Homes Inns, an economy-hotel chain that’s been a big beneficiary of China’s travel industry boom, expects to keep up its rapid expansion in the next few years, CEO David Sun told reporters.
Since 2004, the Shanghai-based company has increased the number of hotels in its chain from 20 to 700. It hopes to have 1,000 hotels open by the end of next year, Sun said at a gathering of the Shanghai Foreign Correspondents Club on Wednesday.
Nasdaq-listed Home Inns’ share price has climbed as it has grown. From its IPO price of $13.8 in Oct. 2006, it closed at $41.23 yesterday. It trades at a projected price-earning ratio of 28, according to Bloomberg. That compares with a PE ratio of 38 for th China Lodging Group and 43 for the 7 Days Group, two other U.S.-listed Chinese hotel chains.
Future growth will come from an overall increase in local trips, as well as inbound and outbound tourism, Sun said. Travel in China which used to be concentrated in relatively well-off eastern cities is spreading out more nationally, booming the hotel industy, Sun said.
Sun didn’t rule out international expansion in the future, in line with the growing numbers of Chinese traveling abroad. “You follow your customers,” he said.
Home Inns is 18% owned by Ctrip.com, China’s largest online travel company. Nasdaq-listd Ctrip trades at a projected PE of 41, Bloomberg says. The state-owned Beijing Tourism Group, another major shareholder, holds 17% of Homes Inns.
