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Timeshare companies: Boom, bust & boom?

Nina Varghese

CHENNAI, July 6

THAT holidays have become an important part of a person's agenda is fact of life. And naturally, timeshare companies are the gainers as more and more people seek an outlet from today's high-pressure life style.

Mr Prakash Wakankar, President and CEO, Mahindra Holidays & Resorts, said that earlier, an holiday would be very lowdown in a person's priority. But now, things have changed. The positive sign is that people are beginning to plan vacations even when ther e is an economic slowdown.

Timeshare companies have come a full circle: The early hype, mushrooming of companies, the inevitable bust and then the revival.

Mr Wakankar said that Club Mahindra has registered 60 per cent increase in sales in this quarter over the last quarter.

The year 1998 was a watershed year for timeshare companies. That was when things started going wrong.

Resort companies had vastly oversold their capacity and were unable to break even. In the cut-throat competition, companies made tall promises.

But they disappeared overnight, leaving timeshare members high and dry, which in turn created a credibility problem.

Sterling Resorts, which had the largest number properties, continued to be in the red and sustained a loss of Rs 12,014.91 lakh for the 18 months ended December 2000 as against a loss of Rs 8,141.97 lakh in the previous year.

But many timeshare members told Business Line that though they were unhappy with the financial performance of the company, they were able to take their holidays.

Another company that survived the shakeout is Hill Country Holiday Resorts India Ltd.

According to Mr George Koshy, Chairman and Managing Director, Hill Country, one of the main issues faced by the timeshare companies is credibility.

To restore investor confidence, Hill Country has entered into a tie-up with First National Trustee Company Ltd UK (FNTC) - a company which offers an insurance for timeshare members.

Mr Koshy said that in case his company could not honour its commitments, FNTC would step in.

Another offshoot of the tough times was the arrival of marketing companies in India, a fairly common phenomenon abroad.

When things started getting tough, timeshare companies were forced to trim costs and cut back on their staff strength. To fill the gap, marketing companies sprang up.

These companies did more harm than good. Most of them went in for high-pressure sales which were often counter-productive, pointed out Mr S. Prabhu, Consultant, Ogilvy PR.

Timeshare companies also went in for short-term sales of two to five years, which also brought in new customers. But it was the long term sales of 33-35 years which have put these companies back on track.