Excerpt from our comprehensive Decision Guide to Destination Clubs. Click here to request a free copy (50-page downloadable PDF).

Top 10 Terms: Member-to-Home Ratio

The member-to-home ratio is the de facto proxy to compare availability between destination clubs. The clubs combine members’ dues to acquire homes. The more members per home, presumably the more competition between members for the home during peak seasons.

The industry standard is one home for every six members: a 6:1 ratio. The figure ranges from 4:1 to as high as 10:1. From our viewpoint, the metric is an inadequate tool to analyze destination clubs.

The member-to-home ratio fails to tell the entire story. It’s comparable to the price-earnings ratio for companies – a number that’s more deceiving than useful since it’s so easy to misinterpret out of context.

The ratio is meaningless without studying its corollary: the number of days of travel in member plans. The two numbers together provide a much better gauge of home availability.

Take the 6:1 ratio as an example. If members join a plan that provides them with 30 days of access per year, then each home has 180 days of usage designated (6 members x 30 days each). Assuming full usage, then the home is occupied ~50% of the year (180 of 365 days).

Now, let’s increase the plan to 45 days for every member. The same 6:1 ratio results in 270 days of usage per year, or 74% occupancy. Since demand is greatest during peak seasons, the odds of securing a holiday reservation are lower, yet the member-to-home ratio is the same in both cases.

6 members x 30 days = 180 days usage
(49% occupancy)
6 members x 45 days = 270 days usage
(74% occupancy)

A 7:1 member-to-home ratio with a 21-day member plan is almost 20% lower occupancy than a 6:1 ratio with a 30-day plan.

7 members x 21 days = 147 days usage
(40% occupancy)
6 members x 30 days = 180 days usage
(49% occupancy)

As with Asset Value (see previous post), the member-to-home ratio is always in flux and better viewed as a “target” than an “actual.” As destination clubs add members, the number of the homes in the portfolio ebbs and flows according to their acquisition strategy.

Destination clubs such as Exclusive Resorts may develop several homes in a location simultaneously. Thus, the ratio at any given time may be lower than the figure stated in their membership agreement as new homes are added to their portfolio.

On the other hand, a club might have five new members and will acquire another home after the sixth joins. During that time frame, the total membership base temporarily exceeds the published member-to-home ratio until another home is added to the portfolio.

Non-holiday, affiliate and corporate membership programs further complicate member-to-home ratios. When you add these reduced plans into the picture, it’s even harder to compare one club’s ratio against another.

Inexperienced sales directors cite the figure as a badge of honor – the lower the ratio, the better the club. As you analyze your destination clubs finalists, combine the member-to-home ratio with the plan days to get the best sense of occupancy.

Helium Report believes destination clubs should operate with a total occupancy plan of around 70% to 90%. The downtime includes off-seasons (e.g., Scottsdale, Arizona in July) and scheduled maintenance or repair. Members should expect all homes to be 100% occupied in peak holiday times. In addition, members should expect some availability within a 30-day to 90-day window prior to travel, allowing for “space available” reservations.

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