Australians are turning away from traditional holiday home investments

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New Zealand entrepreneur Nick Wood, co-founder of the internetprovider, ihug, says the concept still isn't properly understoodhere, and people tend to confuse them with timeshares or fractionalownership.
But with Australia at number 10 on the global rich list, with172,000 Australians with financial assets of at least $US1 million,he believes destination clubs are going to be the next big thing inluxury travel here.
Membership sales of destination clubs generated more than $US450million last year, up from about $US140 million in 2003, shows asurvey by US Market Researchers Ragatz Associates.
Destination clubs generally offer access to a portfolio of high-endfully-furnished homes, in locations around the world, with memberspaying an upfront deposit and annual dues.
They are seen as a cost-effective alternative to luxury hotels,villa rentals, and second home ownership.
Like hotels they have access to concierge services and mostlocations have between three to seven bedrooms, allowing for largergroups and families.
Unlike holiday homes, there are no maintenance hassles andexpenses, but unlike resorts, they offer privacy.
With all this in mind, and after selling ihug for around $100m in2003, Wood has started his own business, Distinctive Holiday Homes(DHH).
He had been living at his own resort in Fiji when the idea came tohim.
He has now spent more than $US20 million on 11 properties(including two yachts) that come with concierge, maid service, foodand luxury vehicles.
So far, DHH has 54 members from all over the world includingAustralia, New Zealand, US, UK, Mexico, France, Bermuda, Norway andBelgium.
Current destinations include a six-bedroom home in Beaver Creek,Colorado, a 17th century, five-bedroom Tuscan villa set among anolive grove and a lodge in Aspen Grove, Queenstown, New Zealand aswell as two luxury ocean yachts.
"Australians are turning away from traditional holiday home investments and are discovering the huge benefits of destinationclubs," Wood says.
"Our clients are often able to afford numerous internationalholidays and holiday homes. But they lead busy lives and don't wantthe burden of ownership."
Wood says increasingly Australians are craving themulti-millionaire's lifestyle, complete with yachts, sports carsand private jets, but don't want the bill that comes with it.
So destination clubs are being touted as the answer. And manycompanies are cottoning onto the idea, using the membership as away to have venues for staff retreats and rewards for loyalcustomers and staff.
Depending on the club, members may use the properties for seven to70 days a year, and sometimes more, depending on availability.
DHH members pay an initial membership deposit (of which 80 per centis refundable) of between $59,000 and $299,000.
Annually members then pay dues between $5,900 (for seven days stay)and $29,900 (for 42 days stay).
Members of Wood's club get: accommodation, laundry and cookingservices, discount private jets and use of luxury vehicles for 10%or 15% of what they would have to pay to buy the house themselves.
"Financially it makes huge sense in the current climate. Mostsecond or holiday homes have limited potential for net capitalgrowth and do not generate income. With interest rates as high asthey are, and a flat property market, any holiday home you buytoday you will probably be paying the bank interest for the nextfour years with little or no capital appreciation," he says.
"All our homes are worth well over $A2 mil. As we all know, thereare many ways to buy a property. But to buy a house like this, youmight require a deposit of at least $550,000, and then you wouldspend at least $120,000 in interest alone a year on the loan beforeprinciple repayment, $150,000 on furniture, power, water, rates,maintenance, etc. Compare this to $29,900 maximum a year for theclub."
The majority of properties and yachts have between four and sevenbedrooms, are professionally designed and decorated; containextensive artworks, top line furniture and fittings and all DHHdestinations come with a wide range of books, movies, games,magazines and an iPod sound system loaded with music.
Destinations to be added within the next year include a seasidehome in Diamond Head, Hawaii; a Manhattan residence; South ofFrance; a Caribbean beach house in St Maarten; an apartment onSydney harbour; Bora Bora in Tahiti and a 26-metre motor yacht tobe based in the Caribbean and the East Coast of the US.
IF YOU GO:
Details: visit: www.d-h-h.com.au