By Christine Tatum, The Denver Post Knight Ridder/Tribune Business News
Dec. 3--Former AOL Time Warner chief Steve Case is getting into the luxury vacation business with an investment in Exclusive Resorts estimated at more than $10 million.
The Denver startup, dreamed up by brothers Brad and Brent Handler, sells stays in multimillion-dollar homes to the rich and famous. Some real estate experts say their idea may steer more wealthy people away from buying vacation homes.
"An Exclusive Resorts membership is like having multiple second homes all over," said Buck Blessing, an Exclusive Resorts member and chief executive of Colorado Springs real-estate investment and development firm Griffis/Blessing Inc.
"Second homes -- and I do own one -- are not all they're cracked up to be. They're more expensive than you expect, and you don't use them as often as you think," said Blessing, who was en route from a stay at the company's Cabo San Lucas, Mexico, property, which was staffed with a cook, concierge, driver and various other employees.
Lest you mistake its offerings for the likes of a one-bedroom, one-bathroom apartment in Orlando, Fla., the company's glossy brochures don't use "time share" to describe 31 upscale residences in places such as Beaver Creek, New York and Paris, as well as a ship that travels the world. Instead, chairman and CEO Brad Handler likened an Exclusive Resorts membership to those sold by country clubs.
Members pay a $295,000 initiation fee and annual dues ranging from $12,000 to $18,000, depending on the number of guaranteed reservations they want in a year. By maintaining a ratio of no more than six members to every one residence it owns, the company claims it can give members who reserve at least 90 days in advance the destination and time of their choice.
Exclusive Resorts also says it can support about 400 members with its current portfolio of properties, valued at an average of $2.5 million.
The company began to accept memberships 10 months ago, and on Tuesday, Brad Handler said deposits now total more than $10 million a month. Professional golfer Hale Irwin and United Sports Agency president Dwight Manley are among those who have ponied up.
"They have a unique product that appeals to a very affluent sector," said Howard Glassroth, spokesman for the American Resort and Development Association in Washington, D.C. "More people of all incomes are seeing time shares as an attractive way to vacation.
"I know. I know," Glassroth added quickly. "I can understand that they may not want to use the phrase 'time share,' but at the end of a day, that's really what it is." Resort Condominiums International estimates the nation's time-share sales last year grew more than 14 percent to $5.5 billion. Roughly 1,600 resorts serve 3 million American households, or fewer than 3 percent of the country's residences.
Since leaving his post as chairman and CEO of AOL Time Warner earlier this year, Case has taken a special interest in Exclusive Resorts, visiting Denver at least a half-dozen times since January. He serves on the company's board of directors and as head of a corporate advisory committee.
Brad Handler, who served as the first in-house lawyer for online auction giant eBay, said he was surprised when Case contacted the fledgling company he runs with brother Brent, who ran an online IT training company in Denver, IQDestination, which shuttered in 2002.
"Steve found us on the Internet while doing a search, and he sent us a note with his name and phone number and a request for more information," Brad Handler said. "He made his decision to invest on the phone." Case declined to comment. However, analysts long have suspected that he is working to diversify his personal wealth, valued at about $525 million and once mostly caught up in highly volatile AOL stock.
Case is one of the largest landowners in Hawaii, with roughly 50,000 acres under his control. Among his holdings is beachfront property in Kauai on which he reportedly plans to build a hotel, golf course and residences.
None of Case's properties are now included in Exclusive Resorts' portfolio, Brad Handler said.
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(c) 2003, The Denver Post. Distributed by Knight Ridder/Tribune Business News.
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