LEMONTREE Q3 FY26 earnings call.
A source-linked concall view: reported numbers, management language, guidance, commitments and risks that should carry forward.
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Revenue
₹407.8 Cr
verified against source
Revenue YoY
15%
reported change
EBITDA
₹206.44 Cr
latest reported figure
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Actual signal trajectory
Where this quarter sits.
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What the record says.
Lemon Tree Hotels reported its highest-ever Q3 revenue of ₹407.8 crore (up 15% YoY), though EBITDA margin contracted 133bps to 50.6% due to elevated renovation, technology investment, and GST headwinds totaling 6.4% of revenue. PAT grew only 2% YoY to ₹81.8 crore after a ₹31.3 crore exceptional charge (labor code gratuity and property tax). The asset-light segment showed promise with management fees up 24% YoY to ₹22.9 crore from third-party hotels, while owned hotel fees remained flat. Occupancy declined 82bps to 73.4% amid deliberate repricing in Hyderabad (+25% ADR) and ongoing renovations affecting ~1,200 rooms. The Auria brand continues its Mumbai stabilization journey, reaching 79% occupancy with ARR expansion expected in Q4. Management targets expense reduction to 3.5% of revenue by FY28, guiding for at least 15% revenue growth in FY27 with existing portfolio. The upcoming demerger of Auria will leave Lemon Tree as a debt-free, asset-light entity. Key risks include Gurgaon's persistent weakness, ongoing renovation disruption in Bangalore, and the extended stabilization timeline for large owned properties.
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Guidance to track
- Management expressed high confidence in achieving at least 15% revenue growth from the existing portfolio in FY27, with additional upside possible from new signings.
- Combined renovation, technology and GST expenses currently at 6.4% of revenue are expected to decline to approximately 3.5% by FY28, driving EBITDA margin expansion.
- GST impact on revenue expected at 2% for full year FY27 (down from ~1.8% in Q3 FY26) and further to 1.7% in FY28 as more customers pay above ₹7,500 threshold.
- The Ora Shillong property, a ~200 crore investment with 70% debt financing at subsidized rates, is expected to commence operations in H2 calendar 2027.
Risks flagged
- Gurgaon portfolio recorded negative RevPAR growth in Q3 and remains a work in progress. Management is seeking replacement for large corporate groups that dominated Q3/Q4 FY25 but did not repeat, affecting both Lemon Tree and Red Fox properties in the micro-market.
- The 670-room Auria Mumbai property, now at 79% occupancy, has taken longer than anticipated to reach stabilization due to its scale. Management acknowledged it will take additional quarters before full repricing benefits materialize, delaying margin contribution from this flagship asset.
- Bangalore's tall building floor plates (20-30 rooms per floor) forced mass closures for renovation rather than floor-by-floor approach, causing guest disruption and occupancy pressure. The Keys portfolio in Bangalore (47% of 874 rooms) remains under renovation with impact expected to persist through FY27.
- Management acknowledged that the 1,600 rooms added in 9M FY26 generated only ~25% of their potential fee income due to stabilization timelines. With 9,400 rooms in pipeline, investors should expect a 3-3.5 year lag before full fee contribution materializes, creating near-term headwinds to asset-light growth metrics.
Key quotes
- The change in GST in this quarter accounted for 1.8% of revenue in a seasonally strong quarter of the year and we expect this to be 2% for the full year in FY27 and then further reduced to 1.7% in FY28.
- We have grown about 23-24% [RevPAR] in 24 over 23, 20% in 25 over 24. In 26 we have shut a lot of rooms. So while we report on full inventory actually we had shut 1,200 rooms this year part of which is still shut by the way.
- I don't think it's a cycle anymore. I really feel we are seeing early signs of a structural change in demand and a whole bunch of new customers especially post-COVID and these are younger customers who want to stay in branded hotels.
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