Florida Fractional Ownership

As a member of a destination club, the buyer gains access to a portfolio of luxury vacation homes, often in a variety of resort locations. Access is generally for 30 days’ of vacation time per year, and each club has clear procedures for reserving times and locations.

Destination club membership works like the familiar country club model: members pay a one-time initial membership fee as well as annual membership dues. The membership fee may vary from $20,000 to $1.5 million, depending upon the caliber of the club and the quality, size and location of its properties. The average membership fee for upper-bracket destination clubs is $300,000 - $400,000.

Annual dues for high-end destination clubs range from $25,000 to $35,000. Some clubs charge a nightly residence fee as well.

Buyers of destination club memberships do not own equity in the property; rather they own a membership in the club. Generally this increases the liquidity of the owner’s investment; members withdrawing from a destination club may be refunded 80% to 100% of their membership fee. But clubs typically impose constraints on member withdrawals, often specifying that three new members must be added for every member withdrawing.

The largest destination club is Exclusive Resorts, with some 2500 members and 300 properties. Exclusive Resorts has a 65% market share in the destination club category. Other large players are Yellowstone Club World, Solstice, Crescendo and Quintess. There is some consolidation underway in this industry, with Ultimate Resort and Private Escapes recently announcing their merger.

The destination club membership buyer depends upon the health and stability of the Club’s business model for the continuing liquidity and value of his membership. Abercrombie and Kent Private Retreats was one of the pioneers of the destination club model. When they filed for Chapter 11 bankruptcy protection in 2006, the value of their 874 members’ investment was at risk. Generally, destination clubs have taken steps to assure sound business practices to protect the value of owner’s memberships.