Mahindra Group to increase room inventory by 1,500 keys in next three years

The Mahindra Group's hospitality business, which is built on the vacation ownership model, has set aside Rs 1,000-1,200 crore for expansion, which would comprise a mix of greenfield resort construction and long-term rentals.

Mahindra Group to increase room inventory by 1,500 keys in next three years

Mahindra Holidays & Resorts India Ltd (MHRIL) has devised a bold growth strategy to capitalise on the revenge travel trend and a strong revival in leisure locations. The company's Club Mahindra resorts, according to Kavinder Singh, Managing Director and CEO, are operating at maximum capacity in various places as people flock to drivable regions looking to get away from it all.

Over the next three years, the country's sole publicly traded firm that offers time-shares for vacation packages will add 1,500 rooms to its inventory of 4198 rooms as part of the expansion strategy. By FY25, the total room inventory is anticipated to exceed 5,500.

According to Singh, the Mahindra Group's hospitality business, which is built on the vacation ownership model, has set aside Rs 1,000-1,200 crore for expansion, which would comprise a mix of greenfield resort construction and long-term rentals. The business has a cash reserve of Rs 950 crore after the three months that ended in June, with receivables available for securitization worth Rs 1,170 crore.

MHRIL has observed an increase in average occupancies month over month as a result of the vaccination push, which has given people more confidence in travelling and the relaxation of Covid-19-related restrictions. It has risen from 51% in June to over 70% in July and is likely to grow much more in the following months.

There has been a significant increase in tourism, and as a result, many of our resorts have no vacancies. There is no longer any seasonality because of the workcation (relocating and setting up offices in vacation destinations). Otherwise, June and July are sluggish months.” He said the firm has done well because of its excellent positioning in the leisure market, which focuses on families and avoids weddings and MICE (meetings, incentives, conferences, and exhibits).

MHRIL is also willing to purchase assets that are available for sale. Singh acknowledged that the epidemic had lowered property values to more acceptable levels. However, there aren't many people that are upset. The firm will only proceed with a buyout if all of the criteria are met, including location, property size, and price. “We are not a one-size-fits-all hotel chain,” Singh explained.

Club Mahindra welcomed 1062 new members at the end of the June quarter, bringing the total number of members to over 255,000. Because of the second wave of Covid, the number of new members added in Q1 was the lowest in recent quarters. In Q4 FY21, it added 4,789 members, up from 3,291 in Q3 FY21.

Meanwhile, the company's intentions to enter the fee-based hotel and resort management industry are still being considered, according to Singh added that the plans will be finalised shortly. MHRIL will have a new corporate identity. He claims that the change will allow members to have more options for locations and properties.

The new brand will also adhere to the leisure brand's fundamental concept. “We have no intention of entering the business or any other sector. We know how to manage huge leisure facilities and will continue to do so,” he added.

In 2020, retirees and older travellers, a major target demographic, curtailed their travel considerably. However, when vaccination rates rise, they are more willing to go again. According to an investor presentation, according to the company's predictions, 80% of individuals will be more likely to travel in 2020.

Even last year, when the hotel sector was crippled for the majority of the year due to a strict national lockdown, MHRIL spent Rs 1,000 crore in Capex for new assets and inventory enhancement.

Source: Business Standard