Riding on revenge travel, Mahindra Holidays to add 1,500 rooms in 3 years

The Mahindra Group hospitality arm plans to invest Rs 1,000-1,200 crore

Mahindra Holidays and Resorts India Ltd (MHRIL) have charted out an aggressive expansion plan as it seeks to ride on the revenge travel trend and a strong resurgence in leisure destinations. Kavinder Singh Managing Director and CEO, says company’s Club Mahindra resorts are running at an optimal capacity at various locations as people throng to drivable destinations seeking to get away from home.  

As part of the expansion plan, over the next three years, the country’s only publicly-traded company that sells time-shares for vacation packages will be adding 1,500 rooms to its portfolio of 4198 rooms. The total room inventory is expected to be over 5,500-plus by FY25.

The hospitality arm of the Mahindra Group that is  based on the vacation ownership model has outlined an investment of Rs 1,000-1,200 crore for an expansion that will include a combination of building greenfield resorts and taking properties on long term leases, said Singh. At the end of the three months that ended in June, the company had a cash reserve of Rs 950 crore while receivables available for securitization stood at Rs 1,170 crore.

Amid the vaccination drive that has made people more confident of travelling and easing of Covid-19 related curbs, MHRIL has seen an uptick in the average occupancies month-on-month. From 51 per cent in June, it has inched up to over 70 per cent in July and expected to rise further in the coming months.  

“There’s a big resurgence in travel and as a result there are no vacancies at many of our resorts. There’s no seasonality any longer due to the workcation (relocating and setting up work from offices in leisure locations) trend. June and July are otherwise weak months.” A strong positioning in the leisure segment focused sharply on the families and staying clear of weddings or MICE (meetings, incentives, conferences and exhibitions) have held the company in good stead, he said.

MHRIL is also open to buying out assets up for sale. Singh conceded that the pandemic has brought the valuations of properties to reasonable levels. But not many are distressed. The company will go ahead with a buyout only if it ticks all its boxes including location, property’s size and price. “We are not a cookie cutter hotel company,” said Singh.    

At the end of June quarter, Club Mahindra added 1062 new members taking the cumulative member base to over 255,000. The addition of new members in Q1 is the lowest in several quarters as it was impacted by the second wave of Covid. It added 4,789 members in Q4 FY21, and 3,291 in Q3FY21.  

Meanwhile, the company's plans to make an entry into the business of managing hotels and resorts for a fee remains “under active consideration,” said Singh adding that the plans will be firmed up soon. MHRIL will have a new brand for the business. The move will help in giving the members a wider choice of locations and properties, he said. The new brand too will stick to the core positioning of a leisure brand. “We have no plans to get into the business or any other segment. Managing large leisure properties is what we know the best and will stick to that,” he said.

Retirees and mature travelers, a key target segment, had significantly reduced travel in 2020. But as vaccinations increase, they are more open to travel again. As per company’s estimates, 80 per cent people are more inclined to travel in 2020, it said in an investor presentation.      

Even last year, when most part of the year got disrupted due to a stringent countrywide lockdown, crippling the hospitality sector, MHRIL invested Rs 1,000 crore in capex for  new assets and enhancing existing inventory.