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Dolat Capital Report
Lemon Tree Hotels Ltd.'s Q1 FY22 was disappointing.
Average room rate decline and flat occupancies YoY were key disappointments. Healthy recovery from July 2021 pin hopes of revival.
Management remains upbeat with Q2 FY22 performance to be similar to Q4 FY21 (220% of Q1 FY22), Q3 FY22 to be 75-80% and Q4 FY22 to be similar to pre-Covid-19.
Cost rationalisation benefits are likely to be structural. Low-inventory supply and consolidation are likely to be other benefits.
Lemon Tree Hotels with its superior positioning in ~Rs 4000-5000 average room rate bracket in mid-market segment, high dependency on domestic clients (~85-90%) and room revenues (~75%) is well-poised for recovery especially as corporate travel revives.
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