Mahindra Holidays looks to check in non-members with new hotel brand

Mahindra Holidays & Resorts (MHRL) — that runs Club Mahindra resorts — is in the final stages of entering the hospitality segment. As part of the plan, the vacation ownership firm will diversify into hotels in the leisure segment.  The move will help the firm target new clientele for its core business, said the company’s senior executive. 

A hotel under a new dedicated brand is likely to come up by the first or second quarter of the next financial year (2023-24). To be positioned in the upper upscale band of the leisure segment, the hotel will compete with the likes of Pullman and Courtyard by Marriott.

“The new brand will help us expand our clientele base, as well as our inventory. It presents a significant opportunity in the post-pandemic phase,” Kavinder Singh, managing director and chief executive officer at MHRL, told Business Standard.

The name of the brand and the places the hotels will be coming up in are still a “work in progress”, said Singh, adding the company is six to nine months away from the launch.  

“It’s critical we get it right. We believe there are enough tailwinds for our core business to continue to grow,” he said.

It will be positioned in the upper upscale going up to premium. The company is looking to create a differentiated proposition and not looking at direct competition with the existing brand in the segment.

“We specialise in family holidays and will stick to that,” said Singh.

The investment in the new venture will not be significant since the business will be based on an asset-light model, said Singh. 

While Mahindra manages the properties actively through management contracts, it is not looking to plough much resource into assets.

“The one-odd property to build the brand is fine since the objective is to build the brand, not property. There are enough properties and all we need to do is to ensure it meets our brand standards as we get them on lease,” he said.

Kavinder Singh, Managing Director and CEO at Mahindra Holiday Resorts

MHRL on Wednesday reported a 30 per cent decline in consolidated profit after tax (PAT) to Rs 41.39 crore for the second quarter (Q2) of 2022-23, impacted by higher expenses. The company had posted a consolidated PAT of Rs 59.76 crore in the same period last financial year (2021-22). 

Consolidated revenue from operations during the quarter under review stood at Rs 598.36 crore, against Rs 546.4 crore in the year-ago period. In the quarter gone by, it saw additions of 4,397 members, growth of 12 per cent year-on-year (YoY). It also saw the highest-ever Q2 membership sales value at Rs 194 crore — a growth of 93 per cent YoY.

According to a person aware of the company’s plans, Mahindra has been in talks for acquisition of hotels in Jaipur and Aurangabad.

“It has almost concluded talks to acquire a 100-room property in Aurangabad, while discussions for acquiring a hotel in Jaipur are still on,” said the person quoted earlier. 

MHRL has set aside Rs 300 crore for acquiring hotels, he added.   

Singh said the foray into hotels will be confined to leisure and the company will steer clear of entering the business hotel segment in cities. The former, he added, commands a pricing premium of 2.4x over the latter in terms of average daily rates.

“We believe this premium further justifies our entry into the leisure space,” he said.

For addressing the needs of those wanting to stay in city hotels, MHRL has a partnership with 400 hotel brands under brand Horizon. It enables Club Mahindra members to book their room nights, pay the exchange fee, and stay at any of the partner hotels.