Life after an IPO

Lemon Tree Hotels recently got a nod from SEBI for its Initial Public Offering (IPO). Rattan Keswani, Deputy Managing Director, Lemon Tree Hotels, talks about this landmark achievement and what it means for the group.

Anupriya Bishnoi

What are the latest happenings at Lemon Tree Hotels?
There are a lot of exciting things happening in the group. The recent one was the successful IPO; we opened hotels one after the other post that. It continues to be that way in the sense that we have about seven to eight openings due by the end of this fiscal. A fair amount of growth will also be seen in terms of inventory. From a managed piece, there are a few contracts in play. The market is firmer now and occupancies are stable even though it’s summer. Fortunately, Lemon Tree is still at an occupancy of 75-76 per cent, if you look at a pan India performance. Come October, we should be in for better times.

Did the Nipah virus affect Lemon Tree hotels in the South?
We have a resort outside Kochi. We were not really affected by the Nipah virus. Our other South Indian hotels, whether in Chennai or other places, were not really affected. We did not even see guests talking about it or their fears around it.

Your take on the business of serviced residences in India?
The serviced residence business will evolve in India because luxurious, fully furnished accommodations are available in some great condominiums in Noida, Gurugram, and some parts of Delhi. It will get traction. Long stays have faded off. We have seen the elements of these short visits coming in. So, I see it has a bright future.

Which brand of Lemon Tree is doing well?
All our brands have occupancies of over 75-76 per cent. So, I can’t say that one brand is better than the other in occupancy percentage. Obviously, the hotels which are in Tier-I cities, from a gross revenue perspective, will do better since rates are firmer. We have seen growth in Tier-I and II cities being solid.

What kind of challenges do you foresee?
In the hospitality industry, the challenge lies in the dynamism of the local, economic, and political environment because if anything goes edgy or iffy, the first effect is on the hospitality sector, resulting in a drop in visitations, tourists getting worried, etc. That said, these things can be avoided. Everything else is robust. Things seem to be moving in the right direction. So, if everything seems stable in and around our continent, we shouldn’t be worried.

Where is Lemon Tree looking to expand?

We have a development happening in Kathmandu, Nepal. We will go where a larger sect of Indians may want to go. In Sri Lanka, the largest inbound is from India and also in Dubai. We are focusing on these two locations because we know the strength of the brand will create a market for us without having to work overly hard. We are chasing a few pieces in both these places. Hope something works out. Our strength is our loyalty programme. Approximately 90 per cent of our customers are Indians, so that’s our focus, but we have not scored any goals that I can talk about at this moment.