Ramesh Ramanathan, MD, Sterling Holiday Resorts (India) Ltd is an Economics graduate and a rank holder from Madras University, with a Management Degree from the Indian Institute of Management, Kolkata, Ramesh has over 33 years of work experience over a range of industries, starting with the intensely competitive Paint Industry. A successful stint of over 10 years in that industry was followed by stints in consumer durables, tyres, organized retail, IT and hospitality. Ramesh has been one of the pioneers in the Vacation Ownership industry in India. He began his tryst with the Vacation Ownership industry with Sterling Holiday Resorts in the early 1990s before leaving the company to help set up Mahindra Holidays and Resorts in 1996.
Sterling Holiday Resorts (India) Limited is a pioneer in Vacation Ownership and a leading Leisure Hospitality company in India. Sterling was incorporated in 1986 with the vision of delivering Great Holiday experiences to Indian Families. To achieve this vision, the company pioneered Vacation Ownership in India and set about building a network of leisure resorts at some of the best holiday destinations in India. Currently, Sterling has 18 resorts located in Corbett, Darjeeling, Gangtok, Goa, Karwar, Kodaikanal, Lonavala, Manali, Munnar, Mussoorie, Ooty, Puri, Thekkady, Yelagiri and Yercaud. The company also has 15 additional sites where it plans to add new resorts in the coming years.
Replying to Yash Ved of IIFL, Ramesh Ramanathan says, "We intend to build on the momentum gained in FY12 by continuing the process of rebuilding the Company through additional investments in our product, service, people and technology as this will be key to consolidating and accelerating Sterling’s resurgence."
What are your plans for FY2012-13?
During the year, the Company added 4 resorts – Thekkady, Karwar, Corbett and a second resort in Goa - taking the total number of resorts to 18. In addition, the Company has signed MOUs for four more resorts in popular holiday locations.
The Company is continuing its plans to upgrade and renovate its existing resorts to raise the product and service standards across its network.
The company is also planning to expand into 19 locations from the current 15 locations in the immediate future. Over the next few years, the Company is likely to spread its wings further since it has a land bank of 15 additional sites where it can construct leisure resorts.
What’s your business strategy?
We intend to build on the momentum gained in FY12 by continuing the process of rebuilding the Company through additional investments in our product, service, people and technology as this will be key to consolidating and accelerating Sterling’s resurgence
Brief us about your financials?
The company has announced its results for the quarter ending June 30, 2012. The Company continued witnessing an impressive growth momentum with Income from Sales of Vacation Ownership Plans increasing by 250% from Rs45mn in the previous year to Rs158mn.
The quarterly Total Operating Income of the Company was reported as Rs317mn, as compared to Rs185mn for the same period of the previous fiscal, representing a 71% growth.
The Company declared an EBITDA of Rs10.80mn, reflecting the positive growth trend.
What is the outlook you see for the hospitality sector?
India has vast potential in its domestic tourism sector. The Indian tourism sector has been seeing sustained growth in the ﬁrst decade of the twenty-ﬁrst century, driven by the aspirations of a burgeoning middle class segment and increased Central and State Government investment in promoting tourism. The direct contribution of the Tourism sector to GDP stood at Rs. 1689.8bn; a figure that is projected to increase by 7.6% in 2012, and 7.7% per annum thereafter right through to 2022. The growing interest in travel by the Indian populace is also reﬂected in the fact that India is one of the fastest growing outbound travel market in the world today, clocking an impressive growth of 20% over the last few years. There were 6.39 million Foreign Tourist Arrivals in India in 2011 as compared to 5.8 million in 2010, representing a growth of 8.9%. More significantly, India still has only 0.64% share of world tourist arrivals – a figure that indicates the enormous room for growth in a country that is acknowledged to be rich in culture, heritage and natural resources. However, to accentuate the growth, India will need to encourage and accelerate investment in the availability of good quality and affordable hotel rooms since as of today; the country has just 168,856 hotel rooms.
In the area of Vacation Ownership, there has been a considerable increase in the awareness of the concept in recent years, accompanied by a favourable disposition towards buying ‘holiday plans’ for longer tenures. This can be seen to be in line with the growing consumer interest and demand for leisure travel.
What are your fund raising plans?
We are currently debt free and have no plans to raise debt as we think we will be able to fund our expansion through internal accruals.
Our immediate focus is on raising the customer satisfaction levels by investing in the refurbishment and upgradation of our resorts to contemporary, best-in-class standards. We are also simultaneously concentrating on expanding our destination footprint, as evidenced by the opening of 3 new destinations in quick succession. The overall investments in the current fiscal will be around Rs 120 crore and this will come through revenue, equity and internal accruals.
Do you expect increase in average room rates?
We have raised our room tariffs for our Hotel Stay guests in line with our enhanced standards and in order to cover inflationary costs. The tariffs, however, are still market competitive and value-for-money. In the case of our Vacation Ownership members, their room rates are protected as they purchase a plan of 25-years tenure.
What is your revenue mix?
Sterling Holidays has 3 lines of business: Vacation Ownership plans, Hotel Stays & MICE solutions. As on date, we have around 1,374 apartments spread across 18 resorts. Out of 1,374, close to 1,100 are own apartments and the rest are leased. The company’s vacation ownership membership base stands at 65,000 of which 56,000 joined in 1986 when Sterling commenced operations. We are targeting 80% revenue from our members and 20% from normal hotel business.