China Lodging Group, Limited Reports First Quarter of 2012 Financial Results

 China Lodging Group, Limited Reports First Quarter of 2012 Financial Results

PR Newswire

SHANGHAI, May 9, 2012

SHANGHAI, May 9, 2012 /PRNewswire-Asia-FirstCall/-- China Lodging Group,
Limited (NASDAQ: HTHT) ("China Lodging Group" or the "Company"), a leading and
fast-growing limited service hotel chain operator in China, today announced
its unaudited financial results for first quarter ended March 31, 2012.

  oNet Revenues increased 53.0% year-over-year for the first quarter of 2012,
    exceeding the guidance previously announced
  oAdjusted EBITDA from operating hotels (non-GAAP)(1) was RMB111.0 million
    (US$17.6 million)(2) for the first quarter
  oNet loss attributable to China Lodging Group, Limited was RMB9.4 million
    (US$1.5 million) for the first quarter. Diluted net loss per ADS(3) for
    the first quarter was RMB0.16 (US$0.02); adjusted diluted net loss per ADS
    (non-GAAP) for the first quarter was RMB0.10 (US$0.02).
  oRevPAR grew by 9% year-over-year and same-hotel RevPAR grew by 10%
    year-over-year in the first quarter
  o36 net new hotels added in the quarter, bringing the total hotel count to
    675
  oFull year new opening target increased to 260 to 270 hotels, with 140 to
    150 new managed hotels

(1) The following non-GAAP financial measures is used in this press release:
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/(loss) from operations excluding share-based compensation expenses,
adjusted net income/(loss) attributable to China Lodging Group, Limited
excluding share-based compensation expenses, adjusted basic and diluted net
earnings/(loss) 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. See "Use of
Non-GAAP Financial Measures" and "Unaudited Reconciliation of GAAP and
Non-GAAP Results" below for more information about the non-GAAP financial
measures included in this release.
(2) The conversion of Renminbi ("RMB") into United States dollars ("US$") is
based on the exchange rate of US$1.00=RMB6. 2975 on March 30, 2012 as set
forth in the H.10 statistical release of the Federal Reserve Board.
(3) Each ADS represents four of the Company's ordinary shares.

First Quarter 2012 Operational Highlights

  oDuring the first quarter of 2012, the Company opened 36 net new hotels,
    including nine net new leased hotels (or "leased-and-operated hotels") and
    27 net new managed hotels (or "franchised-and-managed hotels"). As of
    March 31, 2012, the Company had 675 hotels in operation, consisting of 353
    leased hotels and 322 managed hotels. Hotels in operation covered 111
    cities in China as of March 31, 2012. The Company had 24 Seasons Hotels
    and 29 Hi Inns in operation as of March 31, 2012.
  oAs of March 31, 2012, the Company had a total pipeline of 336 hotels under
    development, including 107 leased hotels and 229 managed hotels.
  oThe occupancy rate for all hotels in operation was 91% in the first
    quarter of 2012, compared with 82% in the first quarter of 2011, and 93%
    in the previous quarter. Occupancy improved 19 percentage points for the
    Company's hotels in Shanghai and seven percentage points for the Company's
    hotels outside of Shanghai year-over-year, mainly attributable to robust
    travel demand, the Company's successful seasonal promotions, a more mature
    hotel mix, and the rebound of the Shanghai market from post-Expo weakness
    experienced in the first quarter of 2011. The sequential decrease resulted
    mainly from seasonality.
  oThe ADR, or average daily rate, for all hotels, was RMB172 in the first
    quarter of 2012, compared with RMB175 in the first quarter of 2011 and
    RMB179 in the previous quarter. The year-over-year decrease was mainly
    attributable to the city mix shift of the Company's hotels towards lower
    tier cities and the Company's seasonal promotions, partially offset by the
    same-hotel ADR appreciation. The sequential decrease resulted mainly from
    the Company's seasonal price adjustment and promotions.
  oRevPAR, defined as revenue per available room, was RMB156 in the first
    quarter of 2012, compared with RMB143 in the first quarter of 2011 and
    RMB167 in the previous quarter. The year-over-year improvement in RevPAR
    was a result of a higher occupancy slightly offset by a lower ADR. The
    sequential decrease was mainly due to seasonality.
  oFor all the hotels which had been in operation for at least 18 months, the
    same-hotel RevPAR was RMB172 for the first quarter of 2012, a 10% increase
    from RMB157 for the first quarter of 2011. Outside of Shanghai, the
    same-hotel RevPAR increased by 8%, with a 3% increase in ADR and a 5%
    increase in occupancy.
  oAs of March 31, 2012, HanTing Club had more than 5.0 million individual
    members, a 65% increase from a year ago. These individual members
    contributed 66% of room nights sold during the first quarter of 2012,
    remaining stable as in the first quarter of 2011. The Company's corporate
    members contributed an additional 8% of room nights sold. In addition to
    the HanTing Club program, the Company introduced the e-member program in
    2010 to enhance brand awareness and to expand coverage of its customer
    loyalty program. E-members can register on the Company's website free of
    charge and can enjoy discounts on room rates for their on-line booking. As
    of March 31, 2012, the Company had approximately 0.8 million e-members,
    who contributed 2% of room nights sold during the first quarter. In the
    first quarter of 2012, 96% of room nights sold were sold through the
    Company's own channels.

"We are pleased with our robust results in the first quarter of 2012, with 9%
year-over-year increase in RevPAR across the whole chain and solid growth in
hotel count. Our leading and high-quality brand has been well recognized in
the market, which continuously attracts a growing number of customers and
franchisees," said Mr. Qi Ji, founder, executive Chairman and Chief Executive
Officer of China Lodging Group. "We remain confident in our rapid and
high-quality expansion with focus on customer experience, which is sustainable
and profitable in the long run."

First Quarter of 2012 Financial Results

Total revenues for the first quarter were RMB688.6 million (US$109.3 million),
representing an increase of 52.9% year-over-year and coming in flat
sequentially. The year-over-year increase was primarily due to the Company's
continued expansion of its hotel network and an increase in RevPAR
year-over-year. The flat sequential comparison was a result of increased
number of hotels in operation offset by a lower RevPAR due to seasonality.

Total revenues from leased hotels for the first quarter of 2012 were RMB627.0
million (US$99.6 million), representing an increase of 52.8% year-over-year
and coming in flat from the previous quarter.

Total revenues from managed hotels for the first quarter of 2012 were RMB61.5
million (US$9.8 million), representing a 53.9% year-over-year increase and a
2.6% decrease sequentially. The sequential decrease was mainly due to
seasonality and a smaller number of new managed hotels opened in the first
quart of 2012.

Net revenues for the first quarter of 2012 were RMB649.5 million (US$103.1
million), representing an increase of 53.0% year-over-year and coming in flat
sequentially.

Hotel operating costs for the first quarter of 2012 were RMB549.4 million
(US$87.2 million), compared to RMB361.3 million (US$55.2 million) for the
first quarter of 2011 and RMB493.8 million (US$78.5 million) for the previous
quarter, representing a 52.1% and 11.2% increase, respectively. The
year-over-year increase in hotel operating costs was mainly driven by the
Company's hotel network expansion, especially growth in leased hotels, whose
room nights available for sale increased 39.3% year-over-year. On top of that,
the year-over-year increase was also attributable to the higher occupancy in
the first quarter of 2012, and the inflation in the costs such as salary,
utility, and consumables, food and beverage. Total hotel operating costs
excluding share-based compensation expenses (non-GAAP) were RMB548.8 million
(US$87.1 million), representing 84.5% of net revenues, compared to 85.0% for
the first quarter in 2011 and 75.8% in the previous quarter. The
year-over-year decrease in hotel operating costs as a percentage of net
revenues was because the RevPAR growth outpaced the cost increase in the
comparable periods. The sequential increase in hotel operating costs as a
percentage of net revenues was mainly driven by seasonality. The first quarter
of a year typically has lower RevPAR and higher utility cost.

Selling and marketing expenses for the first quarter of 2012 were RMB22.2
million (US$3.5 million), compared to RMB17.9 million (US$2.7 million) for the
first quarter of 2011 and RMB29.3 million (US$4.7 million) for the previous
quarter. Selling and marketing expenses excluding share-based compensation
expenses (non-GAAP) were RMB21.9 million (US$3.5 million), or 3.4 % of net
revenues, compared to 4.2% for the first quarter in 2011 and 4.5% for the
previous quarter. The year-over-year decrease was mainly attributable to an
enlarged revenue base. The sequential decrease was mainly due to less spending
on advertising and other marketing programs.

General and administrative expenses for the first quarter of 2012 were RMB48.8
million (US$7.8 million), compared to RMB34.6 million (US$5.3 million) for the
first quarter of 2011 and RMB43.8 million (US$7.0 million) for the previous
quarter. General and administrative expenses excluding share-based
compensation expenses (non-GAAP) were RMB46.4 million (US$7.4 million),
representing 7.1% of the net revenues for the first quarter of 2012, compared
with 7.5% of the net revenues for the first quarter of 2011 and 6.4% for the
previous quarter. The year-over-year decrease in percentage was mainly due to
an enlarged revenue base.

Pre-opening expenses for the first quarter of 2012 were RMB41.4 million
(US$6.6 million), representing a year-over-year increase of 20.7% and a
decrease of 16.4% sequentially. The pre-opening expenses were primarily driven
by the number of leased hotels under construction during the period.

Loss from operations for the quarter was RMB12.3 million (US$2.0 million),
compared to loss from operations of RMB23.6 million (US$3.6 million) for the
first quarter of 2011 and income from operations of RMB34.4 million (US$5.5
million) for the previous quarter. Excluding share-based compensation
expenses, adjusted loss from operations (non-GAAP) for the quarter was RMB9.0
million (US$1.4 million). Loss from operations for the first quarter was
impacted by seasonality and the ramp-up of new leased hotels.

Net loss attributable to China Lodging Group, Limited for the first quarter
was RMB9.4 million (US$1.5 million), compared to net loss attributable to
China Lodging Group, Limited of RMB14.0 million (US$2.1 million) for the first
quarter of 2011 and net income attributable to China Lodging Group, Limited of
RMB30.3 million (US$4.8 million) for the previous quarter. Excluding
share-based compensation expenses, adjusted net loss attributable to China
Lodging Group, Limited (non-GAAP) for the first quarter of 2012 was RMB6.1
million (US$1.0 million), compared to adjusted net loss attributable to China
Lodging Group, Limited of RMB10.6 million (US$1.6 million) for the first
quarter of 2011 and adjusted net income attributable to China Lodging Group,
Limited of RMB33.2 million (US$5.3 million) for the previous quarter.

Basic and diluted net loss per share/ADS. For the first quarter of 2012, basic
net loss per share and diluted net loss per share were RMB0.04 (US$0.01);
basic net loss per ADS and diluted net loss per ADS were RMB0.16 (US$0.02).
Excluding share-based compensation expenses, adjusted basic net loss per share
(non-GAAP) and adjusted diluted net loss per share (non-GAAP) for the first
quarter of 2012 were RMB0.03 (US$0.01), and adjusted basic net loss per ADS
(non-GAAP) and adjusted diluted net loss per ADS (non-GAAP) were RMB0.10
(US$0.02).

EBITDA (non-GAAP) for the first quarter of 2012 was RMB66.3 million (US$10.5
million), compared to RMB35.9 million (US$5.5 million) for the first quarter
of 2011 and RMB112.0 million (US$17.8 million) for the previous quarter.
Adjusted EBITDA from operating hotels (non-GAAP) for the first quarter of 2012
was RMB111.0 million (US$17.6 million), representing an increase of 50.8% from
the first quarter of 2011 and a decrease of 32.5% sequentially. The
year-over-year increase was mainly a result of the expansion of the Company's
hotel network and improvement in operating margin, partially offset by lower
interest income and the absence of foreign exchange gain. The sequential
decrease was mainly due to seasonality.

Hotel income (non-GAAP), which is the difference between net revenues and
hotel operating costs, was RMB100.1 million (US$15.9 million) for the first
quarter of 2012, compared with RMB63.2 million (US$9.6 million) for the first
quarter of 2011 and RMB156.9 million (US$24.9 million) for the previous
quarter. The year-over-year increase of hotel income (non-GAAP) was mainly
attributable to the enlarged managed hotel network and increased number of
mature leased hotels in the portfolio. For leased hotels in operation for at
least six months, hotel income (non-GAAP) was RMB78.7 million (US$12.5
million) during the first quarter of 2012, or 15% of net revenues derived from
those hotels. Leased hotels in operation for less than six months, which
accounted for 14% of leased room nights available for sale for the first
quarter of 2012, derived a hotel loss (non-GAAP) of RMB22.7 million (US$3.6
million), or 36% of net revenues derived from those hotels for this quarter,
mainly due to lower revenue achievement of those hotels during their ramp-up
stage. For managed hotels, hotel income (non-GAAP) was RMB44.1 million (US$7.0
million), or 76% of net revenue derived from those hotels.

Cash flow. Net operating cash flow for the first quarter of 2012 was RMB101.0
million (US$16.0 million). Cash spent on the purchase of property and
equipment, purchase of intangible assets and acquisitions, which are part of
investing cash flow, was RMB254.9 million (US$40.5 million).

Cash and cash equivalents, restricted cash, and short-term investment. As of
March 31, 2012, the Company had a total balance of cash and cash equivalents,
restricted cash and short-term investment of RMB630.2 million (US$100.1
million).

In March 2012, the Company entered into a credit facility with the Industrial
and Commercial Bank of China under which the Company can draw down up to
RMB500.0 million by May 21, 2015. As of May 9, 2012, the Company had not drawn
down this credit facility.

Business Outlook and Guidance for Second Quarter of 2012

"The continuous urbanization in China not only stimulates growing travel
demand but also provides more opportunities of various properties for
multiple-brand hotel chain operators like us. Our attractive brand positioning
and solid performance lead to fast and quality expansion and a strong
pipeline." commented Mr. Ji. "We started 2012 with record number of managed
hotels under development. Thus, we increase our full year new openings to 260
to 270 hotels, with 120 leased hotels and 140 to 150 managed hotels."

The Company expects to achieve net revenues in the range of RMB740 to 755
million in the second quarter of 2012, representing a 35% to 38% growth
year-over-year.

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,
Wednesday, May 9, 2012 (or 9 a.m. on Thursday, May 10, 2012 in the
Shanghai/Hong Kong time zone) following the announcement. To participate in
the event by telephone, please dial +1 (855) 500 8701 (for callers in the US),
+86 400 120 0654 (for callers in China Mainland), +852 3051 2745 (for callers
in Hong Kong) or +65 6723 9385 (for callers outside of the US, China Mainland,
and Hong Kong) and entering pass code 7122 2557. 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 May 16, 2012. Please dial +1 (866) 214 5335 (for
callers in the US) or +61 2 8235 5000 (for callers outside the US) and
entering pass code 7122 2557.

The conference call will also be webcast live over the Internet and can be
accessed by all interested parties at the Company's Web site,
http://ir.htinns.com.

Annual Report

China Lodging Group filed its Annual Report on Form 20-F for the year ended
December 31, 2011 with the Securities and Exchange Commission on April 12,
2012. The Annual Report on Form 20-F can be accessed through the "SEC Filings"
page on the China Lodging Group investor relations website at
http://ir.htinns.com.

Use of Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented
in accordance with U.S. GAAP, the Company uses the following non-GAAP measures
defined as non-GAAP financial measures by the Securities and Exchange
Commission: 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/(loss) from operations excluding share-based
compensation expenses, adjusted net income/(loss) attributable to China
Lodging Group, Limited excluding share-based compensation expenses,and
adjusted basic and diluted net earnings/(loss) per share and per ADS excluding
share-based compensation expenses, EBITDA, adjusted EBITDA from operating
hotels excluding pre-opening expenses and share-based compensation expenses,
and hotel income. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with U.S. GAAP. For more
information on these non-GAAP financial measures, please see the table
captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end
of this release. The Company believes that these non-GAAP financial measures
provide meaningful supplemental information regarding its performance by
excluding share-based compensation expenses that may not be indicative of its
operating performance. The Company believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing its
performance and when planning and forecasting future periods.These non-GAAP
financial measures also facilitate management's internal comparisons to the
Company's historical performance.The Company believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by management in
its financial and operational decision making.A limitation of using non-GAAP
financial measures excluding share-based compensation expenses is that
share-based compensation expenses have been and will continue to be a
significant recurring expense in the Company's business. The Company
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 also believes that EBITDA is a useful financial metric to assess
its operating and financial performance before the impact of investing and
financing transactions and income taxes. Given the significant investments
that the Company has made in leasehold improvements, depreciation and
amortization expense comprises a significant portion of its 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 its
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-openingexpenses, a portion of which is non-cash
rental expenses, and share-based compensation expenses helps facilitate
year-on-year comparison of its results of operations as the number of hotels
in the development stage may vary significantly from year to yearand provides
a proxy for the cash generation capability of the hotels in operation at their
current level of maturity. Therefore, the Company believes adjusted EBITDA
from operating hotels more closely reflects the performance capability of
hotels currently in operation. The Company's calculation of EBITDA and
adjusted EBITDA from operating hotels does not deduct interest incomeor
foreign exchange gain or loss. 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 it
considers to be outside the ordinary course ofits 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
Company's results. Additionally, EBITDA or adjusted EBITDA from operating
hotels does not consider capital expenditures and other investing activities
and should not be considered as a measure of our liquidity. The Company
compensates for these limitations by providing the relevant disclosure of its
depreciation and amortization, interest expense, income tax expense, capital
expenditures pre-opening expenses, share-based compensation expenses and other
relevant items both in its reconciliations to the U.S. GAAP financial measures
and in its 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 performanceof the Company, investors should not consider this
data in isolation or as a substitute for the Company's net income/(loss),
operating income/(loss) 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.

Reconciliations of the Company's non-GAAP financial measures, including
EBITDA, adjusted EBITDA from operating hotels and hotel income, to
consolidated statement of operations information are included at the end of
this release.

About China Lodging Group, Limited

China Lodging Group, Limited is a leading and fast-growing limited service
hotel chain operator in China with leased and managed models. Under the leased
model, the Company directly operates hotels typically located on leased
properties. Under the managed model, the Company manages franchised hotels and
collects fees from franchisees. China Lodging Group provides business and
leisure travelers with high-quality, and conveniently-located hotels. As of
March 31, 2012, the Company had 675 hotels and 75,622 rooms in 111 cities
across China.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: The information in this release contains forward-looking statements
which involve risks and uncertainties, including statements regarding the
Company's capital needs, business strategy and expectations. Any statements
contained herein that are not statements of historical fact may be deemed to
be forward-looking statements, which may be identified by terminology such as
"may," "should," "will," "expect," "plan," "intend," "anticipate," "believe,"
"estimate," "predict," "potential," "forecast," "project," or "continue," the
negative of such terms or other comparable terminology. Readers should not
rely on forward-looking statements as predictions of future events or results.
Any or all of the Company's forward-looking statements may turn out to be
wrong. They can be affected by inaccurate assumptions, risks and uncertainties
and other factors which could cause actual events or results to be materially
different from those expressed or implied in the forward-looking statements.
In evaluating these statements, readers should consider various factors,
including the anticipated growth strategies of the Company, the future results
of operations and financial condition of the Company, the economic conditions
of China, the regulatory environment in China, the Company's ability to
attract customers and leverage its brand, trends and competition in the
lodging industry, the expected growth of the lodging market in China and other
factors and risks outlined in the Company's filings with the Securities and
Exchange Commission, including its annual report on Form 20-F and other
filings. These factors may cause the Company's actual results to differ
materially from any forward-looking statement. In addition, new factors emerge
from time to time and it is not possible for the Company to predict all
factors that may cause actual results to differ materially from those
contained in any forward-looking statements. Any projections in this release
are based on limited information currently available to the Company, which is
subject to change. This release also contains statements or projections that
are based upon information available to the public, as well as other
information from sources which the Company believes to be reliable, but it is
not guaranteed by the Company to be accurate, nor does the Company purport it
to be complete. The Company disclaims any obligation to publicly update any
forward-looking statements to reflect events or circumstances after the date
of this document, except as required by applicable law.

Contact Information

Ida Yu
Investor Relations Manager
Tel: 86 (21) 6195 9561
Email: ir@htinns.com
http://ir.htinns.com



China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
                                         December 31, 2011  March 31, 2012
                                         RMB                RMB        US$
                                         (in thousands)
Assets
Current assets:
 Cash and cash equivalents              781,601            615,682    97,766
 Restricted cash                        1,500              14,495     2,302
 Accounts receivable, net               37,416             41,851     6,646
 Prepaid rent                           228,087            231,665    36,787
 Inventories                            31,232             27,662     4,393
 Income tax receivables                 -                  816        130
 Other current assets                   53,862             48,999     7,780
 Deferred tax assets                    40,119             40,119     6,371
 Total current assets                   1,173,817          1,021,289  162,175
Property and equipment, net              2,095,794          2,197,399  348,932
Intangible assets, net                   69,779             67,700     10,750
Goodwill                                 42,536             42,536     6,754
Other assets                             102,056            107,073    17,002
Deferred tax assets                      40,968             40,968     6,505
Total assets                             3,524,950          3,476,965  552,118
Liabilities and equity
Current liabilities:
 Accounts payable                       417,605            343,526    54,550
 Amount due to related parties          1,030              1,508      240
 Salary and welfare payable             80,266             61,964     9,839
 Deferred revenue                       138,148            150,317    23,869
 Accrued expenses and other current     142,146            157,591    25,024
liabilities
 Income tax payable                     14,148             -          -
 Total current liabilities              793,343            714,906    113,522
Deferred rent                            329,774            355,102    56,388
Deferred revenue                         71,698             77,494     12,305
Other long-term liabilities              61,574             64,862     10,300
Deferred tax liabilities                 12,677             12,677     2,013
Total liabilities                        1,269,066          1,225,041  194,528
Equity
 Ordinary shares                        179                179        28
 Additional paid-in capital             2,199,954          2,205,262  350,181
 Retained earnings                      85,127             75,698     12,020
 Accumulated other comprehensive loss   (39,166)           (38,935)   (6,183)
Total China Lodging Group, Limited       2,246,094          2,242,204  356,046
equity
 Noncontrolling interest                9,790              9,720      1,544
Total equity                             2,255,884          2,251,924  357,590
Total liabilities and equity             3,524,950          3,476,965  552,118



China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Operations
                             Quarter Ended
                             March 31,     December 31,   March 31, 2012
                             2011          2011
                             RMB           RMB            RMB        US$
                             (in thousands, except per share and per ADS data)
Revenues:
Leased hotels                410,390       626,738        627,006    99,564
Managed hotels               39,994        63,183         61,549     9,774
Total revenues               450,384       689,921        688,555    109,338
Less: business tax and       (25,949)      (39,184)       (39,097)   (6,208)
related surcharges
Net revenues                 424,435       650,737        649,458    103,130
Operating costs and
expenses:
 Hotel operating costs:
 Rents                  (141,457)     (183,367)      (205,397)  (32,616)
 Utilities              (43,734)      (40,514)       (64,729)   (10,279)
 Personnel costs        (61,434)      (97,065)       (105,771)  (16,796)
 Depreciation and       (50,445)      (66,611)       (74,166)   (11,777)
amortization
 Consumables, food and  (41,764)      (70,341)       (67,633)   (10,740)
beverage
 Others                 (22,433)      (35,921)       (31,672)   (5,028)
 Total hotel operating      (361,267)     (493,819)      (549,368)  (87,236)
costs
 Selling and marketing      (17,897)      (29,307)       (22,211)   (3,527)
expenses
 General and administrative (34,551)      (43,792)       (48,812)   (7,751)
expenses
 Pre-opening expenses       (34,275)      (49,460)       (41,355)   (6,567)
Total operating costs and    (447,990)     (616,378)      (661,746)  (105,081)
expenses
Income/(Loss) from           (23,555)      34,359         (12,288)   (1,951)
operations
Interest income              3,904         5,199          3,102      493
Interest expenses            (224)         (213)          (213)      (34)
Other income                 1,059         753            375        59
Foreign exchange gain/(loss) 3,059         2,734          (643)      (102)
Income/(Loss) before income  (15,757)      42,832         (9,667)    (1,535)
tax
Income tax expense/(benefit) 2,409         (11,192)       967        154
Net income/(loss)            (13,348)      31,640         (8,700)    (1,381)
Net income attributable to   (607)         (1,340)        (729)      (116)
noncontrolling interests
Net income/(loss)
attributable to China        (13,955)      30,300         (9,429)    (1,497)
Lodging Group, Limited
Net earnings/(loss) per
share
— Basic                      (0.06)        0.12           (0.04)     (0.01)
— Diluted                    (0.06)        0.12           (0.04)     (0.01)
Net earnings/(loss) per ADS
— Basic                      (0.23)        0.50           (0.16)     (0.02)
— Diluted                    (0.23)        0.49           (0.16)     (0.02)
Weighted average ordinary
shares outstanding
— Basic                      241,156       242,461        242,629    242,629
— Diluted                    241,156       245,896        242,629    242,629
Other comprehensive
income/(loss), net of tax
Foreign currency translation (3,338)       (2,841)        231        37
adjustments
Comprehensive income/(loss)  (16,686)      28,799         (8,469)    (1,344)
Comprehensive income/(loss)
attributable to the          (607)         (1,340)        (729)      (116)
noncontrolling interest
Comprehensive income/(loss)
attributable to China        (17,293)      27,459         (9,198)    (1,460)
Lodging Group, Limited



China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
                       Quarter Ended
                       March31,2011  December31,2011  March 31, 2012
                       RMB             RMB                RMB        US$
                       (in thousands)
Operating activities:
Net income             (13,348)        31,640             (8,700)    (1,381)
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Share-based            3,393           2,858              3,288      522
compensation
Depreciation and       52,061          70,328             76,512     12,150
amortization
Deferred taxes         (16)            (35,714)           -          -
Bad debt expenses      113             554                1,105      175
Deferred rent          12,259          27,966             25,496     4,049
Impairment loss        -               710                -          -
Excess tax benefit
from share-based       -               (8,324)            (352)      (56)
compensation
Changes in operating
assets and
liabilities, net of
effect of
acquisitions:
Accounts receivable    (10,520)        (4,669)            (5,540)    (880)
Prepaid rent           (2,698)         (34,442)           (3,578)    (568)
Inventories            (2,514)         (4,736)            3,570      567
Other current assets   (551)           (14,701)           4,513      717
Other assets           (2,310)         176                (5,016)    (797)
Accounts payable       1,465           (627)              53         8
Amount due to related  114             (290)              479        76
parties
Salary and welfare     (18,313)        37,718             (18,302)   (2,906)
payables
Deferred revenue       24,937          26,549             17,964     2,853
Accrued expenses and
other current          8,276           169                20,695     3,286
liabilities
Income tax payable and (17,304)        34,290             (14,611)   (2,320)
receivable
Other long-term        3,576           5,469              3,397      539
liabilities
Net cash provided by   38,620          134,924            100,973    16,034
operating activities
Investing activities:
Purchase of property   (157,014)       (208,746)          (250,065)  (39,709)
and equipment
Purchases of           (136)           (13,037)           (215)      (34)
intangibles
Amount received as a
result of government   6,900           -                  -          -
zoning
Acquisitions, net of   (40,252)        (9,540)            (4,610)    (732)
cash received
Proceeds from sales of -               30,000             -          -
short-term investments
Decrease (increase) in (1,970)         4,000              (12,995)   (2,064)
restricted cash
Net cash used in       (192,472)       (197,323)          (267,885)  (42,539)
investing activities
Financing activities:
Net proceeds from
issuance of ordinary   146             2,076              2,019      321
shares upon exercise
of option
Repayment of funds
advanced from          (1,249)         (533)              (810)      (129)
noncontrolling
interest holders
Contribution from
noncontrolling         225             -                  5          1
interest holders
Dividend paid to
noncontrolling         -               (127)              (804)      (128)
interest holders
Excess tax benefit
from share-based       -               8,324              352        56
compensation
Net cash provided by
(used in) financing   (878)           9,740              762        121
activities
Effect of exchange
rate changes on cash   (3,335)         (2,841)            231        37
and cash equivalents
Net decrease in cash   (158,065)       (55,500)           (165,919)  (26,347)
and cash equivalents
Cash and cash
equivalents, beginning 1,060,067       837,101            781,601    124,113
of period
Cash and cash
equivalents, end of    902,002         781,601            615,682    97,766
period



China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
                          Quarter Ended March 31, 2012
                          GAAP      % of Net  Share-based   % of Net  Non-GAAP
                          Result    Revenues  Compensation  Revenues  Result
                          RMB                 RMB                     RMB
                          (in thousands)
Hotel operating costs     549,368   84.6%     615           0.1%      548,753
Selling and marketing     22,211    3.4%      270           0.0%      21,941
expenses
General and               48,812    7.5%      2,403         0.4%      46,409
administrative expenses
Pre-opening expenses      41,355    6.4%      -             0.0%      41,355
Total operating costs and 661,746   101.9%    3,288         0.5%      658,458
expenses
Loss from operations      (12,288)  -1.9%     3,288         0.5%      (9,000)
                          Quarter Ended March 31, 2012
                          GAAP      % of Net  Share-based   % of Net  Non-GAAP
                          Result    Revenues  Compensation  Revenues  Result
                          US$                US$                     US$
                          (in thousands)
Hotel operating costs     87,236    84.6%     98            0.1%      87,138
Selling and marketing     3,527     3.4%      43            0.0%      3,484
expenses
General and               7,751     7.5%      382           0.4%      7,369
administrative expenses
Pre-opening expenses      6,567     6.4%      -             0.0%      6,567
Total operating costs and 105,081   101.9%    523           0.5%      104,558
expenses
Loss from operations      (1,951)   -1.9%     523           0.5%      (1,428)
                          Quarter Ended December 31, 2011
                          GAAP      % of Net  Share-based   % of Net  Non-GAAP
                          Result    Revenues  Compensation  Revenues  Result
                          RMB                 RMB                     RMB
                          (in thousands)
Hotel operating costs     493,819   75.9%     536           0.1%      493,283
Selling and marketing     29,307    4.5%      178           0.0%      29,129
expenses
General and               43,792    6.7%      2,144         0.3%      41,648
administrative expenses
Pre-opening expenses      49,460    7.6%      -             0.0%      49,460
Total operating costs and 616,378   94.7%     2,858         0.4%      613,520
expenses
Income from operations    34,359    5.3%      2,858         0.4%      37,217
                          Quarter Ended March 31, 2011
                          GAAP      % of Net  Share-based   % of Net  Non-GAAP
                          Result    Revenues  Compensation  Revenues  Result
                          RMB                 RMB                     RMB
                          (in thousands)
Hotel operating costs     361,267   85.1%     473           0.1%      360,794
Selling and marketing     17,897    4.2%      196           0.0%      17,701
expenses
General and               34,551    8.1%      2,724         0.6%      31,827
administrative expenses
Pre-opening expenses      34,275    8.1%      -             0.0%      34,275
Total operating costs and 447,990   105.5%    3,393         0.7%      444,597
expenses
Loss from operations      (23,555)  -5.5%     3,393         0.7%      (20,162)



China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
                        Quarter Ended
                        March31,2011  December31,2011  March 31, 2012
                        RMB             RMB                RMB        US$
                        (in thousands, except per share and per ADS data)
Net income/(loss)
attributable to China   (13,955)        30,300             (9,429)    (1,497)
Lodging Group, Limited
(GAAP)
Share-based             3,393           2,858              3,288      523
compensation expenses
Adjusted net
income/(loss)
attributable to China   (10,562)        33,158             (6,141)    (974)
Lodging Group, Limited
(non-GAAP)
Net earnings/(loss) per
share (GAAP)
— Basic                 (0.06)          0.12               (0.04)     (0.01)
— Diluted               (0.06)          0.12               (0.04)     (0.01)
Net earnings/(loss) per
ADS (GAAP)
— Basic                 (0.23)          0.50               (0.16)     (0.02)
— Diluted               (0.23)          0.49               (0.16)     (0.02)
Adjusted net
earnings/(loss) per
share (non-GAAP)
— Basic                 (0.04)          0.14               (0.03)     (0.01)
— Diluted               (0.04)          0.13               (0.03)     (0.01)
Adjusted net
earnings/(loss) per ADS
(non-GAAP)
— Basic                 (0.18)          0.55               (0.10)     (0.02)
— Diluted               (0.18)          0.54               (0.10)     (0.02)
Weighted average
ordinary shares
outstanding
— Basic                 241,156         242,461            242,629    242,629
— Diluted               241,156         245,896            242,629    242,629
                        Quarter Ended
                        March 31, 2011  December 31, 2011  March 31, 2012
                        RMB             RMB                RMB        US$
                        (in thousands)
Net income/(loss)
attributable to China   (13,955)        30,300             (9,429)    (1,497)
Lodging Group, Limited
(GAAP)
Interest expenses       224             213                213        34
Income tax expense      (2,409)         11,192             (967)      (154)
Depreciation and        52,061          70,328             76,512     12,150
amortization
EBITDA (non-GAAP)       35,921          112,033            66,329     10,533
Pre-opening expenses    34,275          49,460             41,355     6,567
Share-based             3,393           2,858              3,288      523
Compensation
Adjusted EBITDA from
operating hotels        73,589          164,351            110,972    17,623
(non-GAAP)
                        Quarter Ended
                        March 31, 2011  December 31, 2011  March 31, 2012
                        RMB             RMB                RMB        US$
                        (in thousands)
Net revenues (GAAP)     424,435         650,737            649,458    103,130
Less: Hotel operating  (361,267)       (493,819)          (549,368)  (87,236)
costs
Hotel income (non-GAAP) 63,168          156,918            100,090    15,894



China Lodging Group, Limited
Operational Data
                                 As of
                                 March 31,        December 31,       March 31,
                                 2011             2011               2012
Total hotels in operation:       473              639                675
 Leased hotels                  259              344                353
 Managed hotels                 214              295                322
Total hotel rooms in operation   54,160           71,621             75,622
 Leased hotels                  31,540           40,514             42,057
 Managed hotels                 22,620           31,107             33,565
Number of cities                 71               100                111
                                 For the quarter ended
                                 March 31,        December 31,       March 31,
                                 2011             2011               2012
Occupancy rate (as a percentage)
 Leased hotels                  80%              92%                90%
 Managed hotels                 84%              95%                92%
 Total hotels in operation      82%              93%                91%
Average daily room rate (in RMB)
 Leased hotels                  179              184                176
 Managed hotels                 170              173                166
 Total hotels in operation      175              179                172
RevPAR (in RMB)
 Leased hotels                  144              170                158
 Managed hotels                 142              164                153
 Total hotels in operation      143              167                156
Like-for-like performance for hotels opened for at least 18 months
during the current quarter
                                 As of and for the quarter ended
                                 March 31,
                                 2011             2012
Total hotels in operation:       362              362
 Leased hotels                  199              199
 Managed hotels                 163              163
Total hotel rooms in operation   42,013           42,013
 Leased hotels                  24,787           24,787
 Managed hotels                 17,226           17,226
Occupancy rate (as a percentage) 88%              96%
Average daily rate (in RMB)      178              180
RevPAR (in RMB)                  157              172

SOURCE China Lodging Group, Limited