Bookended by a precipitous rise to the top of the destination club industry and by a meteoric collapse, High Country Club has announced it will file for Chapter 7 bankruptcy next week.
In a candid letter to the club's members sent last week, Christian Kirschner, High Country Club's CEO wrote:
Effective immediately, High Country Club will no longer be in business. Along with our bankruptcy attorneys, we are in the process of filing Chapter 7 bankruptcy next week.
The severe decline in the economy has made it impossible to operate our business. Our team has worked tirelessly over the past 120 days to restructure and save the business. However, multiplying outside factors and a declining membership has made operations impossible.
Effective immediately all reservations are canceled.
We expect that the bankruptcy court will be in contact with members after our filing next week.
I offer my sincerest apologies and regrets as the current business and economic environment has made it impossible for HCC to operate.
Christian V. Kirschner
President & CEO
High Country Club
Founded as a specialty destination club focused on the affluent ski audience, High Country Club entered the industry as a low cost alternative to the myriad of other more costly destination clubs that dominated the industry. As the sole club in the sub-$50,000 price point, High Country Club soon emerged as a destination club power, consistently meeting sales and revenue goals and serving as a founding member of the Destination Club Association.
The club's ability to generate a continual stream of new sales led to over reaching on real estate, purchasing luxury vacation homes outside of their business model's price range. In their attempt to remain the most cost effective destination club, annual dues, the club's yearly payments made by club members used to pay for the club's ongoing operations, were set below the club's operational burn rate.
As the real estate and financial markets began to decline, so did sales for High Country Club. Often selling upwards of 30 memberships per month, the club's sales initiatives began to yield single digits in the months prior to their bankruptcy.
With club sales eroding and facing financing issues from lenders, High Country Club executives attempted to merge with another destination club, only to have the buyer back out in early October of 2008. In a letter to High Country Club members regarding the destination club merger sent on October 28, Kirschner wrote "I approached several destination clubs and we made a decision to move forward with one. Documents were signed and the integration process had begun. Two and a half weeks ago the deal was terminated due to the difficulties created by the extraordinary economic events of the past 45 days...There was never any doubt in my mind we would not close on this transaction for several reasons...The economic events of the past 45 days changed everything."
With anemic sales and growing debt obligations, High Country Club created a Success Plan that theoretically would allow the club to become self sufficient and operational solely on membership dues. The plan consisted primarily of increased annual dues for members, decreases in properties available to members, and drastic layoffs to High Country Club staff to reduce overhead.
For the plan to succeed, approximately 75 percent of the membership base needed to agree to sign off on new addendums outlining these terms. While the club approached the 75 percent barrier, ultimately it fell just short, leading management to create a new alternative to members, the High Country Club Sustainability Plan.
The Sustainability Plan also failed to create the self sufficient model club executives and members sought.
With High Country Club's upcoming Chapter 7 filing, they join One Key World and Lusso Collection as firms starting 2009 poorly. One Key World and their rental brokerage model was forced to cease operations earlier this month while the Lusso Collection is currently going through Chapter 11 bankruptcy.
Despite Kirschner's immediate closure notice, expect more news about High Country Club to follow as creditors, real estate owners, and members alike continue asking questions about how High Country Club reached this point.
Original Article
High Country Club Files For Chapter 7 Bankruptcy
Showing posts with label christian kirschner. Show all posts
Showing posts with label christian kirschner. Show all posts
Thursday, January 29, 2009
Monday, November 10, 2008
High Country Club Raises Dues and Cuts More Homes Following The Results Of
High Country Club members were asked to provide a preliminary answer to a very difficult question that will affect their checkbooks, their travel plans moving forward, and the future of a leading destination club: Do you want to stay with High Country Club?
Due to a stumbling economy, plummeting real estate prices, and a failed destination club merger, High Country Club was forced to restructure their business model. The High Country Club team in tandem with support from their legal council and investors introduced their "High Country Club Success Plan." This plan would make the club self sufficient, reliant only on membership dues, not new membership sales or affected by swings in financial or real estate markets.
Read Christian Kirschner's High Country Club Success Plan Letter
Read High Country Club's Success Plan Questions and Answers
The plan to save their destination club required many concessions from members. As a start up club, High Country Club focused on being the price leader in the destination club industry. By doing so, High Country Club's membership dues were set well below their competitors, an attractive marketing campaign but not a sustainable business model. For the Success Plan to be implemented, members would have to pay more in annual dues to come more in line with the club's annual payments. To infuse the club with much needed capital, members would also need to pay their annual dues in advance. In addition, to lower much of their costs, nearly half of the club's inventory of luxury vacation homes would need to be cut from their portfolio. For the plan to be implemented, 75 percent of the club's members would need to sign new addendums agreeing to the new terms for the destination club to survive.
High Country Club asked that members answer with a tentative yes or no if they would be moving forward with the club and their new direction by Friday of last week. By voting yes, you believed that there was a 90 percent chance of moving forward with the plan. Of the 354 votes, 264 of them said that they would be moving forward with High Country Club and their Success Plan. 90 voted no. In the slimmest of margins, High Country Club just fell short of their 75 percent goal with 74.576 percent of the club's members voting yes. Unfortunately, many of the 264 yes votes came from members who wanted to stay with the club but elected to downgrade their membership to a lower annual dues structure. Based on the results, Christian Kirschner, High Country Club's CEO wrote a letter to his members outlining what the results meant to members and how the Success Plan will be changed.
Over the past 2 weeks we worked together to truly challenge the Success Plan and expose its weaknesses. We have responded to several thousand emails and hundreds of calls. Our team has worked day and night to take all of the suggestions, challenges and comments and include those is the final Success Plan that we are proposing. I am thankful for all of the time and effort many of you made to analyze the plan to help find ways it can be approve.
Based on Friday’s vote, which included 264 yes votes and 90 no votes, we have adjusted the model to reflect the results. Many of the yes votes also downgraded their membership, which has in turn, decreased the annual dues revenues.
The following are the key points of the Success Plan moving forward.
1) Based on last week’s vote of 264 yes votes and 90 no votes, including numerous downgraded memberships, the annual dues were required to be modified according to the following schedule based on a 10.5 member to 1 home member to property ratio:
Companion – $475/night or $3,325 annually
Associate – $450/night or $6,750 annually
Affiliate (21 night) – $435/night or $9,135 annually
Affiliate (25 night) – $425/night or $10,625 annually
Private (35 night) – $360/night or $12,600 annually
Private (45 night) – $325/night or $14,625 annually
Corporate/Group – $370/night or $15,540 annually
*Annual dues will be adjusted by actual Addendums signed and downgraded or upgraded memberships.
2) Annual dues will be required 1 year in advance. All member's annual dues will be due on December 1st of each year. We have contemplated many different scenarios regarding the payment of dues. The conclusion is that it is vital for the success of our plan that we have the revenue to support a year’s worth of service and accommodations each year. All members paying their annual dues at the same time each year will ensure members that they will get the service they paid for during the coming year. If we were to allow members to pay quarterly or semi-annually, we could very quickly move into a downward spiral situation where members, not renewing their dues throughout the year, would force us to liquidate homes and cancel reservations, which simply will not work.
Dues will be required to be paid by December 1st of each year by check. We will allow members to charge dues to their credit card for a 3% convenience fee. Annual dues for December 1st, 2008 through November 31st, 2009 will be due on November 21st, 2008.
3) Based on votes by members last week, feedback from members, demographics of our members and limitations we have with some of the properties, the following is the priority list of homes. Please keep in mind this is not the final list and it is subject to how many Addendums are signed and how many additional members downgrade their membership. In addition, if we have some of the undecided votes agree to the Plan and we have over 264 members sign the Addendum, additional homes may be included. The following scenario assumes a 10.5:1 member to property ratio.
1) Cabo San Lucas/Villa La Estancia
2) Playa del Carmen/Luna Encantada – Beachfront
3) Mammoth/Grand Sierra Lodge
4) Nuevo Vallarta/Villa La Estancia
5) Punta Mita/La Playa Estates
6) Outer Banks/The Currituck Club
7) Keystone/Settlers Creek
8) Turks & Caicos/Villa Renaissance
9) Big Island-Waikoloa/Colony Villas
10) La Quinta/PGA West
11) Beaver Creek-Arrowhead/Aspenwood Lodge
12) New York/1600 Broadway
13) Orlando/Champion’s Gate
14) Stowe Vermont/Stoweflake
4) Many of our members expressed that they were willing to pay more in annual dues for more options and better availability. We spent days running different models and determined that if we were to have a member to property ratio less than 10.5:1, the majority of our members would potentially not be able to agree to the Success Plan because the dues would be far too high. Therefore, we have developed a plan for members who would like to pay more in annual dues for additional destinations and better availability. The following is the offer and would require 90 members to agree to the increase in annual dues:
* 4 additional properties would be added to the portfolio for exclusive use of the 90 members.
* The dues increase would be approximately $300/night or $4,200 annually.
* Members would be allowed 2 weeks of usage in the 4 homes.
* The 4 homes would offer 208 weeks, but dues are based on selling 180 weeks for better availability.
* Members for this plan would only be eligible if they do not downgrade their membership and only if it is an addition to their current membership.
* The 90 members would vote on which of the properties would be included from the following list:
1) Costa Rica/Reserva Conchal
2) Tuscany/Villa Petrischio-Artu 2BR
3) Cancun/Portofino
4) Beaver Creek/Village Hall
5) Maui – Wailea/The Palms
6) Breckenridge/Stonehaven
7) Copper Mountain/The Mill Club
8) Playa del Carmn/Luna Encantada – Penthouse
9) Winter Park/Antler’s at Lakota
10) Telluride/Owl Meadows
11) Other
5) We have formed the HCC Member Board. The board consists of members who have specialties that will be critical to the success of the business. They also have extensive destination club industry experience. Most of all, they want High Country Club to succeed for many years into the future. The board will be made up of the following members:
Deleted names to preserve privacy
Details of the roles and responsibilities of the Member Board will be available toward the end of November.
6) HCC will place member’s annual dues in a separate account. We are developing the draw schedule that is required during the Success Plan phase. The independent account will be managed by (member name deleted) of our Member Board.
7) In the event we are forced to file for Chapter 11 bankruptcy protection, we will need to have member's contribute to the cost of Chapter 11 protection. There will be a 1 time charge of up to $600 per member.
8) All members of HCC existing membership base will be classified as “Charter Members”. This does include members who do not sign the Addendum. All this means is that members will be able to sell their membership at the then current membership pricing once new membership sales resume over and above our 375 member membership base.
9) Members will be responsible for the cleaning fees for each stay varying between approximately $125 per stay to $350 per stay, depending on the size of the unit. A cleaning schedule per property will be provided.
10) The resignation policy will be as follows:
HCC will offer for sale on the website the first member (not the top 5 members) on the resignation list in each membership type the ability to sell their membership for a price determined by the member based on the following: If your membership agreement entitles you up to 80% of what you paid, you may price your membership at up 100% of what you paid and the club will not take it’s 20%. The dues for the new member must be based on our current dues structure. We believe that this will offer members a much greater opportunity to sell their membership than our old 2 in, 1 out policy.
11) In a continued effort to keep our expenses as low as possible, we have vacated our office space and will be working from home. This will not affect our ability to run the club and service our members. In addition, we have very sadly had to let Nancy go in order to keep dues down. Chris and Kristy will be taking care of Nancy’s members.
12) Reservations in the following homes will be cancelled effective January 3, 2009. The cost to the company to pay rent through March in the following homes was over $130k. If we honored those reservations, dues would have had to be increased significantly, which the majority of members would not agree to. We will do our best to re-book members with cancelled reservations in other homes in the portfolio.
The following homes will no longer have reservations honored:
1) Rosemary Beach/Barrett Square Lofts
2) Tuscany/Villa Petrischio-Merlino 1BR
The following homes will have reservations honored through December 15, 2009:
1) Tuscany/Villa Petrischio-Artu 2BR
The following homes will have reservations honored through January 3, 2009:
1) Costa Rica/Reserva Conchal
2) Cancun/Portofino
3) Lake Tahoe/Iron Horse Lodge
4) Maui-Mauka/Nani Lau
5) Breckenridge Mountain Lodge
6) Beaver Creek/Village Hall
7) Playa del Carmen/Luna Encantada – Penthouse
The following homes will have their reservations honored through March of 2009:
1) Hilton Head/Sea Pines Plantation
2) Keystone/Red Hawk
3) Steamboat Springs/Eagle Ridge Lodge
4) Snowmass/Terrace House
5) La Costa Resort and Spa
6) Copper Mountain/The Mill Club
7) Winter Park/Antler’s at Lakota
8) Breckenridge/Stonehaven
9) Maui – Wailea/The Palms
10) Telluride/Owl Meadows
11) Deer Valley/Black Bear Lodge
The Success Plan that we have presented will enable HCC to stabilize itself during the difficult economic times ahead. The plan requires sacrifice from everyone. However, the Success Plan gives all us the opportunity to continue enjoying the High Country Club lifestyle until we move into better economic times. HCC will re-emerge as a stronger, more stable business that all of us can enjoy for many years into the future.
The Addendum will be sent to members by the end of the day on Monday. On Wednesday, we will ask for members to send a final email letting us know if they are signing the Addendum. In the event fewer people intend to sign the Addendum than during last week’s vote, we will again have to adjust the dues and portfolio appropriately and will propose any changes Thursday. Friday will be the final decision day.
Thank you again for the time and consideration it has taken to get through this process. I am prayerful that we will get the support we need to keep the company going through the rough economic times ahead. If we are able, HCC will flourish into the future.
Respectfully,
Christian V. Kirschner
President & CEO
As mentioned by Kirschner, new addendums outlining these terms will be sent to members today. With High Country Club falling just short of their 75 percent goal, it will be interesting to see how the news of increased annual dues and decreased properties will alter the upcoming decision members have. The club has been receptive to many suggestions offered by members and the creation of a High Country Club Member Board is a positive step, but for High Country Club members, are these changes coming too late?
Original Article
http://www.theverasgroup.com/index.php?pr=Destination_Club_News-High_Country_Club_Releases_Success_Plan_Results_and_Decreases_Destination_Club_Homes
About The Veras Group
The Veras Group is the only unbiased destination club news, consulting and brokerage firm. As our client, we accompany your purchase from start to finish: customized reviews of your travel needs, unrestricted access to our expert advisors, insiders' advice from industry veterans, insightful due diligence support, thorough club comparisons and points of difference, and the best available terms & pricing on your membership, all at no cost to you.
Please reach one of our destination club advisors at 877-VERAS-07 or 970-449-4680 to learn more about the industry, specific clubs, and our service, or visit our website www.TheVerasGroup.com.
Join us: we know the way.
Due to a stumbling economy, plummeting real estate prices, and a failed destination club merger, High Country Club was forced to restructure their business model. The High Country Club team in tandem with support from their legal council and investors introduced their "High Country Club Success Plan." This plan would make the club self sufficient, reliant only on membership dues, not new membership sales or affected by swings in financial or real estate markets.
Read Christian Kirschner's High Country Club Success Plan Letter
Read High Country Club's Success Plan Questions and Answers
The plan to save their destination club required many concessions from members. As a start up club, High Country Club focused on being the price leader in the destination club industry. By doing so, High Country Club's membership dues were set well below their competitors, an attractive marketing campaign but not a sustainable business model. For the Success Plan to be implemented, members would have to pay more in annual dues to come more in line with the club's annual payments. To infuse the club with much needed capital, members would also need to pay their annual dues in advance. In addition, to lower much of their costs, nearly half of the club's inventory of luxury vacation homes would need to be cut from their portfolio. For the plan to be implemented, 75 percent of the club's members would need to sign new addendums agreeing to the new terms for the destination club to survive.
High Country Club asked that members answer with a tentative yes or no if they would be moving forward with the club and their new direction by Friday of last week. By voting yes, you believed that there was a 90 percent chance of moving forward with the plan. Of the 354 votes, 264 of them said that they would be moving forward with High Country Club and their Success Plan. 90 voted no. In the slimmest of margins, High Country Club just fell short of their 75 percent goal with 74.576 percent of the club's members voting yes. Unfortunately, many of the 264 yes votes came from members who wanted to stay with the club but elected to downgrade their membership to a lower annual dues structure. Based on the results, Christian Kirschner, High Country Club's CEO wrote a letter to his members outlining what the results meant to members and how the Success Plan will be changed.
Over the past 2 weeks we worked together to truly challenge the Success Plan and expose its weaknesses. We have responded to several thousand emails and hundreds of calls. Our team has worked day and night to take all of the suggestions, challenges and comments and include those is the final Success Plan that we are proposing. I am thankful for all of the time and effort many of you made to analyze the plan to help find ways it can be approve.
Based on Friday’s vote, which included 264 yes votes and 90 no votes, we have adjusted the model to reflect the results. Many of the yes votes also downgraded their membership, which has in turn, decreased the annual dues revenues.
The following are the key points of the Success Plan moving forward.
1) Based on last week’s vote of 264 yes votes and 90 no votes, including numerous downgraded memberships, the annual dues were required to be modified according to the following schedule based on a 10.5 member to 1 home member to property ratio:
Companion – $475/night or $3,325 annually
Associate – $450/night or $6,750 annually
Affiliate (21 night) – $435/night or $9,135 annually
Affiliate (25 night) – $425/night or $10,625 annually
Private (35 night) – $360/night or $12,600 annually
Private (45 night) – $325/night or $14,625 annually
Corporate/Group – $370/night or $15,540 annually
*Annual dues will be adjusted by actual Addendums signed and downgraded or upgraded memberships.
2) Annual dues will be required 1 year in advance. All member's annual dues will be due on December 1st of each year. We have contemplated many different scenarios regarding the payment of dues. The conclusion is that it is vital for the success of our plan that we have the revenue to support a year’s worth of service and accommodations each year. All members paying their annual dues at the same time each year will ensure members that they will get the service they paid for during the coming year. If we were to allow members to pay quarterly or semi-annually, we could very quickly move into a downward spiral situation where members, not renewing their dues throughout the year, would force us to liquidate homes and cancel reservations, which simply will not work.
Dues will be required to be paid by December 1st of each year by check. We will allow members to charge dues to their credit card for a 3% convenience fee. Annual dues for December 1st, 2008 through November 31st, 2009 will be due on November 21st, 2008.
3) Based on votes by members last week, feedback from members, demographics of our members and limitations we have with some of the properties, the following is the priority list of homes. Please keep in mind this is not the final list and it is subject to how many Addendums are signed and how many additional members downgrade their membership. In addition, if we have some of the undecided votes agree to the Plan and we have over 264 members sign the Addendum, additional homes may be included. The following scenario assumes a 10.5:1 member to property ratio.
1) Cabo San Lucas/Villa La Estancia
2) Playa del Carmen/Luna Encantada – Beachfront
3) Mammoth/Grand Sierra Lodge
4) Nuevo Vallarta/Villa La Estancia
5) Punta Mita/La Playa Estates
6) Outer Banks/The Currituck Club
7) Keystone/Settlers Creek
8) Turks & Caicos/Villa Renaissance
9) Big Island-Waikoloa/Colony Villas
10) La Quinta/PGA West
11) Beaver Creek-Arrowhead/Aspenwood Lodge
12) New York/1600 Broadway
13) Orlando/Champion’s Gate
14) Stowe Vermont/Stoweflake
4) Many of our members expressed that they were willing to pay more in annual dues for more options and better availability. We spent days running different models and determined that if we were to have a member to property ratio less than 10.5:1, the majority of our members would potentially not be able to agree to the Success Plan because the dues would be far too high. Therefore, we have developed a plan for members who would like to pay more in annual dues for additional destinations and better availability. The following is the offer and would require 90 members to agree to the increase in annual dues:
* 4 additional properties would be added to the portfolio for exclusive use of the 90 members.
* The dues increase would be approximately $300/night or $4,200 annually.
* Members would be allowed 2 weeks of usage in the 4 homes.
* The 4 homes would offer 208 weeks, but dues are based on selling 180 weeks for better availability.
* Members for this plan would only be eligible if they do not downgrade their membership and only if it is an addition to their current membership.
* The 90 members would vote on which of the properties would be included from the following list:
1) Costa Rica/Reserva Conchal
2) Tuscany/Villa Petrischio-Artu 2BR
3) Cancun/Portofino
4) Beaver Creek/Village Hall
5) Maui – Wailea/The Palms
6) Breckenridge/Stonehaven
7) Copper Mountain/The Mill Club
8) Playa del Carmn/Luna Encantada – Penthouse
9) Winter Park/Antler’s at Lakota
10) Telluride/Owl Meadows
11) Other
5) We have formed the HCC Member Board. The board consists of members who have specialties that will be critical to the success of the business. They also have extensive destination club industry experience. Most of all, they want High Country Club to succeed for many years into the future. The board will be made up of the following members:
Deleted names to preserve privacy
Details of the roles and responsibilities of the Member Board will be available toward the end of November.
6) HCC will place member’s annual dues in a separate account. We are developing the draw schedule that is required during the Success Plan phase. The independent account will be managed by (member name deleted) of our Member Board.
7) In the event we are forced to file for Chapter 11 bankruptcy protection, we will need to have member's contribute to the cost of Chapter 11 protection. There will be a 1 time charge of up to $600 per member.
8) All members of HCC existing membership base will be classified as “Charter Members”. This does include members who do not sign the Addendum. All this means is that members will be able to sell their membership at the then current membership pricing once new membership sales resume over and above our 375 member membership base.
9) Members will be responsible for the cleaning fees for each stay varying between approximately $125 per stay to $350 per stay, depending on the size of the unit. A cleaning schedule per property will be provided.
10) The resignation policy will be as follows:
HCC will offer for sale on the website the first member (not the top 5 members) on the resignation list in each membership type the ability to sell their membership for a price determined by the member based on the following: If your membership agreement entitles you up to 80% of what you paid, you may price your membership at up 100% of what you paid and the club will not take it’s 20%. The dues for the new member must be based on our current dues structure. We believe that this will offer members a much greater opportunity to sell their membership than our old 2 in, 1 out policy.
11) In a continued effort to keep our expenses as low as possible, we have vacated our office space and will be working from home. This will not affect our ability to run the club and service our members. In addition, we have very sadly had to let Nancy go in order to keep dues down. Chris and Kristy will be taking care of Nancy’s members.
12) Reservations in the following homes will be cancelled effective January 3, 2009. The cost to the company to pay rent through March in the following homes was over $130k. If we honored those reservations, dues would have had to be increased significantly, which the majority of members would not agree to. We will do our best to re-book members with cancelled reservations in other homes in the portfolio.
The following homes will no longer have reservations honored:
1) Rosemary Beach/Barrett Square Lofts
2) Tuscany/Villa Petrischio-Merlino 1BR
The following homes will have reservations honored through December 15, 2009:
1) Tuscany/Villa Petrischio-Artu 2BR
The following homes will have reservations honored through January 3, 2009:
1) Costa Rica/Reserva Conchal
2) Cancun/Portofino
3) Lake Tahoe/Iron Horse Lodge
4) Maui-Mauka/Nani Lau
5) Breckenridge Mountain Lodge
6) Beaver Creek/Village Hall
7) Playa del Carmen/Luna Encantada – Penthouse
The following homes will have their reservations honored through March of 2009:
1) Hilton Head/Sea Pines Plantation
2) Keystone/Red Hawk
3) Steamboat Springs/Eagle Ridge Lodge
4) Snowmass/Terrace House
5) La Costa Resort and Spa
6) Copper Mountain/The Mill Club
7) Winter Park/Antler’s at Lakota
8) Breckenridge/Stonehaven
9) Maui – Wailea/The Palms
10) Telluride/Owl Meadows
11) Deer Valley/Black Bear Lodge
The Success Plan that we have presented will enable HCC to stabilize itself during the difficult economic times ahead. The plan requires sacrifice from everyone. However, the Success Plan gives all us the opportunity to continue enjoying the High Country Club lifestyle until we move into better economic times. HCC will re-emerge as a stronger, more stable business that all of us can enjoy for many years into the future.
The Addendum will be sent to members by the end of the day on Monday. On Wednesday, we will ask for members to send a final email letting us know if they are signing the Addendum. In the event fewer people intend to sign the Addendum than during last week’s vote, we will again have to adjust the dues and portfolio appropriately and will propose any changes Thursday. Friday will be the final decision day.
Thank you again for the time and consideration it has taken to get through this process. I am prayerful that we will get the support we need to keep the company going through the rough economic times ahead. If we are able, HCC will flourish into the future.
Respectfully,
Christian V. Kirschner
President & CEO
As mentioned by Kirschner, new addendums outlining these terms will be sent to members today. With High Country Club falling just short of their 75 percent goal, it will be interesting to see how the news of increased annual dues and decreased properties will alter the upcoming decision members have. The club has been receptive to many suggestions offered by members and the creation of a High Country Club Member Board is a positive step, but for High Country Club members, are these changes coming too late?
Original Article
http://www.theverasgroup.com/index.php?pr=Destination_Club_News-High_Country_Club_Releases_Success_Plan_Results_and_Decreases_Destination_Club_Homes
About The Veras Group
The Veras Group is the only unbiased destination club news, consulting and brokerage firm. As our client, we accompany your purchase from start to finish: customized reviews of your travel needs, unrestricted access to our expert advisors, insiders' advice from industry veterans, insightful due diligence support, thorough club comparisons and points of difference, and the best available terms & pricing on your membership, all at no cost to you.
Please reach one of our destination club advisors at 877-VERAS-07 or 970-449-4680 to learn more about the industry, specific clubs, and our service, or visit our website www.TheVerasGroup.com.
Join us: we know the way.
Thursday, November 6, 2008
High Country Club CEO Discusses Destination Club Merger
Following the announcement of High Country Club's restructuring, many concerned members sought out High Country Club CEO Christian Kirschner to learn more about why the club did not more actively seek a merger with another destination club prior to the club's financial trouble. Kirschner responded to these questions with a letter to High Country Club members.
As a result of yesterday's questions and comments, I want to offer further disclosure regarding our company during 2008.
For the past 6 months, HCC has been in merger/acquisition negotiations with a destination club. I am under a strict confidentiality agreement so I will not be able to disclose any specifics on the transaction. At the beginning of 2008, I realized the ability to raise capital was going to be increasingly difficult with the downward trend in the economy. HCC had become a market leader and was positioned for tremendous growth in the future, but I felt like I could not grow the business to its full potential without a capital partner. Therefore, I approached several destination clubs and we made a decision to move forward with one. Documents were signed and the integration process had begun. Two and a half weeks ago the deal was terminated due to the difficulties created by the extraordinary economic events of the past 45 days.
The 6 month period while we focused our efforts on the merger caused our investor sources to halt any type of investment due to the fact we were merging. Because we essentially had been cut off from investors, we had to dramatically reduce our expenses which included our marketing costs, which caused our sales to decline although we were still able to sell a fair amount of memberships. In addition, one of our lenders terminated a $500k line of credit because of their concerns regarding the economy. However, I was certain that once the merger was announced, we would have tremendous growth from new sales and the company would be on very solid ground.
There was never any doubt in my mind we would not close on this transaction for several reasons. Most importantly, in the back of my mind I was prepared to completely give HCC away and take nothing in return personally as long as my members were protected. Secondly, a club absorbing HCC and combining operational costs would see almost no additional cost to their operations. HCC would essentially pay for itself. Given this situation, I believed beyond a shadow of a doubt I was positioning new members and old members in a very positive and stable situation for the future.
The economic events of the past 45 days changed everything. Every single prospect we had been speaking with declined further discussions of membership, all of our capital sources completely shut down, and two and a half weeks ago merger progress was terminated.
In 2 and a half weeks, along with our legal counsel, bankruptcy attorney and business advisors, we have developed the Success Plan which will enable HCC to operate, preserve member's deposits and position ourselves for growth in the future. The model will work because all of the costs are fixed and there is no dependence on new sales or investor capital.
I sincerely ask that members do not speculate on any aspect our merger discussions as it is irrelevant at this point and can only create more confusion.
Thank you again for your consideration.
Christian V. Kirschner
President & CEO
Destination club mergers typically fall into two rather broad categories: mutually beneficial and club acquisitions. Mutually beneficial exist when two similarly valued clubs join together to form a club stronger and more sustainable than they would be if they existed independently. Ultimate Resort and Private Escapes merger to form Ultimate Escapes and Quintess merging with Dream Catcher Retreats and Leading Residences of the World are examples of this. Club acquisitions typically involve a struggling or already unsuccessful club's assets, including real estate and members, being purchased by a more established destination club. Ultimate Resort acquired the assets of Tanner & Haley Destination Club following its public bankruptcy. Havens, a small destination club that struggled to get off the ground was acquired by equity destination club BelleHavens prior to any substantial problems. Ironically, BelleHavens and Crescendo Residences were acquired in a mutually beneficial merger to create the new Abercrombie & Kent Residence Club.
Both can be advantageous to both clubs and members if there is a synergy between the merging clubs. As dozens of real estate mortgages in different countries and unique membership plans are blended to create a new offering of the combined clubs, mergers and acquisitions often take many months of due diligence and negotiating prior to any formal announcements.
As addressed by Kirschner, due to the time component attached to High Country Club's current financial situation, pursuing a new merger once theirs had been terminated would not work.
If High Country Club's Success Plan can be implemented and produces a successful outcome, the management team at High Country Club and their member base should be congratulated for working together to create a sustainable destination club business model.
The Veras Group is the only unbiased destination club news, consulting and brokerage firm. As our client, we accompany your purchase from start to finish: customized reviews of your travel needs, unrestricted access to our expert advisors, insiders’ advice from industry veterans, insightful due diligence support, thorough club comparisons and points of difference, and the best available terms & pricing on your membership, all at no cost to you.
Please reach one of our destination club advisors at 877-VERAS-07 or 970-449-4680 to learn more about the industry, specific clubs, and our service, or visit our website www.TheVerasGroup.com.
Join us: we know the way.
Original Article
High Country Club CEO Discusses Destination Club Merger
As a result of yesterday's questions and comments, I want to offer further disclosure regarding our company during 2008.
For the past 6 months, HCC has been in merger/acquisition negotiations with a destination club. I am under a strict confidentiality agreement so I will not be able to disclose any specifics on the transaction. At the beginning of 2008, I realized the ability to raise capital was going to be increasingly difficult with the downward trend in the economy. HCC had become a market leader and was positioned for tremendous growth in the future, but I felt like I could not grow the business to its full potential without a capital partner. Therefore, I approached several destination clubs and we made a decision to move forward with one. Documents were signed and the integration process had begun. Two and a half weeks ago the deal was terminated due to the difficulties created by the extraordinary economic events of the past 45 days.
The 6 month period while we focused our efforts on the merger caused our investor sources to halt any type of investment due to the fact we were merging. Because we essentially had been cut off from investors, we had to dramatically reduce our expenses which included our marketing costs, which caused our sales to decline although we were still able to sell a fair amount of memberships. In addition, one of our lenders terminated a $500k line of credit because of their concerns regarding the economy. However, I was certain that once the merger was announced, we would have tremendous growth from new sales and the company would be on very solid ground.
There was never any doubt in my mind we would not close on this transaction for several reasons. Most importantly, in the back of my mind I was prepared to completely give HCC away and take nothing in return personally as long as my members were protected. Secondly, a club absorbing HCC and combining operational costs would see almost no additional cost to their operations. HCC would essentially pay for itself. Given this situation, I believed beyond a shadow of a doubt I was positioning new members and old members in a very positive and stable situation for the future.
The economic events of the past 45 days changed everything. Every single prospect we had been speaking with declined further discussions of membership, all of our capital sources completely shut down, and two and a half weeks ago merger progress was terminated.
In 2 and a half weeks, along with our legal counsel, bankruptcy attorney and business advisors, we have developed the Success Plan which will enable HCC to operate, preserve member's deposits and position ourselves for growth in the future. The model will work because all of the costs are fixed and there is no dependence on new sales or investor capital.
I sincerely ask that members do not speculate on any aspect our merger discussions as it is irrelevant at this point and can only create more confusion.
Thank you again for your consideration.
Christian V. Kirschner
President & CEO
Destination club mergers typically fall into two rather broad categories: mutually beneficial and club acquisitions. Mutually beneficial exist when two similarly valued clubs join together to form a club stronger and more sustainable than they would be if they existed independently. Ultimate Resort and Private Escapes merger to form Ultimate Escapes and Quintess merging with Dream Catcher Retreats and Leading Residences of the World are examples of this. Club acquisitions typically involve a struggling or already unsuccessful club's assets, including real estate and members, being purchased by a more established destination club. Ultimate Resort acquired the assets of Tanner & Haley Destination Club following its public bankruptcy. Havens, a small destination club that struggled to get off the ground was acquired by equity destination club BelleHavens prior to any substantial problems. Ironically, BelleHavens and Crescendo Residences were acquired in a mutually beneficial merger to create the new Abercrombie & Kent Residence Club.
Both can be advantageous to both clubs and members if there is a synergy between the merging clubs. As dozens of real estate mortgages in different countries and unique membership plans are blended to create a new offering of the combined clubs, mergers and acquisitions often take many months of due diligence and negotiating prior to any formal announcements.
As addressed by Kirschner, due to the time component attached to High Country Club's current financial situation, pursuing a new merger once theirs had been terminated would not work.
If High Country Club's Success Plan can be implemented and produces a successful outcome, the management team at High Country Club and their member base should be congratulated for working together to create a sustainable destination club business model.
The Veras Group is the only unbiased destination club news, consulting and brokerage firm. As our client, we accompany your purchase from start to finish: customized reviews of your travel needs, unrestricted access to our expert advisors, insiders’ advice from industry veterans, insightful due diligence support, thorough club comparisons and points of difference, and the best available terms & pricing on your membership, all at no cost to you.
Please reach one of our destination club advisors at 877-VERAS-07 or 970-449-4680 to learn more about the industry, specific clubs, and our service, or visit our website www.TheVerasGroup.com.
Join us: we know the way.
Original Article
High Country Club CEO Discusses Destination Club Merger
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