Time-share players eye acquisitions for growth

At a time when the hospitality industry is still reeling under a slowdown, the time share or vacation ownership players are a profitable lot, busy making acquisitions to strengthen operations.

While Mumbai-based Mahindra Holidays has been steadily increasing its stake in Finland-based Holiday Club, Chennai-based Sterling Holiday Resorts recently acquired Nature Trails to enter adventure tourism.

“Time share is a recession and inflation-proof business as it has assured occupancy. It is more consumer friendly since it is a 25-year-old product which can have pay back time of 6-8 years with its fixed rates,’’ observes Ramesh Ramanathan, Managing Director, Sterling Holidays Resorts.

Time share, with its value proposition, is getting popular despite the negative image associated with the category due to varying quality standards, high maintenance costs and lack of availability, when needed for making holiday bookings.

“Time share did have a bad name in the 80s and 90s as consumers were not getting the right experience and resort development got frozen. But now the category has been growing at 40 per cent since 2012 on the back of development of brands such as Club Mahindra and Sterling Holidays,’’ says Pali Badwal, Managing Director, RCI India, the global exchange company for timeshare.

According to the All India Resort Development Association, four lakh families have enrolled for time share in India.

Of late there have been fresh investments into the category through acquisitions. For instance, since last year Mahindra Holidays has been increasing its stake (from 18.8 to 23.3 per cent) with an initial investment of ₹125 crore in one of Europe’s largest vacation companies Holiday Club Resorts.

“With this additional stake, we will now have a platform to grow our business in Europe and West Asia. There will also be Indian products designed for the Arab world in places such as Dubai and Kuwait,’’ said Arun Nanda, Chairman, Mahindra Holidays & Resorts.

With its 45 resorts, Mahindra Holidays also plans to add 700 rooms for which it would invest ₹700 crore through internal accruals for the domestic market.

Meanwhile, another time share major Sterling Holiday Resorts, which became a subsidiary of Thomas Cook last year, acquired Mumbai Nature Trails for about ₹50 crore recently.

“We have managed a turnaround and are not ruling out further acquisitions as it gives access to large tracts of land to grow our resorts. We have renovated and upgraded our 24 resorts and occupancies have picked up to 60 per cent. The time share industry continues to add about 60,000 members every year,’’ added Ramanathan.

For Sterling Holiday Resorts, income from sales of vacation ownership plans increased by 49 per cent with the addition of 5,481 vacation ownership members this year.

Even Mahindra Holidays would continue to scout for acquisitions to expand its time share business.

“We are always open if there is a good opportunity for acquisitions. Mahindra as a brand has built trust in the time share category and we have grown at 49 per cent in the first half of this year,’’ said Kavinder Singh, Managing Director & CEO, Mahindra Holidays.

COMMENT NOW