Lemon Tree Hotels Ltd. · NSE:LEMONTREE
Lemon Tree Hotels — Investor Presentation (June 2018)
67 slides from Lemon Tree Hotels's investor presentation, June 2018
Slide 1: Lemon Tree Hotels Limited Corporate Presentation
June 2018 Lemon Tree Hotels Limited Corporate Presentation 1
Slide 2: 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 3: Table of Contents
Table of Contents I Attractiveness of Indian Hotel Industry 4 II Differentiated Business Model of Lemon Tree 12 III Company Overview and Growth Plans 22 IV Strong Operating and Financial Performance 27 V Corporate Governance and Sustainability 34 3
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 4
Slide 5: India: A comparatively under-penetrated hotel market
India: A comparatively under-penetrated hotel market Supply of Rooms 16.2 Million 5.0 Million 3.78 Million 0.2 Million Population 7349 Million 321 Million 1379 Million 1211 Million Penetration 2.2 15.7 2.7 0.2 (Rooms/1000 People) Source : 1) STR census inventory as on December 2016 2) United Nations
Slide 6: 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* 2017* No. of rooms No. of rooms Luxury and Upper Upscale refers to Luxury- top tier hotels generally referred to Upper Upscale 15,05
Slide 7: Significant drivers for hotel industry growth in India
Significant drivers for hotel industry growth in India Increasing Indian GDP Growing middle class population Middle Class Population (mn) 8.5% 800 8.2% 600 600 8.0% 8.1% 400 300 7.7% 7.9% 7.8% 200 7.5% 0 2004 2012 7.1% Middle class population in India is likely to overtake that of US 7.0% and China
Slide 8: 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 9: 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 Occupancy (%) Rooms demand per day ('000) Rooms supply per day ('000) Occupancy No. of rooms in ‘000s 200 85% Demand 10.8% Demand 15.1% Demand 13.7% Demand 12.5% Supply 14.9%
Slide 10: 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 (RHS) ADR (INR) Occupancy % 9,000 71% 69% 68% 8,000 67% 65% 7,543 63% 7,000 63% 60% 59% 59% 59% 6,000 59% 58% 58% 57% 5,745 5,000 55% FY07 FY08 FY09 FY10
Slide 11: Mid-priced hotel sector expected to have higher demand supply gap
Mid-priced hotel sector expected to have higher demand supply gap resulting in higher growth in occupancy Mid-priced hotel sector expected to continue having higher demand-supply gap leading to… Demand Growth Supply Growth Demand Supply Gap 25% FY12-17 FY17-21 19% 4% 19% 20% 16% 4% 7% 16% 8% 15% 1%
Slide 12: 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) 12
Slide 13: 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 14: Competitive Advantage: Differentiated Business Model
Competitive Advantage: Differentiated Business Model Focus on culture & Lower than industry Presence across value service differentiation Process average development chain with focus on domestic cost per room* travellers Occupancy Customers Value for money RevPAR (Revenue per (Utilization) pricing r
Slide 15: Land Development of Hotels
Lower than industry Focus on culture & service Presence across value Process average development cost differentiation with focus on chain per room domestic travellers Development Ownership Operations Sales & Land Marketing of Guest of Hotels of Hotels Of Hotels Hotels Development1 Ownership Manageme
Slide 16: Lower than industry average development cost per room
Lower than industry Focus on culture & service Process Presence across value chain average development cost differentiation with focus on per room ^ domestic travellers Average development cost, per room* (INR Mn.) 24.0 22.3 20.0 16.0 14.0 12.0 9.8 8.0 7.2 5.9 5.6 5.0 4.5 3.5 4.0 0.0 Luxury Upper-up
Slide 17: Focus on culture & service differentiation
Lower than industry Focus on culture & service Presence across value Process average development cost differentiation with focus chain per room 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 -
Slide 18: Value for money, higher occupancy and RevPAR
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) 1.1x 1.1x 1.0x Upper 3,075 4,186 74.6% 2,863 Midscale 4,123 68.4% Lemon Tree Industry 2017 Lemon Tree Industry
Slide 19: 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 0.9x 0.7x Upper 1.6 66.5% Midscale 56.6% 1.1 Lemon Tree Premier 2017 Industry 2017 Lemon Tree Premier 2017 Industry 2017 0.8x 0.8x Midscale 71.0% 1.5 57.7% 1.2 Lemon Tree Hotels
Slide 20: Relative Performance comparison (Lemon Tree vs. Industry Segments)
Summary | Relative Performance comparison (Lemon Tree vs. Industry Segments) LT Group % LTP % LTH % RFH % FY17 of Five Star of Four Star of Three Star of Two Star Aggregate Aggregate Aggregate Aggregate Net ARR (INR) 59% 98% 115% 101% Occupancy (%) 114% 109% 128% 128% RevPAR (INR) 68% 107% 148% 129%
Slide 21: Efficient capital structure with a balanced-asset model
Capital Low debt to equity Efficient Capital ratio Deployment Maintained an efficient capital structure with a balanced-asset model • Standardized pre-opening and seamless day-to-day operations, at high levels of service and cost efficiencies Stabilisation • A dynamic pricing policy • Diversified te
Slide 22: 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 22
Slide 23: Lemon Tree – Snapshot
Lemon Tree – Snapshot Leadership in mid-priced hotel sector Key Statistics3 #1 mid-priced hotel sector chain by owned rooms 1 2,4 31 23 54 #3 overall hotel sector chain by owned rooms 2,4 Cities for current New cities for under Cities by operating hotels development hotels end of FY21 1,301 49 29 78
Slide 24: India's largest hotel chain in Mid-priced Hotel Sector
India’s largest hotel chain in Mid-priced Hotel Sector 1 Lemon Tree is the largest hotel chain in mid-priced hotel sector in India1 and #3 in terms of total rooms 1,2 No. of rooms Owned Rooms Owned Rooms Total Rooms Ranking 5,000 6 1 5 4,488 4,000 4,225 4,209 4,188 2 3,403 3 3,000 2,968 2,904 2,872
Slide 25: Strategically positioned in key geographies
Strategically positioned in key geographies City: Lemon Tree share of total mid priced hotel rooms sector Share identified for top 10 markets as per Horwath HTL Geographical spread across India and presence in key markets to cater effectively to corporate clients and business travelers Delhi NCR: FY
Slide 26: Milestones
Milestones 2002 2004 2006 2009 2010 2012 2015 • Investment by APG in Company Opened the Further and Fleur Subscription to Opened the Investment by first “Lemon Investment by Opened the • Commenced equity shares of first “Lemon Maplewood Tree Premier” APG – in first “Red Fox” business of Lemon Tree b
Slide 27: Strong Operating and Financial Performance
Lemon Tree Amarante Beach, Goa Lemon Tree Premier, Corbett Lemon Tree Premier, Hyderabad Strong Operating and Financial Performance 27
Slide 28: Strong operating performance
Strong operating performance Rooms are being added… …and occupancy levels increasing… Owned Leased Hotels Managed Hotels FY15 FY16 FY17 FY18 20% 4,870 3,698 1593 78% 79% 3,249 77% 77% 77% 2,708 3,001 461 843 75% 171 274 481 75% 74% 1,920 283 283 317 73% 283 283 2,444 2,505 2,538 2,796 68% 68% 68% 2,
Slide 29: Strong Growth and improving margins
Strong Growth and improving margins Revenue has increased at 22% over the last 5 years… …coupled with increasing EBITDA margins Revenue from operations (Rs. million) EBITDA & EBITDA margins 22% 29.7% 29.3% 4,843 27.9% 4,121 3,680 2,904 17.8% 2,217 11.0% 246 519 1,033 1,247 1,440 FY14 FY15 FY16 FY17
Slide 30: Performance of owned/leased hotels by ageing – FY18 vs. FY17
Performance of owned/leased hotels by ageing – FY18 vs. FY17 Toddler Hotels Adult Hotels Infant Hotels Under- Financial (Stabilizing - Parameters (Stable - older (New - less than 1 development year between 1-3 than 3 years) year old) hotels years old) FY17 21 3 - Hotels 7 FY18 21 3 4 Operating FY17
Slide 31: Key levers to drive better results
Key levers to drive better results Inventory Under Triple Whammy Development = For Owned/Leased 1,525* Assets: Price Hike Stabilized Equivalent to 2,300 (1.5x) rooms in inventory Number of revenue potential Rooms and 3,050 (2.0x) Higher pricing rooms in EBITDAR Stabilizing potential = More hig
Slide 32: RoCE: Hotel Buckets by ageing
Lemon Tree Hotels RoCE : Hotel Buckets by ageing as on 31st March, 2018 RoCE (%) Occupancy (%) 70% 75% Adult Hotels (Stable - Older than 3 years) Toddler Hotels (Stablizing - between 1-3 years old) Infant Hotels (New - less than 1 year old) All India Hotel Occupancy (%) 60% 69% 70% 68% 68% 53% 50% 6
Slide 33: RoCE: Hotel Buckets by opening
Lemon Tree Hotels RoCE : Hotel Buckets by opening Occupancy (%) RoCE (%) First Five hotels opened in FY05 - FY08 Second Five hotels opened in FY09 60% 75% Third Seven hotels opened in FY10 & FY11 Fourth Five hotels opened during FY12 - FY15 Last Six hotels opened during FY17 - FY18 All India Hotel O
Slide 34: Corporate Governance and Sustainability
Lemon Tree Hotel, Dehradun Lemon Tree Premier, Ahmedabad Lemon Tree Premier, Bengaluru Corporate Governance and Sustainability 34
Slide 35: Board of Directors
Board of Directors Patanjali Govind Keswani (Chairman and Managing Director) • Bachelor’s degree in electrical engineering from the Indian Institute of Technology, New Delhi • Postgraduate diploma degree in management from the Indian Institute of Management, Calcutta • Worked in: Tata Administrative
Slide 36: Board of Directors (contd.)
Board of Directors (contd.) Gopal Sitaram Jiwarajka (Independent Director) • Bachelor’s degree in commerce from the University of Bombay • Serves as the Managing Director and whole-time Director of Salora International Limited • Serves as a Director of PHD Chamber of Commerce and Industry • Worked i
Slide 37: Key Management Team
Key Management Team Patanjali Govind Keswani (Promoter, Chairman and Managing Director) • Bachelor’s degree in electrical engineering from the Indian Institute of Technology, New Delhi • Postgraduate diploma degree in management from the Indian Institute of Management, Calcutta • Worked in: Tata Adm
Slide 38: Key Management Team (contd.)
Key Management Team (contd.) Sumant Jaidka (Senior Vice President - Operations) • Graduate degree in hotel Management from the Salzburg School of Austria • Worked in: Taj Group of Hotels, Hilton, Maurya Sheraton, Crowne Plaza and Hyatt Regency across key managerial posts • Over 30 years of experienc
Slide 39: Shareholding structure
Shareholding structure Others (includes - HNI’s/Retail/NII/ Employees): 19.38% Promoter & Promoter Group: 31.07% Other Institutions (QIBs): 21.94% APG: 15.10% Warburg Pincus: 12.51% Note: Shareholding as on 15 June, 2018 39
Slide 40: 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 41: 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 May 31, 2018, Lemon Tree has employed a total of around 900* Opportunity Dep
Slide 42: 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 43: Appendix
Lemon Tree Amarante Beach, Goa Lemon Tree Premier, Corbett Lemon Tree Premier, Hyderabad Appendix 43
Slide 44: Latest Performance – Q4 & FY18
Lemon Tree Hotel, Coimbatore Lemon Tree Premier, City Center, Gurgaon Lemon Tree Vembanad Lake, Alleppey, Kerela Latest Performance – Q4 & FY18 44
Slide 45: Performance Highlights – Operational Metrics
Performance Highlights – Operational Metrics Operational Inventory Average Daily Rate (Rs.) Owned/Leased Managed Total rooms rooms rooms 16% 4,235 13% 32% 4,870 3,896 3,664 3,449 15% 3,698 3,277 2,855 89% 1,593 843 FY17 FY18 FY17 FY18 FY17 FY18 Q4 FY17 Q4 FY18 FY17 FY18 Note: Based on number of room
Slide 46: Performance Highlights – Financial Metrics (Consolidated)
Performance Highlights – Financial Metrics (Consolidated) Total Income (Rs. million) EBITDA (Rs. million) 16% 17% 1,440 1,247 4,921 4,203 24% 55% 454 1,392 293 1,118 Q4 FY17 Q4 FY18 FY17 FY18 Q4 FY17 Q4 FY18 FY17 FY18 Cash profit (PAT + Depreciation, Rs. million) PAT (Rs. million) 46% 672 145 117 46
Slide 47: Discussion on Consolidated Financial & Operational Performance – Q4 and FY18
Discussion on Consolidated Financial & Operational Performance – Q4 and FY18 As of 31 March, 2018, operational portfolio comprised of 48 hotels and 4,870 rooms : 2,796 owned, 481 leased and 1,593 managed rooms Added 1,172 rooms in FY18 to operational portfolio as compared to 449 rooms added in F
Slide 48: Profit & Loss Statement (Consolidated)
Profit & Loss Statement (Consolidated) Change Change Rs. million Q4 FY17 Q4 FY18 FY17 FY18 (%) (%) Revenue from operations 1,113 1,320 19% 4,121 4,843 18% Other income 5 72 1,219% 82 78 (5%) Total income 1,118 1,392 24% 4,203 4,921 17% Cost of F&B consumed 89 115 29% 353 436 23% Employee benefit exp
Slide 49: Balance Sheet Snapshot (Consolidated)
Balance Sheet Snapshot (Consolidated) Rs. million FY17 FY18 Shareholder's Funds 8,086 8,148 Non-controlling interests 4,284 4,286 Total Shareholder’s equity 12,370 12,435 Total Debt 7,987 10,110 Other Non-current liabilities 294 344 Other Current liabilities 1,467 1,693 Total Equity & Liabilities 22
Slide 50: Operational Performance by Brands – FY18 vs. FY17
Operational Performance by Brands – FY18 vs. FY17 Hotel level Average Daily Rate Hotel level EBITDAR2 Parameters Occupancy Rate (%) EBITDAR2/room (Rs. (Rs.) Margin million) Change Change Change Change By Brand FY17 FY18 (%) FY17 FY18 (%) FY17 FY18 (%) FY17 FY18 (%) Lemon Tree Premier 74.6% 77.2% 3.5
Slide 51: Portfolio as on 31st March, 2018
Portfolio as on 31st March, 2018 Operational Owned Leased Managed Total Portfolio 31.03.2018 Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Lemon Tree Premier 4 796 2 161 4 344 10 1,301 Lemon Tree Hotels 13 1,241 4 320 13 937 30 2,498 Red Fox Hotels 5 759 - - 3 312 8 1,071 Total 22 2,796 6 481
Slide 52: Expansion Plans – Hotels under Development
Expansion Plans – Hotels under Development Expected Ownership Under-development hotels Type Rooms Opening date (%) Leased Red Fox Hotel, Dehradun 91 Jul-18 57.98% (40 years) Lemon Tree Premier, City Centre, Owned 199 Dec-18 57.98% Pune Lemon Tree Premier, Andheri (East), Owned 298 Jan-19 100.00% Mum
Slide 53: Expansion Plans – Pipeline of Management Contracts
Expansion Plans – Pipeline of Management Contracts (as of 15 June, 2018) Management Contracts Pipeline Rooms Expected Opening date Tenure Lemon Tree Hotel, Lucknow 51 Sep-18 11 Red Fox Hotel, Morjim, Goa 111 Oct-18 10 Lemon Tree Hotel, Shirdi 59 Jan-19 12 Lemon Tree Hotel, Rishikesh 102 Jan-19 12 Le
Slide 54: Under Development Hotels
Lemon Tree Premier, Corbett Lemon Tree Premier, Aerocity Red Fox Hotel, Delhi Airport Under Development Hotels 54
Slide 55: Lemon Tree Premier – Pune | Image Representation
Lemon Tree Premier – Pune | Image Representation Note: Hotel is expected to have 199 rooms and expected month of opening is December-2018. 55
Slide 56: Lemon Tree Premier – Pune
Lemon Tree Premier – Pune Note: Photograph as on June 15th, 2018 Hotel is expected to have 199 rooms and expected month of opening is December-2018. 56
Slide 57: Lemon Tree Premier – Mumbai (Andheri) | Image Representation
Lemon Tree Premier – Mumbai (Andheri) | Image Representation Note: Hotel is expected to have 298 rooms and expected month of opening is January-2019. 57
Slide 58: Lemon Tree Premier – Mumbai (Andheri)
Lemon Tree Premier – Mumbai (Andheri) Note: Photograph as on June 15th, 2018 Hotel is expected to have 298 rooms and expected month of opening is January-2019. 58
Slide 59: Lemon Tree Premier – Udaipur | Image Representation
Lemon Tree Premier – Udaipur | Image Representation Note: Hotel is expected to have 139 rooms and expected month of opening is April-2019. 59
Slide 60: Lemon Tree Premier – Udaipur
Lemon Tree Premier – Udaipur Note: Photograph as on June 15th, 2018 Hotel is expected to have 139 rooms and expected month of opening is April-2019. 60
Slide 61: Lemon Tree Premier – Kolkata | Image Representation
Lemon Tree Premier – Kolkata | Image Representation Note: Hotel is expected to have 142 rooms and expected month of opening is April-2019. 61
Slide 62: Lemon Tree Premier – Kolkata
Lemon Tree Premier – Kolkata Note: Photograph as on June 15th, 2018 Hotel is expected to have 142 rooms and expected month of opening is April-2019. 62
Slide 63: 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 December-2020. 63
Slide 64: Lemon Tree Mountain Resort – Shimla
Lemon Tree Mountain Resort – Shimla Note: Photograph as on June 15th, 2018 Hotel is expected to have 69 rooms and expected month of opening is December-2020. 64
Slide 65: Lemon Tree Premier – Mumbai Airport | Image Representation
Lemon Tree Premier – Mumbai Airport | Image Representation 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 94 rooms to 671. Expected month of opening is March
Slide 66: Lemon Tree Premier – Mumbai Airport
Lemon Tree Premier – Mumbai Airport Note: Photograph as on June 15th, 2018 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 94 rooms to 671. Expected month of openin
Slide 67: Thank You
Thank You lemorfec HOTELS
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