Patu Keswani - Founder, Lemon Tree Hotels

1. GREAT PLACE TO WORK

BEST WORKPLACES CONFERENCE


Wednesday, August 22
nd
2012

2. The Corporate Professional
The Entrepreneur
A bit about me ….
Property of Lemon Tree Hotels Pvt. Ltd.

3. IIT - Delhi
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IIM - Kolkata
Tata
Administrative
Services
JRD Tata
The Perfect
Hotel
Rusi Mody
Ronnie Lobo

4. 1999: Three Friends, A bottle of scotch and a retirement plan
Plan A:
Betting The
Bank
• Don’t have
catastrophic failures

• Failure is a step down
in the ladder of
success

• The importance of
plan B
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5. Plan B : A.T. Kearney
Timing and
A Second
Chance
• The importance of
Meritocracy and
Incentivizing.

• Why is risk taking
important?

6. •Applying the ratios and creating the business model ( IDEA)
•Getting the right team ( TALENT)
•Funding the hotel (CAPITAL)
2002
2004
•The first Lemon Tree Hotel – Lemon Tree Udyog Vihar
•Right price, Right product in the Right Market
•Validation of the business model
•Asymmetric access to knowledge and excellent execution

Property of Lemon Tree Hotels Pvt. Ltd.
Boredom and the accidental evolution of Plan C :
Retire as an Entrepreneur

7. 2006
$ 200 Mn.
The Idea -Talent -Capital Tripod
and the advent of Private Equity
2008
$ 500 Mn
2012
$ 750 Mn
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8. Lemon Tree Hotel
Gurgaon (1)
‘04 ‘05
Hotel Opening:
City Centre,
Gurgaon (2)
‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12
Hotel Opening:
Goa
Hotel Openings:
Pune and East
Delhi
Hotel Openings:
Aurangabad,
Ahmadabad,
Indore and
Allepey
Hotel Openings:
Bangalore (1) and
Jaipur
Hotel Openings:
City Centre
North, Gurgaon
(3) and East Delhi
Lemon Tree
Premier Brand
Launch
Hotel Openings:
Hyderabad (2),
Bangalore (2) and
Chandigarh
Hotel Openings:
New Delhi (2)
’02
Warburg Pincus
Investment
Red Fox Hotels
Promoted
Kotak Realty Fund
and Shinsei Bank
Investment
APG Investment
Lemon Tree
Hotels Promoted
Investment
Hotel Opening
Brand Launch Property of Lemon Tree Hotels Pvt. Ltd.

9. December 2014:
26 hotels and
~3600 rooms in 16
cities with 4000
employees
Where we are today….
Presently:
18 hotels and 1969
rooms in 14 cities
with 2200
employees
VISION 2020

20,000 Owned Rooms
+
20,000 Managed Rooms
&
40, 000 Employees
Property of Lemon Tree Hotels Pvt. Ltd.

10. Some recognition along the way….
Awarded to
Lemon Tree
Amarante Beach Resort
(only 650 hotels out of
130,000 globally get this
distinction)
The NCPEDP – Shell Helen
Keller Award, 2010 for
exemplary policies,
practices and belief in equal
rights and gainful
employment for persons
with disabilities
NCPEDP Mphasis
Universal Design
Award 2011
FHRAI
Hall of
Fame,
2010
Ranked in the Top 50
Large Organizations, in
the 2012 study of the
Best Companies to Work
For by the Great Place to
Work Institute & the
Economic Times
SATTE 2010
“Best Mid-Market
Developer
Republic of
Noodles, Goa
Winner 2010, 2011
and 2012
Times Travel Honors,
2011 Best Hotels –
Mid Range
National Award 2011,
for the empowerment
of persons with
disabilities
Property of Lemon Tree Hotels Pvt. Ltd.

11. … and a 50% plus year on year capacity growth driven by
engaged employees who drive guest retention. 82%
86%
88%
91%
94%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% 218
273
682
857
1,393
1,478
18
22
31
35
29
38
0
5
10
15
20
25
30
35
40
0
250
500
750
1,000
1,250
1,500
1,750
2,000
Count of rooms which have completed one or more years of operation
Repeat visitors %
Awarded to 15 out
of 18 operational
hotels in 2012.
10-11 09-10 08-09 07-08 11-12

10-11 09-10 08-09 07-08 11-12
71 74
83 79
84
0
10
20
30
40
50
60
70
80
90
100
Lemon Tree Employee Satisfaction Survey:
Overall Scores %
10-11 09-10 08-09 07-08 06-07
Guest Overall Satisfaction Scores
Repeat Guest Percentage for inventory older that 1 year
12-13 E

12. KEY LEARNING

Guests return ONLY
because of engaged
and happy
employees…
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13. We understand that anyone can build a superior product
superior customer experience is impossible to duplicate


In India it is very easy for people to
replicate or develop a superior hotel
product because:

1.Hotels are often built by irrational
investors with asymmetric access
to influence or capital

2. ROCE is never a concern, the
biggest factor often is ROE –
Return on Ego
Therefore, to
Attract,
Engage and
Retain customers –
SUPERIOR SERVICE is
the key differentiator.
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14. Superior customer service comes only from the right talent …
So we -
Recruit for Attitude (Behavioral Competencies)
And
Train for Skill (Functional Competencies)
The Lemon Tree Recruitment Matrix
Attitude

Experience
High
High

Low

Low
Competence = Attitude (or desire) + Experience (or knowledge)
Lemon Tree Hotels
(Current)
Lemon Tree Hotels
(Desired)
Key Competence: Interview Skills

Key Competence: Skill Development and Wisdom Transfer

15. Right talent which is effectively engaged…
It is where Management devotes
time and resources that
determines what is important and
what is not to the organization

And this is how we show our
employees that they are the most
important factor in our success
Property of Lemon Tree Hotels Pvt. Ltd.
Share the wealth

Create a happy and caring work
environment with unique practices

Communicate effectively

Praise extensively and celebrate
the small wins

Mentor, coach and transfer wisdom
at each step

16. BUSINESS
Non Critical Critical
Non Critical

Critical

CUSTOMERS
1 2
3 4
Quadrant 2 are key employees who are
paid a premium over industry salaries
for the roles they perform.

Roles in quadrant 1 and 3 are where
compensation is typically in the 70
th

percentile of Industry standards.

The aim is to move high potential
employees from these quadrants to
quadrant 2

Quadrant 4 job roles are paid minimum
wage
Right talent which is effectively engaged
in the correct role.
The Lemon Tree Job Role Evaluation Matrix
Property of Lemon Tree Hotels Pvt. Ltd.

17. KEY LEARNING

Leadership begins
and ends with how
you manage
People, Risk and
Reputation
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18. People (Culture)
Risk Reputation
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19. In a descending hierarchy, the equation
is:

Happy Employees
= Happy Customers
= Happy Investors
= Happy Management



(Happiness Axis)

Our culture/ethos is based on one simple equation
So Lemon Tree Hotels has two sets of customers

• Employees: Served by management
• Guests: Served by employees
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20. Creating a Virtuous Cycle of Happiness
EMPLOYEES
GUESTS
INVESTORS
MANAGEMENT
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21. Business IS always about mitigating risk…
Learn to
Enjoy Risk
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22. …. and managing reputation

23. Some dilemmas along the way ...
Loyalty
vs.
Competency
Preserving the
small company
culture in a large
corporate
structure
Re-inventing
roles in a fast
growth
environment
High growth +
High Attrition =
Doubling of
Workforce each
year

24. ..and mistakes to be avoided.
Invest in people and people
related process FOR THE FUTURE
rather than for the present
NEVER use shortcuts for

Recruitment
Learning and Development
Performance Management
Promotions
Retention
Create a system of wisdom
transfer from Day 1

25. In conclusion, Business IS NOT always about profits
Focus on
the Triple
Bottom Line
– It is a key
part of your
culture
PEOPLE
PLANET
PROFITS
It is also about long term sustainability ..
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26. TRUST

EMPLOYER of CHOICE
INDIAN
SUSTAINABILITY
INSPIRE

…and what you want to stand for
EXTENDING
THE
BRAND
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27. Thank You
Property of Lemon Tree Hotels Pvt. Ltd.