Armed with a stellar 96.7% occupancy rate and a 17% spike in revenue per available room (or RevPAR as they say in the hospitality industry), one can't fault the hotelier for its aggressive expansion efforts.
It plans to open at least 250 hotels next year, a healthy upgrade to the 728 inns it currently watches over in 134 different Chinese cities.
Yes, Home Inns delivered another strong quarter last night. Revenue climbed 21% to $131.5 million. Adjusted earnings rose even faster, clocking in at $0.37 a share. Wall Street was only banking on an adjusted profit of $0.53 a share on $124 million in revenue. With a healthy blend of leased-and-operated hotels alongside franchised-and-managed buildings, Home Inns has been able to grow quickly -- and profitably.
It can't afford to slow down. It's no longer the only game in town for stateside investors looking for some skin in China's booming lodging industry. 7 Days
There is certainly no shortage of ways to play the travel boom. Ctrip.com
If you don't want to play the handful of Chinese airlines, why not bet on the airport? AirMedia
Then again, we can also return to Home Inns. The stock isn't cheap -- at 32 times this year's projected earnings and 29 times next year's target -- but it's still in the heavy expansion phase of its growth.
There's plenty of room for expansion, if the nearly 97% occupancy rate doesn't make that perfectly clear. However, Home Inns is already having visions of going upmarket. It recently opened its first mid-level hotel under a different brand, and plans to tack on a few more next year.
Home Inns isn't as cheap as its rooms, but this story stock deserves more than just an overnight stay.
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Ctrip.com International is a Motley Fool Hidden Gems pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy, and it leaves mints on your pillow during turndown service.