# Want to buy into the Steve Case/AOL Vacation Club?



## ricoba (Jun 6, 2006)

Do you think that any of the units are available for resale on ebay yet???


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## taffy19 (Jun 6, 2006)

I'll bet you they are private homes too. As long as real estate keeps appreciating, they can promise you 80% of your money back when you leave the club. I wonder how they can do this if we get a real estate bust? Very interesting to read more about it.


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## Patricia (Jun 7, 2006)

Hello:

Well it certainly sounds like a wonderful plan for those people who are wealthy....guess our family will stick to 
our regular, old, timeshare  (but we're happy with things the way they are.

But I certainly wonder what will happen when they get tons of members and
everyone wants to travel during school vacations...betcha they didn't plan
for that.   Whew, $250,000 is a lot to pay.

Thanks for the article, it is very interesting.
Hope they do well.

Regards,

Patricia


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## ohioelk (Jun 8, 2006)

Most of these vacation clubs only allow about 6 members for each property owned.  This keeps availability much better than an average timeshare.  There is of course still pressure on peak times.


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## PerryM (Jun 8, 2006)

*You can do better and be safer*

Exclusive Resorts is undoubtedly the leader in the Private Residence Club field; but not the best.  The best deal is at http://www.bellehavens.com

Bell Havens is the ONLY equity club out there – your dues make you a part owner of the master deeds to all the condos, homes.  If there is $500,000,000 worth of homes and condos you own part of that.

All the rest of the Private Residence Clubs you own nothing – zilch, zero.  If the administrative assistant sells the deeds one night and heads south, you have nothing to show for it.  We have thought of becoming members but this problem makes membership in all but Bell Havens super risky.  Super super risky.

That said, many folks find this type of “ownership” preferable to owning a second or third home.  Most folks investing in these clubs consider this fourth or fifth home ownership and its peanuts so they just go ahead and "invest".

Many clubs are based on the model of 7 owners split the generic home/condo and MFs are 8% of the current selling price of a membership.  This means that management makes 7 * 8% or 56% income for each membership per year – that’s why these things are mushrooming all over the place.  Most have the average membership at $200,000 with the MF of $16,000 per year.

You typically are limited to 3 weeks of prime usage in any residence and they have a nifty way to handle holiday weeks:

Each person is given 100 “Holiday Points” and bid on weeks at various residences.  The high bidder gets the week and loses the Holiday Points.  If you don’t win, the Holiday Points roll forward to next year.  E.g. if you have 4 resorts that you could see spending New Years week at you might bid 25 points for each of the weeks.  If you get one then 25 Points are deducted and have 75 left.  I really like this method for determining who wants a holiday week.  Next year you could bid 175 Holiday Points for Whistler for weeks 51 & 52 and get them!  Or, bid 75 points on another unit for this year.

Weeks not reserved can be used by any member for a cleaning fee.  Only about 60% of the weeks at any condo/home can be reserved in advance.  Folks in these clubs don't reserve 13 months out - many clubs open reservations just 6 months out.

You typically can sell your membership after 2 or more years of membership on a 2 out/1 in basis and that’s based on current prices.  E.g. you bought your membership for $150,000 5 years ago and want out.  You notify the club and once they sell the next two memberships (say at $250,000 each ) you get 80% of the CURRENT sales price or $200,000 – you made $50,000 on your membership.

Current selling price of a membership is directly tied to real estate.   If the generic condo they are now buying costs $2,000,000 divide that by 7 = $285,000 membership fee.  The generic condo/home’s price appreciates with real estate and thus do the memberships.

To bad the timeshare world can’t learn a lesson here.


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## ricoba (Jun 8, 2006)

*Re: You can do better and be safer*



			
				PerryM said:
			
		

> To bad the timeshare world can’t learn a lesson here.



As usual an excellent analysis...and a great last sentance.


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## mav (Jun 8, 2006)

Perry M., I take my hat off to you. Your knowledge and in depth research of vacationing, options in ownership, etc., etc. is amazing!  I really enjoy your posts!
     Maria


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## PerryM (Jun 8, 2006)

Thanks for the kind words – I’ll give myself a pat on the back.  

Timeshares still have an important part in our vacation portfolio which now contains timeshares, fractionals, and condo hotels – each has a place.  Of course, the more knowledge you bring to bear on your vacation needs the better the vacation.

I’m still worried about timeshares – too much fat is wasted each day by the timeshare industry with little a thought towards efficiency.

July 1st we will be vacationing in Maui and plan to hit our normal round of 5 timeshare developers and get $1,000 worth of cash and goodies.  Name another consumer product that has so much fat oozing out of every orifice?  The timeshare world waddles along assuming that as long as they don’t look over their shoulder everything is just fine.

I just know that something will come along that is “lean and mean” and will have the timeshare world lumbering down the same path that the dinosaurs took.  What will be the timeshare world’s “catastrophic event” that signals that the reign of timeshares is over?

Until then, exploit, exploit, and exploit!  (That’s what our $1,000 will be – the rewards of exploiting the timeshare world for our family’s benefit)


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## kxknj (Jun 8, 2006)

I have to agree with ricoba and mav. As a newbie to timesharing I appreciate the analysis that Perry provides on this forum. Kudos.

Kyle


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## getreal (Jun 8, 2006)

*BelleHavens is the best for who????*

I find the Belle Havens information very interesting, and remarked about that in a different forum.   PerryM is an encyclopedia of great TS information.

The only drawback of Belle Havens that I can see is the 8% MF.   Suppose you buy your membership for $285,000 and pay the $22,800 annual MF.  For that you get 3 excellent weeks of vacation.   

But is $22,800 for 3 weeks vacation really a good deal?   

It may just be fiscally more advantageous to invest the $285,000 elsewhere, and still have $22,800 each year to vacation on.

JMHO


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## PerryM (Jun 8, 2006)

*MF's on Timeshares are close to twice that of Residence Clubs!*

GetReal,

It’s not just Belle Havens, but the entire set of Private Residence Clubs, that has set the MF of about 8% based on the current membership fee.  I’m assuming that competition keeps this value as low as possible.

The average Marriott 2BR condo has a real estate value of about $300,000 to maybe $400,000.  The average Marriott MF is about $850 and if you work out the math and assume just 7 owners thats $850 * 52 weeks = $44,200 for the year then divide by 7 = $6,314 for each of the 7 owners.  Extrapolating to compare to a Residence Club has us multiplying that $400,000 condo by 5  = $ 2M Residence Club and the MF would be $31,570 (5 * $6,314).  What does that say about MF’s on timeshares? (Almost twice the rate charged by the Residence Clubs; 8% of $ 285,000 membership fee or $22,800)

The cleaning crew must travel to the home or condo specifically to clean just that one unit.  Then there is the wear and tear that a 6-star residence has that a Marriott would not be concerned with.

Net conclusion: Timeshare MF’s are twice as high as Private Residence Clubs! (When you normalize them)

P.S.

Timeshares are NOT sold to investors, Ma and Pa are the candidates for timeshares since investors know that timeshares are just a horrible investment.

Private Residence Clubs, on the other hand, capture the eye of the investor who wants a 4th home and doesn’t want another property manager and all the headaches with their second, and third homes.  The Clubs don’t need to spend 50% of the sales price beating a sale out of a weary prospect – the Clubs attract investor type folks who seek the Clubs out.


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## getreal (Jun 8, 2006)

*Twice as much as Marriott????*

Perry

You have me confused.   

In your examples above, 
(1) Belle Havens MF is $22,800 for 3 weeks, or $7,600 per week.   
(2) Marriott MF is $850 per week.

I'm not sure how Marriott costs more.   Please help me get some clarity.


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## PerryM (Jun 8, 2006)

*It's clear as mud to me...*

GetReal,

I was trying to compare a Marriott timeshare to a Private Residence Club – I have to normalize them to compare them.

That’s where I took the Marriott $850 MF per week and normalized it to just 7 owners or $850 * 52 / 7 = $6,314 for a $400,000 condo.

Then you need to normalize the $400,000 Marriott condo to that to a $2 M Club condo and you multiply by 5 or $6,314 * 5 = $31,570 is what Marriott would charge for a $ 2 M condo with just 7 owners.  The Club only charges 8% of the $2,000,000/7 owners = $22,800 for at least 3 weeks of usage.

All these Clubs have one theme to them – “This is not a timeshare”.  Reservations are just 6 months out, an orderly way has been devised to handle holiday weeks (Some Clubs have a Holiday Package where that membership costs 50% greater than a normal membership)

Since only 3 weeks * 7 owners = 21 weeks can be reserved per residence that means that the rest of the year (52 – 21 = 31 weeks) is a quick phone call to see if the residence is free and the only charge is a cleaning fee.  Theoretically you cold get 31 weeks/7 owners = 4 more weeks totaling 7 weeks for the $22,800 MF or $3,257 per week on a $2 M condo/home.

These Clubs are marketed as an alternative to home ownership (normally 3rd or 4th home) and I’m assuming that there is a market since these Clubs seem to be exploding everywhere.  Only one Club, however, has you protected by deeded ownership – the Belle Havens.

If you think about this – the principals who put up the money to buy the first residence get to use the deeds to the residences as collateral for other real estate ventures and if they default, well the club collapses – with only once exception - the Belle Havens.


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## getreal (Jun 8, 2006)

*Working through the mud ....*

Perry ...

I think I'm starting to understand your theory ...

You propose that Belle Haven condos cost 5 times as much as Marriott condos, but Belle Haven MF is not 5 times as much as Marriott MF, hence Belle Haven is cheaper.

On that basis, you are correct.   From your numbers, 5 x Marriott would be $4250 per week, and Belle Haven is _only_ $3257 (plus cleaning fee$) per week, so Belle Haven is not 5 times the Marriott price.

As always Perry, you have an interesting perspective.  In this case it is like claiming that my 8 seat SUV that gets 15 miles per gallon is more economical than a motorcycle that gets 50 miles per gallon.


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## PerryM (Jun 8, 2006)

*Exclusive Resorts Press Release as of today*

Press Release: Exclusive Resorts 
Now Exceeds All Competitors Combined 
June 8, 2006 
DENVER & WASHINGTON -- Exclusive Resorts yesterday announced significant expansion plans, fueled by new investments in the company and record levels of membership growth. The club also announced that golf legend Jack Nicklaus has joined the company to lead its golf program and that it has formed an alliance with his global golf course development firm to enhance the destination club's golf offerings.

Specifically, the announcements include: 

New residences and destinations for the club: A $72 million equity investment, led by Perry Capital, will help fuel $250 million of future real estate acquisitions for the club. Among the most intriguing acquisitions are: (1) new members-only developments in luxury resort destinations; and (2) new club residences in additional exotic destinations. 
New golf program with Jack Nicklaus and Nicklaus Design: Exclusive Resorts is further strengthening its golf amenities and services with assistance from the most legendary golfer of all time, Jack Nicklaus, and the world's leading golf course design firm, Nicklaus Design. Nicklaus is personally working with the club to elevate its current golf offerings and explore various development opportunities with his design firm to create one-of-a-kind golf destinations for club members. Nicklaus will participate in golf events organized by the club and assist in developing golf training programs for members through the Nicklaus Academies. 
Significant milestone in Exclusive Resorts' membership growth: Just a little more than a year after Exclusive Resorts became the first destination club to have 1,000 members, it has now broken through the 2,000-member mark -- giving the club what it believes to be more members than all other destination clubs combined. As the largest destination club in the industry, Exclusive Resorts is able to offer its members more unique vacation experiences in more destinations than any other club. Exclusive Resorts is leading the growth of the entire destination club category, which has grown three times faster than the fractional jet industry did in its early years. 
"Exclusive Resorts has come a long way in a short time," said Donn Davis, chief executive officer of Exclusive Resorts. "Now we are raising the bar even higher -- with new members-only destinations, expansion in more exotic locations and an incredible new golf program led by Jack Nicklaus. We have delivered more than 20,000 vacations to our members at an astounding member satisfaction rate of 95 percent. With this expansion, the best way for affluent families to vacation will become even better."

"Our expansion continues to solidify Exclusive Resorts as the premier destination club in the industry," said Steve Case, chairman of Exclusive Resorts. "By partnering with Perry Capital and Jack Nicklaus, Exclusive Resorts is creating more memorable experiences for our members and further defining excellence within a category that has truly arrived for consumers."

New Real Estate Acquisitions and Investment

The $72 million equity investment was led by Perry Capital. Robert Stern, managing director of Perry Capital, has joined Exclusive Resorts' board of directors, bringing extensive expertise in real estate acquisition and finance. Steve Case retains majority control of ER through his holding company, Revolution LLC, which, along with the company's founders, also invested in this round.

Exclusive Resorts plans to use the funds for a number of purposes, but largely to expand its vast real estate holdings for members with $250 million in new acquisitions, which include: 

New members-only developments: The club plans to establish additional members-only developments around the world that provide compelling "six-star" vacation experiences in resort destinations created especially for Exclusive Resorts members. The club already has under construction two of these developments, scheduled to open in 2007: the Exclusive Enclave, Ritz-Carlton, Grand Cayman, and Poro Poro, Peninsula Papagayo, Costa Rica. 
New exotic destinations: Exclusive Resorts currently owns more residences than all other luxury destination clubs combined. The new investment will allow the club to expand into new exotic locations to provide members the luxury, service and certainty of the Exclusive Resorts experience in "off the beaten path" locations. 
"Exclusive Resorts is a very compelling company and we are proud to have made a significant investment in its future growth," said Richard Perry, founder and chief executive officer of Perry Capital. "Exclusive Resorts can now add several additional 'wow' destinations around the world in the coming years. Exclusive Resorts is the trusted brand that is guiding families effortlessly into new and unique vacation locales."

New Golf Program Led by Jack Nicklaus

With assistance from golf legend Jack Nicklaus, Exclusive Resorts expects to strengthen its golf amenities and services, including a number of members-only events and programs to be launched in 2006 and beyond. Jack Nicklaus will attend these member golf events, provide exclusive online golfing tips and insight into Nicklaus Design's world-class courses at which Exclusive Resorts members have privileges and provide guidance on the club's overall golf program. In addition, Nicklaus Design and Exclusive Resorts will embark on a partnership to explore new destinations and developments for future golf courses and resort real estate communities that Nicklaus' organization is targeting worldwide.

"Exclusive Resorts is a one-of-a-kind club for families, and it provides a first-class experience for golfers and non-golfers alike," said Nicklaus, the designer of nearly 250 golf courses around the world. "We have a distinct advantage in being able to provide Exclusive Resorts with insight into unique, high-end destinations and properties that will be a perfect fit for its members. I look forward to helping my fellow club members enjoy the great game of golf on some of the finest courses in the world."

New Membership Milestone

The club also announced that the Finnegan family of Houston, Texas, became its 2,000th member. With 2,000 families now experiencing the Exclusive Resorts vacation lifestyle, the club has what it believes to be more members than all other destination clubs combined. Exclusive Resorts has grown rapidly from fewer than 100 members at the end of 2003 as its distinctive luxury vacation experience has met the needs and desires of today's affluent consumers.

"Exclusive Resorts is the only destination club with a membership base large enough to allow us to span the globe in terms of locations, employ the best team to provide personalized service, and offer members the most amazing vacation experiences imaginable," said Davis. "Simply put, our club makes it possible to take more and better vacations than ever before."

With three membership plans designed to meet the needs of a variety of affluent consumers, Exclusive Resorts offers its members access to custom-designed vacation homes in 35 of the world's most desirable destinations. Through its team of experienced service managers and its proprietary, easy-to-use Web-based reservation system, members enjoy personalized and effortless vacation experiences with family and friends.

ABOUT PERRY CAPITAL

Founded in 1988, Perry Capital is a private investment management firm with approximately $12 billion under management and offices in New York, London and Hong Kong. Perry Capital generally considers its investments to be long-term and seeks to develop close working relationships with the key members of a company's management and operating team.

ABOUT JACK NICKLAUS AND NICKLAUS DESIGN

No name is more synonymous with greatness in the sport of golf than the name Jack Nicklaus, and no single person has changed the face of the sport more than Jack Nicklaus - the player, the designer, and the good-will ambassador. Jack has been named "Golfer of the Century" by almost every major golf publication in the world. He was also named Individual Male Athlete of the Century by Sports Illustrated, and one of the 10 Greatest Athletes of the Century by ESPN. For close to 35 years, the mission of the Nicklaus Companies has been to enhance the golf experience, and to bring to the national and international consumer golf-related businesses and services that mirror the high standards established in the career and life of Jack Nicklaus. These services include golf-course design, the development of golf and real estate communities, and the marketing and licensing of golf products and services. Nicklaus Design, recognized as the world leader in golf course design, has been involved with 300 courses open for play in 28 countries and 37 states. At least 47 Nicklaus Design courses have been ranked in various national or international Top-100 lists, and by the end of 2006, at least 79 Nicklaus Design courses will have hosted a combined total of over 500 professional tournaments worldwide.

ABOUT EXCLUSIVE RESORTS

Exclusive Resorts is the leader in the new consumer segment of luxury destination clubs. Named 'Best of the Best' by Robb Report in 2006, Exclusive Resorts offers its members unprecedented access to a portfolio of hundreds of the finest luxury vacation residences in dozens of the world's most desirable destinations. With an average value of approximately $3 million, each residence combines the spaciousness and elegance of a private home with the services, amenities and conveniences of a five-star resort. Membership in Exclusive Resorts eliminates the burdens of owning a second home, the limitations of fractional real estate, and the uncertainties of renting a villa. Members of Exclusive Resorts pay a one-time membership fee that is 80 percent refundable upon resignation, plus annual dues. Exclusive Resorts is the partner of choice in the luxury destination club segment, with strategic alliances with leading companies including American Express, Neiman Marcus, Marquis Jet, YPO and Merrill Lynch. The company is based in Denver and Washington. Membership is subject to the terms and conditions of the club membership agreement. For more information on membership, please call 800.447.8988 or visit www.exclusiveresorts.com

P.S.
I am not Perry Capital (shucks)


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## JillChang (Jun 9, 2006)

I actually looked at these luxury residence club a few years back, before I understand the concept of timeshare.  At the time, I thought it was a great deal - a luxury second home and usage only a few weeks a year and therefore don't have to worry about the maintenance the rest of the year.

I think what stopped me was the high MF.  It seems like a lot to pay AFTER you paid for the high cost of the home.  Although it provides the ultra luxury, but how often do I need such a home on vacation?  Most of the time while on vacation I don't even spend that much time indoors.  I mean most of us don't even spend a weeks of those MF in maintaining our primary residence for the month!

I think in the end I concluded that if I want such luxury, I am probably better off just rent, or stay in luxury hotel (before I understood timeshare that is) and use the money saved on food or entertainment while on vacation.

I am sure though there are a huge market for these luxury residence.  Some people just want the best and don't mind paying for it, and the MF for these people is not an issue at all!   I guess if I wasn't divorced and had to PAY my husband off, I would have been one of those people  

But now I found TUG and picking up good and cheap resale timeshares, I am just as happy!  Also now that I am smarter and wiser (I think), I still prefer timeshare over residence club even if money isn't an issue.  It seems so much more fun than a stuffy large luxury home all to yourself.  I used to live in a 5000 sq. ft home, now I live in a 1600 sq ft condo, but in prime downtown Toronto.  I will never go back to a large house.  Like my sons said, our condo feels so much more intimate and our big home is so scary to them because it is so large and formal.  I feel the same way about timeshare now.  A nice 1 or 2 bdrm in a nice resort is so much nicer than a large home.  We need to be in company of other people both within the condo and within the resorts.


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## timeos2 (Jun 9, 2006)

JillChang said:
			
		

> A nice 1 or 2 bdrm in a nice resort is so much nicer than a large home.  We need to be in company of other people both within the condo and within the resorts.



Thats what we have come to realize as well. There are beautiful homes and condos that I would want to stay in if I were picking a spot to live or visit for months at a time. But we're there for a week or maybe two. In that time the features of a resort, the typical location within the area of  most interest and the social nature of a more transient population means we enjoy that type of stay more than simply having a nice or even spectacular place to stay. It is the whole package not just the room(s) you are getting to use that make it appealing. Those additional resort features that round out a unit are why we seem to prefer a fancy resort maybe a 1/2 mile off the beach vs a unit on the beach that lacks the other amenities and unit quality. We wouldn't turn either down but our first choice would be the resort with all the bells and whistles.


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## RonaldCol (Jun 10, 2006)

*Entertainment Value*

Large homes are bought by business executives with the thought of entertaining and bonding with associates. The same holds true for the success of these types of ownerships. These mini-sized luxurious mansions have mutliple bedrooms and oftentimes access to premium golf courses. The owners will use these to entertain business clients and prospects. Quite a few business executives I know own second homes in exclusive areas and will fly their associates in for a week of golfing.


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