We did some follow-up with the team at the new Solstice to better understand the club’s new programs and pricing.

There are three plans in the new club:

• Solstice Signature: Deposit is $505,000 now, moving to $535,000 after Jan.15th (6% increase).
• Solstice Platinum: Deposit is $825,000 going to $875,000 (6% increase).
• Solstice Sky: Deposit is $1.55 million, going to $1.65 million (6.5% increase).

For any prospects that had been in discussions with either club, the original membership pricing will be honored prior to Jan. 15th, 2007. After that, the prices above will apply. See below for a summary chart from Solstice.

The new club is also offering an interesting alternative with regards to the member deposit: members can choose either 80% of “Then Current Value” or 100% of “Original Deposit.” Basically members can decide how much risk they want to share with the club, in return for the potential of some upside – if they resign and the membership rates have increased, they can get a refund based on the new higher (or lower) deposits.

We like this approach of giving the prospect an option – essentially a “typical” non-equity membership, like most other clubs or a chance to take some additional risk in exchange for some upside. The only downside might be that it complicates the decision a little for the prospect, which is probably why most of the non-equity clubs would not consider such an option. But for Solstice it could make sense with membership deposits in the million dollar range.

In terms of expansion, Mark Cain, head of marketing, says the next two locations to be opened will be New York and Hawaii – what we don’t know is whether the club needs more members to join before being able to purchase homes in these locations.

The new Solstice has positioned itself as the leader in the ultra-luxury market, with over 50 members, 9 homes, a partnership with Sentient Jet and over 750 reservations completed. However, the new Ciel could mount a real challenge, assuming its backer and management are willing to continue to spend ahead of membership growth. It entered the market with six ten million dollar homes and may need to add more to prove to prospects that it’s a viable alternative to Solstice. For now, Solstice can offer more homes in more locations.

In 2007, the ability of new clubs to attract new members and then acquire homes afterwards will be limited. The market is too competitive with too many clubs offering lots of homes in prime locations. A prospect will need a real good reason to join a club and then wait for additional homes to be added. Clubs will have to raise money in order to build their real estate portfolio. It helps if your club is backed by a billionaire.

UPDATE (12/8/06): Solstice provided a new version of their chart, which we’ve posted below.