China Lodging Group, Limited Reports Fourth Quarter and Full Year 2013 Financial Results

  • A total of 1,425 hotels or 152,879 hotel rooms in operation as of December 31, 2013
  • Net Revenues increased 26.8% year-over-year for the fourth quarter and 29.3% for the full year of 2013, in line with the high end of guidance.
  • Adjusted EBITDA from operating hotels (non-GAAP)1 increased 32.7% to RMB265.7 million (US$43.9 million)2 for the fourth quarter and 33.0% to RMB1,083.5 million (US$179.0 million) for the full year of 2013.
  • Net income attributable to China Lodging Group, Limited was RMB58.5 million (US$9.7 million) for the fourth quarter and RMB279.9 million (US$46.2 million) for the full year of 2013. Excluding share-based compensation expenses, adjusted net income attributable to the Company (non-GAAP) increased 178.0% to RMB64.8 million (US$10.7 million) for the fourth quarter of 2013 and 58.6% to RMB310.3 million (US$51.3 million) for the full year of 2013.
  • Adjusted operating margin (non-GAAP)3 for the fourth quarter of 2013 was 8.1%, improved from 3.8% in the same period of 2012. Adjusted operating margin (non-GAAP) for the full year of 2013 was 9.8%, improved from 7.4% in 2012.
  • Diluted earnings per ADS4 were RMB0.93 (US$0.15) for the fourth quarter of 2013 and RMB4.49 (US$0.74) for the full year of 2013. Excluding share-based compensation expenses, adjusted diluted earnings per ADS (non-GAAP) increased 175.2% to RMB1.03 (US$0.17) for the fourth quarter of 2013 and 57.0% to RMB4.98 (US$0.82) for the full year of 2013.
  • The Company provided guidance for full year 2014 net revenues growth of 20% to 23% and Q1 net revenue growth of 19% to 21%.

SHANGHAI, China, March 11, 2014 (GLOBE NEWSWIRE) --China Lodging Group, Limited (Nasdaq:HTHT) ("China Lodging Group" 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, 2013.

Operational Highlights of Fourth Quarter 2013

  • During the fourth quarter of 2013, the Company opened 27 net leased ("leased-and-operated") hotels and 58 net manachised ("franchised-and-managed") hotels.
  • The ADR, which is defined as the average daily rate for all hotels in operation (excluding franchised Starway hotels), was RMB178 in the fourth quarter of 2013, compared with RMB176 in the fourth quarter of 2012 and RMB186 in the previous quarter. The year-over-year increase of 1% was mainly attributable to a 3% increase in same-hotel ADR, partially offset by the city mix shifting toward lower-tier cities. The sequential decrease resulted mainly from seasonality.
  • The occupancy rate for all hotels in operation (excluding franchised Starway hotels) was 90.0% in the fourth quarter of 2013, compared with 92.1% in the fourth quarter of 2012 and 94.1% in the previous quarter. The slight year-over-year decrease was mainly due to soft and still-recovering macro economy. The sequential decrease resulted mainly from seasonality.
  • RevPAR, defined as revenue per available room for all hotels in operation (excluding franchised Starway hotels), was RMB160 in the fourth quarter of 2013, compared with RMB162 in the fourth quarter of 2012 and RMB175 in the previous quarter. The year-over-year decrease was a result of a lower occupancy rate partially offset by a higher ADR. The sequential decrease resulted mainly from seasonality.
  • For all hotels which had been in operation for at least 18 months (excluding franchised Starway hotels), the same-hotel RevPAR was RMB173 for the fourth quarter of 2013, a 1% increase from RMB172 for the fourth quarter of 2012, with a 3% increase in ADR and a two-percentage-point decrease in occupancy rate. The increase in same-hotel ADR was driven by price increase to enhance yield. The decrease in same-hotel occupancy rate was mainly due to soft and still-recovering Chinese economy as well as the Company's efforts to enhance yield management.

Operational Highlights of Full Year 2013

  • For the full year of 2013, the Company opened 100 net new leased hotels and 319 net new manachised hotels, exceeding the Company's previously announced guidance. As of December 31, 2013, the Company had 565 leased hotels, 835 manachised hotels, and 25 franchised Starway hotels in operation in 249 cities. The leased and manachised hotel rooms in operation increased by 20% and 58%, respectively, from a year ago.
  • As of December 31, 2013, the Company had 63 leased hotels and 350 manachised hotels contracted or under construction.
  • For the full year of 2013, the ADR was RMB180, compared to RMB178 in 2012. The year-over-year increase of 1% was primarily due to a 3% increase in same-hotel ADR, partially offset by the city mix shifting toward lower-tier cities.
  • For the full year of 2013, the occupancy rate for all hotels in operation (excluding franchised Starway hotels) was 90.7%, compared with 94.4% in 2012. The decrease in occupancy rate was mainly due to soft and still-recovering Chinese economy, and the temporary decline in demand caused by avian flu in the second quarter of 2013.
  • For the full year of 2013, the RevPAR for all hotels in operation, excluding franchised Starway hotels, was RMB163, a 3% decrease from RMB168 in 2012. The decrease was a result of a lower occupancy rate partially offset by a higher ADR.
  • For all the hotels which had been in operation for at least 18 months, excluding franchised Starway hotels, the same-hotel RevPAR was RMB178 in 2013, a 1% increase from RMB177 in 2012, with a 3% increase in ADR and a two-percentage-point decrease in occupancy rate. On average, those hotels achieved an average occupancy of 95.6% for the full year of 2013.
  • As of December 31, 2013, the Company's loyalty program had more than 15 million members, who contributed more than 80% of room nights sold during the full year of 2013. In 2013, more than 90% of room nights were sold through the Company's own channels.

"We are pleased that we concluded 2013 with a strong set of results," said Mr. Qi Ji, founder, executive Chairman and Chief Executive Officer of China Lodging Group. "In spite of the relatively weak economy in 2013, we raised our full year same-hotel RevPAR by 1%. Our midscale hotels recorded a 3.5% same-hotel RevPAR improvement, thanks to the upgrade consumption trend and successful brand positioning. Room booking through mobile channel saw a solid and significant growth in 2013. The fast and vast adoption of mobile application among our customers enabled us to further strengthen our connection with customers and our direct sales channel."

Fourth Quarter and full year of 2013 Financial Results

(RMB in millions) Q4 2012 Q3 2013 Q4 2013 2012 FY 2013 FY
Revenues:
Leased hotels 831,104 1,066,240 1,036,650 3,069,431 3,870,887
Manachised and franchised hotels 105,561 149,862 151,736 349,847 549,958
Total revenues 936,665 1,216,102 1,188,386 3,419,278 4,420,845
Less: business tax and related surcharges (53,468) (69,436) (68,172) (194,751) (252,216)
Net revenues 883,197 1,146,666 1,120,214 3,224,527 4,168,629

Total revenues for the fourth quarter of 2013 were RMB1,188.4 million (US$196.3 million), representing a 26.9% year-over-year increase and a 2.3% sequential decrease. The year-over-year increase was primarily due to our hotel network growth. The sequential decrease was mainly due to seasonality.

Total revenues for the year of 2013 were RMB4,420.8 million (US$730.3 million), representing an increase of 29.3% from the year of 2012.

Total revenues from leased hotels for the fourth quarter of 2013 were RMB1,036.7 million (US$171.2 million), representing a 24.7% year-over-year increase and a 2.8% sequential decrease.

For the year of 2013, total revenues from leased hotels were RMB3,870.9 million (US$639.4 million), representing a 26.1% year-over-year increase.

Total revenues from manachised and franchised hotels for the fourth quarter of 2013 were RMB151.7 million (US$25.1 million), representing a 43.7% year-over-year increase and a 1.3% sequential increase.

For the year of 2013, total revenues from manachised and franchised hotels were RMB 550.0 million (US$90.8 million), representing a 57.2% year-over-year increase, and accounting for 12.4% of total revenues, compared to 10.2% of total revenues for the year of 2012.

Net revenues for the fourth quarter of 2013 were RMB1,120.2 million (US$185.0 million), representing a 26.8% year-over-year increase and a 2.3% sequential decrease.

Net revenues for the full year of 2013 were RMB4,168.6 million (US$688.6 million), representing a 29.3% year-over-year increase.

(RMB in millions) Q4 2012 Q3 2013 Q4 2013 2012 FY 2013 FY
Operating costs and expenses:
Hotel operating costs 694,075 823,214 876,713 2,453,902 3,181,666
Selling and marketing expenses 28,959 37,280 45,088 102,814 138,129
General and administrative expenses 62,098 68,762 80,765 224,111 284,756
Pre-opening expenses 69,835 52,438 48,999 230,690 211,284
Total operating costs and expenses 854,967 981,694 1,051,565 3,011,517 3,815,835

Hotel operating costs for the fourth quarter of 2013 were RMB876.7 million (US$144.8 million), compared to RMB694.1 million (US$111.4 million) in the fourth quarter of 2012 and RMB823.2 million (US$134.5 million) in the previous quarter, representing 26.3% and 6.5% increases, respectively. The Company's hotel network expansion, especially the growth in leased hotels, was the main driver for the increase in hotel operating costs. The average number of leased hotels in operation5 during the fourth quarter of 2013 increased 25.3% from the same period of 2012 and 4.8% sequentially. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2013 were RMB875.3 million (US$144.6 million), representing 78.2% of net revenues, compared to 78.6% for the fourth quarter in 2012 and 71.7% for the previous quarter. The year-over-year decrease was mainly attributed to higher portion of high-margin manachise business. The sequential increase in cost percentage was primarily due to seasonally-lower RevPAR as the base for calculation.

For the full year of 2013, total hotel operating costs were RMB3,181.7 million (US$525.6 million), compared to RMB2,453.9 million (US$393.9 million) in 2012. Excluding share-based compensation, hotel operating costs (non-GAAP) were RMB3,176.7 million (US$524.8 million), representing 76.2% of net revenues, compared to 76.0% in 2012. The year-over-year increase of 0.2 percentage point in cost percentage was mainly driven by cost inflation and an increase in the number of new midscale hotels which have a high cost ratio during ramp-up stage, largely offset by the increased portion of high-margin manachise revenue.

Selling and marketing expenses for the fourth quarter of 2013 were RMB45.1 million (US$7.4 million), compared to RMB29.0 million (US$4.6 million) in the fourth quarter of 2012 and RMB37.3 million (US6.1 million) in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2013 were RMB44.9 million (US$7.4 million), or 4.0% of net revenues, compared to 3.3% for the fourth quarter in 2012 and 3.2% for the previous quarter. The year-over-year and sequential increase in percentage mainly resulted from increased marketing cost for new brands and increased reservation from third-party agencies.

For the full year of 2013, total selling and marketing expenses were RMB138.1 million (US$22.8 million), compared to RMB102.8 million (US$16.5 million) in 2012. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB137.2 million (US$22.7 million), representing 3.3% of net revenues, compared to 3.2% in 2012.

General and administrative expenses for the fourth quarter of 2013 were RMB80.8 million (US$13.3 million), compared to RMB62.1 million (US$10.0 million) in the fourth quarter of 2012 and RMB68.8 million (US$11.2 million) in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2013 were RMB76.2 million (US$12.6 million), representing 6.8% of net revenues, compared with 6.5% of net revenues in the fourth quarter of 2012 and 5.3% in the previous quarter. The year-over-year increase in the percentage was mainly attributable to the increased IT spending in the fourth quarter of 2013.

General and administrative expenses were RMB284.8 million (US$47.0 million) for the year of 2013, compared to RMB224.1 million (US$36.0 million) in 2012. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB260.2 million (US$43.0 million), representing 6.2% of net revenues, compared to 6.5% in 2012, mainly due to the benefit from economies of scale.

Pre-opening expenses for the fourth quarter of 2013 were RMB49.0 million (US$8.1 million), representing a 29.8% year-over-year decrease and 6.6% sequential decrease. The pre-opening expenses were primarily driven by the number of leased hotels under conversion during the period. 27 net leased hotels were opened during this quarter and another 63 were in the pipeline at the end of the quarter.

Pre-opening expenses for the full year of 2013 were RMB211.3 million (US$34.9 million), compared to RMB230.7 million (US$37.0 million) in 2012, representing a year-over-year decrease of 8.4%. The decrease in pre-opening expenses was mainly a result of the decrease in leased hotel openings and shortened construction cycle in 2013. The pre-opening expenses as a percentage of net revenues decreased to 5.1% in 2013 on an enlarged revenue base.

Income from operations for the fourth quarter of 2013 was RMB85.2 million (US$14.1 million), compared to RMB29.3 million (US$4.7 million) in the fourth quarter of 2012 and RMB171.1 million (US$28.0 million) in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2013 was RMB91.4 million (US$15.1 million), compared to RMB34.4 million (US$5.5 million) for the fourth quarter of 2012. The year-over-year increase was mainly due to the expansion of our hotel network and the decrease in pre-opening expense.

Income from operations for the year was RMB380.5 million (US$62.9 million), compared to RMB219.7 million (US$35.3 million) in 2012. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the year of 2013 was RMB411.0 million (US$67.9 million), compared to RMB240.6 million (US$38.6 million) for the year of 2012. The significant growth in income from operations was attributable to rapid expansion of our hotel network and lower pre-opening expenses in 2013.

Operating margin for the fourth quarter of 2013 was 7.6%, compared with 3.3% for the fourth quarter of 2012 and 15.0% for the previous quarter. Excluding share-based compensation expenses, adjusted operating margin (non-GAAP) for the fourth quarter of 2013 was 8.1%, compared with 3.8% for the fourth quarter of 2012 and 15.7% for the previous quarter. The year-over-year increase in adjusted operating margin (non-GAAP) was mainly attributable to higher portion of high-margin manachise business and reduction of pre-opening expenses. The sequential decrease was mainly due to the seasonality.

Operating margin for the full year of 2013 was 9.1%, compared with 6.8% for the year of 2012. Excluding share-based compensation expenses, adjusted operating margin (non-GAAP) for the year of 2013 was 9.8%, compared with 7.4% for the year of 2012. The year-over-year increase in adjusted operating margin (non-GAAP) was mainly due to higher portion of high-margin manachise business and reduction of pre-opening expenses.

Net income attributable to China Lodging Group, Limited for the fourth quarter of 2013 was RMB58.5 million (US$9.7 million), compared to RMB18.2 million (US$2.9 million) in the fourth quarter of 2012 and RMB124.9 million (US$20.4 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 2013 was RMB64.8 million (US$10.7 million), compared to RMB23.3 million (US$3.7 million) in the fourth quarter of 2012 and RMB133.8 million (US$21.9 million) in the previous quarter. The year-over-year increase in net income was mainly due to the expansion of our hotel network and lower pre-opening expenses. The sequential decrease in net income was mainly due to seasonality.

Net income attributable to China Lodging Group, Limited for the full year of 2013 was RMB279.9 million (US$46.2 million), compared to RMB174.9 million (US$28.1 million) in 2012. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2013 was RMB310.3 million (US$51.3 million), compared to RMB195.7 million (US$31.4 million) in 2012. The year-over-year increase was mainly attributable to the expansion of our hotel network and lower pre-opening expenses.

Basic and diluted earnings per share/ADS. For the fourth quarter of 2013, basic earnings per share were RMB0.24 (US$0.04) and diluted earnings per share were RMB0.23 (US$0.04); basic earnings per ADS were RMB0.95 (US$0.16) and diluted earnings per ADS were RMB0.93 (US$0.15). For the fourth quarter of 2013, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) and adjusted diluted earnings per share (non-GAAP) were RMB0.26 (US$0.04); adjusted basic earnings per ADS (non-GAAP) were RMB1.05 (US$0.17) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.03 (US$0.17).

For the full year of 2013, basic earnings per share were RMB1.14 (US$0.19) and diluted earnings per share were RMB1.12 (US$0.19); basic earnings per ADS were RMB4.57 (US$0.75), while diluted earnings per ADS were RMB4.49 (US$0.74). For the full year of 2013, excluding share-based compensation expenses, adjusted earnings per share (non-GAAP) were RMB1.27 (US$0.21), while adjusted diluted earnings per share (non-GAAP) were RMB1.24 (US$0.21), and adjusted earnings per ADS (non-GAAP) were RMB5.06 (US$0.84), while adjusted diluted earnings per ADS (non-GAAP) were RMB4.98 (US$0.82).

EBITDA (non-GAAP) for the fourth quarter of 2013 was RMB210.5 million (US$34.8 million), compared with RMB125.2 million (US$20.1 million) in the fourth quarter of 2012 and RMB289.8 million (US$47.4 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 2013 was RMB265.7 million (US$43.9 million), compared with RMB200.2 million (US$32.1 million) for the fourth quarter of 2012 and RMB351.2 million (US$57.4 million) for the previous quarter. The year-over-year increase was mainly due to the expansion of our hotel network and lower pre-opening expenses. The sequential decrease was mainly due to seasonality.

EBITDA (non-GAAP) for the full year of 2013 was RMB841.8 million (US$139.1 million), compared to RMB562.9 million (US$90.4 million) in 2012. Excluding pre-opening expenses and share-based compensation expenses, adjusted EBITDA from operating hotels (non-GAAP) for the full year of 2013 was RMB1,083.5 million (US$179.0 million), compared with RMB814.4 million (US$130.7 million) in 2012. The increase in adjusted EBITDA was mainly driven by the expansion of our hotel network and lower pre-opening expenses.

Hotel income (non-GAAP), which is the difference between net revenues and hotel operating costs, was RMB243.5 million (US$40.2 million) for the fourth quarter of 2013, compared with RMB189.1 million (US$30.4 million) in the fourth quarter of 2012 and RMB323.5 million (US$52.9 million) in the previous quarter. The year-over-year increase of hotel income (non-GAAP) was mainly attributable to the enlarged manachised hotel network and the increased number of mature leased hotels in our portfolio. For leased hotels in operation for at least six months, the hotel income (non-GAAP) was RMB155.1 million (US$25.6 million) during the fourth quarter of 2013, or 17% of net revenues derived from those hotels. Leased hotels in operation for less than six months accounted for 10% of leased room nights available for sale in the fourth quarter of 2013. Those hotels derived a hotel loss (non-GAAP) of RMB27.0 million (US$4.5 million), or 34% of net revenues derived from those hotels this quarter, mainly due to anticipated lower revenue achievement of those hotels during their ramp-up stage. For manachised and franchised hotels, the hotel income (non-GAAP) was RMB115.4 million (US$19.1 million), or 81% of net revenue derived from those hotels.

Hotel income (non-GAAP) for the full year of 2013 was RMB987.0 million (US$163.0 million), compared with RMB770.6 million (US$123.7 million) for 2012. The year-over-year increase was mainly due to higher hotel income generated from our expanded network of manachised hotels and mature leased hotels. For leased hotels in operation for at least six months, the hotel income (non-GAAP) was RMB686.3 million (US$113.4 million) during 2013, or 21% of net revenues derived from those hotels. Leased hotels in operation for less than six months derived a hotel loss (non-GAAP) of RMB111.9 million (US$18.5 million), or 37% of net revenues derived from those hotels in 2013. Losses generated from leased hotels in operation for less than six months increased from prior year, due to a larger number of rooms added and higher per-hotel ramping-up loss primarily relating to development of mid-scale hotel brand and penetration into new cities. For manachised and franchised hotels, hotel income (non-GAAP) was RMB412.6 million (US$68.1 million), or 80% of net revenue derived from those hotels.

Cash flow. Net operating cash flow for the fourth quarter of 2013 was RMB345.8 million (US$57.1 million). Cash spent on the purchase of property and equipment, purchase of intangible assets, long-term investment and short-term investment and acquisitions, which are part of investing cash flow, was RMB339.4 million (US$56.1 million).

Net operating cash flow for the full year of 2013 was RMB1,070.2 million (US$176.8 million). Cash spent on the purchase of property and equipment, purchase of intangible assets, long-term investment and short-term investment and acquisitions was RMB1,165.8 million (US$192.6 million).

Cash and cash equivalents and Restricted cash. As of December 31, 2013, the Company had a total balance of cash and cash equivalents, restricted cash of RMB400.8 million (US$66.2 million).

Loans and other debt financing

As of December 31, 2013, total credit facility available to the Company was RMB898.3 million.

Business Outlook and Guidance for 2014

"We remain positive on the growing trend of travel demand in China, especially with a significant growth from leisure travel demand in recent years. Our brand portfolio is well-positioned to meet the diversified needs of customers who seek good value for their money. We will continue to invest in our new brands. In 2014, we plan to add 420 to 450 leased and manachised hotels, with 50 to 60 leased hotels and 370 to 390 manachised hotels. Among these new hotels, 80% will be economy hotels, and 20% will be midscale hotels," commented Mr. Ji.

The Company expects to achieve net revenues in the range of RMB1.03 to 1.05 billion in the first quarter of 2014, representing a 19% to 21% growth year-over-year. For the full year 2014, the Company expects net revenues to grow 20% to 23% from 2013.

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. EDT, Tuesday, March 11, 2014 (or 9 a.m. on Wednesday, March 12, 2014 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 5005 7266. 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 18, 2014. Please dial +1 (855) 452 5696 (for callers in the US) or +61 2 8199 0299 (for callers outside the US) and entering pass code 5005 7266.

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 expenses excluding share-based compensation expenses; adjusted income from operations excluding share-based compensation expenses; adjusted operating margin 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; 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 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 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 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 income, 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 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 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 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 and fast-growing multi-brand hotel group in China. The Company provides business and leisure travelers with high-quality, and conveniently-located hotel products under six brands, namely, Joya Hotel, Manxin Hotels & Resorts, JI Hotel, Starway Hotel, HanTing Hotel, and Hi Inn. 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 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.

1 Defined as EBITDA before pre-opening expenses and share-based compensation expenses.

2 The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.0537 on December 31, 2013 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.

3 Defined as operating margin excluding share-based compensation expenses.

4 Each ADS represents four of the Company's ordinary shares.

5 Calculated as the average of the number of leased hotels in operation at the beginning of the quarter and the number of leased hotels in operation at the end of the quarter.

--Financial Tables and Operational Data Follow—

China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
December 31, 2012 September 30, 2013 December 31, 2013
RMB RMB RMB US$
(in thousands)
Assets
Current assets:
Cash and cash equivalents 449,844 353,803 397,435 65,652
Restricted cash 1,790 4,247 3,317 548
Short-term Investment 8,074 12,388 -- --
Accounts receivable, net 50,633 76,306 74,646 12,331
Amount due from related parties -- -- 658 109
Prepaid rent 321,305 360,944 363,581 60,059
Inventories 37,971 31,195 34,013 5,618
Other current assets 83,058 98,188 116,979 19,323
Deferred tax assets 44,231 44,231 51,759 8,550
Total current assets 996,906 981,302 1,042,388 172,190
Property and equipment, net 2,951,509 3,445,462 3,634,039 600,301
Intangible assets, net 100,980 98,577 101,845 16,824
Long term investment 28,129 28,437 90,517 14,952
Goodwill 64,180 64,180 64,842 10,711
Other assets 133,536 183,111 184,013 30,397
Deferred tax assets 54,947 54,947 67,408 11,135
Total assets 4,330,187 4,856,016 5,185,052 856,510
Liabilities and equity
Current liabilities:
Short-term loans -- 1,230 -- --
Accounts payable 624,824 630,217 677,305 111,883
Amount due to related parties 801 3,365 5,593 924
Salary and welfare payable 117,980 77,115 147,238 24,322
Deferred revenue 200,515 266,904 297,284 49,108
Accrued expenses and other current liabilities 187,380 236,073 249,185 41,163
Income tax payable 23,142 20,101 26,053 4,304
Deferred tax liabilities -- -- 151 25
Total current liabilities 1,154,642 1,235,005 1,402,809 231,729
Deferred rent 470,438 610,417 653,831 108,005
Deferred revenue 99,800 111,926 118,818 19,627
Amount due to related parties -- -- 8,167 1,349
Other long-term liabilities 92,407 129,678 147,565 24,375
Deferred tax liabilities 22,335 22,335 26,071 4,307
Total liabilities 1,739,822 1,997,435 2,238,443 369,765
Equity
Ordinary shares 180 181 182 30
Additional paid-in capital 2,243,403 2,279,897 2,315,083 382,424
Retained earnings 260,014 481,332 539,872 89,181
Accumulated other comprehensive loss (38,408) (39,497) (39,384) (6,506)
Total China Lodging Group, Limited equity 2,465,189 2,721,913 2,815,753 465,129
Noncontrolling interest 25,376 24,742 12,038 1,989
Total equity 2,490,565 2,746,655 2,827,791 467,118
Total liabilities and equity 4,230,387 4,744,090 5,066,234 836,883
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
Quarter Ended Year Ended
December 31, 2012 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2013
RMB RMB RMB US$ RMB RMB US$
(in thousands, except per share and per ADS data)
Revenues:
Leased hotels 831,104 1,066,240 1,036,650 171,242 3,069,431 3,870,887 639,425
Manachised and franchised hotels 105,561 149,862 151,736 25,065 349,847 549,958 90,846
Total revenues 936,665 1,216,102 1,188,386 196,307 3,419,278 4,420,845 730,271
Less: business tax and related surcharges (53,468) (69,436) (68,172) (11,261) (194,751) (252,216) (41,663)
Net revenues 883,197 1,146,666 1,120,214 185,046 3,224,527 4,168,629 688,608
Operating costs and expenses:
Hotel operating costs:
Rents (255,967) (320,902) (350,073) (57,828) (916,357) (1,255,663) (207,421)
Utilities (58,166) (71,532) (69,941) (11,553) (215,768) (273,314) (45,148)
Personnel costs (143,511) (166,141) (171,673) (28,358) (505,773) (638,511) (105,475)
Depreciation and amortization (93,929) (117,688) (124,077) (20,496) (337,162) (453,062) (74,840)
Consumables, food and beverage (94,190) (102,596) (108,758) (17,966) (333,245) (391,715) (64,707)
Others (48,312) (44,355) (52,191) (8,621) (145,597) (169,401) (27,983)
Total hotel operating costs (694,075) (823,214) (876,713) (144,822) (2,453,902) (3,181,666) (525,574)
Selling and marketing expenses (28,959) (37,280) (45,088) (7,448) (102,814) (138,129) (22,817)
General and administrative expenses (62,098) (68,762) (80,765) (13,341) (224,111) (284,756) (47,038)
Pre-opening expenses (69,835) (52,438) (48,999) (8,094) (230,690) (211,284) (34,902)
Total operating costs and expenses (854,967) (981,694) (1,051,565) (173,705) (3,011,517) (3,815,835) (630,331)
Other operating income * 1,054 6,101 16,553 2,734 6,723 27,750 4,584
Income from operations 29,284 171,073 85,202 14,075 219,733 380,544 62,861
Interest income 3,309 2,294 2,319 383 14,554 6,856 1,133
Interest expenses (200) (198) (197) (33) (822) (813) (134)
Other income 374 368 22 4 2,208 1,907 315
Foreign exchange gain (loss) 354 31 (40) (7) (2,000) 21 3
Income before income tax 33,121 173,568 87,306 14,422 233,673 388,515 64,178
Income tax expense (13,311) (46,637) (27,348) (4,518) (54,169) (104,820) (17,315)
Net income 19,810 126,931 59,958 9,904 179,504 283,695 46,863
Net income attributable to noncontrolling interests (1,618) (2,012) (1,418) (234) (4,617) (3,837) (634)
Net income attributable to China Lodging Group, Limited 18,192 124,919 58,540 9,670 174,887 279,858 46,229
Earnings per share
— Basic 0.07 0.51 0.24 0.04 0.72 1.14 0.19
— Diluted 0.07 0.50 0.23 0.04 0.71 1.12 0.19
Earnings per ADS
— Basic 0.30 2.04 0.95 0.16 2.88 4.57 0.75
— Diluted 0.29 2.00 0.93 0.15 2.83 4.49 0.74
Weighted average ordinary shares outstanding
— Basic 244,318 245,222 246,162 246,162 243,284 245,187 245,187
— Diluted 248,265 249,679 250,748 250,748 246,981 249,486 249,486
Other comprehensive income , net of tax
Foreign currency translation adjustments (760) (314) 113 19 758 (976) (161)
Comprehensive income 19,050 126,617 60,071 9,923 180,262 282,719 46,702
Comprehensive income attributable to the noncontrolling interest (1,618) (2,012) (1,418) (234) (4,617) (3,837) (634)
Comprehensive income attributable to China Lodging Group, Limited 17,432 124,605 58,653 9,689 175,645 278,882 46,068
* Other operating income mainly includes government grants and gain from government zoning, which was reclassified from general and administrative expenses.
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
Quarter Ended Year Ended
December 31, 2012 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2013
RMB RMB RMB US$ RMB RMB US$
(in thousands)
Operating activities:
Net income 19,810 126,931 59,958 9,904 179,504 283,695 46,863
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation 5,103 8,920 6,211 1,026 20,837 30,468 5,033
Depreciation and amortization 96,834 120,333 126,700 20,929 347,575 463,146 76,506
Deferred taxes (18,226) -- (22,619) (3,736) (18,226) (22,619) (3,736)
Bad debt expenses (735) 82 281 46 1,238 4,573 755
Deferred rent 37,259 57,119 41,709 6,890 143,858 187,214 30,926
Gain from disposal of property and equipment -- -- (10,734) (1,773) -- (10,734) (1,773)
Impairment loss 4,549 -- 7,965 1,316 5,349 7,965 1,316
Investment loss -- 88 308 51 -- 430 71
Excess tax benefit from share-based compensation (793) (2,075) (11,473) (1,895) (4,302) (14,582) (2,409)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable (1,773) 9,520 1,379 228 (12,336) (28,270) (4,670)
Prepaid rent (43,029) (16,375) (2,637) (436) (93,218) (42,276) (6,983)
Inventories (4,991) 3,284 (2,817) (465) (6,714) 4,043 668
Amount due from related parties -- -- (658) (109) -- (658) (109)
Other current assets (20,616) (10,763) (13,223) (2,184) (29,404) (26,400) (4,362)
Other assets (7,030) (9,023) (901) (149) (31,482) (50,228) (8,298)
Accounts payable 5,493 (963) 7,913 1,307 3,390 3,605 596
Amount due to related parties (366) (67) (1,856) (307) (229) 708 117
Salary and welfare payables 57,914 (28,913) 70,124 11,584 36,809 28,768 4,752
Deferred revenue 23,108 45,549 37,272 6,157 90,468 115,787 19,127
Accrued expenses and other current liabilities 7,425 8,865 17,450 2,883 36,076 62,545 10,332
Income tax payable and receivable 22,078 25,467 17,591 2,906 13,296 17,493 2,890
Other long-term liabilities 9,348 12,318 17,898 2,956 33,231 55,496 9,167
Net cash provided by operating activities 191,362 350,297 345,841 57,129 715,720 1,070,169 176,779
Investing activities:
Purchase of property and equipment (263,764) (266,179) (285,973) (47,240) (998,050) (1,072,647) (177,189)
Purchases of intangibles (1,936) (591) (3,395) (561) (3,532) (4,290) (709)
Amount received as a result of government zoning -- -- 12,530 2,070 -- 15,030 2,483
Acquisitions, net of cash received (510) (31,030) -- -- (30,055) (34,070) (5,628)
Purchase of long term investment -- -- (54,314) (8,972) (28,129) (54,744) (9,043)
Purchase of short term investment (8,074) (4,314) 4,314 713 (8,074) -- --
Decrease (increase) in restricted cash 59,665 1,300 930 154 (290) (1,527) (252)
Net cash used in investing activities (214,619) (300,814) (325,908) (53,836) (1,068,130) (1,152,248) (190,338)
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option 6,017 6,037 18,834 3,111 18,520 28,122 4,645
Proceeds from short-term bank loans -- 60,000 -- -- -- 105,796 17,476
Repayment of short term debt -- (60,000) (1,256) (207) -- (105,796) (17,476)
Proceeds from long-term bank loans -- -- -- -- 1,000 -- --
Repayment of long term debt (880) -- -- -- (1,000) -- --
Funds advanced from noncontrolling shareholders 3,000 -- -- -- 3,000 1,945 321
Repayment of funds advanced from noncontrolling interest holders (621) (1,089) (1,105) (183) (2,681) (6,564) (1,084)
Acquisition of non controlling interests -- -- (4,210) (695) -- (4,210) (695)
Contribution from noncontrolling interest holders 25 -- -- -- 240 200 33
Repayment to noncontrolling interest holders -- (200) -- -- -- (200) (33)
Dividend paid to noncontrolling interest holders (168) (165) (177) (29) (3,486) (3,229) (533)
Excess tax benefit from share-based compensation 793 2,075 11,473 1,895 4,302 14,582 2,409
Net cash provided by financing activities 8,166 6,658 23,559 3,892 19,895 30,646 5,063
Effect of exchange rate changes on cash and cash equivalents (760) (322) 140 23 758 (976) (161)
Net increase (decrease) in cash and cash equivalents (15,851) 55,819 43,632 7,208 (331,757) (52,409) (8,657)
Cash and cash equivalents, beginning of period 465,695 297,984 353,803 58,444 781,601 449,844 74,309
Cash and cash equivalents, end of period 449,844 353,803 397,435 65,652 449,844 397,435 65,652
China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
Quarter Ended December 31, 2013
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 876,713 78.3% 1,443 0.1% 875,270 78.2%
Selling and marketing expenses 45,088 4.0% 203 0.0% 44,885 4.0%
General and administrative expenses 80,765 7.2% 4,565 0.4% 76,200 6.8%
Pre-opening expenses 48,999 4.4% -- 0.0% 48,999 4.4%
Total operating costs and expenses 1,051,565 93.9% 6,211 0.5% 1,045,354 93.4%
Income from operations 85,202 7.6% 6,211 0.5% 91,413 8.1%
Quarter Ended December 31, 2013
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 144,822 78.3% 238 0.1% 144,584 78.2%
Selling and marketing expenses 7,448 4.0% 34 0.0% 7,414 4.0%
General and administrative expenses 13,341 7.2% 754 0.4% 12,587 6.8%
Pre-opening expenses 8,094 4.4% -- 0.0% 8,094 4.4%
Total operating costs and expenses 173,705 93.9% 1,026 0.5% 172,679 93.4%
Income from operations 14,075 7.6% 1,026 0.5% 15,101 8.1%
Quarter Ended September 30, 2013
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 823,214 71.8% 1,713 0.1% 821,501 71.7%
Selling and marketing expenses 37,280 3.2% 251 0.0% 37,029 3.2%
General and administrative expenses 68,762 5.9% 6,956 0.6% 61,806 5.3%
Pre-opening expenses 52,438 4.6% -- 0.0% 52,438 4.6%
Total operating costs and expenses 981,694 85.5% 8,920 0.7% 972,774 84.8%
Income from operations 171,073 15.0% 8,920 0.7% 179,993 15.7%
Quarter Ended December 31, 2012
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 694,075 78.6% 318 0.0% 693,757 78.6%
Selling and marketing expenses 28,959 3.3% 164 0.0% 28,795 3.3%
General and administrative expenses 62,098 7.0% 4,621 0.5% 57,477 6.5%
Pre-opening expenses 69,835 7.9% -- 0.0% 69,835 7.9%
Total operating costs and expenses 854,967 96.8% 5,103 0.5% 849,864 96.3%
Income from operations 29,284 3.3% 5,103 0.5% 34,387 3.8%
Year Ended December 31, 2013
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 3,181,666 76.3% 4,948 0.1% 3,176,718 76.2%
Selling and marketing expenses 138,129 3.3% 973 0.0% 137,156 3.3%
General and administrative expenses 284,756 6.8% 24,547 0.6% 260,209 6.2%
Pre-opening expenses 211,284 5.1% -- 0.0% 211,284 5.1%
Total operating costs and expenses 3,815,835 91.5% 30,468 0.7% 3,785,367 90.8%
Income from operations 380,544 9.1% 30,468 0.7% 411,012 9.8%
Year Ended December 31, 2013
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 525,574 76.3% 817 0.1% 524,757 76.2%
Selling and marketing expenses 22,817 3.3% 161 0.0% 22,656 3.3%
General and administrative expenses 47,038 6.8% 4,055 0.6% 42,983 6.2%
Pre-opening expenses 34,902 5.1% -- 0.0% 34,902 5.1%
Total operating costs and expenses 630,331 91.5% 5,033 0.7% 625,298 90.8%
Income from operations 62,861 9.1% 5,033 0.7% 67,894 9.8%
Year Ended December 31, 2012
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 2,453,902 76.1% 2,592 0.1% 2,451,310 76.0%
Selling and marketing expenses 102,814 3.2% 1,031 0.0% 101,783 3.2%
General and administrative expenses 224,111 7.0% 17,214 0.5% 206,897 6.5%
Pre-opening expenses 230,690 7.2% -- 0.0% 230,690 7.2%
Total operating costs and expenses 3,011,517 93.5% 20,837 0.6% 2,990,680 92.9%
Income from operations 219,733 6.8% 20,837 0.6% 240,570 7.4%
China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
Quarter Ended Year Ended
December 31, 2012 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2013
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) 18,192 124,919 58,540 9,670 174,887 279,858 46,229
Share-based compensation expenses 5,103 8,920 6,211 1,026 20,837 30,468 5,033
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP) 23,295 133,839 64,751 10,696 195,724 310,326 51,262
Earnings per share (GAAP)
— Basic 0.07 0.51 0.24 0.04 0.72 1.14 0.19
— Diluted 0.07 0.50 0.23 0.04 0.71 1.12 0.19
Earnings per ADS (GAAP)
— Basic 0.30 2.04 0.95 0.16 2.88 4.57 0.75
— Diluted 0.29 2.00 0.93 0.15 2.83 4.49 0.74
Adjusted earnings per share (non-GAAP)
— Basic 0.10 0.55 0.26 0.04 0.80 1.27 0.21
— Diluted 0.09 0.54 0.26 0.04 0.79 1.24 0.21
Adjusted earnings per ADS (non-GAAP)
— Basic 0.38 2.18 1.05 0.17 3.22 5.06 0.84
— Diluted 0.38 2.14 1.03 0.17 3.17 4.98 0.82
Weighted average ordinary shares outstanding
— Basic 244,318 245,222 246,162 246,162 243,284 245,187 245,187
— Diluted 248,265 249,679 250,748 250,748 246,981 249,486 249,486
Quarter Ended Year Ended
December 31, 2012 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2013
RMB RMB RMB US$ RMB RMB US$
(in thousands)
Net income attributable to China Lodging Group, Limited (GAAP) 18,192 124,919 58,540 9,670 174,887 279,858 46,229
Interest income (3,309) (2,294) (2,319) (383) (14,554) (6,856) (1,133)
Interest expenses 200 198 197 33 822 813 134
Income tax expense 13,311 46,637 27,348 4,518 54,169 104,820 17,315
Depreciation and amortization 96,834 120,333 126,700 20,929 347,575 463,146 76,506
EBITDA (non-GAAP) 125,228 289,793 210,466 34,767 562,899 841,781 139,051
Pre-opening expenses 69,835 52,438 48,999 8,094 230,690 211,284 34,902
Share-based Compensation 5,103 8,920 6,211 1,026 20,837 30,468 5,033
Adjusted EBITDA from operating hotels (non-GAAP) 200,166 351,151 265,676 43,887 814,426 1,083,533 178,986
Quarter Ended Year Ended
December 31, 2012 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2013
RMB RMB RMB US$ RMB RMB US$
(in thousands)
Net revenues (GAAP) 883,197 1,146,666 1,120,214 185,046 3,224,527 4,168,629 688,608
Less: Hotel operating costs (694,075) (823,214) (876,713) (144,822) (2,453,902) (3,181,666) (525,574)
Hotel income (non-GAAP) 189,122 323,452 243,501 40,224 770,625 986,963 163,034
China Lodging Group, Limited
Operational Data
As of
December 31, September 30, December 31,
2012 2013 2013
Total hotels in operation: 1,035 1,341 1,425
Leased hotels 465 538 565
Manachised hotels 516 777 835
Franchised hotels* 54 26 25
Total hotel rooms in operation 113,650 144,494 152,879
Leased hotels 54,694 62,964 65,836
Manachised hotels 53,381 78,866 84,437
Franchised hotels* 5,575 2,664 2,606
Number of cities 171 232 249
* refers to franchised Starway hotels
For the quarter ended
December 31, September 30, December 31,
2012 2013 2013
Occupancy rate (as a percentage)
Leased hotels 91.8% 92.6% 89.2%
Manachised hotels 92.2% 95.3% 90.6%
Blended 92.1% 94.1% 90.0%
Average daily room rate (in RMB)
Leased hotels 182 193 187
Manachised hotels 170 180 171
Blended 176 186 178
RevPAR (in RMB)
Leased hotels 167 179 166
Manachised hotels 157 171 155
Blended 162 175 160
For the full year ended
December 31, December 31,
2012 2013
Occupancy rate (as a percentage)
Leased hotels 94.0% 89.5%
Manachised hotels 94.9% 91.6%
Blended 94.4% 90.7%
Average daily room rate (in RMB)
Leased hotels 184 187
Manachised hotels 172 174
Blended 178 180
RevPAR (in RMB)
Leased hotels 173 168
Manachised hotels 163 159
Blended 168 163
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,
2012 2013
Total 757 757
Leased hotels 388 388
Manachised hotels 369 369
Occupancy rate (as a percentage) 96.2% 94.3%
Average daily room rate (in RMB) 179 183
RevPAR (in RMB) 172 173
As of and for full year ended
December 31,
2012 2013
Total 757 757
Leased hotels 388 388
Manachised hotels 369 369
Occupancy rate (as a percentage) 97.9% 95.6%
Average daily room rate (in RMB) 181 187
RevPAR (in RMB) 177 178
Number of hotels in operation Number of rooms in operation
As of December 31, 2013 As of December 31, 2013
Economy hotels 1,309 138,576
Hanting Hotel 1,226 130,747
Leased hotels 473 54,154
Manachised hotels 753 76,593
Hi Inn 83 7,829
Leased hotels 41 4,422
Manachised hotels 42 3,407
Midscale and upscale hotels 116 14,303
JI Hotel 68 9,106
Leased hotels 48 6,891
Manachised hotels 20 2,215
Starway Hotel 46 4,959
Leased hotels 1 131
Manachised hotels 20 2,222
Franchised hotels 25 2,606
Joya Hotel 1 141
Leased hotels 1 141
Manxin Hotels & Resorts 1 97
Leased hotels 1 97
Total 1,425 152,879
Full-year operational metrics for hotels in operation for at least 6 months in 2013
Number of hotels in operation RevPAR ADR Occupancy
As of December 31, 2013
Economy hotels 1,125 167 177 94%
Leased hotels 475 167 179 93%
Manachised hotels 650 166 174 96%
Midscale and upscale hotels 65 256 284 90%
Leased hotels 36 281 301 93%
Manachised hotels 29 207 247 84%

CONTACT: Ida Yu Investor Relations Manager Tel: +86 (21) 6195 9561 Email: ir@huazhu.com http://ir.huazhu.comSource:China Lodging Group, Limited