Lemon Tree Hotels, a Delhi-based upscale hotel chain, plans to have at least 20 hotels of the four-star category operational in two years, as part of its strategy to tap the potential in cities in the north, west and south of the country.
The company, which operates four-star Lemon Tree and economy-class Red Fox hotels, today opened its 14th Lemon Tree property, and the first in Hyderabad in the IT hub of Hitec City. The 267-room hotel has been built with an investment of Rs 205 crore and also houses its sister brand, Red Fox hotel.
Patu Keswani, chairman and managing director, Lemon Tree Hotels said its current turnover was Rs 300 crore (including Rs 28 crore from three Red Fox hotels), and plans to go public once it clocks a revenue of Rs 600 crore. This is expected to happen in the first quarter of 2013, he said, adding there were no plans to raise more funds through private equity.
Lemon Tree currently has hotels with 1,500 rooms in 11 cities including Delhi, Gurgaon, Chandigarh, Mumbai, Ahmedabad, Aurangabad, Bangalore and Kumarakom. It plans to take its capacity to 2,800 rooms in 20 hotels in 15 cities in the next two years.
“Till 2016, we will saturate the cities in the north, west and south, which are expected to grow at 12 per cent, and will move to those in the east from 2017, when the growth is expected to pick up there,” said Keswani.
He said the hotel industry wan now in a situation similar to the one airline industry was in before low-cost carriers entered the market. The sector is going to see a doubling of capacity by 2020, most of it in the non-luxury categories.
India currently has 72,205 classified hotel rooms, of which two-thirds is in the four-star and above categories.
Six other Lemon Tree hotels are under construction in different cities, as well as a second Red Fox unit at Gachibowli in Hyderabad. The latter property was delayed for a year due to uncertainty over the Telangana issue, Keswani said. It has three Red Fox hotels and plans to add three more by the end of 2012.
Lemon Tree has so far invested Rs 1,600 crore in its properties, of which 50 per cent has been raised as debt. Warburg Pincus, a global private equity group, holds 25 per cent equity in the company. It would pursue a growth-focused strategy, adding about 500 rooms a year, according to Keswani.
