Companies

Lemon Tree to complete Keys Hotels buy by Dec

Abhishek Law Kolkata | Updated on October 23, 2019

Sumant Jaidka, Senior Vice President – Operations, Lemon Tree Hotels   -  Debasish Bhaduri

Mid-range brand Lemon Tree Hotels is looking to complete the acquisition of Keys Hotels in India by December this year.

Sumant Jaidka, Senior Vice President – Operations, Lemon Tree Hotels, said that the company will initially continue with the ‘Keys’ brand. The brand, he said, is a strategic fit with Lemon Tree’s portfolio.

The acquisition will also grant Lemon Tree access to Keys’ client base. Earlier this year, Lemon Tree had in a notification to the bourses said it has signed a non-binding term sheet with Mauritius-incorporated Berggruen Hotels and Berggruen Investments, that build and operates ‘Keys’ brand, to acquire a 100 per cent stake in Keys Hotels in India. “We are doing due diligence on the Keys brand and the process (of acquisition) should be completed within this year,” he told BusinessLine on the sidelines of the launch of Lemon Tree’s first property in Kolkata. The Kolkata property is operational and has 142 keys. It involved a capex of ₹140 crore.

Lemon Tree Hotels currently has 58 properties across India. Of these, 33-odd are own properties and the remaining 25 are managed ones. Across the three brands — ‘Red Fox’ (economy segment); ‘Lemon Tree’ (in the mid-scale category) and through the ‘Lemon Tree Premier’ (upper mid-scale brand) — its occupancy rate stands at around 78 per cent.

The target over the next 15 months will be to near double its hotel count to 100. Jaidka said that future expansion will mostly be through an “asset light model”. This means the company will be exploring more managed properties. The hotel brand could also explore the possibility of selling some of its assets and then subsequently lease it back.

The focus, he said, will be to “generate high profitability”. He said, “The first six months (beginning April) has been a bit challenging. But, we have not seen much of dip. However, we are expecting things to pick up post September (second half) onwards and wedding season demand and MICE (meetings, incentives, conferences and exhibitions) bookings kick in.”

Lemon Tree is exploring the possibility of a fourth brand catering to hotels in the “upscale” segment — one each in Udaipur, Shimla and Mumbai — that are likely to be operational over the next two years. As of now the upscale properties will be owned Lemon Tree.

“We will make announcements about the new brand, next month,” Jaidka added.

Published on October 23, 2019

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