Question-and-Answer Session
Operator
(Operator instructions). Your first question comes from the line of Paul Keung from Oppenheimer. Please proceed.
Paul Keung – Oppenheimer
Hi, David. Hi, May. Hi, Ethan.
David Sun
Hi, Paul.
May Wu
Hi.
Paul Keung – Oppenheimer
Looking at your portfolio right now, roughly what percent of those hotels would you consider to be cash flow positive in the fourth quarter or in the year, or may be asked another way, sort of what stages, how would you segment out your portfolio in terms of what (inaudible) and generating cash flow which is hard to replicate?
May Wu
Hi Paul. For the franchised and managed hotels, first of all, we only generate fee revenue, and for the leased and operated hotels, of the 300 plus leased and operated hotels, 131 were new for 2008. So in other words, over one third of the leased and operated hotels are new hotels. And of the reminder two thirds of the leased and operated hotels, I would say 90% are cash flow positive for the full year as well as for the fourth quarter.
Paul Keung – Oppenheimer
What is your estimate of CapEx for the first quarter and 2009, full year 2009?
May Wu
CapEx for the first quarter will be somewhat similar to what we had in the fourth quarter because as we mentioned, of the approximately 65 new leased and operated hotels that we will open in 2009, a majority of that will open in the first half and actually more get towards the first quarter because those are projects that we contracted and started construction in the second half of 2008. However we expect that CapEx to be substantially reduced in the second half of 2009. And on a full-year basis, if you still take the 65 hotels multiply it by the 6 to 7million per hotel, that is the CapEx to be recognized. However one factor that we need to take into account for 2009 is, in 2008, our recognizes CapEx is actually higher than our actual cash CapEx because of the increase in construction payable that as the number of new leased and operated hotel openings reduced in 2009, the construction payable will go down. So total cash outlay will be slightly higher than the CapEx for 65 hotels because there are some residual pay down for the 2008 openings.
Paul Keung – Oppenheimer
Got it. Okay, all right. Thank you.
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