Recent Destination Club News

[Kagehitokiri2]

hmm ER changes dynamic again

http://destinationclubnews.com/News_Exclusive_Resorts_Discounts_Pricing_For_Full_Payments.php

choose to pay over time, or discount

 

[Buon Viaggio]

June was best month in sales ... has anyone heard how many members joined?

 

[AK.TH.UR.UEmember]

Why do I have doubts..??

June is the "best month" for membership sales say some...

But in legal public filings, UE says sales were very slow in 2009 and continue to be very slow this year...

anyone see a conflict there..??

 

[TarheelTraveler]

Ultimate Escapes

Ultimate Escapes closes Fort Collins, Colorado office:

http://destinationclubnews.com/News_Ultimate_Escapes_Closes_Fort_Collins_Branch.php

I'm actually surprised this didn't happen sooner. However, I'm also surprised by the $3M cost savings figure. Is there that much overlap or excess capacity?

 

[lovetovac]

UE - Esperanza

UE has listed all Esperanza properties as unavailable. Reason given - deferred maintenance???? Esperanza has an HOA - no deferred maintanence - must be more cost savings????

 

[Desties]

Yep

I figured something was up when I got an email two days ago from my NEW escape planner. I'm guessing most people in Fort Collins aren't going to move to KC or Orlando given the iffy financial stability.

I also noticed that PrivateEscapes.com was down this morning. The only reason I know this is that I had failed to update my bookmarks post-merger for the member website, and it finally stopped redirecting today. My heart sank at first, but then I simply got in through the actual UE site.

As for the savings, they SHOULD be substantial. Look at the filing and you'll see the dramatic expense bumps pre and post PE merger. Fort Collins must've factored into a lot of that. There was no reason for UE to have THREE offices. I'm just bummed for the PE folks that got bumped in the math.

 

[Desties]

UE properties

On the property front, it seems as if both of the NYC Link condos are going away come March. It's a pity, I enjoyed having a 2br Signature property in the heart of it all.

It also seems as if Trump Miami is going away on the Premiere side. It always had low occupancy levels, but I imagine Miami is going to get a dramatic uptick in demand during Miami Heat season.

All of the seasonal and annual leases about to come online should help in terms of availability, though obviously the "going concern" quote in the latest filing is a more pressing matter than me bellyaching about the end of a 2 bedroom unit in midtown.

 

[willmyclubmakeit]

Its possible that the Esperanza units (if the signature units) are finally getting the deferred refresh (like the NY Trump units) that every other unit at Esperanza received 4 or more ago except the UE units which were TH units at that time (and TH didn't have the money obviously). The Elite units were upgraded about 2 years ago and the Signature units were supposed to be upgraded this summer so manybe its finally happening or Esperanza told UE you have no choice but to upgrade them or they are being considered for disposal given the high management fees but that would be a shame as we love Esperanza. Time will tell.

UE has listed all Esperanza properties as unavailable. Reason given - deferred maintenance???? Esperanza has an HOA - no deferred maintanence - must be more cost savings????

as for NYC Link--wasn't there an HOA issue at Linc disputing the ability of clubs for shared usage (post-handover of the homeowners association of course as I was told the developer approved of the arrangement). I would bet this may have factored into that decision and I am sure it will be missed as I have never been able to get the Link 2 bedroom but only the Trump units.

 

[BestHC]

Besthc

Took me awhile to land here.....a rather short runway

 

[TarheelTraveler]

Exclusive Resorts

Interesting article on ER cost-cutting efforts:

http://destinationclubnews.com/News_Exclusive_Resorts_Reduces_Costs_And_Remains_Below_Budget.php


"As one can assume, the property costs of running and operating the hundreds of residences available to members account for much of the club's expenses. Representing 60% of their operating expenses, homeowner association fees, rent on leased residences, and housekeeping are the club's three most costly property expenses, followed by member services and support, concierges, fees related to beach clubs, resorts and onsite amenities, property taxes, insurance, and others. Through the club's diligence, operating expenses are approximately 45% below 2007 levels on a "per member basis."....

This year has also seen the reduction of administration and support costs, all without affecting the membership experience. Exclusive Resorts has been able to reduce costs in several departments, including legal, risk management, information technology, member reservation systems, tax, human resources and accounting. The world's largest destination club has also subleased a portion of their square footage in their Denver office space to a third party. The combination of these efforts have led to a near 30% reduction in costs compared to 2007. Even with these savings, the club is planning and is on track for an additional 10% reduction this year."

 

[AK.TH.UR.UEmember]

Anyone hear that UE has hired a Chief Restructuring Officer..???

Can't be very long now...

Will it be a 7 or an 11...???

 

[wilkes591]

Haters have been posting that since the first assessment, sooner or later it might or will happen. Just traveled this weekend and everything went fine. Some other things are going on, however I agree BK is a strong possibility, as is an attempt at a second assessment. As for hiring another Chief, it just like leaving all those member reservations up for the PHANTOM peak leases, not based in the current reality of the situation.

Whatever the pain will be, I am sure it will make you , not

Just remember even the T&H member base that Rob McGrath ripped-off had value, and I think you are under estimating the value of a large paying member base to other clubs. I would think the UE membership base is even more valuable from BK without CapSource, The Equity Holder's Egos about the club's valuation, and The Under Water Properties.

Time will tell, best of luck to all the members.

 

[Kagehitokiri2]

Just remember even the T&H member base that Rob McGrath ripped-off had value, and I think you are under estimating the value of a large paying member base to other clubs. I would think the UE membership base is even more valuable from BK without CapSource, The Equity Holder's Egos about the club's valuation, and The Under Water Properties.

agree re value of members in terms of acquisitions/etc.

 

[TarheelTraveler]

Just remember even the T&H member base that Rob McGrath ripped-off had value, and I think you are under estimating the value of a large paying member base to other clubs. I would think the UE membership base is even more valuable from BK without CapSource, The Equity Holder's Egos about the club's valuation, and The Under Water Properties.

Time will tell, best of luck to all the members.

Hope it doesn't come to that. I also agree that the member base has value. Question is how much value, and is it enough to make up for the fact that the members presumably wouldn't be coming with any deposits in a BR situation? When Lusso went down, Quintess, A&K and EE all made offers to the Lusso refugees. The equity clubs made much more conservative offers (essentially longer term trials with deferred deposits IIRC), and Quintess made a much more aggressive offer (close to a free membership again IIRC), which at the end of the day probably pulled in the most refugees.

Problem is could any club absorb UE's huge membership base without causing financial and availability issues for the existing members. ER has never seemed interested in such deals, and they have a large enough membership base to where they wouldn't seem to gain much. UE has aggressively gone after such deals (Tanner & Haley, DC in Florida, Everlands, etc.), and would be the most obvious acquirer if we weren't talking about UE to begin with. Quintess is aimed at the high end. A&K is smaller, pretty darn conserative financially and focused on the equity model. I assume EE is the same way. RC is larger, but so far hasn't shown an interest in growing that way, and Marriott seemed like they were battoning down the hatches.

Maybe a non-DC third party would come in and give it a try, but it's hard to compete with other DCs when you've got to provide the houses burdened by a lot of leverage (since you don't have any deposits of note) and you've got competitors with no leverage or little leverage with dues that should be equal or less.

In any event, best of luck to members and hope JT can put something together to keep things going.

 

[SciFrog]

Quintess had excess capacity at the time of Lusso BK. This is not the case anymore, so any offer would not be agressive IMHO.

 

[AK.TH.UR.UEmember]

UE information

Haters have been posting that since the first assessment, sooner or later it might or will happen. Just traveled this weekend and everything went fine. Some other things are going on, however I agree BK is a strong possibility, as is an attempt at a second assessment. As for hiring another Chief, it just like leaving all those member reservations up for the PHANTOM peak leases, not based in the current reality of the situation.

Sorry, but your attack on me is inappropriate - I am not a "hater" - far from it. I am just someone with actual information, rather than stuff I simply hope is right.

Look - I have traveled for years with this company in various forms and have future reservations as well, but I am trying to be realistic....

Fact #1 - The CRO was hired at the demand of Cap Source. He is now there now deciding on the company's next steps.

By the way, that first assessment of $11,000,000 (claimed) from "way back" in early 2009, plus the $8,000,000 (less many many expenses unfortunately) from the shell merger "IPO" in 2010 have all disappeared at this point - that's a lot of negative cash flow.

Fact #2 - JT seems to have found a way to make one recent payment to CS, but he will have to continue to sell properties to keep them at bay until the year-end renewals give him a bit more cash.

So here's a game plan that buys some time - sell all the best properties, lease condos, announce new locations (but since there is no $$, how will they ever honor those phantom property reservations??), and hope there is a high renewal rate at year end.

Fact #3 - The "value" of the members in the T&H situation was only because another DC saw a way to grow in a hurry - buy the real estate with the membership coming along as a source of cash flow. What club is in a position to do that now? And don't say ER - they have problems of their own, and, in any case, they have a totally different model - clustered properties - versus JT's "we have the largest DC [by number of destinations]" approach - one or two all over the place.

It is hard to see who would buy this bunch of properties and assume the membership this time unless a few (or a lot) of the members got together to do something....unlikely, but possible I believe. Maybe that's a conversation worth having.....

 

[willmyclubmakeit]

as for fact #3, I agree that the membership in place had more value 5 years ago than today but there should still be a huge value in 1000+ dues paying members to another club. Think about the avoided costs of marketing/sales alone which is not insignficant but it also allows a club to possibly cash out some on a resignation list, increase their utilization, and maybe upsell some members. However the key in my opinion is what portion of UE's real estate portfolio a club would take, what if any portion of a refundable membership liabiilty they would assume, and how to deal with membership plans that are radically below the price of their current market. For example, why would Quintess, AK, or ER be interested in a premier member unless the member radically increased their annual dues? For Elite it shoudl be easy and given the size of the Signature class and price point I would imagine that another club will make this work. How would transitional benefits/services be provided given so many have airline reservations and commitments to friends/family---if members are disenchanted in the transtion they will have less joy and loyalty to a new club but if the other club rented UE's properties for say a year transition where they could not substitute their own properties wouldn't we all be singing form the same hymm book? How about capsource--don't they have a shared interest in the industry's success/reputation beyond just their UE debt as they are lenders to the other clubs? How would an equity club convert/offer something to UE members--key is that the membership sticks together to a large extent to have real value to another club. Just my personal opinion and hopes for a solution for all.

 

[SciFrog]

ER will not care about another club, they have proven that before. Q will merge with another club before they will consider dues paying members but with no capital. ER and Q have achieved stability and balance. Once they will lower deposits to reflect lower real estate to buy, they will resume growing organically. The current deferred plans is one way to lower deposits. It shows these companies are committed to long term organic growth. UE going down would in effect benefit them. So it is unlikely they will rescue members. Also marketing costs are almost zero these days...

 

[Kagehitokiri2]

to clarify, the members who keep paying up are of value to whoever they are paying, but are probably not going to be receiving a lot of value in return, considering what weve seen so far.

 

[willmyclubmakeit]

ER will not care about another club, they have proven that before. Q will merge with another club before they will consider dues paying members but with no capital. ER and Q have achieved stability and balance. Once they will lower deposits to reflect lower real estate to buy, they will resume growing organically. The current deferred plans is one way to lower deposits. It shows these companies are committed to long term organic growth. UE going down would in effect benefit them. So it is unlikely they will rescue members. Also marketing costs are almost zero these days...

come on....its tough to sell anyone on a DC today, probably tougher than ever, and it would be tougher still if UE goes down. The cost to sell new a new membership is big---expensive to get a good prospect list, work the list, develop trust in a prospective member, sell the club, hope to get the cash and a contract signed, pay commissions to salespeople, etc. we are valuable to a club but what we will get out of that is surely less than T&H members got and time will only tell.

 

[Desties]

June is the "best month" for membership sales say some...

But in legal public filings, UE says sales were very slow in 2009 and continue to be very slow this year...

anyone see a conflict there..??

Well, the 10-K sheds some light here.

The club went from 1,214 active members to 1,232 during the first six months of 2010. No one's going to cheer a net gain of 18 -- and it would be hard for that to be read into a strong June -- but at least it's growth.

The resignation list went from 46 to 60. Now, I don't recall if those that have resigned are included as active (so it would be +4 instead of +18), but it does mean that the club has grown (albeit slowly) in that time.

FYI, this is on page 8 of the filing, for those playing at home.

 

[Buon Viaggio]

The size of the UE resignation list at 4.9% seems shockingly small all things considered. Looks like somehow most members have been convinced to take a wait-and-see approach. Good luck to everyone.

 

[SciFrog]

come on....its tough to sell anyone on a DC today, probably tougher than ever, and it would be tougher still if UE goes down. The cost to sell new a new membership is big---expensive to get a good prospect list, work the list, develop trust in a prospective member, sell the club, hope to get the cash and a contract signed, pay commissions to salespeople, etc. we are valuable to a club but what we will get out of that is surely less than T&H members got and time will only tell.

True, but clubs are in survival mode, for the time being, they are fine not getting new members or deferred payment. But I don't see the value in members without some form of deposit. The math simply doesn't work anymore. I would bet new members are only referrals from other members, the DC industry isn't attracting outside attention anymore.

 

[wilkes591]

Did I call you a hater? I said "Haters" have been posting that since the first assessment. If you took that statement of fact as an implication against you, do not blame me. However, people have been posting UE(UR/PE) is going BK since 2007, eventually I agree, sooner now maybe.

Sorry, but your attack on me is inappropriate - I am not a "hater" - far from it. I am just someone with actual information, rather than stuff I simply hope is right.

Look - I have traveled for years with this company in various forms and have future reservations as well, but I am trying to be realistic....

I am not a JT, RK, or UE pumper and am a realist as well, as for your facts please note the May 15 post. Not that it was very difficult to see what the future was with JT's "realistic" view of the financial conditions and most other realist or people with "information" saw this coming as well. The only question is timing.

UE is not merging functions, PE still runs out of CO and UR runs out of FL with the same functions. An accounting office in KC. Two high paid CEOs in JT and RK and a high paid CFO. Very TOP heavy with executives, COO, Chief Sales and Marketing Officer with no marketing budget, Senior VP of Business Planning, Chief Technology Office, and very heavy on executive salaries. Then UE added Directors, look at McMillian's sweet deal. Not exactly a company cutting salaries back to stay alive.

I guess the way to look at it now is what ever cash UE leaves laying around, Capital Source will want it, so just spend it. This company could make it, it is just not trying to make it. The Cash flow is the place to focus on, look at the burn rate and the cash on hand. UE will make it through the 2nd QTR and the 3rd QTR. UE will be forced to do something around October/November.

Capital Source will sit back collect the interest and fees and just let UE sell the homes and pay down the debt while UE maintains the homes and collects from the members. Depending on how UE manages the members and cash flow determines how long this can continue.

The unbelievable part is UE is still getting new members with the PUBLIC financial statements. Clearly, the new members are not reviewing the financials. If this increases and only slightly perhaps UE will make it through the year with out a problem in October/November. Anyone resigning can forget about getting a deposit back, clearly UE does not have the money to give back. I would love to resign and get my money back, but let's be realistic.

Do any other member's see a different angle?

 

[wilkes591]

Fact #3 - The "value" of the members in the T&H situation was only because another DC saw a way to grow in a hurry - buy the real estate with the membership coming along as a source of cash flow. What club is in a position to do that now? And don't say ER - they have problems of their own, and, in any case, they have a totally different model - clustered properties - versus JT's "we have the largest DC [by number of destinations]" approach - one or two all over the place.

It is hard to see who would buy this bunch of properties and assume the membership this time unless a few (or a lot) of the members got together to do something....unlikely, but possible I believe. Maybe that's a conversation worth having.....

There are other clubs with "SUGAR DADDIES" looking to get bigger and if you can get "information", there are other things going on as well. I just think that the equity holders egos are so big that it most likely will not happen unless Capital Source forces the current equity holders hands.