we're talking today with Chad and Rowdy from Costco's third home initiative, which is the homeowner exchange program that we offer to our homeowners. Guys, thanks for coming on. You got it. Thanks for having us. Thanks, Steve. So we've had a lot of homeowners ask the questions, what is the third home initiative through Costco? Um, how do they jump onto the program and how does it work exactly? So we're going to dig a little bit into that today. Can you tell us as a homeowner in Casago?
How, how does it work for them? How does the home exchange work? And, just give it a quick overview of what they need to know as a homeowner. And then we'll dig down into the details of it. Sure, absolutely. Well, the, genesis is, to find more flexible usage for
Properties globally, and to allow more flexibility for that property to be monetized, uh, towards travel. Around the world essentially each of each of you as homeowners under a Costco, would have the right to deposit a fixed time in the increments of seven night weeks, into our portfolio of third home. And in return for that, you'd get, travel credits, what we call keys. to then be used as currency against other exchanges around the globe.
Yeah. we have something that's called an indirect model versus a direct model. What's the difference between an indirect model versus a direct model? And why is the, uh, Costco's third home program better by being an indirect model? The quick answer is organization and efficiency, right? The concept of home exchange and home swapping.
Is decades old, but the process and the reality of two homeowners on different sides of the continent or world, um, communicating with one another effectively to exchange a specific week in each other's property. Steve, I would love to stay in your property and, um, Scottsdale. You can use my home and veil at the same time for the same week. Um, how do we coordinate this?
Um, it, it's a bit antiquated And instead of, of following that, we decided to, to follow a much more tried and true concept of, um, indirect. In other words, A point space system. Time in a home equates to a certain value of points. Those keys are then used as currency to exchange into other homes. And so when you mentioned keys, Roddy, how are keys earned? How are they calculated? And, how do owners know what the value of a week in their property is worth?
So basically when, um, uh, a person joins we evaluate their property and the, and the way keys work is, is we made it pretty simple. Basically, if you have a, a 1 million property that equates to a, to a one key week, if you have a 5 million property and you put in a week of that property, you would earn five keys. And a non peak season and a non peak week.
Now we do have a scale where people, when people join and they look at the calendar and they're like, and they decide, okay, we want to put, August 1st in or you choose your date, there are some peak weeks and super peak weeks, and when you put your, your home in, in a peaks peak week, you'll get a two X you'll get a two X multipliers to get double the amount of keys and for a super peak week, like a Christmas week and tell your ride, you would get A three X multiplier on your property.
Can you walk me through the process in which a homeowner would go through when they want to list their property on the Costco's. Third Home initiative. Sure. So basically they would fill out a URL link. They would put their address in their and then a member experience associate would contact them. But once they put their address in, we would go ahead and, uh, take a look at the property.
We would, uh, we would evaluate the property and see what the value is, and then we would discuss with the homeowner. The key value and then we would discuss with the homeowner the weeks that they want to put in. It's a pretty simple process. It if Steve, if you put one of your properties in, you gave us the address. You wouldn't have to do a lot of work. So basically they will, you know, they'll choose the weeks and then It's, I don't know. It's about a three day process.
I would say to, to fill out that form and to go through the process. Um, and I would say one of the, the really great things is that when they. When they join and they get their, their keys, they're not waiting for anyone to book their property. They actually get those keys. The moment that they deposit those two weeks Um, that's a huge benefit because you don't have to wait around for anyone to book it. Like you, you can literally join today and travel next week.
Yeah. You know, I just signed up my own personal property on third home. Uh, it was so easy. And, uh, went right through, you know, the channels, knocked it out, put the description in it up, uploaded some photos and, uh, I ended up getting six keys, uh, for my couple of weeks out of the whole deal. Now I used one of the premium weeks, you know, a week that you'd said was premium.
So I got a multiplier on my keys there, but I'm really excited something that's important to understand is, um, getting onto the service is free for Costco homeowners, but there is an exchange fee. How do they know what that is or where to find that? When you go on and book a vacation, you book a trip, everything is, all the fees are listed right there on the, on the page. So you'll, you'll scroll down, you'll choose a week. And then when you choose.
Your timeframe that you want to travel on the same line, it will have, 695 or whatever the exchange fee is for that specific property. Uh, it's probably an average of 900 a week, but you're talking about a, you know, 20, 30, 000 vacation. Um, but it's all right there. There's no, there's no. Hidden information that you're going to be surprised by, a fee when you show up to the property or anything like that, like everything is, is pretty upfront for you. When you book your trip.
Yeah. The savings looked, when I was digging through the software, when I was digging through all the inventory that's available to us, it looked like it was about a 95 percent savings you know, a 600 fee. I was living in Italy, but it was a 6, 000 rental. It was 6, 000 and change. I'm like, well, that's a pretty good deal. So that's how it seemed to work out. Sorry. You're right on the money. And in fact, it averages closer to 97 percent discount.
If you related directly to a pure rental and fee based model, right? Um, good news for, Okay. Each of, of your owners is that, the value of the properties that they're trading into well exceeds that the average nightly rate, for instance, within a inventory is similar to what our weekly. Uh, exchange fee might be so tremendous discount in that regard. Um, and they get the keys, whether or not somebody stays there or not.
So if I, so for my property, I put in Christmas week, down in, in Rocky point, Mexico, the week is there. Now, if nobody books it or stays, I still have my keys no matter what. Is that correct? That's right. That's right. there's an exception to that. our part of our, our model is to reward our members with instant gratification. You, you trust us with guaranteed time in your home for other members to utilize. We're going to reward you immediately With keys.
The only exception to that is if those if the week for which you deposit is within 60 days. From the date you deposit it to arrival date within 60 days of the date you deposit it, um, which is in our world is a tight turn, so to speak. so we, we switched to a keys when booked model at that point. the key values hold true. But you don't earn them for last minute deposits like that until someone chooses to, to exchange into that property. That makes sense.
So nobody books like, Hey, somebody come in tomorrow and then they got the keys, right? That makes no sense. That's right. as long as I offer a week at 61 days or more, I'm guaranteed to get my keys to use somewhere else. Whether somebody stays in my property or not. That's correct. So the best way for a homeowner to get signed up is to reach out to their local property manager here at Costco.
As everybody knows, every Costco office is locally owned and operated, and they're going to go ahead and send you a link for you to sign up with Costco's third home initiative. Now, if you. Haven't, if you're not able to get ahold of that, go ahead and go to Costco. com four slash third home and select the city you're in. It'll send you to a, uh, to the proper link. Can you get signed up from there?
And that will give you all the benefits and perks of being part of Costco and being a Costco homeowner with this exchange program. Is that right?. Yeah, that's a great process. And, just know, you know, this is a people business. So there are always. Individuals within our team, including Rowdy and myself that are more than happy to pick up one on one conversations with your owners. Um, every home is unique.
Every body is unique and if their circumstances might be a little bit different from the norm We want to hear about that and work with them to find a comfortable, partnership with us there. Chad Rowdy. Thanks for coming on and explaining Costco's third home initiative and the exchange program that we have you have any final words or final thoughts as we sign off today? I'm excited for homeowners to start traveling Steve, because it's a game changer.
it's a life changing experience to be a part of this because you're truly able to travel to places around the world that you normally don't have access to. It's life changing. So I'm excited for you guys to be a part of it. Thanks for joining us guys. We really appreciate it. If you're a Costco homeowner and you're looking for more information, make sure to go to costco. com for slash third home, or you can check the show notes below and, find the links there. Thanks guys. Thank you.