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Customer mix helps Mahindra Holidays

Srividhya Sivakumar BL Research Bureau | Updated on February 02, 2011

Mahindra Holidays and Resorts has returned to strong growth in the December quarter. The company registered 13 per cent growth in sales over the corresponding year-ago quarter.

Improved operational metrics, operating profit margins expansion by 2.6 percentage points to 34.5 per cent and a favourable customer mix helped the company deliver higher profit growth.

Profits during the quarter grew by about 31 per cent.

Member additions continue to be slow. The company added 3,758 members during the quarter.

While 3,146 were for Club Mahindra Holidays, the rest were for Zest, the short-break holiday option. In the corresponding quarter last year, it had added 4,905 members.

The slowdown in member addition can be attributed largely to the change in the company's customer acquisition strategy.

From the first quarter of this year, Mahindra Holidays increased the down-payment for its packages to 15 per cent from 10 per cent, reduced the maximum financing period to 48 months from 60 months, streamlined its sales force and stopped letting out rooms to non-members.

Lower cancellations

While this has significantly slowed the pace of member additions, it has also helped the company improve its customer mix and reduce membership cancellations.

During the quarter, 1,057 memberships were cancelled, leading to a provisioning of Rs 12 crore (Rs 27 crore in the year-ago quarter). The company also saw in the period an improvement in its occupancy rates to 81.4 per cent from 74.1 per cent.

Its cumulative member count stands at 1,21,751 against 1, 09,110 in the year-ago quarter.

Mahindra Holidays added Osian, Navalgarh and Swamimalai to its offerings and expanded presence in Coorg. These added 82 units to its inventory, taking the count to 1,555 rooms (as of end-December).

Its work in Tungi is in the second phase and will add 155 units to the inventory (on final clearance) on completion.

Zest destinations are based in South India. But in the coming quarters, Mahindra plans to launch zest in other regions.

For its to-be-launched fractional ownership of villa project, the company expects to start its capex from the next fiscal and has indentified land in Coorg.

Published on February 02, 2011

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