With each of the destination clubs having different fee structures it requires a little math to put them on a par to compare the cost per night. This article walks through the calculation and provides you with a downloadable spreadsheet showing the calculation for most of the clubs.
The calculation of a cost per night (equivalent) is a useful tool to financially compare each of the destination clubs. It is also useful for comparing the clubs to alternatives, such as luxury hotels or house rentals, for which the cost per night is much more obvious.
There are a variety of ways to do this calculation, with no one "right" way. The way we've done it is to use 4 elements:
- Annual dues
- Non refundable portion of the initial fee
- Nightly fee (if any)
- Opportunity cost (on the initial fee)
1. Annual Fees: These are divided by the number of days in the plan or tier of membership, to produce a cost per night. Some memberships have "unlimited" nights of use, but are subject to the clubs reservation rules. In these cases, where there is no specific number of nights with a plan we've assumed 30 days a year of usage. You can adjust this 30 days to better fit your own travel patterns in cell B7 of the spreadsheet.
2. Opportunity Cost: Your initial membership fee ties up a piece of your capital assets that could otherwise be invested. We apply an interest rate to this capital to produce an "Opportunity Cost" of having this capital used for membership rather than being invested. The default interest rate in the spreadsheet is a conservative 6%. You can change this in cell B6 on the sheet "Compare DCs"
3. Non Refundable Initial Fee: When a member resigns from a club, they receive back a portion of their initial membership fee. This is often 80% to 100% of the initial fee, or maybe related to the current value of the initial fee or related to the appreciation in the initial fee or appreciation in the property portfolio. The calculation takes the amount that is not refunded and apportions it across the nights of usage in the membership period. For instance if you receive back 80% when you resign, we've taken the remaining 20% and divided it across all the nights in the membership period.
Where the refundable amount includes an appreciation of the fee or appreciation of the property portfolio, we have not used this appreciation, since it is not guaranteed. However column S on the spreadsheet shows the clubs that do offer some potential appreciation so that you can bear this in mind.
4. Nightly Fee: some of the clubs charge a per night fee for any nights that a member uses. Others charge a fee over a certain number of nights.
Variables and Assumptions
The calculation assumes a membership period of 10 years. You can alter this period eg make it 15 years or 20 years, by changing the figure in cell B5.
The calculation assumes an opportunity cost of capital of 6%. You can change this in cell B6. In early 2007 money market accounts yield about 5%, the long term return on equities is between 8-10%.
If a given plan or tier offers "unlimited" nights of usage we've based the calculation on 30 nights of actual usage. If you know you will use more or less than this you can change this in cell B7.Examples
Some results from the spreadsheet are shown in the table below. The full spreadsheet includes information for several tiers of membership in each of the clubs.
Comparison to Hotels
When comparing the cost per night to hotel rooms remember that the destination clubs provide large family homes that typically have 3/4/5 + bedrooms. You will usually need to pay for multiple hotel rooms to have the same sleeping accommodation. So to make a comparison, you can either divide the destination club cost per night by the typical number of bedrooms or multiply the hotel cost per night by the number of bedrooms you will need.
You can download the full cost per night spreadsheet here.
For other aspects of comparing the destination clubs start at "Compare Destination Clubs".
|< Prev||Next >|
- Destination Club Concierges…Is There Anything They Can’t Do?
- Collaborative Consumption of Luxury Assets
- Familiarity With Destination Clubs and Fractionals
- Destination Club Cost Per Night July 2008
- Private Jet Partnerships with Destination Clubs
- Help, Destination Clubs. Where Do I Start.
- Destination Club Glossary
- Vacation Homes Compared to Destination Clubs
- The Economics of Destination Clubs Compared to Luxury Second Homes
- Can Family Members Use the Destination Club Homes ?
- Destination Clubs Minimum Nights for Vacations
- Destination Club Cost Per Night Calculation Revisited
- 14 and 15 Night Membership Plans at Destination Clubs
- Destination Clubs - A Free Guide for Prospective Members
- The Difference between Destination Clubs and Private Residence Clubs
- Compare Destination Clubs
- Destination Clubs - An Overview
Latest Destination Club News
Latest Destination Club Research
- Top 5 Reasons NOT to Join a Destination Club
- The Top 7 Reasons to Join a Destination Club
- Increasing Interest in Purchasing Access to a Shared Vacation Home
- Destination Clubs - a Rose by Any Other Name?
- Newly Updated Guide to Destination Clubs
- Portico Club Overview
- New Research Identifies Key Factors in Choosing a Destination Club
- Destination club, it's like a luxury timeshare isn't it?