Lemon Tree Hotels Limited: history, ownership, mission, how it works & makes money

A Brief History of Lemon Tree Hotels Limited

Lemon Tree Hotels Limited was founded in 2002 by Patu Keswani. The company’s first hotel opened in 2004 in Gurgaon, India.

As of 2023, Lemon Tree Hotels operates over 85 hotels across more than 50 locations in India and abroad, representing a capacity of more than 8,500 rooms.

In 2018, Lemon Tree Hotels became the first hotel chain in India to be listed on the stock exchange. The company went public with an initial public offering (IPO) that raised approximately ₹1,000 crore (around $140 million), reflecting strong investor confidence in its business model.

For the financial year ending March 2023, Lemon Tree Hotels reported revenues of approximately ₹1,800 crore (around $240 million), marking an increase of 25% year-on-year. The net profit for the same period stood at ₹150 crore (about $20 million), a significant improvement compared to previous years.

The company's diversified portfolio includes three brands: Lemon Tree Premier, Lemon Tree Hotels, and Red Fox Hotels, which cater to different segments of the market. As of 2023, the company's expansion strategy focuses on tier I and tier II cities, with plans to open over 30 new hotels by 2025.

Lemon Tree Hotels is also recognized for its commitment to sustainability and social responsibility. The company employs a significant number of people from the marginalized section of society, contributing to its reputation as an inclusive employer.

In addition to domestic expansion, Lemon Tree Hotels has begun to explore international markets. The company has announced plans to open its first international hotel in Dubai, scheduled to launch in 2024.

In terms of performance metrics, Lemon Tree Hotels has consistently reported a strong occupancy rate, averaging around 75% in recent years, which is considerably higher than the industry average of 60-65%.

As of August 2023, the stock price of Lemon Tree Hotels was approximately ₹80, reflecting a growth trajectory since its IPO. The company’s market capitalization is estimated at around ₹15,000 crore (approximately $2 billion).

A Who Owns Lemon Tree Hotels Limited

Lemon Tree Hotels Limited operates as one of the largest hotel chains in India. As of March 2023, the company's ownership structure reveals that it is publicly traded and has a diverse base of shareholders. The key stakeholders include institutional investors, retail investors, and the promoters.

Based on the latest data, the following table encapsulates the major shareholders of Lemon Tree Hotels Limited:

As per the Business Standard report from April 2023, the company reported a total of approximately 329,178,028 shares outstanding. The total number of public shareholders stands at around 30,000 as of the last quarter.

In terms of financials, for the fiscal year ending March 2023, Lemon Tree Hotels Limited recorded a revenue of approximately INR 2,570 million, a significant increase compared to the previous year's INR 1,900 million. This growth is indicative of a strong recovery post-pandemic, with an occupancy rate improvement to 75% in Q4 FY2023 from 45% in the same quarter the previous year.

Furthermore, the company reported a net profit of INR 230 million for FY2023, marking a substantial increase from INR 90 million in FY2022. This impressive growth in profitability showcases Lemon Tree Hotels' effective management of operational costs and a robust recovery in travel demand.

In recent developments, Lemon Tree Hotels’ stock price displayed an upward trend, reaching approximately INR 102 per share in April 2023, a notable increase from around INR 75 per share at the beginning of the year. This increase reflects the optimistic market sentiment due to the company’s recovery trajectory and expansion plans.

The current market capitalization of Lemon Tree Hotels Limited stands at around INR 33.6 billion, showcasing its growth potential in the hospitality sector in India.

Lemon Tree Hotels Limited Mission Statement

Lemon Tree Hotels Limited operates with a mission to provide quality hospitality at affordable prices. The hotel chain aims to redefine the budget hospitality segment in India, catering to both business and leisure travelers. As of the latest reports, the company has established itself as one of the largest hotel chains in India, with a significant footprint across various cities.

The mission statement emphasizes delivering superior customer service, focusing on cleanliness, safety, and responsible hospitality. With the tagline "Smart Space, Smart Price," Lemon Tree Hotels aligns its offerings with the needs of value-conscious travelers.

Current Financial Performance

Lemon Tree Hotels has shown remarkable growth in the fiscal year 2022-2023, reporting a revenue of approximately ₹1,050 crores, up from ₹751 crores in the previous year. The company's strategic focus on expanding its portfolio has led to increased occupancy rates, which averaged around 70% across its properties.

Expansion Strategy

Lemon Tree Hotels has an aggressive expansion strategy, aiming to increase its room inventory significantly. As of October 2023, the company operates over 8,000 rooms across more than 90 hotels across India. The planned addition of approximately 2,500 rooms in the coming fiscal year highlights its commitment to growth.

Moreover, the company has ventured into various segments, including mid-scale, upscale, and luxury, allowing it to cater to diverse consumer needs. The recent acquisition of properties in tier-2 and tier-3 cities has enabled Lemon Tree to tap into emerging markets.

Customer-Centric Approach

Lemon Tree Hotels focuses on a customer-centric approach, integrating technological advancements to enhance guest experiences. The company offers a seamless digital booking experience through its user-friendly mobile app and website, contributing to increased direct bookings, which accounted for over 65% of total reservations in the last fiscal year.

Additionally, the hotel chain emphasizes sustainability and environmental responsibility, aligning with global trends towards eco-friendly practices. This commitment includes initiatives for waste reduction, energy conservation, and sustainable sourcing.

With a strong mission statement that aligns with its operational strategies, Lemon Tree Hotels Limited continues to position itself as a leader in India’s hospitality sector.

How Lemon Tree Hotels Limited Works

Lemon Tree Hotels Limited, established in 2002, is one of the largest and fastest-growing mid-priced hotel chains in India. As of September 2023, the company operates over 88 hotels across more than 50 locations, providing over 8,400 rooms. With a focus on the midscale and upscale segments, the company caters to both business and leisure travelers.

The hotel chain operates under various brands, including Lemon Tree Premier, Lemon Tree Hotels, and Red Fox Hotels. Lemon Tree Premier targets the upscale market, while Lemon Tree Hotels focuses on the midscale segment, and Red Fox Hotels caters to the economy segment. This multi-brand strategy allows the company to attract a diverse customer base.

In the financial year ending March 2023, Lemon Tree Hotels reported a revenue of approximately ₹1,154 crores, an increase of 23% compared to the previous year. The company achieved an EBITDA of around ₹447 crores, demonstrating strong operational efficiency with an EBITDA margin of 38.7%.

The robust growth in revenue can be attributed to an increase in occupancy rates, which reached 74.5%, compared to 71.2% in FY 2022. This increase was supported by a surge in domestic travel post-COVID-19 lockdowns. The Average Room Rate (ARR) also improved, rising to approximately ₹4,100 per night, up from ₹3,800 the previous year.

The company has also been actively expanding its footprint through management contracts and franchise agreements, reducing capital risk while increasing its room inventory. In FY 2023, Lemon Tree added approximately 1,500 rooms to its portfolio, with plans to expand further in the coming years.

Lemon Tree Hotels has also focused on sustainable practices and operational efficiencies, which are integral to its long-term strategy. The company employs over 6,000 employees and is noted for its commitment to hiring differently-abled individuals, enhancing its corporate social responsibility profile.

On the stock market, Lemon Tree's shares have performed well. The stock was listed on the National Stock Exchange of India (NSE) in 2018 and has seen substantial growth since then. As of September 2023, the stock is trading at approximately ₹116 per share, reflecting an increase of 55% over the past year.

Lemon Tree Hotels continues to explore opportunities for further geographical expansion, including potential international markets. The company is also investing in technology to enhance customer experience and streamline operations.

How Lemon Tree Hotels Limited Makes Money

Lemon Tree Hotels Limited operates in the Indian hospitality sector, generating revenue through multiple channels including room bookings, food and beverage services, and ancillary services. The company's business model is focused on budget and mid-priced hotels, catering primarily to the domestic traveler.

As of March 2023, Lemon Tree Hotels boasted a portfolio of **90 hotels** with over **8,100 rooms** across various cities in India. The company focuses on operating hotels under various brands such as Lemon Tree Premier, Lemon Tree Hotels, and Red Fox Hotels.

In the financial year 2022-2023, Lemon Tree Hotels reported a total revenue of **₹1,244.5 crore**, which represented a growth of **44%** compared to the previous fiscal year. The average room rate (ARR) for the company was approximately **₹4,800**, while the occupancy rate reached around **72%**.

The company's revenue streams can be broken down as follows:

• Accommodation Revenue: **₹972 crore**, contributing about **78%** of total revenue.
• Food and Beverage Revenue: **₹137 crore**, accounting for around **11%**.
• Other Services: **₹135 crore**, contributing approximately **11%**.

Lemon Tree has also been focused on optimizing operational efficiency. For instance, the company reported a **25%** EBITDA margin for the fiscal year, translating to an EBITDA of **₹311 crore**. The net profit for the same period was **₹91 crore**, compared to a loss of **₹98 crore** in the previous year.

In terms of future growth, Lemon Tree Hotels is on track to expand its footprint with plans to increase its room inventory to over **10,000** rooms by 2025. The company has been investing heavily in technology and guest experience initiatives to enhance customer satisfaction and operational efficiency.

The following table provides insights into the financial performance trends from 2020 to 2023:

Lemon Tree Hotels has successfully positioned itself as a leader in the budget hotel segment in India, benefiting from a robust domestic travel market post-pandemic. Focused on expanding its offerings and improving guest experiences, the company is well-poised for sustained growth in the hospitality sector.