Lemon Tree Hotels announced its financial results for the third quarter of FY26, achieving its highest-ever revenue of ₹407.8 crore, a 15% YoY growth. Net EBITDA stood at ₹206.4 crore, with a margin of 50.6%, slightly lower due to increased investments in renovation and technology. The company signed 17 new management contracts, adding 1,855 rooms to its pipeline, and is confident in achieving substantial growth as its portfolio stabilizes.
Q3 FY26 Financial Highlights
Lemon Tree Hotels recorded significant milestones in the third quarter of FY26, achieving revenue of Rs. 407.8 crore, marking a 15% year-over-year (YoY) growth. Net EBITDA reached Rs. 206.4 crore, growing 12% YoY, translating to a net EBITDA margin of 50.6%. This margin saw a 133 basis point decrease YoY, primarily attributed to continuing increased investments in renovation, technology, and the impact of GST.
Profit After Tax (PAT) for the quarter was Rs. 81.8 crore, reflecting only a 2% YoY increase, while Cash Profit grew 14% YoY to Rs. 131.1 crore. Management noted that investments accounted for 6.4% of revenue this quarter, which is expected to reduce to about 3.6% by FY28.
Operational Performance Metrics
The Gross Average Daily Rate (ARR) for Q3 FY26 stood at Rs. 7,487, an 11% YoY increase. Occupancy was recorded at 73.4%, a slight decrease of 82 basis points YoY. This resulted in a Revenue Per Available Room (RevPAR) of Rs. 5,494, which increased by 9% YoY.
In addition, the company booked one-off exceptional items totaling Rs. 31.3 crore related to the Labour Code impact, ex-gratia payments, and a property tax payment for New Delhi properties.
Asset-Light Pipeline Expansion
The asset-light business showed strong momentum in Q3. The company signed 17 new management and franchise contracts, adding 1,855 rooms to the pipeline. Additionally, 9 hotels were operationalized, bringing 816 rooms online. As of December 31, 2025, the total group inventory stands at 259 hotels, comprising 21,942 rooms, with 11,772 rooms (130 hotels) operational.
Fees from management and franchise contracts for third-party owned hotels increased by 24% YoY to Rs. 22.9 crore. Fees from Fleur Hotels stood flat at Rs. 25.3 crore due to the GST change and accelerated renovations.
Strategic Brand Initiatives
Management detailed updates on branding and future development:
- Designs are finalized for the Aurika, Nehru Place project.
- Plans are underway to open 2 out of 3 blocks of Aurika, Shimla by Q2 of the current fiscal year.
- A license deal for a 47-room heritage Aurika Hotel in Varanasi, adjoining the River Ganges, was signed in January.
Addressing Market Performance and Renovations
In response to analyst queries, management explained RevPAR variance. The primary drag was performance in Gurgaon, which experienced a weak quarter. Markets like Delhi (11% RevPAR growth), Hyderabad (19%), and Bangalore (14%) showed healthy performance despite renovation disruptions.
Renovation efforts are focused on owned properties, with over 65% completion on the 4,100 rooms requiring full renovation. Future rebranding activities include converting a Red Fox Hotel in Hyderabad to a Lemon Tree Hotel by October this year. The company noted that the current tech investments, started in FY25, are focused on creating a single source of truth and will continue for the next 4-5 years, aiming for clear monetization.
Fleur Demerger and Future Outlook
Regarding the planned demerger, management reaffirmed the guidance that Fleur is expected to achieve an EBITDA of about Rs. 1,000 crore by FY28. Following the split, Lemon Tree will effectively become a debt-free company from next year, with cash flows available for reinvestment in technology, marketing, and branding, positioning the brand for potential international expansion.
Management expressed optimism for the remainder of the quarter, expecting February and March to yield good outcomes, despite a sluggish start to the first month.
Source: BSE
