Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) (“Huazhu”, “the
Company”, “we” or “our”), a world-leading hotel group, today
announced its unaudited financial results for the third quarter
ended September 30, 2021.
As of September 30, 2021, Huazhu’s worldwide
hotel network in operation totaled 7,466 hotels and 722,983 rooms,
including 121 hotels from DH. During the third quarter of 2021, our
Legacy-Huazhu business opened 481 hotels, including 2 leased (or
leased-and-operated) hotels and 479 manachised (or
franchised-and-managed) hotels and franchised hotels, and closed a
total of 140 hotels, including 14 leased hotels and 126 manachised
and franchised hotels. During the third quarter of 2021, the
Legacy-DH business opened 1 leased hotel, and closed 2 manachised
and franchised hotels. As of September 30, 2021, Huazhu had a total
of 2,827 unopened hotels in our pipeline, including 2,788 hotels
from the Legacy-Huazhu business and 39 hotels from the Legacy-DH
business.
Legacy-Huazhu Only
– Third Quarter of 2021 Operational
Highlights
As of September 30, 2021,
Legacy-Huazhu had 7,345 hotels in operation, including 663
leased and owned hotels, and 6,682 manachised hotels and franchised
hotels. In addition, as of the same date, Legacy-Huazhu had
698,668 hotel rooms in operation, including 91,609 rooms under the
lease and ownership model, and 607,059 rooms under the manachise
and franchise models. Legacy-Huazhu also had 2,788 unopened
hotels in our pipeline, including 17 leased and owned hotels and
2,771 manachised and franchised hotels. The following discusses
Legacy-Huazhu’s RevPAR, average daily room rate (“ADR”) and
occupancy rate for its leased and owned hotels, as well as
manachised and franchised hotels (excluding hotels under
governmental requisition) for the periods indicated.
- The ADR was RMB246 in the third
quarter of 2021, compared with RMB218 in the third quarter of 2020,
RMB255 in the previous quarter, and RMB245 in the third quarter of
2019.
- The occupancy rate for all
Legacy-Huazhu hotels in operation was 71.9% in the third quarter of
2021, compared with 82.0% in the third quarter of 2020, 82.3% in
the previous quarter, and 87.7% in the third quarter of 2019.
- Blended RevPAR was RMB177 in the
third quarter of 2021, compared with RMB179 in the third quarter of
2020, RMB210 in the previous quarter, and RMB215 in the third
quarter of 2019.
- For all Legacy-Huazhu hotels which
had been in operation for at least 18 months, the same-hotel RevPAR
was RMB176 for the third quarter of 2021, representing a 5.9%
decrease from RMB187 for the third quarter of 2020, with a 8.7%
increase in ADR and an 11.3-percentage-point decrease in occupancy
rate; comparing the third quarter of 2021 with the pre-COVID-19
third quarter of 2019, RevPAR represented a 24.8% decrease from
RMB226 for the third quarter of 2019, with a 6.3% decrease in ADR,
and a 17.9-percentage-point decrease in occupancy rate.
Legacy-DH Only
– Third Quarter of 2021 Operational
Highlights
As of September 30, 2021,
Legacy-DH had 121 hotels in operation, including 75 leased and
owned hotels and 46 manachised hotels and franchised hotels. In
addition, as of the same date, Legacy-DH had 24,315 hotel
rooms in operation, including 14,002 rooms under the lease and
ownership model, and 10,313 rooms under the manachise and franchise
models. Legacy-DH also had 39 hotels in our pipeline,
including 28 leased and owned hotels and 11 manachised and
franchised hotels. The following discusses Legacy-DH’s RevPAR, ADR
and occupancy rate for its leased as well as manachised and
franchised hotels (excluding hotels temporarily closed) for the
periods indicated.
- The ADR was EUR99 in the third quarter of 2021, compared with
EUR93 in the third quarter of 2020 and EUR81 in the previous
quarter.
- The occupancy rate for all Legacy-DH hotels in operation was
48.6% in the third quarter of 2021, compared with 37.9% in the
third quarter of 2020 and 24.4% in the previous quarter.
- Blended RevPAR was EUR48 in the third quarter of 2021, compared
with EUR35 in the third quarter of 2020 and EUR20 in the previous
quarter.
Jin Hui, CEO of Huazhu commented: “Our China
business RevPAR recovered in the third quarter to 83% of the same
period of 2019, mainly impacted by the Delta variant of COVID-19
surging in Nanjing since late July, with further spreading into
many other Chinese provinces and cities. Since early September, we
saw our RevPAR recovery gradually resumed until late October, where
another upsurge of COVID-19 occurred again. The recent worsening
also significantly impacted our performance in November with
month-to-date RevPAR recovered to only 68% of the 2019 level. For
our European business, thanks to continued progress of vaccinations
and easing restrictions, the RevPAR recovering to 65% of the 2019
level in the third quarter from 28% in the second quarter.”
“We had witnessed several COVID-19 recurrences
over the last year and a half,” Mr. Jin continued. “COVID-19 not
only negatively impacted our performance, but also weakened the
confidence and willingness of our franchisees and business
partners. In fact, the global macroeconomic conditions as well as
the business environment also changed dramatically due to the
pandemic. Under such circumstances, we adjusted our strategy to
focus more on ‘Lean’ growth rather than ‘Mega Scale’ growth going
forward. With this adjustment, in addition to the overall number of
our hotels, we are now putting greater emphasis on our customers’
satisfaction and our franchisees’ profitability.”
Third quarter of 2021 Unaudited
Financial Results
(RMB in millions) |
Q3 2020 |
Q2 2021 |
Q3 2021 |
Revenue: |
|
|
|
Leased and owned hotels |
2,131 |
2,282 |
2,345 |
Manachised and franchised hotels |
995 |
1,275 |
1,128 |
Others |
32 |
30 |
50 |
Total revenue |
3,158 |
3,587 |
3,523 |
|
|
|
|
Revenue for the third quarter
of 2021 was RMB3.5 billion (US$547 million), representing an 11.6%
year-over-year increase and a 1.8% sequential decrease. Revenue
from Legacy-Huazhu for the third quarter of 2021 was RMB2.9
billion, representing a 7.4% year-over-year increase and a 12.8%
sequential decrease. The sequential decrease was mainly due to
COVID-19 resurgence in Nanjing since late July. Our European
business achieved strong recovery in the third quarter of 2021 with
revenue from Legacy-DH achieved RMB590 million, representing a
38.6% year-over-year and 163.5% sequential increase.
Revenue from leased and owned
hotels for the third quarter of 2021 was RMB2.3 billion
(US$364 million), representing a 10.0% year-over-year increase and
a 2.8% sequential increase. Revenue from Legacy-Huazhu from leased
and owned hotels for the third quarter of 2021 was RMB1.8 billion,
representing a 3.9% year-over-year increase.
Revenue from manachised and franchised
hotels for the third quarter of 2021 was RMB1.1 billion
(US$175 million), representing a 13.4% year-over-year increase and
an 11.5% sequential decrease. Revenue from Legacy-Huazhu from
manachised and franchised hotels for the third quarter of 2021 was
RMB1.1 billion, representing a 13.7% year-over-year increase.
Other revenue represents
revenue generated from businesses other than our hotel operations,
which mainly includes revenue from the provision of IT products and
services to hotels, and revenue from Huazhu Mall™ and other revenue
from the Legacy-DH business, totaling RMB50 million (US$8 million)
in the third quarter of 2021, compared to RMB32 million in the
third quarter of 2020 and RMB30 million in the previous
quarter.
(RMB in millions) |
Q3 2020 |
Q2 2021 |
Q3 2021 |
Operating costs and expenses: |
|
|
|
Hotel operating costs |
2,470 |
2,739 |
2,885 |
Other operating costs |
15 |
12 |
14 |
Selling and marketing expenses |
162 |
161 |
189 |
General and administrative expenses |
343 |
392 |
388 |
Pre-opening expenses |
42 |
16 |
15 |
Total operating costs and expenses |
3,032 |
3,320 |
3,491 |
|
|
|
|
Hotel operating costs for the
third quarter of 2021 were RMB2.9 billion (US$448 million),
compared to RMB2.5 billion in the third quarter of 2020 and RMB2.7
billion in the previous quarter. The increase was mainly due to
higher rental costs for our leased and owned upscale hotels and
acquisition of CitiGO hotels, and higher personnel costs from
continuous hotel network expansion. Hotel operating costs from
Legacy-Huazhu for the third quarter of 2021 were RMB2.3 billion,
which represented 76.9% of the quarter’s revenues, compared to
70.4% for the third quarter in 2020 and 65.5% for the previous
quarter.
Selling and marketing expenses
for the third quarter of 2021 were RMB189 million (US$29 million),
compared to RMB162 million in the third quarter of 2020 and RMB161
million in the previous quarter. Selling and marketing expenses
from Legacy-Huazhu for the third quarter of 2021 were RMB129
million, which represented 4.4% of the quarter’s revenue, compared
to RMB102 million or 3.7% of revenue for the third quarter in 2020,
and RMB129 million or 3.8% of revenue for the previous quarter. The
increase was mainly due to headcount increase for our sales
team.
General and administrative
expenses for the third quarter of 2021 were RMB388 million
(US$62 million), compared to RMB343 million in the third quarter of
2020 and RMB392 million in the previous quarter. General and
administrative expenses from Legacy-Huazhu for the third quarter of
2021 were RMB306 million, which represented 10.4% of the quarter’s
revenue, compared to RMB235 million or 8.6% for the third quarter
in 2020 and RMB294 million or 8.7% for the previous quarter. The
increase was mainly due to our investments in business development
team, information technology, as well as upscale hotel
division.
Pre-opening expenses for the
third quarter of 2021 were mostly related to Legacy-Huazhu and
totaling RMB15 million (US$2 million), compared to RMB42 million in
the third quarter of 2020 and RMB16 million in the previous
quarter.
Other operating income, net for
the third quarter of 2021 was RMB40 million (US$6 million),
compared to RMB110 million in the third quarter of 2020 and RMB362
million in the previous quarter.
Income from operations for the
third quarter of 2021 was RMB72 million (US$10 million), compared
to loss from operations of RMB201 million in the third quarter of
2020 and income from operations of RMB629 million in the previous
quarter. Adjusted income from operations (non-GAAP) which excluded
share-based compensation expenses, for the third quarter of 2021
was RMB103 million (US$15 million), compared to loss from
operations of RMB168 million in the third quarter of 2020 and
income from operations of RMB657 million in the previous quarter.
Income from operations from Legacy-Huazhu for the third quarter of
2021 was RMB239 million, compared to RMB523 million in the third
quarter of 2020 and RMB763 million in the previous quarter.
Operating margin, defined as
income from operations as a percentage of revenues, for the third
quarter of 2021, was 2.0%. Operating margin from Legacy-Huazhu for
the third quarter of 2021 was 8.2%, compared with 19.1% in the
third quarter of 2020 and 22.7% in the previous quarter.
Other income, net for the third
quarter of 2021 was RMB4 million (US$1 million), compared to other
expense, net RMB1 million for the third quarter of 2020 and other
expense, net RMB61 million for the previous quarter.
Unrealized losses from fair value
changes of equity securities for the third quarter of 2021
were RMB60 million (US$9 million), compared to unrealized gains
from fair value changes of equity securities RMB39 million in the
third quarter of 2020, and unrealized losses from fair value
changes of RMB58 million in the previous quarter. Unrealized gains
(losses) from fair value changes of equity securities mainly
represents the unrealized gains (losses) from our investment in
equity securities with readily determinable fair values, such as
AccorHotels.
Income tax benefit for the
third quarter of 2021 was RMB13 million (US$2 million), compared to
income tax benefit of RMB50 million in the same period of 2020 and
income tax expense of RMB132 million in the previous quarter.
Net loss attributable to Huazhu Group
Limited for the third quarter of 2021 was RMB137 million
(US$22 million), compared to a net loss of RMB212 million in the
third quarter of 2020 and a net income of RMB378 million in the
previous quarter. Adjusted net loss attributable to Huazhu Group
Limited (non-GAAP), which excluded share-based compensation
expenses and the unrealized gains (losses) from fair value changes
of equity securities, for the third quarter of 2021 was RMB46
million (US$8 million), compared to a net loss of RMB218 million in
the third quarter of 2020 and a net income of RMB464 million in the
previous quarter. Net income attributable to Huazhu Group Limited
from Legacy-Huazhu for the third quarter of 2021 was RMB27 million,
compared to RMB482 million in the third quarter of 2020 and RMB492
million in the previous quarter. The adjusted net income
attributable to Huazhu Group Limited from Legacy-Huazhu (non-GAAP)
for the third quarter of 2021 was RMB117 million, compared with
RMB476 million in the third quarter of 2020 and RMB579 million in
the previous quarter.
Basic and diluted losses per
share/American depositary share (ADS). For the third
quarter of 2021, basic and diluted losses per share were RMB0.04
(US$0.01). Adjusted basic and diluted losses per share (non-GAAP),
which excluded share-based compensation expenses and unrealized
gains (losses) from fair value changes of equity securities, were
RMB0.01 (US$0.00). Basic and diluted losses per ADS were RMB0.44
(US$0.07). Adjusted basic and diluted losses per ADS (non-GAAP),
which excluded share-based compensation expenses and unrealized
gains (losses) from fair value changes of equity securities, were
RMB0.15 (US$0.02).
EBITDA (non-GAAP) for the third
quarter of 2021 was RMB294 million (US$45 million), compared with
RMB190 million in the third quarter of 2020 and RMB957 million in
the previous quarter. EBITDA from Legacy-Huazhu (non-GAAP) for the
third quarter of 2021 was RMB410 million, compared with RMB859
million in the third quarter of 2020 and RMB1.0 billion in the
previous quarter. Adjusted EBITDA (non-GAAP), which excluded
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities, for the third quarter
of 2021 was RMB385 million (US$59 million), compared with RMB184
million in the third quarter of 2020 and RMB1.0 billion in the
previous quarter. The adjusted EBITDA from Legacy-Huazhu (non-GAAP)
for the third quarter of 2021 was RMB500 million, compared with
RMB853 million in the third quarter of 2020 and RMB1.1 billion in
the previous quarter.
Cash flow. Operating cash
inflow for the third quarter of 2021 was RMB192 million (US$29
million). Investing cash outflow for the third quarter of 2021 was
RMB1.0 billion (US$158 million), including RMB397 million in
partial payments for the previously announced CitiGO acquisition4.
Financing cash outflow for the third quarter of 2021 was RMB17
million (US$3 million).
Cash and cash equivalents and Restricted
cash. As of September 30, 2021, the Company had a total
balance of cash and cash equivalents of RMB5.4 billion (US$836
million) and restricted cash of RMB26 million (US$4 million).
Debt financing. As of September
30, 2021, the Company had a total debt balance of RMB10.6 billion
(US$1.6 billion) and the unutilized credit facility available to
the Company was RMB7.0 billion.
COVID-19 update For our
Legacy-Huazhu business, our RevPAR recovery momentum resumed
quickly in early July. Since late July, however, the spread of the
Delta variant of COVID-19 from Nanjing to several Chinese provinces
and cities resulted in the relevant governmental authorities
imposing a new round of strict travelling restrictions;
consequently, the blended RevPAR of Legacy-Huazhu in August dropped
significantly to only 54% of the 2019 level. After the Delta
variant of COVID-19 in Nanjing became largely contained in early
September, the monthly blended RevPAR of Legacy-Huazhu continued to
recover, reaching approximately 92% of the 2019 level. However,
with a relatively-small-scale outbreak occurring in Fujian province
in mid-September, the relevant governmental authorities again
imposed strict travelling restrictions, especially for students,
during “Golden Week” in celebration of China’s National Day
Holidays. As a result, the blended RevPAR of Legacy-Huazhu during
Golden Week recovered to only approximately 82% of the 2019 level.
Nevertheless, RevPAR recovery in the second week of October
rebounded to nearly 90% of the 2019 level, mainly driven by an
upturn in business travel. Since late October, increased incidence
of confirmed new COVID-19 cases spread more widely, reaching over
20 provinces in China; thus, governmental authorities reintroduced
travel restrictions to curb the further spread of COVID-19. As of
November 23rd, the incidence of daily confirmed cases had dropped
to single digits, and RevPAR had gradually picked up.
DH also suffered from European Union lockdown
policies and restrictions in public life due to the third and
fourth waves of the COVID-19 pandemic in European countries.
European vaccination commenced in December 2020 and increased
momentum during the first half of 2021. As of November 23rd, 2021,
71% of the entire German population has received at least one shot
and about 68% of the population is fully vaccinated. Along with the
growing inoculation rate and the receding third COVID-19 wave since
August 2021, restrictions were gradually eased for people who are
fully vaccinated, or who have recovered from a COVID-19 infection,
and who have tested negative for the virus. Thanks to the
abovementioned progress in vaccination and easing of restrictions,
DH’s business recovery started in the second quarter and continued
in the third quarter during the European summer holiday break,
driven by leisure business, and is on track to continue recovery.
However, with regard to the emergence of a fourth COVID-19 wave in
Europe with dramatically-rising 7-day-incidence rates since early
November, DH faces pressure and uncertainty on future recovery. The
impact over the incoming months, especially regarding business
travel, is still to be determined with the unfolding of the
pandemic and future government policies in the European Union.
Meanwhile, DH is continuing to implement further
cost reduction and cash flow measures, especially regarding
personnel and lease costs. The impact of further lockdowns should
be partially offset by the extension of scope and duration of EU
government support, of which EUR 38 million from the German
government – relating to the 2020 lockdown period – were received
and recorded in the second quarter of 2021. An application for an
additional government support, relating to 2021 lockdown period,
was submitted in late October.
Guidance In the fourth quarter
of 2021, Huazhu expects revenue growth to be in the range of 6%-10%
compared to the fourth quarter of 2020, or revenue reduction to be
in the range of 4% to 8% if excluding DH. To provide more
meaningful guidance excluding the impact of COVID-19, Huazhu
expects revenue growth to be in the range of 12%-16% compared to
pre-COVID-19 results in the fourth quarter of 2019, or revenue
reduction to be in the range of 7% to 11% if excluding DH.
For the full year of 2021, we expect revenue
growth to range from 22% to 26%, or to range from 26% to 30%
excluding DH. To provide more meaningful guidance excluding the
impact of COVID-19, Huazhu expects revenue growth to be in the
range of 11%-15% compared to pre-COVID-19 results of 2019, or
revenue reduction to be in the range from 0% to 4% excluding
DH.
The above guidance is based on our current
expectation that there will be no massive resurgence of COVID-19
for the remainder of 2021.
The above forecast reflects the Company’s
current and preliminary view, which is subject to change.
Conference CallHuazhu’s
management will host a conference call at 8 p.m. (U.S. Eastern
time) on Wednesday, November 24, 2021 (or 9 a.m. (Hong Kong time)
on Thursday, November 25, 2021). The conference call will be a
Direct Event call. All participants must preregister online prior
to the call. Please use the link
http://apac.directeventreg.com/registration/event/9233318 to
complete the online registration at least 15 minutes prior to the
start of the conference call. Once preregistration has been
completed, participants will receive dial-in numbers, an event
passcode, and a unique registrant ID. To join the conference,
please dial the number you receive, enter the event passcode
followed by your unique registrant ID, and you will be joined to
the conference instantly. Please dial in approximately 10 minutes
before the scheduled time of the call.
A recording of the conference call will be
available after the conclusion of the conference call through
December 2, 2021. Please dial +1 (855) 452 5696 (for callers in the
U.S.), 400 632 2162 (for callers in mainland China), 800 963 117
(for callers in Hong Kong) or +61 2 8199 0299 (for callers outside
the U.S., mainland China and Hong Kong) and enter the passcode
9233318.
The conference call will also be webcast live
over the Internet and can be accessed by all interested parties at
the Company’s Web site, https://ir.huazhu.com.
Use of Non-GAAP Financial
MeasuresTo supplement the Company’s unaudited consolidated
financial results presented in accordance with U.S.
Generally-Accepted Accounting Principles (“GAAP”), the Company uses
the following non-GAAP measures defined as non-GAAP financial
measures by the U.S. Securities and Exchange Commission (“SEC”):
hotel operating costs excluding share-based compensation expenses;
general and administrative expenses excluding share-based
compensation expenses; selling and marketing expenses excluding
share-based compensation expenses; adjusted income (loss) from
operations excluding share-based compensation expenses; adjusted
net income (loss) attributable to Huazhu Group Limited excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities; adjusted basic and
diluted earnings (losses) per share/ADS excluding share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities; EBITDA; adjusted EBITDA excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities; and adjusted EBITDA
margin; adjusted net income (loss) attributable to Huazhu Group
Limited excluding share-based compensation expenses and unrealized
gains (losses) from fair value changes of equity securities from
Legacy-Huazhu; EBITDA from Legacy-Huazhu; and adjusted EBITDA
excluding share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities from
Legacy-Huazhu. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with U.S. GAAP. For more information on these non-GAAP
financial measures, please see the table captioned “Reconciliations
of GAAP and non-GAAP results” set forth at the end of this release.
The Company believes that these non-GAAP financial measures provide
meaningful supplemental information regarding Company performance
by excluding share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities that may not
be indicative of Company operating performance. The Company
believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing Company
performance and when planning and forecasting future periods. These
non-GAAP financial measures also facilitate management’s internal
comparisons to the Company’s historical performance. The Company
believes these non-GAAP financial measures are also useful to
investors in allowing for greater transparency with respect to
supplemental information used regularly by Company management in
financial and operational decision-making. A limitation of using
non-GAAP financial measures excluding share-based compensation
expenses and unrealized gains (losses) from fair value changes of
equity securities is that share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity
securities have been and will continue to be significant and
recurring in the Company’s business. Management compensates for
these limitations by providing specific information regarding the
GAAP amounts excluded from each non-GAAP measure. The accompanying
tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to non-GAAP
financial measures.
The Company believes that EBITDA is a useful
financial metric to assess the operating and financial performance
before the impact of investing and financing transactions and
income taxes, given the significant investments that the Company
has made in leasehold improvements, depreciation and amortization
expense that comprise a significant portion of the Company’s cost
structure. In addition, the Company believes that EBITDA is widely
used by other companies in the lodging industry and may be used by
investors as a measure of financial performance. The Company
believes that EBITDA information provides investors with a useful
tool for comparability between periods because it eliminates
depreciation and amortization expense attributable to capital
expenditures. The Company also uses adjusted EBITDA, which is
defined as EBITDA before share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity
securities, to assess operating results of its hotels in operation.
The Company believes that the exclusion of share-based compensation
expenses and unrealized gains (losses) from fair value changes of
equity securities helps facilitate year-on-year comparisons of the
results of operations as the share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity
securities may not be indicative of Company operating
performance.
The Company believes that unrealized gains and
losses from changes in fair value of equity securities are
generally meaningless in understanding the Company’s reported
results or evaluating its economic performance of its businesses.
These gains and losses have caused and will continue to cause
significant volatility in reported periodic earnings.
Therefore, the Company believes adjusted EBITDA
more closely reflects the performance capability of our hotels. The
presentation of EBITDA and adjusted EBITDA should not be construed
as an indication that the Company’s future results will be
unaffected by other charges and gains considered to be outside the
ordinary course of business.
The use of EBITDA and adjusted EBITDA has
certain limitations. Depreciation and amortization expense for
various long-term assets (including land use rights), income tax,
interest expense and interest income have been and will be incurred
and are not reflected in the presentation of EBITDA. Share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities have been and will be incurred and are
not reflected in the presentation of adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of the
results. The Company compensates for these limitations by providing
the relevant disclosure of depreciation and amortization, interest
income, interest expense, income tax expense, share-based
compensation expenses, and unrealized gains (losses) from fair
value changes of equity securities and other relevant items both in
the reconciliations to the U.S. GAAP financial measures and in the
consolidated financial statements, all of which should be
considered when evaluating the performance of the Company.
The terms EBITDA and adjusted EBITDA are not
defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is
a measure of net income, operating income, operating performance or
liquidity presented in accordance with U.S. GAAP. When assessing
the operating and financial performance, investors should not
consider these data in isolation or as a substitute for the
Company’s net income, operating income or any other operating
performance measure that is calculated in accordance with U.S.
GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not
be comparable to EBITDA or adjusted EBITDA or similarly titled
measures utilized by other companies since such other companies may
not calculate EBITDA or adjusted EBITDA in the same manner as the
Company does.
Reconciliations of the Company’s non-GAAP
financial measures, including EBITDA and adjusted EBITDA, to the
consolidated statement of operations information are included at
the end of this press release.
About Huazhu Group
LimitedOriginated in China, Huazhu Group Limited is a
world-leading hotel group. As of September 30, 2021, Huazhu
operated 7,466 hotels with 722,983 rooms in operation in 17
countries. Huazhu’s brands include Blossom House, CitiGO Hotel,
Crystal Orange Hotel, Elan Hotel, HanTing Hotel, Hi Inn, JI Hotel,
Joya Hotel, Madison Hotel, Manxin Hotel, Ni Hao Hotel, Orange Hotel
and Starway Hotel. Upon the completion of the acquisition of DH on
January 2, 2020, Huazhu added five brands to its portfolio,
including IntercityHotel, Jaz in the City, MAXX by
Steigenberger, Steigenberger Hotels & Resorts and Zleep
Hotels. In addition, Huazhu also has the rights as master
franchisee for Ibis, Ibis Styles and Mercure, and co-development
rights for Grand Mercure and Novotel, in the pan-China region.
Huazhu’s business includes leased and owned,
manachised and franchised models. Under the lease and ownership
model, Huazhu directly operates hotels typically located on leased
or owned properties. Under the manachise model, Huazhu manages
manachised hotels through the on-site hotel managers that Huazhu
appoints, and Huazhu collects fees from franchisees. Under the
franchise model, Huazhu provides training, reservations and support
services to the franchised hotels, and collects fees from
franchisees but does not appoint on-site hotel managers. Huazhu
applies a consistent standard and platform across all of its
hotels. As of September 30, 2021, Huazhu operates 15 percent
of its hotel rooms under lease and ownership model, and 85 percent
under manachise and franchise models.
For more information, please visit Huazhu’s
website: http://ir.huazhu.com.
Safe Harbor Statement Under the U.S. Private
Securities Litigation Reform Act of 1995: The information in this
release contains forward-looking statements which involve risks and
uncertainties. Such factors and risks include our anticipated
growth strategies; our future results of operations and financial
condition; economic conditions; the regulatory environment; our
ability to attract and retain customers and leverage our brands;
trends and competition in the lodging industry; the expected growth
of demand for lodging; and other factors and risks detailed in our
filings with the SEC. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking
statements, which may be identified by terminology such as “may,”
“should,” “will,” “expect,” “plan,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “forecast,”
“project” or “continue,” the negative of such terms or other
comparable terminology. Readers should not rely on forward-looking
statements as predictions of future events or results.
Huazhu undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, unless required by
applicable law.
—Financial Tables and Operational Data
Follow—
Huazhu Group Limited |
Unaudited Condensed Consolidated Balance
Sheets |
|
December 31, 2020 |
|
September 30, 2021 |
|
RMB |
RMB |
US$5 |
|
(in millions) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
7,026 |
|
|
5,385 |
|
|
836 |
|
Restricted cash |
64 |
|
|
26 |
|
|
4 |
|
Short-term investments |
3,903 |
|
|
2,906 |
|
|
451 |
|
Accounts receivable, net |
404 |
|
|
523 |
|
|
81 |
|
Loan receivables, net |
304 |
|
|
218 |
|
|
34 |
|
Amounts due from related parties |
178 |
|
|
148 |
|
|
23 |
|
Inventories |
89 |
|
|
85 |
|
|
13 |
|
Other current assets, net |
914 |
|
|
836 |
|
|
130 |
|
Total current assets |
12,882 |
|
|
10,127 |
|
|
1,572 |
|
|
|
|
|
Property and equipment, net |
6,682 |
|
|
6,996 |
|
|
1,086 |
|
Intangible assets, net |
5,945 |
|
|
5,748 |
|
|
892 |
|
Operating lease right-of-use assets |
28,980 |
|
|
30,111 |
|
|
4,673 |
|
Finance lease right-of-use assets |
2,041 |
|
|
1,855 |
|
|
288 |
|
Land use rights, net |
213 |
|
|
208 |
|
|
32 |
|
Long-term investments |
1,923 |
|
|
2,058 |
|
|
319 |
|
Goodwill |
4,988 |
|
|
5,221 |
|
|
810 |
|
Amounts due from related parties, non-current |
- |
|
|
39 |
|
|
6 |
|
Loan receivables, net |
135 |
|
|
75 |
|
|
12 |
|
Other assets, net |
743 |
|
|
827 |
|
|
128 |
|
Deferred tax assets |
623 |
|
|
608 |
|
|
94 |
|
Total assets |
65,155 |
|
|
63,873 |
|
|
9,912 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Short-term debt |
1,142 |
|
|
661 |
|
|
103 |
|
Accounts payable |
1,241 |
|
|
909 |
|
|
141 |
|
Amounts due to related parties |
132 |
|
|
149 |
|
|
23 |
|
Salary and welfare payables |
526 |
|
|
424 |
|
|
66 |
|
Deferred revenue |
1,272 |
|
|
1,340 |
|
|
208 |
|
Operating lease liabilities, current |
3,406 |
|
|
3,572 |
|
|
554 |
|
Finance lease liabilities, current |
31 |
|
|
42 |
|
|
7 |
|
Accrued expenses and other current liabilities |
2,440 |
|
|
2,124 |
|
|
330 |
|
Income tax payable |
339 |
|
|
150 |
|
|
23 |
|
Total current liabilities |
10,529 |
|
|
9,371 |
|
|
1,455 |
|
|
|
|
|
Long-term debt |
10,856 |
|
|
9,936 |
|
|
1,542 |
|
Operating lease liabilities, non-current |
27,048 |
|
|
28,034 |
|
|
4,351 |
|
Finance lease liabilities, non-current |
2,497 |
|
|
2,312 |
|
|
359 |
|
Deferred revenue |
662 |
|
|
749 |
|
|
116 |
|
Other long-term liabilities |
771 |
|
|
864 |
|
|
134 |
|
Deferred tax liabilities |
1,181 |
|
|
975 |
|
|
151 |
|
Retirement benefit obligations |
179 |
|
|
168 |
|
|
26 |
|
Total liabilities |
53,723 |
|
|
52,409 |
|
|
8,134 |
|
|
|
|
|
Equity: |
|
|
|
Ordinary shares |
0 |
|
|
0 |
|
|
0 |
|
Treasury shares |
(107 |
) |
|
(107 |
) |
|
(17 |
) |
Additional paid-in capital |
9,808 |
|
|
9,949 |
|
|
1,544 |
|
Retained earnings |
1,502 |
|
|
1,495 |
|
|
232 |
|
Accumulated other comprehensive income (loss) |
127 |
|
|
21 |
|
|
3 |
|
Total Huazhu Group Limited shareholders' equity |
11,330 |
|
|
11,358 |
|
|
1,762 |
|
Noncontrolling interest |
102 |
|
|
106 |
|
|
16 |
|
Total equity |
11,432 |
|
|
11,464 |
|
|
1,778 |
|
Total liabilities and equity |
65,155 |
|
|
63,873 |
|
|
9,912 |
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Comprehensive Income |
|
Quarter Ended |
|
September 30, 2020 |
|
June 30, 2021 |
|
September 30, 2021 |
|
RMB |
RMB |
RMB |
US$ |
|
(in millions, except share, per share and per ADS
data) |
Revenues: |
|
|
|
|
Leased and owned hotels |
2,131 |
|
|
2,282 |
|
|
2,345 |
|
|
364 |
|
Manachised and franchised hotels |
995 |
|
|
1,275 |
|
|
1,128 |
|
|
175 |
|
Others |
32 |
|
|
30 |
|
|
50 |
|
|
8 |
|
Total revenues |
3,158 |
|
|
3,587 |
|
|
3,523 |
|
|
547 |
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
Hotel operating costs: |
|
|
|
|
Rents |
(859 |
) |
|
(949 |
) |
|
(1,009 |
) |
|
(157 |
) |
Utilities |
(136 |
) |
|
(107 |
) |
|
(137 |
) |
|
(21 |
) |
Personnel costs |
(611 |
) |
|
(757 |
) |
|
(793 |
) |
|
(123 |
) |
Depreciation and amortization |
(337 |
) |
|
(351 |
) |
|
(356 |
) |
|
(55 |
) |
Consumables, food and beverage |
(253 |
) |
|
(244 |
) |
|
(264 |
) |
|
(41 |
) |
Others |
(274 |
) |
|
(331 |
) |
|
(326 |
) |
|
(51 |
) |
Total hotel operating costs |
(2,470 |
) |
|
(2,739 |
) |
|
(2,885 |
) |
|
(448 |
) |
Other operating costs |
(15 |
) |
|
(12 |
) |
|
(14 |
) |
|
(2 |
) |
Selling and marketing expenses |
(162 |
) |
|
(161 |
) |
|
(189 |
) |
|
(29 |
) |
General and administrative expenses |
(343 |
) |
|
(392 |
) |
|
(388 |
) |
|
(62 |
) |
Pre-opening expenses |
(42 |
) |
|
(16 |
) |
|
(15 |
) |
|
(2 |
) |
Total operating costs and expenses |
(3,032 |
) |
|
(3,320 |
) |
|
(3,491 |
) |
|
(543 |
) |
Goodwill impairment loss |
(437 |
) |
|
- |
|
|
- |
|
|
- |
|
Other operating income (expense), net |
110 |
|
|
362 |
|
|
40 |
|
|
6 |
|
Income (losses) from operations |
(201 |
) |
|
629 |
|
|
72 |
|
|
10 |
|
Interest income |
31 |
|
|
17 |
|
|
25 |
|
|
4 |
|
Interest expense |
(136 |
) |
|
(102 |
) |
|
(101 |
) |
|
(16 |
) |
Other (expense) income, net |
(1 |
) |
|
(61 |
) |
|
4 |
|
|
1 |
|
Unrealized gains (losses) from fair value changes of equity
securities |
39 |
|
|
(58 |
) |
|
(60 |
) |
|
(9 |
) |
Foreign exchange gain (loss) |
48 |
|
|
85 |
|
|
(92 |
) |
|
(14 |
) |
Income (loss) before income taxes |
(220 |
) |
|
510 |
|
|
(152 |
) |
|
(24 |
) |
Income tax (expense) benefit |
50 |
|
|
(132 |
) |
|
13 |
|
|
2 |
|
Income (loss) from equity method investments |
(35 |
) |
|
(1 |
) |
|
3 |
|
|
0 |
|
Net income (loss) |
(205 |
) |
|
377 |
|
|
(136 |
) |
|
(22 |
) |
Net (income) loss attributable to noncontrolling interest |
(7 |
) |
|
1 |
|
|
(1 |
) |
|
(0 |
) |
Net income (loss) attributable to Huazhu Group Limited |
(212 |
) |
|
378 |
|
|
(137 |
) |
|
(22 |
) |
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Gain arising from defined benefit plan, net of tax |
(7 |
) |
|
- |
|
|
1 |
|
|
0 |
|
Foreign currency translation adjustments, net of tax |
237 |
|
|
(23 |
) |
|
(28 |
) |
|
(4 |
) |
Comprehensive income (loss) |
25 |
|
|
354 |
|
|
(163 |
) |
|
(26 |
) |
Comprehensive (income) loss attributable to noncontrolling
interest |
(7 |
) |
|
1 |
|
|
(1 |
) |
|
(0 |
) |
Comprehensive income (loss) attributable to Huazhu Group
Limited |
18 |
|
|
355 |
|
|
(164 |
) |
|
(26 |
) |
|
|
|
|
|
Earnings (Losses) per share(1): |
|
|
|
|
Basic |
(0.07 |
) |
|
0.12 |
|
|
(0.04 |
) |
|
(0.01 |
) |
Diluted |
(0.07 |
) |
|
0.12 |
|
|
(0.04 |
) |
|
(0.01 |
) |
|
|
|
|
|
Earnings (Losses) per ADS: |
|
|
Basic |
(0.73 |
) |
|
1.22 |
|
|
(0.44 |
) |
|
(0.07 |
) |
Diluted |
(0.73 |
) |
|
1.17 |
|
|
(0.44 |
) |
|
(0.07 |
) |
|
|
|
|
|
Weighted average number of shares used in computation: |
|
|
|
Basic |
2,916,753,962 |
|
|
3,114,135,304 |
|
|
3,115,104,798 |
|
|
3,115,104,798 |
|
Diluted |
2,916,753,962 |
|
|
3,273,978,191 |
|
|
3,115,104,798 |
|
|
3,115,104,798 |
|
(1) The Company retrospectively revised prior comparative periods'
presentation to reflect the sub-division of our shares in the
second quarter. |
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
Quarter Ended |
|
September 30, 2020 |
|
June 30, 2021 |
|
September 30, 2021 |
|
|
|
|
|
|
|
|
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
(in millions) |
Operating activities: |
|
|
|
|
Net income (loss) |
(205 |
) |
|
377 |
|
|
(136 |
) |
|
(22 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
Share-based compensation |
33 |
|
|
28 |
|
|
31 |
|
|
5 |
|
Depreciation and amortization, and other |
367 |
|
|
377 |
|
|
383 |
|
|
59 |
|
Impairment loss |
453 |
|
|
9 |
|
|
51 |
|
|
8 |
|
Loss from equity method investments, net of dividends |
14 |
|
|
1 |
|
|
1 |
|
|
0 |
|
Investment (income) loss |
(89 |
) |
|
(50 |
) |
|
135 |
|
|
21 |
|
Changes in operating assets and liabilities |
747 |
|
|
472 |
|
|
(305 |
) |
|
(47 |
) |
Other |
(181 |
) |
|
24 |
|
|
32 |
|
|
5 |
|
Net cash provided by (used in) operating activities |
1,139 |
|
|
1,238 |
|
|
192 |
|
|
29 |
|
|
|
|
|
|
Investing activities: |
|
|
|
|
Capital expenditures |
(452 |
) |
|
(311 |
) |
|
(346 |
) |
|
(53 |
) |
Acquisitions, net of cash received |
(3 |
) |
|
(346 |
) |
|
(395 |
) |
|
(60 |
) |
Purchase of investments |
(1,631 |
) |
|
(134 |
) |
|
(303 |
) |
|
(47 |
) |
Proceeds from maturity/sale of investments |
14 |
|
|
174 |
|
|
- |
|
|
- |
|
Loan advances |
(48 |
) |
|
(31 |
) |
|
(32 |
) |
|
(5 |
) |
Loan collections |
51 |
|
|
45 |
|
|
41 |
|
|
6 |
|
Other |
0 |
|
|
21 |
|
|
4 |
|
|
1 |
|
Net cash provided by (used in) investing activities |
(2,069 |
) |
|
(582 |
) |
|
(1,031 |
) |
|
(158 |
) |
|
|
|
|
|
Financing activities: |
|
|
|
|
Net proceeds from issuance of ordinary shares |
5,245 |
|
|
- |
|
|
- |
|
|
- |
|
Proceeds from debt |
1,468 |
|
|
207 |
|
|
491 |
|
|
76 |
|
Repayment of debt |
(2,844 |
) |
|
(434 |
) |
|
(497 |
) |
|
(77 |
) |
Other |
(33 |
) |
|
42 |
|
|
(11 |
) |
|
(2 |
) |
Net cash provided by (used in) financing activities |
3,836 |
|
|
(185 |
) |
|
(17 |
) |
|
(3 |
) |
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
(73 |
) |
|
(16 |
) |
|
9 |
|
|
1 |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
2,833 |
|
|
455 |
|
|
(847 |
) |
|
(131 |
) |
Cash, cash equivalents and restricted cash at the beginning of the
period |
5,067 |
|
|
5,803 |
|
|
6,258 |
|
|
971 |
|
Cash, cash equivalents and restricted cash at the end of the
period |
7,900 |
|
|
6,258 |
|
|
5,411 |
|
|
840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended September 30, 2021 |
|
GAAP Result |
|
% ofRevenues |
|
Share-based Compensation |
|
% ofRevenues |
|
Non-GAAPResult |
|
% ofRevenues |
|
RMB |
|
RMB |
|
|
|
RMB |
|
|
(in millions) |
Hotel operating costs |
2,885 |
|
|
81.9 |
% |
|
12 |
|
|
0.3 |
% |
|
2,873 |
|
|
81.6 |
% |
Other operating costs |
14 |
|
|
0.4 |
% |
|
- |
|
|
0.0 |
% |
|
14 |
|
|
0.4 |
% |
Selling and marketing expenses |
189 |
|
|
5.4 |
% |
|
1 |
|
|
0.0 |
% |
|
188 |
|
|
5.4 |
% |
General and administrative expenses |
388 |
|
|
11.0 |
% |
|
18 |
|
|
0.5 |
% |
|
370 |
|
|
10.5 |
% |
Pre-opening expenses |
15 |
|
|
0.4 |
% |
|
- |
|
|
0.0 |
% |
|
15 |
|
|
0.4 |
% |
Total operating costs and expenses |
3,491 |
|
|
99.1 |
% |
|
31 |
|
|
0.8 |
% |
|
3,460 |
|
|
98.3 |
% |
Income (Loss) from operations |
72 |
|
|
2.0 |
% |
|
31 |
|
|
0.8 |
% |
|
103 |
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2021 |
|
GAAP Result |
|
% ofRevenues |
|
Share-based Compensation |
|
% ofRevenues |
|
Non-GAAPResult |
|
% ofRevenues |
|
US$ |
|
US$ |
|
|
|
US$ |
|
|
(in millions) |
Hotel operating costs |
448 |
|
|
81.9 |
% |
|
2 |
|
|
0.3 |
% |
|
446 |
|
|
81.6 |
% |
Other operating costs |
2 |
|
|
0.4 |
% |
|
- |
|
|
0.0 |
% |
|
2 |
|
|
0.4 |
% |
Selling and marketing expenses |
29 |
|
|
5.4 |
% |
|
0 |
|
|
0.0 |
% |
|
29 |
|
|
5.4 |
% |
General and administrative expenses |
62 |
|
|
11.0 |
% |
|
3 |
|
|
0.5 |
% |
|
59 |
|
|
10.5 |
% |
Pre-opening expenses |
2 |
|
|
0.4 |
% |
|
- |
|
|
0.0 |
% |
|
2 |
|
|
0.4 |
% |
Total operating costs and expenses |
543 |
|
|
99.1 |
% |
|
5 |
|
|
0.8 |
% |
|
538 |
|
|
98.3 |
% |
Income (Loss) from operations |
10 |
|
|
2.0 |
% |
|
5 |
|
|
0.8 |
% |
|
15 |
|
|
2.8 |
% |
|
|
|
Quarter Ended June 30, 2021 |
|
GAAP Result |
|
% ofRevenues |
|
Share-based Compensation |
|
% ofRevenues |
|
Non-GAAPResult |
|
% ofRevenues |
|
RMB |
|
RMB |
|
|
|
RMB |
|
|
(in millions) |
Hotel operating costs |
2,739 |
|
|
76.4 |
% |
|
10 |
|
|
0.3 |
% |
|
2,729 |
|
|
76.1 |
% |
Other operating costs |
12 |
|
|
0.3 |
% |
|
- |
|
|
0.0 |
% |
|
12 |
|
|
0.3 |
% |
Selling and marketing expenses |
161 |
|
|
4.5 |
% |
|
1 |
|
|
0.0 |
% |
|
160 |
|
|
4.5 |
% |
General and administrative expenses |
392 |
|
|
10.9 |
% |
|
17 |
|
|
0.5 |
% |
|
375 |
|
|
10.4 |
% |
Pre-opening expenses |
16 |
|
|
0.4 |
% |
|
- |
|
|
0.0 |
% |
|
16 |
|
|
0.4 |
% |
Total operating costs and expenses |
3,320 |
|
|
92.5 |
% |
|
28 |
|
|
0.8 |
% |
|
3,292 |
|
|
91.7 |
% |
Income (Loss) from operations |
629 |
|
|
17.5 |
% |
|
28 |
|
|
0.8 |
% |
|
657 |
|
|
18.3 |
% |
|
|
|
Quarter Ended September 30, 2020 |
|
GAAP Result |
|
% ofRevenues |
|
Share-based Compensation |
|
% ofRevenues |
|
Non-GAAPResult |
|
% ofRevenues |
|
RMB |
|
RMB |
|
|
|
RMB |
|
|
(in millions) |
Hotel operating costs |
2,470 |
|
|
78.2 |
% |
|
12 |
|
|
0.4 |
% |
|
2,458 |
|
|
77.8 |
% |
Other operating costs |
15 |
|
|
0.5 |
% |
|
- |
|
|
0.0 |
% |
|
15 |
|
|
0.5 |
% |
Selling and marketing expenses |
162 |
|
|
5.1 |
% |
|
1 |
|
|
0.0 |
% |
|
161 |
|
|
5.1 |
% |
General and administrative expenses |
343 |
|
|
10.9 |
% |
|
20 |
|
|
0.6 |
% |
|
323 |
|
|
10.3 |
% |
Pre-opening expenses |
42 |
|
|
1.3 |
% |
|
- |
|
|
0.0 |
% |
|
42 |
|
|
1.3 |
% |
Total operating costs and expenses |
3,032 |
|
|
96.0 |
% |
|
33 |
|
|
1.0 |
% |
|
2,999 |
|
|
95.0 |
% |
Income (Loss) from operations |
(201 |
) |
|
-6.4 |
% |
|
33 |
|
|
1.0 |
% |
|
(168 |
) |
|
-5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended |
|
September 30, 2020 |
|
June 30, 2021 |
|
September 30, 2021 |
|
RMB |
RMB |
RMB |
US$ |
|
(in millions, except shares, per share and per ADS
data) |
Net income (loss) attributable to Huazhu Group Limited (GAAP) |
(212 |
) |
|
378 |
|
|
(137 |
) |
|
(22 |
) |
Share-based compensation expenses |
33 |
|
|
28 |
|
|
31 |
|
|
5 |
|
Unrealized (gains) losses from fair value changes of equity
securities |
(39 |
) |
|
58 |
|
|
60 |
|
|
9 |
|
Adjusted net income (loss) attributable to Huazhu Group Limited
(non-GAAP) |
(218 |
) |
|
464 |
|
|
(46 |
) |
|
(8 |
) |
|
|
|
|
|
Adjusted earnings (losses) per share (non-GAAP)(2) |
Basic |
(0.07 |
) |
|
0.15 |
|
|
(0.01 |
) |
|
(0.00 |
) |
Diluted |
(0.07 |
) |
|
0.14 |
|
|
(0.01 |
) |
|
(0.00 |
) |
|
|
|
|
|
Adjusted earnings (losses) per ADS (non-GAAP) |
|
|
|
|
Basic |
(0.75 |
) |
|
1.49 |
|
|
(0.15 |
) |
|
(0.02 |
) |
Diluted |
(0.75 |
) |
|
1.43 |
|
|
(0.15 |
) |
|
(0.02 |
) |
|
|
|
|
|
Weighted average number of shares used in computation
(Non-GAAP) |
Basic |
2,916,753,962 |
|
|
3,114,135,304 |
|
|
3,115,104,798 |
|
|
3,115,104,798 |
|
Diluted |
2,916,753,962 |
|
|
3,273,978,191 |
|
|
3,115,104,798 |
|
|
3,115,104,798 |
|
(2) The Company retrospectively revised prior comparative periods'
presentation to reflect the sub-division of our shares in the
second quarter. |
|
|
|
|
|
|
Quarter Ended |
|
September 30, 2020 |
|
June 30, 2021 |
|
September 30, 2021 |
|
RMB |
RMB |
RMB |
US$ |
|
(in millions, except per share and per ADS
data) |
Net income (loss) attributable to Huazhu Group Limited
(GAAP) |
(212 |
) |
|
378 |
|
|
(137 |
) |
|
(22 |
) |
Interest income |
(31 |
) |
|
(17 |
) |
|
(25 |
) |
|
(4 |
) |
Interest expense |
136 |
|
|
102 |
|
|
101 |
|
|
16 |
|
Income tax expense (benefit) |
(50 |
) |
|
132 |
|
|
(13 |
) |
|
(2 |
) |
Depreciation and amortization |
347 |
|
|
362 |
|
|
368 |
|
|
57 |
|
EBITDA (non-GAAP) |
190 |
|
|
957 |
|
|
294 |
|
|
45 |
|
Share-based compensation expense |
33 |
|
|
28 |
|
|
31 |
|
|
5 |
|
Unrealized (gains) losses from fair value changes of equity
securities |
(39 |
) |
|
58 |
|
|
60 |
|
|
9 |
|
Adjusted EBITDA (non-GAAP) |
184 |
|
|
1,043 |
|
|
385 |
|
|
59 |
|
Operating Results:
Legacy-Huazhu(1)
|
Number of hotels |
|
Number of rooms |
|
Opened in Q3 2021 |
Closed (2)in Q3
2021 |
Net added in Q3 2021 |
As of September 30,2021
(3) |
|
as of September 30,2021 |
|
|
Leased and owned hotels |
2 |
(14 |
) |
(12 |
) |
663 |
|
91,609 |
Manachised and franchised hotels |
479 |
(126 |
) |
353 |
|
6,682 |
|
607,059 |
Total |
481 |
(140 |
) |
341 |
|
7,345 |
|
698,668 |
(1) Legacy-Huazhu refers to Huazhu and its subsidiaries,
excluding DH.(2) The reasons for hotel closures mainly
included non-compliance with our brand standards, operating losses,
and property-related issues. In Q3 2021, we temporarily closed 18
hotels for brand upgrade and business model change
purposes.(3) As of September 30, 2021, 120 hotels were
requisitioned by governmental authorities. |
|
As of September 30, 2021 |
|
Number of hotels |
Unopened hotels in pipeline |
Economy hotels |
4,621 |
1,374 |
Leased and owned hotels |
404 |
3 |
Manachised and franchised hotels |
4,217 |
1,371 |
Midscale and upscale hotels |
2,724 |
1,414 |
Leased and owned hotels |
259 |
14 |
Manachised and franchised hotels |
2,465 |
1,400 |
Total |
7,345 |
2,788 |
Operational hotels excluding hotels under
requisition |
|
For the quarter ended |
|
|
September 30, |
June 30, |
September 30, |
yoy |
|
2020 |
|
2021 |
|
2021 |
|
change |
Average daily room rate (in RMB) |
|
|
|
Leased and owned hotels |
255 |
|
311 |
|
296 |
|
16.0% |
|
Manachised and franchised hotels |
211 |
|
246 |
|
238 |
|
12.8% |
|
Blended |
218 |
|
255 |
|
246 |
|
12.8% |
|
Occupancy Rate (as a percentage) |
|
|
|
Leased and owned hotels |
82.9% |
|
81.1% |
|
69.7% |
|
-13.1p.p. |
|
Manachised and franchised hotels |
81.8% |
|
82.5% |
|
72.2% |
|
-9.6p.p. |
|
Blended |
82.0% |
|
82.3% |
|
71.9% |
|
-10.1p.p. |
|
RevPAR (in RMB) |
|
|
|
|
Leased and owned hotels |
211 |
|
252 |
|
206 |
|
-2.4% |
|
Manachised and franchised hotels |
173 |
|
203 |
|
172 |
|
-0.5% |
|
Blended |
179 |
|
210 |
|
177 |
|
-1.1% |
|
|
For the quarter ended |
|
September 30, |
September 30, |
yoy |
|
2019 |
|
2021 |
|
change |
Average daily room rate (in RMB) |
|
|
Leased and owned hotels |
288 |
|
296 |
|
2.7% |
|
Manachised and franchised hotels |
235 |
|
238 |
|
1.2% |
|
Blended |
245 |
|
246 |
|
0.3% |
|
Occupancy Rate (as a percentage) |
|
|
Leased and owned hotels |
90.0% |
|
69.7% |
|
-20.3p.p. |
|
Manachised and franchised hotels |
87.2% |
|
72.2% |
|
-15.0p.p. |
|
Blended |
87.7% |
|
71.9% |
|
-15.8p.p. |
|
RevPAR (in RMB) |
|
|
|
Leased and owned hotels |
259 |
|
206 |
|
-20.4% |
|
Manachised and franchised hotels |
205 |
|
172 |
|
-16.2% |
|
Blended |
215 |
|
177 |
|
-17.8% |
|
Same-hotel operational data by class |
|
|
|
|
Mature hotels in operation for more than 18 months
(excluding hotels under requisition) |
|
Number of hotels |
Same-hotel RevPAR |
Same-hotel ADR |
Same-hotel Occupancy |
|
As ofSeptember 30, |
For the quarter |
yoy |
For the quarter |
yoy |
For the quarter |
yoy |
|
ended September 30, |
change |
ended September 30, |
change |
ended September 30, |
change |
|
2020 |
2021 |
2020 |
2021 |
|
2020 |
2021 |
|
2020 |
2021 |
(p.p.) |
Economy hotels |
3,157 |
3,157 |
147 |
141 |
-3.9% |
170 |
187 |
10.3% |
86.6% |
75.4% |
-11.2 |
Leased and owned hotels |
398 |
398 |
162 |
157 |
-3.4% |
187 |
213 |
14.2% |
87.0% |
73.6% |
-13.4 |
Manachised and franchised hotels |
2,759 |
2,759 |
144 |
138 |
-4.1% |
166 |
182 |
9.5% |
86.5% |
75.8% |
-10.7 |
Midscale and upscale hotels |
1,646 |
1,646 |
244 |
225 |
-7.9% |
301 |
323 |
7.2% |
80.9% |
69.6% |
-11.3 |
Leased and owned hotels |
218 |
218 |
280 |
257 |
-8.3% |
358 |
392 |
9.5% |
78.4% |
65.7% |
-12.7 |
Manachised and franchised hotels |
1,428 |
1,428 |
236 |
217 |
-7.8% |
289 |
309 |
6.7% |
81.5% |
70.4% |
-11.0 |
Total |
4,803 |
4,803 |
187 |
176 |
-5.9% |
222 |
241 |
8.7% |
84.2% |
73.0% |
-11.3 |
|
|
Number of hotels |
Same-hotel RevPAR |
Same-hotel ADR |
Same-hotel Occupancy |
|
As ofSeptember 30, |
For the quarter |
yoy |
For the quarter |
yoy |
For the quarter |
yoy |
|
ended September 30, |
change |
ended September 30, |
change |
ended September 30, |
change |
|
2019 |
2021 |
2019 |
2021 |
|
2019 |
2021 |
|
2019 |
2021 |
(p.p.) |
Economy hotels |
2,364 |
2,364 |
187 |
141 |
-24.5% |
201 |
187 |
-6.7% |
93.2% |
75.4% |
-17.8 |
Leased and owned hotels |
385 |
385 |
209 |
154 |
-26.2% |
224 |
210 |
-6.2% |
93.5% |
73.5% |
-19.9 |
Manachised and franchised hotels |
1,979 |
1,979 |
181 |
138 |
-24.1% |
195 |
181 |
-6.9% |
93.1% |
75.9% |
-17.2 |
Midscale and upscale hotels |
1,057 |
1,057 |
293 |
219 |
-25.4% |
340 |
321 |
-5.6% |
86.4% |
68.2% |
-18.1 |
Leased and owned hotels |
187 |
187 |
355 |
245 |
-31.0% |
406 |
379 |
-6.7% |
87.3% |
64.5% |
-22.8 |
Manachised and franchised hotels |
870 |
870 |
275 |
211 |
-23.4% |
320 |
304 |
-4.9% |
86.1% |
69.4% |
-16.7 |
Total |
3,421 |
3,421 |
226 |
170 |
-24.8% |
249 |
234 |
-6.3% |
90.7% |
72.7% |
-17.9 |
Operating Results:
Legacy-DH(4)
|
Number of hotels |
|
Number ofrooms |
|
Unopened hotelsin pipeline |
|
Opened in Q3 2021 |
Closedin Q3 2021 |
Net added in Q3 2021 |
As of September
30,2021(5) |
|
As of September 30,2021 |
|
As ofSeptember 30,2021 |
Leased hotels |
1 |
- |
|
1 |
|
75 |
|
14,002 |
|
28 |
Manachised and franchised hotels |
- |
(2 |
) |
(2 |
) |
46 |
|
10,313 |
|
11 |
Total |
1 |
(2 |
) |
(1 |
) |
121 |
|
24,315 |
|
39 |
(4) Legacy-DH refers to DH. (5) As of September 30, 2021,
a total of 4 DH brand hotels were temporarily closed due to
COVID-19. 1 hotel is closed for renovation and 1 hotel is closed
temporarily due to flood damage. |
|
For the quarter ended |
|
|
September 30, |
June 30, |
September 30, |
yoy |
|
2020 |
|
2021 |
|
2021 |
|
change |
Average daily room rate (in EUR) |
|
|
|
|
Leased hotels |
88 |
|
85 |
|
94 |
|
6.8% |
|
Manachised and franchised hotels |
101 |
|
78 |
|
104 |
|
3.6% |
|
Blended |
93 |
|
81 |
|
99 |
|
6.1% |
|
Occupancy rate (as a percentage) |
|
|
|
|
Leased hotels |
38.2% |
|
20.0% |
|
48.0% |
|
9.8p.p. |
|
Managed and franchised hotels |
37.5% |
|
30.8% |
|
49.4% |
|
12.0p.p. |
|
Blended |
37.9% |
|
24.4% |
|
48.6% |
|
10.7p.p. |
|
RevPAR (in EUR) |
|
|
|
|
Leased hotels |
34 |
|
17 |
|
45 |
|
34.1% |
|
Managed and franchised hotels |
38 |
|
24 |
|
52 |
|
36.7% |
|
Blended |
35 |
|
20 |
|
48 |
|
35.9% |
|
Hotel Portfolio by Brand
|
Total |
|
Hotels |
Rooms |
Unopened hotels |
|
in operation |
in pipeline |
Economy hotels |
4,635 |
382,337 |
1,386 |
HanTing Hotel |
2,937 |
268,347 |
765 |
Hi Inn |
430 |
25,069 |
107 |
Elan Hotel(6) |
1,040 |
64,757 |
468 |
Ibis Hotel |
214 |
22,503 |
34 |
Zleep Hotels |
14 |
1,661 |
12 |
Midscale hotels |
2,288 |
256,146 |
1,099 |
Ibis Styles Hotel |
78 |
8,299 |
17 |
Starway Hotel |
496 |
41,913 |
280 |
JI Hotel |
1,294 |
158,008 |
588 |
Orange Hotel |
390 |
43,146 |
209 |
CitiGO Hotel |
30 |
4,780 |
5 |
Upper midscale hotels |
429 |
63,959 |
276 |
Crystal Orange Hotel |
137 |
18,406 |
67 |
Manxin Hotel |
76 |
7,416 |
63 |
Madison Hotel |
35 |
5,247 |
54 |
Mercure Hotel |
119 |
20,561 |
52 |
Novotel Hotel |
14 |
3,723 |
16 |
IntercityHotel(7) |
48 |
8,606 |
24 |
Upscale hotels |
107 |
18,383 |
62 |
Jaz in the City |
3 |
587 |
1 |
Joya Hotel |
9 |
1,760 |
0 |
Blossom House |
32 |
1,579 |
35 |
Grand Mercure Hotel |
7 |
1,485 |
6 |
Steigenberger Hotels & Resorts(8) |
50 |
12,013 |
14 |
MAXX (9) |
6 |
959 |
6 |
Others |
7 |
2,158 |
4 |
Other hotels(10) |
7 |
2,158 |
4 |
Total |
7,466 |
722,983 |
2,827 |
(6) As of September 30, 2021, 46 Ni Hao Hotels were
included in the operational hotel for Elan Hotels and 145 Ni Hao
hotels were included in the pipeline for Elan Hotels.(7) As of
September 30, 2021, 2 operational hotels and 6 pipeline hotels of
IntercityHotel were in China.(8) As of September 30, 2021, 1
operational hotel and 7 pipeline hotels of Steigenberger Hotels
& Resorts were in China.(9) As of September 30, 2021, 1
operational hotel and 5 pipeline hotels of MAXX were in China.(10)
Other hotels include other partner hotels and other hotel brands in
Yongle Huazhu Hotel & Resort Group (excluding Steigenberger
Hotels & Resorts and Blossom House).
______________________________
1 Hotel turnover refers to total transaction
value of room and non-room revenue from Huazhu hotels (i.e., leased
and operated, manachised and franchised hotels).2 The conversion of
Renminbi (“RMB”) into United States dollars (“US$”) is based on the
exchange rate of US$1.00=RMB6.4434 on September 30, 2021 as set
forth in H.10 statistical release of the U.S. Federal Reserve Board
and available at
http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.3
Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.4
As of September 30, 2021, the Company is still process the
evaluating the purchase price allocation of CitiGO. Hence, the
financial results for the third quarter of 2021 are based on the
preliminary numbers and are subject to change upon finalization.5
The conversion of Renminbi (“RMB”) into United States dollars
(“US$”) is based on the exchange rate of US$1.00=RMB6.4434 on
September 30, 2021 as set forth in H.10 statistical release of the
U.S. Federal Reserve Board and available at
http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.
Contact InformationInvestor RelationsTel: +86 (21)
6195 9561Email: ir@huazhu.comhttp://ir.huazhu.com
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