Patanjali (Patu) Keswani

The first wave of COVID-19 slammed the brakes on the hospitality industry’s progress. The second wave tripped up things further by delaying the recovery steps that some brands had tentatively begun.

Lemon Tree Hotels was one of them. Its revenues were hit following the series of lockdowns and restrictions last year, which inhibited any possibility of growth in the domain. As the COVID-19 cases rose, occupancy levels across its 84 hotels in 52 destinations went down from 75% in January 2020 to 20% by end of March 2020, when WHO announced COVID-19 a pandemic and the nation shuttered down. Overall, the hotel chain’s consolidated revenues increased 3.7% year-on-year to INR Rs 42 crore, as per its Q1 FY22 results. RevPAR went down around 8% year-on-year and 53% sequentially to INR 700.

However, these figures have not dented the optimism of Patanjali (Patu) Keswani, CMD of Lemon Tree Hotels. “Currently, we are seeing a very healthy build-up in demand and consumption that is strengthening on a month-over-month basis from June onwards,” he said during an earnings presentation.

In fact, the company is working out details to open 23 properties in the next two years. This includes a 669-key hotel at the Mumbai International Airport, which will significantly boost its existing inventory of 8300 keys.

LIGHT AHEAD
One strategy that Lemon Tree Hotels has identified for its growth is the asset-light model. While it currently owns close to 70% of its properties, it plans to opt for management contracts for the newer hotels. This will free up the capital and reduce the strain on its operating costs, while allowing the company to achieve its goals.

While the hotel brand traditionally focused on mid-segment price-conscious customers, it launched Aurika Udaipur as an upscale brand 2019. The proposed property at Mumbai Airport will be the second one under this brand.

However, seeing the recent, and growing, impetus of leisure travel, it is eyeing this segment, with an inclination to acquire or manage more resorts. This will also meet the gap that currently exists in its portfolio, which is largely skewed towards the midscale Lemon Tree Hotels and upper midscale Lemon Tree Premiere.

Currently, Lemon Tree Hotels is developing three properties at a total estimated cost of INR 991 crore. Its proposed pipeline also includes 20 hotels under management contracts in tier-two cities like Bhubaneswar, Durgapur, Rishikesh and Agra.