Home Inns Expands in China - Analyst Blog

Shanghai-based Home Inns & Hotels Management Inc (HMIN) is all set to capitalize on China's secular growth story by further increasing its presence in that country. Home Inns is planning to expand its portfolio in China from 818 hotels in 2010 to 1,100 by the end of 2011.

The company is targeting to open 260 to 280 hotels in 2011, as compared to 208 hotels opened in 2010, thus expanding its portfolio by more than 30% in China. Home Inns will open 100 to 110 new hotels as leased-and-operated hotels and 160 to 170 as franchised-and-managed hotels.

The company slowed down its growth in 2009 as the hotel industry faced extremely tough challenges due to the economic turmoil that resulted in weak labor and tight credit markets, resulting in lower discretionary spending. However, with the gradual recovery of the global economy, Home Inns is all geared up to accelerate its growth momentum.

China is expected to be the world's largest travel destination by 2020 and the opening of new hotels in China will boost HMIN's market share. Moreover, we believe that the company will be able to achieve its target  in 2011 based on its strong financial position and development team.

The demand for hotels is higher in the international market than in the U.S., where the pace of economic recovery is particularly fast. Many U.S. companies are targeting the emerging economies for expanding their base. The Asia-Pacific region, including China and India, specifically promises solid growth. So its peer companies Starwood Hotels and Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) are also increasing their presence in this region.

 
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