Mahindra Holidays Navigates Monsoon Challenges with Robust Q2 FY26 Performance

Mahindra Holidays & Resorts India Limited (MHRIL) has reported a resilient performance for the second quarter and half year ended September 30, 2025, demonstrating strategic clarity amidst a dynamic market. Despite facing challenges from unusually heavy monsoons, which led to an estimated loss of 10,000 nights due to cancellations, the company delivered solid financial results and continued its strategic expansion.

For Q2 FY26, MHRIL's standalone total income increased by 3% year-on-year (YoY) to INR381 crores. The company's EBITDA saw a significant 18% YoY jump, reaching INR141 crores, with an impressive EBITDA margin of 37%. Profit After Tax (PAT) also grew by 10% YoY to INR52 crores. On a consolidated basis, total income rose by 6% to INR749 crores, and EBITDA increased by 16% to INR185 crores, achieving a margin of 24.7%. The company's cash position remained strong, improving by 6% to INR1,532 crores as of September 30, 2025.

Strategic Expansion and Digital Transformation

MHRIL is aggressively pursuing its vision to expand its inventory base to 10,000 keys by FY30, a significant increase from the current 5,742 keys across 118 resorts. This expansion strategy includes a mix of new resort additions, such as the recently opened property in Mahabaleshwar, and the expansion of existing resorts in locations like Kandaghat, Dindi, Patkot, and Jaipur. The company also has three ongoing Greenfield/brownfield projects in Ganpatipule, Theog, and Puducherry. A key aspect of this growth is a capital-light model, with management indicating that approximately 70% of incremental key additions will come from such arrangements.

Digital transformation and AI integration are central to MHRIL's operational strategy. The company has successfully rolled out DigiSell, a digital engagement tool for assisted selling, achieving 100% compliance. An AI-based inventory optimization tool, RIYO, helps predict check-in occupancy 60 days in advance, enhancing efficiency. Furthermore, AI is being leveraged for a referral engine to identify high-propensity members for referrals and to analyze customer feedback across various channels. Management anticipates AI will redefine many operational aspects over the next 12 to 24 months.

Member Acquisition and Value Enhancement

The company's focus on selective member acquisition and enhancing member value is yielding positive results. Member additions through referral and digital routes now constitute 66% of total sales, an increase from 58% in the previous year. This shift towards more efficient channels contributes to better conversion rates and optimized acquisition costs. The Average Unit Realization (AUR) has seen a remarkable 85% year-on-year increase, reaching INR9.3 lakhs, reflecting the acquisition of higher-value members. Upgrades from existing members also contributed significantly, growing by 24% to INR66 crores this quarter, underscoring strong member satisfaction and the perceived value of MHRIL's offerings.

Despite the positive trends, the company acknowledged that net member additions were flattish or negative in the first half of the year. However, management expressed confidence that the member-to-room ratio would improve with the planned inventory additions in the second half of the year. The company's international presence, primarily through an associate model, continues to perform well with occupancies close to 90%, albeit representing a smaller portion of the overall inventory.

Outlook and Management Commentary

Mahindra Holidays is committed to delivering a differentiated business model focused on family vacations, larger apartments, and a multi-product portfolio catering to diverse consumer segments. The company's strategy includes sharpening experiences and making them more curated, moving beyond just providing rooms to creating lasting memories. This approach, combined with a strong emphasis on service and brand standards, aims to build a hard-to-replace brand edge.

Management highlighted the robust growth in the Indian travel and tourism sector, driven by favorable demographics and rising discretionary spending. The company's disciplined capital allocation, strong cash generation, and proactive use of technology position it well to capitalize on these opportunities. While a one-time interest charge of INR7.8 crores and an equity adjustment of INR79 crores impacted the quarter, these were part of a comprehensive review of historical tax positions, indicating a commitment to transparent financial practices.

Overall, Mahindra Holidays & Resorts India Limited's Q2 FY26 performance reflects a company that is strategically expanding its footprint, enhancing member value through digital innovation, and maintaining financial discipline, all while navigating external challenges. The focus on experience-led holidays and a capital-light expansion model sets a clear path for sustained growth in the thriving Indian hospitality sector.