Demeure - UE

[TarheelTraveler]

Press release for Demeure as bidder for UE assets:

http://www.prnewswire.com/news-rele...-destination-club-members-woes-105474773.html

"Demeure...announced it has been selected as the successful bidder for a bulk lot in the bankruptcy estate of Ultimate Escapes, the second largest destination club with more than 1,247 members. Demeure's plan restarts member access to many of the same residences Ultimate Escape's members previously had through their prior membership. The transaction remains subject to court approval, and satisfaction of closing conditions...."

DCNews article:

http://destinationclubnews.com/News_Demeure_Selected_As_Successful_Bidder_For_Ultimate_Escapes.php

Letter to Members from CRO

"Dear Ultimate Escapes Members,
I am pleased to inform you that the Company has reached agreement with the Laurence Group, based in Waterloo, Ontario, Canada, to sell a number of the company’s properties and to offer members an opportunity to transition their Ultimate Escapes membership experience to the Demeure travel club, an affiliate of the Laurence Group, on preferred terms. The transaction remains subject to court approval and satisfaction of closing conditions.
I am also pleased to inform you that the Laurence Group has additionally agreed to lease a significant number of the Company’s former properties from Capital Source, which combined with the homes they are buying, will allow for members to continue to use the majority of the homes they know and love.
Our agreement allows for Demeure to invite our members to transition your membership to the Demeure club, and, unlike the previous offers you may have received from third parties, this offer is not only authorized by the Company, but has our complete support. The Company will be working hand in hand with Demeure in transitioning all interested members to their Club.
I believe this is a very good result for the members, and that we have accomplished our goal of providing a home for members that will enable them to begin traveling again very soon.
A press release is being issued contemporaneously by Demeure, and we will post it on the Member Only Website as soon as it is available.
As always, we thank you again for your support. If you have questions, you may submit them via email to bankruptcy@ultimateescapes.com.
Thank you,
Sheon Karol CRO"

 

[3DH]

this offer is not only authorized by the Company, but has our complete support.

I just have to wonder how members feel about this statement... reminds me of LUSSO giving it's backing to the Q offer when they (LUSSO, obviuosly) went into bankruptcy! I can tell you that with how the club had been run and the situation that they were in, the last thing I wanted to do was take their advice!

 

[Desties]

Details? Terms?

We'll get that in the coming days.

I'm still scratching my head. The chatter is that we'll have to front deposits, but that doesn't sound like the Demeure model at all, where you basically pay $2,500 for five years to receive 40% discounts on properties in its portfolio -- or you pay nothing if you contribute a minimum number of nights at your own vacation home and get in for free and with 50% discounts.

How can that model possibly have UE refugees digging into their pockets -- unless it's an equity model where those who kick in will own a piece of the old UE properties they acquired (again -- which ones)?

Obviously a concept that promises "no deposits ever" is not going to demand refundable deposits -- so anyone holding out hope for Demeure as a way to get their original deposits back is out of luck. And if Demeure is serious, obviously it's not going to be charging us the same $2,500 rack rate for the 5-year membership to UE refugees, though it's unlikely to be free either (unless the UE homes are somehow considered real estate contribution, even though it's obviously CapSource's real estate now).

This is definitely NOT what I was hoping for. Stupid Quintess. You could've bought UE and be welcomed as saviors. Now you're just the "other woman" that distracted UE during the final 6 months of its life.

 

[Kagehitokiri2]

no, demeure originally talked about owning some properties, then never mentioned it again until now.

but yes, it was planned to be equity actually, now that i think about it. so in terms of "deposits" that might actually be ok. and maybe other demeure members/investors will put in some as well?

that would just leave the ongoing lease costs.

...

Q is already dumping properties into duo. they must have finally decided they didnt want many of UE's properties.

 

[EOD]

Q

I don't think Q could have bought UE. Buying it means you get all the debt along with all the homes. So, say you pay zero for the whole company, it still doesn't work since UE could not cover its expenses. Cap source would have to have agreed to substantially restructure debt to make it work. Cap source may be happy to just foreclose on the whole company and take ownership. Will be fascinating to hear what UE members will be able to expect in terms of refund of deposit in the future. I'm guessing: zero....Cap source after all doesn't care if members get paid back.

 

[Kagehitokiri2]

demeure
buy 11 properties $14.3mm
lease 45 properties $4.3mm/yr ($0 > $6k > $23k per month)

something about dues of at least $12mm? ($12mm / 1200 = $10k)

there has still not been any communication?? obviously question is what are UE member terms, but possibly more importantly is how does this relate to their current members, at time of closing, and moving forward.

 

[UEgly]

something about dues of at least $12mm? ($12mm / 1200 = $10k)

Getting enough UE members to join Demeure so they get at least $12MM in binding annual dues commitments is a closing condition to the sale. So if enough of us don't bite, there is no deal (unless D waives the condition for some reason).

 

[Desties]

demeure
buy 11 properties $14.3mm
lease 45 properties $4.3mm/yr ($0 > $6k > $23k per month)

something about dues of at least $12mm? ($12mm / 1200 = $10k)

It's amazing how non-UE members are getting the details of this before UE members.

I'm not sure how this is supposed to fly. Even if it is on a "dues only" basis, who would join a green club with just 11 properties and 45 leases that can be sold off by CapSource at any time?

One of the worst things about being a UE member over the past year and change -- outside of paying phantom dues -- was that you never knew if a booked property was going to be sold off before your trip. Even VRBO comes with less uncertainty!

Obviously the club can't plan on 1200 members. Dozens will go to DUO. Dozens will go to EE. The who knows how many comp'd members won't go anywhere. There were also hundreds of T&H and PE members that were paying dues only for the shot at resigning after a set time to get their deposits back -- and obviously that isn't happening here.

Blech!

 

[HereWeGoAgain]

NUTS..!!

Title says it all...

This "deal" is the sale of a few homes to D to get CS a bit of debt reduction, then CS holds the others, but will be trying to sell them all the time hoping for value recovery. I don't think CS is suddenly changing its business to becoming a landlord. The D leasing transaction is simply to have some income for CS to help with carrying costs while they sell the homes off ASAP. So, a shot at a way out for CS, albeit with a probable haircut...but they have certainly got a major reserve on this loan already.

For UE members - basically nada.... Certainly no recovery of past bond or membership deposits. New dues to be paid, even for those with unused nights from earlier dues already paid into this mess. And, probably at market rental costs at best, but with a very limited selection. So, why not just use VRBO or rent through a RE broker in the locations that you really want to visit..??

So, goodbye DC club model....hello rentals....

 

[Kagehitokiri2]

dc model (exchange free) isnt going anywhere

Desties, its all right here >
http://www.bmcgroup.com/restructuring/DocView.aspx?ClientID=255&DocNumber=381&CaseNo=1-10-bk-12915

1. equity?
2. investors?
3. UE members vs regular members moving forward?

 

[TarheelTraveler]

Some new info on UE member terms on Sherpa:

http://www.sherpareport.com/destination-clubs/demuere-buys-ultimate-escapes-assets.html


"Demeure is inviting all the Ultimate Escapes members to join Demeure. Ultimate members who lost their travel credits in 2010, due to the bankruptcy, will have this applied to their new account in Demeure. Members will all have a 2 year window to book ahead when making their reservations. The annual dues in the new club will be 15% higher than in Ultimate Escapes and Peter stated that he’s looking to get about 60% of the membership to join in order to cover the costs of the homes. There are no joining fees.

Of the roughly 150,000 nights that Demeure has available across its portfolio, about 30,000 of them offer discounts to club members, with the homes from Ultimate Escapes making up the bulk of this discounted group. The discounts range from at least 20% to 50% from the retail rental rate.

Demeure is planning to hold a webinar next week and will be sending out lots of information to the Ultimate members.

Peter thought some of the Ultimate Escapes members may self organize in groups and buy some of the homes, then put the spare capacity into the club. Essentially giving them a real estate play in the houses they own and yet having access to 300+ homes around the world."

 

[DCworker]

Welcome, Ultimate Escapes Members


Dear XXX,


After an intensive process working through the Ultimate Escapes bankruptcy process, we are pleased to offer our sincere welcome to Demeure. Our goal is to move the membership and portfolio to a safe and secure financial footing as soon as possible.

Each step of the way has been designed to address the concerns you have shared around stability, flexibility, transparency, and fairness. Specifically, Demeure provides an opportunity for you to enjoy the originally intended travel benefits of Ultimate Escapes without any upfront assessment, surcharges or risky deposits. In removing the burden of the capital risk historically asked of members and moving to a "dues only" model Demeure allows you to pay for what you chose while maintaining the service level and personal touch you expect.

We carefully analyzed the post-bankruptcy costs of the properties purchased and leased as part of this transaction. We've been able to make the club economics work with a modest 15% increase in the amount you previous spent with Ultimate Escapes each year.

Highlights of the Offer:

Membership transition to Demeure is without any deposit risk or membership plan decisions. Simply agree to travel as you intended with Ultimate Escapes;
We are in the process of reactivating the Ultimate Escapes reservations and are working to clarify the status of your travel plans. Your planners will be contacting you to discuss your specific situation.
The core Ultimate Escapes portfolio, Escape Planners, and Local Hosts will be reactivated and scaled based upon total Membership transition milestones;
Services will remain substantially the same;
Ultimate Escapes used a large membership deposit plus pre-paid dues model for travel payment. Demeure operates efficiently on the dues or what we refer to as travel commitment component. To ensure a successful and immediate re-start of the operations and future sustainability, a "dues" increase equivalent to 15% of your previous Ultimate Escapes membership program is required;
Demeure will be waiving the customary six month early termination fee by applying a credit value of the prepaid dues you may have lost from the prior club;
To honor the lost value of former Ultimate Escapes members we offer the ability to participate in a one time, special event transition lottery;
For a period of 90 days, newly converted Demeure members have the option to purchase select assets from the Ultimate Escapes portfolio, individually or collectively, at the same terms negotiated by Demeure during the bankruptcy process.
To ensure that your ability to travel is reactivated as soon as possible, please review the Demeure Offer Terms: http://demeure.com/news/ue-offer.pdf

Your Escape Planner will provide you with assistance completing the membership conversion documents beginning Monday October 25th,2010. Your membership transition should be confirmed by Friday November 5th, 2010.

We invite you to learn more about Demeure and the transition process during a web presentation scheduled for Tuesday, October 26 at 7 pm EST. Look for the invitation link in a follow up email from your Escape Planner.

I'm sure you may be asking, "Who is Demeure?" We invite you to view our website at demeure.com for more background on Demeure, but here is the key difference between Demeure and destination clubs: Demeure does not require the financial risk associated with membership deposits and is not dependent upon direct club ownership of assets for you to enjoy more flexible and less costly access to a greater variety of homes, villas, flats and hotels all around the world. Demeure's affiliate, Laurence Development, LLP, purchased several homes and arranged leases for others to stabilize the club.

While we cannot replace the loss of your deposit that was long ago spent at UE, your new Demeure membership ensures that you can travel confidently with full control of your vacation experiences; and without the risk to your capital once again.

You may begin calling your Kansas City-based Escape Planning team beginning 12 pm EST Monday October 25th. We'll be working together to prepare for your smooth transition as a new Demeure member and immediate reactivation of club operations. If you require service on an existing reservation, they'll be there for you too.

Feel free to reply to ue@demeure.com with any questions you have of the process.
All the best,
Peter Schwartz
Chairman and CEO
Demeure

demeure.com
ue@demeure.com

P.S. Membership transition is time sensitive. To ensure that your ability to travel is activated as quickly as possible, please carefully read the Demeure Offer Terms and contact your Escape Planner with any questions. Your transition should be completed by November 5th.

 

[Kagehitokiri2]

well im glad to see communication next mon/tues.

join by nov 5 - thats 2 weeks from today. so the idea is that this is simply an "intent" to see whether the minimums are met? obviously the process is nowhere near done yet.

------

UE = 11 own + 45 lease = 20,000 nights (out of 30,000 night figure which i dont fully understand...)

the doc says 13 own (+2) and 46 lease (+1)

they do not say anything about being equity investment... this seems ridiculous... what are their plans for the leased properties...

also dont understand UE member vs demeure member...

------

and a move to points. the trade off >

points are better for people who want more travel time - lower season, cheaper accommodation, or both.

no points are better for people who want more expensive stuff - holidays, expensive accommodation, or both.

 

[Desties]

Maybe I'm just dense, but what am I missing here? Why would I go this route -- committing to paying 15% more in dues for travel to properties that I still haven't been shown the rates to (so I have no idea how many nights I would be getting) when those same properties are available to the regular Demeure club who didn't have to prepay a five-figure sum every year?

I can appreciate that the services are custom-priced (I was never big on the concierge extras outside of initial grocery stocking). I like how members are encourage to purchase some of the assets -- as long as they commit to offering them up to the club for at least five years. I like how my favorite of the Signature properties -- Provo's Grace Bay property -- was one of the few actually purchased by Demeure.

Still, I have no idea if I'm getting a good or bad deal here? My initial reaction is to pass and then consider the regular Demeure membership route to revisit some of the UE homes every so often.

Why pay 15% more in dues, when the main reason I was paying the dues was to remain in good standing so I can get my deposit back? Absent that, it becomes a matter of prepaying a year's worth of travel to Demeure for a small lot of homes or paying as I go for a wider selection through VRBO, etc.

This will be an interesting webinar for sure, but I can't see how this makes any sense. And -- once again -- the short deadline to make an important decision is as classy as it sounds.

Is there anyone who is sold on this offer?

 

[Kagehitokiri2]

agree - what are they calculating - gibberish? they need to find out how many are interested then divide cost transparently.

also very strange no discussion of equity investment or their plans re buying leased properties.
'can buy leased properties' - seriously? thats it? if YOURE not planning to buy any, then why did you option them?

is anyone understanding UE member vs demeure member? im not sure if they consider it fully explained in the doc or not.

seems its a question of how vague next week, not if. keep hope alive for at least relative transparency.

 

[ClubsRDead]

You're probably not "dense," just astute.

Let's quickly review the deal in simplistic form: They're going to pay $14MM for some 10 "C" list homes, not the choice stuff. They're leasing 45 at carry costs of almost $5M. They're required by the lender to have $7.5MM working capital on hand for closing. They've put $10MM down; they need another $12MM to close. How do you get that? Sign up members to the tune of probably $25k-30k each.

Read the pdf as part of the mailing they sent - they want a 5 year commitment. In addition, as an "added bonus" you can purchase any of the leased or other homes from CS, through them, at the Demeure negotiated rates. Check those out - they're all listed with strike prices higher than the stalking horse bids.

There is nothing compelling about this offer. Maybe if we're smart and all say "no" it will get better - either with them or with someone else (perhaps the unreasonable lender).

There's no equity in this deal - just an increase in costs and uncertainty. At a time in the world when everything else is going DOWN in cost, we're supposed to pay more, once again, to pay for someone else's sins of the past.

 

[Kagehitokiri2]

They're leasing 45 at carry costs of almost $5M. They're required by the lender to have $7.5MM working capital on hand for closing. They've put $10MM down; they need another $12MM to close. How do you get that? Sign up members to the tune of probably $25k-30k each.

Read the pdf as part of the mailing they sent - they want a 5 year commitment. In addition, as an "added bonus" you can purchase any of the leased or other homes from CS, through them, at the Demeure negotiated rates. Check those out - they're all listed with strike prices higher than the stalking horse bids.

ah, gotcha. so they are charging dues to buy properties. i was just going to say, its only $4.3mm for leases, so why do they even need much dues? sigh. <insert emoticon here>

there goes any hope of equity investment. more opaque game playing. i can see why people keep saying THAT is the DC model.

i also noticed the differences in property values/bids/prices/etc.

 

[Nwtm74a]

I like how my favorite of the Signature properties -- Provo's Grace Bay property -- was one of the few actually purchased by Demeure.

Where can I find a list of the properties that were purchased by Demure?

 

[Kagehitokiri2]

see post 10.

i guess they decided (a while ago) against buying properties because they didnt want to do equity? but now they see an opportunity to pull a move like UE, without the debt.

but then wouldnt ER and Q (with their much more substantial backing, right?) have considered doing the exact same thing if they thought it could work, as a separate club etc? ok, reasons not to. ER has "brand integrity." but Q already has 3 clubs total now, and multiple clubs with caps has always been a concept, like lusso. yet with duo they just shifted properties. and with pricing that isnt way lower than Q. http://tugbbs.com/forums/showpost.php?p=997411&postcount=1064

* is there currently any group discussion amongst UE members via email or that other forum etc?

 

[ClubsRDead]

This isn't designed as a tiered club, or so the offer says. I suppose a premier members with relatively low dues (some JT special deal) could really capitalize on this if Demeure was willing to let them in and only add 15%, and there was actually access to the upper level homes.

"For a period of 90 days, newly converted Demeure members are able to purchase select assets from the Ultimate Escapes portfolio, individually or collectively, at the same terms negotiated by Demeure during the bankruptcy process."

Hmm....that's not a deal. When you read the "Option Purchase Prices," you'll note that they are significantly higher than value, even double in some instances what the stalking horse prices were.

This was entirely predicatable - someone comes along with an unproven model, smaller business and needs us to prop up their purchase price and plan with additional costs out of our wallet. Understandably, nothing is for free and JT and co left the club in a complete financial disaster - but the cost per night of travel doesn't have to go up -- we can just go elsewhere.

 

[Desties]

Where can I find a list of the properties that were purchased by Demure?

I'll save you the time by pointing out that the list is on Page 115 of that link.

The 11 properties purchased:

From Elite - Maui and Trump NYC
From Sig - La Quinta, Trump NYC, Lake George, Miami Beach, Turks
From Pre - Stowe, 1600 Broadway, Chicago, Tuscany (Borgo di Vagli)

I don't see these as C-list properties. This is a much better collection than the DUO property set that Q claims averages $2 million (where here it's obviously averaging $1.3 million).

As for Premiere vs. Elite dues differences, obviously we're only talking about the amount being prepaid annually. This is really nothing more than a prepaid DC debit card, isn't it? Premiere may be paying a third to half of what Elite members pay, but they would be staying at a third to half as many nights if they're booking the same properties.

I don't mind that -- especially since different properties have different values. This is freakishly close to the point-based system that some used to bring up on DC4MS or even, gasp, timeshare exchanges.

In short, there are some parts of the model that I like. I just don't think it will fly because I am still waiting to hear one convincing reason to pay 115% of what I used to pay for what will likely be less value and greater uncertainty when I can just become a regular Demeure member.

And for those of us who found that we had more available days than we can use usually, can we trade down? The deal as offered now is unlikely to appeal to me, but maybe I'd consider it if it was 15% more on 25% or 50% of what I used to pay -- trading down accordingly. If not, where's the carrot?

"Sign here by November 5" is NOT a carrot. It's a dagger.

 

[willmyclubmakeit]

deal

and most importantly we do not know what rents they will charge us for usage of each property (and does it vary by time of year), what will be availability, and use/extra fees they will charge. We do know what they are paying to rent the properties but not what they would charge us (surely more than they would pay on a daily basis given their profit motive and that they sort of absorb down time but not if we prepay enough deposits). I'm skeptical at best.

 

[Kagehitokiri2]

another thing re the covenant as pointed out by ClubsRDead re buying properties at the end of each year - it decreases over 3 years IIRC - which means they need less dues each year. if theyre not discussing this already, it means its not going to happen. so theyre going to see dramatic increase in dues profit margin.

 

[Passepartout]

Deleted... Jim

 

[DCworker]

October 2010

Your Transition Questions Answered


Thank you for the thoughtful responses and questions that have been streaming in over the last several hours since issuance of our initial membership communication and offer. We thought it best to group many of these questions into themes and send them out to you as a membership group as a whole, while answering specific questions that require personal attention will be returned appropriately.

We have created this Frequently Asked Questions section on Demeure.com with specific questions posed directly from the Ultimate Escapes members. Please check back frequently for updates:
When do we start to travel?

We are committed to having you travel regularly again Jan 1, 2011 and we will do our best to facilitate any travel for the balance of 2010.

Are there any hidden charges or potential added fees I would have to pay?

There are no hidden charges. The only additional charges you may incur would be through services that you request outside of the regular services provided at each property. Ie: groceries, spa services, chef services etc.

Do we have credit for UE money or is this new billing for use of existing reservations?

All prepaid dues and membership deposits were lost as a result of the bankruptcy. Demeure is extending a credit to those members that convert within the offer period based upon their situation. New travel deposits in your trust account will be applied against forward travel with Demeure.

How do I know that my annual dues are protected?

Your annual dues will be placed into a segregated interest bearing trust account that is settled in a secure electronic environment ensuring that funds are protected at all times. Interest will accrue to the member.

At UE there were three difference levels of membership. I believe I was “Elite.” How does that translate into the new structure?

You would be committing to the same annual travel plan budget with Demeure as you had with UE. The added benfit is the ability to choose availability in any home in the UE portfolio in addition to the Demeure portfolio (approximately 400 properties combined).

Are the services any different what I had at Ultimate Escapes?

We are committed to providing the same level of service from the same service providers as well as including a list of a la carte services allowing you to pay only for what it is you use; mindful luxury.

Again, thank you for the first wave of responses. We’re looking forward to getting you traveling again soon.

The Demeure Team
demeure.com
ue@demeure.com