Ultimate Resort, the 2nd largest destination club, and Private Escapes, the 3rd largest destination club, are planning to merge. The combined club will have 1,200 members with 140 club homes located in nearly 50 destinations in the US, Mexico, the Caribbean and Europe.
The merged company will operate 3 distinct destination clubs targeting the $1 million, $2 million and $3 million average home value club categories. Currently Ultimate Resorts (UR) has two destination clubs and Private Escapes (PE) has three.The two clubs are still working through the full merger process and expect to close the merger in November 2007. There are several items for them to balance out such as:
- Reservations and Usage: PE members in a given club have some rights to use the homes in the other clubs, whereas UR members typically do not have these reciprocal night of usage
- Membership Levels and Fees: PE members have unlimited nights usage of homes, subject to the clubs reservation policies, but also pay a modest nightly fee, whereas UR members just pay their initial membership fee and annual dues with no nightly charges.
The combined company is also changing to a flat 80% refund of the initial deposit, when a member resigns from the club. This is the current offer from PE but UR has a more generous 80% of the value at the time you resign, and since the clubs have all been raising their deposit amounts this has meant that members could recover over 100% of their deposits on resignation.
During the first 90 days after closing, Rich Keith, the founder and CEO of Private Escapes, and Jim Tousignant, founder and CEO of Ultimate Resort will both serve as co-CEO's of the combined company. Thereafter, Jim Tousignant will serve as the CEO of the combined company and Rich Keith will be the Chairman of the Board.
The destination club industry has seen several mergers over the past year. Quintess combined with Dreamcatcher, and then with Leading Residences of the World, Ultimate Resorts bought Tanner & Haley out of bankruptcy, Solstice merged with Parallel, and BelleHavens bought The Havens. There is certainly a minimum scale that any club needs to be appealing, so that it can offer a variety of destinations to its members, and also with a larger number of homes and members the club can be more financially successful as it spreads its central costs over a wider base.
Read the comments from Jim Tousignant and Rich Keith about the merger.