Why Sterling Holidays is moving beyond holiday memberships before its standalone listing

The leisure hospitality subsidiary of Thomas Cook India stopped selling new memberships about two-and-a-half years ago. Its 50,000 legacy members now provide an occupancy cushion as Sterling builds a conventional hotel business ahead of its demerger from the parent and a separate listing, managing director and chief executive Vikram Lalvani said.

“The membership model is not bad, but economically it may not work in the long term. We sunset acquisitions about two-and-a-half years ago. We first moved towards leisure hospitality and then towards a larger hospitality play,” Lalvani told Mint.

The shift is already reshaping the company. Sterling operates 78 resorts, hotels and retreats with more than 3,800 rooms across 65 destinations. It expects to cross 95 properties and 4,500 rooms by 2027.

Thomas Cook India announced in March that it would demerge its resorts and resort management business into Sterling Holiday Resorts, subject to regulatory approvals. The transaction will also transfer Thomas Cook India's Nature Trails resorts business to Sterling and pave the way for its separate listing.

No more new members

Sterling continues to service its existing base of about 50,000 members, with around 30,000-35,000 travelling each year. Those members are no longer the source of future growth. Instead, they provide a built-in occupancy cushion.

"The base that we have is actually our competitive advantage because it helps fill the first 10-15% of occupancy. It keeps the cash registers ticking," Lalvani added.

Navneet Nagpal, founder of Spectra Hospitality Services, said the vacation ownership model was facing structural pressure as travellers increasingly preferred flexible hotel bookings over long-term commitments. Rising maintenance fees, limited peak-season availability and the growth of online travel platforms had reduced the appeal of traditional timeshare products, he said.

"Timeshare didn't fail as an idea. It failed to keep pace with how Indians now buy travel," Nagpal said, adding that operators were increasingly using memberships as a loyalty tool while relying on hotel operations for growth.

“With some active members but no new membership sales, it will continue to service existing customers but shift future growth to its hotel business. When older memberships gradually expire, the company's long-term obligations will reduce, allowing new hotel rooms to be sold at market rates instead of being tied to member bookings,” added Nagpal.

From survival to scale

The transformation began during the pandemic, Lalvani said. “First it was about surviving. Then it was about reviving. Now it is about thriving.”

Sterling generated less than ₹200 crore in revenue in 2019, when 70-90% of the business was linked to memberships and the company was loss-making. While profitability has improved, Lalvani said accumulated losses from the legacy business continue to remain on its books.

"Legacy businesses take time to repair," he said.

The numbers now show the shift. Resort operations contributed 85% of revenue in FY26, up from 79% a year earlier. The company reported revenue of ₹548.7 crore, Ebitda of ₹170.1 crore and profit before tax of ₹114.2 crore for FY26 while remaining debt-free. It also completed its 25th consecutive profitable quarter.

Sterling is also trying to make its hotel business less dependent on seasonal leisure demand. It has begun adding hotels in business and mixed-demand markets such as Karwar and Madurai, while targeting meetings and incentive travellers.

"In earlier years, the first quarter was always our strongest. In the last two years, the third one—October to December—have become the strongest because this is also when families travel and weddings happen," Lalvani said, adding that the company now balances leisure demand with corporate, and pilgrimage travel.

Beyond memberships

Sterling plans to add another 35 hotels with nearly 2,000 rooms over the next 12-15 months, Lalvani said.

Its expansion has focused on wildlife, pilgrimage and drive-to destinations, while it is building travel circuits across states such as Rajasthan and Kerala to encourage longer stays.

Unlike several hotel companies that have adopted asset-light strategies, Sterling plans to retain a mix of owned, leased and managed hotels. About 45% of its room inventory is owned, with the remainder split between leased and managed properties.

"We are not over asset-heavy and neither are we asset-light. We have to strike the right balance and that has an impact on the profit and loss, not just the balance sheet."

The company also has no plans to sell its owned assets at this point. Instead, it is expanding existing properties. Its Puri resort has grown from 97 rooms to 156 rooms and is now being expanded to 220 rooms. Sterling also owns around 60 acres of land that could support future resort developments.

The strategy is deliberately less about building the biggest hotel network than about building a profitable one. “We could be at 150 hotels, but the Ebitda at 40 hotels could be far greater. There's no point saying we have 200 or 300 hotels when the Ebitda is not strong,” Lalvani said.