A Legacy of Quality and Excellence
Dear Shareholders,
I am delighted to share the third Integrated Report of Lemon Tree Hotels (LTH), which
outlines our robust financial and non-financial performance in FY24. We set new milestones
in revenue and operational excellence while expanding our footprint in India and
internationally. This showcases our ability to navigate a dynamic market landscape. Our
journey is inspired by India's growing aspirations. From our small beginning as a single
mid-market hotel 20 years ago, we have evolved to own and operate over 100 hotels in
nearly 70 destinations, including Dubai and Bhutan, spanning the upscale, upper-midscale,
midscale and economy segments. In FY24 also, we witnessed 38 new signings and 17 hotel
openings, including Aurika, Mumbai Skycity - India's largest hotel by number of rooms.
Soaring High with India
The Government of India projects the travel and tourism sector to recover to
pre-pandemic levels by 2024-25, with foreign tourist arrivals increasing by 435% over
three years21. By 2024, the sector is expected to contribute $150 billion to
India's GDP, growing to $250 billion by 203021. However, the Indian hotel
industry remains highly fragmented, with under 7% of the 2.8 million available rooms being
branded. Our growth prospects are strengthened by an increasing demand for branded rooms,
which is anticipated to rise at a CAGR of about 10.6% from FY24 to FY27. This growth rate
surpasses the expected supply expansion, which is projected to grow at approximately 6%
CAGR during the same period. Future supply growth is expected to be driven more rationally
by institutional ownership, leading to healthier financial performance. This robust
demand- supply dynamic points to a promising landscape for us. With our asset light
strategy in place, Lemon Tree is well poised to keep this momentum going.
Pursuing Growth and Success
In FY24, we recorded a strong 23% Y-o-Y growth in total revenue to Rs.1,076.8 Crores.
However, our net EBITDA margin dropped 278 bps from FY23 to 49.1% in FY24, as we made
strategic investments in renovation, expanding our business development team and
addressing payroll increases due to inflation - which were crucial for our long-term
growth. Total network revenue stood at Rs.1,621 Crores for FY24, compared to Rs.1,330
Crores in FY23, which translates to an increase of 22%.
We focused on building occupancy, achieving an increase of 173 bps compared to FY23.
Additionally, our Average Room Rate (ARR) increased by 10% compared to FY23, reaching
Rs.5,87622. This improvement translated into a revenue per available room
(RevPAR) of Rs.4,103, reflecting a 10.9% growth.
Our Profit After Tax (PAT) for FY24 was at Rs.181.7 Crores, an increase of 29% Y-o-Y.
Our cash profit demonstrated a 24% Y-o-Y growth, reaching Rs.293.8 Crores. The total
management fees received was Rs.134.3 Crores, which was 30% higher than in FY23.
With prudent financial management, our gross debt (on 31st March 2024) stood
at Rs.1,889.1 Crores, owing to borrowing against Aurika, Mumbai Skycity, while the average
cost of borrowings was 8.86% which was a reduction of 22 bps versus FY23.
Focus on Inclusivity, Sustainability and Empowerment
At LTH, sustainability is a cornerstone of our business, driven by a strong ESG focus.
We aim to become an ESG leader by FY26, making significant progress in our journey and
creating measurable impact.
We believe inclusivity drives creativity, loyalty and a sense of belonging within our
organisation. By FY26, we aim for 20% of our workforce to be Opportunity Deprived
Individuals (ODIs), including those with disabilities and 15% to be women. Through this
commitment, we aim to give every individual a chance to live up to their potential and
lead a life of purpose. We also actively engage with the communities we operate in,
focusing on skilling, which then drives their upliftment and well-being.
Our people-centric approach has led to significant success, as our empowered employees
have delivered a noticeable surge in service excellence and guest satisfaction, creating a
sense of moving towards a shared purpose.
By CY26, we aim to reduce energy consumption by 15%, fulfil 50% of our energy needs
from renewable sources, cut GHG emissions by 40% and reduce water consumption by 10%, all
in intensity terms vs. an FY19 baseline. In FY24, 29.27% of our owned portfolio was IGBC
Gold certified, achieving significant reductions in energy consumption, emissions and
water use.
We are committed to adopting innovative measures to reduce our environmental impact.
One such initiative is the tracking and monitoring of our Scope 1 and 2 emissions
company-wide, reflecting our dedication to sustainability. Aurika, Mumbai Skycity embodies
our commitment to sustainability with the implementation of eco-friendly features like a
bio-gas plant, a water bottling plant and multiple EV charging stations.
Lemon Tree 2.0: Paving the Path for Growth
As we look towards the future, we are confident that our strategic roadmap 'Lemon Tree
2.0' will make us resilient and guide us towards sustained growth in this dynamic sector.
By the end of FY25, we expect our operational inventory to surpass 120 hotels,
offering over 11,000 rooms. We are committed to achieving a revenue growth of nearly 15%
in the coming years, driven by a strategic mix of Average Room Rate (ARR), occupancy and
managed/franchised fee income.
By FY26, we aim for Rs.60 Crores in annual EBITDA from the Keys portfolio. We are also
committed to debt reduction within four years, ensuring financial stability and enabling
reinvestment in growth opportunities.
To enhance our guest experience and elevate our standards, we plan to invest Rs.100
Crores each in FY25 and FY26 in renovations.
Lemon Tree has undertaken a Digital Transformation exercise in order to create a
technology platform that will help transform the performance of all its hotels.
This exercise involves designing and deploying analytics and algorithms in a modular
technology stack. It would also entail changing business processes and building the
desired capabilities for sustained performance and impact.
I want to thank all our employees for their passion, hard work and dedication. Your
efforts have shaped us into the resilient and agile organisation we are today.
To our stakeholders, your unwavering support has been invaluable and I look forward to
continuing this journey together. With your continued support and our collective
aspirations, I am confident that we will continue to set new standards in hospitality.
Warm regards,
Patanjali G. Keswani
Chairman and Managing Director
Lemon Tree Hotels Limited