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Home Inns & Hotels Management Inc reported RMB988 million in the third quarter 2011, representing a 12.3% increase in revenue, year-on-year. The company's most mature set of hotels reported better than expected results. Home Inns & Hotels Management Inc represents a leading economy hotel chain in China.
The market is relatively buoyant with price increases implemented for their more mature hotels not impacting on demand. EBITDA for the third quarter of 2011 was RMB331.8 million (US$52.0 million) which represents a strong financial performance.
Net income attributable to Home Inns' shareholders for the third quarter of 2011 was RMB 164.3 million (US$25.8 million). Net income was reduced by share-based compensation expenses of RMB 20.1 million (US$3.1 million), foreign exchange loss of RMB 0.8 million (US$0.1 million), corporate spending related to the concluded acquisition of Motel 168 International Holdings Limited ("Motel 168") of RMB 41.4 million (US$6.5 million) and the withholding tax for distributable earnings from previous periods of RMB 26.7 million (US$4.2 million), and increased by gain from fair value change of convertible notes of RMB 121.2 million (US$19.0 million).
On 1st October 2011, Home Inns completed its acquisition of 100% equity interest in Motel 168, and took control of Motel 168. The acquisition price was US$470 million (subject to customary purchase price adjustments) that consists approximately US$305.0 million in cash and approximately 8.15 million Home Inns' ordinary shares at a price equivalent to a per-ADS price of US$40.37 (each Nasdaq-traded Home Inns' ADS represents two ordinary shares).
The better than expected increases in revenue for the third quarter of 2011 was primarily due to improved operational efficiency especially within their more mature hotels located outside Shanghai. In addition, the group opened their 1000th Home Inn Hotel during the third quarter of 2011 which represents a significant milestone in their continued growth strategy.
Home Inns & Hotels Management Inc are optimistic about the future growth in the business and leisure travel sectors in China and despite uncertainties concerning the wider Global economy, the group feels that they are in a strong position to take advantage of opportunities within the domestic market in China.
As of September 30, 2011, Home Inns operated across 174 cities in China with a total of 1,004 hotels (net of one closure), of which 500 were leased-and-operated hotels (including 2 Yitel Hotels under Home Inns' mid-scale hotel brand) and 504 were franchised-and-managed hotels. The average number of guest rooms per hotel was 114.In addition, Home Inns had another 202 hotels contracted or under construction as of September 30, 2011, of which, 82 were leased-and-operated hotels and 120 were franchised-and-managed hotels.As of September 30, 2011, Home Inns had 4.61 million active non-corporate members, representing a 39% increase from 3.31 million as of September 30, 2010. Room nights sold to active non-corporate members consistently represented over 50% of total room nights sold.The occupancy rate for all hotels in operation was 94.1% in the third quarter of 2011, compared with 96.7% in the same period in 2010 and 94.0% in the previous quarter of 2011. The decrease in occupancy rate year over year was mainly due to a higher mix of new hotels going through ramp up with relatively lower occupancy rate than that of mature hotels during the quarter as compared with the same period in 2010.
To view more information on the trends in China's budget or economy hotel industry, please click here: http://www.companiesandmarkets.com/Market-Report/china-budget-hotel-industry-report,-2011-708144.asp
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