Ladies and gentlemen, thank you for standing by and welcome to China Lodging Group's 2013 First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday the 9th of May 2013. I would now like to hand the conference over to your first speaker today, Investor Relations Manager Ida Yu. Thank you. Please go ahead.

Thank you, [BJ]. Hello everyone and welcome to our first quarter of 2013 earnings conference call. Joining us today is Mr. Qi Ji, our Founder, Executive Chairman and CEO; Mr. Xie Yunhang, our COO; and Jen Zhang, our CFO, who will elaborate on our company’s development strategies and performance for the first quarter of 2013. Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. China Lodging Group does not undertake any obligation to update any forward looking statements, except as required under applicable law. On the call today we will also mention adjusted financial measures during the discussion of our performance. Reconciliations of those measures to comparable GAAP information can be found in the earnings release that was distributed earlier today. As a reminder, this conference call is being recorded. The webcast of this conference call as well as the mandatory presentation slides are available on Investors section of China Lodging Group's website at ir.htinns.com. Now I would like to turn the call over to Mr. Ji who will be speaking in Chinese and his statements will be translated into English. Ji Qi, please.

[Interpreted]. Good morning everyone. Thank you for joining our earnings conference call today. During the first quarter we maintained our robust growth with high quality. Net revenues for Q1 increased by 33% year over year, exceeding the high end of our quarterly guidance by 1%. We made a profit in a seasonally low quarter. At the end of first quarter 2013 we had more than 120,000 rooms in operation, an increase of 59% from a year ago. Our same-hotel RevPAR increased 1% in the first quarter. Behind our consistent strong performance is our committed and dedicated team who implements our strategies to build multiple brands to expand fast, to be customers' favorite, and to achieve leading profitability. We have been communicating our multi-brand strategy several times for the past six months. Today I would like to share with you our focus on fast expansion. In retrospect, on page four of presentation, illustrated our rapid expansion from the year of 2008 to 2012. The [take-up] for the number of our hotels in operation reached 58%, with 34% for leased hotels and as high as 120% for manachised hotels. Since 2010 the significant growth of manachised hotels accelerated our network expansion. Looking forward, on page five, at the end of 2012, compared with our peers we had the strongest pipeline for both leased and manachised hotels, with 80 and 330 hotels contracted, respectively. Our strong pipeline is well-supported by our multi-brand portfolio and industry-leading profitability which underpins a sustainable rapid expansion in the coming years. Leveraging on franchisees' local network, Hua Zhu is better-positioned to an accelerated high-margin and light asset expansions, as shown on page six. First, manachised model allows for very quick expansion and through our direct management to ensure quality. Secondly, asset-light manachised business requires no upfront capital investment…

[Interpreted]. Thanks, Ji Qi. Hello everyone. As mentioned by Ji Qi just now, Hua Zhu again achieved fast growth with high quality in Q1 of 2013. As shown on page 10, we opened 19 net new leased hotels and 70 net new manachised hotels in Q1, which was beyond our expectations, especially for manachised hotels. At the end of Q1 we had 1,105 hotels in operation, among which 44% were leased hotels, 53% were manachised hotels, and the remaining 3% were franchised Starway hotels. In addition, we had a pipeline of 76 leased hotels and 322 manachised hotels contracted for development. As shown on page 11, in Q1 2013 occupancy was 87%, a decrease of 4 percentage points year over year, mainly because China's economy remained soft in Q1 2013 and our fast expansion led to a higher percentage of new hotels at the ramp-up stage compared to a year ago. In Q1 2013 the new hotels in operation for less than six months contributed 19% of our total hotel room nights available for sale compared to 16% in Q1 2012. ADR was RMB172, an increase of 2.5% year over year, mainly attributable to an increase in same-hotel ADR of 3%. With our hotel network expansion, our hotels in tier 1 cities as percentage of our total hotels is gradually decreasing. Therefore the increase in same-hotel ADR for mature hotels outperformed the branded ADR for all hotels in Q1. As a result, in Q1, RevPAR was RMB149, a decrease of 4% year over year. Page 12 provides a detailed view of our same-hotel RevPAR [traction] for the hotels in operation for at least 18 months. In the first quarter of 2013 our same-hotel RevPAR appreciated by 1% with 3% increase in ADR and 2 percentage points decrease in occupancy. This…

Thank you, Yunhang, and hello everyone. In the first quarter of 2013, we were delighted to see a very strong revenue growth and a significant improvement in operational margin. Let me walk you through the details. As shown on page 18, our Q1 net revenues increased 33% year over year, exceeding the high end of our quarterly guidance by 1%. Leased hotels revenue grew 28% and manachised and franchised hotels revenue grew 86% year over year. This quarter our manachised and franchised hotels revenue reached 12% of our total revenue. Page 19 shows the adjusted EBIT margin which increased by 1.8 percentage points in Q1 of 2013 when compared to a year ago. As Yunhang mentioned earlier, China's economy remained soft in Q1 2013 and we had a higher percentage of new hotels at the ramp-up stage this quarter compared with Q1 last year. Those factors coupled with cost inflation led to an increase of adjusted hotel operating cost as a percent of net revenues. However, preopening expenses as a percentage of net revenues saw a 0.2% decrease due to our enlarged revenue base. At the same time, our SG&A expenses as a percentage of net revenues continued to show a decrease of 1.8% year over year, [owed] both to our cost control efforts and the benefit of economies of scale. As shown on page 20, our cash balance closed at RMB186 million at the end of the first quarter. We have total credit facility of RMB760m. In the first quarter, the operating cash flow reached RMB71 million compared with RMB101 million for the first quarter of 2012. The year-over-year decrease was mainly attributable to increasing working capital related to our fast expansion and seasonality, such as increasing [advances] to employees and accounts receivable and the payment of accrued bonus. The cash deployed to investment activities for the first quarter totaled RMB350 million. We believe that our cash balance, our operating cash flow and our available credit facility will be sufficient to fund our expansion plan in the near future. Last but not the last, as shown on page 21, we revised our full-year hotel opening target for manachised hotels to approximately 300. We're confident in our robust [core] pipeline. Our full-year hotel opening target for leased hotels is around 100. We expect to achieve net revenues in the range of RMB1.01 billion to RMB1.02 billion in the second quarter of 2013, representing a 27% to 29% year-over-year growth. With that, let's open the floor for questions. [BJ]?

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Lin He of Morgan Stanley. Please go ahead. Lin He – Morgan Stanley: Hi. Good morning, management. Thank you for taking my questions. A couple of questions. Firstly, Jenny, just you talked briefly about the operating cash flow, but I still want to -- want you to share more color on that. I think historically your operating cash flow tends to be higher than EBITDA, which is not the case in Q1 this year. Can you please give us a bit more color details on that? For example, what drives the account receivables? And secondly is, on the margin outlook, I think in last quarter you guided that this year we should expect to see relatively flattish EBIT margin. But in Q1 you have a very good margin expansion. So do you still keep that guidance? And how should we think about the following quarters? Thank you.

Thank you, Lin. On the cash flow, as the management a little bit earlier, that we had a significant change in working capital position during this quarter. Part of that is because of the business expansion. For example, the advances to employees as well as, you know -- I think are reasonable based on the scale expansion. We opened a significant number of new leased hotels at the end of last year. So that has led to, you know, increase in advances to employees. And there also, you know, during the first quarter, we had a few factors driving up accounts receivables. For example this quarter-end closing at a weekend, so that had led to the [inaudible] relating to the credit card increased quite significantly. We think those changes are fairly normal. And another factor is the payment of accrued bonus. We had a quite profitable year last year, so the accrued bonus at the end of last year was a significant number. And still in Q1, you know, before the Chinese New Year, we paid out all the bonus. So that has caused a significant change in the payable -- salary payable to employees. So those factors we feel are, you know, normal to our business course. And Q1 has this special seasonality such as the bonus payment. Going forward we still expect our operating cash flow to be higher than EBITDA as the two major factors driving that gap remain there. That's the deferred revenue as well as deferred rental, especially deferred rental factor I think is still quite significant. So that's the situation on operating cash flow. And on the question on margin, we have significantly increased the -- kind of tightened up the cost management throughout the company this year. So the cost savings resulting, you know, from those efforts actually were beyond my original expectation for the first quarter. So the cost saving is a major factor driving up the first quarter margin. And also the franchise revenue in the first quarter were higher than our original expectation. So those two factors had led to higher EBIT margin compared with a year ago. Going forward we will continue the effort in cost control. But the major uncertainty would come from the revenue side, especially when we look at the Chinese economy, the recent activity level doesn’t seem to have picked up significantly. So as for now, we think, you know, more positively in the beginning of the year, but we will still reserve some room and I don’t expect the full year would be as significant as the first quarter. Lin He – Morgan Stanley: Okay. That's very clear. Thanks, Jenny.

Thank you, Lin.

Your next question comes from the line of Justin Kwok of Goldman Sachs. Please go ahead. Justin Kwok – Goldman Sachs: Thanks for taking my question. Can you give a sense on the latest run rate of April and May and how do you see demand trend in the segment? As you mentioned, [the steadiness of today] when you compare to the beginning of the year, it seems that you look a little bit more positive than before. What prompted you to look at that or what kind of [expectations] that you can share with us on that trend? And also on a full-year basis or the rest of the year, how do you see your same-hotel RevPAR trend moving ahead? Thank you.

From the data we have seen so far, I think, you know, we see two things, the macro and our internal situation. I think, you know, our own execution has been fairly good, actually better than we originally expected. For example, you have seen the cost control effect coming better than what we originally expected, and also the acceleration of the manachised business expansion also favorably improved our bottom line. So those two factors I think will continue throughout the year. However, the macro economy situation, at least from the data in April, we haven't really seen significant improvement from Q1. So we are here to, you know, find out how the macro situation will evolve. Justin Kwok – Goldman Sachs: Just a follow-up, when you look at April and May within your geographical [coverage], do you see any divergence in performance between say the first-tier city than the second or third-tier cities? And also with the news flow on avian flu, does that impact more to the Shanghai portfolio surrounding area that -- or whether you've seen any such impact yet?

In general our tier 1 cities are performing quite well. We have seen, you know, relatively the challenges mainly come from the tier 2 and tier 3 cities. Justin Kwok – Goldman Sachs: And on the avian flu, any observations on that?

I beg your pardon, Justin? Justin Kwok – Goldman Sachs: On the news flow for the avian flu in Yangtze River Delta, have you seen any notable changes in your booking pattern or your occupancy rate in the respective provinces or major cities?

The avian flu, you know, has some minor impact on our eastern part of China's business. But we don't think it's very significant. It does have some minor regional impact. Justin Kwok – Goldman Sachs: Okay. Thank you.

You're welcome.

Your next question comes from the line of Ella Ji of Oppenheimer. Please go ahead. Ella Ji – Oppenheimer: Thank you for taking my questions. A follow-up on the previous question with regards to the mature hotel RevPAR performance, what's your expectation for 2Q?

You know, currently the RevPAR, same-store RevPAR situation is still fairly similar to the first quarter. So we still see quite some uncertainties in the Q2. So we currently probably cannot provide a very specific guidance to the same-store RevPAR guidance for the second quarter. Ella Ji – Oppenheimer: Sure. And then just the quarter-to-date, are you, just in terms of trends, are you also seeing ADRs being up year over year while occupancy is being down year over year?

That trend seems to be continuing. Ella Ji – Oppenheimer: Okay. And then secondly, with regards to the leased hotel opening targets, I noticed that it's adjusted to around 100 from 100 to 110 previously. Can you provide some colors with regards why you made such change?

We made the change based on our -- this is a really small fine-tuning based on our pipeline situation. Ella Ji – Oppenheimer: Is there anything like macro, anything that has been taken into consideration, or cash flow management?

Not really. It's really a small fine-tuning based on our current pipeline situation. We are being a little bit more conservative than before in putting the leased hotel into tier 3 and 4 cities. So that has some, you know, small impact into the pipeline. Ella Ji – Oppenheimer: Okay, got it. Thank you, Jenny.

You're welcome, Ella.

Your next question comes from the line of Billy Ng of Bank of America Merrill Lynch. Please go ahead. Billy Ng – Bank of America Merrill Lynch: Hi, good morning. Thanks for taking my question. Actually it's also a follow-up question on the outlook for 2013. Understand that there may not be too much visibility given the economic condition right now. But overall, like what's your view for the second half? Like do -- are you still confident that, because last quarter earning call, it seems like you believe there should be some pickup in the second half of the year. And so what's your view now in the second half in terms of RevPAR, in terms of revenue? And do you have any updates on the revenue guidance for the whole year?

First of all, you know, we are still very confident in our full-year revenue guidance, even with the uncertainties in the macro economy as well as those impacts from the avian flu, we do feel the full-year guidance is achievable. And in terms of the second half, I think it's quite hard to predict. My personal view, I still feel there are -- the situation are likely to improve when we move into the second half, because the avian flu impact, we expect that to end sometime in the second quarter. And also the leisure travel will peak in Q3. And those two factors I think are turning more favorable as we move into the third quarter. Billy Ng – Bank of America Merrill Lynch: And just follow-up on that, in order to meet your full-year guidance, what kind of RevPAR trend we have to see for the rest of the year? So like for first quarter we see 4% overall for the RevPAR, but for the rest of the year, roughly speaking, what kind of RevPAR trend we have to get in order to achieve your full-year guidance?

Actually I think the full-year guidance has left sufficient room for us. In the first quarter our revenue grew 33%, which is significantly higher than our full-year guidance of 23% to 28%. So we think we have sufficient room in terms of RevPAR trend to complete the full-year guidance. And by the way, you know, the fluctuation in the third quarter RevPAR has direct correlation with our increasing percentage of new hotels in the ramp-up stage. So I think that's kind of a normal situation and I would be more concerned over the same-store RevPAR trend instead of the blended RevPAR change. Billy Ng – Bank of America Merrill Lynch: Okay. And how about like do you see the conditions improving enough maybe in the next few months you may be able to get some pricing power or potentially raise room rates systematically?

I think our policy over the room rates has been fairly, you know, stable. Even in the first quarter, facing the tough economies, our same-store ADR increased 3%. I think the price increase has not been an issue for us and we have always been the pricing leader in the industry. The risk or uncertainty mainly come from the occupancy side. Billy Ng – Bank of America Merrill Lynch: Thanks. Thanks a lot.

Yeah, thank you, Billy.

Your next question comes from the line of Fawne Jiang of Brean Capital. Please go ahead. Fawne Jiang – Brean Murray: Good morning. Thank you for taking my questions. First of all is actually a follow-up on your margin. In fact you have nice margin improvement year over year, but that I think largely contributed by your increasing franchise model. If we look at leased and operated model per se, it seems like you had about 4% year-over-year margin decline. Jenny, you did mention that you guys opened a lot of stores in the fourth quarter. Just wonder like besides I guess the dilutive impact on new store, is there any other increasing cost factor we should be aware of in the first quarter?

First of all, the overall EBIT margin improvement mainly come from the SG&A savings as well as the preopening as a percentage of revenue decrease. And there we have been expecting the hotel operating margin to be lower this year compared with the year ago. And in the first quarter, due to our cost control efforts as well as the increased percentage of franchise revenue contribution, that we had only a very minor increase in the hotel operating cost as a percentage of revenue. So I think that's a more complete view, you know, over the margin situation. This year we continue to see the minimum wage increase around 13%, 14%, this year. But at the same time, we have taken a more proactive approach to further reduce our staff to room ratio this year. So we believe we will be able to absorb a significant portion of the labor cost increase this year. Fawne Jiang – Brean Murray: Got it. That's very helpful. Thank you, Jenny. Second question is actually regarding the industry dynamic. I think as of now we probably already have around 10,000 budget hotels. Just wonder like from your perspective how would industry evolve from here? Is there any difference we might see coming ahead versus in the past few years when industry was in the high-growth stage? And any I guess meaningful acquisition you might see down the road?

First of all, I think, you know, in terms of industry consolidation, China is still in the very, very early stage. According to our statistics, all the branded chains only account for 6% to 7% of the relevant market. And compared with Europe, the number I think is around 40% to 50%. And in US it's around 70%. So we believe there is still a long way to go for consolidation. And along that path, I think the most recent trend has been, you know, different companies start to differentiate themselves and create products, adjusting different sub-segments. So clearly we are seeing, you know, people are trying to figure out products both in the mid-scale as well as in the budget sector, and try to establish their position in those parts. And China Lodging, I think, you know, we are a leader and we have earlier captured this trend and that has been driven our multi-brand strategy. So we are riding the tide right now. Fawne Jiang – Brean Murray: Got it. Thank you, Jenny.

Thank you.

Your next question comes from the line of Shang Koo of One North Capital. Please go ahead. Shang Koo – One North Capital: Yes, hi. Thanks for the call. I've got a couple of questions. One is, how much of your sales in the first quarter was from the e-channels? And second question relates more to the mix of your revenues. How much of your traffic -- have you noticed any significant changes to your traffic between leisure versus business over the past 12 months in the case of softer economy and environment? And maybe if you could just indicate where it used to be, the mix, and where it is right now.

Sure. Currently we have more than 40% reservation coming through our central channels, and the greater majority of that is e-channels, including internet and [inaudible] application. And in terms of customer mix, about 40% to 50% of our customers are staying with us for leisure purpose, and 50% to 60% are for business. And if you look back three or five years, then that mix has clearly been shifting, you know, the leisure contribution has been increasing gradually in the past few years, which is in line with the overall demand structure shift in the past few years. Leisure traveling has been growing at a very significant pace as compared with business travel. Shang Koo – One North Capital: Right. Okay. And just one last question, I mean, you know, together with your growth in your hotel pipeline and given more mature growth profile in terms of demand, softer economy environment, what will be a reasonable occupancy rate that you think for China Lodging hotels let's say one to two years out?

When we talk about occupancy, we have to separate, you know, the mature hotels from the ramping-up hotels. In the past five years, you know, our mature hotels, which is defined as those, you know, has operation history above six months, has maintained occupancy above 95%. So going forward, we continue to expect the mature hotels to achieve occupancy in that ballpark. Shang Koo – One North Capital: Okay. Help me understand it because, you know, I would imagine that as you increase the number of hotels, [in many ways] for your peers, there should be a little bit more cannibalization within the relevant geographic zones. So the normal thinking is that occupancy should be coming off over time.

I think the occupancy is a strong evidence to show that despite that a few major players have been growing fast, in total they're still accounting for most advantage of over-supply in the market. As I mentioned earlier, all the chains together only account for 6% to 7% of the supply in the whole country. So that cannibalization stage I think is still, you know, miles from today. Shang Koo – One North Capital: Thank you. I'm sorry to prolong this, but I mean, for example, the same-hotel occupancy change for this quarter compared to the first quarter of last year is low -- has come off. So I mean, help me understand why is that. Is that just simply because of the temporary softness in the economy? To what extent is it just increased density of hotels within the relevant markets?

I think the main driver is relatively soft economy. Shang Koo – One North Capital: All right. Okay. And would that be more the impact on business customer segment or are there any other segments that's showing weakness?

The weakness has a bigger impact on business travel. And Q1 is also the low season of leisure travel, so, you know, despite leisure travel is overall growing strongly, you know, the impact in Q1 is not as significant as in other seasons. Shang Koo – One North Capital: Okay. So how would you think about the leisure/business travel mix by the end of this year?

We don't have a very accurate number as of today, but history has been the leisure travel are growing more than 20% year over year in the past five years. Shang Koo – One North Capital: Okay. Okay. Great. Thank you very much.

Thank you.

Your next question comes from the line of Vivian Hao of Deutsche Bank. Please go ahead. Vivian Hao – Deutsche Bank: Hi, Jenny. Thank you for taking my question. Just very quickly, so this year we have a shorter May holiday in China. Do you see that -- because previously I guess you mentioned the seasonality from this year on will probably see stronger seasonality in peak seasons with longer holidays. So do you see any impact of the shorter May holiday, has impact on your second quarter?

I have to, you know, one impression that people often thing those, you know, golden weeks or holidays are favorable to our business. On contrary, actually those periods are not, you know, kind of peak season for us. Because typically, you know, before and immediately after the holiday, the travel traffic will significantly decrease. We will have a few peak days in the legal part of the holiday. But if you blended that period together, often, you know, those periods are below our average performance. So, you know, as for the May holiday, this year, you know, I think we had kind of also shown that pattern. Vivian Hao – Deutsche Bank: Okay. So that means that actually less negative impact from this shorter holiday for your second quarter performance?

No matter it's May holiday or it's a Qing Ming or it's a [Dragon Boat] holiday, all those, you know, three-day holidays have never been a good thing for the business. So, you know, this year just repeat the pattern. Vivian Hao – Deutsche Bank: Okay. Thank you.

You're welcome.

Your next question comes from the line of Lin He of Morgan Stanley. Please go ahead. Lin He – Morgan Stanley: Hi, Jenny. I have two questions for the modeling purpose. One is CapEx. I think this quarter the CapEx number looks a bit high. So if we annualize that, full-year CapEx looks like will probably exceed your previous guidance. So how should we think about that? And secondly is preopening expenses, we have seen relatively low number this quarter. Is there any one-time issue for this quarter or should we assume that next few quarters we should see relatively a similar number? And the last question is for Qi, if he's still on the line, can I ask him to talk about some operating results, matrix of the other two brands, especially JI hotel?

When you say two brands, you mean Qi hotel and? Lin He – Morgan Stanley: And Hi Inn.

And Hi Inn. Lin He – Morgan Stanley: Yes.

Okay, sure. When you talk about CapEx, do you refer to the fixed asset position or you refer to the investment cash flow, can I clarify that? Lin He – Morgan Stanley: I'm referring to the number of over 300 million.

Okay, that's investment cash flow. Lin He – Morgan Stanley: Yeah.

Typically the first quarter is a peak quarter for the payments to suppliers, especially those, you know, contractors, you know, help us renovate the hotels. So that's an important factor driven up the first quarter investment cash flow. For now we expect the next three quarters actually, you know, unlikely to exceed the level of the first quarter. So we continue to expect our investment cash flow to be approximately RMB1.2 billion this year. There may be some small, you know, adjustments, but we don’t think it will be significantly different from our original expectation. In terms of the preopening, you know, that's mainly driven by our pipeline situation. So I think our earlier provided, you know, indication on the full-year preopening data will remain similar. So we don't expect major change in the preopening number. I think our leased hotel opening schedule hasn't changed significantly either. And let me refer your first question to Mr. Ji. [Chinese language spoken]

[Chinese language spoken]

Let me translate for the audience. In terms of Mr. Ji's comments, the JI Hotel has been doing quite well. Of course our new hotels opened so far are not a very huge number yet. We have mainly been focusing on the tier 1 to tier 2 cities. And obviously those JI Hotel in tier 1 cities are extremely welcomed. They have achieved very high RevPAR and ramping-up speed is also very fast. We are here to increase the number of hotels so we can make a conclusion on a bigger sample. As for Hi Inn, we also had an early success after we adjusted the model last year. We have changed the original large room count model to a four-room count model, and then we tried to create cheerful atmosphere in the hotel and occupied new locations. After the adjustments, the manachised business has picked up very significantly. We are also working on getting more leased hotel into the Hi Inn portfolio. We are expecting to also make a conclusion after we have a bigger sample in this brand. Lin He – Morgan Stanley: [Chinese language spoken]

[Chinese language spoken] Lin He – Morgan Stanley: [Chinese language spoken]

[Chinese language spoken] Lin He – Morgan Stanley: [Chinese language spoken]

Let me translate their conversation for the wide audience. There were two questions in the conversation. The first one is relating, you know, who are the main competitors for our JI Hotel. Mr. Ji mentioned Holiday Inn Express, Garden Inn, as well as Vienna Hotels which is a domestic player. So far we haven't seen any of them have any too outstanding performance. And the foreigners I think are testing the market. The Holiday Inn Express has 30 to 40 hotels in operation right now, but the model is different from ours. They have much higher room count and much higher investment. Garden Inn doesn't have a hotel in operation yet. So our JI Hotel will stick to the high price performance ratio concept with reasonable investment and attractive financial return. And we believe, you know, our [taste for] product design and good control in terms of investment will become a new favorite choice for both the customers as well as the franchisees as investors. And then the second question was regarding, you know, Mr. Ji's thoughts on the Joya brand. You know, strategically we have a few different revenue streams. One is of course our traditional lease model and the second will the franchise and management business in the economy hotels as well as mid-tier hotels. And the third one which is what Joya represents is we want to build a third revenue stream which would be the management business in the high-end hotels. And then if you look at the global leaders like Marriott and Intercontinental, you know, Starwood, you know, their main -- a big portion of their revenue comes from that area. So we think we can build our own management capability in the high-end hotel segment and with our own characteristics. Our, you know, we will have a few members of our leased hotels first, currently mainly located in the tier 2 cities, so it has a limited exposure in terms of the rental. And we want to use those sites to test our product design as well as service model. And if we're successful, then this is going to become a third growth engine for China Lodging.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd like to hand the conference back to the presenters for closing remarks. Please continue.

Thank you, [BJ]. Before closing the call, I would like you to be aware of a few upcoming China Lodging investor events. We will participate in Macquarie Greater China Conference on May 10 in Hong Kong and Morgan Stanley Investor Summit on May 13 to 14 in Hong Kong. On June 3 to 4, we will participate in JPMorgan China Summit in Beijing and Goldman Sachs Lodging, Gaming, Restaurant and [Video] Conference in New York. Once again, thanks to everyone for making time for your busy schedules to join our call today. To get our timely news and updates, please register at our Investor Relations website at ir.htinns.com. We look forward to talking to you in the next quarter earnings call. Goodbye everyone.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.