Distinctive Holiday Homes, competes with HCC

Kagehitokiri · Jul 30, 2007

http://www.distinctiveholidayhomes.com/

~$3MM homes (6) and yachts (2)

includes things like vehicles, F&B credit, cell phones, etc

until Sept 30 lowest plan is $25K deposit / $7K annually
(deposits double after Sept 30)
for >
7 nights advanced reservations
unlimited space available (from 1 to 4 weeks out) @ $300/night

IMHO its a pretty strong competitor to HCC, especially before Sept 30 deposit doubling. (and 20% of $25K is only $5K. similar to HCC's lowest plan, these do not involve much risk at all compared to other clubs with the same 80% refund, but MUCH higher deposits)

also, resignation is 1 in 1 out, which appears to be fairly uncommon. (usually 3 in 1 out, HCC is 2 in 1 out)

saluki · Jul 30, 2007

The 15 night HCC membership involves a $30k initiatiion fee & $3500 annual dues.

The 14 night DHH membership requires a $50k initiation & $14,000 annual fee.

If you subtract out the $1000 per week food & beverage allowance, you would still be paying more than 3 times the annual fee with DHH as compared to HCC.

Steamboat Bill · Jul 30, 2007

I don't know anything about this club other than they have a nice web site and appear to be a non-US company.

The three boats are awesome and worth the price of the club alone.

They only have 2 US properties, 2 Pacific properties, 3 European, and 3 boats (Europe).

Currently, this club is probably a 5% competitor for HCC as 95% of people comparing the two clubs will probably join HCC as they offer better US locations and a much LESS cost per night.

Kagehitokiri · Jul 30, 2007

if you use the space available @ $300/night, you can compare the lowest DHH plan to the highest HCC plan.

homes have 3-7BR and yachts have 3-4 cabins (sail and motor)

yachts also include US, Caribbean, and South Pacific itin

price range for yachts per week (not including fuel)
advanced - $3000 > $8000
space available - $900 > $2400

saluki · Jul 30, 2007

Kagehitokiri said:
if you use the space available @ $300/night, you can compare the lowest DHH plan to the highest HCC plan.

homes have 3-7BR and yachts have 3-4 cabins

yachts also include US, Caribbean, and South Pacific itin

price range for yachts per week (fuel is additional)
advanced - $3000 > $8000
space available - $900 > $2400

Two things would scare me about this: 1) Counting on space being available on short notice when you want to travel & 2) Yacht fuel expense!

I don't doubt the quality of the product. I just don't really see this as a direct competitor to HCC given the pricing differences & current shortage of properties.

Kagehitokiri · Jul 30, 2007

i guess i should rephrase.. its pretty much the only direct competitor to HCC in terms of approximate entry price. but thats the only thing they have in common.

there appear to be 16 members right now, according to helium report.

sailing yachts wouldnt use TOO much fuel.

also IIRC i saw some charter rates for the yachts they have, in the $35K+ per week range.

Steamboat Bill · Jul 30, 2007

Kagehitokiri said:
there appear to be 16 members right now, according to helium report.

also IIRC i saw some charter rates for the yachts they have, in the $35K+ per week range.

16 members for this level of club at these prices is unsustainable and I would be very concerned about how they are structured. I would venture to say that the combined membership could not support even one of their properties or boats, let alone the entire collection.

TUGers raked HCC over the coals last year about their business model and sustainability yet this club is "WAY MORE" riskier.

You are correct about the weekly "charter" price of these yachts as the "average prices" of a sailboat charter is in the $12-25k range and the motor boat is in the $25-50k range depending on location, time, supplies, etc.

Thus, if this club is "legitimate" then it is an incredible bargain.

Who bought all these properties?
Are they owned or leased?
Are they renting out unused spaces?

Unlike real estate (that can appreciate), yachts depreciate about 10-15% per year, thus in 5 years, your yacht is probably worth only 40-50% what you paid...this is a dangerous cycle for the members as all other Destination Clubs are built upon the premise that real estate can double in 10-15 years in a hot market, while these boats will loose 90% of their value in that time. Additionally, yachts have very large maintenance fees.

Kagehitokiri · Jul 30, 2007

IIRC $35K+ was the charter rate for one of the EXACT sailing yachts they have. for more general comparison purposes, the cheapest offered by Fraser (American Express Platinum/Centurion partner) for example are around $18K per week.

the yachts seem to be more in the ~$1MM+ range, and sailing does make a difference in maintenance cost, although i have no idea how much.

DHH says they have a $25MM cash reserve right now.
(100% owned, no leasing)

and even though they start competitive to HCC, notice the top plan is currently $125K / $35K, and will become $250K / $35K. that does make it seem more feasible to me, but i did not do any complex analysis.

i was also off, 2 properties launch in the coming months, meaning 2:1 ratio currently (according to helium report)

NeilGoBlue · Jul 30, 2007

Besides everything everybody has already said... they are in the charter phase and more than likely are offering substantial discounts to sign members up. Nothing wrong with that, all the clubs have done it... but those prices probably won't be around long.. even the doubling of prices probably won't be around long...

It kind of strikes me as a similar scenario to bellehavens.. Bellehaven's isn't the biggest club, and might not be around in 5 years... But the price/value was very good and since they had reached 100 members..I felt good about it..

This is obviously a much better value proposition right now, but there is more risk.. will they get to 100 members?

Do you feel lucky today?

puffpuff · Jul 31, 2007

NeilGoBlue said:
Besides everything everybody has already said... they are in the charter phase and more than likely are offering substantial discounts to sign members up. Nothing wrong with that, all the clubs have done it... but those prices probably won't be around long.. even the doubling of prices probably won't be around long...

It kind of strikes me as a similar scenario to bellehavens.. Bellehaven's isn't the biggest club, and might not be around in 5 years... But the price/value was very good and since they had reached 100 members..I felt good about it..

This is obviously a much better value proposition right now, but there is more risk.. will they get to 100 members?

Do you feel lucky today?

At 50,000 for one week membership ( after Sept 30, 2007) and a 300 day (40 weeks) sell out per property, they will need 40 Lite members or 8 deluxe members ( one deluxe member is equal to one member equivlant

to cover one property. Even without the boats ( which adds financial burden), given the 6 houses on hand ( excluding the boat) , they will need a lot of member ( say 25 delux members and 100 elite members ) equivalent to break even on current properties before new ones can be comtemplated. They currently have 16 members, and not all are member equivalents. Perhpas only about 8 real member equilvants.

The founders also also deveopers of the Octopus resort in Fiji where one of the houses are located. I look at the internet and Octopus resort appears to be a value two star destination resort ( with dormatories ) with cost per week at $499 per person , and you can get a dail three meal package per person at $ 39 . I am not sure this is an enviroment that that can command 3-4 million dollar homes.

There is a lot promised,and the $1000 a night is not high after you take off the $150 per night food allowance, BMW car in the garage, the airport transfer etc. The $300 a night charged after allot nights are used up is cheap if you can get the booking.

I am not sure how this model can be sustained unless there is a very deep pocket behind . I hope I am wrong, as I may join if I am proven wrong. Any thoughts ???

Kagehitokiri · Jul 31, 2007

if you look at the site, it seems clear that the home at the octopus resort was built by the owners for their own use.

who knows which other properties were already owned. for any club for that matter. even though the value is said to be X, acquisition cost is a completely different number. ER for example buys them in bulk, im sure at a hefty discount.

NeilGoBlue · Jul 31, 2007

puffpuff said:
At 50,000 for one week membership ( after Sept 30, 2007) and a 300 day (40 weeks) sell out per property, they will need 40 Lite members or 8 deluxe members ( one deluxe member is equal to one member equivlantto cover one property. Even without the boats ( which adds financial burden), given the 6 houses on hand ( excluding the boat) , they will need a lot of member ( say 25 delux members and 100 elite members ) equivalent to break even on current properties before new ones can be comtemplated. They currently have 16 members, and not all are member equivalents. Perhpas only about 8 real member equilvants.

The founders also also deveopers of the Octopus resort in Fiji where one of the houses are located. I look at the internet and Octopus resort appears to be a value two star destination resort ( with dormatories ) with cost per week at $499 per person , and you can get a dail three meal package per person at $ 39 . I am not sure this is an enviroment that that can command 3-4 million dollar homes.

There is a lot promised,and the $1000 a night is not high after you take off the $150 per night food allowance, BMW car in the garage, the airport transfer etc. The $300 a night charged after allot nights are used up is cheap if you can get the booking.

I am not sure how this model can be sustained unless there is a very deep pocket behind . I hope I am wrong, as I may join if I am proven wrong. Any thoughts ???

My point is that the fees and initial deposits might triple over the next 18 months to make the club sustainable... so if you get in now, and the club is successfull...you'll make out big time.. if it goes belly up, well.. you're screwed..

So, it seems to me there is a point in a club's development that a potential member needs to be comfortable with the risk... for example, if I had several million.. I might join that club (who cares if I lose the money). If I only have a networth of a few hundred thousand it might be too risky.

I felt comfortable with Bellehaven's and my networth when they got to 100 members. It was a risk to join, but I got in before waves of price increases, but enough stability that I felt comfortable with.

puffpuff · Aug 1, 2007

NeilGoBlue said:
My point is that the fees and initial deposits might triple over the next 18 months to make the club sustainable... so if you get in now, and the club is successfull...you'll make out big time.. if it goes belly up, well.. you're screwed..

So, it seems to me there is a point in a club's development that a potential member needs to be comfortable with the risk... for example, if I had several million.. I might join that club (who cares if I lose the money). If I only have a networth of a few hundred thousand it might be too risky.

I felt comfortable with Bellehaven's and my networth when they got to 100 members. It was a risk to join, but I got in before waves of price increases, but enough stability that I felt comfortable with.

I tend to submit that the "fair" market price with what they have at this time ( assuminging 3 million dollar homes and all the amenities ) for 7 days membership is about $125000-150000 initiation fee and about $ 8000 annual dues max. If that is correct, they will have limted options to increase further both the initiation and annual dues unless the market as a whole goes up. I think Bellehavens pricing for 7 days is very competitive in this respect and yes, it is far more secure at this juncture. So

The major draw and selling point at this charter period is inthe initial fee discount from what I can see. The annual dues is already at market price. The $300 a day for extra days is a nice perk but it is clear taht the model calls for selling a lot of 7 and 14 day packages, in which case the avilablity of homes to be reserved at $300 a day ( last minute) will be quite limited if the model succeed. Most other DC also have such a program, and they benefit only those who live close to the destinations most of the time as a drive to destination. For those that live inthe US, majority of the desinations of DHH homes are target locations outside the country and 30 days booking is not very accomodating. Also since the refund is 80% of amount paid, there is no tangible upside, unlike Bellehavens or UR .

Having said the above, the current 25,000 initiation fee is highely discounted ( 75% off market). The "max" loss is $5000 from cash on cash basis, and if you can enjoy 7 days a year , the average price is about $ 1240 per night after factoring in opportunity cost for the 25000 and depreciation over time of the non refundable portion of $ 5000. If one can use it for 14 days ( 7 reserved and 7 as available), the cost per night drops to $775 per night. At 21 nights, its $600 per night, and at 28 nights, its $540 a night app. Last minute availableity at this time is exclllent at this moment as the houses are only posing under 20% occupancy. Christams 07 in Brekenridge is still available as of today. For the frequent traveller with lots of time who can take advantage of last minute travel at this particular time where member usage is minimal, signing up for the 7 days and use last minute reservation more days makes a lot of sense. The more you use, the lower the average cost per night. In fact, if you can use 50 nights, the average cost goes down to $433 per night. If it takes the club 2-3 years to ramp up , there is a tremendous window of bargain at this time for those who can take advantage of it and only have to fork out $25000 . EVen if the club went bellyup and the whole 25000 is lost, if you can use 50 nights a year, then over three year time, the average cost per night goes up to $626 per night all in, still a good deal - esp for the boat.

Too Good to be True???

NeilGoBlue · Aug 2, 2007

puffpuff said:
Too Good to be True???

I think your analysis is good.. keep doing your due diligience.. talking to management, looking at operating agreements..etc..

travelguy · Aug 2, 2007

puffpuff said:
Too Good to be True???

The most important thing during due diligence of this start-up DC is the question of a sustainable business model. They appear to have deep pockets to start with but are attempting a somewhat unique approach for a new DC (not necessarily a bad thing). On the surface it seems extremely risky, IMHO, as indicated by the analysis of previous posts. However, the real question is what is Management's plan to make this DC work.

Those of us who became involved in High Country Club in the early stages were in a similar situation. The HCC business plan was different and the target demographic was different than the generally accepted DC business plan. Most of us made the decision to join HCC after reviewing their 10 year plan, projections, and frank discussions with their financial exec. Their business model made sense once it was presented and explained. The result is that many of us joined and HCC has exceeded their projections so far. I believe that a big reason that they are successful is their openness with their business plans.

By comparison, DHH may have a unique business model that makes perfect sense. The question will be how open they are with providing the information on the financial aspects of their plan to give potential members some intellectual assurance of their decision to join. Then the question will be how many potential members are comfortable enough with the DHH biz model to join and provide DHH with enough momentum to survive.

Unfortunately for DHH, the DC market is maturing fast and there appear to be other options that may make more sense and provide more security for potential members.

mjs · Aug 2, 2007

$1000/day for any of the yachts seems like a good deal. But after looking at the houses, I am not sure that they are as nice as HCC, and weekly 7,000 seems too much.
Can I find homes like these to rent for $7,000 per week?
Help me see the lightl
Mark

Kagehitokiri · Aug 3, 2007

the homes are much more valuable than HCC, but youre still right, im not sure how many nights i would personally want at $1000, instead of $300. (thats more like ER pricing than HCC)

nick@ihug.co.nz · Aug 14, 2007

Happy to answer any questions

Hi All,

I am am happy to answer any questions you have about the club. As to it's structure etc ....and i hope you don't mind me joining this forum....

I response to the main questions :

- the price is low at present purely as an introductory offer.
- We do own all the property outright, we do not and will not lease any property.
- Our Business model worked just fine at $25,000 per week, and at $50,000 we will be able to enhance the quality of the properties, and also add more value to the membership in terms of other add on services ...
- the company is US based. Just some of the shareholders are from New Zealand.
- one of our key differences are that our membership is spread globally, so we don't have everyone trying to vacation at the same time , with different holiday periods from country to country ...
-As we own the property outright we do not need to sign up a lot of new members before adding more property so we will continue to add another destination for every 30 weeks we sign up ... so the member to property ratio will remain very low far into the future ...
- the resort in Fiji caters for guests from backpackers to wealth adventurers, this property is so popular that it is 99 % full 365 days a year, which is one of the reasons it won editors choice from "Lonely Planet" and also why the beach was voted one of the top 10 in the world by Conde Naste ...
- As we add members in each area we add more property in that region , so as we add more US members we will add more property in the US & Caribbean.

Cheers

Nick Wood

Steamboat Bill · Aug 14, 2007

Nick

Welcome to TUG and I would love to hear some yacht stories as this is a unique draw of your club.

nick@ihug.co.nz · Aug 14, 2007

The Boats etc

Thanks for the friendly welcome ....

We currently have 2 an 86 ft Mangusta motor yacht and a 53' Hanse Sailing yacht.

Both were launched a in July this year, they are based in the south of France this year, and will start going further a field next year e.g. Greek Islands, or Croatia ... we will add another yacht and motor yacht or the same type in the Florida/Caribbean soon ...and we have a 63 ft yacht organized to be in New Zealand during its summer and then Fiji for the rest of the year ...

The 86 ft yacht's normal charter rate is 35,000 euros per week and the 53 ft around 9,000 euro this translates to $50,000 and $12,000 per week respectively ... however as a club member you have access to the vessels for $8,000 per week for the 86' motor yacht, and $3,000 per week for the sailing yacht... fuel consumption for the small yacht is negligible, for the 86' yacht ranges from $200 - $400 per hour of actual sailing time depending on how fast you go.

DHH has a close affiliation with a Yacht Brokerage & Management Company which is owned by two of the shareholders of DHH, we have over 20 years of industry experience.

I personally have stayed with my family on both yachts, and they are just fantastic, the sailing yacht, is very spacious due to its 4.5 mtr beam, it was designed by the same people that did the design work for the America's cup challenger Alinghi, she is very easy to sail, with self furling sails, and a self tacking jib, and Sam the captain is just a great at making your stay perfect , and is great at teaching people to sail ....

The 86 ft Mangusta was a great buy, a very spacious yacht and very well made, it has 4 cabins, a separate dinning room ( which is rare on a boat this size ) along with a walk up bar and 2 separate sitting areas in the salon. There is a crew of 4 including a chef ...she can comfortably do 20 knots , but is much more economical at around 12 ...it was owned by the head of the Toyota formula 1 racing team and has been well looked after ...there is lots of outside space both up on the fly bridge and forward and to the stern ...

Many of the shareholders have a love of the sea, so we are keen to maintain the planned 15 % ot the total as water based destinations...

Answering the question re concerns about depreciation on boats, we are able to buy well, and also have dealer pricing for many brands, so we pay below retail, and also purchase boats, after their early heavy depreciation cycle, so the depreciation impact will be very low if any, in fact after refitting the 86 ft yacht, we had a walk up purchase offer of 400,000 euros more than we paid for the yacht ....which we refused of course ...

Hope this answers some of your questions ....

Note: you can try the club before you join, which does include the yachts, so you can check us out at a nightly rate, and then decide if you think we are good enough .. FYI every single person who has done this to date has joined the club within 7 days ..with no pressure from us to purchase ... you won't find us doing any hard sell, we figure if we do our job well, we will have no problem getting new members, hence the reason we offer a 1 in 1 out policy vs the other clubs doing 3 in 1 out ...

We have also made some new rule changes that will take place on the 30th September , thanks to some member suggestions :

- you will be able to move one week of your membership on any plan forward to the next year, if you don't want to use it this year, or bring one week from next year to the current year.

- you will be able to book more than one destination for the same dates ...

- we will be changing the shared membership options so you can share any of the plans ( we are also adding a 5 week plan for Individual members ) and you can share it with up to 3 other friends or family , for an additional Membership Deposit of $5,000 per name added) which is 80 % refundable as well ..

Kagehitokiri · Aug 14, 2007

Wow... first CEO of DC to join Tug?

which does include the yachts,

really??

might have to do that!

We have also made some new rule changes that will take place on the 30th September , thanks to some member suggestions :

- you will be able to move one week of your membership on any plan forward to the next year, if you don't want to use it this year, or bring one week from next year to the current year.

- you will be able to book more than one destination for the same dates ...

- we will be changing the shared membership options so you can share any of the plans ( we are also adding a 5 week plan for Individual members ) and you can share it with up to 3 other friends or family , for an additional Membership Deposit of $5,000 per name added) which is 80 % refundable as well ..

VERY interesting, and IMHO positive changes.

puffpuff · Aug 15, 2007

nick@ihug.co.nz said:
Thanks for the friendly welcome ....

We currently have 2 an 86 ft Mangusta motor yacht and a 53' Hanse Sailing yacht.

Both were launched a in July this year, they are based in the south of France this year, and will start going further a field next year e.g. Greek Islands, or Croatia ... we will add another yacht and motor yacht or the same type in the Florida/Caribbean soon ...and we have a 63 ft yacht organized to be in New Zealand during its summer and then Fiji for the rest of the year ...

The 86 ft yacht's normal charter rate is 35,000 euros per week and the 53 ft around 9,000 euro this translates to $50,000 and $12,000 per week respectively ... however as a club member you have access to the vessels for $8,000 per week for the 86' motor yacht, and $3,000 per week for the sailing yacht... fuel consumption for the small yacht is negligible, for the 86' yacht ranges from $200 - $400 per hour of actual sailing time depending on how fast you go.

DHH has a close affiliation with a Yacht Brokerage & Management Company which is owned by two of the shareholders of DHH, we have over 20 years of industry experience.

I personally have stayed with my family on both yachts, and they are just fantastic, the sailing yacht, is very spacious due to its 4.5 mtr beam, it was designed by the same people that did the design work for the America's cup challenger Alinghi, she is very easy to sail, with self furling sails, and a self tacking jib, and Sam the captain is just a great at making your stay perfect , and is great at teaching people to sail ....

The 86 ft Mangusta was a great buy, a very spacious yacht and very well made, it has 4 cabins, a separate dinning room ( which is rare on a boat this size ) along with a walk up bar and 2 separate sitting areas in the salon. There is a crew of 4 including a chef ...she can comfortably do 20 knots , but is much more economical at around 12 ...it was owned by the head of the Toyota formula 1 racing team and has been well looked after ...there is lots of outside space both up on the fly bridge and forward and to the stern ...

Many of the shareholders have a love of the sea, so we are keen to maintain the planned 15 % ot the total as water based destinations...

Answering the question re concerns about depreciation on boats, we are able to buy well, and also have dealer pricing for many brands, so we pay below retail, and also purchase boats, after their early heavy depreciation cycle, so the depreciation impact will be very low if any, in fact after refitting the 86 ft yacht, we had a walk up purchase offer of 400,000 euros more than we paid for the yacht ....which we refused of course ...

Hope this answers some of your questions ....

Note: you can try the club before you join, which does include the yachts, so you can check us out at a nightly rate, and then decide if you think we are good enough .. FYI every single person who has done this to date has joined the club within 7 days ..with no pressure from us to purchase ... you won't find us doing any hard sell, we figure if we do our job well, we will have no problem getting new members, hence the reason we offer a 1 in 1 out policy vs the other clubs doing 3 in 1 out ...

We have also made some new rule changes that will take place on the 30th September , thanks to some member suggestions :

- you will be able to move one week of your membership on any plan forward to the next year, if you don't want to use it this year, or bring one week from next year to the current year.

- you will be able to book more than one destination for the same dates ...

- we will be changing the shared membership options so you can share any of the plans ( we are also adding a 5 week plan for Individual members ) and you can share it with up to 3 other friends or family , for an additional Membership Deposit of $5,000 per name added) which is 80 % refundable as well ..

1. Many of us already have our vacations planned going foward for the next 12-24 months. Also because of the international nature of the destiantion, advance planning is required. The ability to allow one week of the membership of any plan to move forared to the nextyear, o bring one week from the next year to the current year makes a lot of sense. If I subscribe to the 7 day play on Sept 15, 2007, are you saying that the 7 days does not have to be used until sept 14, 2009? If that is the case, how would the booking be affacted? CAn I book now for Sept 2009 usage? Also , Question: are members joining now on or before Sept 31, 2007will be able to take advantage of these amendments or are these rules enhancesment applicableto those paying a higher rate ?

nick@ihug.co.nz · Aug 20, 2007

when you can use it ...

Hi

You will be able to move a week forward to the next year up to 6 months from your anniversary date so if you joined on the 15th Sept you would have until 15th March 08 to move it forward, but can move it or a week from next year back up until 1 week before 15th of Sept 08. If you move it forward to the next year then yes you have until the 15th of Sept 09 to use it , however the weeks are not distinct , so you can still move another week forward in the 08 /09 year so in effect you can keep moving one week in total forward forever if you like ...

Cheers

Nick Wood

Many of us already have our vacations planned going forward for the next 12-24 months. Also because of the international nature of the destination, advance planning is required. The ability to allow one week of the membership of any plan to move forward to the next year, o bring one week from the next year to the current year makes a lot of sense. If I subscribe to the 7 day play on Sept 15, 2007, are you saying that the 7 days does not have to be used until sept 14, 2009? If that is the case, how would the booking be affected? Can I book now for Sept 2009 usage? Also , Question: are members joining now on or before Sept 31, 2007will be able to take advantage of these amendments or are these rules enhancement applicable to those paying a higher rate ?

myip · Aug 21, 2007

How many members does Distinctive Holiday Homes have?

nick@ihug.co.nz · Aug 22, 2007

number of members

myip said:
How many members does Distinctive Holiday Homes have?

We currently have 19 Members , we have another 10 or so pending ... we expect to have about 40 by the end of September before the price rise, we only started actively taking members from the Public in May this year ...our goal is 70 Members by May 2008 ...once we get to this point we will have added another 4 destinations ...this will give us a max occupancy rate of 26 % ( which is very low ) so there will be no issue of availability problems for our members ...

They are also spread all around the world, so we also will not have everyone rushing to use the houses for 4th July or Memorial Day etc ...

Cheers

Nick Wood

Distinctive Holiday Homes, competes with HCC

Steamboat Bill

Steamboat Bill

Steamboat Bill

TUG Review Crew: Expert