Written by Jamie Cheng 06/15/2006
The Lusso Collection, a new destination club based in Eden Prairie, Minnesota, pulls back the curtain and announces the official launch of their club. After nearly two years of behind-the-scenes development, LUSSO selected Helium Report as the venue for their initial debut.
Today, in the first of a three part series, we'll review The Lusso Collection and compare their program to other destination clubs. Next, we'll publish an exclusive interview with Steve Greer, CEO, and finally, we'll wrap up with an overview of their existing home portfolio.
As the destination club experts, Helium Report covers every new club, including three that launched in May 2006. Lusso is the only one we've seen this year that launches with 30 members and 14 available homes in 8 destinations (7 more homes are under construction).
At first glance, Lusso resembles many of the other luxury destination clubs, which one would expect for a club whose name is the Italian word for luxury. The Lusso membership deposit is $325,000, annual dues are $25,000, and home values average $3 million. They offer a 100%+ member refund (more information on that later) and the typical 3:1 resignation ratio (3 members must join before 1 leaves). Lusso touts a 5.5:1 member-to-home ratio, but as we point out in our Decision Guide to Destination Clubs, the metric doesn't provide a complete picture of occupancy unless you factor in the days of usage per member.
Lusso sent us a sneak preview of their new brochure: a heavyweight-class, 55-ounces of beautiful photos of homes in the usual locations from Deer Valley, Utah to Cabo San Lucas, Mexico. They include a not-so-subtle reference to a hypothetical "Big Residence Club" (hmm, which club is that?) when describing their 550 member limit.
Lusso Differentiators
What's different about Lusso is their quiet development and launch as not a charter club, but rather as a growth stage club with some elements of scale. With an existing portfolio of homes and a base of members (not including investors), Lusso has demonstrated they've surpassed the startup hurdle of acquiring members and homes simultaneously.
CEO Greer waited to launch Lusso officially, believing that "if they build it, people will join," instead of the other way around. It's as if he's channeled Terence Mann from Field of Dreams>
"Steve, people will come Steve. They'll come to Lusso for reasons they can't even fathom. They'll arrive at your website as innocent as children, longing for the Lusso Collection. And they'll visit the homes and it'll be as if they dipped themselves in magic waters."
As with any new entrant, Lusso offers some unique features to differentiate themselves from other destination clubs. Lusso promises a 100% refund plus 50% of the increase of the value of the deposit if you leave the club. Their program is similar to other "membership appreciation" models, where clubs offer to share the potential gains as they increase dues or their real estate portfolio appreciates.
Lusso makes a point about load-balancing their demand - both in geography and number of families with school-age children - to help ensure members have equitable access to homes. They offer the option to gift two weeks a year at no charge to friends or family. Members and guests have access to a luxury car at most locations as well.
The holiday rotation program tries to be simple but still sounds complicated. There are A, B, and C holiday groups, rotating Christmas and New Year's reservations, plus a bonus if the Twins win the World Series. Lusso offers a real-time online reservation system to simplify the booking process, a feature that we usually only see offered by clubs that have reached scale (or what Lusso calls the "Big Residence Clubs").
Summary
Greer has assembled a strong team of investors, real estate professionals, and managers with destination club experience. By operating in "stealth mode" the past two years, Lusso has leapfrogged the initial startup phase. We're glad to see the voice inspiring Greer is James Earl Jones' whispering, "If you build it, they will come," not "Join the dark side, Steve," reprising his role as Darth Vader.
As we've found with most destination clubs, you still need a slide rule and a PhD in astrophysics to fully grasp all of the reservation rules, but the online system helps significantly. Lusso is upfront about how they operate a viable business - producing revenue through the deposit, annual dues, and real estate appreciation. They're specific about stating that deposits are subordinate only to the average of 50% debt financing for homes. Both points provide a level of transparency and assurance we like to see.
Next, we'll publish an interview with the CEO followed with more information about the fourteen existing Lusso homes. For more information about Lusso Collection, visit their website, www.lussocollection.com to request marketing material.