# How is the destination Club market holding up?



## BocaBum99

Just curious since anything with real estate in it seems to be down these days.


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## Steamboat Bill

Here are some of my observations:

Exclusive Resorts is booming and adding lots of new members and homes, they are the 800 pound Destination Club Gorilla.

Ultimate Escapes is buying everyone up and just finished a $200m merger with Private Escapes and will probably try to buy another club.

Quintess is expanding after a $120m investor got involved and their members are very happy.

High Country Club is at 375 members and actively growing and adding some great properties. I went to their two Hawaii properties over the summer and the Maui property was UNREAL.

Equity Estates is an up and coming "equity club" and may be the only true equity play in the market and is very interesting.

A&K is about to market heavily for new members and will be a major force to recon with very soon.

DHH contiues to add choice properties and many international ones and they are adding a second 60-80 yacht for their members and just bought a nice home in Hawaii.

Lusso also is adding many choice homes and is more boutique in nature and has very happy members.

-----------------

There are lots more "Destination Club specific" info (not too many timeshare people there) and "Destination Club Posters" on the www.DestinationClubForums.com site as they focus only on DCs and have gotten very popular lately.


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## caribbeansun

Real estate values are down and DC initial deposits are up - seems to work.


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## Veras Group Jim

We are also seeing a boom in the DC market outside the US.  Clubs like Hideaways and the Oyster Circle are growing well, and Botiga (new club) has a strong initial position.  

A&K is poised to become a major player.  Great offerings, great branding.  Only the ongoing lawsuits to slow them down, but doesn't seem to be happening.

Banyan Tree remains the only real offering in Asia, to my knowledge.  But there is, I think, very high demand for an Asian-based player.  Can't wait to see some enterprising group launch that.  

M Private Residences and Diamante Luxury Residence Collection are two Canadian firms, both seeing success.  

Dream Circle Destinations operates in South Africa, and have a compelling initial offering.

With the strength of several other currencies against the dollar, we are seeing more Canadian, European, and even Asian buyers in US-based DCs as well.


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## GregGH

Hey Boca and other readers of this thread

Don't the lack of activity on this folder in TUG fool you into thinking not much is happening - a lot of posts have gone to the DC forum -- kind of a shame since lots of TS users are ripe for an upgrade

Greg


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## TarheelTraveler

Steamboat Bill said:


> Here are some of my observations:
> 
> Equity Estates is an up and coming "equity club" and may be the only true equity play in the market and is very interesting.
> 
> A&K is about to market heavily for new members and will be a major force to recon with very soon.
> 
> 
> -----------------
> 
> There are lots more "Destination Club specific" info (not too many timeshare people there) and "Destination Club Posters" on the www.DestinationClubForums.com site as they focus only on DCs and have gotten very popular lately.



Very nice summary, Steamboat Bill.  Just one comment.  I would call Equity Estates the only true "investment play" in the U.S. DC market rather than the only true equity play.  A&K is absolutely a 100% true equity club in my opinion.  All of the real estate is owned 100% by the members.  It's not sold as an investment though, whereas Equity Estates is.

I think the international DC space is about the only place an upstart DC can make some headway unless it's a brand name at this point.


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## short

*Hype or fact.*

Lots of companies are doing fabulously right up until they file BK.  I would be hesitant to place much faith in company hype.

The key is to look at their current financials and budgets and more importantly understand what you are reading.

Short


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## BocaBum99

short said:


> Lots of companies are doing fabulously right up until they file BK.  I would be hesitant to place much faith in company hype.
> 
> The key is to look at their current financials and budgets and more importantly understand what you are reading.
> 
> Short



I agree.  I haven't seen anything posted on this thread that gives me a good idea either way.  I guess I'll have to attend one of those private screenings and do my own due diligence.  It wouldn't be hard to figure out their health by simply looking at their balance sheet and income statements over the past two years and compare their new member forecasts with their future business plans.


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## TarheelTraveler

The DC experience is simply amazing, and I wouldn't go back to traveling any other way, but it certainly pays to do heavy due diligence.  Some DCs have great financials, business models and financial and marketing support.  Others are essentially DOA, despite being very attractive on their face.


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## Bourne

Steamboat Bill said:


> Here are some of my observations:
> 
> Exclusive Resorts is booming and adding lots of new members and homes, they are the 800 pound Destination Club Gorilla.
> 
> Ultimate Escapes is buying everyone up and just finished a $200m merger with Private Escapes and will probably try to buy another club.
> 
> Quintess is expanding after a $120m investor got involved and their members are very happy.
> 
> High Country Club is at 375 members and actively growing and adding some great properties. I went to their two Hawaii properties over the summer and the Maui property was UNREAL.
> 
> Equity Estates is an up and coming "equity club" and may be the only true equity play in the market and is very interesting.
> 
> A&K is about to market heavily for new members and will be a major force to recon with very soon.
> 
> DHH contiues to add choice properties and many international ones and they are adding a second 60-80 yacht for their members and just bought a nice home in Hawaii.
> 
> Lusso also is adding many choice homes and is more boutique in nature and has very happy members.
> 
> -----------------



To keep things in perspective, 

Portofino bit the dust. Chaper 7 no less without any other club bailing it out. 

That said, it has been a great year for DCs. The top 5 clubs are managed well and are growing at a steady clip.


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## caribbeansun

Really???  I thought M was kind of dead in the water based on the stale material on their website. 



Veras Group Jim said:


> M Private Residences and Diamante Luxury Residence Collection are two Canadian firms, both seeing success.


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## LAX Mom

What happened to Bellehavens? I received some info on their program and I recall they had some equity built into the ownership. Are they still around?

edited because I just did a search on this forum. It seems Bellehavens has merged with another club to form the new A&K Residence Club.


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## TarheelTraveler

LAX Mom - NeilGoBlue who posts on this forum and destinationclubforums.com can tell you more about the Bellehavens merger with Crescendo into the A&K Residence Club if you're interested (he was a Bellehavens member).  To my knowledge, he was very pleased with Bellehavens and has been very happy with the A&K enhancements.  As a member from the Crescendo side, I'm thrilled with the new club as well.  Great equity structure, finances, houses and management.


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## Veras Group Jim

caribbeansun said:


> Really???  I thought M was kind of dead in the water based on the stale material on their website.



Maybe you are seeing something we haven't, CS--what stale material are you referring to?

Thank you,

Jim


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## NeilGoBlue

If you have any questions about the merger..let me know..

I'm a very satisfied former Bellehavens member and now a very satisfied AK member..


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## Veras Group Jim

NeilGoBlue said:


> If you have any questions about the merger..let me know..
> 
> I'm a very satisfied former Bellehavens member and now a very satisfied AK member..



I have to say, I have also been very impressed with the attention to detail A&K is putting into their new product.  SherpaReport wrote a great article recently on Geoffrey Kent's involvement as well.  They have great homes, and a great comprehensive offering.  It will be exciting to watch (and contribute) to their growth over the next years.

Jim


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## Bill4728

From Street Talk


> Rancho Mañana Ventures, LLC filed for Chapter 11 voluntary bankruptcy in Phoenix on August 13, listing debt of $10 million to $50 million and assets of $1 million to $10 million. The company did not file an affidavit citing reasons leading to the bankruptcy.
> 
> Rancho is a privately-held development company formed specifically to create the $30 million, 39 residence Rancho Mañana Private Residence Club. This is the same group which created the awardwinning Franz Klammer Lodge in Telluride, Colorado, a pioneer project in fractional resort real estate ownership.



Also from Street Talk


> Another Destination Club has gone bankrupt, apparently the victim of underfinancing and poor financial management.
> 
> Portofino Destinations Club called itself one of the largest companies in the luxury residence club industry, offering its members guaranteed access to a growing collection of luxury $2 million dollar average price residences in some of the world’s most exciting and sought out vacation travel destinations.


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## pwrshift

The security of the membership fees and how they are spent with private companies has always concerned me.  An equity position in a DC does appeal to me more than handing hard-earned cash over to a private company to spend as they want ... even with promises to give 80% of it back if your resign.  Even then, if the DC fails, what chance would you have getting any of it back?


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## TarheelTraveler

Bill4728 said:


> From Street Talk
> 
> 
> Also from Street Talk



The Portofino bankruptcy is not a surprise to anyone with friends in the industry.  There have been rumors floating around for at least a year or two about concierges and contractors not getting paid in a timely manner.   Several DCs wanted to buy them out, but for whatever reason management was not reachable or interested.

There have been many posters on this forum (mainly members of non-equity DCs) that have poo-poohed the advantages of equity DCs, essentially saying they are overpriced or fringe models.  I would instead argue that they are priced realistically and sustainably, don't practice the bait and switch, and will be common place long term as they are much more consumer friendly.  The new larger players entering the market are choosing that model.  The whole idea is to enjoy your incredible vacations, not worry about your membership deposit.


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## caribbeansun

I tend to agree with Tarheel in the longer term.

Presently the pain isn't sufficient to discourage the purchase of a non-equity club plan however as those entrance fees increase over time it will be a greater and greater disincentive to join a non-equity club.


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## Veras Group Jim

TarheelTraveler said:


> The Portofino bankruptcy is not a surprise to anyone with friends in the industry.  There have been rumors floating around for at least a year or two about concierges and contractors not getting paid in a timely manner.   Several DCs wanted to buy them out, but for whatever reason management was not reachable or interested.
> 
> There have been many posters on this forum (mainly members of non-equity DCs) that have poo-poohed the advantages of equity DCs, essentially saying they are overpriced or fringe models.  I would instead argue that they are priced realistically and sustainably, don't practice the bait and switch, and will be common place long term as they are much more consumer friendly.  The new larger players entering the market are choosing that model.  The whole idea is to enjoy your incredible vacations, not worry about your membership deposit.



I absolutely agree with your post, TT.  Anyone who joined Portofino in the past few years would have been nuts, not to mention a little oblivious to anything anyone else was saying.  That said, when you're a representative at a DC, that sort of talk can sound a little like badmouthing the competition, so it's hard to do effectively.

There have also been enormous changes in the industry, for the better, over the past 3-4 years.  Portofino fell victim very early on to trying to compete with the media spends of Exclusive Resorts and Private Retreats, and sacrificed asset acquisition to do so.  

The costs of destination clubs add up quickly, and with the thin margins that are necessary to operate a sustainable club, you have to be very mindful in your marketing spend and staffing costs.  Portofino was decidedly overly agressive the first, and when more competition entered the market, they were toast.


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## Veras Group Jim

pwrshift said:


> The security of the membership fees and how they are spent with private companies has always concerned me.  An equity position in a DC does appeal to me more than handing hard-earned cash over to a private company to spend as they want ... even with promises to give 80% of it back if your resign.  Even then, if the DC fails, what chance would you have getting any of it back?



The growth of redemption protection models has been interesting over the past couple years.

LUSSO Collection has the DepositTrust program.  Ultimate Escapes, the Member Assurance Program.  Exclusive Resorts, I suppose, just has a billionaire... 

The growth of third-party trust models has been, from my point of view, very encouraging.  Hard to evaluate though, as you have to wait for a DC to fail to do so.

Bottom line: there is significant legal and financial review members should perform at even the most seemingly stable companies.  Then again, I would certainly recommend that for any major investment.


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## TarheelTraveler

Veras Group Jim said:


> The growth of redemption protection models has been interesting over the past couple years.
> 
> LUSSO Collection has the DepositTrust program.  Ultimate Escapes, the Member Assurance Program.  Exclusive Resorts, I suppose, just has a billionaire...
> 
> The growth of third-party trust models has been, from my point of view, very encouraging.  Hard to evaluate though, as you have to wait for a DC to fail to do so.
> 
> Bottom line: there is significant legal and financial review members should perform at even the most seemingly stable companies.  Then again, I would certainly recommend that for any major investment.



Safety of the deposit in my view is still one of the most important issues in the industry.  I view it as four general sets of structures from a safety perspective:

1.   A&K in my view has built the most conservative and safe structure.  I'd honestly say this even if I wasn't a member.  They've had the benefit of hindsight and history with T&H to really fix the past issues in the industry. Fairly high deposit used to buy properties 100% debt free.  Dues that are actually commensurate with the costs to run a DC.  All properties owned 100% by the members without debt.  Fully transparent financially and operationally.  Solid books and backing.

2. Other equity clubs like Equity Estates (and I believe M Residences) that are positioned as investment vehicles (like the old Crescendo).  Members own equity in the club, but so does management.  To the extent they are putting money into the club to grow the club, they are essentially diluting the members interest in the underlying real estate.  If the club does well, members can do well.  If club doesn't do well, then you've got some issues.  Still would be difficult to go to zero though.

3. "Trust," "member assurance programs" and similar programs like Lusso and UE.  The idea is to put members ahead of unsecured creditors.  Problem with that is you're still behind secured creditors.  A club can just increase the leverage on their properties if their member sales slow down or if they are not charging enough in dues.  All that needs to happen is a refinance of the properties.  Other than vendors, I would expect most DC debts to be secured debts, as any lending institution will want to have collateral.  Still, however, better than nothing.  At least you're ahead of vendors and the investors of the DC.

4. Other DCs with merely contractual rights for the members have the most risk in my view (e.g., T&H and Portofino members were in this boat).  You put money in and the DC owes you nights.  As long as the DC is running fine, no problems.  If not and the entity can't make it, you're stuck with nothing in a liquidation or a merger with worse contract terms.  ER is set up like this, but at least they're steamrolling with members.  Still won't share financial info though for whatever reason. 

As Jim points out, prospective and current members need to do their due diligence, particularly on the cash flow and whether the economics really make sense.  Nothing is free.  The lower the member deposit and dues, the more expensive the houses and included services and nights, the worse off the DC probably is from a financial perspective.


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## vivalour

Veras Group Jim said:


> The growth of redemption protection models has been interesting over the past couple years.
> 
> LUSSO Collection has the DepositTrust program.  Ultimate Escapes, the Member Assurance Program.  Exclusive Resorts, I suppose, just has a billionaire...
> 
> Bottom line: there is significant legal and financial review members should perform at even the most seemingly stable companies.  Then again, I would certainly recommend that for any major investment.



Just wondering how forthcoming DCs currently are to Jim and his group, as well as to prospective new members re their club's financials, cash flows, and sources of capital. Anyone seeing more transparency -- or less???  Interesting to re-visit this topic now -- what a difference a month makes!


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## BocaBum99

With all the hedge funds having great difficulty with the current financial crisis, how can anyone be bullish on the DC market?  I'd fear for my membership deposit.


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## TarheelTraveler

I agree Boca to some extent, but I don't think you can lump all DCs together, just like you can't say every bank is likely to go under.  It does, however, amaze me that some DCs can sign up members without being willing to produce detailed, audited financials.


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## BocaBum99

TarheelTraveler said:


> I agree Boca to some extent, but I don't think you can lump all DCs together, just like you can't say every bank is likely to go under.  It does, however, amaze me that some DCs can sign up members without being willing to produce detailed, audited financials.



So which financial institution are you purchasing stock in today?


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## TarheelTraveler

BocaBum99 said:


> So which financial institution are you purchasing stock in today?



I bought and sold financials over the last two weeks.  Will probably do so again (maybe not today though  and I might focus on certain regionals this go round).


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## vivalour

Hedge funds are not my thing, but I don't see the direct connection between DCs and the hedge fund industry -- which IMHO is based on pure speculation. DCs, I would say, are more about calculated risk.


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## BocaBum99

vivalour said:


> Hedge funds are not my thing, but I don't see the direct connection between DCs and the hedge fund industry -- which IMHO is based on pure speculation. DCs, I would say, are more about calculated risk.



The direct link is that investors in Hedge funds are the same target market for purchasers of memberships in DCs.  Hedge funds are taking a bath in the current market conditions.  

The key question is this.  Given their portfolios are taking a big hit, are the affluent likely to continue to make luxury purchasers like yachts, jewelry, country club memberships and DCs? 

Or, do people on this board actually believe that the DC industry is immune to the current state of the financial markets?

"Two men enter, One man leaves."  In rethinking this rule, it could help out current members.  If the market dries up and there are very buyers of DCs, at least they won't be forced to liquidate property to return deposits.  In retrospect, that seems like a good thing.  The deposit may be devalued significantly, but at least it won't be liquidating like hedge funds are today.


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## vivalour

BocaBum99 said:


> The direct link is that investors in Hedge funds are the same target market for purchasers of memberships in DCs.
> 
> How do you know?  I would have thought it is a pretty diverse market of high-income earners of all kinds, all ages, and all genders.
> 
> Hedge funds are taking a bath in the current market conditions.   No kidding.
> 
> The key question is this.  Given their portfolios are taking a big hit, are the affluent likely to continue to make luxury purchasers like yachts, jewelry, country club memberships and DCs?
> 
> There's affluent and there's super wealthy. Though I'm not personally in this bracket I know at least two families who have incomes of at least several hundred thousands of $$$ monthly, rain or shine. The price of luxuries is small change for them.
> 
> Or, do people on this board actually believe that the DC industry is immune to the current state of the financial markets?  Who knows? Time will tell. There's lots of fear & panic out there because we're in uncharted financial territory. The good companies are being trashed with the bad as the hedge funds "de-leverage" and portfolio managers sit it out. But we still have to live our lives.
> 
> "Two men enter, One man leaves."  In rethinking this rule, it could help out current members.  If the market dries up and there are very buyers of DCs, at least they won't be forced to liquidate property to return deposits.  In retrospect, that seems like a good thing.  The deposit may be devalued significantly, but at least it won't be liquidating like hedge funds are today.



Hopefully this is short-lived and five years from now it will just be a bad memory.


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## TarheelTraveler

I'm willing to bet that consumer spending will slow dramatically.  Discretionary items will be hurt the worst.  I think you will see a tiering effect in real estate.  Vacation house spending will drop dramatically, and DCs also but to a lesser extent (because the outlay isn't as large and it is still a relatively new concept in growth mode).


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## BocaBum99

vivalour said:


> Hopefully this is short-lived and five years from now it will just be a bad memory.



I take it that you are one who believes that the DC industry is immune to the current state of the financial markets.

If you don't think that Hedge Fund inventors are in the same market segment as DC purchasers, then a discussion on the topic will probably not be fruitful for either of us.  I just leave it at that.


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## vivalour

*Shaken confidence in DCs?*



BocaBum99 said:


> I take it that you are one who believes that the DC industry is immune to the current state of the financial markets.
> 
> If you don't think that Hedge Fund inventors are in the same market segment as DC purchasers, then a discussion on the topic will probably not be fruitful for either of us.  I just leave it at that.



I don't want to beat this one to death, Boca, but to clarify:
I don't at all think the DC industry is immune and wouldn't be surprised if sales stall/slow for most DCs till at least next spring. Hopefully most clubs with a 4-5 year track record behind them have patient investors (backers) with deep pockets and can weather the storm even if memberships stall or some members bail out.

Not sure at all about your second point.  Do you mean that you believe hedge fund investors are the major backers of all/most DCs? Or do you mean you think they are the bulk of DC members? 

I would agree with Tarheel here -- pls see his posts above. I revived this topic simply to see if anyone (prospective members, for example) had insights/experience re DCs being more or less transparent on their business financials in this turmoil.


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## NeilGoBlue

I agree that on the surface if you take 4 trillion dollars out of the economy.. you'd think that DCs would suffer.. but..

Sometimes logic works backwards.. for example.. when I was thinking of buying my house back in 01..the market was crashing..something like 8 trillion in market cap was lost.. I said.. 'great, housing prices will be lower.. you can't take 8 trillion out of the economy, lay off all those tech people and have it not affect housing prices.. but low and behold.. housing went up.. and went up for years..  I was dead wrong.

It could work similar for DCs.. instead of people committing to buying a second home for cash or financed.. they might 'downscale' to a DC and get the same result with substantially less money and less overhead.  I know it doesn't seem logical, but it wouldn't surprise me...

Another example.. I own a business where I lend money to real estate investors.  I borrow money from people so that I can relend it.. You'd think given the current market conditions people would be pulling their money out of my company and running for the hills..but once again logic defies.. not only has nobody pulled their money out... we have more inquires than ever about putting money IN!.. all in the last two weeks... they perceive us as safer than the market.. or even banks.. (plus we pay a substantially higher rate and we are doing well)

Who would've thunk it?


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## Floridaski

*People do strange things*

We are among many of the people that are concerned watching our investments move in the wrong direction.

But we own a condo in River Run in Keystone. I am very concerned about the income level that it needs to produce this year. 

Well today somebody booked it for 6 NIGHTS OVER CHRISTMAS AT $ 715.00 PER NIGHT. Are they nuts? Do they not watch CNN or read the newspaper? I really do not care, they left their 50% non-refundable deposit and I am sure they will enjoy themselves.

So, it appears that while we may have a difficult year and all things will suffer - people will still spend money!


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## pwrshift

If the largest Timeshare and Fractional developers are having difficulty you can bet DC's are having trouble too.  It will be interesting to see how many of them fail over the next year alongside the banking industry.  Even the wealthy are hoarding cash right now ... not handing it over interest free and unsecured to private companies to play with.  Compared to this time last year when every DC was raising membership fees Nov 1st, only two that I know of have announced increases this November and I've been told they are now wavering on this decision.  A telling sign IMO that the industry could be in trouble.  We'll know for sure by this time next year.


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## vivalour

pwrshift said:


> If the largest Timeshare and Fractional developers are having difficulty you can bet DC's are having trouble too.  It will be interesting to see how many of them fail over the next year alongside the banking industry.  Even the wealthy are hoarding cash right now ... not handing it over interest free and unsecured to private companies to play with.  Compared to this time last year when every DC was raising membership fees Nov 1st, only two that I know of have announced increases this November and I've been told they are now wavering on this decision.  A telling sign IMO that the industry could be in trouble.  We'll know for sure by this time next year.



IMO the root of the trouble right now is in the tight lending situation. My own take is that the majority of DC purchasers can pay cash and do not have to borrow for a membership. Of course, those considering DC memberships may also be more careful over the next year -- they will want solid info on financials rather than smoke and mirrors from DC companies -- but I think you are looking at a different demographic from timeshares. Not raising membership fees right now is probably smart marketing -- I think that any retail business is very careful now while consumers are especially price-sensitive. Maybe a few of the high rollers on DC payrolls will get cut, though....


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## vivalour

Floridaski said:


> We are among many of the people that are concerned watching our investments move in the wrong direction.
> 
> But we own a condo in River Run in Keystone. I am very concerned about the income level that it needs to produce this year.
> 
> Well today somebody booked it for 6 NIGHTS OVER CHRISTMAS AT $ 715.00 PER NIGHT. Are they nuts? Do they not watch CNN or read the newspaper? I really do not care, they left their 50% non-refundable deposit and I am sure they will enjoy themselves.
> 
> So, it appears that while we may have a difficult year and all things will suffer - people will still spend money!



Sounds to me like a good deal for the renters! They probably don't live paycheque to paycheque and pay off their credit cards every month. This will be a very tough lesson for people who have to live on credit, while the cash savers will benefit from the deals out there. 

A friend recently told me about a conversation he had this year with a speculator in U.S. real estate who "bought" 12 houses, hoping to flip them. When the market turned bad, he had to take on extra jobs to carry the mortgages -- or lose the houses to the bank.  Pure idiocy.


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## Floridaski

*I am glad you think it is a deal.*

I am really glad you think it is a deal, I personally would not pay $ 715.00 per night for a condo.  They also pay 5.68 booking fee, 6 % Keystone tax.  Their Christmas vacation, just for the condo is going to run them  

 A TOTAL OF $ 4886.40 FOR 6 NIGHTS!


We are very relieved that we are getting holiday bookings as most of our income comes in over the ski season.  But, I was really shocked that somebody would put down a 50% percent deposit on this large of a vacation expense with the economic turmoil.

It is obvious that it is somebody who is not worried or has enough cash on hand to just go ahead and live their lives.  I am glad there are still folks out there that have enough confidence to plan their vacations.  We also got an expensive March week booking this week - another surprise.  

Personally I am being a little conservative in our larger purchases.  But, we are still moving forward - just perhaps thinking a little longer about spending the money.  So, I would think the DC demographic would be similar to the higher end condo renter.  If they have the money they will still take their vacations.


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## tombo

I think this article about Ritz-carlton, Marriott, and Exclusive resort's joint project shows that this economy is very rough on everyone and everything. 

http://pacific.bizjournals.com/pacific/stories/2008/09/29/daily62.html


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## travelguy

I believe that the Destination Club member is less effected by the fear of purchase than the average timeshare purchaser.  DC members tend to have more discretionary income and shift that income to more fulfilling experiences in tough economic times.  I also believe that the timeshare purchase (from the developer) is more impulsive than the due-diligence intensive DC purchase.  I'm not saying that the economy won't affect DCs, just that I believe that timeshares will be hit much harder than DCs.

Here are what I believe there are the four schools of thought regarding Destination Club purchases during the current market conditions:

1) Those prospective DC members who are paralyzed by the current financial events, or at least the media and political representations of those events, and will not take action on DC membership until they conquer their fear of discretionary expenditure.

2) Those prospective DC members who would have normally purchased a second or third vacation home in the Bull market but have now realized the value of a Destination Club membership in lieu of the luxury home ownership headaches and loss of property value.  (I don't believe there are many potential DC purchasers that will downgrade to a timeshare).

3) Those prospective DC members who are unaffected by the current economic crisis (both real and as portrayed on TV) and are buying a DC membership for the positive reasons that some of us became DC members (value, quality of properties, numerous and growing locations, ease of reservation, quality of customer service, etc.).

4) Those prospective DC members who have given up on the investment markets, liquidated their portfolios, and are purchasing goods and experiences that have "real" value to them. (Like a new DC membership).

I base my unscientific hypothesis on several recent conversations I've had with prospective DC members and my years of owning a high-end luxury consumer electronics retail chain during recessions in the 1980s through the tech bubble burst of the early 2000s. You'd be amazed by the vast majority of luxury purchasers that are not as affected by the economic news as those of use who are market watchers. As long as there are Americans, there will exist the sales of high-end discretionary luxury goods and experiences.


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## BocaBum99

Given the HCC announcement of a new survival plan, does anyone want to update their position on the DC market?



> 5) In the event the business is liquidated, will there be anything left for members?
> At the end of 2007, our net asset test showed that the net assets of HCC exceed the amount of our member refundable deposit obligations. During 2008, we have seen a significant decrease in our property values ranging from 20% - 50% off of our 2007 appraisals, which means that the equity in our portfolio has greatly diminished over the past 10 month period. In addition, we anticipate that the real estate market will continue to decline over 2009. *Due to the current economic conditions, we believe that once the mortgage holders are paid there will not be any equity left for us to refund to our members.* Management and investors of HCC would not receive any compensation from a liquidation unless our members were fully paid their refundable deposit.



It appears that the liquidation value of HCC member deposits is now ZERO.  And, the HCC management is planning on ZERO new sales over foreseeable future.  They did remove the 2 in, 1 out rule.  But, in this market, who is going in?


----------



## travelguy

BocaBum99 said:


> Given the HCC announcement of a new survival plan, does anyone want to update their position on the DC market?



Yes! Based on the last month of chaos in the world economic markets and my own personal chaos, I'd like to update my position on the DC market, the financial markets, the fractional market, the timeshare market, the CDS market, the condotel market, the farmer's market, the real estate market, the foreign markets, the commodities markets and any other market I can think of.  My official position now is that they are all "down" and will continue to be "down" for "awhile".


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## alvin

it's certainly going to get worse before it gets better.  look at what's happened to other resort/destination projects around the country in just the past month.  and this is by no means a comprehensive list, but just some of the stories i've been following...

tamarack resort in idaho falls into receivership.
ritz club in maui loses funding.
hcc proposes restructuring.
intrawest barely escapes bankruptcy (i'd imagine the upcoming winter olympics was a major motivating force behind them avoiding chapter 11)
rumors are that the vail plaza hotel is nearing foreclosure, which if true certainly won't help the new four seasons and ritz under construction in vail village.
meanwhile, talisker corp recently outbid vail for control (and most importantly, development rights) of the canyons ski resort in park city.  but considering that the big high-end Promontory development outside park city recently filed for bankruptcy, not too mention the growing inventory of unsold high end homes and condos in deer valley (talisker's primary market to date), they may have bitten off more than they can chew too.

And keep in mind, the real recession has barely even begun!

While the premiere resort towns like Vail, Park City, Maui, etc, and the prime areas of NYC, SF and LA have held up well so far, it's tough to argue they'll  be immune much longer, especially with wall street and hedge funds hemorrhaging money, and Europe and much of the developing world in  arguably worse shape than we are.

HCC has stated their (arguably second tier) properties' values are down 20% to 50% as of last month.  Seems likely the upper tier DC's properties won't be far behind.  Survival of the fittest will likely ultimately boil down to survival of the least leveraged...


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## tombo

What you bought isn't what you will own even if HCC survives. Here is their quote:

"We will require our members to sign an Addendum to their membership agreement by November 14th in order for us to execute our Success Plan. In the event the vast majority of our members do not agree to the Success Plan, we will be forced to begin shutting down the business on the 17th. Members who choose not to sign the Addendum will unfortunately have their reservations canceled and will be placed on the resignation list. "

 They are using severe intimidation to try and get all members to give up rights in the club that they purchased. Your choices are sign, give up benefits, and pay higher annual dues or no reservations for you and you will no longer be a member. Also they use a less than subtle threat that unless at least 75% of the members sign the new rules the entire club is history along with your money. If 75% don't sign they will shut the "club" down and by their own admissions there will not be enough money to give the members refunds. From many previous posts this is apparently not a problem because DC owners have more discretionary income than timeshare buyers and won't miss the $40,000 to $70,000 they paid in membership fees when they joined.

The owners of HCC have decided what will be done with HCC and how they will do it without a vote or discussion from the paying members. I am sure the "success plan" that members are being forced into signing will give the owners of HCC the right to change many things now, many more things in the future (whenever they deem it necessary), and it will probably have clauses signing away member's rights to sue for damages. You might as well throw your original  contract away once you sign the addendum.

I think it is obvious that the membership club format was full of risk and peril as many of us have stated in the past. Yes all timeshares companies are having hard times, but none of the major developers have told their timeshare owners that they will no longer be able to vacation as they were promised when they laid down their money. If you purchased a timeshare week, you still own a timeshare week. If you purchased a membership in a DC you own nothing, of course you never did own anything, and that has always been the problem with the non-equity DC's.

HCC members should probably take their vacations as quickly as they can, while they still can.


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## Troopers

Phew!

I'm glad I didn't buy HCC a three months ago.


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## pwrshift

All of a sudden resale timeshares and fractional ownerships look a lot better.  Firms like Marriott and Starwood will (probably) be around tomorrow once the storm is over.  This may not be the case with DC's.

It is, indeed, a sad situation for all HCC members and for the DC industry as a whole.  But, HCC may be just the start of what lies ahead for members of all non-equity privately-owned DC's.  Their promise of a guaranteed return of 75% - 100% of the initial membership fee now appears to be not worth the paper on which they are printed.


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## Sir Newf

....from Boca's #43 posting above: "Due to the current economic conditions, we believe that once the mortgage holders are paid there will not be any equity left for us to refund to our members. Management and investors of HCC would not receive any compensation from a liquidation unless our members were fully paid their refundable..."

Question on this- so, where would the equity monies go? If all the funds are used to pay motgage holders, would there not be some equity once they are paid? Who gets that equity? 

Best of luck to all members, I sincerely hope it works out OK for each of you.


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## tombo

Sir Newf said:


> ....from Boca's #43 posting above: "Due to the current economic conditions, we believe that once the mortgage holders are paid there will not be any equity left for us to refund to our members. Management and investors of HCC would not receive any compensation from a liquidation unless our members were fully paid their refundable..."
> 
> Question on this- so, where would the equity monies go? If all the funds are used to pay motgage holders, would there not be some equity once they are paid? Who gets that equity?
> 
> Best of luck to all members, I sincerely hope it works out OK for each of you.



From this one can either assume that they were over leveraged, under funded, or that they took every dollar they received that was not obligated for expenses and paid themselves as though that money was profit. If you spend all income received except what is needed to pay current obligations when times are good, you will have no reserves left when times are bad. It appears that they didn't save for a rainy day or simply mismanaged the company and ran it into the ground. 

Reading between the lines it also appears that the owners of HCC are not willing to take the current depreciation loss on the properties they purchased for themselves with the member's money. I am sure that they would have had no problem enjoying their profits if the properties they purchased had increased in value. If they weren't trying to change the rules or liquidate, their debt obligations would remain the same, and they should have enough members to cover the current expenses. However they have decided that 75% of the owners must capitulate to their demands or they will sell everything at current values covering every penny of their property value loss with current assets before attempting to refund a dollar to members. The owners will leave with their salaries and bonuses from past years, the owners will leave with no personal debt remaining, and they will leave with all of the member's cash either spent or missing. 

I especially feel sorry for the HCC members who financed their membership fees as they will still be making payments with HCC gone, no chance of recouping their huge losses, and no "pre-paid "vacations coming from HCC now or in the future. Some poor people will be paying for a non-existent HCC for 30 years. 
This is a TUG post from the past showing HCC's great financing options: "For qualifying members, JP Morgan Chase will establish a home equity line of credit with a variable interest rate, which will rise or fall according to changes in the Federal Reserve Rate. While most home equity lines of credit do not generally have fixed interest rates, JP Morgan Chase also offers an option that allows you to lock in a fixed interest rate on all or a portion of your line of credit balance.

This financing option lets you leverage your membership fee over a 10, 20 or 30 year payment period. For example:

Membership Fee - $25,000 - $40,000 - $50,000 - $70,000
10 year (APR 1) - $312.38 (8.68%) - $499.80 (8.68%) - $624.75 (8.68%) - $855.97 (8.18%)

20 year (APR 1) - $223.17 (8.89%) - $357.07 (8.89%) - $446.33 (8.89%) - $602.61 (8.39%)

30 year (APR 1) - $199.54 (8.91%) - $319.26 (8.91%) - $399.08 (8.91%) - $533.78 (8.41%"

Either way it is sad for the members, but non equity DC's were always a disaster waiting to happen.


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## BocaBum99

Sir Newf said:


> ....from Boca's #43 posting above: "Due to the current economic conditions, we believe that once the mortgage holders are paid there will not be any equity left for us to refund to our members. Management and investors of HCC would not receive any compensation from a liquidation unless our members were fully paid their refundable..."
> 
> Question on this- so, where would the equity monies go? If all the funds are used to pay motgage holders, would there not be some equity once they are paid? Who gets that equity?
> 
> Best of luck to all members, I sincerely hope it works out OK for each of you.



The point is that due to the fall in the real estate values of the properties that the member "equity" is now zero.  They can't call it equity because it was never equity in the first place.  It was an unsecured interest free loan.

My guess is that the reason for the 20-50% drop in real estate values is partially due to the market.  The other part is due to the appraiser who gave them those artificially high numbers to report.

Many people tried to warn others on this message board that this was an issue.  Most just blew off the warnings and suggested that the DC market was immune to fluctuations in the economy because the rich aren't affected by economic recessions.  Well, this goes far beyond recession.  It threatens the fabric of our capitalist system.  So, the rich are really getting hammered.

I think one hedge fund manager even challenged my assertions about it.  I wonder how his hedge fund is doing right now.  And, how all of those so called educated consumers feel about putting their "trust" into the biggest "trust me" industry on earth.  I think that trust bond has been more than violated.


----------



## tombo

BocaBum99 said:


> The point is that due to the fall in the real estate values of the properties that the member "equity" is now zero.  They can't call it equity because it was never equity in the first place.  It was an unsecured interest free loan.
> 
> My guess is that the reason for the 20-50% drop in real estate values is partially due to the market.  The other part is due to the appraiser who gave them those artificially high numbers to report.
> 
> Many people tried to warn others on this message board that this was an issue.  Most just blew off the warnings and suggested that the DC market was immune to fluctuations in the economy because the rich aren't affected by economic recessions.  Well, this goes far beyond recession.  It threatens the fabric of our capitalist system.  So, the rich are really getting hammered.
> 
> I think one hedge fund manager even challenged my assertions about it.  I wonder how his hedge fund is doing right now.  And, how all of those so called educated consumers feel about putting their "trust" into the biggest "trust me" industry on earth.  I think that trust bond has been more than violated.



It seemed to me that in the past there were many people who believed in HCC regardless of anything many of us said. I went back and re-read many of the past posts where several of us repeatedly said that HCC and all DC's were a huge risk not worth taking. We were blasted as ignorant because we didn't understand how safe HCC was. We were all supposed to hurry and buy because the membership fees were going to keep increasing. There was no reason for state or federal regulation of DC's because these smart business men were self regulating. We referenced a couple of DC's that went out of business and were told that only happened because they were new, they leased too many properties, etc. Where are all of the posters who begged people to buy HCC on this forum and many others. I am wondering why I haven't heard from the moderator who repeatedly blasted me for stating that buying HCC was a bad idea. Unfortunatelly many who listened to the HCC cheerleaders are now paying a huge price.

I am going to go back and re-read some more of the abuse I received for having the audacity to say that it was crazy to give people your money so they could buy themselves homes that they would then let you rent through annual fees you paid to them. I am going to re-live my ignorance for suggesting that it was crazy to pay all that money to own nothing, to not have a vote in HCC's purchases or leases, and how crazy it was to blindly trust that the owners of HCC would do what is best for the members rather than what was best for their wallet.


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## caribbeansun

Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.  

If you did then you sold the market short and you have made enough until the end of your days.  If you didn't then like most of the rest of us you got spanked.

Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.

Those that joined HCC will pay the real price of doing so, such as myself, you won't.  I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that.  I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.

So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.


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## vivalour

Well put, thank you. I think that most of us who bought into HCC understood the risks (to the extent that we could, at the time we bought in) and do not need a scolding from Tuggers at this point. I ignored my own mantra "if it looks too good to be true, it probably is." But money is only money -- this is not the end of life or good times -- I hope.


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## tombo

caribbeansun said:


> Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.
> 
> If you did then you sold the market short and you have made enough until the end of your days.  If you didn't then like most of the rest of us you got spanked.
> 
> Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.
> 
> Those that joined HCC will pay the real price of doing so, such as myself, you won't.  I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that.  I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.
> 
> So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.



Please feel free to go back and read comments made about those of us who warned about DC's on this forum in the past (by many including a moderater) to see distasteful. Back then it was group maulings of any who weren't on the HCC band wagon. We didn't know that this economic downturn was coming, but we always felt that DC's were a house of cards sold using smoke and mirrors. Many of us posted warnings well over a year ago about the risk of joining DC's. This is not patting myself on the back, these are the facts. I simply want to remind those who gave us such grief that we had repeatedly warned everyone on the forum about numerous risks associated with giving large sums of money to HCC and other non equity DC's. For stating our reasons for concern about HCC we were booed out of the forum. The HCC booster club didn't want to hear anything other than HCC is great. Those people I don't feel very sorry for. They refused to listen to valid concerns about the safety of investing money in DC's. For that select group of HCC fans to not apologize to those of us they ridiculed in the past for our DC warnings (which hopefully saved many people a lot of misery), and to not apologize to those they talked into joining HCC (while telling them to ignore us) is very telling about certain people too.

This was not directed at all HCC owners, this was directed at the HCC fans who belittled us when we warned repeatedly against investing in DC's. There was no open dialogue here about the potential problems with HCC and other DC's. If you ever spoke against buying HCC you were crucified here. I am sorry for those who got hurt and especially those who financed their membership fees. If more civil discussions of the pros and cons of HCC had occurred, then more people could have made their choice after hearing both sides. Most of us quit posting on this thread because of constant attacks. I personally didn't post a thing about DC's for the last several months because it wasn't worth all the attacks I received when I did.  If we had posted more negative facts and conjectures about the risks involved with joining DC's on this forum there might be fewer "HCC members" in this sad situation now. For those who didn't buy because of doubts we raised, thank goodness we weren't totally silenced. For those who joined after we were driven off of this forum, I hope the HCC cheerleaders will offer their apologies.


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## BocaBum99

caribbeansun said:


> Before you pat yourself on the back too much you should probably consider whether or not you could have predicted the problems that occurred over the past 2 months.
> 
> If you did then you sold the market short and you have made enough until the end of your days.  If you didn't then like most of the rest of us you got spanked.
> 
> Gloating is distasteful at best and sentiments like "I told you so" are more telling about the one that speaks the phrase.
> 
> Those that joined HCC will pay the real price of doing so, such as myself, you won't.  I would imagine that those that were avid proponents of HCC were so because they truly believed in what they were experiencing and there's nothing wrong with that.  I do not blame them on any level for my own decision - my crystal ball didn't see the termoil of the past 2 months so with the benefit of hindsight I can say I made a mistake.
> 
> So try to restrain your joy at the cost of others - if you can't then go look at your 401k statement/investment statements again - that should be sobering enough for anyone these days.



I had no idea the financial markets were in as bad a shape as they were.  I did know, however, that people were taking great risks by investing in Destination Club memberships.  

Warnings were given and many put their heads in the sand.  I am not happy that this is happening to so many people.  What is most unfortunate is that people didn't heed the warnings and chose instead to put their heads in the sand.

Regarding investments in real estate and stocks.  I am a heavy investor in both.  I took a large loss on all of those investments like most people did.  The big difference is that today, I am still an investor in real estate and stocks and will be for the rest of my life.  However, I am not going to be an investor in a Destination Club.


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## Bourne

tombo said:


> This was not directed at all HCC owners, this was directed at the HCC fans who belittled us when we warned repeatedly against investing in DC's. There was no open dialogue here about the potential problems with HCC and other DC's. If you ever spoke against buying HCC you were crucified here. I am sorry for those who got hurt and especially those who financed their membership fees. If more civil discussions of the pros and cons of HCC had occurred, then more people could have made their choice after hearing both sides. Most of us quit posting on this thread because of constant attacks. I personally didn't post a thing about DC's for the last several months because it wasn't worth all the attacks I received when I did.  If we had posted more negative facts and conjectures about the risks involved with joining DC's on this forum there might be fewer "HCC members" in this sad situation now. For those who didn't buy because of doubts we raised, thank goodness we weren't totally silenced. For those who joined after we were driven off of this forum, I hope the HCC cheerleaders will offer their apologies.



Apologies eh!

Personally, here is how I see it. I always touted the *risk vs reward* ratio. For me,the risk *is* worth it. Consider this...

1. The membership and dues paid till now have already paid off based on the value of vacations taken. 
2. The current stock market downturn has made me lose my membership value many times over. Every large gyration is a few memberships lost and regained. Point is, calculate the risk. If you cannot stomach the loss, don't even bother buying it. 

Lastly, don't write off the HCC members just yet. The "success plan" or a "T&H type merger" would probably be the final outcome. Realistically, getting deposit is out of question in the next 5 years, but we will still be vacationing in some of those properties for many years to come. 

It ain't over till the fat lady sings.  And baankruptcy is not the fat lady.


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## TarheelTraveler

I agree with you 100%, Bourne, on risk vs reward being a significant part of the equation.  However, my problem with that is consumers have no way of adequately judging the risk.  For example, HCC in the last six months had many members pay deposits and dues that were much higher than prior members paid, yet their risk was significantly higher and their reward significantly lower.  On the outside, a DC looks like a DC looks like a DC, but the mechanics and models are completely different from DC to DC.  Failing clubs have historically been very adept at hiding the ball to prospective members.  I've seen the financials of my own club and the financials of many others.  Clubs with the most to worry about tend to show you projections and also leave off cash flow statements or apply deposits to the cash flow statements to make them look better.  Unless you're an accountant (and even if you're an accountant), it can be very difficult to ascertain the true long term health of a club.  While clubs are often sold as "country clubs for vacation real estate," very few are operated that way and if prospective members actually understood that many would not join or would join clubs that actually are operated that way.  I bet in many situations (particularly now) one club might be 20% cheaper but have 5 or 10 times the risk of failure.  No prospective consumer has any idea of these metrics.


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## tombo

Bourne said:


> Apologies eh!
> 
> Personally, here is how I see it. I always touted the *risk vs reward* ratio. For me,the risk *is* worth it. Consider this...
> 
> 1. The membership and dues paid till now have already paid off based on the value of vacations taken.
> 2. The current stock market downturn has made me lose my membership value many times over. Every large gyration is a few memberships lost and regained. Point is, calculate the risk. If you cannot stomach the loss, don't even bother buying it.
> 
> Lastly, don't write off the HCC members just yet. The "success plan" or a "T&H type merger" would probably be the final outcome. Realistically, getting deposit is out of question in the next 5 years, but we will still be vacationing in some of those properties for many years to come.
> 
> It ain't over till the fat lady sings.  And baankruptcy is not the fat lady.




The risk vs reward is worth it? If someone "joined" a few months ago and haven't taken a single trip, was that a good deal for them? Did their reward equal the huge risk? Would they take half of their memership fees back right now just to get out? Wouldn't most members?

 I am sure that most members feel great that they were able to take a couple of trips or so for only $70,000 plus annual fees with no future vacations or refunds likely.What a reward. Members who took out a 30 year Home Equity Loan to pay membership fees will still be paying for a defunct "club" for decades to come. Those members have to feel the reward was worth the risk. Who are you kidding? They were sold a lifetime of travel, they instead got a year or two. Members got screwed, and there is no sugar coating it!

Don't count HCC as finished? Really? They themselves said if 75% of the members won't give up the rights to what they purchased by signing the addendum by November 14'th (negating the contract members signed when they joined), that HCC will begin shutting the business down on November 17th. You have the choice of definite closure of HCC and a total loss, or you can agree to new club rules and annual fees much different than you signed up for hoping that HCC might survive.You also have to hope that enough HCC members have enough faith in the owners to pay next year fees to keep HCC operating( I wouldn't pay them in this situation), and you also have to hope that the owners don't take your fees and still shut it down. There's that ugly risk thing again. No matter how it turns out, HCC is finished being the club that was sold to current members.

A T and H type merger? They said they don't have anone lined up to buy them out (translation no one wants to buy the mess they created in this economy). Here is the quote from your CEO: "HCC explored the possibility of merging with or being acquired by another club. HCC does not currently have any merger/acquisition offers pending from any destination club." I guess you feel that they will find a buyer by the 17th before they shut it down with no member refunds.

You are right about bankruptcy not being the end of HCC. Bankruptcy is not an option that HCC is currently exploring. They have stated that they will take all of the HCC assets (your money), and pay off all of their debts (on properties members bought for them), so they will walk away owing nothing(no reason to file bankruptcy), and members will simply walk away with nothing. You can either sign away your rights, pay higher annual dues, and succumb to any changes they make on your membership, or they will shut it down not refunding a penny. If 75% of the members sign agreeing to the forced membership changes, and you won't sign away your rights, they won't let you reserve any more vacations even though you paid to be a member. What a kind and benevolent group those HCC owners are. You are being forced to do what the owners want, or no vacations for you (sounds like the soup nazi from Seinfeld). But at least they aren't threatening Bankruptcy.

Once again in the face of irrefutable facts (this time spelled out by HCC's CEO), proponents are still saying that the HCC risk is (and was) worth the rewards. Some are still making positive statements about HCC's future. Please find out how many owners faced with losing their entire investment with nothing but a few weeks of vacation to show for it feel like you, that the rewards were worth it. I can't imagine that you mirror the feelings of many (if any) of HCC's members. The risk was always way too high, and obviously the rewards weren't worth it. Even the owners of HCC have given up trying to sell HCC to new members. That is a sure sign that the fat lady has sung.


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## Troopers

Bourne said:


> 1. The membership and dues paid till now have already paid off based on the value of vacations taken.



Bourne, not trying to be confrontation here but just trying to understand.  How did you arrive at this?  You must be adding some phantom dollars for your vacation experiences to get the math to work out, right?  When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.


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## TarheelTraveler

Troopers said:


> Bourne, not trying to be confrontation here but just trying to understand.  How did you arrive at this?  You must be adding some phantom dollars for your vacation experiences to get the math to work out, right?  When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.



That's a good question, but the deposit and dues varied depending on when you joined.  As an example, early members might have paid a $5,000 or $10,000 deposit with dues 1/4 of current dues (don't actually know the numbers but I bet that's not far from reality for those first joining).


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## RoshiGuy

*New HHC Member's POV*

I joined HCC in September 2008 and, like carribeansun, have yet to take any trips. Fortunately, the potential loss of $$ on my Affliliate membership, painful as it is, will not affect our family's lifestyle in any material way. I cannot say that I was duped. I had read all the posts on TUG by people pro and con - PerryM, tombo, boca, etc. I realized there was a risk but I did not fully appreciate how much of a risk! Also, economic events of the past 45 days (after I joined) apparently pushed HHC beyond the "worst-case" scenario I had anticipated (takeover at less favorable membership terms).

Did the huge support for HCC here and on DestinationClubForum influence my decision to join HCC? Of course it played an important role. But I took that for what it was - members commenting on the great experience they had vacationing in HCC homes. I had also read the posts on "Ponzi Scheme" that those skeptical of DCs had posted. As a business consultant I thought about sustainable business models, did some math (can explain this later if people care) and tricked myself into believing that HCC was close to getting there. Clearly "getting a good deal" played a role in my decision - wanting to get in before the costs were raised a bit more to a level that was sustainable for HCC. Ironically, I still think that a DC model in the $400-$500 per night cost range would work for many people like me. Unfortunately, most HCC members were in much lower and the next 400 full-paying members never materialized.

So thanks for all the pro/con arguments made on this site. It'll be interesting to see what happens with HCC - of course, now I have major skin in the game!


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## tombo

I am truly sorry for your loss but glad to hear that it won't affect your family's lifestyle. Hopefully somehow this will not be a total loss for you, and I hope that your family will at least be able to make some trips to what all agree are great accomodations.


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## TarheelTraveler

Well said RoshiGuy.  Welcome to the forum.  I hope that everything works out for the HCC members including yourself.  I also hope the bar gets raised across the industry for creating responsible DCs.  The DC idea is fantastic and you just hope that the irresponsible DCs (I don't blame the members at all in this) don't ruin the industry as a whole.


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## BocaBum99

RoshiGuy said:


> I joined HCC in September 2008 and, like carribeansun, have yet to take any trips. Fortunately, the potential loss of $$ on my Affliliate membership, painful as it is, will not affect our family's lifestyle in any material way. I cannot say that I was duped. I had read all the posts on TUG by people pro and con - PerryM, tombo, boca, etc. I realized there was a risk but I did not fully appreciate how much of a risk! Also, economic events of the past 45 days (after I joined) apparently pushed HHC beyond the "worst-case" scenario I had anticipated (takeover at less favorable membership terms).
> 
> Did the huge support for HCC here and on DestinationClubForum influence my decision to join HCC? Of course it played an important role. But I took that for what it was - members commenting on the great experience they had vacationing in HCC homes. I had also read the posts on "Ponzi Scheme" that those skeptical of DCs had posted. As a business consultant I thought about sustainable business models, did some math (can explain this later if people care) and tricked myself into believing that HCC was close to getting there. Clearly "getting a good deal" played a role in my decision - wanting to get in before the costs were raised a bit more to a level that was sustainable for HCC. Ironically, I still think that a DC model in the $400-$500 per night cost range would work for many people like me. Unfortunately, most HCC members were in much lower and the next 400 full-paying members never materialized.
> 
> So thanks for all the pro/con arguments made on this site. It'll be interesting to see what happens with HCC - of course, now I have major skin in the game!



Thanks for the note.  As long as you did the analysis, read the threads and made your decision, you will be okay.  You made a calculated risk and the market turned against you.  It happens.  As long as you make calculated risks, over time, the averages turn in your favor.  It's when people make bad risks is when they get hosed and can't understand why.


----------



## BocaBum99

Troopers said:


> Bourne, not trying to be confrontation here but just trying to understand.  How did you arrive at this?  You must be adding some phantom dollars for your vacation experiences to get the math to work out, right?  When i looked at HCC this summer, my recollection was that the annual dues per night was more or less the rental price per night.



That's my thinking as well.  I'll bet if you did the net present value calculation on his actual vacations including the lost membership that he is paying way more than the rental rate.

It may be a good time to find out if HCC and other Destination Clubs will now rent to non-members.  My guess is that the rate will be less than the maintennace fees and owners should gladly take it.  No reason why unbooked member days should go unused when money can be acquired to offset maintenance fees.    

My guess is that some will reject this concept because it would further devalue their ownership when indeed it would reduce their own cash outlays if they did it.


----------



## caribbeansun

*More on HCC*

Everyone is different in how they arrived at their decision to either join or not join.

If you do a search of my posts on the topic you'll find that I was very negative on DC's in general.

I gradually warmed to the idea, did considerable research, talked to numerous DC's and made a decision.  My timing was impeccable wasn't it?

Going in, it was known that there was substantial risk, I knew there was a chance that I'd lose 100% of what I put in.  I didn't honestly believe that would be the case and I really did believe that in the worst case I could visit a couple places and back out in my first year. Okay, so I underestimated the life span of HCC - my bad and I own that or lost that whichever way works for you.  

It's dead money no matter what happens going forward.  

Applying hindsight to this is pointless.  Where did you predict the Dow to be a year ago? - honestly - if you were wrong (and you ALL were) there's really not a whole lot different.  The contrarians say "we are brilliant and were right that the Dow couldn't sustain the gains of the past few years", the optomists say "yes, but you're going to miss the bottom of the market so we will win in the end" - it's all just noise. 

Debating the cost per night calculations - you know what, everyone is of a different economic reality.  $390/night is a drop in the bucket compared to many high end places - in fact you don't get in the door although it's possible that you might find a studio/garbage bin view room at that rate.  But again it really doesn't matter does it?  It's whatever the individual wants to spend, whereever they place value and how you decide to travel or spend your $'s isn't relevant, both are right because it's a personal decision.

Everyone that joined is an adult capable of making their own decisions, assessing risk/reward trade offs and writing a cheque.  This also will have little, if any, impact on me.  I don't like losing money no matter the quantum but come on - I'm not buying into something like this with anything other than discretionary dollars.

Will I consider a DC again - NFW!  I'm done with TS as well - low value, one-step above a hotel room stuff (no Mary-otts in my future).  The only TS's I'm going to look at going forward are Aviara (if I can remember how to spell it), Troon North and Westin St. John - I haven't found anything else close to what my expectations are.

Frankly, I'm going back to what I know - beachfront, luxury condos that are off shore.  Worst case in that scenario is that I have to buy more sunscreen and find someone to bring me ice for my bucket of beer.


----------



## caribbeansun

Some have been doing this all along.  I personally rejected one that was doing it because it was taking away from availability to the members.



BocaBum99 said:


> It may be a good time to find out if HCC and other Destination Clubs will now rent to non-members.  My guess is that the rate will be less than the maintennace fees and owners should gladly take it.  No reason why unbooked member days should go unused when money can be acquired to offset maintenance fees.


----------



## PerryM

*You bought what?*

VRBO.com is the logical next step for displaced DC members.  They have 110,000 vacation rental homes/condos that easily match HCC villas and probably some of the $300k+ DCs.

Something comparable to a DC could probably be built from those owners if they wanted.

There probably are chat rooms that have VRBO experts who can help folks get into the DC like units that timeshares can’t address.

No up front cash to worry about.

Of course the key question is: What will replace DCs as the hot new gimmick to get involved with?

I still like the DC idea and as the DC universe unravels maybe one of the guys in the industry will put together a real DC that is 100% equity based and is 100% transparent and is a co-op where the investors get to reap the rewards and the management company gets paid to manage the thing.

It will have to be called something else since DC’s are about to join Timeshares in the list of phrases that make folks point at you, smile, and say “You bought what?”


----------



## Steamboat Bill

I agree that vrbo adn other sites like them are a great (but not perfect) alternative as many times the pics and descriptions are lacking and/or deceiving. Even tripadvisor ratings and reviews get "gamed" by a few people.

There are only a few equity DCs such as Equity Estates and A&K RC.

Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there. 

On the other hand, it is clear the DC industry could use some regulation to make sure they are selling a product that can be honored and delivered. This is one area that Perry (and ARDA) has been calling attention to and the DCA obviously has no teeth.

One thing to think about is that "rich people" are the ones joining DCs and HCC was a "value" club that competed more with high end timeshares than any other DC out there. HCC had the cheapest membership fees and annual dues of any club, by far. As funny as this seems, many of the other DCs never considered HCC to be a real player or competition for them. Unfortunately, if they go bust, it will have a negative effect on every club.

A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive.

Did I have my head in the "Maui" sand on anything? Possibly as I brought up a topic of charging a premium for premium homes that was met with resistance. I also advocated a "points based" reservation system that was very unpopular and I wanted to put restrictions on the 1 week members. I thought I was trying to help the club and had no idea that the foundation was so shaky.

With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate.

I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.


----------



## PerryM

*Greed doomed the DC market from the start....*

When the DC market finally dies, and I can’t even guess when that will be, folks will look back and use 20/20 hindsight and many, especially the drive-by media, will ask “Wasn’t it obvious to everyone?”.

DCs are a great idea but the folks who started them were just to greedy – they went way too far in screwing the consumer in every way possible:

1)	They should have been 100% equity based – a few were, they should have ALL been

2)	They should have banned together to promote an industry association that would aggressively advertise against DCs who did not join – self policing

3)	A major CPA firm should have blessed every possible aspect of the operation of the DCs

4)	Investors should have pledged iron clad agreements and stake their fortune on the operation of the DC

5)	100% points oriented in every aspect of the operation and free market rental rates determine what a villa was worth for reservation purposes

6)	Yearly independent real estate appraisals

7)	Price of memberships are directly tied to these appraisals and thus can increase OR decrease over time

8)	Memberships can be sold on eBay but the DC industry had a ROFR and could buy each other’s memberships if need be to shore up a poorly run DC and thus not have one DC sink the entire industry

Well that’s just 5 minutes of typing – I’m sure I missed some points and will add them as I think of them.

But NOOOOOOOOO! Our DC founders found greed far too much of a driving force to worry about the members – and that’s what the DC market will be remembered for – greed.


----------



## tombo

Steamboat Bill said:


> There are only a few equity DCs such as Equity Estates and A&K RC./QUOTE
> 
> Since there are only a few of these operating I guess one should throw their money away on the many non-equity money pits.
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there. .
> 
> 
> 
> 
> They are all at great risk to fold and as such deserve to be condemned, avoided, and exposed for what they are, a get rich scheme for the owners which is diastrous for the paying members. Several hundred unsatisfied customers so far with 6000 or more left to lose their investments in the future.
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> On the other hand, it is clear the DC industry could use some regulation..
> 
> Click to expand...
> 
> 
> You reckon? When did this become apparent? Many of us have said this for years. It is good that you are starting to agree that the owner's benevolence and business skills aren't enough.
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive..
> 
> Click to expand...
> 
> 
> Everything is unclear to members because DC's don't have to disclose any information they don't want to. This is why any you invest in could be fine or about to file bankruptcy. No transparency, no way I would invest in their get rich schemes.
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> Did I have my head in the "Maui" sand on anything?.
> 
> Click to expand...
> 
> 
> Yes on about everything, and it is apparently still in the sand. You are one of the few that still feels like non equity DC's are a good investment. Please feel free to join all of the exisiting DC's to keep the failing DC industry going, but how can you (with good conscience) possibly still tell people here that there is any reason to join any non equity DC in this environment?
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate..
> 
> Click to expand...
> 
> 
> Bigger investments simply will translate into bigger losses for members when they fold. Having a lot of income does not guarantee that the clubs have a lot of money, only that those owners have large salaries. Keep trying to convince people that they need to join a DC and you are going to make some very bitter enemies when another one of these "scams" fold.
> 
> 
> 
> Steamboat Bill said:
> 
> 
> 
> I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.
> 
> Click to expand...
> 
> 
> I hope that there is not another HCC member trusting enough to put another penny in HCC. Surely it is obvious that it is over and would be a total waste of money. How many times are you going to believe the rhetoric of how everything is going to be OK at HCC when you have so many facts to prove otherwise. If you read these threads and spend another penny on HCC or joining another DC, you do so with the knowledge that you are making a very expensive mistake!
Click to expand...


----------



## PerryM

*Bill is not the enemy here.....*

I know and like Bill – let’s not lump a member of  a DC whose one and only responsibility was to buy a membership, pay the dues, and use that membership to his benefit.

We’re all grownups here and “Due Diligence” is a theme that runs throughout TUG – I know for a fact Bill did his due diligence and HCC made a lot of sense to him – I believe Bill has already gotten more out of HCC than he put in.  (If you look at the rental rates he would have had to pay to stay at the same exact villas).

Bill is the kind of guy who shares his experiences and that’s what he did – his adventure into the world of DCs – I for one, can’t fault Bill for simply sharing his experiences with us and I distinctly remember him warning that DCs aren’t for everyone.

I think an examination of the DC market is worthy of discussion and to those stuck in this horrible mess I, for one, can only throw in my 3¢ worth and secretly say to myself (Wow, I almost stepped into that one).


----------



## caribbeansun

My own perspective:

I reviewed the Equity Estates model and I found it scarier than HCC and had serious questions around many things to do with the club.  A&K's buy in was way too many $'s for something I wasn't convinced of.

The DCA is pointless, their bogus net asset test is pointless (I did know this going in BTW)

The DC industry will have a difficult time surviving a 3rd failed club, particularly one with this many members.  I don't think this is the last club to go under but that's just my own prediction which is tainted by what's happened.  I think the HCC failure will make it very difficult for any new entrant to be possible.

I wouldn't assume that any DC is flush with cash.



Steamboat Bill said:


> There are only a few equity DCs such as Equity Estates and A&K RC.
> 
> Even if HCC go bankrupt, I still don't think it is fair to condem the entire DC industry as there are still over 6,000 members out there.
> 
> On the other hand, it is clear the DC industry could use some regulation to make sure they are selling a product that can be honored and delivered. This is one area that Perry (and ARDA) has been calling attention to and the DCA obviously has no teeth.
> 
> One thing to think about is that "rich people" are the ones joining DCs and HCC was a "value" club that competed more with high end timeshares than any other DC out there. HCC had the cheapest membership fees and annual dues of any club, by far. As funny as this seems, many of the other DCs never considered HCC to be a real player or competition for them. Unfortunately, if they go bust, it will have a negative effect on every club.
> 
> A few other factors, that were unknown to me, was HCC was putting the minimal down (20%), taking unfavorable mortgages, too many leased homes, too many unclear partnership homes, and started to fragment the market with 1 week membership plans, and needed new members to survive.
> 
> Did I have my head in the "Maui" sand on anything? Possibly as I brought up a topic of charging a premium for premium homes that was met with resistance. I also advocated a "points based" reservation system that was very unpopular and I wanted to put restrictions on the 1 week members. I thought I was trying to help the club and had no idea that the foundation was so shaky.
> 
> With an average cost of $200-300k or so to join a DC like ER, Quintess, LUSSO, UE and annual dues that are $500-1000 per night, it is pretty clear that these clubs have a ton of money. If they have been responsible with investing and minimizing debit, then the clubs will thrive. Hopefully the other clubs will learn from T&H and HCC mistakes and quickly modify their clubs to avoid the same fate.
> 
> I am sadden to witness the turn of events for HCC and hope they can pull off a miracle, but the clock is running out and they need a hail mary pass.


----------



## pwrshift

*Writing off membership fees?*

I think someone posted this question elsewhere but not answered...is there any way the membership fees and dues of a DC can be written off against other income?  I suspect not as it's like joining a golf club, but perhaps there are other roads.


----------



## BocaBum99

pwrshift said:


> I think someone posted this question elsewhere but not answered...is there any way the membership fees and dues of a DC can be written off against other income?  I suspect not as it's like joining a golf club, but perhaps there are other roads.



On what basis would this be deductible?


----------



## TarheelTraveler

PerryM said:


> VRBO.com is the logical next step for displaced DC members.  They have 110,000 vacation rental homes/condos that easily match HCC villas and probably some of the $300k+ DCs.
> 
> Something comparable to a DC could probably be built from those owners if they wanted.
> 
> There probably are chat rooms that have VRBO experts who can help folks get into the DC like units that timeshares can’t address.
> 
> No up front cash to worry about.
> 
> Of course the key question is: What will replace DCs as the hot new gimmick to get involved with?
> 
> I still like the DC idea and as the DC universe unravels maybe one of the guys in the industry will put together a real DC that is 100% equity based and is 100% transparent and is a co-op where the investors get to reap the rewards and the management company gets paid to manage the thing.
> 
> It will have to be called something else since DC’s are about to join Timeshares in the list of phrases that make folks point at you, smile, and say “You bought what?”



A couple of thoughts from my perspective:

I'm a DC member and I've also rented on VRBO and otherwise.  I can tell you that I would never go back to renting unless I had to.  I think most who have experienced both would say the same thing.  See, for example, http://www.destinationclubforums.co...roperties-vs-membership-destination-1102.html

Your proposed DC is actually pretty close to the A&K Residence Club, if you look at the details.  Members own 100% of the real estate debt free, A&K owns the management entity that runs the thing and collects a management fee in order to pay for the expenses in doing so.  They also market the memberships and get a commission for selling any in order to pay their marketing costs and hopefully some level of profit if they sell enough.  Dues are used to pay for the taxes, insurance, HOA dues and are intended to actually reflect the costs.  Transparency is a focus.  The whole structure just makes a lot more sense than the non-equity clubs out there.  I actually think there's a market for a lower priced club using the same structure, especially now that one irrational competitor has been forced to become sustainable (no offense to any HCC members here).   

However, I agree with your thoughts generally (and have previously over the years on DCs in general).  There are way too many irresponsible DCs out there, and it makes it difficult for those trying to do it right, as you've always got someone out there selling some underpriced product that on it's face looks the same, but will likely be bankrupt in a few years.  I'm starting to think that regulation is the only way to go, since the DCA has no teeth and has been incapable of really accomplishing much.

I don't think equity DCs, in of themselves, are the pancea.  You can run an irresponsible equity DC just like you can an irresponsible non-equity DC.  You can still leverage up the thing and underprice the deposits and dues and still have financial problems.  However, as a general matter, (i) equity DCs tend to be run with more tranparency (probably only partially because it's equity though), (ii) you have "ownership" of the underlying real estate, so you've got a leg up in the event there is a problem, and (iii) you tend to have stronger legal and financial rights as a shareholder or partner as opposed to a contract which gets thrown out the window in the event of a merger or financial problems (this is the reality in contrast to what is sold by the non-equity DCs).

Running a DC is incredibly expensive and with most DCs, the dues just aren't enough, so I agree that you can't just assume a DC is flush with cash.  Based on economics and that there aren't new member deposits coming in to be "poached," I would expect at least two of the higher end clubs will have to come clean and overhaul their basic structure and dues.  I've always said you can't have $4M houses, low deposits and dues, low house to member ratios with great availability, and incredible services and be sustainable.  I would argue that you can't be sustainable for the long term even with new members and appreciation, and without, things come to a head much sooner.


----------



## BocaBum99

The biggest issue in this market is that consumers do NOT treat their money like it were an investment.  If they did, they would never do it.

I heard all of the arguments about how the rich throw money at lots of luxury products without thinking twice about it and this really puzzled me.  If anything, high net worth people should know better.

Why would anyone want to provide an unsecured interest free loan to anyone for the right to rent vacations from that person at or above the market rate?  Especially when that loan cannot be called unless 2 other members come in?  Ponzi scheme is written all over this one.

This was about as clear an example of a sure fire money losing strategy I've ever seen.

I just hope owners in dead DCs don't try to throw good money after bad trying to save a very poor business model.


----------



## tombo

PerryM said:


> I know and like Bill – let’s not lump a member of  a DC whose one and only responsibility was to buy a membership, pay the dues, and use that membership to his benefit.
> 
> We’re all grownups here and “Due Diligence” is a theme that runs throughout TUG – I know for a fact Bill did his due diligence and HCC made a lot of sense to him – I believe Bill has already gotten more out of HCC than he put in.  (If you look at the rental rates he would have had to pay to stay at the same exact villas).
> 
> Bill is the kind of guy who shares his experiences and that’s what he did – his adventure into the world of DCs – I for one, can’t fault Bill for simply sharing his experiences with us and I distinctly remember him warning that DCs aren’t for everyone.
> 
> I think an examination of the DC market is worthy of discussion and to those stuck in this horrible mess I, for one, can only throw in my 3¢ worth and secretly say to myself (Wow, I almost stepped into that one).




Bill constantly told me and others that HCC was the best thing since sliced bread. Bill has gotten many more people to invest in HCC than he would like to admit. I have asked Bill many times if he worked for HCC since he was like an advertisement for HCC here on TUG. Bill would post on every thread on TUG about how great HCC was. If someone on the buying selling thread asked about HGVC or Mariott, Bill would say why buy that when you could join HCC? Feel free to look at Bill's past posts if you think I am kidding.
I am a salesman and have never promoted my product harder in my locale than Bill pushed HCC on TUG. Bill still has a prolem admitting that HCC and all DC's are a bad idea.

Bill not only tried to make HCC fit every one, he proposed financing HCC with home equity loans. If you think I am wrong I will be glad to direct you to his thread where he proposed the home equity loans as a great way to join HCC. I said repeatedly that HCC and other DC's were a bad risk and he scoffed me and acted like I was stupid. Bill was the biggest HCC salesman on TUG and even now when it is obvious that HCC is folding he still wants to get people to pay money to keep the fiasco going. Bill is now and always was wrong about HCC! HCC and all DC's are a bad deal for all but the owners. Feel free to defend HCC, DC's, and Bill at your own peril. All of the these are just wrong.


----------



## PerryM

*Play a little louder please...*

I can’t speak for Bill but we all know he’s a nice guy – he is enthusiastic about his beliefs and promotes his positions – that’s the essence of a chat room.

In the case of DC’s I was in Bill’s shoes 1 year before him and he took my place – he put his money where is mouth is and bought a HCC membership.  I was 180° opposed to Bill by then and we have had many lively discussions – again exactly what a chat room is all about – discussions.

I am 100% convinced that HCC has been a winner for Bill – he has gotten more out of the villas he has used than the membership fee and MFs he paid.  For Bill HCC is a success and if it goes belly up he will be sad but better off for doing so.

Can anyone want more?

This is why I classify DCs as a variant of a Ponzi scheme – if new members don’t buy higher priced memberships the scheme collapses and the members have nothing but the savings over renting the identical villas.

DCs are too leveraged and if HCC had stuck with a equity model they would find the new membership fees cheaper by 25% - assuming their villas have taken a hit of 25%.  The members could not squawk since everyone’s real estate has taken a hit.

But 95% of the DC industry took just a greedy approach – sell high priced memberships and the members have nothing in return – except salesreps’ promises which are worthless.

Nothing can save the DC industry now and folks can’t get out and they are on the Titanic after it hit that iceberg – everyone telling the band to play a little louder while the water slowly rises.

I’ve given up informing folks on chat rooms about new opportunities – there really isn’t anything in it for me as I’ve learned.  That’s exactly what’s happening here when we ridicule folks for posting their blog of their adventures in timeshares or related events.


We are on thin ice when we invite folks to Blog their experiences here and then criticize them for doing so.


----------



## caribbeansun

It's called marginal utility and has nothing to do with knowledge I suspect.



BocaBum99 said:


> I heard all of the arguments about how the rich throw money at lots of luxury products without thinking twice about it and this really puzzled me.  If anything, high net worth people should know better.


----------



## AwayWeGo

*A Penny Saved Is A Penny Earned.*




BocaBum99 said:


> I heard all of the arguments about how the rich throw money at lots of luxury products without thinking twice about it and this really puzzled me.  If anything, high net worth people should know better.


Shux, if I weren't thrifty I wouldn't be rich. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


----------



## caribbeansun

Since you are Canadian the US posters on this thread won't understand this.

The annual fees are not deductible in any fashion unless you are able to prove you are using the time for business purposes or to earn taxable income.

The deposit is likely considered to be personal use property which would allow you a rather marginal write-off upon it going to zero value.  If memory serves it's capped at $1,000 capital loss.  

Regrettably the HCC documentation clearly indicates that this was not an investment and therefore treatment as a capital loss won't be accorded.  Although you agreement may be different.

IF on the other hand HCC did grant the concession of allowing equity in the club which may seem to be advocating I think you'd have an argument to say that it is indeed an investment and then when the deposit proves to be unreturnable (if that's the case and I believe it will be but you may not) then you would be able to write off the entire loss.

If you have one of the earlier HCC memberships that allowed some form of equity appreciation there might be an argument to be made for capital loss treatment as well.

If you believe you advanced an unsecured, non-interest bearing loan - no deduction for you since it didn't have the potential to earn taxable income or taxable gains.

Lots of variables out there, some of which haven't as yet been determined. You don't say if you actually have an HCC membership so I don't know if your question was hypothetical or not.

Regardless, you should ask your tax advisor before filing your tax return.



pwrshift said:


> I think someone posted this question elsewhere but not answered...is there any way the membership fees and dues of a DC can be written off against other income?  I suspect not as it's like joining a golf club, but perhaps there are other roads.


----------



## Steamboat Bill

PerryM said:


> I am 100% convinced that HCC has been a winner for Bill – he has gotten more out of the villas he has used than the membership fee and MFs he paid.  For Bill HCC is a success and if it goes belly up he will be sad but better off for doing so.
> 
> I’ve given up informing folks on chat rooms about new opportunities – there really isn’t anything in it for me as I’ve learned.  That’s exactly what’s happening here when we ridicule folks for posting their blog of their adventures in timeshares or related events.
> 
> We are on thin ice when we invite folks to Blog their experiences here and then criticize them for doing so.



I NEVER recommended people taking out a Home loan to pay for a DC membership or timeshare.....NEVER. I did however post a news release that this was an option as it was an official new release.

Yes, I have had GREAT value of my HCC membership, just like I have had with my DVC, Westgate, and even Marriott timeshares. I don;t want to rub it in that I am WAY beyond break even with my HCC membership as it is disrespectful to someone that has not traveled as much as I have.

If HCC goes bust, I will be sad, but not devastated. The money is not an issue as it is a small number for me. It really was something that provided great value and opportunity for me and I will MISS the travel opportunities as I will have to find a replacement.

For the record - I HAVE NEVER RECEIVED ONE PENNY PAYMENT FROM HCC

When I found out about HCC (thanks to PerryM) and experienced it firsthand, I loved it and wanted to help spread the news......shame on me.

Before TUG, I was VERY active on DIS and was very passionate about DVC and thought it was a great investment (yes investment). At the old prices, I bought well over $100,000 in DVC points. At the new prices (from the developer) I can't justify it as an investment anymore and think people are better renting from a current owner.

I started to SLOW down my TUG posting a month or two ago when I approached the 4,000 post mark as people just seemed to find offense in anything I posted about....and I mean anything. If I posted about window washer rates, speeding tickets, overweight people, HCC, etc......someone (or many people) began to make personal attacks on me. No big deal at first, but started to increase a few months ago.

I *WAS* a Moderator on TUG and even INVENTED this non-traditional forum and *RESIGNED* as a moderator several months ago......nobody even noticed or sent me a PM.

I resigned as a moderator as TUG was no longer interesting or fun anymore as the personal attacks and online BS was tiresome. I even thought of killing off Steamboat Bill as an online suicide, but figured that thread would get deleted fast. I just wanted to go back and be a regular member and not have every post examined for offensive material.

I could EASILY log off, create a new screen name and take a new identity....perhaps something like "Sweet Old Lady" and nobody would know.

HCC is NOT dead yet...there is still a small sliver of hope left and if it does survive or get bought out or continue in a modified form, I will be VERY happy.

I have seen the DC light, but the light is dimming and/or changing locations and if HCC FAILS, the entire industry should not be condemned no more than if Westgate fails the entire timeshare industry should not suffer.

I also find it ironic that Timeshare companies are the Sleeziest people I have ever met and have ripped off billions of dollars, yet nobody is calling this a ponzi scheme or SCAM.

There would be no timeshare resales if there were no SUCKERS that bought from a developer and why are TUGers so proud to post they bought a super cheap timeshare on eBay when someone may have gone bankrupt just to get out of the financial obligation of the week you just bought. This is plain offensive.


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