights. If that member uses all of their nights, the cost drops by nearly $1,200 a night to $1,192. The key is to be realistic about your travel plans—destination clubs are always more than willing to upgrade members to a plan with more nights.

Risk 5: You can’t get your deposit back.
How to avoid it: Conduct proper financial due diligence before joining.

It’s the doomsday scenario in the destination club world, and the Tanner and Haley bankruptcy filing in 2006 brought the risk to the forefront of the industry.

We saw the formation of the Destination Club Association and the beginning of calls for more financial transparency among clubs. Halogen Guides has always advocated for full financial disclosure among destination clubs. We recommend you look for clubs that are members of the Destination Club Association, which requires that a club pass an annual net asset test as a condition of joining.

Consider how willing a club is to open its books to members and potential members. If a club is unwilling to answer your questions on how it runs its business, detailing how it will be able to return your deposit upon departure, consider looking elsewhere.

For a closer look at club options, other risks and tips on how to conduct proper due diligence, download our Decision Guide to Destination Clubs.