Recent Destination Club News

Did any of the non document signers

ever get anything out of PE? So basically it was sign the merger docs and become UE or bye bye. I thought about not signing, that would have been a big mistake.

I'm interested as well as to how it turned out for the "non signers?" UR had the holdouts on the assessment last spring but it turned out well for them in the end. I've never seen the PE documents but suspect they didn't really have the ability to just take your money and kick you out for not signing, did they?

I think they are still in the "PE" that "UE" did not acquire. Which would be what, I do not know. There were some properties that did not come over to UE, what happened to them, your guess is as good as mine. They(JT and RK) basically did say good bye, if you did not sign the documents. I guess each PE member that did not sign must litigate and prove that UE has their deposits. I believe in one case UE was removed from a PE member's complaint. Once again throwing good money after bad. As we all know what is at the end of the road, it is just a question of how long that road is.

Ultimate Escapes

Just as an FYI, UE filed a form extending the period of time to file the financials by 15 days (could not be completed on a timely basis without unreasonable effort or expense due to the business combination in October 2009):

http://www.sec.gov/Archives/edgar/data/1402364/000114420410017115/v179549_nt10k.htm

TarheelTraveler said:

Just as an FYI, UE filed a form extending the period of time to file the financials by 15 days (could not be completed on a timely basis without unreasonable effort or expense due to the business combination in October 2009):

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Brace yourselves for bad news!

UnhappyInCT said:

Brace yourselves for bad news!

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What would be the Bad News? Anything new? Or the same old same old, no cash?

wilkes591 said:

What would be the Bad News? Anything new? Or the same old same old, no cash?

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There is a lot of disclosure required in the 10-K. In addition to no cash, look for comments about how the lenders are tightening the noose. Also, look for disclosure as to how many reinstated suspendeds (like me) refused to pay their 2010 dues in December.

Of course, if the delay in filing is due to a dire financial situation then prior to the filing don't be surprised if a gun is put to the heads of the membership for another cash call.

TarheelTraveler said:

Just as an FYI, UE filed a form extending the period of time to file the financials by 15 days (could not be completed on a timely basis without unreasonable effort or expense due to the business combination in October 2009):

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TT - do you have any idea how they could answer the question in Part IV(3) in the negative?
(Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof ?)

2009 will look nothing like the result from 2008 (which was for Secure America)

they did release "full" financials for UE, UR, and then PE.

breakdowns are where it gets trickier. and they could break down even less...

UnhappyInCT said:

There is a lot of disclosure required in the 10-K. In addition to no cash, look for comments about how the lenders are tightening the noose. Also, look for disclosure as to how many reinstated suspendeds (like me) refused to pay their 2010 dues in December.

Of course, if the delay in filing is due to a dire financial situation then prior to the filing don't be surprised if a gun is put to the heads of the membership for another cash call.

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Does this have anything to due with JT meeting with a private equity firm today?

Can you say Rabbit?

wilkes591 said:

Does this have anything to due with JT meeting with a private equity firm today?

Can you say Rabbit?

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Who'd he meet with?

And, is there a firm that is so flush right now that they'd pour good money after bad? Can't see what JT has to offer them at this point, I think his own shares are restricted.

UnhappyInCT said:

TT - do you have any idea how they could answer the question in Part IV(3) in the negative?
(Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof ?)

2009 will look nothing like the result from 2008 (which was for Secure America)

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It does seem like the question would be answered yes for the reasons that you noted, and then perhaps you'd explain that the financial statements for the separate companies were released as part of previous filings as Kage notes and that you don't expect a significant change from those.

http://www.sherpareport.com/prc/fractional-ragatz-2009.html

"The annual North America survey by Ragatz Associates showed a significant drop of 44% across all shared property types, including fractionals, private residence clubs and destination clubs.

...

The sales split by property types were:

Fractional Interests $150m
Private Residence Clubs $515m
Destination Clubs $195m

Last year the total sales were $1.525m, with fractional and private residence club sales at $1,176m and destination club sales of $349m.

Despite all these lower sales the research notes the widely held feeling in the resort industry that shared property will rebound faster than whole ownership as the overall economy turns around. The reasons for buying fractional and shared property hasn't changed and include:


1.personal use rather than investment speculation.
2.ability to purchase just the amount of time you need, compared to underutilized wholly owned homes.
3.lowered household spending habits, which match the lower costs of sharing.
4.the hassle free nature, so that owners just show up and enjoy their shared property.
5.the flexibility and variety offered by trading and exchange programs, which let members visit many other locations."

That's a heck of a drop in sales. No wonder so many DCs, PRCs and timeshares struggled. Furthermore, I'm actually a little skeptical that the DC industry sold $195M in memberships last year. Didn't ER go from selling 50-100 memberships a month to about 5-10 or so many months? I got the impression that type of drop in sales was pretty consistent across the industry. On top of that, there was a lot more discounting and trial memberships being sold.

how do they define sales?

ER and EE numbers >
http://tugbbs.com/forums/showpost.php?p=879619&postcount=112

hideaways >
http://destinationclubnews.com/News_The_Hideaways_Club_Confirms_Price_Increase.php

"The fund's audited accounts for 2009 will show an increase in the number of shareholders of 85%, up to 120 total members,"

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120 / 1.85 = 65 (so 55 in 2009?)

EE members, is this accurate?
http://www.ibtimes.com/contents/20100402/equity-estates-luxury-residence-fund-worldly-investment.htm

Annual dues range in price from $9,250 to $24,750 with capital contribution rates ranging from $197,500 to $549,000. With the Executive Membership Interest Plan, members can travel 15 nights per year; the Elite Membership Interest Plan includes 30 nights per year; and with the Advantage Membership Interest Plan, members are afforded 45 nights per year at any of the luxury residences.

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http://twitter.com/AKResClub

AK discount extended through june, increase after that still a lot less than original pricing. must annoy people who joined before this... have there been any partial refunds? then again jan/feb 2010 = 2009 sales, and discount started mid december.

http://destinationclubnews.com/News...esidence_Club_Wraps_Up_Discounted_Pricing.php
http://www.fraxfinder.com/blog/Savi...ip-in-the-Abercrombie-Kent-Resident-Club.html
http://www.akresidenceclub.com/#membership-and-equity/membership-levels/chart

interesting/amusing article on frax
http://www.fraxfinder.com/archives/233-despite-lackluster-sales-fractional-conferences-persist.html

Kagehitokiri2 said:

banyan tree private collection
2009 - 23? / $1.3MM

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AK >
http://www.sherpareport.com/destination-clubs/a-k-residence-club-member-survey.html

nearly one third of the members recently upgraded

we expect many two-year trial members to convert before the deadline

more than a dozen prospects in the final stages of joining

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Thanks for posting the A&K SherpaReport link, Kage.

I thought the following was also interesting: "In the annual member survey, 97% of the membership reported complete satisfaction with Club offerings and service, including their personal Global Experience Manager and on-site Destination Hosts." To me, that number is pretty remarkable in the travel industry, where satisfaction rates are often mired in the same range as cable TV providers.

Other DC stuff I came across today:

Ultimate Escapes has filed an 8-K stating that 241,301 shares were issued as part of the redemption value conversion program.

http://www.sec.gov/Archives/edgar/data/1402364/000114420410019138/v180507_8k.htm

What's odd is the Form D filed by UE on the same date (http://www.sec.gov/Archives/edgar/data/1402364/000140236410000003/xslFormDX01/primary_doc.xml) states: "Pursuant to the Issuer's redemption value exchange program, the Issuer issued a total of 1,128,806 shares of its common stock to certain of its club members who elected to convert all or portion of their redemption value into shares of common stock."

131 investors invested in offering per this form.

http://sf.blockshopper.com/news/sto...nce_club_founder_lists_Belvedere_4BD_for_5_2M

"Graham V. Kos and Shay A. Kos have listed for sale a four-bedroom, 4.5-bath home at 219 Beach Road in Belvedere for $5.2 million.

The Koses paid $4.0215 million for the property in June 2000.

The 3,558-square-foot house, built in 1900, is in Belvedere Bayside.

...
Mr. Kos is the founder of Solstice, a leading second-home destination club.

Prior to founding Solstice, he was an options trader at the Chicago Board Options Exchange and was affiliated with Boulder Concepts Restaurant Group, a collection of restaurants in Denver and San Francisco."

Equity Estates SherpaReport link:

http://www.sherpareport.com/destination-clubs/dennis-rasmussen-equity-estates-0410.html

"The former Major League Baseball pitcher Dennis Rasmussen has signed on with luxury residence fund Equity Estates. Based out of Orlando, Florida, Rasmussen will leverage his involvement with the MLB Players Association alumni arm as well as other professional athlete organizations to expand Equity Estates’ reach in those markets...."

LuxLife link (new Asian club):

http://www.destinationclubnews.com/News_LUXLife_Unveils_Equity_Shares_Villa_Memberships.php

"LUXLife has announced that they have introduced their first phase of "Equity Shares Villa Memberships." These equity shares will be available at the club's oceanfront villa at the St. Regis Resort & Villas residences in Nusa Dua, Bali and the pool villa at Andara Resort & Villas in Phuket, Thailand.

Equity Shares Villa Members receive "ownership plus a full VIP LUXLife Membership." Phase I shares are available in 1/12th increments and are priced between HK$2.9 to HK$3.9 million, depending on the villa selected. Based on today's currency conversion, this equates to roughly $375,000 and $500,000 respectively. Financing is available to qualified and approved owners, members, and applicants...."

odd. st regis residences must not have usage limits. thought i read that they did.

so perhaps LUXLife is like elan. (fractional with potentially DC-style use) (and at least some ridiculous markups)

OTOH karma's belvedere is full ownership of a unit with limited use, but owners use is DC-style at any property. and its unique in that its a hotel residence that you get rental income from.

re the EE hire, someone reminded me of this > http://findarticles.com/p/articles/mi_m0EIN/is_2004_June_8/ai_n6058462/

TarheelTraveler said:

Interesting case. Thanks for pointing that out CM.

Amended complaint is linked here.

http://webaccess.sftc.org/Scripts/M...,-AEXCLUSIVE RESORTS CLUB MANAGEMENT\, LLC,-A

Probably the best written plaintiff's complaint that I've seen in a suit against a DC. ER is trying to get this into arbitration. If successful, we probably won't find out the result. Again, the lesson to be learned from this case is be careful what you sign (I actually find it interesting that a lawyer signed it, particularly one this good (although in fairness, she says ER wouldn't negotiate the contractual terms)).

IMO, you can basically boil it down to can dues be raised above the cap that is specifically provided or can ER unilaterally amend the contract, disregarding the specific cap that is provided. Typically, the specific trumps the general in a contract, but I've clearly not looked at the law on that point.

I thought this part of the complaint was interesting:

"11. Prior to the execution of the Agreement, Exclusive Resorts discussed its business plan with Plaintiff Priest. Defendants represented that Exclusive Resorts' business would be operated on a "for-profit" basis, that Exclusive Resorts was soliciting Membership Fees with the intention of using those fees to invest in and develop a portfolio of high-end vacation properties, and that Exclusive Resorts' business model would assure its ability to repay Plaintiffs' Membership Deposit. Exclusive Resorts further stated that it expected Plaintiffs' annual dues, along with the higher annual dues of Club members who were subsequently to join, to cover the physical operating costs of such properties. Defendants specifically told Plaintiff Priest that neither Membership Fees nor dues were to be used to pay property taxes or investment expenses, which costs were to be covered by the long-term investment returns."

I've not heard that depiction of the model yet.

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Interesting ruling in this case. "MOTION [to compel arbitration] IS DENIED, 2003 AND 2010 CLAUSES UNENFORCEABLE, BECAUSE UNCONSCIONABLE"

Here is the whole report that is posted. ER will need to file a response within 15 days of April 1 (unless extended).

LAW AND MOTION 302, DEFENDANT EXCLUSIVE RESORTS CLUB MANAGEMENT, LLC MOTION TO COMPEL ARBITRATION AND TO STAY PROCEEDINGS. ARGUED AND THE COURT ADOPTED ITS TENTATIVE RULING AS FOLLOWS: MOTION IS DENIED, 2003 AND 2010 CLAUSES UNENFORCEABLE, BECAUSE UNCONSCIONABLE. THE COURT IS STILL DETERMINING IF THE 2010 CLAUSE IS STILL APPLICABLE, THIS ISSUE IS STILL UNDECIDED. ALSO, THE COURT RULES THAT DEFENDANT HAS 15 DAYS TO RESPOND TO COMPLAINT. (PREVAILING PARTY TO PREPARE A FORM OF ORDER.) JUDGE: PAUL H. ALVARADO; COURT REPORTER: KENT GUBBINE, CSR #5797

I'm seriously asking this question...

Is 'UNCONSCIONABLE' a legal term?

Or is this a total slam of ER?

Seems like a very strong word for a judge to use unless it's some legal term that I hadn't heard of..

NeilGoBlue said:

I'm seriously asking this question...

Is 'UNCONSCIONABLE' a legal term?

Or is this a total slam of ER?

Seems like a very strong word for a judge to use unless it's some legal term that I hadn't heard of..

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It's really both. It is a legal term but it is used pretty sparingly in contract law, particularly by judges in actual rulings (versus one side's lawyer throwing it out there as another argument). What's also unusual is that arbitration clauses in contracts are typically valid, so I suspect the judge is not at all a fan of ER's contracts, which doesn't bode well IMHO for the likely argument that they could change the contract at their discretion. I could see a lot of courts being reticent to enforce what is in many ways a one-way contract. Binding against the member, but not against the Club, because the Club can change many terms.

Yes, the term is actually often used in legal proceedings in contract law issues. However, it typically implies that one party took advantage of another who didn't have the mental capacity to understand the terms they were entering into. I think most ER (or any DC club members) would have a hard time fitting into that box.

I think everyone knew that the ER contract issues were going to come to a head one of these days. All they will be looking for is a precedent, so if they can stave off one or two, the rest won't get anywhere either. I think this is pretty similar to what is going to happen with the TH / AK suits. The clubs just want one or two to go there way, the members, of course, want the same thing.

I think we're actually saying the same thing in different ways. Lawyers very often like to throw out the argument that a contract was unconscionable. It actually comes up a lot in cases with people that have impaired judgment as CRD points out (essentially the person was taken advantage of by a contract that is so clearly one-sided it is unconscionable).

However, what makes this case so unusual IMHO is that a judge apparently felt that a clause was unconscionable as to a person who presumably was not impaired (and actually was an attorney) when she signed the contract. Furthermore, it deals with an arbitration clause which is routine, and routinely upheld because the parties agreed to it. On top of that, IMO, most of the time, judges like to enforce those clauses because frankly, they then have the justification to boot a case reducing their heavy workloads.

I personally think ER should prevail on that issue, but it's California so nothing surprises me. If I were ER, I'd much prefer to get this into arbitration, so that the results wouldn't be public. If this ER member wins and it is public, it could open up the floodgates with respect to the earlier ER members. To me, the issue that should be much more controversial (again IMHO) is whether the specific dues cap prevails over the general ER contract amendment clause. I guess the lesson is be careful as to what you sign and never assume that something is not going to be used against you in the future.

Just my two cents. Not providing legal advice.

http://www.steamboatpilot.com/news/2010/apr/11/big-3-luxury-ski-area-base-condo-developers-reach-/

"Burden said his company has negotiated a bulk sale of 10 whole-ownership condominiums with an outside destination club his company has done business with in the past. They will defer the purchase of five of those units indefinitely, but he expects two or three sales to close soon and the rest of the first five to sell this year."

Is this ER? By the way, not being critical if it is, as it's the prudent thing to do.

yes.

other pending = viceroy anguilla and vdara las vegas

seems like viceroy might be worth dumping.

Looks like UE financial results will be out by the extended deadline today.

http://www.marketwatch.com/story/ul...april-15-2010-2010-04-14?reflink=MW_news_stmp

Also have a conf. call to discuss the results.

Press release: "Ultimate Escapes, Inc. (OTCBB: ULEI and ULEI-W) (the "Company"), one of the world's largest luxury destination clubs, today announced that it will report its fourth quarter and full year 2009 results on Thursday, April 15, 2010.

The company will hold a conference call with investors and analysts at 4:00 PM EDT on that day to discuss the results. The dial-in number for the conference call is (888) 516-2447 -- please dial the number 10 minutes prior to the scheduled start time. A live webcast of the conference call will also be available on Ultimate Escapes' website at www.ultimateescapes.com.

A replay of the call will be available two hours following the end of the call through midnight EDT on Thursday, April 22 at www.transact-tech.com and by telephone at (888) 203-1112; passcode 2924116."