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China Lodging Group, Limited Reports First Quarter of 2010 Financial Results

05/11/2010| 12:22:29 PM| 中文

China Lodging Group, Limited (Nasdaq:HTHT), a leading economy hotel chain operator in China, today announced its unaudited financial results for the quarter ended March 31, 2010.

- Net Revenues for the first quarter increased 34.5% year-over-year to RMB340.9 million (US$49.9 million)

- Despite of being the low season during the year, the first quarter saw a net profit attributable to China Lodging Group, Limited of RMB12.4 million (US$1.8 million), compared with a net loss of RMB27.5 million (US$4.0 million) in the first quarter of 2009

- Occupancy rate reached 93% and average daily rate ("ADR") RMB173, resulting in revenue per available room ("RevPAR") of RMB161; 282 Hotels were in Operation and 144 Hotels under Development as of March 31, 2010 .

SHANGHAI, China, May 10, 2010 (GLOBE NEWSWIRE) -- China Lodging Group, Limited (Nasdaq:HTHT - News) ("HanTing Inns and Hotels" or the "Company"), a leading economy hotel chain operator in China, today announced its unaudited financial results for the quarter ended March 31, 2010.

First Quarter of 2010 Operational Highlights

During the first quarter of 2010, the Company opened 46 net new hotels, including 5 net leased-and-operated hotels and 41 net franchised-and-managed hotels. As of March 31, 2010, the Company had 282 hotels in operation, consisting of 178 leased-and-operated hotels and 104 franchised-and-managed hotels. Our hotels in operation covered 47 cities in China as of March 31, 2010, compared with 39 cities at the end of the previous quarter.

As of March 31, 2010, the Company had a total pipeline of 144 hotels under development, including 32 leased-and-operated hotels and 112 franchised-and-managed hotels.

The occupancy rate for all hotels in operation was 93% in the first quarter of 2010, compared with 85% in the first quarter of 2009, and 95% in the previous quarter. The year-over-year increase was mainly due to stronger demand. The sequential decline was due to seasonality as the first quarter is typically the lowest season for hotel industry in China.

The ADR, or average daily rate, was RMB173 in the first quarter of 2010, compared with RMB169 in the first quarter of 2009 and RMB177 in the previous quarter. The year-over-year increase was mainly attributable to price increase in response to the economy recovery and the strengthening of our brand. The sequential decrease was mainly due to seasonality as we conducted sales promotions to increase occupancy rate during the low season.

RevPAR, defined as revenue per available room, was RMB161 in the first quarter of 2010, compared with RMB144 in the first quarter of 2009 and RMB168 in the previous quarter. The year-over-year increase was attributable to the higher occupancy rate and higher ADR. The sequential decline was mainly due to seasonality.

RevPAR for the hotels which had been in operation for at least 18 months was RMB168 for the first quarter of 2010, compared with RMB150 for the first quarter of 2009 for the same group of hotels. The improvement was caused by both higher occupancy rate and higher ADR, as the economy recovered and our brand strengthened.@@
"The prime location of our hotels and the high quality of our products and service have enabled us to establish a premium brand, which attracted an increasing number of frequent travelers to experience our hotels and join HanTing Club, our customer loyalty program. As of March 31, 2010, our HanTing Club had approximately 1.75 million individual members," said Mr. Matthew Zhang, Chief Executive Officer of HanTing Inns and Hotels. "We are also delighted to see the healthy growth across all the three hotel products introduced by HanTing. In the first quarter of 2010, we added 42 HanTing Express Hotels, two HanTing Seasons Hotels, and two HanTing Hi Inns. Our multi-product strategy allows us to target a wide spectrum of customers."

First Quarter of 2010 Financial Results

Total revenues for the quarter increased 34.3% year-over-year to RMB360.7 million (US$52.8 million) primarily as a result of our enlarged network and higher RevPAR. Comparing to the fourth quarter of 2009, the revenue decreased 2.6% due to seasonality.

Total revenues from leased-and-operated hotels for the first quarter of 2010 were RMB339.2 million (US$49.7 million), representing a 29.2% increase year-over-year as both the number of leased-and-operated hotels and the revenue per leased-and-operated hotel increased. As of March 31, 2010, we had 178 leased-and-operated hotels in operation, compared with 151 a year ago.

Total revenues from franchised-and-managed hotels for the first quarter of 2010 were RMB21.6 million (US$3.2 million), representing a 258.1% increase year-over-year mainly due to the enlarged base of franchised-and-managed hotels. As of March 31, 2010, we had 104 franchised-and-managed hotels in operation, compared with 30 a year ago.

Net revenues for the first quarter of 2010 were RMB340.9 million (US$49.9 million), representing an increase of 34.5% year-over-year and a decrease of 2.7% sequentially.

Total operating costs and expenses for the first quarter of 2010 were RMB323.7 million (US$47.4 million), compared with RMB285.3 million (US$41.8 million) in the same quarter of 2009 and RMB317.1 million (US$46.5 million) in the previous quarter. Total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter were RMB320.3 million (US$46.9 million), representing a 12.8% increase year-over-year mainly due to expansion of network, and a 2.1% increase sequentially mainly due to seasonal increase of utility costs. Major components of operating costs and expenses are described and discussed in more detail below.

Hotel operating costs for the first quarter of 2010 were RMB272.2 million (US$39.9 million), compared with RMB241.7 million (US$35.4 million) in the same quarter of 2009 and RMB267.5 million (US$39.2 million) in the previous quarter. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) were RMB271.9 million (US$39.8 million), representing 79.7% of net revenues, compared with 95.3% for the same quarter in 2009 and 76.3% in the previous quarter. The decrease in hotel operating costs as a percentage of net revenues year-over-year was primarily due to higher revenue per hotel during the quarter as a majority of our costs are relatively fixed. The sequential increase was due to seasonality, which impacted both revenue and utility cost.@@
Selling and marketing expenses for the first quarter of 2010 were RMB14.5 million (US$2.1 million), compared with RMB8.8 million (US$1.3 million) in the same quarter of 2009 and RMB14.1 million (US$2.1 million) in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB14.3 million (US$2.1 million), representing 4.2% of net revenues, compared with 3.5% for the same quarter in 2009 and 4.0% in the previous quarter. The selling and marketing expenses fluctuated from quarter to quarter mainly due to timing of marketing programs and changes relating to customer loyalty program.

General and administrative expenses for the first quarter of 2010 were RMB25.8 million (US$3.8 million), compared with RMB19.8 million (US$2.9 million) in the same quarter of 2009 and RMB27.9 million (US$4.1 million) in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB23.0 million (US$3.4 million), or 6.7% of the net revenues, compared with 7.4% of the net revenues in the same period of 2009 and 7.2% in the previous quarter.

Pre-opening expenses for the first quarter of 2010 were RMB11.2 million (US$1.6 million), representing a decrease of 25.0% year-over-year and an increase of 47.1% sequentially. The fluctuation of pre-opening expenses was mainly driven by the number of leased-and-operated hotels under construction.

Income from operations for the quarter was RMB17.2 million (US$2.5 million), compared with loss from operations of RMB31.7 million (US$4.6 million) in the same quarter of 2009 and income from operations of RMB33.1 million (US$4.9 million) in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the quarter was RMB20.6 million (US$3.0 million). This compares to adjusted loss from operations (non-GAAP) of RMB30.5 million (US$4.5 million) in the same quarter of 2009, and adjusted income from operations (non-GAAP) of RMB36.4 million (US$5.3 million) in the previous quarter.

Net income attributable to China Lodging Group, Limited for the quarter was RMB12.4 million (US$1.8 million), compared with net loss attributable to China Lodging Group, Limited of RMB27.5 million (US$4.0 million) in the same quarter of 2009, and net income attributable to China Lodging Group, Limited of RMB19.8 million (US$2.9 million) in the previous quarter. Excluding share-based compensation expenses, adjusted net income attributable to the China Lodging Group, Limited (non-GAAP) for the quarter was RMB15.9 million (US$2.3 million). This compares to adjusted net loss attributable to China Lodging Group, Limited (non-GAAP) of RMB26.3 million (US$3.8 million) in the same quarter of 2009, and adjusted net income attributable to China Lodging Group, Limited (non-GAAP) of RMB23.1 million (US$3.4 million) in the previous quarter. The year-over-year improvement on profit was mainly attributable to the improved RevPAR as a result of strengthening of the economy and our brand and the increased number of franchised-and-managed hotels. The sequential decrease in profit was mainly driven by seasonality.

Basic and diluted net earnings per share/ADS. For the first quarter of 2010, basic net earnings per share was RMB0.07 (US$0.01) and diluted net earnings per share was RMB0.06 (US$0.01), while basic net earnings per ADS was RMB0.26 (US$0.04), and diluted net earnings per ADS was RMB0.25 (US$0.04). Excluding share-based compensation expenses, adjusted basic and diluted net earnings per share (non-GAAP) was RMB0.08 (US$0.01), and adjusted basic net earnings per ADS (non-GAAP) was RMB0.33 (US$0.05), while adjusted diluted net earnings per ADS (non-GAAP) was RMB0.32 (US$0.05).@@
EBITDA (non-GAAP) for the first quarter of 2010 was RMB54.9 million (US$8.0 million), compared with RMB2.3 million (US$0.3 million) in the same quarter of 2009 and RMB69.3 million (US$10.2 million) in the previous quarter. EBITDA from operating hotels (non-GAAP) was RMB66.1 million (US$9.7 million), an increase of 282.3% from the same period of 2009 but a decrease of 14.1% sequentially. The year-over-year increase in EBITDA and EBITDA from operating hotels was primarily due to the substantial expansion of hotels and improvement in profitability during the period. The sequential decrease was mainly due to seasonality.

Cash flow. Net operating cash flow for the first quarter of 2010 was RMB87.2 million (US$12.8 million). Cash spent on the purchase of property and equipment, which is part of investing cash flow, was RMB65.0 million (US$9.5 million).

Cash and cash equivalents. As of March 31, 2010, the Company had cash and cash equivalents of RMB258.4 million (US$37.9 million). In March 2010, the Company completed its initial public offering and a private placement to Ctrip, raising approximately US$140 million, in total, after underwriting fees and expenses. The proceeds from the IPO and the private placement were received in April, and thus not included in the cash balance as of March 31, 2010.

Business Outlook

"Thanks to China´s strengthening economy, the demand for affordable accommodation with quality continues to grow. We are on track in executing our hotel network expansion plan. We plan to add 180 to 200 hotels in 2010, with 60-70 leased-and-operated hotels and 120-130 franchised-and-managed hotels," added Mr. Zhang.

Second Quarter and Full Year 2010 Guidance

We expect to achieve net revenues in the range of RMB 395 to 415 million in the second quarter of 2010. We expect our full year net revenues to grow 33% to 35% from 2009.

The above forecast reflects the Company´s current and preliminary view, which is subject to change.

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