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30 June 2006
The Luxury Club
Despite 14 years as a senior executive at the K Club, Paul Crowe
always knew he wanted to run his own business, one in which
he would have a stake.
That opportunity came last December when he became chief executive
of The Oyster Circle, a start-up company based on a totally
new idea for the Irish market.
Backed by a group of investors including CBT Systems founder
Bill McCabe, The Oyster Club is a private members’ destination
club.
Basically, the company buys a range of luxury private properties
in stylish and exclusive locations around the world and members
get access to them for a set number of days each year. The concept
has already turned into a $2.2 billion industry in the US.
Crowe’s venture is up-and-running and he has ambitious
plans for the future of the business on this side of the Atlantic.
The Oyster Circle has already bought houses in Andalucia in
Spain, Cannes in France, New York and the French Alps.
By the end of next year, it will own properties in Cape Town,
the Swiss and Austrian Alps, Mauritius, San Francisco, Napa,
Barbados, Sardinia, Majorca, Crete, Lake Garda in Italy, and
Paris.
The idea is a little like golf club membership in that people
pay a once-off fee, and then annual fees to cover the maintenance,
service and kit-out of these luxury homes.
In return, members can stay at the houses for up to 35 days
per year.
‘‘A large part of the concept is service,”
said Crowe. ‘‘Each member will be assigned a personal
assistant with no more than 20 members to one personal assistant.
“That person will keep in regular contact and organise
anything that needs to be done, from flights, to car hire, to
any special needs.”
Crowe said that the company will have a concierge at each location
to meet the members when they arrive at the airport and make
contact with them every day during their stay to ensure they
are fully taken care of.
The club has a fee structure which is typical of similar clubs
operating in the US. Members who join pay a once-off fee of
€300,000.
After the first 50 members are signed up, this will increase
for new members to €350,000.
The lump sum is non-refundable in the first year and 80 per
cent refundable between the second and fourth years if people
wish to leave.
After the fourth year, the membership fee is fully refundable
if people want out, or they can receive 80 per cent of the market
value of the member’s fee, whichever is the highest.
Once the members have paid up, it costs €20,000 per year
for access to the houses for 28 days in that year, or €24,000
for 35 days.
‘‘Most people seem to want 35 days,” said
Crowe. He has already signed up over a dozen members, even though
he only began selling memberships in the last four weeks.
‘‘The properties have an average value of €3
million and we spend up to €200,000 on refurbishment and
decoration,” he said.
Ownership of the properties remains with the company, not the
members. According to Crowe, the scheme is not a money-making
investment but a lifestyle and holiday decision.
He rejected the suggestion that the charges were high.
‘‘When you look at what it would cost to buy one
of these homes, €300,000 would just pay the deposit,”
he said. ‘‘Typically, these kinds of homes in these
locations would cost around €15,000 per week to rent.”
Crowe had all his figures carefully worked out. He said a €2.5million
home would incur €125,000 a year in interest payments and
up to €60,000 per year in maintenance and servicing bills.
This works out at €185,000 per year to own one of these
homes.
The Oyster Circle wants to build up its portfolio to 67 homes
and 400 members.
‘‘This would ensure the properties were only used
50 per cent of the time,” he said. For Crowe, this membership
to homes ratio would ensure that people had access to whatever
homes they wanted, whenever they wanted them.
He gave the example of how one member recently arrived at one
of the houses and was delighted to discover that all the shopping
for the family had been bought and stocked in the house.
‘‘There is no one type of person we are targeting
as members,” he said. ‘‘But imagine someone
who can’t afford to spend €3 million on a holiday
home and if they did, it would just give them one location for
a break.
‘‘Or imagine the person who has a place in Spain.
The kids are all grown up and they are bored with going there.”
So far, he has signed up a varied group. ‘‘In some
cases they are people who have made money and have a lot of
time on their hands. They want to travel but don’t want
the hassle of owning a second home abroad,” he said.
In rural settings, the houses typically have five bedrooms.
The member or their partner can bring as many people as they
want to the house, subject to the number of bedrooms.
So up to ten people could stay at one of the rural houses.
‘‘The Umbria property, due to be ready in August,
has eight bedrooms,” said Crowe. They also have corporate
membership where five people are nominated for full member access
to the houses.
One question is whether the concept will work in Ireland. It
has already worked in the US, where the biggest player is a
company called Exclusive Resorts.
Set up in 2003, the company has 2,000 members, 280 houses and
a further 110 in development.
In 2004, AOL founder and chairman Steve Close bought a majority
stake in the company and became chairman. Its property portfolio
is valued at $1 billion.
Exclusive Resorts’ pricing structure is almost identical
to The Oyster Circle, in terms of membership and annual fees.
As well as Crowe, Bill McCabe’s other shareholders in
the venture include former CBT executives Bill Beamish and TG
Marsh, former Farrell Grant Sparks accountant Martin Scully
and former Gunne Estate Agents executive Ken McCullagh.
If they manage to secure 67 properties with an average value
of €3 million, they will have put €200million into
the project.
Originally from Cavan Town, Crowe describes himself as ‘‘a
reformed accountant’’. After spending four years
working for BDO Simpson Xavier, he joined the K Club in 1991
as its financial controller.
Over a 14-year career with the golf and country club, he held
a number of positions, including deputy chief executive and
director of golf from 1995.
‘‘Being there at the start of the K Club was very
exciting. It was the country’s first real world-class
golf resort,” he said. Michael Smurfit always took a very
hands-on role and Crowe said he first met him when he was being
hired. ‘‘He built that place with the Ryder Cup
in mind,” he said.
For Crowe, leaving less than a year before the club hosted the
Ryder Cup was a difficult decision.
‘‘But I had been involved with ten European tour
competitions and had done all of that, although I don’t
think people fully appreciate here yet just how big the Ryder
Cup is going to be,” he said.
He said the K Club would provide a perfect setting and course
for the competition, despite some criticism from American sportswriter
Bruce Selcraig about the venue.
‘‘That article was unfair. The K Club is a fantastic
golf course. Both [the courses at the club] are tremendous courses.
I thought that was a poor article,” he said. |
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