Mahindra War Room 2014 Leisure & Hospitality Sector Caselet

Broadvision Perspectives Client Confidential Page 1 of 2

MAHINDRA LEISURE & HOSPITALITY SECTOR
CLUB MAHINDRA BUSINESS

Mahindra Groups Leisure & Hospitality Sector comprises Mahindra Holidays & Resorts
India Limited (MHRIL) which offers Club Mahindra Resorts and Mahindra Ocean Blue
Marine that manages the Odyssea Luxury Boats business. This caselet pertains to the
Club Mahindra Business and is the only caselet in the Leisure & Hospitality Sector.

BUSINESS BACKGROUND

Mahindra ventured into the Leisure & Hospitality Sector in 1996 by opening the first
Club Mahindra Resort in Munnar, Kerala. At that time, the industry was going through a
crisis wherein the market leader was in a severe financial distress while most of the
other players proved that they were fly-by-night operators out to make a quick buck
sell the deal and then not deliver. Basically the category had acquired a bad reputation.
In this environment Mahindra saw an opportunity and aspired to bring a change to the
business, by bringing a legitimate, high quality vacation ownership offering to the Indian
consumer And as the saying goes the rest is history! Club Mahindra today is Indias
No.1 Vacation Ownership brand targeting Indian families and has over 170,000
members. It has built a network of 40 exquisite resorts in some of the most picturesque
locations in Sikkim, Corbett, Missourie, Pondicherry, Goa, Ooty, Gangtok, Binsar,
Dharamsala, Mashobra, Naukuchiatal, Thekkady, Masinagudi, Sasan Gir, Manali,
Kumbalgarh, Kanatal, Coorg, Madikeri, Kandaghat, Cochin, Kodaikanal, Ashtamudi in
India, and in overseas locations such as Dubai, Bangkok, Sri Lanka and Malaysia.

LIVE BUSINESS CHALLENGE

Club Mahindra members pay an upfront membership fee and an annual charge over the
25 year tenure of the membership. This entitles the member to 7 days holiday at any
Club Mahindra resort every year over the tenure of the membership. The members can
take this holiday during a certain season and in a room type that they originally choose
to purchase as part of the membership. However the membership plan provides
flexibility to members to be able holiday in a season and room type different from what
they own subject to certain rules. Club Mahindra is also affiliated to RCI, the worlds
largest Vacation Ownership affiliation and exchange organization. Club Mahindras
members can use their membership to holiday at over 6500 resorts worldwide that are
part of the RCI network, for a small transaction fee.

The Mahindra Group has brought several innovations to the timeshare space - the
resorts bring a truly rich vacation experience that includes food and beverages, local
sightseeing and a host of activities for the entire family. MHRIL has also made
significant investment in state-of-the-art IT systems to streamline backend operations
for a smooth and efficient management of a large customer base.
Mahindra War Room 2014 Leisure & Hospitality Sector Caselet
Broadvision Perspectives Client Confidential Page 2 of 2

Club Mahindras 16 branch offices supported by 34 sales offices and 208 Franchisees
across India. Club Mahindra currently has a capacity of 2410 rooms and delivered an
average occupancy at 83% for the financial year 2013-14.


Club Mahindra recently acquired 18.8% stake in Finland based Holiday Club Resorts
Oy with a right to increase ownership over 2 years. Holiday Club Resorts Oy is a
leading vacation ownership company in Europe with 32 resorts across Europe and a
membership base of 50,000 families. Once full ownership is achieved, the combined
entity has the potential to be the largest vacation ownership company in the world,
outside of USA.

The Indian tourism industry has grown significantly in the last decade, contributing to
2% of the GDP at INR 2.17 Lac Crores in 2014. Estimates indicate that this figure may
grow to INR. 4.35 Lac Crores by 2024. There are over 740 million domestic travelers in
India, almost the entire population of Europe. However the vacation ownership industry
in India represents a very small fraction of the larger hospitality market. Moreover while
the tourism industry is growing, the vacation ownership category is stagnant at best in
terms of net new memberships added. As the market leader Club Mahindra is most
affected by this. The same products and strategies that were working until 3 years ago
dont seem to be as effective anymore. Is there a fundamental shift in the market
since it is not as if Club Mahindra is not losing share to a competitor? It is probably
reasonable to assume that perhaps the value proposition of Vacation Ownership
products in general and Club Mahindras own offering in particular, may have somewhat
eroded over time.

MHRIL is keen to examine
How the Vacation Ownership category in India will evolve over the next few
years, especially in the context of the changing consumer demographics,
aspirations, needs and behavior?
What is deters consumers from opting for the vacation ownership model in
general and Club Mahindra in particular?
What should be Club Mahindras strategy if it wishes to maintain the high growth
(25%+) that it experienced over the past many years?
Reexamine the target market based on segmentation, positioning, product
design, sales & marketing strategies etc.