China Lodging sets sights on pipeline growth

Despite calling it a “relatively low season,” China Lodging Group CEO Jenny Zhang happily shared during the fourth-quarter earnings call that the company achieved 15% revenue-per-available-room growth in the quarter.

The strong performance led to accelerated growth in revenue and profit margins, Zhang told analysts. During the year, net revenue grew 25% to 8.2 billion Chinese yuan ($1.3 billion). Income from operations increased by 17.6% to 1.4 billion yuan ($227.5 million), and earnings before interest, taxes, depreciation and amortization margin jumped 36.5% to 2.4 billion yuan ($373.7 million).

“Those sets of stats exceeded the legendary year of Shanghai Expo 2010,” she said.

Leveraging the company’s powerful brands and member program, China Lodging expanded its network under its asset-light model, Zhang said, which provides it with good margins and reliable cash flow.

“At the end of 2017, our manachised and franchised hotel rooms accounted for 78% in total rooms in operation, up by two percentage points from the previous year,” she said.

At press time, China Lodging’s stock was trading at $134.84, down 6.5% year to date. The Baird/STR Hotel Stock Index was down 1.6% for the same time period.