Spend Smart. Should you sign up for timeshares?

Travelling is a great stress-buster. With improving income levels and changes in lifestyles, families are now regularly taking to holidays to relax and rewind. For such travellers, companies offering timeshare holidays are an option.

Timeshares, also known as vacation ownership, offer a member the right to use a resort unit at different locations for a specified period (say, one week) each year for a specified number of years (say, 25 years). Club Mahindra Holidays and Sterling Holiday Resorts are among the popular ones in India. For getting such membership, one has to pay a one-time membership fee, which could range anywhere from ₹2,50,000-8,50,000 based on the type of membership. More the preference for larger rooms or holidaying during peak or festival time, more the membership cost. Also, one has to pay annual maintenance fees, which is in the ₹10,000-15,000 range.

One, you indirectly freeze on the room rates at current prices. For instance, if one is signing for a ‘Red (Studio)’ membership of Club Mahindra, the membership fee is about ₹5,56,000, as per its call centre officials. Back-of-the-envelope calculations show that it is effectively tantamount to locking in at average room rate of ₹3,178 per day. This is significantly lower than ₹7,000 per day that some of the properties quote for non-members in various online travel websites. Also, the convenience factor is hard to ignore.

“Timeshare holidays are the best thing to happen, especially for families with kids,” says Sriganesh, a Chennai-based Club Mahindra member. This is because once you step into the property, there are activities lined up for the day. You also need not worry about the quality of food, travel and other services.

However, the flip side of getting into such membership is that you are wedded to the company and will have to only consider their locations while charting your travel plan. Moreover, there are challenges in the form of non-availability of rooms on preferred dates. A few days ago, for instance, Club Mahindra member, Sonny John Abraham, from Mumbai logged into their website for booking a room in a Kerala-based property.

Despite planning, he was not able to get the bookings. At about the same time, he also got an SMS saying a property in the outskirts of Mumbai was opening up shortly for bookings.

“You have to plan well in advance and, increasingly, I feel it’s getting difficult to get the location of your choice these days,” feels Sriganesh Raman, a Chennai-based Club Mahindra member. Some customers of Sterling Holiday Resorts talk about similar problems.

Thirdly, you sometimes need to be prepared for not-so-good cost surprises. Take the case of Abraham who took membership in Club Mahindra in 2011. At that time, there were only three membership options — Red, White and Blue.

He chose the White membership and paid about ₹2.5 lakh then. ‘White’ membership is usually for those holidaying during the non-peak season or the working week.

With two daughters in school he, however, felt later that he was not getting to holiday during their vacation time. So, the Club Mahindra official advised him to upgrade to ‘Red’ to get preference in booking during festive seasons or holidays. And he shelled out about ₹1 lakh more to upgrade to the ‘Red’ membership.

However, within few years, the company introduced one more membership option (the most premium that is) called the ‘Purple’.

Interestingly, it gave preference to travel over all other members anytime during the year for a relatively higher membership fee. The basic thumb rule is that timeshare holidays might not be as cost effective as they might be projected to be.

Moreover, the annual maintenance fee goes up regularly and has, in fact, doubled in less than a decade for some companies. Many of the members also often complain about very high food rates.

If you are the type who prefers last-minute impromptu travel, timeshares holidays are not for you. As more members sign up, rooms may not increase at the same rate and peak-hour rush becomes inevitable. So, plan your travel well-in-advance.

Also, choose a company that is reputed. The company that you sign up with should remain in existence for the next 25 years or so. So, stick to those that have been in this business for long and have a strong financial backing. Moreover, also check what has been their growth path (properties added, for instance) over the last few years.

Look for companies that not only have several properties, but also those that are well-spread, thereby giving you a better choice. Happy holidays!