The destination clubs business had been a fast-growing one until industry pioneer Tanner and Haley went under earlier this year. The business is sort of like time shares but customers are buying a share in the club not a share in a resort property. A membership fee of $350,000 plus $21,000 a year in dues buys you thirty days per year in luxurious homes like this one in Los Cabos owned by the destination club operator Quintess.
One hot selling point of the destination clubs is that their membership fees are party refundable—80% in Quintess’ case. That’s true if the company doesn’t fall into bankruptcy like Tanner and Haley. Quintess co-chairman Scott Anderson helped found the industry’s trade association and is pushing for standards. He’d like to see every operator disclose—as his company does—their assets and liabilities so members will know just how refundable their membership are. “There should be a statement from external auditor that shows the appraised value of property greater than refund obligation,” he says. By the way, the largest player in this business is AOL founder Steve Case’s Exclusive Resorts.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.