Holiday Homes... Is it worth the money?

The enrolment procedure followed by these clubs would be rather strange and interesting. At random, they would inform some select people that they are required to visit them in a star hotel to receive a precious gift.

Holiday Homes... Is it worth the money?
Holiday Homes... Is it worth the money?

Life membership in Holiday resorts on a time sharing basis appears to be a boon for the club houses and the general public who avail of this benefit during peak summer. There are innumerable clubs running this type of business. It is basically helpful for the lovers of holiday resorts in cool cities. This will help them avoid the disappointment of ‘houseful’ status when they plan to make a trip.

The enrolment procedure followed by these clubs would be rather strange and interesting. At random, they would inform some select people that they are required to visit them in a star hotel to receive a precious gift. They would specifically invite their wives also. When they come to the hotel with family to receive the gift, this idea of time-sharing in holiday resorts would be comfortably sold to them.

In this form of business, though a formal contract would be drafted, there are equal number of advantages and disadvantages. Number of services would be tied-up and offered in the beginning. In some places, annual maintenance fees, electricity charges, water charges etc. would not be explicitly mentioned and they would try to exploit the public. Investment consultant and the former head of the Securities & Time Share Owners’ Association, V.Nagappan shares the following information:-

Holiday resort booking on a time-sharing basis has been in practice for many years now. The customers are entitled to book it for a particular week in a year for their use. The sellers mention clearly that it would be beneficial for the customers to enjoy this facility, especially in the long run and with increasing inflation.
As per norms, the sellers had promised that a kitchen would be offered without any additional cost with the facility of a provision shop in the compound. This feature is hardly to be found.

In the beginning the facility was for full life time and the contract covered successors also; then it was made applicable for 99 years and then 33 years and now it is just for 25 years only.
Another malpractice that they do is in the matter of cheating the customers in electricity & water services. Initially, they had installed sub-meter (only actual consumption will be charged)and nowadays they are in the habit of collecting a sum of Rs.1,000/- flat per day without any details.
Similarly, they were offering the facility of accommodation of the same resort for our friends and relatives for their use and also the unavailed days in previous years would be allowed to be compensated in the current year. However, these practices have been now given up.

Likewise, if we do not spend our time in the resort in a particular year, they would allot it to someone else and reimburse the rental benefit to us earlier. These practices have also since been withdrawn.

Subsequently, they introduced annual maintenance charges in the contract. In the contract, they had just mentioned that in case of any additional expenses warranted, it would be collected from the customers. Normally we sign on dotted lines without reading the full contract. Hence, we could not protest this payment. If we do not pay, the contract would be terminated with no refund. They used to enhance this annual maintenance charges further.
Again, they had cancelled the provision of offering our time share to our friends as gift. They started collecting some guest charges from us. The electric sub-meter provision was also withdrawn against which they started collecting some average amount in which case it became necessary to spend a few thousand rupees in these resorts extra.
Another way of forcefully collecting money from us was from kitchenware. They had slowly withdrawn gas, stove and related vessels in place of which they had kept a micro oven in the name of avoiding wear and tear to the kitchen caused by the customers. With the help of micro oven, we could only re-heat the substances and not virtually cook the items. We could not go to any other place for food due to distance and hence we were forced to have our lunch and dinner in the resort only which is very high.
Yet another inconvenience caused by them was that the resort would not be confirmed on the dates of our requirement for one reason or the other. When they allot, we may not get leave facility. Thus the status that was favourable some thirty years back is no more prevalent. It has rather become a recurring expenditure item.
He concluded by saying that since this industry does not come under the purview of SEBI or RBI, they are above law. Hence, it would be only wise to avoid the time-share resort instead of which we can choose a resort as per our convenience and as and when required.

Ownership is also futile:-

Holiday homes are bought on ownership basis with an intention to use it for self or sell it on rental basis. But this concept also has huge problems like maintenance factor, usage by someone when we are not using, misuse of the premises because we are not overseeing the functions directly etc. In effect, we may have to lose lot of our money in the end. Otherwise, we will be allowing our friends to use the resort free of cost

Beneficial investment:-

Dr.Somu Lakshmanan shares a different experience. He says that he has been a member in the Club Mahindra Holiday Home for the past ten years. He paid a sum of Rs.3 Lacs when he became a member and he has been staying one week per year and enjoying his holiday. These resorts are in certain prime and cool places. He says that if he books it in advance, he can comfortably stay and enjoy with his friends also at a nominal additional cost.

He further says that one difficulty in this is that the booking should be done well in advance as early as 4 months; else, it would not be possible for reservation. Moreover, since he is a medical practitioner, it would be difficult to plan in advance. But he says it may be possible for those employed.

He is of the view that holiday resort on a time-share basis will be comfortable and pleasant if only we make the booking well in advance. These resorts will be meant only for staying. Some resorts have the kitchen facility. Annual maintenance charges are payable every year. The holiday resort will be a convenient one if only we can plan and book it in advance.

Vatsala Subramanian, who has an experience in working in the holiday resorts, says that in general, those who have subscribed for 25 years will be treated as life time members and accorded free stay in any of their resort in India for a week every year.

There three types of membership in this concept . One would be studio apartment ( hall and one bedroom)wherein only one couple can comfortably stay and enjoy. The second one is a kind of apartment wherein one family can be accommodated (hall, bedroom and kitchen)and the third type is a bigger one which will allow two families to stay with two bed rooms, one hall and one kitchen amenities.

Further, the resorts are divided into white, blue, red and purple kinds based on the season. If it is non-season, it would be known as white with less cost. On the contrary, a resort during the peak season, will be known as purple wherein the cost will automatically be more.

It is generally believed that only the richer section of society will be approached for becoming a member in this category based on their status like ownership of a house, car and annual earnings by them etc, the main fact being that the membership itself would run into several lakhs of rupees. He says that enrolment of membership would be resorted to by distributing their pamphlets to the car owners crossing the toll plaza check points as well as in the exhibition or big malls etc. where they can get the right opportunity to catch their target clients. She says that the membership fee would range from roughly Rs.4 L to 15 L per year.

Thus the holiday resorts possess certain advantages and many disadvantages. May be for a very rich person, all his expectations would be fulfilled. For the rest, it is advisable to stay away and book hotels or resorts only when they travel.

(This article written in Tamil by D.S.Gauthaman for Naanayam Vikatan magazine dt 29/4/18 has been transcreated in English by P S Ramamurthy)