The China-based economy hotels company slashed its revenue guidance for 2013 as the Chinese economy continues to weaken.

　　China’s weakening economy is acting as an anchor to Home Inns & Hotel Management’s performance.

　　The China-based economy hotel company slashed its revenue guidance for 2013 to a range of 1.7 billion to 1.8 billion renminbi ($284.1 million to $294 million) from 6.6 billion to 6.8 billion renminbi ($1.1 billion).

　　"The overall macroeconomic environment continues to be soft,” CEO David Sun said during an earnings call with analysts Tuesday morning in China.

　　The weakening also brought down the three key hotel performance metrics of occupancy, average daily rate and revenue per available room. Occupancy slipped to 87% from 89.2% during the same period in 2012; ADR was flat at 167 renminbi ($27.28); and RevPAR was down 2.7% to 145 renminbi ($23.68).

　　Home Inns’ CFO Huiping Yan said the economic instability is likely to persist in China at least through the remainder of 2013.

　　"While we keep a positive outlook for improvement overall, we don’t expect dramatic changes in the overall market condition,” she said, adding, “We are not exuberant here looking at the rest of the year.” The hotel market should improve in 2014, she said.

　　Still, while executives noted difficult conditions for economy-branded hotels in China, Motel 168 operations was able to show positive results. The brand notched a 2.3% gain in RevPAR; occupancy increased to 82.1% from 80.8%; and ADR edged up by 1.3%.

　　"Motel 168 hotels outperformed the market,” Sun said.

　　Development

　　As of 30 June, Home Inns had a total of 1,953 hotels in 271 Chinese cities in its system. The company opened 100 properties during the second quarter. It had 206 hotels contracted or under construction, 71% of which were franchised-and-managed.

　　Home Inns plans to scale back the number of leased-and-operated hotels it intends to open in 2013 to between 65 and 70 properties from a prior estimate of 80 to 90 hotels. Overall, Home Inns expects to open a total of 395 to 405 hotels during 2013 up from its prior estimate of 350 to 390 hotels.

　　An analyst questioned Huiping over the slowdown in the number of leased-and-operated openings.

　　"We are very careful and very closely monitoring market conditions and the potential oversaturation in certain markets,” she said. Huiping added that during the next two to three years, the franchised-and-managed model will be the focus for Home Inns.

　　The forecasted increase in openings for 2013 points to the optimism in China’s hotel sector, despite the current conditions, Huiping said

　　"What we have seen in traveling the country and talking to franchisees is that they are very positive,” she said.