Rattan Keswani Deputy Managing Director of the company addressed the call.

Highlights of the call:

Lemon Tree Hotels (LTH) is the largest mid-priced hotel sector chain, and the third largest overall, on the basis of controlling interest in owned and leased rooms.

LTH opened its first hotel with 49 rooms in May 2004.

As of September, 2018, operational portfolio comprised of 50 hotels and 4999 rooms. Out of this 2796 are owned, 482 are leased and 1721 are managed rooms.

LTH operates in the mid-priced hotel sector, consisting of the upper midscale, midscale and economy hotel segments and seeks to cater to Indian middle class guests and deliver differentiated yet superior service offerings, with a value-for-money proposition.

Lemon Tree Premier targets primarily the upper-midscale hotel segment typically comparable to 4-star and sometimes 3-star. In this segment it has 1,301 rooms in 10 hotels. This category saw occupancy jump 1020 bps in Q2 to 84.8%.

Lemon Tree Hotels primarily targets the midscale hotel segment typically comparable to 3-star. It has 2,516 rooms in 31 hotels in this segment. This segment saw occupancy fall 340 bps in Q2 to 73.2%.

Red Fox by Lemon Tree Hotels targets primarily at the economy hotel segment typically comparable to 2-star. Under this the company has 1,273 rooms in 10 hotels. This segment saw occupancy rise 370 bps in Q2 to 80.4%.

The company delivered another strong consolidated performance in Q2 FY 2019 with sales growth of 20% in a seasonally weak quarter.

Strong cost control and operating leverage resulted in strong EBITDA growth and expansion of EBITDA margins.

It has posted a profit against loss after tax.

Around 2.3% increase in expenses was due to new inventory and around 3.5% increase was due to change in business mix like more Online Travel Agency (OTA) bookings.

It has geographical spread across India and presence in key markets to cater effectively to corporate clients and business travelers.

It operates in each of the top 10 markets in India.

Lemon Tree hotels are located across India, in metro regions, including the NCR, Bengaluru, Hyderabad and Chennai, as well as tier I and tier II cities such as Pune, Ahmedabad, Chandigarh, Jaipur, Indore and Aurangabad.

New hotels will open shortly in Mumbai, Pune, Kolkata and Udaipur.

The hotel industry is at the cusp of an upcycle and the company is at the forefront to capitalize on the strong industry dynamics on the back of strong brand and unique value proposition.

It has signed a License Agreement for a 27 room city hotel in the heart of Thimphu, Bhutan under the brand Lemon Tree Hotel. The Hotel is expected to be operational by March, 2019.

It has forayed into Dubai and the Middle-East with a signing of a License Agreement for a 114 room hotel in Dubai under the Company's brand Lemon Tree Hotel. The hotel is expected to be operational by June, 2019.

In October 2018 the company opened hotel under brand name Red Fox Hotel at Rajpur Road, Dehradun, today. This is its second hotel in the City. The Hotel has 91 rooms with a multi cuisine coffee shop, fitness center, banquet spaces including a conference room.

It has hotels at locations with high entry barrier such as close to major business centers, airports etc.

Cash profits grew 132% to Rs 19.7 crore. Price hikes coupled with operational cost efficiencies will drive strong cash flows in the coming years.

Capacity growth beyond FY 22 will be largely via the managed contract route, continuing the free cash generation.

It saw a 9% increase in ADR in Q2 on the back of price hikes taken in H2 of FY 2018.

Occupancies improved 230 bps to 78.3%, resulting in robust Revenue per available room (RevPAR) growth of 12% to Rs 3083.

Demand growth in the hotel sector is projected at 12.5% while supply is estimated to grow at 8% between FY 2018-21 which is leading to higher occupancies for the industry.

Due to the large demand-supply mismatch in the mid-priced hotel sector, the management expects steeper price hikes going forward, resulting in robust RevPAR growth.

Its capacity addition plans are on track.

It plans to add another 1796 rooms to the operational inventory by the end of Q2 of FY 2020 of which 730 rooms will be owned and 1066 rooms will be managed.

All these owned/leased rooms will be in high entry barrier and demand dense markets with high occupancies and Average Daily Rate (ADR).

This addition of owned rooms includes 298 rooms in Mumbai, 199 rooms in Pune-city centre and 142 rooms in Kolkata.

Target is to operate 70 hotels with 6735 rooms across 47 cities by end of Q2 of FY 2020.

It plans to operate 84 hotels with 8,598 rooms, across 56 cities by FY 2021.

Focus will be on leisure and vacation travel of domestic travellers.

22 rooms were added in Lemon Tree Wildlife resort, Bandhavgarh which were operational from November 2017.

The management expects debt cycle to peak within a year.

Quarter and HI are not indicative of full year's performance due to seasonal nature of the business.

Second half will be strong. H2 is which is peak season and accounts for majority of the annual revenue and EBITDA.

The large inventory of hotels that were opened in the last 3 years is moving towards steady state, higher pricing, operationalization of high value inventory in the coming quarters and cost leadership will be key drivers.

It has a large supply of high value inventory, in demand dense regions of Mumbai, Pune and Udaipur, which will be operationalized over the next few quarters.

It has pipeline plans to operationalize of 1434 rooms from December 2018 quarter to March 2021 quarter at an estimated capex of Rs 1725 crore. Out of the capex of Rs 1725 crore, Rs 732.8 crore will be deployed over the next 3 years in a phased manner, the majority of which will be through internal accruals.

Out of, 1434 pipeline rooms, 199 rooms will be in Pune which is expected to be operational by December 2018. 298 rooms will be in Andheri (East), Mumbai which is expected to be operational by January 2019. 139 rooms in Udaipur is expected to be operational by October 2019. 142 rooms will be in Kolkata which is expected to be operational by April 2019. Lemon Tree Premier, Intl. Airport, Mumbai having 577 rooms is expected to be operational by March 2021.

The management is confident that its strong competitive position in mid-priced hotel sector will help it increase market share.