Private Residence Clubs
Who buys into which program, and why.
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According to the most recent research,* the market for fractional ownership of vacation residences jumped 40 percent last year, reaching half a billion dollars in sales volume, fueled mainly by people buying into private residence clubs.The sudden and surprising success of this luxury vacation option obviously tapped into an unquenched market: vacationers seeking an exclusive resort home environment, where their needs are completely taken care of. Members are guaranteed the security of a private villa and a customized vacation that gives them, for a short time at least, a problem-free life.
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Membership in private residence clubs falls into two fiscal entities: a nonequity membership bond, where the member owns no property but belongs to a private club with all the amenities it provides; or a real estate deed of fractional ownership. For those who do not wish to own any more property, no matter how fractional, a nonequity membership bond is their choice. The industry leaders in this category are Abercrombie & Kent’s Destination Clubs (www.akdestinationclubs.com) and Exclusive Resorts (www.exclusiveresorts.com).
Conceived and implemented by Rob McGrath, a former Wall Street financial securities trader, Abercrombie & Kent’s Private Retreats concept (now called Destination Clubs) grew from an idea that addressed the convergence of real estate ownership and the high-end travel market. “We set out to create availability and choice by combining the successful business models of the private golf club, fractional jet and luxury resort industries, and to create a concept that expands personal vacation possibilities, instead of limiting them,” McGrath says. “Our members are not limited to a single home, yacht, or city dwelling. On one vacation, they could go golfing, on another, skiing, on another, they can travel the world on an Abercrombie & Kent tour.” For a $275,000 fee plus $9,500 dues per year, Private Retreats offered 400 members access to private residences in over 30 destinations, as well as A&K tours that span seven continents. Yachts and a private jet fleet are also available. Due to the popularity of Private Retreats, the second level of club, called Distinctive Retreats (p. 48 of our Fall 2004 issue) was instituted in late 2003.
Brothers Brad
and Brent Handler created Exclusive Resorts in late 2002 as a luxury residence
club that understood the concerns of family travel. “We first began accepting
members in March 2003,” says Brad Handler, a law professor at the University of
Virginia and former senior counsel for eBay. “There are nearly 700 now,
including 50 to 60 on the wait list. Every few months we have been doubling in
size.” Mark Westman, a 40-something stockbroker, has been an Exclusive Resorts
member for about a year. “Exclusive Resorts changed our attitude about
vacations,” Westman says. “Before, the planning and the logistics were so
time-consuming. But what was worse was trying to find a suitable place for
my family—my wife, our two small daughters, and often my parents and
in-laws. Now we have great residences that fit all of us, and a dedicated
concierge who cares for all our needs.”
