Lemon Tree Hotels, India’s largest mid-priced hotel chain, has announced that its subsidiary Fleur Hotels IPO will be list by 2025. This is part of a well thought out plan to be debt free in 6 years, according to Chairman and Managing Director Patanjali Govind Keswani.
Lemon Tree Hotels (LTHL) is already a listed entity and LTHL shareholders will be eligible to apply under the shareholder quota for the upcoming IPO of Fleur Hotels—a great opportunity for existing investors to participate in the growth of the group’s most valuable subsidiary.
Fleur Hotels IPO
The Fleur Hotels IPO will be a game changer for Lemon Tree Hotels. As per the company’s disclosures, Fleur Hotels accounts for 90% of Lemon Tree’s consolidated debt. As of March 2024, Lemon Tree’s total debt was INR 2,336 crore out of which INR 1,500-1,760 crore is for Fleur Hotels alone.
Keswani has mentioned multiple times in investor calls and media interviews, “When we take Fleur public, our debt will become zero in 6 years”. He said the listing will provide the required capital to retire debt and then the company can deploy resources into expansion, renovations and digital transformation initiatives.
About Fleur Hotels
Lemont Tree has 58.91% stake in Fleur Hotels. Fleur operates under brands like Aurika, Lemon Tree Premier, Lemon Tree Hotels and Red Fox Hotels. The remaining 41.09% stake is with APG, a Dutch pension asset manager.
Fleur Hotels, direct and indirectly, operates 24 hotels with 3,993 rooms. The subsidiary has flagship hotels in Mumbai, Delhi, Kolkata and Hyderabad with major properties like Aurika Mumbai Skycity, India’s largest hotel with 669 rooms.
Though the exact date is not announced, the IPO is expected by 2025 and “sooner rather than later” depending on regulatory approvals and market conditions. Market experts see this as a good time as India’s hospitality sector is benefiting from post pandemic travel surge, growing mid market and favorable demand supply dynamics.
The Lemon Tree inventory, including managed hotels, now stands at 107 operational hotels with 10,125 rooms and a pipeline of 4,000 rooms which is a strong growth trajectory.
Investment Cycle and Short Term Margin Impact
As the company prepares for the IPO, Lemon Tree is also going through a heavy investment cycle. The company has increased spending on property renovations, digital transformation and expansion of sales and business development teams. Though these are strategic spends, they have impacted operating margins in the short term.
For instance, EBITDA margin fell 456 bps in Q1 FY25 mainly due to one time costs. The Keys Hotel portfolio, which is also part of the group, saw a 10% YoY decline in EBITDA margin due to upgrades and repositioning efforts.
Despite these temporary headwinds, Lemon Tree recorded its highest-ever quarterly revenue in Q1 FY25 at INR 268.4 crore, a 19% YoY increase, driven by a 9% growth in average room rates and strong brand positioning.
A Win-Win for Shareholders
Fleur Hotels IPO is not only a strategic milestone for Lemon Tree Hotels but also an opportunity for existing shareholders. Since Lemon Tree is already a listed compan, anyone holding even a single share of LTHL will be eligible to apply under the shareholder quota during the Fleur Hotels IPO.
This eligibility adds an exclusive investment channel for retail shareholders to gain access to Fleur’s high-quality hospitality portfolio and benefit from its future growth potential.
Looking Ahead
With favorable macroeconomic conditions, a resurgent travel industry, and Lemon Tree’s ongoing investment in quality and service innovation, the Fleur Hotels IPO is poised to be a landmark event not only for the company but also for India’s broader hotel and travel sector.
As the market watches closely, Lemon Tree Hotels seems firmly on its way to becoming a debt-free, digitally advanced, and strategically positioned leader in the mid-market hospitality space—reaffirming investor confidence in its long-term growth vision. For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.