The Hideaways Club is facing fresh criticism from rebel investors after documents revealed its property funds have not managed to recruit any new shareholders for nearly five years.
The troubled luxury holiday company, which is backed by celebrities and sports stars including former tennis player Tim Henman, markets itself as an alternative to second homes and timeshares.
The firm offers investors the chance to purchase a stake in a property portfolio comprised of villas, chalets and high-end apartments. They can then book the properties for holidays if they pay an additional membership fee each year to cover maintenance costs.
But it is locked in a battle with a group of rebel shareholders calling themselves the Hideaways Members Action Group (HMAG).
They are preparing to file a lawsuit against the business and have claimed documents showing the firm has not managed to bring in any new investors since 2019 mean its existing backers are trapped, due to the company’s ‘two-in-one-out’ system. The policy means two new members must join for each one that leaves.
Troubled waters: The Hideaways Club is locked in a battle with a group of rebel shareholders calling themselves the Hideaways Members Action Group
The Club says these investors are attempting to leave by ‘disputing’ the contracts they originally signed when they joined, which included the two-for-one system.
But in a 2022 review of one of the Club’s property funds, seen by This is Money’s sister title, The Mail on Sunday, Hideaways reported that no new full shares had been purchased since 2019, with the only transactions involving fractions of stock. Another fund, focused on city apartments, showed that only half of one new share had been purchased between 2019 and the end of 2022.
‘As members say, they really have checked into Hotel California,’ a HMAG spokesman said.
The spokesman claimed that even after members pass away, heirs remain stuck.
‘For all intents and purposes, they can never leave.
‘But unlike the song, neither can their partners nor their children. These generations will also have to pay ever-increasing fees for decades, even when they cannot and do not use the Club.’
As well as Henman, Hideaways Club’s backers included Formula 1 driver Nick Heidfeld and billionaire Mike Balfour, founder of the Fitness First gym chain.
The Club has previously claimed that it operates a service which enables some members to leave
But shareholders respond that in that situation, they would have to accept a hefty discount.
The latest data, however, threatens to pile pressure on the firm as the lack of new shareholders means existing members are likely to remain stuck unless demand recovers. The spat comes as around 70 members are preparing to file a class action lawsuit in Gibraltar against the Club.
It will be the first time such a motion has been attempted in the territory.
The rebels are being assisted by Sir Peter Caruana, a barrister and the former chief minister of Gibraltar, who is part of a legal team representing the group.
In a separate action, Hideaways Club is pursuing several members in the courts over unpaid membership fees.
The company secured a victory earlier this month when a Gibraltar court ruled that it could continue to charge members even if they have not been using its properties. It is not yet known if the investors will appeal the decision.
But the rebels remain undeterred and are understood to be pushing for their case to eventually be heard by a panel of UK judges.
A Hideaways Group spokesman said: ‘A small percentage of disgruntled high net worth members have engaged in a two-year unsuccessful campaign to buy the Club, control the fund boards, escape large personal debts – recently reaffirmed by the Gibraltar Supreme Court– and liquidate the Club’s holiday properties for their benefit.
‘As part of their campaign, they appear to be engaging in new campaigns of defamation and litigation.’