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Mahindra Holidays earmarks Rs 500 crore for capacity expansion

Thursday, 8 May 2014 - 6:35am IST | Place: Mumbai | Agency: dna

Will add 600 rooms across north, west and south India by Dec 2015

Mahindra Holidays and Resorts India Ltd (MHRIL), which runs time-share holidays under the Club Mahindra brand, will invest Rs 500 crore towards capacity expansion over the next 18 months. The capital expenditure will largely involve adding new guestroom inventory to its portfolio of 2,400 taking the total to nearly 3,000 by the 2015-end.

According to an MHRIL company executive, the new room additions will be made through a combination of expanding existing resorts and adding new properties to their domestic portfolio.

"Approximately 600 new rooms are being targeted. Capacity expansion will happen across six resorts including those in Coorg, Kerala and Kanha. New properties will also get added in the northern, western and southern regions of the country," the executive said at an earnings call on Wednesday.

The company said per key cost would be between Rs 90 lakh and Rs 1 crore as against Rs 65-70 lakh a year ago. Funding the expansion will be done through a mix of securitisation and debt.

On the membership base, MHRIL saw the additions decline by 1,000 on year during January to March quarter. However, on a twelve-month basis the membership additions increased to 17,500 as compared to 12,000 added in fiscal 2013. It's total membership bases as of March 31, 2014 stands at 170,722.

The increased membership base was also the key reason for MHRIL to undertake capacity expansion. "The members to room ratio has increased from 65 to 70 thus it will require addition of 450 to 600 rooms to lower the ratio," said the executive.

MHRIL also expanded its sales and marketing activities to 10 new tier II cities of the country. The company executive said, prospective sales from these markets are seeing a positive trend because of the higher disposable income some of these cities have than the metros plus a higher propensity travel with the growing middle class.

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