Mahindra War Room 2016

Hospitality Caselet

MAHINDRA HOSPITALITY SECTOR:

CLUB MAHINDRA CASELET: WINNING IN THE AGE OF PARADOXES
Mahindra Groups Hospitality Sector comprises Mahindra Holidays & Resorts India
Limited (MHRIL), which offers Club Mahindra Holidays, Club Mahindra Fundays and
Club Mahindra Xperience Breaks. This caselet pertains to Club Mahindra Holidays,
which is engaged in the vacation ownership business, and is the only caselet in the
Hospitality Sector.
BACKGROUND:
Mahindras decision to enter the leisure and hospitality business in 1996 was
prompted by the dominance of fly-by-night operators then, who cheated customers
of their money, after selling them vacation ownership deals. A newspaper clipping in
the summer of 1996, prompted a board discussion, that led to an eventual decision
to enter the Timeshare Industry, as it was known then in India. The primary benefit
Mahindra wanted to bring, was to enable Indian families to holiday across our vast
and beautiful country, delivering consistent holiday experiences in an affordable
manner, with Mahindra values of trust and ethics.
Club Mahindra started with a single resort in Munnar, Kerala in 1996. Over time, the
business expanded to 44 exotic resorts across India and South East Asia, offering
2900 apartments and cottages, benefiting 200,000 members, to become Indias #1
Vacation Ownership Brand.
Club Mahindra resorts are known to offer unparalleled holidaying experience ,which,
not only includes holiday activities for all members of the family but also spa
treatments at most of the resorts . Also local cuisine, art and culture complement the
overall holiday experience at the resorts.
Club Mahindra Members pay a fixed joining fee and enjoy 7 nights & 8 days
of vacation every year for 25 years, at any of the Club Mahindra resorts, or get
access to exchange their vacations with 4000+ RCI affiliated resorts around the
worldat a fee.The week is available across 12 different configurations, of 4 seasons
and 3 accommodation types. MHRIL has been consistently expanding its global
footprint over the last few years, expanding into Thailand, Dubai, Malaysia and
Austria. MHRIL also acquired controlling stake of 85.6% equity in Finland
based Holiday Club Resorts Oy, making the combined entity the largest Vacation
Ownership player, outside of USA. Holiday Club Resorts is a leading vacation
ownership company in Europe with 31 resorts (23 of which are in Finland, 2 in
Sweden and 6 in Spain), and a membershipbase of 55,000 families.

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Mahindra War Room 2016

Hospitality Caselet

Club Mahindra resorts span some of the most picturesque locations in Sikkim,
Corbett, Mussorie, Pondicherry, Goa, Ooty, Gangtok, Binsar, Dharamsala,
Kandaghat, Naukuchiatal, Thekkady, Masinagudi, Sasan Gir, Manali, Kumbalgarh,
Kanatal, Coorg, Kandaghat, Kodaikanal, Ashtamudi in India, apart from Dubai,
Bangkok, and Malaysia and Innsbruck (Austria).

LIVE CHALLENGE: WINNING IN THE AGE OF PARADOXES

The travel and tourism Industry contributes to 6.7% of Indias GDP, valued at USD.
113 Billion, and is likely to grow at 7.5% per annum over the next 10 years. Socioeconomic indicators point towards the growth of the hospitality industry at a rapid
pace in the coming years. The domestic travel market grew at 11.6 % from 1.28
billion trips (2014) to 1.43 billion trips (2015). Indias popularity as a holiday
destination has been growing, and the recent liberal e-visa policy, coupled with
Indias rising international profile is expected to bring in more tourists toIndia.Inthe
growing hospitality industry, Club Mahindra has positioned itself uniquely to deliver
differentiatedholidayingexperiences.
Targeted to a mix of middle and upper middle class families, Club
Mahindra promises a variety of experiences for every family member at its resorts,
which forms the core of Club Mahindra Experience. The 44 resorts are of high
quality at exotic locations, with high standards of maintenance and upkeep round the
year - irrespective of the season or popularity of the destination.High standards of
services and locations, and diverse holidaying activities in and around the resorts
make stays at Club Mahindra properties cherished and memorable events for all
members of the holidaying family.In addition, customers saveasubstantial amount
of money (over 25 years), for the value they get from Club Mahindra membership.
This model inherently requires customers to pay and commit to a membership, as
well as plan holidays in advance to maximise chances of securing a booking, in a
resort of their choice and for their desired travel dates.
In the last decade, Indian households holidaying preferences have changed
substantially. Not only do they want to try new destinations andexperiences, but also
want in shorter planning cycles, taking more frequent and drive around holidays.
Around such changing preferences, there have been significant changes in the
travel ecosystem with the entry of peer-to-peer accommodation marketplaces
(e.g. Airbnb), aggregators of hotels (e.g. OyoRooms), Online Travel Agents (such
as Goibibo, MakeMyTrip) and experience providers (such as thrillophilia, Viator)
that have substantially changed the way travelers plan their holidays and stay during
their holiday trips.
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Mahindra War Room 2016

Hospitality Caselet

These rapid and radical changes to both the travel ecosystem and customers
holidaying preferences, the intrinsic business model of Club Mahindra is
experiencing challenges:
Millennials, a major emerging segment, is wary of making long-term or lifetime commitments (TERM OF USE).
Customers increasingly seek on-demand options and resent being refused
access to the vacation home of their choice, when they want it. (ON
DEMAND)
The advent of options like Airbnb, VRBO and similar players is opening up a
new set of holidaying options to customers. (ALTERNATIVE ACCESS
WITHOUT COMMITMENT)
New avenues and experiences are becoming accessible to customers (THE
PARADOX OF CHOICES)
It is therefore likely that future millennial customers will evaluate the Club Mahindra
value proposition with different lenses. Millennial customers are likely to scrutinise
closely the value they get, from paid and committed access to high quality Club
Mahindra resorts providing unique & consistent experiences, against the greater
flexibility and stay choices available through marketplace platforms that may not
guarantee quality of service, but also don't require to make a long term commitment
or pay in advance.
Last year, Club Mahindra did a couple of experiments that produced interesting
results - one consisted of offering its members an opportunity to holidayin a tent by
the sea (in lieu of holiday in its resorts) and the other was stay in houseboats in
Kashmir. Enthusiastic response from members was received as evidenced by
occupancies. It appears that the new breed of vacationer, the instant decision
makeris looking for more choice of holidaying destinationsand also doesnt want to
commit for a long duration.
In this evolving market scenario, does the business model of Club
Mahindra require fundamental changes? What should Club Mahindra do to
embrace the paradoxes (as outlined above) it is confronted with, and best
connect with the changing customer behaviour, without giving up its core
value proposition of delivering affordable and consistent holidaying
experiences suited to Indian family needs? Does the future lie in a flexible, on
demand vacation and if so, how should Club Mahindra approach this vastly
different paradigm?What should Club Mahindra do to increase access to more
destinations /experiences? Should it follow an incremental approach or
radically re-imagine itsbusiness model? Evolve a strategy for Club Mahindra
to embrace the apparent paradoxes it is confronted with.
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