Patu Keswani - Founder, Lemon Tree Hotels

GREAT PLACE TO WORK

BEST WORKPLACES CONFERENCE

Wednesday, August 22nd 2012

The Corporate Professional

The Entrepreneur

A bit about me ….

Property of Lemon Tree Hotels Pvt. Ltd.

IIT - Delhi


IIM - Kolkata

Tata Administrative

Services

JRD Tata

The Perfect Hotel

Rusi Mody

Ronnie Lobo

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


Plan B : A.T. Kearney

Timing and A Second Chance

• The importance of Meritocracy and Incentivizing.

• Why is risk taking important?

• 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


Boredom and the accidental evolution of Plan C : Retire as an Entrepreneur

2006 $ 200 Mn.

The Idea -Talent -Capital Tripod and the advent of Private Equity

2008 $ 500 Mn

2012 $ 750 Mn


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.

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


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


… 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

682857

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

0102030405060708090

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

KEY LEARNING

Guests return ONLY because of engaged

and happy employees…


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.


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

Att

itu

de

Experience

High

Hig

h

Low

Low

Competence = Attitude (or desire) + Experience (or knowledge)

Lemon Tree Hotels (Current)

Lemon Tree Hotels (Desired)

Key

Co

mp

ete

nce

: In

terv

iew

Ski

lls

Key Competence: Skill Development and Wisdom Transfer

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


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

BUSINESS

Non Critical Critical

No

n C

riti

cal

Cri

tica

l

CU

STO

MER

S

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 70th

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


KEY LEARNING

Leadership begins and ends with how

you manage People, Risk and

Reputation


People (Culture)

Risk Reputation Property of Lemon Tree Hotels Pvt. Ltd.

In a descending hierarchy, the equation

is:

Happy Employees

= Happy Customers

= Happy Investors

= Happy Management

(H

ap

pin

ess A

xis

)

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


Creating a Virtuous Cycle of Happiness

EMPLOYEES

GUESTS

INVESTORS

MANAGEMENT


Business IS always about mitigating risk…

Learn to Enjoy Risk


…. and managing reputation

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

..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

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 ..


TRU

ST EMPLOYER of CHOICE

INDIAN SUSTAINABILITY

INSP

IRE

…and what you want to stand for

EXTENDING THE

BRAND


Thank You
