I am pleased to present the Annual Report of our company for the fiscalyear 2019. This year is of importance to us as we complete our first full year since ourpublic listing on 9th April 2018. The investor response to our issue andsubsequently has been very good which reflects in LTHL being the second best performingIPO of FY19. It will be our endeavor to maintain best practices in investor interactionsand relations at all times.
The hotel industry in India is at an inflection point on the back ofgrowth in domestic travel which is expected to continue with the expansion of anaspirational middle class increasing urbanization and higher disposable income. FinancialYear 2018 saw demand growth (at 9.5%) outpacing supply growth (at 6%). For the last sixyears the branded hotel industry's occupancy has been on an uptrend. It reached 67%level in FY18 for the first time since FY08. This positive trend gives confidence tohotels across India to increase room rates to reasonable levels. We have delivered ahealthy top line growth of 14% in FY19 at र 559.4 crores on the back of 7.3% YoYincrease in ADR and addition of 292 owned/leased rooms during the year. We continued tomaintain our occupancy premium showing a 48 bps YoY improvement to 76.3% in FY19 from75.9% in FY18. Excluding our newly opened hotels occupancies increased by 188 bps YoY to77.8%. Fees from managed hotels stood at 17.4 crores in FY19 as compared to 14.1 crores inFY18. Our focus on cost control and operating leverage resulted in EBITDA growth of 24.1%YoY to र 178.7 crores in FY19 while margins expanded by 269 bps YoY to 31.9%. PATincreased 287% to र 56.4 crores and cash profit increased 64% toर 110.5 crores.Our three brands Lemon Tree Premier in the upper midscale segment Lemon TreeHotels in the midscale segment and Red Fox Hotels by Lemon Tree Hotels in the economysegment are well differentiated targeting distinct customer segments. We will belaunching our fourth brand Aurika (in the upscale space) to cater to the evolved andwidely traveled business and leisure customer who is willing to pay a premium for asuperior product-service mix and a convenient location.
Since April 2018 we have added 723 rooms in 9 hotels across 8 citiesand now we operate 5525 rooms in 56 hotels across 33 cities. With these new hotels wehave expanded our geographical presence to Srinagar Baddi Lucknow and Amritsar.
We have a solid pipeline of owned leased and managed hotels underdevelopment. In the next 6 months we will open our 303 room Lemon Tree Premier MumbaiProperty the 142 room Lemon Tree Premier Kolkata Property and the 139 room Udaipurproperty under our new upscale brand Aurika. All these owned properties will operate indemand dense and high barrier-to-entry markets. We will also open close to 700 rooms undermanagement contracts by March 2020. Based on our current pipeline we will have 8800 roomsacross 87 hotels in 58 cities by calendar year 2022. This pipeline will constantlyincrease as we add more hotels under leased/management contracts. We have created anactive and loyal member base by leveraging our loyalty program Lemon Tree Smiles. We haveclose to 1 million loyalty program members in less than 4 years of launch. Our brandstrength has led to repeat guests being close to 35% of our total guests. This gives us anetwork advantage due to which we are able to stabilize our hotels in new geographies in arelatively short span of time. In December 2018 we signed a joint venture with WarburgPincus which marks our foray into student housing and co-living spaces for the millennialpopulation. Our focus will be on college students and young migrant working professionals.We believe this is an exciting space and a huge opportunity for a large organized playerlike us to tap. Our capital investment in this business in the initial years will beminimal as we will adopt an asset light strategy to test the market and grow the business.
Going forward our focus is to grow asset-light by expanding our leasedand managed hotels portfolio. This will lead to distribution of costs cheaper sourcing ofraw materials and efficient deployment of capital. We also intend to continue using ourasset monetization and recycling strategy to fund organic and inorganic growthopportunities expand or redevelop our owned hotels and reduce debt.
On behalf of the Board I thank all our stakeholders includingshareholders investors bankers creditors and employees for their continued support. Iexpress my sincere gratitude to all the members of our Board for their continued insightsand invaluable guidance as we explore new opportunities and move ahead with confidence.
Patanjali G. Keswani
Chairman & Managing Director