The average room rates for the properties of Lemon Tree Hotels Ltd. will grow 10–15% each year in the next five years, according to Chairperson Patanjali Keswani.
The ARRs of the hotels have gone up and will continue to rise significantly, the managing director told NDTV Profit in a interview.
"What will actually change is revenue per available room," he said. "Ultimately, when you have a lot of owned hotels or you are managing hotels for other owners, the real metric you want to look at is the revenue per square foot and what is your fixed and variable cost."
Both occupancies and ARRs are going to continue growing, with occupancy rising from 70% to 75–80%, Keswani said. "But the (average room) rates will grow by 10% to 15% every year in my opinion in the next five years and 90% of that will go to the bottom line."
Lemon Tree plans to expand geographically in order to achieve the company's long-term target of having 20,000 rooms by 2027. "There are two parts of the strategy, one is owners reaching out to us to be a part of our network. Then, there's the strategic aspect, which is where we make specific outreaches where we think there are markets we should be present," he said.
We have signed over 20 hotels in the last three–four months and expect to sign another 20 in the next three–four months.Patanjali Keswani
Lemon Tree expects the third quarter of the current financial year to be significantly better than the same period of the preceding fiscal on account of strong demand.
Keswani is seeing "very good demand" in comparison to last year for Lemon Tree. "Typically, winter is the better part of the year. H2 is usually 15–20% better in revenue terms than H1."
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