Mahindra Holidays and Resorts India, the hospitality arm of Mahindra and Mahindra (M&M) group, is banking on development that the domestic leisure vacation segment is anticipated to witness in the coming decade, as it plans to invest Rs 1,200 crore in adding 1,500-odd rooms to its present portfolio of 3,700 rooms more than the next 3 to 4 years.
Kavinder Singh, MD and CEO, Mahindra Holidays and Resorts, observed that Covid-19 had altered people’s vacation plans, and most would be unwilling to travel to international destinations for at least two to 3 years, which opened up possibilities for domestic leisure tourism. The resort corporation has currently observed a sharp surge in its occupancies, with the most current February numbers hovering about 84%. The occupancy levels had dipped to 30% in the July-September period, ahead of enhancing to 75% in the quarter ended December 2020.
The corporation reported a 63% year-on-year raise in profit soon after tax at `41 crore, though the ebitda (earnings ahead of interest, tax, depreciation and amortisation) margins surged 750 basis points YoY to 33.8%, in the third quarter ended December 31, 2020. The company’s earnings was impacted due to fall in resort earnings compared to final year, and declined 8% YoY to Rs 246 crore. However, it reported that resort earnings had enhanced month on month and grown considerably from Rs 7 crore in Q2FY21 to Rs 45 crore in Q3FY21.
The corporation that operates on membership model has its most current member count at 2.6 lakh. It used to add 12,000 members annually, six years ago, which improved to 16,000 and then to 18,000-member additions a year, ahead of the pandemic hit. However, now, the corporation is expecting to best its final count, with hopes of adding more than 18,000 members as it sees possibilities to tap the burgeoning middle class that will want to commit on leisure. “I see big opportunities in growing this business. I see opportunity for scaling up like never before both in terms of member and inventory additions and most importantly creating experiences which people will value far more than what they valued earlier, which include outdoor experiences,” Singh told FE.
With models like work-from-household and work-from-anyplace right here to keep, Singh is currently witnessing a alter in the spending and staying habits of individuals. There is also a alter, as individuals are more keen to have distinct type of experiences and discover more outdoors. Destinations inside driving distance are seeing more traction of vacationers, even so, Goa is an exception, he stated.
The typical length of keep has improved from 3 nights to 4-4.5 nights now, though longer stays beginning from 14 days lasting to about a month is also what he is seeing in his resorts. “This was not there earlier. I think there would be a set of people who would be looking at this going forward too. People will stay longer at our resorts as they are in a position to work from anywhere and that is definitely a trend that I am seeing,” he stated.
As individuals are sceptical about consuming at smaller sized or more affordable alternatives, Mahindra has observed spends on meals also raise at the restaurants in the resorts. “Earlier, guests would stay at our resorts but would go out and look for cheaper options to eat. We used to discuss this internally and had to make efforts like undertaking guest tours of our kitchens to show the hygiene standards followed. Now, none of that is required, people want to eat in the resort and that has led to increase in spends at our rooms,” Singh stated.
While the corporation is hunting to develop its space count and will commit Rs 1,200 crore for creating more rooms on its personal and also acquisitions, the altering dynamics of people’s holidaying behaviour and the company’s sharper concentrate on monetary prudence are guiding its future expansion plans. Singh stated the corporation would be following a healthful-mix of owned and asset-light tactic, whereby 55-60% of rooms will be owned by the corporation and the remaining 40%-odd will be on extended leases.
“We are not an asset heavy business even today. Our cash is about Rs 850 crore and our receivables are at about Rs 1,600 crore, so our liquid cash is about Rs 2,500 crore and our assets are at about Rs 2,500-Rs 2,700 crore. On our asset mix also we are more on current assets than fixed assets, which is the liquid assets and cash. However, the core idea is to have own resorts and have experiences built to a certain level,” he stated.
Singh stated not all of the `1,200 crore will be spent on creating rooms on its personal. “We might also acquire, and that too at distressed prices, so that will be better utilisation of cash,” he stated.
The corporation is in the industry hunting for acquisition possibilities in resorts based on correct place and correct price tag. “Even if the resort is not up to our standards we can correct it, but location is key,” he stated. The corporation is exploring western and eastern India, specifically, as it sees prospective to develop new destinations and experiences more there, though getting open to possibilities in the North and South as effectively- markets exactly where the corporation is currently effectively entrenched.