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Home Inns & Hotels Management's CEO Discusses Q2 2012 Results - Earnings Call Transcript

I will now turn the call to our CEO, David Sun.

David Sun

Hello, everyone, and thank you for joining us today to discuss our second quarter 2012 results. Since the first quarter of 2011, overall Chinese market experienced low growth post Chinese New Year holiday season. Previously, manufacturing and export dependent geographic [areas] continued to showing unfavorable year-over-year comparison and overall micro economy continued to be weak with no clear sign to recovery.

Facing such deceleration in the operating environment, the company was able to achieve solid overall performance with double-digit organic revenue growth, continued positive integration results at Motel 168, and increased productivity gain on [second] quarter cost. Total revenues for the second quarter increased 60.2% year-over-year to RMB 1.4 billion, including revenues of RMB 377.4 million from Motel 168. Excluding Motel 168, our core business revenues 18.5% to RMB 1.1 billion at the high end of our guidance.

Despite market softness, occupancy rates was still healthy at 92.1% compared with 94% in the same quarter last year. RevPAR of RMB 157 this quarter compared with RMB 153 in the same quarter last year was consistent with changes in market conditions. It is worth to emphasize that 790 mature hotels under Home Inns and Yitel brands that have been in operation for at least 18 months, maintain the same RevPAR of RMB 168 as that in the second quarter last year. This reflects the strength of our core business portfolio to weather economic downturns and their potential of resilient growth when the market rebounds.

Secondly, what was also encouraging was that our three Yitel brand hotels that opened in the second half of 2011 are tracking positive ramp up performance quarter-over-quarter and contributing to our total top line growth meaningfully. This adds validation to our product design and market position of this upscale brand and it confirms that effectiveness of our motel brand strategy.

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