Huazhu Group Limited Reports Fourth Quarter and Full Year 2020 Financial Results
Huazhu Group Limited (NASDAQ: HTHT) reported its financial results for Q4 and FY 2020. The company saw a 5.5% revenue increase in Q4 to RMB3.1 billion (US$471 million) but a 9.1% decline for the year to RMB10.2 billion (US$1.6 billion). Notably, net income for Q4 was RMB703 million (US$108 million), up from a net loss in the previous quarter. However, overall, Huazhu faced a net loss of RMB2.2 billion (US$336 million) for FY 2020. The company anticipates a 50%-54% revenue growth for FY 2021, despite ongoing challenges from COVID-19.
- Net income for Q4 2020 reached RMB703 million (US$108 million), showing recovery compared to negative net income in prior quarter.
- Q4 2020 net revenues increased 5.5% year-over-year to RMB3.1 billion (US$471 million), exceeding previous guidance.
- The full year 2020 net loss was RMB2.2 billion (US$336 million).
- Net revenues for FY 2020 decreased by 9.1% year-over-year to RMB10.2 billion (US$1.6 billion).
- Adjusted net income for FY 2020 was negative RMB1.8 billion (US$275 million), a decline from the previous year.
- A total of 6,789 hotels or 652,162 hotel rooms in operation as of December 31, 2020.
- Hotel turnover1 increased
17.5% year-over-year to RMB11 billion for the fourth quarter, and decreased5.6% to RMB33 billion for the full year of 2020. Excluding DH, hotel turnover increased13.2% year-over-year for the fourth quarter and decreased12.5% year-over-year for the full year of 2020. - Net revenues increased
5.5% year-over-year to RMB3.1 billion (US$471 million )2 for the fourth quarter, better than revenue guidance previously announced of0% to3% , and decreased9.1% to RMB10.2 billion (US$1.6 billion ) for the full year of 2020. Excluding DH, net revenues for the fourth quarter decreased3.1% year-over-year, better than our guidance previously announced of a decline of 4 to7% . - Net income attributable to Huazhu Group Limited was RMB703 million (US
$108 million ) for the fourth quarter of 2020, compared with RMB619 million for the fourth quarter of 2019 and net loss attributable to Huazhu Group Limited of RMB212 million in the previous quarter. Net loss attributable to Huazhu Group Limited was RMB2.2 billion (US$336 million ) for the full year of 2020. Excluding DH, net income attributable to Huazhu Group Limited was RMB1.0 billion for the fourth quarter of 2020 and was negative RMB847 million for the full year of 2020. - Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted net income (non-GAAP) for the fourth quarter of 2020 was negative RMB8 million (US
$1 million ), compared with RMB411 million for the fourth quarter of 2019, and adjusted net income (non-GAAP) for the full year of 2020 was negative RMB1.8 billion (US$275 million ), compared with RMB1.6 billion for the full year of 2019. Excluding DH, adjusted net income attributable to Huazhu Group Limited (non-GAAP) for the fourth quarter of 2020 was RMB300 million and was negative RMB459 million for the full year of 2020. - EBITDA (non-GAAP) for the fourth quarter of 2020 increased
2.3% year-over-year to RMB1.1 billion (US$167 million ). EBITDA (non-GAAP) for the full year of 2020 was negative RMB631 million (US$96 million ). Excluding DH, EBITDA (non-GAAP) increased38.8% year-over-year to RMB1.5 billion for the fourth quarter of 2020 and was RMB736 million for the full year of 2020. - Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) was RMB375 million (US
$58 million ) for the fourth quarter and was negative RMB244 million (US$35 million ) for the full year of 2020. Excluding DH, adjusted EBITDA (non-GAAP) was RMB764 million for the fourth quarter of 2020 and was RMB1.1 billion for the full year of 2020. - In the first quarter of 2021, Huazhu expects net revenues growth to range from an
8% to a10% increase compared to the first quarter of 2020, or to range from an increase of 61-63% if excluding DH. For the full year of 2021, we expect the net revenue growth to range from a50% to54% , or to range from50% to54% if excluding DH. To provide a more meaningful guidance considering the impact of COVID-19, the net revenue guidance mentioned above if compared to 2019 represents a decline of7% to9% in the first quarter of 2021 (or a decline of 12-14% if excluding DH), and growth of36% to40% for the full year in 2021 (or15% to19% if excluding DH). In order to contain the spread of COVID-19 during the Chinese New Year, Chinese government imposed strict “stay local” guidance, which impacted travel demand in January and February 2021. Upon the relaxation of travel restrictions from mid-March, we recorded a strong recovery in RevPAR. Excluding the impact of January and February, our revenue guidance for Q1 2021 compared to Q1 2019 would have been a growth of7% -9% , (or1% -3% if excluding DH), and45% -49% (36% -40% if excluding DH) for the full year 2021 compared to 2019.
SHANGHAI, China, March 24, 2021 (GLOBE NEWSWIRE) -- Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) (“Huazhu”, “the Company”, “we” or “our”), a world-leading hotel group, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.
As of December 31, 2020, Huazhu’s worldwide hotel network in operation totaled 6,789 hotels and 652,162 rooms, including 120 hotels from DH. For the full year of 2020, the Company opened 40 leased hotels and 1,609 manachised hotels and franchised hotels, and closed 41 leased hotels and 556 manachised and franchised hotels. During the fourth quarter of 2020, Legacy-Huazhu3 business opened 393 hotels, including 4 leased (or leased-and-operated) hotels and 389 manachised (or franchised-and-managed) hotels and franchised hotels, and closed a total of 114 hotels, including 10 leased hotels and 104 manachised and franchised hotels. For the full year of 2020, Legacy-Huazhu opened 32 leased hotels and 1,605 manachised hotels and franchised hotels, and closed 39 leased hotels and 547 manachised and franchised hotels. During the fourth quarter of 2020, the Legacy-DH4 business opened 3 hotels, including 2 leased hotels and 1 manachised and franchised hotel. For the full year of 2020, Legacy-DH opened 8 leased hotels and 4 manachised hotels and franchised hotels, and closed 2 leased hotels and 9 manachised and franchised hotels. As of December 31, 2020, Huazhu had a total of 2,449 unopened hotels in the pipeline, including 2,411 hotels from Legacy-Huazhu business and 38 hotels from the Legacy-DH business.
Legacy-Huazhu Only – Fourth Quarter and Full Year of 2020 Operational Highlights
As of December 31, 2020, Legacy-Huazhu had 6,669 hotels in operation, including 681 leased and owned hotels and 5,988 manachised hotels and franchised hotels. In addition, as of the same date, Legacy-Huazhu had 628,135 hotel rooms in operation, including 90,942 under the lease and ownership model and 537,193 under the manachise and franchise models. Legacy-Huazhu also had 2,411 hotels in the pipeline, including 18 leased and owned hotels and 2,393 manachised and franchised hotels. As of December 31, 2020, approximately
- The ADR was RMB231 in the fourth quarter of 2020, compared with RMB232 in the fourth quarter of 2019 and RMB218 in the previous quarter. The ADR was RMB210 for the full year of 2020, compared with RMB234 for the previous year.
- The occupancy rate for all Legacy-Huazhu hotels in operation was
80.6% in the fourth quarter of 2020, compared with82.2% in the fourth quarter of 2019 and82.0% in the previous quarter. The occupancy rate was71.0% for the full year of 2020, compared with84.4% for the previous year.
- Blended RevPAR was RMB186 in the fourth quarter of 2020, compared with RMB191 in the fourth quarter of 2019 and RMB179 in the previous quarter. Blended RevPAR was RMB149 for the full year of 2020, compared with RMB198 for the previous year.
- For all hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB186 for the fourth quarter of 2020, representing a
7.6% decrease from RMB201 for the fourth quarter of 2019, with a3.9% decrease in ADR and a 3.3-percentage-point decrease in occupancy rate. The same-hotel RevPAR was RMB148 for the full year of 2020, representing a27.9% decrease from RMB205 for the full year of 2019, with a13.1% decrease in ADR and a 14.8-percentage-point decrease in occupancy rate.
Legacy-DH Only – Fourth Quarter and Full Year of 2020 Operational Highlights
As of December 31, 2020, Legacy-DH had 120 hotels in operation, including 72 leased and owned hotels and 48 manachised hotels and franchised hotels. In addition, as of the same date, Legacy-DH had 24,027 hotel rooms in operation, including 13,371 under the lease and ownership model and 10,656 under the manachise and franchise models. Legacy-DH also had 38 hotels in the pipeline, including 26 leased and owned hotels and 12 manachised and franchised hotels. The following discusses Legacy-DH’s RevPAR, average daily room rate (“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 EUR76 in the fourth quarter of 2020, compared with EUR97 in the fourth quarter of 2019 and EUR93 in the previous quarter. The ADR was EUR88 for the full year of 2020, compared with EUR97 for the previous year.
- The occupancy rate for all Legacy-DH hotels in operation was
22.5% in the fourth quarter of 2020, compared with68.0% in the fourth quarter of 2019 and37.9% in the previous quarter. The occupancy rate was34.8% for the full year of 2020, compared with69.1% for the previous year.
- Blended RevPAR was EUR17 in the fourth quarter of 2020, compared with EUR66 in the fourth quarter of 2019 and EUR35 in the previous quarter. Blended RevPAR was EUR31 for the full year of 2020, compared with EUR67 for the previous year.
Ji Qi, Founder, Executive Chairman and CEO of Huazhu commented: “COVID-19 has caused very significant challenges to both our China and European businesses in 2020. However, our China business achieved strong recovery throughout the year, especially in the second half of 2020 despite several resurgences of the COVID-19 pandemic in various regions. In the second half, we achieved over RMB1.6 billion of adjusted EBITDA for our China business. More importantly, we continued to expand our hotel network and pipeline, thanks to our dedicated employees, our powerful brand portfolio and solid execution. Although our European business is still being impacted by COVID-19 pandemic, we have continued to advance our digitalization plan. Moreover, we also took the opportunity to streamline our organizational structure to prepare well for future recovery.”
“Looking ahead, we believe the COVID-19 pandemic has not changed the long-term growth potential of China’s lodging industry. Under the China’s ’Dual circulation‘ economy model, we continue to emphasize our China-focus strategy, together with our unique Three-in-One ’Super Composite’ business model for further hotel network expansion. More importantly, our future expansion will not focus on speed only, but more on quality as we see customers become more quality-oriented after COVID-19. Additionally, we are continuously improving and upgrading our technology and organizational capabilities to support our long-term strategy execution.”
Fourth Quarter and Full Year of 2020 Financial Results
The fourth quarter and full year of 2020 financial results included results of the Legacy-DH business, which was not included in the fourth quarter and full year of 2019 financial results. In the fourth quarter and full year of 2020, both Legacy-Huazhu business and Legacy-DH businesses were affected by the COVID-19 pandemic compared with the fourth quarter of 2019 and full year of 2020.
(RMB in millions) | Q4 2019 | Q3 2020 | Q4 2020 | 2019FY | 2020FY |
| Revenues: | |||||
| Leased and owned hotels | 1,921 | 2,131 | 2,024 | 7,718 | 6,908 |
| Manachised and franchised hotels | 938 | 995 | 999 | 3,342 | 3,136 |
| Others | 51 | 32 | 48 | 152 | 152 |
| Net revenues | 2,910 | 3,158 | 3,071 | 11,212 | 10,196 |
Net revenues for the fourth quarter of 2020 were RMB3.1 billion (US
Net revenues for the full year of 2020 were RMB10.2 billion (US
Net revenues from leased and owned hotels for the fourth quarter of 2020 were RMB2.0 billion (US
For the full year of 2020, net revenues from leased and owned hotels were RMB6.9 billion (US
Net revenues from manachised and franchised hotels for the fourth quarter of 2020 were RMB999 million (US
For the full year of 2020, net revenues from manachised and franchised hotels were RMB3.1 billion (US
Other revenues represent revenues generated from businesses other than the hotel operation, which mainly include revenues from the provision of IT products and services to hotels and revenues from Huazhu Mall™ and other revenues from Legacy-DH business, totaling RMB48 million (US
For the full year of 2020, other revenues were RMB152 million (US
(RMB in millions) | Q4 2019 | Q3 2020 | Q4 2020 | 2019FY | 2020FY |
| Operating costs and expenses: | |||||
| Hotel operating costs | 1,879 | 2,470 | 2,748 | 7,190 | 9,729 |
| Other operating costs | 21 | 15 | 22 | 57 | 52 |
| Selling and marketing expenses | 134 | 162 | 181 | 426 | 597 |
| General and administrative expenses | 330 | 343 | 336 | 1,061 | 1,259 |
| Pre-opening expenses | 149 | 42 | 36 | 502 | 288 |
| Total operating costs and expenses | 2,513 | 3,032 | 3,323 | 9,236 | 11,925 |
Hotel operating costs for the fourth quarter of 2020 were RMB2.7 billion (US
For the full year of 2020, hotel operating costs were RMB9.7 billion (US
Selling and marketing expenses for the fourth quarter of 2020 were RMB181 million (US
For the full year of 2020, selling and marketing expenses were RMB597 million (US
General and administrative expenses for the fourth quarter of 2020 were RMB336 million (US
For the full year of 2020, general and administrative expenses were RMB1.3 billion (US
Pre-opening expenses for the fourth quarter of 2020 were mostly related to Legacy-Huazhu totaling RMB36 million (US
Pre-opening expenses for the full year of 2020 were RMB288 million (US
Other operating income, net for the fourth quarter of 2020 was RMB118 million (US
Other operating income, net for the full year of 2020 was RMB480 million (US
Income from operations for the fourth quarter of 2020 was negative RMB134 million (US
Income from operations for the full year of 2020 was negative RMB1.7 billion (US
Operating margin, defined as income from operations as a percentage of net revenues, for the fourth quarter of 2020, was a negative
Operating margin for the full year of 2020 was a negative
Other income, net for the fourth quarter of 2020 was negative RMB8 million (US
Other income, net for the full year of 2020 was negative RMB89 million (US
Unrealized gains from fair value changes of equity securities for the fourth quarter of 2020 was RMB733 million (US
For the full year of 2020, unrealized losses from fair value changes of equity securities were RMB265 million (US
Income tax benefit for the fourth quarter of 2020 was RMB66 million (US
Net income attributable to Huazhu Group Limited for the fourth quarter of 2020 was RMB703 million (US
Net loss attributable to Huazhu Group Limited for the full year of 2020 was RMB2.2 billion (US
Basic and diluted earnings per share/ADS. For the fourth quarter of 2020, basic and diluted earnings per share were RMB2.27 (US
For the full year of 2020, basic losses per share were RMB7.49 (US
EBITDA (non-GAAP) for the fourth quarter of 2020 was RMB1.1 billion (US
EBITDA (non-GAAP) for the full year of 2020 was negative RMB631 million (US
Adjusted EBITDA margin (non-GAAP), defined as adjusted EBITDA as a percentage of net revenues, for the fourth quarter of 2020 was
We achieved very strong recovery in the second half of 2020. Adjusted EBITDA margin (non-GAAP) for the second half of 2020 was
Cash flow. Operating cash inflow for the fourth quarter of 2020 was RMB304 million (US
Operating cash inflow for the full year of 2020 was RMB609 million (US
Cash and cash equivalents and Restricted cash. As of December 31, 2020, the Company had a total balance of cash and cash equivalents of RMB7.0 billion (US
Debt financing. As of December 31, 2020, the Company had a total debt balance of RMB12.0 billion (US
COVID-19 update
During Q4 2020, despite numerous recurrences of COVID-19 in several cities and provinces in mainland China, such as Shanghai, Chengdu, and the Northeastern area of China, our business continued to recover, thanks to China’s effective and precise control of the COVID-19 pandemic. More importantly, we noticed that demand for travel shows resilience and recovery in previously-affected cities, with acceleration after the COVID-19 risk level was moved downward in those cities (from mid-to-high risk to low risk). This recovery trend was temporarily paused in the first two months of 2021 due to another COVID-19 resurgence in Shanghai, Beijing and Hebei Province. Accordingly, the Chinese government introduced “stay local” guidance prior to the Chinese New Year holiday (CNY) which further pressured the recovery in February. However, our performance started to recover steadily again post the CNY holiday. RevPAR in March 2021 recovered to
Steigenberger Hotels AG and its subsidiaries (“DH”) suffered from the second wave and third wave of COVID-19 outbreak in European countries since late September 2020. Given that the Europe has been encountering several resurgences of the COVID-19 pandemic, the lockdown period there has been extended several times, and currently is scheduled to end on April 18, 2021. Despite these resurgences, the Q4 2020 DH net revenues remain within our previous guidance. European countries began their vaccination process in December 2020. However, due to the uncertainty of the completion of the vaccination process, and consequently the timing of business recovery, we are taking further cost reduction and cash flow measures, such as negotiating with landlords to reduce our rental costs, reducing or eliminating discretionary corporate spending and capital expenditures, etc. We also actively sought new business opportunities in the government’s fight against COVID-19, such as offering Huazhu hotels to support governmental agencies for pandemic prevention and control. The extension of lockdown impacts are partially offset by extension of the scope and duration of European government subsidy programs.
Guidance
Huazhu anticipates the gross opening of 1,800-2,000 hotels in 2021, considering the COVID-19 resurgence happened in January and February. In 2021, Huazhu is expected to close 500-550 hotels.
In the first quarter of 2021, Huazhu expects net revenues growth to range from an
To provide a more meaningful guidance considering the impact of COVID-19, the net revenue guidance mentioned above if compared to 2019 represents a decline of
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call
The Company’s management will host a conference call beginning at 9:00 a.m. Hong Kong time on Thursday, March 25, 2021 (or 9:00 p.m. U.S. Eastern time on Wednesday, March 24, 2021) following the announcement of the results. The conference call will be a Direct Event call. All participants must preregister online prior to the call. Please use the link http://apac.directeventreg.com/registration/event/1749583 to complete the online registration at least 15 minutes prior to the commencement of the conference call. Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID. To join the conference, please dial the number you receive, enter the event passcode, followed by your unique registrant ID, and you will be joined to the conference promptly. Please dial in approximately 10 minutes before the scheduled time of the call.
A recording of the conference call will be available after the conclusion of the conference call through April 1, 2021. Please dial +1 (855) 452 5696 (for callers in the U.S.); 400 632 2162 (for callers in mainland China); 800 963 117 (for callers in Hong Kong); or +61 2 8199 0299 (for callers outside the U.S., mainland China and Hong Kong) and enter the passcode 1749583.
Use of Non-GAAP Financial Measures
To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: hotel operating costs excluding share-based compensation expenses; general and administrative expenses excluding share-based compensation expenses; selling and marketing expenses excluding share-based compensation expenses; adjusted income from operations excluding share-based compensation expenses; adjusted net income attributable to Huazhu Group Limited excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities; adjusted basic and diluted earnings per share/ADS excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities; EBITDA; adjusted EBITDA excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities; and adjusted EBITDA margin. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding Company performance by excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities that may not be indicative of Company operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Company performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are also useful to investors in allowing for greater transparency with respect to supplemental information used regularly by Company management in financial and operational decision-making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities is that share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities have been and will continue to be significant and recurring in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and financing transactions and income taxes, given the significant investments that the Company has made in leasehold improvements, depreciation and amortization expense that comprise a significant portion of the Company’s cost structure. In addition, the Company believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The Company also uses adjusted EBITDA, which is defined as EBITDA before share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, to assess operating results of the hotels in operation. The Company believes that the exclusion of share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities helps facilitate year-on-year comparison of the results of operations as the share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities may not be indicative of Company operating performance.
The Company believes that unrealized gains and losses from changes in fair value of equity securities are generally meaningless in understanding our reported results or evaluating our economic performance of our businesses. These gains and losses have caused and will continue to cause significant volatility in periodic earnings.
Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of hotels. The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered to be outside the ordinary course of business.
The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets (including land use rights), income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. The Company compensates for these limitations by providing the relevant disclosure of the depreciation and amortization, interest income, interest expense, income tax expense, share-based compensation expenses, and unrealized gains (losses) from fair value changes of equity securities and other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should be considered when evaluating the performance of the Company.
The terms EBITDA and adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial performance, investors should not consider these data in isolation or as a substitute for the Company’s net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or adjusted EBITDA in the same manner as the Company does.
Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, to the consolidated statement of operations information are included at the end of this press release.
About Huazhu Group Limited
Originated in China, Huazhu Group Limited is a world-leading hotel group. As of December 31, 2020, Huazhu operated 6,789 hotels with 652,162 rooms in operation in 16 countries. Huazhu’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, and Ni Hao Hotel. Upon the completion of the acquisition of DH on January 2, 2020, Huazhu added five brands to its portfolio, including Steigenberger Hotels & Resorts, Maxx by Steigenberger, Jaz in the City, IntercityHotel and Zleep Hotel. In addition, Huazhu 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.
Huazhu’s business includes leased and owned, manachised and franchised models. Under the lease and ownership model, Huazhu directly operates hotels typically located on leased or owned properties. Under the manachise model, Huazhu manages manachised hotels through the on-site hotel managers that Huazhu appoints, and Huazhu collects fees from franchisees. Under the franchise model, Huazhu provides training, reservations and support services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers. Huazhu applies a consistent standard and platform across all of its hotels. As of December 31, 2020, Huazhu operates 16 percent of its hotel rooms under lease and ownership model, and 84 percent under manachise and franchise models.
For more information, please visit Huazhu’s website: http://ir.huazhu.com.
Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; economic conditions; the regulatory environment; our ability to attract and retain customers and leverage our brands; trends and competition in the lodging industry; the expected growth of demand for lodging; and other factors and risks detailed in our filings with the 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.
Huazhu undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com
---Financial Tables and Operational Data Follow---
| Huazhu Group Limited | |||||||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||||||
| December 31, 2019 | December 31, 2020 | ||||||||||
| RMB | RMB | US$ | |||||||||
| (in millions) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | 3,234 | 7,026 | 1,077 | ||||||||
| Restricted cash | 10,765 | 64 | 10 | ||||||||
| Short-term investments | 2,908 | 3,903 | 598 | ||||||||
| Accounts receivable, net | 218 | 404 | 62 | ||||||||
| Loan receivables, net | 193 | 304 | 47 | ||||||||
| Amounts due from related parties | 182 | 178 | 27 | ||||||||
| Inventories | 57 | 89 | 14 | ||||||||
| Other current assets, net | 699 | 914 | 140 | ||||||||
| Total current assets | 18,256 | 12,882 | 1,975 | ||||||||
| Property and equipment, net | 5,854 | 6,682 | 1,024 | ||||||||
| Intangible assets, net | 1,662 | 5,945 | 911 | ||||||||
| Operating lease right-of-use assets | 20,875 | 28,980 | 4,441 | ||||||||
| Finance lease right-of-use assets | - | 2,041 | 313 | ||||||||
| Land use rights, net | 215 | 213 | 33 | ||||||||
| Long-term investments | 1,929 | 1,923 | 295 | ||||||||
| Goodwill | 2,657 | 4,988 | 764 | ||||||||
| Loan receivables, net | 280 | 135 | 21 | ||||||||
| Other assets, net | 707 | 743 | 114 | ||||||||
| Deferred tax assets | 548 | 1,266 | 193 | ||||||||
| Total assets | 52,983 | 65,798 | 10,084 | ||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | 8,499 | 1,142 | 175 | ||||||||
| Accounts payable | 1,176 | 1,241 | 190 | ||||||||
| Amounts due to related parties | 95 | 132 | 20 | ||||||||
| Salary and welfare payables | 491 | 526 | 81 | ||||||||
| Deferred revenue | 1,179 | 1,272 | 195 | ||||||||
| Operating lease liabilities, current | 3,082 | 3,406 | 522 | ||||||||
| Finance lease liabilities, current | - | 31 | 5 | ||||||||
| Accrued expenses and other current liabilities | 1,856 | 2,440 | 374 | ||||||||
| Dividends payable | 678 | - | - | ||||||||
| Income tax payable | 231 | 339 | 52 | ||||||||
| Total current liabilities | 17,287 | 10,529 | 1,614 | ||||||||
| Long-term debt | 8,084 | 10,856 | 1,664 | ||||||||
| Operating lease liabilities, noncurrent | 18,496 | 27,048 | 4,145 | ||||||||
| Finance lease liabilities, noncurrent | - | 2,497 | 383 | ||||||||
| Deferred revenue | 559 | 662 | 101 | ||||||||
| Other long-term liabilities | 566 | 771 | 118 | ||||||||
| Deferred tax liabilities | 491 | 1,824 | 280 | ||||||||
| Retirement benefit obligations | - | 179 | 27 | ||||||||
| Total liabilities | 45,483 | 54,366 | 8,332 | ||||||||
| Equity: | |||||||||||
| Ordinary shares | 0 | 0 | 0 | ||||||||
| Treasury shares | (107 | ) | (107 | ) | (16 | ) | |||||
| Additional paid-in capital | 3,834 | 9,808 | 1,503 | ||||||||
| Retained earnings | 3,701 | 1,502 | 230 | ||||||||
| Accumulated other comprehensive income (loss) | (49 | ) | 127 | 19 | |||||||
| Total Huazhu Group Limited shareholders' equity | 7,379 | 11,330 | 1,736 | ||||||||
| Noncontrolling interest | 121 | 102 | 16 | ||||||||
| Total equity | 7,500 | 11,432 | 1,752 | ||||||||
| Total liabilities and equity | 52,983 | 65,798 | 10,084 | ||||||||
| Huazhu Group Limited | |||||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income | |||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||
| December 31, 2019 | September 30, 2020 | December 31, 2020 | December 31, 2019 | December 31, 2020 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| (in millions, except shares, per share and per ADS data) | |||||||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Leased and owned hotels | 1,921 | 2,131 | 2,024 | 310 | 7,718 | 6,908 | 1,059 | ||||||||||||||
| Manachised and franchised hotels | 938 | 995 | 999 | 153 | 3,342 | 3,136 | 481 | ||||||||||||||
| Others | 51 | 32 | 48 | 8 | 152 | 152 | 23 | ||||||||||||||
| Net revenues | 2,910 | 3,158 | 3,071 | 471 | 11,212 | 10,196 | 1,563 | ||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||
| Hotel operating costs: | |||||||||||||||||||||
| Rents | (663 | ) | (859 | ) | (929 | ) | (142 | ) | (2,624 | ) | (3,485 | ) | (534 | ) | |||||||
| Utilities | (91 | ) | (136 | ) | (120 | ) | (18 | ) | (404 | ) | (478 | ) | (73 | ) | |||||||
| Personnel costs | (490 | ) | (611 | ) | (738 | ) | (113 | ) | (1,854 | ) | (2,501 | ) | (383 | ) | |||||||
| Depreciation and amortization | (257 | ) | (337 | ) | (348 | ) | (53 | ) | (960 | ) | (1,316 | ) | (202 | ) | |||||||
| Consumables, food and beverage | (215 | ) | (253 | ) | (257 | ) | (39 | ) | (793 | ) | (885 | ) | (136 | ) | |||||||
| Others | (163 | ) | (274 | ) | (356 | ) | (55 | ) | (555 | ) | (1,064 | ) | (163 | ) | |||||||
| Total hotel operating costs | (1,879 | ) | (2,470 | ) | (2,748 | ) | (420 | ) | (7,190 | ) | (9,729 | ) | (1,491 | ) | |||||||
| Other operating costs | (21 | ) | (15 | ) | (22 | ) | (3 | ) | (57 | ) | (52 | ) | (8 | ) | |||||||
| Selling and marketing expenses | (134 | ) | (162 | ) | (181 | ) | (28 | ) | (426 | ) | (597 | ) | (91 | ) | |||||||
| General and administrative expenses | (330 | ) | (343 | ) | (336 | ) | (52 | ) | (1,061 | ) | (1,259 | ) | (193 | ) | |||||||
| Pre-opening expenses | (149 | ) | (42 | ) | (36 | ) | (6 | ) | (502 | ) | (288 | ) | (44 | ) | |||||||
| Total operating costs and expenses | (2,513 | ) | (3,032 | ) | (3,323 | ) | (509 | ) | (9,236 | ) | (11,925 | ) | (1,827 | ) | |||||||
| Goodwill impairment loss | - | (437 | ) | - | - | - | (437 | ) | (67 | ) | |||||||||||
| Other operating income (expense), net | 89 | 110 | 118 | 18 | 132 | 480 | 74 | ||||||||||||||
| Income (losses) from operations | 486 | (201 | ) | (134 | ) | (20 | ) | 2,108 | (1,686 | ) | (257 | ) | |||||||||
| Interest income | 39 | 31 | 33 | 5 | 160 | 119 | 18 | ||||||||||||||
| Interest expense | (83 | ) | (136 | ) | (118 | ) | (18 | ) | (315 | ) | (533 | ) | (82 | ) | |||||||
| Other (expense) income, net | 45 | (1 | ) | (8 | ) | (2 | ) | 331 | (89 | ) | (14 | ) | |||||||||
| Unrealized gains (losses) from fair value changes of equity securities | 230 | 39 | 733 | 113 | 316 | (265 | ) | (42 | ) | ||||||||||||
| Foreign exchange (loss) gain | 69 | 48 | 151 | 23 | (35 | ) | 175 | 27 | |||||||||||||
| Income (Loss) before income taxes | 786 | (220 | ) | 657 | 101 | 2,565 | (2,279 | ) | (350 | ) | |||||||||||
| Income tax (expense) benefit | (133 | ) | 50 | 66 | 10 | (640 | ) | 215 | 33 | ||||||||||||
| Gain (Loss) from equity method investments | (28 | ) | (35 | ) | (11 | ) | (2 | ) | (164 | ) | (140 | ) | (21 | ) | |||||||
| Net income (loss) | 625 | (205 | ) | 712 | 109 | 1,761 | (2,204 | ) | (338 | ) | |||||||||||
| Net (income) loss attributable to noncontrolling interest | (6 | ) | (7 | ) | (9 | ) | (1 | ) | 8 | 12 | 2 | ||||||||||
| Net income (loss) attributable to Huazhu Group Limited | 619 | (212 | ) | 703 | 108 | 1,769 | (2,192 | ) | (336 | ) | |||||||||||
| Other comprehensive income | |||||||||||||||||||||
| Gain arising from defined benefit plan, net of tax | - | (7 | ) | (27 | ) | (4 | ) | - | (27 | ) | (4 | ) | |||||||||
| Foreign currency translation adjustments, net of tax | 29 | 237 | (8 | ) | (1 | ) | (7 | ) | 203 | 31 | |||||||||||
| Comprehensive income (loss) | 654 | 25 | 677 | 104 | 1,754 | (2,028 | ) | (311 | ) | ||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interest | (6 | ) | (7 | ) | (9 | ) | (1 | ) | 8 | 12 | 2 | ||||||||||
| Comprehensive income (loss) attributable to Huazhu Group Limited | 648 | 18 | 668 | 103 | 1,762 | (2,016 | ) | (309 | ) | ||||||||||||
| Earnings (Losses) per share/ADS: | |||||||||||||||||||||
| Basic | 2.17 | (0.73 | ) | 2.27 | 0.35 | 6.22 | (7.49 | ) | (1.15 | ) | |||||||||||
| Diluted | 2.07 | (0.73 | ) | 2.16 | 0.33 | 5.94 | (7.49 | ) | (1.15 | ) | |||||||||||
| Weighted average number of shares used in computation: | |||||||||||||||||||||
| Basic | 285,256,343 | 291,675,396 | 309,752,462 | 309,752,462 | 284,305,138 | 292,739,841 | 292,739,841 | ||||||||||||||
| Diluted | 304,319,151 | 291,675,396 | 326,326,640 | 326,326,640 | 304,309,890 | 292,739,841 | 292,739,841 | ||||||||||||||
| Huazhu Group Limited | |||||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||
| December 31, 2019 | September 30, 2020 | December 31, 2020 | December 31,2019 | December 31, 2020 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| ( in millions) | |||||||||||||||||||||
| Operating activities: | |||||||||||||||||||||
| Net (loss) income | 625 | (205 | ) | 712 | 109 | 1,761 | (2,204 | ) | (338 | ) | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||
| Share-based compensation | 22 | 33 | 22 | 4 | 110 | 122 | 19 | ||||||||||||||
| Depreciation and amortization, and other | 273 | 367 | 384 | 59 | 1,019 | 1,445 | 221 | ||||||||||||||
| Impairment loss | 10 | 453 | 138 | 21 | 13 | 709 | 109 | ||||||||||||||
| Loss (Income) from equity method investments, net of dividends | 37 | 14 | 38 | 6 | 213 | 145 | 22 | ||||||||||||||
| Investment (income) loss | (353 | ) | (89 | ) | (881 | ) | (135 | ) | (477 | ) | 108 | 17 | |||||||||
| Changes in operating assets and liabilities | 387 | 747 | 399 | 61 | 482 | 339 | 52 | ||||||||||||||
| Other | (22 | ) | (181 | ) | (508 | ) | (79 | ) | 172 | (55 | ) | (9 | ) | ||||||||
| Net cash provided by operating activities | 979 | 1,139 | 304 | 46 | 3,293 | 609 | 93 | ||||||||||||||
| Investing activities: | |||||||||||||||||||||
| Capital expenditures | (459 | ) | (452 | ) | (501 | ) | (77 | ) | (1,535 | ) | (1,776 | ) | (272 | ) | |||||||
| Acquisitions, net of cash received | (160 | ) | (3 | ) | (1 | ) | 0 | (244 | ) | (5,060 | ) | (775 | ) | ||||||||
| Purchase of investments | (63 | ) | (1,631 | ) | (71 | ) | (11 | ) | (329 | ) | (1,702 | ) | (261 | ) | |||||||
| Proceeds from maturity/sale of investments | 1,281 | 14 | 12 | 2 | 2,002 | 396 | 61 | ||||||||||||||
| Loan advances | (76 | ) | (48 | ) | (15 | ) | (2 | ) | (541 | ) | (145 | ) | (22 | ) | |||||||
| Loan collections | 92 | 51 | 60 | 9 | 347 | 182 | 28 | ||||||||||||||
| Other | 20 | 0 | 1 | 0 | 15 | 4 | 1 | ||||||||||||||
| Net cash provided by (used in) investing activities | 635 | (2,069 | ) | (515 | ) | (79 | ) | (285 | ) | (8,101 | ) | (1,240 | ) | ||||||||
| Financing activities: | |||||||||||||||||||||
| Net proceeds from issuance of ordinary shares | 4 | 5,245 | 774 | 119 | 14 | 6,019 | 922 | ||||||||||||||
| Proceeds from debt | 11,064 | 1,468 | 311 | 48 | 15,392 | 6,906 | 1,058 | ||||||||||||||
| Repayment of debt | (3,136 | ) | (2,844 | ) | (1,410 | ) | (216 | ) | (8,682 | ) | (11,207 | ) | (1,718 | ) | |||||||
| Dividend paid | - | - | - | - | (658 | ) | (678 | ) | (104 | ) | |||||||||||
| Other | (2 | ) | (33 | ) | (85 | ) | (13 | ) | (21 | ) | (157 | ) | (24 | ) | |||||||
| Net cash provided by (used in) financing activities | 7,930 | 3,836 | (410 | ) | (62 | ) | 6,045 | 883 | 134 | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 4 | (73 | ) | (189 | ) | (29 | ) | 62 | (300 | ) | (45 | ) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 9,548 | 2,833 | (810 | ) | (124 | ) | 9,115 | (6,909 | ) | (1,058 | ) | ||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 4,451 | 5,067 | 7,900 | 1,211 | 4,884 | 13,999 | 2,145 | ||||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | 13,999 | 7,900 | 7,090 | 1,087 | 13,999 | 7,090 | 1,087 | ||||||||||||||
| Huazhu Group Limited | |||||||||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||||||||
| Quarter Ended December 31, 2020 | |||||||||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||||||||
| RMB | RMB | RMB | |||||||||||||||
| (in millions) | |||||||||||||||||
| Hotel operating costs | 2,748 | 89.5 | % | 10 | 0.3 | % | 2,738 | 89.2 | % | ||||||||
| Other operating costs | 22 | 0.7 | % | - | 0.0 | % | 22 | 0.7 | % | ||||||||
| Selling and marketing expenses | 181 | 5.9 | % | 1 | 0.0 | % | 180 | 5.9 | % | ||||||||
| General and administrative expenses | 336 | 10.9 | % | 11 | 0.4 | % | 325 | 10.5 | % | ||||||||
| Pre-opening expenses | 36 | 1.2 | % | - | 0.0 | % | 36 | 1.2 | % | ||||||||
| Total operating costs and expenses | 3,323 | 108.2 | % | 22 | 0.7 | % | 3,301 | 107.5 | % | ||||||||
| Income from operations | (134 | ) | -4.4 | % | 22 | 0.7 | % | (112 | ) | -3.7 | % | ||||||
| Quarter Ended December 31, 2020 | |||||||||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||||||||
| US$ | US$ | US$ | |||||||||||||||
| (in millions) | |||||||||||||||||
| Hotel operating costs | 420 | 89.5 | % | 2 | 0.3 | % | 418 | 89.2 | % | ||||||||
| Other operating costs | 3 | 0.7 | % | - | 0.0 | % | 3 | 0.7 | % | ||||||||
| Selling and marketing expenses | 28 | 5.9 | % | 0 | 0.0 | % | 28 | 5.9 | % | ||||||||
| General and administrative expenses | 52 | 10.9 | % | 2 | 0.4 | % | 50 | 10.5 | % | ||||||||
| Pre-opening expenses | 6 | 1.2 | % | - | 0.0 | % | 6 | 1.2 | % | ||||||||
| Total operating costs and expenses | 509 | 108.2 | % | 4 | 0.7 | % | 505 | 107.5 | % | ||||||||
| Income from operations | (20 | ) | -4.4 | % | 4 | 0.7 | % | (16 | ) | -3.7 | % | ||||||
| Quarter Ended September 30, 2020 | |||||||||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||||||||
| RMB | RMB | RMB | |||||||||||||||
| (in millions) | |||||||||||||||||
| Hotel operating costs | 2,470 | 78.2 | % | 12 | 0.4 | % | 2,458 | 77.8 | % | ||||||||
| Other operating costs | 15 | 0.5 | % | - | 0.0 | % | 15 | 0.5 | % | ||||||||
| Selling and marketing expenses | 162 | 5.1 | % | 1 | 0.0 | % | 161 | 5.1 | % | ||||||||
| General and administrative expenses | 343 | 10.9 | % | 20 | 0.6 | % | 323 | 10.3 | % | ||||||||
| Pre-opening expenses | 42 | 1.3 | % | - | 0.0 | % | 42 | 1.3 | % | ||||||||
| Total operating costs and expenses | 3,032 | 96.0 | % | 33 | 1.0 | % | 2,999 | 95.0 | % | ||||||||
| Income from operations | (201 | ) | -6.4 | % | 33 | 1.0 | % | (168 | ) | -5.4 | % | ||||||
| Quarter Ended December 31, 2019 | |||||||||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||||||||
| RMB | RMB | RMB | |||||||||||||||
| (in millions) | |||||||||||||||||
| Hotel operating costs | 1,879 | 64.6 | % | 7 | 0.2 | % | 1,872 | 64.4 | % | ||||||||
| Other operating costs | 21 | 0.7 | % | - | 0.0 | % | 21 | 0.7 | % | ||||||||
| Selling and marketing expenses | 134 | 4.6 | % | 1 | 0.0 | % | 133 | 4.6 | % | ||||||||
| General and administrative expenses | 330 | 11.3 | % | 14 | 0.5 | % | 316 | 10.8 | % | ||||||||
| Pre-opening expenses | 149 | 5.1 | % | - | 0.0 | % | 149 | 5.1 | % | ||||||||
| Total operating costs and expenses | 2,513 | 86.3 | % | 22 | 0.7 | % | 2,491 | 85.6 | % | ||||||||
| Income from operations | 486 | 16.7 | % | 22 | 0.7 | % | 508 | 17.4 | % | ||||||||
| Year Ended December 31, 2020 | |||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||
| RMB | RMB | RMB | |||||||||
| (in millions) | |||||||||||
| Hotel operating costs | 9,729 | 95.4 | % | 42 | 0.4 | % | 9,687 | 95.0 | % | ||
| Other operating costs | 52 | 0.5 | % | - | 0.0 | % | 52 | 0.5 | % | ||
| Selling and marketing expenses | 597 | 5.9 | % | 4 | 0.0 | % | 593 | 5.9 | % | ||
| General and administrative expenses | 1,259 | 12.3 | % | 76 | 0.7 | % | 1,183 | 11.6 | % | ||
| Pre-opening expenses | 288 | 2.8 | % | - | 0.0 | % | 288 | 2.8 | % | ||
| Total operating costs and expenses | 11,925 | 116.9 | % | 122 | 1.1 | % | 11,803 | 115.8 | % | ||
| Income from operations | (1,686 | ) | -16.5 | % | 122 | 1.1 | % | (1,564 | ) | -15.4 | % |
| Year Ended December 31, 2020 | |||||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||||
| US$ | US$ | US$ | |||||||||
| (in millions) | |||||||||||
| Hotel operating costs | 1,491 | 95.4 | % | 6 | 0.4 | % | 1,485 | 95.0 | % | ||
| Other operating costs | 8 | 0.5 | % | - | 0.0 | % | 8 | 0.5 | % | ||
| Selling and marketing expenses | 91 | 5.9 | % | 1 | 0.0 | % | 90 | 5.9 | % | ||
| General and administrative expenses | 193 | 12.3 | % | 12 | 0.7 | % | 181 | 11.6 | % | ||
| Pre-opening expenses | 44 | 2.8 | % | - | 0.0 | % | 44 | 2.8 | % | ||
| Total operating costs and expenses | 1,827 | 116.9 | % | 19 | 1.1 | % | 1,808 | 115.8 | % | ||
| Income from operations | (257 | ) | -16.5 | % | 19 | 1.1 | % | (238 | ) | -15.4 | % |
| Year Ended December 31, 2019 | |||||||||
| GAAP Result | % of Net Revenues | Share-based Compensation | % of Net Revenues | Non-GAAP Result | % of Net Revenues | ||||
| RMB | RMB | RMB | |||||||
| (in millions) | |||||||||
| Hotel operating costs | 7,190 | 64.1 | % | 35 | 0.3 | % | 7,155 | 63.8 | % |
| Other operating costs | 57 | 0.5 | % | - | 0.0 | % | 57 | 0.5 | % |
| Selling and marketing expenses | 426 | 3.8 | % | 3 | 0.0 | % | 423 | 3.8 | % |
| General and administrative expenses | 1,061 | 9.5 | % | 72 | 0.6 | % | 989 | 8.9 | % |
| Pre-opening expenses | 502 | 4.5 | % | - | 0.0 | % | 502 | 4.5 | % |
| Total operating costs and expenses | 9,236 | 82.4 | % | 110 | 0.9 | % | 9,126 | 81.5 | % |
| Income from operations | 2,108 | 18.8 | % | 110 | 0.9 | % | 2,218 | 19.7 | % |
| Huazhu Group Limited | |||||||||||||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||
| December 31, 2019 | September 30,2020 | December 31, 2020 | December 31, 2019 | December 31, 2020 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| (in millions, except shares, per share and per ADS data) | |||||||||||||||||||||
| Net income (loss) attributable to Huazhu Group Limited (GAAP) | 619 | (212 | ) | 703 | 108 | 1,769 | (2,192 | ) | (336 | ) | |||||||||||
| Share-based compensation expenses | 22 | 33 | 22 | 4 | 110 | 122 | 19 | ||||||||||||||
| Unrealized (gains) losses from fair value changes of equity securities | (230 | ) | (39 | ) | (733 | ) | (113 | ) | (316 | ) | 265 | 42 | |||||||||
| Adjusted net income attributable to Huazhu Group Limited (non-GAAP) | 411 | (218 | ) | (8 | ) | (1 | ) | 1,563 | (1,805 | ) | (275 | ) | |||||||||
| Adjusted earnings (losses) per share/ADS (non-GAAP) | |||||||||||||||||||||
| Basic | 1.44 | (0.75 | ) | (0.02 | ) | (0.00 | ) | 5.50 | (6.16 | ) | (0.94 | ) | |||||||||
| Diluted | 1.38 | (0.75 | ) | (0.02 | ) | (0.00 | ) | 5.27 | (6.16 | ) | (0.94 | ) | |||||||||
| Weighted average number of shares used in computation | |||||||||||||||||||||
| Basic | 285,256,343 | 291,675,396 | 309,752,462 | 309,752,462 | 284,305,138 | 292,739,841 | 292,739,841 | ||||||||||||||
| Diluted | 304,319,151 | 291,675,396 | 309,752,462 | 309,752,462 | 304,309,890 | 292,739,841 | 292,739,841 | ||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||
| December 31, 2019 | September 30, 2020 | December 31, 2020 | December 31, 2019 | December 31, 2020 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| (in millions, except per share and per ADS data) | |||||||||||||||||||||
| Net income (loss) attributable to Huazhu Group Limited (GAAP) | 619 | (212 | ) | 703 | 108 | 1,769 | (2,192 | ) | (336 | ) | |||||||||||
| Interest income | (39 | ) | (31 | ) | (33 | ) | (5 | ) | (160 | ) | (119 | ) | (18 | ) | |||||||
| Interest expense | 83 | 136 | 118 | 18 | 315 | 533 | 82 | ||||||||||||||
| Income tax expense | 133 | (50 | ) | (66 | ) | (10 | ) | 640 | (215 | ) | (33 | ) | |||||||||
| Depreciation and amortization | 266 | 347 | 364 | 56 | 991 | 1,362 | 209 | ||||||||||||||
| EBITDA (non-GAAP) | 1,062 | 190 | 1,086 | 167 | 3,555 | (631 | ) | (96 | ) | ||||||||||||
| Share-based compensation | 22 | 33 | 22 | 4 | 110 | 122 | 19 | ||||||||||||||
| Unrealized (gains) losses from fair value changes of equity securities | (230 | ) | (39 | ) | (733 | ) | (113 | ) | (316 | ) | 265 | 42 | |||||||||
| Adjusted EBITDA (non-GAAP) | 854 | 184 | 375 | 58 | 3,349 | (244 | ) | (35 | ) | ||||||||||||
Operating Results: Legacy-Huazhu(1)
| Number of hotels | Number of rooms | |||||||
| Opened in Q4 2020 | Closed (2) in Q4 2020 | Net added in Q4 2020 | As of December 31, 2020 (3) | As of December 31, 2020 | ||||
| Leased and owned hotels | 4 | (10 | ) | (6 | ) | 681 | 90,942 | |
| Manachised and franchised hotels | 389 | (104 | ) | 285 | 5,988 | 537,193 | ||
| Total | 393 | (114 | ) | 279 | 6,669 | 628,135 | ||
| (1) Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH. (2) The reasons for hotel closures mainly include non-compliance with our brand standards, operating losses, and property-related issues. In Q4 2020, we temporarily closed 6 hotels for brand upgrade and business model change purposes. (3) As of December 31, 2020, 74 hotels were requisitioned by governmental authorities. | ||||||||
| As of December 31, 2020 | ||
| Number of hotels | Unopened hotels in pipeline | |
| Economy hotels | 4,362 | 1,183 |
| Leased and owned hotels | 438 | 4 |
| Manachised and franchised hotels | 3,924 | 1,179 |
| Midscale and upscale hotels | 2,307 | 1,228 |
| Leased and owned hotels | 243 | 14 |
| Manachised and franchised hotels | 2,064 | 1,214 |
| Total | 6,669 | 2,411 |
| Operational hotels (excluding hotels under requisition) | |||||||||
| For the quarter ended | |||||||||
| December 31, | September 30, | December 31, | yoy | ||||||
| 2019 | 2020 | 2020 | change | ||||||
| Average daily room rate (in RMB) | |||||||||
| Leased and owned hotels | 277 | 255 | 272 | - | |||||
| Manachised and franchised hotels | 223 | 211 | 224 | ||||||
| Blended | 232 | 218 | 231 | - | |||||
| Occupancy rate (as a percentage) | |||||||||
| Leased and owned hotels | -5.2p.p. | ||||||||
| Manachised and franchised hotels | -0.9p.p. | ||||||||
| Blended | -1.6p.p. | ||||||||
| RevPAR (in RMB) | |||||||||
| Leased and owned hotels | 235 | 211 | 217 | - | |||||
| Manachised and franchised hotels | 182 | 173 | 181 | - | |||||
| Blended | 191 | 179 | 186 | - | |||||
| For the year ended | ||||||
| December 31, | December 31, | yoy | ||||
| 2019 | 2020 | change | ||||
| Average daily room rate (in RMB) | ||||||
| Leased and owned hotels | 276 | 241 | - | |||
| Manachised and franchised hotels | 224 | 204 | - | |||
| Blended | 234 | 210 | - | |||
| Occupancy rate (as a percentage) | ||||||
| Leased and owned hotels | -18.1p.p. | |||||
| Manachised and franchised hotels | -12.4p.p. | |||||
| Blended | -13.4p.p. | |||||
| RevPAR (in RMB) | ||||||
| Leased and owned hotels | 240 | 166 | - | |||
| Manachised and franchised hotels | 188 | 146 | - | |||
| Blended | 198 | 149 | - | |||
| Same-hotel operational data by class | ||||||||||||||||
| Mature hotels in operation for more than 18 months (excluding hotels under requisition) | ||||||||||||||||
| Number of hotels | Same-hotel RevPAR | Same-hotel ADR | Same-hotel Occupancy | |||||||||||||
| As of December 31, | For the quarter | yoy | For the quarter | yoy | For the quarter | yoy | ||||||||||
| ended December 31, | change | ended December 31, | change | ended December 31, | change | |||||||||||
| 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | (p.p.) | ||||||||
| Economy hotels | 2,651 | 2,651 | 162 | 151 | -6.7 | % | 185 | 178 | -3.7 | % | 87.6 | % | 84.9 | % | -2.7 | |
| Leased and owned hotels | 412 | 412 | 184 | 167 | -8.9 | % | 210 | 199 | -5.2 | % | 87.7 | % | 84.3 | % | -3.4 | |
| Manachised and franchised hotels | 2,239 | 2,239 | 157 | 147 | -6.1 | % | 179 | 173 | -3.3 | % | 87.5 | % | 85.0 | % | -2.5 | |
| Midscale and upscale hotels | 1,225 | 1,225 | 266 | 243 | -8.5 | % | 322 | 311 | -3.4 | % | 82.5 | % | 78.2 | % | -4.3 | |
| Leased and owned hotels | 190 | 190 | 327 | 272 | -16.7 | % | 392 | 365 | -6.8 | % | 83.4 | % | 74.5 | % | -8.8 | |
| Manachised and franchised hotels | 1,035 | 1,035 | 250 | 236 | -5.6 | % | 303 | 298 | -1.9 | % | 82.3 | % | 79.2 | % | -3.1 | |
| Total | 3,876 | 3,876 | 201 | 186 | -7.6 | % | 235 | 225 | -3.9 | % | 85.7 | % | 82.4 | % | -3.3 | |
| Number of hotels | Same-hotel RevPAR | Same-hotel ADR | Same-hotel Occupancy | |||||||||||||
| As of December 31, | For the year | yoy | For the year | yoy | For the year | yoy | ||||||||||
| ended December 31, | change | ended December 31, | change | ended December 31, | change | |||||||||||
| 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | (p.p.) | ||||||||
| Economy hotels | 2,651 | 2,651 | 169 | 121 | -28.8 | % | 189 | 162 | -14.1 | % | 89.7 | % | 74.3 | % | -15.4 | |
| Leased and owned hotels | 412 | 412 | 191 | 128 | -32.8 | % | 211 | 176 | -16.4 | % | 90.5 | % | 72.8 | % | -17.7 | |
| Manachised and franchised hotels | 2,239 | 2,239 | 164 | 118 | -27.7 | % | 183 | 159 | -13.4 | % | 89.4 | % | 74.7 | % | -14.8 | |
| Midscale and upscale hotels | 1,225 | 1,225 | 272 | 198 | -27.0 | % | 328 | 287 | -12.4 | % | 82.8 | % | 69.0 | % | -13.8 | |
| Leased and owned hotels | 190 | 190 | 332 | 211 | -36.4 | % | 395 | 328 | -17.0 | % | 84.1 | % | 64.5 | % | -19.7 | |
| Manachised and franchised hotels | 1,035 | 1,035 | 254 | 194 | -23.4 | % | 308 | 276 | -10.3 | % | 82.5 | % | 70.4 | % | -12.1 | |
| Total | 3,876 | 3,876 | 205 | 148 | -27.9 | % | 234 | 204 | -13.1 | % | 87.3 | % | 72.5 | % | -14.8 | |
Operating Results: Legacy-DH(4)
| Number of hotels | Number of rooms | Unopened hotels in pipeline | ||||||
| Opened in Q4 2020 | Closed in Q4 2020 | Net added in Q4 2020 | As of December 31, 2020(5) | | As of December 31, 2020 | | As of December 31, 2020 | |
| Leased hotels | 2 | - | 2 | 72 | 13,371 | 26 | ||
| Manachised and franchised hotels | 1 | - | 1 | 48 | 10,656 | 12 | ||
| Total | 3 | - | 3 | 120 | 24,027 | 38 | ||
| (4) Legacy-DH refers to DH. (5) As of December 31, 2020, a total of 18 DH brand hotels were temporarily closed due to COVID-19. | ||||||||
| For the quarter ended | ||||||||
| December 31, | September 30, | December 31, | yoy | |||||
| 2019 | 2020 | 2020 | change | |||||
| Average daily room rate (in EUR) | ||||||||
| Leased hotels | 108 | 88 | 78 | - | ||||
| Manachised and franchised hotels | 85 | 101 | 73 | - | ||||
| Blended | 97 | 93 | 76 | - | ||||
| Occupancy rate (as a percentage) | ||||||||
| Leased hotels | -52.6p.p. | |||||||
| Manachised and franchised hotels | -37.2p.p. | |||||||
| Blended | -45.5p.p. | |||||||
| RevPAR (in EUR) | ||||||||
| Leased hotels | 79 | 34 | 16 | - | ||||
| Manachised and franchised hotels | 53 | 38 | 19 | - | ||||
| Blended | 66 | 35 | 17 | - | ||||
| For the year ended | ||||||
| December 31, | December 31, | yoy | ||||
| 2019 | 2020 | change | ||||
| Average daily room rate (in EUR) | ||||||
| Leased hotels | 105 | 89 | - | |||
| Manachised and franchised hotels | 88 | 85 | - | |||
| Blended | 97 | 88 | - | |||
| Occupancy rate (as a percentage) | ||||||
| Leased hotels | -38.9p.p. | |||||
| Manachised and franchised hotels | -28.7p.p. | |||||
| Blended | -34.3p.p. | |||||
| RevPAR (in EUR) | ||||||
| Leased hotels | 76 | 30 | - | |||
| Manachised and franchised hotels | 57 | 31 | - | |||
| Blended | 67 | 31 | - | |||
Hotel Portfolio by Brand
| As of December 31, 2020 | |||
| Hotels | Rooms | Unopened hotels | |
| in operation | in pipeline | ||
| Economy hotels | 4,376 | 361,435 | 1,192 |
| HanTing Hotel | 2,780 | 254,106 | 597 |
| Hi Inn | 439 | 25,282 | 91 |
| Elan Hotel(6) | 938 | 58,753 | 448 |
| Ibis Hotel | 205 | 21,633 | 47 |
| Zleep Hotel | 14 | 1,661 | 9 |
| Midscale and upscale hotels | 2,413 | 290,727 | 1,257 |
| Ibis Styles Hotel | 69 | 7,992 | 22 |
| Starway Hotel | 455 | 38,657 | 252 |
| JI Hotel | 1,105 | 135,737 | 512 |
| Orange Hotel | 320 | 36,167 | 174 |
| Crystal Orange Hotel | 114 | 15,400 | 66 |
| Manxin Hotel | 61 | 6,009 | 47 |
| Madison Hotel | 22 | 2,950 | 42 |
| Mercure Hotel | 104 | 17,486 | 61 |
| Novotel Hotel | 12 | 3,387 | 14 |
| Joya Hotel | 10 | 1,842 | - |
| Blossom House | 28 | 1,249 | 23 |
| Grand Mercure Hotel | 7 | 1,485 | 7 |
| Steigenberger Hotels & Resorts | 49 | 11,574 | 7 |
| IntercityHotel(7) | 45 | 8,056 | 23 |
| Maxx by Steigenberger(8) | 5 | 777 | 4 |
| Jaz in the City | 2 | 424 | 2 |
| Other partner hotels | 5 | 1,535 | 1 |
| Total | 6,789 | 652,162 | 2,449 |
| (6) As of December 31, 2020, 5 Ni Hao Hotels were included in the operational hotel total for Elan Hotels and 74 Ni Hao hotels were included in the pipeline total for Elan Hotels. (7) As of December 31, 2020, 5 pipeline hotels of IntercityHotel were in China. (8) As of December 31, 2020, 3 pipeline hotels of Maxx by Steigenberger were in China. | |||
__________________________________________________________
1 Hotel turnover refers to total transaction value of room and non-room revenues from Huazhu hotels (i.e., leased and operated, manachised and franchised hotels).
2 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US
3 Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.
4 Legacy-DH refers to DH.
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