Leisure - Hospitality Sector - An Overview

Written by Broadvision Perspectives Tuesday, 26 July 2011 22:03 -

Prepared by Broadvision Perspectives

Mahindra Holidays & Resorts India (MHRIL)

Mahindra Holidays & Resorts is the leading company in holidays and leisurefor the urban Indian family.Over the past decade, the company has established itself as the market leader in the Indian family holiday business.Since 1996, it has been rapidly expanding its bouquet of resorts through the brands, Club Mahindra and Zest to bring more variety to customers. Its expansion into Homestays and Terra Camps in fascinating regions throughout India offers a completely new set of experiences.The companys affiliation with RCI, the largest timeshare body in the world, means that membership offers discounted access to over 6,500 resorts across more than 100 countries.

BHAG Million members = World No.1 - Every year Mahindra Holidays (MHRIL) adds new members through acquisition. MHRIL has been in the top 5 Vacation Ownership (VO) companies world-wide in adding new members, for the past 3 years. We have been adding 15,000 to 20,000 members a year. - Over the past 15 years, MHRIL has a cumulative member base of 125,000+ families. Since we sell a 25-year membership, this is augmented every year by the new members we add. - Currently, MHRIL is 9 th in the world with respect to the cumulative member base. Wyndham is No. 1 with 814,000 members. The top 5 VO companies have in excess of 250,000 cumulative members.

How can MHRIL build a base of 350,000 members by 2016 and be in the top 5. This is their stated Vision. How can they triple their beat rate to achieve this?

Over the next 10 years, MHRIL would like to be No. 1 in the World with a Million member base. Give the business strategy that helps MHRIL accomplish this vision.

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Leisure - Hospitality Sector - An Overview

Written by Broadvision Perspectives Tuesday, 26 July 2011 22:03 -

Resort Classification - Club Mahindra Holidays (CMH) is a membership that provides members with a week of holidays every year for a period of 25 years, across a variety of resorts, both in India and abroad. - Over the last 15 years, Club Mahindra has added 23 resorts to its portfolio. - This has been accomplished through a variety of routes: Green field development, M&A, Long-term leases etc. - The green-field developments are generally the best-suited for the product in terms of facilities, amenities and services. The M&A and Long-term leases generally are not built to the same specifications, but are good in their own right, especially in their amenities and services. - All in all, each resort adds its own unique flavor to the bouquet and adds a different dimension in terms of the experience. - We are looking to grade the resorts so as to clearly differentiate them and position them more sharply.

What are the possible approaches to classification, the number of classes they should be divided into, how is each class to be positioned, will there be a variation in the usage by members?

Business model for a 10-year Vacation Ownership product - CMH is a 25-year VO product. Part of the money paid by the member goes towards constructing the resort (apartment), which the member owns for a week every year for 25 years. - Broadly, with a 25 year product, the money paid by a member goes towards: Construction of the apartment (35%), Cost of Acquisition (35%), Other overheads (10%) and profits. - Members then pay an Annual Subscription Fee (ASF) towards maintenance of the apartment, provision of the continued club services like reservation, etc. - There is resistance among prospects to tie themselves up to a product for such a long period as 25 years considering that there is very little visibility for that period, in terms of their holiday habits, the existence / quality / relevance of the CMH product etc. over the time period. - Generally there is a visibility / comfort over an 8 to 10 year timeframe for the prospect.

Come up with a 10 year product, where the absolute cost of construction, cost of acquisition and other overheads are by and large the same as in the 25 year product. However, the

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Leisure - Hospitality Sector - An Overview

Written by Broadvision Perspectives Tuesday, 26 July 2011 22:03 -

absolute price of the membership would be considerably lower (say 50 to 60%) than the 25-year product.

One of the strong advantages MHRIL has over hospitality companies is that it is a zero-debt company with a strong balance sheet, and MHRIL would like to maintain this advantage.

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