Lemon Tree Hotels - Market leader in mid-priced hotel sector

Lemon Tree Hotels: Planning to add 30% inventory by FY25 (asset-light). Retail demand has picked up strongly & corporate demand is picking up as business events as well as flights are improving. Higher occupancy & better pricing would improve performance. Company has guided for EBITDA margins of 50% in FY23, compared to about 48% in H1FY23.


Hotel - On a strong wicket - HSIE-202301271523464011426.pdf (2.2 MB)

Hotel sector Hdfc securities institutional research report enclosed

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G20 ,MICE,weddings,lower expenses cost control
hotels in a upcycle as per the hdfc report enclosed

Two hotels in two states bring on board more than 100 rooms

New Delhi, June 2, 2023: Lemon Tree Hotels Limited announced the opening of
two of its latest hotels ~Lemon Tree Hotel, Agra, and Lemon Tree Hotel, Bhopal.
With these two launches, the company makes its debut in both the cities and
also adds more than 100 rooms to its inventory.

The Company has signed a License Agreement for a 48-room property in Mashobra, Shimla, Himachal Pradesh under the Company’s brand “Lemon Tree Hotel”.

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Lemon Tree has signed license agreements for two new properties in Junagadh, Gujarat, and Chitwan, Nepal under the brand Lemon Tree Hotel and Lemon Tree Resort, respectively. Lemon Tree Hotel in Junagadh is expected to be operational by FY25, and Tigerland Safari – A Lemon Tree Resort in Chitwan, Nepal is expected to be operational in FY24 itself.

I also expect Lemon Tree to do record business this holiday season due to the continuous capacity expansion it has been doing recently, out of which many hotels are already operational. This surety is coming after I personally experienced a shortage of rooms in all premium hotels across India which are early signs of how happening all tourist spots are going to be.

Lemon Tree has opened doors to India’s largest hotel in Mumbai, Hotel Aurika which consists of 660 rooms and suites. This move is sure to add a lot to the top line as they had multiple wedding and corporate bookings even before they opened the hotel

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As it was mentioned in concall, last quarter company did not increase price, focused on occupancy. Upcoming two quarters I believe they will increase price due to events and short supply with already increased occupancy rate. Looks disposable income is rapidly rising and people are spending on higher ticket spending such as occupying branded hotels, travel, buying luxury goods.
Disclosure: Invested


Lemon Tree in expansion spree across the country through franchise & non-franchise model: -

Mussoorie.pdf (605.5 KB)
Meerut.pdf (761.9 KB)
Kundapura.pdf (688.0 KB)
Hubli.pdf (308.9 KB)
Hissar.pdf (435.8 KB)
Gujarat.pdf (598.9 KB)
Dapoli.pdf (590.3 KB)
Bihar.pdf (449.3 KB)

Corporate amalgamantion as indicated above: -
Amalgamation.pdf (494.1 KB)

Fine performance from Lemon Tree.

Key points: -
Per mgmt, all India hotel occupancy stands at around 65% likely to increase to 70+ in the next 2 years with significant benefit likely for Lemon Tree.
Lemon Tree to focus more on retail customers than corporate
25% growth in 9M YOY seen on mgmt fees, which now contributes to ~13% of the revenue
The decrease in EBITDA margin Y-o-Y mainly due to planned increase in payroll and
renovation expenses and some impact of Aurika which is yet to stabalize
1.5 million loyalty members; 30%+ repeat customers