20100921-BNPParibas China Hotel &Leisure

Contents
1) China budget hotels: 25% CAGR in 2009-12E .......................................................................................................................... 3
Better railways stimulate tourism demand.......................................................................................................................... 4
We expect to see the elimination of 1-3 star hotels............................................................................................................. 6
2) Shanghai Expo: Stellar 2Q; uncertainty ahead......................................................................................................................... 7
3) Pick the winner......................................................................................................................................................................... 10
Operating metrics at a glance .......................................................................................................................................... 10
Winning strategy: Strong franchise expansion .................................................................................................................. 14
7 Days Inn (TP: US$22.00; BUY): Undervalued play ........................................................................................................ 15
Home Inns (TP US$60.00; BUY): Early mover in tier-2 cities............................................................................................ 16
China Lodging (TP US$22.60; HOLD): Growth in the price .............................................................................................. 16
4) Company updates .................................................................................................................................................................... 19
Home Inns........................................................................................................................................................................ 20
7 Days Inn ........................................................................................................................................................................ 24
China Lodging ...............................................................................................................................