# M Private Residences



## LarryEdmonton (Mar 17, 2009)

This club out of Calgary has a world class portfolio of high end properties.

They have some resale units for sale at not bad discounts.

I expect there are typical issues:

-  Long term viability:  what are the risks of them going under; what happens to member's 'investment'
-  What are annual fees?
-  What is the value - we all know the large discounts for timeshares.

So, any advice or views in general or specifically...


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## tombo (Mar 17, 2009)

Several destination clubs have gone broke leaving the members with nothing, and several more are rumored to be in trouble. Save your membership fees, your annual membership dues, and rent anywhere you want to go from Redweek, TUG, VRBO, etc. with little risk and no investment or commitment.

 Many people on TUG were warned that DC's were a high risk house of cards on numerous threads in the past, and many are now sick that they didn't listen. Please go back to the many past HCC threads and numerous other DC threads to read the warnings. Now fast forward to today so you can see that the warnings have come true. I hope you listen and learn from others past mistakes. Betting $100,000 on red or black in Vegas would be a better bet than hoping a DC will survive IMO.


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## sml2181 (Mar 17, 2009)

www.destinationclubforums.com 

Please read about other clubs too - the ones Tombo is talking about.
High Country Club, Lusso, and maybe a few more. I only read  HCC and Lusso because I seriously considered joining these clubs - until I read the contracts and the club rules.
They are both out of business and have left the members in the cold.

I think M restructured, but I am not sure. You will most probably find  more information there.


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## caribbeansun (Mar 18, 2009)

M did restructure and is now run and owned by the members unlike HCC or Lusso.

There's a lot of pain in the DC world right now and you may be well advised to stay clear as there could be more fallout yet, some would say "will be more fall out yet".

Both HCC and Lusso basically stole from their members and have failed,
Portofino failed
One Key failed
Solstice apparently filed for bankruptcy last week
Markers - relaunching
UE - big levy and my personal opinion is that's not long for this world
Quintess - made signficant increases to their fees and may not last either

The industry seems to be full of dirt bags that would just as soon lie to you than anything else.


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## TarheelTraveler (Mar 18, 2009)

I've been critical for a long time about the things going on in the DC industry (and those clubs now it seems are the ones having the biggest problems or have went bankrupt).  However, let's not paint all DCs with the same broad strokes.  Not all timeshares and timeshare companies are the same either, so let's be fair.  Shady timeshare operators muddy the reputation of the timeshare industry, just as in the DC industry.

As caribbeansun points out, M Private Residences is member owner and managed, and has very low debt and dues that cover expenses from what I've read.  I've not done any due diligence on them, but I wouldn't write them off on their face just because they're a DC, particularly at a good discount from a member having to sell.


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## tombo (Mar 18, 2009)

TarheelTraveler said:


> I've been critical for a long time about the things going on in the DC industry (and those clubs now it seems are the ones having the biggest problems or have went bankrupt).  However, let's not paint all DCs with the same broad strokes.  Not all timeshares and timeshare companies are the same either, so let's be fair.  Shady timeshare operators muddy the reputation of the timeshare industry, just as in the DC industry.
> 
> As caribbeansun points out, M Private Residences is member owner and managed, and has very low debt and dues that cover expenses from what I've read.  I've not done any due diligence on them, but I wouldn't write them off on their face just because they're a DC, particularly at a good discount from a member having to sell.



Shady timeshare operators sell you something that is overpriced and might not work like they promised, but you will own a vacation. Out of the 10,000 (plus or minus) timeshares in existence what per cent has gone broke leaving the owners with nothing? I assume less than 1%.  I can't think a single timeshare development that folded leaving the owners with nothing. 

On the other hand more than 50% of all of the DC's that have ever existed are gone, have filed bankruptcy, or are about to file bankruptcy. Carribeansun named 8 that are gone or going to be gone out of possibly 15 total DC's that have ever existed (guessing at the total number). In addition all of these DC's have gone broke in a 5 year period.

Every DC that has folded promised their current members and potential members that in spite of the closings at other DC's that it would never happen to them because they didn't have as much debt, they owned their units, they weren't over leveraged etc, ect, etc. These promises are usually followed shortly by notice of bankruptcy or insolvency. They will promise you the moon and continue to recruit members right up until they file bankruptcy.

Put all DC's in the same boat because most if not all are going to sink. Don't join whatever you do.


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## TarheelTraveler (Mar 18, 2009)

tombo said:


> Shady timeshare operators sell you something that is overpriced and might not work like they promised, but you will own a vacation. Out of the 10,000 (plus or minus) timeshares in existence what per cent has gone broke leaving the owners with nothing? I assume less than 1%.  I can't think a single timeshare development that folded leaving the owners with nothing.
> 
> On the other hand more than 50% of all of the DC's that have ever existed are gone, have filed bankruptcy, or are about to file bankruptcy. Carribeansun named 8 that are gone or going to be gone out of possibly 15 total DC's that have ever existed (guessing at the total number). In addition all of these DC's have gone broke in a 5 year period.
> 
> ...



I know that I'm on a timeshare forum, but timeshares are not the end all be all panacea of vacations.  I can make all sorts of generalizations of timeshares, but I'm not going to as it's not fair to malign the entire industry.

While some would disagree, I personally think the non-equity DC model is dead.  The idea of entrusting your money to someone in order to build a real estate portfolio in exchange for the promise of perpetual vacations is crazy in my opinion, as has been proven in recent months.

One of the strengths of a timeshare is a deed.  Same goes for equity DCs.  It's the same concept.  If members own the actual property, particularly if there is no debt, and particularly if management has no ownership in the real estate holding company, a lot less can go wrong and it would be very difficult to involuntarily lose your vacation.  Furthermore, the members have the control and say so, when they own the real estate.  A pure equity DC is really not much different than a timeshare.  You pay more money for the dirt, so the properties are bigger, and you sell less usage, so you have better availability, but again, it's really not that different than a timeshare.

From an historical perspective, DCs have not fared well.  However, you should note that every one of the failures has a common theme.  They were all non-equity, highly leveraged, economically difficult to rationalize clubs.  In contrast, no equity DCs have gone under.  In fact, with M Private Residences (an equity club), the shareholders supposedly threw management out, just like you would the HOA of a timeshare complex.

In comparison, timeshares were completely a mess historically and only in recent years with big brand names entering the picture has the industry been cleaned up a good amount and regained some respectability.  People tend to forget that DCs are in their infancy, and I suspect they will follow the same trajectory as timeshares, with established brand names like Abercrombie and Kent, Ritz Carlton and Four Seasons entering the picture.


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## tombo (Mar 18, 2009)

TarheelTraveler said:


> I know that I'm on a timeshare forum, but timeshares are not the end all be all panacea of vacations.  I can make all sorts of generalizations of timeshares, but I'm not going to as it's not fair to malign the entire industry.
> 
> While some would disagree, I personally think the non-equity DC model is dead.  The idea of entrusting your money to someone in order to build a real estate portfolio in exchange for the promise of perpetual vacations is crazy in my opinion, as has been proven in recent months.
> 
> ...



50% or more of the DC's that have ever existed have failed. Please name 8 timeshare developments that have failed leaving owners with nothing out of over 10,000 total. You can't because there aren't that many, and if there were it would equal 8 -1000's of a percent of the total timehshares. In a previous post you can read about 8 different DC's that have failed in the last 5 years out of about 14 total (please feel free to name all the DC's that have ever existed, it won't take long). I am not betting on a DC with my worst enemy's money.

Timeshares aren't the greatest or only vacation choice by any means. However with the DC's track record of failures they would not be a choice I would ever even consider. Please read all the past posts myself and others posted before HCC, Lusso, Portofino, and others folded. If you didn't listen then, maybe you should listen now.

P.S. Are you the TUGGER who is trying to start his own DC?


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## TarheelTraveler (Mar 18, 2009)

tombo said:


> 50% or more of the DC's that have ever existed have failed. Please name 8 timeshare developments that have failed leaving owners with nothing out of over 10,000 total. You can't because there aren't that many, and if there were it would equal 8 -1000's of a percent of the total timehshares. In a previous post you can read about 8 different DC's that have failed in the last 5 years out of about 14 total (please feel free to name all the DC's that have ever existed, it won't take long). I am not betting on a DC with my worst enemy's money.
> 
> Timeshares aren't the greatest or only vacation choice by any means. However with the DC's track record of failures they would not be a choice I would ever even consider. Please read all the past posts myself and others posted before HCC, Lusso, Portofino, and others folded. If you didn't listen then, maybe you should listen now.
> 
> P.S. Are you the TUGGER who is trying to start his own DC?



I'm absolutely familiar with the colorful history of DCs, not from the perspective of management but from the perspective of a member.  I'm actually a member of one of the few sane DCs (in my opinion) - A&K.  I can't say enough good things about my experiences, the structure and the management. 

The history of DCs is not good, but it's not as bad as you paint it.  There have been five bankruptcies, T&H, Portofino, HCC, Solstice and Lusso, with about 450 members losing the ability to travel (HCC and Portofino) without some sort of successor willing to take them on.  To me this is not acceptable, but not as dire as you paint it, with over 30 original clubs and over 6,000 total industry wide members.  The pain is definitely not over with by any means.  Members are in for some painful assessments, but plenty of timeshare owners have been through that as well.  Furthermore, I bet we're not done with the bankruptcies, but again, like timeshares, the difference at the end of the day with DCs will be that *deed*.  Some members have it and some don't.

While timeshares have had relatively few bankruptcies that have fully eliminated the right to travel, timeshare owners have been swindled in many other ways.  Essentially buying overpriced or misrepresented timeshares with ridiculous commissions and overpriced HOA fees.  There is something wrong with a vacation concept when people are buying timeshares on EBay for $1.  I can guarantee that you'll never be able to buy into a no-debt equity DC for a $1.

Look, I've been pretty vocal about my dislike of a lot of the DC industry practices.  I've been preaching about the problems for a long time on here (look back at my old posts - we've actually said a lot of the same things) and destinationclubforums.com, but again there is a difference among DCs once you get beyond the glossy brochures.  And when Ritz-Carlton and Four Seasons enter the market, and DCs become more wide spread, you'll see the same legitimization as you saw in the timeshare world.


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## tombo (Mar 18, 2009)

TarheelTraveler said:


> I'm absolutely familiar with the colorful history of DCs, not from the perspective of management but from the perspective of a member.  I'm actually a member of one of the few sane DCs (in my opinion) - A&K.  I can't say enough good things about my experiences, the structure and the management.
> 
> The history of DCs is not good, but it's not as bad as you paint it.  There have been five bankruptcies, T&H, Portofino, HCC, Solstice and Lusso, with about 450 members losing the ability to travel (HCC and Portofino) without some sort of successor willing to take them on.  To me this is not acceptable, but not as dire as you paint it, with over 30 original clubs and over 6,000 total industry wide members.  The pain is definitely not over with by any means.  Members are in for some painful assessments, but plenty of timeshare owners have been through that as well.  Furthermore, I bet we're not done with the bankruptcies, but again, like timeshares, the difference at the end of the day with DCs will be that *deed*.  Some members have it and some don't.
> 
> ...



Can't ever buy into a DC for a dollar? When HCC was changing the rules and implementing the "success plan" (trying to make all members pay the whole next year's dues up front and in advance or they would not be allowed to reserve any vacation time), HCC allowed owners to sell their memberships for any price they wanted, and some members offered to give them away for free. There was a membership for sale on e-bay with a starting bid of $1, and no bids were made. I was offered a membership for free, but no way was I going to pay a year's dues for a company that was obviously in trouble. If I had taken the offer, I would have owned a DC for free for a couple of months, but I would have lost 100% of the dues and never been able to take a single trip.  

Of course you said a no debt equity DC. You will never know for sure if it is actually a no debt DC because you have to trust the facts and figures they put in the annual reports.What the homes are actually worth and what they claim they are worth can be two far different figures. If you inflate the values of the homes in the portfolio to well above what you could actually sell them for, the club will appear to be debt free, but it will actually be debt free on paper only.  How much cash they have on hand can be adjusted to appear healthy. Just like the savings and loans of the past and the AIG's of the present, the books can be made to look great for a while. By the time you find out that the books were cooked, so is your goose.

Abercrombie and Kent have only been operating their latest DC since September of 2008. That is not a proven track record. They haven't even reached their first anniversary. They became a new and improved A and K DC by acquiring two struggling DC's ( Crescendo and Bell Havens). 

The new A and K destination club was formed after A and K took their name off of a DC that they had enrolled hundreds of members in. This is a web site detailing the law suit:
http://securities.stanford.edu/1037/AKI_01/

Here are some highlights:
"The Complaint further alleges that Abercrombie & Kent, Inc., after enticing hundreds of people to become members in the club, announced that it was no longer permitting its name to be used for the project, notwithstanding the aggressive marketing campaign that had featured Abercrombie & Kent's hallmark name front and center on all approved marketing materials, offering documents and the membership agreement. The fact that it was simply lending or licensing its name, if true, was not disclosed in any of the materials given to the prospective club members. 

Ultimately, Tanner & Haley disclosed that it was the owner of the club, and stated that Abercrombie & Kent, Inc. would no longer license its name to Tanner & Haley. On July 24, 2006, Tanner & Haley filed for protection under Chapter 11 of the United States Bankruptcy Code. The bonds are thus illiquid and non-refundable by Tanner & Haley at present and the Class members are general unsecured creditors of Tanner & Haley in that bankruptcy. Given, inter alia, the unauthorized change in the debt to equity ratio and other matters disclosed to date in the pending bankruptcy proceedings, the Class stands to lose most, if not all, of the value of their securities. In fact, the assets of the Club have been sold, pursuant to an order of the bankruptcy court approving same but for an amount leaving very little if anything to pay the claims of the unsecured creditors."

But Abercrombie and Kent would never lead potential club members astray, yet they did. The welcome letter was from the A and K CEO and even the soap in the resorts had A and K name on it. Can you be sure the new A and K doesn't have any secret partners?

Here is a USA Today article talking about owners who lost their whole investment and ended up suing A and K:
http://www.usatoday.com/travel/news/2007-08-03-abercrombie-and-kent-vs-harper_N.htm

The current A and K DC might be different from all other DC's. It even might be different than the last DC that proudly bore the A and K name (which has since filed bankruptcy leaving the members with no money and no future vacations). However the new and improved A and K has already been talking about having to raise it's annual dues to cover expenses, and they haven't even been operating their new DC for a full year yet. That is always a bad sign this early on.

I wouldn't join any DC for $25000 if they guaranteed me $100,000 back in 5 years. Every DC that folded had promises of giving members money back if they wanted out. Of course the promises were made before the DC's filed bankruptcy. After the DC's filed bankruptcy the members ended up getting zero money back.

To the OP. Don't look at DC's with rose colored glasses and don't believe their pie in the sky promises. Look at them with your eyes wide open and do the smart thing, don't consider joining for a second. There are plenty of former DC owners who wish that they hadn't ever heard of a DC and bought into their promises of luxury vacations with no risk (they were promised that they could get their money back if they ever wanted out). DO NOT JOIN A DC no matter how good it sounds!


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## caribbeansun (Mar 19, 2009)

No, that's Bourne.

FWIW Tarheel has been one of the more realistic posters over at DC4MS - not the cheerleader type that a number are AND nothing like the one you have a previous issue with.

My own perspective is that the equity DC model can make sense but it's a different snack bracket than I live in.  The mistake I made was hoping that a non-equity model would work - it didn't and won't.  

As mentioned TS isn't the be all and end all either.  Buy a TS from a developer and you've just lost 80% (on average) of what you paid - you don't have to wait for them to go bankrupt to lose that paper value.

Owing full ownership isn't a perfect answer either - I've got that.

Long and short is that no one solution fits every pocketbook nor style of traveling.   Look at all options but I would say stay away from anything that is a non-equity DC.



tombo said:


> P.S. Are you the TUGGER who is trying to start his own DC?


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## tombo (Mar 19, 2009)

caribbeansun said:


> No, that's Bourne.
> 
> FWIW Tarheel has been one of the more realistic posters over at DC4MS - not the cheerleader type that a number are AND nothing like the one you have a previous issue with.
> 
> ...



I am not mad at anyone and I am not confusing anyone with Hot Air William from the past. I do remember Tarheel warning against some DC's and realize that he is not a DC cheerleader who ignores all of the facts. I am just surprised that knowing all that has happened in the DC industry that anyone would recommend joining a DC anytime in the near future. Hey it might be a great thing to do but I can't imagine doing it right now in this economy, if ever.

I know that a DC can work in theory, but no one has seemed to succeed well in reality for any significant period of time. The OP asked for advice and I can't see how anyone could advise buying into an industry which is so young, so volatile, and which has such a poor track record so far. 

Comparing purchasing timeshares from the developer to joining a DC is a good analogy (although after you purchase a TS from a developer you won't lose 100% of your money and you will still have access to the vacations you purchased unlike a broke DC which leaves you with nothing). I don't now and never have advised buying a timeshare from any developer including Disney. The fact that I advise against buying timeshares from developers is exactly why I advise against joining a DC, they are both very bad purchases IMO.

If you want to apply the litmus test on recommending DC's, would you advise your children to join a DC? Would you want to look them in the eyes and apologize after the DC you recommended went bust? I sure wouldn't tell my children that it was a good risk, so I won't advise strangers to do something I would tell my children not to do.


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## TarheelTraveler (Mar 19, 2009)

tombo said:


> Can't ever buy into a DC for a dollar? When HCC was changing the rules and implementing the "success plan" (trying to make all members pay the whole next year's dues up front and in advance or they would not be allowed to reserve any vacation time), HCC allowed owners to sell their memberships for any price they wanted, and some members offered to give them away for free. There was a membership for sale on e-bay with a starting bid of $1, and no bids were made. I was offered a membership for free, but no way was I going to pay a year's dues for a company that was obviously in trouble. If I had taken the offer, I would have owned a DC for free for a couple of months, but I would have lost 100% of the dues and never been able to take a single trip.
> 
> Of course you said a no debt equity DC. You will never know for sure if it is actually a no debt DC because you have to trust the facts and figures they put in the annual reports.What the homes are actually worth and what they claim they are worth can be two far different figures. If you inflate the values of the homes in the portfolio to well above what you could actually sell them for, the club will appear to be debt free, but it will actually be debt free on paper only.  How much cash they have on hand can be adjusted to appear healthy. Just like the savings and loans of the past and the AIG's of the present, the books can be made to look great for a while. By the time you find out that the books were cooked, so is your goose.
> 
> ...



Thanks, caribbeansun!

I could definitely see selling a non-equity DC membership for a $1.  In many cases, there is nothing there as far as value and often (as in HCC's example), it is a negative value.

I agree with you 100% that often real estate values are suspect, and, therefore, debt levels as a % of portfolio values are suspect.  So are pronouncements of assets exceeding debt, assets covering non-refundable deposits, etc.

Of course, if you truly have zero debt, you have zero debt.   I can trust that we have no debt, because of the operating documents and the full KPMG audited financials that say we have no debt.  The worst case scenario for A&K's club is the members walk away with the portfolio of homes that have been purchased.  Management has no ownership interest in the member's portfolio, and the homes again have no mortgages or debts.  This is totally different than the worst case scenario for most of the clubs which is a big fat goose egg.

I was actually a Crescendo member that got absorbed into A&K.  Members of Crescendo (and Bellehavens) were actually both saved because of the equity structure and limitations put on debt.  The sales of both clubs actually struggled because of the ridiculous unfulfillable promises of competing clubs.  Now those clubs are bankrupt or close to bankruptcy.

Not that it's a big deal, but just to be factually correct, A&K has been operating the club since the end of 2007.  They launched the club publicly in September of 2008 after also merging in Bellehavens and beefing up the portfolio.

A few other corrections.  A&K licensed its name for T&H, they did do heavy joint marketing, they never signed up members, and they weren't involved with the operations.  And actually from what I've read and heard, very few people outside of Rob McGrath really knew what was going on with T&H.  A&K's mistakes IMHO were not doing enough due diligence before putting the deal in place, not exercising close enough supervision on how the club was doing and making sure that T&H was doing what it was supposed to be doing as far as making sure that it was clear that it was a licensing arrangement as is required by the agreement.  Contractually, T&H did not do what was required IMO.  I've read the contract.  They clearly violated many of the terms of the agreement, but A&K should have called them on it more than they did again IMO.  In the end, they ended the licensing arrangement, because in part they had a hard time getting compliance.

What you are citing is the very much *one-sided allegations* of the plaintiff's attorney in the complaint.  To see both sides of the lawsuit, see the documents posted at http://www.destinationclubforums.com/f35/donald-w-glazer-lawsuit-filed-against-332.html.  A&K is simply one of the few remaining deep pockets.  A few other corrections - most T&H members actually joined Ultimate Resorts with no deposit (UR acquired the T&H portfolio through bankruptcy).  Obviously, the economics of that deal are now being questioned with the plunge in real estate values, but I don't think it's fair to say that they lost their vacations (at least not at this point).

With A&K reentering the business, they've decided to (and probably had to) do it in a totally different matter.  They did it themselves (rather than licensing the name), members own the real estate, the deposits and dues have always been realistic, and they have _by far _the best transparency in the industry.

If A&K is talking about raising dues, I certainly haven't heard that despite being a member.  In fact, earlier in the year, they affirmatively said they _don't _need to raise dues, and a few weeks ago, they again affirmed it.

The problem with DCs has been that people have been suckered into joining completely unsustainable DCs that have left them with nothing.  I've been railing against those DCs for 2+ years, and mostly my warnings have unfortunately fallen on deaf ears.  Smart people would typically join DCs with the best houses, lowest dues and lowest deposits, whether it made fundamental economic sense or not. 

I would absolutely join A&K now.  I'd tell my kids to join.  I've had the best travel and family experiences of my life with the club.  Worth every penny.  It blows away every timeshare/non-timeshare experience that I've had hands down.  Most DC members would say the same thing, particularly if you could get solve the achilles heel of the industry - security of the deposit.

Conversely, just as I have in the past, I'd tell my kids to avoid _most_ of the DCs out there.

Now back to M Private Residences, I haven't done the due diligence on them to know for sure, but they might be worth checking out.  As far as I know, the members own the whole portfolio of houses, there is very little debt, their dues cover all expenses, they are member-managed and certain members have to get out and are selling their memberships at a very significant discount, potentially below the pro rata liquidation value of the portfolio.  Not saying it's a good deal, but it's probably worth checking out, that's all.


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## tombo (Mar 19, 2009)

A and K doesn't own 100% of it's portfolio, it leases some locations also:
http://realestate.halogenguides.com...rescendo-launches-new-equity-destination-club

In addition to the 18 homes, averaging four bedrooms and $3 million in value, in the property portfolio, Abercrombie & Kent Residence Club will have 12 villas that it has secured with long term leases, as well as a partnership with 13 Stein Hotels and Resorts in Europe brought over with the BelleHavens acquisition. This allows them to sell to about twice as many members as they have resorts they own and still give every member his 45 days a year. If in the future the leases become much more expensive to renew, or unavailable at any price, there will be members who can't get their agreed upon 45 days of vacation, and members might be unable to get some locations that they originally joined to visit each year. If the number of days and locations promised are no longer available you could have a large number of people wanting to get out with very few (if any) wanting to join. That can kill a DC company.

These are the opinions from some who blogged about the new A and K:

"leasing homes is the first bad step down a slippery slope. if sales are slow and there is no debt and new homes cant be bought this will either start looking like tanner and haley part two or members will start pulling out.most worrying is that the new ceo has no expereince in destination clubs or real estate.......

The DC business cannot provide availability during peak holiday seasons. The whole problem is that 1/2 of the people want to travel during New Years and Spring Break and there's no way to provide that availability. This new model still doesn't solve that problem"

I feel that A and K has a good chance of making it if the economy doesn't get worse and if there isn't a run on people trying to sell their memberships. A and K (like other bkrpt DC's) has the 3 new members in before 1 member can get out rule, which means if no one is buying no one can get their money out either. It could become like a run on a bank.

If they keep on working the model they have set up without tweaking it or getting greedy it might survive . In spite of that I would a lot rather invest in something that has been operating succesfully for 10 or more years than an upstart anything. There is risk with any financial venture. I just do my best to be risk averse when it comes to my personal money.

I will say that is is great that you can afford to join a DC that has a joining fee of  $495,000. with annual dues of $42000. I could have afforded some of the defunct DC's and some of the current DC's, but I couldn't afford to join the new A and K if I wanted to. So my conjectures on A and K are like my opinions on Lear jets, I can't afford either so my opinin on whether one should buy or not buy is only my opinion. I wish you luck and hope that it is a great investment that will bring you joy for years to come.


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## TarheelTraveler (Mar 19, 2009)

tombo said:


> A and K doesn't own 100% of it's portfolio, it leases some locations also:
> http://realestate.halogenguides.com...rescendo-launches-new-equity-destination-club
> 
> In addition to the 18 homes, averaging four bedrooms and $3 million in value, in the property portfolio, Abercrombie & Kent Residence Club will have 12 villas that it has secured with long term leases, as well as a partnership with 13 Stein Hotels and Resorts in Europe brought over with the BelleHavens acquisition. This allows them to sell to about twice as many members as they have resorts they own and still give every member his 45 days a year. If in the future the leases become much more expensive to renew, or unavailable at any price, there will be members who can't get their agreed upon 45 days of vacation, and members might be unable to get some locations that they originally joined to visit each year. If the number of days and locations promised are no longer available you could have a large number of people wanting to get out with very few (if any) wanting to join. That can kill a DC company.
> ...



A&K definitely has some detractors, almost always members and management from the debt laden non-equity world by the way.  Anytime you try to reform an industry, you are going to have people bad mouthing you if they can come up with a reason.  Those negatives cited above are not true or were said prior to launch before anyone knew what the deal was.

The truth on the comments are as follows:

The leasing is a complete red herring.  A&K leases two or three prime summer weeks for about 12 or 13 villas from its villa program for members in order to provide a portfolio with bigger breadth.  It is less than the equivalent of one house.  Less than 5% of the portfolio.  No deposits are used for this purpose (using deposits for leases was one the main reasons T&H went down by the way).  The Stein hotel arrangement relates to a loan that Bellehavens made in exchange for interest and nights at their hotels.  A&K does not pay for those nights.  Members do in fact own all of the houses in the member's portfolio free and clear of debt.

The maximum ratio of homes to members is 6.5 to 1.  If all of those members took all 45 nights, that's 292 nights.  Still not a problem in that scenario.

The management of both Crescendo and BH are still at A&K (one president doing real estate and one heading sales), so you still have the DC experience.  On top of that, you have the luxury travel experience of A&K.

In our two A&K holiday drawings, 99% and 100% of the members received one of their top three choices.  Personally, we've always received our top choice.  If I didn't get our top choice, I could always go on a holiday A&K trip.  Whenever we've done comparisons of availability (holiday or not), A&K seems to have better availability.

By definition, there can't be a run on the bank if you have a 3 in: 1 out rule.  Even if you have a 1 in: 1 out rule, you still can't have a run on the bank.  You can, however, have people bunched at the exits.  As a practical matter, with A&K, there are no people on the resignation list (one because CR and BH members can't resign for at least another year and two because it's a great outfit).

Nonetheless, tombo, I hear you on risk aversion.  That's the reason I'd only consider two or three DCs (out of the 15 or so that haven't merged, actually launched and are still standing).  From what I've seen, the most expensive DCs are the ones that look like they're going to make it, because they've got less or no leverage and higher dues.  It's the cost of staying solvent and economically sustainable in my opinion.

We have agreed and actually continue to agree on a lot, tombo.  Timeshares can be improved.  DCs can be improved.  I just encourage people to not paint with such broad strokes so to speak and to recognize improvements for the better.


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## Vacation Dude (Mar 19, 2009)

tombo said:


> Put all DC's in the same boat because most if not all are going to sink. Don't join whatever you do.



I personally think an "all or nothing" opinion is ignorant as it ignores clubs that are doing the right thing.

I am not a member, but Exclusive Resorts has a pretty stellar reputation and they have 3,500 members are is the largest destination club out there and I have not see one negative post about them ever.

Frankly, if I had a spare $250,000, this is one club I would consider joining.


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## TarheelTraveler (Mar 19, 2009)

Good point, Vacation Dude.  While I'm not a big fan of their non-equity structure and lack of transparency, ER has done a lotof things right.  I'm willing to bet that they are the last non-equity club standing.  They've got a huge membership base and strong backing.


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