Ultimate Escapes - higher dues for some, no dues for newcomers

Ultimate Escapes, the luxury destination club formed by the merger of Private Escapes and Ultimate Resort, is raising dues for 2010 for some current members while offering a "no dues for one year" pledge to new enrollees.

The club, the second largest in terms of members, has a full page ad in the Saturday Wall Street Journal of Dec. 5, 2009 promising no dues for the first year to lure rich folks into becoming members.

Meanwhile, current members seem to be on a bumpy flight. On the Destinations Club forum, some members say they've been hit with an 11% increase in dues for 2010, in line with a rise in the consumer price index (CPI). Yet in the same thread, another member says: "We pre-paid our dues last year, would not pay the assessment, were suspended and then reinstated and have no intention of paying the dues this year. Good luck to everyone else."

On a brighter note, the club is adding three new "Elite Club" residences at See Forever Village at the Peaks in Telluride, CO.(Typical cabin pictured above.) Elite is its top level of 3 tiers of membership (Elite, Signature, Premiere) but within each of these there are 5 sublevels.

Equity Estates - destination club thrives with fiscal transparency

While the economy takes its time to recover from recession, the destination club Equity Estates is thriving, with 30 new members since the start of 2009 and two more luxury properties in its portfolio -- one in La Jolla and another in midtown Manhattan near Times Square (pictured above.)

CEO Philip Mekelburg calls Equity Estates a luxury residence fund."We re typically cash buyers of homes – we leverage the minimum amount of 23 percent," he told me not long ago. As a result, the company has remained in sound financial condition while other larger, highly leveraged clubs struggled, he said.

Mekelburg points out that Equity Estates is dedicated to fiscal transparency so members know their money is safe. The company puts 80 cents of every dollar into real estate, compared to the 50 % level maintained by some other clubs. It now has 10 residences, with an average price of $3 million. Full members are entitled to 30 nights a year in any of the properties, while executive members get 15 nights.

But perhaps the most unusual thing about Equity Estates is that it has an exit strategy. Starting in 2021, says Mekelburg, the club will start selling off its properties and distribute the proceeds among its member owners. Full membership requires a capital contribution of $375,000 to join. Its properties are in typical luxury vacation areas, such as Turks and Caicos (Caribbean) Deer Valley (Utah) and Hilton Head (South Carolina).

Destination club Ultimate Escapes to be acquired by public company

In the latest news from the sometimes troubled luxury destination club market, the leading club in terms of properties -- Ultimate Escapes -- is getting a big new public partner.

Secure America Acquisition Corp. has announced it is about to invest a minimum of $20-million in Ultimate Escapes, which itself is in the process of absorbing Private Escapes, another destination club. Ultimate is the second largest club in terms of number of members, with more than 1300 members. (Number One is Exclusive Resorts, with more than 3,000 members.) The club has handsome homes in desirable locations such as Nevis, pictured above.

The deal means that Ultimate Escapes not only gets a cash infusion but becomes a public company. Time will tell if that is good for members. In the short run, it undoubtedly is good for Ultimate Escapes, which lost over $15-million last year,according to the Washington Business Journal. As for Secure America, its previous acquisitions have been in the field of homeland security. Guess you could call this one "vacation homeland security."

Value House Shopping in Hamptons, Sanibel, Cape Cod and Other Locations

When is a million-dollar vacation home considered a bargain? When it was first listed at $2-million, of course.

To analyze the plummeting price of fancy second, third or fourth-home real estate, Business Week's Prashant Gopal and Zillow.com got together and gathered intel sampling some prime property areas and how well they were holding up.

Among those faring the best in the sampling included Laguna Beach, CA, Newport, R.I., Chesapeake Beach, MD, Lake George, NY, Destin, FL, and Oahu Hawaii

On the other hand, in the Hamptons, New York's platinum coast, BW quotes two brokerages as saying "home prices have dropped 23.5% to $675,000 in the first quarter, compared with a year earlier." And what can you get for that price? The 2006-completed house shown here, with 3 BR and 3 1/2 baths, on half an acre in East Hampton.

Here are a few other places to hunt -

Arizona
Hard-hit vacation market: Scottsdale
Annual home value change: -27%
Q4 home price: $437,423

Connecticut
Hard-hit vacation market: Mystic
Annual home value change: -17.2%
Q4 home price: $256,000

California
Hard-hit vacation market: Napa
Annual home value change: -21%
Q4 home price: $405,000

Florida
Hard-hit vacation market: Marco Island
Annual home value change: -27%
Q4 home price: $437,423

Florida
Hard-hit vacation market: Sanibel
Annual home value change: -18.1%
Q4 home price: $516,892

Florida
Hard-hit vacation market: Bonita Springs
Annual home value change: -19.8%
Q4 home price: $251,757

Massachusetts
Hard-hit vacation market: Cotuit (on Cape Cod):
Annual home value change: -14.2%
Q4 home price: $375,740

New Jersey
Hard-hit vacation market: Point Pleasant Beach
Annual home value change: -15.6%
Q4 home price: $513,659

Oregon
Hard-hit vacation market: Sunriver
Annual home value change: -15.7%
Q4 home price: $256,000

Destination Clubs failing? LUSSO and Yellowstone bankrupt -- Who is next?

The LUSSO Collection, one of the "destination clubs" that offers wealthy vacationers a choice of private homes around the world, has filed for bankruptcy in Minnesota, according to Halogen Guides. LUSSO has homes in 16 prestigious locations around the world, and will continue operating, according to a statement given to Halogen. But the chatter among owners in luxe land suggests everyone is wondering which club will be the next into bankruptcy court. Exclusive Resorts, the largest of the clubs, has apparently laid off staff. The Yellowstone Club, the private Montana ski resort that was a poster child for ultra-rich digs in flush times, and which grew into a network of 10 resorts worldwide, filed for bankruptcy in November, Other clubs are said to be raising their rates and fees. Stay tuned.

Sherpa Report: Rich Will Buy 2nd Homes Eventually

From the Sherpa Report, which tracks the luxury travel and destination club market, comes a hopeful note on long-term trends based on "a recent survey by Knight Frank and Citi Private Bank.


While second home purchases by the affluent may be slow for "perhaps another 2 years," Liam Bailey, Knight Frank Residential Research Director, says that caution may be temporary.

"The advantage for people with equity is that they can benefit from forced sales from others in the market," said Bailey. "There are bargains beginning to appear in many locations. But due to tight credit you need to be fairly wealthy to take advantage."

Better Value For Destination Club Members

The 5,000 rich people who hold "destination club" memberships will be thrilled to hear they will soon have a bigger choice of destination vacation homes to visit. Two of the largest clubs -- Private Escapes, based in Colorado, and Ultimate Resorts, based in Florida, are merging. Together, they will create a company that becomes No. 2 in this field. The biggest is Esclusive Resorts, based in Denver, with 3,000 members. The combined new entity will have with $200 million in assets, 1,200 members and about 120 employees.

Hidden Cost in Aspen Fractionals

Beware of fractionals for sale that don't tell you clearly about a "club membership." A new development here in Aspen, CO, the Dancing Bear, is just a few holes in the ground but already lining up buyers. It is being sold as fractional deeded interests, but... deep in its Web site it reveals the annual cost of the "membership" -- not yet determined, but estimated at about $13,000=$15,000 per year. While that includes homeowner dues, it means that besides the $769,000 price of a 3-BR 1/12th ownership, you'll pay at least $2,100 a month for each month of use. Might be cheaper to rent.

How to Tell Timeshare from Fractional

Not quite sure of the difference between various "shared ownership" vacation home plans? Today's New York Times has a very helpful article about this. A "timeshare purchase is typically a week, whereas a fractional purchase is usually three or four weeks. The luxury versions of fractionals are private residence clubs, defined by industry analysts as any residence selling for more than $1,000 a square foot and offering amenities like a private storage facility, daily housekeeping and concierge services....Timeshares and fractionals are usually deeded and can be bought, sold or passed from one generation to the next....Timeshares can cost about $10,000 to $50,000," says one expert. Another says "fractional prices range from $24,730 to $70,435 a week; annual maintenance fees range from $5,410 to $8,700."

Portofino: First Two-Tiered Destinations Club

The universe of ultra-luxe "destination clubs" changed today as two clubs -- Portofino and Signature -- merged. According to a press release, the newly named "Portofino Destinations Club" will be the first residence club with two tiers and will "provide its members access to high-end homes all over the world: the U.S., Mexico, Canada, Italy, France and the United Kingdom."

Membership for the Portofino properties cost as much as $250,000, plus annual membership dues of up to $19,800. Signature membership costs as much as $150,000, with dues of up to $11,500. Each has a core of members in a particular region: Signature is based in Colorado while Portofino's focus is the Pacific northwest.

Rich Folks Club Goes Bust

Kudos to the Helium Report for breaking the news of the bankruptcy of Tanner & Haley, the destination club. It filed to reorganize under Chapter 11 in July. The club gave four reasons for its problems: "costly short-term leases, memberships at extremely low annual dues, various ventures "that ultimately proved unsuccessful," and "increasingly stiff competition."