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Mahindra Holidays & Resorts India Limited (MHRIL), the hospitality arm of the Mahindra Group, is planning to invest over Rs 600 crore in the next 18 months to increase its inventory. The company is also exploring the possibility of expanding in the western part of the globe.
Arun Nanda, MHRIL Chairman, said the company’s inventory was 2,500-2,600 rooms across 41 properties. In the next 18 months, the company planned to add 600-700 rooms, with an investment of Rs 500-600 crore.
“We are considering an increase in investment, given the fact that things are looking good now and the feel- good factor has come back among consumers,” said Nanda.
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2,500-2,600 Total number of rooms that Mahindra Holidays & Resorts owns across 41 properties 600-700 Number of rooms the company plans to add in 18 months 11-33% Compound annual growth rate in sales of vacation ownership companies, compared to large-size hotel companies growth of 5-8% 70% Market share of the company in the vacation-chain industry |
According to reports, sales of vacation ownership companies including MHRIL, Sterling Holidays & Resorts and others grew at a CAGR of 11 per cent - 33 per cent, compared to large-size hotel companies, which grew at 5 per cent - 8 per cent. These companies were poised to grow at a much higher phase compared to hotel chains.
Nanda attributed this to mainly to capital and the fact that vacation ownership companies could drive the traffic (customers) in a better way. Besides, there is the choice of properties across the country. MHRIL alone has 41 properties across India.
He claimed that MHRIL’s properties were reporting around 85-90 per cent occupancy ratio in the first year itself, which many of the hospitality chains are not able to.
He noted that MHRIL’s rooms on an average were spread over 400 sq ft as compared to 200 sq ft for those of hotels. The company claims 70 per cent market share in the vacation chain industry.
Nanda said MHRIL’s expansion plan would be funded mainly through internal accruals. “We are a zero debt company and have got the cash equivalent of Rs 1,000 crore,” said Nanda.
He added that MHIL was also open for acquisition, mainly to address clearance and other legal procedures. “In many places, there are embargoes to acquire land for any new construction. To expand our big resorts, expansions will be mainly through acquisitions,” said Nanda.
Speaking about overseas expansion, he said, Thailand, Malaysia and Sri Lanka were some of the destinations which the company was considering. “We are also exploring possibility of expanding in the western part of the globe,” said Nanda.
