COVID-19 proved to be a bane for the hospitality industry, with a majority of the players still trying to shrug off its after-effects. However, Mahindra Holidays & Resorts India Ltd (MHRIL) has emerged relatively unscathed from this ordeal.
While the company’s business did take a battering in Q1 of this fiscal, the second quarter saw it register 30% occupancy, which rose to around 80% by end of Q3. In January 2021, the resort chain had reached pre-pandemic occupancy levels, touching 87% and was cruising around 84% in Feb.
Needless to say, Kavinder Singh, MD and CEO, MHRIL is a happy man, especially as these occupancy rates are averaged out across the company’s 70 resorts in India and overseas. Some properties even posted 100% occupancy; a feat few other hotels can lay claim to currently.
But then again, Singh maintains that MHRIL is not in competition with most hotels. According to him , the city hotels have a well-furnished lobby, a well-stocked bar, a swimming pool and restaurants. This is apt for business travellers or people in transit.
However, when people take a vacation, they want to go to places where children can run with abandon, where the elderly can walk through leisurely pathways, and the entire family can participate in an array of activities that binds them together. And that is what MHRIL offers at its properties.
“Children can be left unsupervised at our resorts and participate in activities like pottery, water Zorbing or rappelling while their parents laze on a hammock or enjoy a spa treatment,” Singh noted. Most traditional hotels are unable to offer these experiences because they lack the leisure of space – something that MHRIL’s resorts have aplenty. That also explains why the company takes pride in calling itself a leisure vacation brand.
In fact, Singh pointed out, that MHRIL members have the confidence that they were safe vacationing at its properties, since their spacious resorts have open-air areas and larger apartments. Most engagement activities are conducted while keeping safety protocols and social distancing in mind. With all these boxes checked, why would guests, who suffered from cabin fever during the lockdown, not want to visit these resorts?
REFRESHING EXPERIENCES
MHRIL ran two programmes since May 2020 – ‘Safe Stay’ and ‘Travel With Confidence’. The former hinged on three pillars, which included a contactless transaction experience, right from check-in to check-out. “We had created an app for our members a couple of years ago, where they could book rooms, check in and out, order meals, give feedback, etc. This helped us tremendously during the pandemic,” Singh noted.
The second pillar was a Bureau Veritas platinum certification, which underlined that its properties followed all the prescribed hygiene protocols. The last leg was implementing best known safety policies.
“No one ever asks if a hospital room has been disinfected before they are admitted there. That is the level of trust people have in the cleanliness of healthcare facilities. So, we learnt the disinfection protocols followed in hospitals from a facilities management company and then implemented it in our properties,” Singh stated.
Having ensured that the resorts were all set from the safety perspective, it was time to give members the confidence to travel. MHRIL tied up its sister division, Mahindra First Choice Wheels, wherein car sanitisation services were offered to members at 50% discount. It also partnered with Zoomcar, so people could rent a vehicle and drive down.
A help line was set up to provide real-time COVID-related information to members. This included details about testing and certification needed in some states, as well as other rules and regulation. The company did not stop there. “We tied up with diagnostic labs to conduct RT-PCR COVID tests at discounted rates for our members,” Singh stated. “Next, we partnered with insurance companies to help members get COVID and travel insurance. With all these bases covered, when they visited the resort, they were welcomed with the Safe Stay programme.”
To communicate this holistic approach, the company ran a digital campaign with actor Ayushmann Khurrana where he spoke of his love for travel. It also created bubbles for its employees. This included providing staff with on-site accommodation so that they lived in a safe environment. All personnel were tested regularly for COVID-19 to rule out any chance of infection transmission to guests.
REFRESHING EXPERIENCES
As a leisure vacation brand, MHRIL has to constantly come up with ways to personalise experiences to augment a member’s life time value. While it currently offers over 2000 activities at its resorts, this is constantly refreshed so that guests have something new to look forward to every time they visit a property.
In addition to enhancing guest experience, this strategy is pertinent to the company’s business, since almost 90% of its revenues come from F&B and activities. After all, MHRIL positions its resorts as destinations, where members need not step out for entertainment.
Moreover, it has also come up with an inventory exchange programme to increase customer stickiness and boost their satisfaction. Members can opt to stay at select hotels affiliated to this programme by paying MHRIL an exchange fee. This ensures that they can get more bang on their buck, or rather their holiday package.
Explaining this, Singh said, “This inventory exchange programme allows guests to explore a city beyond the Club Mahindra universe. If a member wants to visit a city hotel for bleisure, then we have deals with individual boutique properties and hotel chains. We offer discounted room rates at these hotels to our members, after charging a nominal exchange fee.” This works as a win-win arrangement for everyone involved –hotels get additional occupancy, members get special rates for their stay, and MHRIL can offer valued-added services to its clientele.
However, Singh reiterated that the company does not promote any particular hotel to members. “If a member wants to visit a specific hotel and it is part of our network, we try to offer them a room by charging an exchange fee. But, we do not have any permanent deals with these hotels,” he stated.
Moreover, he added that it is not MHRIL’s objective to become a gateway to these hotels. However, if a property is keen to partner with the vacation company, it can offer the resort chain a special price, especially for weekends. This especially works in favour of city-based hotels that have low occupancy on weekends, where MHRIL can feed it incremental traffic.
“We would like to expand the inventory exchange programme by adding more hotels. However, the trick is to get rooms at these properties at the right price. If the price is not right, it is not viable for us,” Singh emphasised.
BUCKING THE SLUMP
While many hotel chains are still trying to lure back guests, MHRIL has been successful in signing up new members. It added 2,681 members in the second quarter to its network of 2,60,955 members. “If you presume that there are four people in a family, then over a million people transit in and out of Club Mahindra resorts at least once or twice a year, depending on the frequency of their holiday habits,” Singh proudly stated.
Also the company has recorded 89% growth (YoY) in Profit after tax at INR 34 crore in Q2, on an Income of INR 212 crore, though it was 15% lower than the previous year. Though this was 15% lower than the previous fiscal, it is still impressive given the turbulent year gone by.
Currently, MHRIL has 3,700 room units, which it wants to boost to 5,000 within three years. And the company is well poised to achieve it. “If you look at our 9-month levels, 44% (PBT), while our cash in hand has grown from INR 781 crore to INR 848 crore. This year, we expect to register the highest profits. While we were battered in the first quarter, business ramped up in the second quarter and we did extremely well in the third quarter, closing with 75% occupancy at quarter level,” Singh explained.
The two major challenges in the hospitality business are managing debt and occupancy. In addition to being armed with INR 848 crore in cash MHRIL has already reached pre-COVID occupancy levels. “Moreover, we take membership fee upfront, which helps us build properties. The recurrent annual fees help us maintain and expand these resorts, while we continue to earn through F&B and activities. So, we are not dependent on debt to grow the business,” Singh pointed out.
He is confident that the company will generate another INR 700 crore within the next three years. “Our aim is to invest INR 1,200- 1,500 crore and generate 1,300 to 1,400 rooms as we expand our footprint,” he stated. This expansion could occur through multiple acquisition, green field development in our own land banks, expansion in our existing resorts and taking resorts on lease.
MHRIL is in a pursuit to redefine leisure. It wants members to cherish the holidays at their properties, remembering it not just for the stay, or the F&B or the service or activities, but also the social connect they build with fellow vacationers. From a timeshare company, it has metamorphosed to creating memorable vacations at global destinations, as a healthy dose of guest nostalgia aids it to race past newer goalposts.
