For many people, owning a luxury vacation home in an exclusive location has long been an aspiration. However, the costs, maintenance, and the reality of limited usage have driven many individuals to explore alternative models. And these models have proliferated, to the extent that there are multiple options, each with their own advantages and disadvantages. There’s no one size fits all and it’s a very personal decision to find the ones that best fit you and your family.

This article runs through the different options and explains the rather confusing terminology. Many of the organizations use the same terms to describe different offerings. Continue reading to bring some light to this confusion.

Four Options

Let’s delve into four alternatives to buying your own luxury vacation home. The four covered here are destination clubs, residence funds and equity clubs, luxury fractional residences, and private residence clubs. We will help you explore the pros and cons of each model and identify the types of people these alternatives may appeal to. There are other alternatives, for instance you could stay at a luxury hotel or could rent a home or villa – but these also have their advantages and disadvantages.

All four options offer homes that are luxurious, think $1m to $5m+ residences, that are impeccably furnished, provide very high levels of service, with the certainty of a five-star hotel in the comfort of a spacious home. They all require an initial upfront payment to purchase a membership or share and then have annual dues or maintenance payments. Each model enables you to just pay for the time you will actually use a property. In other words, you are not paying year-round for a second home that only gets used for a few weeks a year. They also allow you to bypass maintenance and whole ownership woes, as the annual or usage fees cover all upkeep costs and these fees are shared by all members, while the management company takes care of the everyday maintenance and upkeep.

Destination Clubs

Destination clubs provide access to a wide variety of vacation properties, often spread throughout the world, and may also provide access to specialized travel and tours. With this broad array of vacation offerings, some clubs refer to themselves as luxury vacation clubs or members only travel clubs.

Access to a wide selection of exceptional vacation homes is the core part of the membership offering. The homes are usually large standalone homes with two to five+ bedrooms, providing plenty of room for friends and family. Other member services may include unique tours and experiences, personalized trips and high-end hotel partnerships.

Prior to the member's arrival, the house can be stocked with the food, beverages, and fresh flowers that the member wishes, and a local concierge will be on hand to help arrange local activities. Members do not have any ownership interest in these types of clubs.

Examples of these types of clubs are Inspirato, Solstice and Exclusive Resorts.

Residence Funds and Equity Clubs

Residence funds and equity clubs also provide access to a portfolio of exquisite vacation homes but with a key difference, that members are also investors and owners of the homes. The homes typically provide two to five+ bedrooms, are in sought after vacation destinations and may be in multiple resorts or locations around the world.

As with destination clubs, prior to the member's arrival, the house can be stocked with the food, beverages, flowers, games, and entertainment that the member wishes, and a local concierge is usually on hand to help arrange local activities.

This ownership may be referred to as fractional ownership or co-ownership, but in this case, you are co-owning a portfolio of vacation homes.

Examples of these types of clubs are Equity Residences and Destination M.

Luxury Fractional Residences

Owners of luxury fractional property buy a share of a single luxury residence, that provides them with two weeks to thirteen weeks of usage a year. The homes are usually stand alone, spacious single-family homes, with three to five+ bedrooms. The co-owners share usage of the property throughout the year.

In this model owners are buying into one particular home and there may sometimes, but not always, be opportunities to exchange time in other homes. This is a structure for people who really like one particular destination and want to return there a few times every year.

This ownership may be referred to as fractional ownership or co-ownership – of a single property.

Examples of these types of oragnizations are Pacaso and GoForth.

Private Residence Clubs

Owners of private residence clubs buy a share of a luxury residence, that is part of a larger development. For instance, a development may have ten, twenty or thirty units that are all very similar. These homes are typically two-to-three-bedroom units, and occasionally larger, that provide effortless ownership of resort real estate.

Owners benefit from five-star services and amenities such as daily housekeeping, room service, concierge, on-site restaurants, full-service spas, fitness centers and sports facilities.

In this model owners usually have opportunities to exchange time in other homes through trade and reciprocity programs. This is a structure for people who really like one particular destination and want to return there a few times every year.

This ownership may also be referred to as fractional ownership or co-ownership – of a single property.

Examples of these types of clubs are Timbers Resorts with properties in Vail, Tuscany and Jupiter, FL.

The table below provides a simple summary of some of the key features and differences between each of these luxury vacation home alternatives.