Sterling Holiday Resorts, a subsidiary of Thomas Cook India, has ceased the sale of new vacation memberships as part of a strategic shift towards a conventional hotel business. The company stopped selling new memberships approximately two-and-a-half years ago, according to managing director Vikram Lalvani. This decision comes as Sterling prepares for a demerger from Thomas Cook India and a separate listing, pending regulatory approvals.
Shift in Business Model
Sterling currently services a base of about 50,000 legacy members, with approximately 30,000 to 35,000 members traveling each year. Lalvani described this membership base as a "competitive advantage" that helps maintain occupancy rates, filling the first 10-15% of rooms. However, the company is focusing on expanding its hotel operations, with plans to increase its portfolio from 78 properties to over 95 by 2027, and to grow its room count from 3,800 to 4,500.
Market Dynamics
Industry experts, including Navneet Nagpal of Spectra Hospitality Services, noted that the vacation ownership model faces challenges due to changing consumer preferences. Travelers increasingly favor flexible hotel bookings over long-term commitments, influenced by rising maintenance fees and the availability of online travel platforms. This shift has led Sterling to adapt its business strategy away from traditional timeshare products, which have seen declining appeal.
Thomas Cook India announced in March the intention to transfer its Nature Trails resorts business to Sterling, facilitating the upcoming demerger.
The cessation of new membership sales may lead to a more streamlined hotel operation for Sterling Holidays, potentially enhancing its market position in the hospitality sector. Investors will watch for regulatory approvals regarding the demerger and the separate listing of Sterling Holiday Resorts, expected in the coming months.