Recent Destination Club News

[Jack1234]

Clearly it's time for any interested club(s) to come up with an alternative if they want more members. If "Jim's plan" works for a club as deep in the hole as UE it sure works really well for any financially sound (or as sound as a DC can be right now) club. Sounds to me like people are not against paying higher dues but those funds need to go towards a working, financially reasonable business plan. I believe those exist and sure would prefer to put my $$$ towards one of those over this joke of a plan. I will also second whomever stated the obvious of why would Cap care how we vote on a non-binding question. They just want whatever gets them the highest return (as they should) and don't care if we can take out planned vacation next week. UE (Jim) is in a VERY big rush right now but that doesn't mean we need to rush into anything. just my 2 cents...

 

[Desties]

The good news: JT's plan is based only on 750 of the 1200-ish members coming aboard, far less than those who paid last year's assessment.

The bad news: The same "preserve your lifetime membership" nudge that may have worked a year ago in getting assessments paid isn't going to fly too well with folks the second time around.

Confidence was rattled a year ago, but now it just may be shattered.

All of the latest moves (closing Fort Collins, freezing/slashing exec wages) should have been done long before the first CapSource missing payment on June 5. And, yes, the execs did take cuts during last year's assessment, but clearly there's a cost-control problem when you sell 10 properties and unload 11 leases (during the first six months of the year), raise a little money thought last year's IPO, and you're still millions in the hole.

I still believe in the worth of my fellow members. And I think the concept can survive, ideally with new ownership and a new brand to re-instill confidence. I'm glad to see many options still on the table, and hopefully something plays out if -- as I expect -- the poll results show the need to come up with a new plan.

Think outside the box, JT. Heck. Sell the Elite club to Q or ER, and use that money to keep the other two clubs goig. Or sell Signature and Premiere, if Q or ER want an entry level vehicle.

Either way, if it seems that all of these seasonal and annual leases that were coming online in October to make up for the 21 properties that went away during the first half of the year aren't going to happen, shouldn't the club be informing members about that now in September? Obviously the UE brand is toast if bankruptcy is involved (I mean, who would join -- there's a reason why T&H, Lusso, HCC, etc. don't exist as brands anymore), but if that's the means to necessary change, bring it. Collectively as members, we're more valuable than we probably think.

 

[DestiFan]

After lurking for months, I had to come back to make a few comments. I hope that all of you affected by this (which I am as well) do a lot of research before committing funds again.

Here is the reality as I see it:

1) Capital Source is in charge - and that will not change. They are going to do what is best for their principal balance - not their interest payments.

2) Management - which had no credibility in many of our minds already - has probably lost it with the general membership base.

3) A white knight (I understand Quintess was actively looking for months) will not appear prior to a Chapter 11 - many will come about post-filing. The debt is to burdensome, the struicture too flawed. In addition, the remaining players are too rationale.

4) The non-equity method business model is probably on life support

5) Offers will be available to members of UE, but will not be sweetheart deals. These will be at $$$ levels much more expensvie than current rate.

Lastly, I am still with Equity Estates and am extremely happy I made the move. They are executing well - have record cash signings YTD - and have recently agreed to three new home purchases in great areas.

Hope all of you are well.

 

[TarheelTraveler]

Nice summary of the call last night from DCNews:

http://www.destinationclubnews.com/News_Ultimate_Escapes_Seeks_To_Become_Member_Owned.php

"A group of several individuals, both inside and outside of the club, are actively working with CapitalSource to determine the amount of capital needed moving forward, with estimates ranging from between $15 million on the low end up to $30 million on the high side. With this in mind, Ultimate Escapes is considering five different options:

•Conversion to a member-owned club
•Permanent annual dues increase
•Merger with another club or hospitality firm
•Sale of the club
•File for bankruptcy
Tomorrow, we will outline each of these five in greater detail, but Tousignant stressed throughout the meeting their favoritism of the member-owned plan.

"We believe the conversion to a member-owned club makes a lot of sense. That by converting the club to a member-owned club, particularly outside of a bankruptcy proceeding, we believe makes the most sense as it aligns the shareholder interests, including members now, and it provides all members with a majority ownership of the club, and could provide future upside potential once the economy begins to recover.""

 

[ClubsRDead]

Check the stock today....wow. Good job, JT. You blew it even more.

 

[Jack1234]

I'm actually shocked it is trading at more than a penny.

 

[Desties]

The member letter is now public information.

It was filed this afternoon in an SEC filing:

http://ir.ultimateescapes.com/secfiling.cfm?filingID=1144204-10-48883

The actual presentation may be just for members, but you've got to love an SEC filing of a missive called "confidential" a day earlier.

 

[travels1]

members who are planning travel to leased homes won't travel

I've heard that any members that have travels booked next week into leased homes are going to be told that their reservations are cancelled and they can't travel. Some homeowners are locking out UE from some leased homes and UE is cancelling all leases for those homeowners that are still allowing UE members into their homes. I've heard that calls will start on Monday from their escape planners to any members with reservations in leased homes planning travel in the next few days.

This boat is going down in flames so before you get on the plane you might want to check on the status of your reservations because you may not have a nice comfy home awaiting your arrival!!!!

 

[ClubsRDead]

Cancellations are no surprise here, especially with leased homes (which we probably never should have had). The same thing happened to us before. The difference then was that Rob McGrath didn't get on the phone or Internet the night before a weekend with some whacko presentation. We did get the wondrous phone calls for members from the crazy lady, and we had plenty of people manning the phones when we called about our reservations. But for the most part they honored them as I recall, I even had to pay a little more at one point to keep a lease but it was cheaper outlay then the airfare I would had to to forfeit. I tried calling my "escape planner" 3 times and can only assume she was let go. When I logged into the member site to check my reservations are still in tact but I know one of the homes is a lease so I guess that will disappear soon enough. Of course I had to "vote" first to continue on about a plan to give Jim more money to pad his personal piggy bank with. My answer, of course, was no. I'll just spend my "extra" $50k finding alternate accommodations. And then we can all file our claims again in bankruptcy. That worked so well last time....

 

[TarheelTraveler]

The member letter is now public information.

It was filed this afternoon in an SEC filing:

http://ir.ultimateescapes.com/secfiling.cfm?filingID=1144204-10-48883

The actual presentation may be just for members, but you've got to love an SEC filing of a missive called "confidential" a day earlier.

The actual presentation is also available.

http://www.ultimateescapes.com/recording_4824742/play.html

The urgency could not be emphasized enough in the presentation and the time frames are incredibly tight, but what I don't get is that the writing has been on the wall for quite some time based on the financial filings (payroll issues, not making loan payments for several months, need to raise cash, etc.). Certainly those in the company would seem to be that much better informed.

Seems just plain wrong to the members to get all of these leases, have members book travel for the leased properties and be that tight on cash that you can't honor the leases and being on the verge of filing for bankruptcy.

In potential defense of management, did a potential suitor leave UE in a lurch (8-K mentions 6 mos. of negotiations and due diligence with one suitor)? If so, didn't the same thing happen to Lusso before they filed for bankruptcy?

Again hoping for the best for the members and that a more stable, long-term solution is obtained.

 

[Kagehitokiri2]

remember the cycle of promise then threaten in order to raise funds. been working pretty well. although $5mm in march isnt necessarily that great, if they did indeed raise that much. but then that was not after a threat, right? will certainly be interesting to see what they raise now. i guess the only reason people would be paying UE and not capsource is theyre not in communication with other members or advisors?

...

while UE/lusso/etc clearly are incapable of making reasonable decisions (other than in strategies to shift income to mgmt, and liability away from mgmt) could Q also WANT to encourage that, so they dont recover, go bankrupt, and then Q picks up members etc...

and the thing is, doesnt really matter for members, if they get to move to Q with no deposit.

if that happens, CLEARLY Q is either >
- not breakeven with investor ("covering debt" IIRC)
- concerned about investor leaving
- knows investor is leaving before originally scheduled
- concerned they wont be able to replace that income later (which is pretty far out? but would seem to be a good way to plan..)
~ anything im missing? i dont think pure greed works..

 

[ClubsRDead]

...

while UE/lusso/etc clearly are incapable of making reasonable decisions (other than in strategies to shift income to mgmt, and liability away from mgmt) i dont think pure greed works..

You are 100% correct here. Irrational decisions. The plan proposed wiped out secondary debt of JTs to the original equity guys by taking the dollars he was asking for as a "member equity" club to reduce that debt and convert to shares for himself. Saying you will cut your $500k salary in half is no saving grace when you have some 250+(if not more) people likely to lose their holiday reservations as of right now. I for one ask, what does he get paid for doing? If he and other mgmt incurred lots of debt, personal or otherwise in the various schemes and transactions they've been doing, that shouldn't be our problem - but once again is. We've given money repeatedly to this process - at the signup some $20MM, assessment, dues, early dues programs, early equity asks, some bought stock, you name it. And he appeared to pay little, if any of the debt down to maintain our travel. If he'd used just 1/3 of our money to satisfy creditors we wouldn't be here today. At Tanner there were some odd member deals as I recall, and Jim could have used that BK to get rid of them all. Instead, "early ups," tons of extra days, free memberships (Elite, no less) for his board and certain members from other clubs - like Everlands. Why did they get free Elite's and no dues? TH failed on us - but, we travelled like kings, never got our trips cancelled and had plenty of availability. No one called and said "give us money now or we fail tomorrow." No one assessed, raised dues. In fact, they're biggest problem was NOT saying "no" to member demands. In the end it was a much better travel experience. This one has been some bs maneuver to get big and fat at our expense, promise things undeliverable and then I guess, his plan was try to sell the club for xxearnings and make himself rich, because I am curious what the plan was to pay the note off next year that he had failed to reduce the principal on almost the entire time.

Monday should be a really interesting day.

 

[AKTHUE]

Member Dialog

It is really unfortunate that there is no effective way for the UE members to communicate with each other and share perspectives and viewpoints.

JT even structured the webcast to prevent questions. There are only about 10 UE members who have found TUG, so it is not critical mass.

If members had a forum, they could at least debate alternatives.

If new cash from members were to sustain or create a new UE, it should be on terms very different from what JT presented. It should include:
- elimination of all existing equity as well as the URH loan (which I think is controlled by either JT or RK0
- a substantial write-down of the CapitalSource loan
- a completely new management team
- complete member control, not 4/7 board members

It's possible that with some capital infusion from members UE could be relaunched, or the remnants could be attractive enough for another organization like Hilton or Starwood or Marriott or AK to purchase or operate the club as a member-owned club

But JT's approach to members is to prevent members from considering such alternatives, and to make us sit on the dark and tell us our Christmas and New Year's plans won't happen unless we give him more money. UE has never been forthright and has never treated the members with respect. They always have something to hide or some game they play. The fat lady was singing on JT's webcast.

 

[Kagehitokiri2]

what happened to UE email lists?? there are more than 10 UE that have posted here, and im sure more are lurking.

edited my last post to make clearer.

 

[Jack1234]

There was a good sized email list out there from the time of the assessment. Seems to be a good time to bring it out and get a group to band together to try to negotiate with anyone who has a decent proposal for us. Numbers still talk in DC land. I too am hearing that if/when the BK filing occurs all trips are likely to cease whether leased or owned homes.

 

[Desties]

If UE files next week, I predict that Q and all of the remaining smaller non-equity clubs go under -- or convert to equity models, if they can -- by early next year.

Right now, Q is kept afloat by its mysterious investor and Steve Case is ER's sugar daddy. However, what investor would keep throwing money into an industry if its only public company failed in public? What member would fork over a chunky deposit, when a Google search brings up pothole after pothole? T&H was the industry leader, but it was too long ago and other clubs had already distanced themselves from that "please the member at all costs" model. UE has more members than every other failed club after T&H, combined -- twice. Its collapse may spell the end for all but ER, who can at least point to scale to explain to potential members why it can survive.

If Q is the potential suitor that's been talking to UE for six months, I'm guessing that part of it was to grow its base quickly, but also to swallow the grenade before it explodes in the open. Picking up UE refugees post a filing may seem like a financially savvy strategy, but it will be ALL that the club nets in new members, as industry confidence teeters.

I spent the past few days exploring the ER and Q plans, just to know where the exits are located, and have concluded that neither will work for me, even on a dues only basis. It's too much per night -- compared to what I'm paying for UE now, and compared to the private rental homes available. I've never been a fan of ER's clustering strategy, and Q just doesn't have enough properties to make it worth it for me. To be fair, I probably wouldn't have signed up for UE's current offerings either. If the PE Legacy plan wasn't offered, I would have probably joined the dozens of PE members that bowed out at that point. If any club wants a play for the Sigs and Premieres, they're going to have to consider going downmarket for an entry-level product.

I'm not burning through another deposit, so I'm not even eyeing the equity clubs. And that also includes any potential for UE to go equity, because I'm already far enough in the hole with the initial deposit.

Good luck to everyone in the coming days. They will be industry-defining.

 

[PuntaEscape]

The real question. Most people that still are members are under a can not quit clause until 18 months after sept of 09. We are also under a new cancellation policy with hefty fines for cancelling reservations. So what do we do when dues come due in the next few months assuming there are a next few months, are we legally obligated to pay? Do we pay only till the 18 month obligation is done. What about existing reservations. If you have for Christmas and they cancel then no problem, but what do you do. If you cancel they may come after you with the charge for the cancellation fees. The next few days and weeks will be key. Does the CRO try to continue to generate cash in by honoring resevations for properties still owned and if so continue to run the club during a liquidation period?

 

[Buon Viaggio]

desties - I'll bet a lot of UE members are going through the same thought process when looking at other clubs. In fact, any early adopter in the DC world would be hard-pressed to join a club now after the great deals early on. Unfortunately for your pocketbook all the clubs are now more realistically priced for survival. All I can say in defense of ER is that when they went through the restructure of the contracts they made a major paradigm shift to improve communication with members and to allow feedback and member participation in the solution. They really averted a complete melt-down and they emerged with a much stronger and enthusiastic membership. Sure there is still a waitlist to leave but member satisfaction is as high as ever and the great service is still constantly improving. The homes are still fabulous and not all locations are clusters of homes by the way. Per night compared to rentals is not as good a comparison as it used to be but if/when the market improves that will change and the DC's will be a better value. Not many rentals have the same level of service as a DC either. DC's will survive especially if you consider how reluctantly UE's abused members are willing to give up the lifestyle.

 

[Kagehitokiri2]

If UE files next week, I predict that Q and all of the remaining smaller non-equity clubs go under -- or convert to equity models, if they can -- by early next year.

Right now, Q is kept afloat by its mysterious investor and Steve Case is ER's sugar daddy.

not sure if i quoted or not, but didnt ER say after that $20mm and dues increase that they are breakeven? dont remember. and of course could be false.

anyway, nonequity is down to ER/Q and UE/oyster.

maybe Q is more concerned with acquiring UE members first. and then after that theyll go for oyster members. trying to take on ER and whatnot. maybe its actually that their investor is interested in this, and additional real estate etc investment, during this down period...

we will learn a lot from what happens.

 

[Buon Viaggio]

I haven't heard of any plan for Case to add more funds after the 20 mil. They seem to be on plan - breakeven. With decreased costs, new members and a large number of upgrades they do seem to be on track.

 

[Kagehitokiri2]

so they did say theyre breakeven now, right?

 

[TarheelTraveler]

ER

I've been told by a very reliable source that once the full around $1,000/night dues are phased in at ER over three years for all members, they anticipate being break even. The $20M from Steve Case was supposed to help fill in the gap in the interim.

Frankly I don't get why anyone in their right mind or who does any due diligence would join a non-equity club at this point. Maybe you do it as an early adopter before you've got better choices. And I used to say you might do it if you've got to be in a particular location, and then you really look hard at the financials. However, looking back at the wreckage, I can't ever imagine putting in several hundred thousand dollars to be an unsecured creditor owning zippo, just some promise of perpetual vacations from a no-name company. The structure is just crazy IMO.

I've always thought the industry needed regulation and still do. People joining non-equity DCs always thought their deposits were primarily being used to buy real estate, when the reality was quite different. You notice most or all of the non-equity players have never committed to using 80% of deposits to buy real estate (although ER was always one of the better ones and it's one of the main reasons that they're still standing). Most DCs were started by or had real estate developer investors. In my experience, developers are fantastic at making lots of money or, alternatively, flaming out spectactularly. That personal characteristic of tolerating a high degree of risk is not however what most members probably envisioned when they want to go on worry-free vacations.

 

[Buon Viaggio]

I think the equity vs non-equity debate is really moot in terms of investment. I just look at my DC membership as the cost of accommodations and travel service. Don't need to own that especially with the bleak outlook on resort real estate. A membership in an equity club is really a small investment ($500K or $600K) anyway so we're not really talking about a lot of upside potential are we? Not sure if the equity model is any safer - I've had several real estate investment vehicles unravel in the past 3 years. Agree that there needs to be some sort of regulation and basic standards.

ER is not exactly a no-name company either.

 

[Kagehitokiri2]

I've been told by a very reliable source that once the full around $1,000/night dues are phased in at ER over three years for all members, they anticipate being break even. The $20M from Steve Case was supposed to help fill in the gap in the interim.

forgot about phased. makes sense.

the thing re equity is the details still vary a lot. >

- AK
- m private residences
- hideaways club
- EE
- luxus vacation properties
- rocksure (third fund - euro capitals - is larger than first two)


Buon Viaggio, where do you stand on if the deposit was simply non refundable? (one of the things ive tossed out there.)

 

[AKTHUE]

A membership in an equity club is really a small investment ($500K or $600K) anyway so we're not really talking about a lot of upside potential are we?

You must play in a different league than I do. I would rather own a home having used $500K as the downpayment, than consider $500K a fee to then pay $20K/year in annual dues to vacation for 21 days a year and then have it close down 2 years later while the CEO plays financial games and draws a $500K salary.

How can you call it an investment if it is backed by nothing