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Home Inns & Hotels Management, Inc. (HMIN)
Q4 2010 Earnings Call
March 7, 2010 8:00 PM ET
Ethan Ruan – IR
David Sun – CEO
Huiping Yan – CFO
May Wu – Chief Strategy Officer
Chris Woronka – Deutsche Bank
Allen Gee – Oppenheimer
Billy Ng – Bank of America
Adam Krejcik – ROTH Capital Partners
Justin Kwok – Goldman Sachs
Fawne Jiang – Brean Murray
Lin He – Morgan Stanley Asia Limited
Noah Hudson – Guotai Junan
Previous Statements by HMIN
» Home Inns & Hotels Management CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Home Inns & Hotels Management Inc. Q2 2010 Earnings Call Transcript
» Home Inns & Hotels Management Inc. Q1 2010 Earnings Call Transcript
Hello everyone, and welcome to our earnings conference call. Our fourth quarter and full-year earnings results were released earlier and are available on the company’s website. With us today is David Sun, our Chief Executive Officer; Huiping Yan, our Chief Financial Officer, and May Wu, our Chief Strategy Officer and Chief Executive Officer for Yitel brands, who will be further discussing our performance. After prepared remarks, David, Huiping and May will be available to answer your questions.
Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties and such our results may be materially different from the views expressed as of today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. Home Inns does not undertake any obligation to update any forward-looking statements except as required under applicable laws.
As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Home Inns Investor Relations website at english.homeinns.com.
I will now turn the call over to our CEO, David Sun.
Hello, everyone. And thank you for joining us today as we discuss our results from the fourth quarter and full-year 2010 operations and financials. I’m very pleased to announce another strong quarter with which we concluded a highly successful year. Looking back to 2010, we started the year with strong business momentum as a result of Chinese economy recover from the slowdown that had started in later 2008.
Given our mature hotels strong and a stable performance and the limited new hotels opening in the first half, we seized opportunities and between March and June, we successfully implemented 3% to 5% price increases throughout majority of our mature hotels. This allowed us to recover price decrease during the economy downturn as well as keep our overall price level close to be on par with inflation throughout the year. The highly acclaimed Shanghai World Expo was transformative for entire Chinese travel industry.
It brought better than estimated impact to about 65 of our Shanghai based hotels. Meanwhile supported by an overall stable Chinese economy environment and healthy growth of domestic travel industry, our entire portfolios delivered improvements in key performance metrics year-over-year in the fourth quarter, as well as on the full-year basis. Home Inns’ fourth quarter revenues increased 14.2% year-over-year to RMB797.9 million. And total revenues for the year increased 21.8% year-over-year to RMB3.17 billion. Both results are within our guidance range.
Overall ADR – overall average daily rates increased to RMB173 million in the fourth quarter, an increase to RMB175 million for the full-year of 2010. Combined with an occupancy rate of 90.4% in the fourth quarter, and 93.5% for the full-year. Our RevPAR increased 5% year-over-year in the fourth quarter to RMB156 million and has increased 12% year-over-year to RMB164 million for the full-year.
There were 535 hotels that had been in operations for at least 18 months in the fourth quarter of 2010. Their RevPAR for 2010 increased from RMB153 million in 2009 to RMB163 million. There has been a consistent favorable like-for-like comparison in such performance improvements for the past five consecutive quarters. Our mature hotels as a group, continued to provide positive contributions to the entire portfolio. With the strong operating performance Home Inns’ reported adjusted net income of RMB102 million for the fourth quarter, which was an increase of 34% year-over-year, and RMB466 million for the full-year, which more than doubled the adjusted net income of RMB290 million for 2009.
As of December 31, 2010 Home Inns’ had a 3.8 million active non-corporate members, representing a 51% increase from 2.52 million as December 31, 2009. Room nights sold to active non-corporate members consistently represent over 50% of total room nights, and a stable revenue base. On the development front, we delivered our commitment and opened a total of 208 new hotels in 2010. By the end of the year, we had a total of 818 hotels opened in across 146 cities in China.
In addition as of December 31, 2010 we had 21 leased-and-operated hotels and a 69 franchised-and-managed hotels contracted and under constructions. It is worth noting that our franchise program has reached a level of maturity with a balanced approach in gross leased-and-operated hotels and franchised-and-managed business. Franchised-and-managed hotels represent close to 60% of total new hotels opening in 2010. At the end of 2010, 45% of our total number of hotels is franchised-and-managed, up from 37 a year ago.