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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          toORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company report   Commission file number:
    001-34656
  China Lodging Group,
    Limited
 (Exact name of Registrant as
    specified in its charter)
  Not Applicable
 (Translation of
    Registrants name into English)
 CAYMAN ISLANDS
 (Jurisdiction of incorporation
    or organization)
  No. 2266 Hongqiao
    Road
 Changning District
 Shanghai 200336
 Peoples Republic of
    China
 (86) 21 6195-9595
 (Address of principal executive
    offices)
  Min (Jenny) Zhang
 Chief Financial
    Officer
 Telephone:
    +86-21-6195-9596
 E-mail:
    zhangmin@htinns.com
 Facsimile:
    +86-21-6195-9597
 No. 2266 Hongqiao Road
 Changning District
 Shanghai 200336
 Peoples Republic of
    China
 (Name, Telephone, E-mail and/or
    Facsimile number and Address of Company Contact
    Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredOrdinary Shares, par value $0.0001 per ordinary share

The NASDAQ Global Market*   *
    
    Not for trading, but only in
    connection with the listing on the NASDAQ Global Market of
    American Depositary Shares representing such Ordinary Shares  Securities registered or to be
    registered pursuant to Section 12(g) of the Act:  None
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the Act:
    None
    o þ
  o þ
  þ o
    Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ    þ o o
  o o
  o þ




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##### Table of Contents





TABLE OF
    CONTENTS
        
 PageSPECIAL NOTE REGARDING FORWARD-LOOKING
    STATEMENTS


1CERTAIN CONVENTIONS


1PART I


2ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS


2ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE


2ITEM 3.

KEY INFORMATION


23.A.

Selected Financial Data


23.B.

Capitalization and Indebtedness


43.C.

Reason for the Offer and Use of Proceeds


43.D.

Risk Factors


4ITEM 4.

INFORMATION ON THE COMPANY


224.A.

History and Development of the Company


224.B.

Business Overview


224.C.

Organizational Structure


364.D.

Property, Plants and Equipment


36ITEM 4A.

UNRESOLVED STAFF COMMENTS


37ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


375.A.

Operating Results


375.B.

Liquidity and Capital Resources


535.C.

Research and Development, Patents and Licenses,
    etc.


565.D.

Trend Information


575.E.

Off-Balance Sheet Arrangements


575.F.

Tabular Disclosure of Contractual Obligations


575.G.

Safe Harbor


57ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


586.A.

Directors and Senior Management


586.B.

Compensation


616.C.

Board Practices


636.D.

Employees


646.E.

Share Ownership


65ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


667.A.

Major Shareholders


667.B.

Related Party Transactions


667.C.

Interests of Experts and Counsel


68ITEM 8.

FINANCIAL INFORMATION


688.A.

Consolidated Statements and Other Financial
    Information


688.B.

Significant Changes


69ITEM 9.

THE OFFER AND LISTING


699.A.

Offering and Listing Details


699.B.

Plan of Distribution


699.C.

Markets


699.D.

Selling Shareholders


69 i




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Page9.E.

Dilution


699.F.

Expenses of the Issue


69ITEM 10.

ADDITIONAL INFORMATION


6910.A.

Share Capital


6910.B.

Memorandum and Articles of Association


7010.C.

Material Contracts


7010.D.

Exchange Controls


7010.E.

Taxation


7010.F.

Dividends and Paying Agents


7510.G.

Statement by Experts


7510.H.

Documents on Display


7510.I.

Subsidiary Information


75ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


75ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


7612.A.

Debt Securities


7612.B.

Warrants and Rights


7612.C.

Other Securities


7612.D.

American Depositary Shares


77PART II


78ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


78ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


78ITEM 15.

CONTROLS AND PROCEDURES


78ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


78ITEM 16B.

CODE OF ETHICS


78ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


79ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


79ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


79ITEM 16F.

CHANGE IN REGISTRANTS CERTIFYING
    ACCOUNTANT


79ITEM 16G.

CORPORATE GOVERNANCE


79PART III


80ITEM 17.

FINANCIAL STATEMENTS


80ITEM 18.

FINANCIAL STATEMENTS


80ITEM 19.

EXHIBITS


80EX-8.1EX-12.1EX-12.2EX-13.1EX-23.2   ii




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SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Form 20-F
  
    our anticipated growth strategies, including developing new
    hotels at desirable locations in a timely and cost-effective
    manner;
    our future business development, results of operations and
    financial condition;
    expected changes in our revenues and certain cost or expense
    items;
    our ability to attract customers and leverage our brand; and
    trends and competition in the lodging industry.     CERTAIN
    CONVENTIONS      
    ADRsare to the American depositary receipts
    that may evidence our ADSs;
    ADSsare to our American depositary shares,
    each representing four ordinary shares;
    China or the PRC are to
    the Peoples Republic of China, excluding, for purposes of
    this annual report, Hong Kong, Macau and Taiwan;
    Ordinary sharesare to our ordinary shares,
    par value US$0.0001 per share;
    Series A preferred sharesare to our
    Series A convertible preferred shares, par value US$0.0001
    per share, all of which were converted into an equal number of
    ordinary shares in March 2010 upon the completion of our initial
    public offering;
    Series B preferred sharesare to our
    Series B convertible redeemable preferred shares, par value
    US$0.0001 per share, all of which were converted into an equal
    number of ordinary shares in March 2010 upon the completion
    of our initial public offering;
    RMBand Renminbiare to
    the legal currency of China;
    US$,U.S. dollars,
    $,and dollarsare to the
    legal currency of the United States; and
    we, us, our company,
    our,and HanTingare to China
    Lodging Group, Limited, a Cayman Islands company, and its
    predecessor entities and subsidiaries. 1




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PART I  ITEM 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS    ITEM 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    ITEM 3.
    KEY
    INFORMATION 3.A.  Selected
    Financial Data    Year Ended December 31,2006


2007


2008


2009


2010(RMB)


(RMB)


(RMB)


(RMB)


(RMB)


(US$)(In thousands, except per share and per ADS data)Consolidated Statements of Operations Data:Net revenues


54,031



235,306



764,249



1,260,191



1,738,493



263,408Operating costs and expenses(1)


(94,069
)


(372,616
)


(917,901
)


(1,183,777
)


(1,482,187
)


(224,573
)Income (loss) from operations


(40,038
)


(137,310
)


(153,652
)


76,414



256,306



38,835Income (loss) before income taxes


(36,623
)


(131,001
)


(156,463
)


69,438



279,056



42,282Net income (loss)


(29,954
)


(113,739
)


(132,583
)


51,448



221,794



33,606Less: net income (loss) attributable to noncontrolling interest


(425
)


(2,116
)


3,579



8,903



6,043



916Net income (loss) attributable to China Lodging Group, Limited


(29,529
)


(111,623
)


(136,162
)


42,545



215,751



32,690Net earnings (loss) per share:Basic






(2.85
)


(2.52
)


0.24



1.05



0.16Diluted






(2.85
)


(2.52
)


0.23



0.92



0.14Net earnings (loss) per ADS(2):Basic






(11.41
)


(10.07
)


0.95



4.19



0.63Diluted






(11.41
)


(10.07
)


0.93



3.68



0.56Weighted average number of shares used in computation:Basic






45,248



54,071



57,562



198,517



198,517Diluted






45,248



54,071



183,632



234,481



234,481       Year Ended December 31,2006

2007

2008

2009

2010(RMB)

(RMB)

(RMB)

(RMB)

(RMB)

(US$)(In thousands)Share-based compensation expenses






14,785



4,815



7,955



13,113



1,987   (2)
    
    Each ADS represents four ordinary shares. 2




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As of December 31,2006


2007


2008


2009


2010(RMB)


(RMB)


(RMB)


(RMB)


(RMB)


(US$)(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents


33,272



173,636



183,246



270,587



1,060,067



160,616Restricted cash


27,330



23,650



5,597



500



1,275



193Property and equipment, net


159,216



465,186



957,407



1,028,267



1,422,432



215,520Total assets


280,593



836,045



1,432,940



1,581,131



3,044,080



461,224Long-term debt










27,500



80,000







Deferred rent


6,028



46,084



138,207



174,775



237,427



35,974Total liabilities


175,382



293,062



665,378



678,875



918,770



139,208Mezzanine equity






437,829



796,803



796,803







Total equity (deficit)


105,211



105,154



(29,241
)


105,453



2,125,310



322,016     Year Ended December 31,2007


2008


2009


2010(RMB)


(RMB)


(RMB)


(RMB)


(US$)(In thousands)Consolidated Statement of Cash Flow Data:Net cash provided by (used in) operating activities


(68,254
)


(13,738
)


296,340



469,126



71,080Net cash used in investing activities


(284,014
)


(451,589
)


(256,027
)


(515,310
)


(78,077
)Net cash provided by financing activities


499,307



482,479



47,064



845,836



128,157   Exchange
    Rate Information
   3




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Noon Buying RatePeriod

Period End


Average(1)


Low


High(RMB per US$1.00)2006


7.8041



7.9579



8.0702



7.80412007


7.2946



7.6058



7.8172



7.29462008


6.8225



6.9477



7.2946



6.78002009


6.8259



6.8307



6.8470



6.81762010


6.6000



6.7696



6.8330



6.6000October


6.6707



6.6675



6.6912



6.6397November


6.6670



6.6538



6.6892



6.6330December


6.6000



6.6497



6.6745



6.60002011January


6.6017



6.5964



6.6364



6.5809February


6.5713



6.5761



6.5965



6.5520March


6.5483



6.5645



6.5743



6.5483April  (through April 1, 2011)


6.5477



6.5477



6.5477



6.5477     (1)
    
    Averages for a period are calculated by using the average of the
    exchange rates at the end of each month during the period.
    Monthly averages are calculated by using the average of the
    daily rates during the relevant period. 3.B.  Capitalization
    and Indebtedness   3.C.  Reason
    for the Offer and Use of Proceeds   3.D.  Risk
    Factors  Risks
    Related to Our Business
  Our
    operating results are subject to conditions affecting the
    lodging industry in general and our return-driven development
    model is subject to certain risks.
    
    changes and volatility in general economic conditions;
    competition from other hotels;
    natural disasters or travelers fears of exposure to
    contagious diseases and social unrest;
    seasonality of our business;
    changes in travel patterns or in the desirability of particular
    locations;
    increases in operating costs and expenses due to inflation and
    other factors;
    local market conditions such as an oversupply of, or a reduction
    in demand for, hotel rooms; 4




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
    the quality and performance of managers and other employees of
    our hotels;
    the availability and cost of capital to allow us and our
    franchisees to fund construction and renovation of, and make
    other investments in, our hotels; and
    the possibility that leased properties may be subject to
    challenges as to their compliance with the relevant government
    regulations.    Our
    business is sensitive to global or regional economic crises. A
    severe or prolonged downturn in the global or Chinese economy
    could materially and adversely affect our revenues and results
    of operations.
      The
    lodging industry in China is highly competitive, and if we are
    unable to compete successfully, our financial condition and
    results of operations may be harmed.
   5




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Our
    financial and operating performance may be adversely affected by
    epidemics, natural disasters and other
    catastrophes.
        Seasonality
    of our business and special events may cause fluctuations in our
    revenues, cause our ADS price to decline, and adversely affect
    our profitability
  ramp-up
  Our
    limited operating history makes it difficult to evaluate our
    future prospects and results of operations.
   6




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
    the uncertainties associated with our ability to continue our
    growth while trying to achieve and maintain our profitability;
    preserving our competitive position in the economy hotel segment
    of the lodging industry in China;
    offering innovative products to attract recurring and new
    customers;
    implementing our strategy and modifying it from time to time to
    respond effectively to competition and changes in customer
    preferences and needs;
    increasing awareness of our brand and products and continuing to
    develop customer loyalty; and
    attracting, training, retaining and motivating qualified
    personnel.    We
    have incurred losses in the past and may incur losses in the
    future.
    Our
    newly opened
    leased-and-operated
    hotels typically incur significant pre-opening expenses at their
    development stage and generate relatively low revenues at their
    ramp-up
    stage, which may have a significant negative impact on our
    financial performance.
  lease-and-operate ramp-up leased-and-operated ramp-up leased-and-operated ramp-up leased-and-operated ramp-up leased-and-operated
  Our
    costs and expenses may remain constant or increase even if our
    revenues decline, which would adversely affect our net margins
    and results of operations.
   7




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We may
    not be able to manage our planned growth, which could adversely
    affect our operating results.
      We may
    not be able to successfully identify, secure and develop in a
    timely fashion additional hotel properties.
  lease-and-operate
  We may
    not be able to successfully compete for
    franchise-and-management
    agreements and, as a result, we may not be able to achieve our
    planned growth.
  franchise-and-management franchise-and-management franchise-and-management franchise-and-manage
 8




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Future
    acquisitions may have an adverse effect on our ability to manage
    our business and harm our results of operations and financial
    condition.
    Our
    legal right to lease certain properties could be challenged by
    property owners or other third parties or subject to government
    regulation.
  and/or
  franchised-and-managed
    Any
    failure to comply with land- and property-related PRC laws and
    regulations may negatively affect our ability to operate our
    hotels and we may suffer significant losses as a
    result.
   9




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leased-and-operated
  Our
    success could be adversely affected by the performance of our
    franchised-and-managed
    hotels.
  franchised-and-managed leased-and-operated franchised-and-managed franchised-and-managed
  If we
    are unable to access funds to maintain our hotels
    condition and appearance, or if our franchisees fail to make
    investments necessary to maintain or improve their properties,
    the attractiveness of our hotels and our reputation could suffer
    and our hotel occupancy rates may decline.
  franchise-and-management
    Our
    leases could be terminated early, we may not be able to renew
    our existing leases on commercially reasonable terms and our
    rents could increase substantially in the future, which could
    materially and adversely affect our operations.
   10




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Interruption
    or failure of our information systems could impair our ability
    to effectively provide our services, which could damage our
    reputation.
      Failure
    to maintain the integrity of internal or customer data could
    result in harm to our reputation or subject us to costs,
    liabilities, fines or lawsuits.
    If the
    value of our brand or image diminishes, it could have a material
    and adverse effect on our business and results of
    operations.
   11




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Failure
    to protect our trademarks and other intellectual property rights
    could have a negative impact on our brand and adversely affect
    our business.
      If we
    are not able to retain, hire and train qualified managerial and
    other employees, our business may be materially and adversely
    affected.
  up-to-date
  Our
    current employment practices may be adversely impacted under the
    labor contract law of the PRC.
    Failure
    to retain our management team could harm our
    business.
   12




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We are
    subject to various franchise, hotel industry, construction,
    hygiene, safety and environmental laws and regulations that may
    subject us to liability.
    Our
    limited insurance coverage may expose us to losses, which may
    have a material adverse effect on our reputation, business,
    financial condition and results of operations.
  leased-and-operated
  If we
    fail to maintain an effective system of internal control over
    financial reporting, we may not be able to accurately report our
    financial results or prevent fraud.
  Form 20-F
   13




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We,
    our directors, management and employees may be subject to
    certain risks related to legal proceedings filed by or against
    us, and adverse results may harm our business.
      Risks
    Related to Doing Business in China
  Adverse
    changes in economic and political policies of the PRC government
    could have a material adverse effect on the overall economic
    growth of China, which could adversely affect our
    business.
     14




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Uncertainties
    with respect to the Chinese legal system could limit the legal
    protections available to us and our investors and have a
    material adverse effect on our business and results of
    operations.
    Rapid
    urbanization and changes in zoning and urban planning in China
    may cause our leased properties to be demolished, removed or
    otherwise affected.
  leased-and-operated leased-and-operated
  Governmental
    control of currency conversion may limit our ability to pay
    dividends in foreign currencies to our shareholders and
    therefore adversely affect the value of your
    investment.
   15




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Fluctuation
    in the value of the Renminbi may have a material adverse effect
    on your investment.
      Our
    failure to obtain the prior approval of the China Securities
    Regulatory Commission, or the CSRC, for our initial public
    offering and the listing and trading of our ADSs of the NASDAQ
    Global Market could have a material adverse effect on our
    business, operating results, reputation and trading price of our
    ADSs; a recent regulation also establishes more complex
    procedures for acquisitions conducted by foreign investors which
    could make it more difficult to pursue growth through
    acquisitions.
  Regulations on Mergers and Acquisitions of Domestic
    Enterprises by Foreign Investors
  and/or
   16




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Recent
    PRC regulations relating to the establishment of offshore
    special purpose companies by PRC residents may subject our PRC
    resident shareholders to personal liability and limit our
    ability to inject capital into our PRC subsidiaries, limit our
    PRC subsidiaries ability to distribute profits to us, or
    otherwise adversely affect us.
  Relevant Issues Concerning Foreign
    Exchange Control on Domestic Residents Corporate Financing
    and Roundtrip Investment Through Offshore Special Purpose
    Vehicles
    We
    rely principally on dividends and other distributions on equity
    paid by our subsidiaries to fund any cash and financing
    requirements we may have, and any limitation on the ability of
    our subsidiaries to make payments to us could have a material
    adverse effect on our ability to conduct our
    business.
    We may
    be subject to fines and legal sanctions imposed by SAFE or other
    Chinese government authorities and our ability to further grant
    shares or share options to, and to adopt additional share
    incentive plans for, our directors and employees may be
    restricted if we or the participants of our share incentive
    plans who are PRC citizens fail to comply with PRC regulations
    relating to employee shares or share options granted by offshore
    special purpose companies or offshore listed companies to PRC
    citizens.
  Operating Procedures for
    Administration of Domestic Individuals Participating in the
    Employee Stock Option Plan or Stock Option Plan of An Overseas
    Listed Company
 17




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It is
    unclear whether we will be considered as a PRC resident
    enterprise under the new EIT law, and depending on the
    determination of our PRC resident enterprise status,
    dividends paid to us by our PRC subsidiaries may be subject
    to PRC withholding tax, we may be subject to 25% PRC income tax
    on our worldwide income, and holders of our ADSs or ordinary
    shares may be subject to PRC withholding tax on dividends paid
    by us and gains realized on their transfer of our ADSs or
    ordinary shares.
  Enterprise Income Tax Law Implementation Regulations of the
    Enterprise Income Tax Law de facto
      Risks
    Relating to Our ADSs and Our Trading Market
  The
    market price for our ADSs has been and may continue to be
    volatile.
    
    actual or anticipated fluctuations in our quarterly operating
    results;
    changes in financial estimates by securities research analysts;
    conditions in the travel and lodging industries;
    changes in the economic performance or market valuations of
    other lodging companies;
    announcements by us or our competitors of new products,
    acquisitions, strategic partnerships, joint ventures or capital
    commitments;
    addition or departure of key personnel;
    fluctuations of exchange rates between the RMB and
    U.S. dollar or other foreign currencies; 18




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
    potential litigation or administrative investigations;
    release of
    lock-up or
    other transfer restrictions on our outstanding ADSs or ordinary
    shares or sales of additional ADSs; and
    general economic or political conditions in China.    We may
    need additional capital, and the sale of additional ADSs or
    other equity securities could result in additional dilution to
    our shareholders and the incurrence of additional indebtedness
    could increase our debt service obligations.
    Future
    sales or issuances, or perceived future sales or issuances, of
    substantial amounts of our ordinary shares or ADSs could
    adversely affect the price of our ADSs.
  lock-up lock-up
    As our
    founder and co-founders collectively hold a controlling interest
    in us, they have significant influence over our management and
    their interests may not be aligned with our interests or the
    interests of our other shareholders.
   19




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ADS
    holders may not have the same voting rights as the holders of
    our ordinary shares and may not receive voting materials in time
    to be able to exercise your right to vote.
    ADS
    holders may not be able to participate in rights offerings and
    may experience dilution of his, her or its holdings as a
    result.
    ADS
    holders may be subject to limitations on transfer of their
    ADSs.
    As a
    foreign private issuer, we are permitted to, and we will, rely
    on exemptions from certain NASDAQ corporate governance standards
    applicable to U.S. issuers, including the requirement regarding
    the implementation of a nominations committee. This may afford
    less protection to holders of our ordinary shares and
    ADSs.
    Our
    articles of association contain anti-takeover provisions that
    could have a material adverse effect on the rights of holders of
    our ordinary shares and ADSs.
  change-of-control
 20




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You
    may face difficulties in protecting your interests, and your
    ability to protect your rights through the U.S. federal courts
    may be limited, because we are incorporated under Cayman Islands
    law, conduct substantially all of our operations in China and
    the majority of our officers reside outside the United
    States.
        The
    level of investor interest and trading in our ADSs could be
    affected by the lack of coverage by securities research analysts
    and the lack of investor materials in the Chinese
    language.
   21




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ITEM 4.
    INFORMATION
    ON THE COMPANY 4.A. History
    and Development of the Company  leased-and-operated sub-leasing
    HanTing Express Hotel HanTing
    Hotel HanTing
    Seasons Hotel HanTing Hi Inn
    (21) 6195-9595.
  http://www.htinns.com.
 4.B. Business
    Overview  leased-and-operated franchised-and-managed lease-and-operate franchise-and-manage
 22




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##### Table of Contents



leased-and-operated franchised-and-managed leased-and-operated franchised-and-managed
  HanTing
    Express Hotel HanTing Seasons Hotel HanTing Hi
    Inn
    Our Hotel
    Network
      Franchised


Leased-and-


FranchisedLeased-and-


-and-


Operated Hotels


-and-ManagedOperated


Managed


Under


Hotels UnderHotels


Hotels


Development(1)


Development(1)Shanghai and Beijing


68



61



16



8Other cities


175



134



53



85Total


243



195



69



93     (1)
    
    Include hotels for which we have entered into binding leases or
    franchise-and-management
    agreements but that have not yet commenced operations.    Pre-conversion


ConversionPeriod(1)


Period(2)


TotalLeased-and-operated
    hotels


21



48



69Franchised-and-managed
    hotels


36



57



93Total


57



105



162     (1)
    
    Include hotels for which we have entered into binding leases or
    franchise-and-management
    agreements but of which the property has not been delivered by
    the respective lessors or property owners, as the case may be.
    The majority of these hotels are expected to commence operations
    by December 31, 2011.(2)
    
    Include hotels for which we have commenced conversion activities
    but that have not yet commenced operations. The majority of
    these hotels are expected to commence operations by
    June 30, 2011.  Leased-and-operated
    hotels
  leased-and-operated
 23




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##### Table of Contents



leased-and-operated
  Franchised-and-managed
    hotels
  franchised-and-managed franchised-and-managed franchised-and-managed franchise-and-manage
  franchise-and-management franchise-and-management franchise-and-management franchised-and-managed franchised-and-managed franchised-and-managed
    As of December 31,2005


2006


2007


2008


2009


2010Leased-and-operated
    hotels


5



24



62



145



173



243Franchised-and-managed
    hotels






2



5



22



63



195Total


5



26



67



167



236



438   Our
    Products
  HanTing Express
    Hotel HanTing Seasons Hotel HanTing Hi
    Inn
  HanTing
    Express Hotel
  HanTing Express Hotel HanTing Express
    Hotel
 24




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##### Table of Contents



HanTing Express
    Hotels HanTing Express
    Hotels
  HanTing
    Seasons Hotel
  HanTing Seasons Hotels HanTing Hotel HanTing Seasons Hotel HanTing Seasons Hotels HanTing Seasons Hotels
  HanTing
    Hi Inn
  HanTing Hi Inn HanTing Hi Inn HanTing Hi Inn
  Hotel
    Development
    franchise-and-manage leased-and-operated franchised-and-managed
    Leased-and-operated
    hotels
     25




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##### Table of Contents



Franchised-and-managed
    hotels
  franchised-and-managed Franchised-and-managed leased-and-operated franchised-and-managed Franchised-and-managed
  word-of-mouth franchised-and-managed
  leased-and-operated
  Hotel
    Management
    Budgeting. leased-and-operated franchised-and-managed
  Pricing. leased-and-operated franchised-and-managed
  Monitoring.
 26




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##### Table of Contents



Centralized cash management. leased-and-operated franchised-and-managed
  Centralized procurement system.
  Quality assurance.
  Training.
  Hotel
    Information Platform and Operational Systems
    Web property management system
    (Web-PMS). Web-PMS Web-PMS
  Central reservation system.
  Customer relationship management (CRM)
    system.
 27




---



##### Table of Contents



Sales and
    Marketing
          Competition
    Intellectual
    Property
     28




---



##### Table of Contents



Insurance
    Legal and
    Administrative Proceedings
    Regulation
  Foreign
    Investment Industrial Guidance Catalogue
  Regulations
    on Hotel Operation
  Measures for the Control of Security in the Hotel
    Industry Decision of the State Council on Establishing
    Administrative License for the Administrative Examination and
    Approval Items Really Necessary To Be Retained Measures for the Control of Security in the Hotel Industry Measures for the Control of Security in the Hotel
    Industry
 29




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##### Table of Contents



Public Area
    Hygiene Administration Regulation PRC Law on Food
    Safety
  The Fire Prevention Law Provisions on Supervision and
    Inspection on Fire Prevention and Control
  Regulations for Administration of Entertainment Places Circular on
    Carrying Out the Regulations for Administration of Entertainment
    Places
  Regulations on the Assessment of the Star
    Rating of Tourist Hotels Classification and Assessment of the Star Rating of Tourist
    Hotels
  Regulations
    on Leasing
  Law on Urban Real Estate Administration Law on Urban Real Estate Administration
  PRC Contract Law PRC Contract Law
 30




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##### Table of Contents



PRC Property Law
  Regulations
    on Consumer Protection
  Law on the
    Protection of the Rights and Interests of Consumers
  
    to ensure that commodities and services meet with certain safety
    requirements;
    to disclose serious defects of a commodity or a service and to
    adopt preventive measures against damage occurrence;
    to provide consumers with accurate information and to refrain
    from conducting false advertising;
    not to set unreasonable or unfair terms for consumers or
    alleviate or release itself from civil liability for harming the
    legal rights and interests of consumers by means of standard
    contracts, circulars, announcements, shop notices or other
    means; and
    not to insult or slander consumers or to search the person of,
    or articles carried by, a consumer or to infringe upon the
    personal freedom of a consumer.    Interpretation of Some Issues Concerning the
    Application of Law for the Trial of Cases on Compensation for
    Personal Injury
  Regulations
    on Environmental Protection
  Law on Promoting Clean
    Production
  Environmental Protection Law of the
    Peoples Republic of China and the Environmental Impact
    Assessment Law of the Peoples Republic of China Regulations
    Governing Environmental Protection in Construction Projects Regulations Governing Completion Acceptance of
    Environmental Protection in Construction Projects Environmental Impact Assessment Law of the
    Peoples Republic of China Regulations
    Governing Completion Acceptance of Environmental Protection in
 31




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##### Table of Contents



Construction Projects
  Regulations
    on Commercial Franchising
  Regulations for
    Administration of Commercial Franchising The Regulations for Administration of
    Commercial Franchising Administrative Measures for Archival Filing of Commercial
    Franchises and the Administrative Measures for Information
    Disclosure of Commercial Franchises
        Administrative Measures for Information
    Disclosure of Commercial Franchises
  
    the name, domiciles, legal representative, registered capital,
    scope of business and basic information relating to its
    commercial franchising;
    basic information relating to the registered trademark, logo,
    patent, know-how and business model;
    the type, amount and method of payment of franchise fees
    (including payment of deposit and the conditions and method of
    refund of deposit);
    the price and conditions for the franchisor to provide goods,
    service and equipment to the franchisee;
    the detailed plan, provision and implementation plan of
    consistent services including operational guidance, technical
    support and business training provided to the franchisee;
    detailed measures for guiding and supervising the operation of
    the franchisor;
    investment budget for all franchised hotels of the franchisee;
    the current numbers, territory and operation evaluation of the
    franchisors within China;
    a summary of accounting statements audited by an accounting firm
    and a summary of audit reports for the previous two years;
    information on any lawsuit in which the franchisor has been
    involved in the previous five years;
    basic information regarding whether the franchisor and its legal
    representative have any record of material violation; and 32




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##### Table of Contents




    other information required to be disclosed by the MOC.    Handbook of Market Access of Foreign
    Investment
  Regulations
    on Trademarks
  PRC Trademark Law Implementation Regulation of the
    PRC Trademark Law
  Regulations
    on Foreign Currency Exchange
  Foreign Exchange Administration Regulations
  Notice on
    Perfecting Practices Concerning Foreign Exchange Settlement
    Regarding the Capital Contribution by Foreign-invested
    Enterprises
  Administration Measures on Individual Foreign
    Exchange Control Operating Procedures for Administration of
    Domestic Individuals Participating in the Employee Stock Option
    Plan or Stock Option Plan of An Overseas Listed Company
 33




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##### Table of Contents



Regulations
    on Share Capital
  Company
    Law of the Peoples Republic of China Implementation Opinions on Several Issues
    regarding the Laws Applicable to the Administration of Approval
    and Registration of Foreign-invested Companies
    Regulations
    on Dividend Distribution
  Foreign-invested
    Enterprise Law Implementation Rules of the
    Foreign-invested Enterprise Law
    Regulations
    on Offshore Financing
  Relevant Issues
    Concerning Foreign Exchange Control on Domestic Residents
    Corporate Financing and Roundtrip Investment Through Offshore
    Special Purpose Vehicles
   34




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##### Table of Contents



Regulations
    on Overseas Listing
  Mergers and Acquisitions
    of Domestic Enterprises by Foreign Investors
     35




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##### Table of Contents



4.C.  Organizational
    Structure    
    Percentage ofMajor Subsidiaries

Ownership

Date of or Acquisition

Place of IncorporationChina Lodging Holdings (HK) Limited (China Lodging
    HK)


100
%

October 22, 2008

Hong Kong Special Administrative region of PRCChina Lodging Holdings Singapore Pte. Ltd. (China Lodging
    Singapore)


100
%

April 14, 2010

SingaporeShanghai HanTing Hotel Management Group, Ltd. (Shanghai
    HanTing)


100
%

November 17, 2004

PRCHanTing Xingkong (Shanghai) Hotel Management Co., Ltd.
    (Xingkong)


100
%

March 3, 2006

PRCHanTing (Tianjin) Investment Consulting Co., Ltd. (HanTing
    Tianjin)


100
%

January 16, 2008

PRCYiju (Shanghai) Hotel Management Co., Ltd. (Yiju)


100
%

April 12, 2007

PRCHanting Technology(Suzhou) Co., Ltd. (Suzhou
    Technology)


100
%

December 3, 2008

PRCHanting (Shanghai) Enterprise Management Co., Ltd.


100
%

December 14, 2010

PRC  4.D.  Property,
    Plants and Equipment   36




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##### Table of Contents



ITEM 4A.
    UNRESOLVED
    STAFF COMMENTS    ITEM 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS 5.A.  Operating
    Results  You should read the following discussion and analysis of our
    financial condition and results of operations in conjunction
    with our consolidated financial statements and the related notes
    included elsewhere in this annual report on Form 20-F. This
    discussion may contain forward-looking statements based upon
    current expectations that involve risks and uncertainties. Our
    actual results may differ materially from those anticipated in
    these
    forward-looking
    statements as a result of various factors, including those set
    forth under Item 3. Key Information  D. Risk
    Factors or in other parts of this annual report on Form
    20-F.
  Overview
  leased-and-operated franchised-and-managed lease-and-operate franchise-and-manage leased-and-operated franchised-and-managed leased-and-operated franchised-and-managed
  HanTing
    Express Hotel HanTing Seasons Hotel HanTing Hi
    Inn
    Specific
    factors affecting our results of operations
    
    The total number of hotels and hotel rooms in our hotel
    network.  Our revenues largely depend on the size
    of our hotel network. Furthermore, we believe the expanded
    geographic coverage of our hotel network will enhance our brand
    recognition. Whether we can successfully increase the number of
    hotels and hotel rooms in our hotel chain is largely affected by
    our ability to effectively identify and lease or franchise
    additional hotel properties at desirable locations on
    commercially favorable terms and the availability of funding to
    make necessary capital investments to open these new hotels.
    The fixed-cost nature of our business.  A
    significant portion of our operating costs and expenses,
    including rent and base salary, is relatively fixed. As a
    result, an increase in our revenues achieved through higher
    RevPAR generally will result in higher profitability. Vice
    versa, a decrease in our revenues could result in a 37




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##### Table of Contents



disproportionately larger decrease in our earnings because our
    operating costs and expenses are unlikely to decrease
    proportionately.  
    The mix of mature
    leased-and-operated
    hotels, new
    leased-and-operated
    hotels and
    franchised-and-managed
    hotels.  Generally, the operation of each
    leased-and-operated
    hotel goes through three stages: development,
    ramp-up and
    mature operations. During the development stage,
    leased-and-operated
    hotels generally incur pre-opening expenses ranging from
    approximately RMB0.5 to RMB2.5 million per hotel. During
    the ramp-up
    stage, when the occupancy rate is relatively low, revenues
    generated by these hotels may be insufficient to cover their
    operating costs, which are relatively fixed in nature. The
    pre-opening expenses incurred during the development stage and
    the lower profitability during the
    ramp-up
    stage for
    leased-and-operated
    hotels may have a significant negative impact on our financial
    performance. The length of ramp-up stage may be affected by
    factors such as seasonality and location. On average, it takes
    our hotels approximately six months to ramp up. We define mature
    leased-and-operated
    hotels as those that have been in operation for more than six
    months. Our mature
    leased-and-operated
    hotels have been and will continue to be the main contributor to
    our revenues and profit.  franchise-and-manage franchised-and-managed
  Key
    Performance Indicators
    leased-and-operated
  period-on-period
  Revenues. leased-and-operated franchised-and-managed
 38




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leased-and-operated franchised-and-managed
  Year Ended December 31,2008


2009


2010(RMB)


%


(RMB)


%


(RMB)


(US$)


%(In thousands except percentages)Revenues:Leased-and-operated
    hotels


797,815



98.5



1,288,898



96.6



1,707,771



258,753



92.9Franchised-and-managed
    hotels


12,039



1.5



44,965



3.4



130,579



19,785



7.1Total revenues


809,854



100.0



1,333,863



100.0



1,838,350



278,538



100.0Less: Business tax and related taxes


(45,605
)


(5.6
)


(73,672
)


(5.5
)


(99,857
)


(15,130
)


(5.4
)Net revenues


764,249



94.4



1,260,191



94.5



1,738,493



263,408



94.6   
    Leased-and-operated
    Hotels.  In 2008, we generated revenues of
    RMB797.8 million from our
    leased-and-operated
    hotels, which accounted for 98.5% of our total revenues for the
    year. In 2009, we generated revenues of RMB1,288.9 million
    from our
    leased-and-operated
    hotels, which accounted for 96.6% of our total revenues for the
    year. In 2010, we generated revenues of RMB1,707.8 million
    from our
    leased-and-operated
    hotels, which accounted for 92.9% of our total revenues for the
    year. We expect that revenues from our
    leased-and-operated
    hotels will continue to constitute a substantial majority of our
    total revenues in the foreseeable future. As of
    December 31, 2010, we had 69
    leased-and-operated
    hotels under development.  leased-and-operated
  leased-and-operated
  
    the total number of
    leased-and-operated
    hotels in our hotel chain;
    the total number of
    leased-and-operated
    hotel rooms in our hotel chain; and
    RevPAR achieved by our
    leased-and-operated
    hotels, which represents the product of average daily rates and
    occupancy rates.  leased-and-operated leased-and-operated
  
    Franchised-and-managed
    Hotels.  In 2008, we generated revenues of
    RMB12.0 million from our
    franchised-and-managed
    hotels, which accounted for 1.5% of our total revenues for the
    year. In 2009, we generated revenues of RMB45.0 million
    from our
    franchised-and-managed
    hotels, which accounted for 3.4% of our total revenues for the
    year. In 2010, we generated revenues of RMB130.6 million
    from our
    franchised-and-managed
    hotels, which accounted for 7.1% of our total revenues for the
    year. We expect that revenues from our
    franchised-and-managed
    hotels will increase in the foreseeable future as we add more
    franchised-and-managed
    hotels in our hotel chain. We also expect the number of our 39




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##### Table of Contents



franchised-and-managed
    hotels as a percentage of the total number of hotels in our
    network to increase. As of December 31, 2010, we had 93
    franchised-and-managed
    hotels under development.  franchised-and-managed franchise-and-manage
  franchise-and-management franchise-and-management franchise-and-management franchised-and-managed franchised-and-managed franchised-and-managed
  Operating Costs and Expenses.
  Year Ended December 31,2008


2009


2010(RMB)


%


(RMB)


%


(RMB)


(US$)


%(In thousands except percentages)Net revenues


764,249



100.0



1,260,191



100.0



1,738,493



263,408



100.0Operating costs and expensesHotel operating costs:Rents and utilities


(322,809
)


(42.2
)


(508,579
)


(40.4
)


(584,308
)


(88,531
)


(33.6
)Personnel costs


(137,231
)


(18.0
)


(169,248
)


(13.4
)


(210,906
)


(31,955
)


(12.1
)Depreciation and amortization


(92,838
)


(12.1
)


(141,600
)


(11.2
)


(163,125
)


(24,716
)


(9.4
)Consumables, food and beverage


(82,662
)


(10.8
)


(119,056
)


(9.4
)


(145,317
)


(22,018
)


(8.4
)Others


(51,824
)


(6.9
)


(65,989
)


(5.3
)


(76,546
)


(11,598
)


(4.4
)Total hotel operating costs


(687,364
)


(90.0
)


(1,004,472
)


(79.7
)


(1,180,202
)


(178,818
)


(67.9
)Selling and marketing expenses


(40,810
)


(5.3
)


(57,818
)


(4.6
)


(70,786
)


(10,725
)


(4.1
)General and administrative expenses


(81,665
)


(10.7
)


(83,666
)


(6.6
)


(119,989
)


(18,180
)


(6.9
)Pre-opening expenses


(108,062
)


(14.1
)


(37,821
)


(3.0
)


(111,210
)


(16,850
)


(6.4
)Total operating costs and expenses


(917,901
)


(120.1
)


(1,183,777
)


(93.9
)


(1,482,187
)


(224,573
)


(85.3
)  40




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##### Table of Contents




    Hotel operating costs.  Our hotel operating
    costs consist of costs and expenses directly attributable to the
    operation of our
    leased-and-operated
    and
    franchised-and-managed
    hotels.
    Leased-and-operated
    hotel operating costs primarily include rental payments and
    utility costs for hotel properties, compensation and benefits
    for our hotel-based employees, costs of hotel room consumable
    products and depreciation and amortization of leasehold
    improvements.
    Franchised-and-managed
    hotel operating costs primarily include compensation and
    benefits for
    franchised-and-managed
    hotel managers and other limited number of employees directly
    hired by us, which are recouped by us in the form of monthly
    service fees. We anticipate that our hotel operating costs will
    increase as we continue to open new hotels. However, we
    anticipate that our hotel operating costs as a percentage of our
    total revenues will decrease in general primarily due to
    (i) the enlarged base of relatively mature hotels in our
    leased-and-operated
    hotel portfolio and (ii) the relatively fixed nature of a
    significant portion of our operating costs.
    Selling and marketing expenses.  Our selling
    and marketing expenses consist primarily of commissions to
    travel intermediaries, expenses for marketing programs and
    materials, bank fees for processing bank card payments, and
    compensation and benefits for our sales and marketing personnel,
    including personnel at our centralized reservation center. We
    expect that our selling and marketing expenses will increase as
    our sales increase and as we further expand into new geographic
    locations and promote our brand.
    General and administrative expenses.  Our
    general and administrative expenses consist primarily of
    compensation and benefits for our corporate and regional office
    employees and other employees who are not sales and marketing or
    hotel-based employees, travel and communication expenses of our
    general and administrative staff, costs of third-party
    professional services, and office expenses for corporate and
    regional office. We expect that our general and administrative
    expenses will increase in the near term as we hire additional
    personnel and incur additional costs in connection with the
    expansion of our business and with being a public company,
    including costs of enhancing our internal controls.
    Pre-opening expenses.  Our pre-opening expenses
    consist primarily of rents, personnel cost, and other
    miscellaneous expenses incurred prior to the opening of a new
    leased-and-operated
    hotel.    Year Ended December 31,2008


2009


2010(RMB)


(RMB)


(RMB)


(US$)(In thousands)Rents


77,764



29,907



88,177



13,360Personnel cost


16,402



3,584



5,214



790Others


13,896



4,330



17,819



2,700Total pre-opening expenses


108,062



37,821



111,210



16,850    41




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##### Table of Contents



Year Ended December 31,2008


2009


2010(RMB)


%


(RMB)


%


(RMB)


(US$)


%(In thousands except percentages)Hotel operating costs


116



2.4



523



6.6



1,555



236



11.9Selling and marketing expenses


178



3.7



465



5.8



778



118



5.9General and administrative expenses


4,521



93.9



6,967



87.6



10,780



1,633



82.2Total share-based compensation expenses


4,815



100.0



7,955



100.0



13,113



1,987



100.0     Taxation
        Income Tax Law of the PRC for Enterprises
    with Foreign Investment and Foreign Enterprises Provisional Regulations of the PRC on Enterprises Income
    Tax Enterprise
    Income Tax Law Implementation Regulations of the
    Enterprise Income Tax Law
   42




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##### Table of Contents



Critical
    Accounting Policies
      Revenue
    Recognition
  leased-and-operated
  franchised-and-managed franchise-and-management franchise-and-management franchise-and-management franchise-and-management franchise-and-management
    leased-and-operated franchised-and-managed
  Long-Lived
    Assets
   43




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Goodwill
    Impairment
      Customer
    Loyalty Program
  leased-and-operated franchised-and-managed
  Income
    Taxes
   44




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##### Table of Contents



year-to-date year-to-date
    Share-Based
    Compensation
  leased-and-operated
     45




---



##### Table of Contents




    no material changes in the existing political, legal, fiscal and
    economic conditions in China;
    no major changes in tax law in China or the tax rates applicable
    to our subsidiaries and consolidated affiliated entities in
    China;
    no material changes in the exchange rates and interest rates
    from the presently prevailing rates;
    availability of finance not a constraint on our future growth;
    our ability to retain competent management, key personnel and
    technical staff to support our ongoing operations; and
    no material deviation in market conditions from economic
    forecasts.    Selected
    Operating Data
    As of December 31,2008


2009


2010Selected Operating Data:Total hotels in operation


167



236



438Leased-and-operated
    hotels


145



173



243Franchised-and-managed
    hotels


22



63



195Total hotel rooms in operation


21,033



28,360



50,438Leased-and-operated
    hotels


18,414



21,658



29,888Franchised-and-managed
    hotels


2,619



6,702



20,550Number of cities


35



39



65   Year Ended December 31,2008


2009


2010Occupancy rate (as a percentage)Leased-and-operated
    hotels


89



94



94Franchised-and-managed
    hotels


74



91



90Total hotels in operation


87



94



93Average daily room rate (in RMB)Leased-and-operated
    hotels


178



174



200Franchised-and-managed
    hotels


180



172



192Total hotels in operation


178



174



197RevPAR (in RMB)Leased-and-operated
    hotels


158



165



189Franchised-and-managed
    hotels


132



156



172Total hotels in operation


156



163



183  46




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##### Table of Contents



Results
    of Operations
  year-to-year
  For the Year Ended December 31,2008


2009


2010RMB


%


RMB


%


(RMB)


(US$)


%(In thousands except percentages)Consolidated Statement of Operations Data:Revenues:Leased-and-operated
    hotels


797,815



104.4



1,288,898



102.3



1,707,771



258,753



98.2Franchised-and-managed
    hotels


12,039



1.6



44,965



3.5



130,579



19,785



7.5Total revenues


809,854



106.0



1,333,863



105.8



1,838,350



278,538



105.7Less: Business tax and related taxes


(45,605
)


(6.0
)


(73,672
)


(5.8
)


(99,857
)


(15,130
)


(5.7
)Net revenues


764,249



100.0



1,260,191



100.0



1,738,493



263,408



100.0Operating costs and expenses(1):Hotel operating costs


(687,364
)


(90.0
)


(1,004,472
)


(79.7
)


(1,180,202
)


(178,818
)


(67.9
)Selling and marketing expenses


(40,810
)


(5.3
)


(57,818
)


(4.6
)


(70,786
)


(10,725
)


(4.1
)General and administrative expenses


(81,665
)


(10.7
)


(83,666
)


(6.6
)


(119,989
)


(18,180
)


(6.9
)Pre-opening expenses


(108,062
)


(14.1
)


(37,821
)


(3.0
)


(111,210
)


(16,850
)


(6.4
)Total operating costs and expenses


(917,901
)


(120.1
)


(1,183,777
)


(93.9
)


(1,482,187
)


(224,573
)


(85.3
)Income (loss) from operations


(153,652
)


(20.1
)


76,414



6.1



256,306



38,835



14.7Interest income


3,786



0.5



1,871



0.1



15,945



2,416



1.0Interest expenses


1,249



0.2



8,787



0.7



2,682



406



0.2Other income


















2,564



388



0.2Foreign exchange gain (loss)


(13,884
)


(1.8
)


(60
)


0.0



6,923



1,049



0.4Change in fair value of warrants


8,536



1.1



















Income (loss) before income taxes


(156,463
)


(20.5
)


69,438



5.5



279,056



42,282



16.1Tax expense (benefit)


(23,880
)


(3.1
)


17,990



1.4



57,262



8,676



3.3Net income (loss)


(132,583
)


(17.4
)


51,448



4.1



221,794



33,606



12.8Less: net income (loss) attributable to noncontrolling interest


3,579



0.5



8,903



0.7



6,043



916



0.4Net income (loss) attributable to China Lodging Group, Limited


(136,162
)


(17.9
)


42,545



3.4



215,751



32,690



12.4       Year Ended December 31,2008

2009

2010(RMB)

(RMB)

(RMB)

(US$)(In thousands)Share-based compensation expenses


4,815



7,955



13,113



1,987  47




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Year Ended December 31,2008


2009


2010(RMB)


(RMB)


(RMB)


(US$)(In thousands)Non-GAAP Financial DataEBITDA(1)


(67,957
)


214,893



447,234



67,763EBITDA from Operating Hotels(1)


40,105



252,714



558,444



84,613     (1)
    
    We believe that EBITDA is a useful financial metric to assess
    our operating and financial performance before the impact of
    investing and financing transactions and income taxes. Given the
    significant investments that we have made in leasehold
    improvements, depreciation and amortization expense comprises a
    significant portion of our cost structure. In addition, we
    believe that EBITDA is widely used by other companies in the
    lodging industry and may be used by investors as a measure of
    our financial performance. We believe that EBITDA will provide
    investors with a useful tool for comparability between periods
    because it eliminates depreciation and amortization expense
    attributable to capital expenditures. We also use EBITDA from
    Operating Hotels, which is defined as EBITDA before pre-opening
    expenses, to assess operating results of the hotels in
    operation. We believe that the exclusion of pre-opening
    expenses, a portion of which is non-cash rental expenses, helps
    facilitate
    year-on-year
    comparison of our results of operations as the number of hotels
    in the development stage may vary significantly from year to
    year. Therefore, we believe EBITDA from Operating Hotels more
    closely reflects the performance capability of hotels currently
    in operation. Our calculation of EBITDA and EBITDA from
    Operating Hotels does not deduct interest income, which was
    RMB3.8 million , RMB1.9 million and
    RMB15.9 million in 2008, 2009 and 2010, respectively. The
    presentation of EBITDA and EBITDA from Operating Hotels should
    not be construed as an indication that our future results will
    be unaffected by other charges and gains we consider to be
    outside the ordinary course of our business.The use of EBITDA and EBITDA from Operating Hotels has certain
    limitations. Depreciation and amortization expense for various
    long-term assets, income tax and interest expense have been and
    will be incurred and are not reflected in the presentation of
    EBITDA. Pre-opening expenses have been and will be incurred and
    are not reflected in the presentation of EBITDA from Operating
    Hotels. Each of these items should also be considered in the
    overall evaluation of our results. Additionally, EBITDA or
    EBITDA from Operating Hotels does not consider capital
    expenditures and other investing activities and should not be
    considered as a measure of our liquidity. We compensate for
    these limitations by providing the relevant disclosure of our
    depreciation and amortization, interest expense, income tax
    expense, pre-opening expenses, capital expenditures and other
    relevant items both in our reconciliations to the U.S. GAAP
    financial measures and in our consolidated financial statements,
    all of which should be considered when evaluating our
    performance.The terms EBITDA and EBITDA from Operating Hotels are not
    defined under U.S. GAAP, and neither EBITDA nor EBITDA from
    Operating Hotels is a measure of net income, operating income,
    operating performance or liquidity presented in accordance with
    U.S. GAAP. When assessing our operating and financial
    performance, you should not consider this data in isolation or
    as a substitute for our net income, operating income or any
    other operating performance measure that is calculated in
    accordance with U.S. GAAP. In addition, our EBITDA or
    EBITDA from Operating Hotels may not be comparable to EBITDA or
    EBITDA from Operating Hotels or similarly titled measures
    utilized by other companies since such other companies may not
    calculate EBITDA or EBITDA from Operating Hotels in the same
    manner as we do. 48




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For the Year Ended December 31,2008


2009


2010(RMB)


(RMB)


(RMB)


(US$)(In thousands)Net income (loss) attributable to our company


(136,162
)


42,545



215,751



32,690Interest expense


1,249



8,787



2,682



406Tax expense (benefit)


(23,880
)


17,990



57,262



8,676Depreciation and amortization


90,836



145,571



171,539



25,991EBITDA (Non-GAAP)


(67,957
)


214,893



447,234



67,763Pre-opening expenses


108,062



37,821



111,210



16,850EBITDA from Operating Hotels (Non-GAAP)


40,105



252,714



558,444



84,613   Year
    Ended December 31, 2010 Compared to Year Ended
    December 31, 2009
  Revenues.
  
    Leased-and-operated
    hotels.  Revenues from our
    leased-and-operated
    hotels increased by 32.5% from RMB1,288.9 million in 2009
    to RMB1,707.8 million in 2010. This increase was primarily
    due to our continued expansion of
    leased-and-operated
    hotels from 173 hotels and 21,658 hotel rooms as of
    December 31, 2009 to 243 hotels and 29,888 hotel rooms as
    of December 31, 2010, and an increase in RevPAR. RevPAR for
    our
    leased-and-operated
    hotels increased from RMB165 in 2009 to RMB189 in 2010 due to an
    increase in the average daily rate of our
    leased-and-operated
    hotels from RMB174 in 2009 to RMB200 in 2010. The increase in
    this average daily rate resulted primarily from our
    strengthening brand, our successful yield management,
    Chinas gradual recovery from the global financial crisis
    and the Expo-driven price increase in Shanghai from May 2010 to
    October 2010. The occupancy rate of our
    leased-and-operated
    hotels remains stable at 94% from 2009 to 2010.
    Franchised-and-managed
    hotels.  Revenues from our
    franchised-and-managed
    hotels increased significantly from RMB45.0 million in 2009
    to RMB130.6 million in 2010. This increase was primarily
    due to our continued expansion of
    franchised-and-managed
    hotels from 63 hotels and 6,702 hotel rooms as of
    December 31, 2009 to 195 hotels and 20,550 hotel rooms as
    of December 31, 2010, and an increase in RevPAR. RevPAR for
    our
    franchised-and-managed
    hotels increased from RMB156 in 2009 to RMB172 in 2010 driven by
    an increase in the average daily rate of our
    franchised-and-managed
    hotels from RMB172 in 2009 to RMB192 in 2010 and partially
    offset by a slight decrease of the occupancy rate of our
    franchised-and-managed
    hotels from 91% in 2009 to 90% in 2010. The increase in this
    average daily rate resulted primarily from our strengthening
    brand, our successful yield management, Chinas gradual
    recovery from the global financial crisis and the Expo-driven
    price increase in Shanghai From May 2010 to October 2010.  Operating Costs and Expenses.
  
    Hotel operating costs.  Our hotel operating
    costs increased by 17.5% from RMB1,004.5 million in 2009 to
    RMB1,180.2 million in 2010. This increase was primarily
    because of our substantial expansion of
    leased-and-operated
    hotels from 173 hotels as of December 31, 2009 to 243
    hotels as of December 31, 2010. Our hotel operating costs
    as a percentage of net revenues decreased from 79.7% in 2009 to
    67.9% in 2010, primarily due to an increase in our RevPAR and an
    increase in the proportion of net revenue derived from
    franchised-and-managed
    hotels.
    Selling and marketing expenses.  Our selling
    and marketing expenses increased by 22.4% from
    RMB57.8 million in 2009 to RMB70.8 million in 2010.
    This increase was primarily due to 49




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RMB6.6 million of additional expenses relating to our
    loyalty program resulting from the increase of points earned by
    our customers, RMB6.1 million of additional compensation
    and benefits for our sales and marketing personnel and
    RMB2.7 million of additional bank fees for processing bank
    card payments, partially offset by a decrease of
    RMB2.0 million of marketing and promotional expenses. Our
    selling and marketing expenses as a percentage of net revenues
    decreased from 4.6% in 2009 to 4.1% in 2010.  
    General and administrative expenses.  Our
    general and administrative expenses increased from
    RMB83.7 million in 2009 to RMB120.0 million in 2010,
    primarily as a result of RMB18 million of additional
    personnel cost, RMB8.0 million of additional professional
    service fees and RMB3.8 million of additional share-based
    compensation. Our general and administrative expenses as a
    percentage of net revenues increased from 6.6% in 2009 to 6.9%
    in 2010.
    Pre-opening expenses.  Our pre-opening expenses
    increased from RMB37.8 million in 2009 to
    RMB111.2 million in 2010, primarily due to our accelerated
    expansion of
    leased-and-operated
    hotels. We opened 70
    leased-and-operated
    hotels in 2010, compared with 28 in 2009 and we had 69
    leased-and-operated
    hotels under development as of December 31, 2010, compared
    to 21 as of December 31, 2009. Our pre-opening expenses as
    a percentage of net revenues increased from 3.0% in 2009 to 6.4%
    in 2010.  Income from Operations.
  Interest Income (Expense), Net.
  Other income.
  Foreign Exchange Gain (Loss).
  Tax Expense.
  Net Income Attributable to Noncontrolling
    Interest. leased-and-operated
  Net Income Attributable to China Lodging Group,
    Limited.
  EBITDA and EBITDA from Operating
    Hotels.
 50




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Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
  Revenues.
  
    Leased-and-operated
    hotels.  Revenues from our
    leased-and-operated
    hotels increased by 61.6% from RMB797.8 million in 2008 to
    RMB1,288.9 million in 2009. This increase was primarily due
    to our continued expansion of
    leased-and-operated
    hotels from 145 hotels and 18,414 hotel rooms as of
    December 31, 2008 to 173 hotels and 21,658 hotel rooms as
    of December 31, 2009, and an increase in RevPAR. RevPAR for
    our
    leased-and-operated
    hotels increased from RMB158 in 2008 to RMB165 in 2009 due to an
    increase in occupancy rate of our
    leased-and-operated
    hotels from 89% in 2008 to 94% in 2009. The increase in this
    occupancy rate resulted primarily from the increased proportion
    of room nights in our mature
    leased-and-operated
    hotels, which have been in operation for more than six months,
    from 57% in 2008 to 85% in 2009. The average daily rate for our
    leased-and-operated
    hotels decreased from RMB178 in 2008 to RMB174 in 2009,
    primarily reflecting room rate decreases during the economic
    slowdown.
    Franchised-and-managed
    hotels.  Revenues from our
    franchised-and-managed
    hotels increased significantly from RMB12.0 million in 2008
    to RMB45.0 million in 2009. This growth was primarily due
    to an increase in the number of
    franchised-and-managed
    hotels from 22 as of December 31, 2008 to 63 as of
    December 31, 2009, and an increase in RevPAR. RevPAR for
    our
    franchised-and-managed
    hotels increased from RMB132 in 2008 to RMB156 in 2009 driven by
    the increase in occupancy rate of our
    franchised-and-managed
    hotels from 74% in 2008 to 91% in 2009. The increase in this
    occupancy rate resulted primarily from the increased proportion
    of our
    franchised-and-managed
    hotels that are located in Chinas economically more
    developed cities. The average daily rate for our
    franchised-and-managed
    hotels decreased from RMB180 in 2008 to RMB172 in 2009,
    primarily reflecting room rate decreases during the economic
    slowdown.  Operating Costs and Expenses.
  
    Hotel operating costs.  Our hotel operating
    costs increased by 46% from RMB687.4 million in 2008 to
    RMB1,004.5 million in 2009. This increase was primarily
    because of our substantial expansion of
    leased-and-operated
    hotels from 145 hotels as of December 31, 2008 to 173
    hotels as of December 31, 2009. Our hotel operating costs
    as a percentage of net revenues decreased from 90.0% in 2008 to
    79.7% in 2009, primarily due to cost control of personnel costs,
    consumables, food and beverage and other hotel operating costs.
    Selling and marketing expenses.  Our selling
    and marketing expenses increased by 42% from
    RMB40.8 million in 2008 to RMB57.8 million in 2009.
    This increase was primarily due to RMB9.5 million of
    additional expenses for marketing and promotional activities,
    RMB6.3 million of additional commissions to travel
    intermediaries, RMB5.7 million of additional compensation
    and benefits for our sales and marketing personnel, and
    RMB4.1 million of additional bank fees for processing bank
    card payments as we expanded our business. We recorded less
    expenses relating to our customer loyalty program in 2009 due to
    (i) an amendment to
    franchise-and-management
    agreements to discontinue reimbursing franchisees for free room
    nights provided in connection with point redemption; and
    (ii) the application of a point expiration rate in
    estimating the costs of our customer loyalty program. Our
    selling and marketing expenses as a percentage of net revenues
    decreased from 5.3% in 2008 to 4.6% in 2009.
    General and administrative expenses.  Our
    general and administrative expenses increased slightly from
    RMB81.7 million in 2008 to RMB83.7 million in 2009,
    primarily as a result of an increase in personnel 51




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costs, an increase in provision for contingent liabilities, and
    an increase in share-based compensation expenses, partially
    offset by a decrease of RMB9.2 million in professional
    service fees. Our general and administrative expenses as a
    percentage of net revenues decreased from 10.7% in 2008 to 6.6%
    in 2009.  
    Pre-opening expenses.  Our pre-opening expenses
    decreased from RMB108.1 million in 2008 to
    RMB37.8 million in 2009, primarily due to a decrease in the
    number of newly opened
    leased-and-operated
    hotels from 83 in 2008 to 28 in 2009 in an effort to balance
    growth and profitability during the global economic downturn.
    Our pre-opening expenses as a percentage of net revenues
    decreased from 14.1% in 2008 to 3.0% in 2009.  Income (Loss) from Operations.
  Interest Income (Expense), Net.
  Foreign Exchange Gain (Loss).
  Change of Fair Value of Warrants. mark-to-market
  Tax Expense (Benefit).
  Net Income Attributable to Noncontrolling
    Interest. leased-and-operated
  Net Income (Loss) Attributable to China Lodging Group,
    Limited.
  EBITDA and EBITDA from Operating
    Hotels. leased-and-operated
 52




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Expo
    Impact
  like-for-like
  Outstanding
    Indebtedness
    OutstandingMaximum

Drawdown as

Balance as ofDate of

Credit Line

Credit Line

of December 31,

December 31,

InterestLender

Credit Line

Maturity Date

Amount

2010

2010

Rate(In RMB)Industrial and Commercial Bank of China

September 2008

September 2011


172,000,000



172,000,000







5.72%/5.4%Industrial and Commercial Bank of China

January 2010

January 2013


150,000,000



70,000,000







4.86%      5.B. Liquidity
    and Capital Resources  leased-and-operated
   53




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Year Ended December 31,2008


2009


2010(RMB)


(RMB)


(RMB)


(US$)(In thousands)Net cash provided by (used in) operating activities


(13,738
)


296,340



469,126



71,080Net cash used in investing activities


(451,589
)


(256,027
)


(515,310
)


(78,077
)Net cash provided by financing activities


482,479



47,064



845,836



128,157Effect of exchange rate changes on cash and cash equivalents


(7,541
)


(36
)


(10,172
)


(1,542
)Net increase in cash and cash equivalents


9,611



87,341



789,480



119,618Cash and cash equivalents at the beginning of the year


173,636



183,246



270,587



40,998Cash and cash equivalents at the end of the year


183,247



270,587



1,060,067



160,616   Operating
    Activities
      franchise-and-management
  leased-and-operated leased-and-operated
  Investing
    Activities
  leased-and-operated
   54




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held-to-maturity
  leased-and-operated
  Financing
    Activities
        Restrictions
    on Cash Transfers to Us
         55




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Capital
    Expenditures
   5.C.  Research
    and Development, Patents and Licenses, etc.  Hotel
    Information Platform and Operational Systems
    Web property management system
    (Web-PMS). Web-PMS Web-PMS
  Central reservation system.
  Customer relationship management (CRM)
    system.
  Intellectual
    Property
   56




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5.D.  Trend
    Information   5.E.  Off-Balance
    Sheet Arrangements   5.F.  Tabular
    Disclosure of Contractual Obligations    Payment Due by PeriodMoreLess Than








ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In RMB millions)Operating lease obligations


7,690



611



1,340



1,352



4,387Purchase obligations


78



70



8







Total


7,768



681



1,348



1,352



4,387   leased-and-operated leased-and-operated
 5.G.  Safe
    Harbor  Form 20-F
 57




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##### Table of Contents




    our anticipated growth strategies, including developing new
    hotels at desirable locations in a timely and cost-effective
    manner;
    our future business development, results of operations and
    financial condition;
    expected changes in our revenues and certain cost or expense
    items;
    our ability to attract customers and leverage our brand; and
    trends and competition in the lodging industry.      ITEM 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES 6.A.
    Directors and Senior Management    Directors and Executive Officers

Age


Position/TitleQi Ji


44


Founder, Executive Chairman of the Board of DirectorsJohn Jiong Wu


43


Co-founder, Independent DirectorTongtong Zhao


44


Co-founder, Independent DirectorMin Fan


45


DirectorYan Huang


43


Independent DirectorJoseph Chow


49


Independent DirectorTuo (Matthew) Zhang


45


Chief Executive OfficerMin (Jenny) Zhang


37


Chief Financial OfficerChang Su


46


Chief Operating OfficerHaijun Wang


34


Executive Vice President   Qi Ji
 58




---



##### Table of Contents



John Jiong Wu,
  Tongtong Zhao,
  Min Fan,
  Yan Huang
  Joseph Chow
  Tuo (Matthew) Zhang e-commerce
 59




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##### Table of Contents



Min (Jenny) Zhang
  Chang Su
  Haijun Wang
  Employment
    Agreements
           60




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6.B.
    Compensation    Share
    Incentive Plans
        Plan Administration.
  Types of Awards.
  
    Options.  Each option agreement must specify
    the exercise price. The exercise price of an option must not be
    less than 100% of the fair market value of the underlying shares
    on the option grant date, and a higher percentage may be
    required. The term of an option granted under the Amended and
    Restated 2007 and 2008 Plans must not exceed ten years from the
    date the option is granted, and a shorter term may be required.
    Share Purchase Rights.  A share purchase right
    is a right to purchase restricted shares. Each share purchase
    right under the Amended and Restated 2007 and 2008 Plans must be
    evidenced by a restricted share purchase agreement between the
    purchaser and us. The purchase price will be determined by the
    administrator. The share purchase rights will automatically
    expire if not exercised by the purchaser within 30 days
    after the grant date.    
    Options.  The purchase price per share under an
    option will be determined by a committee appointed by our board
    and set forth in the award agreement. The term of an option
    granted under the Amended 2009 Plan must not exceed ten years
    from the grant date, and a shorter term may be required.
    Restricted Stock and Restricted Stock
    Units.  An award of restricted stock is a grant of
    our ordinary shares subject to restrictions the committee
    appointed by our board may impose. A restricted stock unit is a
    contractual right that is denominated in our ordinary shares,
    each of which represents a right to receive the value of a share
    or a specified percentage of such value upon the terms and
    conditions set forth in the Amended 2009 Plan and the applicable
    award agreement. 61




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
    Other Stock-based Awards.  The committee is
    authorized to grant other stock-based awards that are
    denominated or payable in or otherwise related to our ordinary
    shares such as stock appreciation rights and rights to dividends
    and dividend equivalents. Terms and conditions of such awards
    will be determined by the committee appointed by our board.
    Unless the awards are granted in substitution for outstanding
    awards previously granted by an entity that we acquired or
    combined, the value of the consideration for the ordinary shares
    to be purchased upon the exercise of such awards shall not be
    less than the fair market value of the underlying ordinary
    shares on the grant date.  Vesting Schedule. 1 48 1 8
  Termination of the Amended and Restated 2007 and 2008 Plans
    and the Amended 2009 Plan.
    Ordinary SharesUnderlying Options


Exercise PriceName

Awarded(1)


(US$/Share)


Date of Grant

Date of ExpirationQi Ji


400,000



1.53


October 1, 2009

October 1, 2019Tongtong Zhao


100,000



1.53


October 1, 2009

October 1, 2019John Jiong Wu


100,000



1.53


October 1, 2009

October 1, 2019Yan Huang


*



1.53


October 1, 2009

October 1, 2019Joseph Chow


*



3.71


July 20, 2010

July 20, 2020Tuo (Matthew) Zhang


*



1.40/


July 1, 2007/

July 1, 2017/1.53/


August 3, 2009/

August 3, 2019/1.53


November 20, 2009

November 20, 2019Min (Jenny) Zhang


*



1.40/


October 1, 2007/

October 1, 2017/1.53


November 20, 2009

November 20, 2019Haijun Wang


*



0.50


February 4, 2007

February 4, 2017Other individuals as a group


12,189,170



0.50-3.71


February 4, 2007 

February 4, 2017 July 20, 2010

July 20, 2020     *
    
    Upon exercise of all options granted, would beneficially own
    less than 1% of our outstanding ordinary shares.(1)
    
    Includes options to purchase an aggregate of 3,276,875 ordinary
    shares that have been exercised by certain officers and options
    to purchase an aggregate of 4,565,466 ordinary shares that have
    been exercised by certain employees. 62




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6.C.  Board
    Practices  General
        Duties of
    Directors
    Terms of
    Directors and Executive Officers
    Board
    Committees
    Audit
    Committee
    
    selecting the independent auditors and pre-approving all
    auditing and non-auditing services permitted to be performed by
    the independent auditors;
    selecting independent auditors and pre-approving all auditing
    and non-auditing services permitted to be performed by the
    independent auditors;
    setting clear hiring policies for employees or former employees
    of the independent auditors;
    reviewing with the independent auditors any audit problems or
    difficulties and managements response;
    reviewing and approving all proposed related-party transactions;
    discussing the annual audited financial statements with
    management and the independent auditors; 63




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
    discussing with management and the independent auditors major
    issues regarding accounting principles and financial statement
    presentations;
    reviewing reports prepared by management or the independent
    auditors relating to significant financial reporting issues and
    judgments;
    reviewing with management and the independent auditors
    related-party transactions and off-balance sheet transactions
    and structures;
    reviewing with management and the independent auditors the
    effect of regulatory and accounting initiatives and actions;
    reviewing policies with respect to risk assessment and risk
    management;
    reviewing our disclosure controls and procedures and internal
    control over financial reporting;
    timely reviewing reports from the independent auditors regarding
    all critical accounting policies and practices to be used by our
    company, all alternative treatments of financial information
    within GAAP that have been discussed with management and all
    other material written communications between the independent
    auditors and management;
    establishing procedures for the receipt, retention and treatment
    of complaints received from our employees regarding accounting,
    internal accounting controls or auditing matters and the
    confidential, anonymous submission by our employees of concerns
    regarding questionable accounting or auditing matters;
    annually reviewing and reassessing the adequacy of our audit
    committee charter;
    such other matters that are specifically delegated to our audit
    committee by our board of directors from time to time; and
    meeting separately, periodically, with management, the internal
    auditors and the independent auditors.  Compensation
    Committee
    
    reviewing and approving the compensation for our senior
    executives;
    reviewing and evaluating our executive compensation and benefits
    policies generally;
    reporting to our board of directors periodically;
    evaluating its own performance and reporting to our board of
    directors on such evaluation;
    periodically reviewing and assessing the adequacy of the
    compensation committee charter and recommending any proposed
    changes to our board of directors; and
    such other matters that are specifically delegated to the
    compensation committee by our board of directors from time to
    time. 6.D.  Employees   64




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##### Table of Contents



6.E.  Share
    Ownership  Rule 13d-3
  
    each of our directors and executive officers; and
    each person known to us to own beneficially more than 5% of our
    ordinary shares.    Ordinary SharesBeneficially Owned(1)Number


%Directors and Executive Officers:Qi Ji


115,002,649
(2)


47.7Tongtong Zhao


38,280,000
(3)


15.9John Jiong Wu


9,633,333



4.0Min Fan


22,049,446
(4)


9.1Yan Huang






Joseph Chow






Tuo (Matthew) Zhang


*



*Min (Jenny) Zhang


*



*Chang Su


*



*Haijun Wang


*



*All Directors and Executive Officers as a Group


153,721,053
(5)


64.0Principal Shareholders:Winner Crown Holdings Limited


80,002,649
(6)


33.2East Leader International Limited


38,280,000
(7)


15.9Ctrip.com International, Ltd.


22,049,446
(8)


9.1FMR LLC


20,975,892
(9)


8.7     *
    
    Less than 1%.(1)
    
    The number of ordinary shares outstanding in calculating the
    percentages for each listed person or group includes the
    ordinary shares underlying options held by such person or group
    exercisable within 60 days after March 28, 2011.
    Percentage of beneficial ownership of each listed person or
    group prior to this offering is based on (i) 241,179,223
    ordinary shares outstanding as of March 28, 2011, and
    (ii) the ordinary shares underlying share options
    exercisable by such person within 60 days after
    March 28, 2011.(2)
    
    Includes (i) 80,002,649 ordinary shares held by Winner
    Crown Holdings Limited, or Winner Crown, a British Virgin
    Islands company wholly owned by Sherman Holdings Limited, a
    Bahamas company, which is in turn wholly owned by Credit Suisse
    Trust Limited, or CS Trustee. CS Trustee acts as trustee of
    the Ji Family Trust, of which Mr. Qi Ji and his family
    members, are the beneficiaries, (ii) 15,000,000 ordinary
    shares held by East Leader International Limited, or East
    Leader, a British Virgin Islands company, over which Mr. Ji
    has voting power pursuant to a power of attorney dated
    February 25, 2010, and (iii) 4,000,000 Restricted ADSs
    representing 16,000,000 ordinary shares, 930,000 ADSs
    representing 3,720,000 ordinary shares and 280,000 ordinary
    shares held by East Leader, over which Mr. Ji has voting
    power pursuant to a power of attorney dated March 29, 2011
    East Leader is wholly owned by Perfect Will Holdings Limited, a
    British Virgin Islands company, which is in turn wholly owned by
    Bank Sarasin Nominees (CI) Limited, as nominee for Sarasin
    Trust Company Guernsey Limited, or Sarasin Trust. Sarasin
    Trust acts as trustee of the Tanya Trust, of which
    Ms. Tongtong Zhao and her family members, are the
    beneficiaries. 65




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##### Table of Contents



(3)
    
    Includes 16,760,000 ordinary shares, 4,000,000 Restricted ADSs
    representing 16,000,000 ordinary shares and 1,380,000 ADSs
    representing 5,520,000 ordinary shares held by East Leader, a
    British Virgin Islands company wholly owned by Perfect Will
    Holdings Limited, a British Virgin Islands company, which is in
    turn wholly owned by Bank Sarasin Nominees (CI) Limited, as
    nominee for Sarasin Trust Company Guernsey Limited, or
    Sarasin Trust. Sarasin Trust acts as trustee of the Tanya Trust,
    of which Ms. Tongtong Zhao and her family members, are the
    beneficiaries. Ms. Zhao is the sole director of East Leader.(4)
    
    Includes (i) 7,202,482 ordinary shares that Ctrip purchased
    from us, (ii) an aggregate of 11,646,964 of our ordinary
    shares that Ctrip purchased from the Chengwei Funds, CDH
    Courtyard Limited, the IDG Funds, the Northern Light Funds and
    Pinpoint Capital 2006 A Limited, and (iii) 800,000 ADSs
    representing 3,200,000 ordinary shares that Ctrip subscribed in
    our initial public offering. By virtue of being a director and
    the chief executive officer and president of Ctrip, Mr. Fan
    may be deemed to beneficially own an aggregate of 22,049,446
    ordinary shares. Mr. Fan disclaims beneficial ownership of
    the shares beneficially owned by Ctrip except to the extent of
    his pecuniary interests therein. Mr. Fans business
    address is 99 Fu Quan Road, Shanghai 200335, Peoples
    Republic of China.(5)
    
    Includes ordinary shares and ordinary shares issuable upon exercise
of all of the options that are exercisable within 60 days after March
28, 2011 held by all
of our directors and executive officers as a group.(6)
    
    Winner Crown is a British Virgin Islands company wholly owned by
    Sherman Holdings Limited, a Bahamas company, which is in turn
    wholly owned by Credit Suisse Trust Limited, or CS Trustee.
    CS Trustee acts as trustee of the Ji Family Trust, of which
    Mr. Qi Ji, our founder and executive chairman, and his
    family members, are the beneficiaries. Mr. Ji is the sole
    director of Winner Crown. The address of Winner Crown is Akara
    Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,
    Tortola, British Virgin Islands.(7)
    
    East Leader is a British Virgin Islands company wholly owned by
    Perfect Will Holdings Limited, a British Virgin Islands company,
    which is in turn wholly owned by Bank Sarasin Nominees
    (CI) Limited, as nominee for Sarasin Trust Company
    Guernsey Limited, or Sarasin Trust. Sarasin Trust acts as
    trustee of the Tanya Trust, of which Ms. Tongtong Zhao and
    her family members, are the beneficiaries. Ms. Zhao is the
    sole director of East Leader. The address of East Leader is
    P.O. Box 957, Offshore Incorporations Centre, Road
    Town,Tortola, British Virgin Islands.(8)
    
    Includes (i) 7,202,482 ordinary shares that Ctrip purchased
    from us, (ii) an aggregate of 11,646,964 of our ordinary
    shares that Ctrip purchased from the Chengwei Funds, CDH
    Courtyard Limited, the IDG Funds, the Northern Light Funds and
    Pinpoint Capital 2006 A Limited, and (iii) 800,000 ADSs
    representing 3,200,000 ordinary shares that Ctrip subscribed in
    our initial public offering. Ctrip is a Cayman Islands company
    and its address is 99 Fu Quan Road, Shanghai 200335,
    Peoples Republic of China.(9)
    
    Based on the Schedule 13G filed with the SEC on February 14, 2011.
FMR LLCs principal business office is 82 Devonshire Street, Boston, Massachusetts 02109.
Fidelity Management & Research Company, 82 Devonshire Street, Boston, Massachusetts 02109,
a wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203
of the Investment Advisers Act of 1940, is the beneficial owner of 19,527,580 of our ordinary
shares as a result of acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940. FIL Limited, Pembroke Hall, 42 Crow Lane,
Hamilton, Bermuda, a qualified institution under Rule 13d-1(b)(1)(ii) under the Securities
Exchange Act of 1934 providing investment advisory and management services to a number of
non-U.S. investment companies and certain institutional investors, is the beneficial owner of
1,448,312 of our ordinary shares.      ITEM 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 7.A.  Major
    Shareholders   7.B.  Related
    Party Transactions  Private
    Placements
   66




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##### Table of Contents



one-to-one
  Transactions
    with Suzhou Property
      Transactions
    with Ctrip
  leased-and-operated
    Employment
    Agreements
    Share
    Incentives
   67




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##### Table of Contents



7.C.  Interests
    of Experts and Counsel    ITEM 8.
    FINANCIAL
    INFORMATION 8.A.  Consolidated
    Statements and Other Financial Information  8.A.1.
  8.A.2.
  8.A.3. page F-2
  8.A.4.
  8.A.5.
  8.A.6.
  8.A.7.  Legal
    and Administrative Proceedings
    8.A.8.  Dividend
    Policy
         68




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##### Table of Contents



8.B.  Significant
    Changes    ITEM 9.
    THE
    OFFER AND LISTING 9.A.  Offering
    and Listing Details    Average DailyHigh


Low


Trading Volume(In thousand of ADSs)2010First quarter (from March 26)

$
15.50


$
13.49



2,192.8Second quarter


18.58



13.81



125.3Third quarter


25.95



14.26



102.2Fourth quarter


27.50



19.18



285.2October


27.50



21.67



240.1November


24.98



20.43



317.3December


23.98



19.18



298.22011January


24.47



20.00



274.3February


20.20



16.00



240.1March


19.90



15.90



301.0April (through April 4, 2011)


19.47



17.48



366.0  9.B.  Plan
    of Distribution   9.C.  Markets   9.D.  Selling
    Shareholders   9.E.  Dilution   9.F.  Expenses
    of the Issue    ITEM 10.
    ADDITIONAL
    INFORMATION 10.A.  Share
    Capital   69




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##### Table of Contents



10.B.  Memorandum
    and Articles of Association  Form F-1 No. 333-165247)
 10.C.  Material
    Contracts   10.D.  Exchange
    Controls   10.E.  Taxation    Cayman
    Islands Taxation
    PRC
    Taxation
  PRC
    taxation on us
  Enterprise Income Tax
    Law, Implementation Regulations of the Enterprise
    Income Tax Law,
  PRC
    taxation of our overseas shareholders
   70




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##### Table of Contents



U.S.
    Federal Income Tax Considerations
   71




---



##### Table of Contents




    certain financial institutions;
    dealers or traders in securities who use a
    mark-to-market
    method of tax accounting;
    persons holding ordinary shares or ADSs as part of a hedging
    transaction, straddle, wash sale, conversion transaction or
    integrated transaction or persons entering into a constructive
    sale with respect to the ordinary shares or ADSs;
    persons whose functional currency for U.S. federal income
    tax purposes is not the U.S. dollar;
    entities classified as partnerships for U.S. federal income
    tax purposes;
    tax-exempt entities, including individual retirement
    accounts or Roth IRAs;
    persons that own or are deemed to own ten percent or more of our
    voting stock;
    persons who acquired our ordinary shares or ADSs pursuant to the
    exercise of an employee stock option or otherwise as
    compensation; or
    persons holding shares in connection with a trade or business
    conducted outside of the United States.        
    a citizen or resident of the United States;
    a corporation, or other entity taxable as a corporation, created
    or organized in or under the laws of the United States, any
    state therein or the District of Columbia; or
    an estate or trust the income of which is subject to
    U.S. federal income taxation regardless of its source.     72




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##### Table of Contents



Taxation
    of Distributions
  pro rata
    Sale
    or Other Disposition of Ordinary Shares or ADSs
  U.S.-source
   73




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##### Table of Contents



Passive
    Foreign Investment Company Rules
  non-U.S. corporation non-U.S. corporation
    mark-to-market mark-to-market mark-to-market mark-to-market
      Information
    Reporting and Backup Withholding
  non-U.S. person,
 74




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##### Table of Contents



Form W-9.
   10.F.  Dividends
    and Paying Agents   10.G.  Statement
    by Experts   10.H.  Documents
    on Display  Form 20-F 1-800-SEC-0330.
   10.I.  Subsidiary
    Information    ITEM 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
   75




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##### Table of Contents



Foreign
    Exchange Risk
      Inflation
    ITEM 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES 12.A.  Debt
    Securities   12.B.  Warrants
    and Rights   12.C.  Other
    Securities   76




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##### Table of Contents



12.D.  American
    Depositary Shares  Fees and
    Charges Our ADS holders May Have to Pay
    Service

Fees   Issuance of ADSs

Up to U.S. 5¢ per ADS issued   Cancellation of ADSs

Up to U.S. 5¢ per ADS canceled   Distribution of cash dividends or other
    cash distributions

Up to U.S. 5¢ per ADS held   Distribution of ADSs pursuant to stock
    dividends, free stock distributions or exercise of rights

Up to U.S. 5¢ per ADS held   Distribution of securities other than
    ADSs or rights to purchase additional ADSs

Up to U.S. 5¢ per ADS held   Depositary Services

Up to U.S. 5¢ per ADS held on the applicable record date(s)
    established by the Depositary (U.S. 2¢ per ADS for the year
    of 2010)     
    Fees for the transfer and registration of ordinary shares
    charged by the registrar and transfer agent for the ordinary
    shares in the Cayman Islands (i.e., upon deposit and
    withdrawal of ordinary shares).
    Expenses incurred for converting foreign currency into
    U.S. dollars.
    Expenses for cable, telex and fax transmissions and for delivery
    of securities.
    Taxes and duties upon the transfer of securities (i.e.,
    when ordinary shares are deposited or withdrawn from deposit).
    Fees and expenses incurred in connection with the delivery or
    servicing of ordinary shares on deposit.    i.e.
     77




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##### Table of Contents



Fees and
    Other Payments Made by the Depositary to Us
   PART II  ITEM 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    ITEM 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS    ITEM 15.
    CONTROLS
    AND PROCEDURES    Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Changes
    in Internal Control Over Financial Reporting
    
    we hired additional individuals with the appropriate level of
    U.S. GAAP and SEC reporting expertise and experience;
    we increased our in-house expertise and reporting capabilities
    through regular training for our accounting personnel; and
    we implemented additional control procedures and started to
    prepare an accounting policy manual.  ITEM 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT  Form 20-F, Rule 10A-3
  ITEM 16B.
    CODE
    OF ETHICS   78




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##### Table of Contents



Form F-1 No. 333-165247) http://ir.htinns.com/
  ITEM 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    de minimis
    Year Ended December 31,Services

2009


2010US$


US$(In thousands)Audit Fees(1)

$
650


$
380Audit-Related Fees






Tax Fees






All Other Fees






Total

$
650


$
380       ITEM 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES    ITEM 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS    ITEM 16F.
    CHANGE
    IN REGISTRANTS CERTIFYING ACCOUNTANT    ITEM 16G.
    CORPORATE
    GOVERNANCE   79




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
    We follow home country practice that permits our independent
    directors not to hold regularly scheduled meetings at which only
    independent directors are present in lieu of complying with
    Rule 5605(b)(2).
    We follow home country practice that permits our board of
    directors not to implement a nominations committee, in lieu of
    complying with Rule 5605(e) of the NASDAQ Rules that
    requires the implementation of a nominations committee.    Form 20-F
 PART III  ITEM 17.
    FINANCIAL
    STATEMENTS    ITEM 18.
    FINANCIAL
    STATEMENTS    ITEM 19.
    EXHIBITS  ExhibitNumber

Description of Document1
.1

Amended and Restated Memorandum and Articles of Association of
    the Registrant, as currently in effect. (Incorporated by
    reference to Exhibits 3.2 from the Amendment No. 1 to
    our Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 12, 2010.)2
.1

Registrants Specimen American Depositary Receipt (included
    in Exhibit 2.3).2
.2

Registrants Specimen Certificate for Ordinary Shares.
    (Incorporated by reference to Exhibit 4.2 from our
    Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.) 80




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##### Table of Contents



ExhibitNumber

Description of Document2
.3

Form of Deposit Agreement among the Registrant, the Depositary
    and all Holders and Beneficial Owners of the American Depositary
    Shares issued thereunder. (Incorporated by reference to
    Exhibits 4.3 from the Amendment No. 1 to our
    Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 12, 2010.)4
.1

Amended and Restated 2007 Global Share Plan, amended and
    restated as of December 12, 2007. (Incorporated by
    reference to Exhibit 10.1 from our Registration Statement
    on
    Form F-1
    (file no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.2

Amended and Restated 2008 Global Share Plan, amended and
    restated as of October 31, 2008. (Incorporated by reference
    to Exhibit 10.2 from our Registration Statement on
    Form F-1
    (file no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.3

Amended and Restated 2009 Share Incentive Plan, amended and
    restated as of October 1, 2009. (Incorporated by reference
    to Exhibit 10.3 from our Registration Statement on
    Form F-1
    (file no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.4

Amendment to the Amended and Restated 2009 Share Incentive
    Plan, amended as of August 26, 2010. (Incorporated by
    reference to Exhibit 99.2 from our report on
    Form 6-K
    filed with the Securities and Exchange Commission on
    July 15, 2010.)4
.5

Form of Indemnification Agreement with the Registrants
    Directors. (Incorporated by reference to Exhibit 10.4 from
    our Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.6

Form of Employment Agreement between the Registrant and
    Executive Officers of the Registrant. (Incorporated by reference
    to Exhibit 10.5 from our Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.7

Facility Agreement between China Merchants Bank and HanTing
    Xingkong (Shanghai) Hotel Management Co., Ltd., dated June 19,
    2009. (Incorporated by reference to Exhibit 10.6 from our
    Registration Statement on Form F-1 (file no. 333-165247) filed
    with the Securities and Exchange Commission on March 5, 2010.)4
.8

Fixed Assets Loan Agreement between the Industrial and
    Commercial Bank of China and Shanghai HanTing Hotel Management
    Group, Ltd. (formerly known as Lishan Senbao (Shanghai)
    Investment Management Co., Ltd.), dated September 22, 2008.
    (Incorporated by reference to Exhibit 10.7 from our
    Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.9

Fixed Assets Loan Contract between the Industrial and Commercial
    Bank of China and HanTing Xingkong (Shanghai) Hotel Management
    Co., Ltd., dated January 4, 2010. (Incorporated by
    reference to Exhibit 10.8 from our Registration Statement
    on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)4
.10

Subscription Agreement between the Registrant and Ctrip.com
    International, Ltd., dated March 12, 2010. (Incorporated by
    reference to Exhibit 10.9 from the Amendment No. 1 to
    our Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 12, 2010.)4
.11

Investor and Registration Rights Agreement between the
    Registrant and Ctrip.com International, Ltd., dated
    March 12, 2010. (Incorporated by reference to
    Exhibit 10.10 from the Amendment No. 1 to our
    Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 12, 2010.)8
.1*

Subsidiaries of the Registrant.11
.1

Code of Business Conduct and Ethics of the Registrant.
    (Incorporated by reference to Exhibit 99.1 from our
    Registration Statement on
    Form F-1
    (file
    no. 333-165247)
    filed with the Securities and Exchange Commission on
    March 5, 2010.)12
.1*

Certification of Tuo (Matthew) Zhang, Chief Executive Officer of
    China Lodging Group, Limited, pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002. 81




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##### Table of Contents



ExhibitNumber

Description of Document12
.2*

Certification of Min (Jenny) Zhang, Chief Financial Officer of
    China Lodging Group, Limited, pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.13
.1*

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.23
.2*

Consent of Deloitte Touche Tohmatsu CPA Ltd., Independent
    Registered Public Accounting Firm.     *
    
    Filed with this Annual Report on
    Form 20-F. 82




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##### Table of Contents



SIGNATURES
  Form 20-F
    By:
    /s/ Tuo (Matthew) Zhang   Title:
    Chief Executive Officer   83




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
 DECEMBER
    31, 2008, 2009 AND 2010
  Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2009 and 2010


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2009 and 2010


F-4Consolidated Statements of Changes in Equity
    (Deficit) and Comprehensive Income (Loss) for the Years Ended
    December 31, 2008, 2009 and 2010


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2009 and 2010


F-6Notes to the Consolidated Financial Statements


F-8Financial Statement Schedule I 
    Financial Information for Parent Company


F-30Financial Statement Schedule II 
    Valuation and Qualifying Accounts


F-34  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           810-10-65,
        F-2




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  CONSOLIDATED BALANCE SHEETS (In Renminbi, except share  data, unless otherwise stated)
  As of December 31,2009


2010


2010US$(Note 2)ASSETSCurrent assets:Cash and cash equivalents


270,587,296



1,060,066,663



160,616,161Restricted cash


500,000



1,275,000



193,182Short-term investments






100,000,000



15,151,515Accounts receivable, net of allowance of RMB675,643 and
    RMB778,402 in 2009 and 2010, respectively


15,157,758



21,535,528



3,262,958Amount due from related parties


4,632,338



3,267,193



495,029Prepaid rent


69,618,106



152,266,699



23,070,712Inventories


8,883,092



18,290,222



2,771,246Other current assets


28,974,813



40,176,914



6,087,411Deferred tax assets


18,272,303



17,939,876



2,718,163Total current assets


416,625,706



1,414,818,095



214,366,377Property and equipment, net


1,028,266,722



1,422,432,435



215,520,066Intangible assets, net


20,394,760



57,348,030



8,689,095Goodwill


18,452,163



41,372,983



6,268,634Other assets


61,170,258



79,953,202



12,114,122Deferred tax assets


36,221,906



28,154,661



4,265,858Total assets


1,581,131,515



3,044,079,406



461,224,152LIABILITIES, MEZZANINE EQUITY AND EQUITYCurrent liabilities:Long-term debt, current portion


57,000,000







Accounts payable


141,570,710



283,202,773



42,909,511Amounts due to related parties


927,584



855,243



129,582Salary and welfare payable


29,596,685



57,638,190



8,733,059Deferred revenue


43,203,003



68,599,015



10,393,790Accrued expenses and other current liabilities


89,383,392



148,925,942



22,564,536Income tax payable


3,869,445



15.121.173



2,291,087Total current liabilities


365,550,819



574,342,336



87,021,565Long-term debt


80,000,000







Deferred rent


174,775,327



237,426,792



35,973,756Deferred revenue


31,557,934



48,444,950



7,340,144Other long-term liabilities


20,452,463



46,619,134



7,063,506Deferred tax liabilities


6,538,231



11,936,950



1,808,629Total liabilities


678,874,774



918,770,162



139,207,600Commitments and contingencies (Note 18)Mezzanine equity:Series B convertible redeemable preferred shares
    (US$0.0001 par value per share; 106,000,000 and nil shares
    authorized as of December 31 2009 and 2010, respectively;
    78,058,919 and nil shares issued and outstanding as of
    December 31, 2009 and 2010, respectively)


796,803,452







Equity:Ordinary shares (US$0.0001 par value per share; 300,000,000
    and 8,000,000,000 shares authorized as of December 31,
    2009 and 2010, respectively; 60,948,013 and
    241,151,755 shares issued and outstanding as of
    December 31, 2009 and 2010, respectively)


46,490



177,687



26,922Series A convertible preferred shares (US$0.0001 par
    value; 44,000,000 and nil shares authorized as of
    December 31, 2009 and 2010, respectively; 44,000,000 and
    nil shares issued and outstanding as of December 31, 2009
    and 2010, respectively)


34,136







Additional paid-in capital


351,994,132



2,168,364,165



328,540,025Accumulated deficit


(245,456,912
)


(29,705,435
)


(4,500,823
)Accumulated other comprehensive loss


(12,529,459
)


(22,702,974
)


(3,439,845
)Total China Lodging Group, Limited shareholders equity


94,088,387



2,116,133,443



320,626,279Noncontrolling interest


11,364,902



9,175,801



1,390,273Total equity


105,453,289



2,125,309,244



322,016,552TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY


1,581,131,515



3,044,079,406



461,224,152    F-3




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  CONSOLIDATED STATEMENTS OF
    OPERATIONS(In Renminbi, except share  data, unless otherwise stated)
  Year Ended December 31,2008


2009


2010


2010US$(Note 2)Revenues:Leased-and-operated
    hotels


797,814,566



1,288,897,954



1,707,771,170



258,753,208Franchised-and-managed
    hotels


12,039,268



44,964,749



130,579,312



19,784,744Total revenues


809,853,834



1,333,862,703



1,838,350,482



278,537,952Less: Business tax and related taxes


45,605,227



73,671,579



99,856,772



15,129,814Net revenues


764,248,607



1,260,191,124



1,738,493,710



263,408,138Operating costs and expenses:Hotel operating costs


687,364,048



1,004,472,153



1,180,202,047



178,818,492Selling and marketing expenses


40,810,261



57,818,168



70,786,401



10,725,212General and administrative expenses


81,665,318



83,665,425



119,988,764



18,180,116Pre-opening expenses


108,062,318



37,821,018



111,209,577



16,849,936Total operating costs and expenses


917,901,945



1,183,776,764



1,482,186,789



224,573,756Income (loss) from operations


(153,653,338
)


76,414,360



256,306,921



38,834,382Interest income


3,786,416



1,870,177



15,944,832



2,415,884Interest expenses


1,248,509



8,787,096



2,682,367



406,420Other income










2,563,774



388,451Foreign exchange gain (loss)


(13,883,784
)


(59,677
)


6,922,811



1,048,911Change in fair value of warrants


8,536,094











Income (loss) before income taxes


(156,463,121
)


69,437,764



279,055,971



42,281,208Tax expense (benefit)


(23,879,778
)


17,989,675



57,261,540



8,675,991Net income (loss)


(132,583,343
)


51,448,089



221,794,431



33,605,217Less: net income attributable to noncontrolling interest


3,579,124



8,903,559



6,042,954



915,599Net income (loss) attributable to ordinary shareholders


(136,162,467
)


42,544,530



215,751,477



32,689,618Net earnings (loss) per share:Basic


(2.52
)


0.24



1.05



0.16Diluted


(2.52
)


0.23



0.92



0.14Weighted average number of shares used in computation:Basic


54,071,135



57,562,440



198,517,280



198,517,280Diluted


54,071,135



183,631,885



234,480,894



234,480,894    F-4




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  CONSOLIDATED STATEMENTS OF CHANGES IN
    EQUITY
 (DEFICIT)
    AND COMPREHENSIVE INCOME (LOSS) (In Renminbi, except share  data, unless otherwise stated)
  Series A


Additional





Accumulated OtherOrdinary Shares


Preferred Shares


Paid-in


Accumulated


Comprehensive


Noncontrolling


Total Equity


ComprehensiveShare


Amount


Share


Amount


Capital


Deficit


Income (loss)


Interest


(Deficit)


Income (Loss)Balance at January 1, 2008


54,071,135



41,792



44,000,000



34,136



260,251,508



(151,838,975
)


(5,667,361
)


2,333,179



105,154,279Share-based compensation


















4,815,022















4,815,022Capital contribution from noncontrolling interests holders






























580,000



580,000Acquisitions of noncontrolling interest






























627,615



627,615Net income (loss)






















(136,162,467
)






3,579,124



(132,583,343
)


(136,162,467
)Dividend paid to noncontrolling interest






























(1,008,333
)


(1,008,333
)Foreign currency translation adjustments


























(6,826,519
)






(6,826,519
)


(6,826,519
)Balance at December 31, 2008


54,071,135



41,792



44,000,000



34,136



265,066,530



(288,001,442
)


(12,493,880
)


6,111,585



(29,241,279
)


(142,988,986
)Issuance of ordinary shares


6,141,878



4,195











75,702,439















75,706,634Issuance of ordinary shares upon exercise of option


735,000



503











3,764,755















3,765,258Share-based compensation


















7,955,166















7,955,166Acquisitions of noncontrolling interest


















(494,758
)










(1,450,242
)


(1,945,000
)Net income






















42,544,530







8,903,559



51,448,089



42,544,530Dividend paid to noncontrolling interest






























(2,200,000
)


(2,200,000
)Foreign currency translation adjustments


























(35,579
)






(35,579
)


(35,579
)Balance at December 31, 2009


60,948,013



46,490



44,000,000



34,136



351,994,132



(245,456,912
)


(12,529,459
)


11,364,902



105,453,289



42,508,951Issuance of ordinary shares to Ctrip.com (Note 17)


7,202,482



4,917











150,566,886-















150,571,803Issuance of ordinary shares upon initial public offering,


41,400,000



28,261











804,820,221















804,848,482Conversion of Series A convertible preferred shares to
    ordinary shares upon completion of initial public offering


44,000,000



34,136



(44,000,000
)


(34,136
)


















Conversion of Series B convertible redeemable preferred
    shares into ordinary shares upon completion of initial public
    offering


78,058,919



57,372











796,746,080















796,803,452Issuance of warrants


















942,292















942,292Acquisitions of noncontrolling interest


















(10,588,212
)










(6,511,505
)


(17,099,717
)Issuance of ordinary shares upon exercise of warrants


1,700,000



1,160











17,871,664















17,872,824Issuance of ordinary shares upon exercise of option


7,842,341



5,351











42,335,897















42,341,248Share-based compensation


















13,113,341















13,113,341Capital contribution from noncontrolling interest






























10,000



10,000Sales of partial ownership interest in one subsidiary


















561,864











568,136



1,130,000Net income






















215,751,477







6,042,954



221,794,431



215,751,477Dividend paid to noncontrolling interest






























(2,298,686
)


(2,298,686
)Foreign currency translation adjustments


























(10,173,515
)






(10,173,515
)


(10,173,515
)Balance at December 31, 2010


241,151,755



177,687











2,168,364,165



(29,705,435
)


(22,702,974
)


9,175,801



2,125,309,244



205,577,962    F-5




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS (In Renminbi, except share  data, unless otherwise stated)
  Year Ended December 31,2008


2009


2010


2010US$(Note 2)Operating activities:Net income (loss)


(132,583,343
)


51,448,089



221,794,431



33,605,217Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Share-based compensation


4,815,022



7,955,166



13,113,341



1,986,870Depreciation and amortization


90,835,965



145,571,393



171,538,603



25,990,697Deferred taxes


(34,126,710
)


7,957,146



9,227,695



1,398,136Bad debt expenses


423,368



1,252,275



102,759



15,570Change in the fair value of warrants


(8,536,094
)










Deferred rent


92,123,365



36,567,889



70,761,328



10,721,413Impairment loss






1,947,873







Changes in operating assets and liabilities, net of effect of
    acquisitions:Accounts receivable


(8,891,721
)


(2,848,180
)


(6,480,529
)


(981,898
)Prepaid rent


(35,792,771
)


6,528,111



(82,648,593
)


(12,522,514
)Inventories


(12,823,253
)


13,767,424



(9,407,130
)


(1,425,323
)Amount due from related parties






374,203



1,365,145



206,840Other current assets


2,133,771



(16,873,489
)


(13,403,682
)


(2,030,861
)Other assets


(18,280,632
)


(8,694,549
)


(17,840,652
)


(2,703,129
)Accounts payable


(8,938,700
)


4,254,720



3,477,749



526,932Amount due to related parties


668,275



(581,276
)


(72,341
)


(10,961
)Salary and welfare payables


20,023,538



(4,158,285
)


28,041,505



4,248,713Deferred revenue


25,032,969



42,612,045



42,283,028



6,406,519Accrued expenses and other current liabilities


3,125,029



(1,994,232
)


16,290,019



2,468,185Income tax payable


2,120,195



(1,259,217
)


11,251,728



1,704,807Other long-term liabilities


4,934,203



12,512,907



9,731,779



1,474,512Net cash provided by (used in) operating activities


(13,737,524
)


296,340,013



469,126,183



71,079,725Investing activities:Purchases of property and equipment


(469,501,431
)


(263,775,540
)


(397,251,769
)


(60,189,662
)Purchases of intangibles


(848,077
)


(1,005,300
)


(7,629,735
)


(1,156,020
)Amount received as a result of government zoning






3,280,000







Acquisitions, net of cash received


(1,619,753
)






(9,653,000
)


(1,462,576
)Collection of amount due from related parties


2,327,032



377,139







Purchase of short-term investments










(430,000,000
)


(65,151,515
)Proceeds from sales of short-term investments










330,000,000



50,000,000Decrease (increase) in restricted cash


18,052,764



5,097,087



(775,000
)


(117,424
)Net cash used in investing activities


(451,589,465
)


(256,026,614
)


(515,309,504
)


(78,077,197
)  F-6




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued) (In Renminbi, except share  data, unless otherwise stated)
  Year Ended December 31,2008


2009


2010


2010US$(Note 2)Financing activities:Proceeds from issuance of ordinary shares






54,945,161



959,103,724



145,318,746Ordinary share issuance costs, net of exisiting shareholder
    reimbursements










3,930,236



595,490Net proceeds from issuance of Series B preferred shares


270,804,804











Net proceeds from exercise of warrants


74,274,859







17,872,824



2,708,004Net proceeds from issuance of ordinary shares upon exercise of
    option






3,765,258



41,124,859



6,231,039Proceeds from short-term debt


262,200,000



150,000,000







Repayment of short-term debt


(220,000,000
)


(230,000,000
)






Proceeds from long-term debt


30,000,000



142,000,000



70,000,000



10,606,061Repayment of long-term debt


(500,000
)


(34,500,000
)


(207,000,000
)


(31,363,637
)Funds advanced from noncontrolling interest holders


6,749,121



14,215,330



2,778,484



420,982Repayment of funds advanced from noncontrolling interest holders


(3,483,400
)


(7,930,550
)


(23,715,521
)


(3,593,261
)Acquisitions of noncontrolling interest






(1,945,000
)


(17,099,717
)


(2,590,865
)Proceeds from sales of partial ownership interest in one
    subsidiary










1,130,000



171,212Repayment of amounts due to related parties


(402,861
)










Contribution from noncontrolling interest holders


580,000







10,000



1,515Deposits received for share subscription


105,264,538











Refund of deposits of share subscription


(42,000,000
)


(42,503,065
)






Dividend paid to noncontrolling interest holders


(1,008,333
)


(2,200,000
)


(2,298,686
)


(348,286
)Deposits received for exercise of options






1,216,389







Net cash provided by financing activities


482,478,728



47,063,523



845,836,203



128,157,000Effect of exchange rate changes on cash and cash equivalents


(7,541,319
)


(35,579
)


(10,173,515
)


(1,541,442
)Net increase in cash and cash equivalents


9,610,420



87,341,343



789,479,367



119,618,086Cash and cash equivalents at the beginning of the year


173,635,533



183,245,953



270,587,296



40,998,075Cash and cash equivalents at the end of the year


183,245,953



270,587,296



1,060,066,663



160,616,161Supplemental disclosure of cash flow information:Interest paid


7,840,117



10,473,755



4,074,537



617,354Income taxes paid


6,306,496



11,315,848



36,782,118



5,573,048Supplemental schedule of non-cash investing and financing
    activities:Issuance of Series B preferred shares in exchange for
    amounts due to related parties


13,894,400











Purchases of property and equipment included in payable


170,897,262



125,410,282



269,814,506



40,880,986Issuance of ordinary shares from subscription deposit






20,761,473







Consideration payable for business acquisition










54,047,000



8,188,939Purchase of intangible assets included in payables










12,277,881



1,860,285Payment of ordinary share issuance costs through utilization of
    prepayment and amount included in payables










7,613,675



1,153,587Reimbursement of government zoning included in receivables










4,400,000



666,667Issuance of ordinary shares upon exercise of options from
    subscription deposit










1,216,389



184,301Issuance warrant for acquisition of noncontrolling interest










7,067,187



1,070,786    F-7




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  1.
    ORGANIZATION
    AND PRINCIPAL ACTIVITIES  leased-and-operated franchised-and-managed
  Leased-and-operated
    hotels
      leased-and-operated
  Franchised-and-managed
    hotels
  franchised-and-managed franchise-and-management
  franchised-and-managed
  2.
    SUMMARY
    OF PRINCIPAL ACCOUNTING POLICIES  Basis
    of presentation
    Basis
    of consolidation
     F-8




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  franchised-and-managed franchised-and-managed
  Use of
    estimates
    Cash
    and cash equivalents
    Restricted
    cash
    Short-term
    investments
    Accounts
    receivable, net of allowance
    Inventories
   F-9




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  Property
    and equipment, net
    Leasehold improvements

Shorter of the lease term or their estimated useful livesBuildings

40 yearsFurniture, fixtures and equipment

3-5 yearsMotor vehicles

5 years       Intangible
    assets, net and unfavorable lease
      Goodwill
      leased-and-operated
 F-10




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  Impairment
    of long-lived assets
  leased-and-operated
  Accruals
    for customer loyalty program
    Deferred
    revenue
  franchise-and-management
  Revenue
    recognition
  leased-and-operated
  franchised-and-managed franchise-and-management franchise-and-management
 F-11




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
      Business
    tax and related taxes
    Advertising
    and promotional expenses
    Government
    grants
    Leases
    Capitalization
    of interest
    Income
    taxes
   F-12




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
    Foreign
    currency translation and comprehensive income
    (loss)
      Concentration
    of credit risk
    held-to-maturity
  Fair
    value
       F-13




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
        Warrants
    Share-based
    compensation
    At December 31,2008


2009


2010Hotel operating costs


115,576



523,208



1,554,907Selling and marketing expenses


178,090



465,239



778,268General and administrative expenses


4,521,356



6,966,719



10,780,166Total


4,815,022



7,955,166



13,113,341   Earnings
    (Loss) per share
   F-14




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  Segment
    reporting
    Recently
    issued accounting pronouncements
  2010-28, 2010-28 2010-28
  2010-29, 2010-29 2010-29
  Translation
    into United States Dollars
   F-15




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  3.
    ACQUISITIONS  leased-and-operated
    2010


Amortization periodCash


33,000Property and equipment


25,549,876


5-10 yearsFavorable lease


20,800,000


remaining lease termDeferred tax assets


229,304Goodwill


22,920,820Unfavorable lease


(1,600,000
)

remaining lease termFranchise agreements


600,000


remaining franchise
    agreement termDeferred tax liabilities


(4,800,000
)Total


63,733,000   (ii)
  2009


2010Cash consideration


1,945,000



17,099,717Fair value of warrants






7,067,187Total consideration


1,945,000



24,166,904      F-16




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  4.
    PROPERTY
    AND EQUIPMENT, NET    As of December 31,2009


2010Cost:Buildings


11,859,649



11,859,649Leasehold improvements


1,096,753,728



1,479,969,514Furniture, fixtures and equipment


182,790,955



249,064,786Motor vehicles


191,967



5,7981,291,596,299



1,740,899,747Less: Accumulated depreciation


(277,529,412
)


(441,053,871
)1,014,066,887



1,299,845,876Construction in progress


14,199,835



122,586,559Property and equipment, net


1,028,266,722



1,422,432,435     leased-and-operated
  leased-and-operated
  leased-and-operated
 F-17




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  5.
    INTANGIBLE
    ASSETS, NET AND UNFAVORABLE LEASE    As of December 31,2009


2010Favorable lease agreements


21,538,254



61,309,117Purchased software


3,985,377



4,922,130Total


25,523,631



66,231,247Less: Accumulated amortization


(5,128,871
)


(8,883,217
)Total


20,394,760



57,348,030     As of December 31,2009


2010Unfavorable lease agreements


2,323,897



3,923,897Less: Accumulated amortization


(788,913
)


(1,094,902
)Unfavorable lease agreements, net


1,534,984



2,828,995         Amortization for


Amortization forIntangible Assets


Unfavorable Lease


Net Amortization2011


5,738,649



(452,732
)


5,285,9172012


5,735,388



(452,732
)


5,282,6562013


5,689,726



(354,082
)


5,355,6442014


5,564,583



(313,709
)


5,250,8742015


5,466,218



(304,854
)


5,161,364Thereafter


29,153,466



(950,886
)


28,202,58057,348,030



(2,828,995
)


54,519,035  F-18




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  6.
    GOODWILL    Gross


Accumulated


NetAmount


Impairment Loss


AmountBalance at January 1, 2008


15,691,670







15,691,670Increase in goodwill related to acquisitions


3,858,468







3,858,468Impairment losses recognized










Balance at December 31, 2008


19,550,138







19,550,138Impairment losses recognized






(1,097,975
)


(1,097,975
)Balance at December 31, 2009


19,550,138



(1,097,975
)


18,452,163Increase in goodwill related to acquisitions


22,920,820







22,920,820Impairment losses recognized










Balance at December 31, 2010


42,470,958



(1,097,975
)


41,372,983   7.
    DEBT    As of December 31,2009


2010Borrowings:Long-term debt, current portion


57,000,000



Long-term debt


80,000,000



Total


137,000,000



        F-19




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
      8.
    ACCRUED
    EXPENSES AND OTHER CURRENT LIABILITIES  As of December 31,2009


2010Payable for business acquisitions






49,684,000Business taxes and other subcharge payables


12,471,140



18,961,505Accrual for customer loyalty program


1,875,817



4,119,941Payable to noncontrolling interest holders


31,452,902



10,515,865Other payables


11,108,184



19,849,818Accrued rental


11,562,013



15,379,302Accrued utilities


12,235,690



13,914,181Other accrued expenses


8,677,646



16,501,330Total


89,383,392



148,925,942     9.
    PREFERRED
    SHARES, WARRANT I and WARRANT II             F-20




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
    one-to-one
    Dividends
    Voting
    Rights
    Conversion
        Redemption
      Liquidation
    Preferences
   F-21




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  Investor
    Put Option
    10.
    HOTEL
    OPERATING COSTS  leased-and-operated franchised-and-managed
  Year Ended December 31,2008


2009


2010Rent


263,332,528



418,543,806



476,099,612Utilities


59,476,726



90,034,744



108,208,012Personnel cost


137,230,935



169,248,048



210,906,436Depreciation and amortization


92,838,032



141,599,824



163,125,198Consumable, food and beverage


82,662,332



119,055,974



145,316,505Others


51,823,495



65,989,757



76,546,284Total


687,364,048



1,004,472,153



1,180,202,047   11.
    PRE-OPENING
    EXPENSES  start-up
  Year Ended December 31,2008


2009


2010Rents


77,764,122



29,906,758



88,176,434Personnel cost


16,401,710



3,584,149



5,214,363Others


13,896,486



4,330,111



17,818,780Total


108,062,318



37,821,018



111,209,577   12.
    SHARE-BASED
    COMPENSATION   F-22




---



##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
          2008

2009

2010Suboptimal exercise factor

2.5

2.5

2.5 to 4.24Risk-free interest rate

5.22 to 5.58%

3.95 to 4.58%

3.58 to 4.50%Volatility

41.77 to 43.30%

52.33 to 55.12%

45.36 to 51.42%Dividend yield





Life of option

10 years

10 years

10 years     Weighted-Weighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicOptions


Price


Life


ValueUS$


Years


US$Share options outstanding at January 1, 2010


17,966,473



1.13Granted


767,595



3.19Forfeited/Cancelled


(234,898
)


1.53Exercised


(7,842,341
)


0.79Share options outstanding at December 31, 2010


10,656,829



1.52



8.02



41,828,190Share options vested or expected to vest at December 31,
    2010


9,903,484



1.51



7.99



38,996,578Share options exercisable at December 31, 2010


3,241,669



1.13



6.73



14,005,507  F-23




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
    13.
    EARNINGS
    (LOSS) PER SHARE    Year Ended December 31,2008


2009


2010Net income (loss) attributable to ordinary
    shareholders  basic


(136,162,467
)


13,634,052



207,814,052Amounts allocated to preferred shares for participating rights
    to dividends






28,910,478



7,937,425Net income (loss) attributable to ordinary
    shareholders  diluted


(136,162,467
)


42,544,530



215,751,477Weighted average ordinary shares outstanding  basic


54,071,135



57,562,440



198,517,280Incremental weighted-average ordinary shares from assumed
    exercise of share options using the treasury stock method






4,010,526



6,201,302Preferred shares






122,058,919



29,762,312Weighted average ordinary shares outstanding  diluted


54,071,135



183,631,885



234,480,894Basic earnings (loss) per share


(2.52
)


0.24



1.05Diluted earnings (loss) per share


(2.52
)


0.23



0.92     Year Ended December 31,2008


2009


2010Series A convertible preferred shares


44,000,000







Series B convertible redeemable preferred shares


78,058,919







Outstanding employee options


12,677,410



11,260,935



Total


134,736,329



11,260,935



   14.
    INCOME
    TAXES  Cayman
    Islands
    Hong
    Kong
   F-24




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  Singapore
    PRC
            As of December 31,2008


2009


2010Current Tax


10,246,932



10,032,529



48,033,845Deferred Tax


(34,126,710
)


7,957,146



9,227,695Total


(23,879,778
)


17,989,675



57,261,540     Year Ended December 31,2008


2009


2010PRC statutory tax rate


25
%


25
%


25
%Tax effect of other expenses that are not deductible in
    determining taxable profit


(1
)%


3
%


Effect of different tax rate of group entities operating in
    other jurisdictions


(2
)%


1
%


(2
)%Effect of change in valuation allowance


(7
)%


(3
)%


(1
)%Other










(1
)%Effective tax rate


15
%


26
%


21
%  F-25




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
    As of December 31,2009


2010Deferred tax assets:Net loss carryforward


45,046,819



22,386,789Pre-opening expenses


1,341,553



890,558Deferred revenue


11,346,999



18,013,520Deferred rent


7,756,106



4,548,056Unfavorable lease


226,677



764,780Bad debt provision


168,911



194,601Accrual for customer loyalty program


468,954



1,029,985Accrued payroll






2,069,035Share-based compensation






4,444,516Valuation allowance


(11,861,810
)


(8,247,303
)Total deferred tax assets


54,494,209



46,094,537Deferred tax liabilities:Favorable lease


4,100,055



9,461,063Capitalized interest


2,438,176



2,475,887Total deferred tax liabilities


6,538,231



11,936,950Deferred tax assets are analyzed as:Current


18,272,303



17,939,876Non-Current


36,221,906



28,154,66154,494,209



46,094,537Deferred tax liabilities are analyzed as:Current






Non-current


6,538,231



11,936,9506,538,231



11,936,950       
    Future reversals of existing taxable temporary differences;
    Further taxable income exclusive of reversing temporary
    differences and carryforwards;
    Future taxable income arising from implementing tax planning
    strategies. F-26




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
       15.
    MAINLAND
    CHINA CONTRIBUTION PLAN    16.
    RESTRICTED
    NET ASSETS    17.
    RELATED
    PARTY TRANSACTIONS AND BALANCES     F-27




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
    Related Party

Nature of the Party

Relationship with the GroupLishan Property (Suzhou) Co., Ltd. (Suzhou Property)

Commercial leasing business

Controlled by Qi JiCtrip.com International, Ltd. (Ctrip.com)

Online travel services provider

Qi Ji is a directorPowerhill Holding Limited. (Powerhill)

Investment Company

Controlled by Qi JiWinner Crown Holdings Limited. (Winner Crown)

Investment Company

Controlled by Qi JiQi Ji

Founder

Founder   (a)
    Related
    party balances    At December 31,2009

2010Suzhou Property


4,632,338



3,267,193     At December 31,2009


2010Ctrip.com


927,584



855,243   (b)
    Related
    party transactions    Year Ended December 31,2008


2009


2010Rental expense  Suzhou Property


3,542,963



3,613,509



3,640,386Commission expenses  Ctrip.com


7,515,618



9,949,158



9,457,512        F-28




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##### Table of Contents



CHINA
    LODGING GROUP, LIMITED
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 and 2010
 (In Renminbi, except share  data, unless
    otherwise stated)
  18.
    COMMITMENTS
    AND CONTINGENCIES  (a)
    Operating
    lease commitments      Year ending December 31,2011


610,877,7212012


668,409,0132013


671,989,2872014


679,771,0742015


671,930,789Thereafter


4,386,566,896Total


7,689,544,780   (b)
    Purchase
    Commitments    (c)
    Contingencies   F-29




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##### Table of Contents



ADDITIONAL
    FINANCIAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE
    I
 CHINA LODGING GROUP, LIMITED
 FINANCIAL INFORMATION FOR PARENT COMPANY
  BALANCE SHEETS  (In Renminbi, except share  data, unless otherwise stated)
   As of December 31,2009


2010


2010US$(Note 2)AssetsCurrent assets:Cash and cash equivalents


8,847,298



39,897,975



6,045,148Amounts due from subsidiaries


13,654,400







Prepayments and other current assets


51,827,668



12,626,039



1,913,036Total current assets


74,329,366



52,524,014



7,958,184Other assets






785,243



118,976Investment in subsidiaries


817,568,539



2,070,342,421



313,688,246Total assets


891,897,905



2,123,651,678



321,765,406Liabilities, mezzanine equity and equityCurrent liabilities:Deferred revenue






1,576,514



238,866Accrued expenses and other current liabilities


1,006,068



818,051



123,947Total current liabilities


1,006,068



2,394,565



362,813Deferred revenue






5,123,670



776,314Total liabilities


1,006,068



7,518,235



1,139,127Mezzanine equity:Series B convertible redeemable preferred shares
    (US$0.0001 par value per share; 106,000,000 and nil shares
    authorized as of December 31, 2009 and 2010, respectively;
    78,058,919 and nil shares issued and outstanding as of
    December 31, 2009 and 2010, respectively)


796,803,452







Equity:Ordinary shares (US$0.0001 par value per share; 300,000,000
    and 8,000,000,000 shares authorized as of December 31,
    2009 and 2010, respectively; 60,948,013 and
    241,151,755 shares issued and outstanding as of
    December 31, 2009 and 2010, respectively)


46,490



177,687



26,922Series A convertible preferred shares (US$0.0001 par
    value per share; 44,000,000 and nil shares authorized as of
    December 31, 2009 and 2010, respectively; 44,000,000 and
    nil shares issued and outstanding as of December 31, 2009
    and 2010, respectively)


34,136







Additional paid-in capital


351,994,132



2,168,364,165



328,540,025Accumulated deficit


(245,456,912
)


(29,705,435
)


(4,500,823
)Accumulated other comprehensive loss


(12,529,459
)


(22,702,974
)


(3,439,845
)Total equity


94,088,387



2,116,133,443



320,626,279Total liabilities, mezzanie equity and equity


891,897,907



2,123,651,678



321,765,406   F-30




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##### Table of Contents



ADDITIONAL
    FINANCIAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE
    I
 CHINA LODGING GROUP, LIMITED
 FINANCIAL INFORMATION FOR PARENT COMPANY
  STATEMENTS OF OPERATIONS  (In Renminbi, except share  data, unless otherwise stated)
  Year Ended December 312008


2009


2010


2010US$(Note 2)Operating costs and expenses:Selling and marketing expenses










157,049



23,795General and administrative expenses


7,756,402



9,663,763



13,484,508



2,043,108Total operating costs and expenses


7,756,402



9,663,763



13,641,557



2,066,903Loss from operations


(7,756,402
)


(9,663,763
)


(13,641,557
)


(2,066,903
)Interest income


1,178,661



13,097



813,587



123,271Foreign exchange loss


(10,478,098
)






(547,167
)


(82,904
)Change in fair value of warrants


8,536,094











Other income










3,027,717



458,745Income (loss) in investment in subsidiaries


(127,642,722
)


52,195,196



226,098,897



34,257,409Net income (loss) attributable to ordinary share holders


(136,162,467
)


42,544,530



215,751,477



32,689,618   F-31




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##### Table of Contents



ADDITIONAL
    FINANCIAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE
    I
 CHINA LODGING GROUP, LIMITED
 FINANCIAL INFORMATION FOR PARENT COMPANY
  STATEMENTS OF CASH FLOWS  (In Renminbi, except share  data, unless otherwise stated)
  Year Ended December 31,2008


2009


2010


2010US$(Note 2)Operating activities:Net income (loss)


(136,162,467
)


42,544,530



215,751,477



32,689,618Adjustments to reconcile net income (loss) to net cash used in
    operating activities:Share-based compensation


4,815,022



7,955,166



13,113,341



1,986,870Change in the fair value of warrants


(8,536,094
)










Loss (income) in investment in subsidiaries


127,642,722



(52,195,196
)


(226,098,897
)


(34,257,409
)Changes in operating assets and liabilities:Deferred revenue










6,700,184



1,015,179Prepayments and other current assets


136,564



(487,056
)


(18,583,514
)


(2,815,684
)Salary and welfare payable


1,075,237



(1,075,237
)






Accrued expenses and other current liabilities


(2,677,694
)


(264,466
)


16,280



2,467Net cash provided by (used in) operating activities


(13,706,710
)


(3,552,259
)


(9,101,129
)


(1,378,959
)Investing activities:Collection from amount due from subsidiaries










13,654,400



2,068,849Investment in subsidiaries


(465,162,510
)


(51,340,612
)


(979,345,836
)


(148,385,733
)Net cash used in investing activities


(465,162,510
)


(51,340,612
)


(965,691,436
)


(146,316,884
)Financing activities:Proceeds from issuance ordinary shares






54,945,161



959,103,724



145,318,746Ordinary share issuance costs, net of exisiting shareholder
    reimbursements










3,930,236



595,490Net proceeds from issuance of ordinary shares upon exercise of
    option






3,765,258



41,124,859



6,231,039Net proceeds from issuance of Series B preferred shares


270,804,804











Net proceeds from issuance of Series B preferred shares
    upon warrant exercise


74,274,859











Net proceeds from exercise of warrants










17,872,824



2,708,004Deposits received for share subscription


22,264,538











Refund of deposit for share subscription






(1,503,065
)






Deposit received for exercise of option






1,006,068







Net cash provided by financing activities


367,344,201



58,213,422



1,022,031,643



154,853,279Effect of exchange rate changes on cash and cash equivalents


(6,601,319
)


(20,029
)


(16,188,401
)


(2,452,788
)Net increase (decrease) in cash and cash equivalents


(118,126,338
)


3,330,522



31,050,677



4,704,648Cash and cash equivalents at the beginning of the year


123,643,114



5,516,776



8,847,298



1,340,500Cash and cash equivalents at the end of the year


5,516,776



8,847,298



39,897,975



6,045,148Supplemental schedule of non-cash investing and financing
    activities:Issuance of Series B preferred shares in exchange of
    advance from related party


13,894,400











Issuance of ordinary shares from subscription deposit






20,761,473







Payment of ordinary share issuance costs through utilization of
    prepayment and amount included in payables










7,613,675



1,153,587Issuance of ordinary shares upon exercise of options from
    subscription deposit










1,216,389



184,301Issuance warrant for acquisition of noncontrolling interest










7,067,187



1,070,786    F-32




---



##### Table of Contents



ADDITIONAL
    FINANCIAL INFORMATION  FINANCIAL STATEMENTS
    SCHEDULE I
    CHINA LODGING GROUP, LIMITED
    FINANCIAL INFORMATION FOR PARENT COMPANY
  Note to
    Schedule I
  Rule 12-04(a) Regulation S-X,
     F-33




---



##### Table of Contents



ADDITION
    INFORMATION  FINANCIAL STATEMENTS
    SCHEDULE II



CHINA
    LODGING GROUP, LIMITED



This financial information has been prepared in conformity with
    accounting principles generally accepted in the United States.



VALUATION
    AND QUALIFYING ACCOUNT Balance at


Charge to Costs and


Charge Taken


Balance at end ofBeginning of Year


Expenses


Against Allowance


Year(In Renminbi)Allowance for doubtful accounts of accounts receivables and
    other receivables:December 31, 2008


500,000



423,368







923,368December 31, 2009


923,368



1,252,275







2,175,643December 31, 2010


2,175,643



102,759







2,278,402Valuation allowance for deferred tax assetsDecember 31, 2008


2,673,904



10,836,969







13,510,873December 31, 2009


13,510,873



8,472,009



(10,121,072
)


11,861,810December 31, 2010


11,861,810



3,856,639



(7,471,146
)


8,247,303    F-34