MHRIL - Mahindra Holidays & Resorts India Limited Share Price

Management Outlook:
Management remains optimistic, driven by robust leisure demand, premiumization, and strategic expansion. The focus is on accelerating inventory growth (targeting 10,000 keys by FY30), with plans to add 1,000 keys across 15 new destinations over the next five quarters. Member additions prioritize quality over quantity, with higher Average Unit Realization (AUR) (+37% YoY to Rs.6.16 lakh) through premium products (e.g., GoZest-5) and upgrades (+21% YoY). Resort revenue growth (+12% YoY) is expected to sustain via curated experiences, higher occupancy (84.2%), and expanded capacity. European operations (HCR) are stabilizing despite macroeconomic challenges in Finland, with EBITDA losses narrowing. Sustainability initiatives (34% solar energy, 41 resorts zero-waste) remain a priority.

Key Highlights:

1. Inventory Expansion: Added 206 keys in Q3; greenfield projects (Ganpatipule, Theog) and expansions (Jaipur, Kandaghat) underway.
2. Financial Performance: Standalone revenue grew 8% (adjusted for one-offs), EBITDA +17%, PAT +15%. Consolidated EBITDA surged 30%, PAT 5.5x (ex-one-offs).
3. Member Focus: Digital/referral channels driving acquisitions; deferred revenue at record Rs.5,722 crore.
4. Resort Growth: Occupancy and non-room revenue (F&B, experiences) underpinned by demand and operational efficiency.
5. Europe Recovery: HCR margins improving; turnaround efforts (cost optimization, demand levers) ongoing.
6. Tech & Analytics: Enhanced app, AI-driven booking systems, and data-led customer engagement to boost efficiency.

Catalysts Ahead: New resorts, premium member mix, and scaling high-margin experiences to drive growth. Caution on near-term member additions but confidence in long-term scalability.

Question 1:
"Question pertains to the member addition... directionally how we see this member addition going ahead as we are ramping up the room inventory?"
Answer: Management acknowledged slower net member additions (3,000 in Q3) due to strategic shifts toward premiumization, digital/referral channels, and upgrades. While additions may lag FY24, the focus remains on sustainable growth via quality member profiles. Member upgrades grew 21% YoY, reflecting demand for enhanced experiences. Expect similar trends in Q4 as sales strategies evolve.

Question 2:
"Another thing is on the AUR... directionally, how do you see this going ahead?"
Answer: AUR rose 37% YoY to Rs.6.16 lakhs due to premium product shifts (e.g., GoZest-5 replacing GoZest-3) and upgrades. Management noted AUR may stabilize near current levels, with future growth driven by upgrades (a focus area) and periodic price hikes. Short-term fluctuations are expected, but premiumization remains a key driver.

Question 3:
"Resort income... 12% growth. What resulted in this growth?"
Answer: Resort revenue growth stemmed from expanded inventory (206 keys added), 84.2% occupancy, and experiments with curated experiences (e.g., spa packages, regional cuisine). Sustainability initiatives, including solar adoption (34% energy use) and zero-waste resorts, also contributed. Revenue growth aligns with inventory expansion and member demand for new destinations.

Question 4:
"What has been the top changes since your tenure began, and how do you see results evolving?"
Answer: Key changes include accelerating inventory addition (206 keys in Q3; targeting 1,000+ by FY26), sales transformation (premiumization, digital channels), and tech upgrades (new app, AI-driven analytics). Priorities include resort experience enhancement and sustainability. Inventory expansion is critical to address member availability concerns before scaling member additions.

Question 5:
"How is tech/data mining improving customer engagement?"
Answer: Data analytics drives personalized experiences (e.g., pre-booked meals/spa) and sales targeting. AI optimizes booking systems and predicts customer preferences. A new app improved user engagement, while experiments with dynamic pricing and curated packages (e.g., anniversary events) aim to boost non-room revenue. Tech integration remains a focus for future growth.

Question 6:
"What is the owned vs. leased room ratio?"
Answer: Approximately 50% of rooms are owned, with the remainder leased. Future pipeline may skew toward leases, but ownership depends on location quality. Land acquisition costs (historically low) and construction (Rs.1.1"“1.3 crores/room) underpin asset value, though management avoided detailed replacement-cost discussions.

Question 7:
"Why does VO Weeks cost dip in December?"
Answer: Quarterly VO Weeks cost variation reflects project seasonality and India's completed-contract accounting. Costs normalize annually as projects finalize. Europe's underperformance (geopolitical/economic challenges) also impacts consolidated metrics, but turnaround efforts (cost optimization, demand initiatives) aim for FY26 profitability.

Question 8:
"Can European operations turn around by FY26?"
Answer: Management targets breakeven/improvement in FY26 via cost optimization (landlord negotiations, working capital management) and demand initiatives (synergies with Indian members, destination marketing). Finland's economic challenges and delayed snowfall impacted Q3, but stabilization is expected. Success hinges on geopolitical/economic recovery.

Question 9:
"How will new rooms impact member-to-room ratios?"
Answer: Inventory expansion (15 destinations, 1,000 rooms by March 2026) prioritizes resolving member availability issues before accelerating additions. This strategy aims to boost resort revenue (via occupancy/experiences) and improve member satisfaction, creating a "pull" demand cycle. Member growth will lag room additions near-term.

Question 10:
"What new activities drive non-room revenue?"
Answer: Curated experiences (e.g., e-biking, local cuisine, themed events) and dynamic pricing (discounts, express spa packages) aim to boost ancillary revenue. Experiments vary by resort/season, with a focus on personalization. Management emphasized continuous innovation to align with evolving customer preferences.