Mahindra Holidays CEO details capacity expansion plans and key growth areas

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mahindra Holidays and Resorts sees public-private partnership (PPP) as an important focus area for its growth given the fairly aggressive room inventory addition plan, according to Kavinder Singh, the company’s MD and CEO.

In a chat with CNBC-TV18, Singh outlined the strategy for achieving the goal of 10,000 rooms by 2030 along with a substantial growth in member additions.

The current market capitalisation of the company is ₹8,747.54 crore.

These are the edited excerpts.

Q: You have taken Mahindra Holidays to a certain stature. For your successor, Manoj Bhat, I wanted your thoughts on what your targets for FY25 and beyond are for the new management? Things that perhaps you couldn’t have completed and you have set as targets for the ones who succeed you?

A: We are looking to grow our room inventory from 5,000 to 10,000 keys and let me build a little bit on that by 2030. We have already put in various pieces of the puzzle together as to how to get there. Number one, we are working with various state governments and the public private participation is gaining significant momentum/ We had started one resort in Janjehli in Mandi district with Himachal Pradesh (HP) government, we have got the MTDC Harihareshwar concession agreement signed, and are also looking to start two new projects in Odisha. Two pieces of land parcels as we speak have been in-principle allocated and the demarcation and few other things are going on. We are also identified a few land parcels in Uttarakhand and are working with the government as it has the land allocation policy coming out soon. We have also signed a memorandum of understanding (MoU) with the Tamil Nadu government. So public-private partnership (PPP) is going to be a very big area of focus for us as we move forward, because we have a fairly aggressive room inventory addition plan.

The second good part is that we closed this year, or rather the quarter at ₹1,383 crore of cash on our books. And this is a significant movement upwards over the years as you have been seeing us. So we are very happy that we will be growing our business from 5,000 to 10,000 keys without almost taking no recourse to debt because we generated significant amount of cash this year as well operating cash.

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Now, with these two factors at play, we hit a member additions mark of about 20,000 this year and the quarter four also turned out to be extremely robust. And as member additions accelerate in-line with the inventory additions, more cash will get generated, resulting in more investments in acquiring or building new resorts.

Q: You have told us the quarterly run rate of membership should hit around 5,000. You have achieved that. From hereon, what could the quarterly run rate look like? You said the EU business will turnaround and it did. What is the outlook from here?

A: I’m extremely happy with the Holiday Club Resorts performance in Q4. We hit almost our all-time high number of 6.8 million euro EBITDA (earnings before interest, tax, depreciation, and amortisation) in Q4 leading to five million euro EBITDA for the full year.

The war is still going on Finland and Sweden are still in recession. These are the two big areas where we are present apart from Spain. But having said that there has been a significant focus on cost reductions, significant focus on driving Timeshare sales, which was up 9%. YoY basis people are buying more Timeshare rather than buying second home. Finns love buying second home. But right now the mortgage rates are high. So there are factors which are playing out, management is extremely – they have put in lots of measures to get the Timeshare sales going and the renting sales going. So as a result of which the Holiday Club Resorts turn around, which we had promised is clearly well on its way.

And the areas that I’m even more happier about is that we have 59% of our sales coming from the digital rooms. For the full year, this number stands at 57%. We are also targeting corporate retail business in a much bigger way. So we have launched a few initiatives there.

Also Read | Mahindra Holidays shares gain over 4% amid top management changes

The product proposition is also more robust than ever, immersive experiences for extended families, friends, and the fact that we have access to more than 100 resorts for our members including European resorts the number comes to about 150.

Q: You have cash on your books, growth is coming by European EBITDA turning around everything, any area of improvement where you think you could have done a little better. And that leaves the room open for the next person to come in and see if that area has a growth target apart from all these things that you’ve lined out.

A: Our inventory additions in the past used to be just at about 200 level, we are now at around 400 level. And I’m sure that this is going to accelerate – to my mind this is a high growth opportunity area, which in the past we could not do enough of. And the fact that we have significant cash on our books, which wasn’t there many years ago, will also act as a very big opportunity to create momentum in room additions.

Q: How is Manoj Bhat different from you?

A: I always look to see similarities than differences. We are bound by a common code, which is Mahindra Rise. The philosophies will continue and is common. All the leaders at Mahindra Group are driven to excel, to move with significant amount of collaboration, agility, as well as boldness.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow