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Monetising a timeshare membership

If unable to use the accumulated holidays, here's what you can do

Tinesh Bhasin  |  Mumbai 

If you are enrolled with a company offering vacation ownership and are unable to make full use of it, there are options available to monetise it. You can transfer (read sell) the membership or if you wish to retain it, you can sell the accumulated holidays.

Dilip Bhandari became a member of one such programme in the 1990s, from Sterling Holidays. He has now put the membership on sale, on online classified portals. He is willing to give it for Rs 2.5 lakh. "For the first five to seven years, I used it regularly. Later, I had to make a vacation plan to save the holidays from getting expired," says Bhandari.

Signing up with such companies is akin to taking partial ownership in their resorts. The firms, therefore, keep membership policies flexible and allow people to transfer these and gift holidays to others. Many are now monetising their membership or holidays, as buying a timeshare holiday plan can turn out to be expensive if you stop using it regularly.

Other than a huge upfront payment, a person also needs to shell out annual maintenance fee. The membership plans starts around Rs 2 lakh and can go as high as Rs 17 lakh. The annual charges are upwards of Rs 8,000, revised annually. Most of these companies allow you to carry forward holidays only for two years, beyond which these expire.

Timeshare vacations, however, have their attraction, despite high upfront cost and recurring charges. Kavinder Singh, managing director (MD) of Mahindra Holidays & Resorts India, says people come on board for the experience. Unlike other resorts and hotels, Club Mahindra offers activities for the entire family. The member can also choose rooms as convenient, from studio apartments to two bedrooms. The services offered are comparable to five-star hotels. The room rents, therefore, work out to be cheaper when compared to hotels offering similar facilities.

Ramesh Ramanathan, the MD of Sterling Holiday Resorts (India), says vacation ownership typically suits well-off urban families. "Our members are usually 35 years, married with a child. Their family income is above Rs 15 lakh (yearly)," he says

Selling membership

At present, the most sought membership on the internet is from Sterling Holidays, issued in the 1990s and valid for 99 years. Until two years earlier, members could fetch Rs 90,000 to Rs 1 lakh if they wished to sell, a price higher than what they actually paid. Since the company merged with Thomas Cook in early 2014, the membership price for resale started going up. There's an expectation that the network of hotels will be expanded and existing ones upgraded. According to the deals at online classified portals, it is Rs 1.8 lakh upward for a membership that allows international holidays - that is, an affiliation with the largest timeshare vacation exchange network in the world, RCI. The one without this affiliation is sold for upwards of Rs 1.5 lakh.

At present most memberships are valid for a period of 25 years and have affiliation with RCI. Unlike the 99-year membership of Sterling, these won't fetch you a higher price if you hold on to it. Instead, as the membership gets older, the value of it goes down. If a person wants to sell a 2013 membership, he will get a higher price compared to someone selling a 2005 one. In the former, only three years of holidays have been exhausted. The buyer can use it for another 22 years. A membership bought in 2005 will expire in 15 years.

For example, a member with a leading company, who owns a Red studio membership, is selling it for Rs 42,000. This was bought in 2005. Another member is selling the same membership for Rs 4 lakh that has 22 years' validity. The company is offering the same membership for over Rs 4.5 lakh.

Selling only vacation time

Many who are members of timeshare holidays don't want to part with it. Some might want to retain it for future use; others might not get a deal they hope for. Such members prefer to sell their vacation time rather than the entire membership. This also helps them take care of the annual maintenance charge.

Existing members are demanding a minimum of Rs 2,000 a night for a studio room. If there's seven days worth of vacation, this comes to Rs 14,000. However, not many stay in one resort for this duration. That's why many members need to sell their holidays in parts. Each hotel has a guest fee, too, which varies from Rs 800 to Rs 1,200. When doing such guest bookings, ask for the photo identity and do the bookings for them.

A member, selling his holiday online, says if non-members try to book the same facility, the rates can be anywhere upwards of Rs 6,000 a night, referring to the studio room accommodation he is selling at Rs 2,000 a night. He suggests members should not wait until the last moment to sell the holidays. It's best to start looking for someone at least six months prior to the expiry, as it will ensure the bookings can be done on preferred dates.

For buyers

Firms say transfers of membership can only be done though them. Some even restrict transfers to once in two years. Parties doing such a transaction need to visit the company office and sign the documents there. No agent or third party is involved. As a buyer, first ask the person to scan and e-mail all the documents relating to his/her account. Call the company to verify the details. Once satisfied, visit the company branch office for transfer and get other details such as validity of the membership, accumulated holidays and so on. Avoid paying in cash. Insist on payment through cheque or online transfer.

First Published: Sun, August 23 2015. 22:40 IST