Mahindra Holidays & Resorts India Limited Investor Presentation 26th June, 2019 1
Disclaimer Disclaimer Disclaimer Disclaimer This presentation may contain ‘forward looking statements’ within the meaning of applicable laws and regulations. Investors are cautioned that ‘forward looking statements’ are based on certain assumptions, which Mahindra Holidays & Resorts India Limited considers reasonable at this time and our views as of this date and are accordingly subject to change. Actual results might differ substantially or materially from those expressed or implied. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Future results, performance and achievements may be affected by general economic conditions, regulatory environment, business conditions, changes in statutes and operating risks associated with the vacation ownership / hospitality industry and other circumstances and uncertainties. No representation / assurance is given by the Company as to achievement or completeness of any idea and / or assumptions. This presentation has been prepared exclusively for the benefit and internal use of the recipient and does not carry any right of reproduction or disclosure. This presentation does not constitute an offer for sale or an invitation to subscribe for, or purchase equity shares or other assets / securities of the Company and the information contained herein shall not form basis of any contract. 2
Agenda Agenda Agenda Agenda Environment Scan Customer Value Proposition Business Model Product at a glance Levers of growth Key Strategic Priorities Predictability of Revenues Key Takeaways 3
Domestic Economic Scenario Domestic Economic Scenario Domestic Economic Scenario Domestic Economic Scenario GDP Growth Corporate Performance Discretionary Spending • India's GDP growth has • Corporate results in Q4 FY19 • Slow down across sectors slipped to 5.8 % in Q4 FY19 showed a pattern of slowdown in FY’19, especially those and falling margins • It had grown 7.1% in the Q2 characterized by and 8.2% in the Q1 (7.6% for • Monetary Policy Committee of discretionary spends and the H1) the RBI pointed to contractions indicative of consumer sentiment. in vehicles sales, lower capital • The slowdown is due to weak goods production, deceleration • Personal Loan growth domestic and export demand in industrial activity, lower air slowing down from high of • There is a steady drop in passenger traffic, etc to suggest 20% + a year ago. inflation to 2% in Feb-19 “moderation in economic compared to 4.6% in Apr-18 activity” 4
India Domestic Travel India Domestic Travel India Domestic Travel India Domestic Travel Trends (FY18) High Growth : Domestic travel Leisure Wins : Leisure travel and tourism industry growth dominates the overall segment, estimated at 7% p.a. till 2028 accounting for 95% of the overall ($247 bn at present) spends Explore New Territories : New, Focus On Experiences : less established locations have Expenditure on experiences seen the maximum growth in (currently $9 bn) is estimated to number of tourist visits (84% for grow at a CAGR of 13% from 2018- Sikkim, compared to 8% overall), 21 (Local exploration & recreation) representing the desire to explore Source Hotelivate Reports 2018, 2019 5 Bain Google report “How does India travel”
Hospitality Industry Hospitality Industry Hospitality Industry Hospitality Industry • The number of hotel rooms are estimated to grow at a CAGR of ~4% over the next 5 years • Only 5% of Indian rooms are from branded chains as of FY18, compared to 71% in USA, representing the massive opportunity present in the market • Occupancy rate for FY 18 was 66.6%, inching towards the boom years of 2005 – 2006 (from 71.6%) • 50% of proposed branded supply (FY18-23) is coming in Tier 2 and Tier 3 cities Source Hotelivate Reports 2018, 2019 Bain Google report “How does India travel” 6
G Gl G G l lo l o ob o b b ba a a al l l l V V V Va a a ac c c ca at a a t t ti i i io o o on n n n O O Ow O w w wn ne n n e er e r r rs sh s s h hi h i i ip p p p I I I In nd n n d du d u u us s st s t t tr ry r r y y y Size of the industry – USD 9.6Bn; Total Timeshare resorts – 1570 with 205,100 units; 9.2Mn Household who • own Timeshare product • Average occupancy – 81% - 40% of occupants were owners or owners’ guests; 17% were exchange guests; 17% were renters; 7% were marketing guests. • In 2017, only 41% of timeshare sales came from new owners Member Base Number of Resorts Market Cap ($Bn) Wyndham Destination 887,000 220 3.72 Marriott Vacation Worldwide 650,000 160 4.03 Hilton Grand Vacations 288,000 62 2.31 From 2017 annual report 7 Market Cap as on 3 rd June, 2019
Emerging needs of Leisure Travel Emerging needs of Leisure Travel Emerging needs of Leisure Travel Emerging needs of Leisure Travel Wellness Enrichment Mental Wellness Experiencing the varied Work Life Balance Insta- worthiness social consciousness, giving back, making a difference Local produce/ organic food Building connections & Individual Identity : an Aspiration Social Validation of Travel strengthening quality of relationships 8 Source: Internal Research
Product & Member Profile Product & Member Profile Product & Member Profile Product & Member Profile Our Target Member Profile Seasons Peak Super Peak 32+ years Married Medium Off Peak Age of Customer Apartment Types Appreciates quality family time 1 Bedroom Studio (2 adults, 2 children) (2 adults, 1 child) Takes regular Vacation With 1-2 (Age 3- Seeking Variety 2 Bedroom 15 yrs) Children Plans in advance (4 adults, 2 children) 10
Flexibility Flexibility Flexibility Flexibility Flexibility to choose Season of Holiday, To choose Apartment type and option of splitting HOLIDAY the week Flexibility to travel with your Extended To travel with Flexibility EXTENDED FAMILY Family and Friends To travel across Flexibility to plan your holiday across 61 BEAUTIFUL RESORTS 61 Beautiful Resorts & Beyond & BEYOND Flexibility to accumulate weeks upto 3 To accumulate WEEKS up to 3 YEARS years of entitlement 11
Value Proposition Value Proposition Value Proposition Value Proposition Price* Benefits for Members Huge value in 25 years Leisure = Living of membership Program Vacation = Life 598,600 507,000 Access to increasing Resort 367,800 count at no incremental cost Unique & Immersive 199,200 experiences and 135,000 spacious family accommodation Prepaid 2000 2005 2010 2015 2019 membership fee allows access for 3.4x times increase in the last 2 decades 25 years, 7N/8 D ₋ each year ₋ Members perceive “huge value” as the Members Enjoy membership tenure goes on (more resorts, Discount & more experiences at prepaid price), over 25 Offers on F&B years tenure 12 *List Price for Red studio 25 year tenure
Destination Network Destination Network Destination Network Destination Network Inventory Exchange Program (IEX) 61 Resorts in 33 Resorts in 103 Partner Hotels 4300 Resorts in Europe India & South across Asia, 110 countries East Asia Europe & US 13
MHRIL Resort Network MHRIL Resort Network MHRIL Resort Network MHRIL Resort Network India – 56 destinations UAE & Asia – 5 destinations Presence at the following International Destinations Bangkok Dubai Kuala Lumpur Singapore Srilanka 14
Resort for all generations Resort for all generations - Resort for all generations Resort for all generations - - Kids - Kids Kids Kids 15
Resort for all generations Resort for all generations Resort for all generations Resort for all generations – – – – Parents/ Couples Parents/ Couples Parents/ Couples Parents/ Couples 16
Resort for all generations Resort for all generations Resort for all generations Resort for all generations – – – – Parents/ Grandparents Parents/ Grandparents Parents/ Grandparents Parents/ Grandparents 17
Resilient Business Model Resilient Business Model Resilient Business Model Resilient Business Model Income Annual Subscription Fee Resort - Members Admission Fee from Interest Resort - FIT Financing Recurring Revenue Streams : ASF*, Resort Income Value Creation Upfront Admission Fee Value Realized Residual Value*: Opportunity for Built-in Multiple Annuity Streams Upfront 2 nd cycle – ZERO Admission Fee Residual Value Marginal cost of Inventory 25 26 0 Timeline (years) *Inflation not considered 19
Revenue Mix Revenue Mix Revenue Mix Revenue Mix IND AS 18 IND AS 115 1% 2% 2% 3% 4% 5% 7% 8% 8% 9% 9% 12% 18% 19% 19% 20% 21% Under IND AS 115 27% 18% 16% Cumulative 17% 19% 19% member base contributes to 23% 67% of total income. 56% 55% 53% 50% 48% 33% FY'15 FY'16 FY'17 FY'18 FY'19 FY'19 VO Income ASF Income Resort Income Interest Non Operating Income 20
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