Thank you, operator. Good morning, everyone. Thanks to all of you for dialing in today and welcome to our fourth quarter 2016 earnings conference call. Joining us today is Mr. Qi Ji, our Founder and Executive Chairman; Ms. Jenny Zhang, our CEO; and Mr. Teo Nee Chuan, our CFO. Jenny and Teo will present the strategy overview and Q4 and annual results. 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 U.S. 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 supplementary slide presentation is available on the Investor Relations section of China Lodging Group's website at ir.huazhu.com. Now I would like to turn the call over to Jenny. Jenny, please.

Hello, everyone. Thank you for joining our call today. I am pleased to say that we continue our strong performance in the Q4 of 2016 and we closed the full year with the 84% growth in net profit. This outstanding outcome is attributable to our solid execution of our strategies. So before diving into the details of the quarterly results, I would like to spend a few minutes to update you our achievements along the three strategic focuses. As shown on Page 3, our first focus is to strengthen and differentiate our flagship brand HanTing. HanTing’s same-hotel RevPAR achieved 1.1% year-over-year growth in Q4. This is the encourage turnaround of the quarter’s offer same-hotel RevPAR decline. We expected to the long term to continue in the next quarters. We think this result is driven by our product upgrade of HanTing 2.0 as well as our operational improvement as a store level. On Page 4, we also summarized the progress of our room upgrade. At the end of 2016, we have 31% of our HanTing rooms under the 2.0 model, up from 17% a year ago. We are determining to further upgrade our HanTing hotels in the coming years and have set a target to reach 90% plus HanTing room to be under HanTing 2.0 or newer standards by the year of 2019. On Page 5, I also want to refresh you that we launched the clean it upgrade initiative with a slogan of “Stay Clean, Stay at HanTing” as top of our initiative to upgrade and differentiate HanTing brand from other economic hotels. We are confident of flagship brand HanTing. With all those efforts; we will show strong results in 2017 and the years to come. Our second strategic focus is to continue fast expansion with increasing focus on quality.…

Thank you, Jenny. Good morning, everyone. On Page 19, I'm glad spot that our Q4 net revenues grew by 10.9% year-over-year at the high end of our guidance. We are excited with the increasing revenue contribution from our med and upper scale hotels. This segment contributed 31% of the net revenues in Q4, 2016, an increase of four percentage points from 27% a year ago. Turning to Page 20, in Q4, our blended RevPAR growth for all hotels further accelerated to 5.7%, a significant improvement from a negative 2.3% a year ago. As shown on Page 21, in Q4, our group blended ADR was RMB186 million, an increase of 5.2% year-over-year. As a result of more favorable brand mix, the blended occupancy was 85%, a 0.4 percent point increase compared to 2015. Mid and upscale hotels rooms accounted for 18% of our room inventory in Q4 2016 up from 15% in Q4 2015. At the end of Q4 2016, approximately 77% of our hotel rooms were in first and second tier cities. In summary, for Q4, the blended RevPAR was RMB158, an increase of 5.7% year-over-year. Moving on to financial results on Page 23, our net revenues increased by 10.9% for Q4 from a year ago, at the higher end of our fourth quarter guidance. Net revenues from leased hotels grew by 6% and net revenues from manachised and franchised hotels grew by 27% from Q4 last year. In Q4 2016, revenue contribution from manachised and franchised hotels accounted for 21% of net revenue, an increase of 1.8 percentage points from the prior year. Page 22 provides a detailed view of the growth trend of our same-hotel RevPAR for the last couple years. On hotels from the operations for at least 18 months, in Q4, our same-hotel RevPAR increased by…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Justin Kwok from Goldman Sachs. Please ask your question.

Hi, good morning, thanks for taking my question. I have a question for the acquisition on the Crystal Orange. In particular, how the management view on this option of developing the brands or expanding the portfolio by yourself versus the acquisition, because when I look at the consideration RMB3.65 billion, it seems that you can also do midscale hotel expansion on your own with almost 200 hotels with reference to roughly RMB20 million CapEx of each. And so Jenny also mentioned earlier on you are still be introducing new brands into your portfolio by yourself. So how do you view this transaction, what trigger that you think that is incrementally value adding proposition to enter the portfolio and what is the specific thing that you thing you can do to this change to further improve the operations? Thank you.

Okay, Justin thanks for the question. First of all Crystal Orange is a very well know brand among the midscale hotels. And from the scale perspective, it’s also one of the top five brands in this segment. We also have a few very strong new hotels - midscale hotel brands such as you know JI Hotel as well as the Starway, which is also above the 100 hotel threshold. However, our view on the midscale market is that there will be many successful brands because the consumers are demanding different things and the preferences can vary from customer to customer. And as you can see from the Crystal Orange in the hotel pictures, the style and attitude reflected in the Crystal Orange design is very different from any of our existing brands in the midscale segment. And they have also got a group of loyal customers who are enthusiastic about designs and variation in their hotel experience. So we believe Crystal actually added to our current product portfolio as well as customer base. And secondly, this brand still hasn’t expanded very fast recently through the franchise model. Currently the leased hotels still come for more than half of their portfolio. In our more established brands like HanTing and JI Hotel, we only have 20% to 30% of the hotels are under the lease model. So believe Orange Crystal has a lot of room of growth through the manachised model going forward. And our strong platforms are going to support through that extension process. Under profitability and you know me see a lot of room for further improvement in their current operation mainly due to economy upscale after they merge into our existing platforms, through more efficient back office operation as well as higher occupancies through the loyalty program, we have identified various areas that we can add value to the existing operation.

Thanks for the color. So with the very strong free cash flow in line, I think last year you mentioned of RMB1.5 billion already. Would further acquisition be one of the key focus going forward as you mentioned towards the midscale and higher end spectrum, it seems that you threshold more brand diversification necessity to suit different customer needs?

We do have quite strong balance sheet which positioned ourselves very well through both organic and acquisition to further grow our portfolio. With that said, as you can see from our history that we have always been very disciplined in terms of acquisition deals. We always look at it you know from the three angles, you need to fit into our strategy, you need to have the fair evaluation and thirdly, you need to be able to create value synergy through the deal. So Crystal Orange is a significant deal that meets all our three criteria. We are also actually looking at a various other opportunities, but there's a no formal commitment to any future deals right now.

Thank you.

Thank you. And our next question comes from Yaoxin Huang from CICC. Please ask your question.

Thank you for taking my question. [Interpreted] We will translate the question first for the sake of the rest of listeners. The question Mr. Yaoxin is asking, looking the history of China Lodging, you have funded and we own 600 and 700 stores every year at a very fast speed. On the contrary, other brands for example Crystal Orange also started in 2006. Right now, they have over a 100 hotels. And also there are other brands who are like similar pattern for example Accor. So each one wants to understand why China Lodging has a fact sheet much fact sheet than others in openings and what is contribute to that?

[Interpreted] Okay. There are major two reasons contribute to our fast growth. Number one is a very strong I would say top tier development team in the industry led by myself personally. When I started the business, I know I tried I hired this development team members directly from college, I trained them by myself and I even visit every lease owned hotel by myself. So through this process, our development teams are really good. We don’t have many developing members but almost every one of them is quite capable. So I’m very proud and pleased to say that our development team is the top tier in the industry. And second, is we - the starting of China Lodging, we’ve very focused on developing a back office I would say back from platform for the entire company including procurement, financial modeling and construction and IT and et cetera. All of these enable us to perform with better effectiveness than others. And I want to add one more remark regarding so-called conventional wisdom about hotel industry. People may think high end hotel upscale would make more money than midscale and economy, that’s the conventional wisdom. I would like to use the gentle words, sweet spot regarding our view about hotel industry, I’m not a traditionally coming from hotel industry. I’m a businessman and looking at profitability and sustainability. So the level - the tier of - the segment of the hotels doesn’t matter so much to me, but I care more about the fundamental economics behind it. That’s it.

Thank you. And then next question comes from Billy Ng from Bank of America Merrill Lynch. Please ask your question, Billy.

Hi. Good morning. I just have a very quick questions on one small item like when we look into the other income, it has to swing from 12 million positive numbers I think in Q3 and then down to a negative 3 million, so like what was in there and why we saw a negative 3 million in the other income line item this quarter?

Sorry. Can you repeat again? Can you repeat your questions?

The other income line item in the P&L, it was a small loss for this quarter as a negative 3 million compared to a like in the Q3 it was a positive 12 million or $13 million. So I just want to - is this not is not really significant but I just wonder what go in there and why we had a negative number this quarter?

Oh, I get now. It’s about the other income, right. Okay. Let me explain. You see China Lodging what we had been - what we’ve been doing is that we are trying to restructuring some of the portfolio in the lower tier cities. So we actually are taking for example accessing from some of the local, we’re trying to for example combination of some of the leases in some of our non-profitable hotels. So we actually have make provisions on the litigation costs as well as the potential compensation payable to these landlords for the combination of the lease.

So, would you mind to share how much of provision or kind of like a one-off items, I don’t know how much cost associating with that acquisitions already then bulk are roughly if you can provide a bit guidance on the acquisition as well any legal expense or any other things that will - that we may see in Q4 or even in Q1 that will be helpful, yeah?

Okay. Sorry, your question is about the potential acquisition costs relating to the Crystal, sorry.

Yeah, one is like the transition that you mention, how big is that or roughly speaking every year or in 2017, how much should we expect for provision. And then secondly, also related to one-off of items is like those legal expense related to acquisition?

Okay. Now, coming is regarding the compensations. Actually what we're trying to do, we get the judgment from the combination provision has not materialize, it’s still in progress. So what we're doing is actually make a full provision based on the contracts although - so the total amount that we make in the provision we're talking about like RMB25 million. Having said that is the outcome - the final outcome is actually based on the judgment, the court judgment upon the settlement. So we are trying to do, what we say that is a provision based on the maximum amount we totally exposed. This is number one. And number two is the potential - the acquisition cost with Crystal Orange. We estimate that the legal expenses, the appraisal expenses, the advisory expenses to be totaled approximately like RMB13 million to RMB15 million that may occur in say Q2 and Q3 this year upon the completion of these projects.

Sorry to 13 million to 15 million RMB or US dollars you’re talking about?

Renminbi.

RMB, right. Okay. Mostly in Q2 and Q3 okay, that’s good.

Yeah.

All right and one more question, regarding the current trend, fourth quarter is very strong, we saw year-on-year increase and 5.7% RevPAR growth, what kind of RevPAR trend we are seeing right now, and particularly after Chinese New Year, do you think in the first half of this year’s with the economy continue to improve expecting something like 3% to 5% RevPAR growth, is that a reasonable assumption or is - or at this point not enough visibility to make that call?

Currently the same hotel RevPAR growth trend is very strong up to now. But it’s a little bit early you know to predict exact number. We do get a favorable timing of the Chinese New Year this year. So currently for the first two months you know the same-hotel RevPAR growth is actually above 5%. Yes, we hope to see the results of March and we will report the full quarter number early April.

Okay, thanks. Thanks a lot.

And the next question comes from Timothy Lam from Macquarie. Please ask your question.

Hi, thank you for taking my question. I have a few questions here, first on the capital expenditure plans, just want to understand I mean besides the Crystal acquisition your CapEx on your own lease and own hotels and other spending for 2017 give you some guidance of your CapEx plans? The second question is regarding your hotels additions, I understand a company now guiding for 450 to 500 hotels. Just want to ask two questions, one is what - how of those who are still be lease and owned or are they going to be mostly manachise? And then also if there's any guidance on number of hotels that maybe closes in 2017 in terms of hotels? And then finally the last question I have is about labor cost, wondering how company is able to offset the labor expense increases this year given that this rise in wages and just want to see if that percentage of operating costs to revenue is going to have some meaningful change this year? Thank you.

Okay. Hi, Tim. The CapEx spending is we estimated that we’ll be spend approximately RMB950 million on our capital expenditure, it is then divided the new hotel development of approximately RMB550 million and hotel upgrade of approximately RMB385 million. On the second question is that we estimate that we will open - we are focused that we open approximately 450 to 500 hotels this years. So in terms for our lease and own including in this number is approximately 30, we plan to open approximately 30 lease and owned hotels this year and the rest are actually in for manachised and franchised hotels. As for the closures, we estimate that will be approximately like 100 hotels that we will close, mainly the manachised and franchised hotels for this year. That part is on the labor cost. Yeah labor has been an increasing trend for the last couple of years and be positive that we going forward as well. But having said China Lodging’s operating structure centralized and we are able to meet the expansion skill, so we believe that our IT infrastructures as well as our process structures are enable us to actually increase the productivity of each of employees and we believe that the expansion in our revenue and our operations will be more than offset than the increasing cost pressures from our payroll.

Thank you. Just on the last question, I understand that companies on HanTing has been looking at some potential lot of revenue opportunities from updating is the check in counters and offering other additional services. Do you think that there will be some revenue contribution to be more meaningful in 2017? Thank you.

The reformatting of the - not only HanTing but other brands what we said is these sales check either way actually reduce the labor cost in attending to our customers. But having said that is that what we're trying to do is actually repurpose the role of our franchise into helping as well as to actually serve our customers through our café offerings. So that we actually increase some of the revenue, but the amount - we do not expect that to be that significant, but we feel that kind of service provision will actually provide a better service to our customer they were enjoy our hotel stays.

Thank you very much.

Thank you. And the next question comes from Jessica Hong from Haitong International. Please ask your question, Jessica.

Hi, hi good morning. Thank you for taking my call. Congratulations to the good results. I have two questions. Number one is, could you comment on the Crystal Orange Hotel, what's the reason for them to sell? And I will wait until your answer and then ask the second question.

Could you repeat your question, you asked what’s the reason of what?

What’s the reason that the owner of the Crystal Orange Hotel they were like to sell to you, were you approached by the owner or you actively involve to a project and then you signed it?

Okay. So you are asking about the sale process. You know Carlyle has been the main shareholder of Crystal Orange for years. As the PE saw, you know Carlyle has been looking for opportunities to exit. And that was the main reason of the selling side.

Okay. And my second question is for the new hotels that you plan to open this year, how many of that will be for core hotel alliance?

We are estimating approximately 15% to 20% of the new hotels opened will be under our core brands.

Okay. Thank you. That's all my questions.

Thank you.

And the next question comes from Lin He from Morgan Stanley. Please ask your question.

Good morning, management. Thanks for taking my question and congratulations on the good quarter. I have one general question on the midscale hotel segments. And so, Teo and Jenny [Foreign Language] So my first question is more general question on the midscale hotel segments for Teo and Jenny, we understand that company plans to open around 200 midscale hotels this year and what is the constraint for not growing even the faster given the very strong markets market duration? And my second question is the expected financing cost for Crystal Orange acquisition? Thank you.

[Interpreted] As to answer a question regarding the financing cost of related acquisitions, see the reason, I mean China Lodging we have approximately RMB3.2 billion of cash, okay. So the reason why we raise financing to fund this project is because the Chinese authorities has temporary add limitations on for our investments so there is actually an issue, problem in getting the cash out from China to the fund offshore acquisitions. So what we planned the financing cost on analyze this is approximately RMB130 million. But what our plan is that upon Chinese authorities relaxation on our investment, we would utilize our onshore cash to pay down the loan for offshore. So the full feature impact it, it depends on the more is closing of the transactions, the timing of closing of the transactions. And number two is that the timing of the Chinese authorities relaxation on CapEx that go on the investment outflow to offshore.

Got it. [Foreign Language]

Hi Lie.

Yeah.

Again, to answer that the rate, the financing rate is LIBOR plus 245 basis points.

Okay. Got it. Think you.

Sorry, just to add up because I want to translate this answer to listeners about the midscale market development. So looking at the product life cycle of midscale hotels, we look - we are actually looking at much deeper slope. There are two reasons behind it. Number one is that the play - the hotel players in the industry are stronger has more capability to develop hotels than 10 years before. Second is that in our mind the 200 midscale it actually comparable to a 500 economies because they are basically two kinds of products. It’s really depending on the properties - properties condition and the cities we choose and also the investment amount. So we cannot develop midscale as much as economies because they are different. And also talking about the potential competition about - of the midscale markets, I think people are talking about overcapacity of economy hotels in the past few years and the industry players are already aware some of aggressive mistakes they have made, I believe among the leading players in the industry it is about us, we are very cautious about the quality control and the selected choice of the property and also the management trainee. So, yes. So to sum up, I think economy and midscale market are the broader for the mass market in China. It should be the choice for the mass markets. And we will not expand the store without any without considering any consequence just looking at the quantity. We’re very much focused on the quality and also providing really good product to the mass market. Thank you.

And the final question today comes from Tallan Zhou from Deutsche Bank. Please ask your question.

Hi, Management. I have a quick question. So Jenny mentioned that January to February the revenue part is about 5%. So am I rightly assuming that we’re quite conservative on the first quarter’s guidance on 7.2% to 8.4% growth? Thanks.

Hi. See, our guidance, we are based - we actually based on some results from January to February as well as our estimate for the March numbers. So we wanted hotel exactly the way that is too conservative, but be project that the - because in January and February, is actually a lower season, so what you’re seeing is that the higher RevPAR, we actually have a high impact in the periods down the road in the coming months 2017 rather in Q1. So we think that our RevPAR guidance is within the range of what we expected to be.

Okay. Thanks.

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