Lemon Tree Hotels is betting that the next leg of its international growth can begin with a customer it already knows: the Indian traveller.
Management is now looking at the UAE, Nepal, Thailand, and the Maldives, all matching Lemon Tree’s preference for markets within roughly three hours of India. Executive Chairman Patanjali Keswani has reduced the strategy to a simple rule: “Go where your customers go.
The premise is straightforward, but for execution, Lemon Tree has to convince overseas hotel owners that its Indian customer base can translate into incremental demand for their properties. Its early international record suggests the strength of that proposition will vary sharply by market, especially as the company increasingly pursues growth through management and franchise contracts rather than hotel ownership.
Lemon Tree has been testing international markets since 2019
Lemon Tree first moved outside India with its Dubai hotel in December 2019, followed by Bhutan in February 2020 and another resort signing in 2024. Nepal came in the same year, with the launch of Lemon Tree Premier, Budhanilkantha in Kathmandu and Tigerland Safari in Chitwan in April 2024.
As recently as March 2026, Lemon Tree had just five operational hotels outside India: two each in Nepal and Bhutan and one in the UAE.
Nepal is the clearest example of Lemon Tree building density outside India. By July 30, its portfolio there had reached eight hotels, five operational and three upcoming, extending beyond Kathmandu into Biratnagar, Janakpur, Simara and Siddharthanagar near Lumbini.
The pattern is useful because Lemon Tree is not relying on one demand source. Janakpur and Lumbini draw pilgrimage traffic, Biratnagar and Simara add commercial and transit demand, while Chitwan gives it a leisure market. India already accounts for a large share of Nepal’s international visitors, falling somewhere between 23% to 33% of total foreign traffic, giving Lemon Tree an accessible source market across several of these destinations.
Outside Kathmandu, brand supply is seeing more growth. Hyatt Place Butwal opened only in 2026, while Hyatt, Marriott, IHG and other international operators are now expanding into secondary cities and the Bhairahawa–Butwal corridor. Lemon Tree has therefore been able to sign owners as these markets are still building out their branded hotel base.
Dubai complicates the UAE story
The UAE is the clearest test of Lemon Tree’s international thesis because the Indian demand pool is already substantial. India was Dubai’s largest source market in Q1 2026, contributing roughly 770,000 visitors, up 13% year-on-year, during a record 5.42 million-visitor quarter. Abu Dhabi is also actively courting Indian travellers through a free-entry-visa programme running from August through October for qualifying stays of three nights or more.
The timing could also create openings on the supply side. Weaker trading has pushed UAE hotels towards renovations, repositioning and more aggressive competition for demand. For an asset-light operator such as Lemon Tree, periods like this can make owners more receptive to changing flags or outsourcing management without requiring Lemon Tree to commit capital to the underlying hotel.
But the operating backdrop remains weak. UAE hotel occupancy averaged 57.9% in H1 2026 and roughly 53% in Q2, as regional conflict hit Dubai and long-haul international demand particularly hard. Dubai occupancy fell 24.6 percentage points year-on-year in the first half, while RevPAR declined 35.2%.
On July 14, Lemon Tree de-flagged its 112-room managed hotel in Dubai, ending nearly seven years in the UAE and leaving it without an operating property in the market it now calls its “biggest and best” overseas opportunity. Lemon Tree has not disclosed why the contract ended or how the hotel had performed.
Management’s description of the disruption therefore deserves scrutiny. Keswani told analysts that Indian movement to the UAE had not been materially affected beyond “a few days”, even as the broader hotel market remained under pressure through the first half and industry forecasts pushed a full occupancy recovery towards the end of 2027.
A weaker Dubai may produce more owners willing to reconsider brands, but it also gives those owners more choice. Marriott, Hilton, Accor, IHG and other global operators are competing for the same conversions with much larger loyalty bases and international distribution systems.
The commercial question for Lemon Tree is therefore more demanding than whether Indians travel to Dubai. They already do, in very large numbers. An owner considering a Lemon Tree flag will want to know how many additional room nights, direct bookings or repeat guests the brand can bring that the property would not capture anyway.
The next expansion follows the Indian outbound map
Winning a management or franchise agreement in a new market therefore requires Lemon Tree to answer one question for the hotel owner across the table: what does your flag actually bring? In an overseas market where its brand carries limited recognition, the answer is just a repeatable Indian customer base. It has approximately 2.5 million loyalty members, with management estimating roughly 45% of demand at its Indian hotels comes from repeat guests, though only around half of those repeat customers are currently enrolled in the programme.
The pitch will also need to be market-specific. Nepal and the UAE sit closest to Lemon Tree's domestic competency. Phuket and the Maldives require a resort-focused proposition. Lemon Tree does operate leisure and resort properties with projects like Tigerland Safari in Chitwan Nepal, Aurika Udaipur and Lemon Tree Resort in Bhutan which suggests the product capability exists. The question in Phuket or the Maldives therefore is whether it translates into island and beach-led markets where international brands with significantly larger loyalty programmes and global distribution are already established.
Asset-light makes the experiment easier to scale
Lemon Tree is restructuring around a model that already has some financial momentum. Hotel ownership and future development are being moved into Fleur Hotels, while Lemon Tree is intended to focus on management, franchising, brands and distribution.
Its management arm, Carnation Hotels, which operates several of Lemon Tree’s managed properties in Nepal, grew net sales 25.4% in FY25, while net profit nearly doubled year-on-year and its net profit margin reached 16.3%. Separately, management-fee income from Lemon Tree’s managed portfolio rose to ₹60 crore in FY25 from ₹50 crore a year earlier.
Internationally, this gives Lemon Tree room to enter markets through management contracts without owning the underlying hotels. The model lowers the capital required to test new markets; its ability to win owners will still depend on whether the brand can deliver enough incremental Indian demand to justify the flag.