While the first quarter showed drops in ADR and RevPAR for China Lodging Group’s hotels, the company is unwavering in its commitment to grow through franchising and manachising.

The softening Chinese economy continues to have an impact on the hotel sector, according to Chinese companies that trade publicly.

In its first-quarter 2015 earnings call with analysts, China Lodging Group reported average daily rate for the quarter of 168 renminbi ($27.06), which is down from 176 renminbi ($28.35) in the previous quarter, and 171 renminbi ($27.54) in the first quarter of 2014, according to its financial release. Same-hotel revenue per available room in the first quarter decreased 4.6% year over year to 145 renminbi ($23.36), attributed to lower ADR and occupancy.

However, company executives said they’re beginning to see some recovery and in the meantime are continuing China Lodging’s long-term goals of growing its franchised and manage and franchised—or manachised—units, particularly in the economy and midscale segments.

“We started to see a clear improvement (in RevPAR) starting in March,” said Jenny Zhang, president and CFO. “Same-hotel RevPAR performed better in March compared with January and February, and that trend continued into April.”

Year to date, China Lodging Group’s stock was down 8.2% year to date. By comparison, the Baird/STR Hotel Stock Index was up about 1% through the same period.

The company opened six net leased hotels, 157 net manachised hotels and 19 franchised hotels in the first quarter, growing its total number of guestrooms in operation by 39% compared to a year ago.

As of 31 March, the company had 617 leased hotels, 1,533 manachised hotels and 27 franchised hotels operating in 314 cities. The company had 22 leased hotels and 664 manachised or franchised hotels contracted or under construction.

That fast pace of growth did concern some analysts, however, who asked whether the company might need to adjust its long-term growth strategy or slow expansion.

To that, Zhang said the company is not adjusting its strategy. “Growth is mainly driven by the margin-rent strategy,” she said. “We’re growing significantly faster than our competitors with quality … because we’re penetrating into a much wider range of customers and also, we’re able to utilize a wider range of properties.”

Zhang and China Lodging Founder, Executive Chairman and CEO Qi Ji both stressed on the call that growing in the economy and midscale segments remains the company’s priority.

On the loyalty front, as of 31 March 2015, the company's loyalty program had approximately 34.9 million members, who contributed more than 85% of roomnights sold during the first quarter of 2015. In the first quarter of 2015, 90% of roomnights were sold through the company's own channels.

Other highlights for the quarter include:

》In March, China Lodging Group received antitrust approval for its proposed transaction with Accor to develop Accor brands in the pan-China region. The interim management period started 1 April.

》In April, the company launched its first share repurchase program. China Lodging Group is authorized to repurchase through the open market its own outstanding American Depositary Shares with an aggregate value of up to $40 million, depending on market conditions and other factors, and in accordance with U.S. securities regulations.