Exclusive Resorts Entrepreneurial Positioning and Nonmarket Defense

By David Baron
2004 | Case No. P48
In the summer of 2002, Brad and Brent Handler established Exclusive Resorts, a luxury vacation residence venture, to meet the demand for luxury vacation residences that avoided the hassles of owning a second home and being tied to a single location. The challenge was to position the venture in both the market and nonmarket environments. The positioning in the market environment was successful, and Exclusive Resorts was an instant success. In the nonmarket environment Exclusive Resorts was organized like a country club, which allowed it to avoid state timeshare regulations. The success of Exclusive Resorts soon spurred others to enter the luxury vacation residence club industry, and at the same time, nonmarket threats began to grow. The American Resort Development Association (ARDA) expressed concerns about whether luxury vacation residence clubs were operating outside the law, since consumers did not have the protections of state timeshare law. ARDA was also concerned that the contractual arrangements were not transparent to consumers and that the promises made might not be kept. ARDA was concerned not only with risks to consumers but also feared that possible fraud or failures among the clubs could tarnish the entire resort development industry, including its members. ARDA sought to have the luxury vacation residence clubs registered in the states in which they held properties and in which they sold memberships. If state registration were required, Exclusive Resorts would be subject to costly and burdensome regulations. Indeed, a core component of the Exclusive Resorts business model, that of inventory replacement via the sale of residences, would be prohibited. Students are asked how well Exclusive Resorts is positioned in its market and nonmarket environments, how serious the nonmarket threats are, what Exclusive Resorts should do about them, and to formulate an integrated strategy for Exclusive Resorts.
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