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The Halogen Guides Take: Is Ritz-Carlton Testing the Destination Club Waters?

Written by Amy Gunderson 08/04/2008
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In our mid-year look into the destination club industry crystal ball, Halogen Guides predicted the entrance of a major resort company.

Ritz-Carlton, a hotelier with a strong network of vacation real estate developments, is one company in a prime position to dive into the destination club market. But a recent look at the website for the Ritz-Carlton Club, the hotelier’s fractional real estate arm, reveals that this hotel giant seems already to be dabbling in the space by comparing membership (read: ownership) in its Ritz Club against traditional destination clubs.

The Ritz compares (see screenshot from their website below) its fractional product to what it calls a “non-equity destination club” on several factors, including home maintenance and amenities. Some of the comparisons seem moot. For instance, Ritz notes that its club features “resort style” amenities and services, and points out that the services at a traditional destination club home can vary.

In fact, many destination clubs have a local concierge available to vacationers, similar to the on-site concierges at the Ritz-Carlton Club locations, and some destination clubs, including Quintess, LRW and Exclusive Resorts, even have homes or residences in development at Ritz-Carlton properties.

Beyond deeded real estate ownership, which is the cornerstone of the fractional real estate model, membership in the Ritz-Carlton Club, with its multiple locations and the option to trade time at other resorts, seems to have more in common with so-called non-equity destination clubs than the Ritz site lays out.

We made a handful of suggestions earlier this year about how a hotel company, such as Ritz-Carlton, might begin to enter this space. There are currently seven Ritz-Carlton Club locations now open, from St. Thomas to San Francisco, and four locations in the works, including a development located mid-mountain at the Northstar Resort in Lake Tahoe.

Eleven locations would make a slim destination club portfolio, so Ritz could consider incorporating some of its whole ownership residences into the mix. It has residences in 15 states and Canada, as well as Mexico and the Caribbean. The residences, including those in development, hit the high points of the most popular destination club locations including Cabo San Lucas, New York, and Paradise Valley, Ariz., near Scottsdale. Toss in access to Ritz’s network of hotels and resorts, and tie in the company’s hotel loyalty program to add an extra layer of perks, and the Ritz-Carlton could have a club product appealing enough to go head-to-head with the biggest players in the destination club industry.

The Ritz-Carlton Club may be extolling the ways its fractional club differs from traditional destination clubs now, but with fractional sales slowing in some resort areas, perhaps they’ll be taking a cue from the market forces before too long: If you can’t beat ‘em, join ‘em.

Ritz-Carlton Club Comparison Chart

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