Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | China Lodging Group, Ltd |
Entity Central Index Key | 1,483,994 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 278,282,366 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | FY |
Trading Symbol | HTHT |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Current assets: | |||
Cash and cash equivalents | $ 465,938 | ¥ 3,235,007 | ¥ 1,237,838 |
Restricted cash | 72 | 500 | 360,500 |
Short-term investments measured at fair value | 506,407 | ||
Accounts receivable, net of allowance of RMB5,559 and RMB11,424 as of December 31, 2015 and 2016, respectively | 20,402 | 141,649 | 93,956 |
Loan receivables | 3,228 | 22,410 | 26,808 |
Amounts due from related parties | 14,180 | 98,453 | 16,157 |
Prepaid rent | 64,256 | 446,127 | 429,588 |
Inventories | 3,112 | 21,606 | 24,529 |
Other current assets | 30,091 | 208,929 | 167,995 |
Total current assets | 601,279 | 4,174,681 | 2,863,778 |
Property and equipment, net | 534,419 | 3,710,468 | 3,805,886 |
Intangible assets, net | 49,358 | 342,694 | 144,812 |
Land use rights | 20,959 | 145,521 | |
Long-term investments, including marketable securities measured at fair value of RMB 166,546 and RMB204,945 as of December 31, 2015 and 2016, respectively | 153,294 | 1,064,321 | 344,242 |
Goodwill | 24,702 | 171,504 | 108,344 |
Loan receivables | 1,047 | 7,269 | 12,336 |
Other assets | 28,877 | 200,492 | 195,446 |
Deferred tax assets | 25,409 | 176,414 | 218,677 |
Total assets | 1,439,344 | 9,993,364 | 7,693,521 |
Current liabilities: | |||
Short-term debt | 42,963 | 298,291 | 324,680 |
Accounts payable | 84,219 | 584,731 | 585,347 |
Amounts due to related parties | 1,593 | 11,058 | 7,653 |
Salary and welfare payables | 39,501 | 274,259 | 210,955 |
Deferred revenue | 107,993 | 749,793 | 705,607 |
Accrued expenses and other current liabilities | 129,027 | 895,837 | 576,160 |
Dividends payable | 276,261 | ||
Income tax payable | 21,909 | 152,112 | 102,810 |
Total current liabilities | 427,205 | 2,966,081 | 2,789,473 |
Deferred rent | 147,464 | 1,023,843 | 945,192 |
Deferred revenue | 24,048 | 166,963 | 180,861 |
Other long-term liabilities | 46,664 | 323,991 | 275,954 |
Deferred tax liabilities | 13,874 | 96,329 | 61,293 |
Total liabilities | 659,255 | 4,577,207 | 4,252,773 |
Commitments and contingencies (Note 23) | |||
Equity: | |||
Ordinary shares (US$0.0001 par value per share; 8,000,000,000 shares authorized; 253,978,323 and 281,379,130 shares issued as of December 31, 2015 and 2016, and 250,881,559 and 278,282,366 shares outstanding as of December 31, 2015 and 2016, respectively) | 29 | 204 | 186 |
Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2015 and 2016, respectively) | (15,459) | (107,331) | (107,331) |
Additional paid-in capital | 532,776 | 3,699,056 | 2,470,099 |
Retained earnings | 261,007 | 1,812,174 | 1,007,559 |
Accumulated other comprehensive income (loss) | (649) | (4,503) | 59,596 |
Total China Lodging Group, Limited shareholders' equity | 777,704 | 5,399,600 | 3,430,109 |
Noncontrolling interest | 2,385 | 16,557 | 10,639 |
Total equity | 780,089 | 5,416,157 | 3,440,748 |
Total liabilities and equity | $ 1,439,344 | ¥ 9,993,364 | ¥ 7,693,521 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥)shares |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance | ¥ | ¥ 11,424 | ¥ 5,559 |
Long-term investments, marketable securities measured at fair value | ¥ | ¥ 204,945 | ¥ 166,546 |
Ordinary shares, shares authorized | 8,000,000,000 | 8,000,000,000 |
Ordinary shares, shares issued | 281,379,130 | 253,978,323 |
Ordinary shares, shares outstanding | 278,282,366 | 250,881,559 |
Treasury stock, shares | 3,096,764 | 3,096,764 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)¥ / sharesshares | Dec. 31, 2014CNY (¥)¥ / sharesshares | |
Revenues: | ||||
Leased and owned hotels | $ 750,743 | ¥ 5,212,405 | ¥ 4,986,872 | ¥ 4,522,431 |
Manachised and franchised hotels | 203,249 | 1,411,156 | 1,123,979 | 742,797 |
Others | 4,496 | 31,219 | ||
Total revenues | 958,488 | 6,654,780 | 6,110,851 | 5,265,228 |
Less: Business tax and related taxes | 16,729 | 116,149 | 336,227 | 300,500 |
Net revenues | 941,759 | 6,538,631 | 5,774,624 | 4,964,728 |
Operating costs and expenses: | ||||
Hotel operating costs | 710,381 | 4,932,173 | 4,512,147 | 3,878,027 |
Other operating costs | 1,095 | 7,606 | ||
Selling and marketing expenses | 21,104 | 146,525 | 179,568 | 187,435 |
General and administrative expenses | 70,883 | 492,141 | 403,008 | 342,128 |
Pre-opening expenses | 10,348 | 71,847 | 110,011 | 186,325 |
Total operating costs and expenses | 813,811 | 5,650,292 | 5,204,734 | 4,593,915 |
Other operating income (expenses), net | (2,512) | (17,440) | 31,264 | 18,551 |
Income from operations | 125,436 | 870,899 | 601,154 | 389,364 |
Interest income | 9,703 | 67,366 | 26,712 | 23,162 |
Interest expense | 1,592 | 11,056 | 3,854 | 1,533 |
Other income, net | 19,265 | 133,755 | 6,979 | 2,884 |
Foreign exchange gain (loss) | 2,373 | 16,481 | 7,814 | (246) |
Income before income taxes | 155,185 | 1,077,445 | 638,805 | 413,631 |
Income tax expense | 41,354 | 287,120 | 196,529 | 113,105 |
Loss (income) from equity method investments | 886 | 6,157 | (2,896) | 1,865 |
Net income | 114,717 | 796,482 | 439,380 | 302,391 |
Less: net income (loss) attributable to noncontrolling interest | (1,171) | (8,133) | 2,780 | (4,957) |
Net income attributable to China Lodging Group, Limited | 115,888 | 804,615 | 436,600 | 307,348 |
Other comprehensive income | ||||
Unrealized securities holding gains, net of tax of 9,485, 7,151 and (1,810) for 2014, 2015 and 2016 | 2,369 | 16,449 | 68,069 | 28,458 |
Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income | (9,783) | (67,921) | ||
Foreign currency translation adjustments, net of tax of nil for 2014, 2015 and 2016 | (1,819) | (12,627) | 3,535 | (1,082) |
Comprehensive income | 105,484 | 732,383 | 510,984 | 329,767 |
Comprehensive income (loss) attributable to the noncontrolling interest | (1,171) | (8,133) | 2,780 | (4,957) |
Comprehensive income attributable to China Lodging Group, Limited | $ 106,655 | ¥ 740,516 | ¥ 508,204 | ¥ 334,724 |
Earnings per share: | ||||
Basic (in RMB and dollars per share) | (per share) | $ 0.42 | ¥ 2.92 | ¥ 1.74 | ¥ 1.23 |
Diluted (in RMB and dollars per share) | (per share) | $ 0.41 | ¥ 2.84 | ¥ 1.70 | ¥ 1.21 |
Weighted average number of shares used in computation: | ||||
Basic (in shares) | 275,139,070 | 275,139,070 | 250,533,204 | 248,957,645 |
Diluted (in shares) | 282,889,494 | 282,889,494 | 256,104,167 | 253,004,204 |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized securities holding gains (loss), tax | ¥ (1,810) | ¥ 7,151 | ¥ 9,485 |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Thousands, $ in Thousands | Ordinary SharesCNY (¥)shares | Treasury SharesCNY (¥)shares | Additional Paid-in CapitalCNY (¥) | Retained EarningsCNY (¥) | Accumulated Other Comprehensive LossCNY (¥) | Noncontrolling InterestCNY (¥) | USD ($)shares | CNY (¥)shares |
Balance at Dec. 31, 2013 | ¥ 182 | ¥ 2,315,083 | ¥ 539,872 | ¥ (39,384) | ¥ 12,038 | ¥ 2,827,791 | ||
Balance (in shares) at Dec. 31, 2013 | shares | 247,551,999 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 2 | 20,851 | 20,853 | |||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 3,144,224 | |||||||
Issuance of ordinary shares in exchange of service | 2,000 | 2,000 | ||||||
Issuance of ordinary shares in exchange of service (in shares) | shares | 51,032 | |||||||
Share-based compensation | 31,937 | 31,937 | ||||||
Excess tax benefit from share-based compensation | 11,697 | 11,697 | ||||||
Noncontrolling interest recognized in connection with acquisitions | 25 | 25 | ||||||
Net income | 307,348 | (4,957) | 302,391 | |||||
Unrealized securities holding gains (loss), net of tax | 28,458 | 28,458 | ||||||
Dividend paid to noncontrolling interest holders | (5,357) | (5,357) | ||||||
Foreign currency translation adjustments | (1,082) | (1,082) | ||||||
Balance at Dec. 31, 2014 | ¥ 184 | 2,381,568 | 847,220 | (12,008) | 1,749 | 3,218,713 | ||
Balance (in shares) at Dec. 31, 2014 | shares | 250,747,255 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 2 | 23,158 | 23,160 | |||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 3,231,068 | |||||||
Share-based compensation | 52,535 | 52,535 | ||||||
Excess tax benefit from share-based compensation | 12,838 | 12,838 | ||||||
Noncontrolling interest recognized in connection with acquisitions | 8,264 | 8,264 | ||||||
Net income | 436,600 | 2,780 | 439,380 | |||||
Unrealized securities holding gains (loss), net of tax | 68,069 | 68,069 | ||||||
Dividend paid to noncontrolling interest holders | (4,604) | (4,604) | ||||||
Capital contribution from noncontrolling interest holders | 2,450 | 2,450 | ||||||
Repurchase of shares | ¥ (107,331) | (107,331) | ||||||
Repurchase of shares (in shares) | shares | (3,096,764) | |||||||
Cash dividends declared | (276,261) | (276,261) | ||||||
Foreign currency translation adjustments | 3,535 | 3,535 | ||||||
Balance at Dec. 31, 2015 | ¥ 186 | ¥ (107,331) | 2,470,099 | 1,007,559 | 59,596 | 10,639 | ¥ 3,440,748 | |
Balance (in shares) at Dec. 31, 2015 | shares | 253,978,323 | 253,978,323 | 253,978,323 | |||||
Treasury shares, balance (in shares) at Dec. 31, 2015 | shares | (3,096,764) | (3,096,764) | (3,096,764) | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 2 | 10,581 | ¥ 10,583 | |||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 2,505,264 | |||||||
Issuance of ordinary shares for acquisition | ¥ 16 | 1,143,505 | 1,143,521 | |||||
Issuance of ordinary shares for acquisition (in shares) | shares | 24,895,543 | |||||||
Share-based compensation | 55,436 | 55,436 | ||||||
Excess tax benefit from share-based compensation | 18,645 | 18,645 | ||||||
Net income | 804,615 | (8,133) | $ 114,717 | 796,482 | ||||
Unrealized securities holding gains (loss), net of tax | 16,449 | 2,369 | 16,449 | |||||
Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income | (67,921) | (9,783) | (67,921) | |||||
Dividend paid to noncontrolling interest holders | (3,677) | (3,677) | ||||||
Capital contribution from noncontrolling interest holders | 790 | 44,814 | 45,604 | |||||
Dispose of non-controlling interest for deconsolidation | (27,086) | (27,086) | ||||||
Foreign currency translation adjustments | (12,627) | (1,819) | (12,627) | |||||
Balance at Dec. 31, 2016 | ¥ 204 | ¥ (107,331) | ¥ 3,699,056 | ¥ 1,812,174 | ¥ (4,503) | ¥ 16,557 | $ 780,089 | ¥ 5,416,157 |
Balance (in shares) at Dec. 31, 2016 | shares | 281,379,130 | 281,379,130 | 281,379,130 | |||||
Treasury shares, balance (in shares) at Dec. 31, 2016 | shares | (3,096,764) | (3,096,764) | (3,096,764) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Operating activities: | ||||
Net income | $ 114,717 | ¥ 796,482 | ¥ 439,380 | ¥ 302,391 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Share-based compensation | 7,984 | 55,436 | 52,535 | 31,937 |
Depreciation and amortization | 100,086 | 694,894 | 661,404 | 570,722 |
Deferred taxes | 4,817 | 33,446 | (50,149) | (42,391) |
Bad debt expenses | 156 | 1,082 | 1,997 | 4,770 |
Deferred rent | 14,881 | 103,322 | 130,301 | 182,580 |
Loss (gain) from disposal of property and equipment | 1,344 | 9,333 | (5,519) | 803 |
Impairment loss | 22,143 | 153,741 | 95,608 | 27,391 |
Loss (Income) from equity method investments | (886) | (6,157) | 2,896 | (1,865) |
Investment loss (income) | (16,817) | (116,763) | (2,767) | (3,037) |
Excess tax benefit from share-based compensation | (2,685) | (18,645) | (12,838) | (11,697) |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||
Accounts receivable | (6,656) | (46,211) | (5,749) | (18,773) |
Prepaid rent | (3,655) | (25,380) | (44,430) | (21,577) |
Inventories | 565 | 3,923 | 5,952 | 4,130 |
Amounts due from related parties | (1,341) | (9,314) | 256 | |
Other current assets | (5,878) | (40,813) | (15,518) | (42,369) |
Other assets | (727) | (5,046) | 1,787 | (13,220) |
Accounts payable | 8,516 | 59,129 | 14,194 | 18,016 |
Amounts due to related parties | 1,079 | 7,489 | 1,250 | 810 |
Salary and welfare payables | 8,738 | 60,669 | 24,532 | 38,813 |
Deferred revenue | 2,813 | 19,529 | 216,805 | 253,562 |
Accrued expenses and other current liabilities | 29,145 | 202,351 | 121,502 | 58,995 |
Income tax payable | 9,230 | 64,087 | 56,019 | 45,274 |
Other long-term liabilities | 7,355 | 51,072 | 60,481 | 68,494 |
Net cash provided by operating activities | 294,924 | 2,047,656 | 1,749,673 | 1,454,015 |
Investing activities: | ||||
Purchases of property and equipment for hotels in operation and headquarters | (42,684) | (296,353) | (315,117) | (282,467) |
Purchases of property and equipment for hotels under development | (29,783) | (206,783) | (325,105) | (648,455) |
Purchases of intangibles | (1,953) | (13,557) | (8,818) | (10,423) |
Amount received as a result of government zoning | 302 | 2,099 | 6,721 | 10,557 |
Acquisitions, net of cash received | 18,940 | 131,501 | (19,153) | (16,050) |
Proceeds from disposal of subsidiary and branch, net of cash disposed | (2,977) | (20,668) | 5,000 | 18,484 |
Purchases of long-term investments | (42,219) | (293,125) | (105,707) | (191,064) |
Proceeds from maturity/sale of long-term investments | 2,138 | 14,842 | 14,410 | 88,266 |
Payment for shareholder loan to joint venture | (5,673) | (39,387) | (1,386) | (15,640) |
Collection of shareholder loan from joint venture | 1,337 | 9,285 | 1,522 | |
Purchases of short-term investments | (434,811) | (75,210) | ||
Proceeds from maturity/sale of short-term investments | 75,824 | 526,443 | 55,499 | |
Payment for the origination of loan receivables | (5,246) | (36,420) | (53,000) | |
Proceeds from collection of loan receivables | 6,609 | 45,885 | 45,587 | |
Decrease (increase) in restricted cash | 51,851 | 360,000 | (360,500) | 3,317 |
Net cash provided by (used in) investing activities | 26,466 | 183,762 | (1,550,357) | (1,063,186) |
Financing activities: | ||||
Net proceeds from issuance of ordinary shares upon exercise of options | 1,759 | 12,206 | 22,619 | 20,985 |
Payment of share repurchase | (107,331) | |||
Proceeds from short-term debt | 40,576 | 281,719 | 589,376 | 300,000 |
Repayment of short-term debt | (47,898) | (332,555) | (283,516) | (300,000) |
Funds advanced from noncontrolling interest holders | 1,650 | 11,453 | 5,432 | |
Repayment of funds advanced from noncontrolling interest holders | (86) | (600) | (900) | (1,559) |
Acquisitions of noncontrolling interest | (588) | (4,083) | (4,083) | (4,083) |
Contribution from noncontrolling interest holders | 6,568 | 45,604 | 2,450 | |
Dividend paid to noncontrolling interest holders | (530) | (3,677) | (4,604) | (5,357) |
Dividend paid | (39,790) | (276,261) | ||
Excess tax benefit from share-based compensation | 2,685 | 18,645 | 12,838 | 11,697 |
Net cash provided by (used in) financing activities | (35,654) | (247,549) | 232,281 | 21,683 |
Effect of exchange rate changes on cash and cash equivalents | 1,916 | 13,300 | (2,624) | (1,082) |
Net increase (decrease) in cash and cash equivalents | 287,652 | 1,997,169 | 428,973 | 411,430 |
Cash and cash equivalents at the beginning of the year | 178,286 | 1,237,838 | 808,865 | 397,435 |
Cash and cash equivalents at the end of the year | 465,938 | 3,235,007 | 1,237,838 | 808,865 |
Supplemental disclosure of cash flow information: | ||||
Interest paid, net of amounts capitalized | 1,356 | 9,415 | 3,854 | 1,533 |
Income taxes paid | 26,561 | 184,414 | 190,660 | 110,222 |
Supplemental schedule of non-cash investing and financing activities: | ||||
Purchases of property and equipment included in payables | 65,286 | 453,281 | 513,168 | 585,119 |
Consideration payable for business acquisition | 24,890 | 172,813 | 113,458 | 7,560 |
Purchase of intangible assets included in payables | 1,047 | 7,267 | 7,646 | 8,682 |
Reimbursement of government zoning included in receivables | 389 | 2,700 | 2,099 | 1,000 |
Proceeds from disposal of subsidiary and branch included in receivables | 5,000 | |||
Acquisition of noncontrolling interest included in payables | ¥ 4,083 | ¥ 8,167 | ||
Issuance of ordinary shares for acquisition | $ 164,701 | ¥ 1,143,521 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES China Lodging Group, Limited (the “Company”) was incorporated in the Cayman Islands under the laws of the Cayman Islands on January 4, 2007. The principal business activities of the Company and its subsidiaries (the “Group”) are to develop leased and owned, manachised and franchised hotels under the “Joya Hotel”, “Manxin Hotels & Resorts “, “JI Hotel”, “Starway Hotel” , “HanTing Hotel”, “Elan Hotel” and “Hi Inn” brands in the People’s Republic of China (“PRC”). The Group 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. Leased and owned hotels The Group leases hotel properties from property owners or purchases properties directly and is responsible for all aspects of hotel operations and management, including hiring, training and supervising the managers and employees required to operate the hotels. In addition, the Group is responsible for hotel development and customization to conform to the standards of the Group brands at the beginning of the lease or the construction, as well as repairs and maintenance, operating expenses and management of properties over the term of the lease or the land and building certificate. Under the lease arrangements, the Group typically receives rental holidays of two to six months and pays rent on a quarterly or biannual basis. Rent is typically subject to the fixed escalations of three to five percent every three to five years. The Group recognizes rental expense on a straight-line basis over the lease term. As of December 31, 2015 and 2016, the Group had 616 and 624 leased and owned hotels in operation, respectively. Manachised and franchised hotels Typically the Group enters into certain franchise and management arrangements with franchisees for which the Group is responsible for providing branding, quality assurance, training, reservation, hiring and appointing of the hotel general manager and various other support services relating to the hotel renovation and operation. Those hotels are classified as manachised hotels. Under typical franchise and management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees, the majority of which are equal to a certain percentage of the revenues of the hotel. The franchisee is responsible for the costs of hotel development, renovation and the costs of its operations. The term of the franchise and management agreements are typically eight to ten years and are renewable upon mutual agreement between the Group and the franchisee. The Group also has some franchised hotels in which cases the Group does not provide a hotel general manager. As of December 31, 2015 and 2016, the Group had 2,067 and 2,471 manachised hotels in operation and 80 and 174 franchised hotels in operation, respectively. |
SUMMARY OF PRINCIPAL ACCOUNTING
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). Basis of consolidation The consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances are eliminated on consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses and has the rights to receive benefits that are potentially significant to the entities. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels to identify potential variable interest entities. Generally, these entities qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets, long lived assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include the useful lives and impairment of property and equipment and intangible assets, valuation allowance of deferred tax assets, purchase price allocation, impairment of goodwill, share-based compensation and costs related to its customer loyalty program. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. Restricted cash Restricted cash mainly represents deposits used as security against borrowings and deposits restricted due to contract disputes or lawsuit. Investments Investments represent available-for-sale securities, cost-method investments, and equity-method investments Investments in equity securities that have readily determinable fair values are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses recorded as a component of other comprehensive income or loss. Realized gains or losses are recognized in the consolidated statements of comprehensive income during the period in which the gains or losses are realized. If the Group determines that a decline in the fair value of the individual available-for-sale security is other-than-temporary, the cost basis of the security is written down to the fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss. The new cost basis will not be changed for subsequent recoveries in fair value. The Group reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to: (1) the nature of the investment; (2) the cause and duration of the impairment; (3) the extent to which fair value is less than cost; (4) financial conditions and near term prospects of the issuers; and (5) the Group’s ability to hold the security for a period of time sufficient to allow for any anticipated recovery of its amortized cost or fair value. Available-for-sale securities not expected to be realized in cash or sold in the next normal operating cycle of the business are classified as long-term investments. The Group accounts for the investment in a private entity of which the Group owns less than 20% of the voting securities and does not have the ability to exercise significant influence over operating and financial policies of the entity as cost-method investment. The Group’s cost-method investment is carried at historical cost in its consolidated financial statements and measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the excess of the investment’s cost over its fair value when the impairment is deemed other-than-temporary. The Group accounts for the investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than- temporary. As a result of the impairment analysis, the Group recorded an impairment of RMB3,208, in 2016. No impairment charge was recorded in 2014 or 2015. Accounts receivable, net of allowance Trade receivables mainly consist of franchise fee receivables, amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Group establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers. Loan receivables Loan receivables are measured at amortized cost with interest accrued based on the contract rate. The Group classified loan receivables as long-term or short-term investments according to their contractual maturity or expected holding time. The Group evaluates the credit risk associated with the loans, and estimates the cash flow expected to be collected over the life of loans on an individual basis based on the Group’s past experiences, the borrowers’ financial position, their financial performance and their ability to continue to generate sufficient cash flows. A valuation allowance will be established for the loans unable to collect. No valuation allowance has been recorded in 2014, 2015 or 2016 based on the result of the assessment. Inventories Inventories mainly consist of small appliances, bedding and daily consumables. Small appliances and bedding for new hotels opened are stated at cost, less accumulated amortization, and are amortized over their estimated useful lives, generally one year, from the time they are put into use. Daily consumables and beddings replacement are expensed when used. Property and equipment, net Property and equipment, net are stated at cost less accumulated depreciation and amortization. The renovations, betterments and interest cost incurred during construction are capitalized. Depreciation and amortization of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 3-5 years Motor vehicles 5 years Construction in progress represents leasehold improvements under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying amount of the underlying asset. Intangible assets, net and unfavorable lease Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise agreements and favorable leases acquired in business combinations and purchased software. Intangible assets acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets, including brand name, master brand agreement, non-compete agreements, franchise agreements and favorable lease agreements acquired from business combination are recognized and measured at fair value upon acquisition. Non-compete agreements, franchise agreements and favorable lease agreements are amortized over the expected useful life, remaining franchise contract terms and remaining operating lease terms. Unfavorable lease agreements from business combination transactions are recognized as other long-term liabilities and are amortized over the remaining operating lease terms. Purchased software is stated at cost less accumulated amortization. Brand name is considered to have an indefinite life. Master brand agreement, acquired in Accor acquisition (Note 3), granted the Group the exclusive franchise rights in respect of “Mercure”, “Ibis” and “Ibis Styles” in the PRC, Taiwan and Mongolia and the non-exclusive franchise rights in respect of “Grand Mercure” and “Novotel” in the PRC, Taiwan and Mongolia with initial term of 70 years, and can be renewed without substantial obstacles. As a result, the useful life is also determined to be indefinite. The Group evaluates the brand name and master brand agreement each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Impairment is tested annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group measures the impairment by comparing the fair value of brand name and master brand agreement with its carrying amount. If the carrying amount of brand name and master brand agreement exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The Group measured the fair value of the brand name under the relief-from-royalty method and the master brand agreement under the multi-period excess earnings method. Management performs its annual brand name and master brand agreement impairment test on November 30. Land use rights Land use rights, which are all located in PRC, are recorded at cost and amortized on a straight-line basis over the remaining term of the land certificates, between 30 to 50 years. Impairment of long-lived assets The Group evaluates its long-lived assets and finite lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the property and equipment exceed the future undiscounted net cash flows, and recognized an impairment loss of RMB27,203, RMB93,163 and RMB150,533 during the year ended December 31, 2014, 2015 and 2016, respectively. Fair value of the property and equipment was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group completes a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized in general and administrative expenses for any excess in the carrying value of goodwill over the implied fair value of goodwill. Management performs its annual goodwill impairment test on November 30. The Group recognized goodwill impairment of RMB188, RMB2,445 and nil for years ended December 31, 2014, 2015 and 2016, respectively. Accruals for customer loyalty program The Group invites its customers to participate in a customer loyalty program. The membership has an unlimited life. Members enjoy favorable treatment such as more convenient check-out procedures and late check-out, discounts on room rates and accumulate membership points for their paid stays or their purchasing of products and services provided in the hotels, which can be redeemed for offset the room charges, or used to buy products in Hua Zhu mall within two years after the points are earned. The estimated incremental costs to provide room night awards and other products are accrued and recorded as accruals for customer loyalty program as members accumulate points and are recognized as cost and expense in the accompanying consolidated statements of comprehensive income. As members redeem awards or their entitlements expire, the provision is reduced correspondingly. As of December 31, 2015 and 2016, the accruals for estimated liabilities under the customer loyalty program amounted to RMB113,749 and RMB121,066, respectively. Deferred revenue Deferred revenue generally consists of non-refundable advances received from customers for rental of rooms, cash received for membership fees and initial franchise fees received prior to the Group fulfilling its commitments to the franchisees. Revenue recognition Revenue from leased and owned hotels is derived from hotel operations, mainly including the rental of rooms, food and beverage sales and souvenir sales. Revenue is recognized when rooms are occupied and food and beverages and souvenirs are sold. Revenues from manachised and franchised hotels are derived from franchise agreements where the franchisees are primarily required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) on-going management and service fees mainly based on a certain percentage of the room revenues of the franchised hotels, and (b) system maintenance, support fees and central reservation system usage fees. The one-time franchise fee is recognized when the manachised and franchised hotel opens for business, the fee becomes non-refundable, and the Group has fulfilled all its commitments and obligations, including the assistance to the franchisees in property design, leasehold improvement construction project management, systems installation and personnel recruiting and training. The ongoing management and service fees are recognized when the underlying service revenue is recognized by the franchisees’ operations. The system maintenance, support fee and central reservation system usage fee is recognized over the period when services are provided. In addition, the Group accounts for hotel manager fees related to the manachised hotels under the franchise program as revenues. Pursuant to the franchise agreements, the Group charges the franchisees fixed hotel manager fees to cover the manachised hotel managers’ payroll, social welfare benefits and certain other out-of-pocket expenses that the Group incurs on behalf of the manachised hotels. The hotel manager fee is recognized as revenue monthly. During the years ended December 31, 2014, 2015 and 2016, the hotel manager fees that were recognized as revenue were RMB166,572, RMB261,743 and RMB321,346, respectively. Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. Such duration is estimated based on the Group’s and management’s experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be two to five years which reflects the expected membership retention. Revenues recognized from the customer loyalty program were RMB107,737, RMB130,644 and RMB145,459 for the years ended December 31, 2014, 2015 and 2016, respectively. Other revenues are derived from activities 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. Revenues from Hua Zhu mall are commissions charged from suppliers for goods sold through the platform and are recognized upon delivery of goods to end customers when its suppliers’ obligation is fulfilled and collectability is reasonably assured. Revenues from IT products are recognized when goods are delivered and revenues from IT services are recognized when services are rendered. Business tax and related taxes The Group is subject to business tax, education surtax and urban maintenance and construction tax, on the services provided in the PRC. Such taxes are primarily levied based on revenue at applicable rates and are recorded as a reduction of revenues. On 24 March 2016, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly published Caishui [2016] No. 36 (Circular 36), which provides the detailed implementation guidance on the further rollout of the Value-Added Tax (VAT) reform to sectors such as construction, real estate, financial services and lifestyle services. Circular 36 takes effect from 1 May 2016. Lifestyle services have a broad coverage to include a variety of services which are to meet the daily needs of the residents, and accommodation and associated services are included in such category with the applicable tax rate of 6%. As such, starting from May 2016, the accommodation services of the Group are subject to 6% of VAT. Advertising and promotional expenses Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the consolidated statements of comprehensive income as incurred, and amounted to RMB79,806, RMB47,971 and RMB64,666 for the years ended December 31, 2014, 2015 and 2016, respectively. Government grants Government grants represent cash received by the Group in the PRC from local governments as incentives for investing in certain local districts, and are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. The local governments have final discretion as to whether the Group has met all criteria to be entitled to the subsidies. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized were RMB19,657, RMB28,188 and RMB83,498 for the years ended December 31, 2014, 2015 and 2016, respectively, which were recorded as other operating income. Leases A lease of which substantially all the benefits and risks incidental to ownership remain with the lessor is classified as an operating lease. All leases of the Group are currently classified as operating leases. When a lease contains rent holidays or requires fixed escalations of the minimum lease payments, the Group records the total rental expense on a straight-line basis over the initial lease term and the difference between the straight-line rental expense and cash payment under the lease is recorded as deferred rent. As of December 31, 2015 and 2016, deferred rent of RMB37,224 and RMB37,648 were recorded as other current liabilities and RMB945,192 and RMB1,023,843 were recorded as long-term liabilities, respectively. Capitalization of interest Interest cost incurred on funds used to construct leasehold improvements during the active construction period is capitalized. The interest capitalized is determined by applying the borrowing interest rate to the average amount of accumulated capital expenditures for the assets under construction during the period. The interest expense incurred for the years ended December 31, 2014, 2015 and 2016 were RMB14,733, RMB5,383 and RMB11,056, of which RMB13,200, RMB1,529 and nil were capitalized as additions to assets under construction, respectively. Income taxes Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Foreign currency translation The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar (“US dollar”). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred. Transaction gains and losses are recognized in the statements of comprehensive income. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive loss in the consolidated statements of comprehensive income. The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies. Comprehensive income Comprehensive income includes all changes in equity except for those resulting from investments by owners and distributions to owners and is comprised of net income, foreign-currency translation adjustments and unrealized securities holding gains (losses). Concentration of credit risk Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term and long-term investments, loan receivables, amount due from related parties and accounts receivable. All of the Group’s cash and cash equivalents and restricted cash are held with financial institutions that Group management believes to be high credit quality. In addition, the Group’s investment policy limits its exposure to concentrations of credit risk and the Group’s short-term and long-term investments consist of equity investments in listing and private companies. The Group’s loan receivables are lent to entities with high credit quality. The Group conducts credit evaluations on its group and agency customers and generally does not require collateral or other security from such customers. The Group periodically evaluates the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. Fair value The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The estimated fair value of the Group’s financial instruments of which the inputs used to value are classified as Level 2 and are not reported at fair value, including cash, restricted cash, loan receivables, receivables, payables and accruals, approximates their carrying value due to their short-term nature or because the interest rate approximates market rate. Cost-method investments are presented at cost unless impaired based on the result of impairment assessment, as the investees are all private entities and their fair values are not practicable to obtain without undue cost. As of December 31, 2015 and 2016, cost-method investments were RMB145,302 and RMB172,571, respectively. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. As of December 31, 2015 and 2016, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows: Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value Quoted Prices in Active Significant Other Significant 2015 Short-term available-for-sale securities 2015 Long-term available-for-sale securities 2016 Long-term available-for-sale securities The following table presents the Group’s assets measured at fair value on a non-recurring basis for the years ended December 31, 2014, 2015 and 2016: Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value for Quoted Significant Significant Total 2014 Property and equipment 2014 Goodwill — — 2015 Property and equipment 2015 Goodwill — — 2016 Property and equipment 2016 Long-term investments — — As a result of reduced expectations of future cash flows from certain leased hotels, the Group determined that the hotels property and equipment with a carrying amount of RMB40,764, RMB115,042 and RMB171,239 was not fully recoverable and consequently recorded an impairment charge of RMB27,203, RMB93,163 and RMB150,533 for the years ended December 31, 2014, 2015 and 2016, respectively. The Group also determined that the goodwill amount with a carrying amount of RMB188 and RMB2,445 was impaired as a result of the impairment assessment for the year ended December 31, 2014 and 2015. As a result of the impairment assessment, the Group determined that the long term investment with a carrying amount of RMB3,208 was impaired for the year ended December 31, 2016. Fair value of the property and equipment as well as the reporting units was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. As a result, the Group has determined that the majority of the inputs used to value its long-lived assets held and used and its reporting units are unobservable inputs that fall within Level 3 of the fair value hierarchy. The revenue growth rate and the discount rate were the significant unobservable input used in the fair value measurement, which are 4% and 20%, respectively, for the years ended December 31, 2014, 2015 and 2016. Share-based compensation The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of likely future performance and will be adjusted in future periods based on the actual performance. Compensation expenses for the aw |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS (i) During the years ended December 31, 2014, 2015 and 2016, the Group acquired one individual hotel, one hotel chain and two individual hotels, and two individual hotels for total cash consideration of RMB12,975, RMB127,226 and RMB3,000, respectively. The individual hotels were in the form of leased hotel and the hotel chain acquired contained 13 leased hotels and several manachised and franchised hotels. The business acquisitions were accounted for under purchase accounting. The following is a summary of the fair values of the assets acquired and liabilities assumed: 2014 2015 2016 Amortization Period Current assets Property and equipment 5-10 years Favorable leases remaining lease terms Deferred tax assets — — Franchise agreements — — remaining contracts terms Goodwill — — Other noncurrent assets — — Current liabilities — ) ) Deferred tax liabilities ) ) ) Noncontrolling interest ) ) — Total (ii) In January 2016, the Group completed the transaction of strategic alliance with AccorHotels (“Accor”). Pursuant to the master purchase agreement, the Group acquired 100% equity interest of certain wholly-owned subsidiaries of Accor engaged in the business of owning, leasing franchising, operating and managing hotels under Accor brands in the midscale and economy market in the PRC, Taiwan and Mongolia, as well as a non-controlling stake of 28.16% for Accor Luxury and Upscale hotel operating platform, held by AAPC Hotel Management Limited (“AAPC LUB”) in Greater China. The total consideration consists of consideration amounted to RMB1,143,521 , which was measured at the market price of the 24,895,543 ordinary shares on the issuance date and cash consideration of RMB120,439. The net revenue and net income of the acquirees included in the consolidated statements of operations for the year ended December 31, 2016 were RMB152,595, and RMB64,047, respectively. The following table summarizes unaudited pro forma results of operation for the year ended December 31, 2015 and 2016 assuming that the acquisition occurred as of January 1, 2015. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2015. Year Ended December 31, 2015 2016 Pro forma net revenue Pro forma net income The following is a summary of the fair values of the assets acquired and liabilities assumed: 2016 Amortization Period Current assets Property and equipment 5-30 years Favorable leases remaining lease terms Master brand agreement Land use rights remaining contracts terms Long-term investments Goodwill Other noncurrent assets Current liabilities ) Deferred tax liabilities ) Total Goodwill was recognized as a result of expected synergies from combining operations of the Group and acquired business and other intangible assets that don’t qualify for separate recognition. Goodwill is not amortized and is not deductible for tax purposes. Goodwill is allocated to one single reporting unit. |
SHORT-TERM INVESTMENTS MEASURED
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE | |
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE | 4. SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE The short-term investments measured at fair value as of December 31, 2015 and 2016 were as follows: As of December 31, 2015 2016 HMIN — In 2015, the Group purchased 2,282,951 ADS of HOMEINNS HOTEL GROUP (“HMIN”), a hotel chain listed in NASDAQ in the USA, from open market for consideration of RMB434,811. As of December 31, 2015, the Group holds approximately 4.7% of HMIN’s total outstanding shares. Given the level of investment, the Group accounts for its investment in HMIN as “available-for-sale” and measured the fair value at every period end. The unrealized holding gains and losses for available-for-sale securities are reported in other comprehensive income until realized. As of December 31, 2015, the Group recorded the investment in HMIN at the fair value of RMB506,407, with the fair value increase of RMB46,617 recorded to other comprehensive income. In 2016, the Group sold all the 2,282,951 ADS and reclassified the accumulated unrealized gain of RMB67,921 from other comprehensive income to other income accordingly. |
LOAN RECEIVABLES, CURRENT PORTI
LOAN RECEIVABLES, CURRENT PORTION | 12 Months Ended |
Dec. 31, 2016 | |
LOAN RECEIVABLES, CURRENT PORTION | |
LOAN RECEIVABLES, CURRENT PORTION | 5. LOAN RECEIVABLES, CURRENT PORTION The loan receivables, current portion, as of December 31, 2015 and 2016 were as follows: As of December 31, 2015 2016 Loan receivables from franchisees Loan receivables from other entities Total The Group entered into entrusted loan agreements with certain franchisees with the typical terms to be two to three years and annual interest rates ranging from 8.0% to 8.5%, among which those with due date within 12 months were classified as short-term loan receivables. The Group recognized RMB184, RMB1,124 and RMB1,292 interest income for the short-term parts of the loans in 2014, 2015 and 2016, respectively. Loan receivables from other entities represents the loans the Company lent to other un-related private entities with the annual interest rates ranging from 0% to 12% with the due date within 12 months. The Group recognized RMB91, RMB2,273 and RMB1,186 interest income for the loans in 2014, 2015 and 2016, respectively. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following: As of December 31, 2015 2016 Cost: Buildings Leasehold improvements Furniture, fixtures and equipment Motor vehicles Less: Accumulated depreciation ) ) Construction in progress Property and equipment, net Depreciation expense was RMB559,918, RMB648,277 and RMB673,784 for the years ended December 31, 2014, 2015 and 2016, respectively. The Group occasionally demolishes certain leased hotels due to local government zoning requirements, which typically results in receiving compensation from the government. In 2014, the Group demolished one leased hotel due to local government zoning requirements. As a result, the Group wrote off property and equipment of RMB3,971 associated with this hotel and recognized a gain of RMB33 as other operating income with RMB4,004 cash received. In 2015, the Group demolished one leased hotel due to local government zoning requirements. As a result, the Group wrote off property and equipment of RMB2,301 associated with this hotel and recognized a gain of RMB5,519 as other operating income with RMB5,721 and RMB2,099 cash received in 2015 and 2016, respectively. In 2016, the Group demolished two leased hotels due to local government zoning requirements. As a result, the Group wrote off property and equipment of RMB9,905 associated with these hotels and recognized loss of RMB7,205 as other operating loss, which is net of RMB2,700 has been recorded as a receivable in other current assets as of December 31, 2016. As of December 31, 2016, the Group has been formally notified by local government authorities that two additional leased hotels of the Group will likely be demolished due to local government zoning requirements. The aggregate carrying amount of property and equipment at the associated hotels was RMB7,749 as of December 31, 2016. Neither of the associated hotels has recorded intangible assets or goodwill. The Group has not recognized any impairment as expected cash flows from the hotels’ operations prior to demolition and expected amounts to be received as a result of the demolition will likely exceed the carrying value of such assets. The Group estimated amounts to be received based on the relevant PRC laws and regulations, terms of the lease agreements, and the prevailing market practice. |
INTANGIBLE ASSETS, NET AND UNFA
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE | 12 Months Ended |
Dec. 31, 2016 | |
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE | |
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE | 7. INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE Intangible assets, net consist of the following: As of December 31, 2015 2016 Intangible assets with indefinite life: Brand name Master brand agreement (Note 3) — Intangible assets with definite life: Franchise agreements Non-compete agreement Favorable lease agreements Purchased software Total Less: Accumulated amortization ) ) Total Unfavorable lease As of December 31, 2015 2016 Unfavorable lease agreements Less: Accumulated amortization ) ) Unfavorable lease agreements, net The values of favorable lease agreements were determined based on the estimated present value of the amount the Group has avoided paying as a result of entering into the lease agreements. Unfavorable lease agreements were determined based on the estimated present value of the acquired lease that exceeded market prices and are recognized as other long-term liabilities. The value of favorable and unfavorable lease agreements is amortized using the straight-line method over the remaining lease term. Amortization expense of intangible assets for the years ended December 31, 2014, 2015 and 2016 amounted to RMB11,101, RMB13,415 and RMB17,173, respectively. The annual estimated amortization expense for the above intangible assets and unfavorable lease for the following years is as follows: Amortization for Amortization for Net Amortization 2017 ) 2018 ) 2019 ) 2020 ) 2021 ) Thereafter ) Total ) |
LAND USE RIGHTS
LAND USE RIGHTS | 12 Months Ended |
Dec. 31, 2016 | |
LAND USE RIGHTS | |
LAND USE RIGHTS | 8. LAND USE RIGHTS Land use rights consist of the following: As of December 31, 2015 2016 Land use rights (Note 3) — Less: Accumulated amortization — ) Total — Amortization expense of land use rights for the year ended December 31, 2016 amounted to RMB4,147. |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM INVESTMENTS | |
LONG-TERM INVESTMENTS | 9. LONG-TERM INVESTMENTS The long-term investments as of December 31, 2015 and 2016 were as follows: As of December 31, 2015 2016 Available-for-sale securities: Quanjude Tang Palace — Banyan Tree — Cjia — Cost-method investments: UBOX/BJ UBOX BJ GOOAGOO/GOOAGOO Founder Service Qingpu Other investments — Equity-method investments: Sheen Star Yibang — Distrii — AAPC LUB — China Young — CREATER — Other investments Total Available-for-sale securities: In June 2014, the Group purchased 7,241,131 ordinary shares of China Quanjude (Group) Co., Ltd. (“Quanjude”), a top restaurant brand listed in Shenzhen Stock Exchange in China, through a private placement. The purchase price was set at RMB13.81 per ordinary share and the total purchase cost was RMB100 million. Upon the closing of the transaction described above, the Group holds approximately 2.35% of Quanjude’s total outstanding shares. In 2016, the Group purchased 8,430,000 ordinary shares of Hong Kong Tang Palace Food & Beverage Group (“Tang Palace”), a top restaurant brand listed in Hong Kong Stock Exchange in China, from open market for consideration of RMB16,887. As of December 31, 2016, the Group holds approximately 1.99% of Tang Palace’s total outstanding shares. In December 2016, the Group purchased 11,635,400 ordinary shares of Banyan Tree Holdings Limited (“Banyan Tree “), a leading, international hospitality brand that manages and develops premium resorts, hotels and spas listed in Singapore Stock Exchange in Singapore, from open market for consideration of RMB27,328. As of December 31, 2016, the Group holds approximately 1.53% of Banyan Tree’s total outstanding shares. Given the level of investments, the Group accounts for its investments in Quanjude, Tang Palace, and Banyan Tree as “available-for-sale” and measured the fair value at every period end. The unrealized holding gains and losses for available-for-sale securities are reported in other comprehensive income until realized. For the years ended December 31, 2015 and 2016, the Group recorded RMB21,451 increase and RMB4,856 decrease in fair value of these available-for-sale securities, net of tax, in other comprehensive income, respectively. In 2016, the Group sold its subsidiary- Chengjia Hotel Management Co., Ltd. to Chengjia (Shanghai) Apartment management Co., Limited (“Cjia”), the Group’s equity investee. As a result, the Group recognized a gain of RMB49,630 in other income. As of December 31, 2016, the Group had approximately 22.52% equity interest of Cjia and also a sixty-month convertible note with original value of RMB 51,200, which is convertible at the option of the Group to ordinary shares at any time, while other investors can also require the Group to convert within the last 12 months of the note. The convertible note is recorded as an available-for-sale investment. The Group recognized its share of loss in Cjia of RMB24,615 in income (loss) from equity method investments in 2016, which reduced the cost of equity-method investment to zero and further adjusted the carrying amount of convertible note balance to RMB42,140. The remaining carrying amount of the convertible note approximated its fair value as of December 31, 2016. Cost-method investments: From 2012 to 2013, the Group invested in preferred shares and convertible promissory notes of UBOX International Holdings Co., Limited (“UBOX”), a privately-held company, with the total consideration of RMB40,517. The convertible notes were subsequently converted to ordinary shares of UBOX in 2013 and 2014. As a result of restructuring of UBOX group, the investment in UBOX has been converted to the investment of ordinary shares of Beijing UBOX On-line Technology Co., Ltd. (“BJ UBOX”). The Group has additionally injected RMB7,703 to BJ UBOX in 2015. As of December 31, 2015 and 2016, the Group had approximately 3.6% and 3.24% equity interest of BJ UBOX, respectively. The investments were accounted for using the cost method since the Group does not have the ability to exert significant influence over the operating and financing activities of UBOX or BJ UBOX. In November 2014, the Group purchased 8% equity interest in Beijing GOOAGOO Technology Service Co., Ltd. (“BJ GOOAGOO”), a high-tech service provider for Offline-To-Online data processing and platform operation, for the consideration of RMB10,289. BJ GOOAGOO started restructuring process in 2015. In September 2015, the Group purchased 45,000,000 series A preferred shares for the consideration of RMB45,000 and RMB4,650 convertible notes in Gooagoo Group Holdings Limited (“GOOAGOO”). Each series A preferred share and convertible note shall be convertible at the option of the holder at any time to ordinary shares. As a result of restructuring of GOOAGOO group in 2016, the Group’s investments in BJ GOOAGOO had been all converted to equity interest of GOOAGOO and had approximately 19.43% equity interest of GOOAGOO as of December 31, 2016. The Group accounted for the investment under cost method since the Group does not have the ability to exert significant influence over those companies. In September 2015, the Group purchased 10% equity interest in Shanghai Founder Service Co., Ltd. (“Founder Service”), a serviced office space provider for newly founded companies, for the consideration of RMB20,000. In October 2016, the Group invested another RMB25,000 to Founder Service, and as of December 31, 2016, the Group had approximately 10.87% equity interest of Founder Service. The Group accounted for the investment under cost method since the Group does not have the ability to exert significant influence over Founder Service. In December 2015, the Group purchased 10% equity interest in Beijing Qingpu Tourism Culture Development Co., Ltd. (“Qingpu”), a cultural activities organizer and tourism service provider, for the consideration of RMB17,143. The Group accounted the investment under cost method since the Group does not have the ability to exert significant influence over Qingpu. Other investments included several insignificant cost method investments in certain privately-held companies. Equity-method investments: In April 2014, the Group set up Sheen Star together with Mr. Qi Ji, the founder, executive chairman of the Group and a third party. Sheen Star is a real estate investment company which the Group contributed RMB20,990 and owned equity interest of 19.99%, and Mr. Qi Ji owned 50.01%. The Group accounted for the investment in Sheen Star under equity-method as the Group has the ability to exert significant influence. The Group recognized investment loss of nil, RMB153 and nil in income (loss) from equity method investments in 2014, 2015 and 2016, respectively. In May 2013, the Group acquired 30% equity interest in Lijiang Yibang Changchunteng Hotel Co., Limited (“Yibang”) for consideration of RMB430. In April 2014, The Group acquired additional 20% equity interest in Yibang for consideration of RMB285. The Group accounted for the investment under equity-method because the Group has the ability to exert significant influence but does not have the control over Yibang. The Group recognized investment income of RMB2,197, investment loss of RMB1,712 and investment loss of RMB770 in 2014, 2015 and 2016, respectively, which was recorded in income (loss) from equity method investments. In June 2016, the Group disposed all the 50% equity interest of Yibang for consideration of RMB715, and recognized gain of RMB715 upon disposition in other income (loss) in 2016. In July 2014, the Group acquired 30% equity interest in Shanghai Campsort Travel Development Co., Ltd. (“Campsort”), a new resort hotel chain in China, for consideration of RMB15,000. In November 2014, the Group transferred 6% equity interest to Shanghai Homeinn Hotel Management Co., Ltd. for consideration of RMB3,000. As of December 31, 2014, the Group held 24% equity interest of Campsort and accounted for the investment under equity-method because the Group has the ability to exert significant influence over Campsort. The Group recognized investment loss of RMB356 in income (loss) from equity method investments in 2014. In November 2015, the Group disposed of the 24% equity interest of Campsort for consideration of RMB14,410, and recognized gain of RMB2,766 upon disposition in other income in 2015. In January 2016, the Group set up Shanghai Distrii Technology Development Co., Ltd. (“Distrii”) together with another founder. Distrii is an office rental service company in which the Group contributed RMB35,000 and owned equity interest of 39.00%. The Group accounted for the investment in Distrii under equity-method as the Group has the ability to exert significant influence. The Group recognized investment loss of RMB6,438 in income (loss) from equity method investments in 2016. In January 2016, the Group acquired 28.16% equity interest in AAPC LUB(Note 3). The Group accounted for the investment in AAPC LUB under equity-method as the Group has the ability to exert significant influence. The Group recognized investment income of RMB28,496 in income (loss) from equity method investments in 2016. In 2016, the Group accumulatively purchased 982 ordinary shares and 5,610 Series B Preferred Shares of China Young Professionals Apartment Management Limited (“China Young”), which in total accounts for 36.72% of its equity interest, for consideration of RMB44,904. Each series B preferred shares shall be convertible at the option of the holder at any time to ordinary shares. The Group accounted for the investment in China Young under equity-method as the Group has the ability to exert significant influence. The Group recognized investment loss of RMB1,851 in income (loss) from equity method investments in 2016. In December 2016, the Group acquired 20% equity interest in Shanghai CREATER Industrial Co., Ltd. (“CREATER”), a staged office space company in China, for consideration of RMB100,000. The Group accounted for the investment under equity-method because the Group has the ability to exert significant influence over CREATER. Other investments included several insignificant equity investments in certain privately-held companies. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL | |
GOODWILL | 10. GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2014, 2015 and 2016 were as follows: Gross Accumulated Net Balance at January 1, 2014 ) Impairment losses recognized — ) ) Balance at December 31, 2014 ) Increase in goodwill related to acquisitions — Impairment losses recognized — ) ) Balance at December 31, 2015 ) Increase in goodwill related to acquisitions — Balance at December 31, 2016 ) |
LOAN RECEIVABLES, NON-CURRENT P
LOAN RECEIVABLES, NON-CURRENT PORTION | 12 Months Ended |
Dec. 31, 2016 | |
LOAN RECEIVABLES, NON-CURRENT PORTION | |
LOAN RECEIVABLES, NON-CURRENT PORTION | 11. LOAN RECEIVABLES, NON-CURRENT PORTION The loan receivables, non-current portion as of December 31, 2015 and 2016 were as follows: As of December 31, 2015 2016 Loan receivables from franchisees The Group entered into entrusted loan agreements with certain franchisees with the typical terms of two to three years and the annual interest rates from 8% to 8.5%. The Company classified those with due date over 12 months to be non-current. The Group recognized RMB266, RMB986 and RMB1,091 interest income for the non-current loan receivables in 2014, 2015 and 2016, respectively. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
DEBT | |
DEBT | 12. DEBT In March 2012, the Group entered into a five-year bank credit facility under which the Group can borrow up to RMB500,000 by May 21, 2015, which is subject to bank’s reevaluation from time to time. The credit facility is restricted to certain hotels’ renovation and the credit facility is not collateralized. The credit facility has a specified expiration schedule for draw down. The interest rate for each draw down is established on the draw-down date and is adjusted annually, based on the loan interest rate stipulated by the People’s Bank of China for the corresponding period. RMB100,000 of the credit facility expired as of December 31, 2012. In 2013, 2014 and 2015, the Group did not have any additional draw-down and credit facility had expired on May 21, 2015. In September 2012, the Group entered into a three-year revolving bank credit facility under which the Group can draw-down up to RMB300,000 by October 9, 2015. In December 2013, the Group renewed the bank credit facility under which the Group can borrow up to RMB500,000 by December 11, 2016. The interest rate for this credit facility was determined on the draw-down date and the credit facility was not collateralized. In 2013, 2014 and 2015, the Group has drawn down the credit facility of RMB104,540, nil and RMB100,000 and repaid RMB104,540, nil and RMB100,000, respectively. The weighted average interest rate for borrowings drawn under such credit facility was 6.0% and 5.61% for the year ended December 31, 2013 and 2015, respectively. As of December 31, 2015, a letter of guarantee of RMB700 was issued under this credit facility, and RMB499,300 was available for future borrowing. This facility expired on December 11, 2016. In December 2013, the Group signed a one-year entrusted loan contract with a subsidiary of Ctrip.com International, Ltd. under which the Group can borrow up to RMB300,000 for the period from January 6, 2014 to January 5, 2015. The interest rate of this borrowing is 5.4%. According to the agreement, the Group shall settle the unpaid principal and interest with its ordinary shares if the loan is in default. In January 2014, the Group had drawn down RMB300,000 under this contract and fully repaid the amount in November 2014. In July 2015, the Group entered into a one-year bank loan contract, under which the Group can borrow up to US$30 million for the period ended May 30, 2016, and the Group had a RMB220,000 deposit pledged accordingly. The interest rate of this borrowing is based on the three-month London Interbank Offered Rate (“Libor”) on draw-down date plus 1.2%. In 2015, the Group had drawn down US$30 million under this contract and fully repaid this amount. The weighted average interest rate for borrowings drawn under such credit facility was 1.49% for the year ended December 31, 2015. In July 2015, the Group entered into a one-year bank loan contract, under which the Group can borrow up to US$50 million for the period ended June 30, 2016, and the Group had a RMB360,000 deposit pledged accordingly. The interest rate of this borrowing is based on the three-month Libor on draw-down date plus 1.2%. In 2015, the Group had drawn down US$50 million under this contract and fully repaid the amount in 2016. The weighted average interest rate for borrowings drawn under such credit facility was 1.50% and 1.81% for the year ended December 31, 2015 and 2016, respectively. In January 2016, the Group entered into a one-year bank revolving loan agreement under which the Group can borrow up to US$43 million for the period ended January 1, 2017. The interest rate is based on the one-, two- or three-month Libor on draw-down date plus no less than 2%. As of December 31, 2016, the Group had drawn down US$43 million under this agreement and repaid nil. The weighted average interest rate of borrowings drawn under this agreement was 2.70% for the year ended December 31, 2016. In May 2016, the Group entered into a one-year revolving corporation overdraft facility agreement under which the Group can borrow up to RMB50,000, of which each draw-down should last no longer than three months, by May 16, 2017. The interest rate for each draw-down is established on the draw-down date and is based on the People’s Bank of China’s one-year benchmark interest rate for loans on the draw-down date. As of December 31, 2016, the Group had drawn down nil under this agreement. In September 2016, the Group entered into a one-year revolving general credit facility under which the Group can borrow up to RMB200,000 by September 30, 2017. The interest rate for each draw-down will be established in each draw-down agreement. As of December 31, 2016, the Group had drawn down nil under this agreement. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2015 2016 Payable for business acquisitions Business taxes, value-added tax and other surcharge payables Accrual for customer loyalty program Payable to noncontrolling interest holders Payable to franchisees Other payables Accrued rental Accrued utilities Other accrued expenses Total From time to time, the Group receives cash advances from noncontrolling interest holders of hotels that are not wholly owned by the Group. Such advances are non-interest bearing and are payable within one year. Payable to franchisees mainly represents room charges received on behalf of franchisees and are payable within one year. |
OTHER LONG-TERM LIABILITIES
OTHER LONG-TERM LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
OTHER LONG-TERM LIABILITIES | |
OTHER LONG-TERM LIABILITIES | 14. OTHER LONG-TERM LIABILITIES Other long-term liabilities consist of the following: As of December 31, 2015 2016 Deposits from franchisees Others Total |
HOTEL OPERATING COSTS
HOTEL OPERATING COSTS | 12 Months Ended |
Dec. 31, 2016 | |
HOTEL OPERATING COSTS | |
HOTEL OPERATING COSTS | 15. HOTEL OPERATING COSTS Hotel operating costs include all direct costs incurred in the operation of the leased and owned hotels, manachised and franchised hotels and consist of the following: Year Ended December 31, 2014 2015 2016 Rents Utilities Personnel costs Depreciation and amortization Consumable, food and beverage Others Total |
PRE-OPENING EXPENSES
PRE-OPENING EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
PRE-OPENING EXPENSES | |
PRE-OPENING EXPENSES | 16. PRE-OPENING EXPENSES The Group expenses all costs incurred in connection with start-up activities, including pre-operating costs associated with new hotel facilities and costs incurred with the formation of the subsidiaries, such as organization costs. Pre-opening expenses primarily include rental expenses and employee costs incurred during the hotel pre-opening period. Year Ended December 31, 2014 2015 2016 Rents Personnel costs Others Total |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 17. SHARE-BASED COMPENSATION In February 2007, the Group adopted the 2007 Global Share Plan which allows the Group to offer incentive awards to employees, officers, directors and consultants or advisors (the “Participants”). Under the 2007 Global Share Plan, the Group may issue incentive awards to the Participants to purchase not more than 10,000,000 ordinary shares. In June 2007, the Group adopted the 2008 Global Share Plan which allows the Group to offer incentive awards to Participants to purchase up to 3,000,000 ordinary shares. In October 2008, the Group increased the maximum number of incentive awards available under the 2008 Global Share Plan to 7,000,000. In September 2009, the Group adopted the 2009 Share Incentive Plan which allows the Group to offer incentive awards to Participants. Under the 2009 Share Incentive Plan, the Group may issue incentive awards to purchase up to 3,000,000 ordinary shares. In July 2010, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 15,000,000. In March 2015, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 43,000,000. The 2007 and 2008 Global Share Plans and 2009 Share Incentive Plan (collectively, the “Incentive Award Plans”) contain the same terms and conditions. The incentive awards granted under the Incentive Award Plans typically have a maximum life of ten years and vest in typical ways as listed below: a.) Vest 50% on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the following two years; b.) Vest over a period of ten years in equal yearly installments; As of December 31, 2016, the Group had granted 24,577,669 options and 21,503,016 nonvested restricted stocks. Share options In July 2012, the Group granted 1,475,366 options to executive officers that will vest 50% on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the following two years and will become exercisable if the Group satisfies certain performance conditions, such as number of hotel rooms added, revenue, profit etc., for the three-year period ending December 31, 2014. As of December 31, 2014, the Group has adjusted the number of options granted to 869,232 based on the actual performance. In 2015, the Group granted 85,292 options with performance conditions to senior officers. The actual number of the options each grantee is entitled to is indexed to performance conditions of the grantees including various annual performance target, i.e. number of hotel rooms added, revenue etc., in the coming two years. As of December 31, 2016, the Group has adjusted the number of options granted to 88,224 based on the actual performance. The weighted-average grant date fair value for options granted during the years ended December 31, 2014 and 2015 was RMB15.79 (US$2.57) and RMB11.73 (US$1.88), respectively, computed using the binomial option pricing model. The binomial model requires the input of subjective assumptions including the expected stock price volatility and the expected price multiple at which employees are likely to exercise stock options. The Group uses historical data to estimate forfeiture rate. Expected volatilities are based on the average volatility of the Group and comparable companies. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of stock options was estimated using the following significant assumptions: 2014 2015 Suboptimal exercise factor 4.40 4.16 Risk-free interest rate 1.89 to 1.99% 1.49 to 1.74% Volatility 47.22 to 47.75% 38.88 to 39.25% Dividend yield — — Life of option 6 years 6 years The following table summarized the Group’s share option activity under the option plans: Number of Weighted Average Weighted Average Aggregate Intrinsic US$ Years US$’000 Share options outstanding at January 1, 2016 Forfeited ) Exercised ) Adjusted Share options outstanding at December 31, 2016 Share options vested or expected to vest at December 31, 2016 Share options exercisable at December 31, 2016 As of December 31, 2016, there was RMB2,154 in total unrecognized compensation expense related to unvested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.79 years. During the years ended December 31, 2014, 2015 and 2016, 1,591,004, 1,528,104 and 684,632 options were exercised having an aggregate intrinsic value of RMB42,740, RMB46,433 and RMB40,717, respectively. Nonvested restricted stocks The fair value of nonvested restricted stock with service conditions or performance conditions is based on the fair market value of the underlying ordinary shares on the date of grant. In July 2012, the Group granted 1,059,977 nonvested restricted stocks to executive officers which will become exercisable if the Group satisfies certain performance conditions, such as number of hotel rooms added, profit etc., for the three-year period ending December 31, 2014, and 213,209 nonvested restricted stocks to executive officers which will become exercisable if the Group satisfies certain market condition for the three-year period ending December 31, 2014. These awards vest 50% on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the following two years. As of December 31, 2014, the Group adjusted the number of nonvested restricted stocks granted to executive officers to 1,557,408 based on the three year performance. In 2015 and 2016, the Group granted 6,599,106 and 1,876,975 nonvested restricted stocks in ten batches with performance conditions to senior officers. The actual number of the stocks each grantee is entitled to is indexed to performance conditions of the grantees and/or the Group’s performance conditions, such as number of hotel rooms added, revenue, profit, earnings per share etc. in the coming ten years. For each batch, 50% vests on the second anniversary of the vesting commencement date with the remaining 50% vesting ratably over the following two years. The Group estimated the grant date fair value of the awards with market conditions using a Monte Carlo simulation. Compensation expenses for the awards with market conditions are recognized during the requisite service period, even if the market condition is never satisfied. The following table summarized the Group’s nonvested restricted stock activity in 2016. Number of Restricted Stocks Weighted Average Grant Date US$ Nonvested restricted stocks outstanding at January 1, 2016 Granted Forfeited ) Vested ) Adjusted Nonvested restricted stocks outstanding at December 31, 2016 As of December 31, 2016, there was RMB426,089 in unrecognized compensation costs, net of estimated forfeitures, related to unvested restricted stocks, which is expected to be recognized over a weighted-average period of 4.95 years. The total fair value of nonvested restricted stocks vested in 2014, 2015 and 2016 was RMB59,475, RMB69,130 and RMB123,129, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 18. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the years indicated: Year Ended December 31, 2014 2015 2016 Net income attributable to ordinary shareholders — basic Net income attributable to ordinary shareholders — diluted Weighted average ordinary shares outstanding — basic Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method Weighted average ordinary shares outstanding — diluted Basic earnings per share Diluted earnings per share For the years ended December 31, 2014, 2015 and 2016, the Group had securities which could potentially dilute basic earnings per share in the future, but which were excluded from the computation of diluted earnings per share as their effects would have been anti-dilutive. Such outstanding securities consist of the following: Year Ended December 31, 2014 2015 2016 Outstanding employee options and nonvested restricted stocks — — |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 19. INCOME TAXES Cayman Islands Under the current laws of the Cayman Islands, the Company, China Lodging Investment Limited and City Home Group Limited are not subject to tax on income or capital gain. Hong Kong China Lodging Holdings (HK) Limited, Starway Hotels (HongKong) Limited, IBIS China Investment Limited, ACL Greater China Limited and TAHM Investment Limited are subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been provided as the Group has not had assessable profit that was earned in or derived from Hong Kong during the years presented. Singapore China Lodging Holdings Singapore Pte. Ltd. is subject to Singapore corporate income tax at a rate of 17% in 2014, 2015 and 2016. No Singapore profit tax has been provided as the Group has not had assessable profit that was earned in or derived from Singapore during the years presented. PRC Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), which was effective from January 1, 2008, domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25%. Hanting Technology (Suzhou) Co., Ltd (“Hanting Suzhou”), as a recognized software development entity located at Suzhou Industrial Park in Suzhou of PRC, is entitled to a two-year exemption and three-year 50% reduction starting from the first profit making year after absorbing all prior years’ tax losses. Hanting Suzhou has entered into the first tax profitable year in 2011. Since 2016, Hanting Suzhou is entitled tax rate of 15% as it is qualified as high and new tech enterprise through September 2017. Mengguang Information and Technology (Shanghai) Co., Ltd (“Mengguang Shanghai”), as a recognized software development entity located in Shanghai of PRC, is entitled to a two-year exemption and three-year 50% reduction starting from the first profit making year after absorbing all prior years’ tax losses. Mengguang Shanghai has entered into the first tax profitable year in 2014. Tax expense (benefit) is comprised of the following: As of December 31, 2014 2015 2016 Current Tax Deferred Tax ) ) Total A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: Year Ended December 31, 2014 2015 2016 PRC statutory tax rate % % % Tax effect of other expenses that are not deductible in determining taxable profit % % % Effect of different tax rate of group entities operating in other jurisdictions — — )% Effect of change in valuation allowance % % % Effect of tax holiday )% )% )% Effect of cash dividends — % % Effect of disposal of subsidiary — — )% Effective tax rate % % % The aggregate amount and per share effect of the tax holidays are as follows: Year Ended December 31, 2014 2015 2016 Aggregate amount Per share effect—basic Per share effect—diluted The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2015 and 2016 are as follows: As of December 31, 2015 2016 Deferred tax assets: Net loss carryforward Pre-opening expenses — Deferred revenue Deferred rent Long-term assets Bad debt provision Accrual for customer loyalty program Accrued payroll Other accrued expenses Share-based compensation Others Valuation allowance ) ) Total deferred tax assets Deferred tax liabilities: Favorable lease, building and land use rights-fair value adjustment Capitalized interest Unrealized gain for investment Others Total deferred tax liabilities For the years ended December 31, 2015 and 2016, valuation allowance of RMB47,122 and RMB55,757 were provided, respectively, nil and RMB11,724 were added due to acquisition, respectively, RMB15,508 and RMB17,064 were reversed, respectively, and RMB1,955 and RMB28,319 were written off, respectively. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carryforward periods provided for in the tax law. As of December 31, 2016, the Group had tax loss carryforwards of RMB388,874 which will expire between 2017 and 2021 if not used. The Group determines whether or not a tax position is “more-likely-than-not” of being sustained upon audit based solely on the technical merits of the position. At December 31, 2015 and 2016, the Group had recorded uncertain tax benefits of approximately RMB14,755 and RMB19,787 associated with the interests on intercompany loans, respectively. No interest or penalty expense was recorded for the years ended December 31, 2014, 2015 and 2016. The Group does not anticipate any significant changes to its liability for unrecognized tax benefits within the next 12 months. The following table is a roll-forward of the unrecognized tax benefits: As of December 31, 2014 2015 2016 Balance at January 1 Addition for tax positions Balance at December 31 In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. A lower withholding tax rate may be applied if there is a favorable tax treaty between mainland China and the jurisdiction of the foreign holding company. For example, holding companies in Hong Kong that are also tax residents in Hong Kong are eligible for a 5% withholding tax on dividends under the Tax Memorandum between China and the Hong Kong Special Administrative Region if the holding company is the beneficial owner of the dividends. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. The cumulated undistributed earnings of the Group’s PRC subsidiaries were RMB1,881,185 as of December 31, 2016. In December 2015, with the Group’s declaration of special cash dividends, PRC dividend withholding tax of RMB30,696 had been accrued accordingly for the distribution from the Group’s PRC subsidiaries to the Company. In November 2016, Hanting (Tianjin) Investment Consulting Co., Ltd, one PRC subsidiary of the Company, decided to pay special dividend to the Company and paid withholding tax of RMB32,570 accordingly. Other than these dividends distributions, the Group intends to indefinitely reinvest the remaining undistributed earnings of the Group’s PRC subsidiaries, and therefore, no additional provision for PRC dividend withholding tax was accrued. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB100 is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from 2012 through 2016 on non-transfer pricing matters, and from 2007 through 2016 on transfer pricing matters. |
MAINLAND CHINA CONTRIBUTION PLA
MAINLAND CHINA CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2016 | |
MAINLAND CHINA CONTRIBUTION PLAN | |
MAINLAND CHINA CONTRIBUTION PLAN | 20. MAINLAND CHINA CONTRIBUTION PLAN Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits were RMB143,419, RMB182,321 and RMB212,723 for the years ended December 31, 2014, 2015 and 2016, respectively. The Group has no ongoing obligation to its employees subsequent to its contributions to the PRC plan. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 21. RESTRICTED NET ASSETS Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries of the Group in the PRC must make appropriations from after-tax profit to non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriation of 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserve fund reaches 50% of their registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for specific purposes of offsetting future losses, enterprise expansion and staff bonus and welfare and are not distributable as cash dividends and amounted to RMB105,604, RMB209,782 and RMB277,342 as of December 31, 2014, 2015 and 2016, respectively. In addition, due to restrictions on the distribution of share capital from the Company’s PRC subsidiaries, the PRC subsidiaries share capital of RMB2,410,586 at December 31, 2016 is considered restricted. As a result of these PRC laws and regulations, as of December 31, 2016, approximately RMB2,687,928 is not available for distribution to the Company by its PRC subsidiaries in the form of dividends, loans or advances. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 22. RELATED PARTY TRANSACTIONS AND BALANCES Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. The following entities are considered to be related parties to the Group. The related parties only act as service providers and service recipients to the Group and there is no other relationship wherein the Group has the ability to exercise significant influence over the operating and financial policies of these parties. The Group is not obligated to provide any type of financial support to these related parties. Related Party Nature of the Party Relationship with the Group Ctrip.com International, Ltd. (“Ctrip”) Online travel services provider Mr. Qi Ji is a director Lijiang Yibang Changchunteng Hotel Co Limited (“Yibang”)* Hotel Equity method investee of the Group Sheen Star Group Limited (“Sheen Star”) Investment holding company Equity method investee of the Group, controlled by Mr. Qi Ji Shanghai Qianya Hotel Management Co., Ltd (“Qianya”) Hotels management Investee of the Group Accor Hotels (“Accor”) Hotel Group Shareholder of the Group Chengjia (Shanghai) Apartment Management Co., Ltd. (Cjia) Apartment Management Group Equity method investee of the Group Jiyuan Zhongzhou Express Hotel Co., Ltd. (“Jiyuan”) Hotel Equity method investee of the Group Shanghai Yechun Catering Co., Ltd. (“Yechun”) Catering Management Company Equity method investee of the Group * In June 2016, the Group disposed the equity investment in Yibang, subsequent to which Yibang is no longer a related party of the Group. (a) Related party balances Amounts due from related parties were comprised of shareholder loans to Yibang, Sheen Star, Cjia, Jiyuan and Yechun, which are short-term in nature and payable on demand, and receivable for service fee from Accor and room charges withheld by Ctrip. As of December 31, 2015 2016 Yibang — Sheen Star — Accor — Cjia — Jiyuan — Yechun — Ctrip — Total Amounts due to related parties were comprised of the following. These payables were interest free and payable upon demand. As of December 31, 2015 2016 Ctrip -Payables for hotel reservation services -Payables for Starway acquisition — Qianya -Payables for service fee Accor -Payables for brand use fee, reservation fee and other related service fee — Jiyuan -Payables for cash collected on behalf — Yechun -Payables for cash collected on behalf — Total (b) Related party transactions During the years ended December 31, 2014, 2015 and 2016, related party transactions consisted of the following: Year Ended December 31, 2014 2015 2016 Commission expenses to Ctrip Service fee from Yibang Service fee to Qianya — Brand use fee, reservation fee and other related service fee to Accor — — Marketing and training fee from Ctrip — — Service fee from Accor — — Goods sold and service provided to Cjia — — Interest income from Sheen Star — — Total The Group transferred its investment in Kangdu to Sheen Star for consideration of RMB82,785 in 2014, and its rights and obligations associated with the property purchase agreement was transferred to Sheen Star contemporaneously. In 2016, the Group sold its subsidiary Chengjia Hotel Management Co., Ltd. to Cjia for consideration of RMB10,000. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 23. COMMITMENTS AND CONTINGENCIES (a) Operating lease commitments The Group has entered into lease agreements for certain hotels which it operates. Such leases are classified as operating leases. Future minimum lease payments under non-cancellable operating lease agreements at December 31, 2016 were as follows: Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter Total (b) Purchase Commitments As of December 31, 2016, the Group’s commitments related to leasehold improvements and installation of equipment for hotel operations was RMB43,139, which is expected to be incurred within one year. (c) Contingencies The Group is subject to periodic legal or administrative proceedings in the ordinary course of our business. As of December 31, 2016, the Group had several cases outstanding, including lease contract terminations and disputes, and construction contract disputes. The Group believed it is probable that settlement liabilities will be involved, and therefore accrued contingencies of RMB66,234 in other operating expense based on the terms of contract, laws and regulations and latest negotiation result. The Group does not believe that any other currently pending legal or administrative proceeding to which the Group is a party will have a material adverse effect on the financial statements. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 24. SUBSEQUENT EVENT In January 2017, the Group invested in Mobike Limited, a Chinese bike-sharing company, with total amount of US$10 million, in form of preferred shares and convertible notes. In February 2017, the Group has entered into a definitive share purchase agreement with the shareholders of Crystal Orange Hotel Holdings Limited (“Crystal Orange”) to acquire all of the equity interests of Crystal Orange for an initial aggregate consideration in cash of approximately RMB3.65 billion, with customary post-closing adjustments. The closing of the Transaction is subject to the approval from the Antitrust Bureau of Ministry of Commerce of China. Cash deposit of RMB700 million has been paid in February 2017. |
SCHEDULE I FINANCIAL INFORMATIO
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I BALANCE SHEETS As of December 31, 2015 2016 2016 US$’000 Assets Current assets: Cash and cash equivalents Short-term investments — — Other current assets Total current assets Investment in subsidiaries Long-term investments — Total assets Liabilities and equity Current liabilities: Short-term bank borrowing Salary and welfare payable — — Dividends payable — — Amount due to related parties Accrued expenses and other current liabilities Total current liabilities Total liabilities Equity: Ordinary shares(US$0.0001 par value per share; 8,000,000,000 shares authorized; 253,978,323 and 281,379,130 shares issued as of December 31, 2015 and 2016, and 250,881,559 and 278,282,366 shares outstanding as of December 31, 2015 and 2016, respectively) Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2015 and 2016, respectively) ) ) ) Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) ) ) Total equity Total liabilities and equity ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, 2014 2015 2016 2016 US$’000 Operating costs and expenses: Selling and marketing expenses — — General and administrative expenses Total operating costs and expenses Loss from operations ) ) ) ) Interest income Interest expense — Foreign exchange gain — Other income, net Income in investment in subsidiaries Net income attributable to China Lodging Group, Limited Other comprehensive income Unrealized securities holding gains, net of tax of 9,485, 7,151 and (1,810) for 2014, 2015 and 2016 Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income — — ) ) Foreign currency translation adjustments, net of tax of nil for 2014, 2015 and 2016 ) ) ) Comprehensive income ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 2015 2016 2016 US$’000 Operating activities: Net income Adjustments to reconcile net income to net cash used in operating activities: Share-based compensation Income in investment in subsidiaries ) ) ) ) Investment income — — ) ) Changes in operating assets and liabilities: Deferred revenue ) ) — — Other current assets Salary and welfare payable ) ) ) Accrued expenses and other current liabilities ) ) Net cash provided by operating activities Investing activities: Investment in subsidiaries — ) — — Receipt of investment in subsidiaries — Purchase of long-term investments — — ) ) Proceeds from sale of long-term investments — — Purchase of short-term investments — ) — — Proceeds from sale of short-term investment — — Net cash provided by (used in) investing activities ) Financing activities: Net proceeds from issuance of ordinary shares upon exercise of option Payment of share repurchase — ) — — Proceeds of advances from subsidiaries — — — Proceeds from short-term debt — Repayment of short-term debt — ) ) ) Dividend paid — — ) ) Net cash provided by (used in) financing activities ) ) Effect of exchange rate changes on cash and cash equivalents ) Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year The accompanying notes are an integral part of these consolidated financial statements ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I Note to Schedule I Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04-(c) of Regulation S-X, which require condensed financial information as to the financial position, change in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. Such investments in subsidiaries are presented on the balance sheets as investment in subsidiaries and the profit of the subsidiaries is presented as income in investment in subsidiaries. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements. As of December 31, 2016, there are no material contingencies, mandatory dividend, significant provision of long-term obligation or guarantee of the Company, except for those which have separately disclosed in the consolidated financial statements. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ADDITION INFORMATION — FINANCIAL STATEMENTS SCHEDULE II CHINA LODGING GROUP, LIMITED This financial information has been prepared in conformity with accounting principles generally accepted in the United States. VALUATION AND QUALIFYING ACCOUNTS Balance at Charge to Costs and Addition Due to Charge Taken Write off Balance at (Renminbi in thousands) Allowance for doubtful accounts of accounts receivables and other receivables: 2014 — — ) 2015 — — ) 2016 — ) Valuation allowance for deferred tax assets 2014 — ) — 2015 — ) ) 2016 ) ) ****** |
SUMMARY OF PRINCIPAL ACCOUNTI34
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). |
Basis of consolidation | Basis of consolidation The consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances are eliminated on consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses and has the rights to receive benefits that are potentially significant to the entities. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels to identify potential variable interest entities. Generally, these entities qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets, long lived assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include the useful lives and impairment of property and equipment and intangible assets, valuation allowance of deferred tax assets, purchase price allocation, impairment of goodwill, share-based compensation and costs related to its customer loyalty program. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. |
Restricted cash | Restricted cash Restricted cash mainly represents deposits used as security against borrowings and deposits restricted due to contract disputes or lawsuit. |
Investments | Investments Investments represent available-for-sale securities, cost-method investments, and equity-method investments Investments in equity securities that have readily determinable fair values are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses recorded as a component of other comprehensive income or loss. Realized gains or losses are recognized in the consolidated statements of comprehensive income during the period in which the gains or losses are realized. If the Group determines that a decline in the fair value of the individual available-for-sale security is other-than-temporary, the cost basis of the security is written down to the fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss. The new cost basis will not be changed for subsequent recoveries in fair value. The Group reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to: (1) the nature of the investment; (2) the cause and duration of the impairment; (3) the extent to which fair value is less than cost; (4) financial conditions and near term prospects of the issuers; and (5) the Group’s ability to hold the security for a period of time sufficient to allow for any anticipated recovery of its amortized cost or fair value. Available-for-sale securities not expected to be realized in cash or sold in the next normal operating cycle of the business are classified as long-term investments. The Group accounts for the investment in a private entity of which the Group owns less than 20% of the voting securities and does not have the ability to exercise significant influence over operating and financial policies of the entity as cost-method investment. The Group’s cost-method investment is carried at historical cost in its consolidated financial statements and measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the excess of the investment’s cost over its fair value when the impairment is deemed other-than-temporary. The Group accounts for the investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than- temporary. As a result of the impairment analysis, the Group recorded an impairment of RMB3,208, in 2016. No impairment charge was recorded in 2014 or 2015. |
Accounts receivable, net of allowance | Accounts receivable, net of allowance Trade receivables mainly consist of franchise fee receivables, amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Group establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers. |
Loan receivables | Loan receivables Loan receivables are measured at amortized cost with interest accrued based on the contract rate. The Group classified loan receivables as long-term or short-term investments according to their contractual maturity or expected holding time. The Group evaluates the credit risk associated with the loans, and estimates the cash flow expected to be collected over the life of loans on an individual basis based on the Group’s past experiences, the borrowers’ financial position, their financial performance and their ability to continue to generate sufficient cash flows. A valuation allowance will be established for the loans unable to collect. No valuation allowance has been recorded in 2014, 2015 or 2016 based on the result of the assessment. |
Inventories | Inventories Inventories mainly consist of small appliances, bedding and daily consumables. Small appliances and bedding for new hotels opened are stated at cost, less accumulated amortization, and are amortized over their estimated useful lives, generally one year, from the time they are put into use. Daily consumables and beddings replacement are expensed when used. |
Property and equipment, net | Property and equipment, net Property and equipment, net are stated at cost less accumulated depreciation and amortization. The renovations, betterments and interest cost incurred during construction are capitalized. Depreciation and amortization of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 3-5 years Motor vehicles 5 years Construction in progress represents leasehold improvements under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying amount of the underlying asset. |
Intangible assets, net and unfavorable lease | Intangible assets, net and unfavorable lease Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise agreements and favorable leases acquired in business combinations and purchased software. Intangible assets acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets, including brand name, master brand agreement, non-compete agreements, franchise agreements and favorable lease agreements acquired from business combination are recognized and measured at fair value upon acquisition. Non-compete agreements, franchise agreements and favorable lease agreements are amortized over the expected useful life, remaining franchise contract terms and remaining operating lease terms. Unfavorable lease agreements from business combination transactions are recognized as other long-term liabilities and are amortized over the remaining operating lease terms. Purchased software is stated at cost less accumulated amortization. Brand name is considered to have an indefinite life. Master brand agreement, acquired in Accor acquisition (Note 3), granted the Group the exclusive franchise rights in respect of “Mercure”, “Ibis” and “Ibis Styles” in the PRC, Taiwan and Mongolia and the non-exclusive franchise rights in respect of “Grand Mercure” and “Novotel” in the PRC, Taiwan and Mongolia with initial term of 70 years, and can be renewed without substantial obstacles. As a result, the useful life is also determined to be indefinite. The Group evaluates the brand name and master brand agreement each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Impairment is tested annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group measures the impairment by comparing the fair value of brand name and master brand agreement with its carrying amount. If the carrying amount of brand name and master brand agreement exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The Group measured the fair value of the brand name under the relief-from-royalty method and the master brand agreement under the multi-period excess earnings method. Management performs its annual brand name and master brand agreement impairment test on November 30. |
Land use rights | Land use rights Land use rights, which are all located in PRC, are recorded at cost and amortized on a straight-line basis over the remaining term of the land certificates, between 30 to 50 years. |
Impairment of long-lived assets | Impairment of long-lived assets The Group evaluates its long-lived assets and finite lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the property and equipment exceed the future undiscounted net cash flows, and recognized an impairment loss of RMB27,203, RMB93,163 and RMB150,533 during the year ended December 31, 2014, 2015 and 2016, respectively. Fair value of the property and equipment was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. |
Goodwill | Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group completes a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized in general and administrative expenses for any excess in the carrying value of goodwill over the implied fair value of goodwill. Management performs its annual goodwill impairment test on November 30. The Group recognized goodwill impairment of RMB188, RMB2,445 and nil for years ended December 31, 2014, 2015 and 2016, respectively. |
Accruals for customer loyalty program | Accruals for customer loyalty program The Group invites its customers to participate in a customer loyalty program. The membership has an unlimited life. Members enjoy favorable treatment such as more convenient check-out procedures and late check-out, discounts on room rates and accumulate membership points for their paid stays or their purchasing of products and services provided in the hotels, which can be redeemed for offset the room charges, or used to buy products in Hua Zhu mall within two years after the points are earned. The estimated incremental costs to provide room night awards and other products are accrued and recorded as accruals for customer loyalty program as members accumulate points and are recognized as cost and expense in the accompanying consolidated statements of comprehensive income. As members redeem awards or their entitlements expire, the provision is reduced correspondingly. As of December 31, 2015 and 2016, the accruals for estimated liabilities under the customer loyalty program amounted to RMB113,749 and RMB121,066, respectively. |
Deferred revenue | Deferred revenue Deferred revenue generally consists of non-refundable advances received from customers for rental of rooms, cash received for membership fees and initial franchise fees received prior to the Group fulfilling its commitments to the franchisees. |
Revenue recognition | Revenue recognition Revenue from leased and owned hotels is derived from hotel operations, mainly including the rental of rooms, food and beverage sales and souvenir sales. Revenue is recognized when rooms are occupied and food and beverages and souvenirs are sold. Revenues from manachised and franchised hotels are derived from franchise agreements where the franchisees are primarily required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) on-going management and service fees mainly based on a certain percentage of the room revenues of the franchised hotels, and (b) system maintenance, support fees and central reservation system usage fees. The one-time franchise fee is recognized when the manachised and franchised hotel opens for business, the fee becomes non-refundable, and the Group has fulfilled all its commitments and obligations, including the assistance to the franchisees in property design, leasehold improvement construction project management, systems installation and personnel recruiting and training. The ongoing management and service fees are recognized when the underlying service revenue is recognized by the franchisees’ operations. The system maintenance, support fee and central reservation system usage fee is recognized over the period when services are provided. In addition, the Group accounts for hotel manager fees related to the manachised hotels under the franchise program as revenues. Pursuant to the franchise agreements, the Group charges the franchisees fixed hotel manager fees to cover the manachised hotel managers’ payroll, social welfare benefits and certain other out-of-pocket expenses that the Group incurs on behalf of the manachised hotels. The hotel manager fee is recognized as revenue monthly. During the years ended December 31, 2014, 2015 and 2016, the hotel manager fees that were recognized as revenue were RMB166,572, RMB261,743 and RMB321,346, respectively. Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. Such duration is estimated based on the Group’s and management’s experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be two to five years which reflects the expected membership retention. Revenues recognized from the customer loyalty program were RMB107,737, RMB130,644 and RMB145,459 for the years ended December 31, 2014, 2015 and 2016, respectively. Other revenues are derived from activities 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. Revenues from Hua Zhu mall are commissions charged from suppliers for goods sold through the platform and are recognized upon delivery of goods to end customers when its suppliers’ obligation is fulfilled and collectability is reasonably assured. Revenues from IT products are recognized when goods are delivered and revenues from IT services are recognized when services are rendered. |
Business tax and related taxes | Business tax and related taxes The Group is subject to business tax, education surtax and urban maintenance and construction tax, on the services provided in the PRC. Such taxes are primarily levied based on revenue at applicable rates and are recorded as a reduction of revenues. On 24 March 2016, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly published Caishui [2016] No. 36 (Circular 36), which provides the detailed implementation guidance on the further rollout of the Value-Added Tax (VAT) reform to sectors such as construction, real estate, financial services and lifestyle services. Circular 36 takes effect from 1 May 2016. Lifestyle services have a broad coverage to include a variety of services which are to meet the daily needs of the residents, and accommodation and associated services are included in such category with the applicable tax rate of 6%. As such, starting from May 2016, the accommodation services of the Group are subject to 6% of VAT. |
Advertising and promotional expenses | Advertising and promotional expenses Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the consolidated statements of comprehensive income as incurred, and amounted to RMB79,806, RMB47,971 and RMB64,666 for the years ended December 31, 2014, 2015 and 2016, respectively. |
Government grants | Government grants Government grants represent cash received by the Group in the PRC from local governments as incentives for investing in certain local districts, and are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. The local governments have final discretion as to whether the Group has met all criteria to be entitled to the subsidies. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized were RMB19,657, RMB28,188 and RMB83,498 for the years ended December 31, 2014, 2015 and 2016, respectively, which were recorded as other operating income. |
Leases | Leases A lease of which substantially all the benefits and risks incidental to ownership remain with the lessor is classified as an operating lease. All leases of the Group are currently classified as operating leases. When a lease contains rent holidays or requires fixed escalations of the minimum lease payments, the Group records the total rental expense on a straight-line basis over the initial lease term and the difference between the straight-line rental expense and cash payment under the lease is recorded as deferred rent. As of December 31, 2015 and 2016, deferred rent of RMB37,224 and RMB37,648 were recorded as other current liabilities and RMB945,192 and RMB1,023,843 were recorded as long-term liabilities, respectively. |
Capitalization of interest | Capitalization of interest Interest cost incurred on funds used to construct leasehold improvements during the active construction period is capitalized. The interest capitalized is determined by applying the borrowing interest rate to the average amount of accumulated capital expenditures for the assets under construction during the period. The interest expense incurred for the years ended December 31, 2014, 2015 and 2016 were RMB14,733, RMB5,383 and RMB11,056, of which RMB13,200, RMB1,529 and nil were capitalized as additions to assets under construction, respectively. |
Income taxes | Income taxes Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. |
Foreign currency translation | Foreign currency translation The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar (“US dollar”). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred. Transaction gains and losses are recognized in the statements of comprehensive income. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive loss in the consolidated statements of comprehensive income. The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies. |
Comprehensive income | Comprehensive income Comprehensive income includes all changes in equity except for those resulting from investments by owners and distributions to owners and is comprised of net income, foreign-currency translation adjustments and unrealized securities holding gains (losses). |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term and long-term investments, loan receivables, amount due from related parties and accounts receivable. All of the Group’s cash and cash equivalents and restricted cash are held with financial institutions that Group management believes to be high credit quality. In addition, the Group’s investment policy limits its exposure to concentrations of credit risk and the Group’s short-term and long-term investments consist of equity investments in listing and private companies. The Group’s loan receivables are lent to entities with high credit quality. The Group conducts credit evaluations on its group and agency customers and generally does not require collateral or other security from such customers. The Group periodically evaluates the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. |
Fair value | Fair value The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The estimated fair value of the Group’s financial instruments of which the inputs used to value are classified as Level 2 and are not reported at fair value, including cash, restricted cash, loan receivables, receivables, payables and accruals, approximates their carrying value due to their short-term nature or because the interest rate approximates market rate. Cost-method investments are presented at cost unless impaired based on the result of impairment assessment, as the investees are all private entities and their fair values are not practicable to obtain without undue cost. As of December 31, 2015 and 2016, cost-method investments were RMB145,302 and RMB172,571, respectively. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. As of December 31, 2015 and 2016, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows: Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value Quoted Prices in Active Significant Other Significant 2015 Short-term available-for-sale securities 2015 Long-term available-for-sale securities 2016 Long-term available-for-sale securities The following table presents the Group’s assets measured at fair value on a non-recurring basis for the years ended December 31, 2014, 2015 and 2016: Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value for Quoted Significant Significant Total 2014 Property and equipment 2014 Goodwill — — 2015 Property and equipment 2015 Goodwill — — 2016 Property and equipment 2016 Long-term investments — — As a result of reduced expectations of future cash flows from certain leased hotels, the Group determined that the hotels property and equipment with a carrying amount of RMB40,764, RMB115,042 and RMB171,239 was not fully recoverable and consequently recorded an impairment charge of RMB27,203, RMB93,163 and RMB150,533 for the years ended December 31, 2014, 2015 and 2016, respectively. The Group also determined that the goodwill amount with a carrying amount of RMB188 and RMB2,445 was impaired as a result of the impairment assessment for the year ended December 31, 2014 and 2015. As a result of the impairment assessment, the Group determined that the long term investment with a carrying amount of RMB3,208 was impaired for the year ended December 31, 2016. Fair value of the property and equipment as well as the reporting units was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. As a result, the Group has determined that the majority of the inputs used to value its long-lived assets held and used and its reporting units are unobservable inputs that fall within Level 3 of the fair value hierarchy. The revenue growth rate and the discount rate were the significant unobservable input used in the fair value measurement, which are 4% and 20%, respectively, for the years ended December 31, 2014, 2015 and 2016. |
Share-based compensation | Share-based compensation The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of likely future performance and will be adjusted in future periods based on the actual performance. Compensation expenses for the awards with market conditions are recognized during the requisite service period, even if the market condition is never satisfied. The share-based compensation expenses have been categorized as either hotel operating costs, general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees. For the years ended December 31, 2014, 2015 and 2016, the Group recognized share-based compensation expenses of RMB31,937, RMB52,535 and RMB55,436, respectively, which was classified as follows: Year Ended December 31, 2014 2015 2016 Hotel operating costs Selling and marketing expenses General and administrative expenses Total |
Earnings per share | Earnings per share Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares and is calculated using the treasury stock method for stock options and nonvested restricted stocks. |
Segment reporting | Segment reporting The Group operates and manages its business as a single segment, and the acquired business has been migrated to the Group’s business. The Group primarily generates its revenues from customers in the PRC. Substantially all of the Group’s long-lived assets are located in the PRC. |
Treasury shares | Treasury shares Treasury shares represent shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury shares are accounted for under the cost method. As of December 31, 2016, under the repurchase plan, the Company had repurchased an aggregate of 3,096,764 ordinary shares on the open market for total cash consideration of RMB107,331. The repurchased shares were presented as “treasury shares” in shareholders’ equity on the Group’s consolidated balance sheets. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. The core principle of the new guidance is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new guidance also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple element arrangements. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ; and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . The Company must adopt ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standards”). The new revenue standards may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect recognized as of the date of initial application (the modified retrospective method). The new revenue standards become effective for the Company on January 1, 2018. The Group currently anticipates adopting the new revenue standards using the full retrospective method. The Group is still in the process of assessing the impact of the ASUs on the Group’s consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of financial statements—going concern (Subtopic 205-40) , which provided guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures so as to reduce the diversity in the timing and content of footnote disclosures. ASU 2014-15 will be effective for annual periods ending after December 15, 2016. The Group does not expect the adoption will have a material impact on the Group’s consolidated financial statements. In January, 2016, the FASB issued ASU No. 2016-01, to improve the recognition and measurement of financial instruments. The new guidance requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. The guidance also eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities and the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Group is still in the process of assessing the impact of this ASU on the Group’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU will be effective for fiscal years beginning after December 15, 2018 for public entities, and it will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Group expects material changes to its consolidated balance sheet. As of December 31, 2016, the Group has RMB19,054 million of future minimum operating lease commitments that are not currently recognized on its consolidated balance sheets (Note 23). In March 2016, the FASB issued ASU 2016-07, which eliminates the requirement to retroactively adopt the equity method of accounting. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Group is in the process of evaluating the impact of this ASU on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, which amends the principal-versus-agent implementation guidance and illustrations in the Board’s new revenue standard (ASC 606). The amendments in this update clarify the implementation guidance on principal versus agent considerations. When another party, along with the reporting entity, is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide that good or service to the customer (as a principal) or to arrange for the good or service to be provided to the customer by the other party (as an agent). The guidance is effective for interim and annual periods beginning after December 15, 2017. The Group is in the process of evaluating the impact of this ASU on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public entities, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. Early adoption will be permitted in any interim or annual period for which financial statements have not yet been issued or have not been made available for issuance. The Group is in the process of evaluating the impact of this ASU on the consolidated financial statements. In August, 2016, the FASB issued ASU 2016-15, which amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the ASU is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The ASU’s amendments add or clarify guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted for all entities. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Group is in the process of evaluating the impact on the consolidated financial statements. In October, 2016, the FASB issued ASU 2016-16, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The ASU, which is part of the Board’s simplification initiative, is intended to reduce the complexity of U.S. GAAP and diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. For public business entities, the ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of a fiscal year for which neither the annual or interim (if applicable) financial statements have been issued or made available for issuance. The Group does not expect the adoption of this ASU will have significant impact on the consolidated financial statements. In November, 2016, the FASB issued ASU 2016-18, which amends ASC 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. Key requirements of the ASU are as follows: An entity should include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. The ASU does not define the terms “restricted cash” and “restricted cash equivalents” but states that an entity should continue to provide appropriate disclosures about its accounting policies pertaining to restricted cash in accordance with other GAAP. The ASU also states that any change in accounting policy will need to be assessed under ASC 250. A reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. Changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows. An entity with a material balance of amounts generally described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Group expects the adoption of this ASU will impact its cash flow statements to the extent of restricted cash. In January, 2017, the FASB issued ASU 2017-04, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the ASU clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment. The ASU also clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. For public business entities, the ASU is effective prospectively for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Group is in the process of evaluating the impact on the consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes which simplifies the presentation of deferred taxes on the balance sheet by requiring classification of all deferred tax items as noncurrent including valuation allowances by jurisdiction. The ASU is effective for public entities for annual and interim periods beginning after December 15, 2016, and interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Group early adopted the ASU and all the deferred tax assets and liabilities have been classified as long-term as of December 31, 2016. |
Translation into United States Dollars | Translation into United States Dollars The financial statements of the Group are stated in RMB. Translations of amounts from RMB into United States dollars are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.9430, on December 31, 2016, as set forth in H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into United States dollars at that rate on December 31, 2016, or at any other rate. |
SUMMARY OF PRINCIPAL ACCOUNTI35
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Schedule of expected useful lives of property and equipment | Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 3-5 years Motor vehicles 5 years |
Schedule of information about inputs into the fair value measurements of the assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition | Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value Quoted Prices in Active Significant Other Significant 2015 Short-term available-for-sale securities 2015 Long-term available-for-sale securities 2016 Long-term available-for-sale securities |
Schedule of assets measured at fair value on a non-recurring basis | Fair Value Measurements at Reporting Date Using Year Ended Description Fair Value for Quoted Significant Significant Total 2014 Property and equipment 2014 Goodwill — — 2015 Property and equipment 2015 Goodwill — — 2016 Property and equipment 2016 Long-term investments — — |
Schedule of share-based compensation expense recognized | Year Ended December 31, 2014 2015 2016 Hotel operating costs Selling and marketing expenses General and administrative expenses Total |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Acquisitions | |
Summary of pro forma information | Year Ended December 31, 2015 2016 Pro forma net revenue Pro forma net income |
Individual hotels acquired | |
Acquisitions | |
Summary of fair values of the assets acquired and liabilities assumed | 2014 2015 2016 Amortization Period Current assets Property and equipment 5-10 years Favorable leases remaining lease terms Deferred tax assets — — Franchise agreements — — remaining contracts terms Goodwill — — Other noncurrent assets — — Current liabilities — ) ) Deferred tax liabilities ) ) ) Noncontrolling interest ) ) — Total |
Accor | |
Acquisitions | |
Summary of fair values of the assets acquired and liabilities assumed | 2016 Amortization Period Current assets Property and equipment 5-30 years Favorable leases remaining lease terms Master brand agreement Land use rights remaining contracts terms Long-term investments Goodwill Other noncurrent assets Current liabilities ) Deferred tax liabilities ) Total |
SHORT-TERM INVESTMENTS MEASUR37
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE | |
Schedule of short-term investments measured at fair value | As of December 31, 2015 2016 HMIN — |
LOAN RECEIVABLES, CURRENT POR38
LOAN RECEIVABLES, CURRENT PORTION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LOAN RECEIVABLES, CURRENT PORTION | |
Schedule of current portion of loan receivables | As of December 31, 2015 2016 Loan receivables from franchisees Loan receivables from other entities Total |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | As of December 31, 2015 2016 Cost: Buildings Leasehold improvements Furniture, fixtures and equipment Motor vehicles Less: Accumulated depreciation ) ) Construction in progress Property and equipment, net |
INTANGIBLE ASSETS, NET AND UN40
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE | |
Schedule of intangible assets, net | As of December 31, 2015 2016 Intangible assets with indefinite life: Brand name Master brand agreement (Note 3) — Intangible assets with definite life: Franchise agreements Non-compete agreement Favorable lease agreements Purchased software Total Less: Accumulated amortization ) ) Total |
Schedule of unfavorable lease | As of December 31, 2015 2016 Unfavorable lease agreements Less: Accumulated amortization ) ) Unfavorable lease agreements, net |
Schedule of annual estimated amortization expense for intangible assets and unfavorable lease | Amortization for Amortization for Net Amortization 2017 ) 2018 ) 2019 ) 2020 ) 2021 ) Thereafter ) Total ) |
LAND USE RIGHTS (Tables)
LAND USE RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LAND USE RIGHTS | |
Schedule of land use rights | As of December 31, 2015 2016 Land use rights (Note 3) — Less: Accumulated amortization — ) Total — |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM INVESTMENTS | |
Schedule of long-term investments | As of December 31, 2015 2016 Available-for-sale securities: Quanjude Tang Palace — Banyan Tree — Cjia — Cost-method investments: UBOX/BJ UBOX BJ GOOAGOO/GOOAGOO Founder Service Qingpu Other investments — Equity-method investments: Sheen Star Yibang — Distrii — AAPC LUB — China Young — CREATER — Other investments Total |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | Gross Accumulated Net Balance at January 1, 2014 ) Impairment losses recognized — ) ) Balance at December 31, 2014 ) Increase in goodwill related to acquisitions — Impairment losses recognized — ) ) Balance at December 31, 2015 ) Increase in goodwill related to acquisitions — Balance at December 31, 2016 ) |
LOAN RECEIVABLES, NON-CURRENT44
LOAN RECEIVABLES, NON-CURRENT PORTION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LOAN RECEIVABLES, NON-CURRENT PORTION | |
Schedule of non-current portion of loan receivables | As of December 31, 2015 2016 Loan receivables from franchisees |
ACCRUED EXPENSES AND OTHER CU45
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2015 2016 Payable for business acquisitions Business taxes, value-added tax and other surcharge payables Accrual for customer loyalty program Payable to noncontrolling interest holders Payable to franchisees Other payables Accrued rental Accrued utilities Other accrued expenses Total |
OTHER LONG-TERM LIABILITIES (Ta
OTHER LONG-TERM LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
OTHER LONG-TERM LIABILITIES | |
Schedule of other long-term liabilities | As of December 31, 2015 2016 Deposits from franchisees Others Total |
HOTEL OPERATING COSTS (Tables)
HOTEL OPERATING COSTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
HOTEL OPERATING COSTS | |
Schedule of hotel operating costs | Year Ended December 31, 2014 2015 2016 Rents Utilities Personnel costs Depreciation and amortization Consumable, food and beverage Others Total |
PRE-OPENING EXPENSES (Tables)
PRE-OPENING EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PRE-OPENING EXPENSES | |
Schedule of pre-opening expenses incurred during the hotel pre-opening period | Year Ended December 31, 2014 2015 2016 Rents Personnel costs Others Total |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SHARE-BASED COMPENSATION | |
Summary of significant assumptions used for estimating fair value of stock options | 2014 2015 Suboptimal exercise factor 4.40 4.16 Risk-free interest rate 1.89 to 1.99% 1.49 to 1.74% Volatility 47.22 to 47.75% 38.88 to 39.25% Dividend yield — — Life of option 6 years 6 years |
Summary of the Group's share option activity under the option plans | Number of Weighted Average Weighted Average Aggregate Intrinsic US$ Years US$’000 Share options outstanding at January 1, 2016 Forfeited ) Exercised ) Adjusted Share options outstanding at December 31, 2016 Share options vested or expected to vest at December 31, 2016 Share options exercisable at December 31, 2016 |
Summary of the Group's nonvested restricted stock activity | Number of Restricted Stocks Weighted Average Grant Date US$ Nonvested restricted stocks outstanding at January 1, 2016 Granted Forfeited ) Vested ) Adjusted Nonvested restricted stocks outstanding at December 31, 2016 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per share | Year Ended December 31, 2014 2015 2016 Net income attributable to ordinary shareholders — basic Net income attributable to ordinary shareholders — diluted Weighted average ordinary shares outstanding — basic Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method Weighted average ordinary shares outstanding — diluted Basic earnings per share Diluted earnings per share |
Schedule of outstanding securities excluded from the computation of diluted earnings per share | Year Ended December 31, 2014 2015 2016 Outstanding employee options and nonvested restricted stocks — — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of tax expense (benefit) | As of December 31, 2014 2015 2016 Current Tax Deferred Tax ) ) Total |
Schedule of a reconciliation between the effective income tax rate and PRC statutory income tax rate | Year Ended December 31, 2014 2015 2016 PRC statutory tax rate % % % Tax effect of other expenses that are not deductible in determining taxable profit % % % Effect of different tax rate of group entities operating in other jurisdictions — — )% Effect of change in valuation allowance % % % Effect of tax holiday )% )% )% Effect of cash dividends — % % Effect of disposal of subsidiary — — )% Effective tax rate % % % |
Schedule of the aggregate amount and per share effect of the tax holidays | Year Ended December 31, 2014 2015 2016 Aggregate amount Per share effect—basic Per share effect—diluted |
Schedule of the principal components of the Group's deferred income tax assets and liabilities | As of December 31, 2015 2016 Deferred tax assets: Net loss carryforward Pre-opening expenses — Deferred revenue Deferred rent Long-term assets Bad debt provision Accrual for customer loyalty program Accrued payroll Other accrued expenses Share-based compensation Others Valuation allowance ) ) Total deferred tax assets Deferred tax liabilities: Favorable lease, building and land use rights-fair value adjustment Capitalized interest Unrealized gain for investment Others Total deferred tax liabilities |
Schedule of unrecognized tax benefits | As of December 31, 2014 2015 2016 Balance at January 1 Addition for tax positions Balance at December 31 |
RELATED PARTY TRANSACTIONS AN52
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
Schedule of related parties | Related Party Nature of the Party Relationship with the Group Ctrip.com International, Ltd. (“Ctrip”) Online travel services provider Mr. Qi Ji is a director Lijiang Yibang Changchunteng Hotel Co Limited (“Yibang”)* Hotel Equity method investee of the Group Sheen Star Group Limited (“Sheen Star”) Investment holding company Equity method investee of the Group, controlled by Mr. Qi Ji Shanghai Qianya Hotel Management Co., Ltd (“Qianya”) Hotels management Investee of the Group Accor Hotels (“Accor”) Hotel Group Shareholder of the Group Chengjia (Shanghai) Apartment Management Co., Ltd. (Cjia) Apartment Management Group Equity method investee of the Group Jiyuan Zhongzhou Express Hotel Co., Ltd. (“Jiyuan”) Hotel Equity method investee of the Group Shanghai Yechun Catering Co., Ltd. (“Yechun”) Catering Management Company Equity method investee of the Group * In June 2016, the Group disposed the equity investment in Yibang, subsequent to which Yibang is no longer a related party of the Group. |
Schedule of amounts due from related parties | As of December 31, 2015 2016 Yibang — Sheen Star — Accor — Cjia — Jiyuan — Yechun — Ctrip — Total |
Schedule of amounts due to related party | As of December 31, 2015 2016 Ctrip -Payables for hotel reservation services -Payables for Starway acquisition — Qianya -Payables for service fee Accor -Payables for brand use fee, reservation fee and other related service fee — Jiyuan -Payables for cash collected on behalf — Yechun -Payables for cash collected on behalf — Total |
Schedule of related party transactions | Year Ended December 31, 2014 2015 2016 Commission expenses to Ctrip Service fee from Yibang Service fee to Qianya — Brand use fee, reservation fee and other related service fee to Accor — — Marketing and training fee from Ctrip — — Service fee from Accor — — Goods sold and service provided to Cjia — — Interest income from Sheen Star — — Total |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease payments under non-cancellable operating lease agreements | Future minimum lease payments under non-cancellable operating lease agreements at December 31, 2016 were as follows: Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter Total |
ORGANIZATION AND PRINCIPAL AC54
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) - item | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Leased and owned hotels | ||
Organization and presentation activities | ||
Number of hotels | 624 | 616 |
Manachised hotels | ||
Organization and presentation activities | ||
Number of hotels | 2,471 | 2,067 |
Franchised hotels | ||
Organization and presentation activities | ||
Number of hotels | 174 | 80 |
Minimum | ||
Organization and presentation activities | ||
Term of franchise and management agreement | 8 years | |
Minimum | Leased and owned hotels | ||
Organization and presentation activities | ||
Lease rent holiday period | 2 months | |
Fixed escalation in rent (as a percent) | 3.00% | |
Period before rent escalations | 3 years | |
Maximum | ||
Organization and presentation activities | ||
Term of franchise and management agreement | 10 years | |
Maximum | Leased and owned hotels | ||
Organization and presentation activities | ||
Lease rent holiday period | 6 months | |
Fixed escalation in rent (as a percent) | 5.00% | |
Period before rent escalations | 5 years |
SUMMARY OF PRINCIPAL ACCOUNTI55
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Investments, Loan receivables and Inventories (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investments | |||
Impairment loss | ¥ 3,208 | ¥ 0 | ¥ 0 |
Inventories | |||
Estimated useful life of small appliances and bedding | 1 year |
SUMMARY OF PRINCIPAL ACCOUNTI56
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Property and equipment, net (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Minimum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 5 years | 5 years | 5 years |
Maximum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 10 years | 10 years | 10 years |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | Shorter of the lease term or their estimated useful lives | ||
Buildings | Minimum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 20 years | ||
Buildings | Maximum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 40 years | ||
Furniture, fixtures and equipment | Minimum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 3 years | ||
Furniture, fixtures and equipment | Maximum | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 5 years | ||
Motor vehicles | |||
Property and equipment, net | |||
Property and equipment, estimated useful life | 5 years |
SUMMARY OF PRINCIPAL ACCOUNTI57
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Impairment of long-lived assets (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | May 31, 2016 | |
Accounting policies | ||||||
Long-lived asset impairment loss | ¥ 150,533 | ¥ 93,163 | ¥ 27,203 | |||
Goodwill impairment loss | 0 | 2,445 | 188 | |||
Estimated liability accruals under customer loyalty program | 113,749 | ¥ 121,066 | ||||
Hotel manager fees recognized as revenue | 321,346 | 261,743 | 166,572 | |||
Revenue recognized from customer loyalty program | 145,459 | 130,644 | 107,737 | |||
VAT (as a percent) | 6.00% | |||||
Advertising related expenses | 64,666 | 47,971 | 79,806 | |||
Unrestricted government subsidies from local governmental agencies | 83,498 | 28,188 | 19,657 | |||
Deferred rent current | 37,224 | 37,648 | ||||
Deferred rent long-term | 945,192 | $ 147,464 | ¥ 1,023,843 | |||
Interest cost incurred | 11,056 | 5,383 | 14,733 | |||
Interest cost capitalized | ¥ 0 | ¥ 1,529 | ¥ 13,200 | |||
Master Brand Agreement | ||||||
Accounting policies | ||||||
Initial term | 70 years | |||||
Minimum | ||||||
Accounting policies | ||||||
Estimated membership duration | 2 years | |||||
Minimum | Land use rights | ||||||
Accounting policies | ||||||
Remaining contractual term | 30 years | |||||
Maximum | ||||||
Accounting policies | ||||||
Redemption period for points earned by members on paid stays | 2 years | |||||
Estimated membership duration | 5 years | |||||
Maximum | Land use rights | ||||||
Accounting policies | ||||||
Remaining contractual term | 50 years |
SUMMARY OF PRINCIPAL ACCOUNTI58
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Fair value (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair value | |||
Cost-method investments | ¥ 172,571 | ¥ 145,302 | |
Short-term available-for-sale securities | 506,407 | ||
Long-lived asset impairment loss | 150,533 | 93,163 | ¥ 27,203 |
Goodwill impairment loss | 0 | 2,445 | 188 |
Long-term investments, impairment loss | ¥ 3,208 | ¥ 0 | ¥ 0 |
Revenue growth rate used for level 3 measurement (as a percent) | 4.00% | 4.00% | 4.00% |
Discount rate used for level 3 measurement (as a percent) | 20.00% | 20.00% | 20.00% |
Recurring basis | |||
Fair value | |||
Short-term available-for-sale securities | ¥ 506,407 | ||
Long-term available-for-sale securities | ¥ 247,085 | 166,546 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair value | |||
Short-term available-for-sale securities | 506,407 | ||
Long-term available-for-sale securities | 204,945 | 166,546 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | |||
Fair value | |||
Long-term available-for-sale securities | 42,140 | ||
Non-recurring basis | |||
Fair value | |||
Property and equipment | 20,706 | 21,879 | ¥ 13,561 |
Non-recurring basis | Carrying value | |||
Fair value | |||
Property and equipment | 171,239 | 115,042 | 40,764 |
Non-recurring basis | Significant Unobservable Inputs (Level 3) | |||
Fair value | |||
Property and equipment | ¥ 20,706 | ¥ 21,879 | ¥ 13,561 |
SUMMARY OF PRINCIPAL ACCOUNTI59
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Share-based compensation (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based compensation | |||
Recognized share-based compensation expenses | ¥ 55,436 | ¥ 52,535 | ¥ 31,937 |
Treasury shares | |||
Repurchase of ordinary shares (in shares) | 3,096,764 | 3,096,764 | |
Cash consideration paid for ordinary shares repurchased | ¥ 107,331 | ||
Hotel operating costs | |||
Share-based compensation | |||
Recognized share-based compensation expenses | ¥ 13,603 | 8,835 | 6,830 |
Selling and marketing expenses | |||
Share-based compensation | |||
Recognized share-based compensation expenses | 811 | 907 | 939 |
General and administrative expenses | |||
Share-based compensation | |||
Recognized share-based compensation expenses | ¥ 41,022 | ¥ 42,793 | ¥ 24,168 |
SUMMARY OF PRINCIPAL ACCOUNTI60
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Recently issued accounting pronouncements (Details) ¥ in Thousands | Dec. 31, 2016CNY (¥)¥ / $ |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Future minimum operating lease commitments | ¥ | ¥ 19,054,285 |
Translation into United States Dollars | |
Foreign exchange rate used to translate amounts denominated in RMB to US dollar | ¥ / $ | 6.9430 |
ACQUISITIONS - Hotels (Details)
ACQUISITIONS - Hotels (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016USD ($)item | Dec. 31, 2015CNY (¥)item | Dec. 31, 2014CNY (¥)item | Dec. 31, 2016CNY (¥) | Dec. 31, 2013CNY (¥) | |
Acquisitions | |||||
Goodwill | $ 24,702 | ¥ 108,344 | ¥ 64,654 | ¥ 171,504 | ¥ 64,842 |
Minimum | |||||
Acquisitions | |||||
Amortization period of property and equipment | 5 years | 5 years | 5 years | ||
Maximum | |||||
Acquisitions | |||||
Amortization period of property and equipment | 10 years | 10 years | 10 years | ||
One individual hotel acquired in 2014 | |||||
Acquisitions | |||||
Current assets | ¥ 25 | ||||
Property and equipment | 10,477 | ||||
Deferred tax liabilities | (832) | ||||
Noncontrolling interest | (25) | ||||
Total | 12,975 | ||||
One individual hotel acquired in 2014 | Favorable lease agreements | |||||
Acquisitions | |||||
Intangible assets | ¥ 3,330 | ||||
One individual hotel acquired in 2014 | Individual hotel | |||||
Acquisitions | |||||
Number of acquisitions | item | 1 | ||||
One hotel chain and two individual hotels acquired in 2015 | |||||
Acquisitions | |||||
Current assets | ¥ 3,382 | ||||
Property and equipment | 74,222 | ||||
Deferred tax assets | 515 | ||||
Goodwill | 46,135 | ||||
Other noncurrent assets | 663 | ||||
Current liabilities | (22,864) | ||||
Deferred tax liabilities | (11,146) | ||||
Noncontrolling interest | (8,264) | ||||
Total | 127,226 | ||||
One hotel chain and two individual hotels acquired in 2015 | Favorable lease agreements | |||||
Acquisitions | |||||
Intangible assets | 41,283 | ||||
One hotel chain and two individual hotels acquired in 2015 | Franchise agreements | |||||
Acquisitions | |||||
Intangible assets | ¥ 3,300 | ||||
One hotel chain and two individual hotels acquired in 2015 | Hotel chain | |||||
Acquisitions | |||||
Number of acquisitions | item | 1 | ||||
Number of hotels | item | 13 | ||||
One hotel chain and two individual hotels acquired in 2015 | Individual hotel | |||||
Acquisitions | |||||
Number of acquisitions | item | 2 | ||||
Two individual hotels acquired in 2016 | |||||
Acquisitions | |||||
Current assets | 5,330 | ||||
Property and equipment | 28,412 | ||||
Current liabilities | (34,495) | ||||
Deferred tax liabilities | (1,251) | ||||
Total | 3,000 | ||||
Two individual hotels acquired in 2016 | Favorable lease agreements | |||||
Acquisitions | |||||
Intangible assets | ¥ 5,004 | ||||
Two individual hotels acquired in 2016 | Individual hotel | |||||
Acquisitions | |||||
Number of acquisitions | item | 2 |
ACQUISITIONS - AccorHotels (Det
ACQUISITIONS - AccorHotels (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Jan. 31, 2016CNY (¥)shares | Dec. 31, 2016USD ($)item | Dec. 31, 2016CNY (¥)item | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2013CNY (¥) | |
Acquisitions | |||||||
Total consideration | $ 164,701 | ¥ 1,143,521 | |||||
Net revenue | 941,759 | 6,538,631 | ¥ 5,774,624 | ¥ 4,964,728 | |||
Net income | 115,888 | ¥ 804,615 | 436,600 | 307,348 | |||
Fair values of assets acquired and liabilities assumed: | |||||||
Goodwill | $ 24,702 | ¥ 108,344 | ¥ 64,654 | ¥ 171,504 | ¥ 64,842 | ||
Minimum | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Amortization period of property and equipment | 5 years | 5 years | 5 years | 5 years | |||
Maximum | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Amortization period of property and equipment | 10 years | 10 years | 10 years | 10 years | |||
AAPC LUB | |||||||
Acquisitions | |||||||
Noncontrolling interest (as a percent) | 28.16% | ||||||
Accor | |||||||
Acquisitions | |||||||
Percentage of ownership interest acquired | 100.00% | ||||||
Total consideration | ¥ 1,143,521 | ||||||
Cash consideration | ¥ 120,439 | ||||||
Number of shares issued as share consideration | shares | 24,895,543 | ||||||
Net revenue | ¥ 152,595 | ||||||
Net income | 64,047 | ||||||
Business acquisition, pro forma information | |||||||
Pro forma net revenue | 6,548,083 | ¥ 5,955,538 | |||||
Pro forma net income | ¥ 806,921 | ¥ 478,770 | |||||
Fair values of assets acquired and liabilities assumed: | |||||||
Current assets | ¥ 207,396 | ||||||
Property and equipment | 311,045 | ||||||
Long-term investments | 417,604 | ||||||
Goodwill | 63,160 | ||||||
Other noncurrent assets | 1,664 | ||||||
Current liabilities | (38,634) | ||||||
Deferred tax liabilities | (42,952) | ||||||
Total | ¥ 1,263,960 | ||||||
Number of reporting unit goodwill allocated to | item | 1 | 1 | |||||
Accor | Minimum | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Amortization period of property and equipment | 5 years | ||||||
Accor | Maximum | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Amortization period of property and equipment | 30 years | ||||||
Accor | Master Brand Agreement | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Intangible assets | ¥ 192,000 | ||||||
Accor | Favorable lease agreements | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Intangible assets | 3,009 | ||||||
Accor | Land use rights | |||||||
Fair values of assets acquired and liabilities assumed: | |||||||
Intangible assets | ¥ 149,668 |
SHORT-TERM INVESTMENTS MEASUR63
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE (Details) ¥ in Thousands | Dec. 31, 2015CNY (¥) |
Investment holdings | |
Short-term investments measured at fair value | ¥ 506,407 |
HMIN | |
Investment holdings | |
Short-term investments measured at fair value | ¥ 506,407 |
SHORT-TERM INVESTMENTS MEASUR64
SHORT-TERM INVESTMENTS MEASURED AT FAIR VALUE - Loans and Equity Investments (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2015CNY (¥) | Dec. 31, 2016USD ($)shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2014CNY (¥) |
Investment holdings | |||||
Unrealized securities holding gains (loss), net of tax | $ 2,369 | ¥ 16,449 | ¥ 68,069 | ¥ 28,458 | |
Classification of the accumulated unrealized gain from other comprehensive income to other income | $ 9,783 | ¥ 67,921 | |||
HMIN | |||||
Investment holdings | |||||
American depositary shares acquired | shares | 2,282,951 | ||||
Payments to acquire available-for-sale securities | ¥ 434,811 | ||||
Percentage of equity interest acquired | 4.70% | ||||
Available-for-sale securities | ¥ 506,407 | 506,407 | |||
Unrealized securities holding gains (loss), net of tax | ¥ 46,617 | ||||
American depositary shares sold | shares | 2,282,951 | 2,282,951 | |||
Classification of the accumulated unrealized gain from other comprehensive income to other income | ¥ 67,921 |
LOAN RECEIVABLES, CURRENT POR65
LOAN RECEIVABLES, CURRENT PORTION (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
LOAN RECEIVABLES, CURRENT PORTION | |||||
Total | ¥ 26,808 | $ 3,228 | ¥ 22,410 | ||
Franchisees | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Total | 16,955 | 14,649 | |||
Other entities | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Total | 9,853 | ¥ 7,761 | |||
Loans receivable current | Franchisees | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Interest income | ¥ 1,292 | 1,124 | ¥ 184 | ||
Loans receivable current | Franchisees | Minimum | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Term of loan agreement | 2 years | ||||
Interest rate | 8.00% | 8.00% | |||
Loans receivable current | Franchisees | Maximum | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Term of loan agreement | 3 years | ||||
Interest rate | 8.50% | 8.50% | |||
Loans receivable current | Other entities | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Interest income | ¥ 1,186 | ¥ 2,273 | ¥ 91 | ||
Loans receivable current | Other entities | Minimum | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Interest rate | 0.00% | 0.00% | |||
Loans receivable current | Other entities | Maximum | |||||
LOAN RECEIVABLES, CURRENT PORTION | |||||
Interest rate | 12.00% | 12.00% |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Cost: | |||
Property and equipment, gross | ¥ 6,745,455 | ¥ 6,205,865 | |
Less: Accumulated depreciation | (3,196,496) | (2,582,184) | |
Property and equipment net excluding construction in process | 3,548,959 | 3,623,681 | |
Construction in progress | 161,509 | 182,205 | |
Property and equipment, net | $ 534,419 | 3,710,468 | 3,805,886 |
Buildings | |||
Cost: | |||
Property and equipment, gross | 255,646 | 12,115 | |
Leasehold improvements | |||
Cost: | |||
Property and equipment, gross | 5,563,815 | 5,354,550 | |
Furniture, fixtures and equipment | |||
Cost: | |||
Property and equipment, gross | 925,174 | 838,380 | |
Motor vehicles | |||
Cost: | |||
Property and equipment, gross | ¥ 820 | ¥ 820 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016CNY (¥)item | Dec. 31, 2015CNY (¥)item | Dec. 31, 2014CNY (¥)item | |
PROPERTY AND EQUIPMENT, NET | |||
Depreciation expense | ¥ 673,784 | ¥ 648,277 | ¥ 559,918 |
Number of hotels demolished | item | 2 | 1 | 1 |
Property and equipment written off | ¥ 9,905 | ¥ 2,301 | ¥ 3,971 |
Gain (loss) on demolition of property and equipment | (7,205) | 5,519 | 33 |
Cash received from demolished leased hotel | 2,099 | ¥ 5,721 | ¥ 4,004 |
Reimbursements receivable | ¥ 2,700 | ||
Number of hotels likely to be demolished | item | 2 | ||
Property and equipment aggregate carrying amount | ¥ 7,749 |
INTANGIBLE ASSETS, NET AND UN68
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE - Schedule (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Intangible assets, net | |||||
Intangible assets, gross | ¥ 205,066 | ¥ 422,975 | |||
Less: Accumulated amortization | (60,254) | (80,281) | |||
Total | 144,812 | $ 49,358 | 342,694 | ||
Unfavorable lease | |||||
Unfavorable lease agreements | 3,924 | 3,924 | |||
Less: Accumulated amortization | (2,893) | (3,102) | |||
Unfavorable lease agreements, net | 1,031 | 822 | |||
Amortization expense of intangible assets | ¥ 17,173 | 13,415 | ¥ 11,101 | ||
Franchise agreements | |||||
Intangible assets, net | |||||
Intangible assets, gross | 11,000 | 11,000 | |||
Non-compete agreement | |||||
Intangible assets, net | |||||
Intangible assets, gross | 400 | 400 | |||
Favorable lease agreements | |||||
Intangible assets, net | |||||
Intangible assets, gross | 120,661 | 135,874 | |||
Purchased software | |||||
Intangible assets, net | |||||
Intangible assets, gross | 44,405 | 55,101 | |||
Brand name | |||||
Intangible assets, net | |||||
Intangible assets, gross | ¥ 28,600 | 28,600 | |||
Master Brand Agreement | |||||
Intangible assets, net | |||||
Intangible assets, gross | ¥ 192,000 |
INTANGIBLE ASSETS, NET AND UN69
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE - Amortization (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Amortization for Intangible Assets | ||
2,017 | ¥ 15,793 | |
2,018 | 14,687 | |
2,019 | 14,259 | |
2,020 | 13,898 | |
2,021 | 13,213 | |
Thereafter | 50,246 | |
Amortization for Intangible Assets, Total | 122,096 | |
Amortization for Unfavorable Lease | ||
2,017 | (130) | |
2,018 | (130) | |
2,019 | (130) | |
2,020 | (130) | |
2,021 | (130) | |
Thereafter | (172) | |
Amortization for Unfavorable Lease, Total | (822) | ¥ (1,031) |
Net Amortization | ||
2,017 | 15,663 | |
2,018 | 14,557 | |
2,019 | 14,129 | |
2,020 | 13,768 | |
2,021 | 13,083 | |
Thereafter | 50,074 | |
Net Amortization, Total | ¥ 121,274 |
LAND USE RIGHTS (Details)
LAND USE RIGHTS (Details) - 12 months ended Dec. 31, 2016 ¥ in Thousands, $ in Thousands | CNY (¥) | USD ($) | CNY (¥) |
LAND USE RIGHTS | |||
Land use rights (Note 3) | ¥ 149,668 | ||
Less: Accumulated amortization | (4,147) | ||
Total | $ 20,959 | ¥ 145,521 | |
Amortization expense of land use rights | ¥ 4,147 |
LONG-TERM INVESTMENTS - Schedul
LONG-TERM INVESTMENTS - Schedule (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Investment holdings | |||
Long-term investments | $ 153,294 | ¥ 1,064,321 | ¥ 344,242 |
Available-for-sale securities | Quanjude | |||
Investment holdings | |||
Long-term investments | 159,305 | 166,546 | |
Available-for-sale securities | Tang Palace | |||
Investment holdings | |||
Long-term investments | 18,856 | ||
Available-for-sale securities | Banyan Tree | |||
Investment holdings | |||
Long-term investments | 26,784 | ||
Available-for-sale securities | Cjia | |||
Investment holdings | |||
Long-term investments | 42,140 | ||
Cost-method investments | BJ UBOX | |||
Investment holdings | |||
Long-term investments | 48,220 | 48,220 | |
Cost-method investments | BJ GOOAGOO | |||
Investment holdings | |||
Long-term investments | 60,000 | 59,939 | |
Cost-method investments | Founder Service | |||
Investment holdings | |||
Long-term investments | 45,000 | 20,000 | |
Cost-method investments | Qingpu | |||
Investment holdings | |||
Long-term investments | 17,143 | 17,143 | |
Cost-method investments | Other investments | |||
Investment holdings | |||
Long-term investments | 2,208 | ||
Equity-method investments | Sheen Star | |||
Investment holdings | |||
Long-term investments | 20,862 | 20,862 | |
Equity-method investments | Yibang | |||
Investment holdings | |||
Long-term investments | 770 | ||
Equity-method investments | Distrii | |||
Investment holdings | |||
Long-term investments | 28,562 | ||
Equity-method investments | AAPC LUB | |||
Investment holdings | |||
Long-term investments | 446,100 | ||
Equity-method investments | China Young | |||
Investment holdings | |||
Long-term investments | 43,054 | ||
Equity-method investments | CREATER | |||
Investment holdings | |||
Long-term investments | 100,000 | ||
Equity-method investments | Other investments | |||
Investment holdings | |||
Long-term investments | ¥ 6,087 | ¥ 10,762 |
LONG-TERM INVESTMENTS - Availab
LONG-TERM INVESTMENTS - Available-for-sale securities (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥)shares | Jun. 30, 2014CNY (¥)¥ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Available-for-sale securities | ||||||
Unrealized securities holding gains (loss), net of tax | $ 2,369 | ¥ 16,449 | ¥ 68,069 | ¥ 28,458 | ||
Investment income (loss) | $ 886 | ¥ 6,157 | (2,896) | ¥ 1,865 | ||
Quanjude | ||||||
Available-for-sale securities | ||||||
Ordinary shares acquired in investment of available-for-sale (in shares) | shares | 7,241,131 | |||||
Price of investment (in RMB per share) | ¥ / shares | ¥ 13.81 | |||||
Consideration/purchase cost | ¥ 100,000 | |||||
Percentage of equity interest acquired | 2.35% | |||||
Tang Palace | ||||||
Available-for-sale securities | ||||||
Ordinary shares acquired in investment of available-for-sale (in shares) | shares | 8,430,000 | 8,430,000 | ||||
Consideration/purchase cost | ¥ 16,887 | |||||
Percentage of equity interest acquired | 1.99% | 1.99% | ||||
Banyan Tree | ||||||
Available-for-sale securities | ||||||
Ordinary shares acquired in investment of available-for-sale (in shares) | shares | 11,635,400 | |||||
Consideration/purchase cost | ¥ 27,328 | |||||
Percentage of equity interest acquired | 1.53% | 1.53% | ||||
Cjia | ||||||
Available-for-sale securities | ||||||
Percentage of equity interest owned | 22.52% | 22.52% | ||||
Debt security term | 60 months | 60 months | ||||
Original value of convertible note | ¥ 51,200 | ¥ 51,200 | ||||
Period before maturity date for converting debt securities into ordinary shares under certain conditions | 12 months | 12 months | ||||
Investment income (loss) | ¥ 24,615 | |||||
Cost of equity-method investment | 0 | 0 | ||||
Carrying amount of convertible note | ¥ 42,140 | 42,140 | ||||
Chengjia Hotel Management Co., Ltd. | Cjia | ||||||
Available-for-sale securities | ||||||
Investment income from deconsolidation | 49,630 | |||||
Available-for-sale securities | ||||||
Available-for-sale securities | ||||||
Unrealized securities holding gains (loss), net of tax | ¥ (4,856) | ¥ 21,451 |
LONG-TERM INVESTMENTS - Cost-me
LONG-TERM INVESTMENTS - Cost-method investments (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Dec. 31, 2015 | Sep. 30, 2015 | Nov. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2016 | Dec. 31, 2013 | |
BJ UBOX | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 7,703 | ¥ 7,703 | |||||
Percentage of equity interest acquired | 3.24% | 3.60% | |||||
UBOX | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 40,517 | ||||||
BJ GOOAGOO | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 10,289 | ||||||
Percentage of equity interest acquired | 8.00% | ||||||
GOOAGOO | |||||||
Cost-method investments | |||||||
Percentage of equity interest hold | 19.43% | ||||||
GOOAGOO | Series A preferred shares | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 45,000 | ||||||
Shares purchased (in shares) | 45,000,000 | ||||||
GOOAGOO | Convertible notes | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 4,650 | ||||||
Founder Service | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 20,000 | ¥ 25,000 | |||||
Percentage of equity interest acquired | 10.00% | ||||||
Percentage of equity interest hold | 10.87% | ||||||
Qingpu | |||||||
Cost-method investments | |||||||
Consideration of cost method investment | ¥ 17,143 | ¥ 17,143 | |||||
Percentage of equity interest acquired | 10.00% |
LONG-TERM INVESTMENTS - Equity-
LONG-TERM INVESTMENTS - Equity-method investments (Details) ¥ in Thousands, $ in Thousands | May 31, 2013CNY (¥) | Dec. 31, 2016CNY (¥) | Jun. 30, 2016CNY (¥) | Jan. 31, 2016CNY (¥) | Nov. 30, 2015CNY (¥) | Nov. 30, 2014CNY (¥) | Jul. 31, 2014CNY (¥) | Apr. 30, 2014CNY (¥) | Dec. 31, 2016USD ($)shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) |
Equity-method investments | ||||||||||||
Investment income (loss) | $ 886 | ¥ 6,157 | ¥ (2,896) | ¥ 1,865 | ||||||||
Sheen Star | ||||||||||||
Equity-method investments | ||||||||||||
Consideration paid for acquisition of equity method investments | ¥ 20,990 | |||||||||||
Percentage of equity interest owned | 19.99% | |||||||||||
Equity interest percentage owned in equity method investment by the majority owner | 50.01% | |||||||||||
Investment income (loss) | 0 | (153) | 0 | |||||||||
Yibang | ||||||||||||
Equity-method investments | ||||||||||||
Percentage of equity interest acquired | 30.00% | 20.00% | ||||||||||
Consideration paid for acquisition of equity method investments | ¥ 430 | ¥ 285 | ||||||||||
Investment income (loss) | ¥ (770) | ¥ (1,712) | ¥ 2,197 | |||||||||
Percentage of equity interest transferred or disposed | 50.00% | |||||||||||
Consideration for transfer of investment | ¥ 715 | |||||||||||
Recognized gain on disposal of equity-method investment | ¥ 715 | |||||||||||
Campsort | ||||||||||||
Equity-method investments | ||||||||||||
Percentage of equity interest acquired | 30.00% | |||||||||||
Consideration paid for acquisition of equity method investments | ¥ 15,000 | |||||||||||
Percentage of equity interest owned | 24.00% | |||||||||||
Investment income (loss) | ¥ (356) | |||||||||||
Percentage of equity interest transferred or disposed | 24.00% | 6.00% | ||||||||||
Consideration for transfer of investment | ¥ 14,410 | ¥ 3,000 | ||||||||||
Recognized gain on disposal of equity-method investment | ¥ 2,766 | |||||||||||
Distrii | ||||||||||||
Equity-method investments | ||||||||||||
Consideration paid for acquisition of equity method investments | ¥ 35,000 | |||||||||||
Percentage of equity interest owned | 39.00% | |||||||||||
Investment income (loss) | ¥ (6,438) | |||||||||||
AAPC LUB | ||||||||||||
Equity-method investments | ||||||||||||
Percentage of equity interest acquired | 28.16% | |||||||||||
Investment income (loss) | ¥ 28,496 | |||||||||||
China Young | ||||||||||||
Equity-method investments | ||||||||||||
Percentage of equity interest acquired | 36.72% | 36.72% | ||||||||||
Consideration paid for acquisition of equity method investments | ¥ 44,904 | |||||||||||
Investment income (loss) | ¥ (1,851) | |||||||||||
China Young | Ordinary Shares | ||||||||||||
Equity-method investments | ||||||||||||
Shares acquired in investment of equity method investments (in shares) | shares | 982 | 982 | ||||||||||
China Young | Series B preferred shares | ||||||||||||
Equity-method investments | ||||||||||||
Shares acquired in investment of equity method investments (in shares) | shares | 5,610 | 5,610 | ||||||||||
CREATER | ||||||||||||
Equity-method investments | ||||||||||||
Percentage of equity interest acquired | 20.00% | |||||||||||
Consideration paid for acquisition of equity method investments | ¥ 100,000 |
GOODWILL (Details)
GOODWILL (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Changes in carrying amount of goodwill | ||||
Balance at the beginning of the period, Gross Amount | ¥ 112,785 | ¥ 66,650 | ¥ 66,650 | |
Balance at the beginning of the period, Accumulated Impairment Loss | (4,441) | (1,996) | (1,808) | |
Balance at the beginning of the period, Net Amount | 108,344 | 64,654 | 64,842 | |
Impairment losses recognized | 0 | (2,445) | (188) | |
Increase in goodwill related to acquisitions | 63,160 | 46,135 | ||
Balance at the end of the period, Gross Amount | 175,945 | 112,785 | 66,650 | |
Balance at the end of the period, Accumulated Impairment Loss | (4,441) | (4,441) | (1,996) | |
Balance at the end of the period, Net Amount | $ 24,702 | ¥ 171,504 | ¥ 108,344 | ¥ 64,654 |
LOAN RECEIVABLES, NON-CURRENT76
LOAN RECEIVABLES, NON-CURRENT PORTION (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
LOAN RECEIVABLES, NON-CURRENT PORTION | |||||
Total | ¥ 12,336 | $ 1,047 | ¥ 7,269 | ||
Franchisees | |||||
LOAN RECEIVABLES, NON-CURRENT PORTION | |||||
Total | 12,336 | ¥ 7,269 | |||
Loans receivable non-current | Franchisees | |||||
LOAN RECEIVABLES, NON-CURRENT PORTION | |||||
Interest income | ¥ 1,091 | ¥ 986 | ¥ 266 | ||
Loans receivable non-current | Franchisees | Minimum | |||||
LOAN RECEIVABLES, NON-CURRENT PORTION | |||||
Term of loan agreement | 2 years | ||||
Interest rate | 8.00% | 8.00% | |||
Loans receivable non-current | Franchisees | Maximum | |||||
LOAN RECEIVABLES, NON-CURRENT PORTION | |||||
Term of loan agreement | 3 years | ||||
Interest rate | 8.50% | 8.50% |
DEBT (Details)
DEBT (Details) ¥ in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2016CNY (¥) | May 31, 2016CNY (¥) | Jan. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jul. 31, 2015USD ($) | Nov. 30, 2014CNY (¥) | Jan. 31, 2014CNY (¥) | Dec. 31, 2013CNY (¥) | Sep. 30, 2012CNY (¥) | Mar. 31, 2012CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2013CNY (¥) | Dec. 31, 2012CNY (¥) | Jul. 31, 2015CNY (¥) | |
Five-year bank credit facility | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 5 years | |||||||||||||||||
Line of credit facility maximum borrowing capacity | ¥ 500,000 | |||||||||||||||||
Line of credit facility expired | ¥ 100,000 | |||||||||||||||||
Three-year revolving bank credit facility | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 3 years | |||||||||||||||||
Line of credit facility maximum borrowing capacity | ¥ 500,000 | ¥ 300,000 | ¥ 500,000 | |||||||||||||||
Line of credit draw down amount | ¥ 100,000 | ¥ 0 | 104,540 | |||||||||||||||
Repayment of line of credit facility | ¥ 100,000 | ¥ 0 | ¥ 104,540 | |||||||||||||||
Line of credit facility weighted average interest rate (as a percent) | 5.61% | 5.61% | 6.00% | |||||||||||||||
Line of credit facility, letter of guarantee amount | ¥ 700 | |||||||||||||||||
Line of credit facility available for future borrowing | ¥ 499,300 | |||||||||||||||||
One-year entrusted loan | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Short term debt maximum borrowing capacity | ¥ 300,000 | ¥ 300,000 | ||||||||||||||||
Interest rate (as a percent) | 5.40% | 5.40% | ||||||||||||||||
Line of credit draw down amount | ¥ 300,000 | |||||||||||||||||
Repayment of line of credit facility | ¥ 300,000 | |||||||||||||||||
One-year bank loan due May 30, 2016 | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Line of credit facility maximum borrowing capacity | $ | $ 30 | |||||||||||||||||
Deposit pledged | ¥ 220,000 | |||||||||||||||||
Line of credit draw down amount | $ | $ 30 | |||||||||||||||||
Repayment of line of credit facility | $ | $ 30 | |||||||||||||||||
Line of credit facility weighted average interest rate (as a percent) | 1.49% | 1.49% | ||||||||||||||||
One-year bank loan due May 30, 2016 | Libor | ||||||||||||||||||
Debt | ||||||||||||||||||
Percentage points added to the reference rate | 1.20% | |||||||||||||||||
One-year bank loan due June 30, 2016 | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Line of credit facility maximum borrowing capacity | $ | $ 50 | |||||||||||||||||
Deposit pledged | ¥ 360,000 | |||||||||||||||||
Line of credit draw down amount | $ | $ 50 | |||||||||||||||||
Repayment of line of credit facility | $ | $ 50 | |||||||||||||||||
Line of credit facility weighted average interest rate (as a percent) | 1.81% | 1.81% | 1.50% | 1.50% | ||||||||||||||
One-year bank loan due June 30, 2016 | Libor | ||||||||||||||||||
Debt | ||||||||||||||||||
Percentage points added to the reference rate | 1.20% | |||||||||||||||||
One-year bank revolving loan | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Line of credit facility maximum borrowing capacity | $ | $ 43 | |||||||||||||||||
Line of credit draw down amount | $ | $ 43 | |||||||||||||||||
Repayment of line of credit facility | $ | $ 0 | |||||||||||||||||
Line of credit facility weighted average interest rate (as a percent) | 2.70% | 2.70% | ||||||||||||||||
One-year revolving corporation overdraft facility | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Line of credit facility maximum borrowing capacity | ¥ 50,000 | |||||||||||||||||
Maximum draw-down period of the facility | 3 months | |||||||||||||||||
Line of credit draw down amount | ¥ 0 | |||||||||||||||||
One-year revolving general credit facility | ||||||||||||||||||
Debt | ||||||||||||||||||
Term of debt instrument | 1 year | |||||||||||||||||
Line of credit facility maximum borrowing capacity | ¥ 200,000 | |||||||||||||||||
Line of credit draw down amount | ¥ 0 | |||||||||||||||||
Minimum | One-year bank revolving loan | Libor | ||||||||||||||||||
Debt | ||||||||||||||||||
Percentage points added to the reference rate | 2.00% |
ACCRUED EXPENSES AND OTHER CU78
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Payable for business acquisitions | ¥ 171,484 | ¥ 111,696 | |
Business taxes, value-added tax and other surcharge payables | 31,177 | 69,158 | |
Accrual for customer loyalty program | 121,066 | 113,749 | |
Payable to noncontrolling interest holders | 34,791 | 23,938 | |
Payable to franchisees | 212,242 | 34,474 | |
Other payables | 139,767 | 67,595 | |
Accrued rental | 66,804 | 48,623 | |
Accrued utilities | 46,379 | 43,690 | |
Other accrued expenses | 72,127 | 63,237 | |
Total | $ 129,027 | ¥ 895,837 | ¥ 576,160 |
Additional disclosures | |||
Payable to franchisees, term (in years) | 1 year |
OTHER LONG-TERM LIABILITIES (De
OTHER LONG-TERM LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
OTHER LONG-TERM LIABILITIES | |||
Deposits from franchisees | ¥ 249,552 | ¥ 215,424 | |
Others | 74,439 | 60,530 | |
Total | $ 46,664 | ¥ 323,991 | ¥ 275,954 |
HOTEL OPERATING COSTS (Details)
HOTEL OPERATING COSTS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
HOTEL OPERATING COSTS | ||||
Rents | ¥ 1,870,879 | ¥ 1,804,532 | ¥ 1,543,651 | |
Utilities | 345,615 | 341,620 | 323,837 | |
Personnel costs | 1,088,380 | 919,555 | 788,973 | |
Depreciation and amortization | 676,996 | 645,058 | 558,833 | |
Consumable, food and beverage | 494,764 | 485,099 | 454,795 | |
Others | 455,539 | 316,283 | 207,938 | |
Total | $ 710,381 | ¥ 4,932,173 | ¥ 4,512,147 | ¥ 3,878,027 |
PRE-OPENING EXPENSES (Details)
PRE-OPENING EXPENSES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
PRE-OPENING EXPENSES | ||||
Rents | ¥ 67,277 | ¥ 95,977 | ¥ 163,155 | |
Personnel costs | 1,560 | 5,903 | 7,217 | |
Others | 3,010 | 8,131 | 15,953 | |
Total | $ 10,348 | ¥ 71,847 | ¥ 110,011 | ¥ 186,325 |
SHARE-BASED COMPENSATION - Plan
SHARE-BASED COMPENSATION - Plan (Details) | Jul. 31, 2012shares | Jul. 31, 2012 | Dec. 31, 2016shares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2015¥ / sharesshares | Dec. 31, 2014$ / sharesshares | Dec. 31, 2014¥ / sharesshares | Mar. 31, 2015shares | Jul. 31, 2010shares | Sep. 30, 2009shares | Oct. 31, 2008shares | Jun. 30, 2007shares | Feb. 28, 2007shares |
Share options | |||||||||||||
Share based compensation | |||||||||||||
Weighted-average grant date fair value for options granted (in CNY or dollars per share) | (per share) | $ 1.88 | ¥ 11.73 | $ 2.57 | ¥ 15.79 | |||||||||
Share options | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Vesting period | 2 years | 2 years | |||||||||||
Number of options, granted (in shares) | 1,475,366 | 85,292 | 85,292 | ||||||||||
Period for assessment of performance or market conditions | 3 years | ||||||||||||
Number of options granted based on the actual performance | 88,224 | 869,232 | 869,232 | ||||||||||
Nonvested restricted stocks | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Period for assessment of performance or market conditions | 3 years | 10 years | 3 years | 3 years | |||||||||
Second anniversary of the stated vesting commencement date | Share options | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Second anniversary of the stated vesting commencement date | Nonvested restricted stocks | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Vesting ratably over the following two years | Share options | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Vesting period | 2 years | ||||||||||||
Vesting ratably over the following two years | Nonvested restricted stocks | Performance Condition | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Vesting period | 2 years | ||||||||||||
Incentive Award Plans | |||||||||||||
Share based compensation | |||||||||||||
Vesting period | 10 years | ||||||||||||
Incentive Award Plans | Maximum | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, contractual term | 10 years | ||||||||||||
Incentive Award Plans | Share options | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, option granted (in shares) | 24,577,669 | ||||||||||||
Incentive Award Plans | Nonvested restricted stocks | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, nonvested restricted stocks (in shares) | 21,503,016 | ||||||||||||
Incentive Award Plans | Second anniversary of the stated vesting commencement date | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Incentive Award Plans | Vesting ratably over the following two years | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||||||
Vesting period | 2 years | ||||||||||||
2007 Global Share Plan | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 10,000,000 | ||||||||||||
2008 Global Share Plan | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 7,000,000 | 3,000,000 | |||||||||||
2009 Share Incentive Plan | |||||||||||||
Share based compensation | |||||||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 43,000,000 | 15,000,000 | 3,000,000 |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Option assumptions and Activity (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2014CNY (¥)shares | Dec. 31, 2016CNY (¥)shares | |
Number of Options | |||||
Exercised (in shares) | (684,632) | ||||
Share options | |||||
Share based compensation | |||||
Suboptimal exercise factor | 4.16 | 4.40 | |||
Risk-free interest rate, minimum (as a percent) | 1.49% | 1.89% | |||
Risk-free interest rate, maximum (as a percent) | 1.74% | 1.99% | |||
Volatility, minimum (as a percent) | 38.88% | 47.22% | |||
Volatility, maximum (as a percent) | 39.25% | 47.75% | |||
Life of option | 6 years | 6 years | |||
Number of Options | |||||
Share options outstanding at the beginning of the period (in shares) | 3,463,538 | ||||
Forfeited (in shares) | (125,594) | ||||
Exercised (in shares) | (684,632) | (1,528,104) | (1,591,004) | ||
Adjusted (in shares) | 2,932 | ||||
Share options outstanding at the end of the period (in shares) | 2,656,244 | 3,463,538 | |||
Share options vested or expected to vest (in shares) | 2,622,285 | 2,622,285 | |||
Share options exercisable (in shares) | 2,487,443 | 2,487,443 | |||
Weighted Average Exercise Price | |||||
Share options outstanding at the beginning of the period (in dollars per shares) | $ / shares | $ 2.21 | ||||
Forfeited (in dollars per shares) | $ / shares | 2.90 | ||||
Exercised (in dollars per shares) | $ / shares | 2.31 | ||||
Adjusted (in dollars per share) | $ / shares | 4.31 | ||||
Share options outstanding at the end of the period (in dollars per shares) | $ / shares | 2.15 | ||||
Share options vested or expected to vest (in dollars per shares) | $ / shares | 2.11 | ||||
Share options exercisable (in dollars per shares) | $ / shares | $ 1.95 | ||||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Share options outstanding, Weighted average remaining contractual life | 2 years 3 months 4 days | ||||
Share options vested or expected to vest, Weighted average remaining contractual life | 2 years 2 months 27 days | ||||
Share options exercisable, Weighted average remaining contractual life | 2 years 1 month 21 days | ||||
Share options outstanding, Aggregate intrinsic value | $ | $ 28,720 | ||||
Share options vested or expected to vest, Aggregate intrinsic value | $ | 28,459 | ||||
Share options exercisable, Aggregate intrinsic value | $ | $ 27,387 | ||||
Total unrecognized compensation expense | ¥ | ¥ 2,154 | ||||
Weighted-average period for recognition of unrecognized compensation costs | 1 year 9 months 15 days | ||||
Aggregate intrinsic value of options exercised | ¥ | ¥ 40,717 | ¥ 46,433 | ¥ 42,740 |
SHARE-BASED COMPENSATION - Nonv
SHARE-BASED COMPENSATION - Nonvested restricted stocks (Details) - Nonvested restricted stocks ¥ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jul. 31, 2012shares | Dec. 31, 2016CNY (¥)$ / shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2014CNY (¥)shares | |
Number of Restricted Stocks | |||||
Nonvested restricted stocks outstanding at the beginning of the period (in shares) | 14,658,824 | ||||
Granted (in shares) | 1,919,791 | ||||
Forfeited (in shares) | (1,254,952) | ||||
Vested (in shares) | (1,820,632) | ||||
Adjusted (in shares) | 37,526 | ||||
Nonvested restricted stocks outstanding at the end of the period (in shares) | 13,540,557 | 14,658,824 | |||
Weighted Average Grant Date Fair Value | |||||
Nonvested restricted stocks outstanding at the beginning of the period (in dollars per shares) | $ / shares | $ 4.77 | ||||
Granted (in dollars per shares) | $ / shares | 7.57 | ||||
Forfeited (in dollars per shares) | $ / shares | 4.89 | ||||
Vested (in dollars per shares) | $ / shares | 4.45 | ||||
Adjusted (in dollars per share) | $ / shares | 4.80 | ||||
Nonvested restricted stocks outstanding at the end of the period (in dollars per shares) | $ / shares | $ 5.20 | ||||
Total unrecognized compensation expense | ¥ | $ 426,089 | ¥ 426,089 | |||
Weighted-average period for recognition of unrecognized compensation costs | 4 years 11 months 12 days | ||||
Total fair value of nonvested restricted stocks, vested | ¥ | ¥ 123,129 | ¥ 69,130 | ¥ 59,475 | ||
Performance or market condition | Second anniversary of the stated vesting commencement date | |||||
Share based compensation | |||||
Share-based payment award, vesting percentage | 50.00% | ||||
Performance or market condition | Vesting ratably over the following two years | |||||
Share based compensation | |||||
Share-based payment award, vesting percentage | 50.00% | ||||
Period for remaining percentage vested | 2 years | ||||
Performance Condition | |||||
Share based compensation | |||||
Period for assessment of performance or market conditions | 3 years | 10 years | 3 years | ||
Number of nonvested restricted stocks granted based on the performance | 1,557,408 | ||||
Number of Restricted Stocks | |||||
Granted (in shares) | 1,059,977 | 1,876,975 | 6,599,106 | ||
Performance Condition | Second anniversary of the stated vesting commencement date | |||||
Share based compensation | |||||
Share-based payment award, vesting percentage | 50.00% | ||||
Performance Condition | Vesting ratably over the following two years | |||||
Share based compensation | |||||
Share-based payment award, vesting percentage | 50.00% | ||||
Period for remaining percentage vested | 2 years | ||||
Market Condition | |||||
Share based compensation | |||||
Period for assessment of performance or market conditions | 3 years | ||||
Number of Restricted Stocks | |||||
Granted (in shares) | 213,209 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2016$ / shares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)¥ / sharesshares | Dec. 31, 2014CNY (¥)¥ / sharesshares | |
EARNINGS PER SHARE | ||||
Net income attributable to ordinary shareholders - basic | ¥ | ¥ 804,615 | ¥ 436,600 | ¥ 307,348 | |
Net income attributable to ordinary shareholders - diluted | ¥ | ¥ 804,615 | ¥ 436,600 | ¥ 307,348 | |
Weighted average ordinary shares outstanding - basic | 275,139,070 | 250,533,204 | 248,957,645 | |
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method | 7,750,424 | 5,570,963 | 4,046,559 | |
Weighted average ordinary shares outstanding - diluted | 282,889,494 | 256,104,167 | 253,004,204 | |
Basic earnings per share (in RMB and USD per share) | (per share) | $ 0.42 | ¥ 2.92 | ¥ 1.74 | ¥ 1.23 |
Diluted earnings per share (in RMB and USD per share) | (per share) | $ 0.41 | ¥ 2.84 | ¥ 1.70 | ¥ 1.21 |
Outstanding employee options and nonvested restricted stocks | 293,512 |
INCOME TAXES (Details)
INCOME TAXES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | 21 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | Sep. 30, 2017 | |
Income tax | |||||||||||
Tax rate (as a percent) | 25.00% | 25.00% | 25.00% | 25.00% | |||||||
Profit tax | $ 41,354 | ¥ 287,120 | ¥ 196,529 | ¥ 113,105 | |||||||
PRC | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | |
China Lodging Holdings (HK) Limited | Hong Kong | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 16.50% | 16.50% | |||||||||
Profit tax | ¥ 0 | ||||||||||
Starway | Hong Kong | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 16.50% | 16.50% | |||||||||
Profit tax | ¥ 0 | ||||||||||
IBIS China Investment Limited | Hong Kong | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 16.50% | 16.50% | |||||||||
Profit tax | ¥ 0 | ||||||||||
ACL Greater China Limited | Hong Kong | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 16.50% | 16.50% | |||||||||
Profit tax | ¥ 0 | ||||||||||
TAHM Investment Limited | Hong Kong | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 16.50% | 16.50% | |||||||||
Profit tax | ¥ 0 | ||||||||||
China Lodging Holdings Singapore Pte. Ltd. | Singapore | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 17.00% | 17.00% | 17.00% | 17.00% | |||||||
Profit tax | ¥ 0 | ¥ 0 | ¥ 0 | ||||||||
Hanting Technology (Suzhou) Co., Ltd | PRC | |||||||||||
Income tax | |||||||||||
Tax rate (as a percent) | 15.00% | ||||||||||
Income tax exemption period | 2 years | 2 years | |||||||||
Period of income tax rate reduction | 3 years | 3 years | |||||||||
Percentage of tax reduction | 50.00% | 50.00% | |||||||||
Mengguang Information and Technology (Shanghai) Co., Ltd | PRC | |||||||||||
Income tax | |||||||||||
Income tax exemption period | 2 years | 2 years | |||||||||
Period of income tax rate reduction | 3 years | 3 years | |||||||||
Percentage of tax reduction | 50.00% | 50.00% |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥)¥ / shares | Dec. 31, 2015CNY (¥)¥ / shares | Dec. 31, 2014CNY (¥)¥ / shares | |
Tax expense (benefit) | ||||
Current Tax | ¥ | ¥ 253,674 | ¥ 246,678 | ¥ 155,496 | |
Deferred Tax | $ 4,817 | 33,446 | (50,149) | (42,391) |
Total | $ 41,354 | ¥ 287,120 | ¥ 196,529 | ¥ 113,105 |
Reconciliation between the effective income tax rate and the PRC statutory income tax rate | ||||
PRC statutory tax rate | 25.00% | 25.00% | 25.00% | 25.00% |
Tax effect of other expenses that are not deductible in determining taxable profit | 3.00% | 3.00% | 3.00% | 2.00% |
Effect of different tax rate of group entities operating in other jurisdictions | (1.00%) | (1.00%) | ||
Effect of change in valuation allowance | 1.00% | 1.00% | 5.00% | 3.00% |
Effect of tax holiday | (3.00%) | (3.00%) | (7.00%) | (3.00%) |
Effect of cash dividends | 3.00% | 3.00% | 5.00% | |
Effect of disposal of subsidiary | (1.00%) | (1.00%) | ||
Effective tax rate | 27.00% | 27.00% | 31.00% | 27.00% |
Aggregate amount and per share effect of the tax holidays | ||||
Aggregate amount | ¥ | ¥ 27,224 | ¥ 41,288 | ¥ 9,131 | |
Per share effect - basic (in RMB per share) | ¥ / shares | ¥ 0.10 | ¥ 0.16 | ¥ 0.04 | |
Per share effect - diluted (in RMB per share) | ¥ / shares | ¥ 0.10 | ¥ 0.16 | ¥ 0.04 |
INCOME TAXES - Deferred income
INCOME TAXES - Deferred income tax assets and liabilities (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net loss carryforward | ¥ 97,219 | ¥ 158,910 |
Pre-opening expenses | 785 | |
Deferred revenue | 71,517 | 72,914 |
Deferred rent | 2,968 | 5,316 |
Long-term assets | 51,579 | 27,341 |
Bad debt provision | 2,856 | 1,390 |
Accrual for customer loyalty program | 30,267 | 28,437 |
Accrued payroll | 3,588 | 2,791 |
Other accrued expenses | 17,688 | 850 |
Share-based compensation | 10,978 | 10,857 |
Others | 2,379 | 1,613 |
Valuation allowance | (114,625) | (92,527) |
Total deferred tax assets | 176,414 | 218,677 |
Deferred tax liabilities: | ||
Favorable lease, building and land use rights fair value adjustment | 67,167 | 30,641 |
Capitalized interest | 3,519 | 4,163 |
Unrealized gain for investment | 14,826 | 16,636 |
Others | 10,817 | 9,853 |
Total deferred tax liabilities | ¥ 96,329 | ¥ 61,293 |
INCOME TAXES - Valuation allowa
INCOME TAXES - Valuation allowance (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Valuation allowance | ||||
Valuation allowance additions due to acquisition | ¥ 11,724 | ¥ 0 | ||
Loss carryforwards | 388,874 | |||
Uncertain tax benefits | ||||
Interest or penalty expense | 0 | 0 | ¥ 0 | |
Roll-forward of the unrecognized tax benefits | ||||
Beginning balance | 14,755 | 8,345 | 7,122 | |
Addition for tax positions | 5,032 | 6,410 | 1,223 | |
Ending balance | ¥ 19,787 | 14,755 | 8,345 | |
Withholding income tax rate (as a percentage) | 10.00% | |||
Withholding income tax rate with Hong Kong as holding company (as a percentage) | 5.00% | |||
Cumulated undistributed earnings of the Group's PRC subsidiaries | ¥ 1,881,185 | |||
PRC dividend withholding tax accrued | ¥ 0 | 30,696 | ||
Period of statute of limitations | 3 years | |||
Period of statute of limitations, if the underpayment is more than the specified amount | 5 years | |||
Minimum amount of underpayment of taxes for statute of limitations to be extended to five years | ¥ 100 | |||
Period of statute of limitations for transfer pricing issues | 10 years | |||
Valuation allowance for deferred tax assets | ||||
Valuation allowance | ||||
Charge to costs and expenses | ¥ 55,757 | 47,122 | 29,693 | |
Valuation allowance additions due to acquisition | 11,724 | |||
Charge taken against allowance | 17,064 | 15,508 | ¥ 18,421 | |
Write off | ¥ 28,319 | ¥ 1,955 | ||
Hanting (Tianjin) Investment Consulting Co., Ltd, | ||||
Roll-forward of the unrecognized tax benefits | ||||
Payment of PRC dividend withholding tax | ¥ 32,570 |
MAINLAND CHINA CONTRIBUTION P90
MAINLAND CHINA CONTRIBUTION PLAN (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
MAINLAND CHINA CONTRIBUTION PLAN | |||
Employee benefit contributions | ¥ 212,723 | ¥ 182,321 | ¥ 143,419 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
RESTRICTED NET ASSETS | |||
Minimum required percentage of after tax profit appropriated to general reserve fund | 10.00% | ||
Threshold percentage of general reserve fund to registered capital | 50.00% | ||
Reserve funds not distributed as cash dividends | ¥ 277,342 | ¥ 209,782 | ¥ 105,604 |
Restricted share capital of PRC subsidiaries | 2,410,586 | ||
Restricted net assets not available for distribution to the Company in the form of dividends, loans or advances | ¥ 2,687,928 |
RELATED PARTY TRANSACTIONS AN92
RELATED PARTY TRANSACTIONS AND BALANCES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Related party transaction | |||||
Amount due from related parties | ¥ 16,157 | $ 14,180 | ¥ 98,453 | ||
Due to related party | 7,653 | 11,058 | |||
Total related party transactions | ¥ 70,505 | 18,750 | ¥ 19,762 | ||
Yibang | |||||
Related party transaction | |||||
Amount due from related parties | 16,157 | ||||
Yibang | Service fee | |||||
Related party transaction | |||||
Revenue from related parties | 292 | 593 | 527 | ||
Sheen Star | |||||
Related party transaction | |||||
Amount due from related parties | 37,060 | ||||
Interest income from related party | 2,060 | ||||
Transfer of investment to a related party | 82,785 | ||||
Accor | |||||
Related party transaction | |||||
Amount due from related parties | 4,052 | ||||
Accor | Service fee | |||||
Related party transaction | |||||
Revenue from related parties | 4,052 | ||||
Accor | Brand use fee, reservation fee and other related service fee | |||||
Related party transaction | |||||
Due to related party | 6,019 | ||||
Expenses with related parties | 6,019 | ||||
Cjia | |||||
Related party transaction | |||||
Amount due from related parties | 50,365 | ||||
Cjia | Goods sold and service provided | |||||
Related party transaction | |||||
Revenue from related parties | 353 | ||||
Cjia | Chengjia Hotel Management Co., Ltd. | |||||
Related party transaction | |||||
Consideration from sale of subsidiary | 10,000 | ||||
Jiyuan | |||||
Related party transaction | |||||
Amount due from related parties | 3,398 | ||||
Jiyuan | Cash collected | |||||
Related party transaction | |||||
Due to related party | 59 | ||||
Yechun | |||||
Related party transaction | |||||
Amount due from related parties | 375 | ||||
Yechun | Cash collected | |||||
Related party transaction | |||||
Due to related party | 1,525 | ||||
Ctrip | |||||
Related party transaction | |||||
Amount due from related parties | 3,203 | ||||
Ctrip | Hotel reservation services | |||||
Related party transaction | |||||
Due to related party | 3,332 | 3,291 | |||
Ctrip | Starway acquisition | |||||
Related party transaction | |||||
Due to related party | 4,084 | ||||
Ctrip | Marketing and training fee | |||||
Related party transaction | |||||
Revenue from related parties | 12,667 | ||||
Ctrip | Commission expenses | |||||
Related party transaction | |||||
Expenses with related parties | 44,119 | 17,740 | ¥ 19,235 | ||
Qianya | Service fee | |||||
Related party transaction | |||||
Due to related party | 237 | ¥ 164 | |||
Expenses with related parties | ¥ 943 | ¥ 417 |
COMMITMENTS AND CONTINGENCIES93
COMMITMENTS AND CONTINGENCIES (Details) ¥ in Thousands | Dec. 31, 2016CNY (¥) |
Operating lease commitments | |
2,017 | ¥ 1,956,958 |
2,018 | 1,939,120 |
2,019 | 1,906,911 |
2,020 | 1,840,032 |
2,021 | 1,722,612 |
Thereafter | 9,688,652 |
Total | 19,054,285 |
Purchase commitments | |
Purchase commitments expected to be incurred within one year related to leasehold improvements and installation of equipment for hotel operations | 43,139 |
Other operating expense | |
Contingencies | |
Accrued contingencies | ¥ 66,234 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event ¥ in Millions, $ in Millions | 1 Months Ended | |
Feb. 28, 2017CNY (¥) | Jan. 31, 2017USD ($) | |
Crystal Orange | ||
SUBSEQUENT EVENT | ||
Consideration for acquisition | ¥ 3,650 | |
Cash deposit paid for the acquisition | ¥ 700 | |
Mobike Limited | ||
SUBSEQUENT EVENT | ||
Consideration for purchase of investments | $ | $ 10 |
SCHEDULE I FINANCIAL INFORMAT95
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2013CNY (¥) |
Current assets: | ||||||
Cash and cash equivalents | $ 465,938 | ¥ 3,235,007 | $ 178,286 | ¥ 1,237,838 | ¥ 808,865 | ¥ 397,435 |
Other current assets | 30,091 | 208,929 | 167,995 | |||
Total current assets | 601,279 | 4,174,681 | 2,863,778 | |||
Long-term investments | 153,294 | 1,064,321 | 344,242 | |||
Total assets | 1,439,344 | 9,993,364 | 7,693,521 | |||
Current liabilities: | ||||||
Short-term bank borrowing | 42,963 | 298,291 | 324,680 | |||
Salary and welfare payable | 39,501 | 274,259 | 210,955 | |||
Dividends payable | 276,261 | |||||
Amount due to related parties | 1,593 | 11,058 | 7,653 | |||
Accrued expenses and other current liabilities | 129,027 | 895,837 | 576,160 | |||
Total current liabilities | 427,205 | 2,966,081 | 2,789,473 | |||
Total liabilities | 659,255 | 4,577,207 | 4,252,773 | |||
Equity: | ||||||
Ordinary shares (US$0.0001 par value per share; 8,000,000,000 shares authorized; 253,978,323 and 281,379,130 shares issued as of December 31, 2015 and 2016, and 250,881,559 and 278,282,366 shares outstanding as of December 31, 2015 and 2016, respectively) | 29 | 204 | 186 | |||
Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2015 and 2016, respectively) | (15,459) | (107,331) | (107,331) | |||
Additional paid-in capital | 532,776 | 3,699,056 | 2,470,099 | |||
Retained earnings | 261,007 | 1,812,174 | 1,007,559 | |||
Accumulated other comprehensive income (loss) | (649) | (4,503) | 59,596 | |||
Total equity | 777,704 | 5,399,600 | 3,430,109 | |||
Total liabilities and equity | 1,439,344 | 9,993,364 | 7,693,521 | |||
Parent Company | ||||||
Current assets: | ||||||
Cash and cash equivalents | 53,872 | 374,036 | $ 17,431 | 121,025 | ¥ 94,749 | ¥ 61,182 |
Short-term investments | 324,780 | |||||
Other current assets | 25 | 173 | 2,573 | |||
Total current assets | 53,897 | 374,209 | 448,378 | |||
Investment in subsidiaries | 793,912 | 5,512,131 | 3,833,404 | |||
Long-term investments | 6,574 | 45,640 | ||||
Total assets | 854,383 | 5,931,980 | 4,281,782 | |||
Current liabilities: | ||||||
Short-term bank borrowing | 42,963 | 298,291 | 324,680 | |||
Salary and welfare payable | 25 | |||||
Dividends payable | 276,261 | |||||
Amount due to related parties | 32,033 | 222,402 | 222,402 | |||
Accrued expenses and other current liabilities | 1,683 | 11,687 | 28,305 | |||
Total current liabilities | 76,679 | 532,380 | 851,673 | |||
Total liabilities | 76,679 | 532,380 | 851,673 | |||
Equity: | ||||||
Ordinary shares (US$0.0001 par value per share; 8,000,000,000 shares authorized; 253,978,323 and 281,379,130 shares issued as of December 31, 2015 and 2016, and 250,881,559 and 278,282,366 shares outstanding as of December 31, 2015 and 2016, respectively) | 29 | 204 | 186 | |||
Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2015 and 2016, respectively) | (15,459) | (107,331) | (107,331) | |||
Additional paid-in capital | 532,776 | 3,699,056 | 2,470,099 | |||
Retained earnings | 261,007 | 1,812,174 | 1,007,559 | |||
Accumulated other comprehensive income (loss) | (649) | (4,503) | 59,596 | |||
Total equity | 777,704 | 5,399,600 | 3,430,109 | |||
Total liabilities and equity | $ 854,383 | ¥ 5,931,980 | ¥ 4,281,782 |
SCHEDULE I FINANCIAL INFORMAT96
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Parenthetical) (Details) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
BALANCE SHEETS | ||
Ordinary shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | 8,000,000,000 | 8,000,000,000 |
Ordinary shares, shares issued | 281,379,130 | 253,978,323 |
Ordinary shares, shares outstanding | 278,282,366 | 250,881,559 |
Treasury stock, shares | 3,096,764 | 3,096,764 |
Parent Company | ||
BALANCE SHEETS | ||
Ordinary shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | 8,000,000,000 | 8,000,000,000 |
Ordinary shares, shares issued | 281,379,130 | 253,978,323 |
Ordinary shares, shares outstanding | 278,282,366 | 250,881,559 |
Treasury stock, shares | 3,096,764 | 3,096,764 |
SCHEDULE I FINANCIAL INFORMAT97
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Operating costs and expenses: | ||||
Selling and marketing expenses | $ 21,104 | ¥ 146,525 | ¥ 179,568 | ¥ 187,435 |
General and administrative expenses | 70,883 | 492,141 | 403,008 | 342,128 |
Total operating costs and expenses | 813,811 | 5,650,292 | 5,204,734 | 4,593,915 |
Loss from operations | 125,436 | 870,899 | 601,154 | 389,364 |
Interest income | 9,703 | 67,366 | 26,712 | 23,162 |
Interest expense | 1,592 | 11,056 | 3,854 | 1,533 |
Foreign exchange gain | 2,373 | 16,481 | 7,814 | (246) |
Other income, net | 19,265 | 133,755 | 6,979 | 2,884 |
Net income attributable to China Lodging Group, Limited | 115,888 | 804,615 | 436,600 | 307,348 |
Other comprehensive income | ||||
Unrealized securities holding gains, net of tax of 9,485, 7,151 and (1,810) for 2014, 2015 and 2016 | 2,369 | 16,449 | 68,069 | 28,458 |
Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income | (9,783) | (67,921) | ||
Foreign currency translation adjustments | (1,819) | (12,627) | 3,535 | (1,082) |
Comprehensive income attributable to China Lodging Group, Limited | 106,655 | 740,516 | 508,204 | 334,724 |
Parent Company | ||||
Operating costs and expenses: | ||||
Selling and marketing expenses | 157 | 157 | ||
General and administrative expenses | 8,653 | 60,075 | 59,236 | 35,434 |
Total operating costs and expenses | 8,653 | 60,075 | 59,393 | 35,591 |
Loss from operations | (8,653) | (60,075) | (59,393) | (35,591) |
Interest income | 39 | 273 | 30 | 75 |
Interest expense | 1,505 | 10,453 | 3,198 | |
Foreign exchange gain | 2,124 | 14,750 | 7,477 | |
Other income, net | 10,070 | 69,919 | 2,488 | 2,419 |
Income in investment in subsidiaries | 113,813 | 790,201 | 489,196 | 340,445 |
Net income attributable to China Lodging Group, Limited | 115,888 | 804,615 | 436,600 | 307,348 |
Other comprehensive income | ||||
Unrealized securities holding gains, net of tax of 9,485, 7,151 and (1,810) for 2014, 2015 and 2016 | 2,369 | 16,449 | 68,069 | 28,458 |
Reclassification adjustment of unrealized securities holding gains, net of tax, for gain included in net income | (9,783) | (67,921) | ||
Foreign currency translation adjustments | (1,819) | (12,627) | 3,535 | (1,082) |
Comprehensive income attributable to China Lodging Group, Limited | $ 106,655 | ¥ 740,516 | ¥ 508,204 | ¥ 334,724 |
SCHEDULE I FINANCIAL INFORMAT98
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized securities holding gains, tax | ¥ (1,810) | ¥ 7,151 | ¥ 9,485 |
Foreign currency translation adjustments, tax | 0 | 0 | 0 |
Parent Company | |||
STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized securities holding gains, tax | (1,810) | 7,151 | 9,485 |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
SCHEDULE I FINANCIAL INFORMAT99
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF CASH FLOWS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Operating activities: | ||||
Net income | $ 114,717 | ¥ 796,482 | ¥ 439,380 | ¥ 302,391 |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Share-based compensation | 7,984 | 55,436 | 52,535 | 31,937 |
Investment income | (16,817) | (116,763) | (2,767) | (3,037) |
Changes in operating assets and liabilities: | ||||
Deferred revenue | 2,813 | 19,529 | 216,805 | 253,562 |
Other current assets | (5,878) | (40,813) | (15,518) | (42,369) |
Salary and welfare payable | 8,738 | 60,669 | 24,532 | 38,813 |
Accrued expenses and other current liabilities | 29,145 | 202,351 | 121,502 | 58,995 |
Net cash provided by operating activities | 294,924 | 2,047,656 | 1,749,673 | 1,454,015 |
Investing activities: | ||||
Purchase of long-term investments | (42,219) | (293,125) | (105,707) | (191,064) |
Purchase of short-term investments | (434,811) | (75,210) | ||
Net cash provided by (used in) investing activities | 26,466 | 183,762 | (1,550,357) | (1,063,186) |
Financing activities: | ||||
Net proceeds from issuance of ordinary shares upon exercise of options | 1,759 | 12,206 | 22,619 | 20,985 |
Payment of share repurchase | (107,331) | |||
Proceeds from short-term debt | 40,576 | 281,719 | 589,376 | 300,000 |
Repayment of short-term debt | (47,898) | (332,555) | (283,516) | (300,000) |
Dividend paid | (39,790) | (276,261) | ||
Net cash provided by (used in) financing activities | (35,654) | (247,549) | 232,281 | 21,683 |
Effect of exchange rate changes on cash and cash equivalents | 1,916 | 13,300 | (2,624) | (1,082) |
Net increase (decrease) in cash and cash equivalents | 287,652 | 1,997,169 | 428,973 | 411,430 |
Cash and cash equivalents at the beginning of the year | 178,286 | 1,237,838 | 808,865 | 397,435 |
Cash and cash equivalents at the end of the year | 465,938 | 3,235,007 | 1,237,838 | 808,865 |
Parent Company | ||||
Operating activities: | ||||
Net income | 115,888 | 804,615 | 436,600 | 307,348 |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Share-based compensation | 7,984 | 55,436 | 52,535 | 31,937 |
Income in investment in subsidiaries | (113,813) | (790,201) | (489,196) | (340,445) |
Investment income | (7,363) | (51,123) | ||
Changes in operating assets and liabilities: | ||||
Deferred revenue | (364) | (1,450) | ||
Other current assets | 112 | 776 | 2,312 | 1,477 |
Salary and welfare payable | (4) | (25) | (86) | 111 |
Accrued expenses and other current liabilities | (2,393) | (16,618) | 15,463 | 4,943 |
Net cash provided by operating activities | 411 | 2,860 | 17,264 | 3,921 |
Investing activities: | ||||
Investment in subsidiaries | (168,709) | |||
Receipt of investment in subsidiaries | 34,025 | 236,238 | 8,876 | |
Purchase of long-term investments | (6,893) | (47,859) | ||
Proceeds from sale of long-term investments | 554 | 3,845 | ||
Purchase of short-term investments | (271,630) | |||
Proceeds from sale of short-term investments | 48,565 | 337,189 | ||
Net cash provided by (used in) investing activities | 76,251 | 529,413 | (440,339) | 8,876 |
Financing activities: | ||||
Net proceeds from issuance of ordinary shares upon exercise of options | 1,759 | 12,206 | 22,619 | 20,985 |
Payment of share repurchase | (107,331) | |||
Proceeds of advances from subsidiaries | 222,403 | |||
Proceeds from short-term debt | 40,576 | 281,719 | 489,376 | |
Repayment of short-term debt | (47,898) | (332,555) | (183,516) | |
Dividend paid | (39,790) | (276,261) | ||
Net cash provided by (used in) financing activities | (45,353) | (314,891) | 443,551 | 20,985 |
Effect of exchange rate changes on cash and cash equivalents | 5,132 | 35,629 | 5,800 | (215) |
Net increase (decrease) in cash and cash equivalents | 36,441 | 253,011 | 26,276 | 33,567 |
Cash and cash equivalents at the beginning of the year | 17,431 | 121,025 | 94,749 | 61,182 |
Cash and cash equivalents at the end of the year | $ 53,872 | ¥ 374,036 | ¥ 121,025 | ¥ 94,749 |
SCHEDULE II VALUATION AND QU100
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Valuation And Qualifying Accounts | |||
Addition Due to Acquisition | ¥ 11,724 | ¥ 0 | |
Allowance for doubtful accounts of accounts receivables and other receivables: | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | 6,059 | 6,477 | ¥ 7,756 |
Charge to Costs and Expenses | 1,082 | 1,997 | 4,770 |
Addition Due to Acquisition | 7,151 | ||
Write off | (2,368) | (2,415) | (6,049) |
Balance at End of Year | 11,924 | 6,059 | 6,477 |
Valuation allowance for deferred tax assets | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | 92,527 | 62,868 | 51,596 |
Charge to Costs and Expenses | 55,757 | 47,122 | 29,693 |
Addition Due to Acquisition | 11,724 | ||
Charge Taken Against Allowance | (17,064) | (15,508) | (18,421) |
Write off | (28,319) | (1,955) | |
Balance at End of Year | ¥ 114,625 | ¥ 92,527 | ¥ 62,868 |