MHRILNSEQ2 FY23November 9, 2022

Mahindra Holidays & Resorts India Limited

8,754words
46turns
9analyst exchanges
2executives
Management on call
Kavinder Singh
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Sujit Vaidya
CHIEF FINANCIAL OFFICER V
Key numbers — 40 extracted
Rs,
stic I would like to share with you is that, the leisure accommodation continues to garner high ARRs, RevPARs at a very significant premium, almost double, compared to business hotels. In the short
19 million
ailwinds - growing domestic air travel almost doubled from July’21 to July’22 and stands at about 19 million in July '22 and has gone up further to 20.5 million. Higher demand for leisure holidays, staycati
20.5 million
led from July’21 to July’22 and stands at about 19 million in July '22 and has gone up further to 20.5 million. Higher demand for leisure holidays, staycations, drivable leisure destinations, shorter getaways
79%
trends. We, at Mahindra Holidays achieved industry-leading occupancy during the quarter at about 79% versus 73% in the same quarter last year. This is even more important to note, since this
73%
, at Mahindra Holidays achieved industry-leading occupancy during the quarter at about 79% versus 73% in the same quarter last year. This is even more important to note, since this V
82.5%
same momentum of occupancy has continued in October '22 as well and the occupancy closed at about 82.5%. We have very good business on books in November and December, and we are confident of achieving
84%
ave very good business on books in November and December, and we are confident of achieving about 84% to 85% occupancies for the quarter, October, November, December. I am encouraged to also report
85%
y good business on books in November and December, and we are confident of achieving about 84% to 85% occupancies for the quarter, October, November, December. I am encouraged to also report that o
rs,
nnel engagement and focus on new and immersive experiences. Before I go ahead further with numbers, I just wanted to share with you that through Club Mahindra Horizons, our internal exchange program
1 million
uccessful programs. One provides access and benefits to members outside the system, whether it is 1 million+ hotels or 12,000+ cruises and the Horizon program offers an exchange of the members' inventory t
12%
s an even greater value proposition through membership. We have added ~4,400 members. This is a 12% year-on-year growth. Again, this is the highest number of members added in the quarter 2. And if
93%
er of members added in the quarter 2. And if you were to look at the sales value, it has grown by 93% on Y-o-Y basis and also our AUR stands at INR 4.4 lakhs. AUR increase has also been due to better
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Guidance — 20 items
Kavinder Singh
opening
“In the short to medium term, the leisure demand is expected to outpace supply.”
Kavinder Singh
opening
“Data science has enabled us to target members in a way which helps expand the coverage and effectiveness of referrals.”
Kavinder Singh
opening
“This brings our total resort count to 86 with 4,700+ keys which means we are on a track to deliver our guidance of 5,500+ keys earlier than FY25.”
Kavinder Singh
opening
“We have made some headway in PPP projects, we have done a soft V 40 grir ClubMathindra launch of the Janjheli project in HP.”
Kavinder Singh
opening
“In November, we will be able to add 24 rooms through this project.”
Kavinder Singh
opening
“We have also been awarded a new redevelopment of the existing MTDC project at Harihareshwar in Maharashtra, which will also help us to take and to provide very, very high- quality experiences to our members which are now growing day by day.”
Kavinder Singh
opening
“You will be happy to know that solar power is installed at 21 resorts now with 4 megawatt capacity.”
Kavinder Singh
opening
“We intend increasing the number of resorts which are certified net zero waste and net zero energy to almost double digits.”
Kavinder Singh
opening
“Under Project Hariyali, we planted 12,000 trees in H1 FY23 and since last 10 years, we have crossed 0.5 million trees plantation, and we intend to take this to 1 million trees plantation in the next 7 years.”
Kavinder Singh
opening
“Quarter 3 will also sometime in December pick up, and we believe that Quarter 3 and Quarter 4 performance of HCR will be significantly superior than last year given the current situation that we see, despite the macroeconomic headwinds.”
Risks & concerns — 3 flagged
These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
— Faraz Ahmed
We constantly seek to add corporate memberships and by the nature of that business, it's very difficult to predict what would be the number in the next quarter because you always have a pipeline and truly depends on the corporate appreciation of our product proposition.
— Kavinder Singh
Sometimes these are back or beyond locations, you have to take your risk and hope that people would like, even though the location may not be very ideal or, let's say, not even close to the city.
— Kavinder Singh
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Q&A — 9 exchanges
Q
Good evening, Kavinder and Sujit and congratulations on a good set of numbers. Just one question from my side. We've seen a good uptick in the member additions this quarter. So do you see an acceleration from here? Or is the consumer sentiment a bit subdued given the macro situation? And how should we think about a sustainable quarterly run rate adjusting for seasonality?
Kavinder Singh
So the good news that we are seeing is that the seasonality at least as far as member additions are concerned, is more or less ending. In fact, even if we look at resort occupancies, I mean while we say July, August, September is a seasonally low quarter, but we delivered 79%, we used to V 40 grir ClubMathindra be always at 70%-72%. So one of the megatrends that I am seeing is that the seasonality in travel at least is coming down because of increased connectivity and ability for people to work from anywhere, including work from our resorts. So that is definitely helping in occupancy, and that
Q
Sure. Just a minute.
Management
Q
So just one thing I wanted to mention that as management or operating management, our focus is to drive initiatives which are going to lead to member additions, whether it is the product mix that we have, whether it is the geographies that we are targeting, that is why I spent a lot of time explaining how we are adding new DSAs, new in-resort sales locations. Our idea would be to create significant brand pool for our brand, use referrals and digital as a strategy and a number is just an outcome. We are obviously aiming for higher numbers. So therefore, we normally do not fix a number or give a
Amit Khetan
Understood, just one quick book-keeping question. How much would be the corporate numbers in this quarter? And is this a thing that is going to be a regular feature, or was this a one-off thing? So the corporate business is of the order of about INR 24 crores in this quarter. We constantly seek to add corporate memberships and by the nature of that business, it's very difficult to predict what would be the number in the next quarter because you always have a pipeline and truly depends on the corporate appreciation of our product proposition. So that is something that sometimes comes and someti
Q
Congratulations on a good set of numbers in terms of room addition and members addition. So my first question would be related to the three initiatives which we started post the pandemic or during the pandemic, which are Club M Select, Horizon and then our partnership with Rocksport. So just if you can give some color as to -- as in all these initiatives started at the height of the pandemic. And now that the pandemic is behind us and things are opening up, how do we see these things panning out? And how do we see it, say, one year, two years down the line? Because I suppose right now, very fe
Kavinder Singh
Right. So the three initiatives are vastly different. Let me just quickly explain the initiatives. The Horizon program is about an exchange program where members can exchange their room nights for going into partner properties in India and abroad. You are right, due to the pandemic, there was not much of a traction, but we have noticed in quarter 1 and quarter 2, people have used, and they have gone into the other properties by banking the room nights and paying us an exchange fee. And this is something that is of value to the customers and the whole idea behind the Horizon program and Club M
Q
Sir, my question was on HCRO. As we expect your performance to be good in Q3 and Q4 thanks to the season, should we expect a similar profitability in that segment, as well?
Kavinder Singh
So what happens, Deepak, is that, as I mentioned, that Q3 is actually not a seasonal quarter. It only begins towards end December. So this is not the seasonal quarter, Q3. But we still believe the performance will be superior to last year. And Q4 is a seasonal quarter. If you notice in Holiday Club Resorts, the quarter 2 and quarter 4 are truly seasonal quarters. And as far as what I meant to what that if I were to put Q3 and Q4 together, we will definitely see a better performance even on an individual quarter basis than the last year. And that's because there are many things that have happen
Q
Congratulations for a great set of numbers. Sir, can you just provide more color on corporate deals that we have done, the nature of deal like what kind of product we have sold. And is it similar to our existing like 25-year product and 7 nights, the corporate customers a certain limited set of members would be eligible for those room nights? Or is it more of flexibility that any members of that corporate can travel and for what number of nights when we try to divide it by our AUR. Some more color, if you can just provide on the nature of sales that happens to corporate?
Kavinder Singh
Yes. So basically, just to give you a flavor, this is not the first time we have sold the corporate product. We have many customers already today, which are corporate customers. And during COVID, of course, they didn't use much there. So what really happens in the corporate product is that we offer a set of points. We do not offer room nights at all. The points have a value, and that value translates into room nights. And who uses it is completely dependent on the corporate, they can give it as a reward and recognition, they can make it as a part of the perk. And therefore, every corporate use
Q
Congratulations on a good set of numbers. So I had a question on the member to room ratio. So this quarter, we clocked about 58, the number was at 58. And historically, we have seen the numbers go as high as 72. So I just wanted to know that based on our experience so far and the V 40 grir ClubMathindra occupancy trends, what is the sweet spot that we would like to target the member to room ratio to be at?
Kavinder Singh
So you're right. I mean, in the past, it used to be high, and we are now trending well below 60. And see, as I mentioned maybe earlier sometimes that some of the members do not holiday every year for various personal reasons of theirs, but they can accumulate. The product allows them to accumulate up to 21 days. So technically, they need not holiday for three years if they don't want to. The second reason is that some of them may not be eligible because they may not be up to date on their dues. So there is always in and out of those buckets, members come in and out of that. And as a result of
Q
Congratulation on a good set of numbers. I have two questions. One is on the Club Mahindra plan and other on the Holiday Club plan. My first question is with regards to the Club Mahindra that, is there any particular thought process or is there any policy which we actually hold when we are trying to evaluate the addition of any new resorts or we may be leased or owned? And is there related minimum requirement of profitability or anything which we are looking into per se, since our both business model is different from other hotels? And secondly, on Holiday Club, I just wanted to get a little b
Kavinder Singh
So your first question is around how do we pick resorts? How do we know what will fit us? So obviously, there is a bit of a science, there's a bit of an art here, because it's important that the location is right. Sometimes these are back or beyond locations, you have to take your risk and hope that people would like, even though the location may not be very ideal or, let's say, not even close to the city. So we have taken multiple bets on the locations. Now, when it comes to type and they have worked well for us because of our deep understanding of our customers & our members holidaying habit
Q
Thank you so much for coming for our earnings call. As I have always maintained that we learn a lot from your questions, and we constantly rejig, retool our strategies based on your insights and observations -- and with that, I would like to thank on behalf of me and Sujit and Mahindra Holidays Management, once again, thank you so much for taking your time off and for taking interest in our stock and our performance. Thank you so much.
Management
Speaking time
Kavinder Singh
16
Moderator
11
Amit Khetan
4
Deepak Lalwani
4
Ankit Kanodia
3
Sujit Vaidya
2
Himanshu Shah
2
Nemish Shah
2
Faraz Ahmed
1
Dhvaneet Savla
1
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Opening remarks
Faraz Ahmed
Thank you. Good afternoon and a very warm welcome to the Q2 FY23 Earnings Conference Call of Mahindra Holidays & Resorts Ltd. Today on this call we have; Mr. Kavinder Singh, MD and CEO along with Mr. Sujit Vaidya, CFO. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations as of today and actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. A detailed disclaimer statement is already given on Page 61 of the company's investor presentation which has been uploaded on the stock exchange and the company's website as well. With this, I now hand over the conference call to Mr. Kavinder Singh, MD and CEO of Mahindra Holidays & Resorts India Ltd. Thank you, and over to you, sir.
Kavinder Singh
Good evening everyone and a very warm welcome for our quarter 2 FY23 earnings call. On the call with me today, we have Mr. Sujit Vaidya, our CFO. We have uploaded our results, as well as Investor Presentation for Q2 FY23 on the stock exchanges yesterday and on our company website. I hope you have all had a chance to go through them. And let me begin, first of all, by sharing that it gives me immense happiness to report that we actually produced another set of strong results for the quarter. Our focus on family vacations is holding us in good stead. Our members continue to travel during the monsoon season, usually a lean season for travel. As you know today, leisure is a megatrend, and we are at the forefront of benefiting from it. One interesting statistic I would like to share with you is that, the leisure accommodation continues to garner high ARRs, RevPARs at a very significant premium, almost double, compared to business hotels. In the short to medium term, the leisure demand is ex
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