Premier Destinations Stumbles Early

PerryM · Nov 6, 2007

Good grief - are my predictions for the DC industry already happening?

Click here.....

P.S.
Then there's My Global Playground ...

If you count the founding DC club (Can't remember it's name) that's 3 out of 25 listed on Helium that are dead or dying. So are we looking at a 12% failure rate now for DCs?

Kagehitokiri · Nov 6, 2007

looks like helium report scooped me for that. >
http://www.tugbbs.com/forums/showpost.php?p=412919&postcount=7
like theyve done with other posters on other occasions IIRC.

this is the 2nd thread this has come up in after i originally posted in the membership numbers thread.

neither club really launched in the first place. personally, couldnt care less.

only one poster shared your extreme concern for the DC industry >

range_life said:
We were just about to take the plunge with trial membership at HCC, when we read about "Premier Destinations" suspending its activities. This is the second destination club to run into problems in two years.

Does anyone have any thoughts about how to evaluate the risks of an HCC membership? Since it is unsecured, aren't you really just rolling the dice and hoping for the best?

GOLFNBEACH · Nov 7, 2007

PerryM said:
Good grief - are my predictions for the DC industry already happening?

[/B]

Chicken Little - big difference between existing clubs and new clubs that never got off the ground.

Launching a new club in a competitive market is extremely difficult. New entries have resorted to desperate ideas that result in excessive risk - like refunding members deposits in 3 days.

No DC (or any business) is risk free. Do some due diligence and pick a club with solid business practices and good management. The sky isn't falling.

Steamboat Bill · Nov 7, 2007

PerryM said:
If you count the founding DC club (Can't remember it's name) that's 3 out of 25 listed on Helium that are dead or dying. So are we looking at a 12% failure rate now for DCs?

Premier Destinations and My Global Playground NEVER launched, thus I would not view this as gloom and doom or a failure. It simply means that it is MUCH harder for a start-up company to create a new Destination Club and try to compete with the established players.

My criteria for a DC failure is when a member actually LOSES their deposit and can't use any properties. So far, this has not happened yet.

Tanner & Haley did declare bankruptcy (well documented) and was bought by Ultimate Resorts. Although this may sound bad, the members were not affected like an investor in Enron (that lost everything) as they can now use the UR properties and may actually be in a better situation than when they were with T&H.

Kagehitokiri · Nov 7, 2007

OTOH, there were ~150 T&H members that did not join UR, and also those that did had to pay if they wanted to upgrade past the plan they were given as part of the deal, although IIRC it was at somewhat of a discount.

timeos2 · Nov 7, 2007

Six now and a dozen later?

PerryM said:
Good grief - are my predictions for the DC industry already happening?

Click here.....

P.S.
Then there's My Global Playground ...

If you count the founding DC club (Can't remember it's name) that's 3 out of 25 listed on Helium that are dead or dying. So are we looking at a 12% failure rate now for DCs?

If ever there was a legal, big dollar industry that borders on a pyramid scheme the destination clubs with all their convoluted ongoing sales, refund and buy back clauses fit the bill. Usually this type of thing depends on the fact that for the buyers this is (hopefully) discretionary income and if it all falls apart the buyers shake their heads and say "what was I thinking". The history thus far does not bode well for the long term survival of any of these groups. Perry - I'm in your camp on this one.

Kagehitokiri · Nov 7, 2007

Crescendo "is a fully compliant, Regulation D securities offering" and therefore "cannot advertise nor generally solicit new investors"

Distinctive Holiday Homes allows members, in effect, to resell their memberships.

the most exclusive private concierge is Preferred. it only has 30 member/clients. each has a net worth of over $100MM. the minimum annual fee, simply to remain a member, is $24K.

more allegations about DCs >
http://www.tugbbs.com/forums/showthread.php?p=410196#post410196
http://www.tugbbs.com/forums/showthread.php?p=409974#post409974

RLG · Nov 7, 2007

Steamboat Bill said:
Tanner & Haley did declare bankruptcy (well documented) and was bought by Ultimate Resorts. Although this may sound bad, the members were not affected like an investor in Enron (that lost everything) as they can now use the UR properties and may actually be in a better situation than when they were with T&H.

You've made this inaccurate claim before. I only wish it were true, since I was a Private Retreats/Abercrombie & Kent/Tanner & Haley member.

Let me assure you that we are not better off than before the bankruptcy.

Previously Tanner members had a contractual right to get back their $250,000/$500,000/$1,000,000 deposit subject to X in 1 out. Now they don't. If they don't want to belong to the club anymore, they get zero. That's the same percentage loss as the Enron investors - 100%.

Ultimate did offer a discounted plan to former T&H members. They got the right to buy 14 days annual usage for $10,000 or $15,000 per year depending on their original plan. (They also got a discount if they upgraded to a higher priced Ultimate plan.) That's $715 or $1071 per night, i.e. not much savings versus the cost of renting the same properties.

Rather than rehash my prior posts on the subject I'll just link them here:

http://www.tugbbs.com/forums/showthread.php?p=282631#post282631

http://www.tugbbs.com/forums/showthread.php?p=283004#post283004

http://www.tugbbs.com/forums/showthread.php?p=316320#post316320

Bourne · Nov 7, 2007

What you are making is an inaccurate claim.

For someone who stood to lose a quarter of a million at the minimum, you should have known better.

Ultimate Resorts offer was...

Tanner & Haley members who join Ultimate Resort and remain in good standing for at least five years will be allowed to cancel their membership and redeem their deposit on a “three-in, one-out” basis. In other words, three new members must join the club before you are allowed to leave. The deposit redemption amounts are as follows:

After 5 years of membership, 60% of the then current membership fee
After 6 years of membership, 70% of the then current membership fee
After 7 years of membership, 80% of the then current membership fee

Kagehitokiri · Nov 7, 2007

bourne, isnt that referring to those who paid a NEW deposit to UR? and then it would only refund (based on) that, and not that plus their T&H deposit?

regardless they did also lose unlimited use (like LRW did post merger)

example of T&H plans >
http://web.archive.org/web/20051028080121/www.tannerandhaley.com/become/our-clubs-pricing_4.1.shtm

RLG · Nov 7, 2007

Bourne said:
What you are making is an inaccurate claim.

For someone who stood to loose a quarter of a million at the minimum, you should have known better.

I'm not sure what this is referring to. If it's that I should have known better than to join a destination club so I wouldn't lose a quarter of a million plus, then we're in agreement. (BTW, note the correct spelling of the word "lose".)

If it's that I didn't discuss the contingent payout when I pointed out that T&H members were much worse off than before the bankruptcy, you are correct. Instead of saying that T&H members lost their entire deposit, I should have said that they lost their entire deposit subject to a highly contingent and limited redemption option in the future. (Enron investors also have some contingent payouts from the various litigations, so they may still get more than T&H).

The problem with the redemption option is that with over 600 former T&H members being able to exercise at the same time, no one knows how many years or decades it could take to cash people out given the 3:1 ratio. How much would you be willing to pay me now to buy my redemption claim?

However, that doesn't change my principal point that Bill continues to claim that T&H members came through the bankruptcy OK and may even be better off. (See my linked threads for another example of him making this claim.) This is so far from the truth it's laughable.

Kagehitokiri · Nov 7, 2007

RLG, can you clarify - isnt bourne's post referring to those who paid a NEW deposit to UR? and then it would only refund (based on) that, and not that plus their T&H deposit?

RLG · Nov 7, 2007

Kagehitokiri said:
isnt that referring to those who paid a NEW deposit to UR? and then it would only refund (based on) that, and not that plus their T&H deposit?

Bourne's description of the redemption option was correct. Those who continued as dues paying members but didn't upgrade, still get the ability to get in the redemption queue after 5 years and get x% of whatever Ultimate is selling the "bronze" memberships for at the time. That's subject, of course, to the 3:1 ratio and the hope that membership sales are very brisk to work off what could be hundreds of members in the queue.

Kagehitokiri said:
regardless they did also lose unlimited use (like LRW did post merger)

Correct. Of course to the destination club cheerleaders, they are better off than before the bankruptcy.

Kagehitokiri · Nov 7, 2007

oh right. i forgot about that. so you can hopefully make up some/all of your original deposit, down the road. the pricing has already gone up some, and theyve said they expect ~30% increase after PE merger is complete. and there might be merger potential with HCC, which would also mean an increase.

also in response to some of your other past comments >

1. deposit security - dont know about T&H, but here is some info on other clubs http://www.tugbbs.com/forums/showpost.php?p=413495&postcount=67
(in effect - none for T&H)

2. bad T&H business practices
* leased 2/3 of their properties
* paid for accommodations when no club availability
* risked and lost corporate holdings (presumably including money from deposits) on failed ventures
http://www.heliumreport.com/archives/328-tanner-haley-files-for-chapter-11-bankruptcy
(in effect - T&H spent spent spent)

3. AFAIK/IIRC T&H didnt have any independent audit on financials/policies, nor any real transparency for members
(in effect - none for T&H)

RLG · Nov 7, 2007

Kagehitokiri said:
oh right. i forgot about that. so you can hopefully make up some/all of your original deposit,

If you believe that will happen, I've got a bridge (or a destination club) to sell you.

Kagehitokiri said:
1. deposit security - dont know about T&H, but here is some info on other clubs http://www.tugbbs.com/forums/showpost.php?p=413495&postcount=67
(in effect - none for T&H)

ER, Ultimate, PE and HCC represent substantially all of the members of destination clubs. I don't see anything on your links that contradicts my assertion that membership deposits in those clubs represent a deeply subordinated unsecured loan to an extremely highly leveraged company with very little equity. T&H was no different than the others in that respect.

Kagehitokiri said:
2. bad T&H business practices
* leased 2/3 of their properties
* paid for accommodations when no club availability
* risked and lost corporate holdings (presumably including money from deposits) on failed ventures

The most favorable characterization of T&H management is that they were incompetent. Since there was no meaningful equity to absorb the losses from their bad decisions, the members did.

Most other DC's also have little or no equity and high operating costs. If membership sales slow and/or property values fall there will be a problem.

Kagehitokiri said:
3. AFAIK/IIRC T&H didnt have any independent audit on financials/policies, nor any real transparency for members
(in effect - none for T&H)

DC's still provide much less disclosure than a business would normally have to in order to get me to fund what's essentially the junior most part of their capital structure. Has anyone seen the P&L for ER?

BTW, I'm not convinced that this disclosure would be that helpful to existing members anyway. Suppose a club's next disclosure said "sorry, because of real estate market declines, the value of all of the properties is now insufficient to pay off all the membership deposits." What could existing members do about it?

Kagehitokiri · Nov 7, 2007

5 years - 60% then current
6 years - 70% then current
7 years - 80% then current

in order to get 100% refund of original $275K >

5 years - $460K price
6 years - $395K price
7 years - $345K price

current price - $125K
post PE merger price ~ Nov 15 ~ $165K

inflation could also be added as a variable.

Bourne · Nov 7, 2007

RLG said:
I'm not sure what this is referring to. If it's that I should have known better than to join a destination club so I wouldn't lose a quarter of a million plus, then we're in agreement. (BTW, note the correct spelling of the word "lose".)
However, that doesn't change my principal point that Bill continues to claim that T&H members came through the bankruptcy OK and may even be better off. (See my linked threads for another example of him making this claim.) This is so far from the truth it's laughable.

Too loose with the lose. Point taken and fixed.

The point that I make on this site regarding T&H is similar to Bill's. When he and I say that T&H members came out okay after the bankruptcy, it effectively means that they did not lose EVERYTHING.

T&H had a flawed business plan. Buying into it meant members did not do enough due diligence. The risk was too great compared to what was being offered. Period.

To expect anything more than what UR offered to T&H members is asking for too much. IMHO, UR did not have to offer anything besides usage for ongoing dues.

Steamboat Bill · Nov 7, 2007

My point about T&H is that the members can still use UR's destination club properties and thus, still have some value in membership, unlike Enron stock that is worth nothing.

I am not sticking up for T&H...please...they have caused the largest black eye to affect the DC industry and makes all potential new members think twice before joining.

T&H leased many properties and overpromised guaranteed locations. This was a recipe for disaster. All the current DCs have learned from the T&H meltdown and have made corrections. Can it happen again? Perhaps.

Either way, my HCC membership was less than 20% of the cost of a T&H membership and I feel that this provides me tremendous value.

I still think the Destination Club experience is far superior to a Timeshare experience.

I would be interested in buying a T&H redemption claim if it offred me a bargain to join UR...send me a PM with details.

Kagehitokiri · Nov 7, 2007

theyre not transferable are they?

Bourne · Nov 7, 2007

PerryM said:
Good grief - are my predictions for the DC industry already happening?

Click here.....

P.S.
Then there's My Global Playground ...

If you count the founding DC club (Can't remember it's name) that's 3 out of 25 listed on Helium that are dead or dying. So are we looking at a 12% failure rate now for DCs?

My risk level is 20%. Same in the stock market and same for DCs.

Let two or more DCs fail and I'll consider calling HCC to get my money back. Shoot. They may not give me my money back as there would be hundreds more lining up for the same.

There goes 30K down the drain.

I should have listened to you when you predicted it earlier.

RLG · Nov 7, 2007

Steamboat Bill said:
members can still use UR's destination club properties and thus, still have some value in membership

I certainly would not dispute that the members who chose to accept UR's offer felt that it was better than nothing. BTW, 200 members disagreed and chose not to accept.

However, that claim is a LOT different than your previous statements implying that no one got hurt. See below:

Steamboat Bill said:
the T&H members have been absorbed by another DC that bought them out for over $100 million. Thus, the disaster has been solved.

Steamboat Bill said:
the members were not affected like an investor in Enron (that lost everything) as they can now use the UR properties and may actually be in a better situation than when they were with T&H.

Although I don't like the shaky financial underpinnings of the industry, I can wholeheartedly agree with this comment:

Steamboat Bill said:
I still think the Destination Club experience is far superior to a Timeshare experience.

PerryM · Nov 8, 2007

Connecting those pesky dots .......

GOLFNBEACH said:
Chicken Little - big difference between existing clubs and new clubs that never got off the ground.

Launching a new club in a competitive market is extremely difficult. New entries have resorted to desperate ideas that result in excessive risk - like refunding members deposits in 3 days.

No DC (or any business) is risk free. Do some due diligence and pick a club with solid business practices and good management. The sky isn't falling.

Do we not have 3 instances where the phones were disconnected, names changed, memberships in limbo and perhaps bankruptcy?

Do we ignore those pesky dots that everyone loves to talk about after a calamity hits? I won't ignore these.

I suggest that we classify 3 instances of DCs going out of business and membership benefits in doubt.

Steamboat Bill · Nov 8, 2007

RLG said:
I certainly would not dispute that the members who chose to accept UR's offer felt that it was better than nothing. BTW, 200 members disagreed and chose not to accept.

However, that claim is a LOT different than your previous statements implying that no one got hurt.

OK...I admit that I may have overestimated the gravity of the T&H situation and I agree that many people are probably NOT able to get their membership deposit back (which I assume was promised to them). I am satisified that UR stepped up to the plate and bought the homes and offered some type of membership plan to T&H members, thus it was not a total loss.

What are the 200 people doing with their T&H contract?

Are you able to buy their &H contract to join UR?

Why didn't you join UR?

Steamboat Bill · Nov 8, 2007

PerryM said:
I suggest that we classify 3 instances of DCs going out of business and membership benefits in doubt.

I believe that only ONE DC has gone bust.

If two companies attempted to launch ad DC, but could not sign up any members, then it is a non-event. This would be like a pre-construction sign going up on a vacant lot advertising a condo-hotel that never gets built and classifying it as a sign that condo-hotels are bad business.

If you ever start your own DC (the Perry Club) and decide to fold after 6-12 months, then that should not be a black mark on the DC industry, like the T&H with 900 members in limbo.

PerryM · Nov 8, 2007

RIP DCs

Steamboat Bill said:
I believe that only ONE DC has gone bust.

If two companies attempted to launch ad DC, but could not sign up any members, then it is a non-event. This would be like a pre-construction sign going up on a vacant lot advertising a condo-hotel that never gets built and classifying it as a sign that condo-hotels are bad business.

If you ever start your own DC (the Perry Club) and decide to fold after 6-12 months, then that should not be a black mark on the DC industry, like the T&H with 900 members in limbo.

I agree, but is this what happened? Or, did at least one member sign up?

If we must guess at the answer we should chose the most conservative guess which is to assume that the fledgling DCs did sign up at least one member.

Although I agree its a hard decision to make to ignore 2 DCs who started and found it a bust should be a signal that has some significance.

Hopefully Helium or someone else will take the time to investigate.

Me; I'm counting 3 DCs that have gone bust in various ways; there are 25 DC's total listed in Helium:

RIP DCs:

Tanner & Haley (2006)

Premier Destinations (2007)

My Global Playground (2007)

If someone can confirm that NO member signed up for #2 and/or #3 I will gladly remove them from my infamous RIP list.

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