Vacation ownership sees small hotels, resorts entering industry

Vacation ownership sees small hotels, resorts entering industry

New Delhi: Indian developers will likely invest in excess of 1,500 crore in building timeshare properties this fiscal year to tap growing demand from middle-class vacationers who have shed their suspicion of the concept of sharing holiday homes.

Timeshare is the right to the use of a property such as a vacation resort or condominium units. Multiple investors hold rights to the property, being allotted a period of time in which they may use it. In India, people pay anything between 2 lakh and 9 lakh to use a timeshare property for around a week in a year for 25 years.

“The industry is expected to see an addition of around 2,000 to 3,000 rooms this fiscal year, increasing the total room inventory by almost 25%, because a lot of new companies are entering timeshare," said Ramesh Ramanathan, managing director of Sterling Holiday Resorts (India) Ltd.

Mahindra Holidays and Resorts India Ltd and Sterling dominate India’s timeshare market with 60 resorts and 3,400 rooms combined, but smaller competitors are now seeking to take advantage of increasing demand for shared vacation homes.

Jaipur-based Tree House Resorts and Summer Plaza in Panchgani (Maharashtra) are entering the market, estimated by holiday exchange service RCI Llc at between 700 crore and 800 crore a year.

The still nascent industry has grown at an annual pace of 18% in the last four years.

Globally, the share vacation industry stands at $13.1 billion (around 68,775 crore today) with 9.3 million timeshare owners, according to RCI.

The Tree House Resorts, which currently has one property, plans to open two more, with 30% of the inventory set aside for timeshare. Established companies such as Mahindra Holidays and Resorts, which increased its inventory by 31% in 2011-2012 to 2,049 rooms, have aggressive expansion plans as well.

According to industry estimates, the shared ownership industry in India has between 8,000 and 10,000 rooms, with 350,000 timeshare owners entitled to use them.

Radhika Shastry, managing director of RCI India Pvt. Ltd, said the number of hospitality companies providing timeshare services has been growing substantially. At present, India has more than 100 resorts offering timeshare, up from 74 in 2006.

“Other than the large players already in this industry, many individual resorts are also entering into timeshare, attracted by the compelling opportunity to increase occupancy and generate and retain loyal customers," said Shastry.

Analysts and industry executives expect the timeshare market to grow by as much as 25% in 2012.

“Due to fast-paced life on the job, coupled with the economic independence (gained) by earning more, and the break-up of larger families in the social support system, people now feel that they owe vacations to themselves and to their families," said Mahindra Holidays and Resorts’ managing director Rajiv Sawhney.

“People are now happy to spend money on experience, which is a graduation from when people used to spend on products such as a Fridge or a TV."

Mahindra Holidays and Resorts has registered a compounded annual growth rate of 22% in timeshare owners over the past eight years, with the number increasing to more than 140,000 in 2011 from around 28,500 members in 2004-05. The members pay between 3 lakh and 9 lakh, depending on the product, for a timeshare property.

“People are not doing only annual vacations, but also short vacations such as long weekends. So, timeshare industry has changed accordingly, and it is coming closer to the cities in line with changing consumer demand," Sterling’s Ramanathan said.

Not too long ago, families shied away from timeshare offers they perceived as a scam. After Mahindra Holidays and Resorts started in 1997 and other big firms entered the market, their brand names and the quality of properties on offer and services provided changed the popular perception.

“There has been a change in perception about the industry that it is not just some ‘buy one get one free’ con job...," said Akshay Kulkarni, executive director, South Asia at Cushman and Wakefield Hospitality.

moulishree.s@livemint.com

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