Thank you. Good afternoon, everyone, and thank you for joining us on Lemon Tree Hotels Q4 and FY 2026 earnings conference call.

We have with us Mr. Patanjali Keswani, Executive Chairman of the company; Mr.

Neelendra Singh, Managing Director; Mr. Kapil Sharma, Executive Director and CFO; Mr.

Saurabh Shatdal, Managing Director and CEO of Fleur Hotels; and Mr. Mayank Sharma, CFO of Fleur Hotels.

We'd like to begin the call with opening remarks from the management, following which we'll have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation that was shared with you earlier.

I would now request Mr. Keswani to make his opening remarks.

Thank you very much. Good afternoon, everyone, and thank you for joining us today.

Neil, the new Managing Director of Lemon Tree Hotels, will be covering the business highlights and financial performance for Q4 and full year 2026, post which Saurabh, the Managing Director of Fleur Hotels, will share an update on Fleur's business development, and lastly, I will then share an update on the demerger scheme, which we have also included in the earnings presentation this time, post which of course, we will open the forum for your questions and suggestions. Over to you, Neil.

Thanks.

Thanks, Patu. Hi, that's So despite intermittent global headwinds including renewed geopolitical tensions in the Middle East, aviation disruptions, and GST changes during the year, FY 2026 was the best year in Lemon Tree's history across occupancy, ARR, revenue, EBITDA, PBT, PAT, cash profit, and Q4 FY 2026 was the best ever fourth quarter on the same parameters.

For the full year full year FY 2026, the total revenue stood at ₹1,452.7 crore, up 13% year-on-year. Net EBITDA stood at ₹699.3 crore, up 10%.

PAT grew at 19% to ₹288.2 crore, and cash profit grew 16% to ₹443.1 crore. Gross ARR stood at ₹6,875 for the full year, and occupancy was 73.5%, both the highest we have ever reported for a full financial year.

For Q4 specifically, revenue stood at ₹419.5 crore, up 11% year-on-year. Net EBITDA was ₹218.3 crore, up 7%.

PAT was ₹116.5 crore, up 8%, and occupancy for the quarter was at 78.5%. Our net EBITDA margin for FY 2026 was 48.1%, compared to 49.4% in FY 2025, a contraction of about 126 bps.

For Q4 specifically, margin was at 52%, down 198 basis points from for FY 2025. In FY 2026, our margins were impacted by 588 sorry, 580 basis points due to significant step-up in renovation expenditure as we invest in upgrading our owned hotel portfolio, investments in technology, and the GST-related change that came into effect during the year, which only had a half-year impact in FY 2026, and will have a full-year impact going forward.

The GST impact will decrease year-on-year as the numbers of customers paying a rate below ₹7,500 keeps reducing in the medium term with our price hikes and ARR growth. Additionally, all our current future supply is being planned under the upper-scale upper-upscale Aurika brand, which which remains largely unaffected by the change.

We expect all three expense heads to reduce to approximately 3.7% of revenue by FY 2028 and onwards, leading to a corresponding expansion in EBITDA margin. On debt, we have brought our total borrowings down to ₹1,500 crore from ₹1,699 crore versus a year ago, and our cost of debt has fallen to 7.42%, down 115 basis points versus a year ago.

Our combined operational and signed pipeline inventory now stands at 22,581 rooms across 268 hotels, of which 131 hotels and 11,811 rooms are already operational. For FY 2026, on the asset-light side, we opened 20 managed and franchised hotels with 1,523 rooms, and signed 55 managed and franchised hotels with 4,912 rooms.

Fee from management and franchise contracts for third-party owned hotels stood at ₹73.9 crore in FY 2026, an increase of 23% year-on-year. Fees from Fleur Hotels stood at ₹95.8 crore in FY 2026, an increase of 8% year-on-year, which partially which partially subdued due to which is partially subdued to the impact of GST change and accelerated renovation in the Fleur portfolio.

Total management fee for Lemon Tree stood at ₹169.7 crore in FY 2026, an increase of 14% year-on-year. Lastly, the Indian hospitality market continues to be in favorable structural position.

Demand is consistently outpacing supply in the mid-market segment, and which which is where exactly we operate. Now I will hand over to Saurabh to give an update on Fleur.

Thank you, Neil. Thank you, everyone, for joining us on the call.

I want to spend a few minutes on Fleur's business and pipeline. Post-scheme, Fleur will be India's largest hotel platform by inventory with 5,600 rooms and 39 operational hotels.

While we operate pan-India, our economics are concentrated in top six cities that have structurally high barriers to entry and growing demand. We currently have four hotels with 875 rooms in our confirmed pipeline of which 572 rooms at Nehru Place, which is going to be the North India's largest hotel, are under the final approval stage before we commence construction.

We have finalized the designs for Aurika Nehru Place, a glimpse of which you can see in the annexure section of the investor presentation. Secondly, we plan to open two out of three blocks of Aurika, Naldehra, Shimla, by Q2 this year to capture the increased demand during the summer season.

Thirdly, in January this year, we have signed a license deed for a 47-room heritage Aurika hotel at Varanasi located right on the ghat adjoining the river Ganges. This hotel has the potential to do extremely high rates owing to both the strategic location and the deep demand of the Varanasi market throughout the year.

I also want to highlight that Aurika is the highest ARR and margin product, and the growing portfolio of Aurikas elevates the group's overall profile, and improves financial metrics and the growing network further strengthening the brand. Combined with Warburg Pincus' primary investment commitment and strong internal accruals, we now have the capital structure and the institutional backing to expand our pipeline even further.

We are focused on urban markets with structurally deep demand, leisure markets, and international destinations that Indian travelers visit frequently. On the pipeline, I can tell you that we are evaluating a healthy and growing number of opportunities.

We work across deal types, whether that's acquiring an existing asset or development of new hotel. Fleur's peer-leading margins and in-house development capabilities are key differentiators that compress the time and risk in underwriting new opportunities.

We are not very rigid on structures, but we are very disciplined on returns. There are only a few players in the market that can build hotels at this scale and efficiency as Fleur.

This is a genuine competitive advantage in the market where good assets don't always come packaged neatly. Now I hand over the forum to Patu to give an update on composite scheme of demerger.

I want to take this opportunity to continue the conversation on the demerger scheme, this time with the results we have shared pro forma financials for both Lemon Tree Hotels Limited and Fleur Hotels Limited as they would appear upon the demerger scheme becoming effective. The transaction itself is very simple.

Warburg has completed the purchase of APG's stake in Fleur. Next, Lemon Tree will transfer 17 hotels and development capabilities in exchange for which Lemon Tree shareholders will get Fleur shares, leading to Fleur's listing as a separate entity.

This scheme will result in two distinct, financially sound businesses. Lemon Tree Hotels is a pure-play asset-light company focused on offering hotel management, brand loyalty, distribution, and digital services.

Fleur Hotels will operate as a large-scale growth-oriented hotel ownership/leasing platform with end-to-end in-house development capabilities, and potentially, as Saurabh mentioned, a very large pipeline with a significant pool of available capital. Each entity will have its own management team, capital structure, and growth priorities, while continuing to benefit from long-term operating agreements and arrangements and strategic alignment.

Post the reorganization, Lemon Tree will emerge as a debt-free, high-margin, high-ROCE company generating strong free cash flows from fees and brand-related income. Fleur Hotels will consolidate ownership of our group's existing hotels, all of which will be fully renovated by the time of the demerger.

From a shareholder perspective, the scheme is designed to unlock value while preserving continuity. Post reorganization, Lemon Tree shareholders will effectively own close to 74% of Fleur Hotels: 33% directly, and about 41% indirectly through Lemon Tree.

This is, of course, before any primary infusion by Warburg Pincus, and this is versus the 59% which Lemon Tree directly owns in Fleur today. Post scheme, Lemon Tree and Fleur will continue to enjoy synergistic benefits.

Long-term management contracts give Lemon Tree stable and growing fee income from Fleur, and Fleur can also underwrite new opportunities with certainty and speed with Lemon Tree as the management partner, while retaining strategic flexibility where the opportunity warrants for other brands. Today, as Executive Chairman, I continue to chair both companies with direct ownership in each.

My primary focus will be on delivering the Fleur pipeline and growth as its Executive Chair. In Lemon Tree, I will cease to hold an executive role March 2027 onwards and transition into Non-Executive Chair.

Our core values, including our commitment to being an employer of choice and fostering an inclusive, diverse culture, will remain central to how both platforms operate as we enter this next phase of accelerated growth. With this, we come to the end of our opening remarks, and I would like to ask the moderator to open the forum for any questions that you may have.

Hi. Thanks for taking my question.

I have two simple questions actually. Tomorrow after demerger, if Fleur believes that its inventory can be managed by some other operator and not Lemon Tree, how would that happen?

Is it going to be on arm's-length basis? Can you please give a bit of a color on that?

First point, Achal, is that even our management contracts when Warburg came in, one of the things they did was check the quality and the economics of our management contracts and compare it to other similar operators, and I think they were quite happy with the fact that we were very much in sync with that. Now the point is that if a new asset comes under development or acquisition and it makes more sense for some other brand to operate it, then I can assure you as the Fleur Chairman that we will make sure that happens.

However, having said that, there is a long relationship between Fleur and Lemon Tree, and if we continue to deliver the results that we do in the mid-market segment specially and the upscale segment, then there is also no reason why Lemon Tree will also be considered, and if the economics make sense, then Fleur will go with Lemon Tree. Short answer: brand agnostic, but with one caveat, that obviously Lemon Tree should not be discriminated against when opportunities arise.

Then,

isn't that the loss of a management's fees for Lemon Tree? Yes, but

Lemon Tree must be able to deliver best results in order to get it. Just because Lemon Tree has skin in the game with Fleur does not mean that it has an automatic right to any asset that Fleur develops.

Let me give you an example. It'll I think answer your question.

We bid recently for a five-star hotel. The economics were compelling.

It was through NCLT. Unfortunately, we did not get it.

It was run by another international brand, and run very successfully by that international brand. The reason it was under NCLT was basically a financial structuring problem, and the owner had obviously gone bust.

We bid what would be a fair price for Fleur to buy it assuming the same management contract. Unfortunately, did not happen because we had an ultra-high-net-worth individual who outbid us, but my point here being that if we had bought it, we would have kept the contract with the existing operator.

Understood. Then my second question, within your brands, you have such a huge divergence in terms of RevPAR growth.

Aurika was only 3% while Keys was 16%. What's going on there?

How do you see going ahead? Do you think the kind of growth you're reporting at Keys is the similar kind of growth is possible at Aurika also, or is it sort of a high-end brand, you don't see that kind of growth, and ARR or RevPAR growth will be in low single-digit range?

Thanks.

I want to clarify one thing. RevPAR growth is very subject to micro market.

Okay? Now Keys operates in certain micro markets, and Aurika Hotels operates in actually different micro markets.

Aurika is only two hotels: one is Bombay and one is Udaipur. Keys is from Ludhiana to Visakhapatnam to Bangalore in two markets to Trivandrum to Cochin to Pune, and micro markets within those cities.

I would urge you to look at micro-market growth. I'll give you an example.

In Bombay, a very interesting thing has occurred. What happened was that in the last I think 1 year, about five hotels have opened in the micro market where Aurika operates.

I think it includes Fairmont at the top end to Ginger and then in between at upper-midscale end, there is something called Iconica, then there is some Novotel, some Radisson, multiple hotels opened, and temporarily, this is about 2,000 keys, there was a supply glut. Bombay always absorbs supply glut.

This is, I think, also a timing issue. I would urge you to really look at full year performance and then look at how this grows over time.

Udaipur is, of course, a very seasonal market, and a wedding market, I think I'm quite pleased with the way our Aurika Udaipur is also performing, but the growth was muted, and I think one very big reason which I don't know if any other hotel company has talked about is the impact of the IndiGo shutdown in December, which had an impact December spilling over to January, and then of course the war, where the impact started marginally in early March, but by mid-March had become very significant and has, in fact, continued into April, too. These uncertainties also affect, because we are at the front end of discretionary consumption, and that affects some markets even more than others, specially airport markets.

One has to take all this into account. Now if we look at the full-year performance Do you have the full year RevPAR growth?

I can take that.

Just show me that. I'll tell you now.

We are looking at a quarter with some exceptional thing, but if I look at RevPAR growth for Aurika, FY 2026 to FY 2025, full year, it is 19%. For Keys, it is 20%, and let me tell you an amusing thing.

Keys is only reflecting the first two fully renovated hotels. When we finish the entire renovation, which is still ongoing, then this 20% will continue for another year, another 2 years till the entire portfolio is stable with the new fully renovated hotels.

I think I've mentioned this earlier too in some past earnings call, that Keys is going to be a very positive addition to our brand. As far as the other portfolio goes, as I said, it's subject to local micro markets and overall we look at RevPAR as a group, then obviously we do disaggregate and see where we could do better and so on.

Perfect. Thank you.

I'll come back in the queue.

Hi. Thanks.

Firstly, Patu, given the macro environment, especially with both the largest domestic carriers now announcing capacity cuts for next 3 months, even in the domestic routes, how should one think about the occupancy and RevPAR growth environment for specifically the next 2 to 3 months and if this were to continue, then for full year FY 2027 as well, especially given most of this capacity reduction is in the metro-to-metro routes?

Karan, we took a call about I think in mid-March that we would start focusing on occupancy growth rather than price growth, because in an environment like this, you are constrained with demand shrinking, and therefore you have to look at innovative ways to grow demand. Therefore, our strategy in April, where the slowdown continued from March, going on into May, was very clear that we would adjust pricing so that our occupancy would still continue at a premium to the market.

Having said that, obviously our strategy was not to drop prices ridiculously, and therefore we would at least maintain year-on-year price levels, but do interventions, tactical interventions in markets like the ones you mentioned in order to maintain an occupancy premium. What I can report to you is that has worked very successfully.

Normally we like to report both occupancy and ARR growth till occupancy hits a ceiling. I can tell you that in this quarter, amazingly, our occupancy has hit some form of a ceiling.

We've never seen this before. Our average rate growth has not been significant, has been actually more or less flat.

We are going to continue with this strategy as long as this uncertainty of war continues.

Sure. Then secondly on the signings-to-openings conversion, while you signed 55 hotels during FY 2026, openings stood at just 20 hotels with only one hotel opened in fourth Q.

How should one read this, and more importantly, FY 2027 and '28, where you have about 4,500 keys to be opened, what are the confidence levels here and risks of slippages, if any? As a follow-up, what should the total management fee look like for FY 2027 and '28 if the 4,500 keys opening is on track?

The way to look at that, and I'm going to give you Neil the comment for the following here, but I just want to say one thing, that the way to look at openings and the way to look at signings is as follows: openings typically take, because most of our management contracts are signed for hotel is not conversions, but hotels under construction. The best way to look at growth of openings is look at what we signed, say, 3 years ago and use that as a rough benchmark as to what we will open this year, very rough.

What did we sign 3 years ago, can you tell me? The good news is that while we opened about 2, 1,500 rooms 1,500, 1,600 rooms we signed 5,000 rooms.

Technically, 3 years later, we should open 5,000 rooms. We may in that year sign 10,000 rooms.

Going back 3 years, we, I think, signed a little under 2,000 rooms, and we opened a little under two about 1,500, 1,600 rooms this year. We just follow that, by and large, you will be in the right trajectory.

If I'm signing 5,000 rooms, assume 3 years later I will be opening them, plus minus. Some might get delayed.

None will open earlier, that I can assure you, unfortunately. All will open that time or maybe 6 months slippage or sometimes even a greater slippage if the owner runs out of finance.

The number for total management fee that you mentioned?

For what?

For FY 2027, '28, how should we think about that?

No, I don't want to give guidance. Let's give a number.

Look, this becomes guidance, and if there is a slippage tomorrow, you will correctly ask, "Why did you say this?" We expect broadly to open how many rooms this year?

About 2,000

rooms. Patu, we're in the same clip as last year.

Open about 2,000 rooms. Yes.

Correct.

Sure. Lastly on just Aurika Mumbai, if you can provide some color in terms of how the ADR occupancy and customer mix trended in FY 2026, and expectations for FY 2027, especially given capacity ramp-up at Navi Mumbai?

As a follow-up with two large airports becoming operational at Navi Mumbai and Jewar, how are you thinking about expansion near these airports? See,

these airports are opening up not to shift demand, but to actually cater to increasing demand. What really affects us, say, in a micro market is the growth of supply.

The growth of demand continues. Because the new airports are basically catering to growing demand.

As I mentioned earlier, what affected us in Bombay was the supply growth of those hotels I mentioned. We took a call this year that we would also now start focusing on non-airline sector, because we had kind of stabilized our crew levels.

The crew levels themselves shrank quite dramatically, because this year we didn't get the wet lease crew of last year, because that shifted to a lower rated hotel. These are costs of doing business, or I'm not too worried about it.

Our strategy was can we grow either the ARR or the occupancy based on opportunity in this? As I said, the RevPAR of Aurika as a brand grew by about 16% this year?

Yeah. RevPAR grew about 19%.

Sorry, 19%.

19% for the year, full year.

For the year. FY 2026 to FY 2025, it grew 19%, disproportionately more than the other brands.

The top two performers were the top end and bottom end, Keys and Aurika.

Can I just give a little bit color Karan, to your question around let's say expansion?

See,

most of our expansion is relatively recent. This clip of about let's say signing 55 hotels and opening about 20-odd hotels will safely continue in the future.

If you see our density of our hotels on one of our slides, the first slide in the deck, you will see that our large majority of our hotels are populated in the north and west. If you start now looking at southern region or the eastern coast of India or the eastern far east, Bengal and beyond, there's fair amount of expansion available at this point of time still, as we go deeper into India.

Purely from a general direction perspective, opening about 55 hotels plus every year and opening about 25-ish signing about 55 hotels plus every year and opening about 25 hotel-ish for the next few years is

No, not true. You will catch up, now?

Yeah.

You will not open 25 hotels 3 years later.

Oh, sorry. We will certainly catch up because the pipeline starts building up.

That starts gets operational.

Correct. Sorry.

Yeah. The hotels that we signed couple of years ago, they will pick up that

I think The right way to look at it is how many did you sign this year, and 3 years later, you should open approximately those.

Approximate.

Correct.

We'll bring the charter in FY 2028

onwards. Sure, this is helpful.

Thanks, Neil, and thank you, Patu. All the best.

Thank you.

Hi. Thank you for the opportunity.

My first question is again on the near-term demand trends. I know that Lemon Tree as a portfolio is not very much dependent on foreign travel.

However, based on the conversation that we had with your peers, now most of them are getting more aggressive to capture the domestic demand. If that continues throughout FY 2027, do you see that as a risk for the portfolio, and is there any particular strategy that you can do to maintain the occupancy level that you have right now?

Abhay, I'll just say one thing. Every player in the market competes to maximize their outcomes.

We are one of the players. What we do find is that our B2C business, which is direct customers booking us, whether through our own direct channels or through OTAs, has gone through the roof.

It is the corporate travel that has slowed down. The other day, I was with a friend of mine who is the CEO of a large company in India, and they have 100,000 employees, and they typically give 100,000 room nights a year to the hotel sector.

He told me, and this is late March, that they have given instructions that all travel must reduce to the maximum extent possible, partly because of the rising airfares, and partly because they themselves are worried about what's happening with the war. Corporate travel is the first that kind of dries up when war happens, because it is under the control normally of the CEO or an equivalent CXO, and it is a one-person decision.

What is encouraging, however, is that the retail segment or what I would say the non-corporate segment has continued growing, and we have got more than our share than last year. As I alluded to earlier, our occupancy is much better than last year, same period.

Of course, if you recollect, last year, I think there was Sindoor roughly, yeah. We are in a peculiar situation where last year we had a short war or engagement, whatever, in this Q1, and this year there is a war right next door to us.

We are coming out, I think, quite well. We are more concerned, personally, not about the fact that you see, revenue is not in our hands, in a certain way.

It is a function of how the economy is performing. What we are bothered about is how do we look at our cost structure, which we consider our moat.

Our cost structure has been adversely affected because of certain hard calls we took to do our catch-up renovation. I think if I look at the jhatkas that we got this year, simply from renovation and from ex gratia and from labor code impact and from GST impact and so on, that is affected us to a significant level.

Our intent now is how do we manage to bring that under control and how do we increase our EBITDA margins to the levels they were earlier. We have alluded to that in our investor presentation, and I think that's our current focus, and I'm pretty confident that we will do reasonably well in the cost side from this year on, so that, even with a high single-digit to early double-digit growth quarter-on-quarter, we still manage to maintain a high operating leverage.

Got it. That is very helpful.

My second question is on Fleur. Regarding the expansion to the 2,500 extra rooms that is supposed to be added.

Just I wanted to understand the thought process. Are we going to more Aurikas, more Premiers within that, or is it going to be more evenly spread between Lemon Tree, Lemon Tree Premiers as well?

Even across markets, are we looking at more metros, are we looking at non-leisure markets? Any particular thought process?

Also, if it will be going to be greenfield investments, or are we also looking at expansion strategies, and what will be the timeline for that? Just broad thought on that would be very helpful.

I'll ask Saurabh, as the CEO of Fleur, to answer that.

Thank you. Hi, Abhay.

The rooms which we are talking about 2,500, they are under various stages of discussions, and we are very sure with the capital coming in from Warburg Pincus and the strength of the balance sheet as well as our entire projects team sitting on the Fleur side So it's a combination which I would say none of the any peers have. Given that, we are fairly confident that we'll be able to add that many rooms.

From a strategy of investment locations, like we said, a large amount of Fleur's revenue comes from the top six cities in India, and this remains the core city

and the The question, Saurabh, is a different one. He's saying, "Where are you going to invest?"

That's what I was coming to.

We're going to invest basically in upscale and upper-upscale.

Upscale and upper-upscale, which is between Aurika and Lemon Tree Premier. From a location perspective, we would like to be more in the top six cities.

From the kind of investment, we are looking at greenfield, we are looking at operating hotels, we are looking at brownfield, all kind of assets. We are looking at, however, it has to be core micro market within those six, seven cities and some international destinations where Indians are traveling.

Some leisure.

Very selective leisure markets.

Understood. The timeline would be then close to 5 to 6 years for all the entire 2,500 rooms?

Is that a fair assumption?

I can say that it is not 5 to 6 years. Those which we acquire is immediate.

Those which we acquire but need renovation will be a 1-year period or 2-year period. Those which are greenfields will be 4 years.

We've never take 5 years. We take, unless there is force majeure, we normally take 3 and 1/2 3 to 4 years to build a hotel.

It is a combination of all. Whatever, I think Saurabh was mentioning, it's also covered in the presentation.

We are focused on deep markets, which are structurally deep demand in India. We are focused on international destinations where Indians travel.

We are focused on leisure markets. That's as far as destinations go.

As far as brands go, when we invest our own money for greenfields, we are focused more on Lemon Tree Premier and Aurika. That is investment in greenfields.

This is the broad strategy. There may be opportunities for us to acquire mid-market hotels which makes sense in their micro market, and we would very happily look at those, too.

Thank you. This is very helpful.

Yes, thank you. A couple of questions here.

If you can talk about GST and the headwind that's creating. Obviously, it's been significant, and yes, we'll see it go down, but it'll go down only marginally in fiscal '28.

What are your plans there? How are you trying to achieve that offset?

That's my first question. Second question is, seems like in terms of renovations, we are seeing that slipping into fiscal '28 as well.

Can you comment on that? How should we think about it?

Are those final handful of rooms, or are the major rooms being shifted?

No, what's happening, Sameet, is, I think 2, 3 quarters ago, I said the total spend we will do in FY 2027 in renovation will be a shade under 4%, I think. I've forgotten.

I said 3.6% or 3.8%. Typically, 50% is opex, 50% is capex.

A bunch of it is also replacement of air conditioning systems, pumps, DG sets, on and so forth for the Keys portfolio and some of the very old hotels that we have in our own Lemon Tree. If you notice, if you go to which slide is it, slide 29 in our presentation, we've tried to give a color on the impact of these things and how we see them playing out with our revenue in terms of how it will affect our cost structure.

In FY 2026, we spent 5.8% of our revenue on GST, tech, and renovation. In FY 2027, we have said the impact of GST will go from 1% of revenue to 2% of revenue because it's full year.

We will continue our tech investment at a higher level because it'll be 0.9% of a higher revenue rather than 0.6% of a lower revenue in FY 2026. Renovation will come down to 1.9%.

At that point, more or less the entire portfolio is done. Then we will revert to our normal renovation, and I think I have mentioned this time and again, that our normal renovation is 1.3% to 1.

1.2% to 1.4% kind of percent, okay? We are assuming that we are doing that 1.3%.

It may be less, by the way, but it will certainly not be more. In some ways, this will compensate for the cost of the GST.

Even GST, if we continue with a 7%, 8% price hike every year as we normally achieve, then the GST impact will come down to 1.7%, and technology will then stabilize at about 0.6%, 0.7% of our revenue. That's why we see that from 5.8% of these three cost heads, it will drop to 4.8% in this financial year, and then 3.7% in the next financial year, about 1% a year.

Besides this, what will change is that roughly ₹25 crore to ₹30 crore that we spent this year incrementally, one-offs, on ex gratia, on the property tax at Delhi, the new labor code impact, that will disappear from the P&L from FY 2027, which is another 2% of income. To synopsize, we expect to save 1% of revenue every year from the GST, tech, and renovation, and also another ₹25, ₹30 crore from that one-off impacts, which will be a permanent saving.

Got it. Thanks for that clarification.

Thank you.

Thanks for the opportunity. My first question was on our Fleur demerger timeline.

Earlier, we had mentioned that merger will be completed in 12 months in Jan. Now the slide mentions that it will take another 12 to 15 months for SEBI and other approvals.

Can you just highlight the new timeline for the demerger?

The CCI approval came in April. Kapil, can you give some flavor on this, you and Mayank?

We are currently at the stage of shareholder stock exchange and the SEBI approval. That is the normal process before we file with the NCLT.

No, but he's saying, did it get delayed, and why? I think there's a 2 months slippage?

There is not 2 months, rather I would say 1 month only from that perspective. Generally, it takes 3 months for stock exchange, I would say 1 month.

This estimate which has been given a little conservative estimate, and because there are certain things which are procedural, and especially I would talk about the NCLT, which is a process depends on many factors, actually. It could be shorter also.

We will try our best to how fast it could be done, but looking at the procedural of first motion order, second motion, and in between there would be shareholder approval and creditors approval as well. That's why we are taking that much, but it doesn't mean that it would go to end of CY 2027.

That's not the case. We would not be far away from what we said earlier.

Actually, the real issue is NCLT. Will it take 6 months?

Will it take 9 months? Will it take 12 months?

We have been given multiple possible timelines by experts in this. If that happens earlier, then it will be 12 months from now.

If it happens later, then it will be 18 months, I'm giving you an outer limit.

Understood, sir. My second question was on the pro forma financials for the Lemon Tree standalone entity.

We have reported 60% margins. My impression was that since a flow-through for the management fee income would be near 75% to 80% with 300-odd keys that will be under the lease model, overall margin should be somewhere in the range of 70%.

Can you just highlight why the margins are slightly at a lower end despite the asset-light portfolio, and where do you think this margin trajectory could go towards?

Good question, because that's something we were discussing ourselves. What we have said as guidance is that our steady state flow-through will be 70% plus.

We are currently at 60% for a very simple reason: one is that a bunch of our operating expenses in the corporate side of Lemon Tree have gone up. One of them being our tech investments, and one of them being our hiring of new people.

We've got a whole bunch of new people in, which actually Neil has brought, in terms of operations, in terms of marketing, in terms of revenue, in terms of digital, in terms of what have I missed out? and sales.

This is top-level talent, and it will contribute to the growth of the revenue of the company, but has a lag effect to that, but has immediately come on the P&L. Second is this is not steady state, what you are seeing.

This is pro forma. As we do better, this 60 will become 70, and aapke mooh mein ghee shakkar, maybe one day it will be 75 to 80.

That is when all the hotels that we are signing start giving us fee income. It is very much true that we expect also north of 70% steady state, hopefully 75.

Understood, sir. Can I squeeze in last question?

Please do.

On the renovations bit, can you highlight the current status of the renovation in terms of how much inventory is already renovated, and in the current quarter, in Q4 and Q1, how much part of the inventory is shut for the renovations? That's it from my side.

Thank you.

In the current quarter, it would be maybe 400 rooms. Right now would be more.

I was thinking, are you talking Q4 or Q1? It's current, right?

Q4.

Yeah. Fourth quarter.

Fourth quarter would be 400, 500 rooms. Because we normally maximize renovation in summer and minimize it in winter.

Certain rooms like Keys Whitefield is not complete. I think it'll be complete in the next 4 months.

Certain parts of Lemon Tree Premier, Bangalore, are under renovation. Keys Hosur Road is under renovation.

Keys Pimpri, Pune, is completely renovated. Red Fox Hotel, Delhi, which has now been rebranded to Lemon Tree Hotel, Delhi, has, I think, about 40 rooms to be renovated in this H1.

Broadly, we of the key if I look at our portfolio, we had about, the non-renovated rooms were about 70 the non the rooms we did not have to renovate were about 1,700 rooms, which is Aurika Bombay, Lemon Tree Premier Bombay, Lemon Tree Premier Pune, Lemon Tree Premier Calcutta, and Aurika Udaipur. If I take those out and say that the amount the ones we wanted to renovate are 5,000, of which heavy renovation is in 4,000, the 4,000, I would say about 85% is done.

Okay? Renovation does not only include renovating rooms and public areas.

It was also a catch-up in major repairs and maintenance and in replacement of equipment. That too is continuing.

That is why in this year, our capex is as high as our renovation spend, in fact, a little higher. From next year onwards, while we are showing, I think, 1.

What are we showing, 1.8%, 1.9%?

1.9% in FY 2027, 1.3% in FY 2028.

Yeah. Next year onwards, it'll be 1.3% or more likely, I think that's quite aggressive.

It'll probably be 1.2%, 1.1% for next year. In fact, actually I think it'll be 1%.

We have given you an outer limit, because there is always some stuff that happens, some equipment that needs replacement, and so on.

Understood, sir. Perfect.

Thank you so much for the detailed answer, and all the best.

Thank you.

Hi, sir. In Aurika, the occupancy has declined by 2%.

Can we assume this decline is majorly due to Udaipur?

No. This is because a very large wet lease in Aurika Bombay went away.

One can assume that actually that was a one-off. It has affected us.

We were happy to take it when we needed it. You will notice that has been commensurately compensated by the rate change, because the segment changed therefore.

Occupancy dropped by 2%, but the wet lease was about 8% of occupancy. It means really the wet lease went, but we replaced it with 6% of other demand, and that's how it flowed in at better rates.

Okay. Yeah.

Aurika's

full year is better.

Yeah. I think, Sumant, also keep in mind that we had a big impact due to this IndiGo, and we also had a big impact due to the war.

I would urge you to look at the full-year figures, which is what were you saying, Neil, why don't you say it?

Sumant, I think the best way to look at Aurika, because any hotel business in this case, because of last year every quarter had some extraneous event. Especially to your question, the Q4 performance in Aurika is essentially a March performance.

In fact, January was, let's say, reasonably good, February was excellent. It's only March when the war happened and the air traffic declined and that we had challenges in filling the hotel up.

If you look at the full-year Aurika picture, both the brands moved from occupancy of 62% to 74%. As an aggregate, and therefore, the 19% RevPAR growth.

Very, very healthy as a brand portfolio for the full year.

Okay. ARR increase of 5% is all because of change in product mix in Aurika Mumbai?

You're talking about Q4? Sorry.

Q4. I'm for your quarter, yeah, this quarter.

In Q4, March, the price went down, retail price, because demand dropped. In February, it went up.

First 2 weeks of January, it went down because demand dropped.

Yeah.

Second 2 weeks of January, it went up. It's a question of these extraneous circumstances Neil was referring to that determine our retail pricing.

Corporate pricing does not change, but even corporate demand came down in March.

In March. Yeah.

March.

No, no. So, 5% increase is because of Aurika Mumbai or Udaipur, ARR?

It is both.

I think Aurika Mumbai would Aurika

Same.

It would both be No, maybe Aurika Udaipur was a little higher, if I remember right. Okay.

Majorly driven by Aurika Udaipur?

It would not be material, let me put it this way, because if Aurika Bombay grows by 4% and Aurika Udaipur, which has one-quarter the inventory and similar occupancy, grows by 15%, the average is still 5%.

Okay. Got it.

Got it. Okay.

See we have seen significant growth in Keys, and what we were talking about post renovation, the ARR is going to increase, and currently the Keys ARR is ₹2,900 plus. The commentary and you are talking about 16% kind of growth every quarter and a couple of years.

Can we assume this Keys RevPAR can reach to 4,000 level?

The Keys ARR currently

No, no. I'm talking about RevPAR.

Okay. No,

two years ago, I think I said that Keys was in 3,000 something, and Red Fox was 4,000 something, ARR. I said Keys should move towards Red Fox's ARR.

I think this was in an earnings call maybe 18 months ago, and I was referring to post renovation. Let me give you one example, because we have one fully renovated hotel.

If you go to the investor presentation, which slide is it where we show what happens? The case study?

The case study. Go to slide 56.

Go to slide 56. This is the first fully renovated hotel from last year.

We've been able to focus both on occupancy and on ARR, because the others, when you kind of either rebrand or you renovate fully, then you start with a price change and build up the occupancy because now you are targeting a different segment, okay? Are you on that slide 56, Sumant?

Yes, sir.

You will see what I mean. This is a 100-room hotel, and today, the EBITDA is ₹11 lakh a room.

₹11 lakh EBITDA per room. Now,

obviously all Keys hotels won't have ₹11 lakh a room. I have actually been conservative and said we want ₹60 crore EBITDA, which means over nine 930 rooms, we want less than ₹6 lakh a room EBITDA from Keys.

Hello?

Yeah. Hello.

Yeah. Sumant, are you on that slide?

Yes, yes. Yeah.

I got it. I got it.

Overall, my question was what you are talking about the ARR is going to reach at the Red Fox level, okay, in next 2 years, overall, currently we have ARR of 4,700 in Q4, and average might be maybe in the range of, say, 4,200, 4,300. Is there potential to reach this hotel ARR to 6,000 in next 2 years?

That is market driven. I can't comment on it.

What I can tell you is Keys ARR is today close to Red Fox ARR, but when I say we did an occupancy rate of 64% in what is called Q4, there were rooms also shut, about, I don't know the exact number, but a few hundred rooms of Keys were shut because those were the ones that we were renovating round the year. I do not see it as ambitious to say that we would like Keys occupancy to be like Red Fox's occupancy, which is about mid-70s, and an ARR obviously, even if you assume that it is not 6,000, but 5,455, you should get to your ₹60 crore EBITDA number, which is our target for this portfolio at present.

Got it. Got it, Patu.

Thank you so much.

Thanks for the opportunity. Just one small observation.

Our management fee income from third party was up by about 29%, which was a very healthy growth. The same from Fleur was up by only 3%.

Does it imply that the managed portfolio was relatively less insulated from the Middle East crisis as compared to Fleur, or is there something more to read into this?

No, you see, a large part of our fees comes from incentive fees, which is delivery of EBITDA at different slabs. Our incentive fees can go from 1% of revenue to 5% of revenue based on which slab of GOP or hotel level EBITDA we are at.

Now what happened was that during this year, we aggressively renovated a lot of the old portfolio with a lot of obviously Fleur hotels in that portfolio. GST impact and the elevated renovation impact dropped the EBITDA margins.

As a result, our incentive fees were significantly affected. That is, again, linked to our delivery of EBITDA.

Now if it picks up, as I'm hoping it will, then obviously our fee will pick up proportionately. Plus

Jinesh, the only other thing to add apart from what Patu was saying is that when you look at the management of third-franchised hot- hotel, the full year, I'll give you the full-year picture now. The full-year fee growth was 23% in the in third-party hotels, and Fleur was 8%.

Uh 8% broadly because the same reason that Patu said, and the reason is 23% is because it's both same-store and scale driven. There were net additions in the third-party owner, let's say, base of hotels, and therefore, it's a 23% increase on a base-to-base.

For for for Fleur Hotels, the the 8% full-year number is based on the same-store basis, because there was no no additional rooms added in that base. Makes sense?

Sure, sir. Sure.

Sir, secondly, if I look at our presentation, I think in one slide, we have given the ratio of negotiated room nights. I think that figure in this quarter was about 55% versus 59% in the base quarter.

Just wanted to get some understanding. Have we lost some corporate contracts, or is it that due to fall in occupancy due to the Middle East crisis, some of these nights got reallocated to the retail category and hence temporarily, the mix has changed?

From a long-term perspective, how to think about this mix between negotiated and non-negotiated room nights, because I think there's a differential in rates in both these categories as well?

Negotiated room nights have a lower rate than non-negotiated, generally. However, March was the key differentiator for Q4.

As I said, corporate business dropped in March. We've tried to build some occupancy up through retail at lower prices.

What you see really is what was 59% of, say, what was the occupancy previous year?

77%.

This year?

78.5%. 1.5% more.

You think of it as 59% of 77% last year was corporate, and this year, 55% of 78% was corporate. The corporate came down by about 2%, but it was replaced by 3% of the total occupancy by retail.

In order to get that occupancy in a down time, we had to offer obviously slightly lower rates in order to pick business up.

I'll just, again, Jinesh, that what you're looking at is the Q4 picture. It is not as material when you start looking at the full-year picture.

In the full-year picture, our negotiated ratio is 55.4%, which has come down from 56.1%, 50 basis points. It's not material in that sense.

Whatever happened, actually this difference is largely driven by Q3 and Q4, which is where exactly to what Patu said, when the corporate demand dropped, the relative retail demand also picked up, or we at least tried hard to compensate that through retail demand. Hence this slight change in the pie chart.

Sure. Can you just share what is the

Our long-term strategy is to focus on building more and more See, what insulates a company? Dependence on large aggregators or large, concentrated demand or distributed demand?

We are very clear as we grow our portfolio and network, we want distributed demand. We have a joke within our company that it is better to have 100 individuals booking you than one company giving you 100 room nights, because that one company can disappear tomorrow, but the 100 won't.

We are very clear that as we grow to 20, 25,000 rooms operating, we want 65% of our business to be retail, which is direct to us, direct to So it is really a B2C business, customers coming to us directly, sometimes through OTAs, who are our partners in this endeavor, and sometimes and more and more directly through our website, our loyalty program, and our direct-to-hotel or call center.

Sure, sir. Got it.

Thank you so much, and all the best.

Thank you.

Hi, sir. Thanks for the opportunity.

Just one question from my side. Have we set aside any total capex or capital outlay specifically for this proposed addition of 2,500 keys across Fleur going ahead, which I believe is over next 2 to 3 years' time period?

If you look at acquisitions today, depending on sellers' need and buyers' need, it is available anywhere from 8x of EBITDA to 16x of EBITDA. In some trophy assets, which we are not interested in, it could be even higher.

The capital we put aside is two: one is, if we are buying an existing asset, we'll have to pay a higher price for it, because it is an operating asset, it has EBITDA up front, and the maximum investment we would make would be in renovation if required, which obviously we adjust in our acquisition price. If we build ourselves, then it is naturally much cheaper, but there is time to market in that case.

If I look at the committed capital from Warburg, this is entirely contingent upon availability of the right deals, and that 2,500 active discussions are many of them right deals, then we have the potential, if I take Fleur and Warburg's investment into account, we have the potential to deploy up to ₹3,000 crore in the next 12 to 18 months. Now will we deploy it?

If all the 2,500 come plus everything that we are doing, then yes, we will deploy it. If it doesn't happen, we will deploy less.

That is one. Point number two is our current assets like Nehru Place.

Nehru Place will, best guess, require ₹700 crore. As Saurabh had mentioned earlier, it is the single largest asset in North India.

The next largest is actually a neighbor of ours here called Andaz, which is 525 rooms. This hotel, the cash flow will be over the next 3 and 1/2 years with 6 60% in the last 18 months, because that's when real money goes into finishing a hotel.

We feel that we can build through our internal accruals. The cash that we have available, which is from Warburg and our own likely free cash flow in this financial year, plus debt, should safely enable us to buy these 2,500 rooms if all fructify, and any other opportunistic acquisitions which align with the strategy of core markets, higher leisure demand markets, or international markets where millions of Indians travel.

That's helpful, sir. Thanks for this.

That's it from my side.

Thank you.

Hi, sir. Thank you for giving me the opportunity.

My first question is on margin side for the Lemon Tree Hotels and the Fleur Hotels. When I look at our cost saving that we are estimating going forward, see, most of the cost saving is coming from the renovation expense coming down.

All the flow-through in the margins will go to Fleur Hotels. Is that understanding correct?

How much steady-state margin or in FY 2027, '28 margin, how much are we thinking for the Fleur Hotels?

Margin? Pre-fees, these same stores should be in the late 50s, pre-fees.

Yes, sir. Sir, my second question would be in January, when we did this demerger announcement, we said that our PAT margins for the Lemon Tree Hotels would be somewhere between 60% and

What Sorry?

In the January call for the demerger announcement, we said that our Lemon Tree Hotels PAT margin would be around 60%, and EBITDA

margins would be

Yes.

No, not PAT margins. I assume you're talking EBITDA margins.

In the January call, you stated that, sir. That's why I was just coming back.

No, I only talk EBITDA. PAT I never talk about.

Sir. Then

I think review what I said. It would be EBITDA.

Anyway, let's assume it's EBITDA. What is the question he's asked?

Yes, sir. No, then my question is answered, sir.

That is it, sir. Thank you, thank you very much.

Thank you. Thank you.

Our next question comes from the line of Vikram Shah with Vikram Securities. Please go ahead.

Good evening. Namaste, sir.

Congratulations on a great set of numbers. My question was towards 2,500 room deals etc.

and with or without it, what sort of peak debt number are you comfortable with?

If you look at our debt-to-EBITDA today, it is about 2.1, 2.2. Is that correct?

2.

2.25.

2.25. See, in a high-growth company with stable earnings, you can technically go 4x debt-to-EBITDA, but we are, I think, much more conservative.

If we deploy ₹1,500 crore of capital, our debt would go to mid-₹2,500 to ₹3,000 crore as a consolidated entity of Fleur. Which means that our debt-to-EBITDA would temporarily go up till the EBITDA started flowing in.

Now this is, of course, also a question of how much of these 2,500 rooms have existing EBITDA and how many will give EBITDA after a year or two. It would be a mix-and-match.

I can't comment. It depends on which of these 2,500 rooms we finalize.

I think this question you could perhaps ask us 12 months from now, or earlier, if possible.

Okay. Sir, regarding the Iran war, how has it been in the last 3 months?

If status quo is maintained for the next 6 months, how worried will we be?

We are in the middle of the war, and as I said, we find that our occupancies have improved, not diminished. I cannot comment, because what happens is as uncertainty and volatility continues, then I am more concerned about the impact on the Indian economy.

See, oil, inflation, current account deficit, all this will start hitting our country very hard. By the way, it's not Iran war.

It's the US war against Iran, I would say. Anyway.

The thing is that if there is a conclusion to the war, then this question is irrelevant. If there is no conclusion, then we have taken the necessary steps to mitigate our cost structure appropriately, and I think we will be fine.

Fortunately, this war has not had actually an impact on us other than in the months of March and April. May has been surprisingly good, and I'm just hoping that if it doesn't deteriorate further, then we should do reasonably well.

If it repairs and the economy is not significantly hurt, then we would do even better than that. You're asking me a very difficult question.

I can't really answer it.

I know. It was just directionally, and friend, and more than anything.

I just squeeze in a quick last one, if you don't mind. For the next 5 years, again, directionally, if you could give us an understanding where you foresee CAGR growth for Lemon Tree, the platform owner, the asset-light over the next 5 years now that you've freed up, it's a very asset-light company, as if it's a lot of capital deployed and so much opportunity, how do you see the next 5 years?

See, let's go back for a minute. I don't want to give guidance, but I can give you a direction.

We are signing 5,000 rooms a year. I think that will accelerate.

One of the key resources we've hired, or Neil has hired, is a top-line business development head who has aggressively gone with his team to go and get more and more hotels. Remember, 2 and 1/2 million rooms in India unbranded.

We have strong strengths to convert most of them, because they are in our sweet spot, which is the mid-market to upper-midscale segment. We have grown our fees at only 23%, and I'm using the word only, but that is with about 6,000 branded rooms under the management contract side.

Keep Fleur aside for a moment. If Fleur adds the 2 and 1/2 plus the 1,000 rooms under construction or 800 rooms under construction, then Fleur's size will increase 60% in the next 3 years in terms of operating assets.

Those fees will come directly to Lemon Tree, hopefully, unless there are some hotels which go to some other brand. As far as the managed portfolio goes, we are talking about maybe 2,000 rooms opening in FY 2027.

In FY 2023, I don't know the number, but certainly by FY in another 2, 3 years from now, we'll be opening 5,000 rooms a year, because that's what we are signing now. You can do the math then.

You say, FY 2027, we'll open 2,000 rooms, and we have 11,000 rooms. In FY 2028, Fleur will start contributing more.

We will open maybe 3,000 rooms. In FY 2029, maybe we'll open 4,000 rooms.

One can have a range. How many rooms we open, and you have a simple number, which is the following, and this is where I would be very careful about assessment.

In the first one or two years of opening a hotel, normally one year, the income is not stable. Our fees are subdued.

The minute the hotel gets stable, then our fees start kicking in on a full basis. Really, the fees can increase by 50%, 60% on a stable hotel.

One has to compensate for that and say, okay, I'm opening four 2,000 rooms this year. Maybe I'll earn ₹100 a room.

Next year, these 2,000 rooms will give me ₹150 a day. Then it will be 150 going forward.

Therefore, you have to do this adjustment also in the fee income for the first 12 to 18 months, depending of lower fees till stability. Okay?

If you look at 2023 to 2026, our fee income of the managed portfolio grew at 27% a year.

Got it.

I would obviously expect it to be larger, although the base has become larger, this fee income should also grow much faster. We have projections, but I'm not going to share it with you.

Okay. Thank you so much.

One

Congratulations again. Thank you.

Thank you.

Hi, yeah. I just wanted to ask about this loyalty program of yours.

A lot of your international peers have loyalty programs and tie-up with banks and credit card issuers. I'm a bit surprised to see that as an asset-light company Lemon Tree which is becoming now, why don't we have a very exhaustive application, a mobile app, and loyalty program, because that would really drive consumers towards you, more particularly on the retail side, which would book directly through you, rather than through OTAs.

That's my question.

Fair point, Rahul. That needs, of course, significant technology investment.

I'll answer this in a broader way before I come to the key point. Far, let's say, our technology investments have been focused on essentially making the operations seamless, getting our data aligned, making sure we are fit for purpose for scale.

Therefore, we've invested in our revenue management system, we've invested in a MarTech tool, we've invested in let's say, sales force automation. What remains now going forward is when we should be able to direct our technology investments in some legacy systems transformations like our PMS system and working on our loyalty engine, which means essentially working on our website, our booking engine, and the loyalty program.

The benchmark that you're talking about to international hotels is a very let's say, oft-executed playbook. It helps us, of course, in rebalancing our segments more towards the direct business.

That's what you can expect from us in the next couple of years. We're currently at the early stages of driving investments on the loyalty side.

Though the loyalty program was rehashed couple of years ago, we have about 24 lakh guests there. 48% of them are or let's say of the room nights that we sell in a year, 48% or almost 50% of them are driven by our guests.

From our loyalty guests. If I eliminate the first time sign up of the loyalty guest, 25% of our room nights, the volume that we deliver every year is driven by our loyalty program.

It shows all good signs. The benchmark versus international chains are also pretty solid at this point of time.

Therefore, the next stage is what you just alluded to.

No, that will be all. I think I just look forward to a really great app being a Lemon Tree customer myself.

That will be all.

Likewise. Thank you.

Thank you.

One question, sorry. Is the Nishant of Kizuna Capital still on the line?

Anoop, can I talk to him?

Yeah. Nikhil.

Nikhil. Sorry, it's Nikhil.

Nikhil of Kizuna Capital.

Okay. Nikhil, are you on the line?

Hello?

Hello?

Nikhil, you're there?

Yes, sir. Am I audible?

My apologies. We've just referred to the transcript.

You were talking about what I said about Lemon Tree steady state, that when it becomes a pure-play brand and asset owner on a steady state when our EBITDA hits 75%, 80% and tax is 20%, 25%, then you are absolutely right. There is no depreciation, there is no interest, and our PAT will be 60% of the revenue.

Thank you. You said something correct, and I was incorrect.

Thank you.

Thank you, sir. Thank you for clarifying that, sir.

Sir, let's say now my second follow-up question would be on that only. Now coming to the sub-PAT margins in our recent quarter that we have reported, our PAT margins are coming out to be 40%, and for the FY 2025, it was 45%.

How are we planning to increase those to 60%? Because most of the margin flow-through is going to go to Fleur rather than Lemon Tree because our technological expenses are going to be staying at 0.7% or 0.9% of the revenue.

Can you help us understand a bit more on how the margins will increase because all the technical expense will go to Lemon Tree, if I'm not wrong?

You're absolutely right. Let's put it this way: see, Lemon Tree's current investment in technology, you must consider, although it is in the P&L, must be considered as an investment which we have to monetize, okay?

On a steady-state basis, we are not going to significantly increase our main expense, which are two in Lemon Tree as a brand, which is corporate expenses and technology expenses. As our revenue grows in terms of management fee income, and we've been discussing this, if you do some rough modeling, then on a steady-state basis, hopefully earlier rather than later, the growth of management fee income will translate to a flow-through of about 75%, 80%, okay, on a steady-state basis.

That is what you should track over the next 2 years, 2 and 1/2 years. How is this happening?

Of that, this is including technology, by the way. Then 75% flow-through means that if you take tax at 20%, 23%, then you have a 60% PAT.

This is broad, okay? Obviously, if the fee income grows much faster than the fixed costs of Lemon Tree, then what will happen is that we will then hopefully one achieve that 80% EBITDA, take out 25% tax, and you have 60% PAT.

Does that make sense?

Yes, sir. Makes sense.

Thank you, sir. Thank you very much.

Thank you.

Thank you for the opportunity. Post-restructuring, Lemon Tree is expected to generate substantial free cash flows over the coming years, right?

How are you thinking about capital allocation, would the priority be to reinvest in adjacent growth opportunities or return the excess capital to shareholders through buybacks or dividend?

Lemon Tree will not need any significant capital other than potentially investments in technology or in marketing and so on. It will be essentially a zero-debt, cash-accretive company.

What we will do is I think we will sit down as a board and decide what our dividend distribution or give back to shareholder policy is. Lemon Tree will effectively move into distribution of profit to shareholders.

As far as Fleur goes, Fleur is not currently seen as a dividend-distributing company, at least currently. We would like to deploy capital because we see we can really add to shareholder value by growing the business, and so it will be more focused towards capital growth or share capital growth and share value growth rather than distribution to shareholders, because we think we can give a better return to shareholders simply by growing the business.

Basically we are thinking about shareholder buyback or dividend for the Lemon Tree standalone. That means we are ruling out any investments into adjacent growth areas, let's say, F&B or some other areas, right?

We won't be investing in those lines. Am I right, sir?

Currently we don't see growth in F&B, because F&B has specialists, they have, it's not our core competence, frankly. Look, it's not obviously not on the top of my mind or even our board at present.

If there are interesting opportunities to acquire asset-light platforms at the right value which add value to our entire portfolio of brands or to our customers or to our technology platform, then it is possible we would invest there. Frankly, we would have a very high hurdle rate there, because our view is that if we are not sure we can adequately reward the shareholders by not giving the level of dividend we should, then there should be a compelling reason to then do this acquisition, whatever that is.

Understood. Thank you so much.

Hi, sir. Thanks for the follow-up.

Just small bookkeeping question. Can you share the room revenue and F&B revenue for full year as well as Q4, if it's possible?

I'll call him separately.

Nipun, our head of strategy, will call you and explain that to you. You have his number.

Perfect. Thank you.

Thank you once again, everybody, for your interest and support. We'll continue to stay engaged.

Please be in touch with our investor relations team for any further details or discussions, and we look forward to interacting with you soon. Thank you, and have a good weekend.

Thank you.