The Indian hospitality industry is going through one of its hottest deal-making phases, reports The Economic Times. Private equity firm Warburg Pincus has picked up a 27% stake in the Delhi-based mid-price range hotel chain, Lemon Tree, for Rs 2.7 billion (US$60.2 million)

Of this, around Rs 2 billion will be used for establishing a network of 25 Lemon Tree hotels across the country by 2010. Around Rs 700 million is being used as seed capital to launch a new chain of economy hotels under the Red Fox Hotel brand.

According to Patu Keswani, CMD, Lemon Tree Hotels, plans are afoot to start off with three Red Fox Hotels in Mumbai, Hyderabad and Jaipur, with room rates in the range of Rs 700-Rs 2,000 a night, depending on the city.

Lemon Tree hotels operate in the mid-price segment of Rs 3,000-5,000 a room night and largely cater to business and leisure travellers.

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