• A total of 2,989 hotels or 304,428 hotel rooms in operation as of March 31, 2016.
  • Net revenues increased 18.8% year-over-year to RMB1,438.0 million (US$223.0 million) 1  for the first quarter of 2016, exceeding the high end of the guidance.
  • Adjusted EBITDA (non-GAAP) increased 71.1% year-over-year to RMB275.7 million (US$42.8 million) for the first quarter of 2016.
  • Net income attributable to China Lodging Group, Limited was RMB69.4 million (US$10.8 million) for the first quarter of 2016, compared with net loss attributable to China Lodging Group, Limited of RMB7.0 million for the first quarter of 2015.
  • Basic earnings per ADS 2  were RMB1.03 (US$0.16) and diluted earnings per ADS were RMB1.01 (US$0.16) for the first quarter of 2016. Excluding share-based compensation expenses, adjusted basic earnings per ADS (non-GAAP) were RMB1.25 (US$0.19) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.22 (US$0.19) for the first quarter of 2016.
  • In first quarter of 2016, the Company paid cash dividend of $0.68 per ADS which was declared in December 2015.
  • The Company provided guidance for Q2 2016 net revenues growth of 12 % to 15%

SHANGHAI, China, May 11, 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 first quarter ended March 31, 2016.

Operational Highlights of First Quarter 2016
  • During the first quarter of 2016, the Company completed the transaction for strategic alliance with AccorHotels 3. Pursuant to this transaction, 96 hotels were merged to HuaZhu's platform.
  • During the first quarter of 2016, including both organic growth and strategic alliance, the Company added 11 net leased ("leased-and-operated") and owned hotels, 215 net manachised ("franchised-and-managed") and franchised hotels. As of March 31, 2016, the Company had 627 leased and owned hotels, 2,189 manachised hotels, and 173 franchised hotels in operation in 356 cities. The number of hotel rooms in operation increased by 34% from a year ago.
  • As of March 31, 2016, the Company had 25 leased hotels and 607 manachised and franchised hotels contracted or under construction.
  • The ADR, which is defined as the average daily rate for all hotels in operation (excluding certain franchised Starway hotels), was RMB172 in the first quarter of 2016, compared with RMB168 in the first quarter of 2015 and RMB177 in the previous quarter. The year-over-year increase of 2.5% was due to more favorable brand mix with an increased proportion of midscale and upscale hotels. The sequential decrease mainly resulted from seasonality.
  • The occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 80.4% in the first quarter of 2016, compared with 81.6% in the first quarter of 2015 and 84.3% in the previous quarter. The year-over-year decrease was mainly due to lower occupancy 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 RMB139 in the first quarter of 2016, compared with RMB137 in the first quarter of 2015 and RMB149 in the previous quarter.  The year-over-year increase was mainly attributable to the higher ADR. 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 RMB142 for the first quarter of 2016, representing a 0.3% year-over-year decrease, with a 0.8% increase in ADR and a 0.9-percentage-point decrease in occupancy rate. The midscale and upscale hotels registered an 8.8% same-hotel RevPAR improvement, with a 5.0% increase in ADR and 2.8-percentage-point increase in occupancy rate.
  • As of March 31, 2016, the Company's loyalty program had approximately 55.3 million members, who contributed more than 85% of room nights sold during the first quarter of 2016. In the first quarter of 2016, approximately 87% of room nights were sold through the Company's own channels. The higher percentage of room nights sold through travel agents channels in the first quarter was due to increase utilization of lower costs OTA sales channels during the low season.

"We are pleased with our start to the year with a set of higher-than-expected results. Our net revenues achieved 18.8% year-over-year growth while adjusted EBITDA grew by 71.1% for the first quarter. This was mainly driven by increased contributions from JI Hotel, HanTing 2.0 and Hi Inn that recorded significant same hotel RevPAR increase of 10%, 8% and 6%, respectively." said Ms. Jenny Zhang, Chief Executive Officer of China Lodging Group.

"Our brands remain popular in the market. HanTing Hotel, our flagship brand, re-designed and upgraded in 2015, continues to be favored by our customers and franchisees. HanTing Hotel has a pipeline of 271 hotels and JI Hotel, a leading midscale hotel brand has 105 hotels in the pipeline. In the first quarter, we welcomed 5 brands ranging from economy to upscale segments through our strategic alliance with AccorHotels. We believe our strong capability in development and execution will further strengthen our leading position as an industry consolidator." Ms. Zhang added.

First Quarter of 2016 Financial Results
(RMB in thousands) Q1 2015   Q4 2015   Q1 2016
Revenues:          
Leased and owned hotels   1,055,541       1,287,714       1,201,761  
Manachised and franchised hotels   226,283       305,573       318,103  
Others   -       -       628  
Total revenues   1,281,824       1,593,287       1,520,492  
Less: business tax and related surcharges   (71,454 )     (86,972 )     (82,507 )
Net revenues   1,210,370       1,506,315       1,437,985  
                       

Total revenues for the first quarter of 2016 were RMB1,520.5 million (US$235.8 million), representing an 18.6% year-over-year increase and a 4.6% sequential decrease. The year-over-year increase was primarily due to our hotel network expansion through organic growth and strategic alliance. The sequential decrease was due to seasonality.

Total revenues from leased and owned hotels for the first quarter of 2016 were RMB1,201.8 million (US$186.4 million), representing a 13.9% year-over-year increase and a 6.7% sequential decrease.

Total revenues from manachised and franchised hotels for the first quarter of 2016 were RMB318.1 million (US$49.3 million), representing a 40.6% year-over-year increase and a 4.1% sequential increase. Total revenues from manachised and franchised hotels accounted for 20.9% of the Company's total revenues in the first quarter of 2016, up from 17.7% a year ago.

Other revenues represent revenues generated from businesses other than hotels, which mainly include revenues from HuaZhu mall.

Net revenues for the first quarter of 2016 were RMB1,438.0 million (US$223.0 million), representing an 18.8% year-over-year increase and a 4.5% sequential decrease.
(RMB in thousands) Q1 2015   Q4 2015   Q1 2016
Operating costs and expenses:          
Hotel operating costs 1,058,624   1,198,604   1,200,459
Selling and marketing expenses 45,828   46,791   33,055
General and administrative expenses 77,942   128,233   106,607
Pre-opening expenses 34,593   16,216   22,019
Total operating costs and expenses 1,216,987   1,389,844   1,362,140
           

Hotel operating costs for the first quarter of 2016 were RMB1,200.5 million (US$186.2 million), compared to RMB1,058.6 million in the first quarter of 2015 and RMB1,198.6 million in the previous quarter, representing a 13.4% year-over-year increase and a 0.2% sequential increase. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the first quarter of 2016 were RMB1,197.7 million (US$185.8 million), representing 83.3% of net revenues, compared to 87.4% for the first quarter in 2015 and 79.4% for the previous quarter. The year-over-year decrease in the percentage was mainly attributable to the improved blended RevPAR, and the increased level of maturity of our leased hotels. The sequential increase in the percentage was mainly due to seasonality.

Selling and marketing expenses for the first quarter of 2016 were RMB33.1 million (US$5.1 million), compared to RMB45.8 million in the first quarter of 2015 and RMB46.8 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the first quarter of 2016 were RMB32.8 million (US$5.1 million), or 2.3% of net revenues, compared to 3.8% for the first quarter of 2015 and 3.1% for the previous quarter. The year-over-year and sequential decrease was mainly attributable to the lower marketing spending as a result of timing issue in the first quarter of 2016.

General and administrative expenses for the first quarter of 2016 were RMB106.6 million (US$16.5 million), compared to RMB77.9 million in the first quarter of 2015 and RMB128.2 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the first quarter of 2016 were RMB94.7 million (US$14.7 million), representing 6.6% of net revenues, compared with 5.5% of net revenues in the first quarter of 2015 and 7.7% in the previous quarter. The year-over-year increase was mainly due to increased personnel cost as a result of the Company's growth in scale and brand portfolio. The sequential decrease was mainly due to decreased professional fees.

Pre-opening expenses for the first quarter of 2016 were RMB22.0 million (US$3.4 million), representing a 36.3% year-over-year decrease and a 35.8% sequential increase. The year-over-year decrease was mainly due to fewer leased hotels opened and in the pipeline through our organic growth, and the sequential increase was mainly due to more leased hotels in the pipeline in the first quarter of 2016.

Income from operations for the first quarter of 2016 was RMB70.8 million (US$11.0 million), compared to loss from operations of RMB10.8 million in the first quarter of 2015 and income from operations of RMB130.6 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the first quarter of 2016 was RMB85.6 million (US$13.3 million), compared to adjusted income from operation (non-GAAP) of RMB1.6 million for the first quarter of 2015 and RMB144.5 million for the previous quarter. The adjusted operating margin, defined as adjusted operating income (non-GAAP) as percentage of net revenues, for the first quarter of 2016 was 5.9%, compared with 0.1% in the first quarter of 2015 and 9.7% in the previous quarter. The improved year-over-year adjusted operating margin was mainly due to the improved blended RevPAR, and operating leverage. The sequential decrease in the margin was due to seasonality.

Net income attributable to China Lodging Group, Limited for the first quarter of 2016 was RMB69.4 million (US$10.8 million), compared to net loss attributable to China Lodging Group, Limited of RMB7.0 million in the first quarter of 2015 and net income attributable to China Lodging Group, Limited of RMB70.8 million in the previous quarter. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited (non-GAAP) for the first quarter of 2016 was RMB84.3 million (US$13.1 million), representing a 1465.1% year-over-year increase and a 0.5% sequential decrease. The year-over-year increase was mainly due to the expanded hotel network, the improved blended RevPAR, the lower pre-opening expenses, and gain from partial disposal of Home Inns ADS in the first quarter of 2016.

Basic and diluted earnings per share/ADS.  For the first quarter of 2016, basic earnings per share were RMB0.26 (US$0.04) and diluted earnings per share were RMB0.25 (US$0.04); basic earnings per ADS were RMB1.03 (US$0.16) and diluted earnings per ADS were RMB1.01 (US$0.16). For the first quarter of 2016, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) and adjusted diluted earnings per share (non-GAAP) were RMB0.31 (US$0.05); adjusted basic earnings per ADS (non-GAAP) were RMB1.25 (US$0.19) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.22 (US$0.19).

EBITDA (non-GAAP) for the first quarter of 2016 was RMB260.8 million (US$40.5 million), compared with RMB148.8 million in the first quarter of 2015 and RMB306.5 million in the previous quarter. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the first quarter of 2016 was RMB275.7 million (US$42.8 million), compared with RMB161.2 million for the first quarter of 2015 and RMB320.4 million for the previous quarter.

Cash flow. Operating cash inflow for the first quarter of 2016 was RMB324.9 million (US$50.4 million). Investing cash outflow for the first quarter was RMB196.4 million (US$30.5 million).

Cash and cash equivalents and Restricted cash. As of March 31, 2016, the Company had a total balance of cash and cash equivalents, restricted cash of RMB1,775.3 million (US$275.3 million).

Debt financing. As of March 31, 2016, the Company had a short-term loan balance of RMB600.9 million and the total credit facility available to the Company was RMB499.3 million.

Guidance for Second Quarter of 2016For the second quarter of 2016, the Company expects net revenues to grow 12% to 15% year-over-year.

The above forecast reflects the Company's current and preliminary view, which is subject to change.

Conference CallChina Lodging Group's management will host a conference call at 9 p.m. ET, Wednesday, May 11, 2016 (or 9 a.m. on Thursday, May 12, 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 enter pass code 9009 6815.  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 May 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 9009 6815.

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; and adjusted EBITDA margin excluding share-based compensation expenses. 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.

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

About China Lodging Group, LimitedChina Lodging Group, Limited is a leading hotel operator and franchisor in China under 12 brand names. As of March 31, 2016, the Company had 2,989 hotels or 304,428 rooms in operation in 356 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 March 31, 2016, China Lodging Group operates 25 percent of its hotel rooms under lease model, 75 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=RMB6.4480 on March 31, 2016 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.

3 As of March 31, 2016, the Company is still in the process of completing the valuation of the purchase price allocation, and goodwill of approximately RMB442.0 million was recorded based on the preliminary assessment.

—Financial Tables and Operational Data Follow—
 
China Lodging Group, Limited  
Unaudited Condensed Consolidated Balance Sheets
  December 31, 2015   March 31, 2016
  RMB   RMB   US$
  (in thousands)
ASSETS          
Current assets:          
Cash and cash equivalents   1,237,838       1,414,760       219,411  
Restricted cash   360,500       360,500       55,909  
Short-term investments   533,215       446,995       69,323  
Accounts receivable, net   93,956       119,179       18,483  
Amounts due from a related party   16,157       51,631       8,007  
Prepaid rent   429,588       423,039       65,608  
Inventories   24,529       22,627       3,509  
Other current assets   167,995       198,195       30,738  
Deferred tax assets   98,200       98,200       15,229  
Total current assets   2,961,978       3,135,126       486,217  
           
Property and equipment, net   3,805,886       3,884,909       602,498  
Intangible assets, net   144,812       220,016       34,122  
Long-term investments   356,578       815,505       126,474  
Goodwill   108,344       550,363       85,354  
Other assets   195,446       199,814       30,989  
Deferred tax assets   120,477       120,477       18,684  
Total assets   7,693,521       8,926,210       1,384,338  
           
LIABILITIES AND EQUITY          
Current liabilities:          
Short-term debt   324,680       600,892       93,190  
Accounts payable   585,347       470,243       72,929  
Amounts due to related parties   7,653       8,402       1,303  
Salary and welfare payable   210,955       145,431       22,555  
Deferred revenue   705,607       811,513       125,855  
Accrued expenses and other current liabilities   576,160       594,697       92,230  
Dividends payable   276,261       -       -  
Income tax payable   102,810       83,685       12,978  
Deferred tax liabilities   1,465       1,465       227  
Total current liabilities   2,790,938       2,716,328       421,267  
           
Deferred rent   945,192       982,196       152,326  
Deferred revenue   180,861       183,452       28,451  
Other long-term liabilities   275,954       291,649       45,231  
Deferred tax liabilities   59,828       59,828       9,278  
Total liabilities   4,252,773       4,233,453       656,553  
           
Equity:          
Ordinary shares   186       202       31  
Treasury shares   (107,331 )     (107,331 )     (16,645 )
Additional paid-in capital   2,470,099       3,634,139       563,607  
Retained earnings   1,007,559       1,076,947       167,020  
Accumulated other comprehensive income (loss)   59,596       47,239       7,326  
Total China Lodging Group, Limited shareholders' equity   3,430,109       4,651,196       721,339  
Noncontrolling interest   10,639       41,561       6,446  
Total equity   3,440,748       4,692,757       727,785  
Total liabilities and equity   7,693,521       8,926,210       1,384,338  
           

 
China Lodging Group, Limited  
Unaudited Condensed Consolidated Statements of Comprehensive Income
  Quarter Ended
  March 31, 2015   December 31, 2015   March 31, 2016
  RMB   RMB   RMB   US$
  (in thousands, except per share and per ADS data)
Revenues:              
Leased and owned hotels   1,055,541       1,287,714       1,201,761       186,377  
Manachised and franchised hotels   226,283       305,573       318,103       49,334  
Others   -       -       628       98  
Total revenues   1,281,824       1,593,287       1,520,492       235,809  
Less: business tax and related surcharges   (71,454 )     (86,972 )     (82,507 )     (12,796 )
Net revenues   1,210,370       1,506,315       1,437,985       223,013  
               
Operating costs and expenses:              
Hotel operating costs:              
Rents   (432,697 )     (470,567 )     (477,271 )     (74,018 )
Utilities   (108,454 )     (85,288 )     (114,482 )     (17,755 )
Personnel costs   (207,650 )     (232,662 )     (257,556 )     (39,944 )
Depreciation and amortization   (156,417 )     (164,890 )     (165,870 )     (25,724 )
Consumables, food and beverage   (105,675 )     (130,017 )     (115,037 )     (17,841 )
Others   (47,731 )     (115,180 )     (70,243 )     (10,894 )
Total hotel operating costs   (1,058,624 )     (1,198,604 )     (1,200,459 )     (186,176 )
Selling and marketing expenses   (45,828 )     (46,791 )     (33,055 )     (5,126 )
General and administrative expenses   (77,942 )     (128,233 )     (106,607 )     (16,533 )
Pre-opening expenses   (34,593 )     (16,216 )     (22,019 )     (3,415 )
Total operating costs and expenses   (1,216,987 )     (1,389,844 )     (1,362,140 )     (211,250 )
Other operating income (expense), net   (4,152 )     14,111       (5,091 )     (790 )
Income (Loss) from operations   (10,769 )     130,582       70,754       10,973  
Interest income   3,671       9,007       9,801       1,520  
Interest expense   (173 )     (1,606 )     (3,067 )     (476 )
Other income   425       2,855       15,661       2,429  
Foreign exchange gain (loss)   151       4,533       (1,586 )     (246 )
Income (Loss) before income taxes   (6,695 )     145,371       91,563       14,200  
Income tax benefit (expense)   934       (73,742 )     (27,713 )     (4,297 )
Income (Loss) from equity method investments   (1,455 )     (791 )     3,291       510  
Net income (loss)   (7,216 )     70,838       67,141       10,413  
Less: net  loss (income) attributable to noncontrolling interests   223       (78 )     2,247       348  
Net income (loss) attributable to China Lodging Group, Limited   (6,993 )     70,760       69,388       10,761  
Other comprehensive income              
Unrealized securities holding gains (losses), net of tax   22,429       106,600       (1,288 )     (200 )
Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income   -       -       (12,903 )     (2,001 )
Foreign currency translation adjustments, net of tax   (1,912 )     3,342       1,834       284  
Comprehensive income   13,301       180,780       54,784       8,496  
Comprehensive loss (income) attributable to the noncontrolling interest   223       (78 )     2,247       348  
Comprehensive income attributable to China Lodging Group, Limited   13,524       180,702       57,031       8,844  
               
Earnings (Loss) per share:              
Basic   (0.03 )     0.28       0.26       0.04  
Diluted   (0.03 )     0.28       0.25       0.04  
               
Earnings (Loss) per ADS:              
Basic   (0.11 )     1.13       1.03       0.16  
Diluted   (0.11 )     1.10       1.01       0.16  
               
Weighted average number of shares used in computation:              
Basic   251,042       249,674       269,131       269,131  
Diluted   251,042       256,546       275,949       275,949  
                               

 
China Lodging Group, Limited  
Unaudited Condensed Consolidated Statements of Cash Flows
  Quarter Ended
  March 31, 2015   December 31, 2015   March 31, 2016
  RMB   RMB   RMB   US$
  (in thousands)
Operating activities:              
Net income (loss)   (7,216 )     70,838       67,141       10,413  
Adjustments to reconcile net income to net cash provided by operating activities:              
Share-based compensation   12,376       13,909       14,863       2,306  
Depreciation and amortization   160,213       169,355       170,478       26,439  
Deferred taxes   (7,476 )     (42,673 )     -       -  
Bad debt expenses   1,186       1,909       749       116  
Deferred rent   32,979       32,440       30,547       4,737  
Gain from disposal of property and equipment   -       (5,519 )     -       -  
Impairment loss   -       50,368       6,393       992  
Loss (Income) from equity method investments   1,455       791       (3,291 )     (510 )
Gain from sale of investments   -       (2,766 )     (12,903 )     (2,001 )
Excess tax benefit from share-based compensation   (1,197 )     (7,833 )     (3,009 )     (467 )
               
Changes in operating assets and liabilities, net of effect of acquisitions:              
Accounts receivable   (2,232 )     (5,419 )     (22,211 )     (3,445 )
Prepaid rent   (6,494 )     21,191       6,549       1,016  
Inventories   795       1,888       2,731       424  
Amounts due from related parties   -       -       (824 )     (128 )
Other current assets   6,458       (27,515 )     4,544       705  
Other assets   (5,748 )     6,544       (4,368 )     (677 )
Accounts payable   21,390       8,187       (3,321 )     (515 )
Amounts due to related parties   (155 )     1,332       749       116  
Salary and welfare payables   (70,396 )     79,990       (68,012 )     (10,548 )
Deferred revenue   7,262       80,235       97,110       15,060  
Accrued expenses and other current liabilities   59,689       58,797       39,119       6,067  
Income tax payable and receivable   (37,536 )     58,255       (13,905 )     (2,156 )
Other long-term liabilities   19,588       13,968       15,766       2,445  
Net cash provided by operating activities   184,941       578,272       324,895       50,389  
               
Investing activities:              
Purchases of property and equipment   (290,967 )     (119,380 )     (179,440 )     (27,829 )
Purchases of intangibles   (3,384 )     (1,182 )     (3,868 )     (600 )
Amount received as a result of government zoning   1,000       5,721       2,099       326  
Acquisitions, net of cash received   (13,316 )     (3,633 )     3,762       583  
Proceeds from disposal of subsidiary and branch   -       2,500       -       -  
Purchase of long-term investments   (16,500 )     (36,168 )     (79,252 )     (12,291 )
Proceeds from maturity/sale of long-term investments   2,513       19,007       14,727       2,284  
Payment for shareholder loan to joint venture   (1,252 )     (134 )     (34,650 )     (5,374 )
Purchase of short-term investments   (10,000 )     -       -       -  
Proceeds from maturity/sale of short-term investments   1,001       28,109       80,242       12,444  
Decrease (increase) in restricted cash   -       219,500       -       -  
Net cash provided by (used in) investing activities   (330,905 )     114,340       (196,380 )     (30,457 )
               
Financing activities:              
Net proceeds from issuance of ordinary shares upon exercise of option   2,000       10,970       4,251       659  
Proceeds from short-term debt   -       -       281,719       43,691  
Repayment of short-term debt   -       (269,424 )     -       -  
Funds advanced from noncontrolling interest holders   -       5,432       4,000       620  
Repayment of funds advanced from noncontrolling interest holders   (240 )     (120 )     (100 )     (16 )
Acquisition of noncontrolling interest   -       (2,042 )     -       -  
Contribution from noncontrolling interest holders   -       200       34,059       5,282  
Dividend paid to noncontrolling interest holders   (796 )     (120 )     (890 )     (138 )
Dividend paid   -       -       (276,262 )     (42,845 )
Excess tax benefit from share-based compensation   1,197       7,833       3,009       467  
Net cash provided by (used in) financing activities   2,161       (247,271 )     49,786       7,720  
               
Effect of exchange rate changes on cash and cash equivalents   (1,912 )     (6,731 )     (1,379 )     (213 )
               
Net increase (decrease) in cash and cash equivalents   (145,715 )     438,610       176,922       27,439  
Cash and cash equivalents at the beginning of the period   808,865       799,228       1,237,838       191,972  
Cash and cash equivalents at the end of the period   663,150       1,237,838       1,414,760       219,411  
               

 
China Lodging Group, Limited  
Unaudited Reconciliation of GAAP and Non-GAAP Results
  Quarter Ended March 31, 2016
  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   1,200,459       83.5 %   2,744     0.2 %   1,197,715     83.3 %
Other operating costs   -       0.0 %   -     0.0 %   -     0.0 %
Selling and marketing expenses   33,055       2.3 %   232     0.0 %   32,823     2.3 %
General and administrative expenses   106,607       7.4 %   11,887     0.8 %   94,720     6.6 %
Pre-opening expenses   22,019       1.5 %   -     0.0 %   22,019     1.5 %
Total operating costs and expenses   1,362,140       94.7 %   14,863     1.0 %   1,347,277     93.7 %
Income (Loss) from operations   70,754       4.9 %   14,863     1.0 %   85,617     5.9 %
                       
  Quarter Ended March 31, 2016
  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   186,176       83.5 %   426     0.2 %   185,750     83.3 %
Other operating costs   -       0.0 %   -     0.0 %   -     0.0 %
Selling and marketing expenses   5,126       2.3 %   36     0.0 %   5,090     2.3 %
General and administrative expenses   16,533       7.4 %   1,844     0.8 %   14,689     6.6 %
Pre-opening expenses   3,415       1.5 %   -     0.0 %   3,415     1.5 %
Total operating costs and expenses   211,250       94.7 %   2,306     1.0 %   208,944     93.7 %
Income (Loss) from operations   10,973       4.9 %   2,306     1.0 %   13,279     5.9 %
                       
  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 %
Other operating costs   -       0.0 %   -     0.0 %   -     0.0 %
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 (Loss) from operations   130,582       8.7 %   13,909     1.0 %   144,491     9.7 %
                       
  Quarter Ended March 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   1,058,624       87.5 %   1,675     0.1 %   1,056,949     87.4 %
Other operating costs   -       0.0 %   -     0.0 %   -     0.0 %
Selling and marketing expenses   45,828       3.8 %   280     0.0 %   45,548     3.8 %
General and administrative expenses   77,942       6.4 %   10,421     0.9 %   67,521     5.5 %
Pre-opening expenses   34,593       2.9 %   -     0.0 %   34,593     2.9 %
Total operating costs and expenses   1,216,987       100.6 %   12,376     1.0 %   1,204,611     99.6 %
Income (Loss) from operations   (10,769 )     -0.9 %   12,376     1.0 %   1,607     0.1 %
                       

China Lodging Group, Limited  
  Unaudited Reconciliation of GAAP and Non-GAAP Results  
  Quarter Ended
  March 31, 2015   December 31, 2015   March 31, 2016
  RMB   RMB   RMB   US$
  (in thousands, except per share and per ADS data)
               
Net income (loss) attributable to China Lodging Group, Limited (GAAP)   (6,993 )     70,760       69,388       10,761  
Share-based compensation expenses   12,376       13,909       14,863       2,306  
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP)   5,383       84,669       84,251       13,067  
               
Earnings (Loss) per share (GAAP)              
Basic   (0.03 )     0.28       0.26       0.04  
Diluted   (0.03 )     0.28       0.25       0.04  
               
Earnings (Loss) per ADS (GAAP)              
Basic   (0.11 )     1.13       1.03       0.16  
Diluted   (0.11 )     1.10       1.01       0.16  
               
Adjusted earnings per share (non-GAAP)              
Basic   0.02       0.34       0.31       0.05  
Diluted   0.02       0.33       0.31       0.05  
               
Adjusted earnings per ADS (non-GAAP)              
Basic   0.09       1.36       1.25       0.19  
Diluted   0.09       1.32       1.22       0.19  
               
Weighted average number of shares used in computation              
Basic   251,042       249,674       269,131       269,131  
Diluted   251,042       256,546       275,949       275,949  
               
  Quarter Ended
  March 31, 2015   December 31, 2015   March 31, 2016
  RMB   RMB   RMB   US$
  (in thousands)
               
Net income (loss) attributable to China Lodging Group, Limited (GAAP)   (6,993 )     70,760       69,388       10,761  
Interest income   (3,671 )     (9,007 )     (9,801 )     (1,520 )
Interest expenses   173       1,606       3,067       476  
Income tax expense   (934 )     73,742       27,713       4,297  
Depreciation and amortization   160,213       169,355       170,478       26,439  
EBITDA (non-GAAP)   148,788       306,456       260,845       40,453  
Share-based Compensation   12,376       13,909       14,863       2,306  
Adjusted EBITDA (non-GAAP)   161,164       320,365       275,708       42,759  
 

 
China Lodging Group, Limited
Operational Data              
    As of  
    March 31,     December 31,     March 31,  
    2015   2015   2016
Total hotels in operation:     2,177       2,763       2,989  
Leased and owned hotels (1)     617       616       627  
Manachised hotels     1,533       2,067       2,189  
Franchised hotels     27       80       173  
Total hotel rooms in operation     227,542       278,843       304,428  
Leased and owned hotels     74,180       75,436       77,263  
Manachised hotels     150,782       196,737       209,944  
Franchised hotels     2,580       6,670       17,221  
Number of cities     314       352       356  
             
(1) including 7 owned hotels under ibis brand.
             
             
    For the quarter ended
    March 31,     December 31,     March 31,  
    2015   2015   2016
Occupancy rate (as a percentage)            
Leased and owned hotels     82.7 %     85.8 %     82.2 %
Manachised hotels     81.1 %     84.2 %     80.8 %
Franchised hotels     66.1 %     67.4 %     61.9 %
Blended     81.6 %     84.3 %     80.4 %
Average daily room rate (in RMB)            
Leased and owned hotels     182       201       193  
Manachised hotels     161       167       165  
Franchised hotels     174       172       169  
Blended     168       177       172  
RevPAR (in RMB)            
Leased and owned hotels     150       172       159  
Manachised hotels     131       141       133  
Franchised hotels     115       116       105  
Blended     137       149       139  
             
             
Same-hotel Operational Data: like-for-like performance for hotels in operation for at least 18 months during the current quarter
             
    As of and for the quarter ended    
    March 31,    
    2015   2016    
Total     1,783       1,783      
Leased hotels     584       584      
Manachised hotels     1,199       1,199      
Occupancy rate (as a percentage)     84.1 %     83.2 %    
Average daily room rate (in RMB)     169       171      
RevPAR (in RMB)     142       142      
                     

 
Hotel breakdown by segment      
       
    Number of hotels in operation
    Net added   As of  
    in Q1 2016 March 31, 2016
Economy hotels       195     2,648
HanTing Hotel     56   2,059
Leased hotels     (2 ) 493
Manachised hotels     58   1,566
Hi Inn     30   332
Leased hotels     -   38
Manachised hotels     13   264
Franchised hotels     17   30
Elan Hotel     21   169
Manachised hotels     14   142
Franchised hotels     7   27
ibis Hotel     82   82
Leased and owned hotels     12   12
Manachised hotels     9   9
Franchised hotels     61   61
ibis Styles Hotel     6   6
Manachised hotels     2   2
Franchised hotels     4   4
Midscale and upscale hotels       31     341
JI Hotel     16   202
Leased hotels     2   77
Manachised hotels     14   125
Starway Hotel     5   123
Leased hotels     (1 ) 3
Manachised hotels     4   71
Franchised hotels     2   49
Joya Hotel     1   4
Leased hotels     -   2
Manachised hotels     1   2
Manxin Hotels & Resorts     -   2
Leased hotels     -   1
Manachised hotels     -   1
Mercure Hotel     7   8
Leased hotels     -   1
Manachised hotels     6   6
Franchised hotels     1   1
Novotel Hotel     1   1
Manachised hotels     1   1
Grand Mercure Hotel     1   1
Franchised hotels     1   1
Total       226     2,989
 

 
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    
    March 31, March 31,   yoy March 31,   yoy March 31,   yoy
    2015   2016 2015   2016   change  2015   2016   change    2015       2016     change 
Economy hotels   1,637   1,637 136   133     -1.9 % 160   160     -0.4 %   85 %     83 %     -1.3 %
Leased hotels   518   518 138   135     -2.1 % 165   165     0.0 %   84 %     82 %     -1.8 %
Manachised and franchised hotels 1,119   1,119 134   132     -1.8 % 158   157     -0.5 %   85 %     84 %     -1.1 %
Midscale and upscale hotels   146   146 203   221     8.8 % 256   269     5.0 %   79 %     82 %     2.8 %
Leased hotels   66   66 225   252     12.1 % 276   293     6.3 %   82 %     86 %     4.4 %
Manachised and franchised hotels 80   80 178   184     3.4 % 232   237     2.2 %   77 %     78 %     0.9 %
Total   1,783   1,783 142   142     -0.3 % 169   171     0.8 %   84 %     83 %     -0.9 %
                                       

Contact InformationIda YuSr. Manager of Investor RelationsTel:  +86 (21) 6195 9561Email: ir@huazhu.comhttp://ir.huazhu.com