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Ladies and gentlemen, good day, and welcome to the Mahindra Holidays & Resorts Limited Q4 FY '23 Earnings Conference Call. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.I now hand the conference over to Mr. Kavinder Singh, MD and CEO from Mahindra Holidays & Resorts Limited. Thank you, and over to you, sir.
Good afternoon, everyone, and a very warm welcome to our Quarter 4 and Full Year Financial Year '23 Earnings Call. On the call with me today, we have Mr. Sujit Vaidya, our CFO. I'm sure you have had an opportunity to look at the quarterly and the annual results and the investor presentation, which is being referred to in our remarks today on the stock exchanges and our company website. I'm sure you have been following the travel and hospitality industry, you know that there is significant demand for domestic leisure travel, despite record airfares and soaring hotel tariffs. FY '23 turned out to be a very strong growth year for us, as the concerns around the COVID-19 pandemic began to wane, and people started to travel and were excited to travel with friends and families.Today, we are seeing more and more travelers visiting our resorts, staying in our specious accommodation and experiencing the unparalleled service that our resort teams deliver. This has resulted in a very high occupancy of 84% for the year with highest ever occupied room nights growing by 49% year-on-year. Strong occupancy, higher member spends, we have grown our full year resort income by 67% to INR323 crores, which is the highest ever, and Q4 resort income actually moved up by 40% Y-o-Y to about INR80 crores. Immersive family vacation experiences have helped us gain significant momentum in upgrades, which is an ultimate endorsement of member satisfaction. We have achieved highest-ever upgrades at INR188 crores, which is 71% up in FY '23 and INR55 crores, 41% up for Q4.Our member additions have been extremely strong, and we have added 5097, roughly 5,100 members, which is a 26% growth Y-o-Y this quarter, with sales value at about INR206 crores, which is 33% year-on-year growth. For the full year, member additions were at 17,477, which is 37% growth over the same period last year, with sales value at about INR734 crores, which is up 70% year-on-year. You would appreciate that this clearly shows the desirability of our product offerings. And with these additions to our member base, our cumulative member base stands now at approximately 282,000 member families, 85% of these are fully paid members. The member additions run rate has accelerated, and we hope to continue this acceleration as we focus also towards growing our inventory and creating magical moments and new experiences at our resorts.Our member additions have been propelled and supported by the inventory supply and so that the booking experience is world-class. You will also note that we have added approximately 1,200 rooms in the last 3 years, which is an acceleration in terms of number of rooms that we have added with the like of which has never been seen before. Our member to room ratio is robust at 57% for the year with the addition of 372 rooms during the year. And by the way, as a result of which, our total room inventory is now approximately 5,000 keys, the accurate number is 4940. Across 102 resorts, we were able to add 256 keys in quarter 4 FY '23.We have expanded our presence in domestic locations through our PPP project with the Himachal government in Janjehli, which is in Mandi district, and this is a project that we completed in record 7 to 8 months. Also, we have expanded our presence in Sikkim by having an opportunity for our members to holiday in Lachung, Jambughoda in Gujarat, which is near stature of Unity, Tirupati in Andhra Pradesh, Amba Ghat in Maharashtra area, and also some villa experiences for our members who may want to go and sample them in Goa and Panchgani.We have continued to expand our international footprint in countries such as Maldives, Cambodia, Vietnam, Abu Dhabi, Nepal and Chiang Mai. This year, we expect to continue the momentum in inventory acceleration with multiple greenfield and brownfield resorts, including few acquisitions. So, we have a clear visibility of about 750 keys in FY '24, more will be added, and then more on that will come later. Kandaghat, which is our resort in Himachal Pradesh near Shimla. It's a 72-key resort. It is being expanded by 185 keys to make it a 257-key flagship resort, construction has already commenced in February '22. Goa, Assonora the third phase of our construction has commenced in October '22, to expand this resort by 44 keys to make it a 244-key resort. Puducherry Resort, which is a 125-key resort will be made 187-key resort by adding 62 keys. Construction is expected to commence in the quarter 1 of FY '24.We have received all the permissions for now starting the Ganpatipule project in Village Undi, and the work has already started in April, 236 keys resort at an approximate investment of about INR250 crores is going to be going to be the investment in this beautiful resort that will come out on the side of the Arabian Sea coast. We have land in Theog. We are planning to commence the construction during this year of 141 keys resort. We have realized that we have a significant opportunity as the Government of India has declared tourism on mission mode. There are 50 tourism destinations that will come. There is huge connectivity in airports, roads that we are seeing around us. So, we have envisioned to do about 1,600 keys in about 3 to 4 years through our own investments with a CapEx outlay of roughly INR1,600 crores to INR1,700 crores. And this investments will be done from internal accruals, and we will not be seeking any borrowings for making this happen.Going forward, we continue to build on our strategic investments in new products, technology, people and member experiences, which will continue to propel our business forward. We have dedicated and passionate teams in India and abroad, delivering unparalleled vacation experiences every day to our members and their families, and we continue to positively impact the communities in which we live and work. I think, it would not be out of place, if I were to now talk about our credentials in the ESG area. All Mahindra Group companies have a commitment to Together We Rise initiative. We have 3 brand pillars rise for a more equal world, rise to be future ready and rise to create value.Our sustainability targets include carbon neutrality by 2040 through EP100, RE100 and science-based targets. EP100 stands for energy productivity improvement by 100%, and renewables energy 100%, running our resorts on 100% is the RE100. We are committed to achieve these goals that we have signed up for. I am delighted to announce that our resort, Madikeri, is India's first resort, which is net zero certified in all 3 categories, which is net zero on waste, energy and water. This is a significant achievement. 11 of our resorts are green resorts platinum-certified by IGPC, we have been declared a pioneer in hospitality sector in terms of the number of green resorts that we have.As far as solar power is concerned, we have installed a cumulative capacity of [ 5.97 ] megawatts across 22 resorts and this is meeting 20% of our total energy demand. By the end of this year, we expect this to take it to 11.7 megawatts and 40% of the total energy demand will be served through the solar in our resorts. Rain water harvesting structures have been installed in 20 resorts with 588 million liters or 60% of the total water consumption in our resorts is through the recycling that we do in-house.Moving on, let me talk about the stand-alone financials. As I mentioned earlier, FY '23 results have been exceptional. We moved down to full scale of operations, and we have ended the year on a very, very strong note. Highest-ever MHRIL stand-alone, excluding one-offs, total income grew by 24%. EBITDA grew by 18%. All these numbers are there, so I'll move very fast. PBT grew by about 17%, resort income up by 67% Y-o-Y, driven by higher occupied room nights and member strengths. If I were to look at Q4, income up by 20%, excluding one-offs; EBITDA up by 18%; PBT up by 18%; and resort income at INR80 crores, up 40% year-on-year basis.Moving on to Holiday Club Resorts. This is the European subsidiary. I think, we are very happy to report that the turnaround process of HCR has already started. Quarter 4 has been a great quarter. But before I get there, I think we need to quickly understand few developments that have happened in this quarter as far as Finnish economy as well as the Finland as the country is concerned. Finland is now a member of NATO. Their membership got approved in this quarter that went by.In the FY '23, the Finnish economy's growth forecast was revised downwards on account of ongoing Russia-Ukraine conflict and rising inflationary pressures. The good news is that consumer confidence is slowly coming back with inflation and energy prices coming off from their peak levels. You would appreciate and I probably have mentioned earlier that HCR business has huge momentum during the quarter 2, which is summer holidays; and Q4, which are the winter and skiing holidays. Q1 and Q3 are not the seasons in Finland. But having said that, we are taking some initiatives so that we are able to drive our members and Indian tourists to go to Finland during these off-peak seasons.Our total revenue in Finland has grown by 24% in quarter 4, 18% in FY '23 despite Russia-Ukraine war and high inflation. Very strong domestic demand seen during the summer holiday season, and skiing season in Q4. You would also like to know that despite Russia-Ukraine war, Britishers, Germans, Dutch they all came to Lapland and holidayed in our Finnish resorts, giving us great momentum in quarter 4 in terms of earnings. The quarter 4 revenue from timeshare has grown by 57%, driven by higher sales and better realizations. Quarter 4 Spa hotels revenue grew by 19%, largely driven by higher occupancies and improved ARR and, of course, increase in SMB revenue in our Finnish resorts.Profitability. Holiday Club in quarter 4 has delivered operating profit of EUR6.4 million and profit after tax of EUR4 million, indicating a significant turnaround in the business. Several cost optimization measures were introduced during the year. On a full year basis, Holiday Club Resort has delivered EUR5 million operating profit versus an operating loss of EUR0.3 million last year. Spa -- [ I must ] like to give you a quick outlook on the Finland business. Spa hotels occupancies in the past have outperformed the local hospitality market in Finland, and this trend is expected to continue.While real estate in Finland continues to be under pressure due to the higher interest rate scenario, Timeshare demand has picked up due to its relatively lower transaction price for the customer. Timeshare allows for partial ownership of its second home, which is a part of Finnish lifestyle, and that is something that is leading to an improvement in the Timeshare sales for our business. Given the robust business model, improvement in consumer sentiment and the buoyancy in the leisure travel, the outlook for Holiday Club Resorts, we believe is positive. And I just mention quickly consolidated financials, we had our highest-ever total income roughly at INR2,600 crores, up by 22% on a year-on-year basis. EBITDA of 42% year-on-year basis, up. And profit before tax at INR177 crores, which is 3x what we had the last year number when we declared.Income in quarter 4 moved up by 32%, EBITDA up by 93% and profit before tax at INR80 crores is up 16x. I would like to conclude so that we have enough time to hear your questions and answer to the best of our ability. In conclusion, the fourth quarter has been a very strong quarter for us. And this is aided by increase in our resorts, destination choices, offerings. Not only in India, but even in the Scandinavian region, travelers were consumed by wanderlust despite the geopolitical conflict and macroeconomic challenges present in that region.As I would like to further highlight and I mentioned earlier that we are quite confident of monetizing the full potential of our large member base of 2.8 lakh member families. Of course, we will continue to leverage our brands and our digital assets. And of course, a large member base also provides us to get a very high opportunity for referrals. And I must say that we are very confident using our digital assets, whether it is our mobile app, web page and various other initiatives and various initiatives that we have undertaken will lead us to higher top line growth, lower customer acquisition costs and increased member satisfaction as we make more and more newer experiences and offerings available to our members.We will continue to grow our resorts and destinations, which is now at 100-plus resorts with approximately 5,000 rooms. And we are very confident, member additions will also keep growing at a fairly brisk rate. We have created a very highly appealing product demonstrated through membership upgrades, which is an ultimate endorsement from our members. Our overarching strategy continues to include new -- add new resorts properties to our network, build marquee resorts, expand and evolve our membership product features to meet the expectations of the new-age leisure traveler, which will lead to growth in our cumulative member base and will also drive resort revenues, strategies that will help us to create long-term value for all our stakeholders. As we meet the ever-changing demands of the travelers, we have added, as you know, few offerings, Club M Select and Horizons program, which has strengthened our VO proposition, vacation ownership proposition further.If I look at FY '24, particularly this quarter, and I look at the forward-looking trends, quarter 4 looks to be a quarter in which we will definitely cross 85% occupancy despite the number of rooms that we have added. So, this demonstrates the significant opportunities that we have to drive revenue growth in the coming quarters as more and more members with higher purchasing power holiday at our growing room inventory. Our strategy of targeting higher down payment, lower EMI members is playing out as these members tend to spend higher on an average in our resorts.Sales contributions from referrals, digital, on-site sales is expected to continue to grow. As you already know, that this referral and digital have contributed to 57% of our sales. We have opened new channels, which we are focusing on, whether it's a DSA channel, B2B2B channel and a dedicated team to cater to corporate employees extending targeted differential product offerings. Having crossed the milestone of 5,000 members, we are confident of continuing this run rate and growing this run rate in the coming quarters.Our focus remains towards a multi-product portfolio with the majority of mix coming from long-tenure and medium-tenure products. As you can see, our AUR has shown a healthy trend of INR4.2 lakhs for the full year. And finally, we are working new ways to use the digital transformation efforts that we are using already to unlock the power of data through advanced analytics to improve efficiencies, drive growth in member spend, collections, referrals and upgrades and sales conversions. The opportunities that lie ahead for us are exciting and our optimism about the long-term future has never been greater.Thank you for the time -- your time this evening. We now open the floor for questions and answers.
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions]. The first question is from the line of Ankit Kanodia from Smart Sync Services.
Congratulations for a very good set of numbers. Sir. For Kavinder sir, my first question would be, sir, it is because the general consensus that room rent in India in the hotel industry is expected to go up over the say, 2, 3 years, 5 years. So is it fair to assume that when the room rent in hotels all over the country goes up, members or prospective members will find more value in our kind of offering? And how do we want to capitalize on that thing? Because our -- we don't charge any room rent, so can we expect during that period, the ASF income go up [ rising in ] -- price it higher. That's my fast question, sir.
I think, we do a track. Thank you for this question. We do keep a track on the average room rates. It provides us opportunities to talk about our value proposition to our prospects. It also provides us opportunities to do some price corrections that we do in our package price. It is quite natural for people to think of how to prevent themselves from the constantly increasing room rates. And this is something that today people are feeling the pinch, and we are noticing that our Club Mahindra members are now holding more with Club Mahindra, because they realize there is a huge value. And I think our challenge always is to communicate this value. If we are able to communicate this value to our prospect who has to just be the right prospect to be able to pay us in advance in the sense of paying the membership fee and becoming a member. If we just do that part right, the proposition is extremely strong, as you can see from the journey in the last few quarters and few years.I think we are also aided by the macro tailwinds, whether it is the desire to travel, whether it is desire to spend quality time with family, whether it is getting a consistent brand experience, which is so rare today, particularly in leisure destinations. So there are those factors also apart from the inflation because at the end of the day, this product is also about emotion, apart from the rational reason. So our entire training to over sales staff is not to sell this only on a rational basis, but also bring out the emotion that if you do not holiday with your family, you are losing chance to enjoy some magical moments, which will be gone forever because the time anyway doesn't stay still.
That really helps. And my second question would be, before asking the question, thank you for sharing the membership sales detail and upgrades detail that really helped us. So, I just used that INR734 crore membership sales and then deducted the upgrades amount of INR188 crores, that comes to about INR550 crore or INR546 crores of sales. And it comes down to about 3,12,000 AUR, if I don't include the upgrades. So how do you look at this figure, sir? I think, 1 lakh of upgrade is a good thing. More members are upgrading to a higher, but are you happy with the 3 lakh figure of -- or what is your view on that? That could be [ realized? ]
So I think, the question about average unit realization should we be happy with 4, 3, whatever way you presented the figures, I'm not even getting there. Obviously, as management, our aim is to realize higher value. But what we have realized now is that we can sell a very high-value product and sell very low volumes. And if we are able to blend the high-value and the mid-value kind of products, and get a foot in the door in of the customer and look at the opportunities that -- you may have seen this in our investor presentation also that how the business model works, if people get in, then there is an opportunity to upgrade them. There is an opportunity to get them to holiday in our resorts and spend at our resorts, thereby creating a resort margin for us. So for us, if you look at lifetime value, if you look at the annual fee that they will pay over the tenure, those things also matter a lot over the current average unit realization that you may be getting.So, it is about getting people to be interested in your business. Some people will come at a lower tenure. Some people will come at a medium tenure. And therefore, your AUR may appear to be low, but your ability to upgrade, your ability to earn revenue through the resort offerings is something that actually flows into the P&L over a period of time. So it's quite good to push for the AUR, but not at the expense of attracting the right customer set, which will help you to grow your business over a longer period of time in terms of generating multiyears of value.
Fantastic, sir. Sir, if I just squeeze 1 follow-up on this. So is it fair to say that if we follow this strategy for long enough, say maybe 2, 3 years, 4 years down the line, do we see because more members coming in maybe of 3 year tenure or 10 tenure or 25 years tenure, whatever be the tenure, we will have our resort income and our ASF income going up. And that will probably right now when we see vacation ownership income forming the bulk of the revenue, that may go down and our margin should also go up because of that. Is it fair to make that kind of an assumption?
Yes. See, vacation ownership income now is only 33% of the total income. If you really look at it, I mean, few years ago, it used to be more than 50%. So you can already see the resort income, the annual fee income, which is the income that we get after the member comes in is already above 50% of the total income. So you will appreciate that the initial fee already is not the dominant part of our income stream. It is to get the member in, and encourage them to spend at the resorts where you make the margin on the food and the activities, and the annual fee, of course, to cover the maintenance, et cetera, and the upkeep of the resorts.So I think the business model is structured in a way that we need to use the membership fee to build the resorts. We need to use the members to spend more and more at the resorts through the resort income. That is why I over-highlighted the resort income part, that the resort income growing is a very, very good sign because then people use, they also pay their annual fee and then we have opportunity to upgrade, which is upsell or cross-sell apart from getting referrals from them.
Right. And sir, you didn't -- any more on that. Sure, no problem.
Mr. Kanodia, may we request that you return.
Sure.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, we request you to limit your questions to two for participant-only. We'll move on to the next question, that is from the line of Senthil Manikandan from ithoughtpms.
Congrats for the good set of numbers. Just I have a couple of questions. First one is on the inventory addition. So in the earlier calls, you mentioned that you'll be targeting like 5,500-keys rooms, right for FY '25. By looking at the current guidance, I think it's around 700-odd keys addition this year, we could easily cross that mark by FY'24. So could you please highlight on the change in CapEx plans for this year and also for next 2 years?
Okay. I think I mentioned, and I'll once again mention that yes, definitely 5,500 that we set out is well within our reach. And in fact, we will cross that sooner than planned. Our aim is, we are very clear that, as I mentioned, that there are 50 tourist destinations. There are a lot of PPP opportunities, and there we see a huge momentum in this business. Therefore, we have upped the game by saying that we must build a 1,600, 1,700 odd keys at an investment of roughly INR1,700 crores, INR1,800 crores and we can fund this ourselves with our borrowings, need for borrowings because of the business model and we have cash on our books.So we are accelerating in terms of number of keys that we will build. Even if you were to see it today, and I think I mentioned in the opening remarks, that we have a clear INR700 crores, INR800 crores CapEx, which is already on the road. We have 2 very big projects, which are adding up to roughly INR500 crores, which is in Kandaghat as well as in Maharashtra, Ganpatipule area. And then we have a few expansion programs, which are going on in our existing resorts. As we speak, we are also -- we have land banks, and we are planning for our next wave of greenfield projects that we want to sort of set up.Parallelly, there are opportunities in terms of acquisitions, in terms of properties, which might meet our requirements. So on an overall basis, just by our own investments and building our resorts, I have talked about 1,500 or 1,600 odd keys over the next 3 to 4 years. And of course, there is an option to see a good quality resort lease it and manage it ourselves, which is something that we do. So there is a huge opportunity to grow the room count higher than what we have not only projected. We will definitely beat that ahead of time. And we are obviously going to sort of grow at a level where the rooms growth and destinations growth will, in a manner, run a little ahead of the member additions because we are also parallelly ramping up member additions.
Okay, sir. Second one is on the Holiday Club Resorts. So we are seeing a good turnaround in Q4, and so how would you term this as a sustainable turnaround? And what can we expect over the next 2 to 3 years on the margin front?
So you know that in the Holiday Club Resorts, you would appreciate because of 2 years in pandemic and 1 year of Russia-Ukraine war, we have struggled a bit particularly in terms of generating sufficient profits, even though at an EBITDA level, it broke even despite the pandemic last year. This year, despite the Russia-Ukraine war, you can see the Holiday Club Resorts has delivered EUR5 million EBITDA at a full year level, at a quarter 4 level 6.4%.Now what does it do going forward? As I mentioned, quarter 1 and quarter 3 tend to be slightly soft due to the seasonal aspects. So we are trying to see how we can boost the occupancies there through the way in which we can drive some international traffic, including India in those quarters. But Q2 and Q4 are going to be good, and there are a lot of Timeshare construction opportunities that had been made available in the last 1 or 2 years. Management has really worked hard to identify some new Timeshare. We make money in Timeshare sales largely, and Spa Hotels are basically to attract the customers, so that you can sell Timeshare, that's the fundamental business model there.And the good part is that the -- because of the cost structuring, restructuring that was done during the pandemic and to some extent last year, we are in a position to see definitely at a full year level, much better performance than what we have delivered in this year. And therefore, we believe that there is a compounding story here as well, moving on from now for at least 2 to 3 years, we will keep growing. And meanwhile, we will keep performing our strategies to how to grow this business even further.
The next question is from the line of Swechha from ANS Wealth.
Sir, I actually wanted some data around our members. So the member addition that we have had in Q4, would you be able to share us how many members were added for the CMH product, the Bliss and the GoZest. And also, the overall member base that we have, if you could give me what percentage of it is typically 25 years Bliss and GoZest? And is there any group of members whose 25-year membership is coming to an end, say over 4 or 5 years down the line?
All right. Just wanted to give you a higher-level meta-level data. We have about 282,000 members, 85% of them are fully paid. And the profile of the members is, as you know, quite good in terms of their ability to come and holiday in our resorts. It really doesn't matter where the person enters, whether GoZest or whether it is a CMH or a Bliss, because we always have an opportunity to upgrade. And that is why I would draw your attention to the upgrades, where our upgrades moved by 71% up on value terms. The business is about getting people in at various tenures, depending on their life stage that they are in, everybody is not a target audience for a 25-year product.Equally, everybody is not a target audience for a 3-year product, so the objective is to get people in, depending on their life stage, their needs, and then create a great experience for them and upsell, which is what the business model is all about. That is why we do not generally talk about the product mix because if I have a lower tenure product, I have an opportunity to convert. If I have a lower season product person, I have an opportunity to convert. So that is how these businesses are structured.I think, key things for you to also know is that the CMH-25 is absolutely the dominant form of membership from historical reasons. And in terms of value, continues to remain dominant even in our current mix. So broadly, this is what we are in a position to sort of highlight, explain to the question that you asked.
Okay. So sir, just a follow-up. So I just want to understand what is the type of membership or what is the [ clear ] parameter in terms of membership that we should look at for our company's continuous growth and success for a model to be hit, what kind of members do we need? Do we need 25 years, 10 years of GoZest or like you said, it really does not matter. Like what is the key metrics that matters the most to us for our success?
Okay. My understanding of your question is that, what is the ideal that we are looking at? Is that what you said?
Yes. So I want to understand [indiscernible]
Really want as an ideal mix. Is that what you suggested?
That really matters to us in terms of when we add members like?
Okay. Okay. I think it's a very good question anyway. What really matters to us is the ability to continue to enjoy your holidays, meaning once you have paid the membership fee, come to the resort, spend money at the resort, enjoy the experiences, right? Upgrade yourself, refer new members. So our target audience is people who would want to spend quality family time with their families, extended families and friends, who would be once happy bring in more members who would spend the money on both food and beverage and activities and experiences. So that is an ideal profile for us. And a large percentage of our members actually fall in this category, because if they join as a blue season member, I have an opportunity to convert them into white, and eventually red, and eventually pure because as they move on in their life stage, this is what happens.We have a 15-year product also, and we see a very similar trend. Our idea would be get people to experience. And once they experience, they tend to upgrade, they tend to refer. And of course, they pay their dues in time, which is what helps the company to grow and which is what the real secret sauce of this business is.
Right. Right, right. Okay. And sir, my second question is regarding the [ FCRO ] just want to understand even the profitability that has been shown in this quarter. Can we safely assume that it has completely turned around? Or this was like a one-off kind of a thing that we saw in this quarter?
So the reason we have used the word turnaround in our call as well as everywhere is that -- imagine, there is a -- not, I mean, it's very difficult to some extent, imagine also. There is a war going on in Russia and Ukraine. Here, our resorts are running full and Finland shares a very, very long border with Russia. And Finland becoming a member of NATO, the new found confidence in the Finnish customer and the Finnish banks and the Finnish businesses is of a very, very different level. People are traveling to Finland. As I mentioned, Britishers, Germans, Dutch and many other nationalities are coming and enjoying the resorts in Finland and more so in the winter skiing season, because it's a skiing destination. These are not one-offs.This, if you look at it, the same conditions existed last year. But last year, the war was started in February, and that had led to dampened the sentiment of people coming to Finland, and they were a little bit worried. And most importantly, we have seen the people in Finland have not stopped traveling. They have a desire to own a second home, that's a very Finnish lifestyle. And they find that it is difficult to buy a second home, and therefore, they end up buying Timeshare, which is a low transaction value product. So again, there is a positive momentum for Timeshare that we are noticing there. So for us, there is another thing that happened parallely.By the way, during the pandemic, they were very conscious on their costs. They kept on managing their costs extremely well. As a result of which, the cost-conscious culture has also seeped in. And therefore, what you're seeing is a result of actually many quarters of planning and work, and the occupancy, obviously was critical, and that happened. And that is how you see the results. Going forward, 2 things are likely to happen. The consumer sentiment will improve because of the reasons I mentioned, the Timeshare transaction prices are low. Number one.Number two, the inflation has come off their peaks. The energy prices have come off their peaks. And a matter of time that Finland will actually even technically move out of recession. Now therefore, we believe not only their travel within Finland will grow, which is anyway very good. The International travel is bound to move even faster. On the knowledge that I have that even as we speak, FY '24, in the winter skiing season, the bookings are already beginning to look full, which means people plan so much in advance that if you want to enjoy the winter skiing season, they have to book now. So this is something that we are getting reports that the bookings are looking very robust for even the FY '24 season. So it is not a flash in the pan. It is a complete turnaround both on the cost side as well as on the revenue side. And therefore, you will see the performance in FY '24 superior to FY '23, significantly.
Okay. Okay. Okay. That really helps a lot, and congratulations for an amazing set of numbers, sir.
The next question is from the line of Nemish Shah from Emkay Investment Managers Limited.
Congratulations on a good set of numbers. So I have a few questions. So firstly, on the update that we have seen in the financial year. Can you just help us give some sense in terms of mix, like how much was it driven by change in seasons? And how much was it, say, upgrades from a 3-year to a 25-year product? FromA 10-year to 25-year product?
Yes, it's a very good question. But at this moment of time, I neither do have an answer nor do we plan to sort of share this level of detail. It's a very operational detail. As far as we are concerned, we are constantly chasing opportunity for season upgrade, apartment upgrade, tenure upgrade, it is a mix. And for us, it's all about creating our product proposition stronger, and getting people to think of upgrade. So even internally, we do not focus too much on the breakup here.
Right. Okay. And so, this new 15-year product, was it launched in the last quarter? Or are you planning to launch it in the next year?
I think 15-year product came in sometime around the second half. And it's a product which is seeing good momentum. And we are -- and it's a product like -- it's a long tenure product without a doubt. It's 15 years, it's not a small tenure. And we used to sell a bit of 10-year product. So we are noticing that the 10-year product is almost being replaced by 15 and 15 is growing. So the good part is that is what also helped us to move our average unit realization that you see because, obviously, the 15-year product is priced higher than the 10-year product. So we noticed there is an opportunity here, and that is how we created this product, and we are noticing that there is a momentum.So that's why I'm saying that we are noticing that there are, if we follow a multiproduct portfolio strategy, get in the right people who have done higher down payments, who have the capacity to pay and capacity to spend. They not only boost our resort revenues, they help us in doing upgrades, and they actually make the business model work the way it is intended to be.
Right. Understood. And lastly, for this member to room ratio now from 71% in FY '14 and it's down to like 57 now. So if you could give some sense directionally, where would you like this to head? Will it move upwards now or would it be stable at these levels?
Yes. See inventory comes in fits and starts. It doesn't come in linearly as the way members come. So it's very difficult for me to say whether we will move towards 52 or 60. It will truly depend on the rate at which the inventory comes and the rate at which the member additions happen. But what I want to make a point is that 57% is actually a great number because we are not seeing any issues with respect to being able to meet our services, to offer our services with regards to bookings. Just to let you know, that even with 5,000-odd rooms, we have only 84%, 85% occupancy. There is room -- there are rooms available in various resorts at various points of time. So there is significant improvement in availability. It is leading us to get us very, very good.[Technical Difficulty]
Hello? Hello?
I can't hear.
Sir, give me a minute. Yes, sir. Mr. Bharat Sheth, please proceed with your question.
Congratulations, Kavinder on good set of numbers. Hello? Am I audible?
Thank you, Bharat bhai. Thank you. I am hearing you.
Sir, now looking back, I mean, a little weird question, as I appreciate that our main proposal is for proposition to new customer addition is traveling with the family. But at the current moment, like say, millennial, which is going to be a family member after 5 years, 6 years. So to attract those kind of a member, what are our schemes? Or what is our strategy?
Okay. Very good question, Bharat bhai, expected obviously from you. You may know that we have a product called GoZest, it is a 3-year product. It is actually fitted at the millennial. And if you look at our activities in our resorts also, there are a lot of adventure activities that we have. There are various positions that are there at the resort for younger people to come and go on treks, trails, to outbound adventure, soft adventure, of course, and enjoy a lifestyle, which they probably have not seen while they have been growing up or maybe they have seen. The objective is to introduce them to this world, and the idea is that using the Horizon program, they can even go International, and also through the Club M Select program, they can even go and access 1 million hotels, 70,000-plus experiences around the world at a very significantly discounted rates, not to forget there are cruises also that they can go for and see around the world. There are 12,000-plus cruises, which are listed on the Club M Select.So the idea is to create them, introduce them to the idea of Club, where they feel that they are a member of a top community where they can experience these things. And then my confidence level is that they will not find it easy to leave us after 3 years, because they will miss a lot of what they have got. So the trick is to get them in, give them great experience and then upgrade into either a 15-year product or a 25-year product, and that is what we are trying to do Bharat bhai.
Fair. But my second question, I mean, like see, at the moment, they don't travel with the family many times, they would prefer to go among the group, their own group, where all the people are not -- may not be a member or? So how do they can really align with their group so to come and really have that experience? My question is pertaining to that. So if 1 member goes, but other member group member may not be able to go since they are not members. So any strategy or thinking on that line?
Yes, yes. I think it's a very, very good question, as I mean, again, I would say that. There are people who bring guests on guest fee and we are able to upgrade -- actually sell new memberships at the resort to the members guests. In fact, a lot of our sales that happens in the resorts happens through members guests. Of course, it is something that is actually a creation of a great funnel.And the second thing is when the group is trying to travel together and they find this problem, this is another way where we tap them for the referrals. And this is the time they refer their friends and saying that, listen, we want to travel together, can we buy 1 more membership or 2 more membership. So for us, it works, so far. Obviously, is there a way to sell group memberships, maybe there is an idea where we can sell it to a group of 6 or 7 people who may want to travel together, sell them 7 memberships, but they are all tagged as a group, et cetera, so we can give them some benefits. All those ideas are definitely on the table Bharat bhai.But today, we allow the member to bring in guests, of course, subject to availability and that guest can definitely look at our sales deck and buy a membership, which is how we today get members' guests to look at our membership.
Fair, sir. And last question on [indiscernible]
Sorry to interrupt Mr. Sheth. Thank you.
Okay. Fair enough, fair enough.
The next question is from the line of Darshit from RoboCapital. Please proceed.
Yes, hello. Am I audible?
Yes, sir. Please proceed.
Yes, hi. So firstly, I just wanted to ask that you mentioned that you're going to do a CapEx of, say INR1,600 crores, INR1,700 crores. I just needed a time frame over which it will be executed the entire amount?
So the time frame that we have mentioned in our call and again I mention is between 3 to 4 years.
Okay. All right. And apart from that, like what are the plans on, say margins and revenue growth going in the next 2, 3 years? I mean how do you see the member additions going forward currently?
Member additions. The idea is to accelerate member additions if you are accelerating inventory, then member additions must accelerate.
All right.
Without which our business model doesn't work. So we are obviously making plans to accelerate member additions, as I mentioned in my opening remarks, whether it is through the referral route, whether it is through the digital route, whether it is through the on-site sales route, whether it is the corporate sales route, whether it is through the DSA route, and also going to the smaller towns. The objective is to drive member sales, and that is something that we are driving multiple initiatives and some of the results that you are already beginning to see.And to my mind, that is very, very critical that while we drive the inventory additions, we also drive the member sales hand-in-hand or step -- moving together or marching together. That is what is our strategy right now.
Okay. Okay. And also on the margin front, it is supposed to remain the same, like the same?
On the margin front, I want to make a point that when you accelerate growth, particularly in our business where the revenue gets deferred, the costs are taken upfront, right? So if you accelerate member additions and accelerate inventory, there could be in the short-term, margin may not grow. Okay? May not grow the way it has probably grown between pre-pandemic and now. But it is very, very clear that in our business, we have an unbooked profit sitting in the books. As you know that we have added INR244 crores to the deferred revenue. Of course, there is a deferred cost also which goes, but the relatively deferred revenue to deferred cost, if you minus the gap is around INR4,500 crores. So there is that level of money sitting there, which will keep accruing.So for us, we are confident that if we get the member and if we get the inventory, the profits in the short term, margins may not grow, but they are bound to grow with the accrual income with very little cost as we move forward.
The next question is from the line of [ Raj ] from Arjav Partners.
Am I audible?
Yes, you are.
So I wanted to know how much for FY '24 are your expansion plans like [Technical Difficulty]
Okay. In the FY '24, clearly, there are at least 6 projects, which are on. We have 1 project which is in Kandaghat, which is already on INR200-odd crores investment. We have another project, which is Ganpatipule where INR250 crores investment has started in April this year as we speak right now, we are in April. So these are the 2, the other one which will start in Pondicherry, our own resort, we are expanding another INR60 crores. INR50 crores odd is anyway going in, in Goa, Assonora, which is where we are putting another 44-odd rooms. And we have plans to start a new project this year of about 140 rooms in a place called Theog, which is also in Himachal.And there are a few acquisitions which are being lined up, and there are a few other land banks where we would try to start some more new resorts. The idea is to keep adding to about 700-750 keys visibility that we have. This excludes any acquisitions that may happen or any leases where we own -- where we manage the resort through the complete takeover of the resort.
All right. Sir, expansion plans are around, I can expect INR500 crores for FY '24. Am I right? Around INR500 crores, sir?
So we do not give CapEx guidance. With constant aim to -- fortunately, we are not strapped for cash. If we -- if there is a project going on, cash is not the reason for the project to be delayed. There could be some approvals that may come a little late. There could be some other extraneous factors. But we do not see cash as a constraint. And therefore, CapEx will happen if we are planning to make it happen.
Understood. And for FY '24 end, can we expect the room inventory to go at 5,680 rooms to come on stream by [ FY '27]?
We are not giving this level of guidance. We are constantly mentioning that inventory happens in fits and starts because it is not a quarterly phenomena. It is not a daily phenomenon. Construction activities are going on, retrofitting activities that are going on in an existing lease resort where the inventory comes through, acquisition activities are going on. So we really don't commit at a year-level inventory. That's why I gave you a forecast which is a medium-term forecast where I said 3 to 4 years, we should look at early 1,600 to 1,700 rooms addition is something that we have mentioned already.
All right. Understood, sir.
Ladies and gentlemen, due to time constraints, that was our last question. I now hand the conference over to Mr. Kavinder Singh for his closing comments.
Thank you so much for attending our call. As I mentioned always that we learn a lot from your questions. We think a lot about the questions that you asked. We have been improving and increasing our disclosures as you may have noted. And I just want to say that, once again, I want to repeat that we have never been more confident of the future than now, because we see tailwinds both in the India operations as well as in the European operations that I talked about.On that note, me and my colleague, Sujit, who is also on the call, would like to say thank you, and would remain available for any questions or queries that you may have through the usual channels. Thank you.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Mahindra Holidays & Resorts Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.