India's hotel industry is two years away from the inflection point as demand for mid-market branded properties will rise because of growing incomes, according to Patanjali Keswani, chairperson of Lemon Tree Hotels Ltd.
"Inflection point for the hotel industry really comes at $3,500 and $4,000 per capita, where a very large portion of the population demonstrates a marked preference for branded mid-market hotels," Keswani said in an interview to NDTV Profit on Friday. "You can look at Taiwan, China and at every economy that grow through this; a hockey-stick change in demand occurred at that point."
Demand for luxury goods and services in the country is also at the cusp of taking off, according to Keswani, and that will happen in the hotels industry as well.
Keswani exuded confidence that Lemon Tree would likely see a record-breaking fourth quarter in terms of average room revenue and occupancy rate.
Aurika, Mumbai Skycity, the biggest luxury hotel in India by rooms, is expected to bolster Lemon Tree's revenue. Keswani expects 20% of the sales the property and over time he sees it contributing 30% of Ebitda.
The third quarter, which is predominantly a festive period, does not mean much for Lemon Tree as only 20% of its portfolio is based on the leisure segment. Keswani expects hotels in leisurely spaces to perform better than large hotels in big cities as business activity slows down during the period.
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