Since the pandemic began nearly three years ago, the demand and interest in secondary or tertiary vacation homes has steadily increased. Remote work and school have made it easier to work from anywhere, thus allowing people to operate from wherever they want — as long as there’s a Wi-Fi connection. But as we look to 2023, reports show it’s the worst time to buy a house in decades. Luxury home sales plummeted by 38%, likely due to inflation, a deteriorating stock market, and fears of a recession.
For those who aren’t in the market to purchase a home might find a more economical solution in travel clubs that own and invest in luxury residences for its members. Membership-based travel clubs are nothing new, but in pandemic-ridden times, they’ve become more sought-after for their variety of properties and offerings across the globe as an alternative to the cost and hassles of owning a home.
Exclusive Resorts, founded in 2002 and owned by former AOL executive Steve Case, is a private membership-based vacation club and also one of the world’s largest owners of real estate. The company operates similar to a country club, with a one-time initiation fee of $175,000 for a 10-year commitment and yearly dues depending on your membership plan. The benefit is that daily rates always stay the same for members, even at peak times.
"Second homes often seem like great investments — something you will use frequently with family and friends while it appreciates in value,” Case tells Forbes. “But what often happens is that you use it less than expected and are surprised by the expense and hassle of owning another property. We realized that our company addressed this tension for a large segment of travelers. This is even more true now as the pandemic has shifted the way we want to travel, and where and how we spend time with our families and work.”
Exclusive Resorts has roughly 4,300 members and welcomes around 200 members per year. They own and operate more than 300 private residences and villas in over 75 destinations (and counting), and team up with major brands, like Rosewood Hotels and Four Seasons, to purchase residences that members then vacation at. To date, Exclusive Resorts has purchased over $1 billion in real estate.
Sara Whitford, general counsel and senior vice president of real estate at Exclusive Resorts, echoes Case, saying: “The fact of the matter is that buying, building, and furnishing a second home is a real headache for people. We are looking at one of the most difficult real estate markets that there has been, certainly in recent memory. You're looking at historically high interest rates that just continue to rise. On top of that, most sellers haven’t adjusted their prices even though the market has sold. There are also many costs and difficulties in managing a home.”
Some of the company’s most popular destinations include Peninsula Papagayo in Costa Rica; Dominican Republic; Kiawah Island in South Carolina; Sea Island in Georgia; Nevis in the Caribbean; Deer Valley, Utah; and Colorado, among others. However, the Denver-based company has residences throughout North America, Europe, the Middle East, Asia Pacific, Central and South America, and the Caribbean. They’re constantly adding new residences to the portfolio, like the brand-new residences at Rosewood Mayakoba in Mexico, a ski chalet in Chamonix, France and Jackson Hole, Wyoming. Over 35% of the brand’s portfolio are four- or five-bedroom homes that, on average, cost around $3 million to $4 million. Exclusive Resorts operates the homes and is even involved in the design process when the company joins in on a project early enough.
“For Rosewood Mayakoba in Riviera Maya, Mexico, we worked with the developer on the design of the homes to ensure they have the floor plans and layouts we wanted, because we know what our members want when they travel,” Whitford says. “In Jackson Hole, our team is there installing the furniture, equipment, and decor. We designed the homes ourselves and are carrying out the installation.”
When it comes to adding inventory, the most crucial element is finding the right destinations depending on member demand. Whitford says the company is focused on European expansion, as well as California wine country, Charleston, Nashville, and multiple mountain destinations in the U.S. “We're looking for the A-plus destinations, where our members want to travel, and that's throughout the world,” says Sara Whitford. “There’s always a demand for beach, skiing, and European properties. We look for homes that have been professionally designed with high-end appliances, common areas, and gathering spaces.”
Whitford also adds that partnering with resorts like the Four Seasons in Anguilla or Rosewood Mayakoba is a benefit to the brands and hotels. “Put simply, our members are their customers,” Whitford says. “Our members spend more than $100,000 annually on leisure travel and nearly $50 million on luxury accommodations outside of the club,” she says. “When Exclusive Resorts purchases residences at a resort location like Rosewood Mayakoba it means guaranteed revenue (upwards of $10,000 in incidentals per seven-night stay) and occupancy for our partners with the high likelihood of repeat visits and residential product sales. For example, since 2004 our club members have purchased more than $50 million of real estate after visiting our apartments on the private residential cruise ship The World.”
Exclusive Resorts is also unique in that membership can be passed down to children. This inheritable membership is an investment in the future of travel for families to continue to create memories and experiences.