Founder and CEO of LUSSO, Steve Greer, was kind enough to share his personal journey and insight into the destination club industry as a whole and LUSSO in particular, in this exclusive interview.
SherpaReport: Why did you start the club?
Steve Greer: Personal travel need and desire. It all dates back to when we had our first child. We started renting properties and had unsatisfactory experiences. The places just never lived up to our expectations. We ruled out buying a second home mainly because we knew we wouldn't get enough use out of it for the expense. The timing was perfect. I was looking to do something different, had access to the resources to start a business, and this industry spoke to my personal interests of travel, hospitality and real estate.
What did you do prior to your current position?
SG: For 12 years I worked for Price Waterhouse then, for eight years, I was the C0O/CFO of Rapala, a publicly traded fishing tackle company, and was responsible for overseeing operations in 25 countries.
What would you say distinguishes LUSSO from other destination clubs?
SG: We get asked this on just about every prospect call. It's what I've termed the ABCDE's of LUSSO.
A. Access and availability. Our membership to property ratio is 5.5:1, we offer unlimited access (subject to availability) and we structure our membership to maximize availability (see "Equality" below).
B. Boutique. We want the club to be exclusive and have set a cap at 550 members. We see this as the ideal blend that enables us to offer exemplary personal service, a broad range of destinations and a sustainable business model.
C. Convenience. We offer a broad range of amenities that are covered by a member's annual dues. There is a luxury SUV in the garage at most properties, men's and lady's golf clubs in the homes, beach or other destination-appropriate equipment, ski passes for the ski properties, access to private golf and more.
D. Dollars. We have a 100% refund policy, whereas most competitors offer an 80% refund of the membership deposit.
E. Equality. We have one tier of individual membership. This is a critical difference that sets LUSSO apart from other clubs. Our members are all on a level playing field. We make it easy for our members because the same rules apply to everyone in the club.
Which locations do you personally enjoy the most?
SG: With a 5 year old and 1 year old we are not huge skiers right now. So we tend to enjoy the beach destinations that are most easily accessible - such as Kiawah Island, Naples and Cabo San Lucas. We also like staying at the larger properties. It's nice to have multiple rooms in which we can spread out. Our 5 year old can play his video games in the media room while my wife and I relax in another room and watch a movie. Before we started the club we never took a trip with family or friends, now we hardly ever travel without inviting them for part of the time.
What locations seem to be the top choices for members?
SG: It depends on the time of year, Deer Valley and Aspen are every bit as popular as Cabo and Naples, but somewhat more seasonal. New York is our most popular in terms of trips taken there by members, but they are usually one or two day trips.
How is the LUSSO balance of members working out?
SG: Roughly membership is evenly spread in thirds across the US: East, Central and West. At any point of time 30 to 40 percent of our members will have school age children. A lot of people joined the club with a child in their mid teens at home. They know that the investment will be less now and in two years or so, when their teenager goes off to college; they will have more freedom to travel whenever they want.
What do you think are the most important questions prospective members should ask before joining a club?
SG: First of all I would advise a prospective member to do their due diligence and get comfortable with the business model of the club. Understand the business plan so they can see the economic blueprint for the future.
· The only reason to join a club like this is to travel. So access and availability are critical. They should look at the average occupancy rates-how booked up the club is at any point in time (ask to see the club calendar to see how its weeks fill up) - and depth of properties per destination relative to the membership count, as well as breadth of destinations.
· Find out how the club calculates their memberships and if they use a "full member equivalent" calculation. The reality is a 30 day membership and a 15 day membership will overlap at some point. Therefore a person holding a 15 day membership is still an equal competitor for booking days, though may not be counted as such.
· How level is the playing field? Are some people of a higher priority level? Do they get first dibs on holidays or seasonal peak time?
· Properties and strategies. Look at a club's track record. Does the club continue to purchase properties at the same standards as they did when they first opened?
High service levels are part of what all destination clubs offer, can you give us some examples of LUSSO's services?
SG: Many people think a destination club is all about the real estate - it's not. This is very much a hospitality business. We have to deliver five-star service every day and never lose focus of that goal - though we are of course delivering that service against the backdrop of spectacular real estate. As soon as a person makes a reservation with us they are in contact with the service representative in whichever destination they have chosen. The person on the ground is the one who is going to know about the new restaurants or attractions and will have the most up-to-date inside knowledge of the area. We also do this so that the member and concierge will make a connection early on. It's all about relationships and trust. In addition to the local concierges, we have a complimentary "Wherever, Whenever" concierge service operated for us by Luxury Attaché out of New York. Members have an 800 number to call and can ask the concierge for just about anything. For example, a member who lives in CA was traveling independently of the Club to London and was able to call the concierge and get some Harry Potter premier tickets for her family while they were in London. Another great example is that of a member's personal concierge experience in Hawaii. This family loves to cook, grill and to try new things. The concierge happened to be down at the fish market when he saw a rare fish that was supposed to be absolutely divine-the best. So he immediately called the member to see if they wanted it. The member was blown away that the concierge would think to call and remembered them in that special way.
As a prospective member what assurances do I have about the financial security of my deposit?
SG: The two documents that govern the relationship between club and member are the Rules and Regulations and the Membership Agreement. The Membership Agreement houses the fundamental things that we cannot change. These are things like our commitment to a 5.5:1 ratio, unlimited use, ability to gift two weeks a year to a family member, the refundability of deposits and our financial reporting commitment. The rules include things like the reservation policies because we need the ability to tweak those things from time to time if we think it makes sense, without renegotiating everyone's membership agreement. Recently we set up a trust (DepositTrust) which is separate from the club. The only beneficiaries are the members. The club pledges all of its real estate interests to the trust. This makes our members secured members of the club instead of unsecured members.
What are LUSSO's future plans?
SG: We currently have about 140 members and will continue to grow until we've reached 550. With the club already established, in the future we might consider a second or third LUSSO club each with a different emphasis whether it be geographical, price, etc.
What new locations are on the horizon for the club?
SG: In the next 30 days we will announce two more beach destinations, and soon after that we will announce two European destinations. Our plan this year is to increase from the current 14 to 20 destinations, with similar growth next year.
How has the LUSSO evolved over the years?
SG: Last year we doubled in size and we estimate doubling again this year. Members recommend and refer their friends to us. So the bigger you get the more satisfied members help fuel further growth. We did our due diligence before we launched. Almost three years of planning took place before we announced ourselves to the world. We had a refined model and resisted the temptation to add lower membership tiers. We stayed true to our original set of values. With that said, we have added amenities that we did not foresee. For instance we entered q relationship with the US Ski Association which gets our members discounted skiing and we've also added access to private golf courses. But overall, the club continues to evolve in line with our original thinking.