Stressed Fractionals

There was a sobering article on "destination clubs" in the New York Times over the weekend. These are the clubs that, for entry fees of $40,000 to $1.5 million, let members take vacations in luxurious properties all over the world. Sometimes known as "fractional ownership" deals, they are essentially high-end time-shares.

About 17 of these clubs opened in 2004 and 2005 alone, the Times reports. But as you might expect from an article headlined "Rainy Days in Paradise," the fallout hasn't been pretty. Quoting from the article:

"Home values have dropped, new credit has dried up and membership sales have plummeted, leaving many of the clubs with more bills than income. Several have filed for bankruptcy. Some have asked members for special extra payments to help them survive. And others have made significant cuts in business expenses."

Golf Digest Index (our spin-off magazine that comes out twice yearly) wrote about these clubs a couple of years ago. Its focus was which clubs offer the best access to great golf.  No. 1 in our ranking, the Steve Case-backed Exclusive Resorts, is still around. Apparently it hasn't had to resort to the drastic measures -- big assessments, for example, or dues hikes -- of some competing clubs. Its CEO is quoted as saying they have cut back on marketing expenses and corporate overhead.

Will that be enough to keep Exclusive Resorts sailing along? Stay tuned.

-- P.F.