Club Mahindra Caselet.pdf

Mahindra War Room 2016

Hospitality Caselet

MAHINDRA HOSPITALITY SECTOR: CLUB MAHINDRA CASELET: WINNING IN THE AGE OF PARADOXES Mahindra Group’s Hospitality Sector comprises Mahindra Holidays & Resorts India Limited (MHRIL), which offers Club Mahindra Holidays, Club Mahindra Fundays and Club Mahindra Xperience Breaks. This caselet pertains to Club Mahindra Holidays, which is engaged in the vacation ownership business, and is the only caselet in the Hospitality Sector. BACKGROUND: Mahindra’s decision to enter the leisure and hospitality business in 1996 was prompted by the dominance of fly-by-night operators then, who cheated customers of their money, after selling them vacation ownership deals. A newspaper clipping in the summer of 1996, prompted a board discussion, that led to an eventual decision to enter the “Timeshare” Industry, as it was known then in India. The primary benefit Mahindra wanted to bring, was to enable Indian families to holiday across our vast and beautiful country, delivering consistent holiday experiences in an affordable manner, with Mahindra values of trust and ethics. Club Mahindra started with a single resort in Munnar, Kerala in 1996. Over time, the business expanded to 44 exotic resorts across India and South East Asia, offering 2900 apartments and cottages, benefiting 200,000 members, to become India’s #1 Vacation Ownership Brand. Club Mahindra resorts are known to offer unparalleled holidaying experience ,which, not only includes holiday activities for all  members of the family but also  spa treatments at most of the resorts . Also local cuisine, art and culture complement the overall holiday experience at the resorts. Club Mahindra Members pay a fixed joining fee and enjoy 7 nights & 8 days of  vacation every year for 25 years, at any of the  Club Mahindra resorts, or get access to exchange their vacations with  4000+ RCI affiliated resorts around the world at a fee. The week is available across 12 different configurations, of 4 seasons and 3 accommodation types.  MHRIL has been consistently  expanding its global footprint over the last few years, expanding into Thailand,  Dubai, Malaysia and Austria. MHRIL also acquired  controlling stake of 85.6% equity in Finland based  Holiday Club Resorts  Oy, making the combined entity the largest Vacation Ownership player, outside of USA. Holiday Club  Resorts is a leading vacation ownership company in Europe with 31  resorts (23  of which are in Finland, 2 in Sweden and 6 in Spain), and a membership base of 55,000 families.

Broadvision Perspectives Client Confidential
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Mahindra War Room 2016

Hospitality Caselet

Club Mahindra resorts span some of the most picturesque locations in Sikkim, Corbett, Mussorie, Pondicherry, Goa, Ooty, Gangtok, Binsar, Dharamsala, Kandaghat, Naukuchiatal, Thekkady, Masinagudi, Sasan Gir, Manali, Kumbalgarh, Kanatal, Coorg, Kandaghat, Kodaikanal, Ashtamudi in India, apart from Dubai, Bangkok, and Malaysia and Innsbruck (Austria). 
 LIVE CHALLENGE: WINNING IN THE AGE OF PARADOXES The travel and tourism Industry contributes to 6.7% of India’s GDP, valued at USD. 113 Billion, and is likely to grow at 7.5% per annum over the next 10 years. Socioeconomic indicators point towards the growth of the hospitality industry at a rapid pace in the coming years. The domestic travel market grew at 11.6 % from 1.28 billion trips (2014) to 1.43 billion  trips (2015).  India’s popularity as a holiday destination has been growing, and the recent liberal  e-visa policy, coupled with India’s rising international profile is expected to bring in more tourists to India. In the growing hospitality industry, Club Mahindra has positioned  itself uniquely to deliver differentiated holidaying experiences. Targeted to a mix of middle and upper middle class families,  Club Mahindra  promises a variety of experiences  for every family member at its resorts, which forms the core of “Club Mahindra Experience”. The 44 resorts are of high quality at exotic locations, with high standards of maintenance and upkeep round the year - irrespective of the season or popularity of the destination. High standards of services and locations,  and diverse holidaying  activities in and around the resorts make stays at Club Mahindra properties cherished and memorable events for all members of the holidaying family. In addition, customers save a substantial amount of money  (over 25 years), for  the value they get from Club Mahindra membership. This model inherently requires customers to pay and commit to a membership, as well as plan holidays in advance to maximise chances of securing a booking, in a resort of their choice and for their desired travel dates. In the last decade, Indian households’ holidaying preferences have changed substantially. Not only do they want to try new destinations and experiences, but also want in shorter planning cycles, taking more frequent and “drive around” holidays. Around such changing preferences, there have been significant changes in the travel  ecosystem – with the entry of peer-to-peer accommodation  marketplaces (e.g.  Airbnb), aggregators of hotels (e.g.  OyoRooms), Online Travel Agents (such as  Goibibo,  MakeMyTrip)  and experience providers (such as  thrillophilia,  Viator)  – that have substantially changed the way travelers plan their holidays and stay during their holiday trips. Broadvision Perspectives Client Confidential
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Mahindra War Room 2016

Hospitality Caselet

These rapid and radical changes to both the travel ecosystem and customers’ holidaying preferences, the intrinsic business model of Club Mahindra is experiencing challenges: • Millennials, a major emerging segment, is wary of making long-term or lifetime commitments (TERM OF USE). • Customers increasingly seek “on-demand” options and resent being refused access to the vacation home of their choice, when they want it. (ON DEMAND) • The advent of options like Airbnb, VRBO and similar players is opening up a new set of holidaying options to customers. (ALTERNATIVE ACCESS WITHOUT COMMITMENT) • New avenues and experiences are becoming accessible to customers (THE PARADOX OF CHOICES) It is therefore likely that future millennial customers will evaluate the Club Mahindra value proposition with different lenses. Millennial customers are likely to scrutinise closely the value they get, from “paid and committed access” to high quality Club Mahindra resorts providing unique & consistent experiences, against the greater flexibility and stay choices available through marketplace platforms that may not guarantee quality of service, but also don't require to make a long term commitment or pay in advance. Last year, Club Mahindra did a couple of experiments that produced interesting results - one consisted of offering its members an opportunity to holiday in a tent by the sea (in lieu of holiday in its resorts)    and the other was stay in houseboats in Kashmir. Enthusiastic response from members was received as evidenced by occupancies. It appears that the  new  breed of vacationer, the  “instant decision maker” is looking for more choice of holidaying destinations and also doesn’t want to commit for a long duration. In this evolving market scenario, does the  business model of Club Mahindra  require fundamental changes? What should Club Mahindra do to embrace the paradoxes (as outlined above) it is confronted with, and best connect with the changing customer behaviour, without giving up its core value proposition of delivering affordable and consistent holidaying experiences suited to Indian family needs? Does the future lie in a “flexible, on demand vacation” and if so, how should Club Mahindra approach this vastly different paradigm? What should Club Mahindra do to increase access to more destinations /experiences?  Should it follow an incremental approach or radically re-imagine its business model? Evolve a strategy for Club Mahindra to embrace the apparent paradoxes it is confronted with. Broadvision Perspectives Client Confidential
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