20th Oct 2014

One of the most exciting and rapidly expanding sectors of the hospitality industry in the modern era has been the Destination Club concept.  In this business, instead of a single-unit luxury hotel, the developer builds or acquires vacation homes in various popular “destination” locations, and guests join a club to gain access to these homes.  Often there is an up-front deposit and monthly or annual fees.

Several aspects of the destination club model can require or benefit from the addition of destination club development consulting.  One of the most obvious is the determination of which pricing model to follow.

Pricing Models and Destination Club Development Consulting

In general, there are three basic types of pricing models that most Destination Clubs follow:

  • Non-Equity Memberships: In these pricing models, there is a deposit and then a membership fee, but these are relatively low because members are not acquiring equity in the vacation homes, but are rather just paying for access.  One issue that destination club development consulting firms can help developers make is how to handle refunds of the initial deposits when a member terminates their membership.
  • Equity Memberships: In this model, the initial deposit and subsequent fees are investments and are used to purchase and maintain the properties communally.  This means their payouts on cancellation are determined by the value of the property.
  • Managed Clubs: Leasing properties instead of purchasing them, this model offers a much lower initial cost to members, but lacks the stability and potential profits of owning the property directly.

In the end, all three models can work well for destination clubs.  The determining factor for both investors and consultants is the type of customer desired, and how the ownership or leasing of property will affect the potential members.

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