The Veras Group Destination Club Forecast

Lehman Brother's recent bankruptcy filing sent shockwaves through the heart of Wall Street and may soon have an impact on the destination club industry and other second home ownership alternatives.

Lehman Brothers' bankruptcy joins major changes at AIG, Goldman Sachs and Morgan Stanley, causing drastic market swings on Wall Street and an unsure financial market. In the destination club realm, Ken May, James Millership and Bob Burch, the executives of the conservation focused destination club Everlands, may have been watching the market closest. Lehman Brothers served as both financiers and investors in the ultra-luxury destination club. An Everlands Life spokesperson indicated that their firm was "doing great" despite the Lehman Brothers bankruptcy and declined to make any further comment on the topic. Phone calls to their PR agency were not returned.

Due to the possibility of a slower growth period in the coming months, The Veras Group predicts a shake out period in the near future for destination clubs. Expect a few smaller clubs to merge with one another, as well as acquisitions by larger, more established clubs. Undercapitalized start-up clubs will have difficulty making headway as evidenced by the Diamante Residences cancelled launch. Expect other similarly sized firms to fade out of the industry just after their launch. While we don't anticipate any major changes before the end of the year, destination clubs typically post stronger sales in Q4, coinciding with year-end sales promotions. Expect to hear merger and acquisition news by Q1 of 2009.

As noted in our recent article "How Destination Clubs Fare in a Slow Real Estate Market," the current economic climate is advantageous for well capitalized firms to make positive jumps. Expect to see one to two clubs with strong financial backing to acquire quality real estate at well under the market rates of several years ago. Those more highly capitalized clubs will also weather the economic storm, as will those clubs purposefully designed for slower, steadier growth.

These market conditions reinforce the necessity for strong due diligence when looking at destination clubs and fractional ownership options. The Veras Group serves as your destination club consulting and brokerage firm. As our client, we accompany your destination club 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 The Veras Group website.

Join us: we know the way.

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