Lemon Tree Hotels Ltd: Record Revenue and Profit Growth in Q3 2025

Lemon Tree Hotels Ltd (BOM:541233) reported record-breaking revenue and profit growth in the third quarter of 2025, driven by its strategic focus on fee-based income and renovation activities. The company's net profit surged by 77% year-on-year (YoY) to ₹62.49 crore, while revenue increased by 22.4% YoY to ₹355.2 crore. The company's EBITDA also rose by 30.5% YoY to ₹184.2 crore, and the EBITDA margin expanded to 51.9% from 48.7% YoY.

The company's focus on fee-based income has been a significant driver of its growth. Fees from management and franchised contracts for third-party-owned hotels increased by 24% YoY to ₹18.4 crore, while fees from Fleur Hotels rose by 45% YoY to ₹25.3 crore. This resulted in a 35% YoY increase in total management fees to ₹43.7 crore. Patanjali Keswani, Chairman and Managing Director of Lemon Tree Hotels Ltd, attributed this growth to the company's accelerated growth in its management and franchised portfolio.

Renovation activities have also played a crucial role in Lemon Tree Hotels' record-breaking performance. The company's Gross ARR (Average Revenue per Available Room) for Q3 FY25 was ₹6,763, up 7% YoY, while occupancy rose by 826 bps YoY to 74.2%, translating into a RevPAR (Revenue per Available Room) of ₹5,018 (+21% YoY). Keswani stated that the timely completion of renovation activities in the owned portfolio has further improved Gross ARR and occupancy, contributing to the company's impressive financial performance.

Lemon Tree Hotels' strategy of accelerated growth in its management and franchised portfolio has set it apart from its competitors in the hospitality industry. While other hospitality companies may also have management and franchised contracts, Lemon Tree Hotels' focus on this area has allowed it to generate fee-based income, which is a more stable and predictable revenue stream compared to revenue generated from owned hotels. However, this approach also carries potential risks and rewards. On the one hand, focusing on management and franchised contracts allows Lemon Tree Hotels to grow its revenue without the need for significant capital investment. On the other hand, if the company is unable to successfully manage and franchise its portfolio, it could lead to a decline in revenue and profitability.

In conclusion, Lemon Tree Hotels Ltd's record-breaking revenue and profit growth in Q3 2025 can be attributed to its strategic focus on fee-based income and renovation activities. The company's ability to sustain this growth in the long term will depend on its continued focus on these growth levers and its ability to adapt to changing market conditions. Investors should closely monitor the company's performance and the overall economic conditions to make informed investment decisions.