# NY Times article on DCs



## Steamboat Bill (Mar 14, 2008)

There is a nice article in the NY Times today about Destination Clubs and it is mostly positive news.

I was interviewed for this article, but was NOT quoted  

Newspapers always seem to focus on the higher priced DCs and ignore HCC.

http://www.nytimes.com/2008/03/14/travel/escapes/14dest.html?_r=2&ref=travel&oref=slogin&oref=slogin


----------



## PerryM (Mar 14, 2008)

*Great article..."Buyer Beware"*

"In fact, some people who follow the industry view the Tanner & Haley bankruptcy as an anomaly, saying overly generous policies required the club to lease properties to fulfill demand."

“This club never should have failed,” said Brian Kabateck, a lawyer with Kabateck Brown Kellner, a law firm representing 571 plaintiffs out of 800 members who are suing the travel company Abercrombie & Kent, which had licensed its name to Tanner & Haley, thereby confusing some members about who was operating the club"


Wow, I thought that the DC industry had no problems?  571 folks flailing around trying to get a few bucks back from Tanner & Haley.

My reading of the article is “Buyer beware”.

I must say that the author Susan Stellin seems to have done a thorough job of pointing out the Pros and Cons of DC membership.  Hope she does an article on timeshares.


----------



## Steamboat Bill (Mar 16, 2008)

I don't want to debate the T&H situation, but if 80% of them joined UR when UR bought T&H, thus it was not a total bust as they are still able to use the various properties as they originally planned (getting a full refund on their deposit will probably not happen).

Of course, many people LOST money (on paper). Hopefully this was the first and (hopefully last) DC to go bust.

With 5,000 DC members worldwide and a 95-98% satisfaction rate, the DC industry must be doing something correctly.


----------



## PerryM (Mar 16, 2008)

*Open that door, the one with the Biohazard sign if you want...*

If these 571 members have lawsuits pending against a DC that’s 571/5,000 or 11.4% of DC members currently have outstanding lawsuits.

There are about 3 M timeshare owners in the US, I don’t think that 342,000 have lawsuits against the developers.  Granted, I’m just guessing but I feel pretty confident about this.

I guess folks can slough this off as inconsequential – this, to me, is a red flag, a red and black biohazard warning sign, a tornado siren, skull & crossbones, double red with black square hurricane flags.

Some folks just don’t read flags, placards, or listen to those pesky tornado sirens.  I do.


----------



## Steamboat Bill (Mar 16, 2008)

Technically, there has only been ONE DC to go bust and it happens to be the first DC on the market with some design flaws that became apparent as they grew. These design flaws have been corrected (as far as anyone can tell) and the industry is in better shape as a result of this. I just don't want to blame and banish the entire DC business because of one club (and in particular one individual) decided to make promises he could not keep.


----------



## SDKath (Mar 17, 2008)

I don't know.  I thought this article was all over the place.  As someone interested in DCs but not an owner, I was not sure what to make of it all in the end.  I think it was pretty poorly written and just all over the map.  Sometimes journalists just try to cover every angle and every detail in one short article and what you end up with is a bunch of random facts with little flow or conclusion.  Sigh.  

Katherine


----------



## PerryM (Mar 17, 2008)

*Here's my take on the article...in depth*



SDKath said:


> I don't know.  I thought this article was all over the place.  As someone interested in DCs but not an owner, I was not sure what to make of it all in the end.  I think it was pretty poorly written and just all over the map.  Sometimes journalists just try to cover every angle and every detail in one short article and what you end up with is a bunch of random facts with little flow or conclusion.  Sigh.
> 
> Katherine




I detest the normal Drive-By Media reporter – they have an agenda and their news article is just a way to move that agenda forward.  There is NO way to interact with the all knowing reporter - no way to challenge their agenda.

“Fair and Balanced” is what I’m looking for from a reporter; “Just the facts Ma’am” – 95% of them fail.  In this article I felt that the author was presenting the Pros and Cons of Destination Club membership.  From being involved with DCs I can tell you the reporter knew the facts.

First:
Start with the title “*A second Act for Destination Clubs*” – Act one was having THE initial DC going belly up and leaving the members to read the fine print which dealt with dissolving the DC.  When the founding company of any industry goes bankrupt that is worthy of study – later if the DC industry should have more problems everyone will point back “Didn’t you heed the fact that the founding DC couldn’t make it?”.


Second:
The reporter calls DC a “*Little-known luxury travel niche”* – correct!  

“Destination clubs are designed to appeal to wealthy families who like to vacation in different places but who don’t want the responsibility of owning multiple properties.”  Another bull’s-eye.

“Unlike owners of time shares, members of destination clubs generally do not have a stake in any real estate holdings, and clubs promise to refund at least 80 percent of the initial deposit when a member resigns.”  Right on.  The reporter makes the distinction between DCs and the normal timeshare – lack of ownership.


Third
“But the clubs are not without risks; the 2006 bankruptcy of one of the early companies in the industry, Tanner & Haley, left more than 800 members as unsecured creditors, many of whom are pursuing lawsuits to recover their deposits. As a result, destination clubs have been trying to reassure current and prospective members about their financial stability, mostly through greater transparency and a fledgling effort at self-regulation.”  Dead on target – DCs have NO protection of ANY kind beyond the normal contract enforcement.   *Notice the words “unsecured creditors” – that would be the members of that DC*.

I doubt the normal DC salesrep will point out the fact that 11% of all DC members have outstanding lawsuits against DCs.

“They have also been shoring up their businesses through mergers, partnerships and membership plans that are more diverse, with some clubs betting that bigger is better, especially to appeal to a risk-averse second wave of members.”  Typical of a wild west new venture – the “Strong hands” will dominate and devour the “Weak hands”.  Look for years and years of this happening.

The author mentions other DCs that are merging with other DCs as this consolidation moves forward.


Forth
This is where the reporter interviews some DC executives who give a sales pitch – this could have been left out.


Fifth
“*The availability was not quite what was promised*,” Ms. Haynes said. Mr. Potter said the club had a 95 percent satisfaction rating among its members, and that as with any club or resort, peak travel times have greater demand.

The typical “Too many folks chasing too few holiday weeks”.


Sixth
“*Although destination clubs are not currently regulated by the government*, seven now belong to the Destination Club Association, a group formed in 2006 to spur some self-regulation.

Association members must adhere to the group’s Code of Responsible Business Conduct, which requires that each club give new members seven days to change their minds after joining and an opportunity to get a full refund. Clubs also pledge to get annual independent audits of their financial statements, which some clubs now share, at least in summary form, with their members.

Another requirement is that clubs agree to demonstrate annually that they have the resources to meet at least 66.66 percent of the total deposit amount due to members. This “net asset test” has become a fairly standard measure of financial stability in the industry, with most clubs aiming to maintain a 100 percent rating. “

Hawaii was looking at passing some DC regulations but decided that it was so small as to not be worth the busy politicians time.  Net net there are NO state laws governing how DCs are to behave and so the guys who cook up these DCs can do anything they want.

“Although Hawaii has been considering legislation that would regulate destination clubs, a review released this year by the state auditor concluded that regulation was not necessary. The report determined that there had not been significant harm to consumers to justify new laws and called the industry’s efforts at self-regulation sufficient.”

If you believe that these guys will get together and regulate themselves you misjudge their purpose for forming these great schemes by these high rollers.


Seventh
“Analysts tend to agree that destination clubs have high satisfaction levels.”  This seems to be very true – the folks who pay the big bucks to become a member seem to be happy – well 11.4% of them are suing so that leaves 88.6% satisfaction.

*If you ever use eBay and see an auction where the seller has an 88.6% positive feedback rating would you buy even a Pez candy dispenser from him?*


What was left out?
The definition of a DC would have been very helpful to readers of this great article – since the author left it out I’ll give mine:

*“A Destination Club is where 8 folks buy a rich guy a condo, pay him rent to use it, and get back 80% of their money when the rich guy sells the condo for a fat profit that they don’t share in”.  *I said that...

Now I don't pretend to be a reporter - I don't recommend DC's to anyone at this point.  Years from now after the DC industry leaves the "learning curve" sure they probably will offer something that will appeal to me.


----------



## vivalour (Mar 17, 2008)

PerryM said:


> I detest the normal Drive-By Media reporter – they have an agenda and their news article is just a way to move that agenda forward.  There is NO way to interact with the all knowing reporter - no way to challenge their agenda.



This is nonsense. You CAN challenge MOST reporters' observations by:
1. writing a letter to their editor
2. calling them/their editor
3. engaging in an on-line debate/discussion with them/their editor
4. stop buying their newspaper or watching their broadcasts

In 2008, we have a choice of interactive media, most powerfully the Internet, where it is easier than ever to do research and due diligence. Take this forum, for instance. Why read an article by a NYT "drive-by reporter" if we can take advantage of certain forum participants' "all-knowing", balanced expertise????


----------



## PerryM (Mar 17, 2008)

vivalour said:


> This is nonsense. You CAN challenge MOST reporters' observations by:
> 1. writing a letter to their editor
> 2. calling them/their editor
> 3. engaging in an on-line debate/discussion with them/their editor
> ...



Yea, that's how the Drive-By Media works - they get the front page you get to write a letter to the editor.

Some sites, ABC is one of them, allow readers to post comments and allow readers to immediately see other opinions that are just as valid.

However, try that with ABC, NBC, CBS, CNN TV broadcasts - it's still a one way street; their way.

P.S.
Take this article for instance.  The author never gives any credentials for reporting.  I'm assuming the reporter doesn't own a DC, and just who reviews the reporter for accuracy?  In this case we can't post our opinion to the reporter's opinion/facts.  

We have seen many reporters come to TUG scrounging around for folks to interview on timeshares.  The reporters are so lazy they can't even find their own folks to interview.

But, this reporter for this Drive-By did a great job of presenting the facts.

I understand that some might find this disturbing but the facts are the facts. - And what reporters should be doing.

P.P.S.
Just this morning I bought some stock via my web browser on my cell phone while walking around the block.  Folks want to sell stocks cheap and who am I to stand in their way?

I can book airline trips, order products, do all kinds of neat Internet things over my cell phone now from anywhere in this great country.

However when the NYTs writes an obviously biased article I am relegated to sending an eMail to the editor that will never be published.

It's time for the Drive-By Media to drop their monopoly on news - they will not go willingly but will be consumed by guys like me and my little cell phone.


----------



## TarheelTraveler (Mar 17, 2008)

PerryM - Wouldn't one of the equity destination clubs address most if not all of the concerns that you laid out (e.g., regarding ownership, appreciation, and not being an unsecured creditor)?

Regarding holiday availability, my experience, which is consistent with other DC members, is you won't get "Aspen at Christmas every year," but that you will likely get a holiday or two in a desirable location every year if you do some planning.  If you do want the guaranteed same location every year, then fork over the money for full ownership or that holiday fixed week timeshare.

With respect to the lawsuit, it is not surprising to me that a good chunk of the T&H members have joined the class action lawsuit.  It costs them nothing, and you might as well see if you get some dollars out of it, even if you are happy with your new UR membership.  I think you are taking some liberties to say that all of those that joined the class action lawsuit are unhappy DC members.


----------



## Steamboat Bill (Mar 17, 2008)

PerryM said:


> But, this reporter for this Drive-By did a great job of presenting the facts.



As I said, she actually interviewed me but I was not quoted. I found her to be very objective and well read and I did not think she had any agenda other than writing an interesting article for the NYT.



TarheelTraveler said:


> With respect to the lawsuit, it is not surprising to me that a good chunk of the T&H members have joined the class action lawsuit.  It costs them nothing, and you might as well see if you get some dollars out of it, even if you are happy with your new UR membership.  I think you are taking some liberties to say that all of those that joined the class action lawsuit are unhappy DC members.



Correct...just because they are joining a free class action lawsuit (like the many I have joined) does not mean they are not satisfied. Most class actions give the consumer a coupon for something or a very tiny check while the attorney's get the BIG BUCKS (anyone remember the computer monitor lawsuits for false advertising the screen size?...I got a $25 off coupon to buy a new $500 monitor...while the lawyers got $30m). Thus, I no longer fill out the class action forms that I seem to get every few months.


----------



## PerryM (Mar 17, 2008)

TarheelTraveler said:


> PerryM - Wouldn't one of the equity destination clubs address most if not all of the concerns that you laid out (e.g., regarding ownership, appreciation, and not being an unsecured creditor)?
> 
> Regarding holiday availability, my experience, which is consistent with other DC members, is you won't get "Aspen at Christmas every year," but that you will likely get a holiday or two in a desirable location every year if you do some planning.  If you do want the guaranteed same location every year, then fork over the money for full ownership or that holiday fixed week timeshare.
> 
> With respect to the lawsuit, it is not surprising to me that a good chunk of the T&H members have joined the class action lawsuit.  It costs them nothing, and you might as well see if you get some dollars out of it, even if you are happy with your new UR membership.  I think you are taking some liberties to say that all of those that joined the class action lawsuit are unhappy DC members.



Sure there are some equity based DC's but they account for what, 10%, of the market?

From the title of the article it seems to me that the reporter was trying to show what lies ahead of the DC industry after the founding DC went bankrupt.

I'd hope that folks pay attention to this article which I believe was well balanced.  The reporter could have just as easily done a hit piece on the DC industry.  I don't know how many of these the DC industry can take.


----------



## TarheelTraveler (Mar 17, 2008)

I agree that it was a well-balanced article overall.  The reporter could have just as easily done a puff piece, particularly since it was in the travel section versus the business section.

I am always surprised that the equity clubs are a fairly small portion of the market.  Although they generally have smaller portfolios, you do have some real advantages with an equity club.


----------



## NeilGoBlue (Mar 17, 2008)

TarheelTraveler said:


> I agree that it was a well-balanced article overall.  The reporter could have just as easily done a puff piece, particularly since it was in the travel section versus the business section.
> 
> I am always surprised that the equity clubs are a fairly small portion of the market.  Although they generally have smaller portfolios, you do have some real advantages with an equity club.



Amen.. I've consistiently (sp?) asked Perry to not lump Bellehavens and Crescendo in with the others.. but he seems intent on lumping all DCs together even though it's not accurate and borders on being negligient...


----------

