Lemon Tree Hotel

Lemon Tree Hotels achieved its highest-ever revenue of ₹407.8 crores, a 15% YoY increase, and a record Net EBITDA of ₹206.4 crores, up 12% YoY. Despite this, the Net EBITDA margin saw a 133 bps YoY decrease to 50.6%, primarily due to increased investments in renovation, technology, and the impact of GST. Profit after tax grew modestly by 2% YoY to ₹81.8 crores, affected by ₹31.3 crores in one-off^📎 exceptional item^📎s.

The company continued its asset-light growth strategy by signing 17 new management and franchise contracts, adding 1,855 rooms to its pipeline. Additionally, 9 hotels with 816 rooms were operationalized during the quarter. As of December 31, 2025, the total inventory stands at 259 hotels and 21,942 rooms, with 130 hotels and 11,772 rooms currently operational. Management fees from third-party owned hotels increased by 24% YoY to ₹22.9 crores, contributing to a total management fee of ₹48.2 crores.

Lemon Tree is actively renovating its owned portfolio, with over 65% of the 4,100 rooms requiring renovation already completed. Approximately 700-800 rooms were shut at any given time this year for this purpose, impacting short-term performance. The full renovation of the targeted portfolio is expected to be completed by next year, after which the company anticipates a significant improvement in RevPAR and overall performance, particularly in segments like Keys.

The company is making substantial investments in technology, focusing on data consolidation, revenue management, sales (Salesforce), personalization, and loyalty programs. These investments, while contributing to current margin compression, are expected to yield positive outcomes, with an estimated ₹50 crore improvement from technology alone. The goal is to enhance operational efficiency and customer engagement, with a long-term vision to monetize these tech capabilities with third-party users.

While overall RevPAR grew 9% YoY to ₹5,494 and ARR increased 11% YoY to ₹7,487, occupancy saw an 82 bps YoY decrease to 73.4%. Regional performance varied, with Gurgaon experiencing a weak quarter and negative RevPAR growth. In contrast, Delhi saw 11% growth, Hyderabad 19%, and Bangalore 14%. Mumbai's strategy remains occupancy-led for now, with plans to transition to an ARR-led approach as the portfolio stabilizes, aiming for significant impact next year.

Lemon Tree is actively expanding its upscale Aurika brand. Designs for Aurika, Nehru Place, are finalized, with a projected capacity of 550-560 rooms. Two out of three blocks of Aurika, Shimla, are planned to open by Q2 this year. A license deal for a 47-room heritage Aurika Hotel in Varanasi, with high rate potential, was signed. Construction for Aurika, Delhi, is expected to commence in the next 2-3 months, with completion anticipated in 3-3.5 years, and Aurika, Shillong is targeted to be operational by Q3 CY27 with an investment of ₹200 crores.

Post-demerger, Lemon Tree Hotels Limited is expected to become a debt-free company from next year, as all existing debt will be transferred to Fleur. The company is evaluating its dividend policy, with a decision expected from the Board in the next six months. Annual CAPEX for the next 2-3 years is projected to be ₹70-80 crores, with renovation-related OPEX around ₹100 crores, both expected to shrink dramatically after FY27.