The hotel industry in India is currently facing a quaint situation of demand for rooms outstripping supply, even as tourists and visitors – majority among them being the Millennials — make a beeline for the best of hotels in areas offering them value for money. Eyeing these and other opportunities, Lemon Tree Hotels Limited is launching its IPO of 185,479,400 equity shares at Rs 54 to Rs 56 per share from March 26 to March 28, 2018 on the BSE and NSE, according to its Chairman & Managing Director, Patanjali G Keswani.
“The Indian hotel industry is in the nascent stage and India has barely 9% of global supply in penetration of the hotel rooms market, where even China is three times larger in this regard – due to its low interest rates and ready availability of buildings to convert into hotels,” Keswani said here today while noting that Lemon Tree Hotels Limited is expanding its reach to enter into Tier II and Tier III cities while strengthening itself in the Indian leisure market.
“Today’s Millennium Indian – under 40 years of age and having higher disposable income — wants to stay in branded hotels and different places. Besides, there are hundreds of thousands of Indians seeking affordable hotel rooms, but lack of such supply of rooms is what is driving us to continuously build hotels in meeting these needs. For the first time — eight years ago — investors started putting money into hotels and today India is growing from an ‘immature’ hotel room supply market into a Mature market, where demand will continue to grow by 1.5 times yearly and is expected to increase occupancy in the face of less supply.”
Describing Lemon Tree Hotels Limited as ‘number one’ in the mid-priced hotel sector (with 4697 owned rooms) in 28 Indian cities, Keswani said this was emphasized through its over 70% occupancy rate and revenue growth of 19% per annum. The future witnessed focus on key micro markets; growing its national footprint and diversifying geographically; expanding through development, acquisitions, leases and management agreements; attracting consumers through expansion into leisure hotels and through online channels – al through a unique workforce comprising mostly of “Opportunity Deprived Indians” (those who cannot get jobs or having disabilities) and numbering 550 such staff, he said.
Replying to questions, he said the Indian hotel industry had been witnessing stress in the past few years and hotel rooms supply had dried up, causing debt problems. “Currently our debt is Rs 1,000 crore and, though we are looking at the overseas market, it is not part of our expansion strategy as 86% of our guests are Indians,” Keswani said while stating “We will look at managing overseas hotel properties.”
