Lemon Tree Hotels reported Q1FY24 consolidated revenue of INR2.2bn (up 16% YoY) in line with I-sec estimates as portfolio ARRs grew 8.6% YoY to INR5,237 while occupancies also increased by 514bps YoY to 70.2% resulting RevPAR growing 17% YoY to INR3,678. As per the company reports, July’23 occupancies have trended higher than Q1FY24 occupancy of 70% and initial wedding season demand for Q3FY24 is strong. With the Mumbai Airport Aurika Hotel of 669 keys expected to open in Oct’23 (Occupation Certificate awaited by end of Sep’23 with most licenses in place), performance of this hotel is key monitorable going forward.
The company reported Q1FY24 consolidated revenue of INR2.2bn (up 16% YoY) in line with I-sec estimates as portfolio ARRs grew 8.6% YoY to INR5,237 while occupancies also increased by 514bps YoY to 70.2% resulting RevPAR growing 17% YoY to INR3,678. Q1FY24 EBITDA grew 19% YoY to INR1.0bn at an EBITDA margin of 47.0% (marginally below estimated 48%) owing to higher employee costs (up 23% YoY) as company focuses on building up its business development team and opens new hotels. For FY24, the company is undertaking a revamp of its Keys budget hotel portfolio which will require a capex of Rs 0.4bn – to be expensed in the income statement for FY24E implying a 200-250bps hit on FY24E EBITDA margins. The July’23 occupancies have trended higher than Q1FY24 occupancy of 70% and wedding season demand for Q3FY24 is strong with ~16 weddings already booked.
Aurika Mumbai Airport hotel opening in Q3FY24 to be incremental earnings driver
The Aurika, Mumbai Airport hotel is expected to see a soft opening in Oct’23 (pending capex of ~Rs3.0bn as of Aug’23) with most licenses in place and Occupation Certificate (OC) awaited by end of Sep’23 and is expected to be a key driver for earnings from FY25E. Depending on how quickly it scales up, the hotel can deliver annual EBITDA ranging between Rs1.0-1.4bn in its first full year of stabilised operations assuming ARRs of ~Rs12,000 and occupancy of ~60% in FY25. Post the opening of the Mumbai Airport hotel in H2FY24, the key monitorable going forward is operating cash flows translating into organic net debt reduction over the medium term.
