Home Inns & Hotel Management, Inc. ( HMIN) Q4 2011 Earnings Call March 8, 2012 9:00 p.m. EST Executives Ethan Ruan – IR Manager David Sun – CEO Huiping Yan – CFO Analysts Chenyi Lu – Cowen & Co. Ella Ji – Oppenheimer & Co. Liping Cai – William Blair & Co. Adam Krejcik – Roth Capital Partners Lin He – Morgan Stanley Fawne Jiang – Brean Murray Kenneth Fong – JP Morgan Presentation Operator Ladies and gentlemen, thank you for standing by for Home Inns’ fourth quarter and full-year 2011 earnings conference call. (Operator Instructions). I’d now like to hand the call over to your host for today’s conference, Ethan Ruan, Home Inns’ Investor Relations Manager. Ethan Ruan
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As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available at Home Inns Investor Relations website at english.homeinns.com.I will now turn the call to our CEO, David Sun. David Sun Hello, everyone, and thank you for joining us today as we go through our fourth quarter and full-year 2011 results. 2011 is a special year for Home Inns, despite challenges we faced including rising costs and a softening in the Chinese marketplace, particularly in the fourth quarter, Home Inns achieved major milestones throughout the year. We delivered our commitment of 1,000 opened hotels with our core Home Inns brand. We exceeded our annual target of opening with 306 new hotels including three new Yitel hotels under our [Yitel] brand. We furthered our multi-brand strategy through the successful acquisitions of Motel 168, which strengthened our portfolio with over 300 new locations and a well-established [econ hotel] brand. With a sound integration plan and a solid execution, we are confident that investment in Motel 168 will add a significant value to our shareholders in the long run. Increasing scale and penetration is only one aspect of our achievements. (inaudible) healthy and sustainable growth for the future is reflected in our relentless discipline in quality and cost control, productivity management, and people development. In an environment of increasing competitions for new locations and a rising operating cost, we continue to remain strong profitability with stable underlying cost structures for our core business. Further, our best practice have been imprinted across Motel 168 for operational improvement and initial results are very encouraging. Although there are few uncertainties in the overall economy in China in 2012, we are confident that our strong business fundamentals will see us through to continue health growth in the long run. We believe the Chinese travel industry is still in its early development stage and our ranges of products and services will continue to be well-received. Supported by our stronger-than-ever pipeline, we plan to open 330 to 360 new hotels in 2012. This plan will promote our network expansion with a reasonable portfolio mix to further our market leadership position, to capture opportunities in the growth industry, and generally consistent financial results.
Before going into highlights of our operations for the past quarter and the full year of 2011, I would like to provide an update on our progress of the Motel 168 integration. We found no surprises post-closing, which allow us to focus on execution on integration plan. We are very pleased to report that our initial integration efforts has already generated positive results. We [secured] brand level and the region level leadership organization with (inaudible) from Home Inns and stabilized hotel level operation workforce.Employees’ living condition and working environment have been improved dramatically. Sales and marketing platform including pricing structure have been revamped. Motel 168 customer loyalty program are integrated with Home Inns. And hotel utilization projects are well underway, which include facility renovations and refreshment of quality consumables. [Ways of] training have taken place at various levels of the organization, and a transparent and results-driven KPI program have been implemented. With the (inaudible) and empowered workforce combined with a clear goal-oriented company stewardship, Motel 168 delivered 73.5% occupancy rate and a RevPAR of RMB113 in the fourth quarter of 2011. A mix of Chinese New Year holiday and low seasonality combined January and February, the occupancy for Motel 168 reached 66%. We are very encouraged by this improvement at Motel 168 in the [first five months], and we’ll further our integration efforts in the coming quarters. Now, look at our operational results. Total revenues for the fourth quarter increased 64.2% year over year to RMB1.31 billion, including revenues of RMB367.6 million from Motel 168. Total revenues for the full year of 2011 increased 25% year over year to RMB3.96 billion. Read the rest of this transcript for free on seekingalpha.com