Home Inns Reports Third Quarter of 2009 Financial Results

Quarterly Revenues Increased 38% Year-over-year to RMB 727 Million (US$ 107 Million); Occupancy Rate Reached 97%, Resulting in RevPAR of RMB 157

• Press Release
• Source: Home Inns & Hotels Management Inc.
• On 5:00 pm EST, Monday November 9, 2009

SHANGHAI, Nov. 9 /PRNewswire-Asia/ -- Home Inns & Hotels Management Inc. (Nasdaq: HMIN - News), a leading economy hotel chain in China, today announced its unaudited financial results for the third quarter ended September 30, 2009.

    Third Quarter 2009 Financial Highlights

    -- Total revenues for the quarter increased 37.9% year-over-year to RMB
       727.4 million (US$ 106.6 million), exceeding guidance of RMB 685
       million to RMB 705 million.

    -- Net income attributable to shareholders for the quarter was RMB 86.7
       million (US$ 12.7 million), including gain on buy-back of convertible
       bonds of RMB 4.3 million (US$ 0.6 million), and share-based
       compensation expenses of RMB 7.8 million (US$ 1.1 million). This
       compares to a net income attributable to shareholders of RMB 29.5
       million (US$ 4.3 million) in the third quarter of 2008, which included
       share based compensation of RMB 6.6 million (US$ 1.0 million) and
       foreign exchange loss of RMB 2.4 million (US$ 0.3 million).

    -- Income from operations for the quarter was RMB 107.9 million (US$ 15.8
       million), compared to income from operations of RMB 41.8 million (US$
       6.2 million) in the same period of 2008. Income from operations
       excluding share-based compensation expenses (non-GAAP) was RMB 115.6
       million (US$ 16.9 million) for the quarter, compared to RMB 48.4
       million (US$ 7.1 million) in the same period of 2008, representing an
       increase of 139% year-over-year.

    -- EBITDA (non-GAAP) for the quarter was RMB 187.5 million (US$ 27.5
       million). Excluding gain on buy-back of convertible bonds, foreign
       exchange loss and share-based compensation expenses, adjusted EBITDA
       (non-GAAP) for the quarter was RMB 191.0 million (US$ 28.0 million),
       compared to RMB 102.5 million (US$ 15.1 million) in the same period of
       2008, representing an increase of 86.4% year-over-year.

    -- Diluted earnings per ADS for the quarter were RMB 1.98 (US$ 0.29),
       while adjusted diluted earnings per ADS (Non-GAAP) for the quarter were
       RMB 2.15 (US$ 0.31).

Diluted earnings per ADS and adjusted diluted earnings per ADS exclude gain on buy-back of convertible bonds. Adjusted diluted earnings per ADS also exclude foreign exchange loss and share-based compensation expenses. Please refer to "Reconciliations of GAAP and Non-GAAP Results" at the end of this press release.

"Home Inns has performed above expectations during the third quarter, as we benefited from both an improving economic situation in China and our implementation of certain initiatives at the beginning of the financial crisis," commented Mr. David Sun, Home Inns' Chief Executive Officer. "Due to the strong performance at our hotels as well as our restrained expansion efforts, we exceeded our revenue guidance while simultaneously achieving strengthened margins. We are confident that we will see a continued improvement in our performance during the rest of 2009, and that in 2010 we will be able to successfully execute our strategic business initiatives, including the continued expansion of our company throughout China."

    Third Quarter of 2009 Operational Highlights

    -- The occupancy rate for all hotels in operation was 97.0% in the third
       quarter of 2009, compared with 85.9% in the same period in 2008, and
       92.4% in the previous quarter. The increase year-over-year was due to a
       more favorable travel environment as well as less dilutive impact from
       new hotels opened this year, given the lower proportion of new hotels
       currently within the Home Inns chain. The sequential improvement in
       occupancy was mainly due to the accelerating economic recovery in China
       during the third quarter.

    -- RevPAR, defined as revenue per available room, grew to RMB 157 in the
       third quarter of 2009, compared with RMB 155 in the same period in 2008
       and RMB 148 in the previous quarter. The RevPAR increase year-over-year
       was primarily attributable to the strong improvement in occupancy rate,
       which was partially offset by the expected decline in average daily
       rate, or ADR. The ADR decline year-over-year was due to a mixture of
       the expected impact of Home Inns opening more hotels in lower tier
       cities, where room rates are lower, as well as the one time unfavorable
       comparison with the third quarter last year, when the Olympics in
       Beijing drove ADR higher. Sequentially, RevPAR benefited from a better
       occupancy rate which was due to a strong performance and to a lesser
       extent, a favorable seasonal pattern. The ADR was relatively stable
       compared to the previous quarter.

    -- RevPAR for Home Inns' hotels which had been in operation for at least
       18 months was RMB 169 for the third quarter of 2009, flat compared to
       RMB 169 for the same period in 2008. This indicates a stabilization in
       mature hotel performance following a three-quarter period of decline in
       year-over-year comparisons.

    -- During the third quarter of 2009, Home Inns opened 36 net new hotels,
       including 8 net leased-and-operated hotels and 28 net
       franchised-and-managed hotels. As of September 30, 2009, the Home Inns
       hotel chain consisted of 583 hotels in operation with an average of 117
       rooms per hotel in operation. Home Inns' hotels in operation cover 113
       cities in China and consist of 377 leased-and-operated hotels,
       including one H Hotel (Home Inns' premium brand hotel), and 206
       franchised-and-managed hotels.

    -- As of September 30, 2009, Home Inns had an additional 18
       leased-and-operated hotels and 56 franchised-and-managed hotels
       contracted.

"Home Inns has endured the impact of the economic downturn by effectively meeting the challenges that were presented to us, and the third quarter marks an important inflection point in our recovery," continued Mr. Sun. "Our RevPAR levels have risen above last year's benchmarks for the first time in 2009, and we have seen improved margins despite adjustments for pre-opening costs. With careful consideration towards stable margin and return on investment, we believe that a re-acceleration of our expansion plans at a growth rate that ensures success and profitability is a sensible and effective strategy as we look towards the end of the year and into 2010."

Third Quarter of 2009 Financial Results

For the third quarter of 2009, Home Inns' total revenues increased by 37.9% year-over-year to RMB 727.4 million (US$ 106.6 million).

Total revenues from leased-and-operated hotels for the third quarter of 2009 were RMB 685.7 million (US$ 100.5 million), representing a 37.3% increase year-over-year and a 12.3% increase sequentially. The year-over-year increase was primarily the result of a larger leased-and-operated hotel portfolio, while the sequential increase was primarily a result of a greater number of mature hotels. Home Inns opened a net of 8 new leased-and-operated hotels during the third quarter of 2009.

Total revenues from franchised-and-managed hotels for the third quarter of 2009 were RMB 41.6 million (US$ 6.1 million), representing a 49.2% increase year-over-year and a 26.5% increase sequentially. Revenues from franchised-and-managed hotels for the quarter increased as a result of the higher number of such hotels in operation, as well as higher initial franchise fees due to the significant number of new franchised-and-managed hotels opened during the quarter. Home Inns opened a net of 28 new franchised-and-managed hotels during the third quarter of 2009.

Total operating costs and expenses for the third quarter of 2009 were RMB 575.7 million (US$ 84.3 million). Total operating costs and expenses excluding share-based compensation expenses (non-GAAP) for the quarter were RMB 568.0 million (US$ 83.2 million), or 78.1% of total revenues, representing a 26.8% increase year-over-year and a 7.5% increase sequentially.

Total leased-and-operated hotel costs for the third quarter of 2009 were RMB 521.6 million (US$ 76.4 million), representing 76.1% of the leased-and-operated hotel revenues. This compared to 81.4% for the same quarter in 2008 and 79.8% for the previous quarter. The decrease in leased-and-operated hotel costs as a percentage of leased-and-operated hotel revenue year-over-year was primarily due to fewer hotels under construction, resulting in substantially lower pre-opening expenses. The percentage decease sequentially was mainly due to higher RevPAR and hence higher revenues per hotel while costs per hotel remained relatively stable.

Sales and marketing expenses for the third quarter of 2009 were RMB 7.2 million (US$ 1.1 million), a decrease of 3.1% year-over-year and an increase of 36.9% sequentially. The decrease year-over-year was due to a less aggressive marketing plan in 2009, and the sequential increase was due to certain planned marketing activities during the quarter, following low marketing spending in the second quarter.

General and administrative expenses for the third quarter of 2009 were RMB 46.9 million (US$ 6.9 million). General and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB 39.2 million (US$ 5.7 million), or 5.4% of the total revenues, compared with 6.5% of the total revenues in the same period of 2008 and 5.8% in the previous quarter. The improvement in the ratio of general and administrative expenses to total revenues reflects the positive operational leverage that is being achieved with an expanding revenue base.

Income from operations for the quarter was RMB 107.9 million (US$ 15.8 million). Income from operations excluding share-based compensation expenses (non-GAAP) was RMB 115.6 million (US$ 16.9 million), compared to RMB 48.4 million (US$ 7.1 million) in the same period of 2008 and RMB 74.1 million (US$ 10.9 million) in the previous quarter. The major reasons for the higher income from operations were higher revenues and better leased-and-operated hotel expense ratios.

EBITDA (non-GAAP) for the third quarter of 2009 was RMB 187.5 million (US$ 27.5 million). Excluding gain on buy-back of convertible bonds, foreign exchange loss and share-based compensation expenses, adjusted EBITDA (non-GAAP) was RMB 191.0 million (US$ 28.0 million), an increase of 86.4% from the same period a year ago and an increase of 28.1% sequentially.

Net income attributable to shareholders for the quarter was RMB 86.7 million (US$ 12.7 million). Excluding gain on buy-back of convertible bonds, foreign exchange loss and share-based compensation expenses, adjusted net income attributable to shareholders (non-GAAP) for the third quarter of 2009 was RMB 90.2 million (US$ 13.2 million).

For the third quarter of 2009, basic earnings per share were RMB 1.10 (US$ 0.16), while diluted earnings per share were RMB 0.99 (US$ 0.15). Basic earnings per ADS were RMB 2.19 (US$ 0.32), while diluted earnings per ADS were RMB 1.98 (US$ 0.29). The difference between basic and diluted earnings per share and per ADS was the exclusion of the gain on buy-back of convertible bonds in the diluted earnings calculation under US GAAP. Excluding gain on buy-back of convertible bonds, foreign exchange loss and share-based compensation expenses, adjusted basic earnings per share (non-GAAP) were RMB 1.14 (US$ 0.17), while adjusted diluted earnings per share (non-GAAP) were RMB 1.07 (US$ 0.16). Adjusted basic earnings per ADS (non-GAAP) were RMB 2.28 (US$ 0.33), and adjusted diluted earnings per ADS (non-GAAP) were RMB 2.15 (US$ 0.31).

Net operating cash flow for the third quarter of 2009 was RMB 231.1 million (US$ 33.9 million). Capital expenditures for the quarter were RMB 43.3 million (US$ 6.3 million). Cash spent on the purchase of property and equipment was RMB 54.6 million (US$ 8.0 million), resulting from both new capital expenditure and reduction in payables.

As of September 30, 2009, Home Inns had cash and cash equivalents of RMB 755.4 million (US$ 110.7 million), and the outstanding balance of its convertible bonds was RMB 437.9 million (US$ 64.2 million), including principal and accrued interest. During the third quarter of 2009, Home Inns repurchased and retired RMB 40.0 million (US$ 5.9 million) of these convertible bonds.

Outlook for Fourth Quarter of 2009

Home Inns expects its total revenues in the fourth quarter of 2009 to be in the range of RMB 675 million (US$ 98.9 million) to RMB 695 million (US$ 101.8 million). Home Inns now expects its total revenues for the full year of 2009 to grow between 37-39% over 2008, an increase from the 33-35% guidance it previously announced when it discussed its second quarter of 2009 results in this August, reflecting the impact from the continued improvement in economic and operating environment in China. This forecast reflects Home Inns' current and preliminary view, which is subject to change.

Conference Call Information

Home Inns' management will hold an earnings conference call at 8 PM on November 9, 2009, U.S. Eastern Standard Time (9 AM on November 10, 2009, Beijing/Hong Kong time).

    Dial-in details for the earnings conference call are as follows:

    China Mainland (toll free):    +10-800-130-0399
    Hong Kong:                     +852-3002-1672
    U.S. (toll free):              +1-800-510-9836
    U.S. and International:        +1-617-614-3670

    Passcode for all regions:      Home Inns

A replay of the conference call may be accessed by phone at the following numbers until the end of November 16, 2009, U.S. Eastern Standard Time.

    U.S. toll free:                +1-888-286-8010
    International:                 +1-617-801-6888
    Passcode:                      825-69-917

Live and archived webcasts of this conference call will be available at http://english.homeinns.com .

About Home Inns

Home Inns is a leading economy hotel chain in China based on the number of hotels and hotel rooms, as well as the geographic coverage of the hotel chain. Since Home Inns commenced operations in 2002, it has become one of the best-known economy hotel brands in China. Home Inns offers a consistent product and high-quality services to primarily serve the fast growing population of value-conscious individual business and leisure travelers who demand clean, comfortable and convenient lodging. Home Inns' ADSs, each of which represents two ordinary shares, are currently trading on the NASDAQ Global Select Market under the symbol "HMIN." For more information about Home Inns, please visit http://english.homeinns.com.

Safe Harbor

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; the economic conditions of China; the regulatory environment in China; our ability to attract customers and leverage our brand; trends and competition in the lodging industry; and the expected growth of the lodging market in China; and other factors and risks detailed in our filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which management believes to be reliable, but it is not guaranteed by us to be accurate, nor do we purport it to be complete. We undertake no obligation to update or revise to the public any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

To supplement Home Inns' unaudited consolidated financial results presented in accordance with U.S. GAAP, Home Inns uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: total operating expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, income from operations excluding share-based expenses, adjusted net income attributable to shareholders excluding foreign exchange gain or loss, share- based compensation and gain on buy-back of convertible bonds, adjusted basic and diluted earnings and ADS per share excluding foreign exchange gain or loss, share-based compensation and gain on buy-back of convertible bonds, EBITDA and adjusted EBITDA excluding foreign exchange gain or loss, share-based compensation and gain on buy-back of convertible bonds. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.

Home Inns believes that in conjunction with GAAP financial measures, these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity and both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. Management believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization, is a useful financial metric to assess Home Inns' operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, management believes that EBITDA is widely used by other companies in the lodging industry and may be used as an analysis tool by both management and investors to measure and compare Home Inns' operational and financial performance with industry peers.

One of the limitations of using non-GAAP adjusted gross profit, adjusted EBITDA and adjusted net income is that they do not include all items that impact Home Inns' net income for the period. These non-GAAP measures exclude share-based compensation expenses, which have been and will continue to be a significant recurring expense in its business. In addition, its EBITDA and adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as Home Inns does. Management compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Home Inns computes the non-GAAP financial measures using the same consistent method from quarter to quarter. Reconciliations of GAAP and non-GAAP results are included at the end of this press release.

The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that Home Inns' future results will be unaffected by other charges and gains Home Inns considers to be outside the ordinary course of its business.

    For investor and media inquiries, please contact:

     Ethan Ruan
     Home Inns & Hotels Management Inc.
     Tel:   +86-21-3401-9898 x2004
     Email: zjruan@homeinns.com

     FD Beijing
     Peter Schmidt
     Tel:   +86-10-8591-1953
     Email: peter.schmidt@fd.com



    Home Inns & Hotels Management Inc.
    Consolidated Balance Sheet Information

                                             December     September
                                             31, 2008     30, 2009
                                             RMB '000     RMB '000    US$ '000
                                            (audited)   (unaudited) (unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents                608,445       755,380   110,659
    Short-term investment                    100,000           --         --
    Accounts receivable                       23,263        33,340     4,884
    Receivables from related parties           1,617         1,323       194
    Consumables                               26,885        14,763     2,163
    Prepayments and other current assets,
     net of allowance                         63,904        41,185     6,033
    Deferred tax assets, current              41,824        63,259     9,267

    Total current assets                     865,938       909,250   133,200


    Property and equipment, net            1,950,900     1,942,885   284,622
    Goodwill                                 390,882       390,882    57,262
    Intangible assets, net                    44,977        42,931     6,289
    Other assets                              33,177        33,990     4,979
    Deferred tax assets, non-current          77,580        82,828    12,134

    Total assets                           3,363,454     3,402,766   498,486

    LIABILITIES
    Current liabilities:
    Accounts payable                          22,438        20,372     2,984
    Payables to related parties                6,668         5,896       864
    Salaries and welfare payable              69,635        98,532    14,434
    Income tax payable                        52,458        62,950     9,222
    Other taxes payable                       12,691        14,583     2,136
    Deferred revenues                         38,082        51,549     7,552
    Accruals for customer reward program       8,587        12,943     1,896
    Other unpaid and accruals                 52,220        60,956     8,930
    Other payables                           376,739       225,924    33,096

    Total current liabilities                639,518       553,705    81,114

    Deferred rental                          136,825       150,470    22,043
    Deferred revenues, non-current            22,697        34,780     5,095
    Other long-term liabilities                   --         1,008       148
    Deposits from franchised-and-managed
     hotels                                   13,741        17,480     2,561
    Unfavorable lease liability               16,017        14,943     2,189
    Convertible bond                         895,696       437,924    64,153
    Deferred tax liability, non-current       12,279        11,848     1,736

    Total liabilities                      1,736,773     1,222,158   179,039


    Commitments and contingencies

    Shareholders' equity

    Ordinary shares (US$0.005 par value;
     200,000,000 shares authorized,
     71,212,795 and 79,353,348  shares
     issued and outstanding as of
     December 31, 2008 and September 30,
     2009, respectively)                       2,899         3,177       465
    Additional paid-in capital             1,393,905     1,762,957   258,263
    Statutory reserves                        49,994        49,994     7,324

    Retained earnings                        160,810       348,434    51,044

    Noncontrolling interest                   19,073 *      16,046     2,351

    Total  shareholders' equity            1,626,681     2,180,608   319,447

    Total liabilities and shareholders'
     equity                                3,363,454     3,402,766   498,486


    * Reflects implementation of SFAS No.160 "Noncontrolling Interest in
      Consolidated Financial Statements-an amendment of ARB No.51"

    Note 1: The conversion of Renminbi ("RMB") into United States dollars
    ("US$") is based on the noon buying rate of US$1.00=RMB6.8262 on September
    30, 2009 in the City of New York for cable transfers of RMB as certified
    for customs purposes by the Federal Reserve Bank of New York.



    Home Inns & Hotels Management Inc.
    Consolidated Statement of Operations Information

                                                    Quarter Ended
                                   September 30, June 30,
                                       2008       2009     September 30, 2009
                                     RMB '000   RMB '000   RMB '000   US$ '000
                                   (unaudited)(unaudited)(unaudited)(unaudited)


    Revenues:
      Leased-and-operated hotels     499,409    609,136    685,729    100,455
      Franchised-and-managed
       hotels                         27,907     32,930     41,640      6,100

    Total revenues                   527,316    642,066    727,369    106,555
      Less: Business tax and related
       surcharges                    (31,153)   (39,507)   (43,798)    (6,416)

    Net revenues                     496,163    602,559    683,571    100,139

    Operating costs and expenses:
      Leased-and-operated hotel
       costs -
        Rents and utilities         (170,872)  (186,668)  (198,313)   (29,052)
        Personnel costs*             (93,609)  (114,950)  (126,936)   (18,595)
        Depreciation and
         amortization                (50,136)   (69,833)   (70,985)   (10,398)
        Consumables, food and
         beverage                    (41,818)   (42,811)   (48,645)    (7,126)
        Others                       (49,869)   (71,871)   (76,732)   (11,241)

      Total leased-and-operated hotel
       costs                        (406,305)  (486,133)  (521,611)   (76,412)

      Sales and marketing expenses    (7,407)    (5,243)    (7,177)    (1,051)
      General and administrative
       expenses*                     (40,631)   (43,474)   (46,925)    (6,874)

    Total operating costs and
     expenses                        (45,342)  (534,850)  (575,713)   (84,337)

    Income from operations            41,821     67,709    107,858     15,802

    Interest income                    3,597      1,002      1,364        200
    Interest expense                  (5,800)    (3,142)    (2,212)      (324)
    Gain on buy-back of convertible
     bond                                 --     46,540      4,305        631
    Other non-operating income         3,123      4,672      3,395        497
    Foreign exchange loss, net        (2,360)      (262)       (34)        (5)

    Income before income tax expense
     and noncontrolling interests     40,381    116,519    114,676     16,801

    Income tax expense                (9,785)   (15,144)   (26,557)    (3,890)

    Net income                        30,596    101,375     88,119     12,911

    Noncontrolling interest           (1,134)      (943)    (1,379)      (202)


    Net income attributable to
     shareholders                     29,463    100,432     86,740     12,709

    Earnings per share
    - Basic                             0.42       1.37       1.10       0.16

    - Diluted                           0.40       0.70       0.99       0.14

    Weighted average ordinary shares
     outstanding
    - Basic                           70,897     73,347     79,164     79,164

    - Diluted                         78,128     77,983     84,018     84,018

    * Share-based compensation expense
      was included in the statement of
      operations as follows:
    Leased-and-operated hotel costs -
     Personnel costs                       3         --         --         --
    General and administrative
     expenses                          6,586      6,430      7,759      1,137


    Note 1: The conversion of Renminbi ("RMB") into United States dollars
    ("US$") is based on the noon buying rate of US$1.00=RMB6.8262 on September
    30, 2009 in the City of New York for cable transfers of RMB as certified
    for customs purposes by the Federal Reserve Bank of New York.



    Home Inns & Hotels Management Inc.
    Reconciliation of GAAP and Non-GAAP Results

                                   Quarter Ended September 30, 2009
                         GAAP    %of    Share-based   %of   Non-GAAP %of Total
                        Result   Total  Compensation  Total  Result    Revenue
                                Revenue              Revenue
                       RMB '000           RMB '000          RMB '000
                     (unaudited)        (unaudited)        (unaudited)

    Leased-and-
     operated hotel
     costs             (521,611) 71.7%       --       0.0%  (521,611)  71.7%
    Sales and
     marketing
     expenses            (7,177)  1.0%       --       0.0%    (7,177)   1.0%
    General and
     administrative
     expenses           (46,925)  6.5%    7,759       1.1%   (39,166)   5.4%

    Total operating
     costs and
     expenses          (575,713) 79.2%    7,759       1.1%   (567,954) 78.1%

    Income from
     operations         107,858  14.8%    7,759       1.1%    115,617  15.9%




                                      Quarter Ended September 30, 2009
                         GAAP    %of    Share-based   %of   Non-GAAP %of Total
                        Result   Total  Compensation  Total  Result    Revenue
                                Revenue              Revenue
                       US$ '000           US$ '000          US$ '000
                     (unaudited)        (unaudited)        (unaudited)

    Leased-and-
     operated hotel
     costs              (76,412) 71.7%       --       0.0%    (76,412) 71.7%
    Sales and
     marketing expenses  (1,051)  1.0%       --       0.0%     (1,051)  1.0%
    General and
     administrative
     expenses            (6,874)  6.5%    1,137       1.1%     (5,737)  5.4%

    Total operating
     costs and
     expenses           (84,337) 79.1%    1,137       1.1%    (83,200) 78.1%

    Income from
     operations          15,802  14.8%    1,137       1.1%     16,939  15.9%



                                      Quarter Ended June 30, 2009
                         GAAP    %of    Share-based   %of   Non-GAAP %of Total
                        Result   Total  Compensation  Total  Result    Revenue
                                Revenue              Revenue
                       RMB '000           RMB '000          RMB '000
                     (unaudited)        (unaudited)        (unaudited)

    Leased-and-
     operated hotel
     costs             (486,133) 75.7%       --       0.0%   (486,133) 75.7%
    Sales and
     marketing
     expenses            (5,243)  0.8%       --       0.0%     (5,243)  0.8%
    General and
     administrative
     expenses           (43,474)  6.8%    6,430       1.0%    (37,044)  5.8%

    Total operating
     costs and
     expenses          (534,850) 83.3%    6,430       1.0%   (528,420) 82.3%

    Income from
     operations          67,709  10.6%    6,430       1.0%     74,139  11.6%



                                      Quarter Ended September 30, 2009
                         GAAP    %of    Share-based   %of   Non-GAAP %of Total
                        Result   Total  Compensation  Total Result    Revenue
                                Revenue              Revenue
                       RMB '000           RMB '000          RMB '000
                     (unaudited)        (unaudited)       (unaudited)

    Leased-and-
     operated hotel
     costs             (406,305) 77.1%        3       0.0%   (406,302) 77.1%
    Sales and
     marketing
     expenses            (7,407)  1.4%       --       0.0%     (7,407)  1.4%
    General and
     administrative
     expenses           (40,631)  7.7%    6,586       1.2%    (34,045)  6.5%

    Total operating
     costs and
     expenses          (454,342) 86.2%    6,589       1.2%   (447,753) 84.9%

    Income from
     operations          41,821   7.9%    6,589       1.2%     48,410   9.2%


    Note 1: The conversion of Renminbi ("RMB") into United States dollars
    ("US$") is based on the noon buying rate of US$1.00=RMB6.8262 on September
    30, 2009 in the City of New York for cable transfers of RMB as certified
    for customs purposes by the Federal Reserve Bank of New York.



    Home Inns & Hotels Management Inc.
    Reconciliation of GAAP and Non-GAAP Results (continued)

                                          Quarter Ended
                                September 30, June 30,
                                    2008       2009        September 30, 2009
                                  RMB '000    RMB '000    RMB '000    US$ '000
                                (unaudited) (unaudited) (unaudited) (unaudited)

    Net income attributable to
     shareholders (GAAP)           29,463    100,432        86,740     12,709
      Foreign exchange loss, net    2,360        262            34          5
      Share-based compensation      6,589      6,430         7,759      1,137
      Gain on buy-back of
       convertible bond                --    (46,540)       (4,305)      (631)
    Adjusted net income
     attributable to
     shareholders (Non-GAAP)
     (Net income attributable
     to shareholders excluding
     foreign exchange gain or
     loss, share-based
     compensation and gain on
     buy-back of convertible
     bond)                         38,412     60,584        90,228     13,220



                                          Quarter Ended
                                September 30, June 30,
                                    2008       2009        September 30, 2009
                                  RMB '000    RMB '000    RMB '000    US$ '000
                                (unaudited) (unaudited) (unaudited) (unaudited)
    Earnings per share (GAAP)
    - Basic                          0.42       1.37          1.10       0.16
    - Diluted                        0.40       0.70          0.99       0.14

    Weighted average ordinary
     shares outstanding
    - Basic                        70,897     73,347        79,164     79,164
    - Diluted                      78,128     77,983        84,018     84,018
    Adjusted earnings per share
     (Non-GAAP)(Earnings per share
     excluding foreign exchange
     gain or loss, share-based
     compensation and gain on
     buy-back of convertible bond)
    - Basic                          0.54       0.83          1.14       0.17
    - Diluted                        0.51       0.78          1.07       0.16

    Weighted average ordinary
     shares outstanding
    - Basic                        70,897     73,347        79,164     79,164
    - Diluted                      78,128     77,983        84,018     84,018


    Note 1: The conversion of Renminbi ("RMB") into United States dollars
    ("US$") is based on the noon buying rate of US$1.00=RMB6.8262 on September
    30, 2009 in the City of New York for cable transfers of RMB as certified
    for customs purposes by the Federal Reserve Bank of New York.



    Home Inns & Hotels Management Inc.
    Reconciliation of GAAP and Non-GAAP Results (continued)

                                                 Quarter Ended
                                September 30, June 30,
                                    2008       2009        September 30, 2009
                                  RMB '000    RMB '000    RMB '000    US$ '000
                                (unaudited) (unaudited) (unaudited) (unaudited)


    Net income attributable to
     shareholders                 29,463     100,432       86,740     12,709
      Interest income             (3,597)     (1,002)      (1,364)      (200)
      Interest expenses            5,800       3,142        2,212        324
      Income tax expense           9,785      15,144       26,557      3,890
      Depreciation and
       amortization               52,066      71,177       73,317     10,741

    EBITDA (Non-GAAP)             93,516     188,893      187,462     27,464

      Foreign exchange loss, net   2,360         262           34          5
      Share-based compensation     6,589       6,430        7,759      1,137
      Gain on buy-back of
       convertible bond               --     (46,540)      (4,305)      (631)
    Adjusted EBITDA (Non-GAAP)
    (EBITDA excluding foreign
     exchange gain or loss,
     share-based compensation and
     gain on buy-back of
     convertible bond)           102,465     149,045      190,950     27,975

    %of total revenue               19.4%       23.2%        26.3%      26.3%



    Home Inns & Hotels Management Inc.
    Operating Data

                                             As of and for the quarter ended
                                            September    June 30,   September
                                             30, 2008       2009     30, 2009

    Total Hotels in operation:                   414         547         583
      Leased-and-operated hotels                 291         369         377
      Franchised-and-managed hotels              123         178         206

    Total rooms                               49,459      63,968      68,044

    Occupancy rate (as a percentage)           85.9%       92.4%       97.0%

    Average daily rate (in RMB)                  180         160         161

    RevPAR (in RMB)                              155         148         157



    Like-for-like performance for hotels opened for at least 18 months during
     the current quarter

                                               As of and for the quarter ended
                                                 September 30,    September 30,
                                                      2008              2009

    Total Hotels in operation:                         294               294
      Leased-and-operated hotels                       219               219
      Franchised-and-managed hotels                     75                75

    Total rooms                                     36,162            36,162

    Occupancy rate (as a percentage)                 91.6%            100.3%

    Average daily rate (in RMB)                        184               168

    RevPAR (in RMB)                                    169               169


    * "Occupancy rate" refers to the total number of occupied rooms divided
    by the total number of available rooms in a given period.

    "Average daily rate" refers to total hotel room revenues divided by the
    total number of occupied rooms in a given period.

    "RevPAR" represents revenue per available room, which is calculated by
    dividing total hotel room revenues by the total number of available rooms
    in a given period, or by multiplying average daily rates and occupancy
    rates in a given period.

Buzz up!