Mahindra Holidays & Resorts India Limited (MHRIL) Q4 FY23 Earnings Concall Transcript

Mahindra Holidays & Resorts India Limited (NSE:MHRIL) Q4 FY23 Earnings Concall dated Apr. 26, 2023.

Corporate Participants:

Kavinder Singh — Chief Executive Officer and Managing Director

Analysts:

Ankit Kanodia — Smart Sync Services — Analyst

Senthil Manikandan — Ithought PMS — Analyst

Swechha Jain — ANS Wealth — Analyst

Nemish Shah — Emkay Investment Managers Limited — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Mahindra Holidays and Resorts Limited Q4 FY ’23 earnings conference Call. 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. [Operator Instructions] I now hand the conference over to Mr. Kavinder Singh, MD and CEO from Mahindra Holidays and Resorts Limited. Thank you and over to you sir.

Kavinder Singh — Chief Executive Officer and Managing Director

Good afternoon everyone and a very warm welcome to our quarter four and full year financial year ’23 earnings call. On the call with me today we have Mr. Sujit Vaidya, our CFO. I’m sure you have had an opportunity to look at the quarterly and the annual results and the investor presentation which is being referred to in our remarks today on the stock exchanges and our company website. I’m sure you have been following the travel and hospitality industry. You know that there is significant demand for domestic leisure travel despite record airfares and soaring hotel tariffs. FY 23 turned out to be a very strong growth year for us as the concerns around the COVID 19 pandemic began to wane and people started to travel, and we’re excited to travel with friends and families.

Today, we are seeing more-and-more travelers visiting our resorts, staying in our spacious accommodation, and experiencing the unparalleled service that our resort teams deliver. This has resulted in a very-high occupancy of 84% for the year with highest-ever occupied room nights, growing by 49% year-on year. Strong occupancy, higher member spends, we have grown our full-year resort income by 67% to INR323 crores, which is the highest-ever and Q4 resort income actually moved up by 40% Y-o-Y to about INR80 crores. We must say family vacation experiences have helped us gain significant momentum in upgrades which is [Indecipherable] of member satisfaction.

We have achieved highest of our upgrades at INR188 crores which is 71% up in FY ’23 and INR55 crores, 41% up for Q4. Our member additions have been extremely strong and we have added 5097 roughly 5,100 members, which is a 26% growth Y-o-Y this quarter with face value at about INR206 crores which is 33% year-on year growth. For the full-year, member additions were at 17,477, which is 37% growth over the same-period last year with sales value at about INR734 crores, which is up 70% year-on year. We would appreciate that this clearly shows the desirability of our product offerings and with these addition to our member base our cumulative member base stands now at approximately 282,000, member families. 85% of these are fully paid members.

The member additions run-rate has accelerated and we hope to continue this acceleration as we focus also towards growing our inventory and creating magical moments and new experiences at our resorts. Our member additions have been propelled and supported by the inventory supply. And so that the booking experience is world-class. You will also note that we have added approximately 1,200 rooms in the last three years, which is an acceleration in terms of number of rooms that we have added, like the — like of which have never been seen before.

Operator

Our member to room ratio is robust at 57 for the year with the addition of 372 rooms during the year. And by the way, as a result of which our total room inventory is now approximately 5,000 keys. The accurate number is 4940 across 102 resorts. We were able to add 256 keys in quarter four, FY ’23. We have expanded our presence in domestic locations through our PPP project with the Himachal Government in Janjehli, which is in Mandi district and this is a project that we completed in record seven to eight months.

Also, we have expanded our presence in Sikkim by having an opportunity for our members to holiday in Lachung. Jambughoda in Gujarat, which is near statue of Unity, Tirupati in Andhra Pradesh, Kandaghat in Maharashtra area, and also some [technical issues] experiences for our members who may want to go and sample them in Goa and Panchgani. We have continued to expand our international footprint in countries such as Maldives, Cambodia, Vietnam, Abu Dhabi, Nepal, and Chiang Mai. This year we expect to continue the momentum in inventory acceleration with multiple greenfield and brownfield resorts, including few acquisitions so we have a clear visibility of about 750 keys in FY 24 more will be added and more on that will come later.

Kandaghat which is our resort in Himachal Pradesh near Shimla, it is a 72 key resort, it is being expanded by 185 kets to make it a 257 key flagship resort. Construction has already commenced in February 22. Goa Assonora the third piece of our construction has commenced in October 22 to expand this resort by 44 keys to make it a 244 key resort. Puducherry resort which is a 125 key resort will be made 187 key resort by adding 62 keys. Construction is expected to commence in the quarter one of FY 24. We have received all the permissions for now starting the Ganpatipule project in Village Undi and the work has already started in April, 236 key resort at an approximate investment of about INR250 crores is going to be — is going to be invested in this beautiful resort that will come out on the side of the Arabian Sea coast.

We have land in [Indecipherable], we are planning to commence the construction during this year of 141 keys resort. We have realized that we have a significant opportunity as the Government of India has declared tourism on mission mode there are 50 tourism destinations that will come. There is huge connectivity in airport, roads that we are seeing all around us. So we have envisioned to do about 1,600 keys in about three to four years through our own investments with the capex outlay of roughly INR1,600 to INR1700 crores. And this investments, will be done from internal accruals and we will not be seeking any borrowings for making this happen.

Going-forward, we continue to build-on our strategic investments in new products, technology, people, and member experiences, which will continue to propel our business forward. We have dedicated and passionate teams in India and abroad, delivering unparalleled vacation experiences every day to our members and their families and we continue to positively impact the communities in which we live and work. I think it would not be out of place, if I were to not talk about our credentials in the ESG area. All Mahindra Group companies have a commitment to together revise initiatives. We have three brand pillars, Rise for a More Equal World, Rise to be Future Ready, and Rise to Create Value.

Our sustainability targets include carbon neutrality by 2040 through EP100, RE100, and science-based targets. EP100 stands for energy productivity, improvement by 100%, and renewables energy 100, running our resorts on 100% is RE100. We are committed to achieve these goals that we have signed-up for. I am delighted to announce that our resort Madikeri is India’s first resort which is net-zero certified in all three categories, which is net zero on waste, energy, and water. This is a significant achievement 11 of our resorts are greens resorts, platinum-certified by IGBC, we have been declared a pioneer in hospitality sector in terms of the number of green resorts that we have. As far as solar power is concerned, we have instaled the cumulative capacity of 5.97 MW across 22 resorts and this is meeting, 20% of our total energy demand.

Ideally end of this year, we expect this to take it to 11.7 MW and 40% of the total energy demand will be served through the solar in our resorts. Rainwater harvesting structures have been installed in 20 resorts with 588 Million liters or 60% of the total water consumption in our resorts is through the recycling that we do in-house. Moving on let me talk about the standalone financials, as I mentioned earlier FY 23 results have been exceptional. We moved down to full-scale of operations and we have ended the year, on a very-very strong note, highest-ever MHRIL standalone excluding one-offs total income grew by 24%, EBITDA grew by 18%, all these numbers are there so I’ll move very fast. PBT grew by about 17%, resort income up by 67% Y-o-Y, driven by higher occupied room nights, and member spends.

If I were to look at Q4 income up by 20%, excluding one-offs, EBITDA up by 18%, PBT up by 18%, and resort income at INR80 crores, up 40% year-on year basis. Moving on to Holiday Club Resorts this is the European subsidiary. I think we are very happy to report that the turnaround process of HCR has already started. Quarter-four has been a great quarter but before I get there I think we need to quickly understand two developments that have happened in this quarter as well as Finnish economy as well as the Finland as the country. Finland is now a member of NATO. Their membership got approved in this quarter that went by. In the FY 23, the Finnish economies growth forecast was revised downwards on account of ongoing Russia, Ukraine conflict and rising inflationary prices.

The good news is that consumer confidence is slowly coming back with inflation and energy prices coming off from the peak levels. We would appreciate and I’ve probably had mentioned earlier that HCR business has huge momentum during the quarter two, which is summer holidays and Q4, which is winter and spring holidays. Q1 and Q3 are not the seasons in Finland. But having said that, we are taking some initiatives, so that we are able to drive our members and Indian tourists to go to Finland during these off-peak seasons. Our total revenue in Finland has grown by 24% in quarter 4, 18%, in FY 23 despite Russia, Ukraine war and high inflation. Very strong domestic demand seen during the summer holiday season and skiing season in Q4.

You would also like to note that despite Russia, Ukraine war Britishers, Germans, Dutch they all came to Finland[phonetic] and holidayed in our Finnish resorts, giving us great momentum in-quarter four in terms of earnings. The quarter-four revenue from timeshare has grown by 37%, driven by higher sales and better realizations. But of course star hotels revenue grew by 19%, largely driven by higher occupancies and improve ARRs and of course, increase in F&B revenue in our Finnish resorts. Profitability Holiday Club in quarter four has delivered an operating profit of EUR6.4 million and profit-after-tax of EUR4 million, indicating a significant turnaround in the business, several cost optimization measures were introduced during the year-on a full-year basis. Holiday Club Resorts has delivered EUR5 million operating profit versus an operating loss of EUR0.3 million last year.

I like to give you a quick outlook on the Finnish business. Star hotels occupancies in the past have outperformed the local hospitality market in Finland and this trend is expected to continue while real estate in Finland continues to be under pressure due to the higher interest rate scenario. Timeshare demand has picked-up due to it’s relatively lower transaction price for the customer, timeshare allowance for partial ownership of a second home, which is a part of Finnish lifestyle and that is something that is leading to an improvement in the timeshare sales for our business.

Given the robust Business model improvement in consumer sentiment and the loyalty in the leisure travel the outlook for Holiday Club Resorts we believe is positive. I may just mention quickly consolidated financials. We had our highest-ever total income, roughly at INR2600 crores, up by 22% on a year-on year basis, EBITDA 42% year-on year basis, up and profit before-tax at INR177 crores, which is three times what we had last year number when we declared. Income in quarter four moved up by 32%, EBITDA up by 93% and profit before tax at INR80 crores, it is up 16 times. I would like to conclude so that we have enough time to hear your questions and answer to the best of our ability. In conclusion, the fourth-quarter has been a very strong quarter for us and this is aided by an increase in our resorts, destination choices, offerings, not only in India but even in the Scandinavian region. Travelers were consumed by wonderlust despite the geopolitical conflict and macroeconomic challenges present in that region. As I would like to further highlight and I had mentioned earlier that we are quite confident of monetizing the full potential of our large member base of 2.8 lakh member families. Of course, we will continue to leverage our brands and our digital assets and of course a large member base also provides us to get a very-high opportunity for reference, and I must say that we are very confident, using our digital assets, whether it is our mobile app, web page, and various other initiatives and various initiatives that we’ve undertaken will lead us to higher topline growth, lower customer acquisition costs, and increased member satisfaction as we make more-and-more newer experiences and offerings available to our members. We will continue to grow our resorts and destinations, which is now at 100 plus resorts with approximately 5,000 rooms and we are very confident member additions will also keep growing at a fairly brisk rate. We have created a very highly appealing product demonstrated through membership upgrades, which is an ultimate endorsement from our members, our overarching strategy continues to include new Ag new properties to our network, build marquee resorts, expand and evolve our membership product features to meet the expectations of the new age leisure traveler, which will lead to growth in our cumulative member base and this also drive resort revenues, strategies that will help us to create long-term value for all our stakeholders. As we meet the ever-changing demands of travelers we have added as you know few offerings, Club and Select and Horizons program, which has strengthened our viewer proposition, vacation ownership proposition further. If I look at FY 24 particularly this quarter, and I looked at the forward looking trends quarter four looks to be a quarter in which we will definitely cross 85% occupancy despite the number of rooms that we have added, so this demonstrates the significant opportunities that we have to drive revenue growth in the coming quarters as more-and-more members with higher purchasing power holiday at our growing new inventory. Our strategy of targeting higher down payment, lower EMI members is playing out as these members tend to spend higher on an average in our resorts. Sales contributions from referrals, digital, onsite sales is expected to continue to grow as you — as you already know that referrals and digital have contributed to 57% of our sales. We have opened new channels which we are focusing on whether to DSA channel, B2B2C channel and a dedicated team to cater to corporate employees extending targeted differentiated product offerings. Having crossed the milestone of 5,000 members we have continued — we are confident of continuing this run-rate and growing this run-rate in the coming quarters. Our focus remains towards a multi-product portfolio, whether with the majority mix coming from long tenure and medium-term their products as you can see our AUR has shown a healthy trend of 4.2 laksh for the full-year. And finally, we are working, new ways to use the digital transformation efforts that we are using already to unlock the power of data to advance analytics to improve efficiencies, drive growth in member spend, collections, referrals, and upgrades and sales conversions. The opportunities that lie ahead for us are exciting and our optimism about the long-term future has never been greater. Thank you for the time — your time this evening. We now open the floor for questions and answers.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ankit Kanodia from Smart Sync Services. Please go-ahead.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you for taking my question and congratulations on very good set of numbers. My first question would be, sir, it is our general consensus that room rent in India in the hotel industry is expected to go up over the say three years five years. So is it fair to assume that when the room rent in hotels all over the country goes up members or prospective members will find more value in our kind of offering and how do we want to capitalize on that, because our — we don’t charge any room rent. So can we expect during that period that BASF[Phonetic] income to go up, I believe a little bit higher. That is just my first[phonetic] question.

Kavinder Singh — Chief Executive Officer and Managing Director

Okay. I think we took a track. Thank you for this question. We do keep a track on the average room rates. It provides us opportunities to talk about our value proposition to our prospects. It also provides us opportunities to do some price corrections that we do in our package price. It is quite natural for people to think of how to prevent themselves from the constantly increasing room rates and you know, and this is something that today, people are feeling the pinch and we are noticing that our club Mahindra members are now holidaying more with Club Mahindra because they realize there is a huge value and I think our challenge always to communicate this value. If we are able to communicate this value to our prospect who has to just be the right prospect to be able to pay us in advance in the sense of paying the membership fee and becoming a member.

If we just do that part, right the proposition is extremely strong. As you can see from the journey in the last few quarters and few years. I think we are also aided by the macro tailwinds, whether it is the desire to travel, whether it is the desire to spend quality time with family, whether it is getting consistent brand experience which is so rare today particularly in leisure destinations. So there are those factors also apart from the inflation, because at the end-of-the day this product is also about the notion apart from the rational reasons. So our entire training to oversee staff is not to sell this only on rational basis, but also bring out the notion that if you do not holiday with your family, you are losing chance to enjoy some magical moments, which will be gone forever, because the time anyway doesn’t stay still.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you so much sir. That really helped. And my second question would be, before asking the question thank you for sharing the membership sales detail and upgrades detail. That really helped us. So I just use that INR734 crores membership sales and then deducted the upgrades amount of INR188 crores that comes to about INR576[phonetic] crores of sales and it comes down to about our 3,12,000 AUR. If I don’t include the upgrades. So how do you look at this figure first. I think one lakh of upgrades is existing, more members are upgrading, but are you happy with the 3 lakh figure of — what is your view on that, that could be the reason.

Kavinder Singh — Chief Executive Officer and Managing Director

So I think you know question about average unit realization should be happy with whatever way you presented the figures are not even getting there. Obviously, as management, our aim is to realize higher-value, but what we have realized now is that we can sell very-high value product and sell very low volumes and if we are able to blend the high-value and the mid value kind of products and get a foot in the door in of the customer and look at the opportunities that you may have seen this in our investor presentation also that how the business model works. If people get in and there is an opportunity to upgrade them, there is an opportunity to get them to holiday in our resorts and spend at our resorts, thereby creating a resort margin for us. So for us, if you look at lifetime value, if you look at the annual fee that they will pay over the tenure, those things also matter a lot over the current average unit realization that we may be getting. So it is about getting people to be interested in your business. Some people will come at a lower tenure, some people will come at a medium tenure, and therefore your AUR may appear to be low, but your ability to upgrade, your ability to earn revenue through the resort offerings is something that actually flows into the P&L over a period of time.

So it’s quite good to push for the AUR but not at the expense of attracting the right customer set, which will help you to grow business over a longer period of time in terms of generating multi years of value.

Ankit Kanodia — Smart Sync Services — Analyst

Fantastic sir. Sir, if I just one follow-up on this. So is it fair to say that. If you follow the strategy for long enough to maybe two-three years, four years down the line do we see because more members coming in maybe of three-year tenure or 10 year tenure, or 25-year tenure whatever be the tenure. We will have our result income and our interest income going up and the equity for revenue right now when we see vacation Ownership income forming the bulk of the revenue that may go down and our margins should also go up because of that, is it fair to with that kind of assumption.

Kavinder Singh — Chief Executive Officer and Managing Director

Yeah, see Vacation Ownership income now is only 33% of the total income. If you really look at it I mean, two years ago, it used to be more than 50%, so you can already see the resort income, the annual fee income, which is the income that we get after the member comes in is already above 50% of the total income. So you will appreciate that the initial fee already is not the dominant part of our income stream. It is to get the number in and encourage them to spend at the resorts where you make the margin on the tool and the activities and the annual fee, of course, to cover the maintenance, et-cetera, and the upkeep of the resorts so I think the business model is structured in a way that we need to use the membership fee to build the resorts. We need to use the members to spend more-and-more at the resorts through the resort income that is why I over highlighted the resolved income part and the resort income growing is a very, very good sign, because when people use, they also pay their annual fee and then we have opportunity to upgrade, which is up-sell or cross-sell apart from getting reference from them.

Ankit Kanodia — Smart Sync Services — Analyst

Thank. And sir, you did expand more on that the.

Operator

Mr. Kanodia, may we request you to return. Thank you. [Operator Instructions] We move onto the next question that is from the line of Senthil Manikandan from Ithought PMS. Please go-ahead.

Senthil Manikandan — Ithought PMS — Analyst

Hi, sir. Good evening, and congrats for the big set of numbers. Just a couple of questions. First one is on the inventory addition. So, in the earlier calls you mentioned that we will be targeting like 5500 keys by FY 25, but looking at the current guidance I think around 700 odd keys addition this year, we could easily cross that mark in FY 24, so could you please highlight on the change in capex plans for this year and also for next two years.

Kavinder Singh — Chief Executive Officer and Managing Director

I think I mentioned and I’ll once again mention that, yes, definitely 5,500 that we set-out is well within our reach and in fact we will cross that sooner than planned. Our aim is we are very clear that, as I mentioned that there are 50 tourist destinations. There are lot of PPP opportunities and there we see a huge momentum in this business. Therefore, we have upped the game by saying that we must build 1600, 1700 odd keys at an investment of roughly INR1700 or INR1800 crores and we can fund this ourselves without borrowings — needs for borrowings because of the business model and we have cash in our books. So we are accelerating in terms of number of keys that we will bring even if you were to see today and I think I mentioned in the opening remarks that we have a clear INR7,00 to INR800 crores capex which is already on the roll.

We have two very big projects, which are adding up to roughly INR500 crores, which is in Kandaghat as well as in Maharashtra, Ganpatipule area and then we have few expansion programs which are going on in our existing reserves. As we speak, we are also you know, we have land banks and we are planning for our next wave of greenfield projects that we want to setup parallelly. There are opportunities in terms of acquisitions in terms of properties, which might meet our requirements. So on an overall basis, just by our own investments and building our results I have talked about 1500 or 1,600 odd keys over the next three to four years. And of course, there is an option to see a good-quality resort, lease it and manage it ourselves, which is something that we do. So there is a huge opportunity to grow the room count, higher than what we have not only projected, we will definitely be there ahead of time and we are obviously going to sort of grow at a level where the rooms growth and destinations growth will in a manner run a little ahead of the member additions because we are also parallely ramping-up member additions.

Senthil Manikandan — Ithought PMS — Analyst

Okay, second one is on the Holiday Club Resorts. So we are seeing a good turnaround in Q4 and so, how would you turn this sustainable turnaround and what can we expect over the next two to three years on the margin front.

Kavinder Singh — Chief Executive Officer and Managing Director

So you know that in the Holiday Club Resorts you would appreciate because of two years in pandemic and one year of Russia, Ukraine war. You know, we have struggled a bit. Particularly in terms of generating you know, sufficient profits even though at an EBITDA level it broke-even despite the pandemic last year. This year despite the Russia, Ukaraine war you can see the Holiday Club Resorts has delivered EUR5 billion EBITDA at a full year level [technical issue]. Now what does it do going-forward. As I mentioned quarter one and quarter three tend to be slightly soft due to the seasonal aspects. So we are trying to see how we can boost the occupancies there through the way in which we can drive some international traffic including India in those quarters but Q2 and Q4 are going to be good and there are lot of timeshare construction opportunities that had been made available in the last one or two years.

Management has really worked hard to identify some new timeshare. You know, we make money in timeshare sales largely and spa hotels are basically to attract the customers, so that it can sell timeshare. So that’s the fundamental business model there, and the good part is that the — because of the cost restructuring that was done during the pandemic and to some extent last year, we are in a position to see definitely at a full-year level, much better performance than what we have delivered in this year and therefore we believe that there is a compounding story here as well. Moving on from now for at least two to three years, we will keep growing and meanwhile, we will keep performing our strategies to how to grow this business even further.

Senthil Manikandan — Ithought PMS — Analyst

Great sir, thanks sir, that is it from my side.

Operator

Thank you. The next question is from the line of Swechha from ANS Wealth. Please go-ahead.

Swechha Jain — ANS Wealth — Analyst

Hi sir, thanks for giving this opportunity. Sir, I actually wanted some data around our members and also the member addition that we have had in Q4. Would you be able to share us how many members were added in for the Finnish product, the Bliss and GoZest and also the overall member base that we have, if you could give me what percentage of it is typically 25 years Bliss and GoZest. And is there any group of members whose 25-year membership is coming to an end say over four or five years down the line.

Kavinder Singh — Chief Executive Officer and Managing Director

All right. I just wanted to give you a level data. We have about 2,000 members. 85% of them are fully paid and the profile of the members is, as you know, quite good in terms of variability to come and holiday in our resorts. It really doesn’t matter where the person enters, whether GoZest or whether it is CMH or a Bliss because we always have an opportunity to upgrade and that is why I would draw your attention to the upgrades. There our upgrades moved by 71% up on value terms but business is about getting people think at various tenures depending on their life stage that they are in, everybody is not a target audience for a 25-year product. Equally everybody is not the target audience for three years product.

All the objective is to get people think depending on their life stage, their needs, and that creates a great experience for them and upsell, this is what the business model is all about. That is why we do not generally talk about the drug product mix because if I have a lower tenure product I have an opportunity to convert, if I have a lower season product person. I have an opportunity to convert. So that is how these businesses are structured. I think the thing for you to also know is that the CMH 25 is absolutely the dominant form of membership. You know it from historical reasons and in terms of value continues to remain dominant even in our current picks. So broadly this is what we are in a position to sort of highlight, explain to the question that you asked.

Swechha Jain — ANS Wealth — Analyst

Okay, so sir just a follow-up. So just wanted to understand you know, what is the type of membership or what is the key parameter in terms of membership that we should look at for our company’s continued growth and for a model to be hit. What kind of members do we need,do we need 25 years, 10 years, or GoZest or like you said, it really does not matter, like what is the key metrics that you know that matters the most to us for our success.

Kavinder Singh — Chief Executive Officer and Managing Director

Okay. My understanding of your question is, what is the ideal that we are looking at, is that what you said.

Swechha Jain — ANS Wealth — Analyst

Yeah, so I want to [multiple speakers]

Kavinder Singh — Chief Executive Officer and Managing Director

Want as an ideal mix, is that what you are suggesting.

Swechha Jain — ANS Wealth — Analyst

It really matters to us in terms of when we add members like.

Kavinder Singh — Chief Executive Officer and Managing Director

Okay, okay. I think it’s a very good question anyway. What really matters to us is the ability to continue to enjoy your holidays meaning, once you have paid the membership fee, come to the resort, spend money at the resort, enjoy the experiences, upgrade yourselves, refer new members. So our target audiences people who wouldn’t want to spend quality time with their families, extended families, and friends who would be once happy bringing more members, who would spend the money on both food and beverage and activity experiences. So that is an ideal profile for us and the large percentage of our members actually fall in this category. Because if they join as a blue-season member I have an opportunity to convert them into white and eventually red and eventually purple, because as they evolve in their life stage this is what happens.

We have a 15-year product council and we see a very similar trend. Our idea would be get people to experience and once they experience, they tend to upgrade, they tend to refer and of course they pay their dues in time, which is what helps the company to grow and which is what the real secret sauce of this business is.

Swechha Jain — ANS Wealth — Analyst

Great, okay — okay and sir my second question is regarding the HCRO. So just want to understand, even the profitability that has been shown in this quarter. Now, can we safely assume that it has completely turnaround or this was like a one-off kind of thing that we saw in this quarter?

Kavinder Singh — Chief Executive Officer and Managing Director

So the reason we have used the word turnaround in our call, as well as everywhere is that imagine, there is not — it’s very difficult to some extent, imagine also there is a war going on in Russia and Ukraine. Here our resorts are running full and Finland very-very long border with Russia., it still being a member of NATO. We found confidence in the Finnish customer and the Finnish banks and between these businesses is of a very-very different level, people are traveling to Finland. As I mentioned Britishers, Germans, Dutch, and many other nationalities are coming and enjoying the resorts in Finland and more so in the winter skiing season because it is certainly a destination. These are not one-offs, this if you look at it the same conditions existed last year, but last year the war started in February and that had led to dampen the sentiment of people coming to Finland and they were little bit worried and most importantly, we have seen the people in Finland have not stopped traveling.

They have a desire to own a second-home that is a very Finnish lifestyle and they find that it is difficult to buy a second-home and therefore they end-up buying timeshare which is a low transaction value product. So again there is a positive momentum for timeshare, that we are noticing there. So for us, there is another thing that happened parallely, by the way during the pandemic they were very conscious on their costs, they kept on managing their cost, extremely well. As a result of which the [indecipherable] and therefore, what you’re seeing is a result of actually many quarters of planning and work, and the occupancy obviously was critical and that happened and that is how you see the results.

Going-forward meetings are likely to happen. The consumer sentiment will improve because of the reasons I mentioned the timeshare transaction prices are low number-one, number two, the inflation has come off their peaks, the energy prices have come off their peaks. Matter of time that Finland will actually even technically move out of recession. Now therefore, we believe not only that travel within Finland will grow which is anyway very good, international travel is bound to move even faster. On the knowledge that I have that even as we speak FY 24 in these winter skiing season, bookings are already beginning to look full, which means people plan so much in advance that if they want to enjoy the winter skiing season they have to book now. So this is something that we are getting reports that the bookings are looking very robust for even the FY 24 season.

So it is not a flash in the pan. It is a complete turnaround both on the cost side as well as on the revenue side and therefore you will see the performance in FY 24 superior to FY23 significantly.

Swechha Jain — ANS Wealth — Analyst

Okay, okay, okay. Thank you sir. That is really helps a lot, and congratulations for an amazing set of numbers, sir. Thank you.

Operator

Thank you. The next question is from the line of Nemish Shah from Emkay Investment Managers Limited. Please go-ahead.

Nemish Shah — Emkay Investment Managers Limited — Analyst

Yeah, thanks for this opportunity, and congratulations on a good set of numbers, so I had a few questions. So firstly on the upgrade that we’ve seen in the financial year. Can you just help us, give some sense in terms of mix, like how much was driven by change in-season and how much was the upgrades with [indecipherable].

Kavinder Singh — Chief Executive Officer and Managing Director

Yeah, it’s a very good question. But at this moment of time I neither do have an answer nor do we plan to sort of share this level of detail. It’s a very operational detail. As far as we are concerned, we are constantly changing opportunity for season upgrade, apartment upgrade, tenure upgrade. It is a mix. And for us it’s all about creating our product proposition stronger and getting people to think of upgrades, so even internally, we do not focus too much on the breakup here.

Nemish Shah — Emkay Investment Managers Limited — Analyst

Right. And for this new 15-year product was it launched in the last quarter or are you planning to launch it next year?

Kavinder Singh — Chief Executive Officer and Managing Director

I think 15-year product came in sometime around the second-half and it’s a product which is seeing good momentum and we are and it’s a product like it’s a long-term product without a doubt, so 15 year is not a small tenure. And we used to sell a bit of 10-year product. So we are noticing that the 10-year product is almost being replaced by 15 and 15 is growing. So, the good part is that is what also helped us to move our average unit realization that you see, because obviously the 15-year product is priced higher than the 10-year product. So we notice there is an opportunity here and that is how we created this product and we are noticing that there is a momentum. So that’s why I’m saying that we are noticing that there are if you follow a multi-product portfolio strategy, getting the right people who have done higher down-payments who have the capacity to pay and capacity to spend did not only boost our resort revenues, they help us in doing upgrades and they actually make the business model work the way it was intended to be.

Nemish Shah — Emkay Investment Managers Limited — Analyst

Right, understood. And lastly, sir, this member to room ratio now from 71 in FY 14, is down to like 57 now. So if you could give some sense directionally where would you like this to — will it move up or would it be stable at this range.

Kavinder Singh — Chief Executive Officer and Managing Director

Yeah, see. Inventory comes in fixed starts, it doesn’t come in linearly as the members come. So it’s very difficult for me to say whether we will move towards 52 or 60. It will truly depend on the rate at which the inventory comes and the rate at which the number additions happen, but what I want to make a point is that 57 is actually a great number because we are not seeing any issues with respect to being able to meet our you know that services to offer our services with regards to bookings, just to let you know that even with 5,000 odd rooms we have only 84%, 85% percent occupancy. There is room — there are rooms available in various resorts at various points of time. So there is significant improvement in availability. It is leading us to get us very-very good [technical issue].

Operator

[Technical issue] please proceed with your question.

Unidentified Participant — — Analyst

Yeah, hi congratulations Kavinder on good set of numbers. Hello.

Kavinder Singh — Chief Executive Officer and Managing Director

[Technical issue] Thank you. I am hearing you.

Unidentified Participant — — Analyst

Sir. Now looking back I mean, little weird question as I appreciate that our main proposal is — proposes that to new customer anytime he is traveling with the family. But at the current moment like millennia[phonetic] which is going to be a family member after five years, six years. So to attract those kind of a member what are our schemes or what is our strategy.

Kavinder Singh — Chief Executive Officer and Managing Director

Okay. Very good question. I expected obviously from you. You know — you may know that we have a product called GoZest. It is a three-year product. Actually, it is at the millennials and if you look at our activities in our resorts also there are lot of adventure activities that we have. There are various oppositions that are there at the resort for younger people to come and go on treks, trails, go outbound adventure, soft adventure of course. And enjoy a lifestyle which they probably have not seen. While they have been doing up or maybe they have seen. The objective is to introduce them to this world and the idea is that using the Horizon program, they can even go international. And also through the plug and select program, they can even go and access one million hotels, 70 thousand-plus experiences, around the world at a very significantly discounted rates, not to forget there are cruises also, that they can go for and see around the world. There are 12 thousand-plus cruises which are listed on the club.

So the idea is to create them, introduce them to the idea of club where they feel that they are a member of a club community where they can experience these things. And then, my confidence level is that they will not find it easy to leave us after three years, because they will miss a lot of what they have got. So the trick is to get them in, give them great experience and then upgrade into either a 15-year product or a 25-year product and that is what we are trying to do.

Unidentified Participant — — Analyst

Fair, but my second question. I mean, like see at the moment, they don’t travel with the family many times they would prefer to go among the group, their own group where all the people are — may not be a member or so, how do that can really align with their group so to come and really have that experience. My question is pertaining to that. So if one member goes, but other member of group member goes so they are not members. So any strategy or thinking on that line.

Kavinder Singh — Chief Executive Officer and Managing Director

Yeah. I think it’s a very-very good question as again I would say that. There are people who bring guests on guest fee and we are able to upgrade — actually sell new memberships at the resort to the members guests. In fact, a lot of our sales that happens in the resorts happens through members guests. Of course, it is something that is actually a creation of a great funnel. And the second thing is when the group is trying to travel together and they find this problem this is another way where we tap them for the referrals and this is the time they refer their friends and say that, listen, we want to travel together, can we buy one more membership or two more membership. So for us it works so-far obviously you know, is there a way to sell group memberships, maybe there is an idea of where we can sell it to a group of six or seven people who may want to travel together. You know sell them seven memberships, but they are all tagged as a group, et-cetera, so we can give them some benefits.

All those ideas are definitely on the table, Bharath Bhai, but today we allow the member to bring in guests, of course subject to availability and that guests can definitely look at our sales back and buy a membership, which is how we today get members guests to look at our membership.

Unidentified Participant — — Analyst

Fair sir. And the last question on.

Operator

Sorry to interrupt [Technical issue]. The next question is from the line of [indecipherable] Capital, please go-ahead.

Unidentified Participant — — Analyst

Yeah, hello. Am I audible?

Operator

Yes sir, please proceed.

Unidentified Participant — — Analyst

Yeah, hi, so thank you for taking my questions. So, firstly. I just wanted to ask that you’ve mentioned that you’re going to do a capex of say INR1600 or INR1700 crores. I just needed a timeframe over which it will be executed the entire amount.

Kavinder Singh — Chief Executive Officer and Managing Director

So the time-frame that we have mentioned in our call and again, I mention is between three to four years.

Unidentified Participant — — Analyst

Okay, all right. And apart from that like what are the plans on say, margins and revenue growth going-in the next two-three years. I know how you see the member additions going-forward currently.

Kavinder Singh — Chief Executive Officer and Managing Director

Member addition, see the idea is to accelerate member additions. If you’re accelerating inventory then member additions must accelerate.

Unidentified Participant — — Analyst

Alright.

Kavinder Singh — Chief Executive Officer and Managing Director

Without which our business model does not work. So we are obviously making plans to accelerate member additions as I mentioned in my opening remarks. Whether it is through the referral route, whether it is through the digital route, whether it is through the onsite sales route, whether it is the corporate sales route, whether it is through DSA route, and also going to the smaller towns. The objective is to drive member sales and that is something that we are driving multiple initiatives and some of the results that you are already beginning to see. And to my mind that is very-very critical that while we drive the inventory additions we also drive the member sales hand-in-hand or moving together or marching together, that is what is our strategy right now.

Unidentified Participant — — Analyst

Okay. And also on the margin front. It is supposed to remain the same like the.

Kavinder Singh — Chief Executive Officer and Managing Director

On the margin front, I want to make a point that when you accelerate growth, particularly in our business where the revenue gets deferred, the costs are taken upfront, right. So if you accelerate member additions and accelerate inventory, there could be in the short term, margin may not grow. Okay. May not grow the way it has probably grown between pre-pandemic and now, but it is very, very clear that in our business, we have an unbooked profit sitting in the books, as you know that we have added INR244 crores to the deferred revenue, of course, there is a deferred cost also which goes, but the relatively deferred revenue to deferred cost if you minus, the gap is around INR4,500 crores. So there is that level of money sitting there, which will keep accruing. So for us, we are confident that if we get the member and if we get the inventory, the profits in the short term margins may not grow but they are bound to grow with the accrual income with cost as we move forward.

Unidentified Participant — — Analyst

Okay, thank you so much.

Operator

Thank you. The next question is from the line of Raj from Arjav Partners. Please go ahead.

Unidentified Participant — — Analyst

Am I audible?

Kavinder Singh — Chief Executive Officer and Managing Director

Yes, you are.

Unidentified Participant — — Analyst

So I wanted to know, how much for FY ’24 are your expansion plans like?

Kavinder Singh — Chief Executive Officer and Managing Director

Okay. In the FY ’24, clearly there are at least six projects which are on. We have one project, which is in Kandaghat which is already on, INR200 odd crores investment. We have another project which is Ganpatipule, where INR250 crores [phonetic] investment has started in April, this year, as we speak. Right now, we are in April. So these are the two. The other one which will start in Pondicherry, our own resort. We are expanding another INR60 crores, INR50 crores odd is anyway going in Goa, Assonora which is where we are putting in another 44 odd rooms. And we have plans to start a new project this year of about 140 rooms in a place called [Indecipherable], which is also in Himachal. And there are few acquisitions, which are being lined up and there are few other land banks where we would try to start some more new resorts. The idea is to keep adding to about 700, 750 keys visibility that we have. This excludes any acquisitions that may happen or any leases where we own, where we manage the resort through the complete takeover of the resort.

Unidentified Participant — — Analyst

All right, your expansion plans are around, I can expect INR500 crore for FY ’24, am I right around INR500 crores?

Kavinder Singh — Chief Executive Officer and Managing Director

We do not give capex guidance with constant aim to — fortunately, we are not strapped for cash, if we — if there is a project going on, cash is not the reason for the project to be delayed. There would be some approvals that may come little late. There could be some other extraneous factors, but we do not see cash as a constraint and therefore capex will happen if we are planning to make it happen.

Unidentified Participant — — Analyst

Understood. And for FY ’24 end, can we expect the room inventory to go by — to go at 5,680 rooms to come on stream by FY ’24.

Kavinder Singh — Chief Executive Officer and Managing Director

So we are not giving this level of guidance. We are constantly mentioning that inventory happens in fits and starts, because it is not a quarterly phenomena. It is not a daily phenomenon, construction activities are going on, retrofitting activities are going on in existing lease resort where the inventory comes through acquisition, activities are going on. So we really don’t commit at a year level inventory. That’s why, I gave you a forecast which is a medium-term forecast, where I said three to four years, we should look at clearly 1,600 to 1,700 rooms addition is something that we have mentioned already.

Unidentified Participant — — Analyst

All right. That is it sir. Thank you so much.

Operator

Ladies and gentlemen, due to time constraints that was our last question. I now hand the conference over to Mr. Kavinder Singh for his closing comments.

Kavinder Singh — Chief Executive Officer and Managing Director

Thank you so much for attending our call. As I have mentioned always that we learn a lot from your questions. We — we think a lot about the questions that you asked, we have been improving and increasing our disclosures, as you may have noted, and I just want to say that once again, I want to repeat that we have never been more confident of the future than now because we see tailwinds both in the India operations as well as in the European operations that I talked about. On that note, me and my colleague, Sujit, who is also on the call, would like to say thank you. And would remain available for any questions or queries that you may have through the usual channels. Thank you.

Operator

[Operator Closing Remarks]