BTG Hotels reported 71.33% increase in operating income to RMB 3.988 billion, in the first six months of 2017. Net profit attributable to the parent company grew RMB 227 million to RMB 241 million, an increase of 1626.29%, according to the interim financial results announced on August 29.
During the period, hotel business netted operating income of RMB 3.75 billion, accounting for 94% of the total revenue. Of which, Homeinns contributed RMB 3.332 billion, or 83.6% of the total revenue, and the attractions business contributed RMB 239 million, accounting for 6%.
Major asset restructuring begins to show positive effects
The substantial improvement in the interim results was attributed partly to the positive impact of its major asset restructuring post-merger with Homeinns, which has heightened BTG’s earning power; and partly to the stabilization and recovery of the tourism and accommodation business leading to steady improvement in its inventory management. The attraction business performed well, generating RMB 19.4 million more in net profit attributable to the parent company.
Homeinn contributed rosier financial figures to BTG for three reasons.
The stable recovery of the accommodation market has led to improvement in both room occupancy rate and room rates for Homeinns, and hence improved operating performance.
The 2017 interim results compare favorably to the 2016 interim results as the Homeinns merger took place in April 2016 and contributed only April to June figures to the BTG’s 2016 interim results, instead of the full six months as in 2017.
Homeinns is contributing higher profit attributable to the parent company as BTG is holding 100% stake in Homeinns since October 2016, compared to the smaller stake of 66.14% in April-June 2016.
Brand Operation Data
BTG’s updated portfolio
As of the end of June 2017, BTG has 3,472 hotels (including one overseas) and 374,939 rooms, up by 70 hotels and 1,379 rooms at the end of 2016. The number of upscale hotels was 354, accounting for 10.20%, up 0.88 percentage points, and the number of rooms was 54,848, accounting for 14.63%, up 1.04 percentage points from the end of 2016.
In the first half of 2017, 152 BTG hotels were newly added to its inventory, including six directly-managed hotels and 146 franchise hotels. Among them, there are 69 economy hotels and all are franchise, and 44 upscale hotels with five being directly-managed and 39 franchise hotels. As of June 30, 2017, 483 hotels are either signed but yet operational or still under negotiation.
In the first half of 2017, BTG-JianGuo signed with 20 upscale hotels across the country, more than the number of all the hotels signed in 2016 and an all-time high for the same duration. One of the new hotels is ZhuoRun Hot Springs Jianguo Hotel, the first upscale brand hotel in Xiong’an District that is expected to set new standards for the district’s hotel industry.
Hotel Operation Performance
Homeinns reports 84% occupancy rate in H1 2017
Homeinns hotels achieved 5.8% increase in overall RevPAR to 142 yuan, and the average room rate increased by 4.8% to 168 yuan. The occupancy rate was 84%, up by 0.79 percentage points over the same period last year.
For economy hotels, RevPAR increased by 3.4% to 133 yuan; and the average room rate increased by 2.4% to 158 yuan. The occupancy rate was 84.6%, up 0.83 percentage points over the same period last year.
For upscale hotels, RevPAR increased by 5.4% to 241 yuan, and the average room rate increased by 4.3% to 312 yuan. The occupancy rate was 77.2%, an increase of 0.8 percentage points over the same period last year.
Improvements across all key performance indicators in H1 2017
Homeinns also saw improvements in the key performance indicators across its hotel portfolio. RevPAR increased by 7.7% to 226 yuan, and the average room rate increased by 0.7% to 378 yuan. The occupancy rate was 59.8%, up by 3.91 percentage points over the same period last year.
For economy hotels, RevPAR increased by 8.5% to 106 yuan; and the average room rate increased by 1.4% to 147 yuan. The occupancy rate was 71,8%, up 4.72 percentage points over the same period last year. For upscale hotels, RevPAR increased by 8% to 254 yuan, and the average room rate increased by 1.1% to 447 yuan. The occupancy rate was 57%, an increase of 3.65 percentage points over the same period last year.
Of the 3,471 hotels and 374,739 rooms in BTG’s China portfolio, 1,557 hotel or 44.85%, of the total are in Beijing, Shanghai, Jiangsu, Shandong and Zhejiang, and the room count of those total 169,464, accounting for 45.22%. BTG hotels in these five areas account for nearly half of its market share.