China Lodging Group Q3 Profit Up 30%

(RTTNews) - China Lodging Group, Ltd. (HTHT), a China-based multi-brand hotel group, on Tuesday reported a 30 percent increase in profit for the third quarter from last year, reflecting continued expansion of the company's hotel network. The company also said it has appointed Jenny Zhang as chief strategy officer, in addition to her existing role as chief financial officer.

Qi Ji, founder, executive chairman and chief executive officer of China Lodging Group said, "We continued our momentum from the first half of the year and are excited to deliver another strong quarter with solid same-hotel RevPAR growth and continuing year-over-year margin expansion. While the relatively soft macro environment, we are able to raise same-hotel ADR by 3% year-over-year in a third consecutive quarter."

China Lodging's third-quarter net income was 124.92 million Chinese yuan, or $20.41 million, up from 95.79 million yuan, or $15.2 million, in the year-ago period. On a per-share basis, earnings for the quarter were 0.50 yuan, or $0.08, up from 0.39 yuan last year. Earnings per ADS was 2.00 yuan, or $0.33, compared to 1.55 yuan last year.

Excluding share-based compensation expense, adjusted net income for the quarter was 133.84 million yuan or 0.54 yuan per share, compared to 103.58 million yuan or 0.42 yuan per share in the same period last year. The latest quarter's adjusted net income translates to $21.87 million or $0.09 per share.

Adjusted earnings per ADS was 2.14 yuan or $0.35. On average, analysts polled by Thomson Reuters expected the company to report earnings of $2.10 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew 28 percent to 1.15 billion yuan, or $187.36 million, from 893.64 million yuan in the same period last year. Analysts had a consensus revenue estimate of $1.12 billion.

The increase in revenues were primarily due to the company's continued expansion of its hotel network. Operating margin for the quarter rose to 15.0 percent from 13.5 percent in the year-ago period.

The ADR, which is defined as the average daily room rate for all hotels in operation excluding franchised Starway hotels, was 186 yuan in the quarter, compared with 183 yuan in the year-ago period.

The year-over-year increase in ADR of 1.5 percent was mainly attributable to a 3.2 percent increase in same-hotel ADR, partially offset by the city mix shifting toward lower-tier cities. The sequential increase resulted mainly from seasonality.

RevPAR, defined as revenue per available room for all hotels in operation excluding franchised Starway hotels, declined to 175 yuan from 178 yuan in the same period. The year-over-year decrease was a result of a lower occupancy rate offset by a higher ADR

During the third quarter, the company opened 24 net leased or leased-and-operated hotels and 98 net manachised or franchised-and-managed hotels. As of September 30, 2013, the company had 538 leased hotels, 777 manachised hotels, and 26 franchised Starway hotels in operation across 232 cities.

Looking ahead to the fourth quarter, China Lodging forecasts revenues in a range of 1.095 billion yuan to 1.113 billion yuan, representing year-over-year growth of 24 percent to 26 percent.

China Lodging said it has appointed Jenny Zhang as chief strategy officer, in addition to her existing role as chief financial officer. As the chief strategy officer, Zhang shall be responsible for incubating and developing the company's early-stage brands, including Hi Inn, Starway, Manxin and Joya, and leading other strategic initiatives.

HTHT closed Tuesday's regular trading session at $23.73, up $0.56 or 2.42 percent on a volume of 249,164 shares.