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China Lodging Group, Limited Announces Investment In Starway Hotels

Stocks in this article: HTHT

SHANGHAI, June 1, 2012 /PRNewswire-Asia-FirstCall/ -- China Lodging Group, Limited (NASDAQ: HTHT) ("China Lodging Group" or the "Company"), a leading and fast-growing limited service hotel chain operator in China, today announced that the Company recently completed an investment in Starway Hotels ( Hong Kong) Limited (or "Starway") to own a majority stake.

Started by International Ltd., Starway operates the largest mid-scale hotel chain in China, with more than 100 franchised hotels, the majority of which are of quality comparable to 3- to 4-star hotels. Since its inception in 2008, Starway has gained wide awareness and recognition among customers and hotel owners.

Mr Qi Ji, founder, executive Chairman and Chief Executive Officer of China Lodging Group, commented, "before this investment, our company operated three brands in the limited service hotel segment, namely, Seasons Hotel, Hanting Express Hotel, and Hi Inn. This new addition enriched our brand portfolio and enabled us to address the mid-scale hotel market with two distinct brands, Seasons with a standardized product and Starway with variety in design and consistency in quality. This new addition will strengthen our leadership position in the mid-scale market and accelerate our expansion in this segment."

In addition to the franchise model Starway has already adopted, China Lodging Group plans to introduce manachise ("franchised-and-managed") and leased ("leased-and-operated") models under the Starway brand. The new models will capture the synergy between the Company's established distribution and operational capability and Starway's wide brand awareness. We also believe this expansion of Starway's business model will enable Starway to add significantly more value to its franchisees and further strengthen Starway's brand and enhance its profitability.

We do not expect this transaction to have any significant impact on the Company's revenue, profit and cash flow in 2012. We maintain our previously announced revenue guidance for 2012.

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