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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Mahindra Holidays & Resorts India Ltd Q4 FY '22 Earnings Conference Call. This conference call will contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Kavinder Singh, Managing Director and Chief Executive Officer from Mahindra Holidays & Resorts India Ltd. Thank you, and over to you, sir.
Good evening, everyone. A very warm welcome to our quarter 4 earnings call. On the call with me today, we have Mr. Sujit Vaidya, our Chief Financial Officer; Dhanraj Mulki, our General Counsel and Company Secretary. You can find our quarter 4 and full year results and investor presentation referred to in our remarks today on the stock exchanges and on our company website. I hope you all have had a chance to go through them. I'm happy to share that we have delivered strong operational and financial performance, both in Q4 and in FY '22 despite Delta and Omicron waves. I would like to attribute this to the flexibility and adaptability of our teams' ability to ramp up and ramp down resort operations, commitment of our members, hour of our brand, and the inherent strength and resilience of our business model. Demand for domestic leisure travel started to gain momentum from mid-February onwards due to easing of be mobility restrictions, backed by the put-up demand, festive travel demand around Holi, long weekends and of course, now the summer travel. Across the industry, fastest recovery was witnessed in occupancy and AURs for the leisure portfolio. We have witnessed tailwinds such as growing domestic air travel as high as 21 million in March '22 from a low of 13 million in January '22. Higher demand for leisure holidays, family bonding through multigenerational travel, drivable leisure destinations, increase in outdoor activities, preference for immersive experiences, willingness of travelers to invest in a rejuvenating vacation to enhance their mental and physical well-being is something that we have witnessed at our resorts and the trends that we are witnessing. A quick recap of the year gone by, Q1 was challenging due to the Delta wave with occupancies of 51% and the resort income of only INR 15 crores. However, we started to see quick recovery post the Delta wave. And since then, the graph has been upwards with quarter 2 and quarter 3 occupancies at 73% and 80%, respectively, with resort incomes of about INR 51 crores and INR 70 crores, respectively. In December 21, early January 22, when the Omicron wave hit, we saw lower occupancies in January '22. However, the recovery was much quicker compared to the earlier waves leading to the highest ever resort income of INR 57 crores in quarter 4. We have noticed in quarter 4, not only the increase in occupancies, but even at a full year level, when we look at the occupancy, they were at 74%. And for the full quarter, fourth quarter, we had an occupancy of 77%. And also in the month of March, we saw an 89% occupancy in March '22. And of course, we have also noticed that we have crossed highest-ever occupied room nights in the month of March. Similar trends have been witnessed in April also, 88% to 89% occupancy is what we have closed with. And of course, a lot of our resorts are crossing 90% plus occupancies levels. We are witnessing a rise in bookings based on what we are seeing. We are noticing a similar trend in May and June, and the occupancies in May and June are looking as of now, above 85%. And we believe that the domestic leisure travel demand will continue. If you recall, throughout the pandemic, we have continued to focus on 3 major drivers of our business growth, number 1, accelerating inventory additions; number 2, growing our member base; number 3, driving resort revenues through F&B services and immersive experiences at our resorts. Our inventory buildup continued to progress as planned. And during the year, we added 385 homes. And in quarter 4, we added 226 homes. Resorts that have been added in domestic destinations include Leh, Daman, Shillong, Rameshwaram, Dindi in Andhra Pradesh, Pushkar in Rajasthan and also international destinations such as Bali, Bentota in Sri Lanka and Pattaya in Thailand. These additions take our total resorts to 84 level, so our resort count hits 84. We have crossed the milestone of 4,500-plus keys. To put this in perspective, we have added 800-plus rooms during the 2 years of the pandemic versus 1,300 rooms over a 6-year period from FY '15 to FY '20. So obviously, the inventory addition has accelerated. Our target is to achieve 5,500-plus rooms in the next 24 to 30 months through multiple ways, acquisition of greenfield properties, acquisition of brownfield properties, greenfield development, utilizing our existing land banks, expansion of our existing resorts and of course, through leasing. We have commenced construction to expand our existing resort at Kandaghat, Shimla. That expansion will be -- will require us to invest about INR 200 crores and will deliver 185 rooms. We are already at the last stages of getting the last permissions to set up a resort in Ganpatipule with about 236 keys, with a total investment of about INR 250 crores. As mentioned earlier, we are also planning to add 60 keys to our existing resort in Puducherry, and we are also likely to have 52 additional keys coming to our resort in Udaipur, which is expected to be completed in June 2022. I'm also happy to announce that we have been recently awarded a very boutique project under the PPP model in Janjehli in Mandi district in Himachal Pradesh. As I have always mentioned that we continue to add choices for our members under a new program, which is called Club Mahindra Horizon. We have 300-plus partner hotels which our members can go to additional vacation destinations and this Club Mahindra Horizon is our proprietary holiday exchange program. Probably the first program for any time share company that has ever been launched. Turning to member additions. In quarter 4, we have had a member addition of 4,058 members. This is very, very good considering the fact that in the month of January, we had significant problems because a lot of our sales team was not well due to Omicron and we really recovered smartly in February and March. While Omicron has ended, the wave has receded sometime in February. We noticed that our member additions really picked up some time mid-February till about March. In view of the inflationary pressures, we have noticed that families now understand that vacation ownership is a preferred way to vacation in a period where travel costs are rising. And this is an opportunity for them to look at Club Mahindra and this we see as a very big positive for our business. They also realize, the members the travelers also realize the ease of planning vacations, increasing choice of resorts, experiences, spacious properties and allowing for multigenerational travel, which is definitely helping to -- helping families to bond with each other. If I were to look at the year, during the year, our member additions grew by 6% on a year-on-year basis to about 12,764 members despite multiple COVID waves. Our cumulative member base now stands at 2.66 lakhs. If you multiply 3 to 4 members per family, we are talking about 1 million cohort, which actually enjoys our resorts year-on-year. While the member count has grown by 6% year-on-year, the sales value of the member additions grew by 24% year-on-year in FY '22. And this is something that we are extremely proud of. This has been due to the -- obviously, the higher sales of Club Mahindra 25-year product, also the Bliss product and, of course, some amount of benefit we got from the average unit realization, which was driven by the price increases that we took during the year. In quarter 4 FY '22, our strategy of enrolling higher down payment contribution continued, we saw a significant improvement in the number of members who are paying higher down payment at the time of enrollment. Sales contribution from referrals and digital has increased 57% in quarter 4. Last year same time, this number was 54%. We have actually initiated a lot of work on acquiring customers through digital by introducing fresh and relevant content. Our diverse product portfolio has helped us upsell and improve sales realizations. We have seen very good movement in upgrades during the year as the members decided to move to a higher season or larger apartment. Vacations at our resorts and marketing activities in towns around our resorts helped us to increase the on-site sales, which is a key focus area for us. Let's move on to the third major driver of growth, resort revenues. As mentioned on previous calls, over the past several quarters, we have taken initiatives to create superlative member experiences to enhance member spends and improve member engagement. Highest ever resort income in fourth quarter, 85% year-on-year growth in resort income, leading to INR 193 crores income in FY '22 despite multiple COVID waves is a significant achievement. Resort revenues per occupied room night during the year was higher through member spends on F&B and other activities. We have introduced multiple culinary experiences and also launched new specialty restaurants. Some of the restaurants, you may be familiar with Barbeque Bay, there is a new fine dining pan-Asian restaurant called Temptation and Fins, which is a seafood brand restaurant, sea food cuisine restaurant. We launched Unwind, which is a cafe launch. We have introduced new resort-based experiences, particularly in the area of themed adventure parks. As you know, we have invested in Rocksport and through Rocksport, we are bringing these new experiences in our resorts. Refurbished HAPPY Hub new experiences in HAPPY Hub, new spa and wellness treatments, birthdays and anniversary packages and also celebrating various festivals. As members spent more time inside our resorts, we introduced all-inclusive packages for members and their families at a discount, including the option to prepurchase. This has helped us drive member spends. Outdoor experiences, as I mentioned earlier, which are soft adventure. But in addition to that, we added Nature treks, family picnics, bird watching and guided electric bike tours, they have also been introduced. I did mention about Rocksport. We have increased the investment in Rocksport from 6.67%. Our stake has increased from 6.67% to 23.4%. This will happen by September 22 as the transaction completes. This, we believe, will help us to increase customer engagement avenues. The most existing part of this investment is that we will have their skill, the Rocksport skill. And through that, we will launch more and more theme adventure parks in our resorts. Also virtual games like Virtual Skydiver, Pandora's Box, et cetera, would be also launched as we speak. And more importantly, we will be able to target their customer base, which is the exact target group for us. And our members in cities will be able to use Rocksport facilities with a certain level of discount, which will help us to get also referrals from our members. At this point of time, Rocksport will also act as a driver for driving the vacation traffic so that people can engage in these experiences, outdoor experiences and which we believe will help us increase our on-site sales. And of course, in the on-site, we just do not add fresh units, but also we upgrade and that will also be a positive thing for us as we move forward. Of course, there are inflationary pressures on our F&B costs. Fuel costs, LPG costs, we have taken price increases across our F&B services in April 2022. We -- to manage the resort costs we are also working very closely with edible oil and other vendors. We have installed solar power at 14 -- solar plants at 14 resorts with a total capacity of 2,500-plus kilowatts power of the above. During Q4, we fast tracked solar installations by adding 350 kilowatt power at 2 resorts. Further, 1,000-plus KWP is ready for installation in Q1 FY '23. There are lots of ESG initiatives that I would like to highlight. And I'm very confident the actions that our team is taking we will be the most sustainable resort chain in the world. Already, we have -- we are aiming to achieve carbon neutrality by 2040 through our EP100, which is the Energy Productivity Improvement by 100%, 100% renewable energy. We have committed -- these declarations have been done by us. And again, we are well on our way. And by the way, we have done calculations through the science-based targets, and we will be -- we are very confident of reducing our greenhouse emissions by 88.3% by 2030. We have implemented the Jal Jeevan initiative to improve efficiency of water utilization. We're using 4R principles of reducing, reusing, recycling and rainwater harvesting. Rainwater harvesting structures are installed in 20 resorts. 250 million liters of total water consumed by our resorts has been recycled in FY '22. 4 resorts are certified under 0 waste to landfill, and our endeavor remains to responsibly source materials and to work towards creating a circular economy. Under Project Hariyali, we have planted 70,000 trees in the last 2 years and almost 4.7 lakhs since FY '11, near our resorts, and we have undertaken biodiversity initiatives at our Coorg resorts and Assonora Goa resorts to conserve natural forest area. Importantly, please note we are founding members of Indian Green Building Council. We have committed to Green Resort Certification of all our resorts by 2024. Currently, 8 resorts have received the highest level of green certification, which is Platinum. On that note, let's take a few minutes to look at our stand-alone financial performance followed by performance of Holiday Club Resorts, our material subsidiary. Stand-alone results, revenue grows by 19.4% Y-o-Y. Our VO income grew by 12.4% Y-o-Y. Resort income, highest ever in the fourth quarter. Yes, there is a one-off. We have sold our investment in the Nreach online services at about -- netting a gain of INR 26.3 crores, almost a 9x return considering that we had taken the stake in 2016, a 12% stake with an investment of INR 3 crores. The reason for us to exit this investment is that their business model, this startups business model has pivoted and the strategic linkage or the reason for which we had invested no longer exists and there was an opportunity, and that opportunity has been utilized. And therefore, there is a one-off income of INR 26.3 crores that you see in quarter 4. By the way, we continue to use their employee engagement platform, which is something that they have pivoted to, very successfully, even in Mahindra Holidays, even after exiting the investment. Total income grown -- has grown by 18% Y-o-Y. Vacation ownership grown -- income has grown by 7%. Resort income has grown by 85%. Our operational efficiency stands at 74% against 72% for the year. When you look at one-off, profit from the sale of investment of Nreach, I mentioned, there have been some lease rent waivers and there was an interest income that happened from the income tax refund that we got. So that is where we have classified one-off income for you to be able to understand what are the one-off and what are the routine operational growth items so that it's easier for you to see how our numbers stack up. If I look at the profits and margins, our PBT has grown by 82%. But if I remove the onetime impact, even then the growth is quite healthy at 37% Y-o-Y. EBT margin with our onetime impact is still up by 200 basis points on a year-on-year basis. Profit after tax stands at INR 45 crores. For the full year, if I were to look at profit before tax, at INR 200 crores, which is 20% up Y-o-Y, PBT margin is at about 19%. PBT without small, a onetime impact at -- stands at INR 160 crores, which is up by 16% year-on-year, and PBT margin without onetime impact stands at 16%, very healthy margins even during this difficult year. And the PAT at INR 151 crores is up by 20%. Total expenses for FY 2, I'm talking a little bit about the expenses now have increased by 17%, mainly on account of higher business activity, higher sales volume, marketing spends and overheads. Sales and marketing expenses increased by INR 34 crores in line with the additional sales volume, customer-related offers, investments in TV and brand marketing campaigns. These investments are going to augur well for our future. There are other expenses which have grown in line with the increased business activity. Some costs are expected to be permanent in nature, savings. When I say costs are expected cost savings are expected to be permanent in nature that will not come back with the volume, and this will help us drive substantial margin improvement, going forward. Moving to digital has helped us in reducing infra cost, travel costs and other related overheads. Manpower utilization at our resorts and a reduction in our employee to room ratio has happened. As a result of our growth, we have been able to redeploy people. We have saved a significant amount of money due to solar implementation in various resorts. Currently, 14 resorts have solar energy panels, which we are -- the solar energy streaming into these resorts. We have been reviewing and looking at all fixed costs and trying to convert them into variable costs, and that's something, particularly in the area of acquisition. And that is something that is playing out as we speak now, more on that later. As far as structural changes go, this is going to be our single biggest initiative to convert as many of our fixed cost into variable costs. And therefore, as we move forward, the overall cost and operational efficiencies will begin to play even an increased role in the profitability and the margin improvement. If I were to look at the balance sheet, deferred revenue for the quarter stands at INR 5,083 crores. This is something which we have seen has moved up by about INR 1 crore, or INR 2-odd crores from the same period, which is March 21. And we continue to have 0 debt at a stand-alone level. Our cash position improved significantly by INR 232 crores to end up at INR 1,172 crores as on March 22. Our cash position movement is due to higher resort revenue, more member additions, better upgrade revenue, higher down payments, lower EMI tenure, continuous tight control on costs in all areas of operations have helped us to increase our cash position. This concludes my commentary on Mahindra Holidays. I move on to now Holiday Club Resorts. As we speak, our quarterly con call coincides with Prime Minister Modi's participation in the historic India Nordics Summit, which is currently ongoing. The India Nordic Summit will strengthen bilateral relationships between India, Finland, Sweden, Norway, Denmark and Iceland. This augurs well for our Holiday Club Resort business, which is the leading hospitality provider in Finland. A quick look on these Holiday Club Resort's macro situation and operational update. During the year, COVID impacted our Finnish operations in quarter 1, quarter 3 and part of quarter 4. Except in quarter 2, where we saw significant domestic travel demand in quarter 4, once restrictions were eased off in mid-February 2022, the recovery was rapid and strong. This was followed by the Russian-Ukraine conflict, which has impacted the Finnish economy. The growth estimates of Finnish economy have been revised downwards from 3% to 1.5%. Inflation is something that we are watching out and we will see how it goes, but preliminary indications are the energy prices are likely to be higher or already are higher. If you were to look at quarter 4 for our Holiday Club Resorts business, the revenue has increased by EUR 9.7 million, primarily due to growth of Spa Hotel's revenue, which has grown by 96% year-on-year in Finland as well as Sweden, in line with occupancy. Timeshare sales increased by 32% year-on-year due to a strong and swift recovery post the restrictions being lifted. COVID impacted for the full year, as I mentioned earlier, except Q2, revenues at the full year level have increased by 23% and 51% increase was seen in SPA Hotels due to higher AURs and increased F&B income. Despite multiple COVID waves, which impacted construction as well as sales timeshare revenues have increased by 6% year-on-year. The best news comes now, the profitability in quarter 4, positive EBITDA of EUR 0.6 million was delivered. In FY '22, Holiday Club Resorts has delivered close to breakeven EBITDA of minus EUR 0.3 million. Several cost optimization measures were introduced during the year despite severe COVID-19 impact on business operations FY '22, HCR managed to reduce its loss before tax by 61% year-on-year to EUR 5.9 million versus FY '21. This is a significant achievement considering a very large part of the year was impacted by the multiple COVID waves. The good news is that while the restrictions on restaurants, spas, sports and indoor activities have eased off from mid-February thereby having a very good recovery in our Finland and Sweden business. The crisis in Ukraine is something that people ask us as to how -- what impact it will have on travel and tourism in Finland. As you know, Holiday Club Resorts operates in the leisure segment and the leisure segment is largely focused on domestic travel. The domestic travel is not likely to get impacted. The Finns and the Swedes and the Norwegians will continue to travel. However, there will be some inflationary effects, which I mentioned, primarily in the area of energy and the consequent impacts, but we still believe the domestic leisure travel is strong and having achieved close to breakeven EBITDA in FY '22, we are very positive for the FY '23 outlook as far as Holiday Club Resorts go. Let me move on to the consolidated performance. The total income at the consolidated level in quarter 4 is up at a healthy 18%. EBITDA moved up by 70% year-on-year, margin at a healthy level of 22% and our PBT stands at INR 32 crores, which is an improvement of INR 43 crores over quarter 4, FY '21. If I were to look at the consolidated full year financial numbers, total income has been up 18%, and our EBITDA at a consolidated level is up at 38% Y-o-Y, and EBITDA margin stands at 22.1%. And our PBT at INR 111 crores, which is an improvement of INR 808 crores over FY '21. PAT at INR 68 crores is the highest ever since the adoption of IND AS 115 in FY '19. PAT improved by INR 82 crores over FY '21. Conclusion, to sum up. I'm really encouraged with -- to see how we have closed FY '22 and the momentum we are carrying on into FY '23. We expect good times ahead for leisure as evidenced from the current booking trends that we are seeing, which are visible to us all the way up to July, even July, we are seeing above 80% occupancy, which is not traditionally a seasonal month. The underlying strength in our business comes from the fact that we have built some amazing resorts. And now more importantly, our focus on accelerating our inventory is evident through the addition of 800-plus keys during the 2 years of pandemic. In today's inflationary environment, timeshare is the need of the hour, and people understand there are clear benefits of owning a Club Mahindra membership. We continue to focus on the right membership portfolio mix of medium and long tenure products in line with our long-term strategy. Going forward, notwithstanding any further COVID wave and related restrictions, we expect the pace of member additions to hasten up. We expect the pace of member additions to grow in FY '23 and the sales contribution from referrals, digital and on-site sales will continue to grow. As we embark on our growth phase, we have made a conscious effort toward advancing front-ending our investments for the future by priorities -- by prioritizing brand-building marketing initiatives and also ensuring that we are ready for the future. This, we believe, will help us immensely as the strong demand comes in leisure travel as we are already beginning to see. Therefore, our focus on our 3 key growth drivers, accelerating member additions, growing our member base and driving resort revenues to creating unique F&B services and outdoor experiences has held us in good stead and is reflected in our growth both in top line, bottom line and cash generation. Holiday Club Resorts under the leadership of Ms. Maisa Romanainen, has demonstrated a strong and quick recovery whenever restrictions were eased off, largely driven by domestic demand, we haven't seen any major impact of the Russia-Ukraine conflict. Hence, we are confident of the profitability and cash generation capabilities of the Holiday Club Resorts. We definitely expect the financial of Holiday Club Resorts will reflect these capabilities as they play out during the year. ESG remains a focus area for us, and I did enumerate our achievements and we expect this to be a very important part of our business, and we treat it as an important part of our business as we emerge out of the pandemic. Finally, FY '23 is going to be an important and transformational year for us as we lay the groundwork for our long-term success. Thank you for your time this evening. We are now opening the line for questions. Thank you very much, once again.
[Operator Instructions] The first question is from the line of Ankit Kanodia from Smart Sync Services.
Congratulations for a good set of numbers. If you look at the member room ratio and if we look at the number for the whole of last 10 years, so we are probably at all time low -- again, all-time lowest number in terms of member room ratio around 58. So in the last 10 years, we have been as high as 77:1 and this is -- it has been trending down in the last 2 years, 58 is the lowest. And even if we take the projection of 5,500 rooms going forward in the next 12 to -- sorry, 24 to 30 months and just do a backup envelop calculation for the number of members taking in account the same number of member additions, but which we had this year, it will come down to around 55. So just wanted to know your view as to, are you satisfied with this number? Or are you pushing for an even lower number? Or what is your view on that? That would be my first question.
It's a very, very relevant question. I think the fact that we have added inventory during the pandemic period. And because of the pandemic, our member additions sort of got impacted. Therefore, the ratio has improved. But the reason we are adding inventory at a brisk pace is that we believe that while we have been comfortable even at a 60:1 kind of a ratio, we believe that even if we are at 1:58, 1:55, even lower, we believe that there is a huge opportunity for having an opportunity to serve existing members because members -- even with this ratio, I can -- I mentioned to you that our occupancies are hovering at 90% occupancy. So we are seeing huge traction -- there are memberships who have been dormant. People have not been holidaying. They are also now holidaying. And we believe that this kind of inventory addition growth path will allow us to actually enable us to enroll more and more members because we would never be worried about not being able to take care about the members' booking needs. We are very clear that this path is the right path. As far as we are concerned, there will be times when inventory additions will run ahead of members. We normally do not want member addition to run ahead of inventory. So even if it goes down to 55, 53, 52, we are very comfortable because there's always an opportunity bring -- to request members to bring their guests. And they do bring, and that helps us to get more sales on site. So we are very, very positive about higher inventory because we have established our brand. Our rooms are not going to go empty. For sure, members will bring their guests, and that is one of the biggest routes we adopt to get new member additions on site. Internationally, a lot of membership sales, rather a majority of the membership sales happens at the resorts. It's only in India, we tend to go out into people's homes to get the membership enrollment. But when we have inventory availability that will have a positive kicker for us, particularly on the on-site sales, which we are looking forward.
My second question is regarding the results on the books, so after 3 years due to that accounting change, first time we are seeing the reserves to be a positive number, although a very small number, but still it's positive. So are we thinking something on the lines of dividend or buyback? Or it is too early to say that?
So please remember that the dividend declaration is a function of our ability to generate profits and that was never ever got compromised even the new accounting standard. If you look at our profit before tax, profit after tax on stand-alone numbers, we have grown at a very healthy rate, just the year that we got into the old accounting -- the new accounting standard, our profit was INR 100 crores. Even if you were to remove these one-offs that I talked about, which is the sale of the investment in Nreach, even if to remove the other one-offs, that I talked which are lease rent waivers. They're still at INR 160 crores on a like-to-like basis. In 3 years, we have moved from INR 100 crores to INR 160 crores, which means we always had the capacity to pay dividend. We have cash. There is an issue that when we move into the new accounting standard, there is a transition difference which has hit our reserves. And as a result of that, and this is something that we have been trying to represent to the Ministry of Corporate Affairs. And the moment we get clarification from them, we should be in a position to declare dividend. Our dividend declaration has nothing to do with our ability to generate profits. Our profits have been constantly being generated. It is only at the consolidated level because of the 2 years of pandemic we have seen some struggle. And that also, as you rightly mentioned, this year, we have come out of it, and we have had a very good, highest ever consolidated PAT, particularly after the new accounting standard came in.
So I couldn't get my answer…
Mr. Kanodia, may we request that you return to the question queue as there are participants waiting for their turn. [Operator Instructions] The next question is from the line of Nihal Jham from Edelweiss.
My first question was on the member addition side. You did mention that there was an impact because of Omicron, which led to a deferment in terms of a lot of sales being made. So would it just be possible because from the commentary, it did look like March and April has seemed to be going pretty well. But just from the March month, what was like the Y-o-Y growth in member addition, if it's possible to highlight that?
Yes. So Nihal, what happened is that January, we got severely impacted because quite a lot of our salespeople were also unwell. It was quite widespread. And February onwards, we started picking up and March, of course, we did very well. And April is going on very well. The main point to note is that despite the fact that we had such a difficult start, we ended up crossing the 4,000 mark for our member additions number, number one. Number 2, you may have caught on the fact that I mentioned that while our full-year growth is only 7% because of these 2 waves. But on a value basis, we have grown by 24% on a Y-o-Y basis. So while the 2 numbers look very close to each other that there was only a 7% growth in the member additions, but our value growth is at a high of 24% on a Y-o-Y basis. So that's something that is to be noted. And the momentum did pick up in March and continued into the April as well. Yes.
The other thing is you mentioned that you've taken a hike in your membership rate. I just wanted to confirm that. And if you could give the AUR number for this quarter, that would be helpful.
In terms of -- yes, we have taken the price increases. We did that earlier in the year. And in terms of the AUR, I will share that separately Nihal, post this call.
The next question is from the line of Himanshu Shah from Dolat Capital.
Can you just give the cost breakup of sales and marketing, rent and other OpEx for the quarter?
It is there in the investor deck, the elements of the cost, sales and marketing separated from the…
It is there in our…
So on the investor deck, it is definitely there. I have seen the breakup of employee benefits.
It is there slide number…
If you go to the Slide number…
33.
33 in our investor deck, whatever breakup you're wanting is there.
Actually [indiscernible] and HOLDCO level both?
We are not able to hear your question. There's some echoing happening from your side. I could only hear Holdco HCR. That's all. I could not hear anything more.
HCR debt number for OPCO and HOLDCO level.
HCR debt number at what level HOLDCO and…
Operating company level.
Operating company. Go ahead, Sujit.
So at the holding company level, we have a EUR 51 million debt, which was for the acquisition. And then at the operating company, which is the HCR level that is close to around EUR 16 million.
Last question on room addition that we are targeting for FY '23 specifically, some color can you provide?
Room additions for FY '23. Room additions for FY '23. Okay. So as I mentioned, we do not give forward guidance in terms of how many rooms we'll add, as you know, for various reasons. But what we definitely have started out as our target that we need to move in the next 24 to 30 months, we have to cross the 5,500 mark. So that is how it was there in my commentary that we are looking within the next 2 to 2.5 years, we should cross the 5,500 mark. We are at 4,568 as we speak now.
The next question is from the line of [ Gigesh Shah ] from Hansa Research.
Congratulations on a very good set of numbers and a very detailed and you had constructed an investor presentation uploaded on the exchange. Sir, can I request you to please elaborate on how you see the lifetime value of a customer and how you see the value creation building up over time? I think there's a very interesting slide in the investor deck, but it would be very helpful to hear your view on this.
So I think, first of all, thank you for picking up that slide, which we had -- which we have sort of done with a lot of diligence and care. You see what happens is that in our business, when we get a member in, that's just the beginning because while we collect the membership fee that helps us to build resorts or lease resorts or do whatever to sort of provide these services, including the CRM and also the member services because all those things get set up for the member, the moment a member buys the membership. And the membership fee is hugely helpful to ensure that we are able to create supply and take care of the servicing part of it.
However, the real value add to the business and to the customer happens when the customers or the members begin to holiday at our resorts. They pay the annual fee, they go to the resorts, experience the resort services, there is a resort experience, which helps them to add to their experiences. Every one of them has their bucket list, what they want to do at the resort. And once they come and engage in the HAPPY Hub, in the outdoor experiences that we have created and for the children -- all of that is actually enabling them to enjoy their vacation. And when people enjoy their vacations, food definitely becomes an important part of their vacation. And food is somewhere -- is one area which we are focused on. We have launched new brands. I mentioned that. We are also creating more opportunities for people to bundle and prepurchase the food offerings that we have. So we have all inclusive plans, we have discounts. We have multiple kind of cuisines, multiple experiences, birthdays, anniversaries, whatever kind of celebrations and whatever kind of F&B actions are required, we take on the ground to engage with members. So that's been a very big source for us to sort of work. And to us that represents a very important part of lifetime value because this is a high-margin business, the F&B business. And that also helps us to next stage of value creation, where the people begin to refer us amongst their friends. And that also helps us to lower the cost of acquisition when we go for referrals. And that is why we do talk about the referral and the digital sales, which is at a healthy 57%, which helps us to reduce our cost of acquisition. Parallelly, because after paying the annual fee, the person has gone to resort, F&B and holiday activity experiences have been used, consumed. And of course, there has been money that has -- there is an income as a result of that. There are spa related experiences at the resort, which also help. Referral is something that I talked about. Some people choose to make the membership through the EMI route. So the interest income also becomes an important part. And now let me move to the most interesting part that people do upgrade. And once they are in the resort, they want to upgrade to the higher season, higher apartment size, and that leads to another stream of income, which we call as upgrades. And the upgrades is something that I talked about are very robust during this year, and that's something that gives us the confidence that the members are enjoying their holiday, and they are trying to get more out of us by upgrading themselves. So this is how the virtuous cycle continues. The only other thing I can add is that we are also using the critical mass that we have to offer experiences to our members, which is through the Horizon Program, which is an exchange program, there members can bank their room nights and go to holidays even outside Club Mahindra. And on top of that, we are offering some unique curated vacations with unique offers like Rann of Kutch Festival, et cetera, et cetera, very special home stays, et cetera, fully managed. Those are the things that are offered to our members and our members are very happily taking it up. So there is this virtuous cycle of multiple annuity revenue streams, whether it is the membership fees, whether it is the annual fee, whether it is the interest income, whether it is the resort income, I mean speaking on financial terms, these are the 4 things that happen. In addition, referrals happen, and upgrades, of course, becomes a part of membership income. And this is how this virtuous cycle. We are continuing and the lifetime value will only increase as member cohort keeps on increasing, which is what you are seeing right now.
[Operator Instructions] The next question is from the line of Ankit Kanodia from Smart Sync Services.
So my next question was related to resort income. So even though quarter 4 has been really good in terms of the all-time high resort income. But when you look at the full-year resort income, we see that the best we did was in FY '20, that was around INR 228 crores. And one thing which we see is that room rate as a percentage of resort income was very highly, say, 8 to 10 years back, which is going down. And then now food and beverages are slowly taking over that, and it is growing at a much faster pace. So I know you don't give any forward-looking guidance, but is it fair to assume that the growth rate in F&B and thereby resort income would be much, much, much higher given our number of members, members addition has gone up over the last 2, 3 years. And based on that, any color or any view you would like to give?
Again, very, very good observation. I must congratulate you for picking up this point. We believe that the real value in our business comes when not only we get the member in when they pay the membership fee, but also when they begin to enjoy the facilities because when they begin to enjoy the facilities, they pay the annual fee, okay, which obviously is not accounted as a room income. The truth is that it is a part of fulfillment of their obligation. And while it is classified as annual fee, but in a way, it is coming in to utilize the rooms that we have created. So there is an annual fee that comes in. There is an F&B income that comes in. There is a holiday activity income that comes in, and most important, which is most invaluable is that this is -- there is an opportunity to get the referrals and also upgrade the members. So the stream of -- the multiple revenue streams that we can kick off, if we are able to get the member to come and holiday and which is where you have rightly picked up. Our focus is members, and that is why you are seeing that the room income has come down. It doesn't really worry us. And to answer your question that we did INR 228 crores Obviously, if we did not have the pandemic, we would have definitely crossed by now that INR 228 crores by a wide margin. And I'm very, very confident that if we do not face any pandemic this year, we are definitely crossing that number by a wide margin. And as we add resorts, as more and more members come and holiday in our resorts and more and more members come in, this income is something you must watch out for. We are very confident of growing this income at a very accelerated pace because this is something that can be done, and this is something which is what we are focused upon.
One last question. [indiscernible] says that we have recently increased our ASF fee. So is it correct? And if yes, how has been the response with the members in terms of the ASF?
So in the annual fee, please remember that we never increased the base fee. We only top it up to the extent of inflation. There is a formula of WPI and CPI, which we apply uniformly, which we have been applying over the years, which is a part of the membership condition. So the formula got applied, the inflation weighted average came to something like about 7.7% or 7.8%. That's a number I remember. It got applied. The invoices got generated and members are paying the annual fee and they are holidaying and our occupancies in April are at 90%, March they were 90%, 89%, and we are seeing May, June also 89%, 89%; July, upwards of 80%. So the story is going on well because the fact of the matter is that annual fee is a very small component, if you were to compare it today's prices if we have to go and take similar quality rooms and vacation experiences for the membership fee and for the annual fee, it is a great value. And that is why…
If I may ask one last question. So is it fair to believe that once the -- can we have this breakup of the receivables in terms of how much -- maybe in the next year onwards or next quarter onwards, how much it -- is belongs to the vacation ownership income and how much it is for ASF, I think that would really help us to know where we are going, if that is possible. This is just a request, if that is possible.
Ankit, in our annual accounts, we will be providing some more details around the receivables.
The next question is from the line of Sanjay Awatramani from Envision Capital.
I just wanted to know any CapEx plans for the next 2, 2.5 years. As you said that we'll be increasing the room size, I mean additional rooms were 900 to 1,000. So if you can highlight the CapEx plans?
Yes. I have always been on record that we are trying to accelerate. We have a capital expenditure plan, which was sanctioned about 2 years ago to about INR 1,200 crores of CapEx. We are well on our way to execute that CapEx plan in the next 2 to 3 years. And please remember the CapEx would be utilized either to acquire a resort, to build our own resorts, and that is something that will remain like, let's say, in continuity that continues to happen. And that is what would be the overall plan for us. And the good news for us is that despite the CapEx, we will continue, hopefully, to grow our cash balance. And more importantly, we are absolutely confident that the combination of building our own resorts, acquiring, leasing has worked very well for us. So we have a clear strategy around utilizing the cash also that we have.
And one last thing, I mean, out of this INR 1,200 crores, what is the amount we've already spent? And what are we, I mean, additional in the balance amount what will be that?
Yes. That's something that we will have to probably work this out because CapEx plans are continuing from one financial year to the other and into the plan period. You see what happens is when we plan for CapEx in FY '19. Obviously, some part of the CapEx has been spent and some more sanctions have been obtained. So it's kind of a rolling plan. We do not have a plan where we say, "Oh, so much has been spent, so much is left." But we can always top it up because once we see growth opportunity, we can constantly keep adding. And we can currently also say that over the next 3 to 4 years, you will see us spending about INR 1,000 crores to INR 1,200 crores for sure.
The next question is from the line of Nagraj Chandrasekar from Laburnum.
And congratulations on another fantastic quarter and very strong stewardship of this company over the last couple of years. Just a question on what you mentioned on inflation in room rates finally turning on customers and them starting to realize this is a good model to have to lock in rates for a 25-year period. I think this is the last time we saw this kind of inflation in room rents -- room rates was 2011, correct. And then we've had deflation for the next 7, 8 years post that. When inflation starts hitting the overall discretionary budget, you will have -- their ability to pay INR 5 lakhs, INR 6 lakhs for a membership being somewhat curtailed. Will you then be okay with wrapping up the EMI portion of our sales? Or would you rather have a slower membership sort of add product leaner membership add, more upfront cash? How do you balance those 2, sort of, competing pulls and takes?
Very, very -- I would say very sharp and very insightful question. And this is exactly what we are right now busy doing. So there are various tools in our toolbox. Number 1 tool is the multiple product types that we have. 2011, we had only one product type. Here we have clearly well-defined 3 product types. We have a GoZest which is a 3-year product. Have a Bliss, which is a 10-year product for people above 50. It's a points-based product. And we have of course our flagship core Club Mahindra, 25-year product. Now for us, depending on the life stage, we believe that -- and also, we cover various price points. When you look at the prices, we are covering virtually all price point. So at a combination of price point and the life stage, we have products to deal with the issue that you raised. Equally important is the opportunity to upsell and a person joins in GoZest we, obviously, after a good experience, he may consider upgrading to a 25-year product. So for us, it is not about that people will find it difficult to buy. And therefore, if we have multiple products, we are in a position to satisfy the demand.
Now coming back to your second and equally important question -- so how do we get growth? And also in some manner, not some manner, actually get the growth and ensure that the quality member additions happen. And since we are insisting on higher down payment with the inflationary environment will it sort of affect the growth because people may want to sort of not pay upfront so much and they may be open to looking at EMI options. We -- our EMI options continuing, the way we handle this is that people who are taking the EMI options get a lesser offer than the people who pay upfront. We do not -- we have not stopped selling on EMI, we are happy to sell on EMI. Just that we will not give the offer that we give to a person who pays us higher fee upfront. So it is a way of changing the customer behavior to seek higher value. And my belief is value-seeking behavior is not going away irrespective. So people feel that there is a value in doing higher down payment, they will pay. And some people feel that, "Hey, I cannot afford. I will only do 10% down payment, 15% down payment, 20% down payment," whatever is the number, and we have certain policies around that, including the EMI tenures because we don't give long EMI tenures. We have short EMI tenures. And then the person picked -- makes his pick. But obviously, the discounts and offers are closely correlated with the amount that you put up front. So I think we have an answer to this problem. And the answer is, create a menu and let people pick and choose. And we -- in either of the choice that you make, we are not going to be the losers. We are going to ensure that our objectives of growth and quality are met.
One more question is on the long-term shift in the model. You mentioned a points model. And if you look at how this industry has evolved globally, the hotel players like your Marriott et cetera, have split out holiday membership entities, which operate on a points model. Are you at all thinking of such a model in the long run, shifts towards that in the long run, which sort of make it easier for even members who are on the fringe about wanting to commit to a 25-year product, not knowing how long they'll be in India or other questions. Is there any move towards such a sort of business model in the long run at all? And how do you think that impacts economics?
Yes. So that is exactly the reason, and we are quite familiar with these business models around the world. We are in touch with these -- we have association bodies through which we get to meet them. Last few, of course, 1 or 2 years, we haven't met [ because of COVID ]. But the answer is very simple. In anticipation of this situation, we launched GoZest and Bliss, which are points-based product. Points-based products obviously have a huge advantage that people can buy more points, they can burn their points faster. But remember one thing, since we are at least in one point based product like Bliss, it is very critical for us to ensure that we get also an opportunity to upsell to you. So we do not wish that someone burns his points in the 1 year itself. So there is a concept of accrual of points, which happens on a year-on-year basis. So if you want to burn higher number of points, you need to buy points, if you want to burn higher number of points than what has been accrued to you in the year, which means that you are trying to ensure that the person completes their tenure and particularly in a product like Bliss, which is a points-based product, but also has an annual fee, you also collect your annual fee. And this is an important part of our consideration because our business is about lifetime value. Our business is about engaging at multiple points so that we are able to derive true value. As you know, in this business, the cost of acquisitions tend to be high. So it is always a good idea to see if the person can have as long a tenure as he or she can have, which helps us to maximize our lifetime value and apportion our cost of acquisition over the tenure of the membership. So fundamentally, the idea of points is there with us. The idea of ensuring that the person does not finish his tenure by burning the points in 1 year is protected by the way the product is designed, thereby enhancing the member lifetime value for us and as well as for the member because when member interacts more, engages more, they get benefits and privileges which they would not get if they were trying to burn their points all at one go. So the points idea is implemented. Points idea has 2 variations. Bliss is a 10-year product, which has ASF also. GoZest is a product which has no annual fee. So therefore, GoZest is an entry-level product. And the best part of all these products is that ultimately, you want them to graduate to a 25-year product because then they can enjoy longer and that is where the true value really resides in terms of price per room night.
Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to the management for their closing comments.
First of all, thank you very much for coming for this call. We always value the interest shown by all our current investors, potential investors, analysts and all interested people. It's always an honor to sort of share views. And most importantly, with your sharp questioning and insights, we get to know what your expectations are, and we will -- we remain committed to ensuring that we come up to your expectations, and we keep building the company from strength to strength. On that note, thank you very much. Bye-bye.
Thank you. Ladies and gentlemen, on behalf of Mahindra Holidays & Resorts India Ltd, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.