Ladies and gentlemen, thank you for standing by and welcome to the China Lodging Group Q3 2014 Earnings Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, November 13, 2014. I'd now like to hand the conference over to your first speaker today, Ms. Ida Yu. Thank you. Please go ahead.

Thank you, Sarah. Good morning everyone. Thanks to all of you for dialing in and welcome to our third-quarter 2014 earnings conference call. Joining us today is Mr. Qi Ji, our founder, Executive Chairman and CEO, Mr. Xie Yunhang, our COO, and Ms. Jenny Zhang, our CFO and CSO. 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. Recalculations 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 a supplementary slide presentation is available on our investor relations section of China Lodging Group's website at ir.huazhu.com. Now I would like to turn the call over to Mr. Ji. Qi Ji, please.

Good morning everyone. Thank you for joining us today. I'm glad to report another quarter with fast hotel network expansion, which remains as our primary strategy, which is supported by multi brands and the successful manachised business. We remain confident in the growth of Chinese travel and the lodging market. Our strategies have been set to take the growth opportunities. As shown on Page 4, during the past five years our hotel network has expanded the CAGR 54%, bringing our hotel count to 1,849 at the end of the third quarter. In the first nine months of 2014, we added a total 424 net new hotels, exceeding the 390 hotels we added in the full year 2013. We stated to have close to 2,000 hotels added at the end of 2014. Our fast network expansion is supported by our multi-brand strategy. Today we have seven hotel brands, covering economic, middle-scale and upscale market. With a good value for money, each of the brands has a unique growth opportunity, as shown on Page 5. Looking at the recent development of our brands by life stage, we are encouraged by the fast growth in our flagship and the rising brands. These brands and the incubating will gradually get [indiscernible] for fast expansion through our operational platform in the future. Our fast network expansion is also supported by our successful manachised business strategy, as shown on Page 6. Manachised business has grown as the vast majority combination of our new hotel openings, which reached 91% in the first nine months of this year. Thanks to the strong brands of the majority among our business partners, we expect to have manachised hotels about 70% in our total hotel network at the end of this year. To sum up, given the huge and the still fragmented of the Chinese lodging market, we expect a long runway of consolidation, as shown on Page 7. As a leading hotel group, Hua Zhu only accounts for 2% of the addressable hotel market. We are confident in our strategy to gaining more shares. After all, hotel business is a long-term business. With that, I will turn the call to Yunhang who will walk you through our Q3 operational results. Yunhang, please.

[Interpreted] Thank you, Qi Ji. Now let me walk you through our operational highlights for Q3 2014. In Q3, as shown on Page 9, we opened 14 net new leased hotels and 168 new manachised hotels. At the end of the quarter, we had 1,849 hotels in operation, among which 33% were leased hotels, 67% were manachised hotels and the remaining 8 were franchised Starway hotels. In the first nine months of 2014, we added 39 leased hotels and 402 manachised hotels, exceeding our expectation at the end -- at the beginning of this year, especially the accelerated openings for manachised hotels. As of September 13, 2014, we had a pipeline of 517 hotels, with 39 leased -- 32 leased hotels and 485 manachised hotels. As shown on Page 10, in Q3 our Group's blended occupancy was 93%, a decrease of 1.6 percentage points year over year. The blended ADR was RMB187, an increase of 1% year over year as a result of a 2% increase in same-hotel ADR, partially offset by more hotels in lower-tier cities where ADR tends to be lower. In summary, in Q3 the blended RevPAR was RMB173, a decrease of 1% year over year. Page 11 provides a detailed view of the growth trend of our same-hotel RevPAR. For the hotels in operation for at least 18 months, in Q3 2014, the same-hotel RevPAR remained the same, with an increase of 2% in ADR and a decrease of 2 percentage points in occupancy. Our pricing strategy has been set in response to the relatively weaker same-hotel occupancy, which was 96% in Q3 2014, compared with 98% in Q3 2013. This was mainly due to the soft macro economy. With that, I will turn the call over to Jenny, our CFO and CSO, who will walk you through our Q3 financial results. Jenny, please.

Thanks, Yunhang. Hello everyone. In Q3 2014 as shown on page 13, our net revenues increased 21% year over year. Leased hotels' revenue grew 17.9% and the manachised and franchised hotels' revenue grew 43.2% year over year. Our manachised and the franchised hotels' revenue reached 14.6% of our total revenue in Q3 this year. On page 14, the adjusted quarterly operating margin came in at 15.8% compared with 15.7% in Q3 last year. The hotel operating costs as a percentage of net revenue decreased by 0.9% year over year, mainly attributable to higher revenue contribution from high-margin manachised business. Our pre-opening expenses as a percentage of net revenue saw a 1.4% decrease due to our enlarged revenue base and fewer leased hotels in the pipeline. The adjusted SG&A expenses and other operating income as a percentage of net revenue increased by 2.2%. This is mainly due to our increased online marketing activities and an increased IT spending, including R&D expense to enhance guest experience and the digital channels, and the spending to enable us to provide comprehensive IT services to our hotels. Last but not the least, move on to cash position as shown on page 16. Our cash balance closed at RMB850 million at the end of Q3. We had a total credit facility of RMB890 million from ICBC and the China Merchant Bank. For the third quarter of 2014, our operating cash flow totaled RMB439m, a 25% increase from a year ago. Our investing cash flow totaled RMB280 million, a 7% decrease from a year ago. We expect to achieve a positive free cash flow this year for the very first year. We believe that our cash balance, our operating cash flow and our available credit facility will be sufficient to fund our rapid expansion plan in the near future. Finally, as shown on page 16, we expect that our net revenues for Q4 will grow 15.5% to 17.5% year over year. Our net revenues for full year 2014 will grow 19% to 19.6%, slightly lower than the initial full-year expectations provided at the beginning of the year. With that, let's open the floor for questions.

[Operator Instructions] Our first question comes from the line of Lin He from Morgan Stanley. Please ask your question. Lin He – Morgan Stanley: Hello. Good morning, management. Thanks for taking my question. My first question is on the revenue guidance, the adjusted and new revenue guidance. Because if I look at the last three quarters, in Q2 you actually exceeded a high-end guidance, and then for Q1 and Q3 you were within the range. So I just want to understand a bit more behind the reason for adjusting on the 4Q revenue guidance. And my second question is on the SG&A expending. Can you provide a little more guidance for the coming quarters? Do you think that going forward, that SG&A may remain at relatively high level, because you need to continue to spend on the IT spending? Thank you.

Let me address the revenue guidance question first. For the fourth quarter, there are some things that impact the revenue. Number one, the economy has generally been soft. And we see the seasonal fluctuation actually become more significant than prior years because of the soft demand from the business travel. So that has lowered our general sales expectations for the Q4. Aside from that, we also have seen a strong momentum of the new openings in franchised hotels, however, a slightly lower achievement in the opening of leased hotels. So that accumulated impact also led to a slightly lower sales revenue in the fourth quarter of this year. Last but not the least, we have around six, seven major hotels in tier-one cities going through renovation to upgrade the product to the new standard of JI Hotel as well as the new HanTing standard. So that caused also more decrease in terms of the Q4 revenue. So those are the factors that have driven to a slightly lower than expectation Q4 sales. And in general, I think the full-year revenue achievement is still very close to our year-beginning guidance. In terms of the SG&A spending, we expect the digital strategy will play a very important role to the Company in the coming years. So we have been formulating a comprehensive investment plan into the IT spending. We expect to provide a more detailed guidance and also elaboration of our digital strategy to our next-quarter earnings release. We expect those investments will increase the competitiveness of ourselves as well as our managed hotels in the market and eventually leading to a higher RevPAR achievement. So we probably -- more likely we will maintain reasonably high level of investment into IT in the coming quarters. Lin He – Morgan Stanley: Okay. Got it, Jenny. Just a quick follow-up. Did you say that there are 47 hotels under renovation?

No. I think it's six or seven, but those are [indiscernible] hotels in tier-one cities. Lin He – Morgan Stanley: Okay.

We want to renovate them as a mix of flagships for the new product standards for both JI Hotel and HanTing Hotel. Lin He – Morgan Stanley: Got it. Okay. Thank you.

Thank you, He.

Our next question comes from the line of Justin Kwok from Goldman Sachs. Please ask your question. Justin Kwok – Goldman Sachs: Morning. Thanks for taking my questions. Yeah, actually I have a question on the free cash flow. I heard your prepared remark thing that you're expecting to turn free cash flow positive on a full-year basis for the first time. I think that's a very good development, but I just want to get a sense on was the continued shift towards franchise an -- I believe that once you turn free cash flow positive it would be likely on an ongoing basis for the next forecast period. And what is the current management plan in terms of how to spend this free cash flow? Are you expecting to increase your CapEx in, say, new hotel development or other kind of ventures or in the IT spending? Or how are you going to treat this free cash flow going forward? Thanks.

Thank you, Justin. We are very happy to see the first year of positive free cash flow, but you need the action we are going to take. In Q4, we will repay the short-term loans we have or had before they mature. So that's number one. And secondly, in terms of the long-term plan for the free cash flow, we have a few things that we plan to invest in. First of all, a portion of the cash will be invested into the product upgrades as we have already started with a few flagship hotels, for JI Hotel and HanTing Hotel. And secondly, this will enable us to accelerate our consolidation effort in the market. So we will be actively looking at the buying opportunities in the market. And then thirdly, we will invest into some of the soft capabilities of the company, including the digital strategy, marketing channels and other technologies may bring breakthroughs in the related travel industry. So those are the main areas that we are going to invest in. Justin Kwok – Goldman Sachs: Sure. Okay. Do you mind to talk a bit more on the product upgrade side? What is, say, the CapEx target either on per-hotel or on aggregate basis? How are you going to spend this money and what is the expected, say, price increase that you aim to achieve after such renovation?

Justin, is the -- I'm not sure I fully get the question. Is the question mainly relating to the RevPAR after the renovations? Justin Kwok – Goldman Sachs: Yes. About the -- you talk about the -- some of the money will be spent in the product upgrade for JI Hotel and the HanTing. I want to get a sense on the amount you're spending on aggregate or per-hotel basis. And then what are you expecting to achieve after the renovation in terms of either the run rate or the RevPAR increase.

I see. We plan to innovate a small number of the existing JI and HanTing hotels, to use them as a flagship, to demo our new product standards. So the benefits of those investments will come in twofold. One will be the improved RevPAR from those hotels. Our current expectation is we will -- is some meaningful improvement, between 3% to 5% in terms of the RevPAR gains. And secondly, I think that will provide us good examples, so we can be more attractive to our franchisees. So the benefit will also be reflected in an increase of number of franchised business for those brands. Justin Kwok – Goldman Sachs: All right. About the CapEx target per hotel? How much you plan to spend? Do you have any guidance on that?

Depending on the current situation of the hotel, the number may vary from RMB40,000 per room for HanTing hotels up to around RMB70,000 per room for HanTing. And as for the JI hotels, the renovation expense will be in the range of RMB80,000 to RMB100,000 per room. Justin Kwok – Goldman Sachs: I see. Okay. Thank you.

Thank you.

Our next question comes from the line of Billy Ng from Bank of America. Please ask your question. Billy Ng – Bank of America Merrill Lynch: Hi. Good morning. Two questions. One is still related to the revenue guidance. Basically, can you share with us a little bit more color on the RevPAR trends? What have you seen? Because you mentioned that one of the reasons is the general softness in the market. Are we seeing particular things in October and in terms of RevPAR? By using your guidance, would that translate to a year-on-year RevPAR drop in the fourth quarter?

Currently, I don't think we can be as specific as providing a RevPAR expectation. The general trend we have observed in the past few years in the market, is that the travel demand from leisure travelers, especially tourists, has been growing very fast. At the same time, the general softness in the Chinese economy has brought a very soft demand from business traveling. So the blend of those two trends has been quite interesting in explaining all of this. First of all, we see a fairly strong demand in the high-travel season, especially in Q3 and partially in Q2. However, the Q4 and Q1, the traditional low seasons, actually become even lower than the prior years. I think that's how the two trends help explaining. We expect that trend to continue for the next year until we see some more significant improvements in the macro economy. Billy Ng – Bank of America Merrill Lynch: Understandable. And my second question, actually, also on the product renovations or upgrade. Can you tell us the budget for the product renovation for next years and more specifically how many hotel will be impacted? And in terms of forecasting, normally when a product is going through -- one particular hotel is going through a renovation, how -- are they closed -- how long does it need to be closed down and how much money needs to be spent per hotel?

We have recently started the re-renovation of a few flagship hotels. And we are [yet] to be formulating a plan for the renovation for the next year. So we will be able to disclose more details in the quarter. Billy Ng – Bank of America Merrill Lynch: Okay. Thanks.

Our next question comes from the line of Jamie Zhou from Macquarie. Please ask your question. Jamie Zhou – Macquarie: Hi. Morning, management. I got a couple of quick follow-ups here. First one is on an earlier question, and the management said the increase in expenditures on IT, on digital marketing, might likely to continue. Can I just ask to clarify that, we have seen two parts in the jump of expenses. One on the selling and marketing expense, around RMB13m. And also on the general administrative, where you are spending more on IT, around RMB30 million, and average run rate from previous quarters. Are we expecting both of these lines to maintain at the high level we're seeing in the third quarter going forward? And my second part to that question is, from our previous announced initiatives, including technologies such as mobile check-in, room selection, to the redefined -- refined budget hotel format, how has the customer feedback been so far? Thanks. That's my first question.

Okay. Let me address the first question and I will pass the second one to our COO, Mr. Xie. Currently, we do expect the IT spending as well as the marketing spending to continue in the next couple of quarters. [Chinese language spoken]

[Interpreted] In general, the customers are quite excited about the new features we have rolled out, including the [indiscernible] check-in and the pre-select of their rooms when they make their reservation. And the number of usage cases has been increasing very fast in the past few months. So we are very encouraged by the positive response of the customers. Aside from the direct features we have added, the backoffice we have also introduced new tools to better monitor customers' feedbacks through various media channels including Weibo and Weixi and a few of those comprehensive analysis we are now able to better understand how customers feel about our product and we can gear those feedbacks towards improvement actions in the hotel. Jamie Zhou – Macquarie: Great. Excellent. Thanks. And looking forward to your new initiatives next quarter. My second question, a quick follow-up on the RevPAR trends. Actually, I'm looking at your mature hotel trends, it seems like in the third quarter, and we have seen in the past as well, you are foregoing some occupancy drop in favor of ADR increase. Is that a proactive decision towards ADR if they are of a flat RevPAR and if that's the case, does it have any meaningful margin improvement contribution to our EBITDA margin? Thanks.

So we have always been fairly active and dynamic in managing our yields. And in today's market situation, when the general business demand is a little bit fast, we believe it's a better choice to hold up the ADR and [indiscernible] occupancy. So that is our intentional choice in our yield management. And that has definitely helped to reduce some of the variable costs in the operation. In general, that's helpful, but avoid due to the generally flattish RevPAR performance, we are still facing cost pressures and we -- the RevPAR performance so far cannot fully absorb the cost inflation. And our margin improvement on the operational side has mainly been driven by the increased proportion of manachised business. Jamie Zhou – Macquarie: Great. That's helpful. And that's all for me. Thanks.

Thank you, Jamie.

Our next question comes from the line of Shang Koo from One North Capital. Please ask your question. Shang Koo – One North Capital: Yes, hi. Good morning and thanks for the call. I've got several questions. I think just one of that, the first question relates to the seasonality effect and its related to enhances and guarantees that we will soak up the travel. Jenny, could you help me understand, what is the revenue mix of businesses and leisure for this quarter and how was your mix a year ago and if you could, you could also indicate how corporate travel has declined year-on-year on the nine month basis so far. So that's the first set of questions. I've got two more sets of questions. Thank you.

Shang Koo, I apologize that because the volume was a little bit low, could you say the question again? Shang Koo – One North Capital: Okay, sure. Yes. Is this better?

This is better. Thank you. Shang Koo – One North Capital: All right, okay. Yes, my first set of question relates to your corporate business leisure travel mix. Because you mentioned that we are going to see enhanced seasonality in the soft corporate travel environment that you have right now. Could you indicate what the revenue mix is for this quarter and how it was a year ago? And if you could as well indicate how corporate travel business has deteriorated on nine-month basis, year-on-year. Thank you.

We haven't done a sample check recently, so I don't have a very accurate data for the recent quarters. But the general observation has been the portion of recent travelers are increasing in the customer mix. A year ago, I think the mix was roughly, leisure is somewhere between 40%, 45%. I believe today it's probably close to 50%. Shang Koo – One North Capital: Okay, okay. And just wanted to come back to the question on the SG&A. Maybe you could just take the sales and marketing expense gain and just help me understand, what was the nature of the increase, the sharp increase that we saw. Where is the spend going in to, to what's initiatives? And for the G&A, if you could also help me understand, how much of the increase was due to the IT spend or maybe you could just give me a sense of how much was spent on IT during the quarter.

Okay. In terms of the increased marketing spend, we have mainly put up a few more initiatives on the e-commerce side. We have been using the different channels more actively promoting our brand and our membership programs. So that has led to an increased registration of new levers as well as new room nights brought by the extended customer base. And in terms of the IT spending, they are mainly in two regards. One is that we have invested into more R&D type of activities to introduce new features in our app, website as well as in the internal use management tools. And secondly is that we are in the setup phase of formulating unit internally to be able to provide comprehensive IT services to all of our hotels and the group purchasing there going to lead cost reduction in for our franchise hotels. And also ensure the consistency of the IT platform in every hotel. So that initiative has also led to some increased cost in our -- the current SG&A line. Shang Koo – One North Capital: Okay Jenny. It sounds like your IT system is currently not on a single integrated platform. Is it right? And you are trying to bring everyone towards one platform?

Not exactly. We have a well-integrated platform in the backoffice. What we are in fact seeing is really extending the platform to enable us to do more. One is that to provide more functionality and the features to the customers and the second is really to provide more services to our hotels. Shang Koo – One North Capital: You mentioned more services in to your hotels. Can you give me one example of what they would be?

For example, we are taking new purchasing activity for the internet connections for all the hotels. So, that's one example. We are doing probably eight to 10 different features in that regard. Shang Koo – One North Capital: Okay. Okay. And just a last question is on the labor cost side. How do you see labor cost trending for this coming year 2015? And can you just give a sense of the productivity gains that you've been able to achieve this year and how much productivity gain on labor productivities you can expect for next year?

Actually the labor cost as a percentage of our revenue in the past year I think being well managed. The reason that you are seeing personnel cost as a percentage of revenue has increased slightly, was partly due to the mix of the personnel cost. Last year actually consists of both the personnel cost from the leased hotels as well as that was a franchised and manachised hotels. With the increased portion of management -- manachised and franchised hotels, here we are seeing a higher percentage of cost coming from that sector. Typically the personnel cost with the comps were around 10% plus minus of the franchised revenue. So the mix change has also contributed to the increased percentage of the personnel cost as percent of revenue aside from the general inflation. Shang Koo – One North Capital: Right, right. Okay. And just now one last final question. How much of your marketing spend is now on -- rather let me see, rephrase this, how much of your customers' reservations are coming from third party on general today. And how do you see that going forward?

Currently it's around 8% for third party channels. Shang Koo – One North Capital: Okay. And how do you see it going forward as you expand in that local hotels?

In general we are seeing the percentage of third party contribution is higher for the new brands and they are much lower on mature brands like HanTing. So going forward, as the new brands contributes more in the -- or more revenue, we expect the percentage of OTA contribution will be slightly higher than today. But we don't expect that to change too dramatically. Shang Koo – One North Capital: Okay. Okay. All right. Thank you very much.

Thank you.

Our next question comes from the line of Lin He from Morgan Stanley. Please ask your question. Lin He – Morgan Stanley: Thanks management. I have two follow-ups. One is for Qi-jong ph]. [Chinese language spoken] And my second question is regarding the cash flow. There is an item for acquisition that is just RMB31m cash out -- sorry, I was reading the wrong number, yes, that's it from me. Thank you.

Yes, let me translate the question for everyone. The question is regarding the digital cash flow for investments. Since we have decided to invest more in our digital platform and to create more innovative experience for the customers. So Lin's question is towards Mr. Ji, that what exactly are the areas that we see potential of improvement in terms of customer experience through different technologies.

[Chinese language spoken]

Okay. Well, before answering Lin's questions in regard to the IT investment, Mr. Ji want to make a general comment on how to look at our business. We have always -- first of all, we have always been paying a lot of attention as well as on analyst results to the same hotel RevPAR growth. Of course I think that's a very important single metric since our today's revenue is still winning comp off these hotels and the RevPAR performance has a direct impact on our profitability. At the same time I wanted to also pay equal amount of attention to the manachised business growth. During the past few years, our manachised business has grown to a significant size. Today it's about tied in terms of number of hotels compared with the leased hotels. Within one to two years as these profit contribution from the manachised hotels are going to be as much as the leased hotels. So we believe the network expansion is still the main theme of our business in to this market. And back to the question, the interest rate. Typically financial investors will look at SG&A as a line of expense. However, in my mind, some of that actually is an investment. Just a week ago, Okor [ph] announced a five-year digital strategy which will lead to EUR225m investment. In total it's like over five years. We are actually thinking along similar lines and we are also formulating our own digital strategy which we will be able to share with you in next quarter's earnings call. And aside from the investment in to the digital capability, we are also investing into the flagship for demonstration of the product upgrade. We envision our business to grow into a large scale capable of swift response and have extensive distribution and marketing capability. So today we need to invest for that future capabilities. And we hoped the money and I think you know that's actually killing our future. So I hope you know older investors and the analysts would be willing to communicate with us in this regard and we hope to win your support in the future investment into those capabilities.

[Interpreted] So the investment under three things in my top priority list. One is the digital capability, the second would be the new product and the brands including R&D expenses relating to that and the third area would be investment in human resources including recruitment and the training to generally enhance our capabilities in the large scale management of a huge number of hotels.

Lin, does that address your question? Lin He – Morgan Stanley: Yes. Thank you very much. That's very, very helpful. [Chinese language spoken]

Our next question comes from the line of Long Lin from Brean Capital. Please ask your question. Long Lin – Brean Capital: Hi, good morning. Thank you for taking my question. My first question is on your franchise, I mean manachised hotels. You had very strong openings for manachised hotels with a very strong pipelines. Can you elaborate out some of the key drivers behind the strong demand? And also given the softness in the RevPAR trend and increasing cost pressure going forward, how is that impacting like the ROI trends for the manachised business? And the business -- and also can you disclose out what the average -- what's the average ROI for the manachised hotels right now? Thank you.

Sure. We believe there are a few key drivers behind our traffic growth of the manachised business as well as the pipeline. Number one is since you know our brands have demonstrated very big performance track record and the financial return is attractive for the potential investors. And then secondly, we are able to provide a full spectrum of brands for selection. So for a lot of the property owners or potential hotel investors, we offer a lot of choices and flexibilities. That's also very powerful for us to win deals in the market. And then thirdly, we have formulated a very strong management and marketing capability on the graph. And I think you know we have delivered the strongest RevPAR over the past years. So, the very professional and hardworking management team we have in the field is another key competitiveness for us. In terms of the general macro economy softness, I think you know we have to put that into the perspective of the overall investment environment in China. I agree with you. The business in terms of single hotels profitability is encountering challenges in today's macro economy, but at the same time the market is also not offering a lot of other attractive investment opportunities to the people who are holding cash today either. So for a hotel investment which can generate long term reasonably stable investment return, this is still a very attractive option for today's investors in China. So that's a big background that's supporting our successful manachised business. In terms of the ROI for the manachised hotels, we do not have the full financials for each of our manachised hotels. From the feedback we have seen, I think they are still in the ballpark of like 15% to 20%. Long Lin – Brean Capital: Okay. Thank you. That's very helpful. My second question is regarding your mid-scale hotels. Can you talk about like what percentage of your customers for your mid-scale hotels are business travelers and what percentage of customers are major travelers?

I think we answered this question a while ago. We don't have a very accurate statistics at this moment. My guesstimate would be it's probably close to half/half today. Long Lin – Brean Capital: Okay. That's very helpful. Thank you very much. That's all my questions.

Thank you, Lin Long.

Our next question comes from the line of Shang Koo from One North Capital. Please ask your question. Shang Koo – One North Capital: Hello again. Hi. Could I just get a bit more -- some clarification around the renovation for the six to seven hotels in the tier one cities? Are these just simple renovations to just upgrade the look because it look a bit aged or is this a conversion of let`s say some HanTing hotels into Ji hotels. And could you also just indicate the strategy between just a normal upgrade versus conversions for the hotels you have in mind for such program next year? Thanks.

Those hotels mainly operate, there are probably one or two cases involving brand conversion. For example the typical case is we have like two hotels in Beijing and one of them was organizing around six years ago, six or seven years ago and the product standard at that time was -- for JI Hotel was still very similar close to the HanTing standard. So we have -- we decided to invest into this property to operate it to the most current product standards of Ji Hotel. So most of the cases its operate to the prevailing product standard to demonstrate the new product standards to consumers as well as potential franchises. Shang Koo – One North Capital:

As we have no further questions in queue, I'll hand the call back to Ms. Ida Yu for any closing remarks.

Thank you all for your time and we look forward to talking with you for the next quarter. Bye-bye.

Thank you very much ladies and gentlemen. That does conclude our conference for today. Thank you so much for your attendance. You may all disconnect.