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 first quarter
ended March 31, 2019.
First Quarter of 2019
Operational Highlights
- During the first quarter of 2019, Huazhu opened 226 hotels,
including 11 leased (“leased-and-operated”) hotels and 215
manachised (“franchised-and-managed”) hotels and franchised
hotels.
- The Company closed a total of 60 hotels, including 12 leased
hotels and 48 manachised and franchised hotels, during the first
quarter of 2019. This was mainly due to:
- Property related issues, including
rezoning and expiry of leases, which resulted in the closure of 22
hotels.
- Operating losses from hotels
located mainly in selected 3rd or lower tier cities which resulted
in the closure of 18 hotels.
- The Company's strategic focus to
upgrade the quality of the product and service. The Company closed
10 hotels for brand upgrade and business model change purposes; and
permanently removed 10 hotels from its network for their
non-compliance with the brand and operating standards. These hotels
were mainly under HanTing 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.
- As of March 31, 2019, the Company
had 698 leased hotels, 3,470 manachised hotels, and 228 franchised
hotels in operation in 404 cities. The number of hotels in
operation increased 15% from a year ago.
- As of March 31, 2019, the Company
had a total number of 1,311 hotels contracted or under
construction, including 50 leased hotels and 1,261 manachised and
franchised hotels. The pipeline represented 30% of the number of
hotels in operation as end of Q1 2019 compared to 19% a year
ago.
- The ADR, which is defined as the
average daily rate for all hotels in operation, was RMB221 in the
first quarter of 2019, compared with RMB207 in the first quarter of
2018. The year-over-year increase of 6.9% was due to both an
increase in ADR of the mature hotels, as well as an increase in the
proportion of midscale and upscale hotels with higher ADR in the
Company’s brand mix.
- The occupancy rate for all hotels
in operation was 80.6% in the first quarter of 2019, compared with
83.7% in the first quarter of 2018. The year-over-year decrease of
3.1 percentage points was mainly due to the softness in macro
economy.
- RevPAR, defined as revenue per
available room for all hotels in operation, was RMB178 in the first
quarter of 2019, compared with RMB173 in the first quarter of 2018.
The year-over-year increase of 2.9% was attributable to higher
ADR.
- For all hotels which had been in
operation for at least 18 months, the same-hotel RevPAR was RMB176
for the first quarter of 2019, representing a 0.4% decrease
year-over-year, with a 2.9% increase in ADR and a
2.8-percentage-point decrease in occupancy rate. Excluding hotel
rooms under renovation for product upgrade, the normalized
same-hotel RevPAR would have been flat.
- As of March 31, 2019, Huazhu’s
loyalty program had approximately 126 million members, who
contributed approximately 76% of room nights sold during the first
quarter of 2019 and approximately 84% of room nights were sold
through Huazhu’s own direct channels.
“We had a record-breaking hotels gross opening
in the first quarter with an average of 2.5 hotels every day. We
will continue our fast expansion in 2019, particularly for the mid-
and up-scale brands, supported by a record-high hotel pipeline of
1,311. In the first quarter of 2019, our mid- and up-scale room
count increased by 45% year-over-year, accounting for approximately
40% in total rooms in operation. With 82% of our pipeline hotel
rooms under the mid- and upscale brands, revenue contribution from
this segment will continue to increase,” commented Ms. Jenny Zhang,
Chief Executive Officer of Huazhu Group.
“In addition, we will continue to invest in our
brands, hotel developments and IT capabilities. We believe these
investments will strengthen our positions in the market and fuel
our continuing future growth,” added Ms Zhang.
1 Hotel turnover, refers to total transaction value of room and
non-room revenues from Huazhu hotels (i.e., leased and operate,
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=RMB6.7112 on March
29, 2019 as set forth in H.10 statistical release of the U.S.
Federal Reserve Board.
First Quarter of 2019
Financial Results
|
|
|
(RMB in
millions) |
Q1
2018 |
Q1
2019 |
Revenues: |
|
|
Leased and
owned hotels |
1,576 |
1,706 |
Manachised
and franchised hotels |
509 |
663 |
Others |
6 |
18 |
Net
revenues |
2,091 |
2,387 |
|
|
|
Net revenues for the first
quarter of 2019 were RMB2.4 billion (US$356 million), representing
a 14.2% year-over-year increase, primarily attributable to our
hotel network expansion and RevPAR growth.
Net revenues from leased and owned
hotels for the first quarter of 2019 were RMB1.7 billion
(US$254 million), representing an 8.2% year-over-year increase.
Net revenues from manachised and
franchised hotels for the first quarter of 2019 were
RMB663 million (US$99 million), representing a 30.3% year-over-year
increase. It accounted for 27.8% of the Company’s net revenues in
the first quarter of 2019, up from 24.3% a year ago.
|
|
|
(RMB in
millions) |
Q1
2018 |
Q1
2019 |
Operating costs and expenses: |
|
|
Hotel operating costs |
1,506 |
1,735 |
Other operating costs |
3 |
7 |
Selling and marketing expenses |
66 |
77 |
General and administrative expenses |
159 |
206 |
Pre-opening expenses |
75 |
104 |
Total
operating costs and expenses |
1,809 |
2,129 |
|
|
|
Hotel operating costs for the
first quarter of 2019 were RMB1.7 billion (US$257 million),
compared to RMB1.5 billion in the first quarter of 2018,
representing a 15.2% year-over-year increase. Total hotel operating
costs excluding share-based compensation expenses (non-GAAP) for
the first quarter of 2019 were RMB1.7 billion (US$256 million),
representing 72.4% of net revenues, compared to 71.8% for the first
quarter in 2018. The higher hotel operating costs mainly reflected
the increase in our hotel network (rentals, hotel headcounts,
utilities and consumables, etc.).
Selling and marketing expenses
for the first quarter of 2019 were RMB77 million (US$12 million),
compared to RMB66 million in the first quarter of 2018. Selling and
marketing expenses excluding share-based compensation expenses
(non-GAAP) for the first quarter of 2019 were RMB76 million (US$12
million), or 3.2% of net revenues, compared to 3.0% for the first
quarter of 2018. The year-over-year increase was mainly related to
expansion in sales and marketing team, increased bank charges for
online payments, and higher commission fees to online travel
agencies.
General and administrative
expenses for the first quarter of 2019 were RMB206 million
(US$31 million), compared to RMB159 million in the first quarter of
2018. General and administrative expenses excluding share-based
compensation expenses (non-GAAP) for the first quarter of 2019 were
RMB189 million (US$28 million), representing 7.9% of net revenues,
compared with 7.1% of net revenues in the first quarter of 2018.
The year-over-year increase was mainly due to our investments to
expand our hotel development teams, upscale brands and IT
capabilities.
Pre-opening expenses for the
first quarter of 2019 were RMB104 million (US$16 million),
representing a 38.7% year-over-year increase, mainly related to
upscale brand hotels.
Other operating income, net for
the first quarter of 2019 were RMB6 million (US$1 million) mainly
related to subsidy income, compared to RMB24 million in the first
quarter of 2018. The year-over-year variance was mainly due to
timing of receipts of such subsidy income.
Income from operations for the
first quarter of 2019 was RMB264 million (US$40 million; 11.1% on
net revenue), compared to RMB306 million (14.7% on net revenue) in
the first quarter of 2018. Excluding our investments to
expand our development teams, upscale brand hotels, and IT
capabilities, the pro-forma operating income for the first quarter
of 2019 would have been RMB352 million (14.7% on net revenue).
Other income, net for the first
quarter of 2019 was RMB65 million (US$10 million), compared to
other expense, net of RMB9 million for the first quarter of 2018.
Other income for the first quarter of 2019 was mainly related to
gain from disposal on marketable securities.
Unrealized losses from fair value
changes of equity securities for the first quarter of 2019
was RMB90 million (US$13 million), compared to RMB136 million in
the first quarter of 2018. These unrealized losses were mainly
related to lower market price of our investments in Accor at each
quarter end.
Net income attributable to Huazhu Group
Limited for the first quarter of 2019 was RMB106 million
(US$16 million), compared to net income attributable to Huazhu
Group Limited of RMB129 million in the first quarter of 2018.
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 first quarter of 2019 was RMB222 million (US$33 million),
compared to RMB282 million in the first quarter of 2018.
Basic and diluted earnings per
share/ADS. For the first quarter of 2019, basic earnings
per share were RMB0.37 (US$0.06) and diluted earnings per share
were RMB0.36 (US$0.05). For the first quarter of 2019, excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities, adjusted basic
earnings per share (non-GAAP) were RMB0.79 (US$0.12) and adjusted
diluted earnings per share (non-GAAP) were RMB0.76 (US$0.11).
EBITDA (non-GAAP) for the first
quarter of 2019 was RMB412 million (US$62 million), compared with
RMB406 million in the first quarter of 2018. Excluding share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities, adjusted EBITDA (non-GAAP) for the
first quarter of 2019 was RMB528 million (US$79 million, 22.1% on
net revenue), compared with RMB559 million (26.7% on net revenue)
for the first quarter of 2018. The pro forma adjusted EBITDA
(non-GAAP) would have been RMB610 million (25.5% on net revenue)
after considering the impact of our investments in development
teams, upscale brands hotel and IT capabilities mentioned
above.
Cash flow. Operating cash
inflow for the first quarter of 2019 was RMB147 million (US$22
million). Investing cash outflow for the first quarter was RMB378
million (US$56 million). Financing cash outflow for the first
quarter was RMB194 million (US$29 million)
Cash and cash equivalents and Restricted
cash. As of March 31, 2019, the Company had a total
balance of cash, cash equivalents and restricted cash of RMB4.5
billion (US$664 million).
Debt financing. As of March 31,
2019, the Company had a total loan balance of RMB10.0 billion
(US$1.5 billion) and the unutilized credit facility available to
the Company was RMB1.9 billion.
Adoption of New Lease Accounting
StandardsThe Company adopted Accounting Standards Update
2016-02, Leases (Topic 842) utilizing the optional transition
approach allowed under ASU 2018-11 and applying the package of
practical expedients beginning January 1, 2019. By applying ASU
2016-02 at the adoption date, as opposed to at the beginning of the
earliest period presented, the reporting for periods prior to
January 1, 2019 will continue to be reported in accordance with
Leases (Topic 840).
As a result of adoption, the Company recognized
operating lease right-of-use assets of RMB19.0 billion and related
operating lease liabilities of RMB19.5 billion for operating leases
on January 1, 2019. The Company reclassified from assets and
liabilities RMB0.5 billion net to operating lease right-of-use
assets. The adoption of ASU 2016-02 did not materially affect the
consolidated statements of income or consolidated statements of
cash flows and had no impact on the debt covenant compliance under
the current agreements.
Guidance In the second quarter
of 2019, the Company expects net revenues to grow 13% to 15%
year-over-year.
The Company revised the gross opening target of
800-900 hotels to 1,100-1,200 hotels, and hotel closure to 200-250
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 9 p.m. ET, Wednesday, May
22, 2019 (or 9 a.m. on Thursday, May 23, 2019 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 7554067. 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 May
30, 2019. 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
7554067.
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 March 31, 2019, the Company had
4,396 hotels or 439,614 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 March 31, 2019, Huazhu Group operates 20 percent
of its hotel rooms under lease and ownership model, 80 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, 2018 |
|
March 31, 2019 |
|
|
|
|
|
|
RMB |
RMB |
US$ |
|
(in
millions) |
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
4,262 |
|
3,840 |
|
572 |
|
Restricted cash |
622 |
|
617 |
|
92 |
|
Short-term investments |
89 |
|
84 |
|
12 |
|
Accounts receivable, net |
195 |
|
226 |
|
34 |
|
Loan receivables |
94 |
|
165 |
|
25 |
|
Amounts due from related parties |
176 |
|
224 |
|
33 |
|
Prepaid rent |
955 |
|
- |
|
- |
|
Inventories |
41 |
|
41 |
|
6 |
|
Other current assets |
540 |
|
536 |
|
80 |
|
Total
current assets |
6,974 |
|
5,733 |
|
854 |
|
|
|
|
|
Property
and equipment, net |
5,018 |
|
5,108 |
|
761 |
|
Intangible assets, net |
1,834 |
|
1,665 |
|
248 |
|
Operating
lease right-of-use assets |
- |
|
20,533 |
|
3,060 |
|
Land use
rights, net |
220 |
|
218 |
|
33 |
|
Long-term
investments |
6,152 |
|
5,747 |
|
856 |
|
Goodwill |
2,630 |
|
2,657 |
|
396 |
|
Loan
receivables |
189 |
|
235 |
|
35 |
|
Other
assets |
471 |
|
498 |
|
74 |
|
Deferred
tax assets |
505 |
|
497 |
|
74 |
|
Total
assets |
23,993 |
|
42,891 |
|
6,391 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Short-term debt |
948 |
|
1,437 |
|
215 |
|
Accounts payable |
890 |
|
788 |
|
117 |
|
Amounts due to related parties |
75 |
|
81 |
|
12 |
|
Salary and welfare payables |
521 |
|
354 |
|
53 |
|
Deferred revenue |
1,005 |
|
1,082 |
|
161 |
|
Operating lease liabilities, current |
- |
|
2,819 |
|
420 |
|
Accrued expenses and other current liabilities |
1,607 |
|
1,538 |
|
229 |
|
Dividends payable |
658 |
|
- |
|
- |
|
Income tax payable |
265 |
|
82 |
|
12 |
|
Total
current liabilities |
5,969 |
|
8,181 |
|
1,219 |
|
|
|
|
|
Long-term
debt |
8,812 |
|
8,583 |
|
1,279 |
|
Deferred
rent |
1,507 |
|
- |
|
- |
|
Operating
lease liabilities, noncurrent |
- |
|
18,175 |
|
2,708 |
|
Deferred
revenue |
458 |
|
450 |
|
67 |
|
Other
long-term liabilities |
453 |
|
474 |
|
71 |
|
Deferred tax
liabilities |
475 |
|
482 |
|
72 |
|
Total
liabilities |
17,674 |
|
36,345 |
|
5,416 |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
Ordinary shares |
0 |
|
0 |
|
0 |
|
Treasury shares |
(107 |
) |
(107 |
) |
(16 |
) |
Additional paid-in capital |
3,713 |
|
3,743 |
|
558 |
|
Retained earnings |
2,610 |
|
2,716 |
|
405 |
|
Accumulated other comprehensive (loss) income |
(42 |
) |
51 |
|
7 |
|
Total Huazhu
Group Limited shareholders' equity |
6,174 |
|
6,403 |
|
954 |
|
Noncontrolling interest |
145 |
|
143 |
|
21 |
|
Total
equity |
6,319 |
|
6,546 |
|
975 |
|
Total
liabilities and equity |
23,993 |
|
42,891 |
|
6,391 |
|
|
Huazhu Group
Limited |
Unaudited
Condensed Consolidated Statements of Comprehensive
Income |
|
Quarter Ended |
|
March 31, 2018 |
|
December 31, 2018 |
|
March 31, 2019 |
|
|
|
|
|
|
|
RMB |
RMB |
RMB |
US$ |
|
(in
millions, except share, per share and per ADS data) |
Revenues: |
|
|
|
|
Leased and owned hotels |
1,576 |
|
1,942 |
|
1,706 |
|
254 |
|
Manachised and franchised hotels |
509 |
|
703 |
|
663 |
|
99 |
|
Others |
6 |
|
38 |
|
18 |
|
3 |
|
Net
revenues |
2,091 |
|
2,683 |
|
2,387 |
|
356 |
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses: |
|
|
|
|
Hotel operating costs: |
|
|
|
|
Rents |
(564 |
) |
(662 |
) |
(651 |
) |
(97 |
) |
Utilities |
(126 |
) |
(87 |
) |
(129 |
) |
(19 |
) |
Personnel costs |
(376 |
) |
(436 |
) |
(446 |
) |
(66 |
) |
Depreciation and amortization |
(211 |
) |
(223 |
) |
(223 |
) |
(33 |
) |
Consumables, food and beverage |
(144 |
) |
(179 |
) |
(174 |
) |
(26 |
) |
Others |
(85 |
) |
(150 |
) |
(112 |
) |
(16 |
) |
Total hotel operating costs |
(1,506 |
) |
(1,737 |
) |
(1,735 |
) |
(257 |
) |
Other operating costs |
(3 |
) |
(8 |
) |
(7 |
) |
(1 |
) |
Selling and marketing expenses |
(66 |
) |
(108 |
) |
(77 |
) |
(12 |
) |
General and administrative expenses |
(159 |
) |
(269 |
) |
(206 |
) |
(31 |
) |
Pre-opening expenses |
(75 |
) |
(54 |
) |
(104 |
) |
(16 |
) |
Total
operating costs and expenses |
(1,809 |
) |
(2,176 |
) |
(2,129 |
) |
(317 |
) |
Other
operating income (expense), net |
24 |
|
85 |
|
6 |
|
1 |
|
Income from
operations |
306 |
|
592 |
|
264 |
|
40 |
|
Interest
income |
34 |
|
32 |
|
33 |
|
5 |
|
Interest
expense |
(51 |
) |
(70 |
) |
(77 |
) |
(12 |
) |
Other
(expense) income, net |
(9 |
) |
1 |
|
65 |
|
10 |
|
Unrealized
gains (losses) from fair value changes of equity securities |
(136 |
) |
(756 |
) |
(90 |
) |
(13 |
) |
Foreign
exchange gain (loss) |
30 |
|
(42 |
) |
(32 |
) |
(5 |
) |
Income
(Loss) before income taxes |
174 |
|
(243 |
) |
163 |
|
25 |
|
Income tax
expense |
(44 |
) |
(106 |
) |
(31 |
) |
(5 |
) |
Gain (Loss)
from equity method investments |
(4 |
) |
(64 |
) |
(33 |
) |
(5 |
) |
Net income
(loss) |
126 |
|
(413 |
) |
99 |
|
15 |
|
Net (income)
loss attributable to noncontrolling interest |
3 |
|
(6 |
) |
7 |
|
1 |
|
Net income
(loss) attributable to Huazhu Group Limited |
129 |
|
(419 |
) |
106 |
|
16 |
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
Foreign
currency translation adjustments, net of tax |
125 |
|
20 |
|
93 |
|
14 |
|
Comprehensive income (loss) |
251 |
|
(393 |
) |
192 |
|
29 |
|
Comprehensive (income) loss attributable to noncontrolling
interest |
3 |
|
(6 |
) |
7 |
|
1 |
|
Comprehensive income (loss) attributable to Huazhu Group
Limited |
254 |
|
(399 |
) |
199 |
|
30 |
|
|
|
|
|
|
|
|
|
|
|
Earnings
(Losses) per share/ADS2: |
|
|
|
|
Basic |
0.46 |
|
(1.48 |
) |
0.37 |
|
0.06 |
|
Diluted |
0.44 |
|
(1.48 |
) |
0.36 |
|
0.05 |
|
|
|
|
|
|
Weighted average
number of shares used in computation: |
|
|
Basic |
280,700,780 |
|
282,500,261 |
|
283,251,520 |
|
283,251,520 |
|
Diluted |
293,243,274 |
|
282,500,261 |
|
293,449,989 |
|
293,449,989 |
|
2 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 first quarter of 2018using the
new ratio.
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended March 31, 2019 |
|
GAAPResult |
|
% of NetRevenues |
|
|
Share-basedCompensation |
|
% of NetRevenues |
|
|
Non-GAAPResult |
|
% of NetRevenues |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
(in
millions) |
Hotel operating costs |
1,735 |
|
72.7 |
% |
|
8 |
|
0.3 |
% |
|
1,727 |
|
72.4 |
% |
Other operating costs |
7 |
|
0.3 |
% |
|
- |
|
0.0 |
% |
|
7 |
|
0.3 |
% |
Selling and marketing expenses |
77 |
|
3.2 |
% |
|
1 |
|
0.0 |
% |
|
76 |
|
3.2 |
% |
General and administrative expenses |
206 |
|
8.6 |
% |
|
17 |
|
0.7 |
% |
|
189 |
|
7.9 |
% |
Pre-opening expenses |
104 |
|
4.4 |
% |
|
- |
|
0.0 |
% |
|
104 |
|
4.4 |
% |
Total operating costs and expenses |
2,129 |
|
89.2 |
% |
|
26 |
|
1.0 |
% |
|
2,103 |
|
88.2 |
% |
Income from operations |
264 |
|
11.1 |
% |
|
26 |
|
1.0 |
% |
|
290 |
|
12.1 |
% |
|
|
. |
|
|
|
|
|
|
|
Quarter Ended March 31, 2019 |
|
GAAPResult |
|
% of NetRevenues |
|
|
Share-basedCompensation |
|
% of NetRevenues |
|
|
Non-GAAPResult |
|
% of NetRevenues |
|
|
US$ |
|
|
US$ |
|
|
US$ |
|
|
(in
millions) |
Hotel operating costs |
257 |
|
72.7 |
% |
|
1 |
|
0.3 |
% |
|
256 |
|
72.4 |
% |
Other operating costs |
1 |
|
0.3 |
% |
|
- |
|
0.0 |
% |
|
1 |
|
0.3 |
% |
Selling and marketing expenses |
12 |
|
3.2 |
% |
|
0 |
|
0.0 |
% |
|
12 |
|
3.2 |
% |
General and administrative expenses |
31 |
|
8.6 |
% |
|
3 |
|
0.7 |
% |
|
28 |
|
7.9 |
% |
Pre-opening expenses |
16 |
|
4.4 |
% |
|
- |
|
0.0 |
% |
|
16 |
|
4.4 |
% |
Total operating costs and expenses |
317 |
|
89.2 |
% |
|
4 |
|
1.0 |
% |
|
313 |
|
88.2 |
% |
Income from operations |
40 |
|
11.1 |
% |
|
4 |
|
1.0 |
% |
|
44 |
|
12.1 |
% |
|
|
|
|
|
Quarter Ended December 31, 2018 |
|
GAAPResult |
|
% of NetRevenues |
|
|
Share-basedCompensation |
|
% of NetRevenues |
|
|
Non-GAAPResult |
|
% of NetRevenues |
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
(in
millions) |
Hotel operating costs |
1,737 |
|
64.7 |
% |
|
9 |
|
0.3 |
% |
|
1,728 |
|
64.4 |
% |
Other operating costs |
8 |
|
0.3 |
% |
|
- |
|
0.0 |
% |
|
8 |
|
0.3 |
% |
Selling and marketing expenses |
108 |
|
4.0 |
% |
|
1 |
|
0.0 |
% |
|
107 |
|
4.0 |
% |
General and administrative expenses |
269 |
|
10.0 |
% |
|
17 |
|
0.7 |
% |
|
252 |
|
9.3 |
% |
Pre-opening expenses |
54 |
|
2.0 |
% |
|
- |
|
0.0 |
% |
|
54 |
|
2.0 |
% |
Total operating costs and expenses |
2,176 |
|
81.0 |
% |
|
27 |
|
1.0 |
% |
|
2,149 |
|
80.0 |
% |
Income from operations |
592 |
|
22.1 |
% |
|
27 |
|
1.0 |
% |
|
619 |
|
23.1 |
% |
|
|
|
|
|
Quarter Ended March 31, 2018 |
|
GAAPResult |
% of NetRevenues |
|
Share-basedCompensation |
% of NetRevenues |
|
Non-GAAPResult |
% of NetRevenues |
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
(in millions) |
Hotel operating costs |
1,506 |
|
72.0 |
% |
|
5 |
|
0.2 |
% |
|
1,501 |
|
71.8 |
% |
Other operating costs |
3 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
3 |
|
0.1 |
% |
Selling and marketing expenses |
66 |
|
3.1 |
% |
|
1 |
|
0.1 |
% |
|
65 |
|
3.0 |
% |
General and administrative expenses |
159 |
|
7.6 |
% |
|
11 |
|
0.5 |
% |
|
148 |
|
7.1 |
% |
Pre-opening expenses |
75 |
|
3.6 |
% |
|
- |
|
0.0 |
% |
|
75 |
|
3.6 |
% |
Total operating costs and expenses |
1,809 |
|
86.4 |
% |
|
17 |
|
0.8 |
% |
|
1,792 |
|
85.6 |
% |
Income from operations |
306 |
|
14.7 |
% |
|
17 |
|
0.8 |
% |
|
323 |
|
15.5 |
% |
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended |
|
March 31, 2018 |
|
December 31, 2018 |
|
|
March 31, 2019 |
|
|
RMB |
RMB |
RMB |
US$ |
|
(in
millions, except share, per share and per ADS data) |
Net income (loss) attributable to Huazhu Group Limited (GAAP) |
129 |
|
|
(419 |
) |
|
|
106 |
|
|
16 |
|
Share-based compensation expenses |
17 |
|
|
27 |
|
|
|
26 |
|
|
4 |
|
Unrealized (gains) losses from fair value changes of equity
securities |
136 |
|
|
756 |
|
|
|
90 |
|
|
13 |
|
Adjusted net income attributable to Huazhu Group Limited
(non-GAAP) |
282 |
|
|
364 |
|
|
|
222 |
|
|
33 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings (losses) per share/ADS (non-GAAP) |
Basic |
1.01 |
|
|
1.29 |
|
|
|
0.79 |
|
|
0.12 |
|
Diluted |
0.96 |
|
|
1.23 |
|
|
|
0.76 |
|
|
0.11 |
|
|
|
|
|
|
Weighted average number of shares used in computation |
Basic |
280,700,780 |
|
|
282,500,261 |
|
|
|
283,251,520 |
|
|
283,251,520 |
|
Diluted |
293,243,274 |
|
|
303,161,652 |
|
|
|
293,449,989 |
|
|
293,449,989 |
|
|
|
|
|
|
|
Quarter Ended |
|
March 31, 2018 |
|
December 31, 2018 |
|
|
March 31, 2019 |
|
|
RMB |
RMB |
RMB |
US$ |
|
(in
millions) |
Net income (loss) attributable to Huazhu Group Limited
(GAAP) |
129 |
|
|
(419 |
) |
|
|
106 |
|
|
16 |
|
Interest income |
(34 |
) |
|
(32 |
) |
|
|
(33 |
) |
|
(5 |
) |
Interest expense |
51 |
|
|
70 |
|
|
|
77 |
|
|
12 |
|
Income tax expense |
44 |
|
|
106 |
|
|
|
31 |
|
|
5 |
|
Depreciation and amortization |
216 |
|
|
229 |
|
|
|
231 |
|
|
34 |
|
EBITDA (non-GAAP) |
406 |
|
|
(46 |
) |
|
|
412 |
|
|
62 |
|
Share-based compensation |
17 |
|
|
27 |
|
|
|
26 |
|
|
4 |
|
Unrealized (gains) losses from fair value changes of equity
securities |
136 |
|
|
756 |
|
|
|
90 |
|
|
13 |
|
Adjusted EBITDA (non-GAAP) |
559 |
|
|
737 |
|
|
|
528 |
|
|
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Operational
Data |
|
|
|
|
As of |
|
March 31, |
December 31, |
March 31, |
|
2018 |
2018 |
2019 |
Total hotels in operation: |
3,817 |
|
4,230 |
|
4,396 |
|
Leased and owned
hotels |
673 |
|
699 |
|
698 |
|
Manachised hotels |
2,943 |
|
3,309 |
|
3,470 |
|
Franchised hotels |
201 |
|
222 |
|
228 |
|
|
|
|
|
|
|
|
Total hotel rooms in
operation |
384,959 |
|
422,747 |
|
439,614 |
|
Leased and owned
hotels |
85,508 |
|
86,787 |
|
87,766 |
|
Manachised hotels |
280,133 |
|
314,932 |
|
330,568 |
|
Franchised hotels |
19,318 |
|
21,028 |
|
21,280 |
|
|
|
|
|
|
|
|
Number of cities |
382 |
|
403 |
|
404 |
|
|
|
|
|
|
|
|
|
|
For the quarter ended |
|
March 31, |
December 31, |
March 31, |
|
2018 |
2018 |
2019 |
Average daily room rate
(in RMB) |
|
|
|
Leased and owned
hotels |
243 |
|
275 |
|
258 |
|
Manachised hotels |
194 |
|
216 |
|
210 |
|
Franchised hotels |
228 |
|
248 |
|
237 |
|
Blended |
207 |
|
230 |
|
221 |
|
|
|
|
|
Occupancy rate (as a
percentage) |
|
|
|
Leased and owned
hotels |
85.6 |
% |
86.7 |
% |
83.6 |
% |
Manachised hotels |
84.0 |
% |
85.5 |
% |
80.5 |
% |
Franchised hotels |
69.8 |
% |
74.5 |
% |
68.6 |
% |
Blended |
83.7 |
% |
85.2 |
% |
80.6 |
% |
|
|
|
|
RevPAR (in RMB) |
|
|
|
Leased and owned
hotels |
208 |
|
238 |
|
216 |
|
Manachised hotels |
163 |
|
185 |
|
169 |
|
Franchised hotels |
159 |
|
185 |
|
162 |
|
Blended |
173 |
|
196 |
|
178 |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
March 31, |
|
|
2018 |
2019 |
|
Total |
3,189 |
|
3,189 |
|
|
Leased and owned
hotels |
608 |
|
608 |
|
|
Manachised and
franchised hotels |
2,581 |
|
2,581 |
|
|
Occupancy rate (as a
percentage) |
86.1 |
% |
83.4 |
% |
|
Average daily room rate (in
RMB) |
205 |
|
211 |
|
|
RevPAR (in RMB) |
176 |
|
176 |
|
|
|
Note: Excluding
hotel rooms under renovations for product upgrades, the normalized
same-hotel RevPAR growth would be flat (0). |
|
Hotel
breakdown by segment |
|
|
|
As of March 31, 2019 |
|
Number of hotelsin operation |
Number of roomsin
operation |
Economy
hotels |
2,916 |
262,040 |
HanTing Hotel |
2,303 |
221,825 |
Hi Inn |
399 |
25,218 |
Elan Hotel |
207 |
14,275 |
Orange Hotel |
7 |
722 |
Midscale and
upscale hotels |
1,480 |
177,574 |
JI Hotel |
611 |
79,024 |
Starway Hotel |
230 |
20,189 |
Joya Hotel |
6 |
1,250 |
Manxin Hotels &
Resorts |
28 |
2,199 |
HanTing Premium
Hotel |
91 |
8,410 |
Ibis Hotel |
149 |
17,653 |
Ibis Styles
Hotel |
37 |
4,732 |
Mercure Hotel |
45 |
9,356 |
Novotel Hotel |
7 |
2,512 |
Grand
Mercure |
7 |
1,452 |
Orange Select |
189 |
22,576 |
Crystal Orange |
60 |
7,618 |
Blossom Hill |
20 |
603 |
Total |
4,396 |
439,614 |
|
|
|
Same-hotel
operational data by segment |
|
|
|
|
|
|
|
|
|
|
Number of hotelsin operation |
Same-hotelRevPAR |
|
Same-hotelADR |
|
Same-hotelOccupancy |
|
|
As of |
For the quarter ended |
|
For the quarter ended |
|
For the quarter ended |
|
|
March 31, |
March 31, |
yoychange |
March 31, |
yoychange |
March 31, |
yoychange(p.p.) |
|
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
|
2019 |
|
Economy hotels |
2,481 |
2,481 |
152 |
152 |
0.1 |
% |
170 |
176 |
3.7 |
% |
89.2 |
% |
86.1 |
% |
(3.1 |
) |
Leased hotels |
439 |
439 |
161 |
167 |
4.0 |
% |
181 |
191 |
5.4 |
% |
88.8 |
% |
87.7 |
% |
(1.1 |
) |
Manachised and
franchised hotels |
2,042 |
2,042 |
149 |
148 |
-1.1 |
% |
167 |
172 |
3.1 |
% |
89.3 |
% |
85.6 |
% |
(3.6 |
) |
Midscale and upscale hotels |
708 |
708 |
240 |
237 |
-1.1 |
% |
306 |
310 |
1.3 |
% |
78.4 |
% |
76.5 |
% |
(1.9 |
) |
Leased and owned
hotels |
169 |
169 |
295 |
287 |
-2.8 |
% |
360 |
362 |
0.4 |
% |
81.8 |
% |
79.3 |
% |
(2.6 |
) |
Manachised and
franchised hotels |
539 |
539 |
216 |
216 |
-0.1 |
% |
281 |
286 |
2.0 |
% |
76.9 |
% |
75.3 |
% |
(1.6 |
) |
Total |
3,189 |
3,189 |
176 |
176 |
-0.4 |
% |
205 |
211 |
2.9 |
% |
86.1 |
% |
83.4 |
% |
(2.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
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H World (NASDAQ:HTHT)
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