ADVERTISING Login Register for eNewsletter At full build-out, Yellowstone Club houses like this 6,500-square- footer will be plentiful. - (Photo by Yellowstone Club) Perched atop Cabo's exclusive Pedegral Hills, Solstice's three- story Casa Estrellas (House of the Stars) boasts 6,500 square feet of meandering luxury ?five ocean-view master suites adorned with eclectic art from Africa and light- gathering domes. NAME * MAIL (WILL NOT BE PUBLISHED) * WEBSITE Life & Style, December Thursday, November 30, 2006 Exclusive Clubs A new alternative to the summer villa you?ve been coveting By: Caroline Li Every few months Eric and Tracy Pozil of Seattle take their three young daughters to their "home away from home." It's a luxuriously updated farmhouse on a sprawling, 20-acre waterfront estate on San Juan Island. They don't exactly own the home, but for them, it's close enough. "Just little things like knowing where the vegetable peeler is makes it home," says Tracy. The Pozils have use of the San Juan estate - as well as several other fine vacation homes around the state, including a soon-to-be completed golfing community in Cle Elum - because they belong to Signature Destinations, a Kirkland-based exclusive destination club. They may not know it, but Tracy, a former public relations executive and now a stay-at-home mom, and Eric, the owner of a Seattle-based web start-up, are part of the fastest-growing segment of the luxury travel market - one aimed primarily at families who like to travel with their children. Today, there are some 20 destination clubs that manage about 600 homes with an average value of $2 million. Total fees for club memberships reached an estimated $1 billion in 2005. For the Pozils, joining Signature was a way to avoid the high price of a nice vacation home while taking advantage of the wide range of local properties the club owns. This month the Pozils will have even more options if they choose to upgrade their membership, because Signature Destinations has just merged with the Colorado-based Portofino Club, which has 28 properties worldwide. Membership in the Signature Club requires a one-time deposit ranging from $100,000 to $150,000, 80 percent of which is returned if the member chooses to leave the club. At $7,250 to $11,250 a year, the dues may seem a little steep, but it's actually one of the best deals around. Consider the Yellowstone Club, where Bill Gates is reportedly a member. The club owns 13,400 acres in the Rocky Mountains, adjacent to Big Sky, Montana, and to Yellowstone National Park, and boasts a members-only ski mountain and a world-class golf course designed by former golf pro Tom Weiskopf. Membership requires a $300,000 deposit (which is refunded after 30 years or whenever the member leaves the club), and the purchase of Yellowstone Club real estate. Homes start at $4.5 million, or you can buy an empty lot for $2.6 million. Solstice, a club based in San Francisco, recently got a leg up on authenticity when it acquired a 400-year-old second-floor "noble's apartment" on Florence's Piazza della Signoria, the historic town square. The building, whose facade was designed by Michelangelo, has been upgraded with an elevator and modern plumbing. Solstice charges a deposit of $535,000 for 14 days a year of guaranteed advanced reservations and $1.6 million for 56 days. Members can have additional use of the homes on an availability basis, with higher-paying members able to make reservations earlier than the others. Members must also pay an annual fee of as much as $40,000. "I did it impulsively," says Basil Williams, a fund manager at New York-based Concordia Advisers, of his decision to join Solstice last year. He had already owned two summer homes and was thinking of adding a third near a ski resort. Williams chose to join Solstice for "the opportunity to enjoy the travel in style and to stay in places with the attention to detail we like." Because he likes to cook, for example, Williams says "it's important to me that the kitchens are always great and the utensils are first rate." Since he and his wife are wine collectors, high-quality wine glasses are a must, too. Memberships at these exclusive clubs typically require an interview with the management of the club, and the number of members is strictly limited. The higher-end clubs may have as few as six members for each property. That means most members can get the properties they want - luxurious homes in unique locations - during their desired dates. And the homes are chock-full of luxury amenities. A concierge service comes with membership, but for a little extra, the club will provide families with everything from groceries to personal chefs, even private jet services and luxury cars for cruising around town. Solstice boasts seven properties worth $4 to $6 million each, including a 90-foot private yacht that tours coastal Belize in winter and the Bahamas in spring. Those properties are now shared by 50 members and are typically empty 28 weeks of the year. "Members can often fly off to their homes at a moment's notice," says Jeffrey Scult, a partner with Solstice. The company recently decided to double its membership to 100 to finance the purchase of 10 new properties in places that include the south of France, Whistler, Costa Rica, New York City and Carmel, Calif. The popularity of exclusive clubs took off in 2002 when AOL founder Steve Case bought half of Exclusive Resorts, a start-up company. That company was the first to come up with the idea of offering the wealthy an alternative to second home ownership. Today, Exclusive Resorts is the industry leader with more than 500 members and 280 properties. By 2008, the club plans to expand its portfolio from 300 homes to over 400 homes. Some, like fund manager Basil Williams, chose not to join Exclusive Resorts because, while it offered a lot of choice, it was too large and impersonal. Tally up all those fees and how much are club members really paying per night? Helium Report, an independent research media company and guide for wealthy consumers, calculates that the cost per night ranges from a low of $300 to as much as $6,000. Williams says his stays at Solstice vacation homes cost him $1,300 to $1,500 a night, a sum he considers a good deal. "These are places that would normally cost you $3,000 a night," he says. The industry has benefited from the recent sharp increase in the number of affluent families in the nation. This year it took at least $1 billion in assets to make Forbes' list of the 400 richest people. And for the first time in history, the collective net worth of the Forbes list climbed to a staggering $1.25 trillion. Milton Pedraza, CEO of the Luxury Institute, a New York-based research institution that focuses solely on the top 10 percent of America's wealthy, says that the well-to-do "are always looking for new adventures." Suppliers of vacation homes are not only competing with five-star hotels, he says, but also with the attraction of adventure travel. "You might even be competing with [tours to] the rain forest of Costa Rica!" As the industry grows, new vacation companies are snatching up prime real estate all over the world. Pedraza says the Northwest is still a pretty well-kept secret: "The Northwest is under the radar screen for vacationers, though it has everything that California has and more." According to the Luxury Institute, 11 million U.S. households have an average net worth above $3.1 million and can afford to live the life of luxury. The Northwest is home to many of these wealthy households, including thousands created by Microsoft's phenomenal success. Still young, the vacation club industry is playing with different business models. "Equity" memberships offer their members investor opportunities that allow them to participate in the appreciation of the club's real estate assets. Usually, these clubs require members to have a personal net worth of $1 million or annual income of at least $200,000 for the previous two years. "Non-equity" clubs provide members with access to multiple locations but no investment or real estate appreciation opportunities. Some clubs, like Solstice, will allow members to choose. Those who consider joining a destination club should examine the club's financial statements to make sure the organization has a strong balance sheet. When Tanner & Haley Resorts filed for bankruptcy protection in July, 900 members were left wondering if their deposits, which ranged from $85,000 to $1.3 million, would ever be refunded. Ron Tapps, founder of the Portofino Club, says he thinks destination clubs will become more than just a trend among the wealthy. He describes it as a new way of vacationing. "The younger generation is going to grow up with this," he says. "It's gaining momentum. This idea has a great future." But these clubs will never be open to all comers. Where's the exclusivity in that? Most clubs operate by invitation only. "We spend time with potential members at one of our country clubs or at the applicant's home, where they're introduced to the club's executives before we sign them up," says Tapps. Clubs are constantly trying to maintain a balance between offering members a wide variety of choices and keeping the membership small. The Pozils, for example, are not attracted at present by the opportunity to stay in homes abroad. Tracy's favorite is the waterfront farmhouse estate on San Juan Island. "We go back to the same place all the time," she says. "With the three kids, it's a lot easier for us to take advantage of vacations close by." But the Pozils met recently with Portofino founder Ron Tapps to decide if they wanted to upgrade their membership. "It was very appealing," Tracy Pozil says, "and maybe someday we'll upgrade - the option will always be there. But for now, we tend to travel locally." 1 2 Next > Comments Leave a Reply PLEASE ENTER HERE THE WORD AS DISPLAYED IN THE PICTURE. THIS IS TO PREVENT SPAMMING. If you can't read the word, click here. Submit ADVERTISING ADVERTISING © Washington CEO Magazine 2008