Lemon Tree Hotels Ltd. · NSE:LEMONTREE
Lemon Tree Hotels — CLSA Investor Conference 2019
58 slides from Lemon Tree Hotels's conference presentation, Nov 14, 2019
Slide 1: Regulation 30 disclosure letter to stock exchanges
lemon ree f i ll I l I ·, November 14, 2019 Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers Bandra (East) Dalal Street Mumbai - 400 051 Mumbai 400 - 001 Name of Scrip: LEMONTREE Scrip Code: 541
Slide 2: Lemon Tree Hotels Limited Corporate Presentation
Lemon Tree Hotels Limited Corporate Presentation November, 2019
Slide 3: Disclaimer
Disclaimer Certain statements in this communication may be ‘forward looking statements’ within the meaning of applicable laws and regulations. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those s
Slide 4: Attractiveness of Indian Hotel Industry
Lemon Tree Premier, Delhi Airport Lemon Tree Premier, Jaipur Lemon Tree Premier, City Center, Gurgaon Attractiveness of Indian Hotel Industry 3
Slide 5: Supply of rooms in India's hotel industry was primarily at the top-end
Supply of rooms in India’s hotel industry was primarily at the top-end When Lemon Tree commenced business in 2002, India’s Hotel industry was an inverted pyramid 2002* 2018* No. of rooms No. of rooms Luxury and Upper Upscale refers to Luxury- top tier hotels generally referred to Upper Upscale 15,05
Slide 6: The hotel business cycle
The hotel business cycle Occupancy 70% Illustrative: 15 Room Hotel with 65% Investment = 300 60% Cycle Top (2) Middle (3) Bottom (2) Occupancy 70% or more 63-68% 60% or less Rooms Sold 12 10 8 Average Daily Rate 13 10 7 Revenue 156 100 56 3:2:1 Expenses 60 50 40 EBITDA 96 50 16 Hotel RoCE 32% 17% 5%
Slide 7: Indian hotel industry is at an inflection point
Indian hotel industry is at an inflection point Slowing supply and rising demand is expected to increase occupancy No. of rooms in ‘000s Occupancy (%) Rooms demand per day ('000) Rooms supply per day ('000) Occupancy 200 85% Demand Demand 10.8% 15.1% Demand 14.1% Demand 11.6% Supply 14.9%
Slide 8: Increasing occupancy leading to increase in room rates
Increasing occupancy leading to increase in room rates Average Daily Rate (ADR) is increasing with increase in occupancy rates ADR (INR) Occupancy % 9,000 71% 69% 68% 8,000 67% 67% 66% 65% 7,543 63% 7,000 63% 60% 59% 59% 59% 5,768 5,973 6,000 59% 58% 58% 57% 5,000 55% FY07 FY08 FY09 FY10 FY11 FY12 F
Slide 9: Differentiated business model of Lemon Tree (LTH)
Lemon Tree Hotel, Aurangabad Lemon Tree Hotel, Gachibowli, Lemon Tree Hotel, Vadodara Hyderabad Differentiated business model of Lemon Tree (LTH) 8
Slide 10: The Business Model | Mid-cycle
The Business Model | Mid-cycle Lemon Tree’s ROCE is > 1.5x of a typical 5 star hotel in India Typical 5 star Cost Per Room (Normalised) 1000 400 ~40% of Five Star Rate (Normalised) 100 50 Occupancy x% 1.2x% Room Revenue (Normalised) 100 60 ~60% of Five Star Total Revenue (Normalised) 100 50 Lower ot
Slide 11: Land, Development and Ownership of Hotels
Focus on culture & service Presence across value Process differentiation with focus on chain domestic travellers Development Ownership Operations Sales & Land Marketing of Guest of Hotels of Hotels Of Hotels Hotels Development1 Ownership Management Brand • Standardized operations for high • Identify
Slide 12: Focus on culture & service
Focus on culture & service Presence across value Process differentiation with focus chain on domestic travellers - Ranked 4th in India and only Hotel chain in top 10 Best Companies to Work for by the Great Place to Work Institute, India in 2017 - Ranked 12th in Asia’s Best Large Workplaces in 2018 b
Slide 13: Higher RevPAR versus industry
Customers Value for money Occupancy RevPAR (Revenue per pricing (Utilization) Premium room) Premium … leads to Higher RevPAR# Value for money (ADR in Rs.)^ Higher Average Occupancy*… (INR) 1.0x 1.1x 1.2x Four Star 4,773 4,641 77.2% 3,686 67.8% 3,149 Lemon Tree Industry 2018 Lemon Tree Industry 2018
Slide 14: Lower operating expense as % of revenue
Cost Lower Average Operating Expenses/ Room Higher GOP^ Lower Operating Expense as % of Revenue Lower Staff per room ratio 0.8x 0.7x Four Star 66.7% 1.6 53.8% 1.1 Lemon Tree Premier 2018 Industry 2018 Lemon Tree Premier 2018 Industry 2018 0.8x 0.7x Three Star 75.1% 64.0% 1.6 1.2 Lemon Tree Hotels 20
Slide 15: Company Overview and Growth Plans
Lemon Tree Hotel, Coimbatore Lemon Tree Premier, City Center, Gurgaon Lemon Tree Vembanad Lake, Alleppey, Kerela Company Overview and Growth Plans 14
Slide 16: Lemon Tree Group Structure
Lemon Tree Group Structure Brand Owner + Asset Owner + Manager Third Party Asset’s Manager Asset Owner Notes :- 1. The Pipeline of hotels is as of 1st November 2019 2. LTP Mumbai is assumed merged into Fleur Hotels 3. LTH is in the process of applying to convert some commercial spaces in Aurika, MIA
Slide 17: Lemon Tree – Snapshot as on 1st Nov, 2019
Lemon Tree – Snapshot as on 1st Nov, 2019 Current (16% of Branded Mid Pipeline By FY22 (20% of Branded Market Hotels in India*) Mid Market Hotels in India*) 7,786 2,804 10,590 rooms; rooms; rooms; 77 hotels 28 hotels 105 hotels Brand Current Pipeline by FY22 Aurika 139 Rooms, 1 Hotel 669 Rooms, 1 Ho
Slide 18: Lemon Tree – Portfolio
Lemon Tree – Portfolio Key Statistics Q2 FY19 Q2 FY20 1st Nov FY20 Cities 31 34 45 Hotels 51 57 77 Rooms 5,090 5,828 7,786 Loyalty 835,732 1,072,977 1,091,326 Members 17
Slide 19: Inventory Progression - Update
Inventory Progression - Update Inventory Progression % Growth End of FY19 End of FY20 End of FY22* FY20 vs FY19 FY22 vs FY19 Owned/Leased Rooms 3,570 5,192 5,940 45% 66% Cities 16 23 24 Managed Rooms 1,739 3,132 4,650 80% 163% Cities 23 37 52 Total Rooms 5,309 8,324 10,590 57% 99% Cities 32 51 66 To
Slide 20: Lemon Tree's Presence Map
Lemon Tree’s Presence Map as of FY23 - Update 19
Slide 21: Hotel Inventory by Segment and Lemon Tree Brand Positioning
Hotel Inventory by Segment and Lemon Tree Brand Positioning Segment Inventory Lemon Tree Brand Positioning Luxury and Upper Upscale 50,000 - Upscale 28,000 Aurika Mid Market 45,700 LTP/LTH/RFH Economy 17,000 - 250,000 LTP/LTH/RFH Unbranded Standalone 1,750,000 Keys Prima/Select/Lite Our Aim is to Co
Slide 22: Lemon Tree Brand Standards – Linked to Business Model
Lemon Tree Brand Standards – Linked to Business Model LT Brand Standards Owned Leased Managed1 Most Unbranded2 (Built to suit) (Renovated) (Renovated) Mid-Market Hotels Product Features 10/10 8/10 6-8/10 2-4/10 Service Features 10/10 10/10 8/10 5/10 Planned Branding Aurika/LTP/LTH/RFH Aurika/LTP/LTH
Slide 23: Expansion Plans – Hotels under Development
Expansion Plans – Hotels under Development Under-development hotels Type Rooms Expected Opening date Ownership (%) Lemon Tree Mountain Resort, Shimla Owned 69 Apr-21 100.00% Lemon Tree Vembanad Lake Resort, Alleppey, Kerela1 Owned 10 Oct-21 100.00% Aurika, Intl. Airport, Mumbai2 Owned 669 Nov-21 57.
Slide 24: Expansion Plans – Pipeline of Management Contracts
Expansion Plans – Pipeline of Management Contracts (as of 1st November , 2019) Management Contracts Pipeline Rooms Expected Opening date Tenure (years) Red Fox Hotel, Vijaywada 90 Dec-19 10 Lemon Tree Premier, Rishikesh 66 Jan-20 12 Lemon Tree Hotel, Dubai 114 Jan-20 10 Lemon Tree Hotel, Thimpu 27 J
Slide 25: Strong Operating and Financial Performance
Lemon Tree Amarante Beach, Goa Lemon Tree Premier, Corbett Lemon Tree Premier, Hyderabad Strong Operating and Financial Performance 24
Slide 26: Strong operating performance
Strong operating performance Rooms are being added… …and occupancy levels increasing… Owned Leased Hotels Managed Hotels FY15 FY16 FY17 FY18 FY19 19% 5,411 4,870 1841 79% 3,698 1593 78% 78% 78% 3,001 3,249 77% 77% 77% 2,708 461 843 573 74% 75% 171 274 481 75% 74% 1,920 283 283 317 73% 283 283 2,505
Slide 27: Strong Growth and improving margins
Strong Growth and improving margins Revenue has increased at CAGR of 20% over the last 5 years… …coupled with increasing EBITDA margins Revenue from operations (Rs. million) EBITDA & EBITDA margins 20% 5,495 31.9% 29.7% 29.2% 4,843 27.9% 4,121 3,680 17.8% 2,904 2,217 11.0% 246 519 1,033 1,247 1,440
Slide 28: Operational Performance by Ageing – FY19 vs. FY18
Operational Performance by Ageing – FY19 vs. FY18 Adult Hotels Toddler Hotels Infant Hotels Under-development Parameters Financial year (Stable - older than 3 (Stabilizing - between (New - less than 1 hotels years) 1-3 years old) year old) FY19 21 7 2 Hotels1 5 FY18 21 3 4 Operating Rooms FY19 2,727
Slide 29: Progression of latest Adult Hotels from Infant to Toddler to Adult
Progression of 4 latest Adult Hotels from Infant to Toddler to Adult Date of Date of Opening FY15 FY16 FY17 FY18 FY19 CAGR Opening FY15 FY16 FY17 FY18 FY19 CAGR LTP Aerocity LTH Whitefield Delhi Dec-FY14 Infant Toddler Toddler Adult Adult Bangalore Jul-FY14 Infant Toddler Toddler Adult Adult Invento
Slide 30: Aggregate Progression of latest Adult Hotels
Aggregate Progression of 4 latest Adult Hotels from Infant to Toddler to Adult FY15 FY16 FY17 FY18 FY19 CAGR Aggregate Infant Toddler Toddler Adult Adult Inventory 472 807 807 807 807 Occupancy 69.6% 76.7% 77.8% 80.6% 85.3% ARR 2,622 2,945 3,130 3,627 4,545 14.7% RevPAR 1,826 2,260 2,436 2,922 3,877
Slide 31: FY19 Actuals EBITDAR/Room
FY19 Actuals EBITDAR/Room EBITDAR/Room FY19 Actuals Inventory in INR L Lemon Tree Premier (Adult) 957 10.2 Lemon Tree Hotels (Adult) 1,340 6.1 Red Fox Hotels (Adult) 605 5.8 New Owned Hotels 668 2.3 Managed Hotels (Fees) 1,739 0.7 30
Slide 32: Operating Expenses per Room per day for Adult Hotels
Operating Expenses per Room per day for Adult Hotels Brands/Hotels Rooms FY 15 FY 16 FY 17 FY 18 FY 19 CAGR (%) Lemon Tree Hotel Group 2,727 1,827 1,955 1,981 2,096 2,266 5.5% Lemon Tree Premier 816 2,026 2,352 2,327 2,460 2,690 7.3% Lemon Tree Hotel 1,306 2,080 2,012 2,098 2,196 2,338 3.0% Red Fox
Slide 33: Debt Profile
Debt Profile Typical Debt Terms Approximate Tenure Interest Principal Repayment First 3 Years 0% Moratorium 4-7 Years 10-15% 8-11 Years 25-30% Ballooned Repayment Final 4 Years 55-65% Debt Profile End of Q2 FY20 In INR Crs Adult Hotels Toddler Hotels Infant Hotels Under Construction Total Ro
Slide 34: Key levers to drive better results
Key levers to drive better results Inventory Under Triple Whammy Development = For Owned/Leased 748* Assets: Price Hike Stabilized Equivalent to 1,122 (1.5x) rooms in inventory Number of revenue potential Rooms and 1,496 (2.0x) Higher pricing rooms in EBITDAR Stabilizing potential = More high
Slide 35: Lemon Tree Hotels RoCE: Hotel Buckets by opening
Lemon Tree Hotels RoCE : Hotel Buckets by opening RoCE (%) Occupancy (%) 70% 75% First Five hotels opened during FY05 - FY08 Second Five hotels opened in FY09 Third Seven hotels opened in FY10 & FY11 Fourth Five hotels opened during FY12 - FY15 60% 69% 70% Fifth Eight Hotels opened during FY17 - FY1
Slide 36: Recognition and awards through the years
Recognition and awards through the years Ranked 4th in India and the only hotel chain in the top 10 Best Companies to Work for in India in 2017 by the Great Place to Work institute Ranked 12th in Asia’s Best Large Workplaces and the only Indian company in the top 15 in 2018 by the Great Place to
Slide 37: Committed to Employees, Environment and Community
Committed to Employees, Environment and Community with socially inclusive work ethos A. We provide employment and livelihood with dignity to ‘Opportunity Deprived Indians’ (ODI) This initiative was started in 2007 and as of Sep 30, 2018, Lemon Tree has employed a total of around 860* Opportunity Dep
Slide 38: Committed to Employees, Environment and Community (contd.)
Committed to Employees, Environment and Community with socially inclusive work ethos (contd.) B. Tribal Art Lemon Tree Hotel is among the largest buyers, nationally, of tribal art from Bastar, Madhya Pradesh. This comprises primarily of bronze age bell metal sculptures and enables the company to fin
Slide 39: Under Development Hotels
Under Development Hotels 38
Slide 40: Lemon Tree Mountain Resort – Shimla | Image Representation
Lemon Tree Mountain Resort – Shimla | Image Representation Note: Hotel is expected to have 69 rooms and expected month of opening is April-2021 39
Slide 41: Lemon Tree Mountain Resort – Shimla | Image Representation
Lemon Tree Mountain Resort – Shimla | Image Representation Note: Hotel is expected to have 69 rooms and expected month of opening is April-2021 40
Slide 42: Lemon Tree Mountain Resort – Shimla
Lemon Tree Mountain Resort – Shimla 41
Slide 43: Lemon Tree Mountain Resort – Shimla
Lemon Tree Mountain Resort – Shimla 42
Slide 44: Aurika, Mumbai Airport (MIAL) | Image Representation
Aurika, Mumbai Airport (MIAL) | Image Representation 43
Slide 45: Aurika, Mumbai Airport (MIAL)
Aurika, Mumbai Airport (MIAL) Note: Currently, hotel is expected to have 577 rooms. LTH is in the process of applying to convert some commercial spaces in this hotel to rooms. This will increase the hotel’s inventory by 92 rooms to 669. Expected month of opening is Nov-2021. 44
Slide 46: Aurika, Mumbai Airport (MIAL)
Aurika, Mumbai Airport (MIAL) Note: Currently, hotel is expected to have 577 rooms. LTH is in the process of applying to convert some commercial spaces in this hotel to rooms. This will increase the hotel’s inventory by 92 rooms to 669. Expected month of opening is Nov-2021. 45
Slide 47: Appendix
Lemon Tree Amarante Beach, Goa Lemon Tree Premier, Corbett Lemon Tree Premier, Hyderabad Appendix 46
Slide 48: Latest Performance – Q2 FY20
Lemon Tree Hotel, Coimbatore Lemon Tree Premier, City Center, Gurgaon Lemon Tree Vembanad Lake, Alleppey, Kerela Latest Performance – Q2 FY20 47
Slide 49: Performance Highlights – Operational Metrics (Consolidated)
Performance Highlights – Operational Metrics (Consolidated) Operational Inventory Owned/Leased rooms Managed rooms Total rooms Average Daily Rate (Rs.) 5,828 4.9% 3.8% 5,411 4,133 4,070 4,999 3,939 3,919 3,975 3,570 3,278 1,721 1,841 1,853 Q2 FY19 FY19 Q2 FY20 Q2 FY19 FY19 Q2 FY20 Q2 FY19 FY19 Q2 FY
Slide 50: Performance Highlights – Financial Metrics (Consolidated)
Performance Highlights – Financial Metrics (Consolidated) Revenue from Operation (Rs. Crores) EBITDA (Rs. Crores) 93 14.9% 31.6% 294 71 256 18.7% 34.5% 48 153 36 129 Q2 FY19 Q2 FY20 H1 FY19 H1 FY20 Q2 FY19 Q2 FY20 H1 FY19 H1 FY20 Cash profit (Rs. Crores) PAT (Rs. Crores) -4.9% 35 9 33 7 -11.1% 20 18
Slide 51: Profit & Loss Statement (Consolidated) Q2 FY20
Profit & Loss Statement (Consolidated) Q2 FY20 YoY Change Q2 FY20 YoY Change Rs. Cr Q2 FY19 Before IndAS After IndAS 116 FY19 116 Impact (%) Impact (%) Revenue from operations 128.7 152.8 18.7% 152.8 18.7% 549.5 Cost of F&B consumed 11.9 13.2 11.7% 13.2 11.7% 49.8 Employee benefit expenses 29.6 36.6
Slide 52: Profit & Loss Statement (Consolidated) H1 FY20
Profit & Loss Statement (Consolidated) H1 FY20 YoY Change H1 FY20 YoY Change Rs. Cr H1 FY19 Before IndAS After IndAS 116 FY19 116 Impact (%) Impact (%) Revenue from operations 255.6 293.7 14.9% 293.7 14.9% 549.5 Cost of F&B consumed 23.8 25.6 7.7% 25.6 7.7% 49.8 Employee benefit expenses 58.7 70.4 1
Slide 53: Balance Sheet Snapshot (Consolidated)
Balance Sheet Snapshot (Consolidated) Rs. Cr H1 FY19 H1 FY20 FY18 FY19 Shareholder's Funds 827.1 824.7 814.8 875.0 Non-controlling interests 429.4 430.9 428.6 432.2 Total Shareholder’s equity 1,256.5 1,255.6 1,243.5 1,307.2 Total Debt 1,107.3 1,334.9 1,011.0 1,204.2 Other Non-current liabilities 38.
Slide 54: Discussion on Consolidated Financial & Operational Performance – Q2 FY20
Discussion on Consolidated Financial & Operational Performance – Q2 FY20 As of 1st November 2019, operational portfolio comprised of 77 hotels and 7,786 rooms : 3,646 owned, 1,546 leased and 2,594 Operational managed rooms; Pipeline includes of 656 owned/leased and 2,056 managed rooms Rooms & Pr
Slide 55: Impact of Ind AS 116 on Consolidated Q2FY20 Results
Impact of Ind AS 116 on Consolidated Q2FY20 Results Profit and Loss Statement Impact (In Rs. Crores) Before Ind AS 116 Ind AS 116 Impact After Ind AS 116 Lease Rent 8.9 (6.8) 2.1 Other Expenses 37.5 (1.2) 36.3 EBITDA 40.4 8.0 48.4 Interest Expense 26.3 9.0 35.3 Depreciation 16.1 3.4 19.6 Profit Befo
Slide 56: Impact of Ind AS 116 on Q2FY20 Results as Waterfall
Impact of Ind AS 116 on LHTL Q2FY20 Results as Waterfall EBITDA Waterfall Lease Waterfall 60.0 10.0 9.0 50.0 8.0 1.4 8.0 40.0 7.0 EBITDA Rs Crs EBITDA Rs Crs 7.0 6.0 30.0 6.8 5.0 48.4 4.0 7.5 20.0 7.3 36.0 33.4 3.0 10.0 2.0 1.0 2.1 0.0 0.0 Q2FY19 Q2 FY20 Same New Hotels Lease Total Q2FY20 Store (DN,
Slide 57: Operational Performance by Brands & Region – Q2FY20 vs. Q2FY19
Operational Performance by Brands & Region – Q2FY20 vs. Q2FY19 Q2 FY20 vs. Q2 FY19 Hotel level EBITDAR/room (Rs. Parameters Occupancy Rate (%) Average Daily Rate (Rs.) Hotel level EBITDAR Margin Lacs) Change Change Change By Brand Q2 FY19 Q2 FY20 (bps) Q2 FY19 Q2 FY20 (%) Q2 FY19 Q2 FY20 Change (%)
Slide 58: Thank You
Thank You 57