Home Inns, the China based economy hotel chain, has published its unaudited financial reports for the quarter ended September 30, 2008.
Third quarter 2008 financial highlights include total revenues for the quarter increased by 98.0% year-over-year to CNY527.3 million — including revenues of CNY 39.0 million from the Top Star hotel chain which Home Inns acquired and took control of in November 2007. EBITDA (non-GAAP) was CNY93.5. And income from operations was CNY 41.8 million.
The group's adjusted net income (non-GAAP) was CNY42.8 million, up 7.5% year-over-year and diluted earnings per ADS were CNY0.79 with non-GAAP adjusted diluted earnings per ADS at CNY1.13.
"I am pleased that during our third quarter, in addition to achieving robust year-on-year growth in revenues, we also improved margins from previous quarters and resumed year-over-year growth in income from operations," remarked David Sun, Home Inns' CEO. "Our business is stable and healthy, and our expansion plan remains on schedule. We continue to be committed to growing our business profitably."
Home Inns continued growing with a net increase of 48 hotels opened during the quarter, consisting of an increase of 20 leased-and-operated hotels and 28 franchised-and-managed hotels. This is an increase compared to a total of 30 new hotels opened in the third quarter of 2007. So far in 2008 Home Inns has opened a net total of 148 hotels, or 74.0% of its targeted total new opening number for this year.
As of September 30, 2008, Home Inns had an additional 131 hotels contracted, which consisted of 79 leased-and-operated hotels and 52 franchised-and-managed hotels.
The occupancy rate for the hotel chain was down year on year in the third quarter of 2008 — at 85.9% compared to 95.4%. Home Inns reports that the occupancy rates for the third quarter of 2008 were negatively impacted by the higher proportion of hotels that had been open for less than six months, especially those in cities that the chain had just entered. This was compounded by the lower occupancy rates of the Top Star hotels. Excluding Top Star, the occupancy rate in the third quarter of 2008 was 87.7%.
The same factors had a negative effect on RevPAR. Average RevPAR for the third quarter was CNY155 (CNY160 excluding Top Star) compared to CNY174 in the same period in 2007.
"We again successfully executed on our expansion plan by opening 48 net new hotels during the quarter, meaning we have completed 148 of the 200 new hotels targeted for 2008," said Sun. "While these new hotels, especially those in new markets, had an anticipated effect of depressing some metrics, we are pleased that our mature hotels continue to provide stable revenues and income, further justifying the sensible investments we are currently making across China. Although we have not yet seen any significant impact on our business from the recent global financial turmoil, we are cautious at this time of uncertainty and have taken steps to ensure that our corporate plan remains flexible, allowing us to be well-positioned for continued growth and profitability."