Lemon Tree Hotels Limited , a leading player in India's mid-market hotel segment, has reported its highest-ever Q2 revenue of Rs 308 crore, marking an 8% year-on-year growth. However, the company's EBITDA margins saw a decline of 306 basis points to 43%, primarily due to ongoing renovation investments, technology upgrades, and one-time ex-gratia payments to employees.

Revenue Growth and Margin Pressure

The company's revenue growth comes despite industry headwinds, including geopolitical tensions, floods, and an airline accident. While the top line showed resilience, the bottom line faced pressure from strategic investments:

Strategic Investments and Renovations

Lemon Tree Hotels has undertaken significant renovations across its portfolio:

• Completed major upgrades in Delhi, Bangalore, and Hyderabad markets
• Renovated approximately 3,000 rooms out of a planned 4,600
• Total renovation investment of nearly Rs 300 crore over the past 2-2.5 years

The company expects these investments to yield returns in the coming quarters, with early signs of success already visible in some renovated properties.

Debt Reduction and Credit Rating Improvement

The company has made strides in strengthening its financial position:

• Reduced debt by Rs 212 crore to Rs 1,610 crore as of September 30
• Improved credit rating to A+ from A
• Lowered cost of borrowings to 7.72% in Q2 from 8.68% in the previous year's Q2

Expansion and Asset-Light Strategy

Lemon Tree Hotels continues to focus on expansion through an asset-light model:

• Signed 15 new management and franchise contracts, adding 1,138 rooms to the pipeline
• Operationalized 5 hotels, adding 272 rooms to the operational portfolio
• Won a Letter of Award for 2.25 acres of land in Nehru Place, New Delhi, for a proposed 500-550 room Aurika hotel

Technology Investments

The company is investing in technology to improve guest experience, revenue management, and operational efficiency:

• Developing an AI-driven revenue management system
• Reimagining the loyalty program and website
• Integrating Salesforce for improved sales efficacy

Outlook

While Q2 faced headwinds, the company maintains a positive outlook for H2. Management expects the benefits of renovations and technology investments to materialize in the coming quarters, potentially leading to improved occupancy and average room rates across the portfolio.

Patanjali Keswani, Executive Chairman of Lemon Tree Hotels, commented, "Our strategic investments in renovation and technology are setting the stage for long-term growth. While these investments have impacted our short-term margins, we are confident that they will drive significant value creation in the coming years."

As the Indian hospitality sector continues to evolve, Lemon Tree Hotels appears well-positioned to capitalize on the growing demand for quality mid-market accommodations across the country.

Lemon Tree Hotels Limited , one of India's leading mid-scale and premium hotel chains, has announced a significant expansion of its presence in Uttar Pradesh. The company has signed a new property agreement for 'Keys Select by Lemon Tree Hotels' in Mahoba, further strengthening its position in the state's hospitality sector.

Key Highlights of the New Property

Strategic Expansion in Uttar Pradesh

This new agreement marks an important step in Lemon Tree Hotels' growth strategy within Uttar Pradesh. The company's portfolio in the state now includes:

• 8 operational properties
• 13 upcoming properties
• The newly signed Mahoba property

Mahoba: A Blend of History and Modernity

Mahoba, located in the Bundelkhand region of Uttar Pradesh, offers a unique mix of historical significance and modern development:

• Home to 9th-century granite Sun Temple and rock-cut Jain Tirthankaras
• Attractions include Kirat Sagar and Madan Sagar lakes
• Rich in mythology and martial legacy, celebrated in ballads of warrior-brothers Alha and Udal
• Serves as the district headquarters, catering to both business and leisure travelers

Connectivity

The new property boasts strategic connectivity:

• Approximately 75 km from Khajuraho Airport
• About 5 km from Mahoba Railway Junction
• Well-connected by roadways for public and private transport

Management's Perspective

Vilas Pawar, CEO - Managed & Franchise Business, Lemon Tree Hotels, commented on the signing: "With this signing, we will expand our leisure and business portfolio in Uttar Pradesh, a state where we have eight operational and 13 upcoming properties in addition to this one. The state, with its booming commerce, distinct culture and testament to India's rich heritage, is the perfect destination for hospitality."

Company Overview

Lemon Tree Hotels Limited continues to solidify its position as a leading player in India's hospitality sector:

• Operates 120+ hotels across 80+ cities in India and abroad
• Pipeline of 120+ upcoming properties
• Presence across various segments including upper upscale, upscale, upper midscale, midscale, leisure, wildlife, and spiritual
• International presence in Dubai, Bhutan, and Nepal

This expansion in Mahoba aligns with Lemon Tree Hotels' vision of offering refreshing and comfortable stays across diverse destinations, catering to both business and leisure travelers seeking quality accommodations in emerging markets.

As the company continues its growth trajectory, this new property in Uttar Pradesh represents another step towards establishing a stronger foothold in key Indian markets, potentially contributing to increased market share and revenue growth in the coming years.