Lessons from Chateau World’s demise

Canmore Resort

BANFF, CANMORE, AB—Chateau World, an Alberta-based travel club, folded earlier this spring leaving over 7,000 members in the lurch. The company is in the process of being foreclosed upon by secured creditors, according to a news release from CHEATauWorld, a recently-formed core group of unhappy club members.

The release added that club members were left with worthless travel club memberships, and memberships in RCI.

Chateau World has operated an unlicensed travel club at Banff Gate Mountain Lodge & Spa and Chateau Canmore for more than a decade. In addition to membership in the travel club, members were sold RCI memberships that were to be maintained through Chateau World.

At press time, Chateau World Resorts at the Banff Gate Mountain Lodge & Spa was still listed on the Group RCI website.

Members are discovering that, not only have their RCI memberships not been maintained, but both resort properties are being foreclosed upon, the CHEATauWorld release said.

“The situation is unbelievable” says Bill Buterman, president of the newly formed Condominium Board for the Banff Gate property. “The members are stunned, angry and more than a little confused by the news. It has been a real blow to them.”

The club’s operators have been in trouble before. In 2004, the provincial government laid 125 charges against its mastermind Andre Muran along with several companies for breaches to the Fair Trading Act. In 2009, creditors foreclosed upon Chateau Canmore. Chateau World members were ‘upgraded’ to accommodations at Banff Gate Mountain Lodge & Spa.

The CHEATauWorld members are currently organizing information meetings at which they intend to propose a plan for the members to purchase and operate the resorts through an elected Board of Directors. Public meetings are planned for both Calgary and Edmonton in early May, so members can attend and have their questions answered.

Ross Perlmutter, president and CEO of the Canadian Resort Development Association, says his organization is truly saddened to hear about this club’s collapse.

“These people honestly believed that they were purchasing secured shared ownership when, in fact, they had purchased a membership in a completely unsecured travel club.

“We’re currently working alongside the Alberta Government to develop very strong travel club legislation to ensure that events like this are never repeated, but alas, in this case it appears to be a case of too little, too late.”

Perlmutter added that his organization was reaching out to both their developer members and the Chateau World members to see what (if any) remedies and solutions CRDA might be able to provide.

“The Chateau World members have obviously expressed a desire to secure their access to luxury vacations by virtue of their purchase of their memberships; it’s just a matter of coming up with creative solutions that will ensure that those entitlements are fully secured and never again compromised.”

He has some advice for potential buyers.

“Don’t be afraid to ask for some type of verification that they actually own the inventory they’re selling, and that this inventory has been fully secured on your behalf via non-disturbance agreements, trusts, etc. In secured shared ownership (timeshare, fractional ownership, etc.), the real estate interest is generally transferred to a trustee “free and clear” of any encumbrances and no one is allowed to borrow against the equity in the units.

“When there’s no debt or mortgages, there’s little risk of collapse; the owners’ maintenance fees are there to cover all of the ongoing aggregate costs of operation. In the case of Chateau World, it would appear that none of these contingencies were in place.”