# Potential Options for UE Members



## DestiFan (Sep 13, 2010)

All,

I wanted to setup a central spot for UE members to discuss potential options with each other.  Within this thread, I expect people will talk about potential NewCo structures, options with other Clubs, VRBO like solutions, etc.  I remember when HCC and Lusso had their collapses and DC4Ms was very good for those members seeking answers on go forward travel.

A little background on my situation...

I joined PE in 2007 (great timing) after the merger with UR was announced.  I was a full on believer.  I became a non-believer in UE at the time of the assessment in January 2009 - due to the multiple red flags that came about during that process.  At that point, I help organize a large group of members to seek changes to UE and its business model, but was met with resistance and potential litigation from UE management.  Many of my group went on to litigate - some successfully I believe - and many of us went searching for alternatives.  I ended up joining Equity Estates and am very happy with that decision.  During my time at UE, I never recommended a member...during my short time at EE, I have recommended several who have joined including several former UE members.  

Now, everyone on this board will have differing opinions on what UE members should do or how they should move forward.  There is truly no right answer - as each family will have a different situation.  I am in a unique position to provide a viewpoint from both a current UE member (non-equity) and a current EE member (equity) perspective.  I have already reached out to EE to see if they would be interested in structuring a new fund for UE members - outside of EE's current fund - that would be able to buy homes from the lender and help UE members move forward.  I am not sure they will be interested, but will update the group when I hear something.

There are several helpful people on here.  Tarheel, NeilGoBlue, Kage, TravelGuy, 3DH, etc.  They have seen as much, if not more, than I have.  If you have questions about AKRC, Tarheel and NGB are your guys.  Kage has a good feel on the overall industry.  I believe 3DH is former Lusso and current EE.  

I am happy to answer any questions on EE, but won't "defend" them against another Club.  DC4Ms got way to negative at times, on all clubs, and I think we need to do our best to provide information here, not opinions.  

Goof luck to all UE members.  I hope we find a solution that works.  But let's stay in touch with each other and make sure we have strength in numbers.  It should have worked 18 months ago - let's not make that mistake again.

DF


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## ClubsRDead (Sep 13, 2010)

I was actually able to reach my planner this morning and be allowed the luxury of being told some of my trips are gone.  Of course, when they told me a couple of them were fine before, I suspected that was bs.

No sign of them filing as of now, so one has to assume they did not.  Which only means Cap Source is in charge and likely that JT is holding out on them.  Probably gathering "data" from his poll to persuade them.  I'd suspect the wheels are completely off the bus by the end of the week unless we see a filing so there is a DIP to continue operating expenses.

Has anyone else heard anything?


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## Desties (Sep 14, 2010)

Thanks for getting this started DestiFan. 

I'm not sure what I'll do if UE goes away. Q and ER have little appeal to me for now, even on a dues only basis. Q's roach motel approach of having folks continue to keep paying, even after they resign, is a total deal breaker. ER's property clustering approach, holiday tiers, and general value (despite being in the position to offer the best value given its size) is a turnoff, but I'm all ears if an offer is made. 

Ideally, I would love to go equity, but I won't. I admire you -- and 3DH -- for having the gumption to fork over a SECOND deposit after your first club failed, but I think most DC refugees are so burned by their initial experiences that it's not even a consideration. Equity clubs aren't about to offer dues only memberships, so they're out. I think my wife would kill me if I floated the idea of ponying up a second six-figure deposit. 

"But, dear, this time it's secured by actual real estate?"

"Isn't that what you thought LAST time."

The Demeure model is intriguing, especially if they offer up a sweetheart deal for UE to scale quickly. 

Let's see how this all plays out. Outside of Q, I'm open to any possibilities that don't involve upfront costs and where getting out is painless. I'm asking for too much, but I think many UE members will be in my boat if the club can't be saved.


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## Desties (Sep 14, 2010)

And I should clarify that by no upfront costs I'm only talking about a refundable or non-refundable deposit. I'm not referring to the dues, which I am more than willing to pay if the value proposition is right and where I can leave on my terms. 

And before I am accused of bringing down the open-armed nature of this thread, I should clarify that the "roach motel" comment about Q refers only to the "they check in, but they can't check out" nature of requiring annual dues to keep flowing even from those who have gone on the resignation list. It's not a reference to Q's properties which are pretty spectacular.


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## Buon Viaggio (Sep 14, 2010)

Desties, I think it's an incredible testament to the allure of the DC lifestyle that you and many previously "burned" members are so reluctant to give it up.  That's why I believe the model will live on somehow.  If the economy ever turns around I believe there will be a strong positive trend in the industry.  Too late for UE perhaps.  In considering ER you should at least go on a Sponsored Guest trial trip to get a good feel for the club.  I know the daily rate is hard to swallow but unless you're interested in small condo accommodations it really is what it takes to make a luxury DC happen.  There is a Deferred Deposit plan and perhaps the club can be flexible with UE refugees.  

So the cluster concept ... just what about that bothers you?  Does it matter that the units are similar or look alike?  All the units in every location are beautiful, spacious, well located and private.  Some locations do have unique custom homes (Whistler, Kiawah, Real del Mar, Tuscany, Lake Tahoe).  And would The World Ship be so hard to tolerate?   No other club will ever have units on that ship and the experience is unbelievable!  The economies of scale achieved with "clustering" has been one of the keys to the club's survival.  I don't think over 90% of members would be so happy if the clustering were a real problem.  

As for holidays, you don't have to buy a holiday reservation right away.  You could see how it goes without that option.  Today I just checked on the ER website under "Using the Club" and "Yesterday's Reservation Activity" and I see that someone booked a res. for Hawaii and Costa Rica for this Christmas week.  Because it is within 6 months of the holiday, those reservations do not require a holiday token. Those bookings are probably a result of the Cancellation Watch List.  I've received many holiday and regular reservations by using that system.  

And finally - I think the communication from management and between members has been unparalleled in the industry.  There is a members' only forum that is very active and management has used it to keep tabs on member sentiment and to communicate when there are concerns or questions.  There are regular updates and members get a good feeling that management is sincerely focused on member satisfaction.  Yes, the club did go through some trials and tribulations a while back but how management conducted themselves has been very encouraging to observe.  Whatever you decide, good luck!


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## TarheelTraveler (Sep 14, 2010)

A couple of thoughts.

Advantages of clusters -

Better pricing on purchases - lower price means less debt incurred for purchases, so potentially lower dues for members (this would be an even better feature in an equity club structure so it would directly benefit members buying versus better for building the real estate portfolio of the owners of the club (i.e., not members)).  As a practical matter, no equity club has the volume to do this as of now (of course, probably no DC (equity or non-equity) has the volume to do so). 
Unique locations only available to bulk purchaser - ER has gotten some exclusive, very cool locations because developers wanted to work with them on a bulk basis (The World ship, Sea Island)
Less member envy - members wishing they were in some other house that wasn't available which was nicer

Negatives of clusters -

More "cookie cutter" accomodations - Not as much flexibility in picking out the precise type of residence you want based on floor plan, features, etc.
Fewer locations than you could otherwise be in - Since you're only buying in clusters, you spend big dollars in few locations, rather than in more locations
Prohibitions in certain neighborhoods - Certain developments will allow a one-off house purchase, but specifically don't want a DC coming in and buying 10 or 20 houses
Not always, but tend to be less likely to have own pool versus a complex pool
Not always, but tend to be more condos versus stand alone homes

Could be a positive or negative depending on the member (i.e., to each his own) -

Tend to have more hotel managed accomodations
More interaction with other members

I actually think Q had the best clustering plan (at least for me).  While these plans haven't come to fruition yet to my knowledge because of the economy, they were buying 3-8 stand-alone homes with pools (RC Molasses Reef, one in Cabo maybe if IIRC).

I like that ER has a member messaging board.  Just curious, is it monitored or censored at all?

Also, ER may be "reformed" now, but members that I know felt like they were totally kept in the dark from a financial standpoint and not given audited financials ever.  Always got glowing reports of the state of the club, and then all of a sudden the crisis communications saying we need to jack up dues contrary to member contracts.  I think the member perspective depended a lot on how much your contract was effected.  If you were a newer member whose contract wasn't unilaterally altered (or not altered much), you probably thought it was handled well. 

In any event, after the member upheaval, my understanding is that ER will share the financials now with a member with an NDA, so they ought to be given kudos for that change for the better with respect to the members.  Q also has come a long ways based on what SciFrog has stated.


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## Buon Viaggio (Sep 14, 2010)

Tarheel's Negatives to clusters:

Many of ER's condos, townhomes and other "cluster" homes do have variable floorplans. Many have at least plunge pools and some that do not have hot tubs.  All beach cluster and custom homes have pools as do some leisure homes.

37 locations plus Once in a Lifetime Trips - doesn't seem to be too much of a limitation so far.

Could be some prohibitions but until resort development came to a screeching halt, many builders actively solicited ER to buy in.  ER has an excellent reputation among developers.

There are more mountain and city condos of course but the majority of beach homes are free-standing, whether cluster or custom.

The ER message board has rarely been actually censored - only when a poster has really flouted the rules.  It is always monitored, of course.  I am a fairly early member by the way and of course I wasn't initially pleased with the dues increase proposal but ER has come a long way to make it more fair and they have demonstrated an impressive willingness to work very closely with members on solutions.  There are much better processes now for garnering member opinion.


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## Kagehitokiri2 (Sep 14, 2010)

are properties managed by four seasons, amanresorts, etc not DC-friendly in general?

im not really impressed with ER's portfolio, and the difference between them and other DCs is they have buying power.

things like single family beachfront and ski-in/ski-out make a huge difference.


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## Buon Viaggio (Sep 14, 2010)

Ritz Carlton seems to be fairly DC friendly at least with ER.  Four Seasons views DC's as competitors.

ER does have beachfront and ski-in and out.  There are free-standing custom ski homes in the portfolio but there are also a lot of ski condos/townhouses  and members love having the choice and the convenience of being located right in  the ski villages.

Yes, buying power is good but no one will be buying much of anything for a while!


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## Desties (Sep 14, 2010)

I definitely realize the cost savings with clusters (in terms of both purchasing power and also managing), but my view of ER's clusters make it seem like little more than a high-end timeshare. 

I like how most of the other clubs have unique properties that I can count on time and again. I know when I go to Turks and Caicos that I'm going to get that stunning ground floor view of Grace Bay Beach and access to five bodies of water within a few feet from my door. I know I can count on being in the same 5-bedroom ski-in/ski-out home in Copper Mountain, with the tubing hill just a few steps away and I can sled down the side of the house with the kids in the lulls. 

It's frankly shocking that ER -- with the economies of scale and 4x the UE base -- would still need to bump rates last year and have Case on the case. 

However, I will see what happens because ER is the club with the greatest shot at survival on the non-equity side. I've followed Case since his early days at AOL, then on to Revolution Money, Revolution Health, and ZipCar and the guy is a winner nearly everywhere he goes. My first choice, though, will be with anyone that steps up to try to salvage what's left of UE as UE.


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## Kagehitokiri2 (Sep 14, 2010)

Buon Viaggio said:


> Four Seasons views DC's as competitors.


my question was more re the developer/residence owners than the management company itself

dont know if ER has tried buying at four seasons or amanresorts etc, so cant say anything negative if they tried


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## 3DH (Sep 15, 2010)

Desties said:


> Ideally, I would love to go equity, but I won't. I admire you -- and 3DH -- for having the gumption to fork over a SECOND deposit after your first club failed, but I think most DC refugees are so burned by their initial experiences that it's not even a consideration. Equity clubs aren't about to offer dues only memberships, so they're out. I think my wife would kill me if I floated the idea of ponying up a second six-figure deposit.
> 
> "But, dear, this time it's secured by actual real estate?"
> 
> "Isn't that what you thought LAST time."



Don't think that discussion went over well the first 10 times, in our case, either! Thankfully, we are still pleased with our decision to dive in, again... this time into what we perceive (and have experienced) as calmer waters! 

I feel your pain -- all UE members -- and seriously hope that your outcome, from what we are all fearing will be a club meltdown, will be more tolerable than we have endured for 2 years, now! Bankruptcy courts have done little in the interest of the members... as usual, the attorneys seem to be the only ones "winning" here!




TarheelTraveler said:


> I like that ER has a member messaging board.  Just curious, is it monitored or censored at all?



While I cannot speak for what is happening, currently, I know there was considerable management censoring at one point years ago...


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## DestiFan (Sep 15, 2010)

3DH said:


> Don't think that discussion went over well the first 10 times, in our case, either! Thankfully, we are still pleased with our decision to dive in, again... this time into what we perceive (and have experienced) as calmer waters!
> 
> I feel your pain -- all UE members -- and seriously hope that your outcome, from what we are all fearing will be a club meltdown, will be more tolerable than we have endured for 2 years, now! Bankruptcy courts have done little in the interest of the members... as usual, the attorneys seem to be the only ones "winning" here!
> 
> ...



3DH - Are you still having positive experiences with EE?  My family has been very happy post-UE debacle.


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## 3DH (Sep 15, 2010)

DestiFan said:


> 3DH - Are you still having positive experiences with EE?  My family has been very happy post-UE debacle.



Absolutely - just wishing we had found them before we left port on the LUSSO ship! While obviously the concept is that of a DC, the operations seem to be far superior to what we have experienced in the past, and we couldn't be happier with the home-team so far as planning!

Wishing all those going through the current UE crisis such happiness in the future... there is light at the end of the tunnel, but you have to have enough determination to delve into the darkness in order to get there!


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## 3DH (Sep 15, 2010)

Before I get comments on my post... let me rephrase, EE is NOT a Destination Club. After re-reading, it appears that is what I was representing. However, I want to reiterate that it is a totally different business model than UE or any other DC -- it is a Luxury Residence Fund.

While it offers similar experience, homes & amenities to that of Q and ER (or any other surviving DC's) it is with a drastically different business model. The company has little to no debt, has equity partners (members), very reasonable dues, and a specific liquidity event that permits members to share in potential appreciation of the very properties to which we enjoy & benefit from in traveling!


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## Kagehitokiri2 (Sep 15, 2010)

but their debt *cap* is huge, management fee is being added later (for dues comparison purposes) and their ratios (total and lease) are not dissimilar to TH.


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## DestiFan (Sep 15, 2010)

Kagehitokiri2 said:


> but their debt *cap* is huge, management fee is being added later (for dues comparison purposes) and their ratios (total and lease) are not dissimilar to TH.



Some of this is not true Kage

- Debt cap is 23% of total fund investment.  That is far from "huge". They have never been close to 23% levered, but agree that they could be.  Still the LTV on 23% is very conservative.

- Ratios are changing with 3 new home purchases yet to be announced to general public - but have been announced to members. Agree that ratio is higher than some (not many left), but majority of this is due to the DCP plan for DC refugees they did for Lusso.  Fund 1 not affected by this.  Fund 1 will own 7 or 8 homes post new acquisitions.

Agree on management fee portion on dues comparison - but like that management has to be successful to get upside on compensation.


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## Kagehitokiri2 (Sep 15, 2010)

the *only* "problem" (more of a question) i have is they are not up front about use of debt cap increasing dues.

if you want to argue with the things i have quoted/calculated/estimated lets move over to where i posted. (please quote when responding) >
http://tugbbs.com/forums/showthread.php?t=130505


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## DestiFan (Sep 15, 2010)

Kagehitokiri2 said:


> the *only* "problem" (more of a question) i have is they are not up front about use of debt cap increasing dues.
> 
> if you want to argue with the things i have quoted/calculated/estimated lets move over to where i posted. (please quote when responding) >
> http://tugbbs.com/forums/showthread.php?t=130505



The prospectus has all the information needed inside on debt cap and management fee.  Owner members and potential owner members will see it all prior to investing.  You should order one and can answer everything you want!

Trust me, I don't want to argue with you Kage!


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## Kagehitokiri2 (Sep 15, 2010)

go look at the figures i used for what the increases would be for max debt and management fee. id like your thoughts, especially on my "estimates" for debt costs.


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