HomeInns, one of China’s biggest hotel groups, experienced a sharp decline in profits in the second quarter of 2015.
The company, which says it has endured “sustained difficult market conditions” in 2015, saw its net profits slide 33.4% to CNY72.1 million (US$11.6m) in the three months to 30 June, as revenues decreased 1.8% year-on-year to CNY1.67 billion.
This followed a net loss of CNY37.6m in the first quarter of the year.
“Revenue growth and revPAR remained under pressure given the surrounding economic climate,” said David Sun, HomeInns’ CEO. “This, coupled with higher pre-opening costs, impacted our overall financial performance.
“However, we believe that our strategy to accelerate the development of midscale hotel offerings serves our overall best interest, given its encouraging performance to date.”
He added that rising mobile sales and stricter cost controls are “keeping our operating foundation strong”.
HomeInns now operates a total portfolio of 2,750 hotels in mainland China, under its five brands: HomeInn, HomeInn Plus, Motel, Fairyland and Yitel. It also has a strong pipeline of 184 hotels. And occupancy remains high, averaging 83.3% in Q2 2015. Unfortunately the group’s revPAR declined 4.2% in the quarter.
Moving forward, Sun said he expects market conditions to remain “quite challenging”.
“However, as we have stated before, we believe that the long-term prospects of the travel and lodging market in China are and will stay very strong and HomeInns is set to remain one of the strongest players in the industry,” he added.
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