With Hotels Out Of Reach, Timeshare Is In

When hotel rooms cost a pretty penny, it makes sense to buy the room itself — or a portion of it — rather than merely renting it. That is the principle on which the timeshare industry works, and these days the business is booming. Many leisure travellers, fed up with ever-rising hotel tariffs, are investing in buying timeshares in resorts instead.

Says Radhika Shastry, director, global business group, at Resort Condominiums International (RCI), a company which enables timeshare owners to swap ownership rights in various resorts: “The increase in hotel room rates across the country is certainly one of the key factors driving growth in the timeshare industry in India.”

Five-star rooms at business or leisure destinations that used to cost under $ 100 before 2002 now cost 30-80% more, depending on season and location. “In such a volatile market situation, a timeshare owner benefits. More so when the timeshare owner looks at availing himself of a family holiday irrespective of lean or peak season,” says Faizan Pasha, director of sales and marketing for The Luxury Club in Mumbai, an upper-end timeshare company.

Clocking in a sales volume of Rs 250 crore in the year to December, 2005, the timeshare industry has been growing at over 20% annually in recent years. India currently has over 200,000 timeshare members, owning pieces of 65 RCI-affiliated resorts. The business is adding 12,000 customers annually. Globally, timeshare is a US $10 billion industry, with over seven million members, with more than 5,425 resorts in 115 countries. “We are adding a substantial number of members every year. Growing at a compounded annual growth rate (CAGR) of over 20% since 2002, we expect to continue this growth for another two or three years. Infrastructure development is expected to happen in the interiors of the country, where hospitality players don’t have a strong presence. This will help further accelerate growth in the coming years,” says Shastry.

Offered generally for a 25-year period, timeshare membership costs differ from company to company. Prices for a week’s ownership – which entitles the owner to spend a week at the resort every year for 25 years – could range from Rs 55,000-70,000 for a lower-end resort to nearly Rs 192,000-200,000 at more upmarket ones. Membership at The Luxury Club’s Mumbai and Ahmedabad hotels starts from Rs 2.5 lakh and goes up to Rs 6.25 lakh for a 25-year period. It works out to Rs 80,000-120,000 for a five-year tenure.

Besides the one-time membership price there is an annual maintenance charge (AMC) that varies from company to company. This charge is incurred whether one uses the facility or not. The Luxury Club charges an AMC of Rs 7,000 for its Mumbai property. It is Rs 4,500 for the Ahmedabad hotel.

Though timeshare members are spread across the country, the western region, with close to 42% of membership, dominates the industry, followed by the southern, northern and eastern regions.

The average age of time-share buyers is in the range of 35 to 40 years. However, the last few years have seen a younger crop of timeshare buyers emerging.

How time-share works

Timeshare developers sell vacation ownership interests in one-week intervals or as packages of points that can be used to reserve resort accommodations anywhere in the world. Members share in the occupancy rights of a property and, therefore, pay an annual maintenance fee after the initial purchase.

Timeshares can be purchased for cash, or financed through loans. The cost of a timeshare depends largely on location, the unit size and the season you buy it for
Timeshare resort amenities sometimes rival those of top-rated resort properties and may include children’s activities, swimming pools, tennis, jacuzzi, golf and bicycles as well as spa and exercise facilities.