We are managing to keep our head above water with collections from members: Sterling Resorts chief
Sterling Holiday Resorts Ltd. is planning to double the number of rooms in the next four years to 4,800, says chairman Ramesh Ramanathan. Excerpts:
What has been the impact of the pandemic on business?
From October 2020 to March 2021, occupancies continued to grow, but not to previous levels. Still, we made a profit due to various cost-control and productivity-enhancement measures initiated by us. We were in a comfortable position and reported profit despite occupancy being at 50% to 55%. Normally, occupancy level would have been over 65%.
We expect the coming months, after lifting of lockdown, to improve, but not rapidly. During the first wave, members started travelling after the lockdown was lifted. It was always drive-to-holdiays to resorts within 4-5 hours driving distance. We expect them to come back once the lockdown is lifted. We expect things to improve with the opening of resorts and hotels in the order of west, north, south, and eastern parts of the country. Thereafter, people will take holiday and will drive to nearby destinations.
Will FY22 be any better?
We expect the second wave to last till end June, but are not sure when or whether there will be a third wave. This year, we lost summer, just like last year. The bookings for the first three months are negligible with some business in early April alone.
We are managing to keep our head above water with some ongoing collections from our members, but all our avenues for income are presently closed. We are betting on the next nine months of uninterrupted business and that depends, on which States are opening up for business and when.
If, we get full nine months, then it will be marginally better than last fiscal, where we barely worked six months. We expect more people to get vaccinated, creating a barrier to the virus and this should result in more guests driving for holidays.
Tell us about your time-share numbers?
We have about 85,000 time-share subscribers. They did not travel for holidays during the first and second wave of the pandemic. These are members of product with a duration of 25 years. Normally, their holidays would have lapsed, if they do not utilise. But, during COVID-19, we have extended the stay and have allowed them to use it after COVID-19. Recently, we came out with a new scheme Anytime Holiday, for our non-member guests. Guests can buy this product now and can use it any time from now till December or March 2022. This is a limited period offer.
What is the biggest learning from the pandemic?
The pandemic has taught us a big lesson, especially in terms of running the operations in a more efficient way. We are taking up digitisation across our properties and this has helped us to be more positive in this period and perform better.
On impact of the lockdown on the hotel industry…
Obviously all resorts were closed and there were travel restrictions. COVID-19 has taught has one thing, people started travelling broadly within the State and within driving distances in their own cars. So, there is a big change in holiday patterns of customers.
Instead of booking hotels months in advance, they are waiting till the last minute. But this pattern will change, once normalcy sets in.
What is the proposed capital expenditure for FY22?
We are going to follow an asset-light model and so [there will be] no major capex for the current year. We will be entering into management contracts with property owners who will provide inventory and infrastructure. Employees, except general manager and CFO, will be from our side. We will provide training, lend our expertise, logo and brand. The investment will be mostly on IT and digitalisation.
On expansion plans…
Right now, we have 2,400 keys (rooms) in 35 resorts and we will be adding 400 to 500 keys in the current fiscal through five to six properties. Our vision is to have 4,800 keys through 60 to 70 resorts within the next four years and to be a leader in the holiday company space. We are looking for properties with 50 to 100 keys. Our expansion is very much on track.
Where are the new properties being planned?
We are pretty much strong in the South. We will be aggressively entering the West and North. We are looking for properties across the country. It is no longer hill stations, pilgrimage centres, beach resorts or heritage sites. People would like to travel and explore new destinations.
During the year, some of the new properties will come up in Mysuru, Igatpuri and Karjat. They were delayed due to COVID-19. We have identified properties in Allepey, Coorg, Shimla, Alibaug, Tirupati, Madurai, Thanjavur and Varanasi.
What is the revenue share ratio between a member and a non-member?
Sterling started time-share concept about 25 years ago. We have 80,000 members and will be adding 20,000 to 25,000 over the next four years. The revenue from members and non-members is about 50:50. Similarly, the revenue from room rent and food and beverages is more or less equal.
Do you plan to foray into the international arena?
Not for now. India is big enough, so we might as well do enough here before we take a step outside.
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