Home Inns Sees Profit Slip as Expansion Eats into Margins

Home Inns Hotel Management (Nasdaq:HMIN) recorded net income of RMB 32.52 million in the first quarter of 2010, down from RMB 46.05 million in the year-ago period and RMB 33.05 million in the fourth quarter of 2010 and representing diluted earnings per American depository share of RMB 0.11, the company announced May 9. Total revenues for the period increased 10.8% y-o-y to RMB 756.55 million, as the company opened a net of 32 new hotels, bringing its total by the end of the quarter to 848. Home Inns recorded an occupancy rate of 85.1% in the quarter, compared with 90.5% in the same period in 2010 and 90.4% in the previous quarter, with the faster rate of new openings causing the decline, the report said. Revenue per available room (RevPAR) was RMB 140 in the first quarter down from RMB 144 in the first quarter of 2010 and RMB 156 in the previous quarter.

Home Inns expects its total revenues in the second quarter of 2011 to be between RMB 905 million and RMB 925 million, representing a 12-15% y-o-y increase, the report said.