MAHINDRA HOLIDAYS AND RESORTS
June 22, 2009
Market DataShare Holding Pattern (%)
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Mahindra Holiday Resorts
Edelweiss Securities Limited2
Unique business model
Mahindra Holidays and Resorts India (MHRL) is one of the leading leisure hospitality providersin India, offering family holidays with a range of services designed to meet the diverseholiday needs of a family. In addition to providing Vacation Ownership (VO) memberships, italso manages the operations at its resorts, which helps it control the quality of its offeringthereby enhancing customer experience.Apart from its flagship service offering of VO, as part of its growth strategy it diversified itsportfolio by introducing new vacation ownership offerings, Zest and Club Mahindra Fundays,Mahindra Homestays and travel and holiday related services through clubmahindra.travel.Club Mahindra Holiday membership currently entitles members the choice of holidaying atany of its 27 resorts, for seven days each year, in a season and apartment type of theirchoice, for 25 years. In addition, members can choose to access a range of resorts globallythrough our RCI affiliation.As of May 31, 2009, MHRL had 96,067 Club Mahindra Holiday vacation ownership members.
Right to use not ownership
MHRL memberships provide members the right to use its resorts over the period of theirmembership. This type of a membership, gives members the flexibility to choose a differentresort and the time to holiday every year.The holiday seasons are generally divided into three or four seasons, based on the demandfor a particular resort in a particular season. Each of the resorts has a unique weekclassification for the different seasons offered by them.
Venture into other segments will help strengthen presence
Apart from VO, MHRL launched Zest in November 2006, which targets young urban familiesfor short break holidays. Zest membership currently entitles members the choice of holidaying at any of its five Zest resorts, for six days each year, in a season of their choice,for 10 years. Club Mahindra Fundays was launched in October 2006 and targets corporatehouses. The membership currently entitles corporates for a period of 10 years to offer familyholidays to their employees. It also launched clubmahindra.travel in April 2007 to provide aone-stop shop for travel and holiday related services. Mahindra Homestays was launched inJuly 2008, which markets homestays to overseas and Indian travelers wishing to experiencethe real India by lodging with a host family in India.Additionally, a mixed-use model of being a vacation ownership company and also providingnon-members access to its unutilized apartments on a per-night-tariff basis enables MHRL toenhance revenues through optimum occupancy and sales from its restaurants and otherservices.
Likely increase in income levels to augur well for MHRL
Over the next two decades, the Indian market is likely to undergo a major transformation.Income levels will almost triple and India is poised to become the fifth largest consumermarket by 2025. As Indian incomes rise, the shape of the country’s income pyramid will alsochange dramatically. Over 291 mn people will move from desperate poverty to a moresustainable life, and India’s middle class will swell by over ten times from its current size of 50 mn to 583 mn people.Mahindra Holiday Resorts
Edelweiss Securities Limited3
Travel and tourism in India is expected to give a very dynamic performance over the forecastperiod, driven by strong economic growth, an expected increase in its share of GDP to over8% and increased traveler confidence. (
Source: Travel and Tourism – India: Euromonitor International: Country Market Insight, November 2008)
India has seen an increase inexpenditure on leisure and recreation to INR 370 bn in 2005 from INR 270 bn in 2003.
Good track record; membership addition key to success
Of the total revenues of MHRL, income from sale of vacation ownership accounts for 75% of the total operating income. The balance 25% comes from a combination of annualsubscription fee, and income from resorts.Over the past four years, the company’s operating income has posted a CAGR of 40% onaccount of increase in the cumulative member base from 28, 491 in FY05 to 92,825 in FY09,