Lemon Tree Hotels Ltd, which counts private equity giant Warburg Pincus as an investor, has signed a pact to acquire Keys Hotels to expand its business in the mid-market hotel category.
New Delhi-based Lemon Tree said in a stock market disclosure that it will buy Keys Hotels from Berggruen Hotels Pvt. Ltd for an undisclosed amount.
Keys Hotels owns seven hotels with 936 rooms in six Indian cities. It also operates 14 hotels with 975 rooms in 14 cities under management or franchise agreements. Besides, it owns two land parcels for hotel development in Goa and Raipur.
In total, Keys Hotels owns or manages 21 hotels with 1,911 rooms in 19 cities. It runs hotels under the Keys Prima, Keys Select and Keys Lite brands.
Lemon Tree will expand its operating portfolio to 75 hotels with 7,322 rooms in 44 cities in India after the acquisition. It also has a pipeline of 33 hotels with 3,389 rooms in 26 cities that it aims to open by 2020-21.
Lemon Tree directly owns some hotels and operates some others through long-term leases for hotels owned by third parties. It also enters into operating and management agreements for some properties.
The chain operates under three categories in the mid-priced segment—the upper-midscale category called ‘Lemon Tree Premier’, the midscale segment ‘Lemon Tree Hotels’ and economy hotels under ‘Red Fox’.
Lemon Tree Hotels are located in metro regions, including Delhi-NCR, Bengaluru, Hyderabad and Chennai, as well as tier I and tier II cities.
The hotel chain had made a spectacular trading debut last April with its shares jumping 28% on the first day to close at Rs 71.60 apiece. The company's shares have gained further since then, closing at Rs 80.10 apiece on Friday.