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By admin | March 12 2009
CEO and Executive VP of Marketing
Recently Exclusive Resorts’ Chief Executive Officer, Jeff Potter, and Executive Vice President of Marketing, Ian Arthur, sat down with Elite Traveler Editor-in-Chief, Douglas Gollan, to discuss the company’s new approach to marketing its product and some tips on how to enjoy their Colorado homebase.
ET: Jeff and Ian, can you start by giving us some background on your careers since you are both relatively new to Exclusive Resorts?
Jeff Potter: Primarily my entire career has been spent in the aviation field and I came up through the ranks, literally starting as an aircraft cleaner, ticket agent and then over time segued into the pricing, planning, revenue management part of the business. In 1995 I joined Frontier Airlines when it was a year after they started up and helped build that company from about five aircraft to 65 aircraft at the time.
Just over a year ago I was approached about this opportunity, which met some of my internal job criteria. One was escape the airline industry at some point, but more importantly I wanted to work at a company that had a group of people who were very passionate about the service they provided and who provided a service or a product that truly made a difference in people’s lives. So I’ve been with Exclusive Resorts for just over a year and it’s a tremendous company. Bottom line—we’re changing people’s lives.
Ian Arthur: Well, my background is really focused on marketing and I’ve had the opportunity to work for, and help build, a number of really great brands. I started in the sporting goods business with companies like Prince Manufacturing and then Head Sports, and then moved out to Portland, Oregon with Nike and had a great opportunity to work with the number one brand in the sports industry as director of marketing there.
Then I moved—my family didn’t like the rain so much—so I moved back to Colorado where I had the opportunity to work with Jeff at Frontier Airlines. Together we helped do the “Whole Different Animal” branding campaign, and from there I moved on to Vail and Beaver Creek and rebranded Beaver Creek. Then Jeff gave me a call but it took a lot of time to convince me because I really wasn’t interested in leaving the ski industry — it’s one of my favorite things to do.
The more I looked at Exclusive Resorts though, the more I saw that this was really a lifestyle brand. We have the opportunity to really shape how people will travel in the future, particularly the affluent, but there’s an opportunity to extend it beyond that.
So it was really, really exciting. Truly, once you’ve experienced traveling with Exclusive Resorts, why would you travel any other way? As Jeff said, we’ve changed people’s lives and it really is a totally different approach to vacations.
ET: For readers who aren’t familiar with Exclusive Resorts, tell us a little bit about the company’s history and the product and some of the particulars.
Jeff Potter: The company was founded about six years ago. I think when it was founded the model or the thought was that some people have second homes and only use them for very short periods during the year, but if you got a group of people together and you each contributed to the home and had several different homes you’d give yourself some flexibility in where that second home was.
It really grew out of that foundation. So we’re in our sixth year of operations and we have about 3,400 members now and over 400 homes around the world. It’s an all-inclusive experience, and as Ian pointed out, a lifestyle change.
So if you think about going on vacation and going to a very high-end four or five star hotel, it’s kind of that experience plus you have your own travel professional assigned to you who helps you with where you want to go, when you want to go. They kind of lay out the itinerary. Once you’re at the destination we have folks on-site who will meet your every need, 24 hours, seven days a week. Even when you arrive in a particular destination, your groceries, or dinner if you wanted, are there waiting for you. Whatever you want to do during your stay, it’s taken care of. We’re just trying to increase that level of vacation experience and I think the company’s done a phenomenal job.
ET: Tell us a little bit about how the membership works. How do you buy in and what are some of the particulars?
Ian Arthur: It’s very much like a country club membership. You pay a membership fee, a one-time deposit, and 75% of that is refundable if at some time during your membership you choose to leave. I want to point out that we have a 95%, 96% retention rate, so it doesn’t happen too often, but if it does you get 75% of that back.
Then you pay annual dues and those dues are calculated based on the number of days you want to travel during the year. So we have plans ranging from ten days all the way up to 60 days, in ten-day increments.
Once you join, we welcome you to the club and your member services manager contacts you to begin planning your first club vacation experience. This is a person that, trust me, members become very close to and vice versa.
What we do really is take away the hassle and the logistical aspects of a vacation so what you really get is that true experience. You’re not worried about things happening while you’re there—it’s all taken care of and the concierge is there looking out for your every need.
ET: What are the costs? What are the numbers behind the different memberships?
Jeff Potter: The membership fees start at about $129,000 for the ten-day plan and it is 75% refundable if you ever choose to leave. The dues are unilateral across all plans. It’s basically $1,000 a day, so for ten days it’s about that number.
For the high-end plans, the 60-day plans, we just recently converted to ten-day increments to make it a little simpler, and the initial membership fee is just under $500,000 for the 60-day plan.
ET: Now you were mentioning 400 different homes around the world?
Ian Arthur: Yes, over 400 homes.
ET: So let’s say I’m thinking about signing up. I guess one of my concerns is how do I make sure I can get the locations I want when I want it because I’m sure everyone wants to be in Vail and Aspen for Christmas week. How do I actually make sure I’m able to go to the places I want when I want?
Jeff Potter: Well with 3,400 members, there might be some times when you don’t get exactly what you want when you want it, but let me share a story about a member that I met on a recent trip. He told me that he’d gone on two vacations that he would never have gone on and they were probably two of the best vacations he’s ever had. So part of our offering and our scale gives you the diversity to choose among so many destinations and so many homes. If you’re firm in wanting to go to destination A, and it’s got to be this time every year, that might be a challenge. But with 3,400 members, they understand the process and there’s almost an upside that some of them get to go on these vacations and to places that they might not have considered previously because their first choice wasn’t available.
ET: Is the process first-come-first-serve?
Jeff Potter: It’s kind of a random selection with new properties coming on, where members enter requests and our system allocates reservations.. What’s interesting is you can book a destination up to two years in advance but we all change plans, so close to 40% of the original reservations are cancelled for some reason or other. Then we have what’s called a cancellation watch system, so if you want to go to Costa Rica next March and right now it’s full, you can put your name on this running list and if a home becomes available you get that home.
Ian Arthur: Just to add to what Jeff was saying—if you want to go skiing, we have all these great destinations whether it’s Jackson Hole, Vail, Beaver Creek, Whistler, Deer Valley, there are lots of options, and it’s really fundamentally what our members have discovered. It’s not necessarily about the destination that you’re choosing, it’s about getting away and being together.
And that’s what Exclusive Resorts does. We do “together” better than any company in the world. We bring people together, they get to share their experiences and it’s a much more rewarding vacation than if you were just to go to a hotel. For example, your kids can’t run around in their pajamas in the lobby of a hotel like a Ritz or a Four Seasons, but at Exclusive Resorts your kids can run around in their pajamas anywhere they want.
So it’s a very different type of experience. What our members have discovered is that it’s not necessarily the destination, it’s just about going to one of these places and that’s what makes it special.
A lot of our members were saying that they love the residences, but were also asking if there was a chance that we could organize trips to these amazing places around the world where they really wouldn’t want to buy a home, like in Bhutan. So we worked with leading operators, we catered each itinerary to our members knowing the standards that our members expect, and we really have developed these exceptional trips.
We’re also looking at expanding our inventory in Europe for our members because it’s such a desired destination in the summertime.
ET: For the past six or seven years the vacation destination club concept has been around but why don’t you think it’s gained the type of awareness that maybe fractional-ownership and the jet cards have, like Marquis Jets and NetJets?
Ian Arthur: I actually think it’s a pretty simple answer. The answer is that we’ve really sold it the wrong way. We sold it as a financial decision as in don’t buy a second home and worry about all the headaches of a second home. Instead join Exclusive Resorts and get all of these homes, over 400 of them. But it’s really not a financial decision. This is not an equity purchase. It’s not real estate. It is a club and it’s a way of life, and so we’ve sold the features and presented the features to people as opposed to presenting what the end benefit is.
Really the end benefit of our membership is that it becomes a way of life. You’re not thinking of taking a vacation year after year after year, it’s just your life. You make the decision to really live your life in a rewarding way that’s very different than going to a Four Seasons or a Ritz. It’s about sharing with family and friends, about taking friends that couldn’t otherwise afford to go to these spectacular homes and really being able to share your world with them. Members really enjoy that aspect of it.
Our service levels are extraordinary. For example, when you arrive in your destination you can have a private chef who cooks you dinner—especially when you’re tired, you’ve traveled all day and you don’t want to go to a restaurant, they’re there. It’s just about gathering and enjoying the moment.
ET: In terms of customer base, are the customers exclusively from North America? Do you have customers from around the world? Where do you see some growth opportunities?
Ian Arthur: They’re not exclusively from North America. They’re primarily from North America. A good number of Canadians have joined.
Obviously the opportunity and the idea is quite expandable to Europe and Asia. We do have some European members and we have some members from Latin America, but it’s primarily the United States. And is there opportunity to grow internationally? Absolutely.
I think what we need to do first though is to get the word out and help people understand what we do. That’s kind of job number one and we’re focused on that.
ET: Jeff, let’s talk a little bit about your background in the airline business because the airline business gets bashed quite a bit, although Frontier had a very good reputation. So, were there any lessons that you were able to take from running an airline that translated into the service aspects of what you’re doing at Exclusive Resorts, or were there things you had to unlearn?
Jeff Potter: I think it’s fair to say that airlines are not typically seen at the top of the list of providing great customer service, but I’m proud to say that Frontier was a whole different animal and they did a great job. We prided ourselves on great service. We felt those were the basic fundamentals and the industry itself set such a low bar of expectations for its customers that at Frontier we decided to set our own expectations which were tenfold of what the industry standards were.
It’s so important for us at Exclusive Resorts to, not only as we grow, gain new members but also keep our key focus on providing that service and that relationship to our current memberships. They put a lot of trust into us. You know, as Ian pointed out, this is a lifestyle change and with that comes a lot of weight on our shoulders, and I would say this organization does it like no company I’ve ever seen.
But then again, we pride ourselves on always finding ways to improve. So, to answer your question, I probably had to unlearn a little bit more than learn but I’ve gained a greater understanding of the importance and the critical nature of helping people change their lives.
ET: If you now went back to the airline business, are there any things that Exclusive Resorts does that you would say the airlines could do and could do profitably?
Jeff Potter: Could do, yes; could do profitably, I don’t know. I think, again, my background with Frontier is a special case and they did a great job. I think the similarity is simply that they recognize as well as we do that there are always ways to improve and set your own standards. Don’t let peers or an industry set them for you—be your own toughest critic.
ET: Just switching gears from business for a minute, any hobbies or things that you like to do when you’re not busy working?
Jeff Potter: Well, I have three kids and a wonderful wife. We actually spend a lot of time together, and as a member of Exclusive Resorts, I would say this last year we’ve had the opportunity to take a couple of trips as a family that have probably been two of the best vacations we’ve ever had.
At the same time I like to get out and golf. Golf for me is not typical of most golfers. It’s a full-day excursion. It is a lifestyle experience. So I do like to get out, but spending time with family is my priority.
ET: Any of your kids in the airline business?
Jeff Potter: No. I’ve succeeded in stressing to them and enforcing that there are easier paths to follow.
ET: You’re based out in Colorado. For any of our readers who are headed out that way, any great golf courses you’d recommend they play?
Jeff Potter: Yeah. In fact I think Colorado has an incredible selection of golf courses. Right at the foothills there’s Arrowhead. It’s one of those golf courses where the camera is as important as the golf clubs. In my case the camera is more important than the golf clubs because the golf clubs don’t work as well as they should. Ian can probably talk about the mountain courses better than I can. But there’s such a diverse selection. They’re all different. You know, you have courses that while you’re playing you truly think you’re in Scotland or Ireland, and at the same time you go down to Castle Pines and Arrowhead, and you’re in the trees and it’s just a beautiful setting.
ET: Ian, you mentioned you’re a little bit of a skier, and then apparently a mountain golfer. So any hobbies or things you like to do when you’re not busy with Exclusive Resorts?
Ian Arthur: Like Jeff, family comes first. I have three girls and they’re all very, very active so just keeping up with them is difficult. They ski race, they play soccer, and so my Saturdays are generally spent going to the soccer field or in the wintertime going to watch them race. So that’s what I do. I’m also kind of a sports nut. I play golf, I play tennis, I play squash.
ET: What’s your handicap?
Ian Arthur: What’s my handicap? This is being recorded so I’m a 14 handicap. [LAUGHING]
ET: Obviously, you know, yesterday was a good day on the market and we’re having some interesting times in the economy. How is that affecting your business?
Ian Arthur: I think it’s affecting it as you might suspect. On one hand, new sales have slowed down a bit though we’re still having a very good year. But there are a lot of folks out there that are taking the sideline attitude. We’re just going to wait and see how this plays out a little bit.
As for our current membership, I mentioned we have a 95%, 96% retention rate. We would have expected, because of this environment, to see an increase in resignations but, as of right now, we’ve only seen a slight uptick but it’s well below what you might have expected.
I think over time, whether it’s the next 15 days, 30 days, 60 days or 90 days, people still need a vacation. In fact, in these tough times it’s probably more important that they get together with their family and friends. It’s a stressful environment out there, we recognize that, and it actually kind of reinforces what we’re trying to convey. This is an opportunity to change your life and in many respects there’s no better time.
ET: Are there any changes you’re making to the business to better prepare yourself for uncertain times?
Ian Arthur: Oh sure. I think it’s always in the back of your mind that it’s a cyclical environment out there. You have to be prepared for these times. We’ve got a very experienced management team, ownership group and we are certainly prepared for these kinds of tough challenges. And who knows? We can all speculate on when that true consumer confidence starts to rebound, but you know, we’ll be there at the other end and stronger than ever.
ET: The principal owner is Steve Case. He’s quite a famous boss. Do you have any good stories about what it’s like to work for Steve Case? Is he hands on? Does he get involved day to day?
Ian Arthur: I would tell you that Steve fell in love with this company when he first made his original investment a few years back. He truly fell in love with the concept. He, obviously, is a member and travels and I wouldn’t say he’s hands on, but I can tell you he loves this company, loves what we do, loves how we change people’s lives so he has a very significant interest, which goes well beyond the financial aspects. He truly believes in our goals, our vision, what we’re trying to do and so he’s definitely involved. And he’s very insightful. He has such a broad background and it’s always good to hear his thoughts. He’s a great boss to have.
ET: Does he call you up with ideas or what type of interaction do you guys have with Steve?
Jeff Potter: Well, he comes out to visit and likes to know what’s going on. We just had a round of e-mails from him yesterday saying he’s very interested in what we’re doing and has ideas he wants to throw out to us. He’s got a great marketing mind, and so he and Ian have discussions.
As Ian has said to you, we’re going through this rebranding and that’s something that Steve’s got a lot of experience in so we welcome his insight, we welcome his thoughts and also seek those out.
ET: Do you want to talk a little bit about the rebranding and what that’s going to mean and what the new position of Exclusive Resorts is going to be?
Ian Arthur: Yeah, absolutely. One of the important things is we’re a service organization and so we actually have more than 50% of the company involved in the branding process. They all went through the whole education process—who our members are, who our potential customers are—and really got involved with the decision making.
The interesting thing is that we had over 90 of the best agencies in the world solicit our business through the RFP process, and we narrowed it down to a handful of really top agencies, and we gave them a chance. We said we’re looking to rebrand the company, come back to us with new tag lines and a creative platform that expresses our end benefit.
They did a great job. All these agencies did a phenomenal job, and the whole company went through it. There were basically 80 people sitting in a room listening to presentations from agencies. Most of the agencies had never done that; they had always presented to the CEO and the marketing VPs so it was exciting for them as well. We chose Leo Burnett out of Chicago. And the tagline is ‘There’s no place like together.’ That really goes back to the experience where, as we’ve described, we do “together” better than anyone else. What our members love about this is that we shared the campaign with them and they literally wrote in saying they had tears in their eyes, that this is exactly why they joined, that this is exactly what it means to them and it really focuses in on the end benefit. It focuses in on how precious life is, how little time we have and how important it is to share those times with people. In this uncertain time, with the economy the way it is, as Jeff said, this is the kind of investment you want to make. It’s an investment in you, in your life, in your family and in your friends that you want to make because there is no other way to travel with the people you care about like Exclusive Resorts.
ET: So talk to us abut your vision for the next three to five years and where you guys would like to see Exclusive Resorts maybe five years from now?
Ian Arthur: I think from a starting point we need to get the brand out there. We need the consumer, our potential customers, to truly understand what we do. Once we do that, then I think this is a very expandable platform.
Really this is a lifestyle brand. This is one of those products, one of those services, that’s very lifestyle-oriented and will change people’s lives. It has huge potential whether it’s an up market or down market, whether we expand to Europe and Asia, whether we do sports clubs, it’s a very expandable idea.
The beauty is that for every new member that we get, we expand the club. The 75% of the initial membership fee that’s refundable we invest in real estate. That’s what we do with that money. So as we invest in real estate, we expand our portfolio, we offer more destinations and the club becomes bigger and more enjoyable for the members. Their service stays the same because they have member services managers; it just provides them more options. So the more we expand the club the better the club becomes.
ET: Great. Anything else that you want to add?
Jeff Potter: No, I think Ian laid it out very nicely. I think the opportunity that we see before us is very exciting and I think, most importantly, very expandable. I don’t think though that there is a goal out there in mind that we want to be such and such size. That is going to be reflective of how successful we are in generating greater awareness, getting more members, and providing more diversity in destinations and in experiences. Hopefully we’ll see that culmination over the next couple of years.