Ultimate Escapes, LLC:
How the Market Life Cycle
Impacts Success or Failure
Colorado State University
Graduate School of B...
Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout
Solar Industry Example
Source: Solar PV Development Strategies in Europe: 2008-2020
In the Beginning…
• Background: HP, Sorcia, and Center Partners
• Rich Keith and Kären Siwek
• Summer 2003
▫ Ed’s job sear...
Destination Clubs
• Run like country clubs
• Private residences in resort and city destinations
• Lower occupancy, higher ...
Value Propositions
• Target Customers
▫ Who are they and who are they not
▫ People with common needs; segmented by common ...
• Target Customers:
▫ People with combined household incomes $200K-$500K/year
looking to purchase or build a vacation home...
Web Site Launch
Initial Marketing Strategy
• Promotion: “friends and family,” Northern Colorado
advertising, direct mail, search engine pl...
Breakthrough!
• March 2004: Wall Street Journal
• “Operation Remora”
• Grew to 49 Members, 7 residences and 11
employees b...
Market History
01 02 03 04 05
•PrivateRetreats
•PrivateEscapes
•ExclusiveResorts
•PortofinoClub
•GentryRetreats
•Cresendo
...
Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout
Market Dynamics—
2005-6
• Exclusive Resorts grows to over 2,000 members,
surpassing A&K
• New regulations on the horizon
•...
2006-7
• Tanner and Haley (formerly A&K Destination
Clubs, formerly Private Retreats) files for
Chapter 11
• Quintess and ...
Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout
2008
• UE merger underway
• Market down to 6 competitors
• Possibility of more bankruptcies and merging
• Market growth sl...
The World Changed!
Ouch!
2009-10
• Cash crisis
• Special assessment
• Layoffs and restructuring
• Market down to 3 competitors: Exclusive
Resorts, ...
Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout
Died!
ULTIMATE ESCAPES FILES FOR BANKRUPTCY PROTECTION
ORLANDO – (September 20, 2010) – Ultimate Escapes, Inc. (OTCBB: ULE...
What Killed It
• Fatal, implicit assumptions:
▫ Real estate values will always appreciate
▫ Memberships will always increa...
Ultimate Escapes: How the Market Life Cycle Impacts Success or Failure
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Ultimate Escapes: How the Market Life Cycle Impacts Success or Failure

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In this presentation to CSU MBA students, the rise and fall of Ultimate Escapes is used to illustrate the natural patterns companies in all industries experience. Marketers must recognize the market life cycle and plan strategies accordingly.

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Ultimate Escapes: How the Market Life Cycle Impacts Success or Failure

  1. 1. Ultimate Escapes, LLC: How the Market Life Cycle Impacts Success or Failure Colorado State University Graduate School of Business Fundamentals of Marketing October 12, 2010
  2. 2. Typical Market Growth Time $ Early Innovation Rapid Growth Change or DieShakeout
  3. 3. Solar Industry Example Source: Solar PV Development Strategies in Europe: 2008-2020
  4. 4. In the Beginning… • Background: HP, Sorcia, and Center Partners • Rich Keith and Kären Siwek • Summer 2003 ▫ Ed’s job search ▫ Rich and Private Retreats ▫ Brainstorming over a beer
  5. 5. Destination Clubs • Run like country clubs • Private residences in resort and city destinations • Lower occupancy, higher availability • Concierge services • Financial: ▫ Deposits used for real estate and operations ▫ Dues and nightly fees ▫ Limits on redemption ▫ Appreciation on real estate
  6. 6. Value Propositions • Target Customers ▫ Who are they and who are they not ▫ People with common needs; segmented by common value • Specific, measurable, end-result benefits ▫ Exactly how much faster, better, cheaper, etc. in areas important to Target Customers • Tradeoffs Target Customers must make ▫ Price/Cost, inconvenience, change relationships, etc. Source: Building Market Focused Organizations, Lanning and Phillips
  7. 7. • Target Customers: ▫ People with combined household incomes $200K-$500K/year looking to purchase or build a vacation home or join a private residence club • Specific, measurable end-result benefits: ▫ Unlike other destination clubs, we’re affordable ▫ Unlike second home ownership, we offer a choice of worldwide properties (avg. $400K) and convenient services ▫ Unlike fractional ownership, private residence clubs, or timeshares, we offer a choice of worldwide properties, with higher availability, unlimited usage, and convenient services • Price/Tradeoffs: ▫ $50K-$75K refundable bond, $5K-$10K annual dues, $50- $100/night ▫ No asset appreciation; no ownership ▫ Fewer amenities than private residence clubs Initial Value Proposition
  8. 8. Web Site Launch
  9. 9. Initial Marketing Strategy • Promotion: “friends and family,” Northern Colorado advertising, direct mail, search engine placement • Relationship with Private Retreats (A&K) Memberships October November December January February Planned 1 4 4 6 10 Actual 0 0 0 0 1
  10. 10. Breakthrough! • March 2004: Wall Street Journal • “Operation Remora” • Grew to 49 Members, 7 residences and 11 employees by August 2004
  11. 11. Market History 01 02 03 04 05 •PrivateRetreats •PrivateEscapes •ExclusiveResorts •PortofinoClub •GentryRetreats •Cresendo •DestinationsPrivateResorts •Dreamcatcher •UltimateResort •Emperor’sClub •ChoiceEscapes •PrivateResortInternational •Quintess •SimplicityInternational •BelleHavens •Havens •Solstace
  12. 12. Typical Market Growth Time $ Early Innovation Rapid Growth Change or DieShakeout
  13. 13. Market Dynamics— 2005-6 • Exclusive Resorts grows to over 2,000 members, surpassing A&K • New regulations on the horizon • Growth slowing • Rumblings
  14. 14. 2006-7 • Tanner and Haley (formerly A&K Destination Clubs, formerly Private Retreats) files for Chapter 11 • Quintess and Dreamcatcher merge • Portofino and other clubs go dark • Ultimate Resort proposes to merge with Private Escapes, forming Ultimate Escapes
  15. 15. Typical Market Growth Time $ Early Innovation Rapid Growth Change or DieShakeout
  16. 16. 2008 • UE merger underway • Market down to 6 competitors • Possibility of more bankruptcies and merging • Market growth slowing • … then…
  17. 17. The World Changed! Ouch!
  18. 18. 2009-10 • Cash crisis • Special assessment • Layoffs and restructuring • Market down to 3 competitors: Exclusive Resorts, Quintess, and Ultimate Escapes • Plummeting member satisfaction • Sales still nearly zero
  19. 19. Typical Market Growth Time $ Early Innovation Rapid Growth Change or DieShakeout
  20. 20. Died! ULTIMATE ESCAPES FILES FOR BANKRUPTCY PROTECTION ORLANDO – (September 20, 2010) – Ultimate Escapes, Inc. (OTCBB: ULEI and ULEI-W), today announced that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware for itself and certain of its subsidiaries. The Board of Directors of UEI authorized the filing of a Chapter 11 petition following the recommendation of a Special Committee of UEI’s independent directors in order to protect UEI’s assets with a goal to maximize the value for all of its constituencies, including its creditors, its members and potentially its shareholders. The Company has requested that the Court approve the appointment of CRG Partners, LLC to provide the services of a Chief Restructuring Officer and supporting personnel, and UEI has also filed a variety of first day motions that will allow it to manage its critical operations with the goal of continuing to provide a reasonable level of services to its members for the short period of the expected proceeding.
  21. 21. What Killed It • Fatal, implicit assumptions: ▫ Real estate values will always appreciate ▫ Memberships will always increase in value and will always sell ▫ Dues don’t have to cover operating expenses ▫ The recession is just a “speed bump” • Bad management system • … and most of all: hubris!

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