Home Inn Group reports 26.8m yuan loss for 2012

NASDAQ-listed budget hotel chain operator Home Inn Group reported a net loss of 26.8 million yuan ($4.31 million) in 2012, down from a 351.5 million yuan net profit in 2011.

Home Inn's annual revenue increased 46 percent to 5.77 billion yuan in 2012. However, the average occupancy rate was at 86.1 percent, down from 88.8 percent the previous year. Revenue per available room, or RevPAR, which is an indicator of hotel performance, also decreased to 152 yuan to 144 yuan year-on-year.

The company said the year-on-year decrease in RevPAR was mainly driven by continued market softness in China and relatively weaker economic conditions in lower-tier cities. The relatively lower overall RevPAR of the acquired Motel 168 compared with its organic business also had a negative impact on the group’s RevPAR. Home Inn acquired budget hotel chain Motel 168 for $470 million in 2011.

Home Inn is not the only Chinese budget hotel chain that saw its RevPAR declining in 2012. The NASDAQ-listed China Lodging Group, which operates budget hotel chain Hanting Inn & Hotel, said its RevPAR declined from 167 yuan to 162 yuan year-on-year, while the NASDAQ-listed 7Days Inn said its RevPAR for all hotels decreased to 131.5 yuan from 136.2 yuan in 2011.

Zhao Huanyan, an analyst with Hotelsolution Consulting, was quoted by media as saying that budget hotels might enter into a low-profit period because of increasing costs and lower RevPAR.