A need and an innovative solution to a difficult problem combined can provide the base for a large company. Exclusive Resorts was established in 2003 and appears to be doing quite well.
The key value is in the real estate that this company owns.
If an exclusive resort type option was available in India I would want to be a member.
It would also be an interesting experiment to help an entrepreneur make an exclusive resorts type play a reality in India using this blog.
To start this experiment off I will post the first set of questions.
Will an exclusive resorts type play succeed in India and can an entrepreneur with limited bootstrap capital ( own money+ friends & family money) attempt such a play ? Is there anyone who is already doing such a play ?
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Krish,
You are right. The pricing is very steep if you take the cost of capital. I guess the fact that this place has 1800 members means that quite a few people put a high premium on exclusivity and having a luxury home experience with high class service.
I take back my earlier comments. At these price points I would not be a member.
From a member’s ( User’s ) angle, to arrive at the Cost / Vacation (C/V) day, you may also have to factor in interest cost of $ 195,000 ( at the lowest level ).
On a basic inflation rate of 5%, it works out to $ 9750.
Add $ 9500 annual fee, the C /V day = $1283 [ 9500 + 9750 ) / 15 ]
Put consumables at 50% of C/V, which is $ 642.
At the lowest level, total cost would be $ 1925.
It would be a mistake to compare it with cost of owning such a real estate, since that has value appreciation ( over time ) element to reckon with. The Upmarket Members normally don’t look at it that way. They just want to unwind at a great place, that’s it. At best, one might compare it with cost of a similar alternative accommodation at such vacation spots.
From a founder’s angle, one has to factor in (a) member flow ; (b) cost of maintenance (c) Taxes (d) business cycles (e) Overages ( revenues from one time letting out to non-members during off-peak days / weeks – Eg. Feature / Ad Film shoots, Sponsored events etc. )
Good luck.
Membership at the lowest level is $195,000 ( you get 80% back if you leave) and annual fees are $9500. You get 15 vacation days so cost/vacation day is
$633.
What you get is 3500-4000 sq. ft. home with very high level of service. You have to pay for the services. My guess is around 8 adults ( 4 families) would be very comfortable. So it works out to arund $150 per family per night for super accomodation and a vacation to remember. If one budgets atleast $350 per night for food/activities etc then the annual cost excluding travel would be $500 per night.
Mahindra/RCI time shares cater to the mass market while this caters to an exclusive market.
With interest in India being high I do not think getting members even at this price point will be a problem if the vacation homes are in great locations and superbly appointed and run. If a member wanted to build, maintain and run a vacation home it would cost considerably more.
The challenge will be in execution.
Remember the Suman Motels episode….? In that case, they started booking memberships ( with Rs.100 K – Rs.200 K depending upon the locations chosen ) with promise of adding on more and more locations…. when it didn’t click the founders blinked….the members lost their money and the company eventually had to sell of the real estate to another company ( Sterling Resorts…which too bombed and gone under BIFR )….The problem was not the idea itself, it was the inaccurate assessment of liquidity needs.
Hence, I feel the idea is worth exploring…Besides deep and “patient” pockets, one also should be capable of picking up bargain real estate at picturesque locations and spend some money on landscaping, structures, logistics, brand building etc. Business is extremely cyclical – yet the return expectations over the long term is terrific and is directly proportional to the number of years the capital remains locked in.
Looks a lot like time share holidays to me — am i missing something? Mahindras have a good time share option in india.