Distinctive Holiday Homes, competes with HCC

[nick@ihug.co.nz]

Am looking forward to your decision on this.

It has been decided that anyone member joining before the 30th September will have 12 months from the day they joined to upgrade to another plan at the same rate per week as the rate they joined ie $25,000 per week.

Cheers

Nick Wood

 

[LTTravel]

It has been decided that anyone member joining before the 30th September will have 12 months from the day they joined to upgrade to another plan at the same rate per week as the rate they joined ie $25,000 per week.

Cheers

Nick Wood

Definately a good plan. Thanks.

 

[LTTravel]

DHH
$3 million dollar homes
currently 6 homes, 2 boats (including 86ft yacht and 7000 sq foot home in Beaver Creek and other nice choices)
International destinations(with local holiday periods)
$25,000 per week membership deposit (doubling at the end of the month)
80% refundable
$7000 per week membership dues
1-5 week plans
Add up to three friends for $5000 each
Transfer membership for $5000 (potential increase in value of membership!)
Adult children can use the days
$300 per day space available
$1000 per week food allowance
Luxury SUV(some destinations have 2)($800+ value)
Motor boats at some destinations
Airport Transfers($300 value)
Daily maid service, including breakfast preparation and laundry($250 Extra Value)
Concierge services
$7000 per week for the homes
$3000-$8000 per week for the boats
Bank or borrow one week per year
12 months to upgrade at current pricing
$25 million in the black
CEO will chat with you online, talks and listens.

I have no free time (or money) left but I don't think I can resist
I think that I could sell this idea.
Any other thoughts by Tuggers?

 

[Kagehitokiri]

the value is great, especially with the yachts - although moreso with the space available days than the plan days.

and the destination/property selection criteria that nick discussed sounded great to me.

IMHO the ability to transfer to anyone is the most interesting benefit.

incentives to join before sept 30
- deposit pricing will double ($25K/wk > $50K/wk)
- ability to upgrade at current deposit pricing within 12 months

 

[Steamboat Bill]

My #1 concern is their long term survivalability as these prices seem way too low, but perhaps this is simply the benefit to being an early adopter.

Are they planning on joining the DCA and have a net asset test?

 

[LTTravel]

My #1 concern is their long term survivalability as these prices seem way too low, but perhaps this is simply the benefit to being an early adopter.

Are they planning on joining the DCA and have a net asset test?

They say they will have an independant audit and are currently $25 million in the black.

 

[Steamboat Bill]

They say they will have an independant audit and are currently $25 million in the black.

Thanks...I feel MUCH better now. But as they say in Jerry McGuire...."Show me the money"

 

[Kagehitokiri]

nick did say they are trying to join the DCA. also said independent audit by December. >
http://tugbbs.com/forums/showpost.php?p=381143&postcount=35

$25MM reserve was indicated on their website. nick emphasized the cash flow from Octopus Resort. also talked about the model some in response to questions >
http://tugbbs.com/forums/showpost.php?p=381143&postcount=33

 

[PerryM]

Sounds promising....

DHH
$3 million dollar homes
currently 6 homes, 2 boats (including 86ft yacht and 7000 sq foot home in Beaver Creek and other nice choices)
International destinations(with local holiday periods)
$25,000 per week membership deposit (doubling at the end of the month)
80% refundable
$7000 per week membership dues
1-5 week plans
Add up to three friends for $5000 each
Transfer membership for $5000 (potential increase in value of membership!)
Adult children can use the days
$300 per day space available
$1000 per week food allowance
Luxury SUV(some destinations have 2)($800+ value)
Motor boats at some destinations
Airport Transfers($300 value)
Daily maid service, including breakfast preparation and laundry($250 Extra Value)
Concierge services
$7000 per week for the homes
$3000-$8000 per week for the boats
Bank or borrow one week per year
12 months to upgrade at current pricing
$25 million in the black
CEO will chat with you online, talks and listens.

I have no free time (or money) left but I don't think I can resist
I think that I could sell this idea.
Any other thoughts by Tuggers?

I’ve been out of the DC discussion for a while – I like what I’m hearing here:
1) Transfer membership
2) Cars/boats included
3) Daily maid service including breakfast and laundry
4) Bank and borrow weeks
5) $1,000 food allowance (I don’t know what it is but sounds delicious)
6) 100% owned - NO debt to service

I just don’t understand why these DCs aren’t Point oriented and allow you to buy as much or as little as you want and feel "Creative" in the usage of the DC.

But hopefully this DC will cause others to break from the original mold which is getting moldy to me.

P.S.
So if they can do it for $25k what's the reason existing DC's can't offer these goodies too?

Sounds like these guys are not overgrown timeshare folks - they seem to be selling a great dream vacation to their members and not a little fancier timeshare.


Now if they had just picked Points as a currency instead of weeks they could easily outrun a lot of DCs that seem to be stuck in Yesterday.

 

[Kagehitokiri]

and i dont understand why people dont understand the whole point of DCs (and fractional ownership) is to not have points its not "weeks" its NIGHTS. different clubs have different min/max nights set.

- HCC allows unlimited last minute(1 week out?) for free. (private members)

- DHH allows unlimited space available use @ $300/nt. (others charge between $1000-$2500 for additional space available or plan nights.)

- worldwide private residences allows "at least" 35 nights, with no annual fee.

- solstice allows unlimited space available for free.

- lusso and ciel allow virtually unlimited use.

other clubs didnt have the same reserve/cash flow (as a parallel hospitality venture). some did have the "reserve" like yellowstone club world and ciel. they launched with huge portfolios, although they do recoup faster with the higher pricing. ciel also tried to get more of a cash flow, by bidding on the tanner haley sell off.

perry and bill, id recommend taking a look at nick's comments on the business model. id be interested in hearing your thoughts.

 

[Steamboat Bill]

I think DHH has a lot of potential, just using the yachts alone is worth the cost of membership. I have chartered yachts in the BVI and it is VERY expensive. One of the reasons I like PE is that they have a yacht in the BVIs, yet the DHH yachts seem nicer.

My main concerns are:

1. This is still a new and unproven club with only 18 or so members.

2. If all 18 members paid $25k, then they brought in only $450k total, yet they have $25m in the bank....seems strange. If I was an investor/owner, I would want a buy-in in the $100k or more range.

3. Most of their properties are located FAR away from me.

Yes, the current price seems to be a bargain, but this is probably the riskiest club to join as they are still new. In a year or two, if they expand the club and add more properties, these initial concerns will dissapear.

I remember looking at HCC when they only had 9 Colorado properties and passed on joining. When they had 20 properties and 120 members, I joined, but ended up sepnding $20k MORE than I would have if I joined when I first heard of them. Oh well, at least I saved $10k as compared to joining now.

 

[Kagehitokiri]

i agree. its not just about # of properties, its about type/destination. thats another reason why i would wait to consider DHH, WPR, ciel - lack of beach properties right now. ill be fine paying more later.

and its also that i want to really make use of the club when i buy, but thats another issue, and why i dont buy lusso, which has more beach properties, right now.

also agree PE's yacht isnt that appealing IMHO.

The occupancy rate i referred to is what we would have if all members were using their full allocation of weeks at that point in time, as we have invested over $25 million in destinations and infrastructure ahead of signing members, we will have a much lower occupancy rate from the beginning as we have homes which did not require members deposits. We intend to this sustain this rate out into the future, for as long as possible.

The long run occupancy will be approx 65 % or 35 weeks per year to deliver 100 % of our Members vacations ... this generates $50,000 x 35 = $1,750,000 in deposits. The average purchase price of our homes to date over the last 2 years has been just under $2 million dollars we spend around 100,000 on furnishings so we will have at this level $350,000 in debt but on a home that is worth once renovated around $3 million so we carry around 10 % debt on the new properties going forward, and zero on the ones we have to date ..

If you took a very simplistic snap shot forward where we had added 20 more homes, we would have approx $85,000,000 of homes all together and around $7,000,000 of loans so overall debt gearing of approx 8 %. Refundable Member Deposits of $29,000,000, so our net asset to Member deposits and debt is 2.36 i.e. we cover the debt and Member liability 2.36 times .. even if the property market took a dump and the property values dropped 30 % we still have 1.63 times the Member deposits and bank loans.

We collect $245,000 a year in annual dues per home ($35 x 7,000) which taking a simple view allows for the following:

Mortgage $25,200
Concierge $45,000
Food & Bev $34,000
Cleaners $15,000
Property Tax ( this only applies in the US) $25,000
Insurance $10,000
Car lease $9,000
Car Ins $3000
Power $12,000
Cable & Internet $2400
Transportation $10500
Consumables $7000

Which leaves an additional $47,000 per year for maintenance , replacement of furniture due to ware and tear head office costs etc ....

The above is a very simple view, as we have different costs in each market to provide the same solution so our actual average is a lot lower ...when you take into account lower interest rates in Europe, and lower costs of doing business in the Pacific and Europe etc ...but this at least proves that the basic system works ...

I hope this clears up some of your questions about the sustainability of Destination Clubs as a whole ...

Cheers

Nick

 

[LTTravel]

Bill,
You were wise to do your due diligence, but at #120, you may have just missed the "equity" membership in HCC (which unofficially ended at member 100) Still a great deal. My friend just spent over $10,000 for one week in a 1 BR at LaCosta.

K,
Lusso is also a good buy if it remains viable, with 100% plus 50% of increase in membership fee refund on exit and virtually unlimited use, however, I think the increase in membership fee policy may end this month.(They were talking about ending it after 100 members and they will probably pass that this month) They also have very nice homes, SUV on site, Airport transfers, accessable CEO.

Ciel, Solstice, both probably very good, but very expensive
Quintess, also very good, impressive $4 million homes, more expensive than ER
ER has the widest portfolio and greatest selection, also very expensive
PE IMHO also a very good DC, good selection, well thought out
UR now with 100 homes after purchase of T & H, 80% current price on exit, may be worth looking at.
Bellehavens 90% on exit, equity membership, happy member on this forum, also appears to be a good DC
HCC, definately the value leader
just to name a few that were mentioned.


DHH is the only one that allows you to get a true membership with a commitment of only one week, and now, Nick has offered to let the memberhship be able to be upgraded at the same price for 12 months (though 24 months would have been even better) Yes, the homes are far away, but you can limit your commitment and they have an outline for expansion which includes NYC, South Beach and St. Maarten. And, it is the only one that allows you to transfer your membership. And they give you 90 days to think about it.

No, I don't work for DHH, (unless Nick wants to hire me) but $3000 for one week on a 53 foot sailboat in the mediteranean with a captain ($17.86 an hour, they want $120+ per hour for a jet ski when I go on vacation), with other extras, and all the other things we have discussed; please don't tell my wife, but I think I will be in for at least one week by the 30th.

 

[travelguy]

and i dont understand why people dont understand the whole point of DCs (and fractional ownership) is to not have points its not "weeks" its NIGHTS. different clubs have different min/max nights set.

Uh oh ..... I sense a classic TUG "weeks vs. points" debate coming...

 

[travelguy]

DHH Due Diligence

A few quick comments on DHH and the due diligence involved in making a purchase decision:

1. I believe they are New Zealand based. As a potential purchaser, I have no idea of that country's standards of business & accounting, legal recourse and if they are even legally authorized to sell memberships in the US (I'll assume that they are).

2. It seems that the $25Mil is the standard answer to membership RISK. Where is the $25Mil located, who put it there, how are memberships secured by it, are there any other "liens" or secured positions on it (do memberships have a perfect, first position lien?) and what's to keep someone from taking the $25mill back? Has anyone done the actual legal searches to find out these questions?

3. The Fiji resort is also said to provide cash flow for the DHH DC. Why?? If the Fiji resort throws off so much cash, and is presumably very profitable, why take the business risk of funding a DC for the YEARS it may take before the DH is cash positive? What is the corporate relationship between the Fiji Resort and DHH? What's to keep the Fiji resort from stopping the funding to DHH if times get rocky for EITHER the Fiji resort or DHH?

I have other concerns about DHH but I'll leave it at these comments for now. Personally, I would not consider a DC membership unless I could review the spreadsheets of a long-term (5 to 10 yr) business plan including detailed business model, P&L, Balance Sheet and, most importantly, cash-flow projection.

I understand that Nick will address these issues and appears to be forthcoming with the appropriate answers BUT remember that anything can be said by anyone on an internet board (or as PerryM likes to say "some guy on the other end of the phone"). With all due respect to Nick and DHH, has anyone done the actual due diligence?

 

[LTTravel]

A few quick comments on DHH and the due diligence involved in making a purchase decision:

1. I believe they are New Zealand based. As a potential purchaser, I have no idea of that country's standards of business & accounting, legal recourse and if they are even legally authorized to sell memberships in the US (I'll assume that they are).

2. It seems that the $25Mil is the standard answer to membership RISK. Where is the $25Mil located, who put it there, how are memberships secured by it, are there any other "liens" or secured positions on it (do memberships have a perfect, first position lien?) and what's to keep someone from taking the $25mill back? Has anyone done the actual legal searches to find out these questions?

3. The Fiji resort is also said to provide cash flow for the DHH DC. Why?? If the Fiji resort throws off so much cash, and is presumably very profitable, why take the business risk of funding a DC for the YEARS it may take before the DH is cash positive? What is the corporate relationship between the Fiji Resort and DHH? What's to keep the Fiji resort from stopping the funding to DHH if times get rocky for EITHER the Fiji resort or DHH?

I have other concerns about DHH but I'll leave it at these comments for now. Personally, I would not consider a DC membership unless I could review the spreadsheets of a long-term (5 to 10 yr) business plan including detailed business model, P&L, Balance Sheet and, most importantly, cash-flow projection.

I understand that Nick will address these issues and appears to be forthcoming with the appropriate answers BUT remember that anything can be said by anyone on an internet board (or as PerryM likes to say "some guy on the other end of the phone"). With all due respect to Nick and DHH, has anyone done the actual due diligence?

1. I believe that the company was actually set up in Santa Monica
2. The web site and membesrhip agreement state that crediters are paid first(i.e. remaining mortgages, etc), then members and then owners. I presume that the owners have already commited the first $25 million as start up
3. The Fiji resort appears to span from budget to luxury, 95% occupied, but not a very large resort. I don't quite understand how it is generating that much money also

But I would let Nick answer these questions for you. Those who took a risk with almost all current DC's (except Tanner and Haley) are very happy they did, at least for now. I see this as relatively low risk ($25,000 per week as opposed to a $400,0000+ investment in some of the other DC's)

 

[nick@ihug.co.nz]

My #1 concern is their long term survivalability as these prices seem way too low, but perhaps this is simply the benefit to being an early adopter.

Are they planning on joining the DCA and have a net asset test?

Yes we are in the process , and we will have audited accounts after YE 07 , and will publish net asset numbers every 6 months ...

Current ratio of Net assets to deposits is 25:1 , DCA expectation is .66:1 which is a lot worse than our current ratio ...

 

[nick@ihug.co.nz]

1. I believe that the company was actually set up in Santa Monica
2. The web site and membesrhip agreement state that crediters are paid first(i.e. remaining mortgages, etc), then members and then owners. I presume that the owners have already commited the first $25 million as start up
3. The Fiji resort appears to span from budget to luxury, 95% occupied, but not a very large resort. I don't quite understand how it is generating that much money also

But I would let Nick answer these questions for you. Those who took a risk with almost all current DC's (except Tanner and Haley) are very happy they did, at least for now. I see this as relatively low risk ($25,000 per week as opposed to a $400,0000+ investment in some of the other DC's)

We are a Delaware LLC , so a US corporation, with our Head office in Santa Monica, we have shareholders from all around the world, the main ones are from NZ.

We did commit over $25 million at the start.

The resort is very profitable, and runs full all the time, it more than covers the overheads.

Our membership count should be around 40 Members by months end, based on the number of applications we are processing, our main marketing only started in July/August worldwide , the mix of Members are spread all around the world , to help occupancy ...we now have some US Members.

When we get to 150 Members ( aim is by next May) the club will have at least another 5 Destinations, and they will probably be Hawaii, Caribbean , boat in Caribbean, Chateaux in France, New York.

 

[PerryM]

Q & A

We are a Delaware LLC , so a US corporation, with our Head office in Santa Monica, we have shareholders from all around the world, the main ones are from NZ.

We did commit over $25 million at the start.

The resort is very profitable, and runs full all the time, it more than covers the overheads.

Our membership count should be around 40 Members by months end, based on the number of applications we are processing, our main marketing only started in July/August worldwide , the mix of Members are spread all around the world , to help occupancy ...we now have some US Members.

When we get to 150 Members ( aim is by next May) the club will have at least another 5 Destinations, and they will probably be Hawaii, Caribbean , boat in Caribbean, Chateaux in France, New York.

Ok, what can you do to convince me to become a member now? I snowboard and love the beach. I don't want to go to Europe but love the Caribbean area.

Here are my concerns - and they don't have anything really to do with just your DC:

1) The membership fee - how do I know that I can get it back when I want out?

2) MFs - all DCs are eye watering to begin with, what will I be paying in 10 years?

3) How do I know I can get out if I want out?

4) I'm all booked up for the next 13 months - couldn't squeeze another vacation in if I tried

Thanks for any insight.


Good luck with your DC.

 

[LTTravel]

Ok, what can you do to convince me to become a member now? I snowboard and love the beach. I don't want to go to Europe but love the Caribbean area.

Here are my concerns - and they don't have anything really to do with just your DC:

1) The membership fee - how do I know that I can get it back when I want out?

2) MFs - all DCs are eye watering to begin with, what will I be paying in 10 years?

3) How do I know I can get out if I want out?

4) I'm all booked up for the next 13 months - couldn't squeeze another vacation in if I tried

Thanks for any insight.


Good luck with your DC.

I looked into this also and had the same concerns. From what I see

1., 3. They have a 1 in 1 out policy
2. They limit increases to CPI + 3.5% per year, assume the worst, but to remain a viable club, they should be reasonable.
4. You can bank one week from this year to next year, if you buy in for one week. You have up to 12 months to upgrade, which I assume, if you upgrade in 11 months 29 days, means that the membership at the higher level actually starts next year.

 

[PerryM]

I looked into this also and had the same concerns. From what I see

1., 3. They have a 1 in 1 out policy
2. They limit increases to CPI + 3.5% per year, assume the worst, but to remain a viable club, they should be reasonable.
4. You can bank one week from this year to next year, if you buy in for one week. You have up to 12 months to upgrade, which I assume, if you upgrade in 11 months 29 days, means that the membership at the higher level actually starts next year.

Thanks,


I remember having the same conversation with HCC. There you can't roll forward your week. Here I guess I pay $7,000 to postpone my vacation for 1 year - seems pretty stiff but I understand they have tried to at least address the problem. HCC let me postpone MFs for 1 year to accommodate my existing vacation structure.

So, would this DC all me to join and not use the DC for 13 months while I work off my reservations and NOT pay the MF?

 

[Kagehitokiri]

and their "equity" model takes it out of the club's hands and puts it in your own >

5. You can find someone to take your place , not your membership , you are refunded the 80 % , and they pay what you were refunded to join, they can also take over any bookings you had in the system at the time. However they are on a new membership , and yours is canceled. Eg say in 10 years a 4 week membership is $400,000 and you wanted to leave and were owed 80,000 back ( 80 % of 100,000 ) you could invite a friend to take your place , they would pay $80,000 and you would get back your $80,000. Now your friend if he had have joined of the street, just his non refundable part would have been $80,000. You have saved him a bunch of money , while he would still only get $80,000 back when he leaves ....you would no doubt have a discussion about what it was worth for him to save all that money ....

so instead of selling your resigned membership for a lot more, they allow you to do so, as a potential benefit. no promises or sales effort required by them, and they might get people who wouldnt have paid current list price. works for them since the profits come from the annual fees, as the deposits are supposed to be used for property acquisition.

 

[nick@ihug.co.nz]

Ok, what can you do to convince me to become a member now? I snowboard and love the beach. I don't want to go to Europe but love the Caribbean area.

Here are my concerns - and they don't have anything really to do with just your DC:

1) The membership fee - how do I know that I can get it back when I want out?

2) MFs - all DCs are eye watering to begin with, what will I be paying in 10 years?

3) How do I know I can get out if I want out?

4) I'm all booked up for the next 13 months - couldn't squeeze another vacation in if I tried

Thanks for any insight.


Good luck with your DC.

Hi , and thanks ....

So long as members are joining , there is no problem getting your Membership fee back. But nobody can give you a 100 % iron clad guarantee .. if people stop liking the destination/s ( even with time share ) then you will have trouble getting out of either ...

The costs are higher with DC per year , but you get a lot for this , and we are talking about amazing property with 6 star service , so this costs real money no way around this ...the reality is the annual dues will only go up with inflation .....

We will add properties in the Caribbean & Hawaii as our next US destinations along with a 86 ft Yacht for the region, just requires American Members to join ... if things go as planned we will have these properties in place sometime next year ...

You hard working Americans never seem to get much vacation time .... you need to copy the rest of us and take 4 - 8 weeks a year

Cheers

Nick

 

[nick@ihug.co.nz]

and their "equity" model takes it out of the club's hands and puts it in your own >



so instead of selling your resigned membership for a lot more, they allow you to do so, as a potential benefit. no promises or sales effort required by them, and they might get people who wouldnt have paid current list price. works for them since the profits come from the annual fees, as the deposits are supposed to be used for property acquisition.

Just to clear something up , we don't make profits from annual dues , we only charge what it costs to run the properties, our profit comes from the non-refundable part of the joining fee, and the capital gains over time of the property ...

 

[GOLFNBEACH]

Just to clear something up , we don't make profits from annual dues , we only charge what it costs to run the properties, our profit comes from the non-refundable part of the joining fee, and the capital gains over time of the property ...

I don't understand. If the only profit comes from the non-refundable part of the joining fee, and the capital gains over time on the property...you can't realize profits until members leave or you sell the properties.

How is this a sustainable business model?