Mahindra Holidays & Resorts India Limited (NSE: MHRIL) Q1 2026 Earnings Call dated Jul. 24, 2025
Corporate Participants:
Unidentified Speaker
Manoj Bhat — Managing Director and Chief Executive Officer
Vimal Agarwal — Chief Financial Officer
Analysts:
Unidentified Participant
Pankaj Kumar — Analyst
Harshal Mehta — Analyst
Shreyans Gathani — Analyst
Rama Krishna Neti — Analyst
Manoj Dua — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Mahindra Holidays and Resorts India Limited Q1 FY26 earnings conference call hosted by MUFG IR. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing STAR and then zero on your touchstone phone. Please note that this conference is being recorded. This conference call may contain forward looking statements about the company or which are based on the beliefs, opinions and expectations of the company as on date of this call.
These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Manoj Bhatt, MD and CEO. Thank you. And over to you sir.
Manoj Bhat — Managing Director and Chief Executive Officer
Thank you. Good evening everyone. Very warm welcome to our quarter. One FY26 on the call with me today is Mr. Vimal Agarwala, our CFO. You can also find our results and investor presentation on the stock exchanges and our company website. I hope some of you have had a chance to go through them. I think. Let me begin by talking about the industry. I think the industry continues to be doing very well. If I look at the metric of ADR for example in May it was up 7% YoY compared to last year. I think there was some seasonal softening.
But overall I think the occupancy levels continue to be very high. Of course we had the impact in May of the geopolitical tensions along the border which also have impacted occupancy during this quarter for us and for the industry. And I think we are in a very good spot compared as regards the macro environment. I think we continue to see a strong trend of people wanting to do leisure holidays. And that is a trend which has been strong for the past few quarters. And I think it is something we believe will continue into the future.
From our perspective. I think even from the Indian government perspective there is a lot of support. I think There is a 20,000 crore investment in developing 50 destinations with state partners. All of these are helping set the base for this industry on a longer term basis. Coming to our quarter, it’s been a very strong quarter. I think our standalone profits which is a proxy for our India operations I think saw very good growth. In terms of standalone profits were up 69%. Our PAT margin expanded by 6.8% or 680bps. And of course if I look at our consolidated profit I think it was up 18% yoy I must highlight that this growth is despite the adverse currency impact which Vimal will address when he speaks.
But we have absorbed all of that and still despite that grown by about 18% Yui so it’s been a strong performance on that front. If I look at our domestic business, I think it continues to do very well. I think our resort performance has been very consistent. I think even this quarter we have reported double digit growth in resort revenue and delivered about 114 crores of revenue from the resorts. From an occupancy perspective, I did mention that there was a blip in May. Despite that, I think we have got an occupancy level of about 85% plus and I must add that this is on the back of added inventory.
I think we added our highest ever inventory last financial year. So despite that I think we have got to an 85% occupancy level. Our resorts obviously continue to be very popular. I think 14 of our resorts have been awarded the TripWider Advisors Travelers Choice Award. I think this is something which is a continuous journey for us in terms of keeping our resorts current, keeping our resorts to the standards as required by our guess overall. And to that end I think as you look at even this quarter, I think we have reviewed the inventory portfolio and looked at improving the portfolio overall which means we had to let go of a few of our partnerships and you will see the inventory number dip a little this quarter.
Overall, I do believe our goal of gross addition of 1,000 rooms by March end, which is March 26. I think we stand firm on that and I think there’s a very good pipeline of resorts which will be back ended towards the second half of the year. I think in terms of expansions of course we have commenced a new expansion project in our existing resort at Puducherry. We have five ongoing greenfield and brownfield projects. Our current inventory base is about 5,800 keys and I think as I mentioned, the pipeline for the future is very, very strong.
We also looked at improving the journey for our members and to that end we have rolled out a digital engagement tool for focusing on standardization while delivering improved membership buying experience to our customers. I think the way we look at it is that with a focus on selective customer acquisition as well as a focus on getting the right product market fit, I think we continue to improve on our sales processes. We added about 1524 members. At an overall level our AUR is at 8.3 lakh up 69% YoY member additions through the digital route and referrals I think continues to grow.
Now it is 65% of total member additions while upgrades have been stable at about 56 crores. And so I think overall if I look at that journey of looking at the right kind of profile of members who we can serve really well, I think that journey continues and I’m happy to report that it’s headed in the right direction. I think the other thing to look at is that when we look at our overall commitment to sustainability, I think it’s at the core of our operations. I think we have completed biodiversity assessment at four new resorts, increased solar installation to 41% of total demand and overall cumulative installment installation of 15 megawatts.
So I think a lot of work is being done in these areas. My last comment would be that one of the things we are doing is the entire tech transformation of our business and I think that journey is well and truly on. I think some of that is being piloted. For example, we are piloting contactless check in process in two of our resorts. We are also looking at quality of service at the resort level and how do we actually anticipate member needs? Much better. So all in all I think a good quarter operationally, a good quarter from a financial perspective and a lot of progress on some of the initiatives we started on.
To expand on the numbers a bit, I will request Vimal to now step in. Thank you Manoj. Hi everyone. Moving on to the financials for Mhril Standalone, first I’ll call out the highlights which are as follows. Total income for Mhril standalone stand at Rs. 411 crore which is 7% YoY crore. EBITDA came in at 161 crore up 42% and our EBITDA margin expanded to 39%. PAT was at 76 crore up 69% YoY and our PAT margin expanded by almost 680 pips. Our cash position also improved to 1576 crore as on 30th June 2025. Moving on to some key highlights for consolidated Financial results.
Our Consolidated income touched 740 crores up 8% YoY and our EBITDA was 161 crore which was an improvement of about 16% over versus Q1 of F25. Our EBITDA margin stood at 22%. We reported consolidated PAT of 7.2 crore which is an improvement of 18% on Y O Y basis. As Manoj mentioned in earlier in the call, this PAT of 7.2 crore includes forex impact of 28 crores which came due to Euro INR movement from 93 crore beginning of this quarter moving to rupees 100 as on 30th June. These are few of the key highlights. I request if we can open the floor for further discussions please.
Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pankaj Kumar from Kotak Security. Please go ahead.
Pankaj Kumar
Thanks for taking my question. Congratulations on over a good number. My question is on the inventory addition side. So of course as you have told some properties due to the lease 10 year period might have got over and you have kept thousand rooms inventory additions target intact. So just questions like mostly we believe would be adding to the lease properties and now looking at the demand in the industry how do you see the challenge in adding new looking at the demand because there’s aur and all are going up and is it easy to crack the deal in the current scenario.
Manoj Bhat
So Pankaj first of all thank you for the question. So if you look at our inventory journey I think from our perspective first the philosophies about you know one is becoming more present in states we are not present. So if you look at our map I think that covers the eastern part of the country. We are well covered in the south, we are well covered in the west, even in the north. So as you know we opened our first resort in Andhra Pradesh in the March quarter and something So I think that’s one way to look at it.
The second way to look at it is that our philosophy is based on circuits. So I think ideally we would like a circuit which would be comprising of two or three resorts which are ideally two or three hours away from each other. So that’s the other way. Now coming to your question on I think if I look at our pipeline today, I think as I said there are about five Greenfield brownfields which are in progress which should deliver a combined probably close to five to 600 rooms over the next I would say 12 to 18 months.
And in addition I think the remaining are all mostly around partners who are willing to provide capital in the form of either building for us which is what we call the build to suit model or they already have an existing thing which can be modified to the specifications. And frankly, I think even with the kind of demand scenario we are seeing, I think we are not facing much of a challenge in terms of adding, I think adding to a funnel of inventory building. The second part here is that if you look at our journey of doubling inventory today from a funnel visibility at least we have either identified land which we have started to think about building, or identified resorts or identified partners who are going to build for us.
If I take all of that, I think today’s visibility is probably between 65 to 70% of that journey. So from that perspective, I think we do continue to see strong addition into the funnel. The last part I would like to highlight is that which I alluded to in the beginning. These were not just lease ending which is causing this, but it’s also a function of we are doing a portfolio review in terms of customer feedback and quality of some of our largely associate properties. And that’s something which we also took some actions during the quarter that is also contributing, that is contributing predominantly to the minus 53 number which you see in the inventory.
So I think that’s the way to look at it. I don’t know whether you have answered your question fully, Pakar.
Pankaj Kumar
Yeah, I got the answer. And sir, since we are this thousand room inventory would be more of a backend date. And in this quarter we have seen 1524 member additions. So we can expect the first half would be slower on the member edition. So this kind of run rate would possibly be for another one or two quarter. How do you see the member edition for the year?
Manoj Bhat
Yeah, so I would separate inventory from member edition because to me they are two separate tracks. So from my perspective, if I look at the member edition journey and I think I’m kind of summarizing the four quarter journey, I think we first said that we will identify cohorts of prospects where we can serve them the best in terms of the kind of facility we offer, and so on and so forth. Then we said that we will look at cohorts where we have seen members being dissatisfied because of service issues. And what we did was we moved out of those cohorts.
So if you look at the top of the funnel, that itself is reducing. The third thing we did was as we did this, we reduced our spread geographically, which meant that today we have I think about 48 focus destinations and I think it was a much larger number. The last thing we did is we are moving to higher conversion channels which is a journey which is work in progress and all of this, what we said is that in this journey I think we want to get to a point where we are comfortable with the model and comfortable with the right kind of member profile which we can service adequately.
Because to me, customer experience is the number one thing and that journey still continues. So in my mind, I think the member addition will probably not accelerate till we reach a point in time where we are completing this journey. And that also is something which I think will take a few more quarters.
Pankaj Kumar
So just to extend this point, this member to room ratio in this quarter we had around 53 levels that has increased vis a vis what we have seen last quarter because of the room inventory additions were not there. So and directionally you are looking at a lower member to room ratios that you indicated in the previous call. So when we look at that math, so probably we’ll see the membership, cumulative membership base would hover around these if we adjust for the retireals that we have. Is that the right understanding?
Manoj Bhat
Yeah, I think that would be the math of it, but really I think it is more qualitative than that. So for example, we are looking at addressing the retireal pool much more focused manner. And I think there is a set of initiatives around that because they have really expanded, experienced the journey with us. Secondly, I think from my perspective, I think one of the things as I mentioned is moving the overall quality 1 notch higher across the board. And would that would also mean we might surrender some of these partnerships over a period of time, which you will see first time.
We will take very decisive action this year. So that is also something to be factored in. These are the two things I would add.
Pankaj Kumar
Last question if I may ask. So that’s on the resort income. We have seen very decent growth in this quarter as well. And when we look at the annual report numbers, large part of this resort income growth has come from the rentals. So is it the scenario that we are going to see going in future quarter as well? And of course we have taken FNB price hike. So how much that element is there in this 12% resort income group?
Manoj Bhat
So I think from our perspective, I think both of these will continue to drive. So I think in the results the journey here is driving the experiences piece much more sharper. And that journey has just started. I think we are running a pilot currently in three resorts where we are actually putting together a comprehensive explanation experience package because we used to do this of course in these resorts, but I think put a much sharper focus and put a much more easier to access model for our members. So that’s going to be a focus. But of course I think rental incomes will continue to remain an important aspect of resort incomes as it has been in the past.
I think we have just brought a little bit more focus into this.
Pankaj Kumar
Thank you.
operator
Thank you. Ladies and gentlemen. Anyone who wishes to ask a question may press star and one on their touchstone telephone. The next question is from the line of Harshal Mehta from Zen Nivesh. Please go ahead.
Harshal Mehta
Hello. Am I audible, sir?
Manoj Bhat
Yeah, I can hear you, Harshal, Go ahead.
Harshal Mehta
Thank you for the opportunity. So first of all, sir, amazing business model. I was just going through your business for the first time and your profit number as in a consolidated levels and when I saw your cash flow numbers, your cash flow is out, I mean outperforming your profit numbers with a huge margin. So great, great business model. And when I looked at your standalone numbers as in your standalone profits and your standalone cash flow, it was even better than consolidated levels. So really, sir, great, great business model. But so question that I had for this is when we compare the cash flow numbers of standalone and at consolidated levels, I compared for the last five years and I guess there is some bleeding at the consolidated level and I believe that is mainly coming from our HCRO business.
Right?
Manoj Bhat
Yeah, I think that’s a fair assumption. But what is the question, Harshad?
Harshal Mehta
Yeah. So are there any other operations which are also bleeding money at consolidated level?
Manoj Bhat
Okay, so let me answer HCRO because I think this will be a common question across. So if you look at our HCRO business, I think from a overall perspective, I think it has achieved stability. So if I look at it this quarter versus last quarter, I think they are doing slightly better in terms of the P and L numbers on the cash front. Also they are doing better than last year overall. And that’s something which we expect to continue. We don’t anticipate any funding needs for that business at this point. And so even that continues to be stable.
So overall I think it is something which the performance there is muted because of multiple reasons. And I’ll enumerate them. So one is of course the whole geopolitical situation, the Russia, Ukraine situation and a lot of visitors were Russian. So that something which has been now impacting the business for almost two, two and a half years after that came the recession in the Finnish economy. And that economy is expected to recover during the second half of the year and maybe going into the year after. And all of that has really had an Impact in terms of two things.
One is occupancy as well as the overall sale of timeshare, which is, is what they do. Which then I think led us to the conclusion that we should focus on a model which enhances, optimizes, operations. And that’s what the business is doing very well from my perspective. As I said, it’s no incremental cash from our side as well as improving, gradual improvement or stability in the numbers. That’s, that’s what we are targeting there. And also quarter one is a seasonally weak quarter which, which I think you should adjust for because the number is a loss in this quarter.
Harshal Mehta
Right, right. So again, what I was assuming is maybe if, if this business is bleeding then we might be looking at an, you know, exit or anything like that because we, I think we acquired this business in around 2016 or 17 if I’m not wrong. But of course from your answer, I got that point. So any timeline or any, you know, time frame that you can give by when we can, you know, get this CRO business completely turned around and integrated in a proper growth way into this company.
Manoj Bhat
So from our perspective, see, it’s difficult to put a timeline because it depends on largely extraneous factors. So if you look at, as I said, the economy is expected to recover through the course of the year. On the geopolitical situation, the Russia, Ukraine situation, I think that is something to wait and watch. If that changes, I think that’s a dramatic shift from the business perspective. If I look back into almost F19, I think this business was generating roughly about 10 million euros of EBITDA. 10 million euros of EBIT. So it’s inherently a very strong business.
I think it is going through a demand cycle and that’s something which unfortunately I don’t have a timeline and for us to consider any long term strategic options, this is probably not the right time in any case.
Harshal Mehta
Understood. And sir, one more request. If going forward, if we can, you know, share the HTRO numbers in rupee crores compared to what we are quoting as in, in euro millions, then that will be great. That will be, you know, really helpful for us.
Manoj Bhat
Absolutely, we’ll do that and we’ll make it a point to add a page on that.
Harshal Mehta
Thank you so much. And no other operations as in loss making operations apart from hcr, right at consolidated level?
Manoj Bhat
No, nothing. Nothing.
Harshal Mehta
Okay. Okay. Thank you sir. Thank you so much.
operator
Thank you. The next question is from the line of Param Vora from Trinetra Asset Managers. Please go ahead.
Unidentified Participant
Hello sir. Good Afternoon. Thank you for giving me this opportunity, sir. There is now an upward trend in disposable income in tier 2 and tier 3 cities. So how are we seeing member convergence from these geographies compared to Metro Cities?
Manoj Bhat
Param, thank you for the question. So actually if you see what we are seeing is there is no change in the mix, despite what you’re probably saying is true, right? That there is tier two, Tier three coming up. So we don’t see much of a change in mix happening in our members. So which means that our product is probably equally attractive in both the places.
And that’s the current reality.
Unidentified Participant
Okay, sir. And one more question. With the rise of digital travel platforms like Airbnb and Saffron Stays, what is Club Mahindra’s, you know, competitive advantage in terms of customer experience, pricing or exclusivity?
Manoj Bhat
So I think. So first of all, I think whether it’s Airbnb or Saffron State, I think the level of customer experience which we offer, which is a full service resort, I think I don’t know whether it’s comparable because each model has its benefits and it’s a certain kind of traveler profile they attract. But I would like to believe that we are a full service resort.
Right. So from a customer experience perspective, there’s a minimum degree of service, there’s a minimum degree of infrastructure, there’s a minimum degree of FNB experience and other experiences. That’s the way I look at it. From a business model perspective, I think there is a gap in the business model. Sorry, there is a variance in the business model. Our business model is based on, of course, delivering value to the customer in various forms. Only one of them happens to be from a pricing perspective. But if I look at these platforms, I think in my mind, I think as I said, the segment they attract could be different.
The other thing which has come up in our customer insight surveys today, people are looking at various experiences. So they would like experience at a full service resort, but in certain groups or in certain ways, they would probably holiday in certain other areas with the likes of the Airbnb and the Saffron Stay, as you mentioned. And the last thing I would do is I think, I do think these as probably potentially partnership opportunities rather than competitive situation. And that’s the current state of mind in terms of looking at all of these options.
Unidentified Participant
Right, right. Thank you so much.
operator
Thank you. The next question is from the line of Sriant Gathani from SD Securities. Please go ahead.
Shreyans Gathani
Hi, good afternoon. There are a few questions. The first one Is you know we see lower other expenses quarter over quarter and also compared to the previous year. So is this mainly driven by the lower member additions and since we have like 65% that you mentioned is through digital and referral is that we should assume that even when they accelerate our customer acquisition cost would be lower going forward.
Manoj Bhat
So Vimal, you want to answer the. And I’ll add on to that Shreyans, what is causing that dip in terms of other expenses?
Vimal Agarwal
Yeah, so see other expenses primarily is stable is what I’ll say Q1 F26 number for standalone was about 100 crore versus 99 crores overall.
And quite a few things happening here primarily driven by one is the efficiency which we are seeing in our resort spends. The second one is so far as overhead spends are concerned there’s a fairly tighter control and similarly repair and maintenance or the rental expense we have tried to curtail or optimize these are the key drivers in terms of efficiency which you are seeing here
Pankaj Kumar
and maybe in this quarter the main head might be in terms of just looking at each of them cumulatively because each number is not large enough to point out if you understand what I mean.
Strength.
Shreyans Gathani
Yep, got it. Yeah. Because I was seeing like June 24was in the financial 174 crore versus 151 crore for June 25. That’s why.
Manoj Bhat
So that is including other expenses like say sales expenses, marketing expenses which are included in this and rentals are included. So I think let me actually kind of give you a bridge maybe right from the last June to this June quarter. Right. So if you look at the bridge, I think what we have been able to do well is look at the. Look at leverage on our employee expenses. Right. So we are serving more on the same employee expenses base.
Right. So that’s the first thing which has happened. The second thing is I think as I mentioned in one of my previous answers, that whole journey of sales transformation I think has resulted in significant savings from an absolute perspective as well as from a percentage perspective in terms of sales and marketing cost. And the only one expense which has gone up is our rental expense because especially with our associate resorts because we have added over a period of time also better quality inventory. So I think those are the three broad ways to look at the numbers.
So employee expenses are about flat I think reduction overall from a sales and marketing perspective because as we’ve explained we have optimized and very carefully and then expansion in inventory related which is showing up in the rain piece of it. Yeah,
Shreyans Gathani
got it. Got it that’s very helpful, thanks for that. Next question is on, you know, on lease versus owned. So like what is the, like, you. Know, how do we make that decision in terms of, you know, what we want to lease versus own? Like because like the lease yields basically are you know, much lower at this point. And that’s why like all the, you know, Marriotts and the hotel chains are preferring now. So just trying to get a sense of how we look at expanding in terms of which channels.
Manoj Bhat
So the way at least at a top level before I go into the model is there are certain locations where we would like to own and so those are some things where we would put our own capex.
So that’s the highest level filter now coming to. Practically if I see our journey probably we are roughly just about 55% owned inventory today, give or take. And I think incrementally as we go forward I see that swinging to maybe only 30% owned or even less than that owned. And the reason for that is I think if you look at our metrics around ROCE, etc. I think they are pretty much higher than what we would think of spending through a rental yield. So I think that’s one explanation for that. The second thing is I think there is a, what we are finding is there is a lot of partners who are willing to invest the capital and which will enable capital light growth for us.
The only model we are not doing today which is prevalent in the industry is the management contract model which currently our model is not suited for that. But other than that I think we are largely going capital light. I don’t know whether that answers your question, Shreya. Yeah, yeah, that’s helpful. So just the last question is on the voi. So I see that, you know, if I look at the new membership sales was the member additions and the new membership sales, so I see that this quarter is like around 4.5, 4.7 lakh rupees per member as such if I exclude the upgrades.
So previous quarters 3.7 and much lower. So what kind of mix are we seeing in terms of the membership? Like I understand that we took a price hike but is that just due to the price hike or is that, you know, also due to change in mix? And if you could elaborate on the mix between the zest and the, you know, the longer period programs. So Shreya, this varies quarter on quarter but largely the five year plan, right? Which goes as five is our largest percentage and the next largest is usually the 25 year plan, right.
So these are the two biggest plans. If I look at what we define as shorter tenure products, they are about anywhere between, I would say given the quarter between 42 and 47% overall. But the mix, blended mix will probably take us to between 12 and 13 years. Right, got it. So you’re saying 40 to 47% is just for this quarter. I think that’ll be the range. So some quarter it is 41, sometimes it is 47. So it keeps varying. Okay. Okay. So is that how we want to take it for like the 5 year product will be like the most prevalent.
Like because many years ago we did not have like a shorter term. Like it’s mainly the 25 year. Right. So I think sales, the way I think of it is we’ll follow the customer. So we offer a range of options. So we have a 5, we have a 10, we have a 15, we have a 25. And I think we will let the customer much make the choice about what they want. And over a period of time what we have discovered is the five year product is popular because obviously one is from initial investment as well as total investment, it is the lowest product.
The second is of course it also offers many members an opportunity to try the results and a lot of them then can make the call whether they want to upgrade into a longer tenure. I think that was the logic of the five year project product and that’s why it’s probably the most popular. So in our mind, I mean I’m equally happy with all the products. I will give the customer the choice to choose which one they suits their needs best.
Shreyans Gathani
Got it? Got it. So the reason I asked you is like because I believe that the final product.
operator
I request you to rejoin the queue for follow up question. Thank you. A reminder to participants, anyone who wishes to ask a question may press star and one on their touch tone telephone. The next question is from the line of Prashant Sirshagar from Unived Corporate Research Private limited. Please go ahead.
Unidentified Participant
Good afternoon sir. First question is on the Holiday Club Resort in the slide you have mentioned about the improved performance largely driven by growth in spa and renting revenue. So can you just give us the footfalls or in the spa business of Holiday Club Resort by the numbers wise or you know just the color on it?
Manoj Bhat
Prashant, unfortunately I don’t have that number handy with me. We’ll try and find it but and send it to you. I don’t have the number handy with me.
Unidentified Participant
So secondary part is want to ask you is the occupancy level in the holiday club resorts. If you can share with us.
Manoj Bhat
I know that occupancy went up 10% to about 55% or so. Is is the number I have
Unidentified Participant
in this quarter.
Manoj Bhat
Yeah,
Unidentified Participant
10%. But if the geopolitical situation improves or then what should be the occupancy level which you are looking at in this resource?
Manoj Bhat
I think if I remember correctly going back in history, it was probably operating at a 65, 70% occupancy. But it’s not uniform. Right. So it keeps varying but it. It was probably higher by about 10, 10 to 15 percentage points. But that’s the kind of sense I have.
Unidentified Participant
So it doesn’t go in your standalone. We have around 85%. So is there any specific reason why it is on the lower side or is it.
Manoj Bhat
It’s a different model. It’s a different model. It’s more like a conventional hotel chain. The Finland business.
Unidentified Participant
So it’s like a conventional hoddle gene. But the then the general trend out there in Finland is of the same. Level of occupancy or is is asking. You because we have no clue of.
Manoj Bhat
Okay, okay. So let me explain the business. Maybe Prashant and it might be useful for everyone on the call. I think the business model there is. There are two, two things we do. One is we build and sell timeshare rooms. Right. So think of it like we build a community and in the center we build a hotel which is like a conventional hotel. Right. And so the timeshare is like a sale. So you sell weeks and you take the money and the ownership transfers in a way. Right. The hotel continues to be operated and managed by hcro and what it does is it gets guests, independent guests as well as people who stay in those timeshares whenever they come they can also use the hotel.
So it’s more like a conventional hotel business. So the occupancy level should not be compared with our model which is a membership based model where people come and use nights. So it’s a very different model. They have a fixed week which is sold in the timeshare business, if that helps.
Unidentified Participant
Yeah. Just to add on to this, in that hotel which you said the conventional hotel, what should be the levels of occupancy out there?
Manoj Bhat
I think if I look at the Finland average right now in I have for April and May is about 45% we are running about 5, 5, 7% hot higher than that for those two months.
Unidentified Participant
Okay, and the second question is your association with Thomas Cook for club members benefit. What has been the response for that for Finland.
Manoj Bhat
Sorry, are you talking about rci? Thomas Cook? Which one?
Unidentified Participant
No, no, Thomas Cook. You have made an arrangement for club members who get 50.
Manoj Bhat
Sorry, I might not have the details of the individual offer because I think under a Club M select program we have a lot of offers. So if you can just drop us a line offline, we will give you an update of that. Yeah.
Unidentified Participant
Okay. And the second question is, you mentioned in the conference call earlier about withdrawing from partnerships. So can you just elaborate on that will be for associate hotels or how for associates only the.
Manoj Bhat
Prashant, let me clarify that. Right, so. So obviously this quarter it was associates, but also during the course of the year we might look at certain managed results also which have the lowest rating, so to speak.
Unidentified Participant
Okay, so but that will apply to Horizon program also or will it apply only to the resorts?
Manoj Bhat
So I think the way I would look at it is the horizon is an offer for our members and I don’t think we are changing anything there. The managed results, we are looking at quality and customer feedback. Sorry. For associate results and for managed results, I think it is about a churn led by both lease term ending as well as customer feedback and quality.
Unidentified Participant
Okay, and the last question is on the membership addition. You said that you are moving to a better quality or whatever profile of the member. So in terms in days to come that profile you’ll improve or it will be at the same level.
Manoj Bhat
I don’t know whether I would call it improve or at the same level. I was kind of trying to say that. See if you look at our kind of resort environment, it is family led, it is experience rich, it has a certain kind of quality of service, it has a certain kind of environment. I think we are trying to target people who would enjoy that environment to the fullest. And that doesn’t necessarily mean up down. I think it’s about trying to find the right metrics and the right data to target those individuals who can actually use our resort to the fullest.
Unidentified Participant
Okay. Okay, thanks. That answers my question. Thanks a lot.
Manoj Bhat
Thank you, Prashant.
operator
Thank you. Ladies and gentlemen, please limit to two questions per participants. The next question is from the line of Ramakrishnaneti from Zen Wealth Management Services Ltd. Please go ahead.
Rama Krishna Neti
Yeah, hi, thank you for the opportunity. Just a couple of follow up questions and one main question. So you have mentioned earlier to one of the participants that you’re moving towards slightly shorter tenor products, kind of the preference. So the 8.3 AVR that you have reported for Q1, can we assume around 78 to be the new normal going forward. That is the first follow up and the second one which I would want to understand in terms of the longer term subscriptions like 2515 year subscriptions which would have been expiring are likely to expire over the next few years.
Historically like in the last 12 years which you got, which would have got expired. What was the renewal percentage of those? I mean just wanted to understand the continuation of the interest from the from your older subscribers or customers. That is the second one and the third one. At a broader level, sir, you have been indicating that from a room inventory edition the Target is around 10,000 rooms by FY30. On similar note, will you be able to share your thoughts from a P and L perspective? Like last, if you look at last 5, 10 years the top line growth or the bottom line growth have been either mid single digits to low double digits kind of a thing and margins have been hovering around 2827% on some of these P and L items.
Like what would be the thoughts or strategy for the next five years as you keep on ramping up your inventory and rationalizing your inventory and even customers. So your thoughts and insights will be helpful to better arrive at informed decision also.
Manoj Bhat
Okay, so first on the aur, I would assume that it is peaking. I don’t know exactly where it will land up because as I said we are driven by customer presence. But I would say that this is probably at the peak and I don’t know whether we will see see further growth from here. I think your second question was retiral rates. So our historical retireal rates have been low because I think if you really look at from a perspective of overall, I think the numbers are becoming more significant now and hence as I said that we put a program in the place to actually target them.
I think maybe in four quarters we’ll have a good enough answer in terms of what should be the retention rate. But historically I think we have not focused so much on retention of retiring members and hence the percentage is low today. And I think your last question was about how should you think about as we add inventory, what are the metrics which will move in my mind I think two things I want to say Ramakrishna is one is that I think we are more focused on metrics around capital return and profitability. And I think if you saw the profitability growth it is happening today.
And I think that’s something which we want to keep our focus on. The second thing, as we become capital light and as we Explore new models. I think we should see the return on capital metrics also starting to move in the right direction. I think those are the two metrics I would go by and not really top line growth. While top line growth is of course essential for any of these metrics to move. But I think I’m just saying from a goaling perspective, that’s how we are thinking of it.
Rama Krishna Neti
So just can we.
Manoj Bhat
There are five or six participants behind, I’m told. So. Last question from you. Please go ahead.
Rama Krishna Neti
Yeah, no, just can we assume that you know, you are trying to kind of reshuffle and trying to evolve kind of a new business model altogether than what has been happening in the last five, 10 years. Like something new, something different, something more experience led. Can we. Can we understand like that?
Manoj Bhat
Yes, Ramakrishna, I think we are evolving a new business model. Unfortunately it’s not at a stage where I can expand on it. But I think the thought process here is. I think the next stage of growth, the next stage of evolution will have to be different from how we grew in the past. And that’s driving some of these journeys as we speak. I think we are readying up for that. And as soon as I think we have all the things aligned and we’ll come back and talk about it.
Rama Krishna Neti
Sure. This helps. Thank you.
Manoj Bhat
Thank you.
operator
Thank you. The next question is from the line of Manoj Dua from Geometric. Please go ahead.
Manoj Dua
I’m audible.
Manoj Bhat
Yeah, I can hear you, Manoj. Go ahead.
Manoj Dua
Hello. Okay. Okay. So good afternoon. Thank you for taking my question as coming back to the last answer. So we clearly see there’s a different journey from Mahindra from the past that you have decided at what price to sell, whom to sell and how to sell. And this has resulted in better desired of customer according to you but lesser number. So and on the top of it you are increasing the inventory also. So can we assume that you believe that you have a threshold of the membership which is required to cover the basic expense and you want to generate that new mix of traditional hospitality and time share to get the best of the both of the world? Can you? I told that you will come into that.
But we don’t have all the metrics in the. So can you give some more color? What is the direction? What Mahindra Holidays is looking forward as a new strategy.
Manoj Bhat
So Manoj, I think as I said I can’t expand a lot on how we are thinking. But hopefully we should be able to do so soon. And we will arrange a separate call for that. But directionally so in my mind, I think as I said that we are looking at really the room as the center and main asset which we are creating. Room and the experience. Right. So these are the two things which are most important. And I think everything around is then centered around that. Right. And then the second thing which we are centering around is customer or member experience.
So I think as we think about adding more rooms, adding more experiences, I think our member experience will dramatically improve. The last thing is of course in terms of member growth and what sort of simplification we’ll do in terms of of member plans and how we can get better market aligned in terms of realizations. I think that’s the piece we are working on. But unfortunately as I said, I can’t talk about it right now. But more thoughts in the future on that.
Manoj Dua
Okay, fair enough. You said that we are not suitable for contract management. Can you expand on that earlier users to talk about that that you might do that? And I think it is possible in some sense. Is it? This is not possible as a business for Mahindra holidays.
Manoj Bhat
Sorry, what is contract management? Sorry, management contracts. Okay, so. So management contracts. I was referring to a question by one of the earlier speakers where he was referring to the model which is used by many players today to expand, which is a different model which is based on revenue and so on and so forth. In our model I think the revenue is kind of prefixed. Hence I was saying that that might not be suitable. So that was the limited comment on that.
Manoj Dua
On a different line of business like Hilton does or something like that. Can we do add one line of business like that?
operator
So sorry to interrupt but I request you to rejoin the queue for the follow up question.
Manoj Dua
I. I have given my question except to the management. Thank you.
Manoj Bhat
Thank you. So. So Manoj, I think there is nothing ruled out and all of these options are open. Yeah.
Manoj Dua
Thank you.
operator
Thank you. Ladies and gentlemen, please limit to two questions per participants and rejoin the queue for the follow up question. The next question is from the line of Gopinanda from pnr. Please go ahead.
Unidentified Participant
If the European economy situation improves and comes back to wherein we can get the rooms gets filled like the previous times. That level is our. Is the business model of HCRO that we what we thought of when we were buying it, is it still the same? It’s going to work if that is the situation or is there a complete change in what we thought when we bought and what is the current situation now?
Manoj Bhat
So I think Gopinath, there is a series of ifs in the question. So let me try to answer the best I can.
Right. So from my perspective, obviously the first thing is the timing of the recovery in the Finnish economy. Second is a geopolitical resolution and I do believe that if those two get fixed, I think we should be able to go back to some of our earlier. So if I’m just looking at F18 and F19, this was a business which was giving ebit of between 12 and 8 million. Those are the two numbers I have. And that’s the kind of potential for the business compared to probably it is operating at probably an overall yearly EBIT of about one or two today.
Right. So there is a huge amount of operating leverage in the business because the business is running at high efficiency now. What it needs is a demand spurt and that is what we are looking for. And then if we look at the business itself, I think both the businesses, it does both the timeshare business as well as the hotel business, I think these are inherently higher margin business on a variable basis. So I think that’s really. So I think it’s primed for, it’s a very efficient ship, it’s primed for demand revival and hence I think it would jump back very, very quickly if some of these changes happen.
As to the relevance of the model, I think obviously the hotel business is. The hotel business is always relevant and the timeshare business will continue to evolve with the times. I think that’s the way I see it.
Unidentified Participant
Okay, that means we are not in any plans of getting, I mean selling it off or are we looking to continue with it? I mean how long term are we thinking about that business? That is the basic question, sir.
Manoj Bhat
So as I’ve said in previous calls from, I think at this point in time I think the focus is on operating the business at an efficiency level.
I think the strategic options will only think later is what I would say.
Unidentified Participant
That’s it from myself. Thank you.
Manoj Bhat
Thank you.
operator
Thank you. The next question is from the line of Aditya Soni from an investment managers. Please go ahead.
Unidentified Participant
Thank you for the opportunity. I just wanted to ask, we Target to open 10,000 rooms in the next five years would mean that we have to grow by about 750 to 800 rooms per annum. So I just wanted to ask, you know, have we identified around 1500 rooms for the next two years?
Manoj Bhat
I think I answered that somewhere or maybe in my opening statement. I think if I look at the goal to hit 10,000, which means I have to add about probably 40 to 4,300 rooms from here. And I had said that there’s a visibility of about 65 to 70% of that today as part of the funnel including lands identified etc I, I hope that helps.
Unidentified Participant
So out of this 65% that you’ve identified how much of what percentage would be least? So earlier you had said that also
Manoj Bhat
I had answered Aditya that it will be about, I think about 30% maybe will be owned and that’s the ratio we will try and maintain 25 to 30%.
Unidentified Participant
And one more thing I wanted to ask. What is the financial advantage that we get in case we lease? So when you make a building, when you make a hotel you spend around 1.2 crores per room and when you’re leasing it out what is the average rental per room?
Manoj Bhat
So I answered this also I said that the way to think of it is from a capital efficiency perspective and a destination perspect. So there are certain destinations I would like to own and there are certain destinations there are partners who are coming forward and the return on capital employed for me in my own business is higher than any rental yield or lease yield which I am paying for them. And that’s something which I think drives that decision.
Unidentified Participant
Got it. And what about non UI losses?
Manoj Bhat
So what is, what does that mean?
Unidentified Participant
So it just means that the operational losses that we incur, you know the recurring losses that we incur on a normal operations
Vimal Agarwal
we don’t. Any operating losses so far as our India business is concerned.
Manoj Bhat
I didn’t get the question.
Unidentified Participant
So basically year on year if you just consider our revenue from hotels and resorts and expenses from hotels and resorts excluding the VOI component.
Manoj Bhat
No, no I, I think, see that’s an internal metric which we use. I don’t think that’s the right metric. If I have to compare like to like at a EBIT level I think we should give the credit of the VO income as well as the SF income to the resort revenue stream. Right. I think that’s the like to like comparison and that see the losses there are, I think if I look at it stable compare quarter on quarter. I think if I’m not mistaken from last year.
Unidentified Participant
Yeah but is there any plan to you know kind of narrow it down and how do we intend to since we have a lot of the member base is very high. So per member there’s always a loss year on year.
Manoj Bhat
I think that’s the wrong assumption Aditya. That’s the wrong assumption and I think really I don’t know whether we should get into the splitting this because There are some internal metrics we use and this is at that level I think look at the entire portfolio and look at the growth in profits in the entire portfolio and that’s been a very healthy profit growth. And I think we are all goal to manage the portfolio. While some pieces might be in invest mode, some pieces might be in areas where we would like to really sharpen the performance and actually harvest some of the investment.
Unidentified Participant
Got it. And one last question. So we intend to go to a, you know, member to ratio of around 43 or 46 and we are currently at 53. So that would mean that our incremental member to room would be 38.
Manoj Bhat
So I, I, I don’t think you should calculate in that terms. I had said, somebody had asked me I think a couple of quarters back and they said I had said that to fulfill member demand what is a good ratio I would be comfortable with And I had said 45 to 48. So there’s no 43 number. And I, I don’t think you should try to impute what is the membership addition by anything I say on member to room ratio because these are directional kind of statements.
Unidentified Participant
Got it done. Thank you so much.
Manoj Bhat
Thank you.
operator
Thank you very much ladies and gentlemen. In the interest of time, that was the last question. I would now like to hand the conference over to Mr. Manoj Bhatt, MD and CEO for closing comments.
Manoj Bhat
Thank you everyone for joining the call and I think maybe some of you might not have got the opportunity to ask a question. Please email us and we will definitely make it a point to reply. Also a couple of queries we had said. We will send you separately. Please write in and we will answer those too. So thank you so much for joining and as usual I think engaging discussion and look forward forward to the next one. Thank you.
operator
Thank you on behalf of Mahindra Holidays and Resort India Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.