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Companyseéfetary & GM Legal @ififli’l i’fiif‘ H O T E I, 3 August 20, 2018 National Stock Exchange of India Limited BSE Limited Exchange Plaza, C-l, Block G Phiroze Jeejeebhoy Towers Bandra Knrla Complex Dalal Street, Mumbai — 400 001 Bandra (E), Mumbai — 400 051 NSE LEMONTREE BSE Scrip Code: 541233 , Scrip Symbol: Ref: Submission of Annual Report for Finandal Year 2017—18 Dear Sir Pursuant to Regulation 34(1) of SEBI(Listing Obligations & Disclosure Requirements) Regulations, for Financial Year 2017-18 2015, we are enclosing herewith Annual Repon ofthe Company into record, We would request you to please take the above information Thanking You _ xix \H ;\i i New {39111 im; Nik i1 $ethi\\ LIN/r Grou Company Seéfetary & GM Legal & Compliance Officer Lemon Tree Hotels Limited (CIN Nor L74899DL1992PLC049022) Registered Office: Asset No 6, Aerocily Hospitality Districtx New Delhi—110037 T +91 11 4605 0101, F +91 11 46050110. E [email protected] www.|emontreehoielslcom Refreshingly dif ferent LEMON TREE HOTELS LIMITED ANNUAL REPORT 2017-18 Disclaimer In this annual report, certain statements may be ‘forward looking statements’ within the meaning of applicable laws and regulations. These forward-looking statements involve a number of risks, uncertain ties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Important developments that could affect the Company’s operations include WHAT’S changes in the industry structure, significant changes in political and economic environment in India and overseas, tax laws, import duties, litigation and labour relations. Lemon Tree Hotels Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. WHERE Corporate Overview We are Lemon Tree Hotels 06 Chairman’s Message 24 Corporate Structure 28 Management Reports Financial Statements Management Discussion & Analysis 34 Standalone Financial Statement 92 Board’s Report 43 Consolidated Financial Statement 165 Corporate Governance Report 61 REFRESHINGLY DIFFERENT 2 LEMON TREE HOTELS LIMITED CORPORATE OVERVIEW • MANAGEMENT REPORT • FINANCIAL REPORT Fresh, spirited and youthful, Lemon Tree Hotels is India’s Lemon Tree has been a category creator. We are the first largest chain of hotels in the mid-priced hotel sector. Like hotel chain in India that has been designed keeping in the fruit we are named after, Lemon Tree Hotels are mind the evolving needs of middle class Indians, offering fresh, cool and sparkling with zest. them a high quality value-for-money experience and ‘close to home’ comfort. Cheery greetings, a friendly smile and a whiff of the signature lemon fragrance welcome you at Lemon Tree. We have built an award winning brand by delivering a stay experience that is refreshingly different. Our stylish business and leisure hotels delight you with their bright interiors and spirited environment. ANNUAL REPORT 2017-18 3 WE ARE R HOTELS Leader in Mid-priced Hotel Sector #1 mid-priced hotel sector1 chain by owned rooms2,3 #3 overall hotel sector chain by owned rooms2,3 1,301 2,584 1,071 Rooms Rooms Rooms 10 32 8 Hotels Hotels Hotels Red Fox by Lemon Tree Premier Lemon Tree Hotels Lemon Tree Hotels Targeted primarily at the Targeted primarily at the Targeted primarily at the upper-midscale hotel midscale hotel segment, economy hotel segment, segment, typically typically comparable to typically comparable to comparable to 3/4-star 3-star 2-star Notes: 1. Includes upper-midscale, midscale and economy hotels 2. Source : ‘Industry Report - Mid Priced Hotel Sector’ prepared by Horwath HTL India (” Horwath Report “); as of June 30,2017 3. On the basis of controlling interest in owned and leased rooms Above details as of May 25, 2018 4 LEMON TREE HOTELS LIMITED CORPORATE OVERVIEW • MANAGEMENT REPORT • FINANCIAL REPORT KEY STATISTICS 32 22 54 Cities for New cities Cities by current for hotels end of FY21 operating under hotels development 50 28 78 Number of Number of Operating operating hotels under hotels hotels* development* by end of FY21* 4,956 3,196 8,152 Number of Number of Rooms by rooms* rooms under end of FY21* development* 26 of 41 Eligible hotels operating for at least a year, awarded TripAdvisor Certificate of Excellence for 2018 747,666 Members in loyalty program Above details as of May 25, 2018 * operating rooms include 2,796 owned, 481 leased and 1,679 managed rooms; Pipeline includes 1,434 owned, 91 leased and 1,671 managed rooms ANNUAL REPORT 2017-18 5 WE ARE LEMON TREE HOTELS 6 LEMON TREE HOTELS LIMITED CORPORATE OVERVIEW • MANAGEMENT REPORT • FINANCIAL REPORT We are a high growth, capital and cost-efficient, land to owning, developing, managing and marketing mid-priced hotel chain focused on meeting the growing hotels. transient stay needs of the traditionally underserved middle class in India. We do this by combining We opened our first hotel with 49 rooms in May 2004 and differentiated yet superior service offerings, great have grown 100x in 14 years. As of May 25, 2018, we own locations and a high value-for-money proposition. and operate 50 hotels in 32 cities with 4,956 rooms. Today, we are India’s largest mid-priced hotel chain and Due to the dynamic and evolving nature of the Indian the third largest overall, in owned and leased rooms. We guests’ expectations and based on deep market research, operate in the fastest growing hotel segments – we have created three brands in order to capture three upper-midscale, midscale and economy, targetted at the different customer segments. This covers the entire middle class Indian consumer. We are the only integrated gamut of the domestic mid-priced hotel space in India and hospitality company in the mid-priced hotel sector in includes: India, which operates with end-to-end capabilities across the value chain, from land to guest, i.e., from acquiring ANNUAL REPORT 2017-18 7 Lemon Tree Premier is targeted primarily at the LEMON TREE upper-midscale business and leisure customer who wants to use hotels at strategic locations and is willing PREMIER to pay a premium for service and product. Lemon Tree Hotels is targeted primarily at the midscale LEMON TREE business and leisure customer, and offers a comfortable, HOTELS cost-effective and convenient experience. 8 LEMON TREE HOTELS LIMITED CORPORATE OVERVIEW • MANAGEMENT REPORT • FINANCIAL REPORT RED FOX Red Fox by Lemon Tree Hotels is our economy hotel BY LEMON TREE brand which offers a high value-for-money proposition to its customers. HOTELS No. of Rooms No. of Rooms No. of Rooms 1,301 2,584 1,071 No. of Hotels No. of Hotels No. of Hotels 10 32 8 Hotel Segment Hotel Segment Hotel Segment Upper- Midscale Economy Midscale ANNUAL REPORT 2017-18 9 We believe that by offering convenient locations, quality managing and marketing hotels. We undertake our endeavour to achieve quicker timelines from receiving this recognition) were awarded the TripAdvisor and value across the mid-priced hotel sector, we have business through: (i) direct ownership of hotel properties; development to commencement of operations for our Certificate of Excellence for 2018. created a competitive advantage in our markets, which (ii) long-term leases for existing hotels which are owned hotels and maintain consistent brand experience at lower • Differentiating ourselves through our sustainability have traditionally been underserved in terms of presence by third parties; and (iii) operating and management costs. initiatives and human resources strategy. We provide of chain affiliated hotels and are generally served by agreements. As of May 25, 2018, we have a portfolio of 22 • Delivering quality service with an emphasis on employment to opportunity deprived Indians, including independent hotels with fragmented and localised owned hotels, 6 leased hotels and 22 managed hotels. We employee selection, training and engagement, we believe differently-abled individuals as well as those from ownership. Our hotels are located across India, in metro also have project design, management and development that our service standards have resulted in higher than economically, educationally and socially marginalized regions, including the NCR, Bengaluru, Hyderabad and capabilities through our subsidiary, Grey Fox Project average occupancy rates and guest satisfaction. In the sections of society. We believe these initatives lead to an Chennai, as well as tier I and tier II cities such as Pune, Management Company Private Limited (“Grey Fox”). fiscal year 2018, our owned and leased hotels had an engaged and committed workforce. We have been Ahmedabad, Chandigarh, Jaipur, Indore and Aurangabad. average occupancy rate of 75.9%. In the fiscal year 2017, ranked among the “Best Companies to Work for” in India The mid-priced hotel sector is expected to have competi- In order to maintain our leadership position in the our owned and leased hotels had an average occupancy for seven consecutive years from 2011 to 2017, by the tive benefits in offering domestic travellers with hotel mid-priced hotel sector, we have focused on the rate of 76.8%, while the average occupancy rate across all Great Place to Work Institute, including in 2017 when we solutions in tier II and tier III cities. following aspects of our operations: participating hotels in India was 61.8% for the same were ranked the 4th “Best Company to Work for” in India • Developing projects and delivering operating cost period, according to the FHRAI-Indian Hotel Industry and were the only hotel company in the top 10. We were Our operations are spread across the value chain and structures, which are economical and enable us to offer Survey, 2016-17. Further, 26 out of our 41 hotels (which ranked 12th in Asia’s best large workplaces in 2018 by the range from acquiring land to owning, leasing, developing, a value-for-money proposition to our guests.
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