The belt-tightening and tighter financial controls that most families and businesses are implementing will apply to the destination club industry. The destination clubs, like the rest of us, will need to live within their means.

The restructuring of High Country Club (more on that later in the week) is a worrisome but not unexpected development. We can expect other clubs to do some or all of the following:

- Cut operating costs so that income generated from membership dues covers the operating expense of the club. Hopefully member services are not impacted.

- Alter resignation policies so that members are encouraged to stay in the club, at least for the next six to twelve months, until new member sales pick up.

- Restructure their real estate portfolios, perhaps selling homes where lenders are reluctant to extend financing, and shed leases.

This will be a challenging year for all clubs as the access to new capital either to fund the business or to fund new home acquisition will be much tighter. We can expect some members to resign based on trimming their own expenses.

We think that for a prospective member, your due diligence should be thorough. Review our complete list of questions, but focus on the financial stability of the club – its ability to fund operations from revenue, or its access to funding when needed to handle what will likely be a slower membership sales period. Also, we can assume that lenders for real estate will be demanding more equity from the clubs when they acquire homes.

One upside of this environment is that clubs will be able to acquire real estate at better prices than ever before. According to Christian Kirschner, High Country Club CEO, the appraised value of his club’s real estate had dropped 20-50% in one year. If you are thinking about joining a club, then ask the club how they could handle such a drop in their own portfolio.