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Timeshare is cheap, yet restrictive

Source : BUSINESS_STANDARD
Last Updated: Sun, May 05, 2013 21:31 hrs
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A couple of years before she retired and returned to India from Dubai, Geeta Kumar bought a package at a timeshare holiday resort, hoping to go on regular holidays with her family. Though three to four years have passed and she has been on only one holiday - to Coorg in Karnataka. But Kumar is hopeful of putting her package to good use. "The timeshare package would ensure my family and I go on a holiday at least once a year. I feel that is an advantage, as the resorts are in good locations and you can really get away from the crowded city. But the fact that we have to pay the subscription fee even if we don't go every year does pinch," she says.



However, gifting her unused package to friends or relatives would take care of that, she feels.

Timeshare is a form of holiday ownership where one owns the right, either directly or through a "club", to stay for a specific period in an apartment or villa on a resort for a great many years.

Mukesh Shand, an information technology professional from Pune, feels his investment has gone to waste. His advice to anyone considering a timeshare package: Never opt for one. "The initial down-payment, along with the annual maintenance charges, works out to be more expensive. And, whenever you plan to go on a holiday, you find all the rooms are booked, as everyone wants to travel during the season," he says.

Three years ago, Shand had bought a 30-year package in a timeshare resort for ~1.3 lakh. Once, he tried to book a holiday in Goa but the rooms weren't confirmed till the last minute. As a result, he was forced to book rooms in another hotel and pay an additional sum for that. This disappointed him so much that he put up his package, scheduled to expire in 2039, for sale on eBay for ~85,000, after seeing a similar offer on the site. So far, he has received only one offer but refused it as the price was too low.

The cost of a membership in a timeshare package depends on the size of the room and the season chosen. The cost could vary from ~2 lakh to ~20 lakh; the annual maintenance cost could be ~10,000-20,000 or more a year. Once you choose a package, you can use the facilities for the next 25 or 30 years, without paying additional money, even if the room rates increase.

Most resorts also have an option of payments through equated monthly instalments through a period of six months to three years. Typically, the cost of the package covers room rent and discounts on facilities at the resort. Though a hotel package you might book every year would also include the same facilities (room rent and discounts on certain facilities), in this case, room rents would change every year.

A vacation membership allows one to pre-buy holiday accommodation at today's rates, says Rajiv Sawhney, managing director, Mahindra Holidays & Resorts India. "What one pays today is what one enjoys for the next 25 years, along with a nominal annual maintenance fee. In the case of hotels, the rate is dynamic and depends on market conditions. Over a period of time, one could get huge discounts, typically during the off-season. During other seasons, one could expect to pay a premium. In a vacation ownership package, the rates remain stable and the annual fee may be subject to inflation."

Rajeev Reddy, chairman of Country Club, says in a timeshare package, the cost remains constant over the 30-year tenure, while the conventional hospitality price appreciation is rather exponential. Also, the rates are higher during the peak season. "Therefore, in terms of value, three to four conventional holidays are equivalent to what you pay for a lifetime of holidays with Country Club," he says.

Citing an example, Reddy says on an average, hotel rates in four-star properties range between ~5,000 and ~7,000 a day, or ~35,000 to ~40,000 a week. If a timeshare member pays ~3 lakh for a membership and avails of 30 weekly holidays through 30 years, the cost falls to ~10,000 a holiday.

But such a package would tie you down to one weekly holiday a year, for 30 years. And, to ensure you get accommodation, it is advisable to book about six months in advance and keep at least three options in mind.

According to Devesh Khanna, head (outbound holidays division), Makemytrip.com, the buying pattern of Indian travellers is such that holiday packages are bought about 10 days in advance. For foreign travel, people plan about three months in advance, owing to visa requirements.

"People first look at when they would get leave from work. Only then do they book the travel and accommodation. So, it is possible if you decide to go during a particular period, rooms might not be available; you would have to book rooms in some other resort and pay for that," Khanna says.

What if you can't go on a holiday in a particular year? In this case, too, you would have to pay the annual charges or risk losing your membership and the money.

Another disadvantage of a timeshare resort package is though the package might offer 50 destinations, you might be interested only in a few. In such a case, you would be forced to holiday in a place you aren't really interested in, Khanna says. He agrees a timeshare package would ensure quality accommodation but adds even if one chooses a branded hotel, one would be assured of good rooms and quality service anywhere in the world.

Membership in a timeshare resort could provide you access to chains the resort has tie-ups with. For instance, Country Club owns 55 properties and has 200 affiliations within Indian and a tie-up with RCI, which gives members access to a global portfolio of 5,000 properties. Similarly, Club Mahindra, too, has 40 properties in India and abroad and members can enjoy international holidays with RCI exchange facility for discounted rates.

COST-EFFECTIVE:
  • Advantages
    Assured of good quality rooms and service

    No impact of rise in hotel room rates

    It is cheaper over a 25-30-year period
  • Disadvantages
    Choice of destination is limited

    One has to book well in advance to ensure room availability
WHILE CHOOSING A TIMESHARE PACKAGE:
  • Always deal with reputed brands even if the membership comes at a premium
  • Look for brands that have been in the industry for a long time, because it's not only about the quality of properties but also how well the properties are managed and maintained
  • Timeshare should be the core business of the brand that you choose to deal with
  • Look into the financial credibility of the brand and the credibility of the management
  • Look into the history of the brand - with so much information available online, a little research cannot hurt
  • Check the customer base of the firm
  • A bigger property portfolio

On the common complaint that such resorts are usually away from city centres, Mahindra Holiday and Resorts' Sawhney says, "A holiday is best enjoyed away from the hustle and bustle of urban life. Else, there is no real benefit for a family holiday. All resorts are well connected by train/air. All Club Mahindra resorts provide sightseeing services. All the destinations have plenty of sightseeing opportunities."

Club Mahindra's rates range from ~2.22 lakh to ~17.21 lakh, depending on the season and the apartment-type chosen. Memberships are packaged according to the season chosen (purple - super peak season; red - school vacation season; white - shoulder season to school vacations and blue - off season) and by the apartment size chosen - studio, one-bedroom or two-bedroom. So, a 'purple' two-bedroom package is the most expensive.

Country Club packages include 'Billionaire Classic', 'Billionaire Premium' and 'Billionaire Gold' for five, 10 and 30 years, respectively. Non-members are allowed to stay at any Country Club property, at ~35,000-45,000 a week.

Club Mahindra packages are for members alone.

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