posted by Desties on Dec 6
The destination club industry took another hit yesterday, when boutique operator Lusso Collection filed for bankruptcy reorganization.
Lusso seemed to be on the fast track of growth — just like High Country Club — before falling victim to the triple-whammy of falling real estate prices, tightening credit markets, and the cascading financial markets that make disposable income so less disposable these days.
It is important to point out that this is Chapter 11 (reorganization) and not Chapter 7 (liquidation). Save for losing out on some real estate in Anguilla, apparently, the club will continue operating with business as usual as creditors dictate its fate.
The industry obviously did not need this. A pair of prolific buckling speedsters isn’t going to help sway any fence-straddling potential destination club industry members to dive in. Consolidation would have been much better. Surely Exclusive Resorts could have made room for Lusso under better circumstances.
As it stands, with HCC and now Lusso, it appears that the industry’s biggest players are either letting the shakeout take place or have enough to worry about internally to take on companies with deteriorating financials.
Lusso has always been one of my personal favorites on the scene. It gets high marks from me for its polished website, detailed floor plans, and virtual tours. I hope it is able to get everything cobbled back together and grow again, but before any of that happens real estate prices need to stabilize. Now that even Hank Paulson is committed to that goal, we may be closer to the bottom than anyone may realize. Let’s hope so.
Tags: bankruptcy | hhc | high country club | lusso
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