H World Group Limited (NASDAQ: HTHT and HKEX: 1179) (“
H
World”, the “
Company”,
“
we” or “
our”), a key player in
the global hotel industry, today announced its unaudited financial
results in the second quarter and the first half ended June 30,
2023.
As of June 30, 2023, H World’s worldwide hotel
network in operation totaled 8,750 hotels and 844,417 rooms,
including 128 hotels from DH. During the second quarter of 2023,
our Legacy-Huazhu business opened 374 hotels, including 2 leased
and owned hotels, and 372 manachised and franchised hotels, and
closed a total of 216 hotels, including 6 leased and owned hotels
and 210 manachised and franchised hotels. As of June 30, 2023, H
World had a total of 2,845 unopened hotels in the pipeline,
including 2,808 hotels from the Legacy-Huazhu business and 37
hotels from the Legacy-DH business.
Legacy-Huazhu Only
– Second Quarter of 2023 Operational
Highlights
As of June 30, 2023, Legacy-Huazhu had 8,622
hotels in operation, including 616 leased and owned hotels, and
8,006 manachised and franchised hotels. In addition, as of the same
date, Legacy-Huazhu had 818,245 hotel rooms in operation, including
86,846 rooms under the lease and ownership model, and 731,399 rooms
under the manachise and franchise models. Legacy-Huazhu also had
2,808 unopened hotels in its pipeline, including 15 leased and
owned hotels, and 2,793 manachised and franchised hotels. The
following discusses Legacy-Huazhu’s RevPAR, average daily room rate
(“ADR”) and occupancy rate for its leased and
owned hotels, as well as manachised and franchised hotels for the
periods indicated.
- The ADR was RMB305 in the second quarter of 2023, compared with
RMB218 in the second quarter of 2022, RMB277 in the previous
quarter, and RMB236 in the second quarter of 2019.
- The occupancy rate for all the Legacy-Huazhu hotels in
operation was 81.8% in the second quarter of 2023, compared with
64.6% in the second quarter of 2022, 75.6% in the previous quarter,
and 86.9% in the second quarter of 2019.
- Blended RevPAR was RMB250 in the second quarter of 2023,
compared with RMB141 in the second quarter of 2022, RMB210 in the
previous quarter, and RMB206 in the second quarter of 2019.
- For all the Legacy-Huazhu hotels which had been in operation
for at least 18 months, the same-hotel RevPAR was RMB251 in the
second quarter of 2023, representing a 71.8% increase from RMB146
in the second quarter of 2022, with a 37.9% increase in ADR and a
16.3 percentage-point increase in occupancy rate.
Legacy-DH Only
– Second Quarter of 2023 Operational
Highlights
As of June 30, 2023, Legacy-DH had 128 hotels in
operation, including 80 leased hotels, and 48 manachised and
franchised hotels. In addition, as of the same date, Legacy-DH had
26,172 hotel rooms in operation, including 15,497 rooms under the
lease model, and 10,675 rooms under the manachise and franchise
models. Legacy-DH also had 37 unopened hotels in the pipeline,
including 26 leased hotels and 11 manachised and franchised hotels.
The following discusses Legacy-DH’s RevPAR, ADR and occupancy rate
for its leased as well as manachised and franchised hotels
(excluding hotels temporarily closed) for the periods
indicated.
- The ADR was EUR117 in the second
quarter of 2023, compared with EUR110 in the second quarter of 2022
and EUR104 in the previous quarter.
- The occupancy rate for all
Legacy-DH hotels in operation was 67.1% in the second quarter of
2023, compared with 59.8% in the second quarter of 2022 and 53.5%
in the previous quarter.
- Blended RevPAR was EUR78 in the second quarter of 2023,
compared with EUR66 in the second quarter of 2022 and EUR55 in the
previous quarter.
Jin Hui, CEO of H World commented: “We are
pleased to deliver another quarter of strong results, as the growth
of travel demand further strengthened in the second quarter. For
our Legacy-Huazhu business, RevPAR in Q2 2023 recovered to 121% of
the Q2 2019 level. Breaking down into monthly numbers, our RevPAR
in April, May and June 2023 recovered to 127%, 115% and 123% of the
2019 levels of the corresponding months, respectively. The strong
recovery continues to be largely driven by ADR growth in the second
quarter, which reflected a combination of product mix change and
product upgrades, as well as market penetration and synergy via our
regional offices. Continued increases in our franchisees’
confidence level led us to enjoy a historical high signing of over
1,000 new hotels during the quarter.”
“Regarding our business outside China, our
Legacy-DH business recovery improved sequentially as RevPAR
recovered to 111% of the 2019 level and EBITDA turned positive in
the second quarter.”
Second Quarter and Interim of 2023
Unaudited Financial Results
(RMB in millions) |
Q2 2022 |
Q1 2023 |
Q2 2023 |
H1 2022 |
H1 2023 |
Revenue: |
|
|
|
|
|
Leased and owned hotels |
2,361 |
2,874 |
3,592 |
4,003 |
6,466 |
Manachised and franchised hotels |
945 |
1,554 |
1,856 |
1,934 |
3,410 |
Others |
76 |
52 |
82 |
126 |
134 |
Total revenue |
3,382 |
4,480 |
5,530 |
6,063 |
10,010 |
|
|
|
|
|
|
Revenue in the second quarter
of 2023 was RMB5.5 billion (US$762 million), representing a 63.5%
year-over-year increase and a 23.4% sequential increase. Revenue
from the Legacy-Huazhu segment in the second quarter of 2023 was
RMB4.3 billion, representing a 76.6% year-over-year increase and a
21.0% sequential increase. The 76.6% year-over-year increase
exceeds the previously announced revenue guidance of a 64% to 68%
increase, which was mainly due to continued product upgrades and
operational optimization via our regional headquarters, as well as
the strong recovery in travel demand. Revenue from the Legacy-DH
segment in the second quarter of 2023 was RMB1.2 billion,
representing a 28.4% year-over-year increase and a 33.5% sequential
increase. The year-over-year increase was mainly due to continued
recovery of our business, and the sequential increase was mainly
due to seasonality.
Revenue in the first half of 2023 was RMB10.0
billion (US$1.4 billion), representing an increase of 65.1% from
the first half of 2022. Revenue from Legacy-Huazhu in the first
half of 2023 was RMB7.9 billion, representing a 67.7%
year-over-year increase. Revenue from the Legacy-DH segment in the
first half of 2023 was RMB2.1 billion, representing a 55.9%
year-over-year increase.
Revenue from leased and owned
hotels in the second quarter of 2023 was RMB3.6 billion
(US$495 million), representing a 52.1% year-over-year increase and
a 25.0% sequential increase. Revenue from leased and owned hotels
from the Legacy-Huazhu segment in the second quarter of 2023 was
RMB2.5 billion, representing a 67.2% year-over-year increase.
Revenue from leased and owned hotels from the Legacy-DH segment in
the second quarter of 2023 was RMB1.1 billion, representing a 27.1%
year-over-year increase.
In the first half of 2023, revenue from our
leased and owned hotels was RMB6.5 billion (US$892 million),
representing a 61.5% year-over-year increase. Revenue from our
Legacy-Huazhu leased and owned hotels in the first half of 2023 was
RMB4.5 billion, representing a 64.1% year-over-year increase.
Revenue from our Legacy-DH leased and owned hotels in the first
half of 2023 was RMB2.0 billion, representing a 55.9%
year-over-year increase.
Revenue from manachised and franchised
hotels in the second quarter of 2023 was RMB1.9 billion
(US$256 million), representing a 96.4% year-over-year increase and
a 19.4% sequential increase. Revenue from our Legacy-Huazhu segment
from manachised and franchised hotels in the second quarter of 2023
was RMB1.8 billion, representing a 97.0% year-over-year increase.
Revenue from manachised and franchised hotels from the Legacy-DH
segment in the second quarter of 2023 was RMB26 million,
representing a 62.5% year-over-year increase.
In the first half of 2023, revenue from
manachised and franchised hotels was RMB3.4 billion (US$470
million), representing a 76.3% year-over-year increase. These
hotels accounted for 34.1% of revenue, compared to 31.9% of revenue
in the first half of 2022. Revenue from our Legacy-Huazhu
manachised and franchised hotels in the first half of 2023 was
RMB3.4 billion, representing a 76.9% year-over-year increase.
Other revenue represents
revenue generated from businesses other than our hotel operations,
which mainly includes revenue from the provision of IT products and
services and Huazhu Mall™ and other revenue from the Legacy-DH
segment, totaling RMB82 million (US$11 million) in the second
quarter of 2023, compared to RMB76 million in the second quarter of
2022 and RMB52 million in the previous quarter.
In the first half of 2023, other revenue was
RMB134 million (US$18 million), compared to RMB126 million in the
first half of 2022.
(RMB in millions) |
Q2 2022 |
Q1 2023 |
Q2 2023 |
H1 2022 |
H1 2023 |
Operating costs and expenses: |
|
|
|
|
|
Hotel operating costs |
(2,972 |
) |
(3,250 |
) |
(3,482 |
) |
(5,785 |
) |
(6,732 |
) |
Other operating costs |
(15 |
) |
(11 |
) |
(6 |
) |
(26 |
) |
(17 |
) |
Selling and marketing expenses |
(142 |
) |
(195 |
) |
(262 |
) |
(264 |
) |
(457 |
) |
General and administrative expenses |
(368 |
) |
(425 |
) |
(477 |
) |
(830 |
) |
(902 |
) |
Pre-opening expenses |
(31 |
) |
(9 |
) |
(12 |
) |
(57 |
) |
(21 |
) |
Total operating costs and expenses |
(3,528 |
) |
(3,890 |
) |
(4,239 |
) |
(6,962 |
) |
(8,129 |
) |
|
|
|
|
|
|
|
|
|
|
|
Hotel operating costs in the
second quarter of 2023 were RMB3.5 billion (US$480 million),
compared to RMB3.0 billion in the second quarter of 2022 and RMB3.3
billion in the previous quarter. The year-over-year increase was
mainly due to the rising occupancy rate in our hotels. Hotel
operating costs from the Legacy-Huazhu segment in the second
quarter of 2023 were RMB2.6 billion, which represented 58.9% of the
quarter’s revenue, compared to RMB2.2 billion or 88.1% of the
revenue in the second quarter in 2022 and RMB2.4 billion or 66.3%
of the revenue for the previous quarter.
In the first half of 2023, hotel operating costs
were RMB6.7 billion (US$929 million), compared to RMB5.8 billion in
the first half of 2022. Hotel operating costs from Legacy-Huazhu in
the first half of 2023 were RMB4.9 billion, which represented 62.2%
of revenue, compared to 93.4% in the first half of 2022.
Selling and marketing expenses
in the second quarter of 2023 were RMB262 million (US$36 million),
compared to RMB142 million in the second quarter of 2022 and RMB195
million in the previous quarter. The increase was mainly due to the
recovery of both Legacy-Huazhu and Legacy-DH businesses. Selling
and marketing expenses from the Legacy-Huazhu segment in the second
quarter of 2023 were RMB153 million, which represented 3.5% of this
quarter’s revenue, compared to RMB65 million or 2.6% of revenue in
the second quarter in 2022, and RMB117 million or 3.3% of revenue
in the previous quarter.
In the first half of 2023, selling and marketing
expenses were RMB457 million (US$63 million), compared to RMB264
million in 2022. Selling and marketing expenses from Legacy-Huazhu
in the first half of 2023 were RMB270 million, which represented
3.4% of revenue, compared to RMB143 million or 3.0% of revenue in
the first half of 2022.
General and administrative
expenses in the second quarter of 2023 were RMB477 million
(US$66 million), compared to RMB368 million in the second quarter
of 2022 and RMB425 million in the previous quarter. General and
administrative expenses from the Legacy-Huazhu segment in the
second quarter of 2023 were RMB352 million, which represented 8.1%
of this quarter’s revenue, compared to RMB267 million or 10.8% in
the second quarter in 2022 and RMB312 million or 8.7% for the
previous quarter.
In the first half of 2023, general and
administrative expenses were RMB902 million (US$124 million),
compared to RMB830 million in 2022. General and administrative
expenses from Legacy-Huazhu in the first half of 2023 were RMB664
million, which represented 8.4% of revenue, compared to RMB613
million or 12.9% of revenue in the first half of 2022.
Pre-opening expenses in the
second quarter of 2023 were primarily related to the Legacy-Huazhu
segment and totaled RMB12 million (US$2 million), compared to RMB31
million in the second quarter of 2022 and RMB9 million in the
previous quarter.
Pre-opening expenses in the first half of 2023
were RMB21 million (US$3 million), compared to RMB57 million in
2022. Pre-opening expenses from Legacy-Huazhu as a percentage of
revenue were 0.3% in the first half of 2023, compared to 1.2% in
the first half of 2022.
Other operating income, net in
the second quarter of 2023 was RMB94 million (US$13 million),
compared to RMB154 million in the second quarter of 2022 and RMB74
million in the previous quarter.
Other operating income, net in the first half of
2023 was RMB168 million (US$22 million), compared to RMB199 million
in 2022.
Income from operations in the
second quarter of 2023 was RMB1.4 billion (US$190 million),
compared to income from operations of RMB8 million in the second
quarter of 2022 and income from operations of RMB664 million in the
previous quarter. Income from operations from the Legacy-Huazhu
segment in the second quarter of 2023 was RMB1.3 billion, compared
to income from operations of RMB21 million in the second quarter of
2022 and income from operations of RMB822 million in the previous
quarter. The Legacy-DH segment had income from operations of RMB35
million in the second quarter of 2023, compared to losses from
operations of RMB13 million in the second quarter of 2022 and
losses from operations of RMB158 million in the previous
quarter.
Income from operations in the first half of 2023
was RMB2.0 billion (US$281 million), compared to losses from
operation of RMB700 million in 2022. Income from operations from
Legacy-Huazhu in the first half of 2023 was RMB2.2 billion,
compared to losses from operations of RMB395 million in 2022.
Losses from operations from Legacy-DH in the first half of 2023 was
RMB123 million, compared to losses of RMB305 million in 2022.
Operating margin, defined as
income from operations as a percentage of revenue, was 25.0% in the
second quarter of 2023, compared with 0.2% in the second quarter of
2022 and 14.8% for the previous quarter. Operating margin from the
Legacy-Huazhu segment in the second quarter of 2023 was 31.1%,
compared with 0.9% in the second quarter of 2022 and 22.9% in the
previous quarter.
Operating margin in the first half of 2023 was
20.5%, compared with a negative 11.5% in 2022. Operating margin
from Legacy-Huazhu in the first half of 2023 was 27.4%, compared
with a negative 8.3% in 2022.
Other income, net in the second
quarter of 2023 was RMB32 million (US$4 million), compared to RMB29
million in the second quarter of 2022 and RMB514 million for the
previous quarter.
Other income, net in the first half of 2023 was
RMB546 million (US$75 million) which was mainly due to gains from
selling AccorHotels shares, compared to RMB88 million in 2022.
Losses from fair value changes of equity
securities in the second quarter of 2023 were RMB19
million (US$3 million), compared to losses of RMB240 million in the
second quarter of 2022, and gains of RMB13 million in the previous
quarter. Gains (losses) from fair value changes of equity
securities mainly represent the unrealized gains (losses) from our
investment in equity securities with readily determinable fair
values.
In the first half of 2023, losses from fair
value changes of equity securities were RMB6 million (US$1
million), compared to losses of RMB186 million in 2022, which were
mainly due to losses from holding AccorHotels shares. We sold all
of the Company’s holdings of Accor shares in March 2023.
Income tax expense in the
second quarter of 2023 was RMB308 million (US$42 million), compared
to an income tax benefit of RMB299 million in the second quarter of
2022 and income tax expense of RMB194 million in the previous
quarter.
In the first half of 2023, income tax expense
was RMB502 million (US$69 million), compared to income tax benefit
of RMB430 million in 2022.
Net income attributable to H World Group
Limited in the second quarter of 2023 was RMB1.0 billion
(US$138 million), compared with a net loss attributable to H World
Group Limited of RMB350 million in the second quarter of 2022 and
net income attributable to H World Group Limited of RMB990 million
in the previous quarter. Net income attributable to H World Group
Limited from the Legacy-Huazhu segment was RMB993 million in the
second quarter of 2023, compared with a net loss attributable to H
World Group Limited from the Legacy-Huazhu segment of RMB298
million in the second quarter of 2022 and net income attributable
to H World Group Limited from the Legacy-Huazhu segment of RMB1.2
billion in the previous quarter.
Net income attributable to H World Group Limited
in the first half of 2023 was RMB2.0 billion (US$276 million),
compared with a net loss attributable to H World Group Limited of
RMB980 million in 2022. Net income attributable to H World Group
Limited from Legacy-Huazhu in the first half of 2023 was RMB2.1
billion, compared to a net loss attributable to H World Group
Limited of RMB605 million in 2022.
EBITDA (non-GAAP) in the second
quarter of 2023 was RMB1.7 billion (US$234 million), compared with
a negative RMB213 million in the second quarter of 2022 and RMB1.6
billion in the previous quarter. Adjusted EBITDA (non-GAAP), which
excluded share-based compensation expenses and gains (losses) from
fair value changes of equity securities from EBITDA (non-GAAP), was
RMB1.8 billion (US$242 million) in the second quarter of 2023,
compared with RMB53 million in the second quarter of 2022 and
RMB1.7 billion in the previous quarter. Adjusted EBITDA from the
Legacy-Huazhu segment, which is a segment measure, was RMB1.7
billion in the second quarter of 2023, compared with RMB23 million
in the second quarter of 2022 and RMB1.7 billion in the previous
quarter, which includes a gain of RMB0.5 billion realized due to
the sale of all of the Company’s holdings of Accor shares.
EBITDA (non-GAAP) in the first half of 2023 was
RMB3.4 billion (US$461 million), compared with a negative RMB514
million in 2022. Excluding share-based compensation expenses and
gains (losses) from fair value changes of equity securities,
adjusted EBITDA (non-GAAP) in the first half of 2023 was RMB3.4
billion (US$470 million), compared with a negative RMB280 million
in 2022. The adjusted EBITDA from Legacy-Huazhu in the first half
of 2023 was RMB3.4 billion, compared with a negative RMB70 million
in 2022.
Cash flow. Operating cash
inflow in the second quarter of 2023 was RMB2.2 billion (US$311
million). Investing cash outflow in the second quarter of 2023 was
RMB1.1 billion (US$158 million). The investing cash outflow was
mainly due to the purchase of time deposits. Financing cash outflow
in the second quarter of 2023 was RMB3.8 billion (US$528 million).
The financing cash outflow was mainly due to the repayment of a
Euro syndicated loan.
Operating cash inflow in the first half of 2023
was RMB4.1 billion (US$563 million), compared to RMB68 million in
2022. Investing cash inflow in the first half of 2023 was RMB849
million (US$118 million), compared to RMB145 million cash outflow
in 2022. Financing cash outflow in the first half of 2023 was
RMB2.4 billion (US$326 million), compared to RMB455 million in
2022.
Cash and cash equivalents and restricted
cash. As of June 30, 2023, the Company had a total balance
of cash and cash equivalents of RMB7.3 billion (US$1.0 billion) and
restricted cash of RMB520 million (US$72 million).
Debt financing. As of June 30,
2023, the Company had a total debt and net cash balance of RMB5.8
billion (US$804 million) and RMB2.0 billion (US$277 million),
respectively; the unutilized credit facility available to the
Company was RMB2.8 billion.
Guidance For the third quarter
of 2023, H World expects its revenue growth to be in the range of
43%-47% compared to the third quarter of 2022, or in the range of
49%-53% excluding DH.
We raise our guidance for the full year of 2023,
expecting revenue growth to be in the range of 48%-52% compared to
the full year of 2022, and up from our previous guidance of
42%-46%, or in the range of 54%-58% excluding DH compared to the
previous guidance of 46%-50% excluding DH.
The above forecast reflects the Company’s
current and preliminary view, which is subject to change.
Conference CallH World’s
management will host a conference call at 9 p.m. U.S. Eastern time
on Thursday, August 24, 2023 (9 a.m. Hong Kong time on Friday,
August 25, 2023) following the announcement.
To join by phone, all participants must
pre-register this conference call using the Participant
Registration link of
https://register.vevent.com/register/BId135226269b74b64b25b25d927db4f5e.
Upon registration, each participant will receive details for the
conference call, which include dial-in numbers, conference call
passcode and a unique access PIN.
A live webcast of the call can be accessed at
https://edge.media-server.com/mmc/p/d6tooa2u/lan/zhs or the
Company’s website at
https://ir.hworld.com/news-and-events/events-calendar.
A replay of the conference call will be
available for twelve months from the date of the conference at the
Company’s website,
https://ir.hworld.com/news-and-events/events-calendar.
Use of Non-GAAP Financial
MeasuresTo supplement the Company’s unaudited consolidated
financial results presented in accordance with U.S.
Generally-Accepted Accounting Principles (“GAAP”),
the Company uses the following non-GAAP measures defined as
non-GAAP financial measures by the U.S. Securities and Exchange
Commission (“SEC”): adjusted net income (loss)
attributable to H World Group Limited excluding share-based
compensation expenses and gains (losses) from fair value changes of
equity securities; adjusted basic and diluted earnings (losses) per
share/ADS excluding share-based compensation expenses and gains
(losses) from fair value changes of equity securities; EBITDA;
adjusted EBITDA excluding share-based compensation expenses and
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 “Unaudited 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 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
gains (losses) from fair value changes of equity securities is that
share-based compensation expenses and gains (losses) from fair
value changes of equity securities have been and may continue to be
significant and recurring in the Company’s business. Management
compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from each non-GAAP measure. The
accompanying tables have more details on the reconciliations
between GAAP financial measures that are most directly comparable
to non-GAAP financial measures.
The Company believes that EBITDA is a useful
financial metric to assess the operating and financial performance
before the impact of investing and financing transactions and
income taxes, given the significant investments that the Company
has made in leasehold improvements, depreciation and amortization
expense that comprise a significant portion of the Company’s cost
structure. In addition, the Company believes that EBITDA is widely
used by other companies in the lodging industry and may be used by
investors as a measure of financial performance. The Company
believes that EBITDA information provides investors with a useful
tool for comparability between periods because it excludes
depreciation and amortization expense attributable to capital
expenditures. The Company also uses adjusted EBITDA to assess
operating results of its hotels in operation. The Company believes
that the exclusion of share-based compensation expenses and gains
(losses) from fair value changes of equity securities helps
facilitate year-over-year comparisons of the results of operations
as the share-based compensation expenses and gains (losses) from
fair value changes of equity securities may not be indicative of
Company operating performance.
The Company believes that gains and losses from
changes in fair value of equity securities are generally less
significant in understanding the Company’s reported results or
evaluating the economic performance of its businesses. These gains
and losses have caused and may continue to cause significant
volatility in reported periodic earnings.
Therefore, the Company believes adjusted EBITDA
more closely reflects the financial performance capability of our
hotels. The presentation of EBITDA and adjusted EBITDA should not
be construed as an indication that the Company’s future results
will be unaffected by other charges and gains considered to be
outside the ordinary course of business.
The use of EBITDA and adjusted EBITDA has
certain limitations. Depreciation and amortization expense for
various long-term assets (including land use rights), income tax,
interest expense and interest income have been and will be incurred
and are not reflected in the presentation of EBITDA. Share-based
compensation expenses and gains (losses) from fair value changes of
equity securities have been and will be incurred and are not
reflected in the presentation of adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of the
results. The Company compensates for these limitations by providing
the relevant disclosure of depreciation and amortization, interest
income, interest expense, income tax expense, share-based
compensation expenses, and 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 H World Group
LimitedOriginated in China, H World Group Limited is a key
player in the global hotel industry. As of June 30, 2023, H World
operated 8,750 hotels with 844,417 rooms in operation in 18
countries. H World’s brands include Hi Inn, Elan Hotel, HanTing
Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel,
Manxin Hotel, Madison Hotel, Joya Hotel, Blossom House, Ni Hao
Hotel, CitiGO Hotel, Steigenberger Hotels & Resorts, MAXX, Jaz
in the City, IntercityHotel, Zleep Hotels, Steigenberger Icon and
Song Hotels. In addition, H World also has the rights as master
franchisee for Mercure, Ibis and Ibis Styles, and
co-development rights for Grand Mercure and Novotel, in the
pan-China region.
H World’s business includes leased and owned,
manachised and franchised models. Under the lease and ownership
model, H World directly operates hotels typically located on leased
or owned properties. Under the manachise model, H World manages
manachised hotels through the on-site hotel managers that H World
appoints, and H World collects fees from franchisees. Under the
franchise model, H World provides training, reservations and
support services to the franchised hotels, and collects fees from
franchisees but does not appoint on-site hotel managers. H World
applies a consistent standard and platform across all of its
hotels. As of June 30, 2023, H World operates 12 percent of its
hotel rooms under lease and ownership model, and 88 percent under
manachise and franchise models.
For more information, please visit H World’s
website: https://ir.hworld.com.
Safe Harbor Statement Under the U.S. Private
Securities Litigation Reform Act of 1995: The information in this
release contains forward-looking statements which involve risks and
uncertainties. Such factors and risks include our anticipated
growth strategies; our future results of operations and financial
condition; economic conditions; the regulatory environment; our
ability to attract and retain customers and leverage our brands;
trends and competition in the lodging industry; the expected growth
of demand for lodging; and other factors and risks detailed in our
filings with the U.S. Securities and Exchange Commission. 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.
H World undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, unless required by
applicable law.
—Financial Tables and Operational Data
Follow—
H World Group Limited |
Unaudited Condensed Consolidated Balance
Sheets |
|
December 31, 2022 |
|
June 30, 2023 |
|
RMB |
|
RMB |
US$3 |
|
(in millions) |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
3,583 |
|
|
7,316 |
|
|
1,009 |
|
Restricted cash |
1,503 |
|
|
520 |
|
|
72 |
|
Short-term investments |
1,788 |
|
|
749 |
|
|
103 |
|
Accounts receivable, net |
1,113 |
|
|
933 |
|
|
129 |
|
Loan receivables, net |
134 |
|
|
126 |
|
|
17 |
|
Amounts due from related parties, current |
178 |
|
|
131 |
|
|
18 |
|
Inventories |
70 |
|
|
65 |
|
|
9 |
|
Other current assets, net |
809 |
|
|
725 |
|
|
100 |
|
Total current assets |
9,178 |
|
|
10,565 |
|
|
1,457 |
|
|
|
|
|
Property and equipment, net |
6,784 |
|
|
6,403 |
|
|
883 |
|
Intangible assets, net |
5,278 |
|
|
5,475 |
|
|
755 |
|
Operating lease right-of-use assets |
28,970 |
|
|
28,865 |
|
|
3,981 |
|
Finance lease right-of-use assets |
2,047 |
|
|
2,187 |
|
|
302 |
|
Land use rights, net |
199 |
|
|
195 |
|
|
27 |
|
Long-term investments |
1,945 |
|
|
2,199 |
|
|
303 |
|
Goodwill |
5,195 |
|
|
5,327 |
|
|
735 |
|
Amounts due from related parties, non-current |
6 |
|
|
16 |
|
|
2 |
|
Loan receivables, net |
124 |
|
|
134 |
|
|
18 |
|
Other assets, net |
688 |
|
|
664 |
|
|
91 |
|
Deferred tax assets |
1,093 |
|
|
1,082 |
|
|
149 |
|
Total assets |
61,507 |
|
|
63,112 |
|
|
8,703 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Short-term debt |
3,288 |
|
|
4,765 |
|
|
657 |
|
Accounts payable |
1,171 |
|
|
935 |
|
|
129 |
|
Amounts due to related parties |
71 |
|
|
89 |
|
|
12 |
|
Salary and welfare payables |
657 |
|
|
708 |
|
|
98 |
|
Deferred revenue |
1,308 |
|
|
1,413 |
|
|
195 |
|
Operating lease liabilities, current |
3,773 |
|
|
3,832 |
|
|
528 |
|
Finance lease liabilities, current |
41 |
|
|
49 |
|
|
7 |
|
Accrued expenses and other current liabilities |
2,337 |
|
|
3,336 |
|
|
460 |
|
Income tax payable |
500 |
|
|
618 |
|
|
85 |
|
Total current liabilities |
13,146 |
|
|
15,745 |
|
|
2,171 |
|
|
|
|
|
Long-term debt |
6,635 |
|
|
1,065 |
|
|
147 |
|
Operating lease liabilities, non-current |
27,637 |
|
|
27,520 |
|
|
3,795 |
|
Finance lease liabilities, non-current |
2,513 |
|
|
2,703 |
|
|
373 |
|
Deferred revenue |
828 |
|
|
936 |
|
|
129 |
|
Other long-term liabilities |
977 |
|
|
1,057 |
|
|
146 |
|
Deferred tax liabilities |
858 |
|
|
868 |
|
|
120 |
|
Retirement benefit obligations |
110 |
|
|
116 |
|
|
16 |
|
Total liabilities |
52,704 |
|
|
50,010 |
|
|
6,897 |
|
|
|
|
|
Equity: |
|
|
|
Ordinary shares |
0 |
|
|
0 |
|
|
0 |
|
Treasury shares |
(441 |
) |
|
(441 |
) |
|
(61 |
) |
Additional paid-in capital |
10,138 |
|
|
12,163 |
|
|
1,677 |
|
Retained earnings |
(1,200 |
) |
|
805 |
|
|
111 |
|
Accumulated other comprehensive income |
232 |
|
|
474 |
|
|
65 |
|
Total H World Group Limited shareholders' equity |
8,729 |
|
|
13,001 |
|
|
1,792 |
|
Noncontrolling interest |
74 |
|
|
101 |
|
|
14 |
|
Total equity |
8,803 |
|
|
13,102 |
|
|
1,806 |
|
Total liabilities and equity |
61,507 |
|
|
63,112 |
|
|
8,703 |
|
|
|
|
|
|
|
|
|
|
H World Group Limited |
Unaudited Condensed Consolidated Statements of
Comprehensive Income |
|
Quarter Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
March 31, 2023 |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
(in millions, except shares, per share and per ADS
data) |
Revenue: |
|
|
|
|
|
|
|
Leased and owned hotels |
2,361 |
|
|
2,874 |
|
|
3,592 |
|
|
495 |
|
|
4,003 |
|
|
6,466 |
|
|
892 |
|
Manachised and franchised hotels |
945 |
|
|
1,554 |
|
|
1,856 |
|
|
256 |
|
|
1,934 |
|
|
3,410 |
|
|
470 |
|
Others |
76 |
|
|
52 |
|
|
82 |
|
|
11 |
|
|
126 |
|
|
134 |
|
|
18 |
|
Total revenue |
3,382 |
|
|
4,480 |
|
|
5,530 |
|
|
762 |
|
|
6,063 |
|
|
10,010 |
|
|
1,380 |
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
Hotel operating costs: |
|
|
|
|
|
|
|
Rents |
(1,012 |
) |
|
(1,051 |
) |
|
(1,088 |
) |
|
(150 |
) |
|
(2,038 |
) |
|
(2,139 |
) |
|
(295 |
) |
Utilities |
(123 |
) |
|
(204 |
) |
|
(137 |
) |
|
(19 |
) |
|
(278 |
) |
|
(341 |
) |
|
(47 |
) |
Personnel costs |
(899 |
) |
|
(1,036 |
) |
|
(1,131 |
) |
|
(156 |
) |
|
(1,737 |
) |
|
(2,167 |
) |
|
(299 |
) |
Depreciation and amortization |
(355 |
) |
|
(346 |
) |
|
(332 |
) |
|
(46 |
) |
|
(712 |
) |
|
(678 |
) |
|
(94 |
) |
Consumables, food and beverage |
(245 |
) |
|
(278 |
) |
|
(335 |
) |
|
(46 |
) |
|
(451 |
) |
|
(613 |
) |
|
(84 |
) |
Others |
(338 |
) |
|
(335 |
) |
|
(459 |
) |
|
(63 |
) |
|
(569 |
) |
|
(794 |
) |
|
(110 |
) |
Total hotel operating costs |
(2,972 |
) |
|
(3,250 |
) |
|
(3,482 |
) |
|
(480 |
) |
|
(5,785 |
) |
|
(6,732 |
) |
|
(929 |
) |
Other operating costs |
(15 |
) |
|
(11 |
) |
|
(6 |
) |
|
(1 |
) |
|
(26 |
) |
|
(17 |
) |
|
(2 |
) |
Selling and marketing expenses |
(142 |
) |
|
(195 |
) |
|
(262 |
) |
|
(36 |
) |
|
(264 |
) |
|
(457 |
) |
|
(63 |
) |
General and administrative expenses |
(368 |
) |
|
(425 |
) |
|
(477 |
) |
|
(66 |
) |
|
(830 |
) |
|
(902 |
) |
|
(124 |
) |
Pre-opening expenses |
(31 |
) |
|
(9 |
) |
|
(12 |
) |
|
(2 |
) |
|
(57 |
) |
|
(21 |
) |
|
(3 |
) |
Total operating costs and expenses |
(3,528 |
) |
|
(3,890 |
) |
|
(4,239 |
) |
|
(585 |
) |
|
(6,962 |
) |
|
(8,129 |
) |
|
(1,121 |
) |
Other operating income (expense), net |
154 |
|
|
74 |
|
|
94 |
|
|
13 |
|
|
199 |
|
|
168 |
|
|
22 |
|
Income (loss) from operations |
8 |
|
|
664 |
|
|
1,385 |
|
|
190 |
|
|
(700 |
) |
|
2,049 |
|
|
281 |
|
Interest income |
19 |
|
|
44 |
|
|
57 |
|
|
8 |
|
|
37 |
|
|
101 |
|
|
14 |
|
Interest expense |
(90 |
) |
|
(130 |
) |
|
(94 |
) |
|
(13 |
) |
|
(199 |
) |
|
(224 |
) |
|
(31 |
) |
Other income (expense), net |
29 |
|
|
514 |
|
|
32 |
|
|
4 |
|
|
88 |
|
|
546 |
|
|
75 |
|
Gains (losses) from fair value changes of equity securities |
(240 |
) |
|
13 |
|
|
(19 |
) |
|
(3 |
) |
|
(186 |
) |
|
(6 |
) |
|
(1 |
) |
Foreign exchange gains (losses) |
(402 |
) |
|
104 |
|
|
(5 |
) |
|
(1 |
) |
|
(463 |
) |
|
99 |
|
|
15 |
|
Income (loss) before income taxes |
(676 |
) |
|
1,209 |
|
|
1,356 |
|
|
185 |
|
|
(1,423 |
) |
|
2,565 |
|
|
353 |
|
Income tax (expense) benefit |
299 |
|
|
(194 |
) |
|
(308 |
) |
|
(42 |
) |
|
430 |
|
|
(502 |
) |
|
(69 |
) |
Income (Loss) from equity method investments |
14 |
|
|
(15 |
) |
|
(12 |
) |
|
(2 |
) |
|
(19 |
) |
|
(27 |
) |
|
(4 |
) |
Net income (loss) |
(363 |
) |
|
1,000 |
|
|
1,036 |
|
|
141 |
|
|
(1,012 |
) |
|
2,036 |
|
|
280 |
|
Net (income) loss attributable to noncontrolling interest |
13 |
|
|
(10 |
) |
|
(21 |
) |
|
(3 |
) |
|
32 |
|
|
(31 |
) |
|
(4 |
) |
Net income (loss) attributable to H World Group Limited |
(350 |
) |
|
990 |
|
|
1,015 |
|
|
138 |
|
|
(980 |
) |
|
2,005 |
|
|
276 |
|
|
|
|
|
|
|
|
|
Gains (losses) arising from defined benefit plan, net of tax |
(0 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(0 |
) |
|
- |
|
|
- |
|
Gains(losses) from fair value changes of debt securities, net of
tax |
- |
|
|
- |
|
|
20 |
|
|
3 |
|
|
- |
|
|
20 |
|
|
3 |
|
Foreign currency translation adjustments, net of tax |
26 |
|
|
39 |
|
|
183 |
|
|
25 |
|
|
22 |
|
|
222 |
|
|
31 |
|
Comprehensive income (loss) |
(337 |
) |
|
1,039 |
|
|
1,239 |
|
|
169 |
|
|
(990 |
) |
|
2,278 |
|
|
314 |
|
Comprehensive (income) loss attributable to noncontrolling
interest |
13 |
|
|
(10 |
) |
|
(21 |
) |
|
(3 |
) |
|
32 |
|
|
(31 |
) |
|
(4 |
) |
Comprehensive income (loss) attributable to H World Group
Limited |
(324 |
) |
|
1,029 |
|
|
1,218 |
|
|
166 |
|
|
(958 |
) |
|
2,247 |
|
|
310 |
|
|
|
|
|
|
|
|
|
Earnings (Losses) per share: |
|
|
|
|
|
|
|
Basic |
(0.11 |
) |
|
0.31 |
|
|
0.32 |
|
|
0.04 |
|
|
(0.31 |
) |
|
0.63 |
|
|
0.09 |
|
Diluted |
(0.11 |
) |
|
0.30 |
|
|
0.31 |
|
|
0.04 |
|
|
(0.31 |
) |
|
0.62 |
|
|
0.09 |
|
|
|
|
|
|
|
|
|
Earnings (Losses) per ADS: |
|
|
|
|
|
|
|
Basic |
(1.13 |
) |
|
3.12 |
|
|
3.18 |
|
|
0.44 |
|
|
(3.15 |
) |
|
6.30 |
|
|
0.87 |
|
Diluted |
(1.13 |
) |
|
3.05 |
|
|
3.11 |
|
|
0.43 |
|
|
(3.15 |
) |
|
6.16 |
|
|
0.85 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation: |
|
|
|
|
|
Basic |
3,108,693,946 |
|
|
3,174,229,716 |
|
|
3,187,331,990 |
|
|
3,187,331,990 |
|
|
3,113,771,581 |
|
|
3,180,817,047 |
|
|
3,180,817,047 |
|
Diluted |
3,108,693,946 |
|
|
3,343,723,364 |
|
|
3,354,717,904 |
|
|
3,354,717,904 |
|
|
3,113,771,581 |
|
|
3,349,256,828 |
|
|
3,349,256,828 |
|
H World Group Limited |
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
Quarter Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
March 31, 2023 |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
( in millions) |
Operating activities: |
|
|
|
|
|
|
|
Net income (loss) |
(363 |
) |
|
1,000 |
|
|
1,036 |
|
|
141 |
|
|
(1,012 |
) |
|
2,036 |
|
|
280 |
|
|
|
|
|
|
|
|
|
Share-based compensation |
26 |
|
|
27 |
|
|
34 |
|
|
5 |
|
|
48 |
|
|
61 |
|
|
8 |
|
Depreciation and amortization,and other |
374 |
|
|
385 |
|
|
359 |
|
|
50 |
|
|
773 |
|
|
744 |
|
|
103 |
|
Impairment loss |
91 |
|
|
- |
|
|
80 |
|
|
11 |
|
|
91 |
|
|
80 |
|
|
11 |
|
Loss (Income) from equity method investments, net of dividends |
(14 |
) |
|
15 |
|
|
68 |
|
|
9 |
|
|
66 |
|
|
83 |
|
|
11 |
|
Investment (income) loss and foreign exchange (gain) loss |
531 |
|
|
(544 |
) |
|
(96 |
) |
|
(13 |
) |
|
474 |
|
|
(640 |
) |
|
(88 |
) |
Changes in operating assets and liabilities |
(135 |
) |
|
1,020 |
|
|
712 |
|
|
102 |
|
|
(1,023 |
) |
|
1,732 |
|
|
240 |
|
Other |
479 |
|
|
(59 |
) |
|
45 |
|
|
6 |
|
|
651 |
|
|
(14 |
) |
|
(2 |
) |
Net cash provided by (used in) operating activities |
989 |
|
|
1,844 |
|
|
2,238 |
|
|
311 |
|
|
68 |
|
|
4,082 |
|
|
563 |
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures |
(143 |
) |
|
(222 |
) |
|
(171 |
) |
|
(24 |
) |
|
(568 |
) |
|
(393 |
) |
|
(54 |
) |
Acquisitions, net of cash received |
(3 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(59 |
) |
|
- |
|
|
- |
|
Purchase of investments |
(0 |
) |
|
(1 |
) |
|
(961 |
) |
|
(133 |
) |
|
(77 |
) |
|
(962 |
) |
|
(133 |
) |
Proceeds from maturity/sale and return of investments |
186 |
|
|
2,200 |
|
|
2 |
|
|
0 |
|
|
562 |
|
|
2,202 |
|
|
304 |
|
Loan advances |
(49 |
) |
|
(34 |
) |
|
(41 |
) |
|
(6 |
) |
|
(123 |
) |
|
(75 |
) |
|
(10 |
) |
Loan collections |
65 |
|
|
34 |
|
|
38 |
|
|
5 |
|
|
120 |
|
|
72 |
|
|
10 |
|
Other |
0 |
|
|
4 |
|
|
1 |
|
|
0 |
|
|
0 |
|
|
5 |
|
|
1 |
|
Net cash provided by (used in) investing activities |
56 |
|
|
1,981 |
|
|
(1,132 |
) |
|
(158 |
) |
|
(145 |
) |
|
849 |
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of ordinary shares |
- |
|
|
1,973 |
|
|
- |
|
|
- |
|
|
- |
|
|
1,973 |
|
|
272 |
|
Payment of share repurchase |
(143 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(334 |
) |
|
- |
|
|
- |
|
Proceeds from debt |
283 |
|
|
428 |
|
|
300 |
|
|
41 |
|
|
1,092 |
|
|
728 |
|
|
100 |
|
Repayment of debt |
(313 |
) |
|
(889 |
) |
|
(4,103 |
) |
|
(566 |
) |
|
(775 |
) |
|
(4,992 |
) |
|
(688 |
) |
Dividend paid |
(416 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(416 |
) |
|
- |
|
|
- |
|
Other |
(12 |
) |
|
(50 |
) |
|
(21 |
) |
|
(3 |
) |
|
(22 |
) |
|
(71 |
) |
|
(10 |
) |
Net cash provided by (used in) financing activities |
(601 |
) |
|
1,462 |
|
|
(3,824 |
) |
|
(528 |
) |
|
(455 |
) |
|
(2,362 |
) |
|
(326 |
) |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
87 |
|
|
(21 |
) |
|
202 |
|
|
28 |
|
|
71 |
|
|
181 |
|
|
25 |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
531 |
|
|
5,266 |
|
|
(2,516 |
) |
|
(347 |
) |
|
(461 |
) |
|
2,750 |
|
|
380 |
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
4,149 |
|
|
5,086 |
|
|
10,352 |
|
|
1,428 |
|
|
5,141 |
|
|
5,086 |
|
|
701 |
|
Cash, cash equivalents and restricted cash at the end of the
period |
4,680 |
|
|
10,352 |
|
|
7,836 |
|
|
1,081 |
|
|
4,680 |
|
|
7,836 |
|
|
1,081 |
|
H World Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
March 31, 2023 |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
(in millions, except shares, per share and per ADS
data) |
Net income (loss) attributable to H World Group Limited (GAAP) |
(350 |
) |
|
990 |
|
|
1,015 |
|
|
138 |
|
|
(980 |
) |
|
2,005 |
|
|
276 |
|
Share-based compensation expenses |
26 |
|
|
27 |
|
|
34 |
|
|
5 |
|
|
48 |
|
|
61 |
|
|
8 |
|
(Gains) losses from fair value changes of equity securities |
240 |
|
|
(13 |
) |
|
19 |
|
|
3 |
|
|
186 |
|
|
6 |
|
|
1 |
|
Adjusted net income (loss) attributable to H World Group Limited
(non-GAAP) |
(84 |
) |
|
1,004 |
|
|
1,068 |
|
|
146 |
|
|
(746 |
) |
|
2,072 |
|
|
285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings (losses) per share (non-GAAP) |
|
|
|
|
|
|
|
Basic |
(0.03 |
) |
|
0.32 |
|
|
0.33 |
|
|
0.05 |
|
|
(0.24 |
) |
|
0.65 |
|
|
0.09 |
|
Diluted |
(0.03 |
) |
|
0.31 |
|
|
0.33 |
|
|
0.05 |
|
|
(0.24 |
) |
|
0.64 |
|
|
0.09 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings (losses) per ADS (non-GAAP) |
Basic |
(0.27 |
) |
|
3.17 |
|
|
3.35 |
|
|
0.46 |
|
|
(2.40 |
) |
|
6.51 |
|
|
0.90 |
|
Diluted |
(0.27 |
) |
|
3.09 |
|
|
3.27 |
|
|
0.45 |
|
|
(2.40 |
) |
|
6.36 |
|
|
0.88 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation |
|
|
|
|
|
|
|
Basic |
3,108,693,946 |
|
|
3,174,229,716 |
|
|
3,187,331,990 |
|
|
3,187,331,990 |
|
|
3,113,771,581 |
|
|
3,180,817,047 |
|
|
3,180,817,047 |
|
Diluted |
3,108,693,946 |
|
|
3,343,723,364 |
|
|
3,354,717,904 |
|
|
3,354,717,904 |
|
|
3,113,771,581 |
|
|
3,349,256,828 |
|
|
3,349,256,828 |
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
March 31, 2023 |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
(in millions, except per share and per ADS
data) |
Net income (loss) attributable to H World Group Limited
(GAAP) |
(350 |
) |
|
990 |
|
|
1,015 |
|
|
138 |
|
|
(980 |
) |
|
2,005 |
|
|
276 |
|
Interest income |
(19 |
) |
|
(44 |
) |
|
(57 |
) |
|
(8 |
) |
|
(37 |
) |
|
(101 |
) |
|
(14 |
) |
Interest expense |
90 |
|
|
130 |
|
|
94 |
|
|
13 |
|
|
199 |
|
|
224 |
|
|
31 |
|
Income tax expense |
(299 |
) |
|
194 |
|
|
308 |
|
|
42 |
|
|
(430 |
) |
|
502 |
|
|
69 |
|
Depreciation and amortization |
365 |
|
|
367 |
|
|
354 |
|
|
49 |
|
|
734 |
|
|
721 |
|
|
99 |
|
EBITDA (non-GAAP) |
(213 |
) |
|
1,637 |
|
|
1,714 |
|
|
234 |
|
|
(514 |
) |
|
3,351 |
|
|
461 |
|
Share-based compensation |
26 |
|
|
27 |
|
|
34 |
|
|
5 |
|
|
48 |
|
|
61 |
|
|
8 |
|
(Gains) losses from fair value changes of equity securities |
240 |
|
|
(13 |
) |
|
19 |
|
|
3 |
|
|
186 |
|
|
6 |
|
|
1 |
|
Adjusted EBITDA (non-GAAP) |
53 |
|
|
1,651 |
|
|
1,767 |
|
|
242 |
|
|
(280 |
) |
|
3,418 |
|
|
470 |
|
H World Group Limited |
Segment Financial Summary4 |
|
Quarter Ended June 30, 2022 |
|
Quarter Ended March 31, 2023 |
|
|
Quarter Ended June 30, 2023 |
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
(in millions) |
(in millions) |
(in millions) |
Leased and owned hotels |
1,475 |
|
886 |
|
2,020 |
|
854 |
|
|
2,466 |
|
1,126 |
Manachised and franchised hotels |
929 |
|
16 |
|
1,536 |
|
18 |
|
|
1,830 |
|
26 |
Others |
57 |
|
19 |
|
38 |
|
14 |
|
|
51 |
|
31 |
Revenue |
2,461 |
|
921 |
|
3,594 |
|
886 |
|
|
4,347 |
|
1,183 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
304 |
|
61 |
|
304 |
|
63 |
|
|
294 |
|
60 |
Adjusted EBITDA |
23 |
|
30 |
|
1,730 |
|
(79 |
) |
|
1,655 |
|
112 |
H World Group Limited |
Segment Financial Summary |
|
Six Months Ended June 30,
2022 |
|
Six Months Ended June 30, 2023 |
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
(in millions) |
(in millions) |
Leased and owned hotels |
2,733 |
|
|
1,270 |
|
|
4,486 |
|
1,980 |
Manachised and franchised hotels |
1,903 |
|
|
31 |
|
|
3,366 |
|
44 |
Others |
100 |
|
|
26 |
|
|
89 |
|
45 |
Revenue |
4,736 |
|
|
1,327 |
|
|
7,941 |
|
2,069 |
|
|
|
|
|
|
|
Depreciation and amortization |
614 |
|
|
120 |
|
|
598 |
|
123 |
Adjusted EBITDA |
(70 |
) |
|
(210 |
) |
|
3,385 |
|
33 |
|
|
|
|
|
|
|
|
|
|
Operating Results:
Legacy-Huazhu(1)
|
Number of hotels |
|
Number of rooms |
|
Openedin Q2 2023 |
Closed(2)in Q2
2023 |
Net addedin Q2 2023 |
As ofJune 30, 2023 |
|
As ofJune 30, 2023 |
|
|
Leased and owned hotels |
2 |
(6 |
) |
(4 |
) |
616 |
|
86,846 |
Manachised and franchised hotels |
372 |
(210 |
) |
162 |
|
8,006 |
|
731,399 |
Total |
374 |
(216 |
) |
158 |
|
8,622 |
|
818,245 |
(1) Legacy-Huazhu refers to H World and its
subsidiaries, excluding DH.(2) The reasons for
hotel closures mainly included non-compliance with our brand
standards, operating losses, and property-related issues. In Q2
2023, we temporarily closed 23 hotels for brand upgrade or business
model change purposes. |
|
As of June 30, 2023 |
|
Number of hotels |
Unopened hotels in pipeline |
Economy hotels |
4,856 |
1,079 |
Leased and owned hotels |
345 |
1 |
Manachised and franchised hotels |
4,511 |
1,078 |
Midscale and upscale
hotels(3) |
3,766 |
1,729 |
Leased and owned hotels |
271 |
14 |
Manachised and franchised hotels |
3,495 |
1,715 |
Total |
8,622 |
2,808 |
(3) This primarily includes midscale and
upper-midscale hotels.
|
For the quarter ended |
|
|
June 30, |
March 31, |
June 30, |
yoy |
|
2022 |
2023 |
2023 |
change |
Average daily room rate (in RMB) |
|
|
|
|
Leased and owned hotels |
243 |
|
337 |
|
384 |
|
57.7% |
|
Manachised and franchised hotels |
215 |
|
269 |
|
295 |
|
37.3% |
|
Blended |
218 |
|
277 |
|
305 |
|
39.8% |
|
Occupancy rate (as a percentage) |
|
|
|
|
Leased and owned hotels |
62.9% |
|
76.3% |
|
83.6% |
|
+20.7 p.p. |
|
Manachised and franchised hotels |
64.9% |
|
75.5% |
|
81.6% |
|
+16.7 p.p. |
|
Blended |
64.6% |
|
75.6% |
|
81.8% |
|
+17.2 p.p. |
|
RevPAR (in RMB) |
|
|
|
|
Leased and owned hotels |
153 |
|
257 |
|
321 |
|
109.7% |
|
Manachised and franchised hotels |
139 |
|
203 |
|
241 |
|
72.8% |
|
Blended |
141 |
|
210 |
|
250 |
|
77.0% |
|
|
For the quarter ended |
|
June 30, |
June 30, |
yoy |
|
2019 |
2023 |
change |
Average daily room rate (in RMB) |
|
|
|
Leased and owned hotels |
281 |
|
384 |
|
36.4% |
|
Manachised and franchised hotels |
225 |
|
295 |
|
30.9% |
|
Blended |
236 |
|
305 |
|
28.9% |
|
Occupancy rate (as a percentage) |
|
|
|
Leased and owned hotels |
89.4% |
|
83.6% |
|
-5.8 p.p. |
|
Manachised and franchised hotels |
86.3% |
|
81.6% |
|
-4.7 p.p. |
|
Blended |
86.9% |
|
81.8% |
|
-5.1 p.p. |
|
RevPAR (in RMB) |
|
|
|
Leased and owned hotels |
252 |
|
321 |
|
27.6% |
|
Manachised and franchised hotels |
194 |
|
241 |
|
23.8% |
|
Blended |
206 |
|
250 |
|
21.4% |
|
Same-hotel operational data by class |
|
|
|
|
|
|
|
|
Mature hotels in operation for more than 18
months |
|
Number of hotels |
Same-hotel RevPAR |
Same-hotel ADR |
Same-hotel Occupancy |
|
As ofJune 30, |
For the quarter |
|
For the quarter |
|
For the quarter |
yoy |
|
ended June 30, |
yoychange |
ended June 30, |
yoychange |
ended June 30, |
change |
|
2022 |
2023 |
2022 |
2023 |
|
2022 |
2023 |
|
2022 |
2023 |
(p.p.) |
Economy hotels |
3,567 |
3,567 |
118 |
192 |
63.1 |
% |
168 |
231 |
37.3 |
% |
70.1 |
% |
83.3 |
% |
+13.2 |
Leased and owned hotels |
325 |
325 |
124 |
237 |
90.4 |
% |
178 |
277 |
55.2 |
% |
69.7 |
% |
85.5 |
% |
+15.8 |
Manachised and franchised hotels |
3,242 |
3,242 |
117 |
186 |
58.8 |
% |
167 |
224 |
34.3 |
% |
70.2 |
% |
83.0 |
% |
+12.8 |
Midscale and upscale
hotels(3) |
2,624 |
2,624 |
176 |
309 |
75.6 |
% |
284 |
378 |
33.4 |
% |
62.1 |
% |
81.7 |
% |
+19.6 |
Leased and owned hotels |
253 |
253 |
194 |
395 |
104.1 |
% |
339 |
479 |
41.3 |
% |
57.2 |
% |
82.6 |
% |
+25.5 |
Manachised and franchised hotels |
2,371 |
2,371 |
173 |
295 |
70.3 |
% |
276 |
362 |
31.2 |
% |
62.8 |
% |
81.6 |
% |
+18.8 |
Total |
6,191 |
6,191 |
146 |
251 |
71.8 |
% |
221 |
304 |
37.9 |
% |
66.2 |
% |
82.5 |
% |
+16.3 |
(3) This primarily includes midscale and
upper-midscale hotels.
Operating Results:
Legacy-DH(4)
|
Number of hotels |
|
Number of rooms |
|
Unopened hotels in pipeline |
|
Opened in Q2 2023 |
Closedin Q2 2023 |
Net addedin Q2 2023 |
As ofJune 30,
2023(5) |
|
As ofJune 30, 2023 |
|
As ofJune 30, 2023 |
|
Leased hotels |
- |
- |
- |
80 |
|
15,497 |
|
26 |
Manachised and franchised hotels |
- |
- |
- |
48 |
|
10,675 |
|
11 |
Total |
- |
- |
- |
128 |
|
26,172 |
|
37 |
(4) Legacy-DH refers to DH.
(5) As of June 30, 2023, a total of 3 hotels were
temporarily closed: 1 hotel was closed due to flood damage; 1 hotel
was closed due to repair work; and 1 hotel was not in operation due
to a legal proceeding in progress. |
|
For the quarter ended |
|
|
June 30, |
March 31, |
June 30, |
yoy |
|
2022 |
2023 |
2023 |
change |
Average daily room rate (in EUR) |
|
|
|
|
Leased hotels |
113 |
|
108 |
|
119 |
|
6.1% |
|
Manachised and franchised hotels |
107 |
|
97 |
|
112 |
|
5.0% |
|
Blended |
110 |
|
104 |
|
117 |
|
5.6% |
|
Occupancy rate (as a percentage) |
|
|
|
|
Leased hotels |
61.2% |
|
53.0% |
|
69.4% |
|
+8.2 p.p. |
|
Manachised and franchised hotels |
57.9% |
|
54.1% |
|
63.8% |
|
+5.9 p.p. |
|
Blended |
59.8% |
|
53.5% |
|
67.1% |
|
+7.3 p.p. |
|
RevPAR (in EUR) |
|
|
|
|
Leased hotels |
69 |
|
57 |
|
83 |
|
20.3% |
|
Manachised and franchised hotels |
62 |
|
53 |
|
71 |
|
15.7% |
|
Blended |
66 |
|
55 |
|
78 |
|
18.5% |
|
Hotel Portfolio by Brand
|
As of June 30, 2023 |
|
Hotels |
Rooms |
Unopened hotels |
|
in operation |
in pipeline |
Economy hotels |
4,872 |
392,231 |
1,092 |
HanTing Hotel |
3,340 |
297,682 |
700 |
Hi Inn |
442 |
23,650 |
160 |
Ni Hao Hotel |
213 |
15,583 |
188 |
Elan Hotel |
642 |
31,102 |
1 |
Ibis Hotel |
219 |
22,318 |
30 |
Zleep Hotels |
16 |
1,896 |
13 |
Midscale hotels |
3,106 |
337,349 |
1,354 |
Ibis Styles Hotel |
92 |
9,390 |
32 |
Starway Hotel |
598 |
51,888 |
225 |
JI Hotel |
1,839 |
214,630 |
838 |
Orange Hotel |
577 |
61,441 |
259 |
Upper midscale hotels |
618 |
88,649 |
331 |
Crystal Orange Hotel |
167 |
21,748 |
84 |
CitiGO Hotel |
34 |
5,326 |
5 |
Manxin Hotel |
121 |
11,477 |
62 |
Madison Hotel |
64 |
8,202 |
62 |
Mercure Hotel |
148 |
24,667 |
62 |
Novotel Hotel |
20 |
5,114 |
15 |
IntercityHotel(6) |
56 |
10,742 |
36 |
MAXX (7) |
8 |
1,373 |
5 |
Upscale hotels |
129 |
20,644 |
60 |
Jaz in the City |
3 |
587 |
1 |
Joya Hotel |
7 |
1,234 |
- |
Blossom House |
56 |
2,605 |
46 |
Grand Mercure Hotel |
9 |
1,823 |
4 |
Steigenberger Hotels & Resorts(8) |
54 |
14,395 |
9 |
Luxury hotels |
16 |
2,360 |
2 |
Steigenberger Icon(9) |
9 |
1,847 |
1 |
Song Hotels |
7 |
513 |
1 |
Others |
9 |
3,184 |
6 |
Other hotels(10) |
9 |
3,184 |
6 |
Total |
8,750 |
844,417 |
2,845 |
(6) As of June 30, 2023, 5
operational hotels and 22 pipeline hotels of IntercityHotel were in
China.(7) As of June 30, 2023, 3 operational
hotels and 5 pipeline hotels of MAXX were in
China.(8) As of June 30, 2023, 11 operational
hotels and 3 pipeline hotels of Steigenberger Hotels & Resorts
were in China.(9) As of June 30, 2023, 3
operational hotels of Steigenberger Icon were in
China.(10) Other hotels include other partner hotels and
other hotel brands in Yongle Huazhu Hotel & Resort Group
(excluding Steigenberger Hotels & Resorts and Blossom
House).
Contact InformationInvestor RelationsTel: +86 (21)
6195 9561Email: ir@hworld.comhttps://ir.hworld.com
_______________________
1 Hotel turnover refers to total transaction
value of room and non-room revenue from H World hotels (i.e.,
leased and operated, manachised and franchised hotels).2 The
conversion of Renminbi (“RMB”) into United States
dollars (“US$”) is based on the exchange rate of
US$1.00=RMB7.2513 on June 30, 2023, as set forth in H.10
statistical release of the U.S. Federal Reserve Board and available
at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.3
The conversion of Renminbi (“RMB”) into United
States dollars (“US$”) is based on the exchange
rate of US$1.00=RMB7.2513 on June 30, 2023, 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.4
The Company presents segment information after elimination of
intercompany transactions.
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