Lemon Tree Hotels Plans To Expand Betting On Growing Demand

Lemon Tree Hotels Ltd. said it plans to scale up in Mumbai, Kolkata and Udaipur in the next three years as the hotel chain operator bets on rising incomes to boost leisure travel.

Two-four star hotels category in India is at early stages of long-term growth, Patanjali Keswani, chairman and managing director of the chain, told BloomberQuint in an interview. Branded hotel industry has grown fivefold in the last 13 years, driven by demand for mid-priced rooms, said Keswani.

Growth will now be driven by urbanisation, high disposable income, middle-class segment, a stronger economy as well as increase in corporate travel, he said.

All-India hotel occupancy rose from 58 percent to 65 percent in three years through March 2017, primarily due to a 13.7 percent growth in demand against a 8.4 percent rise in supply, according to a report by hotels and tourism consultant Horwath HTL India.

Lemon Tree’s expansion plan comes at a time when the company is looking to launch an initial public offering after getting an approval from the market regulator on Dec 22. Investors, including promoters and private equity firm Warburg Pincus, plan to sell 19.6 crore shares, or 24.9 percent stake, in the IPO. Warburg Pincus, through its investment arm Maplewood Investments, will sell about half of its 24.53 percent stake in the company, according to the draft prospectus.