When Lemon Tree Hotels Limited (LTHL) announced the appointment of Neelendra Singh as MD and CEO last October, it raised a lot of excitement because of his non-hospitality background. One year into his leadership role in LTHL, former Adidas MD Neelendra Singh feels at home and in control as he discusses the proposed strategic demerger, an asset-light growth agenda, deeper domestic expansion and the company’s evolving business models.
P Krishna Kumar
Neelendra Singh, Managing Director and CEO of Lemon Tree Hotels Limited, completed his first year at the helm of the hospitality company after spending two decades with Adidas, where he served as Managing Director. Having begun his career in consumer-facing retail operations before moving into telecom and subsequently the global sportswear major, Singh brings experience across product management, brand building, distribution and consumer engagement. In an exclusive interaction with TravelBiz Monitor, he reflects on his transition into hospitality, the ongoing restructuring of Lemon Tree’s business, its expansion ambitions and the opportunities he sees in India’s evolving hospitality and tourism market.
A consumer-centric approach to hospitality:
Reflecting on his first year in hospitality, Singh says the transition has been more familiar than it might appear from the outside. “Scaling large businesses, distribution, brand management and consumer-direct businesses are all experiences that I brought here,” Singh said.
Describing Lemon Tree as a company with a strong foundation and significant headroom for growth, he believes his experience in more mature consumer ecosystems can help the organisation prepare for its next stage of expansion.
One year down, I’m very excited. I feel this is a great fit to the set of experiences I’ve had over the years. Where Lemon Tree Hotels is today, I can see the role I can play for the future because, if I borrow the words of our Chairman Patanjali Keswani, we have the aircraft ready, the runway ready. We just have to take off. Then you need a skilled pilot and a skilled team to take that big jet that we have built. So in the coming days, the mindset and the experience for scaling is what we need. I feel very much at home,” Singh informed.
Demerger to unlock scale, focus and differentiated value:
Lemon Tree Hotels is undergoing a significant structural transition through the proposed demerger of its hotel ownership and hotel management businesses into two separate entities. The real estate and asset-owning business will operate under Fleur Hotels, while Lemon Tree Hotels Limited will increasingly focus on becoming an asset-light hotel management company. The proposal is to list Fleur Hotels separately by the end of 2027.
Singh said the rationale stems from the recognition that hotel ownership, development, branding and operations involve different capabilities, investment requirements and risk-return profiles. While these functions can be managed under one corporate structure at an early stage, separating them becomes strategically relevant once a business reaches a certain scale.
“In a hotel company, there are four distinct jobs to be done: who owns the land, who builds the hotel, who operates it and whose brand it is,” he explained.
According to Singh, the company believes it has reached the scale at which these activities can be separated to allow each business to pursue its respective strengths.
Lemon Tree has a portfolio of around 135 hotels at present with a collective inventory of close to 12,000 rooms. Out of which 41 are company owned assets and remaining 94 under managed hotels.
Fleur Hotels will focus on capital allocation, acquiring land and properties, developing hotel assets and building its real estate portfolio. Lemon Tree Hotels, meanwhile, will concentrate on operating hotels and providing management services to Fleur as well as third-party property owners.
Singh emphasised that Fleur will not necessarily be tied exclusively to Lemon Tree as its operator. It will have the flexibility to appoint other operators if they can deliver better returns.
For investors, the separation will provide an opportunity to participate in either a real estate-led business or an asset-light hotel management business, each with its own growth and return dynamics, he clarified.
Separate growth agendas, complementary capabilities:
The demerger is also expected to give both businesses greater financial and operational flexibility. Fleur has already secured growth capital following Warburg Pincus’s entry into the business in place of the earlier private equity investor, APG.
Singh indicated that the investment brings approximately Rs 960 crore in growth capital, which will support Fleur’s acquisition and development plans.
The recent acquisition of land in Mumbai’s Bandra Kurla Complex (BKC) is an example of this strategy. Fleur has acquired the land and will develop the hotel, while Lemon Tree is expected to operate the property once it is ready.
The two entities will therefore have distinct but complementary roles, with Fleur deploying capital into hotel assets and Lemon Tree leveraging its operating expertise to manage properties.
Singh believes this separation will also help the management company accelerate its expansion by focusing more decisively on partnerships with third-party owners.
Asset-light model to accelerate expansion:
Lemon Tree’s expansion strategy is increasingly being driven by management contracts rather than ownership of hotel assets. Singh pointed out that the company signed approximately 5,000 rooms and opened around 1,500 rooms in an average year. For the current year, it is targeting approximately 5,000 room signings and 2,000 room openings.
“Most of our expansion was through third-party management contracts. It will accelerate anyway,” he stated, highlighting the recent partnership with leading real estate group Omaxe. The MoU involves 10 hotels with approximately 4,000 keys across locations including Lucknow, Faridabad, Greater Noida, Amritsar and Ghaziabad.
Five of these hotels are linked to Omaxe’s townships, while the other five are associated with projects involving the redevelopment of bus stations under public-private partnership arrangement with the state government.
Singh said such partnerships are particularly relevant because they provide access to strategically located properties that would otherwise be difficult for hotel operators to acquire independently.
“When you think like a management company, you also want to work with larger partners who can give you access to the space, allowing you to stay focused,” he observed.
Going deeper into India through a network approach:
A significant part of Lemon Tree’s growth strategy is centred on expanding beyond established metropolitan markets into smaller cities and emerging destinations where demand for standardised mid-market hospitality is developing.
Singh said that the vision was to build a network that follows the movement and requirements of the Indian consumer and remain relevant in all kinds of use case scenarios of an Indian traveller.
He views a hotel portfolio as a network rather than a collection of properties in key cities. The idea is to serve different travel requirements of the same customer, whether it is a corporate visit to Pune, a family holiday in Ayodhya or a leisure trip with friends to Jim Corbett.
“If we can address all the travel use cases of the same customer, that will be a great vision,” he says.
Handholding investors to build viable hotel products:
While the opportunities in Tier II and III markets are significant, Singh believes that developing a financially viable hotel product requires a careful understanding of local demand, construction costs and achievable room rates.
Lemon Tree’s mid-market positioning, he says, gives it an advantage in advising owners on appropriate development costs and inventory levels.
“Our CAPEX, which is essentially cost per key, is one of the lowest in the industry. We are also far more efficient,” he says.
The company’s operating model is predominantly room-led, with approximately 80% of its business coming from rooms and 20% from food and beverage. Singh believes this is more suitable for its target consumer, who typically seeks a functional and comfortable stay rather than an extensive range of ancillary offerings.
The company also uses its distribution platform, loyalty base and relationships with online travel agencies, local corporates, MSMEs and airlines to generate demand.
Its understanding of the domestic consumer and local markets, combined with the consistency associated with the Lemon Tree brand, helps it deliver attractive returns to owner-partners.
Business outlook: Stronger quarters ahead:
Discussing the business environment, Singh says the first quarter was challenging for the industry, particularly for Lemon Tree because of its exposure to corporate travel and its concentration in business districts and commercial locations. The mid-management corporate travellers who form a significant part of Lemon Tree’s customer base tend to be more sensitive to travel disruptions and economic uncertainties than senior executives and premium corporate travellers, Singh admitted.
However, he says corporate travel has since resumed and the second quarter has witnessed a strong recovery.
“I think we should be able to make up for the losses of Q1. The stronger part of the year comes now. Winter months are traditionally much stronger,” he said.
He also draws confidence from the performance reported by other large hotel companies, which he believes indicates a broader recovery across the hospitality industry.
The company also sees further potential in leveraging its existing loyalty base. With approximately 2.7 million unique users, Singh believes its loyalty programme offers considerable scope for greater personalisation and repeat engagement.
Room-led model remains central to brand strategy
Despite the increasing emphasis on experiential hospitality across the industry, Singh does not see an immediate need for Lemon Tree to shift focus from room-led revenue model.
The company’s room-dominant model is closely linked to the value proposition it offers to both consumers and owner-partners.
Singh said that the company has consistently targeted EBITDA margins of around 45–50% for its owner-partners, and delivered fully loaded EBITDA margins of approximately 48.5% in the previous financial year. He believes maintaining a room-heavy business model is important to sustaining these margins.
The typical Lemon Tree guest stays for approximately 1.8 nights and is primarily looking for good sleep, reliable Wi-Fi, convenient travel and good food.
“We are good at efficiently running a rooms-heavy or rooms-dominant business, which is what we are working on,” he informed..
Self-sufficient in terms of brand portfolio
Lemon Tree’s portfolio spans Aurika in the upper-upscale segment, Lemon Tree Premier in the upper-midscale category, Lemon Tree and Keys brands across the midscale segment, and Red Fox in the budget category.
The bulk of the company’s upcoming expansion is expected to come through Lemon Tree and Lemon Tree Premier, he informs.
Keys also offers the company flexibility in pursuing franchise-led opportunities, although the brand continues to be available under a managed model as well.
The company is also reviewing opportunities to upgrade and reposition some of its mature Red Fox properties where the market has evolved and the product can support a higher positioning. Singh cites the Darjeeling property and the Hyderabad hotel, which was scheduled to transition from Red Fox to Lemon Tree from November 1, as examples.
On whether the company is considering introducing new brands to support its expansion, Singh said the existing portfolio was sufficient to address its target markets and customer segments.
He believes an excessive proliferation of brands can confuse consumers and dilute the clarity of a company’s positioning.