Mahindra Holidays sees growth in domestic leisure tourism,

plans Rs 1,200-cr infra boost

Mahindra Holidays & Resorts India, the hospitality arm of Mahindra & Mahindra (M&M)
Group, is expected to witness the domestic retirement segment in the coming decade, with an
investment of Rs 1,500 crore to Rs 1,200 crore. Rooms for its current portfolio of 3,700 rooms
over the next three to four years.

MD of Mahindra Holidays & Resorts And CEO Gavinder Singh noted that Govt-19 has changed
the holiday plans of the people, most of whom do not want to go to international destinations for
at least two to three years, which has opened up opportunities for domestic leisure tourism. The
resort company has already seen a sharp rise in its occupations, with the latest February numbers
up to 84%. Occupancy levels fell to 30% in the July-September period, before improving to 75%
in the quarter ending December 2020. Profit after tax increased by 63% year-on-year to Rs 41
crore. EBITDA (interest, tax, depreciation and pre-loan income) margins increased by 750 basis
points to 33.8% for the third quarter ended 31 December 2020. The company’s revenue was
affected by the fall in resort revenue compared to last year, ranging from 8% YOY to Rs 246
crore. However, it said resort revenue improved month-on-month and increased from Rs 7 crore
in Q2FY21 to Rs 45 crore in Q3FY21.

The company, which operates on a membership model, has 2.6 lakh recent members. It added
12,000 members annually six years ago, to 16,000 before the epidemic, and then to 18,000
members a year. Now, however, the company expects to top its final count, hoping to add more
than 18,000 members, looking for opportunities to tap into the growing middle class that wants
to spend on leisure. "I have great opportunities in growing this business. I see the opportunity to
scale to an unprecedented level in terms of membership and inventory additions, most
importantly to create experiences that people will value more than ever before, including external
experiences," Singh told FE.

Since there are models like work from home and work-from-home here, Singh has already seen a
change in people’s spending and staying habits. There is also a difference because people are
more interested in having different kinds of experiences and will explore outdoors. Places that
have to go within driving distance see the drag of tourists, however, Goa is an exception, he said.

The average length of stay has now risen from three nights to four 4.5 4.5 nights, while the time
he finds in his resorts can range from 14 days to a month. "It simply came to our notice then. I
think there will be a collection of people looking forward to this. "People stay at our resorts for a
long time because they can work anywhere, which is definitely a trend I see," he said.

The company is looking for acquisition opportunities at resorts based on the right location and
the right price. “We can fix it even if the resort is not up to our standards, but the location is
important,” he said. The company is exploring West and East India, in particular, seeing the
potential to create more new locations and experiences, while at the same time being open to
opportunities in the North and South, as well as markets where the company is already well
rooted.

Business terms from this article:-

1. Portfolio - A portfolio is a collection of equities, securities, commodities, cash and cash
equivalent financial investments, including closed-end funds and exchange traded funds
(ETFs). People generally believe that stocks, bonds and money are the center of a
portfolio. While this often happens, it doesn’t have to be the rule. A portfolio can contain
a wide variety of assets, including real estate, art and private investments. You can
choose to own and manage your portfolio yourself, or you can allow a money manager,
financial advisor or another financial expert to manage your portfolio. One of the key
ideas of portfolio management is the wisdom of diversification — that is, not putting all
your eggs in one basket. Diversification seeks to reduce risk by allocating investments in
various financial instruments, industries and other categories. Each aims to increase
returns by investing in different areas that operate differently for the same event. There
are many ways to diversify. How you choose it is yours. Your goals for the future, your
appetite for risk and your personality are all factors that determine how you build your
portfolio.
2. Occupancy level - Occupancy level Occupancy level is the maximum level of
occupancy of any real property other than hotels (tenants) (to any credit party subsidiaries
or material asset manager (or any of their respective subsidiaries). Five percent of the net
rental space in the applicable plan (5.0%) Such leases (including expansion options), and
(b) leases or management arrangements for the co-working space, if operated or managed
by a Hines subsidiary, shall be in accordance with market rates and terms and payments
as required under written leases based on the occupation per square foot.
3. EBITDA - EBITDA, or Earnings before Interest, Tax, Depreciation and Debt, is a
measure of a company's overall financial performance and is used as an alternative to net
income in certain circumstances. However, EPIDTA is misleading because it eliminates
the cost of capital investments such as property, plant and equipment. This metric also
eliminates the costs associated with debt by adding interest expense and taxes to income.
Nevertheless, it is a very accurate measure of corporate performance because it can show
earnings before the influence of accounting and financial deductions. Earnings, tax and
interest figures are found in the income statement, while depreciation and credit figures
are usually found in the notes on operating profit or cash flow statement. The usual
shortcut to calculating EPIDTA is to start with operating profit, also known as interest
and pre-tax income (EPID), and then add depreciation and credit.
EBITDA = Net Income + Interest + Taxes + D + A
where:
D=Depreciation
A=Amortization