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Kavinder Singh, MD & CEO, Mahindra Holidays & Resorts India Limited (MHRIL) talks about Q1FY21 results, business outlook amid subdued demand, and occupancy level in his resorts in international as well as domestic resorts among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: It seems that Corona Virus had an impact on your numbers for the June quarter. Do you think that the pandemic’s impact has bottomed out and the numbers will improve in coming quarters?

A: As far as your analysis is concerned then I would like to tell few points for your audience that if you will have a look at the standalone results of Mahindra Holidays then its standalone profit has increased by 47%. We have earned a profit of Rs 36 crore in this quarter at profit before tax (PBT) level and Rs 27 crore at the profit after tax (PAT) level. So, there was a 27% growth in PBT and 47% growth in Profit PAT over the previous year. If we will look at the numbers from profit angle then our margins went up by 770 bps and stood at 18.5% in the context of PBT margins and PAT margins grew by 670 bps and stood around 13.5%. So if we have a look on the performance in terms of margin and profit growth then it was one of the best quarters for Mahindra Holidays despite the suspension of all Resort operations in April, May and June. As you know that we are into the membership model due to which we received the annuity revenue streams. We have an income of Rs 195 crore on which we earned a profit of Rs 36 crore. Apart from this, if you have a look on the cash then we had cash of Rs 780 crore when we entered to April, May, June quarter from March 2020 and the cash balance was maintained around Rs 376 crore. Having a look at these aspects you can understand that we have maintained a cash balance even when we didn’t have any income from the resorts. If I will talk about the Holiday Club Resort, our material subsidy, then they started their resorts in June and posted a positive EBITDA in the month, although they have earned a loss at the operational level in the quarter but had more than 90% occupancy in June, which is continuing. Interestingly, their holiday season of July and August has started. If we have a look at EBITDA at the consolidated level then we have earned an EBITDA of Rs 50 crore. As our business model is different from the traditional hospitality sector that’s why this result - given the fact that Corona is present – is the best one for us. 

Q: Let’s talk about the business outlook amid the subdued demand. How will you restrategize your business and what is your outlook for the next couple of quarters?

A: If looked carefully then our business has two parts (i) membership additions and (ii) the resort operation. If I will talk about the Holiday Club Resorts, our European subsidiary, then its occupancy level in June has reached 90% plus in several resorts and it touched 100% level in July. As far as Holiday Club Resort, which is a subsidiary of our own size, is concerned then domestic travel has taken-off there due to which we are expecting a very good occupancy level there and a very good results in the second quarter. 

As far as the Indian operations of Mahindra Holidays are concerned then we have reopened 20 resorts and occupancy has started there because we have pre-paid members and they have started holidaying with us. These are the early days but it looks that occupancy will go up in the near future and I feel that the occupancy level will go up by September-October as our members would like to holiday with us. 

When it comes to membership addition in Mahindra Holidays then we have added 1,270 members in April, May and June. We hope this number will go much higher in the ongoing July-August-September quarter. So member addition and occupancy at the resorts will be better in this quarter compared to the previous quarter. It is not limited just to the Indian operations but the same is expected even in the European operations, where a good momentum is visible. 

Q: Do you think that this is realistic that people would take membership and attempt to move outside amid this pandemic? What percentage of your resorts has opened completely by now in the domestic market and what is the occupancy level in those?

A: People have been working from home for a long time and we are receiving enquiries in which people are saying that we will come if the resorts are opened. So, when we have a look at our business on books because we have forward bookings, then we can see a very good business ahead. It has a reason as a lot of things has happened at our resorts like every process have been made contactless at our resorts, which means if you come to our resort then you will not have to touch anything here as your works will be contactless like check-in, check-out, menu etc. In addition to this, we are running a new idea that there is a need for physical distance but social distancing is not required. We have changed our experiences, so the members who are coming, as we have opened 20 resorts, are giving very positive feedback to us. Apart from this, we have tied-up with Bureau Veritas on hygiene, housekeeping and safety and have received a COVID-safe protocol certification for the resorts that are functional at present. So it is very simple that you should not be worried about safety and hygiene if you are at Mahindra Holidays. Contactless services are offered at our place and the highest form of hygiene is available in our kitchens because our kitchens are ISO 22000 certified. So in view of these factors when we have a look towards the business then it seems that people will definitely come to our resorts by driving if not by airlines. Interestingly, the maximum of our resorts – out of 69 resorts, more than 55 to 60 resorts are located at driveable distances.

So, I feel that domestic tourism will take-off in India as it has picked up in Finland and people will drive to the destinations and will like to holiday with good brands and players. And, we have members who will have to enjoy the holidays and they will reach us to enjoy and such interest is visible to us. People just need to be comfortable in terms of safety hygiene and we have made full arrangements for it.

 

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