Profit before tax stood at Rs 29.21 crore during the quarter, down 19.35% as compared to Rs 36.22 crore reported in Q1 FY24.

EBITDA grew by 8.05% to Rs 115.4 crore in Q1 FY25 as compared to Rs 106.8 crore recorded in Q1 FY24. EBITDA margin reduced to 43% in Q1 FY25 as against 47.6% posted in the corresponding period last year.

During the quarter, Gross ARR (average revenue per room) rose 8.57% to Rs 5,686, Occupancy rate fell to 66.6% from 70.2% in Q1 FY24. RevPAR (revenue per available room) increased 4% to Rs 3,788 in Q1 FY25 as against Rs 3,657 in Q1 FY24.

Patanjali Keswani, chairman & managing director of Lemon Tree Hotels said, “In Q1, despite the temporary headwinds faced by the hotel sector due to the election process and the extreme heat wave, Lemon tree recorded its highest ever Revenue in Q1 at Rs 268.4 crore. The revenue grew over 19% as compared to Q1 FY24 while the EBITDA grew 8% YoY translating into a Net EBITDA Margin of 43% which decreased by 456 bps over Q1 FY24. Of this fall in EBITDA margin YoY of 4.6%, about 50% was due to one off increase in investments in renovation and digital transformation.

As I had stated in earlier calls, the decrease in EBITDA margin Y-o-Y was owing to planned increases in renovation investments above that spent in Q1 FY24 as well as investment in digital capabilities, expansion of our business development team and overall annual payroll increase. The keys portfolio EBITDA Margin decreased by around 10 percentage points YoY due to an increase in renovation expenses of Rs around 1.8 crore over Q1 FY24 which is an increase of 100% Y-o-Y. During the quarter, around 25% of the total Keys portfolio was shut for renovation which impacted the ability of the keys portfolio to increase occupancy which decreased by 148 bps Y-o-Y. With demand growth expected to exceed supply growth in the next few years accompanied by the structural tailwinds that India is currently witnessing, this significant investment in renovation will allow us to better position our hotels going forward to capture superior pricing and position Lemon tree as the brand of choice in the mid-market segment.

Fees from management & franchised contracts for 3rd party owned hotels stood at Rs 12.5 crore in Q1 FY25 up 21% from Rs 10.4 crore in Q1 FY24. Total management fees for Lemon Tree in Q1 were up 22% Y-o-Y at Rs. 29.1 Cr compared to Rs. 23.9 Cr in Q1 FY24.

During the quarter, we signed 3 new management & franchise contracts which added 187 new rooms to our pipeline and operationalized 4 hotels which added 331 rooms to our portfolio. As of 30th June 2024, the inventory for the group stands at 107 operational hotels with 10,125 rooms and our pipeline comprises an additional around 4,000 rooms.”

Lemon Tree Hotels (LTH) is the largest mid-priced hotel sector chain, and the third largest overall, on the basis of controlling interest in owned and leased rooms, as of 30 June 2017, according to the Horwath Report. LTH operates in the mid-market sector, consisting of the upscale, upper midscale, midscale and economy hotel segments and seeks to cater to Indian middle-class guests and deliver differentiated yet superior service offerings, with a value-for-money proposition.