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© 1
Mahindra Holidays & Resorts India Ltd.
Changing the Way India Holidays
(updated as at Dec 31, 2010)
© 2
The MHRIL story
Company OverviewCompany Overview1
Differentiated Approach: Customer Centric DesignDifferentiated Approach: Customer Centric Design2
Integrated and Mixed Use Business ModelIntegrated and Mixed Use Business Model3
Unique Revenue ModelUnique Revenue Model4
Proven Financial PerformanceProven Financial Performance5
Way ForwardWay Forward6
© 3
Company Overview
Highlights & Milestones
Product Portfolio
© 4
Highlights & Milestones
• Among the Top 10 Vacation Ownership Companies in the World#
• India’s No.1 Vacation Ownership Company– 121,751 Vacation Ownership (VO) members as at Dec 31, 2010– 72% of the total active VO members in India with RCI*– 34 resorts, 1,555 apartments & cottages as at Dec 31,2010
• Impressive Growth Rates– 5 year CAGR for Income at 43%– 5 year CAGR for PAT at 54%
• “Club Mahindra Holidays”: Superbrand 2009**• 10 RCI Gold Crown Resorts: Munnar and Goa for 10 consecutive years• Ranked 150 in Business Today BT Top 500 (2009) • One of Best performing Global IPO by Wall street Journal (lone Indian IPO)
# Company Sources * Source: Group RCI as on May 31, 2009 **Source: Brand Council in India
©
Product Portfolio
Flagship Brand : India’s No. 1 holiday brand Offers “Family Holidays” 7 days every year for 25 years 27 resorts in India & Thailand. 5,087 resorts through RCI Age Segment 30 – 55 years
1997
Offers “Short Breaks” 6 days every year for 10 years Across 5 resorts Target Segment young urban families
2006
Corporate Membership Offers Reward & Recognition solutions Points based platform to aid flexibility for Corporates
2006
1 stop shop for family holiday & travel related services Powered thru e-commerce website, dedicated call center
2008
Provides accommodation in private homes Has aggregated 205 homes across 14 states Launched in the UK, extended into India
2008
2010 Tented campsite specially designed for families Outdoor & Adventure activities to bring people closer to
nature
5
© 6
Differentiated Approach
Customer Centric Design
Product Features
©
Conventional Proposition: Essentially discounted
accommodation room nights.
Conventional Proposition: Essentially discounted
accommodation room nights.
7
Understanding Vacation Ownership
• Key features of the conventional model– Ownership at a fixed resort location for a fixed
week in the year every year in a fixed season and room type
‘Concept of Vacation Ownership’
© 8
Customer Centric Design
• Fixed Week Fixed Resort
• Variable Price Model
• Limited Service Resort
• Distinct Developer, Marketer and Service Operator
• Pure Timeshare Resorts
• Floating Week Floating Resort– Gives customer flexibility: Time of holiday,
duration, destination of choice• Fixed Retail Price
– Greater transparency• Full Service Resort
– Amenities, Facilities and Services– Complete Family Holiday Experience
• Vertically Integrated Operations– Deliver on promised value
• Mixed Use Resorts– Maintain Quality
ONE WEEK EVERY YEAR FOR 25 YEARS, RIGHT-TO-USE MEMBERSHIP IN THE SEASON AND APARTMENT TYPE THE MEMBER CHOOSES
• For conditions of usage please refer to the Membership Application Form • available at any of our offices, branches and outlets
Conventional Model Club Mahindra Model
© 9
Integrated & Mixed Use Business Model
Integrated Value Chain
Multiple Sales Channels
Resort Network
Family Holiday Experience
© 10
Delivery Through Integrated Value Chain
Resort Design & Development
Lifestyle product marketing approach
Pan India multi-channel sales
initiatives
Holiday planning & reservation
services
Active customer feedback system
Full service resorts
Additional value opportunities
Identification & acquisition of land
Club Mahindra
©
Pan India multi-channel sales teamPan India multi-channel sales team
11
Onsite
BranchOffices 1919
36#36#
126**126**
3*3*
Retail Outlets
Franchisee
ServiceOffice
1111
*Dubai ; **including Dubai & Kuwait; # 29 Direct and 7 Franchise
• Follow Permission Marketing Approach
• Retails Outlets: Club Mahindra
Holidayworlds at Malls and shopping
complexes
• Direct to home: Meet target members at
home
• Onsite: Club Mahindra Holidayworlds at
resorts
• Follow Permission Marketing Approach
• Retails Outlets: Club Mahindra
Holidayworlds at Malls and shopping
complexes
• Direct to home: Meet target members at
home
• Onsite: Club Mahindra Holidayworlds at
resorts
Reaching Customers throughInnovative Sales & Marketing
Channels
Reaching Customers throughInnovative Sales & Marketing
Channels
Multiple Sales Channels
© 12
Pan India presence
Coorg
KodaikanalPoovar
Ashtamudi
Dharamsala
Mussoorie
Manali
Binsar (2)
Corbett
Goa (2) Pondicherry
Ramnagar
Tungi
Kadapakkam
Theog
Thekkady
Ooty (2)
MasinagudiYercaudMunnar
Varwade
KasPanchgani
Shimla
Operational
Under Development
Green FieldsNaukuchiatal
Kumbalgarh
Hyderabad
Gangtok
Existing Resorts
Own 12 (1047 Apartments)
Long Lease 16 (426 Apartments)
Short Lease 6(82 Apartments)
Total 34 (1555 Apartments)
96% Own & Long Lease
Expansions Planned
Ashtamudi, Coorg
Greenfield Development
Tungi (near Lonavala), Theog (near Shimla)
Landbanks for future
Maharashtra Kas, Varwade
Tamil Nadu Kadapakkam
Andhra Pradesh Near Hyderabad
Karnataka Coorg
**Besides resorts shown in map Club Mahindra members have access to a total of 5,087 RCI affiliated resorts across the world
*Also present in Thailand
12
Gir
Ranthambore
Sariska
Nawalgarh
Osian
Swamimalai
©
Holistic Family Holiday Experience
# Activities and amenities at certain locations are resort specific and may not be available at all locations throughout the year
• 10 RCI Gold Crown resorts
• 2 Resorts 5 Star accredited by Dept. of Tourism GOI
• MRD processes certified ISO:9001-2000 compliant
• PCMM level 3 assessed at Goa Resort
• BHC certified Hygiene systems
Accreditation for quality resort
services• Fun dining
Restaurants & Gourmet takeaways
• Svaastha Spas/Ayurvedic Spas
• Kids Club• Champs• Bars• Swimming pool• Conferences &
Outbound Trainings
Activities & amenities giving complete holiday
experience#
• Designed to suit
topography of the
location
• Non-conventional
accommodation
such as log huts,
tents and floating
cottages Resort
Design
• Adding innovative
activities
Strategy to enhance holiday experience
13
© 14
Unique Revenue Model
Multiple Revenue stream
Continuous Value creation from single unit
The Club Mahindra Advantage
© 15
Revenue Streams From Members
• Membership Fee:– Admission Fee– Entitlement Fee
• Annual Subscription Fee: (ASF)• Interest: On Instalments (EMI’s)• Resort Revenue: Revenue generated at the resort during
the holiday
Upfront Cash:
Admission Fee
Recurring Income:
Entitlement Fee
©
Unique Revenue Model Value created continuously from a single resort
unit..
Timeline (years) *Inflation not considered
0 25
Val
ue
Rea
lized
Recurring Revenue Streams*: ASF, Usage Fee, Resort Revenues
Upfront Cash:
Admission Fee
Residual Value *: Opportunity for 2nd cycle - ZERO Marginal Cost of
Inventory
Income from Financing
Admission FeeEntitlement Fee
Resort - MembersResort – FITInterest on EMI
Annual Subscription Fee
26
Value Creation Profile
Large Upfront Cash-flow
Built in Annuity Stream
Residual Value
16
© 17
The Club Mahindra Advantage
Club Mahindra Hotels
Occupancy Higher and Stable All Year round occupancy
Lower occupancy subject to uncertainty and fluctuations
Revenue Streams
Multiple revenue streams. Yearly and Annuity based.
Limited revenue streams. No Annuity streams.
Debt Structure
Almost debt free High levels of debt
Cash Flows Strong upfront cash flow model Low on cash flow
Receivables Receivables can be Securitized. No Securitization opportunity
Holiday Experience
High Quality – Focus on every member of the Family.
Generally less focus on Holiday Experience and no focus on individuals within the Family.
© 18
Details of income
For FY 05 to FY 09 numbers are from the MHRIL Prospectus
All Figs in Rs crores
2010 2009 2008 2007 2006 2005
Income from sale of Vacation Ownership 348.6 297.21 283.54 181.11 113.49 73.95Annual subscription fee 51.7 45.56 32.28 22.77 19.94 12.73Income from travel services & homestays 2.7 1.21 0.08 0 0 0Income from resorts - Room rentals 22.3 17.53 14.12 10.52 6.37 5.06 - Food and beverages 30.8 23.12 16.22 13.52 9.32 7.31 - Others 12.7 7.57 5.34 3.98 3.21 2.31Total Income from Resorts 65.8 49.08 36.83 28.43 19.29 15.03
Total 468.7 393.06 352.73 232.31 152.72 101.71
2010 2009 2008 2007 2006 2005
Other Income 47.6 51.25 22.31 8.34 4.01 4.44Net Profit before tax, restated 176.7 132.04 126.19 66.77 32.83 15.25Percentage 27% 39% 18% 12% 12% 29%Interest On instalment sales 18.7 37.15 19.68 7.32 3.39 2.84Income from securitization (refer note 5) 22.3 9.96 1.21 0.72 0.45 1.57Gain on exchange fluctuation 0.0 2.50 - - - -Miscellaneous income 6.6 0.16 0.55 0.26 0.16 0.03
Total 47.62 51.25 22.31 8.34 4.01 4.44
Details of Other Income
Details of Income from sale of Vacation Ownership and other services
Year ended March 31st
Year ended March 31st
© 19
Balance Sheet
Summary Statement of Assets & Liabilities As at 31st March In Rs. crore2010 2009 2008 2007 2006 2005
Shareholders' funds:
Share capital 83.3 77.0 76.4 28.4 28.4 28.4 Employee stock options outstanding - - 0.0 Reserves and surplus 356.0 118.8 66.6 47.3 14.9 0.0 Minority Interest - 0.0 0.0 0.0 - -
439.3 195.8 143.0 75.7 43.3 28.4 Deferred income
Advance towards members' facilities 805.0 641.0 482.5 324.2 226.3 164.0 Loan funds:
Secured loans 10.0 24.7 20.1 6.0 26.8 22.0 Unsecured loans - - - - - 1.3 Deferred tax liability (net) 33.3 29.5 23.6 20.2 9.2 - TOTAL 1,287.7 891.0 669.2 426.0 305.6 215.7
APPLICATION OF FUNDSFixed assets
Gross block 489.2 429.3 273.4 225.7 191.7 149.3 Less : Depreciation 82.5 64.1 47.9 38.3 30.7 23.5 Net block 406.7 365.2 225.5 187.4 161.0 125.7 Capital work in progress/advances 86.6 42.8 39.0 9.8 1.4 1.4
Expenditure during construction pending allocation11.3 8.5 6.0 2.9 0.8 0.3
504.6 416.5 270.5 200.1 163.2 127.5 Investments 227.2 0.0 0.0 5.9 0.0 4.5 Deferred tax asset (net) - - - - - 2.2 Current assets, Loans and advancesInventories 3.0 5.3 3.5 1.8 0.9 0.6
Sundry debtors 631.5 482.6 403.4 218.7 145.7 78.2 Cash and bank balances 24.4 32.8 7.6 9.4 7.8 3.9 Loans and advances 81.2 66.5 62.0 41.9 26.2 18.8
740.1 587.1 476.5 271.8 180.6 101.6 Less: Current liabilities and provisionsCurrent liabilities 143.2 82.1 60.9 40.6 38.0 25.1 Provisions 41.0 30.6 17.0 11.2 0.3 0.2
184.2 112.6 77.9 51.8 38.2 25.3 Net current assets 555.9 474.5 398.6 220.0 142.3 76.3 Profit and loss account - - - - - 5.2 TOTAL 1,287.7 891.0 669.1 426.0 305.6 215.7
© 20
Strong Financial Performance
Sustained Growth
Financials
Highlights: 9M FY11 and Q3
Consolidation Measures for the future
© 21
Growth Rate
Please note, all figures are based on consolidated financial statement , Div for FY 10 is proposed .
FY 05 FY 06 FY 07 FY 08 FY 09 FY 105 Year CAGR
Cumulative Member base (No) 28,491 38,691 53,113 73,533 92,825 109,884 31%Income from sale of Vacation Ownership & Other Services
101.7 152.7 232.3 352.7 393.2 473.5 36%
PBDITA 27.3 44.6 79.3 144.0 152.1 199.5 49%
PAT 8.3 20.0 42.5 84.0 79.8 117.1 70%
Share Capital 28.4 28.4 28.4 76.4 77.0 83.3 24%
Reserves 0.0 14.9 47.3 66.6 118.8 355.3 713%
EPS (Diluted) (in Rs) 1.69 4.05 5.50 10.77 10.19 14.18 53%
Dividends 0% 0% 30% 30% 30% 40%
(Rs. In Cr.)
©
77.4 145.7
218.7
403.4 484.1
631.5
733.7
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
106.1 156.7
240.6
375.0
444.3
516.4
364.4
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
500 606
675 779
1,177
1,476 1,555
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
28,491 38,691
53,113
73,533
92,825
109,884 121,751
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
Sustained Growth
Cumulative VO Membership Inventory (Number of Units)
22
CAGR FY08 – FY10: 31% CAGR FY08 – FY10: 24%
Total Income (INR Cr) Receivables Available for securitization (INR Cr)
CAGR FY08 – FY10: 37% CAGR FY08 – FY10: 52%
©
9.2 20.8
41.7
80.5 83.4
117.8
62.6
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
27.2 44.5
78.9
140.5 155.6
200.4
108.1
FY05 FY06 FY07 FY08 FY09 FY10 9M FY11
Consistent Financial Growth
PBIDT and PAT Margins
Please note, all figures are based on standalone financial statement
EBITDA (INR Cr) PAT (INR Cr)
23
CAGR FY08 – FY10: 49% CAGR FY08 – FY10: 67%
FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 9M FY 11EBITDA Margin 26% 28% 33% 37% 35% 39% 30%
PAT Margin 9% 13% 17% 21% 19% 23% 17%
© 24
Nine Month Ending Sept 30, 2010
• 9M F11 Highlights – 9M Total income at INR 364.44 Cr– 9M PAT at INR 62.59 Cr – 11,867 members added– Cumulative member base as on 31st Dec 2010: 121,751
• CMH 114,879 and Zest 6,872– Launched Terra a Tented campsite with adventure activities giving customers an
outdoorsy experience– MOU signed with the Government of Gujarat for setting up 7 resorts– MHRIL became the first vacation ownership company in the world to have
received the prestigious COPC certification.– Won prestigious Bird Express TravelWorld Awards for Excellence in Operations
© 25
Quarter Ending Dec 31, 2010
• Q3 F11 Highlights – Q3 Total income at INR 144.5 Cr (Growth of 14.1% )– Q3 PAT at INR 31.1 Cr (Growth of 30.6% )– Q3 EBITDA at INR 51.9 Cr (Growth of 25.0% )– 3,758 members added– Occupancy was 81.4% against 74.1% in Q3 LY– 3 New destinations added : Osian , Navalgarh and Swamimalai
©
Consolidation Measures for the future
• Measures taken at start of fiscal year– Move from “Aggressive-Push” to “Assisted-Pull” approach in Acquisition– Sales processes streamlined
• Price increase 5%
• DP increased to 15%
• Limit Tenure to 48 EMI plans
– Strengthening memberbase health through re-alignments and cancellations
• Upsides– More committed and actively holidaying member base– Improved Yield : from New Sales funnel and receivables– Released old inventory for resale at current prices
• Downsides– Short term ‘pains’: “dampener” impact on Revenues and PAT
26
© 27
MHRIL Growth Strategy
Strategy Formulation
Intensify, Integrate & Diversify
©
28
Strategy Formulation
Competitive
Advantage
Growth Strategy
Environment & Industry
+
Growth Strategy driven byAn enabling environment & our competitive advantage
Growth Strategy driven byAn enabling environment & our competitive advantage
CHANGEIdentified Business Processes to suit
the changed times.
CONSOLIDATEIntensify existing VO operations.
Enter new segments.
BE FUTURE READYLeverage
Competences & enter related
businesses. Test new initiatives.
+ +India Story:
Strong Fundament
als
Travel & Tourism:
Growth Sector
VO Industry:
Nascent market
New Segments
Management
Competences
Leading Brand, Mahindra Group, Unique & Differentiated Biz
Model, Human Capital
28
© 29
29
Growth Strategy
• Intensification: Build on the VO business– Geographic Expansion– Age Segments
• Project GYPSY, Senior Citizens
– Income Segments• Fractionals, Mass-market VO
• Integration: Strengthen the Value Chain– Travel Services
• Diversification: Expand into Holiday Related Services– Homestays, Svaastha
Intensify Integrate Diversify
Existing
Club Mahindra+
Geographical/Channel Expansions,
Extensions for Sr. Citizens & Teens
Ind
iaInternational Expansions
New
Glo
bal
Geog
rap
hic
al M
ark
et
Product
Zest, Fundays, Fractionals, Mass
Market VO, Club M
Travel Services
Homestays, Svaastha, Campsites
© 30
Thank You!