Recently I got a chance to interact with Mr. Arun Nair, Senior Manager, Marketing, Club Mahindra. I used this opportunity to discuss certain reservations I had about timeshare membership [which are detailed in this post].
In this post I'm publishing Club Mahindra's official response to various concerns I'd raised about their lifetime membership. Purpose of publishing this post is to give both side of the perspectives to readers who can use the same to arrive at a conclusion if they want to spend on timeshare membership or not, after executing necessary verifications and validations as felt appropriate.
Q1. Me: I understand that you've read my post on Club Mahindra's timeshare membership. You're very angry with me for that? Do you think the post is making baseless allegations?
Arun: The Mahindra group overall, and we as a part of it, have a customer centric approach. So, I do not think viewpoints engender anger in us. What we do believe is that we would like to apprise you of facts so that your view is then an informed view. I am sure your motivation is not to sensationalize through baseless allegations but to highlight your views to fellow netizens. We have a high degree of respect for social media and its participants and hence are taking efforts to familiarize them with our service offering.
Q2: Me: The major concern most of the members face is that they're not able to get reservations despite planning well in advance. Why so?
Arun: We would disagree with the fact that most members face this issue. We have a metric we track internally of Unique member holidayed which essentially is to ensure that our efforts are geared towards getting more and more and more members to holiday. This metric for last year stood at 75 %. However, in an effort to help our members plan their holidays we open bookings 6 months prior to the date of the holiday. Now, there are certain periods which have disproportionate demand in comparison to the rest of the year, like New Years Eve in Goa. I am sure you will appreciate that we cannot build capacity in a location for a small period when that demand is not sustained through the rest of the year. Hence there are cases when some members would call in later in the day and find that period in question is fully booked up. We however have a practice of tracking a wait list and whenever there is a booking cancellation we are able to confirm the booking for a wait listed member.
Q3: Me: But there're complaints that a member fails to get accommodation but those willing to take one time holiday readily get accommodation. Whom do you treat with higher preference?
Arun: Unequivocally our members are first priority. We have been often asked by people members and otherwise as to why such an event happens. First let me explain that our members are entitled to Studio, One Bedroom and 2 Bedroom apartments, depending on the membership they have bought. However, we are a mixed use resort i.e. in some resorts we have hotel units also. These are smaller than studio apartments. These are the apartments generally offered to non-members. However, on occasion we have also offered our members the use of this type in case they are interested. Apart from these rooms we have in the off season taken in non-members to ensure we do not have low occupancies. The rationale for a mixed use is that the resort operations & maintenance costs are covered by this revenue and the ASF in conjunction. In the event we did not follow this model we would be constrained to charge higher ASF. In the US where some resorts do not follow this model the ASF is 6-8% of the upfront price whereas in our case it is only about 4 %. In addition this mixed use also ensures we will always be benchmarked to the best in hospitality service levels.
Q4: Me: Is it true that your sales staff hide lots of cost component while explaining the membership scheme to prospects? Many members regret their decision because of this, as what they end up paying will be far more that what they thought they will pay. Most of the sales staff also put pressure on prospects to enroll on the spot with whatever amount they can pay.
Arun: Our entire sales process is carried out in an interactive fashion relying on understanding the consumer needs and suggesting an appropriate membership suited to their needs. Our sales executives carry laptops and make a technology enabled presentation. In terms of the cost components we are the only vacation ownership company in India and amongst a few globally that function on a printed Price list. This price list discloses all components of the price to be paid by the consumer. In addition, at the time of sign up there is a membership application form which carries the contract, to be signed by the member, which has all the cost elements and rules of the membership and a copy of the same is left with the member. In addition we also have a practice of a welcome call done by our member relations team wherein we walk the member through the membership, how to use, rules, our obligations and his obligations. In light of all this practice if an occasional bad apple is present it should not be generalized to the organization.
Q5: Me: Many feel investing several lakhs in timeshare is not a wise option, since the money gets locked in, options get limited and there's no liquidity. Don't you think investing that money wisely elsewhere and using the returns to take one time holiday a better option?
Arun: A Club Mahindra membership is never sold as a pure investment play. It is commitment one places for a certain lifestyle for the family and it should be viewed as such. However, we understand the fact that no decision is purely rational or emotional, and even while making such a commitment for the family there is a monetary payback angle that needs to be considered. So internally, we keep tracking industry trends and ensure that we have a healthy rational argument as well. I am also sending a rudimentary working of the same and you will realize that a Club Mahindra membership in comparison to holidaying through one time holidaying achieves break even in 7-10 years leaving the balance tenure as a complete upside to the consumer.
Check the comparison of Mahindra Timeshare vs Hotel Stay here (as provided by Club Mahindra)
Q6: Me: But prices may not always shoot up at the rate it is predicted. Air travel today is far cheaper than what it was 5 years ago. Economy hotels and home stay business is booming and prices may stabilize or even come down when volumes pick up. What do you think?
Arun: You are absolutely right that certain sectors which had artificially propped up prices when they got de-regulated saw a huge variation in pricing. However, our offering is at the premium end of the market and for the discerning affluent consumer who is looking to commit to a certain lifestyle for the family. We are not competing in the budget category. I am sure your experiences at the Coorg resort will more than bear up to the fact that the Club Mahindra experience is a 5 star experience delivered with a superior value proposition. We believe with our value proposition as we have shown to you will hold good irrespective. In the long term price appreciation of the competitive offers will happen and our value proposition will keep improving.
Q7: Me: Membership offers price protection against accommodation only, that too to a certain extent (as ASF increases every year, passing a part of inflation to member). Members need to pay everything else-Food, laundry, other activities etc at par with others. Food for four people costs as much as room rent. Can something be done to make the holiday really inflation free?
Arun: Let me first answer your query on food. Our funding program which is a member privilege provides for Rs. 450 per person, breakfast+lunch+dinner on an elaborate buffet. This buffet is comparable to any 5 star offering. I am sure you will appreciate that that the price being charged is less than what many 5 Stars charge for ONE buffet meal let alone three. In addition, we also provide rooms with kitchenettes; however we have found that members prefer to dine with us availing the fundining Programme. The kitchenettes come in handy if you are travelling with elders or infants, for whom we also provide additional care kits on request. I am sure you will appreciate that as an organization we have strived to have an edge in the competitive context in terms of our value delivery.
In terms of the membership fee you pay at today’s pricing and enjoy holidaying for 25 years, the only factor that is increased is the ASF which also we have indexed to the Consumer price index as published by the RBI. There are no arbitrary changes done. This ASF is also towards only the upkeep and maintenance of our resorts. Our resorts at Munnar and Goa are 10 years old but are in impeccable state of maintenance. We intend to ensure that for all our resorts going forward as well. I am sure there are umpteen examples of Timeshare resorts which have steadily declined in upkeep, that will not happen to a club mahindra member.
Detailed pricing of timeshare membership | Food Cost at CM resorts |
Q8: Me: Why is there so much negative perception about Club Mahindra? In most of the community sites and forums, the general opinion is not that good, as per my observation.
Arun: We believe each feedback that is there online or otherwise is an opportunity for us to recover ground and improve ourselves. However, I think you would agree that it is more likely for you to comment when you are dissatisfied than when you are happy. I am not for a moment discounting the grievances voiced. But we would like you to consider the following facts:
• We have a cell which monitors the web for feedback whenever we identify negative feedback we try and get in touch with the concerned member and resolve underlying issues – NOT from the perspective of getting him to drop his comments but resolving their issues
• We have a multi channel mechanism for tracking feedback, apart from the point mentioned we also have the usual consumer redressal cell which operated on voice and mail enabled contact centers with dedicated teams. We also have contact programs where we go into cities or localities where we have our members and invite to come and met with us to resolve any issues and most importantly plan their holidays. We also have a in resort real-time feedback mechanism running on touch screen kiosks wherein a member can voice feedback and instead of the usual post event turn around that most companies do we have a person contact the member real time and address their issue so in the same holiday their concern is taken care of.
I believe the above are rare practices in the hospitality industry overall and practically unique when it comes to timeshare. There is no other brand in the holiday space that employs so many means to stay in touch with their consumer. I would also like to mention a few other aspects that we have observed:
• We have 38% of all our sales coming in from referrals – indication of a positive sentiment?
• We have based on member feedback won the RCI Gold Crown awards at 5 of our resorts this award is given every year based on member feedback by RCI to less than 10 % of its 4000 resorts world wide– indication of good service delivery?
• We commission regular consumer satisfaction surveys through CSMM an arm of IMRB, and our resort satisfaction scores are 71% for Excellent and Very good ratings.
We are alive to the fact that services as against products are people dependent will have occasions of below par delivery the above points elucidate some of the steps that we take for tracking and recovery and some satisfaction indicators in addition to the ones you mention.
Q9: Me: The moment I make my initial payment I fall in trap. Why can’t you give an option wherein members can surrender their membership at any point and take proportionate refund? (The 15 days cancellation period is too short for anyone to experience your service and decide if they want to continue. Though one can transfer the membership, onus is on the member to get a buyer. If members can surrender the membership to CM and take refund, more and more people will come and try your services, as they have an option to quit anytime. Also this ensures no one gets a chance to complain. If they are not happy let them surrender and exit. The fear that members may leave ensures higher service standards.
Arun: The commitment to superlative standards is ingrained as a service culture in our organization. In addition I would to point out two facts:
1. The Rescission period was a proactive step from our side not compelled by any regulation; in addition as a part of AIRDA we have tried to establish this as an industry standard. This period is 10 days from the date of realization of the down payment, in which time a re-consideration by the member entitles him to full refund.
2. Proportionate refund, is already available to the member across the term of the membership. This is governed by certain terms and is applicable for a certain part of the fees paid by him.
Update: Bhupesh is a regular reader of my Club Mahindra related posts and he has lot of comments on the answers given by Arun. Read his comment here. His blog has lot of posts related to Club Mahindra-be sure to take a look. I've also sent a set of supplementary questions for which answer is expected soon. Also, Harsha Koda says he is an extremely happy Club Mahindra customer and is detailed comment can be read here.
You may also wish to read: Interview with Ramesh Ramanathan, MD of Club Mahindra by Kiruba on Club Mahindra's Official Blog.