Luxury travel just got a little bit cheaperFebruary 13, 2012: 10:46 AM ET
Portico, a new luxury travel service from Steve Case's Exclusive Resorts, aims to accommodate travelers who want a luxury vacation but don't want to pay so much for it.
By Caitlin Keating, reporter
FORTUNE -- Luxury travel is going downstream. Exclusive Resorts, a high-end travel company owned by Steve Case, is launching Portico, a new private club that lets members access luxury vacation properties at more moderate prices than they otherwise could.
With Exclusive Resorts' existing service, members pay a one-time membership fee of $170,000, and another $1,045 per day for their travel. Portico, which officially launched to the public today, has a similar concept but it has no set rate per day. Portico members pay an initiation fee of $10,000, plus an annual fee of $2,500. In exchange, they have access to below-market prices for vacation homes around the globe, from Nantucket to Bora Bora. Most properties cost between $500 to $3,000 a night and come with a personalized service like you might find at a five-star hotel.
The luxury travel industry has struggled along with the rest of the U.S. economy during recent years. The average daily room rate at luxury hotels rose to $252.15 in the first eight months of 2011, according to the hospitality research firm STR Global. That's up from $237.06 during the same period in 2010, but down from $285.47 in 2008.
Philippe Bourguignon, CEO of Exclusive Resorts and the former CEO of Club Med, says high-end travel is picking up again. The company launched Portico with the idea that people still want to have a luxurious vacation, but they want to pay less for it. He spoke to Fortune about the travel industry in today's economy and the changing needs of vacationers.
How was the idea for this club created?
When I joined the company six months ago, I obviously assessed everything. I looked to see how after this period of 2008 to 2010 we could grow as a company. The idea for Portico was already there, so I decided the idea was a very good one and the time to launch it was now.
What was it about this concept that you liked?
This is not about growing an existing market -- this is creating a new market. Today, if you want to go on a luxury vacation, you have basically two choices. You can go to a hotel and you know what you will get. Most hotel brands have a wide selection of destinations, but they basically all offer the same service. Your other choice is renting a vacation home, where you obviously have more space for yourself and your family, but you don't have the service that you would find at a hotel. You might have a housekeeper, you might not. It's not predictable and consistent. We strongly believe there is a market in the middle where so many people want to have that consistent and more predictable experience with better service. Portico gives you hotel experience in a big nice luxury villa.
With the U.S. economy still undergoing a slow recovery, what is the demand like right now in the luxury hospitality industry?
The demand is still high, but the trends in luxury destinations have changed quite a bit over the last two to three years. People today are more conscious about their time. With Portico, it's more convenient to make a selection and to book a vacation. I've also noticed that people today want to decide what is good for them, instead of the hotel deciding. We do not impose things. If you're in a Portico villa, you decide your own schedule -- even when you want the housekeeper to come by. You organize your vacation the way you want it to be.
When you look back at your experience of being Chairman and CEO of Club Med, what do you take away from it?
When the world changes around you, you basically have two ways to react. One is to resist change and the other one is to embrace change, even if it's challenging. When I joined Club Med in 1997, after three years with a fresh team we did a remarkable job in converting the company, which had been losing money for eight years. After putting the company back together financially, the whole idea was to really evolve Club Med. Unfortunately September 11th happened and Club Med lost about half of its business for about three to four months. The goal was to change the company but it never happened. Club Med hardly makes money now. You must embrace change to be successful.