HICSA 2007

Session Highlights

Alternate hospitality: Timeshare, condos, fractional ownership, vacation homes

Alternate hospitality is the concept of taking a resort, apartments or urban accommodation unit and dividing its use rights each year into increments of time such as a week or a month. These rights are then sold to the consumer either in perpetuity or for a fixed period of time such as 20 to 30 years or more. The amount of ownership differs from segment to segment of the alternate hospitality invested in.

The shock of timeshare business in the early 90s is still being experienced in the Indian market. Moderator Sachin Shah opened the session by admitting that the alternate hospitality market in India is still in its nascent stage. He said, "While developers are becoming more cautious, there is still a wide open market for condo-hotels and fractional ownership projects."

After 9/11 and SARS, alternate hospitality has been growing steadily all over the world. Bupesh Yadav explained, "After the SARS epidemic, terrorist attacks in different parts of the world, people started looking for low-risk vicinity which is less populated and alternate hospitality like condos and serviced apartments are almost like second homes."

At the same time, fractional ownership projects have become a popular alternative to buying a second home and have quickly grown into metropolitan markets all over the world. These projects are being built in more urban areas and would not be as favorable as vacation ownership projects in metros. According to Arun Nijhawan the last few years' fractional and vacation ownerships have seen growth in leaps and bounds, especially in western countries, and although India is a late entrant in this market, it is making steady progress.

However, Radhika Shastri added, "Timeshare is not an investment for monetary returns, it is an investment in vacations and it should be sold keeping that in mind. The timeshare industry is growing due to new laws and understanding of the market. Since RCI has ties with various timeshare companies, members can choose to stay in the property of our enlisted partners."

Summing up the session and picking important points spoken by the panelists, Shah said, "Service apartments are one of the fastest growing industries. Although alternate hospitality may not provide F&B services, it does offer lower costs and lesser staff with no loss of the hospitality component. Though the profit margins are low, there is a market for it since long-staying guests prefer to stay in an economical place. Timeshare, condos, fractional ownership and vacation homes have different ownership proportions and one must invest in its location and the kind of clientele."