China Lodging Group, Limited Reports Fourth Quarter and Full Year 2015 Financial Results

• A total of 2,763 hotels or 278,843 hotel rooms in operation as of December 31, 2015
• Net revenues increased 16.2% year-over-year to RMB1,506.3 million (US$232.5 million)1 for the fourth quarter and 16.3% to RMB5,774.6 million (US$891.4 million) for the full year of 2015, in line with the guidance previously announced.
• Adjusted EBITDA (non-GAAP) increased 55.4% year-over-year to RMB320.4 million (US$49.5 million) for the fourth quarter and increased 32.2% to RMB1,324.2 million (US$204.4 million) for the full year of 2015.
• Net income attributable to China Lodging Group, Limited was RMB70.8 million (US$10.9 million) for the fourth quarter and RMB436.6 million (US$67.4 million) for the full year of 2015, increasing 51.1% year-over-year for the fourth quarter and increasing 42.1% for the full year of 2015.
• Basic earnings per ADS2 were RMB1.13 (US$0.18) for the fourth quarter of 2015 and RMB6.97 (US$1.08) for the full year of 2015. Diluted earnings per ADS were RMB1.10 (US$0.17) for the fourth quarter of 2015 and RMB6.82 (US$1.05) for the full year of 2015. Excluding share-based compensation expenses, adjusted basic earnings per ADS (non-GAAP) were RMB1.36 (US$0.21) for the fourth quarter of 2015 and RMB7.81 (US$1.21) for the full year of 2015 and adjusted diluted earnings per ADS (non-GAAP) were RMB1.32 (US$0.20) for the fourth quarter of 2015 and RMB7.64 (US$1.18) for the full year of 2015.
• For full year of 2015, the Company repurchased 0.77 million ADS for $17.5 million; the Company also declared cash dividend of $0.68 per ADS in 2015 which was paid in early 2016.
• The Company provided guidance for Q1 2016 net revenues growth of 14% to 15% and full year 2016 net revenues growth of 12% to 15%.

SHANGHAI, China, March 10, 2016 (GLOBE NEWSWIRE) -- China Lodging Group, Limited (NASDAQ: HTHT) (“China Lodging Group”, “Huazhu” or the “Company”), a leading and fast-growing multi-brand hotel group in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2015.

Operational Highlights of Fourth Quarter 2015

• During the fourth quarter of 2015, the Company opened 4 leased (“leased-and-operated”) hotels and 192 manachised (“franchised-and-managed”) and franchised hotels, and closed 7 leased hotels and 14 manachised and franchised hotels.
• The ADR, which is defined as the average daily rate for all hotels in operation (excluding certain franchised Starway hotels), was RMB177 in the fourth quarter of 2015, compared with RMB176 in the fourth quarter of 2014 and RMB188 in the previous quarter. The year-over-year increase of 0.4% was mainly attributable to more favorable brand mix with an increased number of midscale hotels, which was partially offset by the city mix shifting toward lower-tier cities. The sequential decrease resulted mainly from seasonality.
• The occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 84.3% in the fourth quarter of 2015, compared with 86.5% in the fourth quarter of 2014 and 89.2% in the previous quarter. The year-over-year decrease was mainly due to soft macro economy and a dilutive impact from newly-opened hotels in lower-tier cities. The sequential decrease resulted mainly from seasonality.
• RevPAR, defined as revenue per available room for all hotels in operation (excluding certain franchised Starway hotels), was RMB149 in the fourth quarter of 2015, compared with RMB153 in the fourth quarter of 2014 and RMB167 in the previous quarter. The year-over-year decrease was a result of lower occupancy rate. The sequential decrease resulted mainly from seasonality.
• For all hotels which had been in operation for at least 18 months (excluding certain franchised Starway hotels), the same-hotel RevPAR was RMB154 for the fourth quarter of 2015, a 2.9% decrease from RMB158 for the fourth quarter of 2014, with a flattish ADR and a 2.6-percentage-point decrease in occupancy rate. The midscale and upscale hotels registered a 7.8% same-hotel RevPAR improvement, with a 4.7% increase in ADR and 2.4-percentage-point increase in occupancy rate.

Operational Highlights of Full Year 2015

• For the full year of 2015, the Company opened 22 leased hotels and 813 manachised and franchised hotels, and closed 17 leased hotels and 50 manachised and franchised hotels. As of December 31, 2015, the Company had 616 leased hotels, 2,067 manachised hotels, and 80 franchised hotels in operation in 352 cities. The number of hotel rooms in operation totaled 278,843, an increase of 33% from a year ago.
• As of December 31, 2015, the Company had 21 leased hotels and 656 manachised and franchised hotels contracted or under construction.
• For the full year of 2015, the ADR for all hotels in operation (excluding certain franchised Starway hotels) was RMB179, compared to RMB179 in 2014.
• For the full year of 2015, the occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 85.3%, compared with 89.0% in 2014. The decline in occupancy rate was mainly due to soft macro economy and a dilutive impact from newly-opened hotels in lower-tier cities.
• For the full year of 2015, the RevPAR for all hotels in operation (excluding certain franchised Starway hotels), was RMB153, a 4.1% decrease from RMB159 in 2014. The decrease was a result of lower occupancy rate.
• For all the hotels which had been in operation for at least 18 months (excluding certain franchised Starway hotels), the same-hotel RevPAR was RMB159 in 2015, a 3.6% decrease from RMB165 in 2014, with a 0.3% increase in ADR and a 3.5-percentage-point drop in occupancy rate. In 2015, the midscale and upscale hotels registered a 6.5% same-hotel RevPAR improvement, with a 5.5% increase in ADR and 0.8-percentage-point increase in occupancy rate.
• As of December 31, 2015, the Company’s loyalty program had more than 49 million members, who contributed more than 80% of room nights sold during the full year of 2015. In 2015, more than 90% of room nights were sold through the Company’s own channels.

Mr. Qi Ji, founder and executive Chairman of China Lodging Group, said, “Our business continues to perform well in 2015, with strong unit growth and improved margin. Our brands have a growing popularity among customers and franchisees. In 2015, we added a total of 68,888 rooms bringing our network to more than 278,000 rooms, about 73% under manachise and franchise models. In spite of the soft Chinese macro economy, our comparable mature hotels (in operation at least 18 months) achieved occupancy rate of 88%. In particular, our midscale and upscale hotels registered a 6.5% same-hotel RevPAR improvement.

“Our healthy balance sheet has allowed us to make investments in our business, while at the same time returning capital to shareholders. Our increasing unit growth and solid operational performance should continue to fuel improving margin, growing cash flow and steady returns to shareholders in the long term.” Mr. Ji added.

Fourth Quarter and Full Year of 2015 Financial Results

(RMB in thousands)	Q4 2014				Q3 2015				Q4 2015				2014 FY				2015 FY
Revenues:
Leased hotels		1,160,852				1,374,492				1,287,714				4,522,431				4,986,872
Manachised and franchised hotels		212,059				318,864				305,573				742,797				1,123,979
Total revenues		1,372,911				1,693,356				1,593,287				5,265,228				6,110,851
Less: business tax and related surcharges		(76,674	)			(93,176	)			(86,972	)			(300,500	)			(336,227	)
Net revenues		1,296,237				1,600,180				1,506,315				4,964,728				5,774,624

Total revenues for the fourth quarter of 2015 were RMB1,593.3 million (US$246.0 million), representing a 16.1% year-over-year increase and a 5.9% sequential decrease. The year-over-year increase was primarily due to our hotel network expansion. The sequential decrease was due to seasonality.

Total revenues for the full year of 2015 were RMB6,110.9 million (US$943.4 million), representing an increase of 16.1% from the full year of 2014.

Total revenues from leased hotels for the fourth quarter of 2015 were RMB1,287.7 million (US$198.8 million), representing a 10.9% year-over-year increase and a 6.3% sequential decrease.

For the full year of 2015, total revenues from leased hotels were RMB4,986.9 million (US$769.8 million), representing a 10.3% year-over-year increase.

Total revenues from manachised and franchised hotels for the fourth quarter of 2015 were RMB305.6 million (US$47.2 million), representing a 44.1% year-over-year increase and a 4.2% sequential decrease.

For the full year of 2015, total revenues from manachised and franchised hotels were RMB 1,124.0 million (US$173.5 million), representing a 51.3% year-over-year increase. It accounts for 18.4% of total revenues, compared to 14.1% of total revenues for the year of 2014.

Net revenues for the fourth quarter of 2015 were RMB1,506.3 million (US$232.5 million), representing a 16.2% year-over-year increase and a 5.9% sequential decrease.

Net revenues for the full year of 2015 were RMB5,774.6 million (US$891.4 million), representing a 16.3% year-over-year increase.

(RMB in thousands)	Q4 2014		Q3 2015		Q4 2015		2014 FY		2015 FY
Operating costs and expenses:
Hotel operating costs	1,048,926		1,166,759		1,198,604		3,878,027		4,512,147
Selling and marketing expenses	65,179		42,383		46,791		187,435		179,568
General and administrative expenses	102,985		101,426		128,233		342,128		403,008
Pre-opening expenses	43,246		27,649		16,216		186,325		110,011
Total operating costs and expenses	1,260,336		1,338,217		1,389,844		4,593,915		5,204,734

Hotel operating costs for the fourth quarter of 2015 were RMB1,198.6 million (US$185.0 million), compared to RMB1,048.9 million in the fourth quarter of 2014 and RMB1,166.8 million in the previous quarter, representing a 14.3% year-over-year increase and a 2.7% sequential increase. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB1,196.3 million (US$184.7 million), representing 79.4% of net revenues, compared to 80.7% for the fourth quarter in 2014 and 72.7% for the previous quarter. The year-over-year decrease in the percentage was mainly attributable to the increased proportion of revenues from manachised and franchised hotels. The sequential increase in the percentage was mainly due to the increased impairment loss from a few under-performing leased hotels.

For the full year of 2015, hotel operating costs were RMB4,512.1 million (US$696.6 million), compared to RMB3,878.0 million in 2014. Excluding share-based compensation, hotel operating costs (non-GAAP) were RMB4,503.3 million (US$695.2 million), representing 77.9% of net revenues, compared to 78.0% in 2014.

Selling and marketing expenses for the fourth quarter of 2015 were RMB46.8 million (US$7.2 million), compared to RMB65.2 million in the fourth quarter of 2014 and RMB42.4 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB46.7 million (US$7.2 million), or 3.1% of net revenues, compared to 5.0% for the fourth quarter of 2014 and 2.6% for the previous quarter. The year-over-year decrease was mainly attributable to lower marketing spending. The sequential increase was mainly due to increased cost associated with membership points in the fourth quarter.

For the full year of 2015, selling and marketing expenses were RMB179.6 million (US$27.7 million), compared to RMB187.4 million in 2014. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB178.7 million (US$27.6 million), representing 3.1% of net revenues, compared to 3.8% in 2014. The year-over-year decrease was mainly attributable to lower marketing spending.

General and administrative expenses for the fourth quarter of 2015 were RMB128.2 million (US$19.8 million), compared to RMB103.0 million in the fourth quarter of 2014 and RMB101.4 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB116.8 million (US$18.0 million), representing 7.7% of net revenues, compared with 7.9% of net revenues in the fourth quarter of 2014 and 5.7% in the previous quarter. The sequential increase in the percentage was mainly due to increased professional fees, personnel cost and decreased revenue base.

For the full year of 2015, general and administrative expenses were RMB403.0 million (US$62.2 million), compared to RMB342.1 million in 2014. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB360.2 million (US$55.6 million), representing 6.3% of net revenues, compared to 6.4% in 2014.

Pre-opening expenses for the fourth quarter of 2015 were RMB16.2 million (US$2.5 million), representing a 62.5% year-over-year decrease and a 41.4% sequential decrease. The decrease was mainly due to fewer leased hotels opened and in the pipeline in the fourth quarter of 2015.

Pre-opening expenses for the full year of 2015 were RMB110.0 million (US$17.0 million), compared to RMB186.3 million in 2014, representing a year-over-year decrease of 41.0%. The decrease in pre-opening expenses was mainly due to fewer leased hotel opened and in the pipeline in 2015. The pre-opening expenses as a percentage of net revenues decreased to 1.9% in 2015 from 3.8% in 2014.

Income from operations for the fourth quarter of 2015 was RMB130.6 million (US$20.2 million), compared to RMB48.8 million in the fourth quarter of 2014 and RMB281.7 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2015 was RMB144.5 million (US$22.3 million), compared to adjusted income from operation (non-GAAP) of RMB51.0 million for the fourth quarter of 2014 and RMB294.6 million for the previous quarter. The adjusted operating margin, defined as adjusted operating income (non-GAAP) as percentage of net revenues, for the fourth quarter of 2015 was 9.7%, compared with 4.0% in the fourth quarter of 2014 and 18.4% in the previous quarter. The improved year-over-year adjusted operating margin was mainly due to a higher proportion of manachised and franchised business and cost control efforts. The sequential decrease in the margin was due to seasonality.

Income from operations for the full year of 2015 was RMB601.2 million (US$92.8 million), compared to RMB389.4 million in 2014. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the year of 2015 was RMB653.7 million (US$100.9 million), compared to RMB421.3 million for the year of 2014. The growth in income from operations was mainly attributable to increased contribution from manachised and franchised hotels in 2015. The adjusted operating margin (non-GAAP) for the year of 2015 was 11.4%, compared with 8.5% for the year of 2014. The improvement of 2.9-percentage-points in the adjusted operating margin was mainly due to a higher proportion of manachised and franchised business and cost control efforts in 2015.

Net income attributable to China Lodging Group, Limited for the fourth quarter of 2015 was RMB70.8 million (US$10.9 million), compared to RMB46.8 million in the fourth quarter of 2014 and RMB223.6 million in the previous quarter. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited (non-GAAP) for the fourth quarter of 2015 was RMB84.7 million (US$13.1 million), representing a 72.7% year-over-year increase and a 64.2% sequential decrease.

Net income attributable to China Lodging Group, Limited for the full year of 2015 was RMB436.6 million (US$67.4 million), compared to RMB307.3 million in 2014. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2015 was RMB489.1 million (US$75.5 million), compared to RMB339.3 million in 2014. The year-over-year increase of 44.2% was mainly attributable to the expanded hotel network, increased contribution from manachised and franchised business and lower pre-opening expenses, as a result of the Company’s continued asset-light strategy.

Basic and diluted earnings per share/ADS.  For the fourth quarter of 2015, basic and diluted earnings per share were RMB0.28 (US$0.04); basic earnings per ADS were RMB1.13 (US$0.18) and diluted earnings per ADS were RMB1.10 (US$0.17). For the fourth quarter of 2015, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB0.34 (US$0.05) and adjusted diluted earnings per share (non-GAAP) were RMB0.33 (US$0.05); adjusted basic earnings per ADS (non-GAAP) were RMB1.36 (US$0.21) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.32 (US$0.20).

For the full year of 2015, basic earnings per share were RMB1.74 (US$0.27) and diluted earnings per share were RMB1.70 (US$0.26); basic earnings per ADS were RMB6.97 (US$1.08), while diluted earnings per ADS were RMB6.82 (US$1.05). For the full year of 2015, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB1.95 (US$0.30), while adjusted diluted earnings per share (non-GAAP) were RMB1.91 (US$0.29), and adjusted basic earnings per ADS (non-GAAP) were RMB7.81 (US$1.21), while adjusted diluted earnings per ADS (non-GAAP) were RMB7.64 (US$1.18).

EBITDA (non-GAAP) for the fourth quarter of 2015 was RMB306.5 million (US$47.3 million), compared with RMB204.0 million in the fourth quarter of 2014 and RMB451.9 million in the previous quarter. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the fourth quarter of 2015 was RMB320.4 million (US$49.5 million), compared with RMB206.2 million for the fourth quarter of 2014 and RMB464.8 million for the previous quarter.

EBITDA (non-GAAP) for the full year of 2015 was RMB1,271.7 million (US$196.3 million), compared to RMB969.5 million in 2014. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the full year of 2015 was RMB1,324.2 million (US$204.4 million), compared with RMB1,001.5 million in 2014, representing a 32.2% year-over-year increase. The year-over-year increase was mainly due to the expansion of the Company’s hotel network. The adjusted EBITDA margin (non-GAAP) for the year of 2015 was 22.9%, compared with 20.2% for the year of 2014. The improvement of 2.7-percentage-points in adjusted EBITDA margin was mainly due to a higher proportion of manachised and franchised business in 2015.

Hotel income (non-GAAP), which is the difference between net revenues and hotel operating costs, was RMB307.7 million (US$47.5 million) for the fourth quarter of 2015, compared with RMB247.3 million in the fourth quarter of 2014 and RMB433.4 million in the previous quarter. The hotel income from the leased hotels was RMB87.3 million (US$13.5 million) during the fourth quarter of 2015. The hotel income from the manachised and franchised hotels was RMB220.4 million (US$34.0 million) during the fourth quarter of 2015, or accounting for approximately 71.6% of total hotel income.

Hotel income (non-GAAP) for the full year of 2015 was RMB1,262.5 million (US$194.9 million), compared with RMB1,086.7 million for 2014. The hotel income from the leased hotels was RMB456.0 million (US$70.4 million) for the full year of 2015. The hotel income from the manachised and franchised hotels was RMB806.5 million (US$124.5 million) during the full year of 2015, or accounting for approximately 63.9% of total hotel income.

Cash flow. Operating cash inflow for the fourth quarter of 2015 was RMB578.3 million (US$89.3 million). Investing cash inflow for the fourth quarter was RMB114.3 million (US$17.7 million).

Operating cash inflow for the full year of 2015 was RMB1,749.7 million (US$270.1 million), representing an increase of 20.3% from 2014. The significant growth was mainly due to the Company’s fast network expansion with manachise and franchise models. Investing cash outflow for the full year of 2015 was RMB1,550.4 million (US$239.3 million), representing an increase of 45.8% from 2014. The increase was mainly attributable to the purchase of Home Inns ADS from the open market in the second and third quarter of 2015.

Cash and cash equivalents and Restricted cash. As of December 31, 2015, the Company had a total balance of cash and cash equivalents, restricted cash of RMB1,598.3 million (US$246.7 million).

Debt financing. As of December 31, 2015, the Company had a short-term loan balance of RMB324.7 million and the total credit facility available to the Company was RMB499.3 million.

Accor-Huazhu Alliance Transaction

In January 2016, China Lodging Group completed the transaction of strategic alliance with AccorHotels. The Company has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in Pan-China region. China Lodging Group takes a non-controlling stake of 29.3% and two board seats in a joint venture for AccorHotels Luxury and Upscale hotel operating platform in Greater China. AccorHotels has a 10.8% stake in of China Lodging Group, including newly issued 24,895,543 ordinary shares at a price of $6.6375 per ordinary share (or 9.0% of China Lodging Group’s outstanding shares after issuance; 4 ordinary shares=1 American depositary shares) and the Company’s American depositary shares purchased by AccorHotels from the open market. Sebastien Bazin, Chaiman and CEO of AccorHotels, has been appointed to China Lodging Group’s Board of Directors.

Business Outlook and Guidance for 2016

“We remain positive about the long-term prospects about China travel industry. In 2016, we continue our consistent execution of asset-light and multiple-brand strategy. We plan to open 750 to 800 hotels, with 80% for economy hotels and 20% for midscale and upscale hotels. The manachised and franchised hotels continue to be the vast majority of our new openings in 2016, which is similar to 2015.” commented Mr. Ji.

In the first quarter of 2016, the Company expects net revenues to grow 14% to 15% year-over-year. For the full year 2016, the Company expects net revenues to grow 12% to 15% from 2015.

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. ET, Thursday, March 10, 2016 (or 9 a.m. on Friday, March 11, 2016 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 3018 6776 (for callers in Hong Kong) or +65 6713 5440 (for callers outside of the US, China Mainland, and Hong Kong) and entering pass code 5380 2516.  Please dial in approximately 10 minutes before the scheduled time of the call.

A recording of the conference call will be available after the conclusion of the conference call through March 18, 2016. Please dial +1 (855) 452 5696 (for callers in the US) or +61 2 9003 4211 (for callers outside the US) and entering pass code 5380 2516.

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

Use of Non-GAAP Financial Measures

To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: hotel operating costs excluding share-based compensation expenses; general and administrative expenses excluding share-based compensation expenses; selling expenses excluding share-based compensation expenses; adjusted income from operations excluding share-based compensation expenses; adjusted operating margin excluding share-based compensation expenses; adjusted net income attributable to China Lodging Group, Limited excluding share-based compensation expenses; adjusted basic and diluted earnings per share and per ADS excluding share-based compensation expenses; EBITDA; adjusted EBITDA excluding share-based compensation expenses; adjusted EBITDA margin excluding share-based compensation expenses; and hotel income. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding Company performance by excluding share-based compensation expenses that may not be indicative of Company operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Company performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are also useful to investors in allowing for greater transparency with respect to supplemental information used regularly by Company management in financial and operational decision-making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been – and will continue to be – a significant recurring expense in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and financing transactions and income taxes, given the significant investments that the Company has made in leasehold improvements, depreciation and amortization expense that comprise a significant portion of the Company’s cost structure. In addition, the Company believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The Company also uses adjusted EBITDA, which is defined as EBITDA before share-based compensation expenses, to assess operating results of the hotels in operation. The Company believes that the exclusion of share-based compensation expenses helps facilitate year-on-year comparison of the results of operations as the share-based compensation expenses may not be indicative of Company operating performance. Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of hotels currently in operation. The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered to be outside the ordinary course of business.

The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. The Company compensates for these limitations by providing the relevant disclosure of the depreciation and amortization, interest income, interest expense, income tax expense, share-based compensation expenses and other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should be considered when evaluating the performance of the Company.

The terms EBITDA and adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial performance, investors should not consider these data in isolation or as a substitute for the Company’s net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA – or similarly titled measures utilized by other companies – since such other companies may not calculate EBITDA or adjusted EBITDA in the same manner as the Company does.

To monitor performance of hotels at different maturity level and of different form, the Company also tracks hotel income, which is the difference between net revenues and hotel operating costs.

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

About China Lodging Group, Limited

China Lodging Group, Limited is a leading hotel operator and franchisor in China under 12 brand names. As of December 31, 2015, the Company had 2,763 hotels or 278,843 rooms in operation in 352 cities. With a primary focus on economy and midscale hotel segments, China Lodging Group’s brands include Hi Inn, HanTing Hotel, Elan Hotel, JI Hotel, Starway Hotel, Joya Hotel, and Manxin Hotels & Resorts. The Company also has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in Pan-China region.

The Company’s business includes leased, manachised and franchised models. Under the lease model, the Company directly operates hotels typically located on leased properties. Under the manachise model, the Company manages manachised hotels through the on-site hotel managers it appoints and collects fees from franchisees. Under the franchise model, the Company provides training, reservation and support services to the franchised hotels and collects fees from franchisees but does not appoint on-site hotel managers. The Company applies a consistent standard and platform across all of its hotels. As of December 31, 2015, China Lodging Group operates 27 percent of its hotel rooms under lease model, 73 percent under manachise and franchise models.

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

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

1 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.4778 on December 31, 2015 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.

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

—Financial Tables and Operational Data Follow—

China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
	December 31, 2014				September 30, 2015				December 31, 2015
	RMB				RMB				RMB				US$
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents		808,865				799,228				1,237,838				191,089
Restricted cash		-				580,000				360,500				55,652
Short-term investments		26,615				471,863				533,215				82,314
Accounts receivable, net		89,243				89,516				93,956				14,504
Amounts due from related parties		16,293				16,023				16,157				2,494
Prepaid rent		385,158				450,779				429,588				66,317
Inventories		29,882				25,818				24,529				3,787
Other current assets		160,582				143,869				167,995				25,934
Deferred tax assets		80,026				80,026				98,200				15,160
Total current assets		1,596,664				2,657,122				2,961,978				457,251
Property and equipment, net		3,907,343				3,795,565				3,805,886				587,527
Intangible assets, net		104,537				110,162				144,812				22,355
Long-term investments		229,005				301,376				356,578				55,046
Goodwill		64,654				64,654				108,344				16,726
Other assets		197,233				201,991				195,446				30,172
Deferred tax assets		83,470				83,470				120,477				18,598
Total assets		6,182,906				7,214,340				7,693,521				1,187,675
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt		-				594,812				324,680				50,122
Accounts payable		640,691				535,183				585,347				90,362
Amounts due to related parties		6,403				8,362				7,653				1,181
Salary and welfare payable		186,051				130,593				210,955				32,566
Deferred revenue		514,268				629,748				705,607				108,927
Accrued expenses and other current liabilities		313,017				375,795				576,160				88,944
Dividends payable		-				-				276,261				42,647
Income tax payable		59,630				44,795				102,810				15,871
Deferred tax liabilities		701				701				1,465				226
Total current liabilities		1,720,761				2,319,989				2,790,938				430,846
Deferred rent		830,414				922,542				945,192				145,912
Deferred revenue		155,395				176,485				180,861				27,920
Amounts due to related parties		4,083				2,042				-				-
Other long-term liabilities		215,762				262,057				275,954				42,600
Deferred tax liabilities		37,778				37,778				59,828				9,237
Total liabilities		2,964,193				3,720,893				4,252,773				656,515
Equity:
Ordinary shares		184				185				186				29
Treasury share		-				(107,332	)			(107,331	)			(16,569	)
Additional paid-in capital		2,381,568				2,435,661				2,470,099				381,318
Retained earnings		847,220				1,213,062				1,007,559				155,540
Accumulated other comprehensive income (loss)		(12,008	)			(50,346	)			59,596				9,200
Total China Lodging Group, Limited shareholders' equity		3,216,964				3,491,230				3,430,109				529,518
Noncontrolling interest		1,749				2,217				10,639				1,642
Total equity		3,218,713				3,493,447				3,440,748				531,160
Total liabilities and equity		6,182,906				7,214,340				7,693,521				1,187,675

 

China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
	Quarter Ended																Year Ended
	December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
	RMB				RMB				RMB				US$				RMB				RMB				US$
	(in thousands, except per share and per ADS data)
Revenues:
Leased hotels		1,160,852				1,374,492				1,287,714				198,789				4,522,431				4,986,872				769,840
Manachised and franchised hotels		212,059				318,864				305,573				47,172				742,797				1,123,979				173,512
Total revenues		1,372,911				1,693,356				1,593,287				245,961				5,265,228				6,110,851				943,352
Less: business tax and related surcharges		(76,674	)			(93,176	)			(86,972	)			(13,426	)			(300,500	)			(336,227	)			(51,904	)
Net revenues		1,296,237				1,600,180				1,506,315				232,535				4,964,728				5,774,624				891,448
Operating costs and expenses:
Hotel operating costs:
Rents		(414,525	)			(459,805	)			(470,567	)			(72,643	)			(1,543,651	)			(1,804,532	)			(278,572	)
Utilities		(83,723	)			(82,475	)			(85,288	)			(13,166	)			(323,837	)			(341,620	)			(52,737	)
Personnel costs		(210,210	)			(247,161	)			(232,662	)			(35,917	)			(788,973	)			(919,555	)			(141,955	)
Depreciation and amortization		(152,386	)			(161,178	)			(164,890	)			(25,455	)			(558,833	)			(645,058	)			(99,580	)
Consumables, food and beverage		(121,754	)			(125,703	)			(130,017	)			(20,071	)			(454,795	)			(485,099	)			(74,886	)
Others		(66,328	)			(90,437	)			(115,180	)			(17,781	)			(207,938	)			(316,283	)			(48,826	)
Total hotel operating costs		(1,048,926	)			(1,166,759	)			(1,198,604	)			(185,033	)			(3,878,027	)			(4,512,147	)			(696,556	)
Selling and marketing expenses		(65,179	)			(42,383	)			(46,791	)			(7,223	)			(187,435	)			(179,568	)			(27,720	)
General and administrative expenses		(102,985	)			(101,426	)			(128,233	)			(19,796	)			(342,128	)			(403,008	)			(62,214	)
Pre-opening expenses		(43,246	)			(27,649	)			(16,216	)			(2,503	)			(186,325	)			(110,011	)			(16,983	)
Total operating costs and expenses		(1,260,336	)			(1,338,217	)			(1,389,844	)			(214,555	)			(4,593,915	)			(5,204,734	)			(803,473	)
Other operating income		12,947				19,718				14,111				2,178				18,551				31,264				4,827
Income from operations		48,848				281,681				130,582				20,158				389,364				601,154				92,802
Interest income		7,872				6,277				9,007				1,390				23,162				26,712				4,124
Interest expense		(173	)			(1,908	)			(1,606	)			(248	)			(1,533	)			(3,854	)			(595	)
Other income (expense)		(417	)			(766	)			2,064				319				4,749				4,083				630
Foreign exchange gain (loss)		(17	)			6,793				4,533				700				(246	)			7,814				1,206
Income before income taxes		56,113				292,077				144,580				22,319				415,496				635,909				98,167
Income tax expense		(8,755	)			(67,290	)			(73,742	)			(11,384	)			(113,105	)			(196,529	)			(30,339	)
Net income		47,358				224,787				70,838				10,935				302,391				439,380				67,828
Less: net  loss (income) attributable to noncontrolling interests		(517	)			(1,138	)			(78	)			(12	)			4,957				(2,780	)			(429	)
Net income attributable to China Lodging Group, Limited		46,841				223,649				70,760				10,923				307,348				436,600				67,399
Other comprehensive income
Unrealized securities holding gains (losses), net of tax		(30,847	)			(68,357	)			106,600				16,456				28,458				68,069				10,508
Foreign currency translation adjustments, net of tax		(1,126	)			1,789				3,342				516				(1,082	)			3,535				546
Comprehensive income		15,385				158,219				180,780				27,907				329,767				510,984				78,882
Comprehensive loss (income) attributable to the noncontrolling interest		(517	)			(1,138	)			(78	)			(12	)			4,957				(2,780	)			(429	)
Comprehensive income attributable to China Lodging Group, Limited		14,868				157,081				180,702				27,895				334,724				508,204				78,453
Earnings per share:
Basic		0.19				0.89				0.28				0.04				1.23				1.74				0.27
Diluted		0.18				0.87				0.28				0.04				1.21				1.70				0.26
Earnings per ADS:
Basic		0.75				3.58				1.13				0.18				4.94				6.97				1.08
Diluted		0.74				3.49				1.10				0.17				4.86				6.82				1.05
Weighted average number of shares used in computation:
Basic		249,642				249,956				249,674				249,674				248,958				250,533				250,533
Diluted		253,906				256,083				256,546				256,546				253,004				256,104				256,104

China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
	Quarter Ended																Year Ended
	December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
	RMB				RMB				RMB				US$				RMB				RMB				US$
	(in thousands)
Operating activities:
Net income		47,358				224,787				70,838				10,935				302,391				439,380				67,828
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		2,199				12,938				13,909				2,147				31,937				52,535				8,110
Depreciation and amortization		156,096				165,302				169,355				26,144				570,722				661,404				102,103
Deferred taxes		(42,391	)			-				(42,673	)			(6,588	)			(42,391	)			(50,149	)			(7,742	)
Bad debt expenses		3,022				348				1,909				295				4,770				1,997				308
Deferred rent		58,172				37,482				32,440				5,008				182,580				130,301				20,115
Loss (gain) from disposal of property and equipment		(522	)			-				(5,519	)			(852	)			803				(5,519	)			(852	)
Impairment loss		13,868				34,735				50,368				7,776				27,391				95,608				14,759
Investment loss (income)		898				477				(1,975	)			(305	)			(4,902	)			129				20
Excess tax benefit from share-based compensation		(2,867	)			(1,790	)			(7,833	)			(1,209	)			(11,697	)			(12,838	)			(1,982	)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		9,119				4,159				(5,419	)			(836	)			(18,773	)			(5,749	)			(888	)
Prepaid rent		(13,353	)			(30,510	)			21,191				3,271				(21,577	)			(44,430	)			(6,859	)
Inventories		2,876				1,553				1,888				291				4,130				5,952				919
Amounts due from related parties		-				-				-				-				256				-				-
Other current assets		11,669				(481	)			(27,515	)			(4,248	)			(42,369	)			(15,518	)			(2,395	)
Other assets		(6,861	)			(4	)			6,544				1,010				(13,220	)			1,787				276
Accounts payable		4,045				(7,763	)			8,187				1,264				18,016				14,194				2,191
Amounts due to related parties		(554	)			(1,574	)			1,332				206				810				1,250				193
Salary and welfare payables		83,441				(29,622	)			79,990				12,348				38,813				24,532				3,787
Deferred revenue		63,235				54,260				80,235				12,386				253,562				216,805				33,469
Accrued expenses and other current liabilities		24,380				26,481				58,797				9,077				58,995				121,502				18,757
Income tax payable and receivable		17,693				11,075				58,255				8,993				45,274				56,019				8,647
Other long-term liabilities		25,949				10,642				13,968				2,156				68,494				60,481				9,337
Net cash provided by operating activities		457,472				512,495				578,272				89,269				1,454,015				1,749,673				270,101
Investing activities:
Purchases of property and equipment		(219,024	)			(128,910	)			(119,380	)			(18,429	)			(930,922	)			(640,222	)			(98,833	)
Purchases of intangibles		(5,629	)			(444	)			(1,182	)			(182	)			(10,423	)			(8,818	)			(1,361	)
Amount received as a result of government zoning		-				-				5,721				883				10,557				6,721				1,038
Acquisitions, net of cash received		(2,160	)			(460	)			(3,633	)			(561	)			(16,050	)			(19,153	)			(2,957	)
Proceeds from disposal of subsidiary and branch		1,000				2,500				2,500				386				18,484				5,000				772
Purchase of long-term investments		(14,789	)			(72,437	)			(36,168	)			(5,583	)			(191,064	)			(137,707	)			(21,258	)
Proceeds from sale of long-term investments		4,345				4,007				19,007				2,934				88,266				29,139				4,498
Payment for shareholder loan to joint venture		(734	)			-				(134	)			(21	)			(15,640	)			(1,386	)			(214	)
Collection of shareholder loan from joint venture		-				773				-				-				-				1,522				235
Purchase of short-term investments		(19,710	)			(207,916	)			-				-				(75,210	)			(455,811	)			(70,365	)
Proceeds from sales of short-term investments		55,499				885				28,109				4,339				55,499				30,858				4,764
Decrease (increase) in restricted cash		-				(580,000	)			219,500				33,885				3,317				(360,500	)			(55,652	)
Net cash provided by (used in) investing activities		(201,202	)			(982,002	)			114,340				17,651				(1,063,186	)			(1,550,357	)			(239,333	)
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option		12,624				1,917				10,970				1,694				20,985				22,619				3,492
Payment of share repurchase		-				(107,331	)			-				-				-				(107,331	)			(16,569	)
Proceeds from short-term debt		-				489,376				-				-				300,000				589,376				90,984
Repayment of short-term debt		(300,000	)			(13,581	)			(269,424	)			(41,592	)			(300,000	)			(283,516	)			(43,767	)
Funds advanced from noncontrolling interest holders		-				-				5,432				839				-				5,432				839
Repayment of funds advanced from noncontrolling interest holders		(340	)			(100	)			(120	)			(19	)			(1,559	)			(900	)			(139	)
Acquisition of noncontrolling interest		(2,042	)			(2,042	)			(2,042	)			(315	)			(4,083	)			(4,083	)			(630	)
Contribution from noncontrolling interest holders		(7,000	)			-				200				31				-				2,450				378
Dividend paid to noncontrolling interest holders		(1,333	)			(475	)			(120	)			(19	)			(5,357	)			(4,604	)			(711	)
Excess tax benefit from share-based compensation		2,867				1,790				7,833				1,209				11,697				12,838				1,982
Net cash provided by (used in) financing activities		(295,224	)			369,554				(247,271	)			(38,172	)			21,683				232,281				35,859
Effect of exchange rate changes on cash and cash equivalents		(1,703	)			5,705				(6,731	)			(1,039	)			(1,082	)			(2,624	)			(405	)
Net increase (decrease) in cash and cash equivalents		(40,657	)			(94,248	)			438,610				67,709				411,430				428,973				66,222
Cash and cash equivalents at the beginning of the period		849,522				893,476				799,228				123,380				397,435				808,865				124,867
Cash and cash equivalents at the end of the period		808,865				799,228				1,237,838				191,089				808,865				1,237,838				191,089

 

China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
	Quarter Ended December 31, 2015
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	RMB						RMB								RMB
	(in thousands)
Hotel operating costs	1,198,604			79.6	%			2,352				0.2	%		1,196,252			79.4	%
Selling and marketing expenses	46,791			3.1	%			100				0.0	%		46,691			3.1	%
General and administrative expenses	128,233			8.5	%			11,457				0.8	%		116,776			7.7	%
Pre-opening expenses	16,216			1.1	%			-				0.0	%		16,216			1.1	%
Total operating costs and expenses	1,389,844			92.3	%			13,909				1.0	%		1,375,935			91.3	%
Income from operations	130,582			8.7	%			13,909				1.0	%		144,491			9.7	%
	Quarter Ended December 31, 2015
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	US$						US$								US$
	(in thousands)
Hotel operating costs	185,033			79.6	%			363				0.2	%		184,670			79.4	%
Selling and marketing expenses	7,223			3.1	%			15				0.0	%		7,208			3.1	%
General and administrative expenses	19,796			8.5	%			1,769				0.8	%		18,027			7.7	%
Pre-opening expenses	2,503			1.1	%			-				0.0	%		2,503			1.1	%
Total operating costs and expenses	214,555			92.3	%			2,147				1.0	%		212,408			91.3	%
Income from operations	20,158			8.7	%			2,147				1.0	%		22,305			9.7	%
	Quarter Ended September 30, 2015
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	RMB						RMB								RMB
	(in thousands)
Hotel operating costs	1,166,759			72.9	%			2,910				0.2	%		1,163,849			72.7	%
Selling and marketing expenses	42,383			2.6	%			246				0.0	%		42,137			2.6	%
General and administrative expenses	101,426			6.3	%			9,782				0.6	%		91,644			5.7	%
Pre-opening expenses	27,649			1.7	%			-				0.0	%		27,649			1.7	%
Total operating costs and expenses	1,338,217			83.5	%			12,938				0.8	%		1,325,279			82.7	%
Income from operations	281,681			17.6	%			12,938				0.8	%		294,619			18.4	%
	Quarter Ended December 31, 2014
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	RMB						RMB								RMB
	(in thousands)
Hotel operating costs	1,048,926			80.9	%			2,075				0.2	%		1,046,851			80.7	%
Selling and marketing expenses	65,179			5.0	%			289				0.0	%		64,890			5.0	%
General and administrative expenses	102,985			7.9	%			(165	)			0.0	%		103,150			7.9	%
Pre-opening expenses	43,246			3.3	%			-				0.0	%		43,246			3.3	%
Total operating costs and expenses	1,260,336			97.1	%			2,199				0.2	%		1,258,137			96.9	%
Income from operations	48,848			3.8	%			2,199				0.2	%		51,047			4.0	%
	Year Ended December 31, 2015
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	RMB						RMB								RMB
	(in thousands)
Hotel operating costs	4,512,147			78.1	%			8,835				0.2	%		4,503,312			77.9	%
Selling and marketing expenses	179,568			3.1	%			907				0.0	%		178,661			3.1	%
General and administrative expenses	403,008			7.0	%			42,793				0.7	%		360,215			6.3	%
Pre-opening expenses	110,011			1.9	%			-				0.0	%		110,011			1.9	%
Total operating costs and expenses	5,204,734			90.1	%			52,535				0.9	%		5,152,199			89.2	%
Income from operations	601,154			10.5	%			52,535				0.9	%		653,689			11.4	%
	Year Ended December 31, 2015
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	US$						US$								US$
	(in thousands)
Hotel operating costs	696,556			78.1	%			1,364				0.2	%		695,192			77.9	%
Selling and marketing expenses	27,720			3.1	%			140				0.0	%		27,580			3.1	%
General and administrative expenses	62,214			7.0	%			6,606				0.7	%		55,608			6.3	%
Pre-opening expenses	16,983			1.9	%			-				0.0	%		16,983			1.9	%
Total operating costs and expenses	803,473			90.1	%			8,110				0.9	%		795,363			89.2	%
Income from operations	92,802			10.5	%			8,110				0.9	%		100,912			11.4	%
	Year Ended December 31, 2014
	GAAP Result		% of Net Revenues				Share-based Compensation				% of Net Revenues				Non-GAAP Result		% of Net Revenues
	RMB						RMB								RMB
	(in thousands)
Hotel operating costs	3,878,027			78.1	%			6,830				0.1	%		3,871,197			78.0	%
Selling and marketing expenses	187,435			3.8	%			939				0.0	%		186,496			3.8	%
General and administrative expenses	342,128			6.9	%			24,168				0.5	%		317,960			6.4	%
Pre-opening expenses	186,325			3.8	%			-				0.0	%		186,325			3.8	%
Total operating costs and expenses	4,593,915			92.6	%			31,937				0.6	%		4,561,978			92.0	%
Income from operations	389,364			7.9	%			31,937				0.6	%		421,301			8.5	%

 

China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
	Quarter Ended																Year Ended
	December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
	RMB				RMB				RMB				US$				RMB				RMB				US$
	(in thousands, except per share and per ADS data)
Net income attributable to China Lodging Group, Limited (GAAP)		46,841				223,649				70,760				10,923				307,348				436,600				67,399
Share-based compensation expenses		2,199				12,938				13,909				2,147				31,937				52,535				8,110
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP)		49,040				236,587				84,669				13,070				339,285				489,135				75,509
Earnings per share (GAAP)
Basic		0.19				0.89				0.28				0.04				1.23				1.74				0.27
Diluted		0.18				0.87				0.28				0.04				1.21				1.70				0.26
Earnings per ADS (GAAP)
Basic		0.75				3.58				1.13				0.18				4.94				6.97				1.08
Diluted		0.74				3.49				1.10				0.17				4.86				6.82				1.05
Adjusted earnings per share (non-GAAP)
Basic		0.20				0.95				0.34				0.05				1.36				1.95				0.30
Diluted		0.19				0.92				0.33				0.05				1.34				1.91				0.29
Adjusted earnings per ADS (non-GAAP)
Basic		0.79				3.79				1.36				0.21				5.45				7.81				1.21
Diluted		0.77				3.70				1.32				0.20				5.36				7.64				1.18
Weighted average number of shares used in computation
Basic		249,642				249,956				249,674				249,674				248,958				250,533				250,533
Diluted		253,906				256,083				256,546				256,546				253,004				256,104				256,104
	Quarter Ended																Year Ended
	December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
	RMB				RMB				RMB				US$				RMB				RMB				US$
	(in thousands)
Net income attributable to China Lodging Group, Limited (GAAP)		46,841				223,649				70,760				10,923				307,348				436,600				67,399
Interest income		(7,872	)			(6,277	)			(9,007	)			(1,390	)			(23,162	)			(26,712	)			(4,124	)
Interest expenses		173				1,908				1,606				248				1,533				3,854				595
Income tax expense		8,755				67,290				73,742				11,384				113,105				196,529				30,339
Depreciation and amortization		156,096				165,302				169,355				26,144				570,722				661,404				102,103
EBITDA (non-GAAP)		203,993				451,872				306,456				47,309				969,546				1,271,675				196,312
Share-based Compensation		2,199				12,938				13,909				2,147				31,937				52,535				8,110
Adjusted EBITDA (non-GAAP)		206,192				464,810				320,365				49,456				1,001,483				1,324,210				204,422
	Quarter Ended																Year Ended
	December 31, 2014				September 30, 2015				December 31, 2015								December 31, 2014				December 31, 2015
	RMB				RMB				RMB				US$								RMB				US$
	(in thousands)
Net revenues (GAAP)		1,296,237				1,600,180				1,506,315				232,535				4,964,728				5,774,624				891,448
Less:  Hotel operating costs		(1,048,926	)			(1,166,759	)			(1,198,604	)			(185,033	)			(3,878,027	)			(4,512,147	)			(696,556	)
Hotel income (non-GAAP)		247,311				433,421				307,711				47,502				1,086,701				1,262,477				194,892

 

China Lodging Group, Limited
Operational Data
	As of
		December 31,			September 30,			December 31,
		2014			2015			2015
Total hotels in operation:		1,995			2,588			2,763
Leased hotels		611			619			616
Manachised hotels		1,376			1,899			2,067
Franchised hotels		8			70			80
Total hotel rooms in operation		209,955			264,076			278,843
Leased hotels		72,335			75,384			75,436
Manachised hotels		136,689			182,663			196,737
Franchised hotels		931			6,029			6,670
Number of cities		300			342			352
	For the quarter ended
	December 31,			September 30,			December 31,
		2014			2015			2015
Occupancy rate (as a percentage)
Leased hotels		87.2	%		90.5	%		85.8	%
Manachised hotels		86.2	%		89.0	%		84.2	%
Franchised hotels		N/A			73.3	%		67.4	%
Blended		86.5	%		89.2	%		84.3	%
Average daily room rate (in RMB)
Leased hotels		190			207			201
Manachised hotels		169			179			167
Franchised hotels		N/A			187			172
Blended		176			188			177
RevPAR (in RMB)
Leased hotels		166			188			172
Manachised hotels		145			159			141
Franchised hotels		N/A			137			116
Blended		153			167			149
	For the full year ended
	December 31,			December 31,
		2014			2015
Occupancy rate (as a percentage)
Leased hotels		88.9	%		86.6	%
Manachised hotels		89.0	%		85.0	%
Franchised hotels		N/A			70.1	%
Blended		89.0	%		85.3	%
Average daily room rate (in RMB)
Leased hotels		190			198
Manachised hotels		172			170
Franchised hotels		N/A			177
Blended		179			179
RevPAR (in RMB)
Leased hotels		169			172
Manachised hotels		153			145
Franchised hotels		N/A			124
Blended		159			153

Same-hotel Operational Data: like-for-like performance for leased and manachised hotels opened for at least 18 months during the current quarter and full year

	As of and for the quarter ended
	December 31,
		2014			2015
Total		1,612			1,612
Leased hotels		568			568
Manachised hotels		1,044			1,044
Occupancy rate (as a percentage)		89.0	%		86.4	%
Average daily room rate (in RMB)		178			178
RevPAR (in RMB)		158			154
	As of and for full year ended
	December 31,
		2014			2015
Total		1,612			1,612
Leased hotels		568			568
Manachised hotels		1,044			1,044
Occupancy rate (as a percentage)		91.4	%		87.9	%
Average daily room rate (in RMB)		181			181
RevPAR (in RMB)		165			159

Hotel breakdown by segment
		Number of Hotels in Operation		Number of Hotel Rooms in Operation		Number of Hotels				Number of Rooms
		As of December 31, 2015		As of December 31, 2015		Net Added in 2015				Net Added in 2015
Economy hotels		2,453		238,156			634				52,197
Hanting Hotel		2,003		205,577			355				33,236
Leased hotels		495		57,277			(7	)			(29	)
Manachised hotels		1,508		148,300			362				33,265
Hi Inn		302		21,340			144				8,789
Leased hotels		38		3,698			(3	)			(197	)
Manachised hotels		251		16,725			134				8,069
Franchised hotels		13		917			13				917
Elan Hotel		148		11,239			135				10,172
Manachised hotels		128		9,837			115				8,770
Franchised hotels		20		1,402			20				1,402
Midscale and upscale hotels		310		40,687			134				16,691
JI Hotel		186		27,559			69				10,507
Leased hotels		75		13,195			13				2,935
Manachised hotels		111		14,364			56				7,572
Starway Hotel		118		12,138			63				5,817
Leased hotels		4		604			1				153
Manachised hotels		67		7,183			23				2,244
Franchised hotels		47		4,351			39				3,420
Joya Hotel		3		515			-				-
Leased hotels		2		315			-				-
Manachised hotels		1		200			-				-
Manxin Hotels & Resorts		2		236			1				128
Leased hotels		1		108			-				-
Manachised hotels		1		128			1				128
Mercure Hotel		1		239			1				239
Leased hotels		1		239			1				239
Total		2,763		278,843			768				68,888

 

Same-hotel operational data by segment
	Number of hotels in operation		Same-hotel RevPAR					Same-hotel ADR					Same-hotel Occupancy
	As of		For the quarter ended					For the quarter ended					For the quarter ended
	December 31,		December 31,		yoy change			December 31,		yoy change			December 31,						yoy change
	2014	2015	2014	2015				2014	2015					2014			2015
Economy hotels	1,491	1,491	152	145		-4.6	%	169	167		-1.2	%		90	%		87	%		-3.1	%
Leased hotels	510	510	156	147		-5.3	%	175	173		-0.9	%		89	%		85	%		-4.0	%
Manachised and franchised hotels	981	981	149	143		-4.2	%	166	163		-1.5	%		90	%		87	%		-2.5	%
Midscale and upscale hotels	121	121	224	241		7.8	%	270	282		4.7	%		83	%		85	%		2.4	%
Leased hotels	58	58	245	276		12.5	%	291	308		5.8	%		84	%		90	%		5.3	%
Manachised and franchised hotels	63	63	195	196		0.4	%	240	245		2.4	%		81	%		80	%		-1.6	%
Total	1,612	1,612	158	154		-2.9	%	178	178		0.0	%		89	%		86	%		-2.6	%
	Number of hotels in operation		Same-hotel RevPAR					Same-hotel ADR					Same-hotel Occupancy
	As of		For the year ended					For the year ended					For the year ended
	December 31,		December 31,		yoy change			December 31,		yoy change			December 31,						yoy change
	2014	2015	2014	2015				2014	2015					2014			2015
Economy hotels	1,491	1,491	159	152		-4.9	%	173	172		-0.8	%		92	%		88	%		-3.9	%
Leased hotels	510	510	162	154		-4.7	%	178	177		-0.5	%		91	%		87	%		-3.9	%
Manachised and franchised hotels	981	981	158	150		-5.1	%	170	169		-1.0	%		93	%		89	%		-3.8	%
Midscale and upscale hotels	121	121	232	247		6.5	%	275	290		5.5	%		84	%		85	%		0.8	%
Leased hotels	58	58	253	277		9.2	%	295	314		6.5	%		86	%		88	%		2.2	%
Manachised and franchised hotels	63	63	202	204		1.2	%	246	252		2.8	%		82	%		81	%		-1.2	%
Total	1,612	1,612	165	159		-3.6	%	181	181		0.3	%		91	%		88	%		-3.5	%

Contact Information
Ida Yu
Sr. Manager of Investor Relations
Tel:  +86 (21) 6195 9561
Email: [email protected]
http://ir.huazhu.com

Source: China Lodging Group, Limited