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Recent Destination Club News

That's pretty much my point. We can all join anywhere we want, anytime - even now, prior to our soon to be demise, for dues only. What we already know, however, is that "dues only" doesn't work. You have to ask, why would Q or ER, or anyone, do this for a bunch of us? Just doesn't make sense to add insane to unsustainable.
 
ClubsRDead said:
You have to ask, why would Q or ER, or anyone, do this for a bunch of us?
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CRD, you keep repeating this point -- and I think I've pointed out how that is exactly how it has gone down in the past with the two largest clubs to go under (T&H and Lusso -- I'm not including HCC, because there really was no product on the market in the DC universe that was similar).

T&H went under 4 years ago, and UR was able to get 650 of the 750 members to stick around by offering dues only memberships AND their original deposits back in 5-7 years.

Lusso went under 2 years ago, and Q stepped up for the biggest bit by offering the same terms PLUS offering to pay Lusso if a certain number came over (I'm fuzzy on the specifics, but it did happen).

Neil is correct about equity-based clubs like his own A&K making this kind of sweetheart deal -- it will never happen -- but non-equity clubs have a pattern of doing this very thing. EE had a deferred deposit program, but that won't fly with non-equity clubs.

The "dues only" offers are likely to come, especially since this is the biggest exile flotilla that the industry has ever seen (if UE can't save itself this week). And some club is bound to offer the same kind of deposit return after X amount of years because there will be no reason for a "dues only" member to stick around if the climate gets rough (as both Q and ER saw when they dramatically bumped up their annual fees) if there is no incentive to stick around.

CDR, I'm not sure if you're an active UE member or not, if you came from the UR side or the PE side, if you're on the resignation list or got out, but I think that if you are an active dues-paying member of UE that you will find the opportunity to continue to travel without a deposit. You seem to be shooting down the possibility, when history shows us otherwise. Economies of scale show that it can be a sound business decision to make the sweetheart deals. UE was overly leveraged, and got stung when real estate prices fell.

Buckle up, folks. It's going to be a wild week.
 
You're still making my point for me. Of course there are dues only deals out there for us. There always has been. UR was basically a dues only deal for us when we left TH, where did that get us? Less homes, weaker travel options and now this. AK has been chasing us for years under their "trial offer." And, UR was offering "discovery" deals to the public, basically the same thing. I know we have the option - the fact is they don't work. Clubs who claim to be fiscally responsible (ER and Q) can't gain much by making these sorts of offers to us. Sure, they might - but what do they gain by doing so....and more importantly, why would they offer redemption rights at all?
 
Desties said:
Economies of scale show that it can be a sound business decision to make the sweetheart deals. UE was overly leveraged, and got stung when real estate prices fell.

.
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And....I don't understand this. Are you suggesting it is a sound business decision to make a fiscally irresponsible one?

And yes, UE has a lot of debt, but do you really think falling real estate prices are the culprit of this current situation? What about a broken, if not totally unsustainable business model (which they copied AFTER it was proven to NOT WORK) in conjunction with ridiculous expenses - high salaries, huge sales and marketing budgets (in a no-sales environment) and super high transaction costs on deals that brought no real revenue.
 
How about seeing Demeure step into this fray. According to their website Rob Mcgrath is part of the team.

He may want his old company back and it looks like he's got wealthy partners.
 
That's a good one.

Wealthy partners, or not -- can you see it? Sure, McGrath does an offering to get "his" members back. Meanwhile you have 400 involved in a lawsuit with AK over the TH deal.

I just don't see a bunch of folks lining up to be led by Rob M again. Nor does he likely have the money.

The way this will likely go down (badly) I suspect there will be plenty of offers for all of us from the various club options out there.

Whether any of them make sense is another question...
 
There will be plenty of offers, but none will be dues only. The only way this would happen is if Capsource take a loss bigger than liquidating the club...

A trial membership is limited in time, why was it even mentioned above?

Deferred deposit is the only thing UE members will get. A dues only club could emerge as you can currently lease homes for cheap. But again this is a short term solution with lesser quality homes.
 
SciFrog said:
There will be plenty of offers, but none will be dues only.
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We'll see. I'm sure a handful of UE members will fall for a deferred deposit offer in a non-equity club, but outside of those 5-10 members, most will either walk away or consider a sweetened equity club offer.

Q will have plenty to prove if it wants a jaded UE member, perhaps even on a dues only basis. Everyone was mentioning Q and UE in the same breath as HCC and Lusso 1-2 years ago when the calamity hit. Q roughly doubled its dues, forced resigning members to keep paying, etc. and still offered the Lusso deal. If you're upset at the Lusso deal because it WEAKENED Q even more, then why should we even consider what Q has on the table?
 
future

none of us have a functioning crystal ball so lets just wait to see what transpires, but one must also consider their is a shared mutual interest here (remember mutually assured destruction?). CapSource is the financier to the industry and thus should look at the industry's health in totality not just its exposure at UE as if the dominoes start leaning it has exposure I believe at Q and ER that is multiples of UE's debt. As for the other clubs (equity and non-equity), one more domino falling could bring down others as even if the industry is not a house of cards it becomes more difficult to convince/reassure a prospective member after club after club has had challenges especially if members feel too much pain. Its just human nature that people are usually more risk adverse than risk taking and the more doubt of a member getting what they paid for or their "deposit" back, the harder sell it will become and thus the other clubs and industry will continue to suffer. This is not a UE situation in isolation.
 
SciFrog said:
Deferred deposit is the only thing UE members will get. A dues only club could emerge as you can currently lease homes for cheap. But again this is a short term solution with lesser quality homes.
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That's the same thing as "dues only". Today, you can join Q for two years dues only and at the end you are still not required to pay a deposit after that period. Regardless of what happens to UE.

Weather you call it trail or deferred deposit is meaningless. Deferred deposit is just nice sounding to members who put up a deposit. Neither way it is Dues Only and the conversion rate will be minimal at the end of two years.

No way is Q getting deposits from the majority of new members, sure some fool comes along and puts one down. Just as I did many years ago. The majority of new members for all DCs are dues only. The new member has all the power right now, if the market does not improve, just walk away and renegotiate or if it does join at a discounted rate negotiate two years ago.

Clubrdead and your point is right, it is unsustainable, just that in this the current environment every DC or Equity Club is unsustainable, which is correct. It is the same problem UE had, The members with actual deposits were subsidizing the travel of the other dues only member with their initial deposits. The dues only does not typical cover the operating expenses, however they are currently offering it. A "deferred deposit" member is simply getting subsidized travel on member's deposits or the investors dime.

So you can argue about what clubs should do, however right now they are doing dues only, regardless of UE. There are even Equity Clubs doing "deferred deposits". Everything is negotiable before joining, just look at what Versa was doing.

As for Capsource you would be shocked at the haircut they are going and will have to take. They are by far the biggest loser and they know it.
 
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Big News

I apologize for being a bit premature on the big news posting. It seems that others that I am involved with continue to believe that our conflict of interest phase is still in effect. I don't agree. Out of respect to the group I will resist posting my story a little while longer. .
 
Why are you putting dues only and deferred deposit in the same basket? Short term they are the same, but in DC land, only 5 years + matter. And some clubs, like Q, are fine getting your deposit over five years as long as they get it eventually because the main investor advances the money and temporary leases are cheap. Dues only (as in no deposit ever) is not sustainable as UE has shown.
 
wilkes591 said:
It is the same problem UE had, The members with actual deposits were subsidizing the travel of the other dues only member with their initial deposits. The dues only does not typical cover the operating expenses, however they are currently offering it. A "deferred deposit" member is simply getting subsidized travel on member's deposits or the investors dime.
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Except for in the case of UR / UE, it is hard to believe there are actually people who paid full membership deposit. At the end of the day, I think most of us are either TH or PE members who were absorbed during mergers and transactions. Considering they never really added any new homes would also seem to support this. I suspect there are very few of us traveling on the deposits of others, ie being subsidized by their initial cash because it doesn't seem like there were any.
 
The DC industry has never been the model for financial stewardship. What will happen with UE will likely differ from what should happen if you actually focused on the long term economics.

As examples, one would normally think that given the debt some clubs have that their dues would be significantly higher than the dues at clubs with little or no leverage, but that is definitely not the case. You'd also think that if a defunct club member comes with no deposit, they would need to pay higher dues to offset the debt needed to buy houses with no deposit (although I acknowledge that for the time being, you could probably do leases and make it work). Furthermore, you'd think how can you offer a return of the member's deposit when you never had one to begin with. Seems to me that if you believe the promise of a future return of the deposit to be true, the monies would likely have to come from existing members or future members. Existing members who actually forked over deposits will not want to cover those that didn't make deposits to their club. And the club would be that much better off by actually getting to keep future deposits rather than having to redeem out folks who did not contribute a deposit to the club to begin with.

These types of crazy financial constructs (IMHO) are the norm in DC land. Nonetheless, the hey day of easy credit and investor interest in DCs is over with, so I'm not sure the result will be what we've seen in the past.

Given the Q rumor cited above, their non-equity structure, their wealthy investor, and the past offerings to defunct clubs and then to members of defunct clubs, I would say they're the most likely one to make an aggressive play for things. ER seems to be the most conservative among the non-equity clubs, has not shown a real interest in acquisitions (other than in their formative years), and doesn't need to grow in order to "scale," so I'd be surprised if they did anything of significance. Equity Estates doesn't appear to have the backing (at least from what we know) to make a play for a club the size of UE. Between the parent co. and private equity funds, A&K has the backing and would have the requisite interest in scaling quickly, but is way too conservative financially and vested in their financial and club model to do anything more than what they did with Lusso IMHO. Maybe they could get comfortable financially in picking up some of the pieces from a BR, but that's about it, again IMHO. With Marriott behind it, RC and the Marriott timeshare units would seem to be a perfect match and would have the backing, but they don't seem to be going in that direction given what they've done with their DC.

This is really all just speculation, and I guess we'll see what happens in the coming weeks. Good luck to UE members, and I hope this turns out well for them and the industry as a whole.
 
SciFrog said:
Why are you putting dues only and deferred deposit in the same basket?
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Because they are never going to get a deposit! The member is not contractually obligated to make a deposit unless 100% satisfied. It is dues only for a membership, what part of that do you not understand. You can you define "deferred", however you want. When the deposit does not materialize at the end of the day, it is dues only membership.

It is unsustainable for Q, ER, AK and the entire industry. It is what is currently offered, along with other perks such as free nights offers during the first year.

I am just stating what offers are out there! You are not denying this. You are hung up on the definition of "deferred". How can something be "deferred" if there is zero obligation? To me "Deferred Deposit" is dues only, since there is no obligation to make a deposit. To an existing member, it sounds like a deposit to be made at a later date, which is what DC's do mislead the existing membership base as not to upset them.

So once again, anyone can join for dues only today and start booking traveling. There is no obligation to make a deposit now or a "deffered deposit" in the future, hence dues only.
 
wilkes591 said:
Because they are never going to get a deposit! The member is not contractually obligated to make a deposit unless 100% satisfied. It is dues only for a membership, what part of that do you not understand. You can you define "deferred", however you want. When the deposit does not materialize at the end of the day, it is dues only membership.

It is unsustainable for Q, ER, AK and the entire industry. It is what is currently offered, along with other perks such as free nights offers during the first year.

I am just stating what offers are out there! You are not denying this. You are hung up on the definition of "deferred". How can something be "deferred" if there is zero obligation? To me "Deferred Deposit" is dues only, since there is no obligation to make a deposit. To an existing member, it sounds like a deposit to be made at a later date, which is what DC's do mislead the existing membership base as not to upset them.

So once again, anyone can join for dues only today and start booking traveling. There is no obligation to make a deposit now or a "deffered deposit" in the future, hence dues only.
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So you think you never have to pay a deposit? How do you know? Is that just your opinion or has someone actually done that? Because it looks like you are speculating.
 
I think what he is saying is simple - there is no obligation to pay the deposit, or deferred deposit - or whatever they want to call it, at a later time. Just like all of us that paid dues only to join UR, some upgraded - but there was no further obligation to pay more. Or take A&K who has been running "trial memberships" good for 2 years - pay dues only + 10 or 15% with no commitment to pay more later. The point is, you don't have to pay later. You might join under one of these various concepts and like it, and later decide to pay more, but you don't have too. And if you don't like the structure, availability or assets - you probably wouldn't. The bigger challenge I would think from a bidding club, if there are any, would be how you explain this influx of members to the existing membership. Especially if they come with no cash and adversely affect your availability and bookings -- which any % of some 1000 UE members is going to affect the overall bookings. If you're Q, you maybe want a few elite homes and those level of members, probably even A&K. If you're ER, you might take anyone but none of our assets outside of what, 5 or 6 even fit their model of homes? So their proposal probably does little towards making CS hole. And, if you're ER and you ask CS to write the note down to take some properties, you subject CS to hearing you (as their lender) later asking to write down other properties in your prior and existing portfolio. Not a pretty place to be if you're CS right now, and I doubt they care at all about us members.
 
The recession has been long and hard enough to render moot any argument that promotes the idea of history repeating itself as in Lusso - Q and T&H. I agree that the deferred deposit or dues only offers that are currently out there are ample incentive to any UE member who still has a passion for the DC life. So how many are really planning to join another club after the agony they've been through and the state of the economy? I think Q and ER really only need to tweak the current offers to scrape up what I see as a relatively few UE members left in play after it is all over. They can probably do it without even adding inventory so CapSource will really have to be creative to put together a workable package. Whatever happens will not have had precedent.
 
SciFrog said:
So you think you never have to pay a deposit? How do you know? Is that just your opinion or has someone actually done that? Because it looks like you are speculating.
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Nope, I will be forced into joining another DC or equity club, when the UE thing is done. I will not be giving a deposit, it will be dues only. I personally would not join another, however there would be a revolt in the household and it really is not that much when it is dues only. So I am contacting the various DCs and negotiating. I have found the longer you keep them on the line, the better the deal gets. I am a long time PE then UE member and I will never get a contract like the current one, which is my loss.
 
Kagehitokiri2 said:
exhaust all (DC) options that exist that do not require deposit.
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Exactly....unless there is just some phenomenal deal on the table, just keep joining (taking advantage of) "dues only" type of deals -- if you really want to travel this way - until there aren't any more. Who knows, maybe during the process you / we find a club that you actually love and believe in the structure and finances and decide to up the ante. Otherwise - there's just too many more economical options out there to explore....like VRBO, etc.
 
May as well strike while the iron's hot! Hopefully the buyers' market will run it's course.
 
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