Home Inns anticipates first-quarter revenue of $95.2 million, and put the year’s growth target at 18% to 22% as it opens 180 to 200 new hotels. Analysts expected 26% revenue growth.
Shares of China’s largest economy-hotel chain were recently down 2.8% to $34.60 after dropping as much as 9% earlier in the session.
Home Inns is moving into the luxury market, as it bets that rising living standards in China will attract more visitors to high-end hotels. While it is seeing some initial success, analysts say the company has a long way to go before it can grab a significant chunk of China’s luxury hotel market. Additionally, Home Inns said it expects to see a shift toward more franchised-and-managed hotels, citing the strong profitability opportunities of those hotels.
The occupancy rate for all hotels in operation was 92.9% in the fourth quarter, up from 84.1% a year earlier but down from 97% in the third quarter. Revenue per available room grew 5.6% on year but fell 5.1% sequentially.
Wall Street Journal states that during the quarter, Home Inns opened 33 new hotels, putting the company’s total at 616. It operates in 120 Chinese cities.