Timeshare industry in consolidation mode

By R. Chandrakanth

BANGALORE, NOV. 18. Shedding the much-maligned of the Nineties, the timeshare industry is in the process of cleansing and consolidation. The weeding out of bad players by RCI, the entry of timeshare trustees, and the self-regulatory mechanisms have been facilitating a healthy growth of the timeshare industry.

Despite the downturn in the economy, the timeshare business has been growing at an amazing pace of 25 per cent, with the factor of credibility spurring the growth, thanks mainly to RCI, the world's largest timeshare exchange organisation.

In the last one year, RCI has got rid of 50 Indian resorts from its exchange network for one sole reason - poor quality of service offered to timeshare members. ``Unlike the early Nineties when RCI got bogged down by the numbers game, we are now focussed on quality," says Mr. Raju Shahani, Managing Director, RCI India. The 50 resorts it has disaffiliated in the last one year were those which did not keep promises made to timeshare members, unfinished resorts and those which were mainly pieces of land.

Alongside the cleansing process, says Mr. Shahani, the entry of two U.K. timeshare trustees - FNTC (First National Trustee Company) and Hutchinson and Company - and RCI's insistence on resort developers to take on a trustee. The trustee companies ensure that timeshare ownership is secure. When an individual buys a week at a resort, the payment is made not to the developer but to the trustee who holds the money in an ``escrow" account and releases the money to the developer, only after legal and other issues of the resort are cleared. ``This is a positive development for the industry."

FNTC acts as a trustee to over 235 clubs around the world with over $1 billion of timeshare assets in trust, protecting the interests of over 3.5 lakh timeshare owners.

Besides this, adds Mr. Shahani, the self-regulation introduced by the developers coming under the umbrella of the All India Resort Development Association (AIRDA) has propped the industry's credibility. ``This has helped build customer confidence." An important outcome of AIRDA has been that the Government has included timeshare in the draft tourism policy.

The RCI monitors the resorts through its Resorts Services Cell which makes quarterly inspection of all its member resorts, ensuring that the resort owners comply with the services promised to timeshare members. ``If they do not comply, then the disaffiliation process begins, starting with the freeze period. A resort is given six months time to clean up its act, failing which it gets disaffiliated from the RCI exchange network. During the freeze period, the RCI does not enroll members from the errant resort or provide exchange of resorts.

``RCI is now operating from a position of strength and we do not want to jeopardise our brand," mentions Mr. Shahani and puts RCI's growth at 15 per cent over last year.

Last week when RCI made its foray into `urban timeshare' in Mumbai, it will be breaking new ground and hopes it will prop the industry further. Also on the anvil is the tying up with big hotel chains for timeshare. ``Prior to the September 11 attacks on WTC, the hotel industry was in a slump. They can overcome this if they tied up at least 10-15 per cent of the room inventories as a resort. There will be constant cash flow - through ownership, maintenance and use of hotel services". Big brands have started talking to RCI, but Mr. Shahani declines to reveal the names at this point.

In this expanding scenario, RCI has opened a call centre in Mumbai, is opening one in Delhi in January, followed by another in Kolkata. The western region accounts for 47 per cent of timeshare members, the North 28 per cent and the South 14 per cent. Of the 48 RCI member resorts, 13 are in Goa and RCI has put a freeze on any more resorts in Goa. ``We are now focussing on other locations - Kerala and Rajasthan where we do not have enough inventory". And also one in Nepal with a golf course attached to it and another in south of Sri Lanka.

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