Real Estate: Hurricane Keith: Private Escapes hit market with Platinum option

Real Estate

Over the past month Richard Keith has monitored the comings and goings of hurricanes with a little more attention than before.
Since January, when Keith launched his Destination Clubs by Private Escapes venture, he’s become an interested property owner in those parts of the world – namely the Caribbean and American southeast – where hurricanes like Frances and Ivan tend to take aim.
“Hurricanes take on a different dynamic when you own property in Florida and Kiawah Island, S.C.,” Keith said after an early September trip to close a purchase near Naples, Fla.
Keith, the former CEO of Center Partners Inc. in Fort Collins, has stirred a hurricane of his own making in the luxury timeshare industry.
In mid August Private Escapes introduced Private Escapes Platinum, a first-of-its-kind concept that gives members a dividend on their $180,000 entry fee.
In the four weeks following the announcement, which included an appearance Aug. 13 on CNBC, Private Escapes Platinum has landed “about 500 very qualified leads” for future members. According to Keith that’s about 10 times the industry’s standard pace for generating leads.
The deluge of phone calls after the Platinum announcement required Private Escapes to hire temporaries to work the switchboard.
As it sounds, Private Escapes Platinum serves higher rollers compared to the original Private Escapes, which charges a $75,000 entry fee.
Members buy access to $1 million-plus properties in vacation and business travel destinations, with concierge services at each site.
Keith isn’t first in the industry, where other rival clubs charge up to $275,000 for entry fees. So he needed a hook to set Private Escapes Platinum apart.
Keith is offering a dividend to members equal to 18 percent of the annual appreciation of the Private Escapes Platinum portfolio. He estimates annual appreciation on the properties to range between eight and 12 percent per year.
“The club does not make money on its dues and its nightly fees,” Keith said. The secret to the business model, rather, is annual appreciation on the portfolio. “To date, no one has been willing to give members a piece of the action.”
As the first to market with the dividend model, Keith expects his rivals will experience some competitive heartburn.
“The other guys now will probably have to scramble a tad to … compete with this,” he said. “We’re fascinated to see how quickly they’ll respond.”
Among the early properties for the Platinum members include Kiawah Island, S.C., a condominium in New York City’s Trump Towers, and a yacht that’s docked in the British Virgin Islands.
Ironically, the task of acquiring the $1 million-plus properties has come easier for Keith and his partners than finding appropriate properties for his Private Escapes members, which aims for a $600,000 price target.
“That’s the most ticklish thing we do today – to try and satisfy members who join at 75K and find a $600,000 property that’s real cool,” Keith said.
Meanwhile, Keith continues the intriguing task of rolling up real estate in exotic locales. Maui is an “absolute must” for the Platinum members, he said. The list of prospects also includes Laguna Beach, Calif.; Cape Cod, Mass.; Lake Tahoe; Whistler, British Columbia and Jackson, Wyo.
“In the Platinum level … we are completely committed to a European product,” he said. “You’ll see us in Rome, London, Paris and Tuscany.”
And other places where hurricanes can’t reach.

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