H World Group Limited Reports First Quarter of 2023 Unaudited Financial Results
- A total of 8,592 hotels or 820,099 hotel rooms in operation as of March 31, 2023.
- Hotel turnover1 increased
71.3% year-over-year to RMB16.2 billion in the first quarter of 2023. Excluding Steigenberger Hotels GmbH and its subsidiaries (“DH”, or “Legacy-DH”), hotel turnover increased68.8% year-over-year in the first quarter of 2023. - Revenue increased
67.1% year-over-year to RMB4.5 billion (US$652 million )2 in the first quarter of 2023, surpassing the revenue guidance previously announced of a61% to65% increase compared to the first quarter of 2022. Revenue from the Legacy-Huazhu segment in the first quarter of 2023 increased58.0% year-over-year, exceeding the revenue guidance previously announced of a53% to57% increase. - Net income attributable to H World Group Limited was RMB990 million (US
$144 million ) in the first quarter of 2023, compared with a net loss attributable to H World Group Limited of RMB630 million in the first quarter of 2022 and a net loss attributable to H World Group Limited of RMB124 million in the previous quarter. Net income attributable to H World Group Limited from the Legacy-Huazhu segment was RMB1.2 billion in the first quarter of 2023, compared with a net loss attributable to H World Group Limited from the Legacy-Huazhu segment of RMB307 million in the first quarter of 2022 and a net loss attributable to H World Group Limited from the Legacy-Huazhu segment of RMB84 million in the previous quarter. - EBITDA (non-GAAP) in the first quarter of 2023 was RMB1.6 billion (US
$238 million ), compared with a negative RMB301 million in the first quarter of 2022 and RMB529 million in the previous quarter. EBITDA from the Legacy-Huazhu segment, which is a segment measure, was RMB1.7 billion in the first quarter of 2023, compared with a negative RMB61 million in the first quarter of 2022 and RMB528 million 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 RMB1.7 billion (US
$240 million ) in the first quarter of 2023, compared with a negative RMB333 million in the first quarter of 2022 and RMB398 million in the previous quarter. Adjusted EBITDA from the Legacy-Huazhu segment (non-GAAP) was RMB1.7 billion in the first quarter of 2023, compared with a negative RMB93 million in the first quarter of 2022 and RMB397 million in the previous quarter. - For the second quarter of 2023, H World expects its revenue growth to be in the range of
51% -55% compared to the second quarter of 2022, or in the range of64% -68% excluding DH.
SINGAPORE and SHANGHAI, China, May 29, 2023 (GLOBE NEWSWIRE) -- 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 for the first quarter ended March 31, 2023.
As of March 31, 2023, H World’s worldwide hotel network in operation totaled 8,592 hotels and 820,099 rooms, including 128 hotels from DH. During the first quarter of 2023, our Legacy-Huazhu business opened 262 hotels, including 2 leased and owned hotels and 260 manachised and franchised hotels, and closed a total of 209 hotels, including 5 leased and owned hotels and 204 manachised and franchised hotels. During the first quarter of 2023, the Legacy-DH business opened 2 hotels, including 1 leased hotel and 1 manachised and franchised hotel, and closed a total of 6 hotels, including 2 leased hotels and 4 manachised and franchised hotels. As of March 31, 2023, H World had a total of 2,339 unopened hotels in the pipeline, including 2,304 hotels from the Legacy-Huazhu business and 35 hotels from the Legacy-DH business.
Legacy-Huazhu Only – First Quarter 2023 Operational Highlights
As of March 31, 2023, Legacy-Huazhu had 8,464 hotels in operation, including 620 leased and owned hotels, and 7,844 manachised and franchised hotels. In addition, as of the same date, Legacy-Huazhu had 793,927 hotel rooms in operation, including 88,416 rooms under the lease and ownership model, and 705,511 rooms under the manachise and franchise models. Legacy-Huazhu also had 2,304 unopened hotels in its pipeline, including 13 leased and owned hotels, and 2,291 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 RMB277 in the first quarter of 2023, compared with RMB224 in the first quarter of 2022, RMB240 in the previous quarter, and RMB221 in the first quarter of 2019.
- The occupancy rate for all the Legacy-Huazhu hotels in operation was
75.6% in the first quarter of 2023, compared with59.2% in the first quarter of 2022,66.2% in the previous quarter, and80.6% in the first quarter of 2019. - Blended RevPAR was RMB210 in the first quarter of 2023, compared with RMB132 in the first quarter of 2022, RMB159 in the previous quarter, and RMB178 in the first quarter of 2019.
- For all the Legacy-Huazhu hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB210 in the first quarter of 2023, representing a
51.8% increase from RMB138 in the first quarter of 2022, with a20.8% increase in ADR and a 15.7 percentage-point increase in occupancy rate.
Legacy-DH Only – First Quarter of 2023 Operational Highlights
As of March 31, 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 35 unopened hotels in the pipeline, including 25 leased hotels and 10 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 EUR104 in the first quarter of 2023, compared with EUR88 in the first quarter of 2022 and EUR122 in the previous quarter.
- The occupancy rate for all Legacy-DH hotels in operation was
53.5% in the first quarter of 2023, compared with38.0% in the first quarter of 2022 and59.3% in the previous quarter. - Blended RevPAR was EUR55 in the first quarter of 2023, compared with EUR33 in the first quarter of 2022 and EUR72 in the previous quarter.
Jin Hui, CEO of H World commented: “We are very pleased to see a strong beginning of the year in China post-reopening. For our Legacy-Huazhu business, RevPAR in Q1 2023 recovered to
“Regarding our business outside China, our Legacy-DH business continued its promising business recovery. Q1 2023 Blended RevPAR recovered to
First Quarter of 2023 Unaudited Financial Results
| (RMB in millions) | Q1 2022 | Q4 2022 | Q1 2023 |
| Revenue: | |||
| Leased and owned hotels | 1,642 | 2,450 | 2,874 |
| Manachised and franchised hotels | 989 | 1,158 | 1,554 |
| Others | 50 | 98 | 52 |
| Total revenue | 2,681 | 3,706 | 4,480 |
Revenue in the first quarter of 2023 was RMB4.5 billion (US
Revenue from leased and owned hotels in the first quarter of 2023 was RMB2.9 billion (US
Revenue from manachised and franchised hotels in the first quarter of 2023 was RMB1.6 billion (US
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 RMB52 million (US
| (RMB in millions) | Q1 2022 | Q4 2022 | Q1 2023 | |||
| Operating costs and expenses: | ||||||
| Hotel operating costs | (2,813 | ) | (3,430 | ) | (3,250 | ) |
| Other operating costs | (11 | ) | (22 | ) | (11 | ) |
| Selling and marketing expenses | (122 | ) | (169 | ) | (195 | ) |
| General and administrative expenses | (462 | ) | (440 | ) | (425 | ) |
| Pre-opening expenses | (26 | ) | (14 | ) | (9 | ) |
| Total operating costs and expenses | (3,434 | ) | (4,075 | ) | (3,890 | ) |
Hotel operating costs in the first quarter of 2023 were RMB3.3 billion (US
Selling and marketing expenses in the first quarter of 2023 were RMB195 million (US
General and administrative expenses in the first quarter of 2023 were RMB425 million (US
Pre-opening expenses in the first quarter of 2023 were primarily related to the Legacy-Huazhu segment and totaled RMB9 million (US
Other operating income, net in the first quarter of 2023 was RMB74 million (US
Income from operations in the first quarter of 2023 was RMB664 million (US
Operating margin, defined as income from operations as a percentage of revenue, was
Other income, net in the first quarter of 2023 was RMB514 million (US
Gains from fair value changes of equity securities in the first quarter of 2023 were RMB13 million (US
Income tax expense in the first quarter of 2023 was RMB194 million (US
Net income attributable to H World Group Limited in the first quarter of 2023 was RMB990 million (US
EBITDA (non-GAAP) in the first quarter of 2023 was RMB1.6 billion (US
Cash flow. Operating cash inflow in the first quarter of 2023 was RMB1.8 billion (US
Cash and cash equivalents and restricted cash. As of March 31, 2023, the Company had a total balance of cash and cash equivalents of RMB9.0 billion (US
Debt financing. As of March 31, 2023, the Company had a total debt and net cash balance of RMB9.4 billion (US
Guidance
In the second quarter of 2023, H World expects its revenue growth to be in the range of
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call
H World’s management will host a conference call at 9 p.m. U.S. Eastern time on Monday, May 29, 2023 (9 a.m. Hong Kong time on Tuesday, May 30, 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/BI06e8970e467241ed8d3d88d65a544383. Upon registration, each participant will receive details for the conference call, including 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/kc248r24 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 Measures
To 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; adjusted EBITDA from the Legacy-Huazhu segment and adjusted EBITDA from the Legacy-DH segment 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, which is defined as EBITDA before share-based compensation expenses and gains (losses) from fair value changes of equity securities, to assess operating results of its hotels in operation. The Company believes that the exclusion of share-based compensation expenses and 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 Limited
Originated in China, H World Group Limited is a key player in the global hotel industry. As of March 31, 2023, H World operated 8,592 hotels with 820,099 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 March 31, 2023, H World operates 13 percent of its hotel rooms under the lease and ownership model, and 87 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 | March 31, 2023 | ||||||||
| RMB | RMB | US$3 | |||||||
| (in millions) | |||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | 3,583 | 8,963 | 1,305 | ||||||
| Restricted cash | 1,503 | 1,389 | 202 | ||||||
| Short-term investments | 1,788 | 96 | 14 | ||||||
| Accounts receivable, net | 1,113 | 936 | 136 | ||||||
| Loan receivables, net | 134 | 129 | 19 | ||||||
| Amounts due from related parties, current | 178 | 195 | 28 | ||||||
| Inventories | 70 | 63 | 9 | ||||||
| Other current assets, net | 809 | 804 | 117 | ||||||
| Total current assets | 9,178 | 12,575 | 1,830 | ||||||
| Property and equipment, net | 6,784 | 6,544 | 953 | ||||||
| Intangible assets, net | 5,278 | 5,302 | 772 | ||||||
| Operating lease right-of-use assets | 28,970 | 29,200 | 4,252 | ||||||
| Finance lease right-of-use assets | 2,047 | 2,096 | 305 | ||||||
| Land use rights, net | 199 | 197 | 29 | ||||||
| Long-term investments | 1,945 | 1,931 | 281 | ||||||
| Goodwill | 5,195 | 5,216 | 760 | ||||||
| Amounts due from related parties, non-current | 6 | 6 | 1 | ||||||
| Loan receivables, net | 124 | 127 | 18 | ||||||
| Other assets, net | 688 | 692 | 101 | ||||||
| Deferred tax assets | 1,093 | 1,086 | 158 | ||||||
| Total assets | 61,507 | 64,972 | 9,460 | ||||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities: | |||||||||
| Short-term debt | 3,288 | 2,874 | 418 | ||||||
| Accounts payable | 1,171 | 915 | 133 | ||||||
| Amounts due to related parties | 71 | 95 | 14 | ||||||
| Salary and welfare payables | 657 | 538 | 78 | ||||||
| Deferred revenue | 1,308 | 1,400 | 204 | ||||||
| Operating lease liabilities, current | 3,773 | 3,799 | 553 | ||||||
| Finance lease liabilities, current | 41 | 44 | 6 | ||||||
| Accrued expenses and other current liabilities | 2,337 | 3,388 | 493 | ||||||
| Income tax payable | 500 | 381 | 56 | ||||||
| Total current liabilities | 13,146 | 13,434 | 1,955 | ||||||
| Long-term debt | 6,635 | 6,521 | 950 | ||||||
| Operating lease liabilities, non-current | 27,637 | 27,777 | 4,045 | ||||||
| Finance lease liabilities, non-current | 2,513 | 2,577 | 375 | ||||||
| Deferred revenue | 828 | 870 | 127 | ||||||
| Other long-term liabilities | 977 | 1,003 | 146 | ||||||
| Deferred tax liabilities | 858 | 849 | 124 | ||||||
| Retirement benefit obligations | 110 | 111 | 16 | ||||||
| Total liabilities | 52,704 | 53,142 | 7,738 | ||||||
| Equity: | |||||||||
| Ordinary shares | 0 | 0 | 0 | ||||||
| Treasury shares | (441 | ) | (441 | ) | (64 | ) | |||
| Additional paid-in capital | 10,138 | 12,129 | 1,766 | ||||||
| Retained earnings | (1,200 | ) | (210 | ) | (31 | ) | |||
| Accumulated other comprehensive income | 232 | 271 | 39 | ||||||
| Total H World Group Limited shareholders' equity | 8,729 | 11,749 | 1,710 | ||||||
| Noncontrolling interest | 74 | 81 | 12 | ||||||
| Total equity | 8,803 | 11,830 | 1,722 | ||||||
| Total liabilities and equity | 61,507 | 64,972 | 9,460 | ||||||
| H World Group Limited | ||||||||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income | ||||||||||||||||
| Quarter Ended | ||||||||||||||||
| March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| (in millions, except share, per-share and per-ADS data) | ||||||||||||||||
| Revenue: | ||||||||||||||||
| Leased and owned hotels | 1,642 | 2,450 | 2,874 | 418 | ||||||||||||
| Manachised and franchised hotels | 989 | 1,158 | 1,554 | 226 | ||||||||||||
| Others | 50 | 98 | 52 | 8 | ||||||||||||
| Total revenues | 2,681 | 3,706 | 4,480 | 652 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Hotel operating costs: | ||||||||||||||||
| Rents | (1,026 | ) | (956 | ) | (1,051 | ) | (153 | ) | ||||||||
| Utilities | (155 | ) | (162 | ) | (204 | ) | (30 | ) | ||||||||
| Personnel costs | (838 | ) | (981 | ) | (1,036 | ) | (151 | ) | ||||||||
| Depreciation and amortization | (357 | ) | (351 | ) | (346 | ) | (50 | ) | ||||||||
| Consumables, food and beverage | (206 | ) | (289 | ) | (278 | ) | (40 | ) | ||||||||
| Others | (231 | ) | (691 | ) | (335 | ) | (49 | ) | ||||||||
| Total hotel operating costs | (2,813 | ) | (3,430 | ) | (3,250 | ) | (473 | ) | ||||||||
| Other operating costs | (11 | ) | (22 | ) | (11 | ) | (2 | ) | ||||||||
| Selling and marketing expenses | (122 | ) | (169 | ) | (195 | ) | (28 | ) | ||||||||
| General and administrative expenses | (462 | ) | (440 | ) | (425 | ) | (62 | ) | ||||||||
| Pre-opening expenses | (26 | ) | (14 | ) | (9 | ) | (1 | ) | ||||||||
| Total operating costs and expenses | (3,434 | ) | (4,075 | ) | (3,890 | ) | (566 | ) | ||||||||
| Other operating income (expense), net | 45 | 276 | 74 | 11 | ||||||||||||
| Income (losses) from operations | (708 | ) | (93 | ) | 664 | 97 | ||||||||||
| Interest income | 18 | 27 | 44 | 6 | ||||||||||||
| Interest expense | (109 | ) | (117 | ) | (130 | ) | (19 | ) | ||||||||
| Other income (expense), net | 59 | (65 | ) | 514 | 75 | |||||||||||
| Gains (losses) from fair value changes of equity securities | 54 | 140 | 13 | 2 | ||||||||||||
| Foreign exchange gain (loss) | (61 | ) | 181 | 104 | 15 | |||||||||||
| Income (loss) before income taxes | (747 | ) | 73 | 1,209 | 176 | |||||||||||
| Income tax (expense) benefit | 131 | (203 | ) | (194 | ) | (28 | ) | |||||||||
| Income (loss) from equity method investments | (33 | ) | 3 | (15 | ) | (2 | ) | |||||||||
| Net income (loss) | (649 | ) | (127 | ) | 1,000 | 146 | ||||||||||
| Net (income) loss attributable to noncontrolling interest | 19 | 3 | (10 | ) | (2 | ) | ||||||||||
| Net income (loss) attributable to H World Group Limited | (630 | ) | (124 | ) | 990 | 144 | ||||||||||
| Gain arising from defined benefit plan, net of tax | - | 22 | - | - | ||||||||||||
| Gains(losses) from fair value changes of debt securities, net of tax | - | 57 | - | - | ||||||||||||
| Foreign currency translation adjustments, net of tax | (4 | ) | 82 | 39 | 6 | |||||||||||
| Comprehensive income (loss) | (653 | ) | 34 | 1,039 | 152 | |||||||||||
| Comprehensive (income) loss attributable to noncontrolling interest | 19 | 3 | (10 | ) | (2 | ) | ||||||||||
| Comprehensive income (loss) attributable to H World Group Limited | (634 | ) | 37 | 1,029 | 150 | |||||||||||
| Earnings (losses) per share: | ||||||||||||||||
| Basic | (0.20 | ) | (0.04 | ) | 0.31 | 0.05 | ||||||||||
| Diluted | (0.20 | ) | (0.04 | ) | 0.30 | 0.04 | ||||||||||
| Earnings (losses) per ADS: | ||||||||||||||||
| Basic | (2.02 | ) | (0.40 | ) | 3.12 | 0.45 | ||||||||||
| Diluted | (2.02 | ) | (0.40 | ) | 3.05 | 0.44 | ||||||||||
| Weighted average number of shares used in computation: | ||||||||||||||||
| Basic | 3,118,897,668 | 3,109,528,097 | 3,174,229,716 | 3,174,229,716 | ||||||||||||
| Diluted | 3,118,897,668 | 3,109,528,097 | 3,343,723,364 | 3,343,723,364 | ||||||||||||
| H World Group Limited | ||||||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| Quarter Ended | ||||||||||||||||
| March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| (in millions) | ||||||||||||||||
| Operating activities: | ||||||||||||||||
| Net income (loss) | (649 | ) | (127 | ) | 1,000 | 146 | ||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
| Share-based compensation | 22 | 9 | 27 | 4 | ||||||||||||
| Depreciation and amortization, and other | 399 | 369 | 385 | 56 | ||||||||||||
| Impairment loss | - | 390 | - | - | ||||||||||||
| Loss (Income) from equity method investments, net of dividends | 80 | (3 | ) | 15 | 2 | |||||||||||
| Investment (income) loss | (57 | ) | (362 | ) | (544 | ) | (79 | ) | ||||||||
| Changes in operating assets and liabilities | (888 | ) | 1,008 | 1,020 | 147 | |||||||||||
| Other | 172 | (242 | ) | (59 | ) | (9 | ) | |||||||||
| Net cash provided by (used in) operating activities | (921 | ) | 1,042 | 1,844 | 267 | |||||||||||
| Investing activities: | ||||||||||||||||
| Capital expenditures | (425 | ) | (229 | ) | (222 | ) | (32 | ) | ||||||||
| Acquisitions, net of cash received | (56 | ) | 2 | - | - | |||||||||||
| Purchase of investments | (77 | ) | (23 | ) | (1 | ) | (0 | ) | ||||||||
| Proceeds from maturity/sale of investments | 376 | 370 | 2,200 | 320 | ||||||||||||
| Loan advances | (74 | ) | (30 | ) | (34 | ) | (5 | ) | ||||||||
| Loan collections | 55 | 52 | 34 | 5 | ||||||||||||
| Other | 0 | 7 | 4 | 1 | ||||||||||||
| Net cash provided by (used in) investing activities | (201 | ) | 149 | 1,981 | 289 | |||||||||||
| Financing activities: | ||||||||||||||||
| Net proceeds from issuance of ordinary shares | -- | - | 1,973 | 287 | ||||||||||||
| Payment of share repurchase | (191 | ) | - | - | - | |||||||||||
| Proceeds from debt | 809 | 2,288 | 428 | 62 | ||||||||||||
| Repayment of debt | (462 | ) | (3,670 | ) | (889 | ) | (129 | ) | ||||||||
| Other | (10 | ) | (19 | ) | (50 | ) | (7 | ) | ||||||||
| Net cash provided by (used in) financing activities | 146 | (1,401 | ) | 1,462 | 213 | |||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (16 | ) | 79 | (21 | ) | (3 | ) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (992 | ) | (131 | ) | 5,266 | 766 | ||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 5,141 | 5,217 | 5,086 | 741 | ||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | 4,149 | 5,086 | 10,352 | 1,507 | ||||||||||||
| H World Group Limited | ||||||||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | ||||||||||||||||
| Quarter Ended | ||||||||||||||||
| March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| (in millions, except shares, per-share and per-ADS data) | ||||||||||||||||
| Net income (loss) attributable to H World Group Limited (GAAP) | (630 | ) | (124 | ) | 990 | 144 | ||||||||||
| Share-based compensation expenses | 22 | 9 | 27 | 4 | ||||||||||||
| (Gains) losses from fair value changes of equity securities | (54 | ) | (140 | ) | (13 | ) | (2 | ) | ||||||||
| Adjusted net income (loss) attributable to H World Group Limited (non-GAAP) | (662 | ) | (255 | ) | 1,004 | 146 | ||||||||||
| Adjusted earnings (losses) per share (non-GAAP) | ||||||||||||||||
| Basic | (0.21 | ) | (0.08 | ) | 0.32 | 0.05 | ||||||||||
| Diluted | (0.21 | ) | (0.08 | ) | 0.31 | 0.05 | ||||||||||
| Adjusted earnings (losses) per ADS (non-GAAP) | ||||||||||||||||
| Basic | (2.12 | ) | (0.82 | ) | 3.17 | 0.46 | ||||||||||
| Diluted | (2.12 | ) | (0.82 | ) | 3.09 | 0.45 | ||||||||||
| Weighted average number of shares used in computation | ||||||||||||||||
| Basic | 3,118,897,668 | 3,109,528,097 | 3,174,229,716 | 3,174,229,716 | ||||||||||||
| Diluted | 3,118,897,668 | 3,109,528,097 | 3,343,723,364 | 3,343,723,364 | ||||||||||||
| Quarter Ended | ||||||||||||||||
| March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| (in millions, except per-share and per-ADS data) | ||||||||||||||||
| Net income (loss) attributable to H World Group Limited (GAAP) | (630 | ) | (124 | ) | 990 | 144 | ||||||||||
| Interest income | (18 | ) | (27 | ) | (44 | ) | (6 | ) | ||||||||
| Interest expense | 109 | 117 | 130 | 19 | ||||||||||||
| Income tax expense (benefit) | (131 | ) | 203 | 194 | 28 | |||||||||||
| Depreciation and amortization | 369 | 360 | 367 | 53 | ||||||||||||
| EBITDA (non-GAAP) | (301 | ) | 529 | 1,637 | 238 | |||||||||||
| Share-based compensation expense | 22 | 9 | 27 | 4 | ||||||||||||
| (Gains) losses from fair value changes of equity securities | (54 | ) | (140 | ) | (13 | ) | (2 | ) | ||||||||
| Adjusted EBITDA (non-GAAP) | (333 | ) | 398 | 1,651 | 240 | |||||||||||
| H World Group Limited | ||||||||||||||||||||||||||||||||||||||||
| Financial Summary | ||||||||||||||||||||||||||||||||||||||||
| Quarter Ended March 31, 2022 | Quarter Ended December 31, 2022 | Quarter Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||
| Legacy- Huazhu | Legacy- DH | Total | Legacy- Huazhu | Legacy- DH | Total | Legacy- Huazhu | Legacy- DH | Total | ||||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||||
| (in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||
| Leased and owned hotels | 1,258 | 384 | 1,642 | 1,537 | 913 | 2,450 | 2,020 | 854 | 2,874 | 418 | ||||||||||||||||||||||||||||||
| Manachised and franchised hotels | 974 | 15 | 989 | 1,130 | 28 | 1,158 | 1,536 | 18 | 1,554 | 226 | ||||||||||||||||||||||||||||||
| Others | 43 | 7 | 50 | 90 | 8 | 98 | 38 | 14 | 52 | 8 | ||||||||||||||||||||||||||||||
| Revenue | 2,275 | 406 | 2,681 | 2,757 | 949 | 3,706 | 3,594 | 886 | 4,480 | 652 | ||||||||||||||||||||||||||||||
| Hotel operating costs | (2,255 | ) | (558 | ) | (2,813 | ) | (2,446 | ) | (984 | ) | (3,430 | ) | (2,383 | ) | (867 | ) | (3,250 | ) | (473 | ) | ||||||||||||||||||||
| Selling and marketing expenses | (78 | ) | (44 | ) | (122 | ) | (88 | ) | (81 | ) | (169 | ) | (117 | ) | (78 | ) | (195 | ) | (28 | ) | ||||||||||||||||||||
| General and administrative expenses | (346 | ) | (116 | ) | (462 | ) | (320 | ) | (120 | ) | (440 | ) | (312 | ) | (113 | ) | (425 | ) | (62 | ) | ||||||||||||||||||||
| Pre-opening expenses | (26 | ) | - | (26 | ) | (14 | ) | (0 | ) | (14 | ) | (9 | ) | 0 | (9 | ) | (1 | ) | ||||||||||||||||||||||
| Income (losses) from operations | (416 | ) | (292 | ) | (708 | ) | (3 | ) | (90 | ) | (93 | ) | 822 | (158 | ) | 664 | 97 | |||||||||||||||||||||||
| Net income (loss) attributable to H World Group Limited | (307 | ) | (323 | ) | (630 | ) | (84 | ) | (40 | ) | (124 | ) | 1,155 | (165 | ) | 990 | 144 | |||||||||||||||||||||||
| Interest income | (18 | ) | (0 | ) | (18 | ) | (27 | ) | (0 | ) | (27 | ) | (44 | ) | (0 | ) | (44 | ) | (6 | ) | ||||||||||||||||||||
| Interest expense | 77 | 32 | 109 | 84 | 33 | 117 | 99 | 31 | 130 | 19 | ||||||||||||||||||||||||||||||
| Income tax expense (benefit) | (123 | ) | (8 | ) | (131 | ) | 260 | (57 | ) | 203 | 202 | (8 | ) | 194 | 28 | |||||||||||||||||||||||||
| Depreciation and amortization | 310 | 59 | 369 | 295 | 65 | 360 | 304 | 63 | 367 | 53 | ||||||||||||||||||||||||||||||
| EBITDA (non-GAAP) | (61 | ) | (240 | ) | (301 | ) | 528 | 1 | 529 | 1,716 | (79 | ) | 1,637 | 238 | ||||||||||||||||||||||||||
| Share-based Compensation | 22 | - | 22 | 9 | - | 9 | 27 | - | 27 | 4 | ||||||||||||||||||||||||||||||
| (Gains) losses from fair value changes of equity securities | (54 | ) | - | (54 | ) | (140 | ) | - | (140 | ) | (13 | ) | - | (13 | ) | (2 | ) | |||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | (93 | ) | (240 | ) | (333 | ) | 397 | 1 | 398 | 1,730 | (79 | ) | 1,651 | 240 | ||||||||||||||||||||||||||
Operating Results: Legacy-Huazhu(1)
| Number of hotels | Number of rooms | |||||||
| Opened in Q1 2023 | Closed(2) in Q1 2023 | Net added in Q1 2023 | As of March 31, 2023 | As of March 31, 2023 | ||||
| Leased and owned hotels | 2 | (5 | ) | (3 | ) | 620 | 88,416 | |
| Manachised and franchised hotels | 260 | (204 | ) | 56 | 7,844 | 705,511 | ||
| Total | 262 | (209 | ) | 53 | 8,464 | 793,927 | ||
| (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 Q1 2023, we temporarily closed 7 hotels for brand upgrade and business model change purposes. | ||||||||
| As of March 31, 2023 | ||
| Number of hotels | Unopened hotels in pipeline | |
| Economy hotels | 4,880 | 903 |
| Leased and owned hotels | 348 | 1 |
| Manachised and franchised hotels | 4,532 | 902 |
| Midscale and upscale hotels | 3,584 | 1,401 |
| Leased and owned hotels | 272 | 12 |
| Manachised and franchised hotels | 3,312 | 1,389 |
| Total | 8,464 | 2,304 |
| For the quarter ended | ||||||||
| March 31, | December 31, | March 31, | yoy | |||||
| 2022 | 2022 | 2023 | change | |||||
| Average daily room rate (in RMB) | ||||||||
| Leased and owned hotels | 263 | 279 | 337 | 28.4 | % | |||
| Manachised and franchised hotels | 218 | 236 | 269 | 23.4 | % | |||
| Blended | 224 | 240 | 277 | 23.9 | % | |||
| Occupancy Rate (as a percentage) | ||||||||
| Leased and owned hotels | 56.7 | % | 63.1 | % | 76.3 | % | +19.6 p.p. | |
| Manachised and franchised hotels | 59.6 | % | 66.6 | % | 75.5 | % | +16.0 p.p. | |
| Blended | 59.2 | % | 66.2 | % | 75.6 | % | +16.4 p.p. | |
| RevPAR (in RMB) | ||||||||
| Leased and owned hotels | 149 | 176 | 257 | 72.9 | % | |||
| Manachised and franchised hotels | 130 | 157 | 203 | 56.4 | % | |||
| Blended | 132 | 159 | 210 | 58.3 | % | |||
| For the quarter ended | ||||||
| March 31, | March 31, | yoy | ||||
| 2019 | 2023 | change | ||||
| Average daily room rate (in RMB) | ||||||
| Leased and owned hotels | 258 | 337 | 30.8 | % | ||
| Manachised and franchised hotels | 211 | 269 | 27.4 | % | ||
| Blended | 221 | 277 | 25.4 | % | ||
| Occupancy Rate (as a percentage) | ||||||
| Leased and owned hotels | 83.6 | % | 76.3 | % | -7.3p.p. | |
| Manachised and franchised hotels | 79.8 | % | 75.5 | % | -4.3p.p. | |
| Blended | 80.6 | % | 75.6 | % | -5.0p.p. | |
| RevPAR (in RMB) | ||||||
| Leased and owned hotels | 216 | 257 | 19.4 | % | ||
| Manachised and franchised hotels | 169 | 203 | 20.5 | % | ||
| Blended | 178 | 210 | 17.6 | % | ||
| 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 of March 31, | For the quarter | yoy | For the quarter | yoy | For the quarter | yoy | |||||||||
| ended March 31, | change | ended March 31, | change | ended March 31, | change | ||||||||||
| 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | (p.p.) | |||||||
| Economy hotels | 3,427 | 3,427 | 111 | 160 | 44.6 | % | 171 | 208 | 21.3 | % | 64.7 | % | 77.1 | % | +12.4 |
| Leased and owned hotels | 332 | 332 | 116 | 190 | 63.2 | % | 188 | 241 | 28.5 | % | 62.0 | % | 78.7 | % | +16.7 |
| Manachised and franchised hotels | 3,095 | 3,095 | 110 | 155 | 41.4 | % | 168 | 202 | 19.8 | % | 65.2 | % | 76.9 | % | +11.7 |
| Midscale and upscale hotels | 2,433 | 2,433 | 167 | 263 | 57.1 | % | 292 | 344 | 18.0 | % | 57.3 | % | 76.3 | % | +19.0 |
| Leased and owned hotels | 250 | 250 | 187 | 319 | 71.1 | % | 355 | 426 | 20.2 | % | 52.7 | % | 75.0 | % | +22.3 |
| Manachised and franchised hotels | 2,183 | 2,183 | 164 | 253 | 54.4 | % | 282 | 330 | 17.3 | % | 58.1 | % | 76.5 | % | +18.4 |
| Total | 5,860 | 5,860 | 138 | 210 | 51.8 | % | 227 | 274 | 20.8 | % | 61.1 | % | 76.7 | % | +15.7 |
Operating Results: Legacy-DH(3)
| Number of hotels | Number of rooms | Unopened hotels in pipeline | ||||||||
| Opened in Q1 2023 | Closed in Q1 2023 | Net added in Q1 2023 | As of March 31, 2023(4) | | As of March 31,2023 | | As of March 31,2023 | |||
| Leased hotels | 1 | (2 | ) | (1 | ) | 80 | 15,497 | 25 | ||
| Manachised and franchised hotels | 1 | (4 | ) | (3 | ) | 48 | 10,675 | 10 | ||
| Total | 2 | (6 | ) | (4 | ) | 128 | 26,172 | 35 | ||
| (3) Legacy-DH refers to DH. (4) As of March 31, 2023, a total of 2 hotels were temporarily closed. 1 hotel was closed due to flood damage, and 1 hotel was closed due to repair work. | ||||||||||
| For the quarter ended | ||||||||
| March 31, | December 31, | March 31, | yoy | |||||
| 2022 | 2022 | 2023 | change | |||||
| Average daily room rate (in EUR) | ||||||||
| Leased hotels | 90 | 114 | 108 | 19.9 | % | |||
| Manachised and franchised hotels | 85 | 134 | 97 | 13.9 | % | |||
| Blended | 88 | 122 | 104 | 17.7 | % | |||
| Occupancy rate (as a percentage) | ||||||||
| Leased hotels | 34.1 | % | 60.0 | % | 53.0 | % | +18.9 p.p. | |
| Manachised and franchised hotels | 44.0 | % | 58.3 | % | 54.1 | % | +10.2 p.p. | |
| Blended | 38.0 | % | 59.3 | % | 53.5 | % | +15.5 p.p. | |
| RevPAR (in EUR) | ||||||||
| Leased hotels | 31 | 68 | 57 | 86.2 | % | |||
| Manachised and franchised hotels | 38 | 78 | 53 | 40.1 | % | |||
| Blended | 33 | 72 | 55 | 65.8 | % | |||
Hotel Portfolio by Brand
| As of March 31, 2023 | |||
| Hotels | Rooms | Unopened hotels | |
| in operation | in pipeline | ||
| Economy hotels | 4,896 | 387,694 | 916 |
| HanTing Hotel | 3,285 | 291,489 | 596 |
| Hi Inn | 445 | 23,193 | 129 |
| Ni Hao Hotel | 184 | 13,553 | 153 |
| Elan Hotel | 747 | 35,255 | 1 |
| Ibis Hotel | 219 | 22,308 | 24 |
| Zleep Hotels | 16 | 1,896 | 13 |
| Midscale hotels | 2,956 | 322,093 | 1,103 |
| Ibis Styles Hotel | 87 | 9,114 | 34 |
| Starway Hotel | 563 | 47,691 | 206 |
| JI Hotel | 1,758 | 206,410 | 639 |
| Orange Hotel | 548 | 58,878 | 224 |
| Upper midscale hotels | 590 | 84,317 | 250 |
| CitiGO Hotel | 34 | 5,337 | 5 |
| Crystal Orange Hotel | 164 | 21,239 | 60 |
| Manxin Hotel | 114 | 10,903 | 57 |
| Madison Hotel | 56 | 7,369 | 41 |
| Mercure Hotel | 139 | 22,532 | 47 |
| Novotel Hotel | 19 | 4,734 | 12 |
| IntercityHotel(5) | 56 | 10,742 | 23 |
| MAXX(6) | 8 | 1,461 | 5 |
| Upscale hotels | 126 | 20,494 | 59 |
| Jaz in the City | 3 | 587 | 1 |
| Joya Hotel | 8 | 1,368 | - |
| Blossom House | 53 | 2,470 | 46 |
| Grand Mercure Hotel | 8 | 1,674 | 4 |
| Steigenberger Hotels & Resorts(7) | 54 | 14,395 | 8 |
| Luxury hotels | 15 | 2,318 | 5 |
| Steigenberger Icon(8) | 9 | 1,847 | 1 |
| Song Hotels | 6 | 471 | 4 |
| Others | 9 | 3,183 | 6 |
| Other hotels(9) | 9 | 3,183 | 6 |
| Total | 8,592 | 820,099 | 2,339 |
(5) As of March 31, 2023, 5 operational hotels and 10 pipeline hotels of IntercityHotel were in China.
(6) As of March 31, 2023, 3 operational hotels and 5 pipeline hotels of MAXX were in China.
(7) As of March 31, 2023, 11 operational hotels and 3 pipeline hotels of Steigenberger Hotels & Resorts were in China.
(8) As of March 31, 2023, 3 operational hotels of Steigenberger Icon were in China.
(9) Other hotels include other partner hotels and other hotel brands in Yongle Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).
_________________________________
1 Hotel turnover refers to total transaction value of room and non-room revenue from H World hotels (i.e., leased and operated, manachised and franchised hotels).
2 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US
3 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US
Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@hworld.com
https://ir.hworld.com
