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Resorts as Private Clubs Business Trend

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FT. LAUDERDALE, FL, January 6, 2006 – Whether it’s a beach resort in the Caribbean, a cruise ship to Alaska or an adventure or spa retreat, affluent baby boomers are expecting the newest and latest when it comes to their leisure time and are willing to pay for it. Multiple signature golf courses, luxurious spas, tennis and fitness centers, wellness centers, hiking, skeet and clay shooting, climbing walls, ropes courses, water sports, nature tours, private air-strip and multiple gourmet dining choices at resorts are now de rigueur for the boomer. 

Resorts have become the Disney World for adults. 

Boomers are also finding that their local country club is striving to keep their attention and dollars by building freestanding fitness centers, multiple pools and tennis complexes. To pay for it, dues and assessments are increasing to unparalleled heights.

Initiation fees have increased anywhere from $25,000 to $300,000, and up, for the privilege of playing golf and hobnobbing with a select few. 

While many may think it is as simple as closing the door to the general public (except for resort guests), it takes a lot more sophistication. Michael Padden, president of Three Oaks Hospitality specializes in developing private clubs for destination resorts.

“Resorts see that it makes all the sense in the world as far as revenue, adding cache to the resort and building guest and brand loyalty, said Padden. “However, it needs to be properly structured or guests will not see the value in the financial outlay when they can just visit the resort as a hotel guest. The resort needs to make significant accommodations in terms of value added, whether it is in private areas, special pricing and private members-only events that entice potential members to join.” 

“There has to be an advantage for the member and their family,” Padden continued. “If done right, it is also a tremendous asset for businessmen and women who want to entertain (and impress) their friends and business associates.”

Resorts, taking their cue from country clubs, are taking note as major capital improvements are essential to keep up with steep competition. It seems the old “heads-in-beds” mentality alone, cannot generate major capital. Resorts are taking advantage of the significant revenue stream to upgrade rooms and facilities, and to build additional amenities.

Adding member clubs also provides a cache for the resort. Joining a resort club provides a “must-have” appeal that makes belonging to a resort club as important as the latest restaurant or fashion label for city folk, (even their appeal lasts many years rather than a season or two). Locals who happen to live near these posh resorts see it as their local country club on steroids.

Many pioneer (resorts) that took advantage of the private club concept were initially supporting real estate components. They found that the resort acted as the country club component to boost real estate sales. Successful resorts that come to mind include the Boca Raton Resort & Club in Florida, Sea Island in Georgia and Pinehurst in North Carolina. They were all resorts that added a member’s club component to complement real estate sales efforts.

Hospitality executives also discovered that during a crisis or economic downturn resorts get hit hard as boomers curtail spending and travel. However, private clubs in resorts continue to generate revenue as the investment is already made and dues continue to support operations. Also, the safety factor checks in, as boomers feel more comfortable in familiar surroundings with staff who know them by name. 

Three Oaks Hospitality recently introduced a private members club called ELITE at the posh Nemacolin Woodlands Resort located in the Pennsylvania countryside. Initial membership opportunities include the release of a limited number of Elite 84 memberships at $84,000 and a limited number of Legacy memberships at $42,000. Social and Corporate memberships are also available. Membership prices will escalate following the initial pre-sale period.

Maggie Hardy Magerko, president and owner of Nemacolin Woodlands stated that ELITE fits in with her plans for the future. The exclusive members club is the first step in the privatization of the resort for club members and guests of the resort.

Members enjoy extensive privileges at Nemacolin including very special pricing on lodging, golf, spa services, recreational and sporting activities. ELITE members will also have private members-only areas and VIP receptions at the resort’s internationally-recognized seasonal events. Nemacolin’s goal is to add amenities to the extensive programs already offered at the 2,800-acre resort. 

New ELITE member John Garlow remarked, “The atmosphere at Nemacolin is wonderful; when I bring employees and friends here, the resort absolutely spoils them. It’s the experience you can have here, and the ability to be able to share it with other people. The ELITE club is very special for me and even better for my clients.”

Padden gave other examples of resorts he is working with to create private members clubs. 

PUNTACANA Resort & Club, located in the Dominican Republic, is the brainchild of Dominican businessman and hotelier Frank R. Rainieri and Theodore W. Kheel, the prominent New York attorney and labor mediator. They teamed up with Julio Iglesias and Oscar De La Renta for a stellar team that understands that a membership club will allow them to raise substantial financing for luxury amenities being planned for the resort. Currently there is a resort hotel, nature villas and beach villas on three miles of beach, with vast amenities including an 18 hole PB Dye course, tennis, horseback riding, fishing and boating. An 18-hole Tom Fazio golf course is currently under construction and a luxury real estate component called Corales is in the works with homesites being offered at the six figure level. 

“Because we are a destination, there must be a residential program,” said Frank Eleas Rainieri, the son of Frank senior and developer of Corales and the new members club. “The members club is a natural. It creates added value to buyers who want to have a home here.”

The financial implications and structure of members clubs can impact real estate as well as membership sales. Some clubs are structured with a high refundable initiation fee, meaning members can get their money back if they want to leave or sell. This is most attractive to the member. Other resort clubs have a non-refundable initiation fee that actually works better for the resort as the fee is now income as opposed to an asset placed in escrow. However, potential members may be more hesitant to join.

In both cases, annual dues pay for the operation of the club and the amenities are there anyway. It sounds easy, but there are ramifications to the resort if not structured properly.

“Developing a club includes financial, legal and marketing aspects that need to be carefully planned and executed. If not, the ramifications can be a nightmare,” explained Padden. “A series of important steps must be taken to insure the viability of a club at any given location.”
 Padden explained that there needs to be an initial investment by the resort in the club concept. “Some owners are afraid to spend, but it takes money to make money.”

“Nemacolin for instance, did everything right,’ added Padden. “They spent the time and effort to understand the program and made the investment to do focus groups to understand the potential user. We did an Internet survey from the database that gave us the information to create what the market was telling us they wanted. In their case, a tiered membership and a corporate and non-resident membership was created.” 

Three Oaks is also working with the K Club in Ireland, Cheyenne Mountain Resort in Colorado Springs, and the Sun River Resort in Oregon, among others.

It seems the resort as club concept offers tremendous opportunities for both owners and members. A win-win for everyone.

For more information about Three Oaks Hospitality, please visit their website at www.threeoakshospitality.com or email direct at corporateoffice@threeoakshospitality.com.

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Contact:

 Three Oaks Hospitality, Inc.
5030 Champion Blvd., Suite G6-258
Boca Raton, FL 33496
Office: (561) 868-2038
Fax:    (800) 915-0147
www.threeoakshospitality.com

Also See: Three Oaks Hospitality Creates New Private Members Club for Nemacolin Woodlands Resort / July 2005
Three Oaks Hospitality Adds Exclusive Nemacolin Woodlands Resort to Client List / February 2005
Three Oaks Hospitality adds Exclusive Private Club to Portfolio / August 2004


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