For Mahindra Holidays & Resorts India Ltd, the June quarter was one of paradoxes. Occupancies stayed high at over 85 percent, profits surged nearly 70 percent year-on-year, and cash reserves touched a record Rs 1,576 crore. Yet, new member additions fell by more than half, and sales value declined 30 percent. The company’s flagship Club Mahindra resorts were bustling, but the business of adding new vacation-ownership customers as the very engine of its long-term growth appeared to slow. The numbers capture a company in transition. In the first quarter of FY26, standalone revenue grew a modest 7 percent to Rs 411 crore, but EBITDA margins expanded sharply to 39 percent, the highest in recent memory. Profit after tax rose to Rs 76 crore, supported by lower marketing costs and richer average realizations per membership, now at Rs 8.3 lakh. It is a margin story as much as it is a capacity story: fewer members, higher prices, and resorts running nearly full despite a larger room base of 5,794 keys. What investors are watching closely is whether this balancing act of fewer, higher-value customers and capital-light expansion can sustain. With the member-to-room ratio now down to 53 from nearly 70 five years ago, the company has eased its biggest structural constraint: availability. But the next question is harder. Can Mahindra Holidays turn that high occupancy into durable growth and returns that justify its premium valuation? Business model and margins: Making sense of the numbers At its heart, Mahindra Holidays runs on a simple idea: sell family vacations as long-term memberships. Members pay an upfront fee and an annual subscription, and in return get to holiday across its 120-plus resorts every year. That upfront cash gives the company predictable income, while the recurring annual fee keeps cash flows steady. In the June quarter, that model worked better on profits than volumes. Total income rose 7 percent to Rs 411 crore, but operating profit jumped 42 percent to Rs 161 crore, and net profit soared 69 percent to Rs 76 crore. Margins touched 39 percent, among the highest ever. The company added 1,524 members, down from 3,692 last year, but the average price per membership shot up 69 percent to Rs 8.3 lakh. Upgrades from existing members brought in another Rs 56 crore. The pivot to digital and referral-led sales, which now make up 65 percent of new sign-ups, helped cut marketing spends by 43 percent. On the operations side, Mahindra Holidays now runs 5,794 resort keys, up from about 5,200 last year. Most of its new projects are structured through leases or partnerships rather than outright ownership — a shift toward an asset-light model. Roughly 45 percent of its resorts are owned today, and the company plans to bring that closer to 30 percent. Occupancy and resort performance Despite expanding to nearly 5,800 rooms across 126 resorts, occupancy in Q1 FY26 held steady at 85.4 percent, a slight dip from last year’s record 89.8 percent, but still among the highest in the industry. For context, most branded hotel chains in India run at 65 to 70 percent even in good quarters. That figure matters because Mahindra Holidays has been adding new resorts at a rapid clip. High occupancy on a larger base means two things: existing members are using their holidays more actively, and new resorts are being absorbed into the network without pulling down utilisation. The company’s resort income rose 10 percent year-on-year to Rs 114 crore, driven by higher F&B spending and better yields from rentals. The focus is now shifting from selling memberships to monetising the experience. Management says pilots are underway at a few properties to package activities like spa, adventure sports, and curated dining, aiming to lift per-guest spending. On average, the member-to-room ratio has improved to 53, down from nearly 70 five years ago. This is a crucial metric for a timeshare business, but it tells you how many families are competing for one room. A lower ratio means members can actually find availability when they want to travel, improving satisfaction and driving referrals. Upgrades and referrals, in turn, are feeding back into the business. Upgrades contributed Rs 56 crore in the quarter, roughly 44 percent of total sales. These are low-cost, high-margin revenues since they come from existing members rather than new marketing efforts. Overall, the numbers show a healthy equilibrium. Resorts are full, collections are rising, and member engagement remains strong. The next challenge is to ensure that full rooms translate into equally full profits. Expansion and asset strategy Mahindra Holidays ended the June quarter with 5,794 keys, and has five new projects under development that together will add nearly 600 rooms over the next 12 to 18 months. These include new resorts in Ganpatipule (Maharashtra, 236 keys) and Theog (Himachal Pradesh, 157 keys), as well as expansions in Puducherry, Jaipur, and Kandaghat. The target is ambitious: double the inventory to about 10,000 keys by FY30. But the way it plans to get there is different. Only about 45 percent of resorts are owned today; the rest are leased or operated through partnerships. Over time, the company expects ownership to drop to around 30 percent, freeing up cash for expansion without stretching the balance sheet. This shift towards an asset-light model matters for investors because it directly impacts return on capital. Owning resorts ties up funds for years, while leasing allows faster expansion and better cash flow visibility. As of June 2025, Mahindra Holidays had no standalone debt and Rs 1,576 crore in cash, earning about an 8.8 percent annual yield. That gives it the flexibility to invest in high-return projects or fund new partnerships as opportunities arise. The new projects also bring better geographic spread with beach resorts in the west, mountain escapes in the north, and cultural destinations in the south. This diversification helps smooth seasonal demand and attract new customer segments. It also supports the company’s goal of building “circuits” of nearby resorts so members can combine multiple destinations in a single trip. What ties all this together is discipline. Management says every new project must clear the same hurdle: at least 20 percent annual return on investment, whether it is leased or built. That filter, coupled with tight cost control, explains why profits are rising even when sales volumes are not. In short, Mahindra Holidays is trying to grow without overextending by adding rooms, not debt. If it can sustain that pace while keeping occupancy high, it could emerge as one of the few Indian hospitality businesses that scale like a hotel chain but earn like a subscription platform. Holiday Club resorts: Europe’s slow turnaround While the India business has been firing on most cylinders, the overseas arm with Holiday Club Resorts (HCR) in Finland is still catching up. The business operates 33 timeshare destinations across Finland, Sweden, and Spain, with about 60,000 members and nine spa hotels. In Q1 FY26, HCR’s revenue grew 4 percent year-on-year to €31.4 million, led by higher spa and rental income. Its spa hotel revenue rose from €15 million to €16.8 million, while rental income climbed from €2.5 million to €3.2 million. Even so, the subsidiary remains in the loss territory. HCR reported an operating loss of €2.3 million, narrower than the €2.9 million loss a year ago. Occupancies improved to about 55 percent, nearly 10 percentage points higher than last year, but still below the 65 to 70 percent levels seen before the pandemic and the Russia-Ukraine conflict. Management says the turnaround is gradual. The Finnish economy has been in a mild recession, and tourism across Northern Europe remains subdued. Still, cash performance has improved, and the business no longer needs funding support from India. The focus now is on optimising operations and driving spa-based revenues with segments that have shown resilience despite weak leisure demand. For Mahindra Holidays, HCR serves two purposes: it gives Indian members access to Europe’s resort network through exchange programmes, and it provides a strategic presence in mature vacation-ownership markets. The financial drag is limited, with India operations contributing nearly all of consolidated profits, but a recovery at HCR could meaningfully lift consolidated margins in the next few years. Valuation and outlook: What’s priced in, what’s not Mahindra Holidays is not valued like a typical hotel company. Investors pay a premium for its predictable cash flows, strong brand, and debt-free balance sheet. The business trades more like a consumer brand than a hospitality stock because it collects cash upfront and builds long-term customer relationships rather than relying on daily occupancy swings. The bigger question for the market is whether profit growth can stay ahead of revenue growth. The June quarter proved that better pricing and cost discipline can lift margins, but for the stock to rerate, investors will want to see steady execution: more resorts going live, faster deliveries, and consistent member growth quarter after quarter. Analysts estimate that Mahindra Holidays currently trades close to sector averages on earnings multiples, despite a stronger balance sheet and higher margins. The valuation premium will hold only if the company shows that its recent profitability gains are not a one-off. Sustained growth in resort revenues, faster ramp-up of the new projects, and a recovery at HCR could all be catalysts for that. On the other hand, the risks are clear. Any slowdown in membership sales, delays in project handovers, or a drop in occupancy can quickly affect cash flows. Competition from branded homestays and boutique resort chains is also rising. But for now, the fundamentals look sound: full resorts, steady cash generation, and a clear plan to double capacity without taking on leverage. If Mahindra Holidays can convert those filled rooms into sustained profits and prove that asset-light growth can deliver hotel-like scale with consumer-brand margins, it will have earned not just loyal members, but patient investors too. Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting. Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
