UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of: March 2012
Commission File Number: 001-34656
China Lodging Group, Limited
(Exact name of registrant as specified in its charter)
No. 2266 Hongqiao Road
Changning District
Shanghai 200336
People’s Republic of China
(86) 21 6195-2011
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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China Lodging Group, Limited
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By:
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/s/ Qi Ji
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Name: Qi Ji
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Title: Chief Executive Officer
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Date: March 8, 2012
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EXHIBIT INDEX
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Exhibit Number
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Description
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Exhibit 99.1
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China Lodging Group, Limited Reports Fourth Quarter and Full Year 2011 Financial Results
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Contact Information
Ida Yu
Investor Relations Manager
Tel: 86 (21) 6195 9561
Email: ir@htinns.com
http://ir.htinns.com
China Lodging Group, Limited Reports Fourth Quarter and Full Year 2011 Financial Results
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Net Revenues increased 43.8% year-over-year for the fourth quarter and 29.4% for the full year of 2011, within the guidance previously announced.
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Adjusted EBITDA from operating hotels (non-GAAP)1 was RMB164.4 million (US$26.1 million) for the fourth quarter and RMB577.2 million (US$91.7 million) for the full year of 2011.
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Net income attributable to China Lodging Group, Limited was RMB30.3 million (US$4.8 million) 2 for the fourth quarter and RMB114.8 million (US$18.2 million) for the full year of 2011.Diluted net earnings per ADS3 for the year were RMB1.87 (US$0.30); adjusted diluted net earnings per ADS (non-GAAP) for the year were RMB2.12 (US$0.34).
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201 net new hotels added in 2011, bringing the total hotel count to 639.
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The Company provided guidance for full year 2012 net revenues growth of 34.5% to 37.5% and Q1 net revenue growth of 43% to 46%
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Shanghai, China, March 7, 2012– China Lodging Group, Limited (NASDAQ: HTHT) (“China Lodging Group” or the “Company”), a leading and high-growth economy hotel chain operator in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2011.
Fourth Quarter 2011 Operational Highlights
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1 The following non-GAAP financial measures is used in this press release: hotel operating costs excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, selling expenses excluding share-based compensation expenses, adjusted income from operations excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited excluding share-based compensation expenses, adjusted basic and diluted net earnings per share and per ADS excluding share-based compensation expenses, EBITDA, adjusted EBITDA from operating hotels excluding pre-opening expenses and share-based compensation expenses, and hotel income. See “Use of Non-GAAP Financial Measures” and “Unaudited Reconciliation of GAAP and Non-GAAP Results” below for more information about the non-GAAP financial measures included in this press release.
2 The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6. 2939 on December 30, 2011 as set forth in H.10 statistical release of the Federal Reserve Board.
3 Each ADS represents four of the Company’s ordinary shares.
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During the fourth quarter of 2011, the Company opened 59 new hotels, including 30 leased-and-operated hotels and 29 franchised-and-managed hotels.
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The ADR, or average daily rate, for all hotels, was RMB179 in the fourth quarter of 2011, compared with RMB194 in the fourth quarter of 2010 and RMB183 in the previous quarter. The year-over-year decrease was mainly attributable to the absence of one-time favorable impact from the Shanghai Expo. In Shanghai, the ADR was RMB181 in the fourth quarter of 2011, compared with RMB242 in the fourth quarter of 2010. The sequential decrease resulted mainly from the Company’s seasonal price adjustment.
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The occupancy rate for all hotels in operation was 93% in the fourth quarter of 2011, compared with 87% in the fourth quarter of 2010, and 97% in the previous quarter. The year-over-year improvement was mainly attributable to a 22% occupancy increase in Shanghai, which experienced a low occupancy in November and December of 2010 after the Shanghai Expo. The sequential decrease resulted mainly from seasonality.
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RevPAR, defined as revenue per available room, was RMB167 in the fourth quarter of 2011, compared with RMB168 in the fourth quarter of 2010 and RMB177 in the previous quarter. The stable year-over-year RevPAR performance was a mixed result of a higher occupancy offset by a lower ADR mainly due to price increase during, and occupancy drop after, the Shanghai Expo. Outside of Shanghai, RevPAR increased 1% year-over-year.
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For all the hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB184 for the fourth quarter of 2011, a 5% increase from RMB175 for the fourth quarter of 2010. Outside of Shanghai, the same-hotel RevPAR increased by 7%, with a 3% increase in ADR and a 4% increase in occupancy.
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Full Year 2011 Operational Highlights
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For the full year of 2011, the Company opened 201 net new hotels in total, including 101 net new leased-and-operated hotels and 100 net new franchised-and-managed hotels. As of December 31, 2011, the Company had 639 hotels in operation, consisting of 344 leased-and-operated hotels and 295 franchised-and-managed hotels. Hotels in operation covered 100 cities in China as of December 31, 2011, compared with 65 cities at the end of 2010. As of December 31, 2011, the Company had 22 Seasons Hotels and 28 Hi Inns in operation.
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As of December 31, 2011, the Company had a total pipeline of 278 hotels under development, including 93 leased-and-operated hotels and 185 franchised-and-managed hotels.
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For the full year of 2011, the ADR was RMB180, compared to RMB197 in 2010. The decrease was primarily due to the absence of one-time favorable impact from the Shanghai Expo, a higher percentage of new hotels in ramp-up stage, and the shift of city mix of hotels toward lower tier cities, partially offset by an increase in same-hotel ADR.
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For the full year of 2011, the occupancy rate for all hotels in operation was 92%, compared with 93% in 2010. During 2011, 201 net new hotels were opened. The Company believes that the achievement of 92% occupancy, during a year with 46% year-over-year hotel count growth, reflected the wide popularity of Hanting’s products and services and the fast-growing demand in China for reliable, reasonably-priced lodging products.
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For the full year of 2011, the RevPAR was RMB165, compared with RMB183 in 2010. The decrease was mainly driven by a lower ADR as noted above.
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For all the hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB183 in 2011, compared to RMB189 in 2010, mainly due to the absence of one-time favorable impact from the Shanghai Expo. Outside of Shanghai, the same-hotel RevPAR increased by 4% for the full year, with a 4% increase in ADR and a stable occupancy.
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As of December 31, 2011, HanTing Club had more than 4.4 million individual members, a 68% increase from the end of 2010. The individual members contributed 66% of room nights sold during the full year of 2011, improving from 61% of room nights sold in 2010. The Company’s corporate members contributed another 10% of room nights sold. In 2011, 96% of room nights were sold through the Company’s own channels.
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“We are delighted that we made solid progress in 2011, growing our hotel count by 46% and city coverage by 54%. Our proven brand strength and well-established hotel management platform continued to attract a growing number of franchisees. We remain committed to optimizing our products and hotel service procedures to maintain outstanding operational and financial performance,” said Mr. Qi Ji, founder, executive Chairman and Chief Executive Officer of China Lodging Group. “Our rapid and high-quality expansion leads to a fast-growing customer base and a robust pipeline of hotels under development, which will support our future growth.”
Fourth Quarter and full year of 2011 Financial Results
Total revenues for the fourth quarter of 2011 were RMB689.9 million (US$109.6million), representing a 44.2% year-over-year increase and a 3.8% sequential increase. The year-over-year and sequential increases were primarily due to the increase in the number of hotels.
Total revenues for the year of 2011 were RMB2,385.6 million (US$379.0 million), representing an increase of 29.8% from the year of 2010.
Total revenues from leased-and-operated hotels for the fourth quarter of 2011 were RMB626.7 million (US$99.6 million), representing a 43.1% year-over-year increase and a 3.4% sequential increase.
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For the year of 2011, total revenues from leased-and-operated hotels were RMB2,172.9 million (US$345.2 million), representing a 27.2% year over year increase. As of December 31, 2011, the Company had 344 leased-and-operated hotels in operation, compared with 243 at the end of 2010.
Total revenues from franchised-and-managed hotels for the fourth quarter of 2011 were RMB63.2 million (US$10.0 million), representing a 55.6% year-over-year increase and an 8.2% sequential increase.
For the year of 2011, total revenues from franchised-and-managed hotels were RMB 212.6 million (US$33.8 million), representing a year-over-year increase of 62.8%, or 8.9% of total revenues, compared to 7.1% of total revenues for the year of 2010. As of December 31, 2011, the Company had 295 franchised-and-managed hotels in operation, compared with 195 at the end of 2010.
Net revenues for the fourth quarter of 2011 were RMB650.7 million (US$103.4 million), representing a year-over-year increase of 43.8% and a sequential increase of 3.8%.
Net revenues for the full year of 2011 were RMB2,249.6 million (US$357.4 million), representing a year-over-year increase of 29.4%.
Hotel operating costs for the fourth quarter of 2011 were RMB493.8 million (US$78.5 million), compared to RMB323.3 million (US$49.0 million) in the fourth quarter of 2010 and RMB452.6 million (US$71.0 million) in the previous quarter, representing a 52.8% and a 9.1% increase, respectively. The Company’s hotel network expansion, especially the growth in leased-and-operated hotels, was the main driver for the increase in hotel operating costs. The average number of leased-and-operated hotels in operation4 during the fourth quarter of 2011 increased 48.5% from the same period of 2010 and 10.6% sequentially. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2011 were RMB493.3 million (US$78.4 million), representing 75.8% of net revenues, compared to 71.3% for the fourth quarter in 2010 and 72.1% in the previous quarter. The year-over-year increase in percentage was mainly caused by higher percentage of new leased-and-operated hotels in ramp-up stage, and the absence of one-time favorable impact from the Shanghai Expo. The sequential increase in percentage was primarily due to lower RevPAR as a result of seasonality.
For the full year of 2011, total hotel operating costs were RMB1,703.3 million (US$270.6 million), compared to RMB1,180.2 million (US$178.8 million) in 2010. Excluding share-based compensation, the hotel operating costs (non-GAAP) were RMB1,701.2 million (US$270.3 million), representing 75.6% of net revenues, compared to 67.8% in 2010. The year-over-year increase in percentage was mainly driven by a higher percentage of new leased-and-operated hotels in ramp-up stage, and the absence of one-time favorable impact from the Shanghai Expo. During 2011, leased-and-operated hotels in operation less than six months contributed 18% of leased-and-operated hotel room nights available for sale, compared with only 7% in 2010.
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4 Calculated as the average of the number of leased-and-operated hotels in operation at the beginning of the quarter and the number of leased-and-operated hotels in operation at the end of the quarter.
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Selling and marketing expenses for the fourth quarter of 2011 were RMB29.3 million (US$4.7 million), compared to RMB19.2 million (US$2.9 million) in the fourth quarter of 2010 and RMB24.9 million (US$3.9 million) in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2011 were RMB29.1 million (US$4.6 million), or 4.5% of net revenues, compared to 4.2% for the fourth quarter in 2010 and 4.0% for the previous quarter. The increase in percentage resulted from an increase in sales promotions in the fourth quarter.
For the full year of 2011, total selling and marketing expenses were RMB94.8 million (US$15.1 million), compared to RMB70.8 million (US$10.7 million) in 2010. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB94.0 million (US$14.9 million), representing 4.2% of net revenues, compared to 4.1% in 2010, mainly due to a revenue base favorably impacted by the Shanghai Expo in 2010.
General and administrative expenses for the fourth quarter of 2011 were RMB43.8 million (US$7.0 million), compared to RMB33.4 million (US$5.1 million) in the fourth quarter of 2010 and RMB39.4 million (US$6.2 million) in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2011 were RMB41.6 million (US$6.6 million), representing 6.4% of net revenues, compared with 6.8% of net revenues in the fourth quarter of 2010 and 5.6% in the previous quarter. The year-over-year decrease in percentage was mainly due to a larger revenue base.
General and administrative expenses were RMB160.1 million (US$25.4 million) for the year of 2011, compared to RMB120.0 million (US$18.2 million) in 2010.General and administrative expenses excluding share-based compensation expenses were RMB147.5 million (US$23.4 million), representing 6.5% of net revenues, compared to 6.3% in 2010, mainly due to a revenue base favorably impacted by the Shanghai Expo in 2010.
Pre-opening expenses for the fourth quarter of 2011 were RMB49.5 million (US$7.9 million), compared to RMB45.9 million (US$7.0 million) in the fourth quarter of 2010 and RMB54.0 million (US$8.5 million) in the previous quarter. The pre-opening expenses were primarily driven by the number of leased-and-operated hotels under conversion during the period. 30 leased-and-operated hotels were opened during this quarter and another 93 were in the pipeline at the end of the quarter, compared to 43 opened and 69 in the pipeline during the same quarter in 2010, and 33 opened and 88 in the pipeline for the previous quarter.
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Pre-opening expenses for the full year of 2011 were RMB184.3 million (US$29.3 million), compared to RMB111.2 million (US$16.9 million) in 2010, representing a year-over-year increase of 65.7%. The increase in pre-opening expenses was mainly a result of our acceleration of leased-and-operated hotel opening from 70 in 2010 to 101 in 2011, and the expansion of leased-and-operated hotel pipeline from 69 at the end of 2010 to 93 at the end of 2011. In addition, the extended conversion period as a result of regulatory changes in new hotel license approval process also led to increased pre-opening expenses in 2011.
Income from operations for the fourth quarter of 2011 was RMB34.4 million (US$5.5 million), compared to RMB30.9 million (US$4.7 million) in the fourth quarter of 2010 and RMB55.9 million (US$8.8 million) in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2011 was RMB37.2 million (US$5.9 million).
Income from operations for the year was RMB107.1 million (US$17.0 million), compared to RMB256.3 million (US$38.8 million) in 2010. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the year of 2011 was RMB122.6 million (US$19.5 million).
Net income attributable to China Lodging Group, Limited for the fourth quarter of 2011 was RMB30.3 million (US$4.8 million), compared to RMB34.9 million (US$5.3 million) in the fourth quarter of 2010 and RMB58.2 million (US$9.1 million) in the previous quarter. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited (non-GAAP) for the fourth quarter of 2011 was RMB33.2 million (US$5.3 million), compared to RMB38.4 million (US$5.8 million) in the fourth quarter of 2010 and RMB63.2 million (US$9.9 million) in the previous quarter. The sequential decrease in net income was mainly due to seasonality.
Net income attributable to China Lodging Group, Limited for the full year of 2011 was RMB114.8 million (US$18.2 million), compared to RMB215.8 million (US$32.7 million) in 2010. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2011 was RMB130.3 million (US$20.7 million), compared to RMB 228.9million (US$34.7 million) in 2010. The year-over-year decrease was mainly attributable to the absence of one-time favorable impact from the Shanghai Expo, more leased-and-operated hotels in ramp-up stage and higher pre-opening expenses as a result of expansion in 2011, partially offset by a higher profit from the expanded base of franchised-and-managed hotels and mature leased-and-operated hotels outside of Shanghai, a higher interest income and foreign exchange gain, and lower interest expenses and income tax.
Basic and diluted net earnings per share/ADS. For the fourth quarter of 2011, basic net earnings per share and diluted net earnings per share were RMB0.12 (US$0.02); basic net earnings per ADS was RMB0.50 (US$0.08) and diluted net earnings per ADS was RMB0.49 (US$0.08). For the fourth quarter of 2011, excluding share-based compensation expenses, adjusted basic net earnings per share (non-GAAP) was RMB0.14 (US$0.02) and adjusted diluted net earnings per share (non-GAAP) was RMB0.13 (US$0.02), adjusted basic net earnings per ADS (non-GAAP) was RMB0.55 (US$0.09) and adjusted diluted net earnings per ADS (non-GAAP) was RMB0.54 (US$0.09).
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For the full year of 2011, basic net earnings per share and diluted net earnings per share was RMB0.47 (US$0.08); basic net earnings per ADS was RMB1.90 (US$0.30), while diluted net earnings per share was RMB1.87 (US$0.30). For the full year of 2011, excluding share-based compensation expenses, adjusted net earnings per share (non-GAAP) was RMB0.54 (US$0.09), while adjusted diluted net earnings per share (non-GAAP) was RMB0.53 (US$0.08), and adjusted net earnings per ADS (non-GAAP) was RMB2.15 (US$0.34), while adjusted diluted net earnings per ADS (non-GAAP) was RMB2.12 (US$0.34).
EBITDA (non-GAAP) for the fourth quarter of 2011 was RMB112.0 million (US$17.8 million), compared with RMB92.9 million (US$14.1 million) in the fourth quarter of 2010 and RMB125.1 million (US$19.6 million) in the previous quarter. Excluding pre-opening expenses and share-based compensation expenses, adjusted EBITDA from operating hotels (non-GAAP) for the fourth quarter of 2011 was RMB164.4 million (US$26.1 million), compared with RMB142.2 million (US$21.5 million) for the fourth quarter of 2010 and RMB184.2 million (US$28.9 million) for the previous quarter. The year-over-year increase was mainly due to the expansion of the Company’s network. The sequential decrease was mainly due to seasonality.
EBITDA (non-GAAP) for the full year of 2011 was RMB377.4 million (US$60.0 million), compared to RMB447.2 million (US$67.8 million) in 2010. Excluding pre-opening expenses and share-based compensation expenses, adjusted EBITDA from operating hotels (non-GAAP) for the full year of 2011 was RMB577.2 million (US$91.7 million), compared with RMB571.6 million (US$86.6 million) in 2010. The growth of adjusted EBITDA were mainly driven by the expanded base of franchised-and-managed hotels and mature leased-and-operated hotels outside of Shanghai, partially offset by the absence of one-time favorable impact from the Shanghai Expo, and a higher percentage of leased-and-operated hotels in ramp-up stage.
Hotel income (non-GAAP), which is the difference between net revenues and hotel operating costs, was RMB156.9 million (US$24.9 million) for the fourth quarter of 2011, compared with RMB129.4 million (US$19.6 million) in the fourth quarter of 2010 and RMB174.1 million (US$27.3 million) in the previous quarter. The year-over-year increase of hotel income (non-GAAP) was mainly attributable to the enlarged franchised-and-managed hotel network and increased number of mature leased-and-operated hotels in the portfolio. For leased-and-operated hotels in operation for at least six months, the hotel income (non-GAAP) was RMB112.2 million (US$17.8 million) during the fourth quarter of 2011, or 21% of net revenues derived from those hotels. Leased-and-operated hotels in operation for less than six months accounted for 15% of leased-and-operated room nights available for sale in the fourth quarter of 2011. Those hotels derived a hotel loss (non-GAAP) of RMB5.6 million (US$0.9 million), or 9% of net revenues derived from those hotels this quarter, mainly due to lower revenue achievement of those hotels during their ramp-up stage. For franchised-and-managed hotels, the hotel income (non-GAAP) was RMB50.4 million (US$8.0 million), or 85% of net revenue derived from those hotels. As an increasing number of leased-and-operated hotels reach maturity and the franchised-and-managed hotel network grows, the Company expects the profit base to expand steadily.
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Hotel income (non-GAAP) for the full year of 2011 was RMB546.3 million (US$86.8 million), compared with RMB558.3 million (US$84.6 million) for 2010. The slight year-over-year decrease was mainly due to the absence of one-time benefit from Expo and more new hotels in operation, partially offset by higher hotel income generated from the expanded network of franchised-and-managed hotels and mature leased-and-operated hotels outside of Shanghai. For leased-and-operated hotels in operation for at least six months, the hotel income (non-GAAP) was RMB420.9 million (US$66.9 million) during 2011, or 23% of net revenues derived from those hotels. Leased-and-operated hotels in operation for less than six months derived a hotel loss (non-GAAP) of RMB42.2 million (US$6.7 million), or 18% of net revenues derived from those hotels in 2011. For franchised-and-managed hotels, the hotel income (non-GAAP) was RMB167.6 million (US$26.6 million), or 84% of net revenue derived from those hotels.
Cash flow. Net operating cash flow for the fourth quarter of 2011 was RMB143.2 million (US$22.8 million). Cash spent on the purchase of property and equipment, purchase of intangible assets and acquisitions, which are part of investing cash flow, was RMB231.3 million (US$36.8 million).
Net operating cash flow for the full year of 2011 was RMB467.1 million (US$74.2 million). Cash spent on the purchase of property and equipment, purchase of intangible and acquisitions was RMB841.3 million (US$133.7 million).
Cash and cash equivalents, Restricted cash, and Short-term investment. As of December 31, 2011, the Company had a total balance of cash and cash equivalents, restricted cash and short-term investment of RMB783.1 million (US$124.4 million).
Business Outlook and Guidance for 2012
“We remain optimistic on the growing trend of travelling demand in China. Leading hotel chains are expanding market share through consolidating existing stand-alone hotels and converting non-hotel properties into hotels. We continued to see tremendous growth opportunities in future years. Hanting’s wide brand recognition and strong performance record made Hanting an attractive choice for franchisees, who in turn helped us accelerate our network expansion.” commented Mr. Ji.
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“We envision, in the next five years, Hanting to grow into a large-scale, multi-brand hotel group and to become an undisputed market leader across the mid-scale, economy and budget hotel segments.” added Mr. Ji.
The Company expects to achieve net revenues in the range of RMB605 to 620 million in the first quarter of 2012, representing a 43% to 46% growth year-over-year. For the full year 2012, the Company expects net revenues to grow 34.5% to 37.5%.
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Corporate Presentation
The latest corporate presentation is available on China Lodging Group’s investor relations website, http://ir.htinns.com .
Conference Call
China Lodging group’s management will host a conference call at 8 p.m. EST, Wednesday, March 7, 2012 (or 9 a.m. on Thursday, March 8, 2012 in the Shanghai/Hong Kong time zone) following the announcement. To participate in the event by telephone, please dial +1 (855) 500 8701 (for callers in the US), +86 400 120 0654 (for callers in China Mainland), +852 3051 2745 (for callers in Hong Kong) or +65 6723 9385 (for callers outside of the US, China Mainland, and Hong Kong) and entering pass code 4824 9658. Please dial in approximately 10 minutes before the scheduled time of the call.
A recording of the conference call will be available after the conclusion of the conference call through March 14, 2012. Please dial +1 (866) 214 5335 (for callers in the US) or +61 2 8235 5000 (for callers outside the US) and entering pass code 4824 9658.
The conference call will also be webcast live over the Internet and can be accessed by all interested parties at the Company’s Web site, http://ir.htinns.com .
Use of Non-GAAP Financial Measures
To supplement the Company's unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: hotel operating costs excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, selling expenses excluding share-based compensation expenses, adjusted income from operations excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited excluding share-based compensation expenses, adjusted basic and diluted net earnings per share and per ADS excluding share-based compensation expenses, EBITDA, adjusted EBITDA from operating hotels excluding pre-opening expenses and share-based compensation expenses, and hotel income. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses that may not be indicative of its operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company's historical performance. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
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The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and financing transactions and income taxes. Given the significant investments that the Company has made in leasehold improvements, depreciation and amortization expense comprises a significant portion of the cost structure. In addition, the Company believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The Company also uses adjusted EBITDA from operating hotels, which is defined as EBITDA before pre-opening expenses and share-based compensation expenses, to assess operating results of the hotels in operation. The Company believes that the exclusion of pre-opening expenses and share-based compensation expenses, a portion of which is non-cash rental expenses, helps facilitate year-on-year comparison of the results of operations as the number of hotels in the development stage may vary significantly from year to year. Therefore, the Company believes adjusted EBITDA from operating hotels more closely reflects the performance capability of hotels currently in operation. The calculation of EBITDA and adjusted EBITDA from operating hotels does not deduct interest income. The presentation of EBITDA and adjusted EBITDA from operating hotels should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered to be outside the ordinary course of business.
The use of EBITDA and adjusted EBITDA from operating hotels has certain limitations. Depreciation and amortization expense for various long-term assets, income tax and interest expense have been and will be incurred and are not reflected in the presentation of EBITDA. Pre-opening expenses and share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA from operating hotels. Each of these items should also be considered in the overall evaluation of the results. The Company compensates for these limitations by providing the relevant disclosure of the depreciation and amortization, interest expense, income tax expense, pre-opening expenses, share-based compensation expenses and other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should be considered when evaluating the performance of the Company.
10
The terms EBITDA and adjusted EBITDA from operating hotels are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA from operating hotels is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial performance, investors should not consider this data in isolation or as a substitute for the Company’s net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company's EBITDA or adjusted EBITDA from operating hotels may not be comparable to EBITDA or adjusted EBITDA from operating hotels or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or adjusted EBITDA from operating hotels in the same manner as the Company does.
To monitor performance of hotels at different maturity level and of different form, the Company also tracks hotel income, which is the difference between net revenues and hotel operating costs.
Reconciliations of the Company's non-GAAP financial measures, including EBITDA, adjusted EBITDA from operating hotels, and hotel income, to consolidated statement of operations information are included at the end of this press release.
About China Lodging Group, Limited
China Lodging Group, Limited is a leading economy hotel chain operator in China. The Company provides business and leisure travelers with high-quality, and conveniently-located hotel products under three brands, namely, HanTing Seasons Hotel, HanTing Express Hotel, and HanTing Hi Inn. As of December 31, 2011, the Company had 639 hotels and 71,621 rooms in 100 cities across China.
11
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, which may be identified by terminology such as “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project,” or “continue,” the negative of such terms or other comparable terminology. Readers should not rely on forward-looking statements as predictions of future events or results. Any or all of the Company’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions, risks and uncertainties and other factors which could cause actual events or results to be materially different from those expressed or implied in the forward-looking statements. In evaluating these statements, readers should consider various factors, including the anticipated growth strategies of the Company, the future results of operations and financial condition of the Company, the economic conditions of China, the regulatory environment in China, the Company’s ability to attract customers and leverage its brand, trends and competition in the lodging industry, the expected growth of the lodging market in China and other factors and risks outlined in the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 20-F and other filings. These factors may cause the Company’s actual results to differ materially from any forward-looking statement. In addition, new factors emerge from time to time and it is not possible for the Company to predict all factors that may cause actual results to differ materially from those contained in any forward-looking statements. Any projections in this release are based on limited information currently available to the Company, which is subject to change. This release also contains statements or projections that are based upon information available to the public, as well as other information from sources which the Company believes to be reliable, but it is not guaranteed by the Company to be accurate, nor does the Company purport it to be complete. The Company disclaims any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date of this document, except as required by applicable law.
--Financial Tables and Operational Data Follow—
12
|
China Lodging Group, Limited
|
||||||||||||||||
|
Unaudited Condensed Consolidated Balance Sheets
|
||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Current assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
1,060,067 | 837,101 | 781,601 | 124,184 | ||||||||||||
|
Restricted cash
|
1,275 | 5,500 | 1,500 | 238 | ||||||||||||
|
Short-term Investment
|
100,000 | 30,000 | - | - | ||||||||||||
|
Accounts receivable, net
|
21,536 | 33,154 | 37,416 | 5,945 | ||||||||||||
|
Amount due from related parties
|
3,267 | - | - | - | ||||||||||||
|
Prepaid rent
|
152,267 | 193,646 | 228,087 | 36,239 | ||||||||||||
|
Inventories
|
18,290 | 26,347 | 31,232 | 4,962 | ||||||||||||
|
Income tax receivables
|
- | 19,757 | - | - | ||||||||||||
|
Other current assets
|
40,177 | 37,659 | 53,862 | 8,559 | ||||||||||||
|
Deferred tax assets
|
17,940 | 17,940 | 40,119 | 6,374 | ||||||||||||
|
Total current assets
|
1,414,819 | 1,201,104 | 1,173,817 | 186,501 | ||||||||||||
|
Property and equipment, net
|
1,422,432 | 1,811,416 | 2,095,794 | 332,988 | ||||||||||||
|
Intangible assets, net
|
57,348 | 56,906 | 69,779 | 11,087 | ||||||||||||
|
Goodwill
|
41,373 | 41,373 | 42,536 | 6,758 | ||||||||||||
|
Other assets
|
79,953 | 102,231 | 102,056 | 16,215 | ||||||||||||
|
Deferred tax assets
|
28,155 | 28,155 | 40,968 | 6,509 | ||||||||||||
|
Total assets
|
3,044,080 | 3,241,185 | 3,524,950 | 560,058 | ||||||||||||
|
Liabilities and equity
|
||||||||||||||||
|
Current liabilities:
|
||||||||||||||||
|
Accounts payable
|
283,203 | 274,915 | 417,605 | 66,351 | ||||||||||||
|
Amount due to related parties
|
855 | 1,320 | 1,030 | 164 | ||||||||||||
|
Salary and welfare payable
|
57,638 | 42,549 | 80,266 | 12,753 | ||||||||||||
|
Deferred revenue
|
68,599 | 117,905 | 138,148 | 21,950 | ||||||||||||
|
Accrued expenses and other current liabilities
|
148,926 | 144,771 | 142,146 | 22,585 | ||||||||||||
|
Income tax payable
|
15,121 | - | 14,148 | 2,248 | ||||||||||||
|
Total current liabilities
|
574,342 | 581,460 | 793,343 | 126,051 | ||||||||||||
|
Deferred rent
|
237,427 | 302,388 | 329,774 | 52,396 | ||||||||||||
|
Deferred revenue
|
48,445 | 65,393 | 71,698 | 11,392 | ||||||||||||
|
Other long-term liabilities
|
46,619 | 57,714 | 61,574 | 9,782 | ||||||||||||
|
Deferred tax liabilities
|
11,937 | 11,937 | 12,677 | 2,014 | ||||||||||||
|
Total liabilities
|
918,770 | 1,018,892 | 1,269,066 | 201,635 | ||||||||||||
|
Equity
|
||||||||||||||||
|
Ordinary shares
|
178 | 179 | 179 | 28 | ||||||||||||
|
Additional paid-in capital
|
2,168,364 | 2,195,035 | 2,199,954 | 349,538 | ||||||||||||
|
Retained earnings (Accumulated deficit)
|
(29,705 | ) | 54,827 | 85,127 | 13,525 | |||||||||||
|
Accumulated other comprehensive loss
|
(22,703 | ) | (36,325 | ) | (39,166 | ) | (6,223 | ) | ||||||||
|
Total China Lodging Group, Limited equity
|
2,116,134 | 2,213,716 | 2,246,094 | 356,868 | ||||||||||||
|
Noncontrolling interest
|
9,176 | 8,577 | 9,790 | 1,555 | ||||||||||||
|
Total equity
|
2,125,310 | 2,222,293 | 2,255,884 | 358,423 | ||||||||||||
|
Total liabilities and equity
|
3,044,080 | 3,241,185 | 3,524,950 | 560,058 | ||||||||||||
13
|
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Operations
|
||||||||||||||||||||||||||||
|
Quarter Ended
|
Year Ended
|
|||||||||||||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
December 31, 2010
|
December 31, 2011
|
||||||||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
||||||||||||||||||||||
|
(in thousands, except per share and per ADS data)
|
||||||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||
|
Leased-and-operated hotels
|
437,989 | 606,073 | 626,738 | 99,579 | 1,707,771 | 2,172,934 | 345,244 | |||||||||||||||||||||
|
Franchised-and-managed hotels
|
40,619 | 58,406 | 63,183 | 10,039 | 130,579 | 212,644 | 33,786 | |||||||||||||||||||||
|
Total revenues
|
478,608 | 664,479 | 689,921 | 109,618 | 1,838,350 | 2,385,578 | 379,030 | |||||||||||||||||||||
|
Less: business tax and related surcharges
|
(25,977 | ) | (37,793 | ) | (39,184 | ) | (6,226 | ) | (99,857 | ) | (135,981 | ) | (21,605 | ) | ||||||||||||||
|
Net revenues
|
452,631 | 626,686 | 650,737 | 103,392 | 1,738,493 | 2,249,597 | 357,425 | |||||||||||||||||||||
|
Operating costs and expenses:
|
||||||||||||||||||||||||||||
|
Hotel operating costs
|
(323,252 | ) | (452,579 | ) | (493,819 | ) | (78,461 | ) | (1,180,202 | ) | (1,703,337 | ) | (270,633 | ) | ||||||||||||||
|
Selling and marketing expenses
|
(19,212 | ) | (24,857 | ) | (29,307 | ) | (4,656 | ) | (70,786 | ) | (94,754 | ) | (15,055 | ) | ||||||||||||||
|
General and administrative expenses
|
(33,389 | ) | (39,359 | ) | (43,792 | ) | (6,958 | ) | (119,989 | ) | (160,062 | ) | (25,431 | ) | ||||||||||||||
|
Pre-opening expenses
|
(45,901 | ) | (54,015 | ) | (49,460 | ) | (7,858 | ) | (111,210 | ) | (184,298 | ) | (29,282 | ) | ||||||||||||||
|
Total operating costs and expenses
|
(421,754 | ) | (570,810 | ) | (616,378 | ) | (97,933 | ) | (1,482,187 | ) | (2,142,451 | ) | (340,401 | ) | ||||||||||||||
|
Income from operations
|
30,877 | 55,876 | 34,359 | 5,459 | 256,306 | 107,146 | 17,024 | |||||||||||||||||||||
|
Interest income
|
8,523 | 4,490 | 5,199 | 826 | 15,945 | 18,111 | 2,877 | |||||||||||||||||||||
|
Interest expenses
|
(272 | ) | (213 | ) | (213 | ) | (34 | ) | (2,682 | ) | (882 | ) | (140 | ) | ||||||||||||||
|
Other income
|
1,758 | 427 | 753 | 120 | 2,564 | 2,649 | 421 | |||||||||||||||||||||
|
Foreign exchange gain
|
3,244 | 5,770 | 2,734 | 434 | 6,923 | 15,930 | 2,531 | |||||||||||||||||||||
|
Income before income tax
|
44,130 | 66,350 | 42,832 | 6,805 | 279,056 | 142,954 | 22,713 | |||||||||||||||||||||
|
Income tax expense
|
(8,093 | ) | (7,174 | ) | (11,192 | ) | (1,778 | ) | (57,262 | ) | (24,816 | ) | (3,943 | ) | ||||||||||||||
|
Net income
|
36,037 | 59,176 | 31,640 | 5,027 | 221,794 | 118,138 | 18,770 | |||||||||||||||||||||
|
Net income attributable to noncontrolling interests
|
(1,117 | ) | (999 | ) | (1,340 | ) | (213 | ) | (6,043 | ) | (3,306 | ) | (525 | ) | ||||||||||||||
|
Net income attributable to China Lodging Group, Limited
|
34,920 | 58,177 | 30,300 | 4,814 | 215,751 | 114,832 | 18,245 | |||||||||||||||||||||
|
Net earnings per share
|
||||||||||||||||||||||||||||
|
— Basic
|
0.14 | 0.24 | 0.12 | 0.02 | 1.05 | 0.47 | 0.08 | |||||||||||||||||||||
|
— Diluted
|
0.14 | 0.24 | 0.12 | 0.02 | 0.92 | 0.47 | 0.08 | |||||||||||||||||||||
|
Net earnings per ADS
|
||||||||||||||||||||||||||||
|
— Basic
|
0.58 | 0.96 | 0.50 | 0.08 | 4.19 | 1.90 | 0.30 | |||||||||||||||||||||
|
— Diluted
|
0.57 | 0.94 | 0.49 | 0.08 | 3.68 | 1.87 | 0.30 | |||||||||||||||||||||
|
Weighted average ordinary shares outstanding
|
||||||||||||||||||||||||||||
|
— Basic
|
241,087 | 242,264 | 242,461 | 242,461 | 198,517 | 241,928 | 241,928 | |||||||||||||||||||||
|
— Diluted
|
246,623 | 246,272 | 245,896 | 245,896 | 234,481 | 246,181 | 246,181 | |||||||||||||||||||||
14
|
China Lodging Group, Limited
|
||||||||||||||||||||||||||||
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
||||||||||||||||||||||||||||
|
Quarter Ended
|
Year Ended
|
|||||||||||||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
December 31, 2010
|
December 31, 2011
|
||||||||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||
|
Operating activities:
|
||||||||||||||||||||||||||||
|
Net income
|
36,037 | 59,176 | 31,640 | 5,027 | 221,794 | 118,138 | 18,770 | |||||||||||||||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||||||||||||||
|
Share-based compensation
|
3,319 | 5,046 | 2,858 | 454 | 13,113 | 15,483 | 2,460 | |||||||||||||||||||||
|
Depreciation and amortization
|
49,587 | 59,583 | 70,328 | 11,174 | 171,539 | 236,857 | 37,633 | |||||||||||||||||||||
|
Deferred taxes
|
10,448 | - | (35,714 | ) | (5,674 | ) | 9,228 | (35,714 | ) | (5,674 | ) | |||||||||||||||||
|
Bad debt expenses
|
(174 | ) | (92 | ) | 554 | 88 | 103 | 667 | 106 | |||||||||||||||||||
|
Deferred rent
|
22,689 | 25,548 | 27,966 | 4,443 | 70,761 | 92,927 | 14,765 | |||||||||||||||||||||
|
Impairment loss
|
- | - | 710 | 113 | - | 710 | 113 | |||||||||||||||||||||
|
Changes in operating assets and liabilities, net of effect of acquisitions:
|
||||||||||||||||||||||||||||
|
Accounts receivable
|
850 | (1,817 | ) | (4,669 | ) | (742 | ) | (6,481 | ) | (16,401 | ) | (2,606 | ) | |||||||||||||||
|
Prepaid rent
|
(29,274 | ) | (25,596 | ) | (34,442 | ) | (5,472 | ) | (82,649 | ) | (75,820 | ) | (12,047 | ) | ||||||||||||||
|
Inventories
|
(7,755 | ) | (4,637 | ) | (4,736 | ) | (752 | ) | (9,407 | ) | (12,792 | ) | (2,032 | ) | ||||||||||||||
|
Amount due from related parties
|
273 | - | - | - | 1,365 | 3,267 | 519 | |||||||||||||||||||||
|
Other current assets
|
(8,572 | ) | (867 | ) | (14,701 | ) | (2,336 | ) | (13,404 | ) | (15,684 | ) | (2,492 | ) | ||||||||||||||
|
Other assets
|
(3,029 | ) | (12,713 | ) | 176 | 28 | (17,841 | ) | (22,102 | ) | (3,512 | ) | ||||||||||||||||
|
Accounts payable
|
(4,670 | ) | 4,255 | (627 | ) | (100 | ) | 3,478 | 3,435 | 546 | ||||||||||||||||||
|
Amount due to related parties
|
(724 | ) | 217 | (290 | ) | (46 | ) | (72 | ) | 175 | 28 | |||||||||||||||||
|
Salary and welfare payables
|
18,363 | (12,156 | ) | 37,718 | 5,993 | 28,042 | 22,628 | 3,595 | ||||||||||||||||||||
|
Deferred revenue
|
7,982 | 26,212 | 26,549 | 4,218 | 42,283 | 92,803 | 14,745 | |||||||||||||||||||||
|
Accrued expenses and other current liabilities
|
(3,697 | ) | 1,082 | 169 | 27 | 16,290 | 34,246 | 5,441 | ||||||||||||||||||||
|
Income tax payable and receivable
|
(22,239 | ) | (4,052 | ) | 34,290 | 5,448 | 11,252 | 7,350 | 1,168 | |||||||||||||||||||
|
Other long-term liabilities
|
5,098 | 4,813 | 5,469 | 869 | 9,732 | 16,891 | 2,684 | |||||||||||||||||||||
|
Net cash provided by operating activities
|
74,512 | 124,002 | 143,248 | 22,760 | 469,126 | 467,064 | 74,210 | |||||||||||||||||||||
|
Investing activities:
|
||||||||||||||||||||||||||||
|
Purchase of property and equipment
|
(156,366 | ) | (222,267 | ) | (208,746 | ) | (33,166 | ) | (397,252 | ) | (768,756 | ) | (122,143 | ) | ||||||||||||||
|
Purchases of intangibles
|
(3,553 | ) | (563 | ) | (13,037 | ) | (2,071 | ) | (7,630 | ) | (14,674 | ) | (2,331 | ) | ||||||||||||||
|
Amount received as a result of government zoning
|
- | - | - | - | - | 6,900 | 1,096 | |||||||||||||||||||||
|
Acquisitions, net of cash received
|
(9,653 | ) | (3,740 | ) | (9,540 | ) | (1,516 | ) | (9,653 | ) | (57,822 | ) | (9,187 | ) | ||||||||||||||
|
Purchase of short term investment
|
(430,000 | ) | (30,000 | ) | - | - | (430,000 | ) | (30,000 | ) | (4,767 | ) | ||||||||||||||||
|
Proceeds from sales of short-term investments
|
330,000 | - | 30,000 | 4,767 | 330,000 | 130,000 | 20,655 | |||||||||||||||||||||
|
Decrease (increase) in restricted cash
|
11,000 | (1,724 | ) | 4,000 | 636 | (775 | ) | (225 | ) | (36 | ) | |||||||||||||||||
|
Net cash used in investing activities
|
(258,572 | ) | (258,294 | ) | (197,323 | ) | (31,350 | ) | (515,310 | ) | (734,577 | ) | (116,713 | ) | ||||||||||||||
|
Financing activities:
|
||||||||||||||||||||||||||||
|
Net proceeds from issuance of ordinary shares
|
- | - | - | - | 959,104 | - | - | |||||||||||||||||||||
|
Ordinary share issuance costs, net of exisiting shareholder reimbursements
|
- | - | - | - | 3,930 | - | - | |||||||||||||||||||||
|
Net proceeds from exercise of warrants
|
- | - | - | - | 17,873 | - | - | |||||||||||||||||||||
|
Net proceeds from issuance of ordinary shares upon exercise of option
|
21 | 918 | 2,076 | 330 | 41,125 | 7,285 | 1,157 | |||||||||||||||||||||
|
Proceeds from long-term bank loans
|
- | - | - | - | 70,000 | - | - | |||||||||||||||||||||
|
Repayment of long term debt
|
(24,000 | ) | - | - | - | (207,000 | ) | - | - | |||||||||||||||||||
|
Funds advanced from noncontrolling shareholders
|
739 | 2,000 | - | - | 2,778 | 3,485 | 554 | |||||||||||||||||||||
|
Repayment of funds advanced from noncontrolling interest holders
|
(1,483 | ) | (252 | ) | (533 | ) | (85 | ) | (23,715 | ) | (2,568 | ) | (408 | ) | ||||||||||||||
|
Acquisition of non controlling interests
|
- | - | - | - | (17,100 | ) | - | - | ||||||||||||||||||||
|
Proceeds from sales of partial ownership interest in one subsidiary
|
1,130 | - | - | - | 1,130 | - | - | |||||||||||||||||||||
|
Contribution from noncontrolling interest holders
|
- | 234 | - | - | 10 | 459 | 73 | |||||||||||||||||||||
|
Dividend paid to noncontrolling interest holders
|
- | (192 | ) | (127 | ) | (20 | ) | (2,299 | ) | (3,151 | ) | (501 | ) | |||||||||||||||
|
Net cash provided by (used in) financing activities
|
(23,593 | ) | 2,708 | 1,416 | 225 | 845,836 | 5,510 | 875 | ||||||||||||||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(3,990 | ) | (6,016 | ) | (2,841 | ) | (453 | ) | (10,172 | ) | (16,463 | ) | (2,616 | ) | ||||||||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(211,643 | ) | (137,600 | ) | (55,500 | ) | (8,818 | ) | 789,480 | (278,466 | ) | (44,244 | ) | |||||||||||||||
|
Cash and cash equivalents, beginning of period
|
1,271,710 | 974,701 | 837,101 | 133,002 | 270,587 | 1,060,067 | 168,428 | |||||||||||||||||||||
|
Cash and cash equivalents, end of period
|
1,060,067 | 837,101 | 781,601 | 124,184 | 1,060,067 | 781,601 | 124,184 | |||||||||||||||||||||
15
|
China Lodging Group, Limited
|
||||||||||||||||||||||||
|
Unaudited reconciliation of GAAP and Non-GAAP Results
|
||||||||||||||||||||||||
|
Quarter Ended December 31, 2011
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
493,819 | 75.9 | % | 536 | 0.1 | % | 493,283 | 75.8 | % | |||||||||||||||
|
Selling and marketing expenses
|
29,307 | 4.5 | % | 178 | 0.0 | % | 29,129 | 4.5 | % | |||||||||||||||
|
General and administrative expenses
|
43,792 | 6.7 | % | 2,144 | 0.3 | % | 41,648 | 6.4 | % | |||||||||||||||
|
Pre-opening expenses
|
49,460 | 7.6 | % | - | 0.0 | % | 49,460 | 7.6 | % | |||||||||||||||
|
Total operating costs and expenses
|
616,378 | 94.7 | % | 2,858 | 0.4 | % | 613,520 | 94.3 | % | |||||||||||||||
|
Income from operations
|
34,359 | 5.3 | % | 2,858 | 0.4 | % | 37,217 | 5.7 | % | |||||||||||||||
|
Quarter Ended December 31, 2011
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
US$
|
US$
|
US$
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
78,461 | 75.9 | % | 85 | 0.1 | % | 78,376 | 75.8 | % | |||||||||||||||
|
Selling and marketing expenses
|
4,656 | 4.5 | % | 28 | 0.0 | % | 4,628 | 4.5 | % | |||||||||||||||
|
General and administrative expenses
|
6,958 | 6.7 | % | 341 | 0.3 | % | 6,617 | 6.4 | % | |||||||||||||||
|
Pre-opening expenses
|
7,858 | 7.6 | % | - | 0.0 | % | 7,858 | 7.6 | % | |||||||||||||||
|
Total operating costs and expenses
|
97,933 | 94.7 | % | 454 | 0.4 | % | 97,479 | 94.3 | % | |||||||||||||||
|
Income from operations
|
5,459 | 5.3 | % | 454 | 0.4 | % | 5,913 | 5.7 | % | |||||||||||||||
|
Quarter Ended September 30, 2011
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
452,579 | 72.2 | % | 549 | 0.1 | % | 452,030 | 72.1 | % | |||||||||||||||
|
Selling and marketing expenses
|
24,857 | 4.0 | % | 216 | 0.0 | % | 24,641 | 4.0 | % | |||||||||||||||
|
General and administrative expenses
|
39,359 | 6.3 | % | 4,282 | 0.7 | % | 35,077 | 5.6 | % | |||||||||||||||
|
Pre-opening expenses
|
54,015 | 8.6 | % | - | 0.0 | % | 54,015 | 8.6 | % | |||||||||||||||
|
Total operating costs and expenses
|
570,810 | 91.1 | % | 5,047 | 0.8 | % | 565,763 | 90.3 | % | |||||||||||||||
|
Income from operations
|
55,876 | 8.9 | % | 5,047 | 0.8 | % | 60,923 | 9.7 | % | |||||||||||||||
|
Quarter Ended December 31, 2010
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
323,252 | 71.4 | % | 425 | 0.1 | % | 322,827 | 71.3 | % | |||||||||||||||
|
Selling and marketing expenses
|
19,212 | 4.2 | % | 138 | 0.0 | % | 19,074 | 4.2 | % | |||||||||||||||
|
General and administrative expenses
|
33,389 | 7.4 | % | 2,874 | 0.6 | % | 30,515 | 6.8 | % | |||||||||||||||
|
Pre-opening expenses
|
45,901 | 10.1 | % | - | 0.0 | % | 45,901 | 10.1 | % | |||||||||||||||
|
Total operating costs and expenses
|
421,754 | 93.1 | % | 3,437 | 0.7 | % | 418,317 | 92.4 | % | |||||||||||||||
|
Income from operations
|
30,877 | 6.9 | % | 3,437 | 0.7 | % | 34,314 | 7.6 | % | |||||||||||||||
|
Year Ended December 31, 2011
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
1,703,337 | 75.7 | % | 2,115 | 0.1 | % | 1,701,222 | 75.6 | % | |||||||||||||||
|
Selling and marketing expenses
|
94,754 | 4.2 | % | 783 | 0.0 | % | 93,971 | 4.2 | % | |||||||||||||||
|
General and administrative expenses
|
160,062 | 7.1 | % | 12,585 | 0.6 | % | 147,477 | 6.5 | % | |||||||||||||||
|
Pre-opening expenses
|
184,298 | 8.2 | % | - | 0.0 | % | 184,298 | 8.2 | % | |||||||||||||||
|
Total operating costs and expenses
|
2,142,451 | 95.2 | % | 15,483 | 0.7 | % | 2,126,968 | 94.5 | % | |||||||||||||||
|
Income from operations
|
107,146 | 4.8 | % | 15,483 | 0.7 | % | 122,629 | 4.1 | % | |||||||||||||||
|
Year Ended December 31, 2011
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
US$
|
US$
|
US$
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
270,633 | 75.7 | % | 336 | 0.1 | % | 270,297 | 75.6 | % | |||||||||||||||
|
Selling and marketing expenses
|
15,055 | 4.2 | % | 124 | 0.0 | % | 14,931 | 4.2 | % | |||||||||||||||
|
General and administrative expenses
|
25,431 | 7.1 | % | 2,000 | 0.6 | % | 23,431 | 6.5 | % | |||||||||||||||
|
Pre-opening expenses
|
29,282 | 8.2 | % | - | 0.0 | % | 29,282 | 8.2 | % | |||||||||||||||
|
Total operating costs and expenses
|
340,401 | 95.2 | % | 2,460 | 0.7 | % | 337,941 | 94.5 | % | |||||||||||||||
|
Income from operations
|
17,024 | 4.8 | % | 2,460 | 0.7 | % | 19,484 | 4.1 | % | |||||||||||||||
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||
|
GAAP Result
|
% of Net Revenues
|
Share-based Compensation
|
% of Net Revenues
|
Non-GAAP Result
|
% of Net Revenues
|
|||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
|
Hotel operating costs
|
1,180,202 | 67.9 | % | 1,555 | 0.1 | % | 1,178,647 | 67.8 | % | |||||||||||||||
|
Selling and marketing expenses
|
70,786 | 4.1 | % | 778 | 0.0 | % | 70,008 | 4.1 | % | |||||||||||||||
|
General and administrative expenses
|
119,989 | 6.9 | % | 10,780 | 0.6 | % | 109,209 | 6.3 | % | |||||||||||||||
|
Pre-opening expenses
|
111,210 | 6.4 | % | - | 0.0 | % | 111,210 | 6.4 | % | |||||||||||||||
|
Total operating costs and expenses
|
1,482,187 | 85.3 | % | 13,113 | 0.8 | % | 1,469,074 | 84.5 | % | |||||||||||||||
|
Income from operations
|
256,306 | 14.7 | % | 13,113 | 0.8 | % | 269,419 | 13.9 | % | |||||||||||||||
16
|
China Lodging Group, Limited
|
||||||||||||||||||||||||||||
|
Unaudited reconciliation of GAAP and Non-GAAP Results
|
||||||||||||||||||||||||||||
|
Quarter Ended
|
Year Ended
|
|||||||||||||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
December 31, 2010
|
December 31, 2011
|
||||||||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
||||||||||||||||||||||
|
(in thousands, except per share and per ADS data)
|
||||||||||||||||||||||||||||
|
Net income attributable to China Lodging Group, Limited (GAAP)
|
34,920 | 58,177 | 30,300 | 4,814 | 215,751 | 114,832 | 18,245 | |||||||||||||||||||||
|
Share-based compensation expenses
|
3,437 | 5,047 | 2,858 | 454 | 13,113 | 15,483 | 2,460 | |||||||||||||||||||||
|
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP)
|
38,357 | 63,224 | 33,158 | 5,268 | 228,864 | 130,315 | 20,705 | |||||||||||||||||||||
|
Net earnings per share (GAAP)
|
||||||||||||||||||||||||||||
|
— Basic
|
0.14 | 0.24 | 0.12 | 0.02 | 1.05 | 0.47 | 0.08 | |||||||||||||||||||||
|
— Diluted
|
0.14 | 0.24 | 0.12 | 0.02 | 0.92 | 0.47 | 0.08 | |||||||||||||||||||||
|
Net earnings per ADS (GAAP)
|
||||||||||||||||||||||||||||
|
— Basic
|
0.58 | 0.96 | 0.50 | 0.08 | 4.19 | 1.90 | 0.30 | |||||||||||||||||||||
|
— Diluted
|
0.57 | 0.94 | 0.49 | 0.08 | 3.68 | 1.87 | 0.30 | |||||||||||||||||||||
|
Adjusted net earnings per share (non-GAAP)
|
||||||||||||||||||||||||||||
|
— Basic
|
0.16 | 0.26 | 0.14 | 0.02 | 1.15 | 0.54 | 0.09 | |||||||||||||||||||||
|
— Diluted
|
0.16 | 0.26 | 0.13 | 0.02 | 0.98 | 0.53 | 0.08 | |||||||||||||||||||||
|
Adjusted net earnings per ADS (non-GAAP)
|
||||||||||||||||||||||||||||
|
— Basic
|
0.64 | 1.04 | 0.55 | 0.09 | 4.61 | 2.15 | 0.34 | |||||||||||||||||||||
|
— Diluted
|
0.62 | 1.03 | 0.54 | 0.09 | 3.90 | 2.12 | 0.34 | |||||||||||||||||||||
|
Weighted average ordinary shares outstanding
|
||||||||||||||||||||||||||||
|
— Basic
|
241,087 | 242,264 | 242,461 | 242,461 | 198,517 | 241,928 | 241,928 | |||||||||||||||||||||
|
— Diluted
|
246,623 | 246,272 | 245,896 | 245,896 | 234,481 | 246,181 | 246,181 | |||||||||||||||||||||
|
Quarter Ended
|
Year Ended
|
|||||||||||||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
December 31, 2010
|
December 31, 2011
|
||||||||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||
|
Net income attributable to China Lodging Group, Limited (GAAP)
|
34,920 | 58,177 | 30,300 | 4,814 | 215,751 | 114,832 | 18,245 | |||||||||||||||||||||
|
Interest expenses
|
272 | 213 | 213 | 34 | 2,682 | 882 | 140 | |||||||||||||||||||||
|
Income tax expense
|
8,093 | 7,174 | 11,192 | 1,778 | 57,262 | 24,816 | 3,943 | |||||||||||||||||||||
|
Depreciation and amortization
|
49,587 | 59,583 | 70,328 | 11,174 | 171,539 | 236,857 | 37,633 | |||||||||||||||||||||
|
EBITDA (non-GAAP)
|
92,872 | 125,147 | 112,033 | 17,800 | 447,234 | 377,387 | 59,961 | |||||||||||||||||||||
|
Pre-opening expenses
|
45,901 | 54,015 | 49,460 | 7,858 | 111,210 | 184,298 | 29,282 | |||||||||||||||||||||
|
Share-based Compensation
|
3,437 | 5,047 | 2,858 | 454 | 13,113 | 15,483 | 2,460 | |||||||||||||||||||||
|
Adjusted EBITDA from operating hotels (non-GAAP)
|
142,210 | 184,209 | 164,351 | 26,112 | 571,557 | 577,168 | 91,703 | |||||||||||||||||||||
|
Quarter Ended
|
Year Ended
|
|||||||||||||||||||||||||||
|
December 31, 2010
|
September 30, 2011
|
December 31, 2011
|
December 31, 2010
|
December 31, 2011
|
||||||||||||||||||||||||
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
||||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||
|
Net revenues (GAAP)
|
452,631 | 626,686 | 650,737 | 103,392 | 1,738,493 | 2,249,597 | 357,425 | |||||||||||||||||||||
|
Less: Hotel operating costs
|
(323,252 | ) | (452,579 | ) | (493,819 | ) | (78,461 | ) | (1,180,202 | ) | (1,703,337 | ) | (270,633 | ) | ||||||||||||||
|
Hotel income (non-GAAP)
|
129,379 | 174,107 | 156,918 | 24,931 | 558,291 | 546,260 | 86,792 | |||||||||||||||||||||
17
|
China Lodging Group, Limited
|
||||||||||||
|
Operational Data
|
||||||||||||
|
As of
|
||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
||||||||||
|
2010
|
2011
|
2011
|
||||||||||
|
Total hotels in operation:
|
438 | 580 | 639 | |||||||||
|
Leased-and-operated hotels
|
243 | 314 | 344 | |||||||||
|
Franchised-and-managed hotels
|
195 | 266 | 295 | |||||||||
|
Total Hotel rooms in operation
|
50,438 | 65,524 | 71,621 | |||||||||
|
Leased-and-operated hotels
|
29,888 | 37,229 | 40,514 | |||||||||
|
Franchised-and-managed hotels
|
20,550 | 28,295 | 31,107 | |||||||||
|
Number of cities
|
65 | 92 | 100 | |||||||||
|
For the quarter ended
|
||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
||||||||||
| 2010 | 2011 | 2011 | ||||||||||
|
Occupancy rate (as a percentage)
|
||||||||||||
|
Leased-and-operated hotels
|
87 | % | 95 | % | 92 | % | ||||||
|
Franchised-and-managed hotels
|
86 | % | 99 | % | 95 | % | ||||||
|
Total hotels in operation
|
87 | % | 97 | % | 93 | % | ||||||
|
Average daily room rate (in RMB)
|
||||||||||||
|
Leased-and-operated hotels
|
200 | 187 | 184 | |||||||||
|
Franchised-and-managed hotels
|
186 | 178 | 173 | |||||||||
|
Total hotels in operation
|
194 | 183 | 179 | |||||||||
|
RevPAR (in RMB)
|
||||||||||||
|
Leased-and-operated hotels
|
174 | 178 | 170 | |||||||||
|
Franchised-and-managed hotels
|
160 | 175 | 164 | |||||||||
|
Total hotels in operation
|
168 | 177 | 167 | |||||||||
|
Like-for-like performance for hotels opened for at least 18 months during the current quarter
|
||||||||||||
|
As of and for the quarter ended
|
||||||||||||
|
December 31,
|
||||||||||||
| 2010 | 2011 | |||||||||||
|
Total hotels in operation:
|
325 | 325 | ||||||||||
|
Leased-and-operated hotels
|
186 | 186 | ||||||||||
|
Franchised-and-managed hotels
|
139 | 139 | ||||||||||
|
Total Hotel rooms in operation
|
37,669 | 37,669 | ||||||||||
|
Leased-and-operated hotels
|
22,951 | 22,951 | ||||||||||
|
Franchised-and-managed hotels
|
14,718 | 14,718 | ||||||||||
|
Occupancy rate (as a percentage)
|
90 | % | 98 | % | ||||||||
|
Average daily rate (in RMB)
|
195 | 188 | ||||||||||
|
RevPAR (in RMB)
|
175 | 184 | ||||||||||
18