You’ve got fun
For the well-heeled, membership in Steve Case’s resort company provides luxury vacations around the world

by Robert Burke
for Virginia Business
April 2007

Why buy a single vacation home when you can vacation at luxury properties around the world? And what busy executive needs the hassle of vacation planning?

There is now another option, assuming you have several hundred thousand dollars you’re willing to commit for the privilege of owning, essentially, nothing. Exclusive Resorts — a 5-year-old company owned and led by America Online founder Steve Case — is telling well-heeled customers in the destination club industry that they can have the best of both worlds. “What Exclusive Resorts really does for its members is it allows [them] to have all the benefits of owning a vacation home, without any of the hassles or any of the costs,” says CEO Donn Davis. “They arrive, they vacation, and they depart.”

In the past few years, the company has expanded quickly. Today it has more than 300 custom-designed homes — with an average value of about $3 million apiece — in 35 hotspot destinations around the world, from the French Alps to the Cayman Islands to Jackson Hole, Wyo. Membership has climbed past 2,500 people, says Davis, a sizeable increase considering that only 50 members belonged when Case bought the company in 2003. Based on the images at the ExclusiveResorts.com Web sites, these homes and locations are jaw-dropping, and they’d better be, since memberships cost from $225,000 to $425,000 plus annual fees that range from $12,900 to $29,900.

Davis says the luxury properties are only part of the appeal. “Everybody tends to focus on the sexiness of the real estate and how neat the homes are, but what most of the members really like is that when they arrive, the fridge is stocked, the lift tickets are on the table, the dinner reservations are made,” says Davis. “We’ve built a service system that’s perfect every time. So three months before you go on vacation, you relax.”

Case purchased the company when it was only a year old. He brought Davis on board to run his new venture, one of several projects Case has invested in since leaving the board of Time Warner after the merger he engineered with America Online (now known as AOL) soured. The holding company for his investments, Revolution LLC, is based in Washington, D.C.

Davis had been president of AOL Interactive Properties Group. He and Case think they’ve got the same kind of innovative approach in the resort business that helped build AOL. Exclusive Resorts is based in Denver, although Davis works in the Washington, D.C., office, and Case lives in nearby McLean. Davis spends a lot of time on the road working on new property acquisition and development. During a recent trip to Costa Rica, the company opened the luxury destination industry’s first members-only resort.

Davis won’t say if the business is making a profit yet — probably not, given that his public comments put the emphasis on growth. Davis says the U.S. has about 4 million people with a net worth of $2 million to $3 million. The company’s goal in the next five years is to increase membership to 10,000, and it’s already got about 75 percent of the market.

Last summer the destination club’s oldest company, Tanner & Haley, filed for bankruptcy, leading some to question whether this was a good business to be in. But Exclusive Resorts is taking a different approach that should give consumers and the company some confidence, says Jamie Cheng, an analyst with the Helium Report, a San Francisco-based firm that describes itself as an independent guide for wealthy consumers. Exclusive Resorts doesn’t lease properties; it buys them or builds them itself. It has close to $1 billion in assets, estimates Cheng, which gives it financial stability. Plus, having multiple properties in a single location allows some economies of scale.

We’re very impressed with the team,” says Cheng. “They clearly know what they’re doing.”

If members want to resign, 80 percent of their membership fee is refunded. They get between 15 and 45 resort property days per year, depending on level of membership. On average, members take about eight trips a year, mostly short vacations of around four days. Clients can use the ExclusiveResorts.com Web site to search available properties and make reservations. “You can plan your vacation in 30 seconds, and because of that you can take more and better vacations than ever before,” says Davis.