Club Mad

By Laura Koss-Feder

Bob Hariri plunked down half a million dollars two years ago to join Distinctive Retreats, one of a growing number of destination clubs that offer members plush vacation homes for up to 60 days a year in exotic locations around the world. But his thrill quickly turned to chill. Hariri, 46, who heads a biotechnology firm based in northern New Jersey, ran into problems booking the properties he wanted and says he was disappointed with the quality of the homes. "I felt I was being overpromised and undersold," says Hariri, who quit the club just months later.

Not all was lost. As is standard for destination clubs, Distinctive Retreats, based in Westport, Conn., refunded most of Hariri's money (80% is typical) when he resigned. Since then, "we have worked out the kinks," says Rob McGrath, CEO of Tanner & Haley Resorts, owner of the club, which has begun leasing properties to meet demand in popular destinations like Cabo San Lucas, Mexico, and Kiawah Island, S.C.

Destination clubs have enjoyed robust growth, fueled by affluent baby boomers, who are opting to join clubs that give them a choice of world getaways rather than buying the traditional second home. The clubs have been around only since the late 1990s, when Tanner & Haley pioneered the concept. There are now 18 in the U.S., each with about 30 properties. Members pay an average $230,000 to join and $15,000 in annual dues, says Dick Ragatz, president of Ragatz Associates, a resort-industry consultant in Eugene, Ore. Some clubs are doubling their membership each year and have been unable to develop properties fast enough.

"It's a race to generate enough distinctive inventory in jet-set markets," says Scott Berman, a leisure-industry consultant at PricewaterhouseCoopers. The general rule is 1 property for every 6 members. But many clubs have fallen behind. They are working to rectify the problems, but in the meantime, if you join, you may not get all that's promised. At any destination club, it can be difficult to lock up the property you want over a holiday or if you book fewer than 90 days in advance. "They're oversold," says Bob Jones, consultant with OneTravel Holdings, an Atlanta online-travel agency. "People become disenchanted and leave."

That was the case with Hariri, who says that two weeks before a trip to Delray Beach, Fla., he was bumped from his chosen property. On another occasion, he says, a "beachfront" house was 700 ft. from the water. Still, Hariri has not given up on the concept. He joined a different club, Havens, based in New York City.

Some clubs are struggling on another level: they can't provide everything they advertise, says James Chung, president of Reach Advisors, a Belmont, Mass., research firm. "The homes didn't have enough pots to cook with," says Elizabeth Schlier, 37, a former member of Private Retreats, also owned by Tanner & Haley. "The towels and other linens were not as plush, and there weren't always enough toys for my children." Says McGrath: "When we were renting properties on a short-term basis to meet increased consumer demand, we would have inconsistent quality. But now we have satisfied client demand and offer consistency."

Exclusive Resorts, the largest destination club with 300 properties, dealt with availability issues by doubling its number of beachfront homes to 80, says Donn Davis, CEO of the Denver-based firm, which also started a member waiting list and added a budget membership level that gets no holiday bookings.

Plenty of folks still rave about the destination-club concept. Shirley Brown, 62, a retired caterer from Richmond, Va., and husband Morton, 64, a retired manufacturer and importer of men's clothing, have taken 15 trips with their three children, seven grandchildren and friends to such varied locations as England, Hawaii, Italy and Mexico since joining Exclusive Resorts in 2004. "The biggest complaint I had about one house was that it didn't have a garlic press," says Shirley.

For a good experience, do some homework. You don't actually own the properties in most destination clubs, unlike in a time-share. What you get is the right to stay at any number of properties for some number of weeks each year. The clubs own the houses and condos that they promote, usually worth $1 million or more on the beach, in cities or ski areas.

In addition to providing homes with plasma televisions, state-of-the-art kitchens and private pools, the clubs have concierge services that stock the refrigerator with your favorite foods, have mountain bikes waiting for you and leave requested theater tickets on the coffee table. "I've had a concierge buy U.S. Open tickets for me in New York and arrange a tennis game for me in California. It's an easy way to take a vacation," says Tim Lovelace, 64, a retired hotelier from Asheville, N.C., who joined the Fort Collins, Colo., Private Escapes in 2004.

Make sure your money is protected. There are no regulations governing vacation clubs, advises Howard Nusbaum, president and CEO of the American Resort Development Association. "Our goal is to have protections in place in the next few years," he says. So make sure you understand the terms. Ask about the ratio of members to homes (as stated earlier, 6 to 1 is par) and where new properties are scheduled. You should know about extra costs like housekeeping. Concierge service is usually free, but the items that are purchased for you are not. Find out the resignation policy so you know what your refund would be if you were unhappy.

Your fee should be protected by a bond or insurance, Ragatz says. So if the club fails, you'll get your money back. Make sure you understand the reservations policy as well so you know how far in advance you'll need to book to get the property you want, he says. Discuss liability issues such as what would happen if a guest got hurt while staying with you.

You probably won't be allowed to test-drive a sample property before joining, so ask for references. Check with your friends; maybe one has a membership and would let you stay as a guest. Have your attorney review the contract as a final stamp of approval.

"You want to be as careful as possible when putting down this kind of money," Ragatz says. "Destination clubs can be great for boomers who want to travel in style and spend time with their families in a comfortable space, as long as you examine everything carefully and take time for due diligence."