Industry Thought Leaders: Jim Tousignant of Ultimate Escapes

The announcement came as a big surprise to an industry recently by traumatized by surprises: that Ultimate Escapes, the second largest Destination Club in the world, was being purchased by Secure America, a SPAC (Special Purpose Acquisition Company), and because of this, soon would become the first publicly traded destination club in existence. In addition to this surprise, came another: in order to close the deal, the acquisition of Private Escapes, another destination cub that was in a 2 year merge process, had to be completed. Last week, this deal was done, paving the way for the SPAC purchase of Ultimate Escapes.

Jim Tousignant recently spoke with me about the changes his company has gone through and where it hopes to go in the future.

What is a SPAC, and how does it work with Ultimate Escapes?

SPACs are common entities outside the shared residence industry that pool investors money, and find relevant companies to invest in. If they don’t find anything, money is given back to investors. Ultimate is the first destination club that has ever been looked at by a SPAC, and that is because we are the second largest with first rate potential for greater growth in the near future.

How did Private Escapes fit into all this?

This acquisition of PE came as a two year process - a labor of love actually, as we knew if we could get it done it would help us, help the industry and most of all, enhance the member vacation experience. It started out as a merger, ended up as an acquisition.

With acquiring PE, we are including 49 new residences, bringing in 50M in luxury resort real estate assets, 16 new club destinations and 387 new club members. It is good for us and good for the industry. Through this process, Rich Keith and I ended up being very good friends, and I think he will be a great company Chairman. He has the ability to travel extensively, and is extremely experienced in luxury real estate negotiation and acquisition. And it must be remembered, he is one the few, FEW people who started a successful destination club when there was no rule book to go by. He did it himself, which is commendable.

What are some of the positive consequences of the Secure America deal?

As regards Secure America, this is a good deal for everyone, and the processes are what many have been wanting for years - Financial transparency, quarterly disclosure statements of where the money stays and where it goes. Further, ours will become a publicly traded company, everything will be out on the table. This type of product demands it, and we will provide it.

Also, with the Secure America deal, we can expand our business as never before. As an example, we are looking at an equity-based club dimension, where the members could indeed buy equity in our company by purchasing our stock. That would be a totally new concept in the industry, and one that we THINK could be a real success.”

What do you think separates Ultimate’s model from the rest of the pack?

I am glad you say “pack” because I think our success lies in that we are a business model that HUNTS: hunts for other business, for other avenues of revenue, for other companies with whom we can strategically liaise so we and they can be more substantially monetized, so our brands can have deeper root systems, with more depth, and more breadth.

Also, you have to know that the first generation DC model just does not work anymore: 3 in, 1 out, 20% of the membership deposit returned to the business while 80% goes back to the member, well, it has been proved it won’t work. You can’t make a profit or even break even with 20% going back into the business. We have gone through a complicated year, and with the unpopular, though necessary, member assessment, we had to reactivate confidence building in our members, and had to reassure suspended members that they could come back without ill will. And in our conference calls, we attempted to answer over all member questions, and these were not simple yes/no’s! I have heard that other clubs on conference calls do not entertain Q&A's because they are just too hard to deal with! But I think we must deal with member concerns when they come up. We would not have a club if we did not have satisfied members!

Are there other deals you are looking at in the near future?

Of course, more deals are over the next set of mountains, and we are there to hunt and incorporate the best ones into our club. No club can survive unless it hunts for business. Lessons learned from this economy is that you can’t depend ONLY on membership acquisition to remain profitable. You also can’t depend ONLY on real estate increasing in value.

We also know there are other products out there that are competitive with ours – this is why we want to provide the best choices for our members. If we can keep them content with OUR choices, and be available to answer all questions any time, then our members will be content and we will have won the day.