Over the last 24 years Mahindra Holidays has offered best- in-classfully serviced holiday resorts that are backed by the highest standards of serviceexcellence and thus created memorable holiday experiences for its members.
It gives me immense pleasure to share with you that your Companyachieved two important milestones during the year. First the vacation ownership memberbase of your Company has crossed the 250000 landmark. And second along with itsmaterial subsidiary Holiday Club Resorts Oy (HCR) your Company now offers holidays at100+ resorts in India and abroad.
Your Company's financial performance during the year was alsocreditable with significant improvement in operating margins and a higher profit beforetax (PBT). All this despite the adverse impact of floods in the second quarter andCOVID-19 crisis in March 2020 adding to the woes of a slowing Indian economy withGDP growing at 4.2% in 2019-20 versus 6.1% in the previous year.
I would like to compliment the management for the performance in thefinancial year 2019-20.
Let me now move on to the challenges posed by the COVID-19 pandemic andwhat these mean for your Company.
On 11 March 2020 the World Health Organization declared the COVID-19outbreak as a pandemic. The tourism and hospitality industry have been among the worstaffected by the crisis. Operations of the resorts of HCR Finland were suspended aroundmid-March; and resort operations of Mahindra Holidays in India were suspended after thenational lockdown was imposed by the Government of India on 25 March 2020.
As far as HCR is concerned most of the resorts have resumed operationsfrom the first week of June and are seeing good occupancies as the summer season begins inFinland. I expect this demand to continue driven by both domestic travel and furtheropening up of travel within Europe.
The recent announcement by the Indian government to open the domesticcommercial air traffic bodes well for the hospitality business. With the gradual easing ofrestrictions in inter-city / state travel your Company has started opening up its resortsin line with the directives of the State Government authorities starting mid-June 2020.Your Company has also started opening sales offices across India in line with thedirectives of the local authorities.
As India emerges steadily from the lockdown your Company is puttingits best efforts to ensure safety and well-being of its members while offering the samewarmth and the signature "Club Mahindra" experiences that they have cherishedover the last two decades at its resorts.
To achieve this your Company has launched a "Safe Stay"program at its resorts. It has implemented best-in-class standard operating procedures(SOPs) and has rigorously trained its employees on implementing these guidelines.Moreover your Company has also appointed Bureau Veritas a global leader in testingand inspection to certify the hygiene and sanitation protocols. In addition itskitchens follow the FSSAI (Food Safety and Standards Authority of India) guidelines.
In the near term I believe that domestic travel will be the key growthdriver as members opt for holidays within drivable distances something your Companyis well positioned to serve with 60 resorts across the country. Large apartment sizes andthe concept of villas in many of the resorts ensures better safety this should increasethe attractiveness of its membership for prospective customers. Your Company has also beenquick to move to the "new normal" by going digital both for customeracquisition and member servicing.
As I mentioned earlier your Company performed well in the financialyear 2019-20 despite headwinds. This was due to a resilient business model andpredictability of revenues in the form of various annuities: a deferred revenue of overRs. 5500 crores which is recognised over the tenure of the membership and a 250000+member base which contributes to revenues through holiday spends as well as the annualsubscription. In addition your Company has a strong balance sheet with zero debt and ahealthy cash position.
All this will continue to help your Company to tide over the currentcrisis and take advantage of the strategic opportunities that may come its way.
In every crisis there are those who suffer lasting setbacks and thosewho come out as winners. With its robust business model excellent propertiesbest-in-class facilities; wide-ranging and stringent SOPs to deliver safe holidays andemployees who are fully aligned to deliver value for its members and stakeholders I amsure that your Company will emerge stronger from this crisis.
Therefore despite the possible short-term impact of COVID-19 Icontinue to remain confident of the growth and continued profitability of your Company.
In the meanwhile stay safe and stay healthy.
With my best wishes
Arun Nanda Chairman
June 25 2020