China’s largest hotel group, Homeinns, suffered a loss in the first quarter of 2015, following what it called the “most difficult” operating period in its 13-year history.
The Shanghai-based company, which mainly operates budget hotels, posted a net loss of CNY37.6 million (US$6.1m) for the first three months of the year, compared to a net profit of CNY74.9m in the same period in 2014. The company’s revenues dipped 0.1% to CNY1.47 billion.
David Sun, Homeinns’ CEO, said the result was not unexpected.
“We achieved revenue in line with our previously provided guidance, which reflected our expectations for a challenging start to the year in very difficult market conditions,” he said.
“While we continued to make meaningful progress in rolling out new business initiatives, controlling costs, and driving beneficial efficiencies in our business, the first quarter was one of the most difficult periods for our business since Homeinns was established in 2002.”
Sun added that this was due to “deepened economic slowdown” in China, and the fact that the first quarter is usually its slowest period.
The pace of Homeinns portfolio expansion also slowed in Q1. Having opened 486 new hotels in 2014, including 129 in the final quarter of the year, the company only added 70 hotels in Q1 2015. By the end of the quarter, the company’s total portfolio stood at 2,661 hotels.
For the rest of the year, Sun said he “remains confident about the long-term prospects of the overall travel and lodging market in China”. Although he admitted that “we are not seeing immediate signs of a market rebound”.
In an effort to diversify, the company is also planning to expand its midscale Homeinns Plus brand this year.
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