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Lemon Tree Hotels reiterated its aggressive expansion strategy

ICICIdirect Research 24 Jun 2026 DISCLAIMER

News: Lemon Tree Hotels reiterated its aggressive expansion strategy, targeting a presence across all 200 Indian cities with populations exceeding 0.5 million, primarily through management contracts and greenfield developments. The company added ~4,900 rooms in FY26, increasing its room inventory base by nearly 30% YoY. Management indicated that demand remained strong until February before witnessing some softness in March and April due to macroeconomic uncertainties, but trends improved in May and June, with Q1FY27 revenue growth expected in the mid-to-high single digits. The company remains focused on driving occupancy-led growth while maintaining stable margins.

View: The management’s expectation of mid-to-high single-digit revenue growth in Q1FY27 is broadly in line with the guidance shared during the recent analyst meet. The moderation in demand largely reflects weaker corporate travel trends amid global uncertainties and geopolitical tensions, which also impacted domestic air traffic, with airlines such as IndiGo and Air India reporting lower passenger growth during January-April 2026. However, domestic leisure travel remained resilient, supported by demand for hill stations and short-haul weekend destinations. As geopolitical uncertainties ease and corporate travel normalises, we expect growth momentum to improve in H2FY27, supported by a recovery in corporate travel, MICE activities and the wedding segment, which remain key demand drivers for the hospitality sector.

Impact: Neutral

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