Thursday, October 09, 2014

Timeshare Holidays : Sterling vs Club Mahindra

I was always opposed to the idea of timeshare as this does not suit my style of travelling. I am a traveller rather than a tourist. However, a couple of years back, an intelligent Club Mahindra salesman managed to convince me to buy a timeshare. Returning home that night, I did a detailed research on Club Mahindra. I made lot of startling discovery and promptly invoked the free look in clause. Thanks to few fellow netizen’s posts, I managed to get my initial deposit back without any hassles. This bolstered my aversion for timeshare. It may surprise many that despite having researched so much about timeshare in India, writing a blog post here few years back on this topic which attracted a lively discussions and comments including those of Club Mahindra team, I finally took the timeshare bait this year again with Sterling Holidays. The concept still has flaws. But after spending this year’s quota at Corbett and Mussorie, I felt that my decision to invest with Sterling has not been bad.

So what made me took the bait this time. One of my senior colleagues had a Sterling membership which he wanted to sell. Another wanted to buy it. But the seller backed out at the last moment, apparently at the advice of his children. This was a 99 year old membership that is valid upto 2094. The prospective buyer saw the potential benefits of buying a resale unit. So he started exploring the market and found some offer on olx and quickr. He finally managed a resale unit from someone in South. He got a bang deal for 1 BR Premium season for 1 lakh. Another colleague then jumped into it and got a fair deal for his budget – 1 Studio Offseason for 65K. Then another one. I had followed the discussions over lunch. Gradually I started developing interest as well. With my experience of Club Mahindra, I had gone through all pros and cons. I found it to be a win-win situation for both the seller and buyer.

The sellers are generally in the age group of 60-80 and have probably visited all of Sterling’s resorts several times over since 1994 or so. They have also seen the period when Sterling was in red and virtually closed down for couple years. A premium season studio with 99 years membership was sold around 59k in the 90’s when Sterling was launched. Therefore many of these old members see this revival of Sterling as an opportunity to get their investment back which at some point were assumed to have sunken. Any appreciation of investment will be a bonus.  If they can manage to sell it for anything above cost price, then they will recover their investment, well after enjoying their membership to the maximum.

The potential buyers also stand to gain from this deal. These are 99 years validity units as against a new unit with only 25 years validity. I am not sure of the latest prices, but a new Sterling studio unit for premium season will not cost less than 5 lakhs. Similarly an off-season or blue season unit cost you not less than 1.7 lakhs. That too for 25 years. All my colleagues, including me, had managed to find peak season studio unit on resale for around 1 lakh and off season studio for around 75K. This is definitely a win-win situation for both. Transfer of membership was smooth. Only issue was that we all had to shell out the agreed amount in one go.

One will be interested to know as to how Sterling compares with Club Mahindra? Well, Club Mahindra is the major player in this field, have a good brand equity and hence costlier in all respect. CM also has the largest number of resorts, 40 as in 2014, and most of them are reputed to be quality facilities. The total room inventory is about 2500. A purple season studio of CM will cost around 7 lakh and red season studio will cost around 5 lakh. Sterling Holidays, based in Chennai, was more south oriented with most of its better facilities spread across South. It has 21 resorts with a room inventory of about 1500. It owns only two resorts in North at Mussorie and Manali. All other resorts in North are on lease. However, Thomas Cook had taken over Sterling it early this year. This piece of news brought smiles to all members. As expected, the involvement of Thomas Cook has already started showing. As per Sterling’s update, almost all resorts had undergone massive renovation this year. Two new locations have been added recently (Oct, 2014) at Sariska and Nainital. This has expanded the options at North with 6 locations – Mussorie, Corbett, Manali, Dharamsala, Sariska and Nainital. It is also claimed in their website that Sterling will be adding 15 more resorts in coming years. The annual maintenance fee of Sterling is also low. For a studio unit it is around 2600 rupees as against Club Mahindra’s 10K plus. There also is a third player in this field named Magic Holidays. For some unknown reason it has stayed low profile and hence not much is known about it.

I had stayed at Sterling’s Corbett facility in June this year. It is a leased facility. Rooms were upscale, but open space were at a premium. Renovation was going on at the site. The resort was closed down since then for maintenance. Nested on a hill facing the Ramganga river, located 12km further from the Dhanagiri gate on NH172 to Ranikhet, this will be a lovely place once renovations is completed. I was just back from Mussorie enjoying 3N/4D at Pine Hill Resort of Sterling during the long weekend of Dusserah. It is a sprawling campus with more than 70 rooms. This is a Sterling owned facility. Half the resort is under renovation. Already renovated rooms were upscale. We had enjoyed a relaxing holiday away from hustle bustle of crowd. One afternoon, we walked down to the Mall road only to be felt cramped for space. It was too crowded for comfort. We slowly walked back to the comfort of our resort. Timeshare is meant for relaxing holidays as against sightseeing holidays. I have grown enough grey hairs to deserve one week of relaxing break every year. On our return, we both felt that the investment in Sterling was worth. With validity till 2094, may be even after great grandchildren can use them.

Before closing, I must warn you of problems of timeshare in India. These companies are selling membership all though the year. Both Sterling and CM has a member base of over 1.5 lakh and is touted to be growing @15-20%. But their room inventory has not expanded that fast. This means that while members are increasing, room inventories are not. None of them clearly informs the ratio of total no of members to total no of rooms. One might get shocked at this reality. This means you need to book well in advance. I can afford to plan such breaks 3 months in advance, but can you. Further if you have a non-peak season unit, then your options to get rooms during peak holiday season is bleak. Keeping this in mind, you should look to buy premium / peak season units only. Finally it depends on your style of travelling. If you are a sightseeing holidayer, then you will not enjoy timeshare as most of these resorts are off the centre of action. So, are you ready for timeshare!