Hotel giant China Lodging's profit rises 60% in Q3 2017
Chinese hotel giant China Lodging Group recorded a 60% rise in net profit to USD 70.7 million, as 19.8% of net revenues. The firm has completed integration of Crystal Orange into Huazhu's platform.
China Lodging Group (Huazhu Hotel Group), a multi-brand hotel group in China, announced its unaudited financial results for the third quarter ended September 30, 2017.
* A total of 3,656 hotels or 372,464 hotel rooms in operation as of September 30, 2017.
* Net revenues increased 33.8% to RMB 2,373.0 million (USD 356.7 million) for the third quarter.
* EBITDA (non-GAAP) increased 55.4% to RMB 849.6 million (USD 127.7 million) for the quarter.
* Net income attributable to the company increased 60.0% to RMB 470.1 million (USD 70.7 million).
* The company expects the Q4 2017 net revenues growth of 29%-32%; and projects the full year 2017 net revenues growth of 24%-25%.
ADR was RMB 218 in the third quarter of 2017, compared with RMB 194 in the third quarter of 2016 and RMB 199 in the previous quarter. The year-over-year increase of 12.1% was due to both an increase in ADR of the mature hotels, as well as an increase in the proportion of midscale and upscale hotels with higher ADR in the Company's brand mix. The sequential increase resulted mainly from seasonality.
Occupancy rate for all hotels in operation was 93.1% in the third quarter of 2017, compared with 88.9% in the third quarter of 2016 and 90.1% in the previous quarter. The year-over-year increase of 4.2-percentage points due to improved performance across all brands as driven by strong travel demand and increasing popularity of the Company's brands. The sequential increase resulted mainly from seasonality.
RevPAR was RMB 203 in the third quarter of 2017, compared with RMB 173 in the third quarter of 2016 and RMB 179 in the previous quarter. The year-over-year increase of 17.3% was attributable to both higher ADR and occupancy. The sequential increase resulted mainly from seasonality.
As of September 30, 2017, the company's loyalty program had approximately 97 million members, who contributed approximately 76% of room nights sold during the third quarter of 2017. In the third quarter of 2017, approximately 86% of room nights were sold through the company's own direct channels. The strong leisure travel demands as well as the expansion of our newly launched midscale brands attract increasing bookings from third party channels.
"Fueled by strong domestic travel demand, our same-hotel RevPAR growth accelerated to 9.5% in the third quarter, the highest in the past five years. The consumption upgrade in China continued to benefit both our economy and midscale hotels. Our flagship economy brand, HanTing, recorded a same-hotel RevPAR growth of 9.8%, driven by upgraded HanTing hotels. In addition, we have also recently rolled-out new models for our other two economy hotel brands, Elan and Hi Inn. We expect our upgraded economy hotel brands will provide better customer experience." said Ms. Jenny Zhang, Chief Executive Officer of China Lodging Group.
"In September, we had completed the integration of Crystal Orange into Huazhu's platform, including operational and booking systems, membership program and back-office supports. In the third quarter, Crystal Orange hotels posted a 14.5% year-over-year growth in same-hotel RevPAR. At the end of the third quarter, midscale and upscale rooms accounted for 25% and 66% of our total room count in operation and in pipeline, respectively. " Ms. Zhang added.
Net revenues for the third quarter of 2017 were RMB 2,373.0 million (USD 356.7 million), representing a 33.8% year-over-year increase and a 19.3% sequential increase. The year-over-year increase was primarily due to the Company's hotel network expansion, improved blended RevPAR and the acquisition of Crystal Orange.
Net income attributable to China Lodging Group for the third quarter of 2017 was RMB 470.1 million (USD 70.7 million), as 19.8% of net revenues, compared to RMB 293.9 million, as 16.6% of net revenues in the third quarter of 2016 and RMB 389.6 million, as 19.6% of net revenues in the previous quarter. This demonstrated a 60.0% year-over-year increase and a 20.6% sequential increase. The year-over-year and sequential increases were mainly attributable to the Company's expanded hotel network, the improved blended RevPAR, and the acquisition of Crystal Orange.
Cash and cash equivalents and Restricted cash. As of September 30, 2017, the Company had a total balance of cash and cash equivalents and restricted cash of RMB 3,826.6 million (USD 575.1 million).
For the fourth quarter of 2017, the Company expects net revenues to grow 29% to 32% year-over-year. For the full year of 2017, the Company projects net revenues growth in the range of 24% to 25%.
The Company reaffirms gross opening of approximately 500 hotels in 2017, on top of the 138 hotels added to its network through the Crystal Orange acquisition. The Company anticipates to increase the gross opening to 650-700 hotels in 2018, 60%-65% of which are midscale and upscale hotels.
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