Mahindra Holidays & Resorts To Add Over 300 Rooms By March

Mahindra Holidays & Resorts, which operates under the flagship Club Mahindra brand of membership-only resorts, plans to add over 300 rooms by March to take the overall inventory to 4,500 keys, a top company official has said.

The Mahindra group firm had reported the highest quarterly profit of Rs 40.6 crore in the three months to September 2021 amid the pandemic that has hit the hospitality and tourism industry badly.

It operates 78 properties offering 4,197 keys and has been clocking about 80 per cent occupancy in the third quarter and hopes to better it going ahead provided there is no third wave and the resultant mobility curbs.

"We started this fiscal with 4,197 rooms and we are on course to close the year with an inventory of 4,500 rooms. We are adding a little over 300 rooms to our existing properties at Assonora in Goa and Ganapatiphule in Maharashtra," Kavinder Singh, managing director and chief executive of Mahindra Holidays, told PTI.

Refusing to give an exact investment going into these brownfield (existing) projects, he said these are part of the planned Rs 1,200-crore capital investment to add over 1,000 rooms in the next three years ending FY24 when "we will an inventory to over 5,500 rooms. Last fiscal we added 150 rooms".

Singh sounded confident of closing the year almost at the FY20 levels given the rising occupancy which is sniffing at 78-80 per cent, marginally up from Q2 levels which were already at the pre-pandemic level in terms of occupancy.

While Q2 occupancy was at par with the pre-pandemic level, October and November averaged at 78-79 per cent and December should be well above 80 per cent, Singh said.

The third quarter is already close to the FY20 level as resort income has been steadily growing and is above the pre-pandemic level, he said stopping short of saying they will close FY23 better than FY22 numbers given the uncertainty about the third wave.

Asked about acquisition plans as the company has been growing through that route especially outside (Holiday Club Resorts in Finland which has a balance-sheet almost as big as Club Mahindra's), Singh said leisure properties are doing well overseas and there is hardly anyone looking for distress sale, ruling out any immediate announcement on this front.

But, Singh was quick to add that they are always on the lookout for good assets.

On how they could weather the pandemic storm, Singh said Club Mahindra has a unique business model wherein its occupancy is assured, as it's a membership-only timeshare club. He added that 96 per cent of a new upfront annual membership fee is considered as differed income, as they can book only four per cent of the membership fee into the balance sheet annually.

"That means with over 2.59 lakh members, we are sitting on differed income of close to Rs 5,000 crore and the net deferred revenue on the book as of Q2 was 4,400 crore on a standalone basis," he said.

The company is debt-free and has assured cash-flows from a subscription monetisation point of view.

Of the Rs 265.2 crore revenue in Q2, the biggest chunk came from vacation ownership at Rs 96.7 crore, followed by an annual subscription fee of Rs 76.2 crore, Rs 50.8 crore as resort income and Rs 14 crore in interest income and a treasury income at Rs 27.6 crore, he said.

Of the 78 properties that Club Mahindra operates overall, its Finnish subsidiary Holiday Club, which is a leading vacation ownership company in Europe, runs 33 timeshare destinations and nine spa resorts across Finland, Sweden and Spain.

In Q2, on a standalone basis, Mahindra Holidays had Rs 265.2 crore of revenue, up 25.3 per cent year-on-year, from which it earned Rs 40.6 crore in net income, which was up by 20.2 per cent and a cash balance of Rs 1,041 crore, up from Rs 950 crore.

On a consolidated level, which includes the Finnish operations, total income stood at Rs 593.3 crore, up 16.1 per cent and net income of Rs 59.8 crore, up 107.7 per cent.

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