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China Lodging Group, Limited$40.48($.03)(.07%)

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 China Lodging Group, Limited Reports Fourth Quarter and Full Year 2015 Financial Results
   Thursday, March 10, 2016 4:00:35 PM ET

-- A total of 2,763 hotels or 278,843 hotel rooms in operation as of December 31, 2015

-- Net revenues increased 16.2% year-over-year to RMB1,506.3 million (US$232.5 million) for the fourth quarter and 16.3% to RMB5,774.6 million (US$891.4 million) for the full year of 2015, in line with the guidance previously announced.

-- Adjusted EBITDA (non-GAAP) increased 55.4% year-over-year to RMB320.4 million (US$49.5 million) for the fourth quarter and increased 32.2% to RMB1,324.2 million (US$204.4 million) for the full year of 2015.

-- Net income attributable to China Lodging Group, Limited was RMB70.8 million (US$10.9 million) for the fourth quarter and RMB436.6 million (US$67.4 million) for the full year of 2015, increasing 51.1% year-over-year for the fourth quarter and increasing 42.1% for the full year of 2015.

-- Basic earnings per ADS were RMB1.13 (US$0.18) for the fourth quarter of 2015 and RMB6.97 (US$1.08) for the full year of 2015. Diluted earnings per ADS were RMB1.10 (US$0.17) for the fourth quarter of 2015 and RMB6.82 (US$1.05) for the full year of 2015. Excluding share-based compensation expenses, adjusted basic earnings per ADS (non-GAAP) were RMB1.36 (US$0.21) for the fourth quarter of 2015 and RMB7.81 (US$1.21) for the full year of 2015 and adjusted diluted earnings per ADS (non-GAAP) were RMB1.32 (US$0.20) for the fourth quarter of 2015 and RMB7.64 (US$1.18) for the full year of 2015.

-- For full year of 2015, the Company repurchased 0.77 million ADS for $17.5 million; the Company also declared cash dividend of $0.68 per ADS in 2015 which was paid in early 2016.

-- The Company provided guidance for Q1 2016 net revenues growth of 14% to 15% and full year 2016 net revenues growth of 12% to 15%.

China Lodging Group, Limited (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 fourth quarter and full year ended December 31, 2015.

Operational Highlights of Fourth Quarter 2015

-- During the fourth quarter of 2015, the Company opened 4 leased ("leased-and-operated") hotels and 192 manachised ("franchised-and-managed") and franchised hotels, and closed 7 leased hotels and 14 manachised and franchised hotels.

-- The ADR, which is defined as the average daily rate for all hotels in operation (excluding certain franchised Starway hotels), was RMB177 in the fourth quarter of 2015, compared with RMB176 in the fourth quarter of 2014 and RMB188 in the previous quarter. The year-over-year increase of 0.4% was mainly attributable to more favorable brand mix with an increased number of midscale hotels, which was partially offset by the city mix shifting toward lower-tier cities. The sequential decrease resulted mainly from seasonality.

-- The occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 84.3% in the fourth quarter of 2015, compared with 86.5% in the fourth quarter of 2014 and 89.2% in the previous quarter. The year-over-year decrease was mainly due to soft macro economy and a dilutive impact from newly-opened hotels 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 RMB149 in the fourth quarter of 2015, compared with RMB153 in the fourth quarter of 2014 and RMB167 in the previous quarter. The year-over-year decrease was a result of lower occupancy rate. 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 RMB154 for the fourth quarter of 2015, a 2.9% decrease from RMB158 for the fourth quarter of 2014, with a flattish ADR and a 2.6-percentage-point decrease in occupancy rate. The midscale and upscale hotels registered a 7.8% same-hotel RevPAR improvement, with a 4.7% increase in ADR and 2.4-percentage-point increase in occupancy rate.

Operational Highlights of Full Year 2015

-- For the full year of 2015, the Company opened 22 leased hotels and 813 manachised and franchised hotels, and closed 17 leased hotels and 50 manachised and franchised hotels. As of December 31, 2015, the Company had 616 leased hotels, 2,067 manachised hotels, and 80 franchised hotels in operation in 352 cities. The number of hotel rooms in operation totaled 278,843, an increase of 33% from a year ago.

-- As of December 31, 2015, the Company had 21 leased hotels and 656 manachised and franchised hotels contracted or under construction.

-- For the full year of 2015, the ADR for all hotels in operation (excluding certain franchised Starway hotels) was RMB179, compared to RMB179 in 2014.

-- For the full year of 2015, the occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 85.3%, compared with 89.0% in 2014. The decline in occupancy rate was mainly due to soft macro economy and a dilutive impact from newly-opened hotels in lower-tier cities.

-- For the full year of 2015, the RevPAR for all hotels in operation (excluding certain franchised Starway hotels), was RMB153, a 4.1% decrease from RMB159 in 2014. The decrease was a result of lower occupancy rate.

-- For all the hotels which had been in operation for at least 18 months (excluding certain franchised Starway hotels), the same-hotel RevPAR was RMB159 in 2015, a 3.6% decrease from RMB165 in 2014, with a 0.3% increase in ADR and a 3.5-percentage-point drop in occupancy rate. In 2015, the midscale and upscale hotels registered a 6.5% same-hotel RevPAR improvement, with a 5.5% increase in ADR and 0.8-percentage-point increase in occupancy rate.

-- As of December 31, 2015, the Company’s loyalty program had more than 49 million members, who contributed more than 80% of room nights sold during the full year of 2015. In 2015, more than 90% of room nights were sold through the Company’s own channels.

Mr. Qi Ji, founder and executive Chairman of China Lodging Group, said, "Our business continues to perform well in 2015, with strong unit growth and improved margin. Our brands have a growing popularity among customers and franchisees. In 2015, we added a total of 68,888 rooms bringing our network to more than 278,000 rooms, about 73% under manachise and franchise models. In spite of the soft Chinese macro economy, our comparable mature hotels (in operation at least 18 months) achieved occupancy rate of 88%. In particular, our midscale and upscale hotels registered a 6.5% same-hotel RevPAR improvement.

"Our healthy balance sheet has allowed us to make investments in our business, while at the same time returning capital to shareholders. Our increasing unit growth and solid operational performance should continue to fuel improving margin, growing cash flow and steady returns to shareholders in the long term." Mr. Ji added.

Fourth Quarter and Full Year of 2015 Financial Results

(RMB in thousands)                        Q4 2014          Q3 2015          Q4 2015          2014 FY          2015 FY
Revenues:
Leased hotels                                1,160,852        1,374,492        1,287,714        4,522,431        4,986,872
Manachised and franchised hotels             212,059          318,864          305,573          742,797          1,123,979
Total revenues                               1,372,911        1,693,356        1,593,287        5,265,228        6,110,851
Less: business tax and related surcharges    (76,674   )      (93,176   )      (86,972   )      (300,500  )      (336,227  )
Net revenues                                 1,296,237        1,600,180        1,506,315        4,964,728        5,774,624

Total revenues for the fourth quarter of 2015 were RMB1,593.3 million (US$246.0 million), representing a 16.1% year-over-year increase and a 5.9% sequential decrease. The year-over-year increase was primarily due to our hotel network expansion. The sequential decrease was due to seasonality.

Total revenues for the full year of 2015 were RMB6,110.9 million (US$943.4 million), representing an increase of 16.1% from the full year of 2014.

Total revenues from leased hotels for the fourth quarter of 2015 were RMB1,287.7 million (US$198.8 million), representing a 10.9% year-over-year increase and a 6.3% sequential decrease.

For the full year of 2015, total revenues from leased hotels were RMB4,986.9 million (US$769.8 million), representing a 10.3% year-over-year increase.

Total revenues from manachised and franchised hotels for the fourth quarter of 2015 were RMB305.6 million (US$47.2 million), representing a 44.1% year-over-year increase and a 4.2% sequential decrease.

For the full year of 2015, total revenues from manachised and franchised hotels were RMB 1,124.0 million (US$173.5 million), representing a 51.3% year-over-year increase. It accounts for 18.4% of total revenues, compared to 14.1% of total revenues for the year of 2014.

Net revenues for the fourth quarter of 2015 were RMB1,506.3 million (US$232.5 million), representing a 16.2% year-over-year increase and a 5.9% sequential decrease.

Net revenues for the full year of 2015 were RMB5,774.6 million (US$891.4 million), representing a 16.3% year-over-year increase.

(RMB in thousands)                  Q4 2014    Q3 2015    Q4 2015    2014 FY    2015 FY
Operating costs and expenses:
Hotel operating costs               1,048,926  1,166,759  1,198,604  3,878,027  4,512,147
Selling and marketing expenses      65,179     42,383     46,791     187,435    179,568
General and administrative expenses 102,985    101,426    128,233    342,128    403,008
Pre-opening expenses                43,246     27,649     16,216     186,325    110,011
Total operating costs and expenses  1,260,336  1,338,217  1,389,844  4,593,915  5,204,734

Hotel operating costs for the fourth quarter of 2015 were RMB1,198.6 million (US$185.0 million), compared to RMB1,048.9 million in the fourth quarter of 2014 and RMB1,166.8 million in the previous quarter, representing a 14.3% year-over-year increase and a 2.7% sequential increase. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB1,196.3 million (US$184.7 million), representing 79.4% of net revenues, compared to 80.7% for the fourth quarter in 2014 and 72.7% for the previous quarter. The year-over-year decrease in the percentage was mainly attributable to the increased proportion of revenues from manachised and franchised hotels. The sequential increase in the percentage was mainly due to the increased impairment loss from a few under-performing leased hotels.

For the full year of 2015, hotel operating costs were RMB4,512.1 million (US$696.6 million), compared to RMB3,878.0 million in 2014. Excluding share-based compensation, hotel operating costs (non-GAAP) were RMB4,503.3 million (US$695.2 million), representing 77.9% of net revenues, compared to 78.0% in 2014.

Selling and marketing expenses for the fourth quarter of 2015 were RMB46.8 million (US$7.2 million), compared to RMB65.2 million in the fourth quarter of 2014 and RMB42.4 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB46.7 million (US$7.2 million), or 3.1% of net revenues, compared to 5.0% for the fourth quarter of 2014 and 2.6% for the previous quarter. The year-over-year decrease was mainly attributable to lower marketing spending. The sequential increase was mainly due to increased cost associated with membership points in the fourth quarter.

For the full year of 2015, selling and marketing expenses were RMB179.6 million (US$27.7 million), compared to RMB187.4 million in 2014. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB178.7 million (US$27.6 million), representing 3.1% of net revenues, compared to 3.8% in 2014. The year-over-year decrease was mainly attributable to lower marketing spending.

General and administrative expenses for the fourth quarter of 2015 were RMB128.2 million (US$19.8 million), compared to RMB103.0 million in the fourth quarter of 2014 and RMB101.4 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 were RMB116.8 million (US$18.0 million), representing 7.7% of net revenues, compared with 7.9% of net revenues in the fourth quarter of 2014 and 5.7% in the previous quarter. The sequential increase in the percentage was mainly due to increased professional fees, personnel cost and decreased revenue base.

For the full year of 2015, general and administrative expenses were RMB403.0 million (US$62.2 million), compared to RMB342.1 million in 2014. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB360.2 million (US$55.6 million), representing 6.3% of net revenues, compared to 6.4% in 2014.

Pre-opening expenses for the fourth quarter of 2015 were RMB16.2 million (US$2.5 million), representing a 62.5% year-over-year decrease and a 41.4% sequential decrease. The decrease was mainly due to fewer leased hotels opened and in the pipeline in the fourth quarter of 2015.

Pre-opening expenses for the full year of 2015 were RMB110.0 million (US$17.0 million), compared to RMB186.3 million in 2014, representing a year-over-year decrease of 41.0%. The decrease in pre-opening expenses was mainly due to fewer leased hotel opened and in the pipeline in 2015. The pre-opening expenses as a percentage of net revenues decreased to 1.9% in 2015 from 3.8% in 2014.

Income from operations for the fourth quarter of 2015 was RMB130.6 million (US$20.2 million), compared to RMB48.8 million in the fourth quarter of 2014 and RMB281.7 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2015 was RMB144.5 million (US$22.3 million), compared to adjusted income from operation (non-GAAP) of RMB51.0 million for the fourth quarter of 2014 and RMB294.6 million for the previous quarter. The adjusted operating margin, defined as adjusted operating income (non-GAAP) as percentage of net revenues, for the fourth quarter of 2015 was 9.7%, compared with 4.0% in the fourth quarter of 2014 and 18.4% in the previous quarter. The improved year-over-year adjusted operating margin was mainly due to a higher proportion of manachised and franchised business and cost control efforts. The sequential decrease in the margin was due to seasonality.

Income from operations for the full year of 2015 was RMB601.2 million (US$92.8 million), compared to RMB389.4 million in 2014. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the year of 2015 was RMB653.7 million (US$100.9 million), compared to RMB421.3 million for the year of 2014. The growth in income from operations was mainly attributable to increased contribution from manachised and franchised hotels in 2015. The adjusted operating margin (non-GAAP) for the year of 2015 was 11.4%, compared with 8.5% for the year of 2014. The improvement of 2.9-percentage-points in the adjusted operating margin was mainly due to a higher proportion of manachised and franchised business and cost control efforts in 2015.

Net income attributable to China Lodging Group, Limited for the fourth quarter of 2015 was RMB70.8 million (US$10.9 million), compared to RMB46.8 million in the fourth quarter of 2014 and RMB223.6 million in the previous quarter. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group, Limited (non-GAAP) for the fourth quarter of 2015 was RMB84.7 million (US$13.1 million), representing a 72.7% year-over-year increase and a 64.2% sequential decrease.

Net income attributable to China Lodging Group, Limited for the full year of 2015 was RMB436.6 million (US$67.4 million), compared to RMB307.3 million in 2014. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2015 was RMB489.1 million (US$75.5 million), compared to RMB339.3 million in 2014. The year-over-year increase of 44.2% was mainly attributable to the expanded hotel network, increased contribution from manachised and franchised business and lower pre-opening expenses, as a result of the Company’s continued asset-light strategy.

Basic and diluted earnings per share/ADS. For the fourth quarter of 2015, basic and diluted earnings per share were RMB0.28 (US$0.04); basic earnings per ADS were RMB1.13 (US$0.18) and diluted earnings per ADS were RMB1.10 (US$0.17). For the fourth quarter of 2015, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB0.34 (US$0.05) and adjusted diluted earnings per share (non-GAAP) were RMB0.33 (US$0.05); adjusted basic earnings per ADS (non-GAAP) were RMB1.36 (US$0.21) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.32 (US$0.20).

For the full year of 2015, basic earnings per share were RMB1.74 (US$0.27) and diluted earnings per share were RMB1.70 (US$0.26); basic earnings per ADS were RMB6.97 (US$1.08), while diluted earnings per ADS were RMB6.82 (US$1.05). For the full year of 2015, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB1.95 (US$0.30), while adjusted diluted earnings per share (non-GAAP) were RMB1.91 (US$0.29), and adjusted basic earnings per ADS (non-GAAP) were RMB7.81 (US$1.21), while adjusted diluted earnings per ADS (non-GAAP) were RMB7.64 (US$1.18).

EBITDA (non-GAAP) for the fourth quarter of 2015 was RMB306.5 million (US$47.3 million), compared with RMB204.0 million in the fourth quarter of 2014 and RMB451.9 million in the previous quarter. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the fourth quarter of 2015 was RMB320.4 million (US$49.5 million), compared with RMB206.2 million for the fourth quarter of 2014 and RMB464.8 million for the previous quarter.

EBITDA (non-GAAP) for the full year of 2015 was RMB1,271.7 million (US$196.3 million), compared to RMB969.5 million in 2014. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the full year of 2015 was RMB1,324.2 million (US$204.4 million), compared with RMB1,001.5 million in 2014, representing a 32.2% year-over-year increase. The year-over-year increase was mainly due to the expansion of the Company’s hotel network. The adjusted EBITDA margin (non-GAAP) for the year of 2015 was 22.9%, compared with 20.2% for the year of 2014. The improvement of 2.7-percentage-points in adjusted EBITDA margin was mainly due to a higher proportion of manachised and franchised business in 2015.

Hotel income (non-GAAP), which is the difference between net revenues and hotel operating costs, was RMB307.7 million (US$47.5 million) for the fourth quarter of 2015, compared with RMB247.3 million in the fourth quarter of 2014 and RMB433.4 million in the previous quarter. The hotel income from the leased hotels was RMB87.3 million (US$13.5 million) during the fourth quarter of 2015. The hotel income from the manachised and franchised hotels was RMB220.4 million (US$34.0 million) during the fourth quarter of 2015, or accounting for approximately 71.6% of total hotel income.

Hotel income (non-GAAP) for the full year of 2015 was RMB1,262.5 million (US$194.9 million), compared with RMB1,086.7 million for 2014. The hotel income from the leased hotels was RMB456.0 million (US$70.4 million) for the full year of 2015. The hotel income from the manachised and franchised hotels was RMB806.5 million (US$124.5 million) during the full year of 2015, or accounting for approximately 63.9% of total hotel income.

Cash flow. Operating cash inflow for the fourth quarter of 2015 was RMB578.3 million (US$89.3 million). Investing cash inflow for the fourth quarter was RMB114.3 million (US$17.7 million).

Operating cash inflow for the full year of 2015 was RMB1,749.7 million (US$270.1 million), representing an increase of 20.3% from 2014. The significant growth was mainly due to the Company’s fast network expansion with manachise and franchise models. Investing cash outflow for the full year of 2015 was RMB1,550.4 million (US$239.3 million), representing an increase of 45.8% from 2014. The increase was mainly attributable to the purchase of Home Inns ADS from the open market in the second and third quarter of 2015.

Cash and cash equivalents and Restricted cash. As of December 31, 2015, the Company had a total balance of cash and cash equivalents, restricted cash of RMB1,598.3 million (US$246.7 million).

Debt financing. As of December 31, 2015, the Company had a short-term loan balance of RMB324.7 million and the total credit facility available to the Company was RMB499.3 million.

Accor-Huazhu Alliance Transaction

In January 2016, China Lodging Group completed the transaction of strategic alliance with AccorHotels. The Company 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. China Lodging Group takes a non-controlling stake of 29.3% and two board seats in a joint venture for AccorHotels Luxury and Upscale hotel operating platform in Greater China. AccorHotels has a 10.8% stake in of China Lodging Group, including newly issued 24,895,543 ordinary shares at a price of $6.6375 per ordinary share (or 9.0% of China Lodging Group’s outstanding shares after issuance; 4 ordinary shares=1 American depositary shares) and the Company’s American depositary shares purchased by AccorHotels from the open market. Sebastien Bazin, Chaiman and CEO of AccorHotels, has been appointed to China Lodging Group’s Board of Directors.

Business Outlook and Guidance for 2016

"We remain positive about the long-term prospects about China travel industry. In 2016, we continue our consistent execution of asset-light and multiple-brand strategy. We plan to open 750 to 800 hotels, with 80% for economy hotels and 20% for midscale and upscale hotels. The manachised and franchised hotels continue to be the vast majority of our new openings in 2016, which is similar to 2015." commented Mr. Ji.

In the first quarter of 2016, the Company expects net revenues to grow 14% to 15% year-over-year. For the full year 2016, the Company expects net revenues to grow 12% to 15% from 2015.

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

Conference Call

China Lodging Group’s management will host a conference call at 8 p.m. ET, Thursday, March 10, 2016 (or 9 a.m. on Friday, March 11, 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 entering pass code 5380 2516. 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 March 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 5380 2516.

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

To monitor performance of hotels at different maturity level and of different form, the Company also tracks hotel income, which is the difference between net revenues and hotel operating costs.

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

About China Lodging Group, Limited

China Lodging Group, Limited is a leading hotel operator and franchisor in China under 12 brand names. As of December 31, 2015, the Company had 2,763 hotels or 278,843 rooms in operation in 352 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 December 31, 2015, China Lodging Group operates 27 percent of its hotel rooms under lease model, 73 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.

The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.4778 on December 31, 2015 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 .

Each ADS represents four of the Company’s ordinary shares.

--Financial Tables and Operational Data Follow--

China Lodging Group, Limited
Unaudited Condensed Consolidated Balance Sheets
                                                        December 31, 2014  September 30, 2015  December 31, 2015
                                                        RMB                RMB                 RMB              US$
                                                        (in thousands)
ASSETS
Current assets:
Cash and cash equivalents                                     808,865             799,228         1,237,838        191,089
Restricted cash                                               -                   580,000         360,500          55,652
Short-term investments                                        26,615              471,863         533,215          82,314
Accounts receivable, net                                      89,243              89,516          93,956           14,504
Amounts due from related parties                              16,293              16,023          16,157           2,494
Prepaid rent                                                  385,158             450,779         429,588          66,317
Inventories                                                   29,882              25,818          24,529           3,787
Other current assets                                          160,582             143,869         167,995          25,934
Deferred tax assets                                           80,026              80,026          98,200           15,160
Total current assets                                          1,596,664           2,657,122       2,961,978        457,251
Property and equipment, net                                   3,907,343           3,795,565       3,805,886        587,527
Intangible assets, net                                        104,537             110,162         144,812          22,355
Long-term investments                                         229,005             301,376         356,578          55,046
Goodwill                                                      64,654              64,654          108,344          16,726
Other assets                                                  197,233             201,991         195,446          30,172
Deferred tax assets                                           83,470              83,470          120,477          18,598
Total assets                                                  6,182,906           7,214,340       7,693,521        1,187,675
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt                                               -                   594,812         324,680          50,122
Accounts payable                                              640,691             535,183         585,347          90,362
Amounts due to related parties                                6,403               8,362           7,653            1,181
Salary and welfare payable                                    186,051             130,593         210,955          32,566
Deferred revenue                                              514,268             629,748         705,607          108,927
Accrued expenses and other current liabilities                313,017             375,795         576,160          88,944
Dividends payable                                             -                   -               276,261          42,647
Income tax payable                                            59,630              44,795          102,810          15,871
Deferred tax liabilities                                      701                 701             1,465            226
Total current liabilities                                     1,720,761           2,319,989       2,790,938        430,846
Deferred rent                                                 830,414             922,542         945,192          145,912
Deferred revenue                                              155,395             176,485         180,861          27,920
Amounts due to related parties                                4,083               2,042           -                -
Other long-term liabilities                                   215,762             262,057         275,954          42,600
Deferred tax liabilities                                      37,778              37,778          59,828           9,237
Total liabilities                                             2,964,193           3,720,893       4,252,773        656,515
Equity:
Ordinary shares                                               184                 185             186              29
Treasury share                                                -                   (107,332  )     (107,331  )      (16,569   )
Additional paid-in capital                                    2,381,568           2,435,661       2,470,099        381,318
Retained earnings                                             847,220             1,213,062       1,007,559        155,540
Accumulated other comprehensive income (loss)                 (12,008   )         (50,346   )     59,596           9,200
Total China Lodging Group, Limited shareholders’ equity       3,216,964           3,491,230       3,430,109        529,518
Noncontrolling interest                                       1,749               2,217           10,639           1,642
Total equity                                                  3,218,713           3,493,447       3,440,748        531,160
Total liabilities and equity                                  6,182,906           7,214,340       7,693,521        1,187,675
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
                                                                        Quarter Ended                                                              Year Ended
                                                                        December 31, 2014   September 30, 2015   December 31, 2015                 December 31, 2014   December 31, 2015
                                                                        RMB                 RMB                  RMB               US$             RMB                 RMB               US$
                                                                        (in thousands, except per share and per ADS data)
Revenues:
Leased hotels                                                                 1,160,852            1,374,492        1,287,714         198,789            4,522,431        4,986,872         769,840
Manachised and franchised hotels                                              212,059              318,864          305,573           47,172             742,797          1,123,979         173,512
Total revenues                                                                1,372,911            1,693,356        1,593,287         245,961            5,265,228        6,110,851         943,352
Less: business tax and related surcharges                                     (76,674    )         (93,176    )     (86,972    )      (13,426  )         (300,500   )     (336,227   )      (51,904  )
Net revenues                                                                  1,296,237            1,600,180        1,506,315         232,535            4,964,728        5,774,624         891,448
Operating costs and expenses:
Hotel operating costs:
Rents                                                                         (414,525   )         (459,805   )     (470,567   )      (72,643  )         (1,543,651 )     (1,804,532 )      (278,572 )
Utilities                                                                     (83,723    )         (82,475    )     (85,288    )      (13,166  )         (323,837   )     (341,620   )      (52,737  )
Personnel costs                                                               (210,210   )         (247,161   )     (232,662   )      (35,917  )         (788,973   )     (919,555   )      (141,955 )
Depreciation and amortization                                                 (152,386   )         (161,178   )     (164,890   )      (25,455  )         (558,833   )     (645,058   )      (99,580  )
Consumables, food and beverage                                                (121,754   )         (125,703   )     (130,017   )      (20,071  )         (454,795   )     (485,099   )      (74,886  )
Others                                                                        (66,328    )         (90,437    )     (115,180   )      (17,781  )         (207,938   )     (316,283   )      (48,826  )
Total hotel operating costs                                                   (1,048,926 )         (1,166,759 )     (1,198,604 )      (185,033 )         (3,878,027 )     (4,512,147 )      (696,556 )
Selling and marketing expenses                                                (65,179    )         (42,383    )     (46,791    )      (7,223   )         (187,435   )     (179,568   )      (27,720  )
General and administrative expenses                                           (102,985   )         (101,426   )     (128,233   )      (19,796  )         (342,128   )     (403,008   )      (62,214  )
Pre-opening expenses                                                          (43,246    )         (27,649    )     (16,216    )      (2,503   )         (186,325   )     (110,011   )      (16,983  )
Total operating costs and expenses                                            (1,260,336 )         (1,338,217 )     (1,389,844 )      (214,555 )         (4,593,915 )     (5,204,734 )      (803,473 )
Other operating income                                                        12,947               19,718           14,111            2,178              18,551           31,264            4,827
Income from operations                                                        48,848               281,681          130,582           20,158             389,364          601,154           92,802
Interest income                                                               7,872                6,277            9,007             1,390              23,162           26,712            4,124
Interest expense                                                              (173       )         (1,908     )     (1,606     )      (248     )         (1,533     )     (3,854     )      (595     )
Other income (expense)                                                        (417       )         (766       )     2,064             319                4,749            4,083             630
Foreign exchange gain (loss)                                                  (17        )         6,793            4,533             700                (246       )     7,814             1,206
Income before income taxes                                                    56,113               292,077          144,580           22,319             415,496          635,909           98,167
Income tax expense                                                            (8,755     )         (67,290    )     (73,742    )      (11,384  )         (113,105   )     (196,529   )      (30,339  )
Net income                                                                    47,358               224,787          70,838            10,935             302,391          439,380           67,828
Less: net  loss (income) attributable to noncontrolling interests             (517       )         (1,138     )     (78        )      (12      )         4,957            (2,780     )      (429     )
Net income attributable to China Lodging Group, Limited                       46,841               223,649          70,760            10,923             307,348          436,600           67,399
Other comprehensive income
Unrealized securities holding gains (losses), net of tax                      (30,847    )         (68,357    )     106,600           16,456             28,458           68,069            10,508
Foreign currency translation adjustments, net of tax                          (1,126     )         1,789            3,342             516                (1,082     )     3,535             546
Comprehensive income                                                          15,385               158,219          180,780           27,907             329,767          510,984           78,882
Comprehensive loss (income) attributable to the noncontrolling interest       (517       )         (1,138     )     (78        )      (12      )         4,957            (2,780     )      (429     )
Comprehensive income attributable to China Lodging Group, Limited             14,868               157,081          180,702           27,895             334,724          508,204           78,453
Earnings per share:
Basic                                                                         0.19                 0.89             0.28              0.04               1.23             1.74              0.27
Diluted                                                                       0.18                 0.87             0.28              0.04               1.21             1.70              0.26
Earnings per ADS:
Basic                                                                         0.75                 3.58             1.13              0.18               4.94             6.97              1.08
Diluted                                                                       0.74                 3.49             1.10              0.17               4.86             6.82              1.05
Weighted average number of shares used in computation:
Basic                                                                         249,642              249,956          249,674           249,674            248,958          250,533           250,533
Diluted                                                                       253,906              256,083          256,546           256,546            253,004          256,104           256,104
China Lodging Group, Limited
Unaudited Condensed Consolidated Statements of Cash Flows
                                                                                  Quarter Ended                                                        Year Ended
                                                                                  December 31, 2014 September 30, 2015 December 31, 2015               December 31, 2014   December 31, 2015
                                                                                  RMB               RMB                RMB              US$            RMB                 RMB               US$
                                                                                  (in thousands)
Operating activities:
Net income                                                                              47,358             224,787        70,838           10,935            302,391          439,380           67,828
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation                                                                2,199              12,938         13,909           2,147             31,937           52,535            8,110
Depreciation and amortization                                                           156,096            165,302        169,355          26,144            570,722          661,404           102,103
Deferred taxes                                                                          (42,391  )         -              (42,673   )      (6,588  )         (42,391    )     (50,149    )      (7,742   )
Bad debt expenses                                                                       3,022              348            1,909            295               4,770            1,997             308
Deferred rent                                                                           58,172             37,482         32,440           5,008             182,580          130,301           20,115
Loss (gain) from disposal of property and equipment                                     (522     )         -              (5,519    )      (852    )         803              (5,519     )      (852     )
Impairment loss                                                                         13,868             34,735         50,368           7,776             27,391           95,608            14,759
Investment loss (income)                                                                898                477            (1,975    )      (305    )         (4,902     )     129               20
Excess tax benefit from share-based compensation                                        (2,867   )         (1,790   )     (7,833    )      (1,209  )         (11,697    )     (12,838    )      (1,982   )
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable                                                                     9,119              4,159          (5,419    )      (836    )         (18,773    )     (5,749     )      (888     )
Prepaid rent                                                                            (13,353  )         (30,510  )     21,191           3,271             (21,577    )     (44,430    )      (6,859   )
Inventories                                                                             2,876              1,553          1,888            291               4,130            5,952             919
Amounts due from related parties                                                        -                  -              -                -                 256              -                 -
Other current assets                                                                    11,669             (481     )     (27,515   )      (4,248  )         (42,369    )     (15,518    )      (2,395   )
Other assets                                                                            (6,861   )         (4       )     6,544            1,010             (13,220    )     1,787             276
Accounts payable                                                                        4,045              (7,763   )     8,187            1,264             18,016           14,194            2,191
Amounts due to related parties                                                          (554     )         (1,574   )     1,332            206               810              1,250             193
Salary and welfare payables                                                             83,441             (29,622  )     79,990           12,348            38,813           24,532            3,787
Deferred revenue                                                                        63,235             54,260         80,235           12,386            253,562          216,805           33,469
Accrued expenses and other current liabilities                                          24,380             26,481         58,797           9,077             58,995           121,502           18,757
Income tax payable and receivable                                                       17,693             11,075         58,255           8,993             45,274           56,019            8,647
Other long-term liabilities                                                             25,949             10,642         13,968           2,156             68,494           60,481            9,337
Net cash provided by operating activities                                               457,472            512,495        578,272          89,269            1,454,015        1,749,673         270,101
Investing activities:
Purchases of property and equipment                                                     (219,024 )         (128,910 )     (119,380  )      (18,429 )         (930,922   )     (640,222   )      (98,833  )
Purchases of intangibles                                                                (5,629   )         (444     )     (1,182    )      (182    )         (10,423    )     (8,818     )      (1,361   )
Amount received as a result of government zoning                                        -                  -              5,721            883               10,557           6,721             1,038
Acquisitions, net of cash received                                                      (2,160   )         (460     )     (3,633    )      (561    )         (16,050    )     (19,153    )      (2,957   )
Proceeds from disposal of subsidiary and branch                                         1,000              2,500          2,500            386               18,484           5,000             772
Purchase of long-term investments                                                       (14,789  )         (72,437  )     (36,168   )      (5,583  )         (191,064   )     (137,707   )      (21,258  )
Proceeds from sale of long-term investments                                             4,345              4,007          19,007           2,934             88,266           29,139            4,498
Payment for shareholder loan to joint venture                                           (734     )         -              (134      )      (21     )         (15,640    )     (1,386     )      (214     )
Collection of shareholder loan from joint venture                                       -                  773            -                -                 -                1,522             235
Purchase of short-term investments                                                      (19,710  )         (207,916 )     -                -                 (75,210    )     (455,811   )      (70,365  )
Proceeds from sales of short-term investments                                           55,499             885            28,109           4,339             55,499           30,858            4,764
Decrease (increase) in restricted cash                                                  -                  (580,000 )     219,500          33,885            3,317            (360,500   )      (55,652  )
Net cash provided by (used in) investing activities                                     (201,202 )         (982,002 )     114,340          17,651            (1,063,186 )     (1,550,357 )      (239,333 )
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option                   12,624             1,917          10,970           1,694             20,985           22,619            3,492
Payment of share repurchase                                                             -                  (107,331 )     -                -                 -                (107,331   )      (16,569  )
Proceeds from short-term debt                                                           -                  489,376        -                -                 300,000          589,376           90,984
Repayment of short-term debt                                                            (300,000 )         (13,581  )     (269,424  )      (41,592 )         (300,000   )     (283,516   )      (43,767  )
Funds advanced from noncontrolling interest holders                                     -                  -              5,432            839               -                5,432             839
Repayment of funds advanced from noncontrolling interest holders                        (340     )         (100     )     (120      )      (19     )         (1,559     )     (900       )      (139     )
Acquisition of noncontrolling interest                                                  (2,042   )         (2,042   )     (2,042    )      (315    )         (4,083     )     (4,083     )      (630     )
Contribution from noncontrolling interest holders                                       (7,000   )         -              200              31                -                2,450             378
Dividend paid to noncontrolling interest holders                                        (1,333   )         (475     )     (120      )      (19     )         (5,357     )     (4,604     )      (711     )
Excess tax benefit from share-based compensation                                        2,867              1,790          7,833            1,209             11,697           12,838            1,982
Net cash provided by (used in) financing activities                                     (295,224 )         369,554        (247,271  )      (38,172 )         21,683           232,281           35,859
Effect of exchange rate changes on cash and cash equivalents                            (1,703   )         5,705          (6,731    )      (1,039  )         (1,082     )     (2,624     )      (405     )
Net increase (decrease) in cash and cash equivalents                                    (40,657  )         (94,248  )     438,610          67,709            411,430          428,973           66,222
Cash and cash equivalents at the beginning of the period                                849,522            893,476        799,228          123,380           397,435          808,865           124,867
Cash and cash equivalents at the end of the period                                      808,865            799,228        1,237,838        191,089           808,865          1,237,838         191,089
China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
                                    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  %
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 from operations              130,582            8.7   %               13,909                 1.0   %      144,491                9.7   %
                                    Quarter Ended December 31, 2015
                                    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               185,033            79.6  %               363                    0.2   %      184,670                79.4  %
Selling and marketing expenses      7,223              3.1   %               15                     0.0   %      7,208                  3.1   %
General and administrative expenses 19,796             8.5   %               1,769                  0.8   %      18,027                 7.7   %
Pre-opening expenses                2,503              1.1   %               -                      0.0   %      2,503                  1.1   %
Total operating costs and expenses  214,555            92.3  %               2,147                  1.0   %      212,408                91.3  %
Income from operations              20,158             8.7   %               2,147                  1.0   %      22,305                 9.7   %
                                    Quarter Ended September 30, 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               1,166,759          72.9  %               2,910                  0.2   %      1,163,849              72.7  %
Selling and marketing expenses      42,383             2.6   %               246                    0.0   %      42,137                 2.6   %
General and administrative expenses 101,426            6.3   %               9,782                  0.6   %      91,644                 5.7   %
Pre-opening expenses                27,649             1.7   %               -                      0.0   %      27,649                 1.7   %
Total operating costs and expenses  1,338,217          83.5  %               12,938                 0.8   %      1,325,279              82.7  %
Income from operations              281,681            17.6  %               12,938                 0.8   %      294,619                18.4  %
                                    Quarter Ended December 31, 2014
                                    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               1,048,926          80.9  %               2,075                  0.2   %      1,046,851              80.7  %
Selling and marketing expenses      65,179             5.0   %               289                    0.0   %      64,890                 5.0   %
General and administrative expenses 102,985            7.9   %               (165     )             0.0   %      103,150                7.9   %
Pre-opening expenses                43,246             3.3   %               -                      0.0   %      43,246                 3.3   %
Total operating costs and expenses  1,260,336          97.1  %               2,199                  0.2   %      1,258,137              96.9  %
Income from operations              48,848             3.8   %               2,199                  0.2   %      51,047                 4.0   %
                                    Year 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               4,512,147          78.1  %               8,835                  0.2   %      4,503,312              77.9  %
Selling and marketing expenses      179,568            3.1   %               907                    0.0   %      178,661                3.1   %
General and administrative expenses 403,008            7.0   %               42,793                 0.7   %      360,215                6.3   %
Pre-opening expenses                110,011            1.9   %               -                      0.0   %      110,011                1.9   %
Total operating costs and expenses  5,204,734          90.1  %               52,535                 0.9   %      5,152,199              89.2  %
Income from operations              601,154            10.5  %               52,535                 0.9   %      653,689                11.4  %
                                    Year Ended December 31, 2015
                                    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               696,556            78.1  %               1,364                  0.2   %      695,192                77.9  %
Selling and marketing expenses      27,720             3.1   %               140                    0.0   %      27,580                 3.1   %
General and administrative expenses 62,214             7.0   %               6,606                  0.7   %      55,608                 6.3   %
Pre-opening expenses                16,983             1.9   %               -                      0.0   %      16,983                 1.9   %
Total operating costs and expenses  803,473            90.1  %               8,110                  0.9   %      795,363                89.2  %
Income from operations              92,802             10.5  %               8,110                  0.9   %      100,912                11.4  %
                                    Year Ended December 31, 2014
                                    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               3,878,027          78.1  %               6,830                  0.1   %      3,871,197              78.0  %
Selling and marketing expenses      187,435            3.8   %               939                    0.0   %      186,496                3.8   %
General and administrative expenses 342,128            6.9   %               24,168                 0.5   %      317,960                6.4   %
Pre-opening expenses                186,325            3.8   %               -                      0.0   %      186,325                3.8   %
Total operating costs and expenses  4,593,915          92.6  %               31,937                 0.6   %      4,561,978              92.0  %
Income from operations              389,364            7.9   %               31,937                 0.6   %      421,301                8.5   %
China Lodging Group, Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
                                                                            Quarter Ended                                                                  Year Ended
                                                                            December 31, 2014   September 30, 2015   December 31, 2015                     December 31, 2014   December 31, 2015
                                                                            RMB                 RMB                  RMB                 US$               RMB                 RMB               US$
                                                                            (in thousands, except per share and per ADS data)
Net income attributable to China Lodging Group, Limited (GAAP)                    46,841               223,649           70,760              10,923              307,348          436,600           67,399
Share-based compensation expenses                                                 2,199                12,938            13,909              2,147               31,937           52,535            8,110
Adjusted net income attributable to China Lodging Group, Limited (non-GAAP)       49,040               236,587           84,669              13,070              339,285          489,135           75,509
Earnings per share (GAAP)
Basic                                                                             0.19                 0.89              0.28                0.04                1.23             1.74              0.27
Diluted                                                                           0.18                 0.87              0.28                0.04                1.21             1.70              0.26
Earnings per ADS (GAAP)
Basic                                                                             0.75                 3.58              1.13                0.18                4.94             6.97              1.08
Diluted                                                                           0.74                 3.49              1.10                0.17                4.86             6.82              1.05
Adjusted earnings per share (non-GAAP)
Basic                                                                             0.20                 0.95              0.34                0.05                1.36             1.95              0.30
Diluted                                                                           0.19                 0.92              0.33                0.05                1.34             1.91              0.29
Adjusted earnings per ADS (non-GAAP)
Basic                                                                             0.79                 3.79              1.36                0.21                5.45             7.81              1.21
Diluted                                                                           0.77                 3.70              1.32                0.20                5.36             7.64              1.18
Weighted average number of shares used in computation
Basic                                                                             249,642              249,956           249,674             249,674             248,958          250,533           250,533
Diluted                                                                           253,906              256,083           256,546             256,546             253,004          256,104           256,104
                                                                            Quarter Ended                                                                  Year Ended
                                                                            December 31, 2014   September 30, 2015   December 31, 2015                     December 31, 2014   December 31, 2015
                                                                            RMB                 RMB                  RMB                 US$               RMB                 RMB               US$
                                                                            (in thousands)
Net income attributable to China Lodging Group, Limited (GAAP)                    46,841               223,649           70,760              10,923              307,348          436,600           67,399
Interest income                                                                   (7,872     )         (6,277     )      (9,007     )        (1,390   )          (23,162    )     (26,712    )      (4,124   )
Interest expenses                                                                 173                  1,908             1,606               248                 1,533            3,854             595
Income tax expense                                                                8,755                67,290            73,742              11,384              113,105          196,529           30,339
Depreciation and amortization                                                     156,096              165,302           169,355             26,144              570,722          661,404           102,103
EBITDA (non-GAAP)                                                                 203,993              451,872           306,456             47,309              969,546          1,271,675         196,312
Share-based Compensation                                                          2,199                12,938            13,909              2,147               31,937           52,535            8,110
Adjusted EBITDA (non-GAAP)                                                        206,192              464,810           320,365             49,456              1,001,483        1,324,210         204,422
                                                                            Quarter Ended                                                                  Year Ended
                                                                            December 31, 2014   September 30, 2015   December 31, 2015                     December 31, 2014   December 31, 2015
                                                                            RMB                 RMB                  RMB                 US$                                   RMB               US$
                                                                            (in thousands)
Net revenues (GAAP)                                                               1,296,237            1,600,180         1,506,315           232,535             4,964,728        5,774,624         891,448
Less:  Hotel operating costs                                                      (1,048,926 )         (1,166,759 )      (1,198,604 )        (185,033 )          (3,878,027 )     (4,512,147 )      (696,556 )
Hotel income (non-GAAP)                                                           247,311              433,421           307,711             47,502              1,086,701        1,262,477         194,892
China Lodging Group, Limited
Operational Data
                                 As of
                                      December 31,           September 30,           December 31,
                                      2014                   2015                    2015
Total hotels in operation:            1,995                  2,588                   2,763
Leased hotels                         611                    619                     616
Manachised hotels                     1,376                  1,899                   2,067
Franchised hotels                     8                      70                      80
Total hotel rooms in operation        209,955                264,076                 278,843
Leased hotels                         72,335                 75,384                  75,436
Manachised hotels                     136,689                182,663                 196,737
Franchised hotels                     931                    6,029                   6,670
Number of cities                      300                    342                     352
                                 For the quarter ended
                                 December 31,           September 30,           December 31,
                                      2014                   2015                    2015
Occupancy rate (as a percentage)
Leased hotels                         87.2         %         90.5          %         85.8         %
Manachised hotels                     86.2         %         89.0          %         84.2         %
Franchised hotels                     N/A                    73.3          %         67.4         %
Blended                               86.5         %         89.2          %         84.3         %
Average daily room rate (in RMB)
Leased hotels                         190                    207                     201
Manachised hotels                     169                    179                     167
Franchised hotels                     N/A                    187                     172
Blended                               176                    188                     177
RevPAR (in RMB)
Leased hotels                         166                    188                     172
Manachised hotels                     145                    159                     141
Franchised hotels                     N/A                    137                     116
Blended                               153                    167                     149
                                 For the full year ended
                                 December 31,           December 31,
                                      2014                   2015
Occupancy rate (as a percentage)
Leased hotels                         88.9         %         86.6          %
Manachised hotels                     89.0         %         85.0          %
Franchised hotels                     N/A                    70.1          %
Blended                               89.0         %         85.3          %
Average daily room rate (in RMB)
Leased hotels                         190                    198
Manachised hotels                     172                    170
Franchised hotels                     N/A                    177
Blended                               179                    179
RevPAR (in RMB)
Leased hotels                         169                    172
Manachised hotels                     153                    145
Franchised hotels                     N/A                    124
Blended                               159                    153

Same-hotel Operational Data: like-for-like performance for leased and manachised hotels opened for at least 18 months during the current quarter and full year

                                 As of and for the quarter ended
                                 December 31,
                                       2014     2015
Total                                  1,612    1,612
Leased hotels                          568      568
Manachised hotels                      1,044    1,044
Occupancy rate (as a percentage)       89.0  %  86.4  %
Average daily room rate (in RMB)       178      178
RevPAR (in RMB)                        158      154
                                 As of and for full year ended
                                 December 31,
                                       2014     2015
Total                                  1,612    1,612
Leased hotels                          568      568
Manachised hotels                      1,044    1,044
Occupancy rate (as a percentage)       91.4  %  87.9  %
Average daily room rate (in RMB)       181      181
RevPAR (in RMB)                        165      159
Hotel breakdown by segment
                             Number of Hotels in Operation  Number of Hotel Rooms in Operation  Number of Hotels  Number of Rooms
                             As of December 31, 2015        As of December 31, 2015             Net Added in 2015 Net Added in 2015
Economy hotels               2,453                          238,156                                   634               52,197
Hanting Hotel                2,003                          205,577                                   355               33,236
Leased hotels                495                            57,277                                    (7    )           (29    )
Manachised hotels            1,508                          148,300                                   362               33,265
Hi Inn                       302                            21,340                                    144               8,789
Leased hotels                38                             3,698                                     (3    )           (197   )
Manachised hotels            251                            16,725                                    134               8,069
Franchised hotels            13                             917                                       13                917
Elan Hotel                   148                            11,239                                    135               10,172
Manachised hotels            128                            9,837                                     115               8,770
Franchised hotels            20                             1,402                                     20                1,402
Midscale and upscale hotels  310                            40,687                                    134               16,691
JI Hotel                     186                            27,559                                    69                10,507
Leased hotels                75                             13,195                                    13                2,935
Manachised hotels            111                            14,364                                    56                7,572
Starway Hotel                118                            12,138                                    63                5,817
Leased hotels                4                              604                                       1                 153
Manachised hotels            67                             7,183                                     23                2,244
Franchised hotels            47                             4,351                                     39                3,420
Joya Hotel                   3                              515                                       -                 -
Leased hotels                2                              315                                       -                 -
Manachised hotels            1                              200                                       -                 -
Manxin Hotels & Resorts      2                              236                                       1                 128
Leased hotels                1                              108                                       -                 -
Manachised hotels            1                              128                                       1                 128
Mercure Hotel                1                              239                                       1                 239
Leased hotels                1                              239                                       1                 239
Total                        2,763                          278,843                                   768               68,888
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
                                 December 31,                  December 31,          yoy change   December 31,          yoy change   December 31,           yoy change
                                 2014           2015           2014       2015                    2014       2015                        2014      2015
Economy hotels                   1,491          1,491          152        145            -4.6 %   169        167            -1.2 %       90   %    87   %       -3.1 %
Leased hotels                    510            510            156        147            -5.3 %   175        173            -0.9 %       89   %    85   %       -4.0 %
Manachised and franchised hotels 981            981            149        143            -4.2 %   166        163            -1.5 %       90   %    87   %       -2.5 %
Midscale and upscale hotels      121            121            224        241            7.8  %   270        282            4.7  %       83   %    85   %       2.4  %
Leased hotels                    58             58             245        276            12.5 %   291        308            5.8  %       84   %    90   %       5.3  %
Manachised and franchised hotels 63             63             195        196            0.4  %   240        245            2.4  %       81   %    80   %       -1.6 %
Total                            1,612          1,612          158        154            -2.9 %   178        178            0.0  %       89   %    86   %       -2.6 %
                                 Number of hotels in operation Same-hotel RevPAR                  Same-hotel ADR                     Same-hotel Occupancy
                                 As of                         For the year ended                 For the year ended                 For the year ended
                                 December 31,                  December 31,          yoy change   December 31,          yoy change   December 31,           yoy change
                                 2014           2015           2014       2015                    2014       2015                        2014      2015
Economy hotels                   1,491          1,491          159        152            -4.9 %   173        172            -0.8 %       92   %    88   %       -3.9 %
Leased hotels                    510            510            162        154            -4.7 %   178        177            -0.5 %       91   %    87   %       -3.9 %
Manachised and franchised hotels 981            981            158        150            -5.1 %   170        169            -1.0 %       93   %    89   %       -3.8 %
Midscale and upscale hotels      121            121            232        247            6.5  %   275        290            5.5  %       84   %    85   %       0.8  %
Leased hotels                    58             58             253        277            9.2  %   295        314            6.5  %       86   %    88   %       2.2  %
Manachised and franchised hotels 63             63             202        204            1.2  %   246        252            2.8  %       82   %    81   %       -1.2 %
Total                            1,612          1,612          165        159            -3.6 %   181        181            0.3  %       91   %    88   %       -3.5 %
Contact Information
Ida Yu
Sr. Manager of Investor Relations
Tel:  +86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com 

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