Lemon Tree targets 9,000-room Fleur portfolio before listing, sees demerger unlocking value

Lemon Tree Hotels, an Indian hotel chain headquartered in New Delhi, plans to expand its Fleur hotel portfolio to around 9,000 rooms before its proposed listing, supported by a capital deployment pipeline of nearly ₹4,000 crore, Founder and Executive Chairman Patanjali Keswani said. The company also expects its ongoing demerger to create two distinct businesses and unlock shareholder value over the long term.

Keswani said Fleur will continue to pursue acquisitions and developments over the coming year ahead of its planned listing in the second half of next calendar year, subject to regulatory approvals. He also expects Lemon Tree's fee-based management business to deliver sustained growth as hotels signed over the past few years become operational.

Discussing the company's latest acquisition, Keswani said Lemon Tree has acquired land in Mumbai's Bandra East, adjacent to the Bandra Kurla Complex (BKC), where it plans to develop a 170-room Lemon Tree Premier hotel.

He clarified that the total land cost is higher than initially reported. "The actual price is not ₹120 crore. It is about ₹170 crore because we have to pay ₹50 crore as premium to the government for FSI," he said.

Lemon Tree Hotels shares were trading at ₹110.50 as of 10:37 am on the NSE. The company, which has a current market capitalisation of ₹8,738.48 crore, has seen its shares decline more than 33% over the last year.

The company plans to invest around ₹360 crore to construct the hotel, which Keswani expects to generate stronger profitability than Lemon Tree's existing Mumbai portfolio.

Fleur listing and expansion plans

Keswani said Lemon Tree has already secured approvals from the stock exchanges and the Securities and Exchange Board of India (SEBI) and has filed its scheme with the National Company Law Tribunal (NCLT).

According to him, the company expects NCLT approval in nine to 12 months, with the reverse demerger and listing likely in the second half of next calendar year.

Ahead of the listing, Fleur plans to strengthen its portfolio through acquisitions and greenfield developments. Backed by nearly ₹1,300-1,400 crore of equity, including investment from World Bank Group member IFC, and additional debt, the company believes it can deploy close to ₹4,000 crore over the next three years.

Keswani said the company aims to increase Fleur's room inventory from around 6,000 rooms currently to nearly 9,000 rooms before listing, with some projects still under development.

Lemon Tree remains on track for key additions

The company also remains on track to open 2,000 rooms during the financial year 2026-27 (FY27), reflecting hotel signings made around three years ago.

"This is an accelerating flywheel. What you signed three years ago, you open now," Keswani said, adding that Lemon Tree expects to sign at least 5,000 additional rooms this year after signing a similar number last year.

Demerger to separate asset-light and asset-heavy businesses
Responding to investor concerns over the restructuring, Keswani said the demerger will separate Lemon Tree's management business from Fleur's asset-heavy development platform, allowing investors to value each business independently.

"I am utterly convinced that when the demerger occurs... the market will then be a little more clear on why we did this and the value addition," he said.

Keswani expects Lemon Tree's management company to deliver well above 25% annual growth in fee revenue, driven by the large pipeline of hotels becoming operational, while Flor aims to build a larger asset portfolio before listing.

For the full interview, watch the accompanying video



Catch all the latest updates from the stock market here