Lemon Tree Hotels expects strong revenue growth in FY26, lifted by biz travel

The company has also seen a stabilization of key assets like its 670-room Aurika Mumbai hotel, which have helped buoy its revenue.

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Lemon Tree Hotels’ chairman and managing director Patanjali G. Keswani, speaking exclusively to Mint, said the company crossed ₹100 crore in quarterly net profit for the first time in January-March 2025, driven by strong occupancies in core business hubs. With 100 new hotels in the pipeline and a push to list its Fleur Hotels subsidiary to become debt-free, Keswani said Lemon Tree is positioning itself to tap rising demand for branded hotels across India—including in the vast unorganized sub-40-room segment—as more Indian households begin to travel.

For the fiscal year ended 31 March 2025, the company on Thursday reported a revenue from operations of ₹1,286 crore, up 20% from FY24’s ₹1,071 crore. Net profit for the year rose 34% to ₹243.1 crore.

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“Our growth was driven across our various brands, and across the board, partly driven by occupancy and partly by average room rates. In Q4, Aurika Mumbai also stabilized and our occupancy stood at 77-78%, growing 6-7% year-on-year,” he said.

Business travel has now returned to normal for the company. Markets like Hyderabad maintained their occupancy upwards of 80%, he said. Mumbai, Bengaluru and Delhi also picked up in terms of occupancies as well as room rates. “Most of our key markets—which anyway are focused on business travel—did well, with some cities like Bengaluru picking up. This helps as a large part of our capital structure is in business hotels and this led to us crossing ₹100 crore of net profit in a quarter,” he added.

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The hospitality company with a market capitalization of more than ₹10,000 crore currently operates 116 hotels, consisting of 41 owned properties with about 5,800 rooms, and 75 managed hotels with around 4,900 rooms. The company is also developing 100 new hotels, which will add approximately 6,600 rooms to its portfolio. Since April 2024, it has signed about 50 new hotels across various locations in the country.

In September, Fleur Hotels Pvt. Ltd was converted from a private limited company into an unlisted public company, with plans to list it by December 2026 to pare debt and fuel expansion. Fleur, which houses flagship properties like Lemon Tree Premier, Delhi Aerocity and Aurika Mumbai International Airport, and a few owned hotels, is expected to generate over ₹700 crore in annual Ebitda post-listing, with management fees from it contributing ₹150-180 crore annually to the parent company. “It will be our top-priority to list Fleur and go debt free, but even if we don’t list it, it will be debt free in the next three years,” he said.

For Q1 FY26, he said some business demand for hotels and retail demand too came down owing to the Pahalgam terror attack as well as the subsequent resurgence of covid. “But despite that we do see that we will do mid-teens growth in Q1 and the full year on a same store and same hotel basis. Basis this, the company expects to target a mid-teen revenue growth this fiscal.”

The company had been spending on renovating its rooms across various hotels and has spent about ₹100-130 crore a year for the last two years. This will continue into FY26 as well. “We are maintaining and in some hotels increasing our Ebitda margins in spite of increasing our renovation costs. Costs in technology upgradation, distribution, payroll, marketing spends have also increased. Despite that, our revenue growth is greater than our cost growth,” he added. The company is renovating the entire Keys portfolio, which operates in the budget to midmarket segment. Lemon Tree acquired this portfolio of hotels in 2019, which added about 7,800 rooms and about 77 hotels to its portfolio then.

The Keys portfolio includes three distinct brands: Keys Prima, Keys Select and Keys Lite.

When Mint spoke to Keswani in December 2024, he outlined the company’s strategy to capture future growth as demand for branded hotel rooms in the country is expected to outpace supply. Keswani said the company planned to leverage its strong brand presence and move up the pricing curve. He said that Lemon Tree had added more rooms in the past 12 years than any other hotel chain in the country.

In December, Keswani also spoke about plans to create a brand to capture the vast unorganized hotel segment of sub-40-room properties across the country’s smaller cities, aiming to tap into an under-penetrated market of over 1.2 million such rooms. Currently, India has about 200,000 branded hotel rooms, a number which is expected to grow to 300,000 by FY30. The country’s growing economy and rising domestic travel, he said, are likely to push the number of households using branded hotels to 30 million, from the current five million, creating unprecedented demand for organized accommodation.