China Lodging Group, Limited Reports Fourth Quarte

• A total of 3,269 hotels or 331,347 hotel rooms in operation as of December 31, 2016.
• Net revenues increased 10.9% year-over-year to RMB1,669.9 million (US$240.5 million) 1 for the fourth quarter and 13.2% to RMB6,538.6 million (US$941.8 million) for the full year of 2016, in line with the guidance previously announced.
• Adjusted EBITDA (non-GAAP) increased 18.4% year-over-year to RMB379.3 million (US$54.6 million) for the fourth quarter and increased 34.9% to RMB1,785.8 million (US$257.2 million) for the full year of 2016. 
• Net income attributable to China Lodging Group, Limited was RMB125.9 million (US$18.1 million) for the fourth quarter and RMB804.6 million (US$115.9 million) for the full year of 2016, increasing 77.9% year-over-year for the fourth quarter and increasing 84.3% for the full year of 2016. 
• Basic earnings per ADS2 were RMB1.81 (US$0.26) for the fourth quarter of 2016 and RMB11.70 (US$1.68) for the full year of 2016. Diluted earnings per ADS were RMB1.76 (US$0.25) for the fourth quarter of 2016 and RMB11.38 (US$1.64) for the full year of 2016. Excluding share-based compensation expenses, adjusted basic earnings per ADS (non-GAAP) were RMB1.99 (US$0.29) for the fourth quarter of 2016 and RMB12.50 (US$1.80) for the full year of 2016 and adjusted diluted earnings per ADS (non-GAAP) were RMB1.94 (US$0.28) for the fourth quarter of 2016 and RMB12.16 (US$1.75) for the full year of 2016.
• The Company provided guidance for Q1 2017 net revenues growth of 7.2% to 8.4% and full year 2017 net revenues growth of 8% to 12%.

SHANGHAI, China, March 15, 2017 (GLOBE NEWSWIRE) -- China Lodging Group, Limited (NASDAQ: 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, 2016.

Operational Highlights of Fourth Quarter 2016

• During the fourth quarter of 2016, the Company opened 10 leased (“leased-and-owned”) hotels and 138 manachised (“franchised-and-managed”) and franchised hotels, and closed 11 leased hotels and 66 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 RMB186 in the fourth quarter of 2016, compared with RMB177 in the fourth quarter of 2015 and RMB194 in the previous quarter. The year-over-year increase of 5.2% was mainly attributable to more favorable brand mix with an increased proportion of midscale and upscale hotels in operation. The sequential decrease resulted mainly from seasonality.
• The occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 84.7% in the fourth quarter of 2016, compared with 84.3% in the fourth quarter of 2015 and 88.9% in the previous quarter. The slight year-over-year increase was mainly due to improved occupancy in mature hotels. 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 RMB158 in the fourth quarter of 2016, compared with RMB149 in the fourth quarter of 2015 and RMB173 in the previous quarter. The year-over-year increase was a result of higher ADR and higher 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 RMB157 for the fourth quarter of 2016, a 2.5% increase from RMB153 for the fourth quarter of 2015, with a 1.6% increase in ADR and a 0.7-percentage-point increase in occupancy rate. The midscale and upscale hotels registered an 8.9% same-hotel RevPAR improvement, with a 7.6% increase in ADR and 1-percentage-point increase in occupancy rate.

Operational Highlights of Full Year 2016

• For the full year of 2016, the Company opened 33 leased hotels and 704 manachised and franchised hotels, and closed 25 leased hotels and 206 manachised and franchised hotels. As of December 31, 2016, the Company had 624 leased hotels, 2,471 manachised hotels, and 174 franchised hotels in operation in 367 cities. The number of hotel rooms in operation totaled 331,347, an increase of 18.8% from a year ago.
• As of December 31, 2016, the Company had 15 leased hotels and 427 manachised and franchised hotels contracted or under construction.
• For the full year of 2016, the ADR for all hotels in operation (excluding certain franchised Starway hotels) was RMB185, compared to RMB179 in 2015.
• For the full year of 2016, the occupancy rate for all hotels in operation (excluding certain franchised Starway hotels) was 84.9%, compared with 85.3% in 2015. The slight decline in occupancy rate was due to lower occupancy of our new brands, and partially offset by improved occupancy in mature hotels.
• For the full year of 2016, the RevPAR for all hotels in operation (excluding certain franchised Starway hotels), was RMB157, a 2.7% increase from RMB153 in 2015. The increase was a result of higher ADR.
• For all the hotels which had been in operation for at least 18 months (excluding certain franchised Starway hotels), the same-hotel RevPAR was RMB158 in 2016, a 0.4% increase from RMB157 in 2015, with a 0.5% increase in ADR and a 0.1-percentage-point drop in occupancy rate. In 2016, the midscale and upscale hotels registered an 8.3% same-hotel RevPAR improvement, with a 5.4% increase in ADR and 2.3-percentage-point increase in occupancy rate.
• As of December 31, 2016, the Company’s loyalty program had more than 78 million members, who contributed 80% of room nights sold during the full year of 2016. In 2016, more than 88% of room nights were sold through the Company’s own channels.

"We are encouraged by our accelerated blended RevPAR growth this quarter. The year-over-year growth of 5.7% was fueled by the improved blended RevPAR of HanTing hotels thanks to upgrade to HanTing 2.0, coupled with continuously-growing demand for our midscale hotels. In the fourth quarter, the blended RevPAR of HanTing hotels increased by 3% year-over-year, with 31% of rooms under HanTing 2.0 model. We will continue the upgrade program of economy hotels in the next three years, so as to revitalize our flagship brand to attract more customers and franchisees," said Ms. Jenny Zhang, Chief Executive Officer of China Lodging Group.

"In 2017, our focus remains on product quality. In addition to our economy hotels upgrade program, we have also strengthened the brand and operating standards for our existing hotels by removing a number of hotels that failed to comply with our standards. We have also increased the proportion of midscale and upscale hotels in the portfolio. For the full year 2016, midscale and upscale brands accounted for 29% of our net new openings, and 40% of our pipeline as of December 31, 2016. We believe our continued focus on quality and powerful brand portfolio will lead to better operational performance and financial results in the coming quarters," Jenny added.

Fourth Quarter and Full Year of 2016 Financial Results

Net revenues for the fourth quarter of 2016 were RMB1,669.9 million (US$240.5 million), representing a 10.9% year-over-year increase and a 5.9% sequential decrease. The year-over-year increase was primarily attributable to our hotel network expansion and improved blended RevPAR. The sequential decrease was due to seasonality.

Net revenues for the full year of 2016 were RMB6,538.6 million (US$941.8 million), representing an increase of 13.2% from the full year of 2015.

Net revenues from leased and owned hotels for the fourth quarter of 2016 were RMB1,290.6 million (US$185.9 million), representing a 6.0% year-over-year increase and a 7.2% sequential decrease.

For the full year of 2016, net revenues from leased and owned hotels were RMB5,121.4 million (US$737.6 million), representing a 8.7% year-over-year increase.

Net revenues from manachised and franchised hotels for the fourth quarter of 2016 were RMB368.0 million (US$53.0 million), representing a 27.4% year-over-year increase and a 1.4% sequential decrease.

For the full year of 2016, net revenues from manachised and franchised hotels were RMB 1,386.5 million (US$199.7 million), representing a 30.5% year-over-year increase. It accounts for 21.2% of net revenues, compared to 18.4% of net revenues for the year of 2015.

Other revenues represent revenues generated from other than the operation of hotel businesses, which mainly include revenues from Hua Zhu mall and the provision of IT products and services to hotels, totaling RMB11.4 million (US$1.6 million) in the fourth quarter of 2016.

For the full year of 2016, net revenues from other businesses were RMB30.7 million (US$4.5 million).

Hotel operating costs for the fourth quarter of 2016 were RMB1,264.6 million (US$182.1 million), compared to RMB1,198.6 million in the fourth quarter of 2015 and RMB1,249.7 million in the previous quarter, representing a 5.5% year-over-year increase and a 1.2% sequential increase. Total hotel operating costs excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2016 were RMB1,260.9 million (US$181.6 million), representing 75.5% of net revenues, compared to 79.4% for the fourth quarter in 2015 and 70.3% for the previous quarter. The year-over-year decrease in the percentage was mainly attributable to the improved blended RevPAR and VAT deductions. The sequential increase in the percentage was mainly due to seasonality.

For the full year of 2016, hotel operating costs were RMB4,932.2 million (US$710.4 million), compared to RMB4,512.1 million in 2015. Excluding share-based compensation, hotel operating costs (non-GAAP) were RMB4,918.6 million (US$708.4 million), representing 75.2% of net revenues, compared to 77.9% in 2015.

Selling and marketing expenses for the fourth quarter of 2016 were RMB46.1 million (US$6.6 million), compared to RMB46.8 million in the fourth quarter of 2015 and RMB31.3 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2016 were RMB46.1 million (US$6.6 million), or 2.8% of net revenues, compared to 3.1% for the fourth quarter of 2015 and 1.8% for the previous quarter. The year-over-year decrease was mainly attributable to the adjustment related to membership point cost in the fourth quarter of 2016. The sequential increase in the percentage was mainly due to more marketing activities occurred at the year-end.

For the full year of 2016, selling and marketing expenses were RMB146.5 million (US$21.1 million), compared to RMB179.6 million in 2015. Selling and marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB145.7 million (US$21.0 million), representing 2.2% of net revenues, compared to 3.1% in 2015. The year-over-year decrease was mainly attributable to the adjustment related to membership point cost in 2016.

General and administrative expenses for the fourth quarter of 2016 were RMB143.4 million (US$20.7 million), compared to RMB128.2 million in the fourth quarter of 2015 and RMB123.2 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2016 were RMB134.7 million (US$19.4 million), representing 8.1% of net revenues, compared with 7.7% of net revenues in the fourth quarter of 2015 and 6.5% in the previous quarter. The year-over-year and sequential increase in the percentage was mainly due to the increase of personnel costs and professional fees.

For the full year of 2016, general and administrative expenses were RMB492.1 million (US$70.9 million), compared to RMB403.0 million in 2015. General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB451.1 million (US$65.0 million), representing 6.9% of net revenues, compared to 6.3% in 2015.

Pre-opening expenses for the fourth quarter of 2016 were RMB19.7 million (US$2.8 million), representing a 21.8% year-over-year increase and an 18.2% sequential increase. The increase was mainly due to more leased and owned hotels are under construction in the fourth quarter of 2016.

Pre-opening expenses for the full year of 2016 were RMB71.8 million (US$10.3 million), compared to RMB110.0 million in 2015, representing a year-over-year decrease of 34.7%. The decrease in pre-opening expenses was mainly attributable to fewer leased hotel opened or under construction in 2016 than in 2015. The pre-opening expenses as a percentage of net revenues decreased to 1.1% in 2016 from 1.9% in 2015.

Income from operations for the fourth quarter of 2016 was RMB185.7 million (US$26.7 million), compared to RMB130.6 million in the fourth quarter of 2015 and RMB351.0 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the fourth quarter of 2016 was RMB198.2 million (US$28.6 million), compared to adjusted income from operation (non-GAAP) of RMB144.5 million for the fourth quarter of 2015 and RMB362.9 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 2016 was 11.8%, compared with 9.7% in the fourth quarter of 2015 and 20.4% in the previous quarter. The improved year-over-year adjusted operating margin was mainly attributable to improved blended RevPAR and VAT deductions. The sequential decrease in the margin was due to seasonality.

Income from operations for the full year of 2016 was RMB870.9 million (US$125.4 million), compared to RMB601.2 million in 2015. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for the year of 2016 was RMB926.3 million (US$133.4 million), compared to RMB653.7 million for the year of 2015. The adjusted operating margin (non-GAAP) for the year of 2016 was 14.1%, compared with 11.4% for the year of 2015. The improvement of 2.7-percentage-points in the adjusted operating margin was mainly attributable to the higher blended RevPAR and VAT deductions in 2016.

Net income attributable to China Lodging Group, Limited for the fourth quarter of 2016 was RMB125.9 million (US$18.1 million), compared to RMB70.8 million in the fourth quarter of 2015 and RMB293.9 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 2016 was RMB138.4 million (US$19.9 million), representing a 63.4% year-over-year increase and a 54.7% sequential decrease.

Net income attributable to China Lodging Group, Limited for the full year of 2016 was RMB804.6 million (US$115.9 million), compared to RMB436.6 million in 2015. Excluding share-based compensation expenses, adjusted net income attributable to China Lodging Group (non-GAAP) for the full year of 2016 was RMB860.1 million (US$123.9 million), compared to RMB489.1 million in 2015. The year-over-year increase of 75.8% was mainly attributable to the expanded hotel network, improved blended RevPAR, and investment gain in 2016.

Basic and diluted earnings per share/ADS.   For the fourth quarter of 2016, basic earnings per share were RMB0.45 (US$0.07) and diluted earnings per share were RMB0.44 (US$0.06); basic earnings per ADS were RMB1.81 (US$0.26) and diluted earnings per ADS were RMB1.76 (US$0.25). For the fourth quarter of 2016, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB0.50 (US$0.07) and adjusted diluted earnings per share (non-GAAP) were RMB0.48 (US$0.07); adjusted basic earnings per ADS (non-GAAP) were RMB1.99 (US$0.29) and adjusted diluted earnings per ADS (non-GAAP) were RMB1.94 (US$0.28).

For the full year of 2016, basic earnings per share were RMB2.92 (US$0.42) and diluted earnings per share were RMB2.84 (US$0.41); basic earnings per ADS were RMB11.70 (US$1.68), while diluted earnings per ADS were RMB11.38 (US$1.64). For the full year of 2016, excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB3.13 (US$0.45), while adjusted diluted earnings per share (non-GAAP) were RMB3.04 (US$0.44), and adjusted basic earnings per ADS (non-GAAP) were RMB12.50 (US$1.80), while adjusted diluted earnings per ADS (non-GAAP) were RMB12.16 (US$1.75).

EBITDA (non-GAAP) for the fourth quarter of 2016 was RMB366.8 million (US$52.8 million), compared with RMB 306.5 million in the fourth quarter of 2015 and RMB546.7 million in the previous quarter. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the fourth quarter of 2016 was RMB379.3 million (US$54.6 million), compared with RMB320.4 million for the fourth quarter of 2015 and RMB558.5 million for the previous quarter.

EBITDA (non-GAAP) for the full year of 2016 was RMB1,730.3 million (US$249.2 million), compared to RMB1,271.7 million in 2015. Excluding share-based compensation expenses, adjusted EBITDA (non-GAAP) for the full year of 2016 was RMB1,785.8 million (US$257.2 million), compared with RMB1,324.2 million in 2015, representing a 34.9% year-over-year increase. The year-over-year increase was mainly due to the expansion of the Company’s hotel network, the improved RevPAR and investment gain in 2016. The adjusted EBITDA margin (non-GAAP) for the year of 2016 was 27.3%, compared with 22.9% for the year of 2015.

Cash flow. Operating cash inflow for the fourth quarter of 2016 was RMB442.5 million (US$63.7 million). Investing cash outflow for the fourth quarter was RMB240.7 million (US$34.7 million).

Operating cash inflow for the full year of 2016 was RMB2,047.7 million (US$294.9 million), representing an increase of 17.0% from 2015. The significant growth was mainly due to the Company’s fast network expansion with manachise and franchise models. Investing cash inflow for the full year of 2016 was RMB183.8 million (US$26.5 million), compared to investing cash outflow of RMB 1,550.4 million in 2015. The fluctuation was mainly attributable to cash from business acquisition, the maturity and sale of short-term investment like Home Inn, and decrease in restricted cash.

Cash and cash equivalents and Restricted cash. As of December 31, 2016, the Company had a total balance of cash and cash equivalents, restricted cash of RMB3,235.5 million (US$466.0 million).

Debt financing. As of December 31, 2016, the Company had a short-term loan balance of RMB298.3 million (US$43.0 million) and the total credit facility available to the Company was RMB250.0 million.

Business Outlook and Guidance for 2016 “We remain positive about the long-term prospects about China travel industry. In 2017, we continue our consistent execution of asset-light and multiple-brand strategy. We plan to add about 450-500 hotels, with approximately 40% for midscale and upscale hotels. The manachised and franchised hotels continue to be the vast majority of our new openings in 2017, which is similar to 2016,” commented Mr. Ji.

In the first quarter of 2017, the Company expects net revenues to grow 7.2% to 8.4% year-over-year. For the full year 2017, the Company expects net revenues to grow 8% to 12% from 2016.

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 9 p.m. ET, Tuesday, March 14, 2017 (or 9 a.m. on Wednesday, March 15, 2017 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 enter pass code 7256 4976.  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 22, 2017. 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 7256 4976.

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. 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 (including land use rights), 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.

Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, 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, 2016, the Company had 3,269 hotels or 331,347 rooms in operation in 367 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, 2016, China Lodging Group operates 24 percent of its hotel rooms under lease model, 76 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.

¹  The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.9430 on December 31, 2016 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 .

²  Each ADS represents four of the Company’s ordinary shares.

—Financial Tables and Operational Data Follow—

Contact Information Tel: +86 (21) 6195 9561 Email: ir@huazhu.com http://ir.huazhu.com