Lemon Tree Hotels has announced a strategic reorganization involving the demerger of hotel assets into Fleur Hotels. Warburg Pincus will invest in Fleur Hotels by acquiring APG’s stake. Fleur Hotels will receive a primary investment of up to INR 960 crores to fuel growth. This creates two distinct platforms: Lemon Tree Hotels, an asset-light management company, and Fleur Hotels, an asset-heavy ownership platform. The goal is to unlock intrinsic value and accelerate expansion.
Reorganization Plan Approved
Lemon Tree Hotels Limited has approved a composite scheme of arrangement, paving the way for a strategic reorganization. This plan was approved on January 9, 2026, and aims to create two differentiated and complementary platforms within the hospitality sector.
Key Elements of the Transaction
The reorganization involves several key steps:
- Lemon Tree will merge its subsidiaries, Carnation Hotels and Hamstede Living, with itself.
- Four subsidiaries of Lemon Tree will merge with Fleur Hotels.
- 12 hotels and the Development Team of Lemon Tree will be demerged into Fleur Hotels.
Warburg Pincus Investment
Warburg Pincus will acquire APG’s 41.09% stake in Fleur Hotels. Additionally, Fleur Hotels will receive a primary investment of up to INR 960 crores of equity capital. This investment will enable Fleur Hotels to accelerate its growth plans.
Ownership Structure Post-Reorganization
Upon completion of the scheme, the ownership of Fleur Hotels will be as follows:
- Shareholders of Lemon Tree: 32.96%
- Lemon Tree Hotels: 41.03%
- Warburg Pincus: 26.01%
Benefits of the Reorganization
The strategic reorganization is expected to yield several benefits:
- It will segregate Lemon Tree Hotels into an asset-light hotel management platform and Fleur Hotels into a hotel ownership and development platform.
- It will enable Fleur Hotels to raise capital and accelerate growth through new developments and acquisitions.
- It will unlock intrinsic value for Lemon Tree shareholders and allow the company to define a dividend distribution policy.
Fleur Hotels: Asset Ownership Platform
Fleur Hotels will become one of the largest owners of hospitality assets in India, owning 5,556 operational rooms and an additional 256 rooms under construction. It will have 39 operational hotels across 21 locations.
Lemon Tree Hotels: Industry Leading Fee-Business
Post demerger, Lemon Tree Hotels will continue to operate as an asset-light company. It will focus on offering hotel management, brand & loyalty, distribution and digital services with about 11,700 rooms operationalised.
Expected Timeline
The scheme is subject to shareholder and regulatory approvals. The entire process, including the listing of Fleur Hotels on Indian stock exchanges, is expected to be completed within 12 to 15 months.
Source: BSE
