In this presentation to CSU MBA students, the rise and fall of Ultimate Escapes is used to illustrate the natural patterns companies in all industries experience. Marketers must recognize the market life cycle and plan strategies accordingly.

1. Ultimate Escapes, LLC:
How the Market Life Cycle
Impacts Success or Failure
Colorado State University
Graduate School of Business
Fundamentals of Marketing
October 12, 2010

2. Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout

3. Solar Industry Example
Source: Solar PV Development Strategies in Europe: 2008-2020

4. In the Beginning…
• Background: HP, Sorcia, and Center Partners
• Rich Keith and Kären Siwek
• Summer 2003
▫ Ed’s job search
▫ Rich and Private Retreats
▫ Brainstorming over a beer

5. Destination Clubs
• Run like country clubs
• Private residences in resort and city destinations
• Lower occupancy, higher availability
• Concierge services
• Financial:
▫ Deposits used for real estate and operations
▫ Dues and nightly fees
▫ Limits on redemption
▫ Appreciation on real estate

6. Value Propositions
• Target Customers
▫ Who are they and who are they not
▫ People with common needs; segmented by common value
• Specific, measurable, end-result benefits
▫ Exactly how much faster, better, cheaper, etc. in areas
important to Target Customers
• Tradeoffs Target Customers must make
▫ Price/Cost, inconvenience, change relationships, etc.
Source: Building Market Focused Organizations, Lanning and Phillips

7. • Target Customers:
▫ People with combined household incomes $200K-$500K/year
looking to purchase or build a vacation home or join a private
residence club
• Specific, measurable end-result benefits:
▫ Unlike other destination clubs, we’re affordable
▫ Unlike second home ownership, we offer a choice of worldwide
properties (avg. $400K) and convenient services
▫ Unlike fractional ownership, private residence clubs, or
timeshares, we offer a choice of worldwide properties, with higher
availability, unlimited usage, and convenient services
• Price/Tradeoffs:
▫ $50K-$75K refundable bond, $5K-$10K annual dues, $50-
$100/night
▫ No asset appreciation; no ownership
▫ Fewer amenities than private residence clubs
Initial Value Proposition

8. Web Site Launch

9. Initial Marketing Strategy
• Promotion: “friends and family,” Northern Colorado
advertising, direct mail, search engine placement
• Relationship with Private Retreats (A&K)
Memberships October November December January February
Planned 1 4 4 6 10
Actual 0 0 0 0 1

10. Breakthrough!
• March 2004: Wall Street Journal
• “Operation Remora”
• Grew to 49 Members, 7 residences and 11
employees by August 2004

11. Market History
01 02 03 04 05
•PrivateRetreats
•PrivateEscapes
•ExclusiveResorts
•PortofinoClub
•GentryRetreats
•Cresendo
•DestinationsPrivateResorts
•Dreamcatcher
•UltimateResort
•Emperor’sClub
•ChoiceEscapes
•PrivateResortInternational
•Quintess
•SimplicityInternational
•BelleHavens
•Havens
•Solstace

12. Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout

13. Market Dynamics—
2005-6
• Exclusive Resorts grows to over 2,000 members,
surpassing A&K
• New regulations on the horizon
• Growth slowing
• Rumblings

14. 2006-7
• Tanner and Haley (formerly A&K Destination
Clubs, formerly Private Retreats) files for
Chapter 11
• Quintess and Dreamcatcher merge
• Portofino and other clubs go dark
• Ultimate Resort proposes to merge with Private
Escapes, forming Ultimate Escapes

15. Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout

16. 2008
• UE merger underway
• Market down to 6 competitors
• Possibility of more bankruptcies and merging
• Market growth slowing
• … then…

17. The World Changed!
Ouch!

18. 2009-10
• Cash crisis
• Special assessment
• Layoffs and restructuring
• Market down to 3 competitors: Exclusive
Resorts, Quintess, and Ultimate Escapes
• Plummeting member satisfaction
• Sales still nearly zero

19. Typical Market Growth
Time
$
Early Innovation Rapid Growth Change or DieShakeout

20. Died!
ULTIMATE ESCAPES FILES FOR BANKRUPTCY PROTECTION
ORLANDO – (September 20, 2010) – Ultimate Escapes, Inc. (OTCBB: ULEI
and ULEI-W), today announced that it had filed for protection under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware for itself and certain of its subsidiaries.
The Board of Directors of UEI authorized the filing of a Chapter 11 petition
following the recommendation of a Special Committee of UEI’s independent
directors in order to protect UEI’s assets with a goal to maximize the value for
all of its constituencies, including its creditors, its members and potentially its
shareholders. The Company has requested that the Court approve the
appointment of CRG Partners, LLC to provide the services of a Chief
Restructuring Officer and supporting personnel, and UEI has also filed a variety
of first day motions that will allow it to manage its critical operations with the
goal of continuing to provide a reasonable level of services to its members for
the short period of the expected proceeding.

21. What Killed It
• Fatal, implicit assumptions:
▫ Real estate values will always appreciate
▫ Memberships will always increase in value and
will always sell
▫ Dues don’t have to cover operating expenses
▫ The recession is just a “speed bump”
• Bad management system
• … and most of all: hubris!