Demeure, a new form of destination club that merges a home exchange with equity ownership is about to launch.
The club builds from the observation that there are a significant number of luxury homes around the world that are under-utilized and individually owned, often by some of the very people who have joined or would join a destination club. The owners of these properties have already invested capital in their homes and are maintaining them accordingly.
Demeure has been deliberately designed around a sophisticated software application that takes each members' contribution and establishes a relative value that can be exchanged amongst the members. This calculation of value works like an airline pricing system with a variety of factors affecting the "value equivalency".
The clubs members can select packages which entitle them to 14-60 days use of luxury properties in the Demeure network for significantly less cost than with other clubs. They have the added benefit of being able to settle their account with time contributed in their own qualifying vacation properties.
"Demeure is a private and by-invitation only global destination club, for like-minded people who treasure their life experiences and who want to maximize their investment in them," says founder Peter Schwartz, Its run and managed just like a destination club, but the important difference is how we build our property network. Weve designed the club to operate as a true membership community.Membership
The essence of the club is to allow people to contribute their vacation homes (becoming "contributing members" or "MCs") in return for "currency" that can be used to stay in other MC homes and/or accept currency in return for use of their home. An MC retains full ownership of their home, and can choose exactly how much and which of their time at their home they want to provide to the club. Equally an MC has total freedom to choose when they want to use their own home or when they want to rent it out themselves.
As an MCs home is used by another member, the MC gains both accommodation credit currency and also receives a check. The value of the credits averages out to about 50% of the rental value and the checks average out to about 25% of the rental value. In each case the values vary and are calculated by the clubs software algorithm depending on a number of factors.
Ownership of a vacation home is not a requirement for joining the club. Members can simply pay an upfront fee and annual dues as they would to any destination club, and then have access to all the Demeure homes.
Joining fees are the same whether members contribute time in their homes or not. All members upfront fees are used to fund the purchase of club-owned homes which creates more capacity to sell memberships and so on. The club has already signed on over 50 members.Homes & Locations
The Demeure club divides its properties into three tiers of $0.5m-$1.5m, $1.5m-$3m and $3m+ homes. The clubs goal is to reach 400 member-contributed homes (equal to 60 full time equivalents) and 20 club-purchased homes, throughout the world. In years 20-25 the club plans to wind up and distribute the proceeds from the sale of club owned homes to members. The club is off to a good start with 37 member contributed homes.
One interesting, and safe, part of the model is that the club will only buy its own homes as it receives money from members. Its model allows it to conservatively manage this club owned growth and so it has no need to buy homes ahead of membership growth. Some of the other clubs that had bought extra homes were caught out in the downturn, when their membership growth stalled and they were left with excess capacity in their homes.The Trading System Software
The clubs founders have a background in logistics and capacity planning software and have applied this knowledge to developing the club.
The clubs proprietary software balances out all the usage and value amongst the different homes and the members. It takes inputs such as popularity, seasonality, comparable rental rates and advance availability to calculate the value of a given home at a given time. The system has been designed to allow members to contribute their homes but yet maintain full control over availability and to dynamically adjust the capacity offered to other club members. The algorithm maintains a living "currency" on the member's account and allows them to iterate this as they look at what they want to do.
Members contributing homes can essentially use the clubs software to track and monitor their homes usage. For instance they can provide access to any rental or management agents, who can go in and reserve time for external rentals. Members do not need to assign fixed periods to the club. If they wish, they can simply declare a maximum number of weeks that club members can use their home, after which it is no longer available.Guarantees & Reserves
Other parts of the model that are designed to give comfort to members, are a reserve held to redeem memberships based on historical attrition rates within the industry. A contractual capacity guarantee means that the club will not sell memberships if it does not have the available capacity, and will even refund fees if for some reason it does exceed its agreed capacity limits. It will also provide annual audits of this capacity, club owned homes and use of the initial membership fees.
The founders' experience in luxury real estate development, operating exclusive private golf clubs, in the culinary industry and in software provides a good mix of the necessary skills and knowledge to run such a club. Demeures innovative offering makes it an interesting one to explore if you're looking into joining a destination club.