Mahindra Holidays and Resorts India conducted a conference call on 31 July 2020 to discuss its financial results for the quarter ended June 2020. Kavinder Singh, MD&CEO and Akhila Balachandar, CFO of the company addressed the call:
Highlights:
Due to the COVID-19 situation, starting from mid-March onwards, the company had to progressively scale down operations at resorts, marketing events for generation of leads and physical meetings with prospects. This has affected resort revenues and new member additions.
Consumer sentiment towards discretionary purchases and specifically related to travel has been significantly affected.
The company believes that as the incidence of corona infections begin to come down, the revival of travel to nearby locations will begin and that will reflect in occupancy going forward.
The company has started opening resorts from 15 June onwards and has opened 20 resorts.
The company has noticed during the lockdown period there is interest for lower transaction value products and its readiness with 3-year and 10-year product helped to add members in Q1 even in the most difficult and unprecedented times in company's history.
The company moved to virtual sales and saw momentum from the second half of May onwards, both in terms of inquiries and interest in buying memberships.
The company is optimistic as domestic travel is bound to increase substantially as the corona incidences begin to come down, travel to nearby drivable destinations would be the norm and 46 out of 69 resorts of the company are in the reach of people through roads.
The company has significant advantage as its apartment sizes are bigger than a typical hotel, while customers will trust brands more than ever and look for healthier food option and wellness experiences.
The company has implemented contactless service delivery, whether at check-in, check-out, digitized menus, online payment etc already at its resorts.
The company has also engaged with Bureau Veritas for certifying the safety and hygiene standards, being followed at resorts.
The net member additions were at about 1270 in Q1FY21. The company has also undertaken a onetime exercise of overdue cancellation of 820 members.
The key focus is on innovations in demand generation, new channels for customer acquisition, digitization etc.
Driven by intrinsic strength and resilience of business model significantly different from the traditional hospitality sector, the company has delivered profit despite no resort income in Q1FY2021.
The cash position remains strong at Rs 776 crore, which is deployed in very safe instruments.
Holiday Club Resorts is EBITDA positive in June, driven by 90% plus occupancies at spa hotels and improved timeshare sales.
The company expects Holiday Club Resorts to benefit from surge in domestic demand for leisure travel and specifically improved demand for timeshare. And as holidaying season continues till mid-August, the company expects an improvement in performance in Q2 going forward at Holiday Club Resorts.
In July, the company has seen occupancies upwards of 35-40% in the resorts at Rajasthan because there are not much of restrictions in Rajasthan. However, Himachal, Uttarakhand and various other states have serious restrictions, including Goa.
The company continues to invest in ongoing projects Goa 150-room property and the 33-room expansion in Ashtamudi.
The Goa project is expected to come up this year subject to all approvals, while the company expects the Phase 2 to be delivered next year, which will be another 57 units. So to become a 209-room hotel resort in Goa, Assonora.
The 33-room project going on in Ashtamudi will be ready next year.
The company has applied for provisions for a resort in the Ganpatipule area, which is going to be in phases, adding up to 150 units.
The company has an existing plot in Kandaghat, Shimla, where the company is looking to expand it by another 160 units.
In terms of capex investments and the desire of the company to achieve 5000 units by FY24 remains on track.
The company has taken significant steps in the area of cost control measures.
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