How getaway firms Mahindra Holidays, Sterling Holiday cope with Covid 3.0

Has the surge in Covid-19 cases led to cancellations in the holiday resorts industry? Ramesh Ramanathan, MD, Sterling Holiday Resorts, says that there have been cancellations in the last few weeks but it's not reason enough to lose sleep over. "The cancellations are tied to the travel restrictions imposed in various states. Some of them have imposed curfew from Friday to Monday. In fact a lot of our guests are opting to stay an additional day at our resorts so that they can avoid the curfew. It is certainly not a situation of zero revenue," he says.

Holiday resort companies, Mahindra Holidays & Resorts and Sterling Holiday Resorts believe that they have an edge over the rest of the hotel industry as their properties are not just within driveable distances, but more importantly they are spread out over a large area. "People want to go to drivable destinations so that they can avoid flight travel. Therefore, our business will see tailwinds," says Kavinder Singh, MD and CEO, Mahindra Holidays & Resorts. The holiday resort company, says Singh, is investing close to Rs 1,200 crore in setting up new resorts. It has also tied up with 60 hotels in India and 80 hotels, where its members can use their timeshare membership.

Sterling on the other hand, is moving towards an asset light management contract model so that it can increase the number of rooms it is able to offer to its patrons. "We currently have 8-9 resorts which operate on the management contract model and going forward we will have more of them," explains Ramanathan. The holiday major since the past three years has been consistently moving away from the timeshare model and has been attracting FIT travelers also. "We operate like a regular hotel so that we can attract a larger cross-section of people. In the past few months 62% of our guests came from the FIT segment," he further explains.

Ramanathan claims that the strategy of attracting FIT travellers has helped the company recover from the Covid-19 losses faster. He says that the current occupancy rates are at 64% vis-a-vis 62% in 2019. "Our ARR (average room rates) is 6%-8% higher than 2019."

Mahindra Holidays, which continues to focus on timeshare membership, has launched shorter duration membership programmes such as Bliss (a 10-year programme). "We also have a three-year sampler programme, and the intent here is to convert those members to our regular 25-year membership," Singh explains.

Creating Experiences

Both the holiday companies are investing hugely in creating unique experiences for their customers and thereby increase stickiness. Mahindra Holidays has recently bought a minority stake in Great Rocksport which specialises in providing outdoor entertainment, adventure programmes and educational adventure tours. This investment, says Singh, would help Mahindra in offering more adventure experiences to its guests. It has also introduced electric bikes in all its resorts for its guests to visit the communities around the resorts. "We have added a lot of experiences such as bird watching, a lot of focus on adventure which is going to boost our resort revenues," says Singh.

Sterling Holidays has launched a brand Sterling Picnics for day-trippers who would be offered brunch along with a host of other adventure and cultural experiences at its various resorts. It has also launched Sterling Discovery and Experience under which it is offering over 1,000 experiences to its guests which include food trails as well as visits to the local communities.

Unlike earlier when most holiday resort companies just had one multi-cuisine restaurant at its resorts, the game has moved towards creating culinary experiences. Mahindra Holidays has launched fine dining Pan-Asian and sea food brands such as Temptations and Fins. It has also launched Unwind, a lounge cafe. "We have realised in Covid times what people have missed the most is eating out. They could of course get food home delivered from restaurants but they missed the restaurant experience. So, we said to ourselves why not focus on food. We also hired a corporate chef with a lot of international experience," says Singh.

Sterling Holidays is also aggressively focusing on food experiences. While some of its bigger resorts have curated a vegan menu, Ramanathan is especially proud of his brand, Sterling Local, which specialises in local cuisine as well as beverages. "Our resort in Goa for instance, has feni and mahua-based cocktails," he explains. Ramanathan says that their local focus has been attracting not just their live-in guests but also guests from the adjoining cities and towns who come only for a dining experience.

Both Mahindra and Sterling claim that they are back to their pre-Covid revenue and are extremely bullish that the leisure ARRs would continue to be good. In fact, business hotels such as Radisson are also looking at expanding their leisure offerings. “We see an opportunity to grow in both leisure and business segments, but I would say we have renewed appreciation for domestic leisure and domestic travel,” Katerina Giannouka, president (Asia-Pacific), Radisson Hotel Group, had said in a recent interview with Fortune India.