Secondary Sales of High Country Club Memberships Dependent On Success Plan

High Country Club, once a leading destination club and a member of the Destination Club Association, was forced to restructure their business model to adapt to the current financial and real estate climate. During the course of the past several weeks, High Country Club's CEO Christian Kirschner with help from legal council and members helped craft a Success Plan to make the destination club self sufficient, allowing the club to exist solely on membership annual dues to cover operating expenses.

To accomplish this, High Country Club was forced to decrease the number of luxury vacation homes available to members and increase annual dues of current members. To minimize their operating expenses, High Country Club restructuring also forced the club to lay off well over 75 percent of their employees, including two of Kirschner's brothers.

Due to the economy, High Country Club has elected to suspend new membership sales and allow current High Country Club members to sell their existing memberships to prospective members if the Success Plan is approved November 17, 2008. For the Success Plan to be approved, roughly 75 percent of the current members would need to sign new addendums agreeing to the increased annual dues. In a preliminary Success Plan vote, nearly 75 percent of members voted yes.

As opposed to the standard destination club model where a predetermined number of new members must be added to the club before one is redeemed, allowing members to determine the price that they are willing to sell their membership effectively makes the membership and membership deposit much more liquid.

Based on the club's resignation list and resignation policies, High Country Club will post the first member chronologically in each membership type from the resignation list on the High Country Club website. Resigning members will be able to set their own pricing on the membership deposit, but cannot exceed the most recent pricing structure used by High Country Club. Membership annual dues and terms can not be changed.

Despite the fact that members who aren't at the top of the resignation list can still sell their membership on the open market, members who are at the top of the list hold complete control of the resignation process.

If a Private Member wants to sell their membership for $79,000 (the last publicly sold pricing for Private Memberships was $80,000), and they are at the top of the resignation list and do not sell their membership, they are effectively holding all other Private Members hostage. As mentioned before, all other Private Members in this example could continue trying to sell their membership, but it is very unlikely that they will receive the exposure the highest person on the resignation list will see.

As you can see above based on the first people on the resignation list, there are widespread differences between what resigning members are seeking when they sell their membership. The highest Private Member with 35 nights of access on the resignation list is seeking to sell their membership for $65,000. Another Private Member but with 45 nights of access is also attempting to resign their membership but only wants $27,935. Although many Private Members with 35 nights of access may be behind this member, it is unlikely that anyone will purchase this membership when another member is selling their membership for $37,065 less and ten additional nights of annual travel.

Leading Canadian equity destination club M Private Residences has also made substantial changes to their business model and also allows members to sell their membership on the open market. Following the changes at M Private Residences, the new redemption policy works far differently from the proposed plan at High Country Club. Prospective members interested in M Private Residences place a bid on what they would like to pay for their membership. Each member of that membership type on the redemption list can potentially sell to this interested party. The person highest on the resignation list is offered what the interested buyer bid. That member can elect to accept the bid or deny it. Accepting it means that the membership is sold to the new party and the new member can begin traveling like any other member. If the member rejects the offer, the next highest person on the resignation list is offered the same bid the prospective member made. If members continue denying the bid placed by the prospective member, the process continues until the last member on the resignation list has the opportunity to accept or deny. If they also deny, the bidder may increase their bid and the process begins anew.

The results of High Country Club's Success Plan should be available Friday. If successful, members may have the opportunity to recoup some of their membership deposits by selling to other interested parties. If not, the destination club will be forced to liquidate their assets and members may not see anything.

Either way, the upcoming 48 hours will be watched closely by Christian Kirschner, 375 members, and the rest of the destination club industry.

Original Article
Sales of High Country Club Memberships Dependent on Success Plan

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