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The Honolulu Advertiser
Posted on: Wednesday, June 7, 2006

Membership surging for Case's luxury travel club

By Matthew Barakat
Associated Press

From the beginning, Steve Case says he knew his Exclusive Resorts luxury residence club was going to be a success.

KEVIN WOLF | Associated Press

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WASHINGTON One might not necessarily imagine that multimillionaires confront limited options in planning their vacations.

But a company chaired by America Online co-founder Steve Case is growing rapidly by offering a menu of luxury vacation options as part of a club that requires members to pony up $200,000 or more to access its $750 million portfolio of vacation properties throughout North America, the Caribbean and Europe.

Today, the club, Exclusive Resorts, will announce that it has added its 2,000th member, which makes it by far the largest company in the fledgling destination club industry.

It will also announce a partnership with golfing legend Jack Nicklaus to expand its golf amenities, and a $72 million investment that will allow it to expand its current roster of nearly 300 vacation homes in 35 destinations.

Case, who bought the club in its infancy in 2003 when it had fewer than 50 members, said he knew the idea was a winner from the start. He bought the company over breakfast after an initial presentation.

"I thought it was brilliant. It was one of those why-didn't-I-think-of-that moments," Case said.

Here's how it works: Members pay a one-time upfront free ranging from $195,000 to $395,000, which gets them between 15 and 45 days at any of the club's destinations, including the Virgin Islands, Costa Rica, Lake Tahoe, the French Alps and Tuscany. They also pay annual dues ranging from $9,500 to $25,000, again depending on how many vacation days they want.

When a member leaves the club, he gets back 80 percent of his membership fee.

While the figures sound steep, Case says it's affordable when compared to buying a vacation home. And the club allows people to vacation in different places every year, rather than being locked into one spot with a vacation home or a time-share.

And for those who vacation with children or in large groups, the club's vacation homes offer size and more of a family atmosphere than you get at a hotel suite, Case said.

Jamie Cheng, co-founder of the Helium Report, which provides research and analysis for the wealthy on various products, including destination clubs, said Exclusive Resorts is the industry leader in a rapidly growing niche of the travel sector.

The industry as a whole has perhaps 4,000 or so members, Cheng said, but there are easily a million Americans or more who could afford a membership.

"As people get more comfortable with the idea, and as the clubs do a better job of explaining it, we think there's a lot of growth potential," he said.

Case said his own experiences convinced him of the market for such a product. He recalled renting a vacation home in his native Hawai'i for his family, including his young children. He was chagrined to find out on arrival that the bedrooms for the young children were essentially isolated from the rest of the house and required you to go outside and down a flight of steps a poor option for his 5-year-old.

Case acknowledged that people often return to the same vacation spots year after year because they like familiarity. But he also believes people sometimes lock themselves into the same location because they worry about the hassle of dealing with a new location.

Exclusive Resorts counters that by trying to offer some consistency at all of its sites. For instance, every home has the same model of plasma screen TV and the same remote control. The company keeps a list of its members' preferred groceries and makes sure the refrigerator and pantry are stocked with the right variety of wine for the grown-ups and the right breakfast cereal for the kids.

Concierge service makes sure that ski lift tickets are waiting for families on arrival. Tee times are already made. Chefs and masseuses are available.

Perhaps the best indication of the club's success is that the average member books nearly seven separate reservations a year through the club, often taking vacations of only two or three days. The club's chief executive, Donn Davis, said many members take more frequent vacations than they initially anticipated because the hassles of vacationing have been eliminated.

Since leaving AOL Time Warner, which has since changed its name back to Time Warner Inc., amid dissatisfaction with the merger he helped orchestrate, Case has founded a new company, Revolution LLC, that has about 2,500 employees and 10 companies, including Exclusive Resorts, which employs almost 200.

He has a particular interest in businesses promoting health and wellness. He owns several healthcare companies and manufactures yoga equipment. His Miraval spa and resort in Arizona is one of the Exclusive Resorts destinations.

Case said he sees the vacation club in a similar vein. He said he's buoyed by the fact that his company helps families take memorable vacations.

And he places an emphasis on adding destinations that are more exotic and incorporate eco-tourism and give vacationers some sense of the places they're visiting. The company is investing heavily in an expansion of its offerings in Costa Rica a place not necessarily synonymous with luxury travel and offering entertainment that brings people in touch with the landscape, like traipsing through the jungle.