The second largest destination club, by number of members, has seen a lot of changes over the last year. CEO Jim Tousignant recently shared his thoughts on these developments.Everlands
At the end of last week Ultimate announced that it was offering members of Everlands some preferred terms to join Ultimate Escapes. Everlands had acquired extensive properties around the world, but the downfall of Lehman Brothers its principal lender, brought about the clubs demise. In Jims words this provides a "preferred glide path" for the Everlands members and for Ultimate could bring up to 50 new members into the club. "Many of the members are folks you would recognize" said Jim, "they are a hi-caliber list of members, including successful business people and entrepreneurs".
As part of the strategic agreement, Everlands will also exclusively share with Ultimate Escapes a database of more than 500 qualified prospects who had expressed interest in Everlands club membership. These prospects will be offered a special membership opportunity with Ultimate Escapes.
Jim added "There is potential for some of the (Everlands) real estate but that's a secondary opportunity". On the whole the Everlands properties were boutique lodges and hotels, rather than being well-appointed single family homes which make up most of Ultimates portfolio.Ultimate Escapes Evolution
"The Club reached a low point when it was forced to go through an assessment back in January" Jim stated frankly. "It was the most important transition that we've gone through, but we stayed the course, gave people facts and transparency."
"The Membership base is now stronger and more loyal" he added, "Members now respect us and trust us. We are now seeing more leads, more sales and more member referrals."
Jim is certainly a consummate deal maker. He brought the club to prominence by acquiring the bankrupt Tanner & Haley, the second largest destination club at the time. He has since acquired Ventures Equity in early 2008 and acquired Private Escapes this year. He's also been able to extend his debt facility, which is good going in this economic environment, "Lenders were comfortable to provide additional working capital" he told me.Public Listing
"This will be a material change in the way the industry operates," said Jim, in talking about his plans to take Ultimate Escapes public via a transaction with a SPAC ("Special Purpose Acquisition Company"). The deal is due to close at the end of this month. In the meantime Ultimate is offering a "Redemption Conversion Program" to its members which enables them to become shareholders in the company, and also to convert some of their redemption value (or refundable deposit) into shares. The company is capping this total conversion at $10m.
"The public stock, as currency, will help with future growth," noted Jim. "The market for luxury real estate was over built and the club can take advantage of that," he continued, "For instance luxury real estate developers will consider trading real estate for public stock."Destination Club Evolution
"Most clubs did what it took to grow the business" said Jim commenting on the early years of destination clubs, "but they are now focusing on charging members what they need to run the business. Those that are survivors will be even stronger," he added.
In fact Jim compared the growth and evolution of the destination clubs to another type of vacation product, (some might say it's distant, older, poorer cousin) timeshares. In the early years of timeshares there were a lot of small and mom and pop operators, and there was also a lot of "shenanigans", but it took a while, about 10 years, for the industry to start to mature. Now major players and major brand names dominate the industry. The destination club industry has recently passed its 10th birthday and has certainly gone through a few changes and shakeouts. Brand name players such as Ritz-Carlton are starting to enter the industry and the larger clubs are becoming more established.