Sterling Holidays has increased focus on the non-member business: Ramesh Ramanathan

After a three-year silence, Sterling Holiday Resorts, which currently operates 33 resorts with 2,200 guestrooms across the country, unveiled its new avatar and brand positioning last week: a holiday company versus a pure timeshare or vacation ownership firm. During the media interaction, Ramesh Ramanathan, managing director, Sterling Holiday Resorts Ltd (a 100% independently managed subsidiary of Thomas Cook India Ltd - TCIL), responded to queries by Ashish K Tiwari on the new approach to tapping the hospitality / leisure market, strategies for expansion, their investment thesis and so on. Edited excerpts...

Have you reduced focus on the timeshare vertical considering it's at 50:50 ratio in terms of revenues. Is timeshare losing its attractiveness and can its revenue contribution go further down?

We have not reduced the focus on timeshare. What we have done is to increase the focus on the non-member area. That is the larger market for us to build. We continue to operate in timeshare and we are very interested as it is a good business model that we do vacation ownership and timeshare as well as others. As a business model, it's working out very well for us. We will continue our focus on that vertical. There is absolutely no change in the timeshare market and it will continue to grow further. We are growing at a particular rate with timeshare and we wanted to outgrow that rate. That's why we changed the business model.

You went from 1,100 rooms to 2,200 rooms by investing Rs 250 crore. Will adding another 2,500 rooms call for similar investments or more over the next five years?

We are taking the management contract route. So our investments for the next couple of years would be much lower. The idea is to get the asset owners to build the property according to our specifications, brand it and run it. Also, if there is an older property which matches our specifications, we will certainly look at it.

The older properties would require refurbishment?

So normally we visit these properties, talk to the owners and give them a list of things that need to be done. They do it and only then we take over. We have in the past been on a lease route from the ground-up with the owners. So we have quite a good experience and a very strong team to take this up.

How do you view competition from brands like OYO and Airbnb? Will they make it more challenging for you considering the same set of people are being catered to?

Personally, I believe that Airbnb has opened up a host of new markets. Also, all existing players continue to do well along with Airbnb. So there is a widening of the market. If we go back to some years like 1996-97 when I was with Club Mahindra, the first resort we opened was 20 kilometres away from Munnar. There was only a single road going towards Munnar when we opened the resort. Today that area has 30 resorts and all of them are doing good business and I think this is how the market grows. Around 15-17 years ago, we could precisely identify what are the holiday dates when will the customer come viz. Diwali, Christmas, summers etc. Today that's not the case. People are moving towards weekends. Sometimes customers don't care about the weather. So you still get occupancies in hot areas like Goa. It used to be empty during the summer months, not anymore. Monsoon has become a separate season to enjoy Goa. Things are spreading out and the market is growing rapidly. Companies like Airbnb has gotten people to holiday more and more and it is a good thing that is happening. We are the fifth on vacation deprived list. It's a long way to go and we wonder if our 2,200 rooms will be good enough.

A lot of local players have entered the market to deliver experiences. Would you look at them for acquisitions?

Absolutely. I think local players have been phenomenal in the hotel industry worldwide. I think opportunities will come and we are open to acquisitions as and when it happens. As of now, we don't have anything but if something comes up we will certainly look at it.

Could you quantify the spends with the new branding exercise?

We have just started the exercise. There will be spends to build visibility for the new brand proposition but difficult to quantify it at this stage. We will focus on social media to start with and will also get into conventional media gradually.

Tell us about the travel insurance offering, are your competitors also doing anything like this?

As far as we know, no one has done this insurance. Most of the hotels have public liability insurance when you are at the hotel. It is a norm. What we have done is offer a doorstep to doorstep travel insurance to our customers for free. Members or non-members have to acknowledge it that they agree with it. In terms of transport, missing and delayed baggage, accidents, missing flights etc. We are planning to offer this from the first quarter of next year to our customers. We also wanted our customers to be free of any worries while holidaying with us. The insurance will be offered in association with our group company, Digit Insurance.