Lemon Tree Hotels is set to unveil 30 fresh properties across the nation within the current calendar year, potentially augmenting its capacity by over 2,000 rooms. The hospitality giant maintains a strong optimism towards the burgeoning demand from middle-class consumers.
Patanjali Keswani, chairman and managing director of Lemon Tree Hotels, stated that this year’s expansion will feature the debut of a Lemon Tree resort in Bhutan, along with the introduction of three or four hotels and resorts in Nepal.
Last year, the BSE-listed company introduced 1,375 new rooms across 14 hotels, featuring the grand debut of India’s largest hotel, the 669-room Aurika Mumbai Skycity.
The company revealed plans to expand into key tier-1, 2, and 3 markets, including Jaipur, Gurgaon, Jamshedpur, Meerut, Jabalpur, and Thiruvananthapuram. Furthermore, it aims to target important leisure, pilgrimage, and wellness destinations such as Goa, Udaipur, Kumbhalgarh, Somnath, Dehradun, and Kanha.
The company is also aiming to broaden its Aurika Hotels & Resorts brand by introducing two new resorts. The 110-room Aurika, Kasauli is scheduled to open towards the end of this year, while the 132-room Aurika Rishikesh is set to open early next year.
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“The large Indian chains will drive consolidation in the hospitality sector through lower inventory hotels, because the economics or cost structure of international chains doesn’t support this kind of expansion at present,” Keswani said.
He said that more conversions will drive the growth of Lemon Tree Hotels this fiscal year.
“I had said we will cross 10,000 rooms. Of which, 60% will be owned by us. We opened India’s biggest hotel in Mumbai. Now our operating owned inventory is close to 6,000 and our managed inventory is about 4,500 rooms. So put together its 10,500. We are there,” said Keswani.
On Tuesday, Lemon Tree announced revenue from operations of INR 289 crore for the quarter ending on December 31. During the third quarter of this fiscal year, the chain recorded a profit of INR 44 crore.
The chairman said, “We will sign another 3,000-4,000 rooms. A lot of this is conversions, which could mean standalone hotels or some other branded hotels getting into our portfolio.”
Keswani remarked that premiumization is occurring across various categories, which he considers to be very “healthy”. He noted that typically, two to three years after this trend, domestic middle-class consumers begin shifting many items from discretionary to non-discretionary categories.
“The rate at which airline traffic has grown will tell you that an increasing number of Indians for whom the default option was trains are now starting to fly. There is an inflection point in every economy, when, for a very large number of consumers what used to be discretionary becomes non-discretionary,” he said. “It’s air traffic for many. I am sure it applies to entertainment and mobile phones. The number of people for whom hospitality will become a non-discretionary category will also grow exponentially at a certain point in the GDP. All this put together means aspirational categories move towards default options and mid-market hotels will also stand to gain from that.”
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