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

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

  *Net Revenues increased 42.6% year-over-year for the third quarter of 2012,
    exceeding the high end of the previously announced guidance by 3%
  *Adjusted EBITDA from operating hotels (non-GAAP)^1 increased 54.3%
    year-over-year to RMB284.3 million (US$45.2 million)^2 for the third
    quarter
  *Adjusted net income attributable to China Lodging Group, Limited increased
    63.8% year-over-year to RMB103.6 million (US$16.5 million) for the third
    quarter. Diluted net earnings per ADS^3 for the third quarter were RMB1.55
    (US$0.25); adjusted diluted net earnings per ADS (non-GAAP) for the third
    quarter were RMB1.67 (US$0.27)
  *Excluding franchised Starway hotels, the Company's RevPAR grew by 1%
    year-over-year and same-hotel RevPAR grew by 5% year-over-year with 3%
    increase in ADR for the third quarter
  *The Company had a total of 938 hotels in operation and 375 hotels in
    pipeline as of September 30, 2012

SHANGHAI, China, Nov. 5, 2012 (GLOBE NEWSWIRE) -- 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 the quarter ended September 30, 2012.

Third Quarter 2012 Operational Highlights

  *In the third quarter of 2012, the Company opened 27 new leased
    ("leased-and-operated") hotels and 81 new manachised
    ("franchised-and-managed") hotels. As of September 30, 2012, the Company
    had 415 leased hotels, 446 manachised hotels, and 77 franchised hotels in
    operation in 149 cities. The leased and manachised hotel rooms in
    operation increased by 31% and 64%, respectively, from a year ago.
  *As of September 30, 2012, the Company had a pipeline of 100 leased hotels
    and 275 manachised hotels.
  *The occupancy rate for all hotels in operation, excluding franchised
    Starway hotels, was 97.4% in the third quarter of 2012, compared with
    96.7% in the third quarter of 2011, and 97.4% in the previous quarter. The
    year-over-year slight improvement in occupancy was mainly attributable to
    a more mature hotel mix.
  *The ADR, or average daily rate, for all hotels, excluding franchised
    Starway hotels, was RMB183 in the third quarter of 2012, compared with
    RMB183 in the third quarter of 2011 and RMB181 in the previous quarter. In
    the third quarter of 2012, the Company achieved an increase of 3% in
    same-hotel ADR, offsetting the price impact resulted from city mix shift
    towards lower tier cities. The sequential increase was mainly due to
    seasonality.
  *RevPAR, or revenue per available room, excluding franchised Starway
    hotels, was RMB178 in the third quarter of 2012, compared with RMB177 in
    the third quarter of 2011 and RMB176 in the previous quarter. The
    year-over-year improvement in RevPAR was a result of a higher occupancy.
    The sequential increase was mainly due to seasonality.
  *RevPAR for leased hotels increased to RMB183 in the third quarter of 2012,
    from RMB178 a year ago, mainly due to the increase in occupancy as a
    result of a mature hotel mix.
  *For all the hotels which had been in operation for at least 18 months,
    excluding franchised Starway hotels, same-hotel RevPAR was RMB195 for the
    third quarter of 2012, a 5% increase from RMB186 for the third quarter of
    2011, with a 3% increase in ADR and a 2% increase in occupancy.
  *As of September 30, 2012, HanTing Club had more than 8 million members,
    including individual members, e-members, and corporate members, who
    contributed more than 80% of room nights sold during the third quarter of
    2012. In the third quarter of 2012, 96% of room nights were sold through
    the Company's own channels. Only 4% of room nights were sold through
    agencies.

"In the third quarter, we continued to strengthen our brand portfolio and
obtained positive results. Seasons and Starway, our mid-scale hotel brands,
provide customers with quality and affordable stay at convenient locations.
Hanting Express and Hi Inn, our economy hotel brands, more widely spread
across China, provide customers with comfortable stay experience within
budget. In addition, we successfully accelerated our manachised hotel network
expansion, achieving a record high new opening of 81 this quarter and a new
high in pipeline of 275," commented Mr. Qi Ji, founder, executive Chairman and
Chief Executive Officer of China Lodging Group.

Third Quarter of 2012 Financial Results

Total revenues for the third quarter were RMB947.6 million (US$150.8 million),
representing an increase of 42.6% year-over-year and 12.0% sequentially. The
year-over-year and sequential increase was primarily due to the Company's
continued expansion of its hotel network.

Total revenues from leased hotels for the third quarter of 2012 were RMB846.7
million (US$134.7 million), representing an increase of 39.7% year-over-year
and 10.7% sequentially.

Total revenues from manachised and franchised hotels for the third quarter of
2012 were RMB101.0 million (US$16.1 million), representing an increase of
72.9% year-over-year and a 23.4% increase sequentially.

Net revenues for the third quarter of 2012 were RMB893.6 million (US$142.2
million), representing an increase of 42.6% year-over-year and 12.0%
sequentially. The result was 3% higher than the high end of our previously
announced guidance.

Hotel operating costs for the third quarter of 2012 were RMB630.0 million
(US$100.2 million), compared to RMB452.6 million (US$71.0 million) for the
third quarter of 2011 and RMB580.4 million (US$91.4 million) for the previous
quarter, representing a 39.2% and 8.5% increase, respectively. The
year-over-year increase in hotel operating costs was mainly driven by the
Company's hotel network expansion. Total hotel operating costs excluding
share-based compensation expenses (non-GAAP) were RMB629.0 million (US$100.1
million), representing 70.4% of net revenues, compared to 72.1% for the third
quarter in 2011 and 72.6% in the previous quarter. The year-over-year and
sequential decrease in percentage was mainly due to an increase in manachised
revenue, a more mature leased hotel portfolio and the improvement in
same-hotel RevPAR.

Selling and marketing expenses for the third quarter of 2012 were RMB24.3
million (US$3.9 million), compared to RMB24.9 million (US$3.9 million) for the
third quarter of 2011 and RMB27.3 million (US$4.3 million) for the previous
quarter. Selling and marketing expenses excluding share-based compensation
expenses (non-GAAP) were RMB24.0 million (US$3.8 million), or 2.7 % of net
revenues, compared to 4.0% for the third quarter in 2011 and 3.4% for the
previous quarter. The year-over-year decrease was mainly attributable to an
enlarged revenue base and the Company's cost-saving efforts.

General and administrative expenses for the third quarter of 2012 were RMB55.7
million (US$8.9 million), compared to RMB39.4 million (US$6.2 million) for the
third quarter of 2011 and RMB51.8 million (US$8.2 million) for the previous
quarter. General and administrative expenses excluding share-based
compensation expenses (non-GAAP) were RMB49.3 million (US$7.8 million),
representing 5.5% of the net revenues for the third quarter of 2012, compared
with 5.6% of the net revenues for the third quarter of 2011 and 6.0% for the
previous quarter.

Pre-opening expenses for the third quarter of 2012 were RMB63.2 million
(US$10.1 million), representing a year-over-year increase of 17.1% and a
sequential increase of 12.4%. The increase in pre-opening expenses was
primarily driven by an increase in the number of leased hotels under
construction during the period. Pre-opening expenses as a percentage of net
revenues decreased to 7.1% in the third quarter of 2012 from 8.6% a year ago
due to an enlarged revenue base.

Income from operations for the quarter was RMB120.3 million (US$19.1 million),
compared to RMB55.9 million (US$8.8 million) for the third quarter of 2011 and
RMB82.4 million (US$13.0 million) for the previous quarter. Excluding
share-based compensation expenses, adjusted income from operations (non-GAAP)
for the quarter was RMB128.1 million (US$20.4 million), representing 14.3% of
net revenues, compared with 9.7% during the third quarter of 2011.

Net income attributable to China Lodging Group, Limited for the third quarter
was RMB95.8 million (US$15.2 million), compared to RMB58.2 million (US$9.1
million) for the third quarter of 2011 and RMB70.3 million (US$11.1 million)
for the previous quarter. Excluding share-based compensation expenses,
adjusted net income attributable to China Lodging Group, Limited (non-GAAP)
for the third quarter of 2012 was RMB103.6 million (US$16.5 million), compared
to RMB63.2 million (US$9.9 million) for the third quarter of 2011 and RMB75.0
million (US$11.8 million) for the previous quarter. The year-over-year
increase of 63.8% in adjusted net income was primarily due to the expansion of
the Company's hotel network and the improvement in operating margin.

Basic and diluted net earnings per share/ADS. For the third quarter of 2012,
basic net earnings per share and diluted net earnings per share were RMB0.39
(US$0.06); basic net earnings per ADS were RMB 1.57 (US$0.25) and diluted net
earnings per ADS were RMB1.55 (US$0.25). Excluding share-based compensation
expenses, adjusted basic net earnings per share (non-GAAP) were RMB0.43
(US$0.07) and adjusted diluted net earnings per share (non-GAAP) were RMB0.42
(US$0.07), and adjusted basic net earnings per ADS (non-GAAP) were RMB 1.70
(US$0.27) and adjusted diluted net earnings per ADS (non-GAAP) were RMB1.67
(US$0.27).

EBITDA (non-GAAP) for the third quarter of 2012 was RMB213.3 million (US$33.9
million), compared to RMB125.1 million (US$19.6 million) for the third quarter
of 2011 and RMB169.3 million (US$26.7 million) for the previous quarter.
Adjusted EBITDA from operating hotels (non-GAAP) for the third quarter of 2012
was RMB284.3 million (US$45.2 million), representing an increase of 54.3% from
the third quarter of 2011 and an increase of 23.5% from the previous quarter.

Hotel income (non-GAAP), defined as the difference between net revenues and
hotel operating costs, was RMB263.6 million (US$41.9 million) for the third
quarter of 2012, compared with RMB174.1 million (US$27.3 million) for the
third quarter of 2011 and RMB217.8 million (US$34.3 million) for 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 the Company's portfolio. For leased hotels in
operation for at least six months, hotel income (non-GAAP) was RMB198.8
million (US$31.6 million) for the third quarter of 2012, or 27% of net
revenues derived from those hotels. Leased hotels in operation for less than
six months, which accounted for 12% of leased room nights available for sale
for the third quarter of 2012, derived a hotel loss (non-GAAP) of RMB12.7
million (US$2.0 million), or 20% of net revenues derived from those hotels for
this quarter, mainly due to lower revenue achieved by those hotels during
their ramp-up stage. For manachised and franchised hotels, hotel income
(non-GAAP) was RMB77.5 million (US$12.3 million), or 82% of net revenues
derived from those hotels.

Cash flow. Net cash provided by operating activities for the third quarter of
2012 was RMB242.8 million (US$38.6 million). Cash spent on the purchase of
property and equipment, purchase of intangible assets, long-term investment
and acquisitions, which was part of investing cash flow, was RMB281.8 million
(US$44.8 million).

Cash and cash equivalents and restricted cash. As of September 30, 2012, the
Company had a total balance of cash and cash equivalents and restricted cash
of RMB527.2 million (US$83.9 million).

In September 2012, China Lodging Group entered into a credit facility with
China Merchant Bank under which the Company can draw down up to RMB300 million
by October 2015, increasing the total bank credit facility available to the
Company to RMB799 million.

Guidance for Fourth Quarter of 2012

"By the end of 2012, our company will have approximately 1,000 hotels under
four brands. We expect the new opening of manachised hotel for 2012 to exceed
200. Looking ahead, we expect to open 100 to 110 leased hotels and 230 to 270
manachised hotels in 2013, including conversion from franchised Starway
hotels," commented Mr. Ji.

The Company expects to achieve net revenues in the range of RMB825 to 840
million in the fourth quarter of 2012, representing a 27% to 29% growth
year-over-year. For the full year of 2012, the Company expects to achieve the
high end of its previously announced guidance of 41% net revenue growth.

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 8 p.m. EST,
Monday, November 5, 2012 (or 9 a.m. on Tuesday, November 6, 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 3991 0545.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 November 12, 2012. 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 3991 0545.

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.

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
financial measures as defined 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, 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-opening expenses, 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 year and 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 income or
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 of its 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 performance of 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, manachised and franchised models.
Under the leased model, the Company directly operates hotels typically located
on leased properties. Under the manachised model, the Company manages
franchised hotels and collects management fees from franchisees. Under the
franchised model, the Company licenses its brand name to, and collects license
fees from, franchisees, but does not directly manage the franchisees' hotels.
China Lodging Group provides business and leisure travelers with high-quality,
and conveniently-located hotels. As of September 30, 2012, the Company had 938
hotels in 149 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 growth 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, the Company's expected successful consolidation and integration of
Starway hotels with its existing operations; 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 The following non-GAAP financial measures are 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=RMB6.2848 on September 28, 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.

                —Financial Tables and Operational Data Follow—

China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
                                    December 31, 2011 September 30, 2012
                                    RMB               RMB        US$
                                    (in thousands)                         
Assets                                                          
Current assets:                                                 
Cash and cash equivalents            781,601          465,695   74,099
Restricted cash                      1,500            61,455    9,778
Accounts receivable, net             37,416           48,125    7,657
Prepaid rent                         228,087          278,276   44,278
Inventories                          31,232           32,980    5,248
Other current assets                 53,862           63,886    10,166
Deferred tax assets                  40,119           40,119    6,383
Total current assets                 1,173,817        990,536   157,609
                                                               
Property and equipment, net          2,095,794        2,670,518 424,917
Intangible assets, net               69,779           117,881   18,756
Long term investment                 --              28,129    4,476
Goodwill                             42,536           42,689    6,792
Other assets                         102,056          126,508   20,129
Deferred tax assets                  40,968           40,968    6,519
Total assets                         3,524,950        4,017,229 639,198
                                                               
Liabilities and equity                                          
Current liabilities:                                            
Long-term debt, current portion      --              240       38
Accounts payable                     417,605          502,034   79,881
Amount due to related parties        1,030            1,168     186
Salary and welfare payable           80,266           60,069    9,558
Deferred revenue                     138,148          183,703   29,230
Accrued expenses and other current   142,146          176,318   28,054
liabilities
Income tax payable                   14,148           2,474     394
Total current liabilities            793,343          926,006   147,341
                                                               
Long-term debt                       --              640       102
Deferred rent                        329,774          434,520   69,138
Deferred revenue                     71,698           93,504    14,878
Other long-term liabilities          61,574           85,129    13,545
Deferred tax liabilities             12,677           12,677    2,017
Total liabilities                    1,269,066        1,552,476 247,021
                                                               
Equity                                                          
Ordinary shares                      179              180       29
Additional paid-in capital           2,199,954        2,234,254 355,501
Retained earnings                    85,127           241,822   38,477
Accumulated other comprehensive loss (39,166)         (37,648)  (5,990)
Total China Lodging Group, Limited   2,246,094        2,438,608 388,017
equity
Noncontrolling interest              9,790            26,145    4,160
Total equity                         2,255,884        2,464,753 392,177
Total liabilities and equity         3,524,950        4,017,229 639,198

                                                                
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Operations
                            Quarter Ended
                            September 30, June 30, 2012 September 30, 2012
                             2011
                            RMB           RMB           RMB        US$
                            (in thousands, except per share and per ADS data)
Revenues:                                                        
Leased hotels                606,073      764,633      846,687   134,720
Manachised and franchised    58,406       81,782       100,955   16,063
hotels
Total revenues               664,479      846,415      947,642   150,783
Less: business tax and       (37,793)     (48,181)     (54,005)  (8,593)
related surcharges
Net revenues                 626,686      798,234      893,637   142,190
                                                                
Operating costs and                                              
expenses:
Hotel operating costs:                                           
Rents                        (172,617)    (219,265)    (235,729) (37,508)
Utilities                    (37,948)     (39,532)     (53,340)  (8,487)
Personnel costs              (92,371)     (127,652)    (128,840) (20,500)
Depreciation and             (57,739)     (80,566)     (88,500)  (14,082)
amortization
Consumables, food and        (63,041)     (81,904)     (89,519)  (14,244)
beverage
Others                       (28,863)     (31,517)     (34,097)  (5,425)
Total hotel operating costs  (452,579)    (580,436)    (630,025) (100,246)
Selling and marketing        (24,857)     (27,327)     (24,316)  (3,869)
expenses
General and administrative   (39,359)     (51,798)     (55,734)  (8,868)
expenses
Pre-opening expenses         (54,015)     (56,269)     (63,230)  (10,061)
Total operating costs and    (570,810)    (715,830)    (773,305) (123,044)
expenses
Income from operations       55,876       82,404       120,332   19,146
Interest income              4,490        4,210        3,932     626
Interest expenses            (213)        (209)        (200)     (32)
Other income                 427          1,082        377       60
Foreign exchange gain (loss) 5,770        (1,463)      (248)     (39)
Income before income tax     66,350       86,024       124,193   19,761
Income tax expense           (7,174)      (15,536)     (26,289)  (4,183)
Net income                   59,176       70,488       97,904    15,578
Net income attributable to   (999)        (157)        (2,112)   (336)
noncontrolling interests
Net income attributable to   58,177       70,331       95,792    15,242
China Lodging Group, Limited
                                                                
Net earnings per share                                           
— Basic                      0.24         0.29         0.39      0.06
— Diluted                    0.24         0.29         0.39      0.06
                                                                
Net earnings per ADS                                             
— Basic                      0.96         1.16         1.57      0.25
— Diluted                    0.94         1.14         1.55      0.25
                                                                
Weighted average ordinary                                        
shares outstanding
— Basic                      242,264      242,894      243,282   243,282
— Diluted                    246,272      245,900      247,620   247,620
                                                                
Other comprehensive                                              
income/(loss), net of tax
Foreign currency translation (6,016)      1,162        126       20
adjustments
Comprehensive income         53,160       71,650       98,030    15,598
Comprehensive income
attributable to the          (999)        (157)        (2,112)   (336)
noncontrolling interest
Comprehensive income
attributable to China        52,161       71,493       95,918    15,262
Lodging Group, Limited

                                                                 
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
                             Quarter Ended
                             September 30, June 30, 2012 September 30, 2012
                              2011
                             RMB           RMB           RMB        US$
                             (in thousands)
Operating activities:                                             
Net income                    59,176       70,488       97,904    15,578
Adjustments to reconcile net
income to net cash provided                                       
by operating activities:
Share-based compensation      5,046        4,657        7,789     1,239
Depreciation and amortization 59,583       83,238       90,991    14,478
Bad debt expenses             (92)         251          618       98
Deferred rent                 25,548       34,948       46,155    7,344
Impairment loss               --          800          --       --
Excess tax benefit from       --          (292)        (2,865)   (456)
share-based compensation
Changes in operating assets
and liabilities, net of                                           
effect of acquisitions:
Accounts receivable           (1,817)      (7,151)      2,129     339
Prepaid rent                  (25,596)     (25,228)     (21,382)  (3,402)
Inventories                   (4,637)      (4,095)      (1,198)   (191)
Other current assets          (867)        (14,227)     926       147
Other assets                  (12,713)     (11,732)     (7,705)   (1,226)
Accounts payable              4,255        (381)        (1,775)   (282)
Amount due to related parties 217          (92)         (249)     (40)
Salary and welfare payables   (12,156)     26,008       (28,811)  (4,584)
Deferred revenue              26,212       22,097       27,299    4,344
Accrued expenses and other    1,082        (6,973)      14,927    2,375
current liabilities
Income tax payable and        (4,052)      (2,791)      8,621     1,372
receivable
Other long-term liabilities   4,813        11,038       9,448     1,503
Net cash provided by          124,002      180,563      242,822   38,636
operating activities
Investing activities:                                             
Purchase of property and      (222,267)    (205,995)    (278,226) (44,270)
equipment
Purchases of intangibles      (563)        (855)        (527)     (84)
Acquisitions, net of cash     (3,740)      (21,895)     (3,040)   (484)
received
Payment to acquire investment --          (28,129)     --       --
Purchase of short term        (30,000)     --          --       --
investment
Decrease (increase) in        (1,724)      (460)        (46,500)  (7,399)
restricted cash
Net cash used in investing    (258,294)    (257,334)    (328,293) (52,237)
activities
Financing activities:                                             
Net proceeds from issuance of
ordinary shares upon exercise 918          2,714        7,770     1,236
of option
Proceeds from long-term bank  --          1,000        --       --
loans
Repayment of long term debt   --          (30)         (90)      (14)
Funds advanced from           2,000        --          --       --
noncontrolling shareholders
Repayment of funds advanced
from noncontrolling interest  (252)        (575)        (674)     (107)
holders
Contribution from
noncontrolling interest       234          --          210       33
holders
Dividend paid to
noncontrolling interest       (192)        (2,331)      (183)     (29)
holders
Excess tax benefit from       --          292          2,865     456
share-based compensation
Net cash provided by          2,708        1,070        9,898     1,575
financing activities
Effect of exchange rate
changes on cash and cash      (6,016)      1,162        125       22
equivalents
Net increase (decrease) in    (137,600)    (74,539)     (75,448)  (12,004)
cash and cash equivalents
Cash and cash equivalents,    974,701      615,682      541,143   86,103
beginning of period
Cash and cash equivalents,    837,101      541,143      465,695   74,099
end of period

                                                                
China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
                    Quarter Ended September 30, 2012
                    GAAP     % of Net Share-based  % of Net Non-GAAP % of Net
                     Result   Revenues Compensation Revenues Result   Revenues
                    RMB              RMB                  RMB      
                    (in thousands)
                                                                
Hotel operating      630,025 70.5%    1,029       0.1%     628,996 70.4%
costs
Selling and          24,316  2.7%     289         0.0%     24,027  2.7%
marketing expenses
General and
administrative       55,734  6.2%     6,471       0.7%     49,263  5.5%
expenses
Pre-opening expenses 63,230  7.1%     --         0.0%     63,230  7.1%
Total operating      773,305 86.5%    7,789       0.8%     765,516 85.7%
costs and expenses
Income from          120,332 13.5%    7,789       0.8%     128,121 14.3%
operations
                                                                
                    Quarter Ended September 30, 2012
                    GAAP     % of Net Share-based  % of Net Non-GAAP % of Net
                     Result   Revenues Compensation Revenues Result   Revenues
                    US$             US$                  US$      
                    (in thousands)
                                                                
Hotel operating      100,246 70.5%    164         0.1%     100,082 70.4%
costs
Selling and          3,869   2.7%     46          0.0%     3,823   2.7%
marketing expenses
General and
administrative       8,868   6.2%     1,030       0.7%     7,838   5.5%
expenses
Pre-opening expenses 10,061  7.1%     --         0.0%     10,061  7.1%
Total operating      123,044 86.5%    1,240       0.8%     121,804 85.7%
costs and expenses
Income from          19,146  13.5%    1,240       0.8%     20,386  14.3%
operations
                                                                
                    Quarter Ended June 30, 2012
                    GAAP     % of Net Share-based  % of Net Non-GAAP % of Net
                     Result   Revenues Compensation Revenues Result   Revenues
                    RMB              RMB                  RMB      
                    (in thousands)
                                                                
Hotel operating      580,436 72.7%    629         0.1%     579,807 72.6%
costs
Selling and          27,327  3.4%     309         0.0%     27,018  3.4%
marketing expenses
General and
administrative       51,798  6.5%     3,719       0.5%     48,079  6.0%
expenses
Pre-opening expenses 56,269  7.0%     --         0.0%     56,269  7.0%
Total operating      715,830 89.6%    4,657       0.6%     711,173 89.0%
costs and expenses
Income/(Loss) from   82,404  10.4%    4,657       0.6%     87,061  11.0%
operations
                                                                
                    Quarter Ended September 30, 2011
                    GAAP     % of Net Share-based  % of Net Non-GAAP % of Net
                     Result   Revenues Compensation Revenues Result   Revenues
                    RMB              RMB                  RMB      
                    (in thousands)
                                                                
Hotel operating      452,579 72.2%    549         0.1%     452,030 72.1%
costs
Selling and          24,857  4.0%     216         0.0%     24,641  4.0%
marketing expenses
General and
administrative       39,359  6.3%     4,281       0.7%     35,078  5.6%
expenses
Pre-opening expenses 54,015  8.6%     --         0.0%     54,015  8.6%
Total operating      570,810 91.1%    5,046       0.8%     565,764 90.3%
costs and expenses
Income from          55,876  8.9%     5,046       0.8%     60,922  9.7%
operations

                                                              
China Lodging Group, Limited
Unaudited reconciliation of GAAP and Non-GAAP Results
                          Quarter Ended
                          September 30, June 30, 2012 September 30, 2012    
                           2011
                          RMB           RMB           RMB        US$
                          (in thousands, except per share and per ADS data)
                                                              
Net income attributable to
China Lodging Group,       58,177       70,331       95,792    15,242
Limited (GAAP)
Share-based compensation   5,047        4,657        7,789     1,240
expenses
Adjusted net income
attributable to China      63,224       74,988       103,581   16,482
Lodging Group, Limited
(non-GAAP)
                                                              
Net earnings per share                                         
(GAAP)
— Basic                    0.24         0.29         0.39      0.06
— Diluted                  0.24         0.29         0.39      0.06
                                                              
Net earnings per ADS                                           
(GAAP)
— Basic                    0.96         1.16         1.57      0.25
— Diluted                  0.94         1.14         1.55      0.25
                                                              
Adjusted net earnings per                                      
share (non-GAAP)
— Basic                    0.26         0.31         0.43      0.07
— Diluted                  0.26         0.30         0.42      0.07
                                                              
Adjusted net earnings per                                      
ADS (non-GAAP)
— Basic                    1.04         1.23         1.70      0.27
— Diluted                  1.03         1.22         1.67      0.27
                                                              
Weighted average ordinary                                      
shares outstanding
— Basic                    242,264      242,894      243,282   243,282
— Diluted                  246,272      245,900      247,620   247,620
                                                              
                          Quarter Ended
                          September 30, June 30, 2012 September 30, 2012    
                           2011
                          RMB           RMB           RMB        US$
                          (in thousands)
                                                              
Net income attributable to
China Lodging Group,       58,177       70,331       95,792    15,242
Limited (GAAP)
Interest expenses          213          209          200       32
Income tax expense         7,174        15,536       26,289    4,183
Depreciation and           59,583       83,238       90,991    14,478
amortization
EBITDA (non-GAAP)          125,147      169,314      213,272   33,935
Pre-opening expenses       54,015       56,269       63,230    10,061
Share-based Compensation   5,047        4,657        7,789     1,240
Adjusted EBITDA from
operating hotels           184,209      230,240      284,291   45,236
(non-GAAP)
                                                              
                          Quarter Ended
                          September 30, June 30, 2012 September 30, 2012    
                           2011
                          RMB           RMB           RMB        US$
                          (in thousands)
                                                              
Net revenues (GAAP)        626,686      798,234      893,637   142,190
Less:Hotel operating      (452,579)    (580,436)    (630,025) (100,246)
costs
Hotel income (non-GAAP)    174,107      217,798      263,612   41,944

                                                            
                          China Lodging Group, Limited        
Operating Data                                               
                          As of
                          September 30,        June 30,       September 30,
                           2011                 2012           2012
Total hotels in operation: 580                 863           938
Leased hotels              314                 388           415
Manachised hotels          266                 365           446
Franchised hotels*         --                 110           77
Total hotel rooms in       65,524              95,573        103,322
operation
Leased hotels              37,229              46,083        48,857
Manachised hotels          28,295              38,045        46,296
Franchised hotels*         --                 11,445        8,169
Number of cities           92                  131           149
                                                            
* refers to franchised Starway hotels
                                                            
Hotel breakdown by brand   As of
                          September 30,        June 30,       September 30,
                           2011                 2012           2012
Total hotels in operation: 580                 863           938
Seasons Hotel              20                  27            26
Hanting Express Hotel      534                 696           795
Hi Inn                     26                  30            35
Starway Hotel              --                 110           82
                                                            
                          For the quarter ended
                          September 30,        June 30,       September 30,
                           2011                 2012           2012
Occupancy rate (as a                                         
percentage)
Leased hotels              95%                  97%            97%
Manachised hotels          99%                  98%            98%
Blended                    97%                  97%            97%
Average daily room rate                                      
(in RMB)
Leased hotels              187                  187            188
Manachised hotels          178                  175            177
Blended                    183                  181            183
RevPAR (in RMB)                                              
Leased hotels              178                  181            183
Manachised hotels          175                  171            173
Blended                    177                  176            178
                                                            
                                                            
Like-for-like performance for leased and manachised hotels opened for at least
18 months during the current quarter
                                                            
                          As of and for the quarter ended     
                          September 30,                      
                          2011                 2012           
Total                     464                 464           
Leased hotels              257                 257           
Manachised hotels          207                 207           
Total                     54,175              54,175        
Leased hotels              32,056              32,056        
Manachised hotels          22,119              22,119        
Occupancy rate (as a       100%                 102%           
percentage)
Average daily rate (in     186                  192            
RMB)
RevPAR (in RMB)            186                  195            

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