Lemon Tree Hotels plans to operate and manage hotels in New York, London, Singapore and Hong Kong, said Patanjali Keswani, Chairman and Managing Director. “If you look at where Indians travel to, 70 per cent of the Indians who travel out of India go to seven or eight cities — New York, London, Dubai, Thailand, Hong Kong, Singapore, Nepal, and Sri Lanka.
“So, these are the places where ideally we would like to operate hotels under management contracts,” said Keswani. The company expanded internationally, with hotels opening in Dubai in December 2019 and in Bhutan in February 2020. Along with this, it opened hotels in Nepal, too. Over the next three years, Lemon Tree will open 5-6 hotels in Nepal, he added.
The group offers seven brands that include Aurika Hotels & Resorts; Lemon Tree Premier; Lemon Tree Hotels; Red Fox Hotels by Lemon Tree Hotels; Keys Prima by Lemon Tree Hotels; Keys Select by Lemon Tree Hotels; and Keys Lite by Lemon Tree Hotels.
The chief of the BSE-listed hotel chain said that he aims to tap growth in the unbranded hotel segment, both domestically as well as internationally. Lemon Tree currently operates over 9,400 rooms in 96 hotels across 61 destinations. When the current pipeline becomes operational, Lemon Tree will be operating 13,300 rooms in 153 hotels across 97 destinations.
He explained that the company, which essentially had an asset-heavy model where it owned hotels, is now focussing on management contracts.
“Today, out of our 10,000 rooms, 6,000 are owned. We’ll be going up to 20,000 rooms. These rooms will be management contracts. That means 70 per cent of our inventory will be management contracts.” Lemon Tree incidentally is the third largest hospitality player in India after Taj and ITC Hotels, with own rooms.
Keswani explained that the company is now leveraging management contracts as part of its multi-pronged strategy.
“Over the past six quarters since April of last year, we’ve implemented a dual strategy involving consistent price hikes and demand generation. We’re now concentrating on optimising returns from our significant hotel investments, being the third-largest owner of hotel rooms in India. Our financial figures consistently show a 15-20 per cent revenue growth, with half attributed to pricing adjustments and the other half to increased demand. This joint approach involves both repricing and segment analysis.”
According to him, India’s hotel industry experienced a prolonged down cycle due to a decade of supply growth (14-15 per cent annually) outpacing demand. This reversed just before Covid, but the pandemic disrupted the trend. Post-Covid, the sector, despite losses, increased prices without immediate demand growth. Notably, in India, he views the surge in hotel demand as a pivotal moment, reminiscent of the growth observed in China.
He further added that over the next four years, the company will continue to have a revenue growth of 15 per cent on a year on year basis.