After turning in a good performance in the March quarter and FY23 and ending the year with 84 per cent occupancy, Mahindra Holidays & Resorts is expecting 90 per cent occupancy at its resorts in the ongoing quarter.
“That is a big point that we are looking at a 90-plus per cent occupancy..and despite adding 1,200 rooms in the last three years, our occupancies are going to be the highest ever in this quarter on a large base of 5,000 rooms,” MD and CEO, Kavinder Singh told businessline in an interview.
Mahindra Holidays, which operates on a membership and timeshare model, is also feeling the impact of the resurgence in demand in the hospitality sector. To meet the rising demand for vacations by families who want to avoid the hassles of keeping an eye on room rates, the company plans to spend about ₹2,000 crore over the next three years on adding more rooms, and refurbishing resorts.
The sixth largest vacation ownership company in the world ended FY23 with total income rising 24 per cent on year to ₹1,275 crore, of which, resort income was 67 per cent higher at ₹323 crore. Sales from memberships rose 70 per cent to ₹734 crore.
Following are edited excerpts from the interaction.
The hospitality sector is seeing a strong rebound after Covid and room rates, as well as revenues are up. You also had a good quarter and year. How is the current year looking?
As you know, we are slightly different from the traditional hospitality business, because we sell memberships and, in that category, we are, by far, the leaders. We have a 3,40,000-member base and that makes us the sixth-largest vacation ownership player in the world. So this hospitality demand resurgence that you are talking about, how it helps us is that in this quarter, we are likely to cross 90 per cent in occupancy. That is a big point that we are looking at a 90-plus per cent occupancy and mind you, in the last three years, we have added about 1,200 rooms roughly. Despite adding more rooms, our occupancies are going to be the highest ever in this quarter on a large base of 5,000 rooms.
Yes, we are seeing a very big demand uptick. We are seeing very robust bookings also for the next four months. The demand is across the country. So, we are looking at resort income getting benefited as a result of this kicker in occupancies - because the spending on food, beverage, and holiday activities is likely to go up. Not only are people coming to the resort, but they are also spending money in the resorts, and that obviously helps in our profit situation. There is also a robustness in the annual fee collections, because people want to holiday more.
You have plans to expand. Could you elaborate more on that?
As of now, we have a ₹2,000-crore capital spend in our mind, which we want to spend over the next three years or so. This will give us 1,500-1,800 rooms. A large part of that is already being deployed. Construction on a ₹150-crore resort in Ganapatipule is on. Another ₹220-250 crore project is on in Kandhaghat near Shimla. We have a project going on in Assonora in Goa where ₹50 crore is being spent on an existing resort. We have a resort in Puducherry where we want to put in about ₹90 crore for 60 rooms that we are going to build. We have various land banks, where we are considering to break the ground. We have a land bank in Theog, which we will most likely open up, another ₹150-odd crore of investment there.
Would you also consider acquiring hotels that are bankrupt or have fallen on hard times in the last two years?
We are very keen to acquire hotels and resorts, which can be refurbished and brought to our standards, and this is something that we have been doing, and we will continue to do. Of course, it’s a question of location, pricing, how much we propose to spend, whether it will meet our requirements. But we are always on the lookout for acquiring resorts.
Do you expect to maintain the revenue growth that you saw last year or will you be exceeding that? And how do you see your membership growing?
There is a good uptick we are seeing and higher occupancy leads to higher resort revenues. People see the benefits of the membership model particularly in a high inflation environment, when people see that when you are buying a membership, you are protecting yourself in a way from future increases in prices. Though in the annual fee, we do add inflation as per our formula, but it’s on a very low base - so people don’t really feel the pinch. So I see that trajectory to be positive.
Since we have multiple products, we have a very good go-to-market reach across the country and we are expanding geographically also.. so we do see the member growth momentum to pick up. We are aiming definitely to grow faster than what we grew in the last year.