The average room rates (ARR) will shoot up once demand improves, Patanjali Keswani, CMD of Lemon Tree Hotels, said. Keswani also said that retail demand is back to pre-COVID levels.
Lemon Tree Hotels reported a weak set of earnings for the March-ended quarter, owing to the second wave of COVID, which saw lockdown-like restrictions across the country. There has been a 55 percent decline in the EBITDA, in spite of sharp cost-cutting undertaken by the company.
Speaking in an interview with CNBC-TV18, Keswani said, “Fundamentally, this business works as per demand levels- the higher the demand, the higher the rate you charge, and the lower the demand, the lower the rate you charge. So, it’s a double whammy either way, and that’s why this business has a very high operating leverage.”
On demand, he said, “I was looking at demand in retail, in Lemon Tree. In the last week, it is equal to the demand that existed pre-COVID. So, while certain segments are subdued; some have evaporated. However, the future of Lemon Tree or for the hotel industry is going to be the retail segment and small and medium enterprises (SMEs).”
For the entire management interview, watch the video.