Private Escapes and Ultimate Resorts to Merge

[puffpuff]

RC , through its RC club, already is in the hybrid DC industry .Current Maui Club cost 390000 for 21 days usage, 17000 annual dues, 38 weeks to be sold per unit. No Christmas/New Year unless you pay premium. Exchangable to other RC club properties within 45 days window. You do get a deed and title.

 

[Sherpa]

does anyone know anything about the hotel deal? Which hotels, how does it work? I don't see any mention of it on their website...

UR announced the "Ultimate Resort Collection" a couple of weeks ago - a partnership with hotels that gives their members access to about 60 hotels in 30 locations. Basically members book the hotels in the same way that they use the nights in their membership plan.

They have their home destinations in each club on their site at http://www.ultimateresort.com/membership/index.cfm - but don't show the number of homes in each location.

Cheers
Sherpa

 

[Kagehitokiri]

Quote from the Helium Report story on the merger; does anyone know anything about the hotel deal? Which hotels, how does it work? I don't see any mention of it on their website...

i referenced/linked it 11 posts ago
http://tugbbs.com/forums/showpost.php?p=391420&postcount=7

websites are updated months later it seems.

Exchangable to other RC club properties within 45 days window.

what does that mean? (RC is a fractional/PRC )

 

[vineyarder]

i referenced/linked it 11 posts ago

missed that link; sorry!

 

[vineyarder]

I'm a little worried looking over the UR site, as some of the non-elite homes appear to be lower in quality/location than PE, but it is very difficult to assess, as there aren't alot of photos...

Just got done seeing a presentation of the UR homes; I withdraw my concern over quality/location!!!

 

[Kagehitokiri]

huh. sorry, i (tried to?) edit that out. i was just joking, but didnt want to come across negatively.

 

[whatmough]

HCC is still UNIQUE in the DC industry as they focus on $1m or less properties and offer memberships that directly compete with high-end timeshares. HCC is NOT in competition with the other DCs, they are in competition with the high end timeshares like Four Seasons, Hyatt, Marriott, DVC, Hitlon, etc.

HCC is also targeting the largest group of potential members (people with upper middle class incomes) vs targeting the wealthy and going after $3-4m homes. Thus, HCC has the BEST long term growth opportunities. This is why timeshares did so well...they were able to sell vacation homes to average people for 1/52 the cost of buying one themselves.

I agree, Bill. HCC new marketing strategy appears to target the high end timeshare market as opposed to competing with other DC's. Their newly offered "Associate" and "Trial" membership levels have brought bother the number of days (7-15) and cost ($20-$30,000) down to a level familiar and comfortable to high-end timesharers. The fact they they have been the only DC to openly court TUG members reaffirms this strategy.

Whether this turns out to be an effective strategy or not will be determined by how successful they are in selling an unfamiliar new DC type model (albeit a much superior one IMHO) to timesharers used to buying a specific property in a specific location a week at a time. Because the number of desirable destinations available in the $850- $1m is limited as is the location (ski- in/ski-out, beachfront vs. more remote) and amenities within the price range, I don't see HCC being an attractive merger partner for any of the top 5 or 6 DC's except perhaps the UR/PE combo. With the new UR/PE combo likely to place its main emphasis on the higher tiers of membership ($200-$400K and $1.5M-$3M+ homes), that would leave the under $1M niche to HCC alone. This would open up a huge opportunity for them assume DC leadership in this niche if they can find the way to exploit it profitably.

 

[Steamboat Bill]

The interesting thing after this merger will be that HCC will be the #3 largest DC in terms of total members.

 

[travelguy]

Here's the web site link for the merger:
http://www.starttheexperience.com/

 

[travelguy]

PE/UR Merger

It's amazing what is being read into a normal business development. Companies grow by three main catalysts: 1) Merger, 2) Acquisition & 3) Infusion of outside capital. I don't believe this merger would happen if the DC sector was not healthy and continuing to show promise in it's infancy. The sky is not falling! PE/UR will continue to do well and may do much better as a single entity. I'm far more skeptical of the other DC start-ups that are struggling with low member counts than I am of the new PE/UR.

I believe the speculation of HCC being acquired or seeking a merger is WAY too premature. They are not even close enough to the biz growth stage that would allow the management and investors to maximum their cash out.

Furthermore, HCC is doing well in the marketing niche that they have created and continue to dominate. Their membership numbers appear to be in line with their projections and they continue to successfully proceed with their unique biz model.

The PE/UR merger only helps HCC as it takes the only real competitor in their price point (PE) and merges it into a company that now has to compete with all but the high-end DCs due to their multi-tier price point membership plans. I believe this will dilute the PE/UR marketing efforts in the "value" area that HCC so successfully exploits. It may be that HCC has had a marketing advantage dropped into their lap that is the equivalent of the disoriented opponent described by Sun Tzu in "The Art of War"!

I also believe that the larger luxury travel property companies (Marriott, Hilton, et. al.) would never be able to compete at the HCC price point because they do not have the corporate efficiency to offer the same quality experience and properties as HCC for the same price. I also believe it's too early in the DC business evolution for them to enter into the biz. They can't be the 800 pound gorilla in the room if the room is not constructed yet!

My two cents worth: I believe that membership in the top DCs is still a good bet and wouldn't let the PE/UR merger dissuade a potential member's due diligence process.

 

[Kagehitokiri]

i definitely agree >
- its a positive market sign.
- non luxury hotels are going to be a WHILE before they get into DCs. marriott is still doing weeks TS instead of points. TS have those crazy margins too.

OTOH >
- PE and UR were pretty different, and neither seemed to be in a "growth" stage.. so this was more of a surprising merger IMHO, meaning HCC could very well be "next" although portofino seems even more prime, as its smaller in terms of members, and has a similar tier (of home values) setup.

...nearly 50 locations...more than 140 [homes]...for a limited time, join now and you can enjoy all of our destinations at our current pre-merger deposit and dues

could turn out to be a heck of a deal..

 

[GOLFNBEACH]

I believe the speculation of HCC being acquired or seeking a merger is WAY too premature. They are not even close enough to the biz growth stage that would allow the management and investors to maximum their cash out.

I'm not sure about that. HCCs is trying to get the average initiation fee up over $100K, which is exactly where PEs Premier club begins. Could be a good fit.

It seems that the DC model is all about obtaining enough members to maximize cash flow.

At this point I would think HCC would benefit more from a merger with a PE than the other way around.

 

[Kagehitokiri]

hmm, guess it also starts depending on how they distribute financially.. and OTOH HCC does have those lower membership levels.

it will be very interesting to see where the pricing starts for the lowest membership of the $1MM tier of the new merged club starts.

 

[Bourne]

I'm not sure about that. HCCs is trying to get the average initiation fee up over $100K, which is exactly where PEs Premier club begins. Could be a good fit.

It seems that the DC model is all about obtaining enough members to maximize cash flow.

At this point I would think HCC would benefit more from a merger with a PE than the other way around.

I tend to agree with Doug on this one.

There are multiple reasons that HCC has been successful...

1. Initial focus on Ski properties. HCC does have the most diverse portfolio of ski locations thatn any other DC out there. If you are an avid skier, HCC membership is a slam dunk.

2. Cost. - HCC kept their price point way below their major/only competitor ( PE ) and inline with High end timeshares. From a potential member's prespective, it is first about cost and second about number of nights. A club may offer 100 nights but if the price is 200K+, not many people are going to sign up.

HCC's future growth will be driven by it's cheaper membership options. Infact, that is what HCC is looking for. A Private membership may net them $60K but 2x Affiliate is 80K and 3x Associate is $90K. Remember, it takes 6-7 FULL to buy a new home. $420K vs $630K before they buy one. Like I mentioned before, 275+ member count is full memberships. Numerically, the number of accounts including trial members may well be over 350.

I have to admit that UR/PE is the most probable merger candidate for HCC. That said, I too believe the speculation of HCC being acquired or seeking a merger is WAY too premature. In fact, they would be better off staying independent as the market conditions have technically improved for HCC.

 

[LTTravel]

Just got done seeing a presentation of the UR homes; I withdraw my concern over quality/location!!!

Where did you see that presentation?

 

[LTTravel]

New Math?

...nearly 50 locations...more than 140 [homes]...for a limited time, join now and you can enjoy all of our destinations at our current pre-merger deposit and dues

I thought UR had 100+ homes and PE had 70+ homes. Does that add up to 140? Where did the homes go?

There are alot of questions to be answered.

Also, An email from Jim Tousignant to Helium apparently stated that current member plans will not be effected, only those going forward. How can you have members in a club where some have unlimited use and others have limited use, where some have unlimited holidays and others have limited holidays? Some must book Sunday to Sunday and others do not have to. Many of the plans are quite different. They apparently will also be going to a 80% refundable plan for new members, no more 80% of current value.
Lots of questions!

 

[NeilGoBlue]

Where did you see that presentation?

When you call and show an interest, they will get you on the website and 'show you' the homes.

I was not impressed during my due diliegence. I thought BH homes were nicer and in better locations. The elite homes were great, but at a much higher price point.

Granted BH is at a higher price point than UR lower end offerings. (but below their elite program)

 

[Kagehitokiri]

...nearly 50 locations...more than 140 [homes]...for a limited time, join now and you can enjoy all of our destinations at our current pre-merger deposit and dues

I thought UR had 100+ homes and PE had 70+ homes. Does that add up to 140? Where did the homes go?

i know with the Solstice-Parallel merger they DID sell properties, although i guess those might have been leased actually?

not sure about the other 3 completed mergers, or the current pending one though.

but most large clubs seem to routinely sell properties, as they reconfigure their portfolios.

also note seemingly the most important phrase "all our destinations" seems to suggest theyre bringing in the reciprocity from PE, unless theyre cutting the destinations that only had $1.5MM and $3MM homes..

and so it seems theyre getting rid of most of the unlimited use, along with the nighly fees. and for the PE premiere / ~$1MM tier, theyre going to go from 1 membership plan to 5 plans. so id have to imagine the price range will include some competitive to HCC (like a replacement for the preview plan..)

for those considering a PE Preview membership, i would really think now would be the time to join.. since you have a 100% refund if you dont want to keep it, regardless of how the merger impacts you.

also especially because HCC seems to have established that their trial isnt going away, although its not extendable..

 

[LTTravel]

When you call and show an interest, they will get you on the website and 'show you' the homes.

It doesn't seem to make sense that they don't show everyone all there homes. They should know that the photos and galleries of homes is probably the most important marketing material. ER has great photos. Quintess has fantastic photos. The photos sure make a difference on your opinion of the homes. I know they have been going around giving sales presentations. You would think that they could make those photos available to all that are interested.

 

[Kagehitokiri]

quintess doesnt allow nonmembers to see property details online... (free registration gives you something, but not that) which is really annoying IMHO... even ciel club allows you to see more pictures, even though it doesnt give fine details.

here are the numbers >

1 - pe premiere - 24 destinations 30 properties
2 - pe platinum - 20 destinations 21 properties (yacht shared with premiere) (website list + breckenridge)
3 - pe pinnacle - 6 destinations 6 properties

2 - ur - 22 destinations 23+ properties
3 - ur elite - 21 destinations 21+ properties
(46 additional properties spit between two tiers)
hotels = 30+ destinations / 60 hotel properties (studios/1BR suites?) (active next month)

combined numbers >
1 - 24 destinations 30 properties
2 - 35 destinations 44 properties
3 - 23 destinations 27 properties
leftover in 2/3 - 46 properties
total destinations - 44
total properties - 147
hotels - not active yet

PE members, please keep us informed as to when they let you know how you will be affected / what your choices are.

 

[GOLFNBEACH]

HCC's future growth will be driven by it's cheaper membership options. Infact, that is what HCC is looking for. .

I'll respectfully disagree. Talk to some of the folks at HCC, or even better sign an NDA and get their financial projecctions. They are trying to evolve their club toward the $100K membership level.

I think HCC has carved out a niche and has been successful so far. However they have equity investors and need an eventual exit strategy. It may be sooner or later - who knows for sure. But... a meger would be a very desirable option if the terms are right.

 

[GOLFNBEACH]

Wall Street Journal

WSJ article pg. D1 from Thursday 9/13.

Destination Clubs Try To Shore Up Their Image

Industry Hopes Consolidation And Regulation Will Restore Members' Shaken Confidence

The article discuss the UR and PE meger plans, however, it seems to focus on the Tanner and Haley bankrupcy problem. It indicates than approximately 650 of the 800 T&H members decided to take URs offer to join the club without additional new deposits. I wonder why the other 150 members decided not to join and potentially only collect pennies on the dollar?

 

[Kagehitokiri]

1. HCC currently runs 30K/3.5K > 40K/5.4K > 60K/8.4K > 70K/9.6K (corporate)

2. PE Premiere is currently 105K/7.7K

3. after the merger, the lowest tier ($800K PE Premiere) will have 4 ADDITIONAL membership plans (3 family and 1 corporate) presumably including at least 1 priced in line with 1 of HCC's current plans

 

[saluki]

3. after the merger, the lowest tier ($800K PE Premiere) will have 4 ADDITIONAL membership plans, presumably including at least 1 priced in line with 1 of HCC's current plans

The Sherpa Report story indicates the merged company will have 3 tiers (not five):

"The merged company will operate 3 distinct destination clubs targeting the $1 million, $2 million and $3 million average home value club categories".

The Helium Report story indicates 5 tiers:

"According to Tousignant, there will be no change to existing memberships, but there will be adjustments to plans going forward, as they tweak the five different plans that the new club will offer".

 

[Kagehitokiri]

Initial plans are for three tiers, $1 million, $2 million and $3 million homes with five membership plans at each level (UR's going into the top two of PE)...sounds more like the UR model.

3 tiers, and 5 plans per tier, like UR has now - 4 family plans and 1 corporate plan.

http://ultimateresort.com/membership/index.cfm

the helium report story confirms this information IMHO - saying "plans" and not "tiers"