Destination Club - Membership Model

Membership Model

While there are several variations, the basic choices are between equity, non-equity and hybrid clubs. This is similar to the membership model choices at country clubs. In all models, club members provide an up-front sum and an annual fee though the exact amounts vary significantly by club-type.

In non-equity clubs, members enjoy the hospitality benefits of the club, but don’t own an interest in the homes and so are not impacted by the real estate appreciation or losses of the club's residence portfolio. The up-front payment is a deposit, and when they resign from the club, members receive 75% to 100% of that deposit back. Exclusive Resorts, which began operations in 2003, is the leading club of this type. There are some exceptions as noted below with the "hybrid" model.

With equity clubs, the up-front payment can be considered an investment of sorts (or at least a reduction in the opportunity cost of making the up-front payment), subject to typical investment risks. When exiting the club, the refund of that fee is adjusted to reflect changes to the value of the home portfolio or in the fee for new members. Various clubs have different ways of providing this benefit. Also, with an equity club, the members own the club's real estate portfolio, which provides additional security of the membership deposits. The Abercrombie and Kent Residence Club, formed by a combination of two leading equity clubs, Crescendo and Bellehavens, is the current leader with this benefit.

The “hybrid” model combines a non-equity club members with an upside benefit that is tied to the value of a club membership.

Inspirato is an example of the newest club model, referred to as "next generation". While the travel product and services available to members are consistent with equity, non-equity and hybrid clubs, next generation clubs lease the residences rather than purchase and are able to offer less expensive memberships as a result. Members pay an up-front membership fee and an annual renewal fee and do not gain equity or appreciation. Members gain access to a portfolio of residences and members are able to book travel by paying nightly rates to the club.

During the real estate boom of the 2000s the equity model had appeal because members could benefit from the rapid appreciation of real estate assets. The economic changes between 2008-11 resulted in innovation within the destination club marketplace and has provided more options for luxury travelers.