Buying shares through a destination club

Destination Clubs are the fastest growing segment of the luxury travel market. From jet setters to baby boomers, affluent households are increasingly buying into Destination Clubs as their primary holiday option. Fractional ownership expert Adrian Zanetti explores the issue in his latest opinion article.

High net worth families are drawn to the benefits of Destination Club membership as a cost-effective alternative to luxury hotels, villa rentals, and second home ownership. Destination Clubs secure top-end luxury holiday living at leisure properties, without the hassle of running the residence and offer a blend of privacy and intimacy well suited to families travelling with friends or children.

Manager of the Registry Collection® in Africa, Rob Kröger, says: "Owning a magnificent holiday residence in a luxury resort offering the sea, bush or golfing experience is a rising demand among the wealthy in South Africa. However, full ownership can be time-consuming, with the result that South Africans are adopting the US concept of buying into Destination Clubs."

In essence, members of a Destination Club share a portfolio of upmarket fully furnished, multi-bedroom homes. And depending on where the club's properties are located, members could find themselves holidaying locally or internationally. Be it a beach, mountain or city residence, members can schedule their holiday, paying an upfront deposit and annual dues for exclusive access and five-star service.

Adding to this, Kroger says: "Members buy their four-weeks of leisure time in a Destination Club which allows them to holiday at any one of the Club's properties at a time that is agreed to in terms of the Club's rules. This means that each member accesses high season weeks on a rotating basis. The rotation schedule usually runs for three-years before reverting to year one's dates.

"Destination Clubs differ from fractional developments and Private Residence Clubs (PRCs) in that clubs offer members more than one destination, which means the purchaser has more choice in annual holidays. Moreover, if the Destination Club is affiliated to The Registry Collection® the club can offer its members the opportunity to exchange their weeks for time at any one of its 110 top international destinations or to a network of 140 luxury villas and châteauxs in France and Italy."

In South Africa, there are three such Clubs – Legacy Private Residencies, Platinum Private Residences of the World, and Stonebridge Leisure Group.

"Destination Clubs are exclusive with limited membership, and because 20% of the stock is set aside as a buffer reserved for maintenance and exchanges, being able to utilise holiday time is guaranteed. Added services, run by professional hospitality operators, include a concierge, butler, full service, chauffeur, airport transfers, or other personalised services to complete that indefinable feeling of sumptuousness," adds Kroger.

Recognised property developers build or develop luxury furnished apartments, which can be stand-alone or within a resort or hotel. A once-off outlay of between R300 000 - R 600 000 provides life membership in a magnificent holiday residence. A management company looks after the owners' interests from maintenance and insurance to bookings and guest services. Annual levies of between R10 000 - R16 000, which usually increase at the CPI rate, ensure that the quality remains at the zenith of owner's expectations.

"The industry is still in its infancy and business models are constantly evolving. Currently in SA equity and non-equity models of ownership are available. Locally, the ROI is not only calculated on the rise of property values but also on the escalating costs of top-end holidays at equally luxurious resorts, and at 2006 hotel rates, membership pays itself off in five-to-eight-years. An added benefit is that this Club membership can be used by family, friends or business colleagues, is transferable and can be bequeathed.

"As consumer awareness increase, the Destination Club model will attract a significant share of the holiday budget of the affluent household, of that we are certain," concludes Kroger.

If you have a question or comment for S'bu, email him here.

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