Questions? +1 (202) 540-8337 Login
Trusted News Since 1995
A service for banking industry professionals · Friday, September 21, 2018 · 462,592,654 Articles · 3+ Million Readers

China Lodging Group, Limited Reports Fourth Quarter and Full Year 2017 Financial Results

  • A total of 3,746 hotels or 379,675 hotel rooms in operation as of December 31, 2017.
  • Net revenues increased 32.6% year-over-year to RMB2,214.9 million (US$340.4 million) 1 for the fourth quarter and 25.0% to RMB8,170.2 million (US$1,255.7 million) for the full year of 2017, at the high-end of guidance previously announced .
  • EBITDA (non-GAAP) increased 22.9% year-over-year to RMB450.7 million (US$69.3 million) for the fourth quarter and increased 36.5% to RMB2,361.1 million (US$362.9 million) for the full year of 2017. 
  • Net income attributable to China Lodging Group, Limited was RMB229.4 million (US$35.3 million) for the fourth quarter and RMB1,237.2 million (US$190.2 million) for the full year of 2017, increasing 82.3% year-over-year for the fourth quarter and increasing 53.8% for the full year of 2017.
  • Basic earnings per ADS2 were RMB3.28 (US$0.50) for the fourth quarter of 2017 and RMB17.72 (US$2.72) for the full year of 2017. Diluted earnings per ADS were RMB3.13 (US$0.48) for the fourth quarter of 2017 and RMB16.95 (US$2.60) for the full year of 2017. Excluding share-based compensation expenses, adjusted basic earnings per ADS (non-GAAP) were RMB3.55 (US$0.55) for the fourth quarter of 2017 and RMB18.67 (US$2.87) for the full year of 2017 and adjusted diluted earnings per ADS (non-GAAP) were RMB3.39 (US$0.52) for the fourth quarter of 2017 and RMB17.85 (US$2.74) for the full year of 2017.
  • The Company provided guidance for Q1 2018 net revenues growth of 27% to 29% year over year and full year 2018 net revenues growth of 16% to 19% from 2017.

SHANGHAI, China, March 13, 2018 (GLOBE NEWSWIRE) -- China Lodging Group, Limited (NASDAQ:HTHT) (“China Lodging Group”, “Huazhu” or the “Company”), a leading and fast-growing multi-brand hotel group in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter of 2017 Operational Highlights

  • During the fourth quarter of 2017, China Lodging Group opened 137 hotels, including 2 leased (“leased-and-operated”) hotels and 135 manachised (“franchised-and-managed”) hotels and franchised hotels.

  • The Company closed a total of 47 hotels, which included 15 leased hotels and 32 manachised and franchised hotels, during the fourth quarter of 2017. This was mainly due to:

    a) The Company's strategic focus to upgrade the quality of the product and service. The Company closed 5 hotels for brand upgrade purposes and permanently removed 11 hotels from its network for their non-compliance with the brand and operating standards. These hotels were mainly under HanTing and Hi Inn brands. By removing hotels of lower quality, the Company is able to provide a more consistent customer experience, which will help enhance both the brands and future profitability.  
    b) Property related issues, including rezoning and returning of military-owned properties, and expiry of leases, which resulted in the closure of 28 hotels. 
    c) Operating losses from hotels located mainly in selected 3rd or lower tier cities which resulted in the closure of 3 hotels.

  • The ADR, which is defined as the average daily rate for all hotels in operation, was RMB211 in the fourth quarter of 2017, compared with RMB186 in the fourth quarter of 2016 and RMB218 in the previous quarter. The year-over-year increase of 13.1% was due to both an increase in ADR of the mature hotels, as well as an increase in the proportion of midscale and upscale hotels with higher ADR in the Company’s brand mix. The sequential decrease resulted mainly from seasonality.

  • The occupancy rate for all hotels in operation was 86.0% in the fourth quarter of 2017, compared with 84.7% in the fourth quarter of 2016 and 93.1% in the previous quarter. The year-over-year increase of 1.4 percentage points was due to the improved performance across all brands as driven by strong travel demand and the increasing popularity of the Company’s brands. The sequential decrease resulted mainly from seasonality.

  • RevPAR, defined as revenue per available room for all hotels in operation, was RMB181 in the fourth quarter of 2017, compared with RMB158 in the fourth quarter of 2016 and RMB203 in the previous quarter. The year-over-year increase of 15.0% was attributable to both higher ADR and occupancy. The sequential decrease resulted mainly from seasonality.

  • For all hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB172 for the fourth quarter of 2017, representing a 6.5% increase from RMB162 for the fourth quarter of 2016, with a 4.9% increase in ADR and a 1.3-percentage-point increase in occupancy rate. The economy hotels registered a 6.9% same-hotel RevPAR improvement, driven by a 5.1% increase in ADR and a 1.5-percentage-point increase in occupancy rate. The midscale and upscale hotels registered a 4.8% same-hotel RevPAR improvement, driven by a 4.4% increase in ADR and a 0.3-percentage-point increase in occupancy rate. Crystal Orange hotels will not be counted in the same-hotel RevPAR statistics until they are in Huazhu system for 18 months.

Operational Highlights of full year 2017

  • For the full year of 2017, the company opened 86 leased hotels and 579 manachised hotels and franchised hotels, and closed 39 leased hotels and 149 manachised and franchised hotels. As of December 31, 2017, the Company had 671 leased hotels, 2,874 manachised hotels, and 201 franchised hotels in operation in 378 cities.  The number of hotel rooms in operation totaled 379,675, an increase of 14.6% from a year ago.

  • As of December 31, 2017, the Company had a total number of 696 hotels contracted or under construction, including 37 leased hotels and 659 manachised and franchised hotels.

  • For the full year of 2017, the ADR for all hotels in operation was RMB203, increasing 10.0% year-over-year from RMB185 in 2016. The occupancy rate for all hotels in operation was 88.3%, compared with 84.9% in 2016. As a result, the RevPAR for all hotels in operation was RMB180 in 2017, a 14.4% increase from RMB157 in 2016.

  • The same-hotel RevPAR was RMB174 in 2017, a 7.7% increase from RMB in 2016, with a 3.7% increase in ADR and a 3.3-percentage-point increase in occupancy rate. In 2017, the economy hotels and the midscale and upscale hotels posted an increase of 7.4% and 8.2% in same-hotel RevPAR, respectively.

  • As of December 31, 2017, the Company’s loyalty program had approximately 103 million members, who contributed approximately 76% of room nights sold during the full year of 2017 and approximately 87% of room nights were sold through the Company’s own direct channels.

“We are pleased to have finished 2017 with strong fourth quarter operating results and expecting another solid year in 2018. Thanks to successful product upgrade, brand mix up-shift, and improved operational environment, we achieved 14.4% increase year-over-year in group blended RevPAR. On the front of hotel development, in 2017, we opened more than three hotels every two days. Our hotel room inventory grew by 20% on a gross basis, or 15% net,” commented Ms. Jenny Zhang, Chief Executive Officer of China Lodging Group.

“Our consistent track record of strong hotel openings and pipeline growth demonstrates robust demand for our brands. In 2017, we continued to strengthen our economy brands by rolling out new models and launch a few of midscale brands such as HanTing Premium, CitiGo and urban Manxin. Our refreshed models have received positive market feedback from guests and franchisees.  Additionally, we have enriched our midscale brand portfolio by acquiring Crystal Orange and successfully integrated the Crystal Orange hotels into our network, which is expected to accelerate our growth and enhance our profitability in 2018. I’m also proud to announce that we have achieved a milestone of having over 100 million members in our loyalty program,” said Ms. Zhang. “Going forward, we will maintain our asset-light growth strategy and continue to invest in our brands and to improve our operational efficiency. We expect operational environment to continue its positive momentum and remain optimistic about outlook in 2018.”

 
Fourth Quarter and Full Year of 2017 Financial Results
 
(RMB in thousands) Q4 2016 Q3 2017 Q4 2017 2016FY   2017FY
Revenues:          
Leased and owned hotels 1,290,575 1,857,846 1,718,840 5,212,405   6,343,279
Manachised and franchised hotels  367,983 506,720 483,026 1,411,156   1,786,660
Others  11,365 8,445 13,032 31,219   40,257
Total revenues 1,669,923 2,373,011 2,214,898 6,654,780   8,170,196
Less: business tax and related surcharges  - - - (116,149 ) -
Net revenues 1,669,923 2,373,011 2,214,898 6,538,631   8,170,196
Net revenues from leased and owned hotels 1,290,575 1,857,846 1,718,840 5,121,431   6,343,279
Net revenues from manachised and franchised hotels 367,983 506,720 483,026 1,386,526   1,786,660
Others  11,365 8,445 13,032 30,674   40,257

Note: Value-added tax ("VAT") has been implemented for hospitality industry to replace business tax in China, effective May 1, 2016. For comparison purpose, the business tax and related surcharges in full year of 2016 is reallocated to reflect net revenues for each business.

Net revenues for the fourth quarter of 2017 were RMB2,214.9 million (US$340.4 million), representing a 32.6% year-over-year increase and a 6.7% sequential decrease. The year-over-year increase was primarily attributable to our hotel network expansion, improved blended RevPAR and the acquisition of Crystal Orange. The sequential decrease was due to seasonality.

Net revenues for the full year of 2017 were RMB8,170.2 million (US$1,255.7 million), representing an increase of 25.0% from the full year of 2016.

Net revenues from leased and owned hotels for the fourth quarter of 2017 were RMB1,718.8 million (US$264.2 million), representing a 33.2% year-over-year increase and a 7.5% sequential decrease.

For the full year of 2017, net revenues from leased and owned hotels were RMB6,343.3 million (US$974.9 million), representing a 23.9% year-over-year increase.

Net revenues from manachised and franchised hotels for the fourth quarter of 2017 were RMB483.0 million (US$74.2 million), representing a 31.3% year-over-year increase and a 4.7% sequential decrease.

For the full year of 2017, net revenues from manachised and franchised hotels were RMB 1,786.7 million (US$274.6 million), representing a 28.9% year-over-year increase. It accounts for 21.9% of net revenues, compared to 21.2% of net revenues for the full year of 2016.

Other revenues represent revenues generated from businesses other than the hotel operation, which mainly include revenues from Hua Zhu mall and the provision of IT products and services to hotels, totaling RMB13.0 million (US$2.0 million) in the fourth quarter of 2017.

For the full year of 2017, other revenues were RMB40.3 million (US$6.2 million).

           
(RMB in thousands) Q4 2016 Q3 2017 Q4 2017 2016FY 2017FY
Operating costs and expenses:          
Hotel operating costs 1,264,602 1,504,070 1,622,849 4,932,173 5,674,151
Other operating costs  2,319 4,816 6,836 7,606 17,324
Selling and marketing expenses  46,142 51,561 83,868 146,525 214,959
General and administrative expenses  143,434 153,725 236,213 492,141 690,970
Pre-opening expenses  19,747 67,632 71,575 71,847 206,454
Total operating costs and expenses 1,476,244 1,781,804 2,021,341 5,650,292 6,803,858
           

Hotel operating costs for the fourth quarter of 2017 were RMB1,622.8 million (US$249.4 million), compared to RMB1,264.6 million in the fourth quarter of 2016 and RMB1,504.1 million in the previous quarter, representing a 28.3% year-over-year increase and a 7.9% sequential increase. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2017 were RMB1,616.8 million (US$248.5 million), representing 73.0% of net revenues, compared to 75.5% for the fourth quarter in 2016 and 63.2% for the previous quarter. The year-over-year decrease in the percentage was mainly attributable to the improved blended RevPAR and the increased portion of manachised-and-franchised hotels. The sequential increase in the percentage was mainly due to seasonality.

For the full year of 2017, hotel operating costs were RMB5,674.2 million (US$872.1 million), compared to RMB4,932.2 million in 2016. Excluding share-based compensation, hotel operating costs (non-GAAP) were RMB5,654.4 million (US$869.1 million), representing 69.2% of net revenues, compared to 75.2% in 2016.

Selling and marketing expenses for the fourth quarter of 2017 were RMB83.9 million (US$12.9 million), compared to RMB46.1 million in the fourth quarter of 2016 and RMB51.6 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2017 were RMB83.3 million (US$12.8 million), or 3.8% of net revenues, compared to 2.8% for the fourth quarter of 2016 and 2.2% for the previous quarter. The year-over-year and sequential increase were mainly attributable to redesign of a number of our hotel brands as well as marketing activities to promote our brands and loyalty programs in the fourth quarter of 2017.

For the full year of 2017, selling and marketing expenses were RMB215.0 million (US$33.0 million), compared to RMB146.5 million in 2016. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB213.4 million (US$32.8 million), representing 2.6% of net revenues, compared to 2.2% in 2016. The increase was mainly due to redesign of a number of our hotel brands as well as marketing activities to promote our brands and loyalty programs.

General and administrative expenses for the fourth quarter of 2017 were RMB236.2 million (US$36.3 million), compared to RMB143.4 million in the fourth quarter of 2016 and RMB153.7 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2017 were RMB223.6 million (US$34.4 million), representing 10.1% of net revenues, compared with 8.1% of net revenues in the fourth quarter of 2016 and 6.1% in the previous quarter. The year-over-year and sequential increase in the percentage was mainly due to the increase of performance-related personnel costs and professional fees.

For the full year of 2017, general and administrative expenses were RMB691.0 million (US$106.2 million), compared to RMB492.1 million in 2016. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB645.9 million (US$99.3 million), representing 7.9% of net revenues, compared to 6.9% in 2016. The increase was mainly attributable to the increase of performance-related personnel costs, general and administrative expenses related to the newly acquired Crystal Orange operations, and one-off Crystal Orange acquisition transaction costs amounting to RMB45.2 million in the first half of 2017.

Pre-opening expenses for the fourth quarter of 2017 were RMB71.6 million (US$11.0 million), representing a 262.5% year-over-year increase and a 5.8% sequential increase. The year-over-year and sequential increases were mainly because more leased mid-and-upscale hotels were under construction in the fourth quarter of 2017.

Pre-opening expenses for the full year of 2017 were RMB206.5 million (US$31.7 million), compared to RMB71.8 million in 2016, representing a year-over-year increase of 187.4%. The increase in pre-opening expenses was mainly attributable to more leased mid-and-upscale hotels opened or under construction in 2017 than in 2016. The pre-opening expenses as a percentage of net revenues increased to 2.5% in 2017 from 1.1% in 2016.

Income from operations for the fourth quarter of 2017 was RMB236.1 million (US$36.3 million), compared to RMB185.7 million in the fourth quarter of 2016 and RMB591.3 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2017 was RMB255.4 million (US$39.2 million), compared to adjusted income from operation (non-GAAP) of RMB198.2 million for the fourth quarter of 2016 and RMB606.6 million for the previous quarter. The adjusted operating margin, defined as adjusted income from operations (non-GAAP) as percentage of net revenues, for the fourth quarter of 2017 was 11.6%, compared with 11.8% in the fourth quarter of 2016 and 25.5% in the previous quarter. The sequential decrease in the operating margin was due to seasonality.

Income from operations for the full year of 2017 was RMB1,437.5 million (US$220.9 million), compared to RMB870.9 million in 2016. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the full year of 2017 was RMB1,503.9 million (US$231.1 million), compared to RMB926.3 million for the full year of 2016. The adjusted operating margin (non-GAAP) for the year of 2017 was 18.4%, compared with 14.1% for the full year of 2016. The improvement of 4.3-percentage-points in the adjusted operating margin was mainly attributable to the higher blended RevPAR and the increased portion of manachised-and-franchised hotels in 2017.

Net income attributable to China Lodging Group, Limited for the fourth quarter of 2017 was RMB229.4 million (US$35.3 million), as 10.4% of net revenues, compared to RMB125.9 million, as 7.5% of net revenues in the fourth quarter of 2016 and RMB470.1 million, as 19.8% of net revenues 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 2017 was RMB248.7 million (US$38.2 million), representing a 79.7% year-over-year increase and a 48.8% sequential decrease.

Net income attributable to China Lodging Group, Limited for the full year of 2017 was RMB1,237.2 million (US$190.2 million), as 15.1% of net revenues, compared to RMB804.6 million, as 12.3% of net revenues in 2016. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2017 was RMB1,303.6 million (US$200.4 million), compared to RMB860.1 million in 2016. The year-over-year increase of 51.6% was mainly attributable to the expanded hotel network, improved blended RevPAR and the acquisition of Crystal Orange in 2017.

Basic and diluted earnings per share/ADS.  For the fourth quarter of 2017, basic earnings per share were RMB0.82 (US$0.13) and diluted earnings per share were RMB0.78 (US$0.12); basic earnings per ADS were RMB3.28 (US$0.50) and diluted earnings per ADS were RMB3.13 (US$0.48). For the fourth quarter of 2017, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB0.89 (US$0.14) and adjusted diluted earnings per share (non-GAAP) were RMB0.85 (US$0.13); adjusted basic earnings per ADS (non-GAAP) were RMB3.55 (US$0.55) and adjusted diluted earnings per ADS (non-GAAP) were RMB3.39 (US$0.52).

For the full year of 2017, basic earnings per share were RMB4.43 (US$0.68) and diluted earnings per share were RMB4.24 (US$0.65); basic earnings per ADS were RMB17.72 (US$2.72), while diluted earnings per ADS were RMB16.95 (US$2.60). For the full year of 2017, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB4.67 (US$0.72), while adjusted diluted earnings per share (non-GAAP) were RMB4.46 (US$0.69), and adjusted basic earnings per ADS (non-GAAP) were RMB18.67 (US$2.87), while adjusted diluted earnings per ADS (non-GAAP) were RMB17.85 (US$2.74).

EBITDA (non-GAAP) for the fourth quarter of 2017 was RMB450.7 million (US$69.3 million), compared with RMB366.8 million in the fourth quarter of 2016 and RMB849.6 million in the previous quarter. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the fourth quarter of 2017 was RMB470.0 million (US$72.2 million), compared with RMB379.3 million for the fourth quarter of 2016 and RMB864.9 million for the previous quarter.

EBITDA (non-GAAP) for the full year of 2017 was RMB2,361.1 million (US$362.9 million), compared to RMB1,730.3 million in 2016. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the full year of 2017 was RMB2,427.5 million (US$373.1 million), compared with RMB1,785.8 million in 2016, representing a 35.9% year-over-year increase. The year-over-year increase was mainly due to the expansion of the Company’s hotel network, the improved RevPAR and the acquisition of Crystal Orange in 2017. The adjusted EBITDA margin (non-GAAP) for the year of 2017 was 29.7%, compared with 27.3% for the full year of 2016.

Cash flow. Operating cash inflow for the fourth quarter of 2017 was RMB554.2 million (US$85.2 million). Investing cash outflow for the fourth quarter was RMB1,403.4 million (US$215.7 million).

Operating cash inflow for the full year of 2017 was RMB2,452.6 million (US$377.0 million), representing an increase of 18.7% from 2016. The significant growth was mainly due to the Company’s fast network expansion with manachise and franchise models. Investing cash outflow for the full year of 2017 was RMB6,716.3 million (US$1,032.3 million), compared to investing cash inflow of RMB183.8 million in 2016. The fluctuation was mainly attributable to cash paid for business acquisitions such as Crystal Orange, the purchase of long-term investments, and increase in restricted cash.

Cash and cash equivalents and Restricted cash. As of December 31, 2017, the Company had a total balance of cash and cash equivalents, restricted cash of RMB3,956.1 million (US$608.0 million).

Debt financing. As of December 31, 2017, the Company had a total loan balance of RMB5,052.6 million (US$776.6 million).  

Guidance
In the first quarter of 2018, the Company expects net revenues to grow 27% to 29% year-over-year. For the full year 2018, the Company expects net revenues to grow 16% to 19% from 2017.

The Company anticipates the gross opening of 650-700 hotels in 2018, 60%-65% of which are midscale and upscale hotels.

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 9 p.m. ET, Tuesday, March 13, 2018 (or 9 a.m. on Wednesday, March 14, 2018 in the Shanghai/Hong Kong time zone) following the announcement. To participate in the event by telephone, please dial +1 (845) 675 0438 (for callers in the US), +86 400 120 0654 (for callers in China Mainland), +852 3018 6776 (for callers in Hong Kong) or +65 6713 5440 (for callers outside of the US, China Mainland, and Hong Kong) and enter pass code 7095016.  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 20, 2018. Please dial +1 (855) 452 5696 (for callers in the US) or +61 2 9003 4211 (for callers outside the US) and entering pass code 7095016.

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.huazhu.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 and marketing 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 earnings per share and per ADS excluding share-based compensation expenses; EBITDA; and adjusted EBITDA excluding share-based compensation expenses. 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 Company performance by excluding share-based compensation expenses that may not be indicative of Company operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Company 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 also useful to investors in allowing for greater transparency with respect to supplemental information used regularly by Company management in 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 that comprise a significant portion of the Company’s 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, which is defined as EBITDA before share-based compensation expenses, to assess operating results of the hotels in operation. The Company believes that the exclusion of share-based compensation expenses helps facilitate year-on-year comparison of the results of operations as the share-based compensation expenses may not be indicative of Company operating performance. Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of hotels. The presentation of EBITDA and adjusted EBITDA 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 has certain limitations. Depreciation and amortization expense for various long-term assets (including land use rights), income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. 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 income, interest expense, income tax expense, 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 are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA 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 these 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 may not be comparable to EBITDA or adjusted EBITDA – or similarly titled measures utilized by other companies – since such other companies may not calculate EBITDA or adjusted EBITDA in the same manner as the Company does.

Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, to the 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 hotel operator and franchisor in China. As of December 31, 2017, the Company had 3,746 hotels or 379,675 rooms in operation in 378 cities. With a primary focus on economy and midscale hotel segments, China Lodging Group's brands include Hi Inn, HanTing Hotel, Elan Hotel, HanTing Premium Hotel, JI Hotel, Starway Hotel, Joya Hotel, VUE Hotel, Crystal Orange Hotel, Orange Hotel Select, Orange Hotel and Manxin Hotel. The Company also has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in Pan-China region.
The Company's business includes leased and owned, manachised and franchised models. Under the lease and ownership model, the Company directly operates hotels typically located on leased or owned properties. Under the manachise model, the Company manages manachised hotels through the on-site hotel managers it appoints and collects fees from franchisees. Under the franchise model, the Company provides training, reservation and support services to the franchised hotels and collects fees from franchisees but does not appoint on-site hotel managers. The Company applies a consistent standard and platform across all of its hotels. As of December 31, 2017, China Lodging Group operates 22 percent of its hotel rooms under lease and ownership model, 78 percent under manachise and franchise models.

For more information, please visit the Company’s website: http://ir.huazhu.com.
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 brands, 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.

_____________________

/EIN News/ -- 1 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.5063 on December 29, 2017 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.

2 Each ADS represents four of the Company’s ordinary shares.

3 In 2017, we adopted ASU No.2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting by using a retrospective transition method in the unaudited condensed consolidated statements of cash flows. Accordingly we reclassified Excess tax benefit from share-based compensation from financing activities to operating activities in the unaudited condensed consolidated statements of cash flows for the quarters ended December 31, 2016, September 30, 2017 and December 31, 2017, and the years ended December 31, 2016 and 2017, respectively.

---Financial Tables and Operational Data Follow—

 
China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
 
  December 31, 2016
  December 31, 2017
  RMB
  RMB US$
  (in thousands)
   
ASSETS      
Current assets:      
Cash and cash equivalents 3,235,007     3,474,719       534,054  
Restricted cash 500     481,348       73,982  
Short-term investments -     129,911       19,967  
Accounts receivable, net 141,649     162,910       25,039  
Loan receivables 22,410     380,580       58,494  
Amounts due from related parties 98,453     118,537       18,219  
Prepaid rent 446,127     659,973       101,436  
Inventories 21,606     24,006       3,690  
Other current assets 208,929     329,140       50,588  
Total current assets 4,174,681     5,761,124       885,469  
       
Property and equipment, net 3,710,468     4,522,878       695,154  
Intangible assets, net 342,694     1,643,972       252,674  
Land use rights 145,521     140,108       21,534  
Long-term investments 1,064,321     2,361,969       363,028  
Goodwill 171,504     2,264,758       348,087  
Loan receivables 7,269     42,330       6,506  
Other assets 200,492     364,660       56,047  
Deferred tax assets 176,414     325,643       50,050  
Total assets 9,993,364     17,427,442       2,678,549  
               
LIABILITIES AND EQUITY      
Current liabilities:      
Short-term debt 298,291     130,684       20,086  
Long-term debt, current portion -     131       20  
Accounts payable 584,731     766,565       117,819  
Amounts due to related parties 11,058     36,890       5,670  
Salary and welfare payables 274,259     427,070       65,640  
Deferred revenue 749,793     832,021       127,879  
Accrued expenses and other current liabilities 895,837     1,264,902       194,412  
Income tax payable 152,112     218,238       33,542  
Total current liabilities 2,966,081     3,676,501       565,068  
       
Long-term debt -     4,921,774       756,463  
Deferred rent 1,023,843     1,380,484       212,177  
Deferred revenue 166,963     171,735       26,394  
Other long-term liabilities 323,991     380,578       58,494  
Deferred tax liabilities 96,329     422,090       64,874  
Total liabilities 4,577,207     10,953,162       1,683,470  
                 
Equity:      
Ordinary shares 204     212       33  
Treasury shares (107,331 )   (107,331 )     (16,496 )
Additional paid-in capital 3,699,056     3,624,135       557,019  
Retained earnings 1,812,174     2,753,715       423,238  
Accumulated other comprehensive income (loss) (4,503 )   167,965       25,816  
Total China Lodging Group, Limited shareholders' equity 5,399,600     6,438,696       989,610  
Noncontrolling interest 16,557     35,584       5,469  
Total equity 5,416,157     6,474,280       995,079  
Total liabilities and equity 9,993,364     17,427,442       2,678,549  
                 


 
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
 
  Quarter Ended
  Year Ended
  December
31, 2016

  September
30,2017

  December
31, 2017

  December 
31, 2016
 

  December
31, 2017

  RMB
  RMB
  RMB
  US$
  RMB
  RMB
  US$
  (in thousands, except per share and per ADS data)
Revenues:                                
Leased and owned hotels 1,290,575     1,857,846     1,718,840     264,181     5,212,405     6,343,279     974,944  
Manachised and franchised hotels 367,983     506,720     483,026     74,240     1,411,156     1,786,660     274,605  
Others 11,365     8,445     13,032     2,003     31,219     40,257     6,187  
Total revenues 1,669,923     2,373,011     2,214,898     340,424     6,654,780     8,170,196     1,255,736  
Less: business tax and related -     -     -         (116,149 )   -      
Net revenues 1,669,923     2,373,011     2,214,898     340,424     6,538,631     8,170,196     1,255,736  
                                                           
Operating costs and expenses:              
Hotel operating costs:              
Rents (461,112 )   (533,285 )   (560,178 )   (86,098 )   (1,870,879 )   (2,058,954 )   (316,455 )
Utilities (78,451 )   (104,284 )   (89,024 )   (13,683 )   (345,615 )   (365,100 )   (56,115 )
Personnel costs (272,706 )   (366,019 )   (412,924 )   (63,465 )   (1,088,380 )   (1,388,284 )   (213,376 )
Depreciation and amortization (169,350 )   (214,069 )   (204,147 )   (31,377 )   (676,996 )   (773,202 )   (118,839 )
Consumables, food and beverage  (127,864 )   (150,458 )   (154,314 )   (23,717 )   (494,764 )   (550,513 )   (84,612 )
Others  (155,119 )   (135,955 )   (202,262 )   (31,087 )   (455,539 )   (538,098 )   (82,704 )
Total hotel operating costs (1,264,602 )   (1,504,070 )   (1,622,849 )   (249,427 )   (4,932,173 )   (5,674,151 )   (872,101 )
Other operating costs (2,319 )   (4,816 )   (6,836 )   (1,051 )   (7,606 )   (17,324 )   (2,663 )
Selling and marketing expenses (46,142 )   (51,561 )   (83,868 )   (12,890 )   (146,525 )   (214,959 )   (33,039 )
General and administrative expenses (143,434 )   (153,725 )   (236,213 )   (36,305 )   (492,141 )   (690,970 )   (106,200 )
Pre-opening expenses  (19,747 )   (67,632 )   (71,575 )   (11,001 )   (71,847 )   (206,454 )   (31,731 )
Total operating costs and expenses (1,476,244 )   (1,781,804 )   (2,021,341 )   (310,674   )   (5,650,292 )   (6,803,858 )   (1,045,734 )
Other operating income (expense), net (7,961 )   137     42,563     6,541     (17,440 )   71,175     10,940  
Income from operations 185,718     591,344     236,120     36,291     870,899     1,437,513     220,942  
Interest income 22,939     31,807     40,713     6,257     67,366     112,645     17,313  
Interest expense (2,289 )   (34,797 )   (34,295 )   (5,271 )   (11,056 )   (87,320 )   (13,421 )
Other income, net (3,207 )   51,123     11,195     1,721     133,755     163,678     25,157  
Foreign exchange gain (loss) 10,341     (5,833 )   (2,341 )   (360 )   16,481     (18,128 )   (2,786 )
Income before income taxes  213,502     633,644     251,392     38,638     1,077,445     1,608,388     247,205  
Income tax expense (87,745 )   (158,446 )   (18,986 )   (2,918 )   (287,120 )   (359,958 )   (55,325 )
Income (Loss) from equity method investments 3,734     (3,279 )   (2,871 )   (441 )   6,157     (11,783 )   (1,811 )
Net income 129,491     471,919     229,535     35,279     796,482     1,236,647     190,069  
Less: net loss (income) attributable to noncontrolling interest (3,633 )   (1,858 )   (116 )   (18 )   8,133     555     86  
Net income attributable to China Lodging Group, Limited  125,858     470,061     229,419     35,261     804,615     1,237,202     190,155  
         
     
     
     
     
       
Other comprehensive income              
Unrealized securities holding gains (losses), net of tax 3,278     (5,757 )   11,400     1,752     16,449     868     133  
Reclassification of gains realized to net income, net of tax  -      -     -         (67,921 )   (5,282 )   (812 )
Foreign currency translation adjustments, net of tax (6,911 )   71,077     58,502     8,992     (12,627 )   176,882     27,186  
Comprehensive income  125,858     537,239     299,437     46,023     732,383     1,409,115     216,576  
Comprehensive loss (income) attributable to noncontrolling interest (3,633 )   (1,858 )   (116 )   (18 )   8,133     555     86  
Comprehensive income attributable to China Lodging Group, Limited  122,225     535,381     299,321     46,005     740,516     1,409,670     216,662  
                                                           
Earnings per share:              
Basic 0.45     1.68     0.82     0.13     2.92     4.43     0.68  
Diluted  0.44     1.62     0.78     0.12     2.84     4.24     0.65  
               
Earnings per ADS:              
Basic 1.81     6.72     3.28     0.50     11.70     17.72     2.72  
Diluted 1.76     6.50     3.13     0.48     11.38     16.95     2.60  
               
Weighted average number of shares used in computation:                                        
Basic  277,473     279,631     279,861     279,861     275,139     279,272     279,272  
Diluted  285,887     289,317     298,903     298,903     282,889     293,074     293,074  
                                         


 
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
 
  Quarter Ended
  Year Ended
  December
31, 2016
  September
30, 2017
  December
31, 2017
  December
31,2016
  December
31, 2017
  RMB
  RMB
  RMB
  US$
  RMB
  RMB
  US$
  (in thousands)
Operating activities3:              
Net income 129,491     471,919       229,535     35,279     796,482     1,236,647     190,069  
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation 12,527     15,302     19,245     2,958     55,436     66,367     10,200  
Depreciation and amortization 173,826     218,081     208,756     32,085     694,894     789,252     121,306  
Amortization of issuance cost of convertible notes -     -     2,598     399     -     2,598     399  
Deferred taxes 30,809     2,823     (81,100 )   (12,465 )   33,446     (76,237 )   (11,717 )
Bad debt expenses 1,200     -     1,434     220     1,082     2,446     376  
Deferred rent 29,764     42,063     103,688     15,937     103,322     209,074     32,134  
Loss from disposal of property and equipment 1,240     -     (2,795 )   (430 )   9,333     12,884     1,980  
Impairment loss 62,669     32,294     92,480     14,214     153,741     169,213     26,008  
Loss (Income) from equity method investments (3,734 )   3,279     2,871     441     (6,157 )   11,783     1,811  
Investment loss (gain) -     (50,781 )   (44,403 )   (6,825 )   (116,763 )   (159,974 )   (24,588 )
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable 922     (7,798 )   10,735     1,650     (46,211 )   4,207     647  
Prepaid rent (43,153 )   (25,934 )   (131,592 )   (20,225 )   (25,380 )   (188,653 )   (28,995 )
Inventories 167     5,527     3,684     566     3,923     2,766     425  
Amounts due from related parties (4,537 )   (6,465 )   (23,967 )   (3,684 )   (9,314 )   (31,151 )   (4,788 )
Other current assets (11,803 )   (16,828 )   (56,720 )   (8,718 )   (40,813 )   (76,320 )   (11,730 )
Other assets 5,362     (23,696 )   4,691     721     (5,046 )   (54,411 )   (8,363 )
Accounts payable 39,690     11,114     35,417     5,444     59,129     8,141     1,251  
Amounts due to related parties 1,796     311     4,234     651     7,489     3,093     475  
Salary and welfare payables 111,005     (42,850 )   223,455     34,345     60,669     133,142     20,464  
Deferred revenue (89,742 )   23,457     13,838     2,127     19,529     4,016     617  
Accrued expenses and other current
liabilities
3,665     186,092     (40,053 )   (6,156 )   202,351     288,185     44,293  
Income tax payable (11,563 )   47,266     (39,224 )   (6,028 )   64,087     44,688     6,868  
Other long-term liabilities 14,339     12,984     17,386     2,672     51,072     50,840     7,813  
Net cash provided by operating activities 453,940     898,160     554,193     85,178     2,066,301     2,452,596     376,955  
                                         
Investing activities:              
Purchases of property and equipment (109,231 )   (210,235 )    (267,332 )   (41,088 )   (503,136 )   (819,523 )   (125,958 )
Purchases of intangibles (3,517 )   (2,702 )    (4,079 )   (627 )   (13,557 )   (7,854 )   (1,207 )
Amount received as a result of government zoning -     -      2,593     399     2,099     2,593     399  
Acquisitions, net of cash received (1,683 )   -      (330 )   (51 )   131,501     (3,745,588 )   (575,686 )
Proceeds from disposal of subisidary and branch, net of cash disposed -     -      13,684     2,103     (20,668 )   13,684     2,103  
Purchase of long-term investments (152,321 )   (175,300 )    (856,682 )   (131,670 )   (293,125 )   (1,327,508 )   (204,034 )
Proceeds from maturity/sale of long-term
investments
-     110      1,857     285     14,842     128,174     19,700  
Payment for shareholder loan to equity investees (1,214 )   (30,370 )    (6,079 )   (934 )   (39,387 )   (113,206 )   (17,399 )
Collection of shareholder loan from equity investees -     71,355     -     -     9,285     119,855     18,421  
Purchase of short-term investments -     (95,802 )   -     -     -     (95,802 )   (14,724 )
Proceeds from maturity/sale of short-term investments -     -     -     -     526,443     -     -  
Payment for the origination of loan receivables -     (75,992 )   (319,500 )   (49,106 )   (36,420 )   (445,892 )   (68,532 )
Proceeds from collection of loan receivables 25,622     25,021     20,303     3,121     45,885     55,662     8,554  
Decrease (increase) in restricted cash 1,657     (26,012 )   12,163     1,869     360,000     (480,849 )   (73,905 )
Net cash provided by (used in) investing activities (240,687 )   (519,927 )   (1,403,402 )   (215,699 )   183,762     (6,716,254 )   (1,032,268 )
                                         
Financing activities:              
Net proceeds from issuance of ordinary shares upon exercise of options 3,668     580     1,875     288     12,206     9,073     1,394  
Proceeds from short-term debt -     -     -     -     281,719     136,488     20,978  
Repayment of short-term debt -     (26,913 )   -     -     (332,555 )   (294,677 )   (45,291 )
Proceeds from long-term debt -     -     -     -     -     3,633,174     558,409  
Repayment of long-term debt -     -     (1,650,916 )   (253,741 )   -     (1,650,917 )   (253,741 )
Funds advanced from noncontrolling interest
holders
7,453     11,913     34,972     5,375     11,453     83,573     12,845  
Repayment of funds advanced from
noncontrolling interest holders
(400 )   (7,053 )   -     -     (600 )   (8,730 )   (1,342 )
Acquisition of noncontrolling interest (4,083 )     -     -     -     (4,083 )   (3,750 )   (576 )
Contribution from noncontrolling interest holders 10,500     890     17,743     2,728     45,604     25,575     3,931  
Dividends paid to noncontrolling interest holders (612 )   (240 )   (240 )   (37 )   (3,677 )   (2,810 )   (432 )
Dividends paid -     -     (306,343 )   (47,084 )   (276,261 )   (306,343 )   (47,084 )
Proceeds from issuance of convertible notes, net of issuance cost and capped call option -     -     2,925,202     449,595     -     2,925,203     449,595  
Debt financing and administrative costs paid -     -     (9,763 )   (1,501 )   -     (9,763 )   (1,501 )
Proceeds from ADS Lending -     -     7     1     -     7     1  
Net cash provided by (used in) financing activities 16,526     (20,823 )   1,012,537     155,624     (266,194 )   4,536,103     697,186  
                                         
Effect of exchange rate changes on cash and cash equivalents 3,397     (4,677 )   (21,717 )   (3,338 )   13,300     (32,733 )   (5,031 )
Net increase in cash and cash equivalents 233,176     352,733     141,611     21,765     1,997,169     239,712     36,842  
Cash and cash equivalents at the beginning of the period 3,001,831     2,980,375     3,333,108     512,289     1,237,838     3,235,007     497,212  
Cash and cash equivalents at the end of the period 3,235,007     3,333,108     3,474,719     534,054     3,235,007     3,474,719     534,054  
                                         

___________________

3 In 2017, we adopted ASU No.2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting by using a retrospective transition method in the unaudited condensed consolidated statements of cash flows. Accordingly we reclassified Excess tax benefit from share-based compensation from financing activities to operating activities in the unaudited condensed consolidated statements of cash flows for the quarters ended December 31, 2016, September 30, 2017 and December 31, 2017, and the years ended December 31, 2016 and 2017, respectively.

 
China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
 
  Quarter Ended December 31, 2017
  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 1,622,849   73.3 %   6,091   0.3 %   1,616,758   73.0 %
Other operating costs 6,836   0.3 %   -   0.0 %   6,836   0.3 %
Selling and marketing expenses 83,868   3.8 %   551   0.0 %   83,317   3.8 %
General and administrative expenses 236,213   10.7 %   12,603   0.6 %   223,610   10.1 %
Pre-opening expenses 71,575   3.2 %   -   0.0 %   71,575   3.2 %
Total operating costs and expenses 2,021,341   91.3 %   19,245   0.9 %   2,002,096   90.4 %
Income from operations 236,120   10.7 %   19,245   0.9 %   255,365   11.6 %
                       
  Quarter Ended December 31, 2017
  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 249,427   73.3 %   936   0.3 %   248,491   73.0 %
Other operating costs 1,051   0.3 %   -   0.0 %   1,051   0.3 %
Selling and marketing expenses 12,890   3.8 %   85   0.0 %   12,805   3.8 %
General and administrative expenses 36,305   10.7 %   1,937   0.6 %   34,368   10.1 %
Pre-opening expenses 11,001   3.2 %   -   0.0 %   11,001   3.2 %
Total operating costs and expenses 310,674   91.3 %   2,958   0.9 %   307,716   90.4 %
Income from operations 36,291   10.7 %   2,958   0.9 %   39,249   11.6 %
                             
  Quarter Ended September 30, 2017
  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 1,504,070   63.4 %   4,460   0.2 %   1,499,610   63.2 %
Other operating costs 4,816   0.2 %   -   0.0 %   4,816   0.2 %
Selling and marketing expenses 51,561   2.2 %   321   0.0 %   51,240   2.2 %
General and administrative expenses 153,725   6.5 %   10,521   0.4 %   143,204   6.1 %
Pre-opening expenses 67,632   2.9 %   -   0.0 %   67,632   2.9 %
Total operating costs and expenses 1,781,804   75.2 %   15,302   0.6 %   1,766,502   74.6 %
Income from operations 591,344   24.9 %   15,302   0.6 %   606,646   25.5 %
                             
  Quarter Ended December 31, 2016
  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 1,264,602   75.7 %   3,738   0.2 %   1,260,864   75.5 %
Other operating costs 2,319   0.1 %   -   0.0 %   2,319   0.1 %
Selling and marketing expenses 46,142   2.8 %   52   0.0 %    46,090   2.8 %
General and administrative expenses 143,434   8.6 %   8,737   0.5 %   134,697     8.1 %
Pre-opening expenses 19,747   1.2 %    -   0.0 %   19,747   1.2 %
Total operating costs and expenses 1,476,244   88.4 %   12,527   0.7 %    1,463,717   87.7 %
Income from operations 185,718   11.1 %   12,527   0.7 %   198,245   11.8 %


 
  Year Ended December 31, 2017
  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 5,674,151   69.4 %   19,725   0.2 %   5,654,426   69.2 %
Other operating costs 17,324   0.2 %   -   0.0 %   17,324   0.2 %
Selling and marketing expenses 214,959   2.6 %   1,530   0.0 %   213,429   2.6 %
General and administrative expenses 690,970   8.5 %   45,112   0.6 %   645,858   7.9 %
Pre-opening expenses 206,454   2.5 %   -   0.0 %   206,454   2.5 %
Total operating costs and expenses 6,803,858   83.2 %   66,367   0.8 %   6,737,491   82.4 %
Income from operations 1,437,513   17.6 %   66,367   0.8 %   1,503,880   18.4 %
                             
  Year Ended December 31, 2017
  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 872,101   69.4 %   3,031   0.2 %   869,070   69.2 %
Other operating costs 2,663   0.2 %   -   0.0 %   2,663   0.2 %
Selling and marketing expenses 33,039   2.6 %   235   0.0 %   32,804   2.6 %
General and administrative expenses 106,200   8.5 %   6,934   0.6 %   99,266   7.9 %
Pre-opening expenses 31,731   2.5 %   -   0.0 %   31,731   2.5 %
Total operating costs and expenses 1,045,734   83.2 %   10,200   0.8 %   1,035,534   82.4 %
Income from operations 220,942   17.6 %   10,200   0.8 %   231,142   18.4 %
                             
  Year Ended December 31, 2016
  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 4,932,173   75.4 %   13,603   0.2 %   4,918,570   75.2 %
Other operating costs 7,606   0.1 %   -   0.0 %   7,606   0.1 %
Selling and marketing expenses 146,525   2.2 %   811   0.0 %    145,714   2.2 %
General and administrative expenses 492,141   7.5 %   41,022   0.6 %   451,119    6.9 %
Pre-opening expenses 71,847   1.1 %   -   0.0 %   71,847   1.1 %
Total operating costs and expenses 5,650,292   86.3 %   55,436   0.8 %   5,594,856   85.5 %
Income from operations 870,899   13.3 %   55,436   0.8 %   926,335   14.1 %
                             


 
China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
 
  Quarter Ended
  Year Ended
  December
31, 2016
  September
30,2017
  December
31, 2017
  December 
31, 2016
  December
31, 2017
  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) 125,858   470,061   229,419   35,261   804,615   1,237,202   190,155  
Share-based compensation expenses 12,527   15,302   19,245   2,958   55,436   66,367   10,200  
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP) 138,385   485,363   248,664   38,219   860,051   1,303,569   200,355  
                             
Earnings per share (GAAP)              
  Basic 0.45   1.68   0.82   0.13   2.92   4.43   0.68  
  Diluted 0.44   1.62   0.78   0.12   2.84   4.24   0.65  
               
Earnings per ADS (GAAP)              
  Basic 1.81   6.72   3.28   0.50   11.70   17.72   2.72    
  Diluted 1.76   6.50   3.13   0.48   11.38   16.95   2.60  
               
Adjusted earnings per share (non-GAAP)              
  Basic 0.50   1.74   0.89   0.14   3.13   4.67   0.72  
  Diluted 0.48   1.68   0.85   0.13   3.04   4.46   0.69  
               
Adjusted earnings per ADS (non-GAAP)              
  Basic 1.99   6.94   3.55   0.55   12.50   18.67   2.87  
  Diluted 1.94   6.71   3.39   0.52   12.16   17.85   2.74  
               
Weighted average number of shares used in computation              
  Basic 277,473   279,631   279,861   279,861   275,139   279,272   279,272  
  Diluted 285,887   289,317   298,903   298,903   282,889   293,074   293,074  
               


   
  Quarter Ended
  Year Ended
  December
31, 2016
  September
30,2017

  December
31, 2017
  December 
31, 2016

  December
31, 2017
  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) 125,858     470,061     229,419     35,261     804,615     1,237,202     190,155  
Interest income (22,939 )   (31,807 )   (40,713 )   (6,257 )   (67,366 )   (112,645 )   (17,313 )
Interest expense 2,289     34,797     34,295     5,271     11,056     87,320     13,421  
Income tax expense 87,745     158,446     18,986     2,918     287,120     359,958     55,325  
Depreciation and amortization 173,826     218,081     208,756     32,085     694,894     789,252     121,306  
EBITDA (non-GAAP) 366,779     849,578     450,743     69,278     1,730,319     2,361,087     362,894  
Share-based compensation 12,527     15,302     19,245     2,958     55,436     66,367     10,200  
Adjusted EBITDA (non-GAAP) 379,306     864,880     469,988     72,236     1,785,755     2,427,454     373,094  
                                         


 
 China Lodging Group, Limited 
 
Operational Data      
  As of
  December 31,   September 30,   December 31,  
  2016   2017   2017  
Total hotels in operation:   3,269     3,656     3,746  
  Leased and owned hotels   624     684     671  
  Manachised hotels   2,471     2,766     2,874  
  Franchised hotels    174     206     201  
Total hotel rooms in operation   331,347     372,464     379,675  
  Leased and owned hotels 78,160   86,568     85,018  
  Manachised hotels 237,094   265,701   275,065  
  Franchised hotels   16,093     20,195     19,592  
Number of cities   367   375     378  
       
  For the quarter ended
  December 31,   September 30,   December 31,  
  2016   2017   2017  
Occupancy rate (as a percentage)      
  Leased and owned hotels 85.5 % 92.8 % 87.2 %
  Manachised hotels 85.4 % 94.1 % 86.6 %
  Franchised hotels 68.1 % 78.9 % 72.1 %
  Blended 84.7 % 93.1 % 86.0 %
Average daily room rate  (in RMB)      
  Leased and owned hotels 211   257   251  
  Manachised hotels 178   204   197  
  Franchised hotels 180   236   232  
  Blended 186   218   211  
RevPAR  (in RMB)      
  Leased and owned hotels 181   238   219  
  Manachised hotels 152   192   170  
  Franchised hotels 123   186   167  
  Blended 158   203   181  
       
  For the full year ended  
  December 31,   December 31,    
  2016   2017    
Occupancy rate (as a percentage)      
  Leased and owned hotels 86.1 % 89.0 %  
  Manachised hotels 85.3 % 89.1 %  
  Franchised hotels 68.9 % 73.1 %  
  Blended 84.9 % 88.3 %  
Average daily room rate (in RMB)      
  Leased and owned hotels 208   237    
  Manachised hotels 177   191    
  Franchised hotels 182   216    
  Blended 185   203    
RevPAR (in RMB)      
  Leased and owned hotels 179   211    
  Manachised hotels 151   171    
  Franchised hotels 125   158    
  Blended 157   180    
       
Same-hotel Operational Data: like-for-like performance for leased and manachised hotels opened for at least 18 months during the current quarter and full year
 
  As of and for the quarter ended  
  December 31,  
  2016   2017    
Total   2,729     2,729    
  Leased and owned hotels   573     573    
  Manachised hotels   2,156     2,156    
Occupancy rate (as a percentage) 86.7 % 88.0 %  
Average daily room rate (in RMB)   187     196    
RevPAR (in RMB)   162     172    
       
  As of and for full year ended  
  December 31,  
  2016   2017    
Total   2,729     2,729    
  Leased and owned hotels   573     573    
  Manachised hotels   2,156     2,156    
Occupancy rate (as a percentage) 87.4 % 90.8 %  
Average daily room rate (in RMB) 184   191    
RevPAR (in RMB) 161   174    
           


   
Hotel breakdown by segment  
     
     
  Number of Hotels in Operation Number of Hotel Rooms in Operation
  As of December 31, 2017 As of December 31, 2017
Economy hotels   2,974   279,619
  HanTing Hotel   2,244   223,121
  Leased hotels   454   52,300
  Manachised hotels   1,786   170,443
  Franchised hotels   4    378
  Hi Inn   396   26,063
  Leased hotels   30   2,727
  Manachised hotels   321   20,466
  Franchised hotels   45   2,870
  Elan Hotel    226   16,120
  Manachised hotels   193   13,963
  Franchised hotels   33   2,157
  ibis Hotel   100   13,474
  Leased and owned hotels    16   2,887
  Manachised hotels   38   4,522
  Franchised hotels   46   6,065
  Orange Hotel   8   841
  Leased hotels    6   678
  Manachised hotels   1   85
  Franchised hotels    1   78
Midscale and upscale hotels   772   100,056
  JI Hotel   390   53,054
  Leased hotels   91   15,868
  Manachised hotels   296    36,912
  Franchised hotels   3   274
  Starway Hotel   174   16,914
  Leased hotels   2   386
  Manachised hotels   141   13,677
  Franchised hotels   31   2,851
  Joya Hotel   6   1,131
  Leased hotels   3   523
  Manachised hotels   3    608
  Manxin Hotels & Resorts   11   1,150
  Leased hotels   2    277
  Manachised hotels   6   769
  Franchised hotels   3   104
  HanTing Premium Hotel   5   446
  Leased hotels   1    98
  Manachised hotels   4   348
  ibis Styles Hotel   13   1,841
  Manachised hotels   10   1,425
  Franchised hotels   3   416
  Mercure Hotel   20   4,664
  Leased hotels   2    496
  Manachised hotels   15   3,546
  Franchised hotels   3   622
  Novotel Hotel   4   1,697
  Manachised hotels   3    1,374
  Franchised hotels   1   323
  Grand Mercure   4   882
  Leased hotels   1   360
  Manachised hotels   1    151
  Franchised hotels   2   371
  Orange Select   103   12,648
  Leased hotels   44   5,732
  Manachised hotels   41    4,817
  Franchised hotels   18   2,099
  Crystal Orange   42   5,629
  Leased hotels   19   2,686
  Manachised hotels   15   1,959
  Franchised hotels   8   984
Total   3,746   379,675
     


 
Same-hotel operational data by segment
  Number of hotels in operation Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy  
  As of For the quarter ended   For the quarter ended   For the quarter ended  
  December 31, December 31, yoy change December 31, yoy change December 31, yoy change
  2016 2017 2016 2017 2016 2017 2016   2017  
Economy hotels   2,406   2,406   146   156 6.9 %   167   175 5.1 % 87 % 89 % 1.5 %
  Leased and owned hotels   492   492   152   166 9.2 %   178   189 6.3 % 85 % 88 % 2.4 %
  Manachised and franchised hotels   1,914   1,914   144   152 6.1 %   163   171 4.6 % 88 % 89 % 1.2 %
Midscale and upscale hotels   323   323   249   261 4.8 %   300   313 4.4 % 83 % 83 % 0.3 %
  Leased hotels   81   81   314   321 2.4 %   348   364 4.5 % 90 % 88 % -1.9 %
  Manachised and franchised hotels   242   242   217   231 6.5 %   273   286 4.7 % 79 % 81 % 1.4 %
Total   2,729   2,729   162   172 6.5 %   187   196 4.9 % 87 % 88 % 1.3 %
                       
                       
  Number of hotels in operation Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy  
  As of For the year ended   For the year ended   For the year ended  
  December 31, December 31, yoy change December 31, yoy change December 31, yoy change
  2016 2017 2016 2017 2016 2017 2016   2017  
Economy hotels   2,406   2,406 147 158 7.4 % 168 173 3.3 % 88 % 92 % 3.5 %
  Leased and owned hotels   492   492 154 167 8.4 % 178 185 3.9 % 86 % 90 % 3.7 %
  Manachised and franchised hotels   1,914   1,914 145 155 7.1 % 164 169 3.0 % 88 % 92 % 3.5 %
Midscale and upscale hotels   323   323 245 265 8.2 % 291 307 5.5 % 84 % 86 % 2.1 %
  Leased hotels   81   81 300 320 6.8 % 333 354 6.3 % 90 % 91 % 0.4 %
  Manachised and franchised hotels   242   242 213 232 9.3 % 263 277 5.1 % 81 % 84 % 3.2 %
Total   2,729   2,729 161 174 7.7 % 184 191 3.7 % 87 % 91 % 3.3 %
 

Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com

Powered by EIN News