Huazhu Group Limited (NASDAQ: HTHT) (“Huazhu” or the “Company”), a
leading and fast-growing multi-brand hotel group in China, today
announced its unaudited financial results for the third quarter
ended September 30, 2018.
Third Quarter of 2018
Operational Highlights
- During the third quarter of 2018, Huazhu opened 235 hotels,
including 30 leased (“leased-and-operated”) hotels and 205
manachised (“franchised-and-managed”) hotels and franchised
hotels.
- The Company closed a total of 83 hotels, including 5 leased
hotels and 78 manachised and franchised hotels, during the third
quarter of 2018. This was mainly due to:a) The Company's strategic
focus to upgrade the quality of the product and service. The
Company closed 16 hotels for brand upgrade purposes and permanently
removed 20 hotels from its network for their non-compliance with
the brand and operating standards. These hotels were mainly under
HanTing, Elan and Hi Inn brands. By removing hotels of lower
quality, the Company is able to provide a more consistent customer
experience, which will help enhance both the brands and future
profitability. b) Property related issues, including
rezoning, and expiry of leases, which resulted in the closure of 28
hotels.c) Operating losses from hotels located mainly in
selected 3rd or lower tier cities which resulted in the closure of
19 hotels.
- As of September 30, 2018, the Company had 698 leased hotels,
3,139 manachised hotels, and 218 franchised hotels in operation in
391 cities. The number of hotel rooms in operation totaled 409,516,
an increase of 9.9% from a year ago.
- The ADR, which is defined as the average daily rate for all
hotels in operation, was RMB239 in the third quarter of 2018,
compared with RMB218 in the third quarter of 2017 and RMB226 in the
previous quarter. The year-over-year increase of 9.8% was due to
both an increase in ADR of the mature hotels, as well as an
increase in the proportion of mid- and up-scale hotels with higher
ADR in the Company’s brand mix. The sequential increase resulted
mainly from seasonality.
- The occupancy rate for all hotels in operation was 90.7% in the
third quarter of 2018, compared with 93.1% in the third quarter of
2017 and 89.6% in the previous quarter. The year-over-year decrease
of 2.3 percentage points was mainly due to the impacts of the
deferment of school summer holiday in July, and Mid-Autumn Festival
in September. The sequential increase was mainly due to
seasonality.
- RevPAR, defined as revenue per available room for all hotels in
operation, was RMB217 in the third quarter of 2018, compared with
RMB203 in the third quarter of 2017 and RMB203 in the previous
quarter. The year-over-year increase of 7.1% was attributable to
higher ADR. The sequential increase was mainly due to
seasonality.
- For all hotels which had been in operation for at least 18
months, the same-hotel RevPAR was RMB207 for the third quarter of
2018, representing a 4.2% increase from RMB199 for the third
quarter of 2017, with a 6.7% increase in ADR and a
2.3-percentage-point decrease in occupancy rate. The economy hotels
registered an 4.1% same-hotel RevPAR improvement, driven by a 7.2%
increase in ADR. The midscale and upscale hotels recorded a 4.3%
same-hotel RevPAR improvement, driven by a 5.0% increase in ADR.
Crystal Orange Hotels were not included in the same-hotel RevPAR
statistics as they have not been in Huazhu system for 18
months.
- As of September 30, 2018, the Company’s loyalty program had
approximately 118 million members, who contributed approximately
76% of room nights sold during the third quarter of 2018 and
approximately 86% of room nights were sold through the Company’s
own direct channels.
1 The conversion of Renminbi (“RMB”) into United
States dollars (“US$”) is based on the exchange rate of US$1.00=
RMB6.8680 on September 28, 2018 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.
“We are excited to deliver another quarter with
strong growth in both hotel openings and revenue growth. In the
third quarter, we added a net of 152 hotels, bringing our total
number of hotels in operation to 4,055. Our hotels in the pipeline
had grown to a historical high of 924 at the end of the third
quarter. This shows that our brands and products are well received
by our customers and hotel owners. We are well on track for the
hotel opening target for this year, and we are confident to further
accelerate our new hotel opening in the coming 2019. We are also
happy to announce that our flagship midscale hotel brand, the JI
brand had exceeded the 500 hotels milestone for hotel in
operations, and also recorded a historical high hotel in pipeline
of 250 at the end of this quarter. Given JI brand’s characteristic
design and superior profitability, we believe the JI brand will
continue to accelerate its growth momentum in years to come.
Huazhu’s other relatively younger and newly-acquired midscale
brands have also started to build their own momentum for fast
expansion, supported by our strong direct sales channels and
centralized operating platform. We believe a number of these brands
will follow JI brand’s growth trajectory to become a much bigger
brand in the years to come,” commented Ms. Jenny Zhang, Chief
Executive Officer of Huazhu.
Third Quarter of 2018
Financial ResultsSince the first quarter of 2018, the
Company adopted new revenue recognition standards and all prior
year numbers are restated using the new standards. Please see the
“Adoption of New Revenue Recognition Accounting Standards” section
of this release for more information.
(RMB in
thousands) |
Q3 2017 |
Q2 2018 |
Q3 2018 |
Revenues: |
|
|
|
Leased
and owned hotels |
1,853,834 |
1,899,707 |
2,052,581 |
Manachised and franchised hotels |
525,063 |
615,976 |
699,223 |
Others |
8,445 |
5,597 |
15,757 |
Net
revenues |
2,387,342 |
2,521,280 |
2,767,561 |
|
|
|
|
Net revenues for the third
quarter of 2018 were RMB2,767.6 million (US$403.0 million),
representing a 15.9% year-over-year increase and a 9.8% sequential
increase. The year-over-year increase was primarily due to our
hotel network expansion and improved blended RevPAR. The sequential
increase was due to seasonality.
Net revenues from leased and owned
hotels for the third quarter of 2018 were RMB2,052.6
million (US$298.9 million), representing a 10.7% year-over-year
increase and an 8.0% sequential increase.
Net revenues from manachised and
franchised hotels for the third quarter of 2018 were
RMB699.2 million (US$101.8 million), representing a 33.2%
year-over-year increase and a 13.5% sequential increase. Net
revenues from manachised and franchised hotels accounted for 25.3%
of the Company’s net revenues in the third quarter of 2018, up from
22.0% a year ago.
Other revenues represent
revenues generated from other than hotel businesses, which mainly
include revenues from Huazhu mall and the provision of IT products
and services to hotels, totaling RMB15.8 million (US$2.3 million)
in the third quarter of 2018.
(RMB in
thousands) |
Q3 2017 |
Q2 2018 |
Q3 2018 |
Operating costs and expenses: |
|
|
|
Hotel
operating costs |
1,503,838 |
1,575,100 |
1,657,803 |
Other
operating costs |
4,816 |
2,137 |
1,685 |
Selling
and marketing expenses |
74,409 |
83,090 |
91,322 |
General
and administrative expenses |
153,725 |
189,514 |
233,353 |
Pre-opening expenses |
67,632 |
65,612 |
59,894 |
Total
operating costs and expenses |
1,804,420 |
1,915,453 |
2,044,057 |
|
|
|
|
Hotel operating costs for the
third quarter of 2018 were RMB1,657.8 million (US$241.4 million),
compared to RMB1,503.8 million in the third quarter of 2017,
representing a 10.2% year-over-year increase. Total hotel operating
costs excluding share-based compensation expenses (non-GAAP) for
the third quarter of 2018 were RMB1,651.2 million (US$240.4
million), representing 59.7% of net revenues, compared to 62.8% for
the third quarter in 2017 and 62.2% for the previous quarter. The
year-over-year decrease in the percentage was mainly attributable
to the improved blended RevPAR and increased proportion of
manachised and franchised hotels.
Selling and marketing expenses
for the third quarter of 2018 were RMB91.3 million (US$13.3
million), compared to RMB74.4 million in the third quarter of 2017
and RMB83.1 million in the previous quarter. Selling and marketing
expenses excluding share-based compensation expenses (non-GAAP) for
the third quarter of 2018 were RMB90.9 million (US$13.2 million),
or 3.3% of net revenues, compared to 3.1% for the third quarter of
2017 and 3.3% for the previous quarter.
General and administrative
expenses for the third quarter of 2018 were RMB233.4
million (US$34.0 million), compared to RMB153.7 million in the
third quarter of 2017 and RMB189.5 million in the previous quarter.
General and administrative expenses excluding share-based
compensation expenses (non-GAAP) for the third quarter of 2018 were
RMB220.0 million (US$32.0 million), representing 7.9% of net
revenues, compared with 6.0% of net revenues in the third quarter
of 2017 and 7.1% in the previous quarter. The year-over-year
increase in percentage was mainly due to (a) higher professional
fees related to hotel investment; and (b) increase in personnel
cost relating to new hotel developments, new business initiatives
around our core hotel business, information technology services,
and a quarterly accrual of a long-term profit-sharing bonus. In
2017, we accrued the entire amount of the long-term profit sharing
bonus in Q4 2017 when we established the plan.
Pre-opening expenses for the
third quarter of 2018 were RMB59.9 million (US$8.7 million),
representing a 11.4% year-over-year decrease and an 8.7% sequential
decrease.
Other operating income, net for
the third quarter of 2018 were RMB51.3 million (US$7.5 million)
mainly related to compensation received from the landlords on
termination of certain lease hotels, compared to RMB0.1 million in
the third quarter of 2017 and RMB65.2 million in the previous
quarter.
Income from operations for the
third quarter of 2018 was RMB774.8 million (US$112.8 million),
representing a 32.9% year-over-year increase and a 15.5% sequential
increase. Excluding share-based compensation expenses, adjusted
income from operations (non-GAAP) for the third quarter of 2018 was
RMB795.2 million (US$115.8 million), compared to adjusted income
from operation (non-GAAP) of RMB598.4 million for the third quarter
of 2017 and RMB689.7 million for the previous quarter. The
operating margin, defined as income from operations as percentage
of net revenues, for the third quarter of 2018 was 28.0%, compared
with 24.4% in the third quarter of 2017 and 26.6% in the previous
quarter. The improved year-over-year operating margin was mainly
attributable to the improved blended RevPAR and asset-light
strategy.
Other income, net for the third
quarter of 2018 was RMB16.3 million (US$2.4 million), compared to
RMB39.7 million for the third quarter of 2017 and RMB195.0 million
for the previous quarter.
Unrealized gains from fair value changes
of equity securities for the third quarter of 2018 was
RMB179.2 million (US$26.1 million), compared to unrealized gains
from fair value changes of equity securities of RMB11.4 million in
the third quarter of 2017 and unrealized losses from fair value
changes of equity securities of RMB200.8 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. The unrealized gains (losses)
will have a significant impact on our GAAP net income going
forward.
Net income attributable to Huazhu Group
Limited for the third quarter of 2018 was RMB667.8 million
(US$97.2 million), compared to RMB463.8 million in the third
quarter of 2017 and RMB338.4 million in the previous quarter.
Excluding share-based compensation expenses and the unrealized
gains (losses) from fair value changes of equity securities,
adjusted net income attributable to Huazhu Group Limited (non-GAAP)
for the third quarter of 2018 was RMB508.9 million (US$74.1
million), representing a 8.8% year-over-year increase and a 8.8%
sequential decrease.
Basic and diluted earnings per
share/ADS. For the third quarter of 2018, basic earnings
per share were RMB2.37 (US$0.34) and diluted earnings per share
were RMB2.23 (US$0.32). For the third quarter of 2018, excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities, adjusted basic
earnings per share (non-GAAP) were RMB1.80 (US$0.26) and adjusted
diluted earnings per share (non-GAAP) were RMB1.71 (US$0.24).
EBITDA (non-GAAP) for the third
quarter of 2018 was RMB1,165.6 million (US$169.7 million), compared
with RMB841.3 million in the third quarter of 2017 and RMB745.6
million in the previous quarter. Excluding share-based compensation
expenses and unrealized gains (losses) from fair value changes of
equity securities, adjusted EBITDA (non-GAAP) for the third quarter
of 2018 was RMB1,006.8 million (US$146.6 million), compared with
RMB845.2 million for the third quarter of 2017 and RMB965.0 million
for the previous quarter.
Cash flow. Operating cash
inflow for the third quarter of 2018 was RMB914.1 million (US$133.1
million). Investing cash outflow for the third quarter of 2018 was
RMB1,394.9 million (US$203.1 million), including RMB425.6 million
(US$62.0 million) for acquiring Blossom Hill Hotel Investment
Management (Kunshan) Co., Ltd.(“Blossom Hill”)2.
Cash and cash equivalents and Restricted
cash. As of September 30, 2018, the Company had a total
balance of cash and cash equivalents and restricted cash of
RMB4,547.4 million (US$662.1 million).
Debt financing. As of September
30, 2018, the Company had a total debt balance of RMB9,239.8
million (US$1,345.3 million) and the unutilized credit facility
available to the Company was RMB1,265.6 million.
Adoption of New Revenue Recognition
Accounting StandardsThe Company adopted Accounting
Standards Update 2014-09, Revenue from Contracts with Customers
(Topic 606) on January 1, 2018 on a full retrospective basis in the
condensed consolidated financial statements. As such, prior period
results have been adjusted to reflect the adoption of ASU
2014-09.
The most meaningful impacts of the adoption of
ASU 2014-09 are as follows:
Under previous guidance, initial one-time
franchise fee was recognized when the hotels opened for business
and the Company had fulfilled its commitments and obligations. Upon
adoption of new revenue standards, the one-time franchise fee will
be recognized over the term of the franchise contract.
Under previous guidance, the Company adopted the
incremental cost model to account for customer loyalty program. The
estimated incremental costs, net of the reimbursement received from
the franchisees, are accrued and recorded as accruals for customer
loyalty program as members accumulate points and are recognized as
cost and expense in the accompanying consolidated statements of
comprehensive income. Under new revenue standards, loyalty program
is considered a separate performance obligation and the
consideration allocated to the loyalty program will be recognized
as revenue upon point redemption, net of any cost paid to the
franchisees and other third parties.
2 As of September 30, 2018, the Company is still
in the process of evaluating the purchase price allocation for
Blossom Hill. Hence, the financial results for the third quarter of
2018 are based on the preliminary numbers and are subject to change
upon finalization.
Guidance The Company expects
net revenues for the fourth quarter to grow 17%-19% year-over-year.
For the full year of 2018, the Company anticipates the net revenues
growth to be at high-end of previous guidance (18%-22%).
In 2019, the Company expects to accelerate the
gross hotel opening to 800-900, about 75%-80% of which will be
under midscale and upscale brands. The Company estimates to close
150-200 hotels in 2019.
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. ET, Thursday,
November 15, 2018 (or 9 a.m. on Friday, November 16, 2018 in the
Shanghai/Hong Kong time zone) following the announcement. To
participate in the event by telephone, please dial +1 (845) 675
0438 (for callers in the US), +86 400 120 0654 (for callers in
China Mainland), +852 3018 6776 (for callers in Hong Kong) or +65
6713 5440 (for callers outside of the US, China Mainland, and Hong
Kong) and enter pass code 7149749. 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
November 22, 2018. Please dial +1 (855) 452 5696 (for callers in
the US) or +61 2 9003 4211 (for callers outside the US) and
entering pass code 7149749.
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, http://ir.huazhu.com.
Use of Non-GAAP Financial
MeasuresTo supplement the Company’s unaudited consolidated
financial results presented in accordance with U.S. GAAP, the
Company uses the following non-GAAP measures defined as non-GAAP
financial measures by the 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 from operations excluding share-based compensation
expenses; adjusted net income 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 per share/ADS excluding share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities; EBITDA; and adjusted EBITDA excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities. 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 will provide 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 the 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 comparison 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 our reported results or
evaluating our economic performance of our businesses. These gains
and losses have caused and will continue to cause significant
volatility in periodic earnings.
Therefore, the Company believes adjusted EBITDA
more closely reflects the performance capability of 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 the 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
LimitedHuazhu Group Limited is a leading hotel operator
and franchisor in China. As of September 30, 2018, the Company had
4,055 hotels or 409,516 rooms in operation. With a primary focus on
economy and midscale hotel segments, Huazhu’s brands include Hi
Inn, Elan Hotel, HanTing Hotel, HanTing Premium Hotel, JI Hotel,
Starway Hotel, Manxin Hotel, Joya Hotel, Crystal Orange Hotel,
Orange Hotel Select, Orange Hotel and Blossom Hill. The Company
also has the rights as master franchisee for Mercure, Ibis and Ibis
Styles, and co-development rights for Grand Mercure and Novotel, in
Pan-China region. The Company's business includes leased and
owned, manachised and franchised models. Under the lease and
ownership model, the Company directly operates hotels typically
located on leased or owned properties. Under the manachise model,
the Company manages manachised hotels through the on-site hotel
managers it appoints and collects fees from franchisees. Under the
franchise model, the Company provides training, reservation and
support services to the franchised hotels and collects fees from
franchisees but does not appoint on-site hotel managers. The
Company applies a consistent standard and platform across all of
its hotels. As of September 30, 2018, Huazhu Group operates 21
percent of its hotel rooms under lease and ownership model, 79
percent under manachise and franchise models.
For more information, please visit the Company’s
website: http://ir.huazhu.com.
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995: The information in this
release contains forward-looking statements which involve risks and
uncertainties, including statements regarding the Company’s capital
needs, business strategy and expectations. 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. Any or all of the Company’s forward-looking statements may
turn out to be wrong. They can be affected by inaccurate
assumptions, risks and uncertainties and other factors which could
cause actual events or results to be materially different from
those expressed or implied in the forward-looking statements. In
evaluating these statements, readers should consider various
factors, including the anticipated growth strategies of the
Company, the future results of operations and financial condition
of the Company, the economic conditions of China, the regulatory
environment in China, the Company’s ability to attract customers
and leverage its brands, trends and competition in the lodging
industry, the expected growth of the lodging market in China and
other factors and risks outlined in the Company’s filings with the
Securities and Exchange Commission, including its annual report on
Form 20-F and other filings. These factors may cause the Company’s
actual results to differ materially from any forward-looking
statement. In addition, new factors emerge from time to time and it
is not possible for the Company to predict all factors that may
cause actual results to differ materially from those contained in
any forward-looking statements. Any projections in this release are
based on limited information currently available to the Company,
which is subject to change. This release also contains statements
or projections that are based upon information available to the
public, as well as other information from sources which the Company
believes to be reliable, but it is not guaranteed by the Company to
be accurate, nor does the Company purport it to be complete. The
Company disclaims any obligation to publicly update any
forward-looking statements to reflect events or circumstances after
the date of this document, except as required by applicable
law.
---Financial Tables and Operational Data
Follow—
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Balance
Sheets |
|
December 31, 2017 |
|
September 30, 2018 |
|
RMB |
|
RMB |
|
US$ |
|
(in thousands) |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
3,474,719 |
|
3,927,561 |
|
571,864 |
Restricted cash |
481,348 |
|
619,879 |
|
90,256 |
Short-term investments |
129,911 |
|
89,591 |
|
13,045 |
Accounts
receivable, net |
162,910 |
|
195,639 |
|
28,485 |
Loan
receivables |
380,580 |
|
104,267 |
|
15,182 |
Amounts
due from related parties |
118,537 |
|
145,487 |
|
21,183 |
Prepaid
rent |
659,973 |
|
571,072 |
|
83,150 |
Inventories |
24,006 |
|
39,137 |
|
5,698 |
Other
current assets |
329,140 |
|
417,917 |
|
60,850 |
Total
current assets |
5,761,124 |
|
6,110,550 |
|
889,713 |
|
|
|
|
|
|
Property and equipment, net |
4,522,878 |
|
4,956,074 |
|
721,618 |
Intangible assets, net |
1,643,972 |
|
1,849,233 |
|
269,254 |
Land
use rights |
140,108 |
|
221,711 |
|
32,282 |
Long-term investments |
2,361,969 |
|
6,750,741 |
|
982,927 |
Goodwill |
2,264,758 |
|
2,572,907 |
|
374,622 |
Loan
receivables |
42,330 |
|
164,799 |
|
23,995 |
Other
assets |
364,660 |
|
359,185 |
|
52,298 |
Deferred tax assets |
405,975 |
|
405,975 |
|
59,111 |
Total
assets |
17,507,774 |
|
23,391,175 |
|
3,405,820 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Short-term debt |
130,815 |
|
578,633 |
|
84,251 |
Accounts
payable |
766,565 |
|
829,655 |
|
120,800 |
Amounts
due to related parties |
36,890 |
|
49,757 |
|
7,245 |
Salary
and welfare payables |
427,070 |
|
326,706 |
|
47,569 |
Deferred
revenue |
942,651 |
|
1,063,012 |
|
154,778 |
Accrued
expenses and other current liabilities |
1,249,032 |
|
1,489,216 |
|
216,834 |
Income
tax payable |
218,238 |
|
239,868 |
|
34,925 |
Total
current liabilities |
3,771,261 |
|
4,576,847 |
|
666,402 |
|
|
|
|
|
|
Long-term debt |
4,921,774 |
|
8,661,135 |
|
1,261,086 |
Deferred
rent |
1,380,484 |
|
1,418,601 |
|
206,552 |
Deferred
revenue |
398,303 |
|
433,999 |
|
63,191 |
Other
long-term liabilities |
380,578 |
|
424,089 |
|
61,748 |
Deferred
tax liabilities |
422,090 |
|
473,699 |
|
68,972 |
Total
liabilities |
11,274,490 |
|
15,988,370 |
|
2,327,951 |
|
|
|
|
|
|
Equity: |
|
|
|
|
|
Ordinary
shares |
212 |
|
213 |
|
31 |
Treasury
shares |
(107,331 |
) |
(107,331 |
) |
(15,628 |
Additional paid-in capital |
3,624,135 |
|
3,684,968 |
|
536,542 |
Retained
earnings |
2,512,719 |
|
3,688,062 |
|
536,992 |
Accumulated other comprehensive income (loss) |
167,965 |
|
(61,982 |
) |
(9,025 |
Total Huazhu Group
Limited shareholders' equity |
6,197,700 |
|
7,203,930 |
|
1,048,912 |
Noncontrolling interest |
35,584 |
|
198,875 |
|
28,957 |
Total
equity |
6,233,284 |
|
7,402,805 |
|
1,077,869 |
Total
liabilities and equity |
17,507,774 |
|
23,391,175 |
|
3,405,820 |
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Comprehensive Income |
|
Quarter Ended |
|
September 30, 2017 |
|
June 30, 2018 |
|
September 30, 2018 |
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
(in
thousands, except per share and per ADS data) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leased
and owned hotels |
1,853,834 |
|
|
1,899,707 |
|
|
2,052,581 |
|
|
298,862 |
|
Manachised and franchised hotels |
525,063 |
|
|
615,976 |
|
|
699,223 |
|
|
101,809 |
|
Others |
8,445 |
|
|
5,597 |
|
|
15,757 |
|
|
2,294 |
|
Net
revenues |
2,387,342 |
|
|
2,521,280 |
|
|
2,767,561 |
|
|
402,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating costs: |
|
|
|
|
|
|
|
|
|
|
|
Rents |
(533,285 |
) |
|
(585,283 |
) |
|
(594,593 |
) |
|
(86,574 |
) |
Utilities |
(104,175 |
) |
|
(76,263 |
) |
|
(110,019 |
) |
|
(16,019 |
) |
Personnel
costs |
(365,983 |
) |
|
(421,573 |
) |
|
(428,924 |
) |
|
(62,453 |
) |
Depreciation and amortization |
(214,069 |
) |
|
(219,122 |
) |
|
(215,942 |
) |
|
(31,442 |
) |
Consumables, food and beverage |
(150,371 |
) |
|
(169,893 |
) |
|
(179,414 |
) |
|
(26,123 |
) |
Others |
(135,955 |
) |
|
(102,966 |
) |
|
(128,911 |
) |
|
(18,770 |
) |
Total
hotel operating costs |
(1,503,838 |
) |
|
(1,575,100 |
) |
|
(1,657,803 |
) |
|
(241,381 |
) |
Other
operating costs |
(4,816 |
) |
|
(2,137 |
) |
|
(1,685 |
) |
|
(245 |
) |
Selling
and marketing expenses |
(74,409 |
) |
|
(83,090 |
) |
|
(91,322 |
) |
|
(13,297 |
) |
General
and administrative expenses |
(153,725 |
) |
|
(189,514 |
) |
|
(233,353 |
) |
|
(33,977 |
) |
Pre-opening expenses |
(67,632 |
) |
|
(65,612 |
) |
|
(59,894 |
) |
|
(8,721 |
) |
Total
operating costs and expenses |
(1,804,420 |
) |
|
(1,915,453 |
) |
|
(2,044,057 |
) |
|
(297,621 |
) |
Other
operating income (expense), net |
137 |
|
|
65,209 |
|
|
51,268 |
|
|
7,465 |
|
Income
from operations |
583,059 |
|
|
671,036 |
|
|
774,772 |
|
|
112,809 |
|
Interest
income |
31,807 |
|
|
39,000 |
|
|
41,870 |
|
|
6,096 |
|
Interest
expense |
(34,797 |
) |
|
(58,827 |
) |
|
(63,306 |
) |
|
(9,217 |
) |
Other
income (expense), net |
39,717 |
|
|
194,989 |
|
|
16,286 |
|
|
2,371 |
|
Unrealized gains (losses) from fair value changes of equity
securities |
11,406 |
|
|
(200,763 |
) |
|
179,229 |
|
|
26,096 |
|
Foreign
exchange gain (loss) |
(5,833 |
) |
|
(131,646 |
) |
|
(433 |
) |
|
(63 |
) |
Income
before income taxes |
625,359 |
|
|
513,789 |
|
|
948,418 |
|
|
138,092 |
|
Income
tax expense |
(156,374 |
) |
|
(163,575 |
) |
|
(254,843 |
) |
|
(37,106 |
) |
(Loss)
from equity method investments |
(3,279 |
) |
|
(10,663 |
) |
|
(18,432 |
) |
|
(2,684 |
) |
Net
income |
465,706 |
|
|
339,551 |
|
|
675,143 |
|
|
98,302 |
|
Less:
net loss (income) attributable to noncontrolling interest |
(1,858 |
) |
|
(1,124 |
) |
|
(7,391 |
) |
|
(1,076 |
) |
Net
income attributable to Huazhu Group Limited |
463,848 |
|
|
338,427 |
|
|
667,752 |
|
|
97,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
Unrealized securities holding (losses), net of tax |
(5,757 |
) |
|
- |
|
|
- |
|
|
- |
|
Foreign
currency translation adjustments, net of tax |
71,077 |
|
|
(166,745 |
) |
|
(147,736 |
) |
|
(21,511 |
) |
Comprehensive income |
531,026 |
|
|
172,806 |
|
|
527,407 |
|
|
76,791 |
|
Comprehensive loss (income) attributable to noncontrolling
interest |
(1,858 |
) |
|
(1,124 |
) |
|
(7,391 |
) |
|
(1,076 |
) |
Comprehensive income attributable to Huazhu Group Limited |
529,168 |
|
|
171,682 |
|
|
520,016 |
|
|
75,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share/ADS3: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.66 |
|
|
1.20 |
|
|
2.37 |
|
|
0.34 |
|
Diluted |
1.60 |
|
|
1.14 |
|
|
2.23 |
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares used in computation: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
279,631 |
|
|
281,495 |
|
|
282,149 |
|
|
282,149 |
|
Diluted |
289,317 |
|
|
303,963 |
|
|
303,605 |
|
|
303,605 |
|
______________________________3 As of May 25, 2018, the company
changed its ADS to its ordinary share ratio from one ADS
representing four ordinary shares to one ADS representing one
ordinary share. Therefore, the company recalculated earnings per
ADS of the previous quarter using the new ratio.
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
Quarter Ended |
|
September
30, 2017 |
|
June 30,
2018 |
|
September
30, 2018 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
(in thousands) |
Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
465,706 |
|
|
339,551 |
|
|
675,143 |
|
|
98,302 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
15,302 |
|
|
18,630 |
|
|
20,397 |
|
|
2,970 |
|
Depreciation and amortization |
218,081 |
|
|
223,815 |
|
|
221,552 |
|
|
32,259 |
|
Amortization of issuance cost of convertible senior notes |
- |
|
|
6,455 |
|
|
6,852 |
|
|
998 |
|
Deferred
taxes |
752 |
|
|
(429 |
) |
|
4,332 |
|
|
631 |
|
Bad debt
expenses |
- |
|
|
741 |
|
|
788 |
|
|
115 |
|
Deferred
rent |
42,063 |
|
|
29,181 |
|
|
(5,959 |
) |
|
(868 |
) |
Loss
(Gain) from disposal of property and equipment |
- |
|
|
(5,762 |
) |
|
7,933 |
|
|
1,155 |
|
Impairment loss |
32,294 |
|
|
- |
|
|
10,818 |
|
|
1,575 |
|
Loss from
equity method investments |
3,279 |
|
|
10,663 |
|
|
18,432 |
|
|
2,684 |
|
Investment (income) loss |
(50,781 |
) |
|
267,239 |
|
|
(192,796 |
) |
|
(28,071 |
) |
Changes
in operating assets and liabilities, net of effect of
acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
(7,798 |
) |
|
(13,166 |
) |
|
21,849 |
|
|
3,181 |
|
Prepaid
rent |
(25,934 |
) |
|
1,472 |
|
|
2,777 |
|
|
404 |
|
Inventories |
5,527 |
|
|
(2,950 |
) |
|
(6,697 |
) |
|
(975 |
) |
Amounts
due from related parties |
(6,465 |
) |
|
11,967 |
|
|
(21,927 |
) |
|
(3,193 |
) |
Other
current assets |
(16,828 |
) |
|
(34,287 |
) |
|
(34,568 |
) |
|
(5,033 |
) |
Other
assets |
(23,696 |
) |
|
(10,943 |
) |
|
3,375 |
|
|
491 |
|
Accounts
payable |
11,114 |
|
|
8,618 |
|
|
(14,372 |
) |
|
(2,093 |
) |
Amounts
due to related parties |
311 |
|
|
20,366 |
|
|
(5,051 |
) |
|
(735 |
) |
Salary
and welfare payables |
(42,850 |
) |
|
101,500 |
|
|
(19,666 |
) |
|
(2,863 |
) |
Deferred
revenue |
33,982 |
|
|
35,499 |
|
|
53,559 |
|
|
7,798 |
|
Accrued
expenses and other current liabilities |
183,851 |
|
|
102,041 |
|
|
38,876 |
|
|
5,660 |
|
Income
tax payable |
47,266 |
|
|
26,859 |
|
|
114,238 |
|
|
16,633 |
|
Other
long-term liabilities |
12,984 |
|
|
2,974 |
|
|
14,220 |
|
|
2,070 |
|
Net
cash provided by operating activities |
898,160 |
|
|
1,140,034 |
|
|
914,105 |
|
|
133,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment |
(210,235 |
) |
|
(160,555 |
) |
|
(271,615 |
) |
|
(39,548 |
) |
Purchases
of intangibles |
(2,702 |
) |
|
(1,441 |
) |
|
(2,020 |
) |
|
(294 |
) |
Purchases
of land use rights |
- |
|
|
- |
|
|
(75,850 |
) |
|
(11,044 |
) |
Amount
received as a result of government zoning |
- |
|
|
4,660 |
|
|
- |
|
|
- |
|
Acquisitions, net of cash received |
- |
|
|
(39,042 |
) |
|
(430,890 |
) |
|
(62,739 |
) |
Proceeds
from disposal of subsidiary and branch, net of cash disposed |
- |
|
|
4,667 |
|
|
- |
|
|
- |
|
Purchases
of long-term investments |
(175,300 |
) |
|
(152,808 |
) |
|
(651,309 |
) |
|
(94,832 |
) |
Proceeds
from maturity/sale of long-term investments |
110 |
|
|
105,207 |
|
|
66,238 |
|
|
9,644 |
|
Payment
for shareholder loan to equity investees |
(30,370 |
) |
|
- |
|
|
- |
|
|
- |
|
Collection of shareholder loan from joint venture |
71,355 |
|
|
- |
|
|
- |
|
|
- |
|
Purchase
of short-term investments |
(95,802 |
) |
|
- |
|
|
- |
|
|
- |
|
Payment
for the origination of loan receivables |
(75,992 |
) |
|
(49,500 |
) |
|
(76,930 |
) |
|
(11,201 |
) |
Proceeds
from collection of loan receivables |
25,021 |
|
|
94,970 |
|
|
47,448 |
|
|
6,909 |
|
Net
cash used in investing activities |
(493,915 |
) |
|
(193,842 |
) |
|
(1,394,928 |
) |
|
(203,105 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
Quarter Ended |
|
September 30, 2017 |
|
June 30, 2018 |
|
September 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
(in thousands) |
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds from issuance of ordinary shares upon exercise of
options |
580 |
|
|
11,959 |
|
|
398 |
|
|
58 |
|
Proceeds
from short-term bank borrowings |
- |
|
|
70,000 |
|
|
268,405 |
|
|
39,080 |
|
Repayment
of short-term bank borrowings |
(26,913 |
) |
|
(128,288 |
) |
|
(90 |
) |
|
(13 |
) |
Proceeds
from long-term bank borrowings |
- |
|
|
- |
|
|
343,960 |
|
|
50,081 |
|
Repayment
of long-term bank borrowings |
- |
|
|
(507,207 |
) |
|
- |
|
|
- |
|
Funds
advanced from noncontrolling interest holders |
11,913 |
|
|
5,630 |
|
|
30,520 |
|
|
4,444 |
|
Repayment of funds advanced from noncontrolling interest
holders |
(7,053 |
) |
|
(1,680 |
) |
|
(2,500 |
) |
|
(364 |
) |
Acquisition of noncontrolling interest |
- |
|
|
(2,091 |
) |
|
(7,000 |
) |
|
(1,019 |
) |
Proceeds from amounts due to related parties |
- |
|
|
16,786 |
|
|
- |
|
|
- |
|
Repayment of amounts due to related parties |
- |
|
|
- |
|
|
(112,964 |
) |
|
(16,448 |
) |
Contribution from noncontrolling interest holders |
890 |
|
|
757 |
|
|
23,267 |
|
|
3,388 |
|
Dividends
paid to noncontrolling interest holders |
(240 |
) |
|
(407 |
) |
|
(2,309 |
) |
|
(336 |
) |
Net
cash provided by (used in) financing activities |
(20,823 |
) |
|
(534,541 |
) |
|
541,687 |
|
|
78,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
(4,677 |
) |
|
30,552 |
|
|
(334 |
) |
|
(48 |
) |
Net
increase (decrease) in cash and cash equivalents, and restricted
cash |
378,745 |
|
|
442,203 |
|
|
60,530 |
|
|
8,813 |
|
Cash,
cash equivalents and restricted cash at the beginning of the
period |
3,447,875 |
|
|
4,044,707 |
|
|
4,486,910 |
|
|
653,307 |
|
Cash,
cash equivalents and restricted cash at the end of the period |
3,826,620 |
|
|
4,486,910 |
|
|
4,547,440 |
|
|
662,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended September 30, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
|
RMB |
|
|
|
RMB |
|
|
|
(in thousands) |
Hotel operating
costs |
1,657,803 |
|
59.9 |
% |
|
6,607 |
|
0.2 |
% |
|
1,651,196 |
|
59.7 |
% |
Other
operating costs |
1,685 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
1,685 |
|
0.1 |
% |
Selling and marketing expenses |
91,322 |
|
3.3 |
% |
|
472 |
|
0.0 |
% |
|
90,850 |
|
3.3 |
% |
General and administrative expenses |
233,353 |
|
8.4 |
% |
|
13,318 |
|
0.5 |
% |
|
220,035 |
|
7.9 |
% |
Pre-opening expenses |
59,894 |
|
2.2 |
% |
|
- |
|
0.0 |
% |
|
59,894 |
|
2.2 |
% |
Total
operating costs and expenses |
2,044,057 |
|
73.9 |
% |
|
20,397 |
|
0.7 |
% |
|
2,023,660 |
|
73.2 |
% |
Income from operations |
774,772 |
|
28.0 |
% |
|
20,397 |
|
0.7 |
% |
|
795,169 |
|
28.7 |
% |
|
|
|
. |
|
|
|
|
|
|
|
Quarter Ended September 30, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
US$ |
|
|
|
US$ |
|
|
|
US$ |
|
|
|
(in thousands) |
Hotel
operating costs |
241,381 |
|
59.9 |
% |
|
962 |
|
0.2 |
% |
|
240,419 |
|
59.7 |
% |
Other
operating costs |
245 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
245 |
|
0.1 |
% |
Selling and marketing expenses |
13,297 |
|
3.3 |
% |
|
69 |
|
0.0 |
% |
|
13,228 |
|
3.3 |
% |
General and administrative expenses |
33,977 |
|
8.4 |
% |
|
1,939 |
|
0.5 |
% |
|
32,038 |
|
7.9 |
% |
Pre-opening expenses |
8,721 |
|
2.2 |
% |
|
- |
|
0.0 |
% |
|
8,721 |
|
2.2 |
% |
Total
operating costs and expenses |
297,621 |
|
73.9 |
% |
|
2,970 |
|
0.7 |
% |
|
294,651 |
|
73.2 |
% |
Income from operations |
112,809 |
|
28.0 |
% |
|
2,970 |
|
0.7 |
% |
|
115,779 |
|
28.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
|
RMB |
|
|
|
RMB |
|
|
|
(in thousands) |
Hotel
operating costs |
1,575,100 |
|
62.5 |
% |
|
6,964 |
|
0.3 |
% |
|
1,568,136 |
|
62.2 |
% |
Other
operating costs |
2,137 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
2,137 |
|
0.1 |
% |
Selling and marketing expenses |
83,090 |
|
3.3 |
% |
|
322 |
|
0.0 |
% |
|
82,768 |
|
3.3 |
% |
General and administrative expenses |
189,514 |
|
7.5 |
% |
|
11,344 |
|
0.4 |
% |
|
178,170 |
|
7.1 |
% |
Pre-opening expenses |
65,612 |
|
2.6 |
% |
|
- |
|
0.0 |
% |
|
65,612 |
|
2.6 |
% |
Total
operating costs and expenses |
1,915,453 |
|
76.0 |
% |
|
18,630 |
|
0.7 |
% |
|
1,896,823 |
|
75.3 |
% |
Income from operations |
671,036 |
|
26.6 |
% |
|
18,630 |
|
0.7 |
% |
|
689,666 |
|
27.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2017 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-basedCompensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
|
RMB |
|
|
|
RMB |
|
|
|
(in thousands) |
Hotel
operating costs |
1,503,838 |
|
63.0 |
% |
|
4,460 |
|
0.2 |
% |
|
1,499,378 |
|
62.8 |
% |
Other
operating costs |
4,816 |
|
0.2 |
% |
|
- |
|
0.0 |
% |
|
4,816 |
|
0.2 |
% |
Selling and marketing expenses |
74,409 |
|
3.1 |
% |
|
321 |
|
0.0 |
% |
|
74,088 |
|
3.1 |
% |
General and administrative expenses |
153,725 |
|
6.4 |
% |
|
10,521 |
|
0.4 |
% |
|
143,204 |
|
6.0 |
% |
Pre-opening expenses |
67,632 |
|
2.8 |
% |
|
- |
|
0.0 |
% |
|
67,632 |
|
2.8 |
% |
Total
operating costs and expenses |
1,804,420 |
|
75.5 |
% |
|
15,302 |
|
0.6 |
% |
|
1,789,118 |
|
74.9 |
% |
Income from operations |
583,059 |
|
24.4 |
% |
|
15,302 |
|
0.6 |
% |
|
598,361 |
|
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended |
|
September 30, 2017 |
|
June 30, 2018 |
|
September 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share and per ADS
data) |
Net income
attributable to Huazhu Group Limited (GAAP) |
463,848 |
|
|
338,427 |
|
|
667,752 |
|
|
97,226 |
|
Share-based compensation expenses |
15,302 |
|
|
18,630 |
|
|
20,397 |
|
|
2,970 |
|
Unrealized losses (gains) from fair value changes of equity
securities |
(11,406 |
) |
|
200,763 |
|
|
(179,229 |
) |
|
(26,096 |
) |
Adjusted net income attributable to Huazhu Group Limited
(non-GAAP) |
467,744 |
|
|
557,820 |
|
|
508,920 |
|
|
74,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share/ADS (GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.66 |
|
|
1.20 |
|
|
2.37 |
|
|
0.34 |
|
Diluted |
1.60 |
|
|
1.14 |
|
|
2.23 |
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share/ADS (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.67 |
|
|
1.98 |
|
|
1.80 |
|
|
0.26 |
|
Diluted |
1.62 |
|
|
1.87 |
|
|
1.71 |
|
|
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation |
|
|
|
|
|
|
|
|
|
|
|
Basic |
279,631 |
|
|
281,495 |
|
|
282,149 |
|
|
282,149 |
|
Diluted |
289,317 |
|
|
303,963 |
|
|
303,605 |
|
|
303,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
September 30, 2017 |
|
June 30, 2018 |
|
September 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Net income attributable to Huazhu Group Limited
(GAAP) |
463,848 |
|
|
338,427 |
|
|
667,752 |
|
|
97,226 |
|
Interest income |
(31,807 |
) |
|
(39,000 |
) |
|
(41,870 |
) |
|
(6,096 |
) |
Interest expense |
34,797 |
|
|
58,827 |
|
|
63,306 |
|
|
9,217 |
|
Income tax expense |
156,374 |
|
|
163,575 |
|
|
254,843 |
|
|
37,106 |
|
Depreciation and amortization |
218,081 |
|
|
223,815 |
|
|
221,552 |
|
|
32,259 |
|
EBITDA (non-GAAP) |
841,293 |
|
|
745,644 |
|
|
1,165,583 |
|
|
169,712 |
|
Share-based compensation |
15,302 |
|
|
18,630 |
|
|
20,397 |
|
|
2,970 |
|
Unrealized losses (gains) from fair value changes of equity
securities |
(11,406 |
) |
|
200,763 |
|
|
(179,229 |
) |
|
(26,096 |
) |
Adjusted EBITDA (non-GAAP) |
845,189 |
|
|
965,037 |
|
|
1,006,751 |
|
|
146,586 |
|
Huazhu Group Limited |
Operational
Data |
|
|
|
|
As of |
|
September
30, |
June 30, |
September
30, |
|
2017 |
2018 |
2018 |
Total hotels in
operation: |
3,656 |
|
3,903 |
|
4,055 |
|
Leased
and owned hotels |
684 |
|
673 |
|
698 |
|
Manachised hotels |
2,766 |
|
3,024 |
|
3,139 |
|
Franchised hotels |
206 |
|
206 |
|
218 |
|
Total hotel rooms in
operation |
372,464 |
|
393,417 |
|
409,516 |
|
Leased
and owned hotels |
86,568 |
|
86,231 |
|
86,825 |
|
Manachised hotels |
265,701 |
|
287,398 |
|
301,451 |
|
Franchised hotels |
20,195 |
|
19,788 |
|
21,240 |
|
Number of cities |
375 |
|
384 |
|
391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended |
|
September 30, |
June 30, |
September 30, |
|
2017 |
2018 |
2018 |
Occupancy
rate (as a percentage) |
|
|
Leased
and owned hotels |
92.8 |
% |
91.4 |
% |
92.0 |
% |
Manachised hotels |
94.1 |
% |
89.8 |
% |
91.1 |
% |
Franchised hotels |
78.9 |
% |
78.7 |
% |
80.7 |
% |
Blended |
93.1 |
% |
89.6 |
% |
90.7 |
% |
Average
daily room rate (in RMB) |
|
|
Leased
and owned hotels |
257 |
|
270 |
|
279 |
|
Manachised hotels |
204 |
|
212 |
|
226 |
|
Franchised hotels |
236 |
|
248 |
|
264 |
|
Blended |
218 |
|
226 |
|
239 |
|
RevPAR (in
RMB) |
|
|
|
Leased
and owned hotels |
238 |
|
246 |
|
257 |
|
Manachised hotels |
192 |
|
190 |
|
205 |
|
Franchised hotels |
186 |
|
195 |
|
213 |
|
Blended |
203 |
|
203 |
|
217 |
|
|
|
|
|
|
|
|
|
Same-hotel
Operational Data: like-for-like performance for leased, manachised
and franchised hotels opened for at least 18 months during the
current quarter |
|
As of and for the quarter ended |
|
|
|
September 30, |
|
|
2017 |
2018 |
|
Total |
2,908 |
|
2,908 |
|
|
Leased
and owned hotels |
551 |
|
551 |
|
|
Manachised hotels |
2,357 |
|
2,357 |
|
|
Occupancy rate (as a
percentage) |
95.5 |
% |
93.2 |
% |
|
Average daily room rate
(in RMB) |
208 |
|
222 |
|
|
RevPAR (in RMB) |
199 |
|
207 |
|
|
|
|
|
|
Hotel breakdown by segment |
|
|
|
|
|
As of September 30, 2018 |
|
Number of Hotels in Operation |
Number of Hotel Rooms in Operation |
Economy
hotels |
2,858 |
262,102 |
HanTing Hotel |
2,255 |
221,468 |
Leased
hotels |
426 |
49,101 |
Manachised hotels |
1,825 |
171,989 |
Franchised hotels |
4 |
378 |
Hi Inn |
392 |
25,197 |
Leased
hotels |
28 |
2,483 |
Manachised hotels |
315 |
19,787 |
Franchised hotels |
49 |
2,927 |
Elan Hotel |
204 |
14,715 |
Manachised hotels |
172 |
12,727 |
Franchised hotels |
32 |
1,988 |
Orange Hotel |
7 |
722 |
Leased
hotels |
5 |
559 |
Manachised hotels |
1 |
85 |
Franchised hotels |
1 |
78 |
Midscale hotels
and upscale hotels |
1,197 |
147,414 |
JI Hotel |
501 |
66,207 |
Leased
hotels |
91 |
15,732 |
Manachised hotels |
407 |
50,091 |
Franchised hotels |
3 |
384 |
Starway Hotel |
193 |
17,945 |
Leased
hotels |
2 |
385 |
Manachised hotels |
161 |
14,869 |
Franchised hotels |
30 |
2,691 |
Joya Hotel |
6 |
1,250 |
Leased
hotels |
4 |
720 |
Manachised hotels |
1 |
374 |
Franchised hotels |
1 |
156 |
Manxin Hotels &
Resorts |
21 |
1,949 |
Leased
hotels |
4 |
577 |
Manachised hotels |
14 |
1,268 |
Franchised hotels |
3 |
104 |
HanTing Premium
Hotel |
59 |
4,944 |
Leased
hotels |
19 |
1,573 |
Manachised hotels |
40 |
3,371 |
ibis Hotel |
125 |
15,580 |
Leased
and owned hotels |
19 |
3,417 |
Manachised hotels |
67 |
6,964 |
Franchised hotels |
39 |
5,199 |
ibis Styles Hotel |
28 |
3,696 |
Leased
hotels |
1 |
102 |
Manachised hotels |
25 |
3,272 |
Franchised hotels |
2 |
322 |
Mercure Hotel |
35 |
7,422 |
Leased
hotels |
9 |
2,164 |
Manachised hotels |
21 |
4,445 |
Franchised hotels |
5 |
813 |
Novotel Hotel |
7 |
2,411 |
Leased
hotels |
1 |
101 |
Manachised hotels |
4 |
1,741 |
Franchised hotels |
2 |
569 |
Grand Mercure
Hotel |
6 |
1,266 |
Leased
hotels |
1 |
277 |
Manachised hotels |
3 |
618 |
Franchised hotels |
2 |
371 |
Orange Select |
143 |
17,606 |
Leased
hotels |
50 |
6,596 |
Manachised hotels |
61 |
7,250 |
Franchised hotels |
32 |
3,760 |
Crystal Orange |
52 |
6,613 |
Leased
hotels |
20 |
2,642 |
Manachised hotels |
19 |
2,471 |
Franchised hotels |
13 |
1,500 |
Blossom Hill |
21 |
525 |
Leased
hotels |
18 |
396 |
Manachised hotels |
3 |
129 |
Total |
4,055 |
409,516 |
|
|
|
|
|
|
Same-hotel operational data by segment |
|
|
|
|
|
|
|
|
|
Number of hotels in operation |
Same-hotel RevPAR |
|
Same-hotel ADR |
|
Same-hotel Occupancy |
|
|
As of |
For the quarter ended |
|
For the quarter ended |
|
For the quarter ended |
|
|
September 30, |
September 30, |
yoy change |
September 30, |
yoy change |
September 30, |
yoy change |
|
2017 |
2018 |
2017 |
2018 |
2017 |
2018 |
2017 |
|
2018 |
|
Economy hotels |
2,425 |
2,425 |
178 |
185 |
4.1 |
% |
182 |
196 |
7.2 |
% |
98 |
% |
95 |
% |
-2.8 |
% |
Leased
hotels |
450 |
450 |
182 |
197 |
8.3 |
% |
192 |
208 |
8.5 |
% |
95 |
% |
94 |
% |
-0.2 |
% |
Manachised and franchised hotels |
1,975 |
1,975 |
177 |
182 |
2.9 |
% |
180 |
192 |
6.7 |
% |
98 |
% |
95 |
% |
-3.5 |
% |
Midscale and upscale hotels |
483 |
483 |
272 |
284 |
4.3 |
% |
308 |
323 |
5.0 |
% |
88 |
% |
88 |
% |
-0.5 |
% |
Leased
and owned hotels |
101 |
101 |
326 |
339 |
4.1 |
% |
356 |
374 |
5.1 |
% |
92 |
% |
91 |
% |
-0.9 |
% |
Manachised and franchised hotels |
382 |
382 |
250 |
262 |
4.4 |
% |
288 |
302 |
4.9 |
% |
87 |
% |
87 |
% |
-0.4 |
% |
Total |
2,908 |
2,908 |
199 |
207 |
4.2 |
% |
208 |
222 |
6.7 |
% |
96 |
% |
93 |
% |
-2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Contact InformationInvestor RelationsTel: +86 (21) 6195
9561Email: ir@huazhu.com http://ir.huazhu.com
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