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 2011
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 6195-9595
(Address of principal executive offices)
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
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o          No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                     

 

 
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.
 	 	 	 	 	
 	China Lodging Group, Limited
 	 	
 	By:  	/s/ Tuo (Matthew) Zhang  	 	
 	 	Name:  	Tuo (Matthew) Zhang 	 	
 	 	Title:  	Chief Executive Officer 	 	
 	
Date: March 10, 2010
2

 
EXHIBIT INDEX
 	 	 	
Exhibit Number	 	Description	
 	 	 	
Exhibit 99.1	 	China Lodging Group, Limited Reports Fourth Quarter and Full Year 2010 Financial Results	
3

Exhibit 99.1

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 2010 Financial Results
•	 	Net Revenues increased 29.2% year-over-year for the fourth quarter and 38.0% for the full year of 2010, within the guidance previously announced	
 	 	 	
•	 	Net income attributable to China Lodging Group, Limited increased 76.0% year-over-year for the fourth quarter and 407.1% for the full year of 2010	
 	 	 	
•	 	Diluted earnings per ADS for the fourth quarter were RMB0.57 (US$0.09, Note 1); excluding share-based compensation expenses, adjusted diluted earnings per ADS (non-GAAP) for the quarter were RMB0.62 (US$0.09). Diluted earnings per ADS for the full year of 2010 were RMB3.68 (US$0.56); adjusted diluted earnings per ADS (non-GAAP) for the year were RMB3.90 (US$0.59).	
 	 	 	
•	 	202 new hotels were opened in 2010, increasing hotel count to 438	
 	 	 	
•	 	The Company provided guidance for full year 2011 net revenues growth of 34% to 38%, with plan to open another 200 new hotels	
Shanghai, China, March 9, 2011 (PRNewswire) — 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, 2010.
Operational Highlights
•	 	During the fourth quarter of 2010, the Company opened 70 new hotels, including 43 leased-and-operated hotels and 27 franchised-and-managed hotels.	

•	 	For the full year of 2010, the Company opened 202 new hotels in total, including 70 new leased-and-operated hotels, exceeding our guidance of 60, and 132 new franchised-and-managed hotels, within our guidance of 125 to 135. As of December 31, 2010, the Company had 438 hotels in operation, consisting of 243 leased-and-operated hotels and 195 franchised-and-managed hotels. Our hotels in operation covered 65 cities in China as of December 31, 2010, compared with 39 cities at the end of 2009.	
 	 	 	
•	 	As of December 31, 2010, the Company had a total pipeline of 162 hotels under	
1

 
 	 	development, including 69 leased-and-operated hotels and 93 franchised-and-managed hotels.	
 	 	 	
•	 	The ADR, or average daily rate, of our hotels, was RMB194 in the fourth quarter of 2010, compared with RMB177 in the fourth quarter of 2009 and RMB218 in the previous quarter. The 9.6% year-over-year increase was mainly attributable to our strengthening brand, successful yield management, and the Expo-driven price increase in Shanghai during October 2010. The sequential decrease resulted from the Company’s seasonal and post-Expo price adjustment.	
 	 	 	
•	 	For the full year 2010, the ADR was RMB197, representing a 13% year-over-year growth from RMB174 in 2009.	
 	 	 	
•	 	The occupancy rate for all hotels in operation was 87% in the fourth quarter of 2010, compared with 95% in the fourth quarter of 2009, and 95% in the previous quarter. The year-over-year decrease was mainly attributable to increased percentage of new hotels in the ramp-up stage and decreased occupancy in Shanghai after the Expo. The sequential decrease resulted from seasonality, new hotels ramp-up and post-Expo impact in Shanghai.	
 	 	 	
•	 	For the full year 2010, the occupancy rate for all hotels in operation was 93%, compared with 94% in 2009.	
 	 	 	
•	 	RevPAR was RMB168 in the fourth quarter of 2010, compared with RMB168 in the fourth quarter of 2009 and RMB207 in the previous quarter. The stable year-over-year comparison was a mixed result of the higher ADR offset by decreased occupancy.	

•	 	For the full year 2010, the RevPAR was RMB183, representing a 12% year-over-year growth from RMB163 in 2009.	

•	 	RevPAR for the hotels which had been in operation for at least 18 months was RMB181 for the fourth quarter of 2010, a 5.7% increase from RMB171 for the fourth quarter of 2009 for the same group of hotels. The improvement was driven by the higher ADR, as a result of our strengthening brand, successful yield management and the Expo-driven price increase in Shanghai.	

•	 	For the full year of 2010, RevPAR for the hotels which had been in operation for at least 18 months increased 13.1% to RMB194 on a weighted average basis.	

•	 	As of December 31, 2010, HanTing Club had more than 2.6 million individual members, a 75% increase from the end of 2009. The individual members contributed 61% of room nights sold during the full year of 2010, improving from 59% of room nights sold in 2009.	
“2010 was a year of significant growth for China Lodging Group, achieving an 86% growth
2

 
in the number of hotels. Our excellent yield management capability enabled us to achieve meaningful ADR increase across the chain. On average, the Company raised room rates by 62% in Shanghai during the Expo of six months’ period. In the full year of 2010, outside of Shanghai, our hotels increased ADR by 6% on a like-for-like basis,” said Mr. Matthew Zhang, Chief Executive Officer of China Lodging Group. “The Expo attracted guests all over China to Shanghai. With a strong presence in Shanghai, we benefit financially as well as in terms of brand awareness. We are pleased to see our loyalty program continuously expand. Our multi-brand strategy, we believe, will enable us to satisfy a wide range of customer needs and attract growing interest from franchisees.”
Fourth Quarter and full year of 2010 Financial Results
Total revenues  for the quarter were RMB478.6 million (US$72.5 million), representing a 29.2% year-over-year increase and a 10.5% decrease sequentially. The year-over-year increase was primarily due to our increased number of hotels. The sequential decrease was mainly due to seasonality and the Expo’s closing at the end of October.
Total revenues for the year of 2010 were RMB1,838.4 million (US$278.5 million), representing an increase of 37.8% from the year of 2009.
Total revenues from leased-and-operated hotels for the fourth quarter of 2010 were RMB438.0 million (US$66.4 million), representing a 23.3% year-over-year increase and a 12.0% decrease sequentially.
For the year of 2010, total revenues from leased-and-operated hotels were RMB1,707.8 million (US$258.8 million), representing a 32.5% year-over-year increase. As of December 31, 2010, we had 243 leased-and-operated hotels in operation, compared with 173 at the end of 2009.
Total revenues from franchised-and-managed hotels for the fourth quarter of 2010 were RMB40.6 million (US$6.2 million), representing a 164.9% year-over-year increase and a 9.0% increase sequentially.
For the year of 2010, total revenues from franchised-and-managed hotels were RMB130.6 million (US$19.8 million), representing a year-over-year increase of 190.4%. As of December 31, 2010, we had 195 franchised-and-managed hotels in operation, compared with 63 at the end of 2009.
Net revenues for the fourth quarter of 2010 were RMB452.6 million (US$68.6 million), representing a year-over-year increase of 29.2% year-over-year and a decrease of 10.6% sequentially.
Net revenues for the full year 2010 were RMB1,738.5 million (US$263.4 million), representing a year-over-year increase of 38.0%.
3

 
Total operating costs and expenses for the fourth quarter of 2010 were RMB421.8 million (US$63.9 million), compared to RMB317.1 million (US$46.5 million) in the fourth quarter of 2009 and RMB402.4 million (US$60.1 million) in the previous quarter. Total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter increased 33.3% year-over-year to RMB418.3 million (US$63.4 million).
Total operating costs and expenses for the year of 2010 were RMB1,482.2 million (US$224.6 million). Total operating costs and expenses excluding share-based compensation expenses (non-GAAP) were RMB1,469.1 million (US$222.6 million), representing 84.6% of net revenues, or 24.9% of increase from the year of 2009.
Major components of operating costs and expenses are described and discussed in more details below.
Hotel operating costs for the fourth quarter of 2010 were RMB323.3 million (US$49.0 million), compared to RMB267.5million (US$39.2 million) in the fourth quarter of 2009 and RMB311.1million (US$46.5 million) in the previous quarter. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) were RMB322.8 million (US$48.9 million), representing 71.3% of net revenues, compared to 76.3 % for the fourth quarter in 2009 and 61.4% in the previous quarter. The year-over-year decrease in hotel operating costs as a percentage of net revenues was mainly due to improvement of RevPAR and growth of the proportion of franchised-and-managed hotels in our hotel network. The sequential increase in percentage was primarily due to lower RevPAR in this quarter.
For the full year of 2010, total hotel operating costs were RMB1,180.2 million (US$178.8 million), compared to RMB1,004.5 million (US$147.2 million) in 2009. Excluding share-based compensation, the hotel operating costs (non-GAAP) were RMB1,178.6 million (US$178.6 million), representing 67.8% of net revenues, compared to 79.7% of net revenues in 2009. The decrease was mainly due to a higher RevPAR and increased weight of franchise revenue in 2010.
Selling and marketing expenses for the fourth quarter of 2010 were RMB19.2 million (US$2.9 million), compared to RMB14.1 million (US$2.1 million) in the fourth quarter of 2009 and RMB20.6 million (US$3.1 million) in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB19.1 million (US$2.9 million), or 4.2 % of net revenues, compared to 4.0% for the fourth quarter in 2009 and 4.1% in the previous quarter.
For the full year 2010, total selling and marketing expenses were RMB70.8 million (US$10.7 million), compared to RMB57.8 million (US$8.5 million) in 2009. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were
4

 
RMB70.0 million, representing 4.1% of net revenue, compared to 4.6% in 2009.
General and administrative expenses for the fourth quarter of 2010 were RMB33.4 million (US$5.1 million), compared to RMB27.9 million (US$4.1 million) in the fourth quarter of 2009 and RMB35.2 million (US$5.3 million) in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB30.5 million (US$4.6 million), representing 6.8% of the net revenues, compared with 7.2% of the net revenues in the fourth quarter of 2009 and 6.4% in the previous quarter.
General and administrative expenses were RMB120.0 million (US$18.2 million) for the year of 2010, compared to RMB83.7 million (US$12.3 million) in 2009. Excluding share-based compensation expenses, general and administrative expenses (non-GAAP) were RMB109.2 million (US$16.5 million), representing 6.3% of net revenues, compared to 6.0% in 2009. The year-over-year increase of general and administrative expenses was primarily due to our enlarged business network, and increased professional service fees associated with our becoming a public company.
Pre-opening expenses for the fourth quarter of 2010 were RMB45.9 million (US$7.0 million), representing a year-over-year increase of 502.2% and an increase of 29.2% sequentially. The increase in pre-opening expenses was a result of more leased-and-operated hotels under construction during the fourth quarter. 43 leased-and-operated hotels were opened during this quarter and another 69 were in the pipeline at the end of the quarter, compared to seven opened and 21 in the pipeline during the same quarter in 2009, and 13 opened and 76 in the pipeline for the previous quarter.
Pre-opening expenses for the full year were RMB111.2 million (US$16.9 million), representing an increase of 194.0% year over year. The increase of pre-opening expenses was a result of our acceleration of leased-and-operated hotel opening from 28 in 2009 to 70 in 2010, and the leased-and-operated hotel pipeline expansion from 21 at the end of 2009 to 69 at the end of 2010.
Income from operations for the quarter was RMB30.9 million (US$4.7 million), compared to RMB33.1 million (US$4.9 million) in the fourth quarter of 2009 and RMB103.7 million (US$15.5 million) in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the quarter was RMB 34.3 million (US$5.2 million), representing a 5.8% year-over-year increase and a 67.9% decrease sequentially. Income from operations for the fourth quarter was impacted by the significant pre-opening expenses, a cost incurred for opening new hotels. We believe those newly opened leased-and-operated hotels will contribute to our profit base in future years.
Income from operations for the year was RMB256.3 million (US$38.8 million), compared to RMB76.4 million (US$11.2 million) in 2009. Excluding share-based compensation
5

 
expenses, adjusted income from operations (non-GAAP) was RMB269.4 million (US$40.8 million), representing a 219.3% increase compared to the year of 2009.
Net income attributable to China Lodging Group, Limited for the fourth quarter was RMB34.9 million (US$5.3 million), compared to RMB19.8 million (US$2.9 million) in the fourth quarter of 2009 and RMB88.7 million (US$13.3 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 increased 65.9% year-over-year to RMB38.4 million (US$5.8 million).
Net income attributable to China Lodging Group, Limited for the full year of 2010 was RMB215.8 million (US$32.7 million), compared to RMB42.5 million (US$6.2 million) in 2009. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited (non-GAAP) was RMB228.9 million (US$34.7 million), increased 353.2% year over year. The year-over-year improvement on profit was mainly attributable to our enlarged hotel network, RevPAR appreciation and the favorable impact of the Expo.
Basic and diluted net earnings per share/ADS. For the fourth quarter of 2010, basic net earnings per share and diluted net earnings per share were RMB0.14 (US$0.02); basic net earnings per ADS was RMB0.58 (US$0.09), while diluted net earnings per ADS was RMB0.57 (US$0.09). Excluding share-based compensation expenses, adjusted basic net earnings per share (non-GAAP) and diluted net earnings per share (non-GAAP) for the fourth quarter of 2010 were RMB0.16 (US$0.02), and adjusted basic net earnings per ADS (non-GAAP) was RMB0.64 (US$0.10), while adjusted diluted net earnings per ADS (non-GAAP) was RMB0.62 (US$0.09).
For the full year of 2010, basic net earnings per share was RMB1.05 (US$0.16), while diluted net earnings per share was RMB0.92 (US$0.14); basic net earnings per ADS was RMB4.19 (US$0.63), while diluted net earnings per ADS was RMB3.68 (US$0.56). Excluding share-based compensation expenses, adjusted basic net earnings per share (non-GAAP) for the full year of 2010 was RMB1.10 (US$0.17), while diluted net earnings per share (non-GAAP) was RMB0.98 (US$0.15), and adjusted net earnings per ADS (non-GAAP) was RMB4.41 (US$0.67), while adjusted diluted net earnings per ADS (non-GAAP) was RMB3.90 (US$0.59).
EBITDA (non-GAAP) for the fourth quarter of 2010 was RMB90.3 million (US$13.7 million), compared to RMB69.3 million (US$10.2 million) in the fourth quarter of 2009 and RMB155.0 million (US$23.2 million) in the previous quarter. EBITDA from operating hotels (non-GAAP) for the fourth quarter of 2010 was RMB136.2 million (US$20.6 million), representing an increase of 77.1% from the fourth quarter of 2009 and a decrease of 28.5% sequentially. The year-over-year increase was a result of enhanced profitability of mature hotels and the expansion of our network, while the sequential decrease was mainly due to the low season and the Expo’s closing in October 2010.
6

 
EBITDA (non-GAAP) for the full year of 2010 was RMB444.7 million (US$67.4 million), compared to RMB214.9 million (US$31.5 million) in 2009. EBITDA from operating hotels (non-GAAP) for the full year of 2010 was RMB555.9 million (US$84.2 million), an increase of 120.0% from 2009.
Cash flow. Net operating cash flow for the fourth quarter of 2010 was RMB74.5 million (US$11.3 million). Cash spent on the purchase of property and equipment, which is part of investing cash flow, was RMB156.4 million (US$23.7 million).
Net operating cash flow for the full year of 2010 was RMB469.1 million (US$71.1 million). Cash spent on the purchase of property and equipment was RMB397.3 million (US$60.2 million).
Cash and cash equivalents. As of December 31, 2010, the Company had cash and cash equivalents of RMB1,060.1 million (US$160.6 million).
Expo Impact
Shanghai Expo, lasting for 6 months from May 1 to October 31, 2010, had a favorable impact on our ADR. As of December 31, 2010, China Lodging Group had 85 hotels in operation in Shanghai, which constitute 19.4% of all hotels operated by the Company. By analyzing our internal operating metrics under normal business circumstances and comparing to the performance of our non-Shanghai hotels, the management of the Company estimated that the favorable impact from the Expo contributed 6.4%, to our net revenues in 2010. Compared with operational and financial results in the full year of 2009, excluding impact from Shanghai Expo, we estimate that our RevPAR improved by 4.0% for the overall portfolio and 7.0% on a like-for-like basis. While net revenues grew by 29.2%, net income attributable to the Company by 227.2%, EBITDA by 59.4%, and EBITDA from operating hotels by 79.5%, in 2010. The solid performance excluding the Expo impact reflected the strength of our brand and operation, which would form the basis for our high quality growth in the coming years.
The tables at the bottom of this release outline our management estimation on the Expo impact for the full year and the second to fourth quarter of 2010.
Business Outlook and Guidance for 2011
“China domestic consumption market continues to grow robustly. We remain positive on the growing trend of travelling demand. Our brand gains increasing recognition and loyalty among Chinese consumers. The fast growth of leading hotel chains like Hanting will drive gradual consolidation of the hotel industry,” commented CEO Mr. Zhang. “2011 is a year of investment for us, as we plan to add about 200 hotels, with half being leased-and-operated hotels. We are confident that once completing their ramp-up cycle, those new hotels will contribute significant revenue and profit growth in 2012 and forward.”
7

 
The Company expects to achieve net revenues in the range of RMB410 to 430 million in the first quarter of 2011, representing a 20% to 26% growth as compared to the first quarter of 2010. For the full year 2011, the Company expects net revenues to grow 34% to 38%.
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call
China Lodging group’s management will host a conference call at 8 p.m. EST, Wednesday, March 9, 2011 (or 9 a.m. on Thursday, March 10, 2011 in the Shanghai/Hong Kong time zone) following the announcement. To participate in the event by telephone, please dial +1 (888) 830 9551 (for callers in the US), +86 10 800 152 1039 (for callers in China Mainland), +852 3002 1675 (for callers in Hong Kong) or +1 (408) 961 6560 (for callers outside of the US, China Mainland, and Hong Kong) and entering pass code HTHT. 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 17, 2011. Please dial +1 877 482 6144 (for callers in the US) or +1 617 213 4164 (for callers outside the US) and entering pass code 604 301 40.
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 and EBITDA from operating hotels. 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 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
8

 
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 our 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.
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 EBITDA from operating hotels, which is defined as EBITDA before pre-opening expenses, to assess operating results of the hotels in operation. The Company believes that the exclusion of pre-opening 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 EBITDA from operating hotels more closely reflects the performance capability of hotels currently in operation. The calculation of EBITDA and EBITDA from operating hotels does not deduct interest income. The presentation of EBITDA and EBITDA from operating hotels should not be construed as an indication that our future results will be unaffected by other charges and gains considered to be outside the ordinary course of the business.
The use of EBITDA and 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 have been and will be incurred and are not reflected in the presentation of 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 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.
9

 
The terms EBITDA and EBITDA from operating hotels are not defined under U.S. GAAP, and neither EBITDA nor 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, you should not consider this data in isolation or as a substitute for our 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 EBITDA from operating hotels may not be comparable to EBITDA or EBITDA from operating hotels or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or EBITDA from operating hotels in the same manner as the Company does.
Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and EBITDA from operating hotels, to consolidated statement of operations information are included at the end of this press release.
About China Lodging Group, Limited
China Lodging Group, Limited (the “Company”) 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, 2010, the Company had 438 hotels and 50,438 rooms in 65 cities across China.
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 risks described in “Risk Factors” beginning on page 13 and elsewhere in the Company’s registration statement on Form F-1. 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. 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.
10

 
—Financial Tables and Operational Data Follow—
11

 
China Lodging Group, Limited
Unaudited Consolidated Balance Sheets
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31, 2009	 	 	September 30, 2010	 	 	December 31, 2010	 	
 	 	RMB	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	
 	 	(in thousands)	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	270,587	 	 	 	1,271,710	 	 	 	1,060,067	 	 	 	160,616	 	
Restricted cash	 	 	500	 	 	 	12,275	 	 	 	1,275	 	 	 	193	 	
Short-term Investment	 	 	—	 	 	 	—	 	 	 	100,000	 	 	 	15,152	 	
Accounts receivable, net	 	 	15,158	 	 	 	22,212	 	 	 	21,536	 	 	 	3,263	 	
Amount due from related parties	 	 	4,632	 	 	 	3,540	 	 	 	3,267	 	 	 	495	 	
Prepaid rent	 	 	69,618	 	 	 	122,993	 	 	 	152,267	 	 	 	23,071	 	
Inventories	 	 	8,883	 	 	 	10,535	 	 	 	18,290	 	 	 	2,771	 	
Other current assets	 	 	28,976	 	 	 	27,585	 	 	 	40,177	 	 	 	6,087	 	
Deferred tax assets	 	 	18,272	 	 	 	18,272	 	 	 	17,940	 	 	 	2,718	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	416,626	 	 	 	1,489,122	 	 	 	1,414,819	 	 	 	214,366	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property and equipment, net	 	 	1,028,267	 	 	 	1,212,064	 	 	 	1,422,432	 	 	 	215,520	 	
Intangible assets, net	 	 	20,395	 	 	 	36,963	 	 	 	57,348	 	 	 	8,689	 	
Goodwill	 	 	18,452	 	 	 	18,452	 	 	 	41,373	 	 	 	6,269	 	
Other assets	 	 	61,170	 	 	 	76,806	 	 	 	79,953	 	 	 	12,114	 	
Deferred tax assets	 	 	36,222	 	 	 	37,442	 	 	 	28,155	 	 	 	4,266	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total assets	 	 	1,581,132	 	 	 	2,870,849	 	 	 	3,044,080	 	 	 	461,224	 	

Liabilities, mezzanine equity and equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt, current portion	 	 	57,000	 	 	 	24,000	 	 	 	—	 	 	 	—	 	
Accounts payable	 	 	141,571	 	 	 	213,161	 	 	 	283,203	 	 	 	42,910	 	
Amount due to related parties	 	 	928	 	 	 	1,579	 	 	 	855	 	 	 	130	 	
Salary and welfare payable	 	 	29,597	 	 	 	39,275	 	 	 	57,638	 	 	 	8,733	 	
Deferred revenue	 	 	43,203	 	 	 	58,925	 	 	 	68,599	 	 	 	10,394	 	
Accrued expenses and other current liabilities	 	 	89,383	 	 	 	92,129	 	 	 	148,926	 	 	 	22,564	 	
Income tax payable	 	 	3,869	 	 	 	37,360	 	 	 	15,121	 	 	 	2,291	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	365,551	 	 	 	466,429	 	 	 	574,342	 	 	 	87,022	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt	 	 	80,000	 	 	 	—	 	 	 	—	 	 	 	—	 	
Deferred rent	 	 	174,775	 	 	 	222,848	 	 	 	237,427	 	 	 	35,974	 	
Deferred revenue	 	 	31,558	 	 	 	50,137	 	 	 	48,445	 	 	 	7,340	 	
Other long-term liabilities	 	 	20,453	 	 	 	38,297	 	 	 	46,619	 	 	 	7,063	 	
Deferred tax liabilities	 	 	6,538	 	 	 	6,538	 	 	 	11,937	 	 	 	1,809	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities	 	 	678,875	 	 	 	784,249	 	 	 	918,770	 	 	 	139,208	 	

Mezzanine equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Series B convertible redeemable preferred shares	 	 	796,803	 	 	 	—	 	 	 	—	 	 	 	—	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ordinary shares	 	 	46	 	 	 	178	 	 	 	178	 	 	 	27	 	
Series A convertible preferred shares	 	 	34	 	 	 	—	 	 	 	—	 	 	 	—	 	
Additional paid-in capital	 	 	351,994	 	 	 	2,162,268	 	 	 	2,168,364	 	 	 	328,540	 	
Accumulated deficit	 	 	(245,457	)	 	 	(64,625	)	 	 	(29,705	)	 	 	(4,501	)	
Accumulated other comprehensive loss	 	 	(12,528	)	 	 	(18,712	)	 	 	(22,703	)	 	 	(3,440	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total China Lodging Group, Limited shareholders’ equity	 	 	94,089	 	 	 	2,079,109	 	 	 	2,116,134	 	 	 	320,626	 	
Noncontrolling interest	 	 	11,365	 	 	 	7,491	 	 	 	9,176	 	 	 	1,390	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity	 	 	105,454	 	 	 	2,086,600	 	 	 	2,125,310	 	 	 	322,016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities, mezzanine equity and equity	 	 	1,581,132	 	 	 	2,870,849	 	 	 	3,044,080	 	 	 	461,224	 	

 	 	 	
Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.6000 on December 31, 2010 as set forth in H.10 statistical release of the Federal Reserve Board.	
12

 
China Lodging Group, Limited
Unaudited Consolidated Statements of Operations
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	December 31, 2009	 	 	September 30, 2010	 	 	December 31, 2010	 	 	December 31, 2009	 	 	December 31, 2010	 	
 	 	RMB	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	
 	 	(in thousands, except per share and per ADS data)	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Leased-and-operated hotels	 	 	355,100	 	 	 	497,742	 	 	 	437,989	 	 	 	66,362	 	 	 	1,288,898	 	 	 	1,707,771	 	 	 	258,753	 	
Franchised-and-managed hotels	 	 	15,334	 	 	 	37,250	 	 	 	40,619	 	 	 	6,154	 	 	 	44,965	 	 	 	130,579	 	 	 	19,785	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	370,434	 	 	 	534,992	 	 	 	478,608	 	 	 	72,516	 	 	 	1,333,863	 	 	 	1,838,350	 	 	 	278,538	 	
Less: business tax and related surcharges	 	 	(20,184	)	 	 	(28,936	)	 	 	(25,977	)	 	 	(3,936	)	 	 	(73,672	)	 	 	(99,857	)	 	 	(15,130	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	 	350,250	 	 	 	506,056	 	 	 	452,631	 	 	 	68,580	 	 	 	1,260,191	 	 	 	1,738,493	 	 	 	263,408	 	

Operating costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hotel operating costs	 	 	(267,464	)	 	 	(311,115	)	 	 	(323,252	)	 	 	(48,978	)	 	 	(1,004,472	)	 	 	(1,180,202	)	 	 	(178,818	)	
Selling and marketing expenses	 	 	(14,120	)	 	 	(20,557	)	 	 	(19,212	)	 	 	(2,911	)	 	 	(57,818	)	 	 	(70,786	)	 	 	(10,725	)	
General and administrative expenses	 	 	(27,902	)	 	 	(35,169	)	 	 	(33,389	)	 	 	(5,058	)	 	 	(83,665	)	 	 	(119,989	)	 	 	(18,180	)	
Pre-opening expenses	 	 	(7,622	)	 	 	(35,528	)	 	 	(45,901	)	 	 	(6,955	)	 	 	(37,821	)	 	 	(111,210	)	 	 	(16,850	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	(317,108	)	 	 	(402,369	)	 	 	(421,754	)	 	 	(63,902	)	 	 	(1,183,776	)	 	 	(1,482,187	)	 	 	(224,573	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	33,142	 	 	 	103,687	 	 	 	30,877	 	 	 	4,678	 	 	 	76,415	 	 	 	256,306	 	 	 	38,835	 	
Interest income	 	 	763	 	 	 	5,232	 	 	 	8,523	 	 	 	1,291	 	 	 	1,870	 	 	 	15,945	 	 	 	2,416	 	
Interest expenses	 	 	(2,534	)	 	 	(127	)	 	 	(272	)	 	 	(41	)	 	 	(8,787	)	 	 	(2,682	)	 	 	(406	)	
Other income	 	 	—	 	 	 	399	 	 	 	1,758	 	 	 	266	 	 	 	—	 	 	 	2,564	 	 	 	388	 	
Foreign exchange gain/(loss)	 	 	(77	)	 	 	4,011	 	 	 	3,244	 	 	 	492	 	 	 	(60	)	 	 	6,923	 	 	 	1,049	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income tax	 	 	31,294	 	 	 	113,202	 	 	 	44,130	 	 	 	6,686	 	 	 	69,438	 	 	 	279,056	 	 	 	42,282	 	
Income tax expense	 	 	(8,377	)	 	 	(23,140	)	 	 	(8,093	)	 	 	(1,226	)	 	 	(17,990	)	 	 	(57,262	)	 	 	(8,676	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	22,917	 	 	 	90,062	 	 	 	36,037	 	 	 	5,460	 	 	 	51,448	 	 	 	221,794	 	 	 	33,606	 	
Net income attributable to noncontrolling interests	 	 	(3,076	)	 	 	(1,380	)	 	 	(1,117	)	 	 	(169	)	 	 	(8,903	)	 	 	(6,043	)	 	 	(916	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to China Lodging Group, Limited	 	 	19,841	 	 	 	88,682	 	 	 	34,920	 	 	 	5,291	 	 	 	42,545	 	 	 	215,751	 	 	 	32,690	 	

Net earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.11	 	 	 	0.37	 	 	 	0.14	 	 	 	0.02	 	 	 	0.24	 	 	 	1.05	 	 	 	0.16	 	
— Diluted	 	 	0.11	 	 	 	0.36	 	 	 	0.14	 	 	 	0.02	 	 	 	0.23	 	 	 	0.92	 	 	 	0.14	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earnings per ADS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.43	 	 	 	1.47	 	 	 	0.58	 	 	 	0.09	 	 	 	0.95	 	 	 	4.19	 	 	 	0.63	 	
— Diluted	 	 	0.42	 	 	 	1.43	 	 	 	0.57	 	 	 	0.09	 	 	 	0.93	 	 	 	3.68	 	 	 	0.56	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average ordinary shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	60,948	 	 	 	241,019	 	 	 	241,087	 	 	 	241,087	 	 	 	57,562	 	 	 	198,517	 	 	 	198,517	 	
— Diluted	 	 	188,528	 	 	 	247,536	 	 	 	246,623	 	 	 	246,623	 	 	 	183,632	 	 	 	234,481	 	 	 	234,481	 	

Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.6000 on December 31, 2010 as set forth in H.10 statistical release of the Federal Reserve Board.	
13

 
China Lodging Group, Limited
Reconciliation of GAAP and Non-GAAP Results
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	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	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(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	%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended December 31, 2010	
 	 	GAAP Result	 	% of Net Revenues	 	Share-based Compensation	 	% of Net Revenues	 	Non-GAAP Result	 	% of Net Revenues	
 	 	US$ ( Note 1)	 	 	 	 	 	US$	 	 	 	 	 	US$	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(in thousands)	
Hotel operating costs	 	 	48,978	 	 	 	71.4	%	 	 	64	 	 	 	0.1	%	 	 	48,914	 	 	 	71.3	%	
Selling and marketing expenses	 	 	2,911	 	 	 	4.2	%	 	 	21	 	 	 	0.0	%	 	 	2,890	 	 	 	4.2	%	
General and administrative expenses	 	 	5,058	 	 	 	7.4	%	 	 	435	 	 	 	0.6	%	 	 	4,623	 	 	 	6.8	%	
Pre-opening expenses	 	 	6,955	 	 	 	10.1	%	 	 	—	 	 	 	0.0	%	 	 	6,955	 	 	 	10.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	63,902	 	 	 	93.1	%	 	 	520	 	 	 	0.7	%	 	 	63,382	 	 	 	92.4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	4,678	 	 	 	6.9	%	 	 	520	 	 	 	0.7	%	 	 	5,198	 	 	 	7.6	%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended September 30, 2010	
 	 	GAAP Result	 	% of Net Revenues	 	Share-based Compensation	 	% of Net Revenues	 	Non-GAAP Result	 	% of Net Revenues	
 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(in thousands)	
Hotel operating costs	 	 	311,115	 	 	 	61.5	%	 	 	452	 	 	 	0.1	%	 	 	310,663	 	 	 	61.4	%	
Selling and marketing expenses	 	 	20,557	 	 	 	4.1	%	 	 	212	 	 	 	0.0	%	 	 	20,345	 	 	 	4.1	%	
General and administrative expenses	 	 	35,169	 	 	 	6.9	%	 	 	2,623	 	 	 	0.5	%	 	 	32,546	 	 	 	6.4	%	
Pre-opening expenses	 	 	35,528	 	 	 	7.0	%	 	 	—	 	 	 	0.0	%	 	 	35,528	 	 	 	7.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	402,369	 	 	 	79.5	%	 	 	3,287	 	 	 	0.6	%	 	 	399,082	 	 	 	78.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	103,687	 	 	 	20.5	%	 	 	3,287	 	 	 	0.6	%	 	 	106,974	 	 	 	21.1	%	

 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended December 31, 2009	
 	 	GAAP Result	 	% of Net Revenues	 	Share-based Compensation	 	% of Net Revenues	 	Non-GAAP Result	 	% of Net Revenues	
 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(in thousands)	
Hotel operating costs	 	 	267,464	 	 	 	76.4	%	 	 	334	 	 	 	0.1	%	 	 	267,130	 	 	 	76.3	%	
Selling and marketing expenses	 	 	14,120	 	 	 	4.0	%	 	 	207	 	 	 	0.0	%	 	 	13,913	 	 	 	4.0	%	
General and administrative expenses	 	 	27,902	 	 	 	8.0	%	 	 	2,741	 	 	 	0.8	%	 	 	25,161	 	 	 	7.2	%	
Pre-opening expenses	 	 	7,622	 	 	 	2.2	%	 	 	—	 	 	 	0.0	%	 	 	7,622	 	 	 	2.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	317,108	 	 	 	90.6	%	 	 	3,282	 	 	 	0.9	%	 	 	313,826	 	 	 	89.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	33,142	 	 	 	9.4	%	 	 	3,282	 	 	 	0.9	%	 	 	36,424	 	 	 	10.3	%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	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	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(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	 	 	 	0.7	%	 	 	1,469,074	 	 	 	84.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	256,306	 	 	 	14.7	%	 	 	13,113	 	 	 	0.7	%	 	 	269,419	 	 	 	15.4	%	

 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31, 2010	
 	 	GAAP Result	 	% of Net Revenues	 	Share-based Compensation	 	% of Net Revenues	 	Non-GAAP Result	 	% of Net Revenues	
 	 	US$ ( Note 1)	 	 	 	 	 	US$	 	 	 	 	 	US$	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(in thousands)	
Hotel operating costs	 	 	178,818	 	 	 	67.9	%	 	 	236	 	 	 	0.1	%	 	 	178,582	 	 	 	67.8	%	
Selling and marketing expenses	 	 	10,725	 	 	 	4.1	%	 	 	118	 	 	 	0.0	%	 	 	10,607	 	 	 	4.1	%	
General and administrative expenses	 	 	18,180	 	 	 	6.9	%	 	 	1,633	 	 	 	0.6	%	 	 	16,547	 	 	 	6.3	%	
Pre-opening expenses	 	 	16,850	 	 	 	6.4	%	 	 	—	 	 	 	0.0	%	 	 	16,850	 	 	 	6.4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	224,573	 	 	 	85.3	%	 	 	1,987	 	 	 	0.7	%	 	 	222,586	 	 	 	84.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	38,835	 	 	 	14.7	%	 	 	1,987	 	 	 	0.7	%	 	 	40,822	 	 	 	15.4	%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31, 2009	
 	 	GAAP Result	 	% of Net Revenues	 	Share-based Compensation	 	% of Net Revenues	 	Non-GAAP Result	 	% of Net Revenues	
 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	 	RMB	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
 	 	(in thousands)	
Hotel operating costs	 	 	1,004,472	 	 	 	79.7	%	 	 	523	 	 	 	0.0	%	 	 	1,003,949	 	 	 	79.7	%	
Selling and marketing expenses	 	 	57,818	 	 	 	4.6	%	 	 	465	 	 	 	0.0	%	 	 	57,353	 	 	 	4.6	%	
General and administrative expenses	 	 	83,665	 	 	 	6.6	%	 	 	6,967	 	 	 	0.6	%	 	 	76,698	 	 	 	6.0	%	
Pre-opening expenses	 	 	37,821	 	 	 	3.0	%	 	 	—	 	 	 	0.0	%	 	 	37,821	 	 	 	3.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	 	 	1,183,776	 	 	 	93.9	%	 	 	7,955	 	 	 	0.6	%	 	 	1,175,821	 	 	 	93.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	76,415	 	 	 	6.1	%	 	 	7,955	 	 	 	0.6	%	 	 	84,370	 	 	 	6.7	%	

 	 	 	
Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.6000 on December 31, 2010 as set forth in H.10 statistical release of the Federal Reserve Board.	
14

 
China Lodging Group, Limited
Reconciliation of GAAP and Non-GAAP Results
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	December 31, 2009	 	 	September 30, 2010	 	 	December 31, 2010	 	 	December 31, 2009	 	 	December 31, 2010	 	
 	 	RMB	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
 	 	(in thousands, except per share and per ADS data)	 	
Net income attributable to China Lodging Group, Limited (GAAP)	 	 	19,841	 	 	 	88,682	 	 	 	34,920	 	 	 	5,291	 	 	 	42,545	 	 	 	215,751	 	 	 	32,690	 	
Share-based compensation expenses	 	 	3,282	 	 	 	3,287	 	 	 	3,437	 	 	 	520	 	 	 	7,955	 	 	 	13,113	 	 	 	1,987	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP)	 	 	23,123	 	 	 	91,969	 	 	 	38,357	 	 	 	5,811	 	 	 	50,500	 	 	 	228,864	 	 	 	34,677	 	

Net earnings per share (GAAP)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.11	 	 	 	0.37	 	 	 	0.14	 	 	 	0.02	 	 	 	0.24	 	 	 	1.05	 	 	 	0.16	 	
— Diluted	 	 	0.11	 	 	 	0.36	 	 	 	0.14	 	 	 	0.02	 	 	 	0.23	 	 	 	0.92	 	 	 	0.14	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earnings per ADS (GAAP)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.43	 	 	 	1.47	 	 	 	0.58	 	 	 	0.09	 	 	 	0.95	 	 	 	4.19	 	 	 	0.63	 	
— Diluted	 	 	0.42	 	 	 	1.43	 	 	 	0.57	 	 	 	0.09	 	 	 	0.93	 	 	 	3.68	 	 	 	0.56	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net earnings per share (non-GAAP)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.13	 	 	 	0.38	 	 	 	0.16	 	 	 	0.02	 	 	 	0.28	 	 	 	1.10	 	 	 	0.17	 	
— Diluted	 	 	0.12	 	 	 	0.37	 	 	 	0.16	 	 	 	0.02	 	 	 	0.28	 	 	 	0.98	 	 	 	0.15	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net earnings per ADS (non-GAAP)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	0.51	 	 	 	1.53	 	 	 	0.64	 	 	 	0.10	 	 	 	1.12	 	 	 	4.41	 	 	 	0.67	 	
— Diluted	 	 	0.49	 	 	 	1.49	 	 	 	0.62	 	 	 	0.09	 	 	 	1.10	 	 	 	3.90	 	 	 	0.59	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average ordinary shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
— Basic	 	 	60,948	 	 	 	241,019	 	 	 	241,087	 	 	 	241,087	 	 	 	57,562	 	 	 	198,517	 	 	 	198,517	 	
— Diluted	 	 	188,528	 	 	 	247,536	 	 	 	246,623	 	 	 	246,623	 	 	 	183,632	 	 	 	234,481	 	 	 	234,481	 	

 	 	Quarter Ended	 	 	Year Ended	 	
 	 	December 31, 2009	 	 	September 30, 2010	 	 	December 31, 2010	 	 	December 31, 2009	 	 	December 31, 2010	 	
 	 	RMB	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	 	RMB	 	 	RMB	 	 	US$ ( Note 1)	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
 	 	(in thousands)	 	
Net income attributable to China Lodging Group, Limited (GAAP)	 	 	19,841	 	 	 	88,682	 	 	 	34,920	 	 	 	5,291	 	 	 	42,545	 	 	 	215,751	 	 	 	32,690	 	
Interest expenses	 	 	2,534	 	 	 	127	 	 	 	272	 	 	 	41	 	 	 	8,787	 	 	 	2,682	 	 	 	406	 	
Income tax expense	 	 	8,377	 	 	 	23,140	 	 	 	8,093	 	 	 	1,226	 	 	 	17,990	 	 	 	57,262	 	 	 	8,676	 	
Depreciation and amortization	 	 	38,550	 	 	 	43,081	 	 	 	47,032	 	 	 	7,126	 	 	 	145,571	 	 	 	168,983	 	 	 	25,603	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (non-GAAP)	 	 	69,302	 	 	 	155,030	 	 	 	90,317	 	 	 	13,684	 	 	 	214,893	 	 	 	444,678	 	 	 	67,375	 	
Pre-opening expenses	 	 	7,622	 	 	 	35,528	 	 	 	45,901	 	 	 	6,955	 	 	 	37,821	 	 	 	111,210	 	 	 	16,850	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA from operating hotels (non-GAAP)	 	 	76,924	 	 	 	190,558	 	 	 	136,218	 	 	 	20,639	 	 	 	252,714	 	 	 	555,888	 	 	 	84,225	 	

 	 	 	
 	 	Note 1: The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.6000 on December 31, 2010 as set forth in H.10 statistical release of the Federal Reserve Board.	
15

 
China Lodging Group, Limited
Operational Data
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	As of	 	
 	 	December 31,	 	 	September 30,	 	 	December 31,	 	
 	 	2009	 	 	2010	 	 	2010	 	
Total hotels in operation:	 	 	236	 	 	 	368	 	 	 	438	 	
Leased-and-operated hotels	 	 	173	 	 	 	200	 	 	 	243	 	
Franchised-and-managed hotels	 	 	63	 	 	 	168	 	 	 	195	 	
Total Hotel rooms in operation	 	 	28,360	 	 	 	42,750	 	 	 	50,438	 	
Leased-and-operated hotels	 	 	21,658	 	 	 	24,938	 	 	 	29,888	 	
Franchised-and-managed hotels	 	 	6,702	 	 	 	17,812	 	 	 	20,550	 	
Number of cities	 	 	39	 	 	 	55	 	 	 	65	 	

 	 	For the quarter ended	 	
 	 	December 31,	 	 	September 30,	 	 	December 31,	 	
 	 	2009	 	 	2010	 	 	2010	 	
Occupancy rate (as a percentage)	 	 	 	 	 	 	 	 	 	 	 	 	
Leased-and-operated hotels	 	 	96	%	 	 	97	%	 	 	87	%	
Franchised-and-managed hotels	 	 	91	%	 	 	93	%	 	 	86	%	
Total hotels in operation	 	 	95	%	 	 	95	%	 	 	87	%	
Average daily room rate (in RMB)	 	 	 	 	 	 	 	 	 	 	 	 	
Leased-and-operated hotels	 	 	178	 	 	 	223	 	 	 	200	 	
Franchised-and-managed hotels	 	 	173	 	 	 	210	 	 	 	186	 	
Total hotels in operation	 	 	177	 	 	 	218	 	 	 	194	 	
RevPAR (in RMB)	 	 	 	 	 	 	 	 	 	 	 	 	
Leased-and-operated hotels	 	 	171	 	 	 	215	 	 	 	174	 	
Franchised-and-managed hotels	 	 	158	 	 	 	195	 	 	 	160	 	
Total hotels in operation	 	 	168	 	 	 	207	 	 	 	168	 	
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,	 	
 	 	2009	 	 	2010	 	
Total hotels in operation:	 	 	201	 	 	 	201	 	
Leased-and-operated hotels	 	 	162	 	 	 	162	 	
Franchised-and-managed hotels	 	 	39	 	 	 	39	 	
Total hotel rooms in operation	 	 	25,003	 	 	 	25,003	 	
Leased-and-operated hotels	 	 	20,522	 	 	 	20,522	 	
Franchised-and-managed hotels	 	 	4,481	 	 	 	4,481	 	
Occupancy rate (as a percentage)	 	 	97	%	 	 	91	%	
Average daily rate (in RMB)	 	 	176	 	 	 	199	 	
RevPAR (in RMB)	 	 	171	 	 	 	181	 	
16

 
Expo Impact in 2010 and by quarter
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2010 Q2	 	 	2010 Q3	 	 	2010 Q4	 	 	Full year 2010	 	
 	 	Reported	 	 	Expo impact	 	 	Reported	 	 	Expo impact	 	 	Reported	 	 	Expo impact	 	 	Reported	 	 	Expo impact	 	
 	 	(RMB)	 	 	(Percentage)	 	 	(RMB)	 	 	(Percentage)	 	 	(RMB)	 	 	(Percentage)	 	 	(RMB)	 	 	(Percentage)	 	
RevPAR	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Leased-and-operated hotels	 	 	199	 	 	 	8.0%	 	 	 	215	 	 	 	14.4%	 	 	 	174	 	 	 	2.9%	 	 	 	189	 	 	 	6.9%	 	
Franchised-and-operated hotels	 	 	179	 	 	 	8.9%	 	 	 	195	 	 	 	13.3%	 	 	 	160	 	 	 	4.4%	 	 	 	172	 	 	 	7.6%	 	
Total hotels in operation	 	 	192	 	 	 	8.3%	 	 	 	207	 	 	 	14.0%	 	 	 	168	 	 	 	3.6%	 	 	 	183	 	 	 	7.7%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
RevPAR for hotels in operation for at least 18 months during the period	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total hotels in operation	 	 	205	 	 	 	6.8%	 	 	 	220	 	 	 	12.3%	 	 	 	181	 	 	 	3.3%	 	 	 	194	 	 	 	5.7%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Revenue (million)	 	 	438.9	 	 	 	7.2%	 	 	 	506.1	 	 	 	13.3%	 	 	 	452.6	 	 	 	2.6%	 	 	 	1738.5	 	 	 	6.4%	 	
EBITDA (million)	 	 	144.5	 	 	 	20.0%	 	 	 	155.0	 	 	 	40.1%	 	 	 	90.3	 	 	 	12.3%	 	 	 	444.7	 	 	 	23.0%	 	
EBITDA from Operating Hotels (million)	 	 	163.0	 	 	 	17.7%	 	 	 	190.6	 	 	 	32.7%	 	 	 	136.2	 	 	 	8.1%	 	 	 	555.9	 	 	 	18.4%	 	
Net Income attributable to China Lodging Group (million)	 	 	79.7	 	 	 	27.2%	 	 	 	88.7	 	 	 	52.6%	 	 	 	34.9	 	 	 	23.8%	 	 	 	215.8	 	 	 	35.5%	 	
###
17