Destination Clubs Weather Storms of 06; See Rapid Growth in 07

• Download today’s press release (PDF, 88k).

SAN FRANCISCO (BUSINESSWIRE, December 12, 2006)—A high profile bankruptcy filing spawned a flurry of mergers in the destination club industry during the final quarter of 2006. Despite strong membership sales in the summer, destination clubs faced increased competition, potential regulation, and higher consumer scrutiny. Several clubs were forced to combine portfolios but the industry remains optimistic about growth opportunities in 2007.

Industry pioneer Tanner & Haley filed for Chapter 11 bankruptcy protection in July 2006, leaving nearly 900 customers stranded. Members discovered the majority of the club’s luxury homes were leased rather than owned, resulting in over $60 million in losses and insufficient capital to refund member deposits.

“Consolidation and Consumer Assurance are the two catch-phrases that sum up the year,” said Helium Report co-founder and industry analyst Jamie Cheng. “Firms are combining forces and increasing their disclosures to assure prospective members.”

Several clubs merged in an attempt to keep pace with industry leader Exclusive Resorts. Quintess acquired two clubs to form a 300-member club and announced a partnership with Leading Hotels of the World. Ultimate Resort is buying the real estate assets of Tanner & Haley in a $100 million transaction that could position the club as the second largest in the industry by member size.

Major industry players formed the Destination Club Association and are preparing for pending consumer protection legislation. Association members submit to a “net asset test” by an independent third party to assure members that the club has sufficient cash or real estate assets to refund member deposits.

“The industry is stabilizing and business models are maturing,” Cheng said. “We’re seeing convergence around the basic non-equity model of an 80% non-refundable deposit. Clubs are no longer promising travel anywhere, anytime, but rather emphasize the shared access of the luxury homes.”

Helium Report continues to recommend consumers carefully evaluate their options.
To help consumers, Helium Report offers member reviews at heliumreport.com that provide prospects with insights from members of each destination club. Later this month, the site will also feature a tool to search for clubs by favorite travel destinations.

Helium Report analysts forecast more than 1,500 new members and 250 new homes in 2007, bringing the industry total to 5,500 members and close to $2 billion in real estate under management across all destination clubs. Indeed, the firm predicts Exclusive Resorts will boast $1 billion in luxury homes early next year.

“Destination clubs are a great alternative to 5-star resorts and villa rentals, but prospects must do their due diligence. Is this the club that’s right for me and my family? And is this destination club financially sound?” advises Cheng.

About Destination Clubs

Destination clubs are the fastest growing luxury travel alternative. Members pay a sizable deposit (average $325,000) and annual dues to access fully-furnished vacation homes around the world.

About Helium Report

Helium Report is an independent new media venture that is not affiliated with any destination club or media company. The firm was founded to provide consumers with a comprehensive resource for high-value purchases. The Helium Report team discovered more information online to decide on a $10 movie than to buy a $10 million jet. Helium Report blends objective analysis, industry directories, and member reviews to help consumers make smart purchase decisions. Current coverage includes luxury real estate options such as destination clubs and private residence clubs, private jet travel options, and fractional ownership of yachts and exotic cars. In 2007, Helium Report will expand its coverage in luxury travel and real estate and add financial and personal services.

#

Contact: helium@heliumreport.com | 415-655-2700