Destination ClubsDetermining whether you will spend your vacation in a 900-square-foot, two-bedroom condo that's a five-minute walk to the slopes or in a fully staffed 10,000-square-foot home on a private mountain begins with the initiation fee. Destination clubs offer five-star service and access to a portfolio of homes in the most coveted vacation spots, but there are a variety of options in a wide range of prices.
At the top of the list, in a class all by itself is Yellowstone Club World. The $3 million initiation fee buys members time at the whole resort — from a French château to a private Caribbean island — rather than just a single home at one location. At a $1 million initiation fee, Ciel caters to the jet-set crowd with homes in high-profile spots such as Aspen, Cannes, and London. The most competitive segment of the destination club market falls into the $300,000-to-$400,000-initiation-fee range.
While all destination clubs deliver the benefits of hassle-free vacations, there are points to consider before becoming a member. Find out how much money the club allocates for home purchases. This important number will determine the size, location, and quality of your home. Clubs such as Quintess allow $4 million per home, while others ante up $2 million or less. In Jackson Hole, that's the difference between a 5,000-square-foot home with panoramic mountain views at Amangani and a 3,000-square-foot condo in town with views of another condo.
Decide how you like to spend your time. If you're a skier, check out clubs, such as High Country Club, that invest heavily in mountain destinations. The Markers caters to golfers while Destination Cellars focuses on wine-producing areas. For those who want it all, clubs such as Exclusive Resorts cater to all lifestyles by offering more than 300 residences in mountain, city, resort, and beach destinations.
Determine the club's taste. If style is important, look to clubs that shun cookie-cutter condos and make decor, quality appliances, and cutting-edge technology priorities. Oyster Circle employs top interior designers for its mostly European destinations, while Solstice boasts a portfolio of one-of-a-kind homes, including a Florence apartment in a building designed by Michelangelo.
Look into the perks. Most clubs offer 24-hour concierge and local personal assistants, but do they possess the connections to get you out of a bind and into the right clubs? Travel glitches occur frequently when accessing remote locations. The concierge should be well connected and have solid backup plans. On-site, the club should offer a concierge who is embedded in the community — someone who can get members tables at the hot new restaurants, give advice on the best powder stashes and snorkeling coves, and warn against tourist traps.
Do a financial background check. Your prospective club should be able to provide audited financial information. Before you join, find out the number of members they have and if membership has increased, stalled, or decreased over the past year. Check to ensure the majority of homes in the portfolio are owned rather than leased. Inquire about how much of your deposit will be refunded and how long it will take to get it back if you decide to leave the club.
Condo Hotels
The idea of owning a suite at the Ritz-Carlton, Mandarin Oriental, or the Plaza has lured many investors to buy into condo hotel developments. According to Smith Travel Research, there were more than 55,000 condo hotel rooms in the active pipeline in February 2007, with nearly 75 percent of these projects located in two vacation hot spots — Florida and Nevada.
Condo hotels are attractive to buyers because they offer the opportunity to own a hassle-free vacation home within a luxury resort that has the potential to earn its keep. Developers like the concept because condo hotels deliver upfront revenue needed to secure development loans.
Prices for condo hotels run the gamut from $300,000 into the millions. Like any hotel, prices are based on location, amenities, service, and brand-name recognition. Canyon Ranch Living in Miami, for instance, delivers 150 condo hotel suites ranging in size from 720 to 1,140 square feet, priced from $500,000 to $1.2 million. At New York's Plaza Hotel, condo hotel residences range in size from 500 to 2,100 square feet and are priced from $1.6 to $9 million. While at the Mandarin Oriental's property on the private island in the Turks and Caicos, one- to four-bedroom residences start at $2 million. By placing a condo hotel residence in a rental pool, the owner agrees to let the hotel operator rent and manage the residences. In return, the hotel splits the profit with the condo owner.
While reputable names, five-star service, and popular locations reassure buyers that their investment will be safe, there are other options to consider before delving in to this popular real estate hybrid.
Determine the state of the market. Before you invest, investigate the area's convention and visitor bureau's statistics to check on year-round occupancy rates and average hotel room rates during high and low seasons. Miami Beach houses more tourists (39 percent) than any other area in Miami-Dade County and boasts an 82 percent occupancy rate and an average hotel room rate of $212. Despite the positives, condo hotels can appreciate or depreciate based on the same market factors that effect hotel and residential condo values — everything from a dip in the tourism industry to a slowdown of business travel to natural disasters.
Think about how you plan to use the property. Some condo hotels require up to a year's notice to book time for popular weeks such as Christmas vacation, while others have blackout dates and do not allow owners to use their property during prime weeks. The amount of time an owner can spend in the unit is also limited in some cases.
Don't expect to cover the mortgage. A hotel condo should be viewed as a vacation home first, and should not be considered an investment that will deliver big returns from the rental income. To determine the income potential, ask about the hotel's year-round occupancy rates and find what your unit rents for during high and low seasons. Add up maintenance costs and determine how often the hotel operator divvies up the profits (usually a 50-50 split). Also, find out if the income is put in a pool or if reservations are rotated or booked based on location and size of the unit.
Make sure you like the property's style. Condo hotel units come furnished and do not allow you to make changes to the room or have a say in the decor of common areas. To determine if the hotel suits your lifestyle, spend some time there before you buy or if you purchase preconstruction, determine what type of buyer the property is aiming to attract — will they cater to families, singles, or corporate outings? Ask about the proposed star ratings, planned restaurants, and amenities. In some cases, owners receive perks that regular hotel guests are not privy to, such as after-hour spa access, priority tee times, or discounts and privileges at sister properties.
Investigate the developer and management company. Find out what other projects they have done and if these projects have been successful. Find out who is responsible for capital improvements and upgrades to your unit and the amenities.
According to The Wall Street Journal, a wealthy hedge-fund manager recently purchased The Forbes Ranch for the record price of $175 million dollars.
