The cost per night for a destination club or residence fund is a really useful calculation for both comparing the clubs amongst each other, and also comparing them to alternatives such as hotels or villa rentals. Overall the cost per night has increased over time. This is not surprising given that the clubs have all been increasing their initial fees and annual dues.
The Results
Most clubs and membership plans fall in a range from $1,000 to $2,200 per night. Although some clubs are more than this and some are less.
We also calculated the cost per night per bedroom, using the average number of bedrooms in the clubs homes. We simply took the cost per night above and divided it by the number of bedrooms. This is useful for comparing the clubs to hotel stays.
Clubs such as Exclusive Resorts, Equity Estates, and Inspirato have a cost per night per bedroom of $300 to $600 per night. Equity Residences and Destination M are in the range $150 to $300. The ultra luxury clubs are $750 to $1,000 per night per bedroom.
The Models
The updated spreadsheet includes three different models for calculating the cost per night.
1. The original model, described here, that uses (i) the annual dues, (ii) the non-refundable portion of the initial fee (iii) the nightly fee (if any) and (iv) the opportunity cost (on the initial fee). The opportunity cost is compounded over all the years of membership and then divided by the number of nights usage over this full membership period.
2. A simplified version of the original model. This is the same as the original model except that the opportunity cost is simply calculated over one year, and then divided by the nights of usage in one year.
3. A net present value based model. This calculates the net present value (NPV) of your cash flows (Initial membership fee, annual dues, any daily fees and the membership fee that is returned when you leave the club) as a member, this NPV is then divided by the number of nights over your membership period to come up with a cost per night. The NPV calculation also includes an element to calculate the value of the clubs who offer an increase in the value of the initial deposit.
As well as the "cost per night per bedroom" mentioned above, the spreadsheet also includes a "cost per night per million dollars of value" for the homes. This latter calculation divides the cost per night by the average value of the homes in a club, as a way to make comparisons across clubs with homes of different values.
The Assumptions
The calculations use the following assumptions:
- A 10 year membership period and then the refundable proportion of your membership deposit is returned
- A cost of capital of 4%
- For plans that allow an unlimited number of nights use we've used 30 nights - you can change this if you think you would use more or less
- If a club returns 80% of the current value of an initial deposit we've assumed that this will grow to 100% of the initial value over 10 years.
The Caveats (and Other Things to Consider)
It's just one tool for assessing destination clubs, and we make no claims for it being THE tool. But, if you're analytically minded, and if you like tinkering with spreadsheets to "run the numbers", then this is a great place to start. We've received lots of positive feedback from potential members that they found this tool really useful.
A lot of people also seem to have their own particular preferences for how to do this calculation and the assumptions to make. We've designed the spreadsheet to be very flexible and you can change most of the assumptions if that is what you like to do.
More specifically the calculation only uses the major financial items - the initial membership deposit and the annual dues - in each clubs membership plans. Be aware that each clubs membership plans include a variety of different items, which you'll need to evaluate separately to assess how important they are for you. For instance:
Holiday Use - Different membership plans have different amounts of peak holiday (eg Christmas, New Year etc) time that a member can reserve. Some clubs offer lower priced plans that specifically exclude any peak holiday time.
Family Use - most membership plans allow family members to use the homes without the member being present, other clubs and plans charge extra for this. See this article on Family use for more information.
Space Available Use - Clubs and membership plans vary quite a bit in how they treat the short notice or space available reservations (eg reservations made within say 30 or 60 days of travel). Some clubs such as Solstice have space available use as part of each membership plan. Some clubs such as Quintess, Exclusive and Equity Residences charge extra for additional nights above the nights in a plan level. Other clubs such as Destination M have unlimited space available use, subject only to the number of reservations that a member can have at once.
On Site Staff - some clubs provide full time on site staff at each home, some have concierges who are on call 24x7 but are not on site full time.
Services and Amenities - The clubs have negotiated favorable rates at local resorts, spas, golf clubs and ski mountains, this can vary by club and by location. Some clubs provide daily housekeeping, some weekly.
For all these extras there are no right answers, it's a personal decision as to which are important to you and how you value them.
Download the spreadsheet here and as always let us know what you think.
