7 Days vs Home Inns: A Tale of Two Hotel Chains?

Budget hotel operator 7 Days (Nasdaq: SVN) has just released its fourth-quarter results and 2011 outloook (results release), and I have to say it looks a bit zippier than industry leader, Home Inns (Nasdaq: HMIN), which reported last week (results release). Whereas Home Inns posted growth mostly in the 10-25 percent range and forecast similar numbers this year, 7 Days is seeing growth more in the 30-plus percentage range. Part of the difference certainly comes from size, as 7 Days is coming off a smaller base. Home Inns also tends to be more conservative, though that can’t explain the difference in historical numbers from 2010. I’ve previously disclosed that I own some shares in Home Inns, as they’re the sector leader and I do like this sector. But perhaps the more up-and-coming 7 Days, which plans to open 290 hotels this year,versus the 270 new hotels planned in 2011 for Home Inns, might make the former a better bet for growth-minded investors. Then again, many a company has stumbled on overly aggressive expansion.