March 7, 2012

China Lodging Group, Limited Reports Fourth Quarter and Full Year 2011 Financial Results

-- 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.
-- 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.
-- 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 ADS[3] 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).
-- 201 net new hotels added in 2011, bringing the total hotel count to 639.
-- 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%

SHANGHAI, March 7, 2012 /PRNewswire-Asia-FirstCall/ -- 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

  • During the fourth quarter of 2011, the Company opened 59 new hotels, including 30 leased-and-operated hotels and 29 franchised-and-managed hotels.
  • 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.
  • 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.
  • 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.
  • 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.

Full Year 2011 Operational Highlights

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.

"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$109.6 million), 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.

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 operation[4] 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.

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.

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 228.9 million (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).

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.

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.

"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.

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.

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.

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.

Contact Information

Ida Yu

Investor Relations Manager

Tel: 86 (21) 6195 9561

Email: ir@htinns.com

http://ir.htinns.com

- Financial Tables and Operational Data Follow -

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

 

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

 

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 existing 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

 

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%

 

</

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)