# HCC December 1, 2007 price increase analysis



## Steamboat Bill (Oct 19, 2007)

HCC – December 1, 2007 Price Increase Analysis

Assumptions: 5% lost opportunity of membership fee + annual dues / nights = cost per night. 

I did NOT add the 20% non refundable portion of your deposit if you decide to resign from the club. In all fairness, you should consider this in your decision, but this number would be highly variable and decreases each year you are a member.

Pricing from now until November 30, 2007:
Companion – $20,000, $1,750, 7 nights – Cost per night = $392
Associate - $30,000, $3,500, 15 nights – Cost per night = $333
Affiliate - $40,000, $5,400, 25 nights – Cost per night = $296
Private - $60,000, $8,400, 45 nights – Cost per night = $253
Group/Corporate - $70,000, $9,600, 42 nights – Cost per night = $311

Pricing after December 1, 2007
Companion - $25,000, $2,100, 7 nights – Cost per night = $478 (22% increase)
Associate - $40,000, $4,300, 15 nights – Cost per night = $420 (26% increase)
Affiliate - $50,000, $6,600, 25 nights – Cost per night = $364 (23% increase)
Private - $70,000, $9,000, 35 nights – Cost per night = $357 (10 less nights and 15% increase)
Group/Corporate – no longer offered but the Private can be modified with family and friends plan
Private + Family/friends - $80,000, $10,800, 35 nights – Cost per night = $422 (7 less nights and 36% increase)

My personal Comments:
The current price for joining HCC is still an incredible BARGAIN…..especially the Affiliate and Corporate membership levels (if you need this level) where the cost per night is around the $300 per night. If you consider that the average HCC property has 3 bedrooms, then it is $100 per night per room and this is LESS than staying at a Holiday Inn and many timeshares.

The December 1, 2007 pricing is still pretty good, but the price per night starts to crack the $400 per night barrier. Even so, HCC at this level is still FAR cheaper than any other DC out there on a strictly cost per night comparison basis. I think the Affiliate level still represents the “sweet spot” as it gives 25 nights usage and that is sufficient for most people and $364 per night for $1m accommodations is still a great price. I was surprised to see the Private membership at 35 nights (a 10 night decrease vs the current plan) and I am not sure why they decided to do this.

I am GLAD that I joined HCC last year and this is the third price increase I have BEAT. If you are considering joining a DC or HCC in particular, I highly recommend that you jump on the bandwagon ASAP as you will kick yourself next year if you miss the current prices. In addition, you can’t beat the 100% price refund guarantee for the first year. This has not been offered to anyone (including myself) but HCC is so confident that you won’t resign in one year, that this guarantee is probably a moot issue, but it certainly sounds great and gives anyone on the fence a perfect out (as they say in poker).


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## vivalour (Oct 19, 2007)

<<but this number would be highly variable and decreases each year you are a member.>>

???????


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## Steamboat Bill (Oct 19, 2007)

vivalour said:


> <<but this number would be highly variable and decreases each year you are a member.>>
> 
> ???????



What I meant is the effect of the 20% loss (membership fee is only 80% refundable) on your average cost per night decreases each year.

Let's take a look at a real example, imagine you want to join HCC at the following level:

Affiliate - $40,000, $5,400, 25 nights – Cost per night = $296

If you resign after 5, 10, or 15 years (you will always lose $8,000), here is the effect on your average cost per night.

Resign after 5 years: average cost per night = $296 + $64 ($8,000 divided by 25 nights per year x 5 years) = $360 "True cost per night"

Resign after 10 years: average cost per night = $296 + $32 ($8,000 divided by 25 nights per year x 10 years) = $328 "True cost per night"

Resign after 15 years: average cost per night = $296 + $21 ($8,000 divided by 25 nights per year x 15 years) = $317 "True cost per night"

Thus, the longer you remain a member, the less effect the guaranteed 20% loss of your membership fee has on your average cost per night. Unfortunately, there is no exact method to determine how long you will be a member, but 10 years is a good rule of thumb.


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## vineyarder (Oct 20, 2007)

> This has not been offered to anyone (including myself) but HCC is so confident that you won’t resign in one year, that this guarantee is probably a moot issue, but it certainly sounds great and gives anyone on the fence a perfect out (as they say in poker).



Actually, that is exactly what the trial membership offered, so it is a natural extension to expand it to all membership levels.  Joining as a trial member in August 2007 locked in my pricing for any membership plan at the August 2007 rates, while giving me the 100% refund option.  At that time, it made no sense for me to join at anything but trial, as any higher membership plan would not have come with a 100% refund in the first year, so having it only on the trial may have driven people away from higher plans and into the trial for the first year.  This way all plans are on equal footing.  It is also what Quintess offers (100% refund in first year).

Glad to see that HCC is doing exactly what it should be doing; borrowing the best practices of its competitors to enhance its strengths; Quintess offers 100% refund in the first year - great, we can do that too... PE allows long weekends to be booked a year in advance - OK, if that works for them, we can do that too...  This allows them to raise their prices, since it takes away advantages from other clubs, and makes them a competitor on more than just price.  My guess is that HCC will have no problem whatsoever hitting the 400 member mark in relatively short order, and will then escalate the prices so that they are only slightly lower than the PE/UR tier 1 club.  Of course, the next logical step would be for HCC to merge into the PE/UR first tier (assuming the merger goes through and is successful).


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## capjak (Oct 20, 2007)

*Sounds like if you join now it is 100% refund forever?*

If you have to get out do they give you the refund at current rate?

For example if you join now at $20,000 now, in 2 months it will be 25, 000

80% refund of 25,000 is $20,000 (original buy in)?

For the associate membership you actually would get more than original amount?

Does HCC do this or is it based only on the amount you originally paid?


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## pwrshift (Oct 20, 2007)

COST PROTECTION: The biggest concern I have on the new pricing is the dramatic increases of 20% or more per night on Bill's summary.  What assurance do members have that HCC will never increase annual dues to that extent ... that they will follow the CPI or lower forever from the levels at which you joined HCC.  It sure smacks of a bait & switch to me...unless it's written in your deal that way and even then I'll bet there's an escape clause.  As I seem to understand from posts, everyone will have different annual dues depending on when they joined that will be controlled - what a nightmare that will be for the HCC admin which has to treat every member an an unequal cost sharing partner - and for how long.

LOCATIONS: Another concern I have is a lack of east coast facilities.  The only current one that appeals to me would be Hilton Head for July 4 week every year, but it doesn't appear to be right on the ocean like Marriott Grand Ocean, Barony, etc.  I wouldn't buy a TS in HH or FL that wasn't right ON the beach, so why would I want a DC off the beach?  Same for the FL property which looks like it's blocks from the beach.  I don't want to make a decision today on 'possible' locations like Boston, Cape Cod, Chicago, Amelia, Sunny Isle, Marco ... when they may be years from now if HCC survives...and want to be able to drive to where I'm going.

SIZE and TIME: Then ... it always comes back to what I need.  I want quality, but I don't want size.  What would I do with 3 bdrms .. really?  I travel alone most of the time and like to stay for several prime time weeks in a row at the same location.  This you can't do so I'd still need my timeshares.  When I voiced this concern most of the DC members told me to stick with TS.  

I'm anxious to blow some $1.05 cdn money right now, but reality must come into the decision at some point I guess.
Brian


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## Steamboat Bill (Oct 20, 2007)

capjak said:


> If you have to get out do they give you the refund at current rate?
> 
> Does HCC do this or is it based only on the amount you originally paid?



All HCC membership fees that are rebated, be it at a 100% or 80% level, is based upon what you originally paid, not the current rate.


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## Steamboat Bill (Oct 20, 2007)

Pwrshift

The 20% increase only applies to new members that join HCC after December 1, 2007. Everyone else is LOCKED into the contracted annual dues that lasts forever + CPI + 2% max. HCC and all other DCs will continue to raise membership fees and annual dues for new members as this is how they trun a money losing idea into a profitable idea. The early DC adopters are really getting a bargain compared to people that join at a later date. This is way better than Marriott that raises dues according to whatever they want to charge.

As far as locations, I live in South Florida and originally did not like HCC when they only had 9 Colorado properties so I did not join back in 2005. When I began to see them grow and add properties, I finally joined. The future looks great for HCC as they add have been adding about 10 peroperties per year. I am really going to be happy with HCC in 2-3 years and will then complain that I can't possibly visit all their locations.

If the size and time are deal breakers for you, they you are correct, a timeshare is better for you based upon these criteria only. HCC properties average 3 bedrooms and range from 1 to 6 bedrooms. The max you can stay in any one location is 2 weeks. There are several beachfront properties and ski-in/out properties, but not all of them are. 

I have visited the Hilton Head HCC property and it is a private house and is very nice. It is NOT on the ocean, but is on a golf course. This place is like a second home that someone would buy and is not a resort type property. 

Based upon your criteris, you should view their Turks and Caicos property or Mexico properties.


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## Tedpilot (Oct 21, 2007)

Bill, a slight correction to one of your posts.  All new memberships are refunded at the rate you paid.  Some of us that joined very early on get 80% of the current rates if we resign.  I should have listened to a friend and bought two back then and "returned" one later for a profit.  Then again maybe I won't get anything as my plan no longer exists?

Ted


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## Steamboat Bill (Oct 22, 2007)

Tedpilot said:


> Bill, a slight correction to one of your posts.  All new memberships are refunded at the rate you paid.  Some of us that joined very early on get 80% of the current rates if we resign.  I should have listened to a friend and bought two back then and "returned" one later for a profit.  Then again maybe I won't get anything as my plan no longer exists?
> 
> Ted



You are correct, I did not want to stir the beehive by continuing to remind everyone what a great deal the lucky "first 50" members received as compared to us late adopters.


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## vivalour (Oct 27, 2007)

Steamboat Bill said:


> HCC – December 1, 2007 Price Increase Analysis
> 
> Assumptions: 5% lost opportunity of membership fee + annual dues / nights = cost per night.
> 
> ...



In the context of existing DCs, yes, I see your point -- HCC seems like a bargain, esp. before Dec. 1.  But it's not THAT big a bargain for everyone. My time horizon for vacation planning is about 5 years, and 15 days p.a. is the max we would use a DC-type property, given current locations. So we're looking at joining HCC at the Associate level, with a $5,000 upgrade to include one holiday reservation (i.e. the Christmas/New Year's break) -- since we are restricted by our son's school year; and Dec/Jan, March break, and summer would be our main times for use. 
My numbers look like this:
Cost of $35,000 membership over 5 years, incl. lost opportunity cost (uncompounded) $35,000 x 5% x5 = $8,750
Forfeited cost of membership if we leave after 5 years =  $7,000
Current p.a. fees = $3,500 x 5% = $175 x 5= $875 lost opportunity cost (uncompounded)   + $3,500 x 5 = $17,500
Total costs: $34,125 divided by 75 nights (15 x 5) = $455

So I ask myself: Is $455 a night what we'd typically spend on vacations over the next five years? Not likely. Without a huge amount of hassle, we have always managed to get very good deals (hotel suites or condo rental) for  less $$ any time of year at most locations we travel. Maybe the digs are not as spacious or luxurious as HCC's with concierge, etc. but they've been very good value for money (salute to PerryM) and sometimes include perks like breakfast.

I can see that stretching the numbers over a 10-year horizon would bring down the "real" nightly cost. But imo 10 years is an unrealistic projection  because both fees and opportunity costs could be very different  in 3-6- or 8 years. (As well, imo using 5% p.a. to calculate opportunity costs is extremely conservative -- unless you put your spare cash into CDs only.)

So after all this rambling, I still love the idea of DCs, but don't want to delude myself by thinking that they're the bargain of the century for our particular needs. Maybe we're just not rich, spoiled or lazy enough to fit the ideal demographic for this product....


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## Steamboat Bill (Oct 27, 2007)

vivalour said:


> So after all this rambling, I still love the idea of DCs, but don't want to delude myself by thinking that they're the bargain of the century for our particular needs. Maybe we're just not rich, spoiled or lazy enough to fit the ideal demographic for this product....



I NEVER recommend joining a DC if your time frame is so short. I probably would not even advise buying a timeshare either.

As far as your $455 cost per night (based upon your personal calculations), this is still not unreasonable to me for what you are getting. If I traveled and rented two rooms at a standard hotel in many of the popular areas I like to visit, the combined cost would be about $500 per night minimal ($250 per room per night including taxes). I like to take the family skiing and the cost for a 1 bedroom property can be $600 or more per night during the spring. 

I have posted several HCC price comparisons to the rental prices at Turks & Caicos, NYC, and Deer Valley. The cost per night at those properties can be $800-$1,000 per night. Thus, a DC can actually seem like it is saving you money just like using frequent flyer miles to fly first class can seem like saving a ton of money (even thought most people would never buy first class tickets with cash).

Here are a few timeshare costs

Ski week (Marriott SummitWatch / Mountainside or Westgate Park City)
$30,000 purchase price (resale), $950 annual dues, 7 nights usage, 2 Bedroom
Cost per night = $214 + $136 = $350 per night

Disney Vacation Club 300 point purchase @ $96pp
$28,800 purchase price, $1,290 annual dues ($4.30 pp), 7 nights usage 2 Bedroom standard
Cost per night = $206 + $184 = $389 per night


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## saluki (Oct 27, 2007)

vivalour said:


> So we're looking at joining HCC at the Associate level, with a $5,000 upgrade to include one holiday reservation (i.e. the Christmas/New Year's break)



Can you provide more details regarding this HCC option? I have not heard of this before. I realize that they are open to customizing membership plans & am curious about this add-on.


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## Kagehitokiri (Oct 27, 2007)

funny they dont have any of this on their site...

more >



vineyarder said:


> Memberships can be upgraded to “family and friend” status for a $10,000 non-refundable fee and 20% increase in annual dues.
> Customized plans can be developed outside the current membership offering.
> High Country Club is also making significant changes to its reservation policies, allowing Members greater flexibility, with the following features:
> 
> ...


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## vivalour (Oct 27, 2007)

saluki said:


> Can you provide more details regarding this HCC option? I have not heard of this before. I realize that they are open to customizing membership plans & am curious about this add-on.



Yes, I originally discussed this with Heath, who I think is the sales v.p. at HCC, in relation to an Affiliate level membership. I tried to match our family's restrictions (northeast location, limited travel & vacation times) with theirs.
He mentioned that lower level memberships can be beefed up for an additional membership cost. The fee p.a. would stay the same. So, for example, you could buy the right to long-term Christmas/New Year's holiday reservations for an extra $5,000 at the Affiliate level when you take out a membership. This might not make sense for someone who has the flexibility and time to travel year-round, or lives within driving distance of several HCC properties.


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## vivalour (Oct 27, 2007)

Kagehitokiri said:


> funny they dont have any of this on their site...
> 
> more >



I guess this line hints at a do-it-yourself plan, within reason, if you are willing to pay extra.... <<Customized plans can be developed outside the current membership offering.>>  Anyone else cook up a custom membership with HCC?


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## vineyarder (Oct 27, 2007)

vivalour said:


> Yes, I originally discussed this with Heath, who I think is the sales v.p. at HCC, in relation to an Affiliate level membership. I tried to match our family's restrictions (northeast location, limited travel & vacation times) with theirs.
> He mentioned that lower level memberships can be beefed up for an additional membership cost. The fee p.a. would stay the same. So, for example, you could buy the right to long-term Christmas/New Year's holiday reservations for an extra $5,000 at the Affiliate level when you take out a membership. This might not make sense for someone who has the flexibility and time to travel year-round, or lives within driving distance of several HCC properties.



My understanding is that with this option, the additional $5000 deposit is 0% refundable, and that there is an additional annual fee as well; were you told something different?


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## vivalour (Oct 27, 2007)

vineyarder said:


> My understanding is that with this option, the additional $5000 deposit is 0% refundable, and that there is an additional annual fee as well; were you told something different?



Annual fee the same as standard membership, but I don't remember anything about refundability of $5,000 -- I guess I assumed it would be included in the 80%.


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