Earthquake Has Limited Impact on Regional Operations & Financial Performance; Expansion Ahead of Schedule with 100 New Hotels Expected In the First Half of the Year
SHANGHAI, China, June 25 /Xinhua-PRNewswire/ -- Home Inns & Hotels Management Inc. (Nasdaq: HMIN), a leading economy hotel chain in China, today announced an operational update with regards to the impact from the recent earthquake in western China, business expectations for the upcoming Olympic Games and the status of its hotel chain expansion. The Company notes that despite some operations being affected by the earthquake, it anticipates only a slight impact to the second quarter’s financial performance. Despite this event the Company continues to see strong growth and expects to complete a total of 100 new hotels in the first half of the year.
Although the second quarter has not yet closed, Home Inns believes that the earthquake has both directly impacted the affected region and indirectly reduced overall travel activities. While the Company is still gathering additional data and conducting final analysis, the Company currently believes that total revenue for the second quarter shall remain within its current guidance range, due partly to the accelerated expansion progress. RevPAR for the quarter will be negatively impacted by the earthquake by an estimated 2 to 4 percent across the Home Inns chain, in addition to the reduced RevPAR the Company had expected as it continues to expand into lower tier cities and the holiday schedule change this year. This impact is more significant within the Top Star hotels, as five Top Star properties are located in Chengdu and Chongqing and experienced a severe decline in travel activities, in addition to Top Star hotels in general having a less robust loyal customer base. These factors will result in an expected 10 to 15 percent negative RevPAR impact and a small net loss for the Top Star hotels in the second quarter.
Home Inns has incurred no serious property damage during the recent earthquake. Despite the current impact on operations, the Company expects the recent earthquake to only have a short-term impact on its operational and financial performance and believes demand for its product and services remains strong as a result of the resilient domestic business travel activities. Home Inns is seeing the ongoing impact of the earthquake on RevPAR decreasing to approximately 1 percent and expects RevPAR to fully recover gradually over the next several months.
Home Inns would again like to express its sympathy to all of those harmed by the earthquake. To demonstrate its commitment to the relief and reconstruction efforts, Home Inns has donated 1RMB for each room that was occupied from May 15th to May 31st, 2008. In addition, multiple Home Inns hotels have been provided as facilities for the rescue and recovery personnel as they work to restore the affected areas.
Separately, based on the current bookings, Home Inns estimates that the upcoming Olympic Games will not have a significant impact on its operational and financial performance. It believes that the high interest for attending the Beijing Olympic Games and visiting other cities in China will be offset by reduced business activities, as well as traffic and entry restrictions during the Olympic Games period.
Home Inns’ expansion plan remains ahead of schedule, with the expectation of 100 new hotels completed in the first half of 2008, compared to 37 in the same period a year ago. The Company’s target remains 200 hotels for the 2008 full year, and notes that in the past a greater proportion of new hotels were opened in the second half of the year. Although the better than expected progress earlier in the year will impact margins in the second quarter, it is expected to alleviate operational and financial pressure from hotel conversions and openings for the later part of the year. The Company therefore expects to benefit in the second half of the year as the hotels under construction will be offset by the larger number of hotels in operation.
About Home Inns
Home Inns is a leading economy hotel chain in China based on the number of hotels and hotel rooms, as well as the geographic coverage of the hotel chain. Since Home Inns commenced operations in 2002, it has become one of the best-known economy hotel brands in China. Home Inns offers a consistent product and high-quality services to primarily serve the fast growing population of value-conscious individual business and leisure travelers who demand clean, comfortable and convenient lodging. Home Inns’ ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Market under the symbol "HMIN." The Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2007 with the Securities and Exchange Commission on April 18, 2008, a copy of which is also available on the Company’s website http://English.homeinns.com .
Safe Harbor Statements
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook as well as Home Inns’ strategic and operational plans contain forward-looking statements. Home Inns may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to first parties. Statements that are not historical facts, including statements about Home Inns’ beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our anticipated growth strategies; our future business development, results of operations and financial condition; expected changes in our revenues, certain cost or expense items as well as RevPAR and other operational measures; our ability to attract customers and leverage our brand; trends and competition in the lodging industry; our ability to successfully integrate the Top Star hotel chain and any other business we may acquire in the future; our ability to hire, train and retain qualified managerial and other employees; our ability to develop new hotels at desirable locations in a timely and cost-effective manner; the expected growth of the Chinese economy hotel market; and Chinese governmental policies relating to private managers and operators of hotels and applicable tax rates.
Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. Home Inns does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this announcement, and Home Inns undertakes no duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
Ethan Ruan
Home Inns & Hotels Management Inc.
Tel: +86-21-3401-9898 x2004
Email: zjruan@homeinns.com
FD Beijing
Julian Wilson
Tel: +86-10-8591-1951
Email: julian.wilson@fd.com
Peter Schmidt
Tel: +86-10-8591-1953
Email: peter.schmidt@fd.com
