Lemon Tree Hotels Limited Conference Call Summary
Conference Call Details
• Date: August 8, 2024
• Disclosure: Transcript released on August 14, 2024
• Participants:
• Patanjali Keswani (Chairman and Managing Director)
• Kapil Sharma (CFO)
• Jyoti Verma (Group Company Secretary)
• Compliance: SEBI regulations followed; forward-looking statements noted.
Financial Highlights (Q1 FY25)
• Revenue: Rs. 268.4 crore (19% YoY increase)
• EBITDA: Grew 8% YoY; net EBITDA margin fell by 4.56%
• Average Room Rate (ARR): Increased by 9% to Rs. 5,686
• Occupancy Rate: Decreased to 66.6%
• Renovations: 25% of Keys portfolio under refurbishment
• Management Fees: Increased by 22%; three new contracts signed (adding 187 rooms)
Strategic Focus
• Investments: Emphasis on renovations and digital transformation for long-term growth.
• Growth Target: Aim for ROCE exceeding 20% in the coming year.
Analyst Q&A Highlights
• RevPAR Growth: Anticipated double-digit growth in FY25 and FY26 post-renovations.
• Aurika Mumbai Performance:
• Q1 FY25 occupancy: 45.9%, ARR just under Rs. 9,000.
• Stabilization expected by Q4 FY25.
• Food and Beverage Costs: Expected to align with historical averages; MICE activities anticipated to increase.
• Occupancy Decline: Attributed to renovations in Hyderabad and Bangalore; strategic for long-term gains.
Renovation Insights
• Renovation Costs: Current efforts involve about 6% of revenue; routine renovations typically cost 1.5%-1.8%.
• Completion Timeline: Most renovations expected to be completed by end of FY26.
• Revenue Projections: Anticipated revenue growth over Rs. 1,250 crore for FY25.
Market Trends and Future Outlook
• Industry Cycles: Noted consistent 10% annual demand growth vs. 6% supply growth.
• Household Growth: Projected increase from 6 million to 30 million households able to afford branded hotels in 5-6 years.
• Growth Guidance: Target of 20,000 rooms by 2027 (30% owned, 70% managed).
• Debt Strategy: Focus on debt reduction; company is cash positive, no rights issue needed.

Lemon Tree Hotels Limited Earnings Conference Call Summary
Date and Context
• Date of Call: June 3, 2024
• Disclosure Date: June 7, 2024
• Focus: Q4 and FY24 financial results
Key Financial Highlights
• Q4 Performance:
• Gross ARR: Rs. 6,605
• Total Revenue: Rs. 331.2 crore (30% YoY increase)
• Net EBITDA Margin: 52.9%
• Full Year Performance:
• Revenue: Rs. 1,076.8 crore (23% increase YoY)
• Cash Profit: 24% YoY growth
• Operational Growth:
• 12 new management contracts signed
• 4 hotels operationalized, totaling over 10,000 rooms
Industry Insights
• Pricing Dynamics:
• Significant price hikes in FY23; further increases expected (5% to 12%)
• Structural shift in consumer demand in India, similar to China and Indonesia
• Luxury segments outperforming mid-market segments
Specific Hotel Performance
• Aurika Mumbai:
• Occupancy Rate: 66%
• ARR: Rs. 9,000
• Future Projections:
• Minimum EBITDA target of Rs. 60 crore annually by next October
• Expected 15% annual revenue increase over the next three years
Debt and Financial Strategy
• Debt Management:
• Anticipation of reducing debt, aiming for net debt zero within four years
• Recent Rs. 140 crore debt increase explained as credit lines and pre-opening expenses
Market Conditions and Challenges
• Occupancy Rates:
• Decline in city-specific occupancy rates attributed to tech sector hiring slowdowns
• Price Sensitivity:
• Guests at lower-tier hotels (Keys) are more price-sensitive than those at higher-end hotels (Aurika)
Renovation Impact
• Renovation Effects:
• Ongoing renovations may temporarily affect occupancy and EBITDA
• Gradual price increases expected post-renovation
Airport Dynamics
• Airport Capacity Growth:
• Growth in airport capacity in Delhi and renovations at Mumbai airport will sustain demand
Promoter Holdings and Growth Concerns
• Promoter Holdings:
• Decrease attributed to debt repayment; trend of decreasing holdings has mostly stopped
• Sales Growth:
• Aiming for a minimum growth of 15% annually despite concerns over operating profit percentage decline
Conclusion
• Engagement: Encouragement for further engagement with the Investor Relations team.

Lemon Tree Hotels Q3 FY24 Earnings Conference Call Summary
Company Performance
• Record Revenue: Total revenue reached Rs. 291 crore, a 24% year-over-year increase.
• Occupancy Rates: Declined, resulting in a net EBITDA margin decrease to 48.8%.
• Cost Increases: Higher payroll and renovation expenses, particularly for the new Aurika hotel in Mumbai.
Expansion and Contracts
• New Contracts: Signed nine new management contracts and operationalized six hotels, expanding to 100 hotels with 9,687 rooms.
• Market Challenges: Noted difficulties in Bangalore and Pune due to IT sector slowdown.
Aurika Hotel Insights
• Occupancy Expectations: Aurika's occupancy below 40% in Q3, expected to exceed 60% in Q4.
• Financial Impact: Significant effects on P&L due to depreciation and interest costs.
• Stabilization Timeline: Aurika's performance should be excluded from overall assessments until stabilization, anticipated next year.
Renovation and Growth Strategy
• ARR Growth Potential: Positive outlook if Aurika performs well; ongoing renovations to enhance pricing and occupancy.
• Investment Plans: Rs. 100 crore planned for renovations in FY25, focusing on the Keys portfolio.
Debt Management
• Debt Reduction Strategy: Projected decrease in debt-to-EBITDA ratios; aim to be debt-free in four years.
• Current Debt Levels: Expected peak at Rs. 1,900-1,950 crore due to Aurika construction.
Market Dynamics
• Supply and Demand: National supply growth of about 5% annually; varying demand across markets.
• Pricing Strategy: Increased corporate rates while making retail prices competitive.
Future Outlook
• Occupancy Projections: Anticipated increase to 70% by FY26, with mid-teens RevPAR growth.
• Tourism Demand: Focus on expanding hotel network in key tourism areas and enhancing loyalty programs.
Additional Insights
• Finance Costs: Increased to Rs. 53 crore, primarily due to construction-related debt.
• Sustainability Commitment: 10% reduction in energy consumption per room since FY19, with plans for further improvements.
Conclusion
• Investor Engagement: Encouraged ongoing communication with investors regarding external factors that could positively impact revenue.

Lemon Tree Hotels Limited Earnings Conference Call Summary
Key Financial Highlights
• Q2 FY24 Performance:
• Record gross ARR: INR 5,268 (7.1% YoY increase)
• Significant occupancy rise contributing to 15.9% YoY RevPAR increase
• PAT growth: 26.3% YoY
• Decrease in net EBITDA margin due to higher renovation and pre-operative expenses
• 11 new management contracts signed, expanding pipeline
Market Demand and Consumer Behavior
• Demand Insights:
• Overall GDP growth driving discretionary spending in the hotel sector
• Correlation between airline traffic and hotel demand
• Projected airline capacity to outpace hotel room supply, favorable for the industry
Operational Strategies
• Website and Loyalty Program Revamp:
• Increase in direct bookings from 2% to 7%
• Aurika Hotel Performance:
• Expected to be EBITDA positive with improving occupancy and ARR
• Margin Outlook:
• Recent margin hits attributed to renovation and pre-opening costs
• Investments in renovations aimed at enhancing future pricing power
Renovation and Capital Expenditure Plans
• Renovation Costs:
• Costs vary by market; significant investments planned for brand maintenance
• CAPEX Outlook:
• Planned spending: 50 crores this year, 100 crores over the next two years
• No new hotel constructions except for Shimla project (20-25 crores remaining)
Revenue Management and Pricing Strategies
• BCG Project Investment:
• Aimed at enhancing revenue management and cost control
• Pricing Dynamics:
• Airlines shifting to more affordable hotel options, presenting opportunities
• Strategy to align corporate and retail pricing to eliminate anomalies
Employee Costs and Competitive Positioning
• Employee Cost Increase:
• INR 4 crore increase due to higher wages, bonuses, and hiring
• ARR Growth Strategy:
• Focus on increasing occupancy by adjusting prices, attracting price-sensitive customers
Future Acquisitions and Portfolio Management
• Capital Allocation Policy:
• Aiming to reduce debt and improve financial ratios
• Keys Hotel Portfolio Performance:
• Categorized into "juicy" and "non-juicy" segments with ongoing renovations
• Projected return of INR 100 crore EBITDA within 12-18 months
Industry Outlook
• Mid-Cycle Recovery:
• Anticipated recovery driven by increased foreign demand and corporate travel
• Plans to re-price aggressively once occupancy stabilizes at 75%
• Expansion Strategy:
• Focus on managed and franchised properties for quicker revenue generation
• Interest in co-living initiatives while enhancing existing hotel operations

Lemon Tree Hotels Q1 FY24 Earnings Conference Call Summary
Key Highlights
• Best Performance Metrics:
• Gross ARR: INR 5,237 (up 8.6% YoY)
• RevPAR: INR 3,678 (up 17.2% YoY)
• Total Revenue: INR 224.6 crores (up 16.8% YoY)
• PAT: INR 27.5 crores (up 103% YoY)
• Net EBITDA Margin: 47.6%
• New Contracts:
• Six new management contracts signed, adding 548 rooms to the pipeline.
Strategic Focus
• Shift to Retail:
• Management aims to increase retail business to 66% of total demand in four years.
• Decrease in corporate room nights noted, with growth in other segments.
• Market Conditions:
• Pricing power influenced by market conditions; conservative pricing strategy for Aurika Mumbai.
Performance Insights
• Occupancy Trends:
• Lemon Tree Premier Mumbai occupancy increased from 50-60% to 90%.
• Aurika Mumbai expected to follow a similar growth trajectory.
• Revenue Model:
• 75% of revenue from room sales; shift anticipated to 68%-32% for Aurika due to convention facilities.
Financial Projections
• Management Fees:
• Projected increase from INR 36 crores to INR 130-150 crores in three years.
• EBITDA Expectations:
• Conservative EBITDA projection for Aurika Mumbai at INR 170 crores.
Operational Challenges
• Cost Increases:
• Rising fixed costs attributed to business development and staff salary normalization.
• Power costs rising due to erratic supply; focus on renewable energy.
Future Outlook
• Growth Confidence:
• Optimism for continued growth in occupancy and ARR, targeting over 15% ARR growth in three years.
• Digital Transformation:
• Significant impact expected from digital sales process improvements.
Capital Expenditure
• Aurika Hotel Opening:
• Set to open in October; expected to generate sufficient cash flow for debt management.
• Debt Levels:
• Fleur's debt around INR 1,400 - 1,450 crores; options for future include listing or attracting investment.
Industry Trends
• Pricing Adjustments:
• Positive pricing trends anticipated starting Q3, with a potential 15% annualized increase.
• Supply-Demand Dynamics:
• Forecasting a "golden period" for hotel companies as demand growth outpaces supply growth over the next 4-5 years.
Conclusion
• Management expressed gratitude to participants and encouraged further engagement with the Investor Relations team.

Lemon Tree Hotels Limited Earnings Conference Call Summary
Financial Performance
• Record Year: Total revenue increased by 111% to INR 879 crores.
• EBITDA Margin: Maintained at 51.9%.
• Best Quarter: Q4 FY23 marked significant growth in occupancy and RevPAR.
Growth Strategy
• New Contracts: Signed nine new management and franchise contracts, adding 538 rooms.
• Focus Areas: Improving occupancy and average room rates (ARR), with investments in renovations, especially for the Keys portfolio.
• Expansion Roadmap: Targeting over 20,000 rooms and 300 hotels in five years.
Capital Expenditures
• Renovation Costs: Classified as operating expenses, with FY24 capex around INR 10-11 crores.
• Aurika Project: Increased capital deployment with INR 300 crores remaining for opening.
EBITDA Projections
• Short-term Impact: Renovation expenses expected to lower margins in H1 FY24, with improvements anticipated in H2.
• Debt Reduction: Projected to be debt-free by FY26 or FY28, with significant reductions starting next year.
Renovation Plans
• Keys Hotels: 60% in high-demand locations, investing INR 5 lakhs per room.
• Three-Year Plan: Renovation of approximately 3,500 rooms, with 1,000 rooms in H1 FY24.
Market Dynamics
• Current State: Hotel industry in mid-cycle phase with occupancy rates around 66-67%.
• Future Potential: Room rates could double in 2-2.5 years, with a 30% increase over the past year.
Investor Engagement
• Ongoing Communication: Encouraged continued engagement with the investor relations team for updates and insights.

Lemon Tree Hotels Limited Q3 & 9M FY23 Earnings Call Summary
Financial Performance Highlights
• Revenue Growth: 19% increase to INR 234.1 crore compared to Q2 FY23.
• Net EBITDA Margin: 54.3%.
• Profit After Tax (PAT): INR 48.6 crore, a 151% increase over Q2 FY23.
• Occupancy Rates: Strong performance with expectations of over 75% occupancy in Q4.
Strategic Focus
• Expansion Plans: New hotel openings and renovations, including Aurika, MIAL hotel by October 2023.
• Cost Optimization: Emphasis on cash generation to support ongoing projects.
• Market Segment Shifts: Increase in retail bookings compared to corporate.
Average Room Rates (ARR) and Occupancy Strategy
• ARR Increase: 24% rise compared to pre-COVID levels; corporate rates up by 25%.
• Occupancy Goals: Targeting over 75% occupancy in Q4.
• Hotel Mix: Balanced approach with owned and managed hotels, aiming for 111 hotels and 11,500 rooms by FY25.
Pricing Strategy and Market Dynamics
• Aggressive Pricing: Prices increased by 20-30% over three years; further hikes anticipated due to strong demand.
• Market Conditions: High construction costs limiting new developments, sustaining demand-supply imbalance.
• Profitability Outlook: Surpassed 50% net EBITDA margin with continued growth expected.
Renovations and Asset Management
• Keys Hotels Acquisition: Ongoing renovations to improve quality and pricing.
• Renovation Budget: INR 50 crore planned for this year, up from previous years.
• EBITDA Margin Influences: Renovation expenses treated as operating costs.
Future Projections
• Revenue Growth: Anticipated 20% growth for FY24 with higher net EBITDA margins.
• Market Confidence: Strong demand in the Indian market allows for price increases without declining occupancy.
• Management Fees: Projected to reach INR 35-36 crore this year, aiming for INR 100 crore in two years.
Leisure Portfolio and Market Position
• Limited Leisure Offerings: Few properties in Goa, Alleppey, and Bandhavgarh.
• Strong Demand: Despite competition, hotel demand remains robust.
• Expansion Goals: Aim to expand to 100 cities and 25,000 rooms in four years.
Conclusion
• Market Position: Third-largest owner of hotel rooms in India, sixth-largest in total managed and owned rooms.
• IPO Valuations: Potential impact on market value discussed.