Sterling Holiday Resorts (India), the company which popularised vacation ownership concept, is on a makeover roll these days with many of its holiday locations getting refurbished to serve customers even better. Simultaneously, the leisure hospitality chain has been focusing on building up the network of leisure resorts at some of the best holiday destinations in India. Ramesh Ramanathan, MD, Sterling Holiday Resorts, tells Sajan C Kumar the company wants to build up the inventory to give customers increased satisfaction rather than indulging in over the skin activities like spending on marketing and ad blitzkrieg. Excerpts:

The company is sitting on a huge land bank… Are you contemplating any thing on greenfield development?

By FY14, we are planning a slew of greenfield development of resorts on our 150-acre land bank available across 15 locations in the country. Our plan is to build 2,000-2,500 apartments. The major locations include Mahabaleshwer, Goa, Perumedu, Ooty, Coorg, Thekkady, Kodaikanal and Munnar, among others. We estimate a R1,200-crore investment going into building 2,000-2,500 apartments. We are working on the designs and other other aspects of the projects, but it may start only by FY14. As of now, we will be continuing with the refurbishment of the existing resorts and leasing out of a number of resorts, in the near term.

What is the update on the upgradation of resorts?

The investment for this year towards refurbishment and rebranding of resorts will be around R100 crore and with R10 crore spent on IT put together, we are planning a capex of R110 crore. In our industry the refurbishment cost is calculated as cost per room which is around R14 lakh. As on date, we have around 1,450 apartments spread across 19 resorts. Out of 1,450, close to 1,100 are own apartments and the rest are leased. Out of 1,100, we have finished 400 apartments and by the end of this fiscal we will be completing 750-800 apartments. Rest will be completed in the next fiscal. Most of the inventory will be done by FY13.

Could you share future expansion plans of the company with us?

We are expanding through refurbishment of existing resorts plus leasing out of a number of properties. In the current fiscal, we are planning to add five to six locations to our existing 19-odd resorts through this mode. The company is in advanced talks with resort owners. As we have enough locations in south, the new resorts that we are eyeing will be in north and eastern parts of the country. Out of our 19 resorts, 12 are our own and the remaining seven are leased ones. The leasing out the properties will be wise for the company as it doesn’t need cash flow

How has slowdown affected vacation ownership industry?

The vacation ownership industry is not really worried about slowdown. Total vacation ownership members in India will be roughly around is 2.5 lakh. We estimate that the number of families who can be considered as potential market for this industry is anywhere between 40 lakh and 45 lakh. The penetration level is low. Of the 45 lakh potential families, the number of membership still stands at 2.5 lakh. Addition per annum will be around 45,000 to 50,000 and that, too, will be contributed by all the major players as a whole. In my view, this kind of addition will anyhow happen in any sort of economic condition.

In my view, the vacation ownership industry works well in the periods of both boom and gloom. It gives you the flexibility in terms of payment and holidaying. Moreover, it is inflation-proof, in the sense that you buy the time share now and the accommodation is assured. You are pre-buying the holidays for the future and that tends to be cheap and works well in slowdown, too. During boom time, because customers have already bought vacation, they go and occupy the resort, which in turn will boost your occupancy rates.

Tell us about the switch in the concept from resort firm to holiday destination?

When the process of rebuilding the company was started some two years ago, we wanted to be known as a holiday company rather than a resort firm. We changed our logo and name to reflect the true character of a holiday company and triggered a transformation from a 1995 company to a new age company. It was anything, but cosmetic. We did not want to put money into the brand, but wanted to give customers a new holiday experience and that was the main reason why we took to refurbishing our properties, which is still under way. We have been getting good response on renovated resorts.