Distinctive Holiday Homes, competes with HCC

[Steamboat Bill]

How are you able to stay in business with these expensive homes/boats and only 20-30 members or even 100 members at your low prices?

 

[nick@ihug.co.nz]

How do we do it

How are you able to stay in business with these expensive homes/boats and only 20-30 members or even 100 members at your low prices?

Firstly we own all the current homes and yachts outright, we have almost no debt at all, we have also invested working capital to operate the business from start up ...the Resort the club owns in Fiji is very profitable and can cover 100 % of the operating overheads for the Club from its profits even if we signed zero Members.

When we get to around 150 Members or approx 300 weeks of Membership, the club will cover all of its own opex without any contribution needed from the Resort and we will have a max occupancy of approx 30 % ( so you will still not have any problems booking a property ) and we will have added a further 7 - 8 destinations overall ...

Our business model worked at $25,000 per week just fine, we used Member deposits to put a 30 % down payment on the new destination and furnish it, and the annual dues covered the staff, all the opex food & beverage and the mortgage on the homes/yachts ...

At $50,000 per week we will have almost zero mortgage on the new properties we acquire, so we have even more funds available from the annual dues to provide more service and other options which we are working on now..

While the average value of our properties are around 3 mill USD, we buy very well and renovate most of the homes, so our cost price is less than $3 mill ...

You will notice if you compare our locations and homes to other clubs, that the quality of our homes and locations are much better than many of the higher priced clubs ..

We are very focus on the smallest details of our Members vacation , and we include yachts etc , as we are a holiday business , which as a side effect will build a property portfolio. Many of the other clubs are solely focused on building a property portfolio , and are taking short cuts , and putting 20 plus homes in the same place side by side , all the same , which for them works really well , but for the Member reduces the choice of locations , and also "Mc Donaldizes" their holidays ...

When we have 10 properties in Italy they will be in 10 different locations eg Venice, Florence, Capri, several in different parts of Tuscany, Rome , Sicily , Sardinia etc ...not 10 houses all in one spot in the middle of nowhere in Tuscany ...

Our goal is to have 1000 destinations within the next 15 years in over 100 different countries so our Members will have a huge range of choice , so they can never say , where do i go this year ?

Cheers

Nick Wood

 

[Kagehitokiri]

at the $50K/week level, what % of the deposit are you going to use toward property acquisition?

one suggestion - go for more truly beachfront homes (detached single family) with pools etc - as beachfront homes are extremely rare right now in the Destination Club market. (so that would be a major additional competitive edge)

i hope you have continued success

 

[nick@ihug.co.nz]

at the $50K/week level, what % of the deposit are you going to use toward property acquisition?

one suggestion - go for more truly beach front homes (detached single family) with pools etc - as beach front homes are extremely rare right now in the Destination Club market. (so that would be a major additional competitive edge)

i hope you have continued success

95 % goes towards property purchase at this stage and the other 5 % approx to furnishings etc ....

I agree we will be having waterfront home in Miami on one of the islands in South Beach, beach Front home in St Marteen, Caribbean, Hawaii will be very near the beach with close seaviews as this market is very expensive to buy.

Fiji we have beach front already , and will add several more there over time ...

We can do beach front and lake front in New Zealand ...and also in Greece & Sardinia ...

All summer destinations will have a pool by default , even if beach front ...

Cheers

Nick

 

[Kagehitokiri]

beach Front home in St Marteen...Sardinia

excellent

are you exploring any Southeast Asian markets?

 

[myip]

When we get to around 150 Members or approx 300 weeks of Membership, the club will cover all of its own opex without any contribution needed from the Resort and we will have a max occupancy of approx 30 % ( so you will still not have any problems booking a property ) and we will have added a further 7 - 8 destinations overall ...

Our business model worked at $25,000 per week just fine, we used Member deposits to put a 30 % down payment on the new destination and furnish it, and the annual dues covered the staff, all the opex food & beverage and the mortgage on the homes/yachts ...

At $50,000 per week we will have almost zero mortgage on the new properties we acquire, so we have even more funds available from the annual dues to provide more service and other options which we are working on now..

I am confused in turn of financing and viable of the business model.

$50,000 per week with no mortgage.
$50,000 * 50 = $2,500,000 - for the home acquistion price
However, you mentioned that 30% occpancy rate.
== $2.5 million * .30 = $750,000.

How can this work 30% occpancy rate and price at $50000 per week? What am I missing?

 

[nick@ihug.co.nz]

excellent

are you exploring any Southeast Asian markets?

We will do , at present, we are focusing on safe haven property markets , so we provide the most protection for our members money, we will allow for a % of the portfolio to be in more interesting places which come with higher ownership risk , as time goes by ..

Nick

 

[nick@ihug.co.nz]

I am confused in turn of financing and viable of the business model.

$50,000 per week with no mortgage.
$50,000 * 50 = $2,500,000 - for the home acquistion price
However, you mentioned that 30% occpancy rate.
== $2.5 million * .30 = $750,000.

How can this work 30% occpancy rate and price at $50000 per week? What am I missing?

The occupancy rate i referred to is what we would have if all members were using their full allocation of weeks at that point in time, as we have invested over $25 million in destinations and infrastructure ahead of signing members, we will have a much lower occupancy rate from the beginning as we have homes which did not require members deposits. We intend to this sustain this rate out into the future, for as long as possible.

The long run occupancy will be approx 65 % or 35 weeks per year to deliver 100 % of our Members vacations ... this generates $50,000 x 35 = $1,750,000 in deposits. The average purchase price of our homes to date over the last 2 years has been just under $2 million dollars we spend around 100,000 on furnishings so we will have at this level $350,000 in debt but on a home that is worth once renovated around $3 million so we carry around 10 % debt on the new properties going forward, and zero on the ones we have to date ..

If you took a very simplistic snap shot forward where we had added 20 more homes, we would have approx $85,000,000 of homes all together and around $7,000,000 of loans so overall debt gearing of approx 8 %. Refundable Member Deposits of $29,000,000, so our net asset to Member deposits and debt is 2.36 i.e. we cover the debt and Member liability 2.36 times .. even if the property market took a dump and the property values dropped 30 % we still have 1.63 times the Member deposits and bank loans.

We collect $245,000 a year in annual dues per home ($35 x 7,000) which taking a simple view allows for the following:

Mortgage $25,200
Concierge $45,000
Food & Bev $34,000
Cleaners $15,000
Property Tax ( this only applies in the US) $25,000
Insurance $10,000
Car lease $9,000
Car Ins $3000
Power $12,000
Cable & Internet $2400
Transportation $10500
Consumables $7000

Which leaves an additional $47,000 per year for maintenance , replacement of furniture due to ware and tear head office costs etc ....

The above is a very simple view, as we have different costs in each market to provide the same solution so our actual average is a lot lower ...when you take into account lower interest rates in Europe, and lower costs of doing business in the Pacific and Europe etc ...but this at least proves that the basic system works ...

I hope this clears up some of your questions about the sustainability of Destination Clubs as a whole ...

Cheers

Nick

 

[LTTravel]

Nick Wood,

It is impressive that you are on this discussion forum and you have provided so much information. I am very tempted to join DHH and with the new rules which allow "borrowing" and "banking" one week and having friends sign on for a reasonable $5000 fee it makes it even more tempting. I just wish that you had a more enticing upgrade path from Lite to higher levels and incentives to bring in more members. Just wondering, since 95% of the membership deposit goes into acquisition and you already have $25 million positive in the LLC, How are the membership deposits treated in the secured vs unsecured creditor chain? Other DC's have set up Depost Trust LLC's (Lusso) or have equity memberships(BH) or have a significant track record(ER) to make us comfortable. Or they have had some more disclosure. The Santa Monica office is only a PO Box which makes me a little nervous. I showed a friend the pictures of the Paris Apartment and the 86 ft yacht and is ready to sign on if I do.

 

[nick@ihug.co.nz]

Nick Wood,

It is impressive that you are on this discussion forum and you have provided so much information. I am very tempted to join DHH and with the new rules which allow "borrowing" and "banking" one week and having friends sign on for a reasonable $5000 fee it makes it even more tempting. I just wish that you had a more enticing upgrade path from Lite to higher levels and incentives to bring in more members. Just wondering, since 95% of the membership deposit goes into acquisition and you already have $25 million positive in the LLC, How are the membership deposits treated in the secured vs unsecured creditor chain? Other DC's have set up Depost Trust LLC's (Lusso) or have equity memberships(BH) or have a significant track record(ER) to make us comfortable. Or they have had some more disclosure. The Santa Monica office is only a PO Box which makes me a little nervous. I showed a friend the pictures of the Paris Apartment and the 86 ft yacht and is ready to sign on if I do.

Hi

This forum is very cool , it is a great place to see things from the Members perspective in a much clear way , which will help us react better to our Members overall needs , lots of good ideas ....

The best way for you to be certain , is to try us out before you join. The only down side to this is you may miss the cut off for our price rise and have to pay more , but we do have availability at most properties in September ...

We are in the process of joining the DCA , and will be after our year end this year in December having an independent audit of the company's accounts , and also we will continue to publish the net asset to Membership deposits Ratio which at the moment is just ridiculously high.

Members are the very next person in line for money after any Mortgages we might have, this is clearly stated in our club rules.

We do have more than a PO BOX in Santa Monica , we have an office with staff , as well as in France , and New Zealand ...

There are no 100 % bets in life , we have tried to make the risk as low as possible for our members, it is then up to them to decided if we stack up, i nor can any other club give you a 100 % money back guarantee.

The reality is we have less than $1 million in Membership Deposits to date and we have $25 million of Net property Assets , so you cover today is over 25 : 1.

The DCA ( Destination Club Association) currently advocates .66:1 ie less than one times cover ... we will have a much higher cover than what is advocated by many other clubs for the foreseeable future ...

Hope this helps you to decided, we would of course love for you guys to join us, we want to add some more Destinations soon

 

[LTTravel]

Hi

This forum is very cool , it is a great place to see things from the Members perspective in a much clear way , which will help us react better to our Members overall needs , lots of good ideas ....

The best way for you to be certain , is to try us out before you join. The only down side to this is you may miss the cut off for our price rise and have to pay more , but we do have availability at most properties in September ...

We are in the process of joining the DCA , and will be after our year end this year in December having an independent audit of the company's accounts , and also we will continue to publish the net asset to Membership deposits Ratio which at the moment is just ridiculously high.

Members are the very next person in line for money after any Mortgages we might have, this is clearly stated in our club rules.

We do have more than a PO BOX in Santa Monica , we have an office with staff , as well as in France , and New Zealand ...

There are no 100 % bets in life , we have tried to make the risk as low as possible for our members, it is then up to them to decided if we stack up, i nor can any other club give you a 100 % money back guarantee.

The reality is we have less than $1 million in Membership Deposits to date and we have $25 million of Net property Assets , so you cover today is over 25 : 1.

The DCA ( Destination Club Association) currently advocates .66:1 ie less than one times cover ... we will have a much higher cover than what is advocated by many other clubs for the foreseeable future ...

Hope this helps you to decided, we would of course love for you guys to join us, we want to add some more Destinations soon

I am impressed at how fast your replyed. I would like to join at the corporate level but may just join at the Lite level to try it out (at least to save $25,000) The new destinations that you mention in the previous post. I understand that the Mageve home is in contract and the 63 ft Yacht is in process. You mention other beach front homes. Have they been identified and in process or are you "just looking" at this point? With real estate prices droping, you may be able to get some better deals now in some of the markets.

 

[Kagehitokiri]

We are in the process of joining the DCA , and will be after our year end this year in December having an independent audit of the company's accounts

fantastic news

Miami/South Beach would be the only beach market he mentioned where i would consider prices dropping.. or am i not current on downtrends in Europe/Caribbean/Hawaii?

Megeve >
This property is being renovated and will be open in January 2008.

63' Hanse >
Present - 15 Oct 2007 - Under Construction
16 Oct 2007 - 3 Nov 2007 - in transit
4 Nov 2007 - 6 Apr 2008 - Hauraki Gulf & Bay of Islands , New Zealand


hmm, in list by type i see >
City
London
New York
Sydney

Mountain
Queenstown

Beach
Bay of Islands
Greece
Hawaii
Miami
St Maarten
St Tropez

Oceans
The World

you mentioned some of those earlier in this thread - but regarding The World, my understanding was that the only destination club that was going to be permitted to own was Exclusive Resorts. is this not accurate?

 

[nick@ihug.co.nz]

I am impressed at how fast your replyed. I would like to join at the corporate level but may just join at the Lite level to try it out (at least to save $25,000) The new destinations that you mention in the previous post. I understand that the Mageve home is in contract and the 63 ft Yacht is in process. You mention other beach front homes. Have they been identified and in process or are you "just looking" at this point? With real estate prices droping, you may be able to get some better deals now in some of the markets.

Just caught me at a good moment ...happy for you to join at whatever level suits you, we are not into heavy sales methods ...we just expect our service and Destinations to do the selling so to speak, for us ....

Yes Megeve is in the process of being renovated , it is taking longer than we would like to get it just right, so looks like it will be ready end of January instead fo for Christmas ...

We have been looking in Hawaii, Miami & New York for a few years been to both places over 5 times looking but have yet to find something that matches our high standards at a fair price , we wanted to wait until the market softened , which we predicted it would do, we think that there will be good buying very soon. We are researching the Caribbean, have visited a few locations , and have settled on St Martin as it has international flights in from Europe direct , and also from the US ... and we can get beach front with a pool there in our budget range ...

We don't buy unless the property is just right , and fits the budget , so in some places this means lots of visits, in Megeve in the French Alps , we went 5 times before we actually put an offer in on a property as we wanted ski in/out but also walking distance to the town center ( 300 meters ) as parking in winter is a bitch ....and it is a small village with limited number of these properties...

Our aim is to have in the first round of property , a few sunny beach destinations, a city destination, and a few ski destinations and a boat in each region ie Americas, Europe & Pacific ... and then to add where members what the property next ...

 

[puffpuff]

Just caught me at a good moment ...happy for you to join at whatever level suits you, we are not into heavy sales methods ...we just expect our service and Destinations to do the selling so to speak, for us ....

Yes Megeve is in the process of being renovated , it is taking longer than we would like to get it just right, so looks like it will be ready end of January instead fo for Christmas ...

We have been looking in Hawaii, Miami & New York for a few years been to both places over 5 times looking but have yet to find something that matches our high standards at a fair price , we wanted to wait until the market softened , which we predicted it would do, we think that there will be good buying very soon. We are researching the Caribbean, have visited a few locations , and have settled on St Martin as it has international flights in from Europe direct , and also from the US ... and we can get beach front with a pool there in our budget range ...

We don't buy unless the property is just right , and fits the budget , so in some places this means lots of visits, in Megeve in the French Alps , we went 5 times before we actually put an offer in on a property as we wanted ski in/out but also walking distance to the town center ( 300 meters ) as parking in winter is a bitch ....and it is a small village with limited number of these properties...

Our aim is to have in the first round of property , a few sunny beach destinations, a city destination, and a few ski destinations and a boat in each region ie Americas, Europe & Pacific ... and then to add where members what the property next ...

Could you pleasea respond to the issue about ER and no one else can have units on the World?

 

[puffpuff]

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 ?

The maximum stretch out period is acatually 2.5 years from date of joining and not two years from your description . if you join now, you have 6 months to decide if you want to roll forward,and hvae two years from that 6 months date to roll. Thus if I join on Sept 1, I have until March 1, 2008 to decide to roll forward, and if I so desire, I can book thru Sept 1, 2010. Is that correct??

 

[LTTravel]

The maximum stretch out period is acatually 2.5 years from date of joining and not two years from your description . if you join now, you have 6 months to decide if you want to roll forward,and hvae two years from that 6 months date to roll. Thus if I join on Sept 1, I have until March 1, 2008 to decide to roll forward, and if I so desire, I can book thru Sept 1, 2010. Is that correct??

I think that the wording of the rules and regulations need to be looked at closely. If you book an advanced reservation more than one year out, you use your advanced reservation token from this year but your useage days from next year. You can move forward both your advanced useage token and useage days till next year, but then next year you can only do this for one week indicating that you will have to use at least one weeks useage days, either with an advanced token or on a space available basis. I would think that though they give you six months to decide whether or not to move your days or your token to next year, they mean to move it to a membership year with your membership anniversary. Every club has a different set of rules. It can get very confusing. Also look at the cancellation rules. They are pretty stiff. Still think DHH sounds good. The homes, boats, destinations, food, car, airport transfers sound good. But with restrictions as would be expected.

 

[Kagehitokiri]

IMHO its also been great to hear about property selection, because thats the most important factor for me.

with the other clubs im watching, im just looking at their current properties, and lists of future destinations. in other words i like what i see, but havent actually heard how they got there.

 

[nick@ihug.co.nz]

The maximum stretch out period is acatually 2.5 years from date of joining and not two years from your description . if you join now, you have 6 months to decide if you want to roll forward,and hvae two years from that 6 months date to roll. Thus if I join on Sept 1, I have until March 1, 2008 to decide to roll forward, and if I so desire, I can book thru Sept 1, 2010. Is that correct??

You have 6 months in your current year to decide if you want to move a week forward, however it can only be used inside of your next year ... ie if you joined in September 07 and waited until Feb 08 to move the week it could be used between Sept 08 and Sept 09 so up to 2 years from when you joined ...

Cheers

Nick

 

[nick@ihug.co.nz]

Could you pleasea respond to the issue about ER and no one else can have units on the World?

As i said in the last post , the last time i check with them they were happy for us to come on board , but it is possible ER have done a swifty on everyone , they like doing that .....

Either way there are many more options , i saw the world first hand when we did an inspection to see if we wanted to have it in the club, and i was impressed, but i have recently hear that it is a bit of a ghost town , as not many owners are on board at any one time , which is not the best when you are on a cruise ship , so we have started to look at several options that are similar as well , but create a better night life environment etc ...its all about making sure our Members have a great holiday ( hope that was not to soppy )

 

[Kagehitokiri]

first i wanted to clarify my last post - i dont just like hearing about the property selection, i liked hearing things i agree with, including the comparison to other clubs - IMHO your strategies/values are an asset/strength for your club.

i didnt see your earlier response re The World?

regarding ER, it may well have been purely marketing. but if it is indeed the case, there are other options. not sure theyre as appealing for the price though. ER's floorplans are fairly nice.

http://www.heliumreport.com/archives/535-quick-guide-to-residential-cruise-ships

Orphalese launches next year and is half residential / half regular, so bigger and lots more people, also very low annual fees. but floorplans arent great, except at the top.

Magellan's floorplans might be a little better than Orpheus, but annual fees might be more than The World. theyll also have more people, because of the fractional and club options, whereas The World is full ownership only, like the Four Seasons ship.

personally i would not mind having less people at all, and would definitely prefer to have the ship be smaller rather than larger.

maybe a larger private yacht would make a good multi-member destination

 

[LTTravel]

I have been on "The World" and it is absolutely beautiful and luxurious. But, it is VERY quiet and not very kid friendly. They have kid quieting rules but also do have some kid activities. You can't even take any photos in the public areas. The other problem with "The World" is that over a period of a week, it may make only two stops. It is basically a hotel in the port for three or four days. You really need to be on it for two weeks to be able to see several destinations. Much of the time it is less than desireable destinations (Jordan, East African Coast, etc) while it is moving to the next destination.
Common charges are also astronomical, I think about $160,000 per year for a 2 bedroom last I checked about 18 months ago. So I am mixed on my opinion of it. In the right location with the right people, it is unbeatable. I would still like to go on it when in the right place.

 

[nick@ihug.co.nz]

Yes i agree 100 % a larger private yacht is on my wish list for DHH , something around 150 ft ....

 

[nick@ihug.co.nz]

I have been on "The World" and it is absolutely beautiful and luxurious. But, it is VERY quiet and not very kid friendly. They have kid quieting rules but also do have some kid activities. You can't even take any photos in the public areas. The other problem with "The World" is that over a period of a week, it may make only two stops. It is basically a hotel in the port for three or four days. You really need to be on it for two weeks to be able to see several destinations. Much of the time it is less than desireable destinations (Jordan, East African Coast, etc) while it is moving to the next destination.
Common charges are also astronomical, I think about $160,000 per year for a 2 bedroom last I checked about 18 months ago. So I am mixed on my opinion of it. In the right location with the right people, it is unbeatable. I would still like to go on it when in the right place.

Yes , that was my worry ... i would even prefer to charter year round for the club a Penthouse Suite on the Crystal Cruise Line which is very cool ( we have sued them quite a bit in the past ) , they are kid friendly, and there is a good night life , and enough people around to have a great time, along with 6 star silver service ....

As a club we are not just focused on making money out of Property ... our focus is on great holiday experiences for everyone, even if they don't involve purchasing an asset ...

 

[LTTravel]

i would even prefer to charter year round for the club a Penthouse Suite on the Crystal Cruise Line which is very cool ( we have sued them quite a bit in the past ) , ...

I hope that was a typo.

 

[Kagehitokiri]

i would even prefer to charter year round for the club a Penthouse Suite on the Crystal Cruise Line which is very cool

thats not really feasible is it?

if it were these might be interesting
- NCL - 3BR garden villa
- RCI - 4BR presidential family suite
- magellan - 2BRs - palma/florence (sale prices seem high)

- the world - 2BRs (rental prices seem ridiculous)