HCC Math - new calculations

[Steamboat Bill]

There have been many posts on TUG about the business model of High Country Club and that the fact that their "initial membership rates" were too low to sustain buying properties that average $850,000. As we have discussed, these were "teaser rates" just to get the club to grow in members and properties.

I perfer to compare Destination Cubs and Timeshare plans by the following:
membership average cost per night = Lost opportunity of membership fee (5%) + yearly mainenance fees (divided by) night per use.

I believe that HCC is now in the break even stage and perhaps are in the profit mode.

It currently takes 7-8 "Private Members" to buy one new property...or...it takes about 14 "Affiliate Members" to buy one new property.

Althought the properties range from $500k to over $1m...the average is $850,000.

14 Affiliate Members @ $40,000 membership fee = $560,000
14 yearly MF of $5,400 = $75,600 per year

This plan works out to cost members about $296 per night and is CHEAPER than most Marriott, Hyatt or DVC timeshare purchases.

Thus, with these numbers, HCC can just get by.

In another 6-9 months, I believe (IMHO) HCC will raise the Affiliate Membership price to $50,000 + $6,000 MF.

The new numbers will be:
14 Affiliate Members @ $50,000 membership fee = $700,000
14 yearly MF of $6,000 = $84,000 per year

This plan works out to cost members about $340 per night which is about average for a Marriott Ski week or a Marriott Hawaii timeshare. In fact, this is the average cost per night for buying DVC and staying in a 2 bedroom unit.

With the above prices...HCC will be very profitable and the sustainability of the business model will not be questioned.

If you extropolate a very realistic "$400 per night average cost" then the future "glass ceiling" of an HCC Affiliate Membership in 2-3 years will probably be:

14 Affiliate Members @ $70,000 membership fee = $980,000
14 yearly MF of $6,500 = $92,000 per year

As you can see....this business model can work very well for both HCC and the members.

In addition, $400 per night is still CHEAPER than buying a Paradise Island Harborside timeshare, CHEAPER than a holiday Marriott ski week, or even CHEAPER than renting a nice hotel room from Disney.

Destination Clubs like HCC are NOT for everyone, but the current (and future prices) are well in line with comparing them to higher end timeshares and are MUCH cheaper than staying at a suite at a hotel or paying for two connecting rooms.

 

[Bourne]

The market is currently supporting a price of 110K + 7700 dues for unlimited nights at comparable properties. ( Private Escapes Premiere ). However, that buys you unlimited nights which is equivalent of 30 nights on an average. ( DC Standard )

IMHO, the glass ceiling for HCC's affiliate membership at 30 nights is 90-100K. Private membership would end up costing 130-150K at 45-50 nights + unlimited last minute usage in the next couple of years. These numbers are indexed to today's dollars.

They are going to get agressive with the pricing as the critical mass of properties is about to be reached. Once they have another 5-7 beach locations and 3-4 metro/european destinations in the portfolio, the price increase would be bigger and quicker. My guess is that the next round of increase would be around Sep 07 if the relative membership growth rate can be maintained.

 

[Steamboat Bill]

The market is currently supporting a price of 110K + 7700 dues for unlimited nights at comparable properties. ( Private Escapes Premiere ). However, that buys you unlimited nights which is equivalent of 30 nights on an average. ( DC Standard )

IMHO, the glass ceiling for HCC's affiliate membership at 30 nights is 90-100K. Private membership would end up costing 130-150K at 45-50 nights + unlimited last minute usage in the next couple of years. These numbers are indexed to today's dollars.

They are going to get agressive with the pricing as the critical mass of properties is about to be reached. Once they have another 5-7 beach locations and 3-4 metro/european destinations in the portfolio, the price increase would be bigger and quicker. My guess is that the next round of increase would be around Sep 07 if the relative membership growth rate can be maintained.

I was very CONSERVATIVE in my estimates....you are probably MORE correct than my original post.

Here are the other Top Destination Clubs for comparison:

Private Escapes preview membership
$50,000 purchase price, $4,600 annual dues (+$78 per night), 14 nights usage, 2-4 bedrooms
Cost per night = $178 + $329 + $78 (nightly fee) = $585 per night

Ultimate Resorts
$110,000 purchase price, $9,500 annual dues, 14 nights usage, 2-4 bedrooms
Cost per night = $393 + $678 = $1,071 per night

Quinteras Catch the Dream
$175,000 purchase price, $12,000 annual dues, 15 nights usage, 2-4 bedrooms
Cost per night = $583 + $800 = $1,383 per night

Exclusive Resorts affiliate membership:
$225,000 purchase price, $10,500 annual dues, 15 nights usage, 2-4 bedrooms
Cost per night = $750 + $700 = $1,450 per night

Thus, IF HCC ever RAISES their prices to a price of $110K + $7,700 dues....this will cost about $528 per night and HCC will still be the CHEAPEST Destination Club on the market.

This is why I (and other TUGers) are pretty excited about joining HCC.

 

[Bourne]

I tend to be a bit agressive with my estimates. All said, it bodes well for us as a higher price would mean that HCC will be able to buy properties at a faster clip and pay down existing mortgages making it financially more stable.