This article first appeared on GuruFocus .
Release Date: February 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Lemon Tree Hotels Ltd ( BOM:541233 ) recorded its highest ever revenue and EBITDA in Q3 FY26, with revenue growing 15% year-on-year.
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The company signed 17 new management and franchise contracts, adding 1,855 rooms to its pipeline, and operationalized 9 hotels, adding 816 rooms to its operational portfolio.
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Management fees from third-party owned hotels increased by 24% year-on-year, indicating strong growth in their asset-light strategy.
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The company plans to open two blocks of Orika Shimla by Q2 to capture increased demand during the summer season.
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Lemon Tree Hotels Ltd ( BOM:541233 ) is focusing on expanding its upper upscale Orika brand, which is less affected by GST changes, indicating a strategic shift towards higher-value offerings.
Negative Points
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EBITDA margin decreased by 133 basis points year-on-year due to increased investments in renovation, technology, and GST impact.
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Occupancy for the quarter decreased by 82 basis points year-on-year, indicating potential challenges in maintaining occupancy levels.
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The company incurred an expense of 31.3 crores as exceptional items related to labor code impact and property tax payments, affecting profitability.
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RevPAR growth was lower than industry averages, particularly affected by weak performance in Gurgaon and tier-two markets.
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The impact of GST changes and accelerated renovation led to flat fee income from Fle Hotels, indicating challenges in maintaining consistent revenue growth.
Q & A Highlights
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Q: During the quarter, industry reports mentioned a 12% RevPAR growth, but Lemon Tree's growth seems lower. Could you explain why? A: Executive Chairman: Our peers are luxury-heavy, allowing for higher repricing. Our portfolio was affected by weak performance in Gurgaon, which saw negative RevPAR growth. Other markets like Delhi, Hyderabad, and Bangalore showed positive growth. We focus on occupancy before repricing, especially in large inventory markets like Bombay.
Q: What are your RevPAR growth expectations for FY27, considering renovation benefits? A: Executive Chairman: We've seen significant growth in renovated properties. However, due to ongoing renovations, the full impact will be visible by FY28. We expect a substantial improvement once the entire portfolio is renovated.
Q: With the demerger process underway, how should we view growth for Lemon Tree and Fleur? A: Executive Chairman: We expect to add 2,500 rooms in the next year and aim for INR 1,000 crore EBITDA by FY28. Lemon Tree will focus on asset-light growth, while Fleur will handle asset-heavy operations.
Q: Can you provide an update on the renovation status and its impact on inventory? A: Executive Chairman: We've completed over 65% of renovations on our older portfolio. This year, about 1,200 rooms were renovated, with 200 rooms still shut. We aim to complete renovations by next year, after which we'll focus on regular refurbishments.
Q: What are your plans for international expansion, particularly in markets like Dubai? A: Executive Chairman: We plan to expand internationally, focusing on markets with high Indian traveler demand. Our brand is now exportable, and we aim to capture more wallet share of Indian travelers globally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
