Land grab: the barons of the bolt-holes

The Hideaways Club offers shares in foreign villas to the super-rich, but its founders hardly want to get away from it all. By Mark Leftly
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The Independent Online

They may have named their holiday homes business The Hideaways Club, but there was little chance of the founders staying hidden for long.

Tucked away in a discreet, unmarked office just off Sloane Square in central London sit three of the more successful men in UK business over the past 15 years: Mike Balfour, the founder and co-chairman of gym chain Fitness First; Stephen Wise, who set up technology businesses QMS and Networks Direct; and Helmut Schön, one of the City's leading deal makers in a career that has taken in senior roles at investment banking giants UBS, Merrill Lynch and WestLB Panmure.

And these are just the guys who could actually make this interview. John Lovering, the Debenhams and Somerfield chairman, and Patrick Henchoz, who set up the Esporta rackets and gym chain in 1989, are also among the stellar cast of investors and directors.

The trio who are here wipe raindrops from their suits. Rarely do three people of this calibre agree to a joint interview, yet they have put up with our photographer, who has put them through hell to get that perfect portrait.

Irate taxi drivers sound their horns as the snapper positions them in the middle of a road, the drizzle turning into a downpour. So private property is trespassed to get a better background for the shot.

The Hideaways Club is a fledgling business, founded in 2006 for £15m using cash from the founders and from bank Investec. The club is loosely based on the US "fractional ownership" model, under which an investor buys a small percentage of an asset and gets the right to use it for a set period each year. At Hideaways, the investor pays £220,000 to own a share in the property holding company. This gives them access to 13 properties from Marrakech to Kalkan in Turkey.

"I owned a villa in Portugal but I never went there," explains Schön. "I'd bought it out of frustration from so many holidays where I'd been fed up. I thought that there had to be a better way."

Between them, the founders believed that the better way was fractional ownership, a largely unknown concept in Europe. The twist here was that the investors would own shares in the company, rather than just buy the right to use the properties. The latest tranche of shares are being issued this month, taking the number of investors to 60.

There has been little marketing so far, with members joining through word of mouth. Around 60 per cent of them are entrepreneurs, chief executives and private equity partners, and a Formula One driver has just joined. "We had no members nine months ago," says Balfour, the dominant personality in the group. "We went out contacting people we knew and then got a lot of referrals from our existing members."

"They all have certain things in common," says Schön, snapping his fingers. "They're successful, have some spare change and have no time to organise a holiday. They need things taken care of," he says, alluding to the fact that there is both a UK concierge and one at every site who will help the holidaymakers plan their time, should they want that.

"If you look at each of our backgrounds, we have got different contacts," chips in Wise, who although by far the quietest of the three men, is the chief executive to Balfour's chairman. "We took the view that word of mouth would be stronger than anything else. This is all just common sense."

"But we ran out of friends," jokes Balfour, before getting serious. "What I like to do is get involved in new trends. Getting in at the time we did, we very quickly became the leader in the equity destination market."

Despite their successes elsewhere, this is no mere hobby horse for the investors. Schö*and Wise devote most of their working time to Hideaways, while Balfour says that he divides his hours fairly evenly with Fitness First.

They have grand ambitions. "Our goal is to build up to 100 villas – that's a property fund worth over £100m – within four years," says Balfour. Within three years, a flotation is an option.

Primarily located in Europe at the moment, the portfolio could soon include properties in Oman, Dubai and Mauritius, though Asia is likely to be the next growth area. "There will be fill-ins, like Greek islands and Italian lakes," says Schön. From 2009, 10 to 15 new properties a year will be introduced, until there are 100 villas in more than 30 locations.

The founders believe this market could be huge. The US has 80 similar clubs, with 6,000 members paying between $400,000 (around £200,000)and $500,000 to join – a $2.5bn-plus sector. "We haven't even scratched the surface," smiles Schön. "We're getting enquiries [to join] from the Middle East, Asia and Russia."

And investors are enjoying another benefit. The shares are revalued by accountant Deloitte every six months, and it already costs £30,000 more to join than it did last summer, demonstrating the demand for the Hideaways Club's product. All of the directors are also members, and Balfour recently went to a villa in Marrakech, where dinners at different restaurants and golf at exclusive courses were arranged for him every day.

Balfour, Schö*and Wise are now dried off, in good spirits despite their ordeal with the photographer. Theirs is a luxury product, out of the reach of people who aren't at least a single-digit millionaire. But there are still quite a few of those in the UK who have yet to be tapped. The aim is that the club won't be hidden away from their view for much longer.

The jet-set can buy into a yacht too

Also operating from the Sloane Square offices is Yacht Plus. This is fractional ownership in boats designed by Lord Foster, one of the world's greatest living architects whose work includes the "Gherkin".

Although not strictly a sister company to the Hideaways Club, there is a "close relationship", says Balfour, between the two. Under construction in Italy are four yachts, all 41 metres in length, that can take 12 people each. Members will have flexible access to the boats.

The first will be launched at a boat show in Monaco in September, with its maiden cruise being around the Caribbean.