Club Mad

Bob Hariri plunked down half a million dollars two years ago to join Distinctive Retreats, one of a growing number of destination clubs that offer members plush vacation homes for up to 60 days a year in exotic locations around the world. But his thrill quickly turned to chill. Hariri, 46, who heads a biotechnology firm based in northern New Jersey, ran into problems booking the properties he wanted and says he was disappointed with the quality of the homes. "I felt I was being overpromised and undersold," says Hariri, who quit the club just months later.

Not all was lost. As is standard for destination clubs, Distinctive Retreats, based in Westport, Conn., refunded most of Hariri's money (80% is typical) when he resigned. Since then, "we have worked out the kinks," says Rob McGrath, CEO of Tanner & Haley Resorts, owner of the club, which has begun leasing properties to meet demand in popular destinations like Cabo San Lucas, Mexico, and Kiawah Island, S.C.

Destination clubs have enjoyed robust growth, fueled by affluent baby boomers, who are opting to join clubs that give them a choice of world getaways rather than buying the traditional second home. The clubs have been around only since the late 1990s, when Tanner & Haley pioneered the concept. There are now 18 in the U.S., each with about 30 properties. Members pay an average $230,000 to join and $15,000 in annual dues, says Dick Ragatz, president of Ragatz Associates, a resort-industry consultant in Eugene, Ore. Some clubs are doubling their membership each year and have been unable to develop properties fast enough.

"It's a race to generate enough distinctive inventory in jet-set markets," says Scott Berman, a leisure-industry consultant at PricewaterhouseCoopers. The general rule is 1 property for every 6 members. But many clubs have fallen behind. They are working to rectify the problems, but in the meantime, if you join, you may not get all that's promised. At any destination club, it can be difficult to lock up the property you want over a holiday or if you book fewer than 90 days in advance. "They're oversold," says Bob Jones, consultant with OneTravel Holdings, an Atlanta online-travel agency. "People become disenchanted and leave."

That was the case with Hariri, who says that two weeks before a trip to Delray Beach, Fla., he was bumped from his chosen property. On another occasion, he says, a "beachfront" house was 700 ft. from the water. Still, Hariri has not given up on the concept. He joined a different club, Havens, based in New York City.

Some clubs are struggling on another level: they can't provide everything they advertise, says James Chung, president of Reach Advisors, a Belmont, Mass., research firm. "The homes didn't have enough pots to cook with," says Elizabeth Schlier, 37, a former member of Private Retreats, also owned by Tanner & Haley. "The towels and other linens were not as plush, and there weren't always enough toys for my children." Says McGrath: "When we were renting properties on a short-term basis to meet increased consumer demand, we would have inconsistent quality. But now we have satisfied client demand and offer consistency."