# Exclusive Resorts to offer second-tier club?



## vineyarder (Oct 16, 2007)

Below is a quote from Donn Davis, the Chairman of the Board of Exclusive Resorts, which seems to imply that ER is considering another lower-priced tier...

"Both Exclusive Resorts and Ultimate Resorts say the opportunities for growth are tremendous. Three million Americans are worth $5 million or more, the target demographic for Exclusive Resorts. _*And with 10 million Americans worth more than $2 million, Davis said he can envision a scaled-down version of the club that would cater to that demographic*_." 

Full article:

http://www.mercurynews.com/travel/ci_7184562


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## Steamboat Bill (Oct 16, 2007)

I think ER would be very smart to cater to th $2m demographic as it adds an additional 7 million potential new customers....this is something I have been wanting them to do for the past year or two.

I can afford ER, but really don't need to vacation in a $4-5m property and feel that it is excessive and I don't want to raise my kids with this level of expectations. That is why I really like HCC....great properties and great value.

If ER offers $2m properties with membership fees in the $100k-150k range...they will get a ton of new members.


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## vineyarder (Oct 16, 2007)

> If ER offers $2m properties with membership fees in the $100k-150k range...they will get a ton of new members.



Given that the membership deposits for the $3M properties are $259K - $459K, I can't imagine that they would offer the $2M club at prices that low; probably more like $175 - $325K...


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## vivalour (Oct 16, 2007)

vineyarder said:


> Given that the membership deposits for the $3M properties are $259K - $459K, I can't imagine that they would offer the $2M club at prices that low; probably more like $175 - $325K...



Just curious, but what is the advantage to you of having PE platinum and HCC trial -- is it a question of property availability, locations or size?


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## Steamboat Bill (Oct 16, 2007)

Here are the current ER prices for $4m homes

  $459,000 + $34,900 for 45 nights
  $349,000 + $22,900 for 25 nights - no Christmas or new year
  $239,000 + $13,900 for 15 nights - no holiday

  I "assumed" that the new tiered price would be 50% for $2m homes

  $229,000 + $17,900 for 45 nights
  $174,000 + $11,900 for 25 nights - no Christmas or new year
  $119,000 + $6,900 for 15 nights - no holiday

  Thus, I would consider the middle membership for a $2m home.

  Lost opportunity = $8,700 + $11,900 annual dies = $20,600 / 25 nights = $824 per night cost


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## vineyarder (Oct 16, 2007)

Steamboat Bill said:


> Here are the current ER prices for $4m homes
> 
> $459,000 + $34,900 for 45 nights
> $349,000 + $22,900 for 25 nights - no Christmas or new year
> ...



I was under the impression that ER's homes average $3M, not $4M... I don't see anything on their website that quotes an average home value, but they do state in a press release "Members enjoy exclusive access to an unprecedented $1 billion portfolio of more than 350 luxury residences open today", which leads me to believe that the average is just under $3M per residence ($1B/350 = $2.86M)...

http://www.exclusiveresorts.com/#Press_Detail_Id_65

Do you have other info to suggest that the average price is closer to $4M?


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## Kagehitokiri (Oct 16, 2007)

ER has always stated $3MM, and they pay even less because they buy in bulk. 

Quintess states $4MM, and actually starts somewhat cheaper than ER, and has a fairly similar range.

two weaknesses of ER to me are having to buy in bulk, and not allowing unlimited use.

i didnt see anything indicating what value properties the new tier would have. could be $1MM, $1.5MM, $2MM..



			
				from OP article said:
			
		

> Both Exclusive Resorts and Ultimate Resorts say the opportunities for growth are tremendous. Three million Americans are worth $5 million or more, the target demographic for Exclusive Resorts. And with 10 million Americans worth more than $2 million, Davis said he can envision a scaled-down version of the club that would cater to that demographic.
> 
> For now, Exclusive Resorts focuses near the high end, while Ultimate Resort offers a variety of options. The average home in Exclusive Resorts' portfolio is worth about $3 million, compared to the $1 million or $2 million homes that might be offered by lower-end clubs.


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## vineyarder (Oct 16, 2007)

vivalour said:


> Just curious, but what is the advantage to you of having PE platinum and HCC trial -- is it a question of property availability, locations or size?



As I see it, HCC and PE are very complementary clubs; PE is light on ski destinations whereas HCC is heavy on them; HCC has the fixed 7 night advanced reservation rule, which prevents a long weekend reservation from blocking two one week reservations, but PE allows short breaks to be booked far in advance... PE allows 2 week stays, where HCC only allows that in a few destinations... and in destinations where the 2 clubs both have homes (Cabo, Punta Mita, Outer Banks, La Costa, NYC, Tuscany, Turks, etc) we have the flexibility to use whichever club has an opening when we want to travel, and in some locations one club has the bigger home but the other club has the better views, so we can choose based on how many are traveling with us as to which best suits our needs.  Even though PE has unlimited usage, it is subject to a 28 day reservation cap at any point in time, and we do run into that cap frequently...  So by joining HCC as well, I can use HCC for 7 day advance reservations to supplement my PE membership, freeing up PE reservation days for 3 or 4 day quick trips, but can still book the quick trips in advance... Both clubs are very open & transparent, with very accessible management and a fair degree of flexibility, and both seem fiscally conservative. Hopefully it will work out as well in real life as it seems to on paper!


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## Steamboat Bill (Oct 16, 2007)

I was estimating ER average prices on the high side...if indeed they are in the upper $2m-to lower $3m than I think they have surpassed my comfort level in terms of price per night for accommodations. 

If they add a lower priced club, they will probably try to squeeze even more profit out of it. For example, they may offer homes that are 50% in value of the current club, but charge members 60% the current club prices (not 50%). The current precedent is when timeshare properties sell Every Other Year contracts at 60% the cost of an Every Year plan.


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## vivalour (Oct 16, 2007)

<<As I see it, HCC and PE are very complementary clubs;>>

Interesting.   As the industry matures, I guess clubs will design themselves more and more to complement their closest competitors.  Newcomers will have to stand out somehow -- e.g. DHH with manors, yachts & cars, etc.   We are looking at both a four-season ownership/rental condo within a few hours drive, and HCC or PE.  Hard choice.


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## TarheelTraveler (Oct 16, 2007)

http://www.usatoday.com/travel/destinations/2007-10-16-luxury-travel-club_N.htm

The same article is on the USA Today website.  Talk about great exposure Exclusive Resorts gets.  No wonder they are having such incredible growth and that we have all the mergers to try to compete.


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## Kagehitokiri (Oct 16, 2007)

their advertising budget must be immense. to a certain degree, thats another thing id rather a DC i join not have.

i dont recall seeing as many print ads for PE, so i wonder how they got to being 2nd best known.

also interesting that solstice originally sold out so fast, while ciel doesnt seem to be selling as well comparatively.


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## vivalour (Oct 16, 2007)

Kagehitokiri said:


> their advertising budget must be immense. to a certain degree, thats another thing id rather a DC i join not have.
> i dont recall seeing as many print ads for PE, so i wonder how they got to being 2nd best known. also interesting that solstice originally sold out so fast, while ciel doesnt seem to be selling as well comparatively.



Many companies have sophisticated marketing people -- they're well connected in the media community and create enough sizzle to get free editorial exposure in major media (e.g. USA Today) so don't necessarily have to spend megabucks on ads. ER's having a high-profile business celeb like Steve Case sure gives them a media edge and I'll bet helps them attract younger members too. imo


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## NeilGoBlue (Oct 16, 2007)

FWIW,

When I met with Bellehaven's they said that ER's marketing budget was over $3 million a year...


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## Kagehitokiri (Oct 16, 2007)

in terms of print alone for instance, ive seen ER ads in many different publications.

whereas the only other DC i seem to recall seeing more regular print ads for is solstice.

and $3MM (if accurate) might not be "immense" at all in general, but i was speaking in terms of the ad budgets of other DCs.

also, the MSM coverage is indeed indicative of good PR/media reps etc. another thing that could be very positive in certain situations, but also quite an additional expense.


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## Steamboat Bill (Oct 17, 2007)

I just spoke with ER and their current average home is now worth $4m each.


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## nodge (Oct 17, 2007)

*ER 10 Day Plan (Associate Membership) Announced*

Hi Gang,

I just got an email from Exclusive Resorts informing me of a new "Associate Membership" 10-day plan.

Click here for details.

I'm not sure if ER'ers already know about it, but if not, consider yourselves informed.

-nodge

Oops, I see Steamboat Bill has already posted this here.


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## Steamboat Bill (Oct 17, 2007)

nodge said:


> Hi Gang,
> 
> I just got an email from Exclusive Resorts informing me of a new "Associate Membership" 10-day plan.
> 
> ...



I posted about this yesterday
http://tugbbs.com/forums/showthread.php?t=56784


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## Kagehitokiri (Oct 17, 2007)

Steamboat Bill said:


> I just spoke with ER and their current average home is now worth $4m each.



i have a hard time believing that.. what does "current average home" mean too, if that was their wording. like the average of new contracts at time of signing? value at time of completion? or maybe a handful have appreciated very well?

no other club is making such "unofficial" comments are they? seems ridiculous IMHO.

if i were more interested in ER, id be looking HARD at values, and trying to find what they paid whenever possible. (which they prevent by negotiating bulk discounts so early, right?) i did look quite a bit at their market rental rates, and boy did they fluctuate. sure some were really high, making it a great value, but there are a number now that you could easily get for under the cost per night even WITHOUT including opp cost.


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## Steamboat Bill (Oct 17, 2007)

I simply called Scott and asked him point blank...what is the current average value of ER's properties. He stated they had a audit and this also confirmed this value, but the market prices change rapidly and they did not appraise every house every year.


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## vineyarder (Oct 17, 2007)

Steamboat Bill said:


> I simply called Scott and asked him point blank...what is the current average value of ER's properties. He stated they had a audit and this also confirmed this value, but the market prices change rapidly and they did not appraise every house every year.



I know it's not what you asked, but I wonder if Scott 'meant' that the average value of new properties that ER is buying is $4M?  Otherwise, they have seen some amzing appreciation in the past 5 months; their press release on May 10, 2007 stated that they reached a portfolio value of $1B, with 350 homes open, giving the calculated average of $2.86M... If the average is now $4M, and assuming that they bought perhaps 50 homes in the last 5 months, then their portfolio would now be $1.6B (which I would think would warrant another press release), so to get there they would have had to either see their existing homes appreciate by 40% in 5 months (an annual appreciation of 96%), or they would have had to have bought 50 homes that averaged $12M each...   Also, the USA Today article from yesterday states that ER has an average home value of $3M... So maybe Scott might be engaging in a bit of sales hyperbole???


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