The Hindu Business Line : Kotak invests Rs 34 cr in Lemon Tree, Red Fox hotels

Earlier this month, the company garnered an investment of Rs 210 crore from leading global private equity firm Warburg Pincus, which will be used to further expand the Lemon Tree network. Lemon Tree Hotels operates in the mid-price segment and caters to business and leisure travellers.

Widening scope

Mr Patu Keswani, Chairman and Managing Director, Lemon Tree Hotels said, "We welcome Kotak Mahindra Realty Fund as a shareholder of the company and look forward to their contribution to support our growth initiatives. We believe that given the focus of this investor in the real estate sector, it also brings to us the ability of being able to widen the scope for new locations across Tier I, II and III cities."

Commenting on the investment, Mr S. Sriniwasan, CEO, Kotak Realty Fund said, "Kotak Realty Fund strongly believes in the need for mid-market and economy hotels in India. We believe that although Lemon Tree is a mid-market hotel brand operating in India, it has a strong international appeal".

In a related development, Kotak Mahindra Realty Fund also said that it was investing about Rs 2 crore in Red Fox Hotels, a new company also promoted by Mr Patu Keswani, which proposes to setup limited service, economy hotels across India at a price range of Rs 800-Rs 2,000 per night.

Warburg Pincus had also invested Rs 70 crore in Red Fox Hotels recently.

The first three Red Fox Hotels, aggregating 500 rooms and targeted at the extremely price conscious business and leisure traveller looking for a no-frills product, are expected to open in Mumbai, Jaipur and Hyderabad by late 2008.

Mr Keswani added, "Red Fox Hotels would offer a very high growth opportunity in the current stage of the Indian hospitality industry. Similar such examples have already been successfully delivered in China through professionally managed local companies. With Red Fox Hotels, we are confident of being able to cater to a significant share of the transient accommodation needs of the domestic Indian low cost air and train traveller."