Officials at Shanghai-based Home Inns are banking on product and market diversity as the outlook for the Chinese economy continues to be uncertain.

　　Home Inns & Hotel Management is turning to geographic diversity to help it counteract a soft economic environment in China, executives said Thursday during a fourth-quarter earnings call.

　　An example of this strategy in action: the company’s planned 230-million yuan ($37.5-million) acquisition of Yunshang Siji Hotel Management Company that is expected to close 1 April. Yunshang operates a portfolio of 35 hotels comprising approximately 3,500 rooms.

　　The deal would enhance economy hotel company Home Inns’ geographic diversity in China by furthering its presence in China’s Yunnan Province, CEO David Sun told analysts during the earnings call.

　　CFO Huiping Yan said the company plans to release more information about the Yunshang acquisition after the deal closes, but she did say the company’s hotels are running at “healthy” earnings before interest, taxes, depreciation and amortization levels.

　　Asked by an analyst to provide greater detail of the company’s overall acquisition strategy, Huiping said the company looks at the replacement cost of developing a hotel in a given market opposed to buying a presence in the market through an acquisition. She said the company is taking a focused approach toward growth.

　　"It’s not anywhere, everywhere,” said Huiping, who is stepping down from her post 30 April. She will be replaced by May Wu, Home Inns’ chief strategy officer and former CFO.

　　Home Inns opened 437 hotels during 2013 and as of 31 December operated 2,180 hotels across China.

　　Integrating Yunshang into the Home Inns mix is likely to be less challenging than the company’s $470-million acquisition of Motel 168 in 2011, Huiping said.

　　"The short answer is it will be much easier,” she said. “The scale is different and it is a much more well-run business compared to the starting point of Motel 168. It will be an immediate enhancement to our presence in those markets.” She added the experience the company gained in integrating Motel 168 will help Home Inns with the Yunshang deal if it closes.

　　Huiping also was asked whether the company would remove the existing brand from an acquired hotel and replace it with a Home Inns brand or leave the existing brand in place.

　　She responded that Home Inns would be open to co-branding the Home Inns name with the existing brand in those situations where the existing brand has a high degree of name recognition and brand equity in the market. Otherwise, Home Inns would look to remove the in-place brand name.

　　Yitel growth

　　Home Inns also is looking to further diversify its range of offerings. Sun noted the company plans to open between 20 and 25 Yitel-branded hotels, the company’s midscale/upscale offering. Home Inns has 18 Yitel hotels open.

　　He added that further expansion of the Yitel brand is planned for 2015.

　　"We believe part of the (Home Inns) brand value is represented by the diversity of our offerings,” Sun said.

　　Huiping said company officials are pleased with the performance of the Yitel properties. “Occupancies are all at 80 (percent or higher), even in a light environment.”