- A total of 3,903 hotels or 393,417
hotel rooms in operation as of June 30, 2018.
- Net revenues increased 25.9% year-over-year from RMB2,002.4
million to RMB2,521.3 million (US$381.0 million) [1] for the second
quarter of 2018, hitting high-end of Q2 revenue guidance.
- Income from operations increased 53.2% year-over-year from
RMB438.0 million to RMB671.0 million (US$101.4 million) for the
second quarter of 2018. The operating margin improved from 21.9% to
26.6%.
- Net income attributable to Huazhu Group Limited was RMB338.4
million (US$51.1 million) for the second quarter of 2018, compared
with RMB386.1 million for the second quarter of 2017. Excluding
unrealized losses from fair value changes of equity securities and
share based compensation, adjusted net income attributable to
Huazhu Group Limited (non-GAAP) increased 38.7% year over year from
RMB402.1 million to RMB557.8 million (US$84.3 million) for the
second quarter of 2018.
- Excluding unrealized losses from fair value changes of equity
securities and share based compensation, adjusted EBITDA (non-GAAP)
increased 35.1% year-over-year from RMB714.4 million to RMB965.0
million (US$145.8 million) for the second quarter of 2018.
- The Company provides guidance for Q3 2018 net revenues growth
of 10.5%-12.5% year over year, and maintains the full year net
revenues growth estimate range of 18%-22%.
1 The conversion of Renminbi (“RMB”) into United
States dollars (“US$”) is based on the exchange rate of US$1.00=
RMB6.6171 on June 29, 2018 as set forth in H.10 statistical release
of the U.S. Federal Reserve Board and available at
http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.
Huazhu Group Limited (NASDAQ: HTHT) (“Huazhu” or the “Company”), a
leading and fast-growing multi-brand hotel group in China, today
announced its unaudited financial results for the second quarter
ended June 30, 2018.
Second Quarter of 2018
Operational Highlights
- During the second quarter of 2018, Huazhu opened 147 hotels,
including 7 leased (“leased-and-operated”) hotels and 140
manachised (“franchised-and-managed”) hotels and franchised
hotels.
- The Company closed a total of 61 hotels, including 7 leased
hotels and 54 manachised and franchised hotels, during the second
quarter of 2018. This was mainly due to:a) The Company's
strategic focus to upgrade the quality of the product and service.
The Company closed 2 hotels for brand upgrade purposes and
permanently removed 15 hotels from its network for their
non-compliance with the brand and operating standards. These hotels
were mainly under HanTing and Hi Inn brands. By removing hotels of
lower quality, the Company is able to provide a more consistent
customer experience, which will help enhance both the brands and
future profitability. b) Property related issues,
including rezoning, and expiry of leases, which resulted in the
closure of 29 hotels.c) Operating losses from hotels located
mainly in selected 3rd or lower tier cities which resulted in the
closure of 15 hotels.
- As of June 30, 2018, the Company had 673 leased hotels, 3,024
manachised hotels, and 206 franchised hotels in operation in 384
cities. The number of hotel rooms in operation totaled 393,417, an
increase of 9.4% from a year ago.
- The ADR, which is defined as the average daily rate for all
hotels in operation, was RMB226 in the second quarter of 2018,
compared with RMB199 in the second quarter of 2017 and RMB207 in
the previous quarter. The year-over-year increase of 13.8% was due
to both an increase in ADR of the mature hotels, as well as an
increase in the proportion of mid- and up-scale hotels with higher
ADR in the Company’s brand mix. The sequential increase resulted
mainly from seasonality.
- The occupancy rate for all hotels in operation was 89.6% in the
second quarter of 2018, compared with 90.1% in the second quarter
of 2017 and 83.7% in the previous quarter. The year-over-year
decrease of 0.5 percentage point was due to an increase in the
proportion of mid- and up-scale hotels with lower average occupancy
rate compared to the economy hotels, as well as more newly added
mid- and up-scale hotels that were still under the ramp-up period.
The sequential increase was mainly due to seasonality.
- RevPAR, defined as revenue per available room for all hotels in
operation, was RMB203 in the second quarter of 2018, compared with
RMB179 in the second quarter of 2017 and RMB173 in the previous
quarter. The year-over-year increase of 13.2% was attributable to
higher ADR. The sequential increase was mainly due to
seasonality.
- For all hotels which had been in operation for at least 18
months, the same-hotel RevPAR was RMB194 for the second quarter of
2018, representing a 7.9% increase from RMB180 for the second
quarter of 2017, with a 7.5% increase in ADR and a
0.3-percentage-point increase in occupancy rate. The economy hotels
registered an 8.0% same-hotel RevPAR improvement, driven by an 8.1%
increase in ADR. The midscale and upscale hotels recorded a 7.2%
same-hotel RevPAR improvement, driven by a 4.8% increase in ADR and
a 2.0-percentage-point increase in occupancy rate. Crystal Orange
Hotels were not included in the same-hotel RevPAR statistics as
they have not been in Huazhu system for 18 months.
- As of June 30, 2018, the Company’s loyalty program had
approximately 113 million members, who contributed approximately
75% of room nights sold during the second quarter of 2018 and
approximately 86% of room nights were sold through the Company’s
own direct channels.
“We are excited about the strong performance in
the second quarter. Our same-hotel RevPAR grew by 7.9%
year-over-year despite a high comparison base during the same
period in 2017. The strong demand allowed us to drive higher room
rates while maintaining occupancy rate as high as 92.2% for our
mature hotels. Our hotel expansion is also well on track. In the
first half of 2018, we opened a total of 274 hotels (gross opening)
with 65% under mid- and up-scale brands. The number of hotels in
pipeline reached 839, a record high number,” commented Ms. Jenny
Zhang, Chief Executive Officer of Huazhu.
“In addition, the developments of our acquired
brands were also very remarkable. For example, we have refreshed
Mercure hotel layout tailored to the taste of the Chinese
middle-class customers. We have also improved the Mercure brand’s
operating model so that it is ready for fast expansion by improving
the RevPar performances and costs efficiencies since we took over
the brand in early 2016. The integration of Crystal Orange is
successful as evidenced by fast expansion, strong RevPAR growth and
cost synergies from headquarters and hotels,” added Ms. Zhang. “A
week ago, we announced the acquisition of Blossom Hill Hotels and
Resorts. Blossom Hill is a reputable upscale holiday and resort
brands in China, which will further enrich our brand portfolio,
catering to an increasing population of Chinese customers looking
for quality stays during their holidays.”
Second Quarter of 2018
Financial ResultsSince the first quarter of 2018, the
Company adopted new revenue recognition standards and all prior
year numbers are restated using the new standards. Please see the
“Adoption of New Revenue Recognition Accounting Standards” section
of this release for more information.
(RMB in
thousands) |
Q2 2017 |
Q1 2018 |
Q2 2018 |
Revenues: |
|
|
|
Leased
and owned hotels |
1,541,383 |
1,575,977 |
1,899,707 |
Manachised and franchised hotels |
450,461 |
508,792 |
615,976 |
Others |
10,512 |
6,455 |
5,597 |
Net
revenues |
2,002,356 |
2,091,224 |
2,521,280 |
Net revenues for the second
quarter of 2018 were RMB2,521.3 million (US$381.0 million),
representing a 25.9% year-over-year increase and a 20.6% sequential
increase. The year-over-year increase was primarily due to our
hotel network expansion, improved blended RevPAR and the
acquisition of Crystal Orange Hotels. The sequential increase was
due to seasonality.
Net revenues from leased and owned
hotels for the second quarter of 2018 were RMB1,899.7
million (US$287.1 million), representing a 23.2% year-over-year
increase and a 20.5% sequential increase.
Net revenues from manachised and
franchised hotels for the second quarter of 2018 were
RMB616.0 million (US$93.1 million), representing a 36.7%
year-over-year increase and a 21.1% sequential increase. Net
revenues from manachised and franchised hotels accounted for 24.4%
of the Company’s net revenues in the second quarter of 2018, up
from 22.5% a year ago.
Other revenues represent
revenues generated from other than hotel businesses, which mainly
include revenues from Huazhu mall and the provision of IT products
and services to hotels, totaling RMB5.6 million (US$0.8 million) in
the second quarter of 2018.
(RMB in
thousands) |
Q2 2017 |
Q1 2018 |
Q2 2018 |
Operating costs and expenses: |
|
|
|
Hotel
operating costs |
1,348,269 |
1,506,035 |
1,575,100 |
Other
operating costs |
3,739 |
2,842 |
2,137 |
Selling
and marketing expenses |
63,126 |
65,826 |
83,090 |
General
and administrative expenses |
135,689 |
158,752 |
189,514 |
Pre-opening expenses |
43,134 |
75,271 |
65,612 |
Total
operating costs and expenses |
1,593,957 |
1,808,726 |
1,915,453 |
Hotel operating costs for the
second quarter of 2018 were RMB1,575.1 million (US$238.0 million),
compared to RMB1,348.3 million in the second quarter of 2017,
representing a 16.8% year-over-year increase. Total hotel operating
costs excluding share-based compensation expenses (non-GAAP) for
the second quarter of 2018 were RMB1,568.1 million (US$237.0
million), representing 62.2% of net revenues, compared to 67.1% for
the second quarter in 2017 and 71.8% for the previous quarter. The
year-over-year decrease in the percentage was mainly attributable
to the improved blended RevPAR and increased proportion of
manachised and franchised hotels.
Selling and marketing expenses
for the second quarter of 2018 were RMB83.1 million (US$12.6
million), compared to RMB63.1 million in the second quarter of 2017
and RMB65.8 million in the previous quarter. Selling and marketing
expenses excluding share-based compensation expenses (non-GAAP) for
the second quarter of 2018 were RMB82.8 million (US$12.5 million),
or 3.3% of net revenues, compared to 3.2% for the second quarter of
2017 and 3.0% for the previous quarter.
General and administrative
expenses for the second quarter of 2018 were RMB189.5
million (US$28.6 million), compared to RMB135.7 million in the
second quarter of 2017 and RMB158.8 million in the previous
quarter. General and administrative expenses excluding share-based
compensation expenses (non-GAAP) for the second quarter of 2018
were RMB178.2 million (US$26.9 million), representing 7.1% of net
revenues, compared with 6.2% of net revenues in the second quarter
of 2017 and 7.1% in the previous quarter. The year-over-year
increase in percentage was mainly due to increase in personnel cost
relating to new hotel developments, design, information technology,
and a quarterly accrual of a long-term profit sharing bonus. In
2017, we accrued the entire sum of the long-term profit sharing
bonus in Q4 2017.
Pre-opening expenses for the
second quarter of 2018 were RMB65.6 million (US$9.9 million),
representing a 52.1% year-over-year increase and a 12.8% sequential
decrease. The year-over-year increase was mainly due to more
midscale or upscale leased hotels were under construction in the
second quarter of 2018.
Other operating income, net for
the second quarter of 2018 were RMB65.2 million (US$9.9 million),
compared to RMB29.6 million in the second quarter of 2017 and
RMB24.1 million in the previous quarter. The year-over-year
increase was mainly due to a RMB35.0 million compensation received
from the selling shareholders of Crystal Orange as the final
settlement of the sales and purchase transaction.
Income from operations for the
second quarter of 2018 was RMB671.0 million (US$101.4 million),
representing a 53.2% year-over-year increase and a 118.9%
sequential increase. Excluding share-based compensation expenses,
adjusted income from operations (non-GAAP) for the second quarter
of 2018 was RMB689.7 million (US$104.2 million), compared to
adjusted income from operation (non-GAAP) of RMB454.0 million for
the second quarter of 2017 and RMB323.7 million for the previous
quarter. The operating margin, defined as income from operations as
percentage of net revenues, for the second quarter of 2018 was
26.6%, compared with 21.9% in the second quarter of 2017 and 14.7%
in the previous quarter. The improved year-over-year operating
margin was mainly attributable to the improved blended RevPAR and
asset-light strategy.
Other income, net for the
second quarter of 2018 was RMB195.0 million (US$29.5 million),
compared to other income, net of RMB74.3 million for the second
quarter of 2017 and other expense, net of RMB8.8 million for the
previous quarter. The year-over-year increase was mainly due to
gross dividends received from AccorHotels of RMB103.8 million
(US$15.7 million).
Unrealized losses from fair value
changes of equity securities for the second quarter of
2018 was RMB200.8 million (US$30.3 million), compared to RMB 136.7
million in the previous quarter. Unrealized losses from fair value
changes of equity securities mainly represents the unrealized
losses from our investment in equity securities with readily
determinable fair values, such as AccorHotels and Quanjude.
According to ASU 2016-01 which was effective from January 1, 2018,
we are required to reflect the unrealized gains (losses) from fair
value changes related to equity investment (except equity method
investment) in net income. The unrealized losses from equity
securities in the second quarter of 2018 were due to the lower
share prices at end of the second quarter of 2018 compared to those
at end of the first quarter of 2018. The unrealized gains (losses)
will have a significant impact on our GAAP net income going
forward.
Net income attributable to Huazhu Group
Limited for the second quarter of 2018 was RMB338.4
million (US$51.1 million), compared to RMB386.1 million in the
second quarter of 2017 and RMB128.5 million in the previous
quarter. Excluding share-based compensation expenses and the
unrealized losses from fair value changes of equity securities,
adjusted net income attributable to Huazhu Group Limited (non-GAAP)
for the second quarter of 2018 was RMB557.8 million (US$84.3
million), representing a 38.7% year-over-year increase and a 97.6%
sequential increase.
Basic and diluted earnings per
share/ADS. For the second quarter of 2018, basic earnings
per share were RMB1.20 (US$0.18) and diluted earnings per share
were RMB1.14 (US$0.17). For the second quarter of 2018, excluding
share-based compensation expenses and unrealized losses from fair
value changes of equity securities, adjusted basic earnings per
share (non-GAAP) were RMB1.98 (US$0.30) and adjusted diluted
earnings per share (non-GAAP) were RMB1.87 (US$0.28).
EBITDA (non-GAAP) for the
second quarter of 2018 was RMB745.6 million (US$112.7 million),
compared with RMB698.4 million in the second quarter of 2017 and
RMB405.9 million in the previous quarter. Excluding share-based
compensation expenses and unrealized losses from fair value changes
of equity securities, adjusted EBITDA (non-GAAP) for the second
quarter of 2018 was RMB965.0 million (US$145.8 million), compared
with RMB714.4 million for the second quarter of 2017 and RMB559.7
million for the previous quarter.
Cash flow. Operating cash
inflow for the second quarter of 2018 was RMB1,140.0 million
(US$172.3 million). Investing cash outflow for the second quarter
of 2018 was RMB193.8 million (US$29.3 million).
Cash and cash equivalents and Restricted
cash. As of June 30, 2018, the Company had a total balance
of cash and cash equivalents and restricted cash of RMB4,486.9
million (US$678.1 million).
Debt financing. As of June 30,
2018, the Company had a total debt balance of RMB8,274.3 million
(US$1,250.4 million) and the unutilized credit facility available
to the Company was RMB1,589.3 million.
Adoption of New Revenue Recognition
Accounting StandardsThe Company adopted Accounting
Standards Update 2014-09, Revenue from Contracts with Customers
(Topic 606) on January 1, 2018 on a full retrospective basis in the
condensed consolidated financial statements. As such, prior period
results have been adjusted to reflect the adoption of ASU
2014-09.
The most meaningful impacts of the adoption of
ASU 2014-09 are as follows:Under previous guidance, initial
one-time franchise fee was recognized when the hotels opened for
business and the Company had fulfilled its commitments and
obligations. Upon adoption of new revenue standards the one-time
franchise fee will be recognized over the term of the franchise
contract.
Under previous guidance, the Company adopted the
incremental cost model to account for customer loyalty program. The
estimated incremental costs, net of the reimbursement received from
the franchisees, are accrued and recorded as accruals for customer
loyalty program as members accumulate points and are recognized as
cost and expense in the accompanying consolidated statements of
comprehensive income. Under new revenue standards, loyalty program
is considered a separate performance obligation and the
consideration allocated to the loyalty program will be recognized
as revenue upon point redemption, net of any cost paid to the
franchisees and other third parties.
Acquisition of Blossom HillIn
August 2018, Huazhu entered into share transfer agreements with
Beijing Tsingpu Travel Culture Development Co., Ltd. and Suzhou
Tiancheng Jiaqi Tourism Industry Investment LLP, two shareholders
of Blossom Hill Hotel Investment Management (Kunshan) Co., Ltd.
(“Blossom Hill”), to acquire 71.2% of outstanding shares of Blossom
Hill for a total consideration of approximately RMB462.9 million in
cash. The acquisition is subject to customary closing conditions
and is expected to be completed on or around August 31, 2018. Upon
completion of the acquisition, Huazhu will own an aggregate of
82.5% of the shares of Blossom Hill, and Blossom Hill Hotels &
Resorts will become part of Huazhu’s hotel network.
Blossom Hill is a boutique hotel and resort
operator founded in 2009, with its roots in Lijiang, Yunan
Province. As of July 31, 2018, Blossom Hill Hotels & Resorts
had 22 hotels or 590 rooms in operation and 12 hotels in pipeline,
spanning across 10 tourist cities in China, including Lijiang,
Suzhou, Hangzhou, Ningbo and Shangri-La. The price range for
Blossom Hill is between RMB600 – RMB1,500 per room/night.
Considering the realization of the future
earnings from the pipeline hotels, and revenue and costs synergies
after integration into Huazhu operating platform, the purchase
valuation represents an EBITDA multiple of approximately 13
times.
Guidance The Company expects
net revenues for the third quarter to grow 10.5%-12.5%
year-over-year. For the full year of 2018, the Company reaffirms
the net revenues growth range of 18%-22%. Considering the
acquisition of Blossom Hill, the full year target for gross hotel
opening has been revised upwards from 650-700 to 680-730. As part
of our quality control exercise, we will also tighten up our
quality control by terminating certain franchisees who fail to
maintain quality standards through product upgrades and procuring
from the authorized suppliers through Huazhu centralized
procurement platform. In this connection, we will also revise-up
the full year target for hotel closure from 200 to 240.
The above forecast reflects the Company’s
current and preliminary view, which is subject to change.
Conference CallHuazhu Group’s
management will host a conference call at 9 p.m. ET, Wednesday,
August 22, 2018 (or 9 a.m. on Thursday, August 23, 2018 in the
Shanghai/Hong Kong time zone) following the announcement. To
participate in the event by telephone, please dial +1 (845) 675
0438 (for callers in the US), +86 400 120 0654 (for callers in
China Mainland), +852 3018 6776 (for callers in Hong Kong) or +65
6713 5440 (for callers outside of the US, China Mainland, and Hong
Kong) and enter pass code 1559907. 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
August 29, 2018. Please dial +1 (855) 452 5696 (for callers in the
US) or +61 2 9003 4211 (for callers outside the US) and entering
pass code 1559907.
The conference call will also be webcast live
over the Internet and can be accessed by all interested parties at
the Company’s website, http://ir.huazhu.com.
Use of Non-GAAP Financial
MeasuresTo supplement the Company’s unaudited consolidated
financial results presented in accordance with U.S. GAAP, the
Company uses the following non-GAAP measures defined as non-GAAP
financial measures by the SEC: hotel operating costs excluding
share-based compensation expenses; general and administrative
expenses excluding share-based compensation expenses; selling and
marketing expenses excluding share-based compensation expenses;
adjusted income from operations excluding share-based compensation
expenses; adjusted net income attributable to Huazhu Group Limited
excluding share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities; adjusted
basic and diluted earnings per share/ADS excluding share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities; EBITDA; and adjusted EBITDA excluding
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities. The presentation of
these non-GAAP financial measures is not intended to be considered
in isolation or as a substitute for the financial information
prepared and presented in accordance with U.S. GAAP. For more
information on these non-GAAP financial measures, please see the
table captioned “Reconciliations of GAAP and non-GAAP results” set
forth at the end of this release. The Company believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding Company performance by excluding share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities that may not be indicative of Company
operating performance. The Company believes that both management
and investors benefit from referring to these non-GAAP financial
measures in assessing Company performance and when planning and
forecasting future periods. These non-GAAP financial measures also
facilitate management’s internal comparisons to the Company’s
historical performance. The Company believes these non-GAAP
financial measures are also useful to investors in allowing for
greater transparency with respect to supplemental information used
regularly by Company management in financial and operational
decision-making. A limitation of using non-GAAP financial measures
excluding share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities is that
share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities have been and will
continue to be significant and recurring in the Company’s business.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables have more details on the
reconciliations between GAAP financial measures that are most
directly comparable to non-GAAP financial measures.
The Company believes that EBITDA is a useful
financial metric to assess the operating and financial performance
before the impact of investing and financing transactions and
income taxes, given the significant investments that the Company
has made in leasehold improvements, depreciation and amortization
expense that comprise a significant portion of the Company’s cost
structure. In addition, the Company believes that EBITDA is widely
used by other companies in the lodging industry and may be used by
investors as a measure of financial performance. The Company
believes that EBITDA will provide investors with a useful tool for
comparability between periods because it eliminates depreciation
and amortization expense attributable to capital expenditures. The
Company also uses adjusted EBITDA, which is defined as EBITDA
before share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities, to assess
operating results of the hotels in operation. The Company believes
that the exclusion of share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity
securities helps facilitate year-on-year comparison of the results
of operations as the share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity
securities may not be indicative of Company operating
performance.
The Company believes that unrealized gains and
losses from changes in fair value of equity securities are
generally meaningless in understanding our reported results or
evaluating our economic performance of our businesses. These gains
and losses have caused and will continue to cause significant
volatility in periodic earnings.
Therefore, the Company believes adjusted EBITDA
more closely reflects the performance capability of hotels. The
presentation of EBITDA and adjusted EBITDA should not be construed
as an indication that the Company’s future results will be
unaffected by other charges and gains considered to be outside the
ordinary course of business.
The use of EBITDA and adjusted EBITDA has
certain limitations. Depreciation and amortization expense for
various long-term assets (including land use rights), income tax,
interest expense and interest income have been and will be incurred
and are not reflected in the presentation of EBITDA. Share-based
compensation expenses and unrealized gains (losses) from fair value
changes of equity securities have been and will be incurred and are
not reflected in the presentation of adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of the
results. The Company compensates for these limitations by providing
the relevant disclosure of the depreciation and amortization,
interest income, interest expense, income tax expense, share-based
compensation expenses, and unrealized gains (losses) from fair
value changes of equity securities and other relevant items both in
the reconciliations to the U.S. GAAP financial measures and in the
consolidated financial statements, all of which should be
considered when evaluating the performance of the Company.
The terms EBITDA and adjusted EBITDA are not
defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is
a measure of net income, operating income, operating performance or
liquidity presented in accordance with U.S. GAAP. When assessing
the operating and financial performance, investors should not
consider these data in isolation or as a substitute for the
Company’s net income, operating income or any other operating
performance measure that is calculated in accordance with U.S.
GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not
be comparable to EBITDA or adjusted EBITDA or similarly titled
measures utilized by other companies since such other companies may
not calculate EBITDA or adjusted EBITDA in the same manner as the
Company does.
Reconciliations of the Company’s non-GAAP
financial measures, including EBITDA and adjusted EBITDA, to the
consolidated statement of operations information are included at
the end of this press release.
About Huazhu Group
LimitedHuazhu Group Limited is a leading hotel operator
and franchisor in China. As of June 30, 2018, the Company had 3,903
hotels or 393,417 rooms in operation. With a primary focus on
economy and midscale hotel segments, Huazhu’s brands include Hi
Inn, HanTing Hotel, Elan Hotel, HanTing Premium Hotel, JI Hotel,
Starway Hotel, Joya Hotel, Crystal Orange Hotel, Orange Hotel
Select, Orange Hotel and Manxin Hotel. The Company also has the
rights as master franchisee for Mercure, Ibis and Ibis Styles, and
co-development rights for Grand Mercure and Novotel, in Pan-China
region.
The Company's business includes leased and
owned, manachised and franchised models. Under the lease and
ownership model, the Company directly operates hotels typically
located on leased or owned properties. Under the manachise model,
the Company manages manachised hotels through the on-site hotel
managers it appoints and collects fees from franchisees. Under the
franchise model, the Company provides training, reservation and
support services to the franchised hotels and collects fees from
franchisees but does not appoint on-site hotel managers. The
Company applies a consistent standard and platform across all of
its hotels. As of June 30, 2018, Huazhu Group operates 22 percent
of its hotel rooms under lease and ownership model, 78 percent
under manachise and franchise models.
For more information, please visit the Company’s
website: http://ir.huazhu.com.
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995: The information in this
release contains forward-looking statements which involve risks and
uncertainties, including statements regarding the Company’s capital
needs, business strategy and expectations. Any statements contained
herein that are not statements of historical fact may be deemed to
be forward-looking statements, which may be identified by
terminology such as “may,” “should,” “will,” “expect,” “plan,”
“intend,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “forecast,” “project,” or “continue,” the negative of
such terms or other comparable terminology. Readers should not rely
on forward-looking statements as predictions of future events or
results. Any or all of the Company’s forward-looking statements may
turn out to be wrong. They can be affected by inaccurate
assumptions, risks and uncertainties and other factors which could
cause actual events or results to be materially different from
those expressed or implied in the forward-looking statements. In
evaluating these statements, readers should consider various
factors, including the anticipated growth strategies of the
Company, the future results of operations and financial condition
of the Company, the economic conditions of China, the regulatory
environment in China, the Company’s ability to attract customers
and leverage its brands, trends and competition in the lodging
industry, the expected growth of the lodging market in China and
other factors and risks outlined in the Company’s filings with the
Securities and Exchange Commission, including its annual report on
Form 20-F and other filings. These factors may cause the Company’s
actual results to differ materially from any forward-looking
statement. In addition, new factors emerge from time to time and it
is not possible for the Company to predict all factors that may
cause actual results to differ materially from those contained in
any forward-looking statements. Any projections in this release are
based on limited information currently available to the Company,
which is subject to change. This release also contains statements
or projections that are based upon information available to the
public, as well as other information from sources which the Company
believes to be reliable, but it is not guaranteed by the Company to
be accurate, nor does the Company purport it to be complete. The
Company disclaims any obligation to publicly update any
forward-looking statements to reflect events or circumstances after
the date of this document, except as required by applicable
law.
Contact InformationInvestor RelationsTel: +86
(21) 6195 9561Email: ir@huazhu.comhttp://ir.huazhu.com
---Financial Tables and Operational Data
Follow—
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Balance
Sheets |
|
|
December 31, 2017 |
|
June 30, 2018 |
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
3,474,719 |
|
|
4,146,471 |
|
|
626,630 |
|
Restricted cash |
481,348 |
|
|
340,439 |
|
|
51,448 |
|
Short-term investments |
129,911 |
|
|
108,984 |
|
|
16,470 |
|
Accounts
receivable, net |
162,910 |
|
|
204,840 |
|
|
30,956 |
|
Loan
receivables |
380,580 |
|
|
115,660 |
|
|
17,479 |
|
Amounts
due from related parties |
118,537 |
|
|
124,081 |
|
|
18,751 |
|
Prepaid
rent |
659,973 |
|
|
562,048 |
|
|
84,939 |
|
Inventories |
24,006 |
|
|
30,139 |
|
|
4,555 |
|
Other
current assets |
329,140 |
|
|
357,850 |
|
|
54,080 |
|
Total
current assets |
5,761,124 |
|
|
5,990,512 |
|
|
905,308 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
4,522,878 |
|
|
4,676,562 |
|
|
706,739 |
|
Intangible assets, net |
1,643,972 |
|
|
1,624,259 |
|
|
245,464 |
|
Land
use rights |
140,108 |
|
|
137,413 |
|
|
20,766 |
|
Long-term investments |
2,361,969 |
|
|
5,889,394 |
|
|
890,026 |
|
Goodwill |
2,264,758 |
|
|
2,264,758 |
|
|
342,259 |
|
Loan
receivables |
42,330 |
|
|
123,924 |
|
|
18,728 |
|
Other
assets |
364,660 |
|
|
362,560 |
|
|
54,791 |
|
Deferred tax assets |
405,975 |
|
|
399,424 |
|
|
60,362 |
|
Total
assets |
17,507,774 |
|
|
21,468,806 |
|
|
3,244,443 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Short-term debt |
130,815 |
|
|
290,132 |
|
|
43,846 |
|
Accounts
payable |
766,565 |
|
|
810,151 |
|
|
122,433 |
|
Amounts
due to related parties |
36,890 |
|
|
175,338 |
|
|
26,498 |
|
Salary
and welfare payables |
427,070 |
|
|
343,935 |
|
|
51,977 |
|
Deferred
revenue |
942,651 |
|
|
1,028,480 |
|
|
155,428 |
|
Accrued
expenses and other current liabilities |
1,249,032 |
|
|
1,348,283 |
|
|
203,756 |
|
Income
tax payable |
218,238 |
|
|
126,077 |
|
|
19,053 |
|
Total
current liabilities |
3,771,261 |
|
|
4,122,396 |
|
|
622,991 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
4,921,774 |
|
|
7,984,121 |
|
|
1,206,589 |
|
Deferred
rent |
1,380,484 |
|
|
1,427,450 |
|
|
215,721 |
|
Deferred
revenue |
398,303 |
|
|
407,484 |
|
|
61,581 |
|
Other
long-term liabilities |
380,578 |
|
|
403,942 |
|
|
61,045 |
|
Deferred
tax liabilities |
422,090 |
|
|
417,439 |
|
|
63,085 |
|
Total
liabilities |
11,274,490 |
|
|
14,762,832 |
|
|
2,231,012 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Ordinary
shares |
212 |
|
|
213 |
|
|
32 |
|
Treasury
shares |
(107,331 |
) |
|
(107,331 |
) |
|
(16,220 |
) |
Additional paid-in capital |
3,624,135 |
|
|
3,667,568 |
|
|
554,256 |
|
Retained
earnings |
2,512,719 |
|
|
3,020,310 |
|
|
456,440 |
|
Accumulated other comprehensive income |
167,965 |
|
|
85,754 |
|
|
12,960 |
|
Total
Huazhu Group Limited shareholders' equity |
6,197,700 |
|
|
6,666,514 |
|
|
1,007,468 |
|
Noncontrolling interest |
35,584 |
|
|
39,460 |
|
|
5,963 |
|
Total
equity |
6,233,284 |
|
|
6,705,974 |
|
|
1,013,431 |
|
Total
liabilities and equity |
17,507,774 |
|
|
21,468,806 |
|
|
3,244,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Comprehensive Income |
|
Quarter Ended |
|
June 30, 2017 |
|
March 31, 2018 |
|
June 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share and per ADS
data) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Leased
and owned hotels |
1,541,383 |
|
|
1,575,977 |
|
|
1,899,707 |
|
|
287,090 |
|
Manachised and franchised hotels |
450,461 |
|
|
508,792 |
|
|
615,976 |
|
|
93,089 |
|
Others |
10,512 |
|
|
6,455 |
|
|
5,597 |
|
|
846 |
|
Net
revenues |
2,002,356 |
|
|
2,091,224 |
|
|
2,521,280 |
|
|
381,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating costs: |
|
|
|
|
|
|
|
|
|
|
|
Rents |
(502,353 |
) |
|
(564,372 |
) |
|
(585,283 |
) |
|
(88,450 |
) |
Utilities |
(69,941 |
) |
|
(125,534 |
) |
|
(76,263 |
) |
|
(11,525 |
) |
Personnel
costs |
(329,025 |
) |
|
(375,935 |
) |
|
(421,573 |
) |
|
(63,710 |
) |
Depreciation and amortization |
(185,419 |
) |
|
(211,111 |
) |
|
(219,122 |
) |
|
(33,115 |
) |
Consumables, food and beverage |
(137,139 |
) |
|
(144,432 |
) |
|
(169,893 |
) |
|
(25,675 |
) |
Others |
(124,392 |
) |
|
(84,651 |
) |
|
(102,966 |
) |
|
(15,561 |
) |
Total
hotel operating costs |
(1,348,269 |
) |
|
(1,506,035 |
) |
|
(1,575,100 |
) |
|
(238,036 |
) |
Other
operating costs |
(3,739 |
) |
|
(2,842 |
) |
|
(2,137 |
) |
|
(323 |
) |
Selling
and marketing expenses |
(63,126 |
) |
|
(65,826 |
) |
|
(83,090 |
) |
|
(12,557 |
) |
General
and administrative expenses |
(135,689 |
) |
|
(158,752 |
) |
|
(189,514 |
) |
|
(28,640 |
) |
Pre-opening expenses |
(43,134 |
) |
|
(75,271 |
) |
|
(65,612 |
) |
|
(9,915 |
) |
Total
operating costs and expenses |
(1,593,957 |
) |
|
(1,808,726 |
) |
|
(1,915,453 |
) |
|
(289,471 |
) |
Other
operating income (expense), net |
29,619 |
|
|
24,088 |
|
|
65,209 |
|
|
9,855 |
|
Income
from operations |
438,018 |
|
|
306,586 |
|
|
671,036 |
|
|
101,409 |
|
Interest
income |
21,792 |
|
|
34,193 |
|
|
39,000 |
|
|
5,894 |
|
Interest
expense |
(15,870 |
) |
|
(51,457 |
) |
|
(58,827 |
) |
|
(8,890 |
) |
Other
income (expense), net |
74,312 |
|
|
(8,836 |
) |
|
194,989 |
|
|
29,467 |
|
Unrealized gains (losses) from fair value changes of equity
securities |
- |
|
|
(136,680 |
) |
|
(200,763 |
) |
|
(30,340 |
) |
Foreign
exchange gain (loss) |
(4,577 |
) |
|
30,012 |
|
|
(131,646 |
) |
|
(19,895 |
) |
Income
before income taxes |
513,675 |
|
|
173,818 |
|
|
513,789 |
|
|
77,645 |
|
Income
tax expense |
(129,011 |
) |
|
(44,465 |
) |
|
(163,575 |
) |
|
(24,720 |
) |
(Loss)
from equity method investments |
(978 |
) |
|
(3,560 |
) |
|
(10,663 |
) |
|
(1,611 |
) |
Net
income |
383,686 |
|
|
125,793 |
|
|
339,551 |
|
|
51,314 |
|
Less:
net loss (income) attributable to noncontrolling interest |
2,437 |
|
|
2,731 |
|
|
(1,124 |
) |
|
(170 |
) |
Net
income attributable to Huazhu Group Limited |
386,123 |
|
|
128,524 |
|
|
338,427 |
|
|
51,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
Unrealized securities holding gains, net of tax |
(13,511 |
) |
|
- |
|
|
- |
|
|
- |
|
Reclassification of gains realized to net income, net of tax |
(1,545 |
) |
|
- |
|
|
- |
|
|
- |
|
Foreign
currency translation adjustments, net of tax |
46,190 |
|
|
125,174 |
|
|
(166,745 |
) |
|
(25,199 |
) |
Comprehensive income |
414,820 |
|
|
250,967 |
|
|
172,806 |
|
|
26,115 |
|
Comprehensive loss (income) attributable to noncontrolling
interest |
2,437 |
|
|
2,731 |
|
|
(1,124 |
) |
|
(170 |
) |
Comprehensive income
attributable to Huazhu Group Limited |
417,257 |
|
|
253,698 |
|
|
171,682 |
|
|
25,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share/ADS2: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.38 |
|
|
0.46 |
|
|
1.20 |
|
|
0.18 |
|
Diluted |
1.34 |
|
|
0.44 |
|
|
1.14 |
|
|
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation: |
|
|
Basic |
279,101 |
|
|
280,701 |
|
|
281,495 |
|
|
281,495 |
|
Diluted |
288,316 |
|
|
293,243 |
|
|
303,963 |
|
|
303,963 |
|
____________________________2 As of May 25, 2018, the company
changed its ADS to its ordinary share ratio from one ADS
representing four ordinary shares to one ADS representing one
ordinary share. Therefore, the company recalculated earnings per
ADS of the previous quarter using the new ratio.
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
Quarter Ended |
|
June 30, 2017 |
|
March 31, 2018 |
|
June 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
(in thousands) |
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
383,686 |
|
|
125,793 |
|
|
339,551 |
|
|
51,314 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
16,021 |
|
|
17,129 |
|
|
18,630 |
|
|
2,815 |
|
Depreciation and amortization |
189,210 |
|
|
215,671 |
|
|
223,815 |
|
|
33,824 |
|
Amortization of issuance cost of convertible senior notes |
- |
|
|
7,958 |
|
|
6,455 |
|
|
976 |
|
Deferred
taxes |
(2,088 |
) |
|
2,672 |
|
|
(429 |
) |
|
(65 |
) |
Bad debt
expenses |
601 |
|
|
542 |
|
|
741 |
|
|
112 |
|
Deferred
rent |
48,485 |
|
|
23,882 |
|
|
29,181 |
|
|
4,410 |
|
Loss
(Gain) from disposal of property and equipment |
11,388 |
|
|
(460 |
) |
|
(5,762 |
) |
|
(871 |
) |
Impairment loss |
44,439 |
|
|
- |
|
|
- |
|
|
- |
|
Loss from
equity method investments |
978 |
|
|
3,560 |
|
|
10,663 |
|
|
1,611 |
|
Investment (income) loss |
(37,773 |
) |
|
137,126 |
|
|
267,239 |
|
|
40,387 |
|
Changes in operating assets and liabilities, net of effect of
acquisitions: |
Accounts
receivable |
(4,904 |
) |
|
(36,160 |
) |
|
(13,166 |
) |
|
(1,990 |
) |
Prepaid
rent |
3,770 |
|
|
96,452 |
|
|
1,472 |
|
|
223 |
|
Inventories |
(4,697 |
) |
|
(3,210 |
) |
|
(2,950 |
) |
|
(446 |
) |
Amounts
due from related parties |
(3,553 |
) |
|
(11,574 |
) |
|
11,967 |
|
|
1,809 |
|
Other
current assets |
4,362 |
|
|
13,857 |
|
|
(34,287 |
) |
|
(5,182 |
) |
Other
assets |
(14,403 |
) |
|
13,044 |
|
|
(10,943 |
) |
|
(1,654 |
) |
Accounts
payable |
1,432 |
|
|
(11,315 |
) |
|
8,618 |
|
|
1,302 |
|
Amounts
due to related parties |
(752 |
) |
|
(2,448 |
) |
|
20,366 |
|
|
3,078 |
|
Salary
and welfare payables |
57,289 |
|
|
(183,447 |
) |
|
101,500 |
|
|
15,339 |
|
Deferred
revenue |
(7,461 |
) |
|
58,644 |
|
|
35,499 |
|
|
5,365 |
|
Accrued
expenses and other current liabilities |
33,224 |
|
|
51,030 |
|
|
102,041 |
|
|
15,421 |
|
Income
tax payable |
83,089 |
|
|
(119,020 |
) |
|
26,859 |
|
|
4,059 |
|
Other
long-term liabilities |
11,886 |
|
|
20,453 |
|
|
2,974 |
|
|
449 |
|
Net
cash provided by operating activities |
814,229 |
|
|
420,179 |
|
|
1,140,034 |
|
|
172,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment |
(156,840 |
) |
|
(370,977 |
) |
|
(160,555 |
) |
|
(24,263 |
) |
Purchases
of intangibles |
(247 |
) |
|
- |
|
|
(1,441 |
) |
|
(218 |
) |
Amount
received as a result of government zoning |
- |
|
|
2,528 |
|
|
4,660 |
|
|
704 |
|
Acquisitions, net of cash received |
(2,980,236 |
) |
|
- |
|
|
(39,042 |
) |
|
(5,900 |
) |
Proceeds
from disposal of subsidiary and branch, net of cash disposed |
- |
|
|
1,185 |
|
|
4,667 |
|
|
705 |
|
Purchases
of long-term investments |
(216,917 |
) |
|
(3,789,845 |
) |
|
(152,808 |
) |
|
(23,093 |
) |
Proceeds
from maturity/sale of long-term investments |
87,593 |
|
|
2,182 |
|
|
105,207 |
|
|
15,899 |
|
Payment
for shareholder loan to equity investees |
(775 |
) |
|
(6,240 |
) |
|
- |
|
|
- |
|
Collection of shareholder loan from joint venture |
48,500 |
|
|
- |
|
|
- |
|
|
- |
|
Payment
for the origination of loan receivables |
(47,000 |
) |
|
(132,170 |
) |
|
(49,500 |
) |
|
(7,480 |
) |
Proceeds
from collection of loan receivables |
4,526 |
|
|
270,026 |
|
|
94,970 |
|
|
14,352 |
|
Net
cash used in investing activities |
(3,261,396 |
) |
|
(4,023,311 |
) |
|
(193,842 |
) |
|
(29,294 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Condensed Consolidated Statements of
Cash Flows |
|
Quarter Ended |
|
June 30, 2017 |
|
March 31, 2018 |
|
June 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
|
US$ |
|
(in thousands) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds from issuance of ordinary shares upon exercise of
options |
4,428 |
|
|
47 |
|
|
11,959 |
|
|
1,807 |
|
Proceeds
from short-term bank borrowings |
135,488 |
|
|
220,000 |
|
|
70,000 |
|
|
10,579 |
|
Repayment
of short-term bank borrowings |
(266,764 |
) |
|
- |
|
|
(128,288 |
) |
|
(19,387 |
) |
Proceeds
from long-term bank borrowings |
3,633,174 |
|
|
3,450,652 |
|
|
- |
|
|
- |
|
Repayment
of long-term bank borrowings |
- |
|
|
- |
|
|
(507,207 |
) |
|
(76,651 |
) |
Funds
advanced from noncontrolling interest holders |
13,950 |
|
|
- |
|
|
5,630 |
|
|
851 |
|
Repayment of funds advanced fromnoncontrolling interest
holders |
(1,677 |
) |
|
(2,250 |
) |
|
(1,680 |
) |
|
(254 |
) |
Acquisition of noncontrolling interest |
- |
|
|
- |
|
|
(2,091 |
) |
|
(316 |
) |
Proceeds from amounts due to related parties |
- |
|
|
86,371 |
|
|
16,786 |
|
|
2,537 |
|
Contribution from noncontrolling interest holders |
6,631 |
|
|
4,070 |
|
|
757 |
|
|
114 |
|
Dividends
paid to noncontrolling interest holders |
(1,680 |
) |
|
(1,422 |
) |
|
(407 |
) |
|
(62 |
) |
Net
cash provided by (used in) financing activities |
3,523,550 |
|
|
3,757,468 |
|
|
(534,541 |
) |
|
(80,782 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
(4,500 |
) |
|
(65,696 |
) |
|
30,552 |
|
|
4,617 |
|
Net
increase (decrease) in cash and cash equivalents, and restricted
cash |
1,071,883 |
|
|
88,640 |
|
|
442,203 |
|
|
66,827 |
|
Cash,
cash equivalents and restricted cash at the beginning of the
period |
2,375,992 |
|
|
3,956,067 |
|
|
4,044,707 |
|
|
611,251 |
|
Cash,
cash equivalents and restricted cash at the end of the period |
3,447,875 |
|
|
4,044,707 |
|
|
4,486,910 |
|
|
678,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended June 30, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
|
|
RMB |
|
|
|
|
RMB |
|
|
|
|
(in thousands) |
Hotel
operating costs |
1,575,100 |
|
62.5 |
% |
|
6,964 |
|
0.3 |
% |
|
1,568,136 |
|
62.2 |
% |
Other
operating costs |
2,137 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
2,137 |
|
0.1 |
% |
Selling and marketing expenses |
83,090 |
|
3.3 |
% |
|
322 |
|
0.0 |
% |
|
82,768 |
|
3.3 |
% |
General and administrative expenses |
189,514 |
|
7.5 |
% |
|
11,344 |
|
0.4 |
% |
|
178,170 |
|
7.1 |
% |
Pre-opening expenses |
65,612 |
|
2.6 |
% |
|
- |
|
0.0 |
% |
|
65,612 |
|
2.6 |
% |
Total
operating costs and expenses |
1,915,453 |
|
76.0 |
% |
|
18,630 |
|
0.7 |
% |
|
1,896,823 |
|
75.3 |
% |
Income from operations |
671,036 |
|
26.6 |
% |
|
18,630 |
|
0.7 |
% |
|
689,666 |
|
27.3 |
% |
|
|
|
. |
|
|
|
|
|
|
|
Quarter Ended June 30, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
US$ |
|
|
|
|
US$ |
|
|
|
|
US$ |
|
|
|
|
(in thousands) |
Hotel
operating costs |
238,036 |
|
62.5 |
% |
|
1,052 |
|
0.3 |
% |
|
236,984 |
|
62.2 |
% |
Other
operating costs |
323 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
323 |
|
0.1 |
% |
Selling and marketing expenses |
12,557 |
|
3.3 |
% |
|
49 |
|
0.0 |
% |
|
12,508 |
|
3.3 |
% |
General and administrative expenses |
28,640 |
|
7.5 |
% |
|
1,714 |
|
0.4 |
% |
|
26,926 |
|
7.1 |
% |
Pre-opening expenses |
9,915 |
|
2.6 |
% |
|
- |
|
0.0 |
% |
|
9,915 |
|
2.6 |
% |
Total
operating costs and expenses |
289,471 |
|
76.0 |
% |
|
2,815 |
|
0.7 |
% |
|
286,656 |
|
75.3 |
% |
Income from operations |
101,409 |
|
26.6 |
% |
|
2,815 |
|
0.7 |
% |
|
104,224 |
|
27.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2018 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
RMB |
|
|
|
|
RMB |
|
|
|
(in thousands) |
Hotel
operating costs |
1,506,035 |
|
72.0 |
% |
|
5,038 |
|
0.2 |
% |
|
1,500,997 |
|
71.8 |
% |
Other
operating costs |
2,842 |
|
0.1 |
% |
|
- |
|
0.0 |
% |
|
2,842 |
|
0.1 |
% |
Selling and marketing expenses |
65,826 |
|
3.1 |
% |
|
1,120 |
|
0.1 |
% |
|
64,706 |
|
3.0 |
% |
General and administrative expenses |
158,752 |
|
7.6 |
% |
|
10,971 |
|
0.5 |
% |
|
147,781 |
|
7.1 |
% |
Pre-opening expenses |
75,271 |
|
3.6 |
% |
|
- |
|
0.0 |
% |
|
75,271 |
|
3.6 |
% |
Total
operating costs and expenses |
1,808,726 |
|
86.4 |
% |
|
17,129 |
|
0.8 |
% |
|
1,791,597 |
|
85.6 |
% |
Income from operations |
306,586 |
|
14.7 |
% |
|
17,129 |
|
0.8 |
% |
|
323,715 |
|
15.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2017 |
|
GAAP Result |
|
% of Net Revenues |
|
Share-based Compensation |
|
% of Net Revenues |
|
Non-GAAP Result |
|
% of Net Revenues |
|
RMB |
|
|
|
|
RMB |
|
|
|
|
RMB |
|
|
|
|
(in thousands) |
Hotel
operating costs |
1,348,269 |
|
67.3 |
% |
|
4,502 |
|
0.2 |
% |
|
1,343,767 |
|
67.1 |
% |
Other operating costs |
3,739 |
|
0.2 |
% |
|
- |
|
0.0 |
% |
|
3,739 |
|
0.2 |
% |
Selling and marketing expenses |
63,126 |
|
3.2 |
% |
|
371 |
|
0.0 |
% |
|
62,755 |
|
3.2 |
% |
General and administrative expenses |
135,689 |
|
6.8 |
% |
|
11,148 |
|
0.6 |
% |
|
124,541 |
|
6.2 |
% |
Pre-opening expenses |
43,134 |
|
2.2 |
% |
|
- |
|
0.0 |
% |
|
43,134 |
|
2.2 |
% |
Total
operating costs and expenses |
1,593,957 |
|
79.7 |
% |
|
16,021 |
|
0.8 |
% |
|
1,577,936 |
|
78.9 |
% |
Income from operations |
438,018 |
|
21.9 |
% |
|
16,021 |
|
0.8 |
% |
|
454,039 |
|
22.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group Limited |
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
Quarter Ended |
|
June 30, 2017 |
|
March 31, 2018 |
|
|
June 30, 2018 |
|
RMB |
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
(in thousands, except per share and per ADS
data) |
Net income attributable
to Huazhu Group Limited (GAAP) |
386,123 |
|
|
128,524 |
|
|
338,427 |
|
|
51,144 |
|
Share-based
compensation expenses |
16,021 |
|
|
17,129 |
|
|
18,630 |
|
|
2,815 |
|
Unrealized losses
(gains) from fair value changes of equity securities |
- |
|
|
136,680 |
|
|
200,763 |
|
|
30,340 |
|
Adjusted net income
attributable to Huazhu Group Limited (non-GAAP) |
402,144 |
|
|
282,333 |
|
|
557,820 |
|
|
84,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share/ADS
(GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.38 |
|
|
0.46 |
|
|
1.20 |
|
|
0.18 |
|
Diluted |
1.34 |
|
|
0.44 |
|
|
1.14 |
|
|
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share/ADS (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.44 |
|
|
1.01 |
|
|
1.98 |
|
|
0.30 |
|
Diluted |
1.39 |
|
|
0.96 |
|
|
1.87 |
|
|
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation |
|
|
|
|
|
|
|
|
|
|
|
Basic |
279,101 |
|
|
280,701 |
|
|
281,495 |
|
|
281,495 |
|
Diluted |
288,316 |
|
|
293,243 |
|
|
303,963 |
|
|
303,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
June 30, 2017 |
|
March 31, 2018 |
|
June 30, 2018 |
|
RMB |
|
RMB |
|
RMB |
US$ |
|
(in thousands) |
Net income attributable to Huazhu Group Limited
(GAAP) |
386,123 |
|
|
128,524 |
|
|
338,427 |
|
|
51,144 |
|
Interest income |
(21,792 |
) |
|
(34,193 |
) |
|
(39,000 |
) |
|
(5,894 |
) |
Interest expense |
15,870 |
|
|
51,457 |
|
|
58,827 |
|
|
8,890 |
|
Income tax expense |
129,011 |
|
|
44,465 |
|
|
163,575 |
|
|
24,720 |
|
Depreciation and amortization |
189,210 |
|
|
215,671 |
|
|
223,815 |
|
|
33,824 |
|
EBITDA (non-GAAP) |
698,422 |
|
|
405,924 |
|
|
745,644 |
|
|
112,684 |
|
Share-based compensation |
16,021 |
|
|
17,129 |
|
|
18,630 |
|
|
2,815 |
|
Unrealized losses (gains) from fair value changes of equity
securities |
- |
|
|
136,680 |
|
|
200,763 |
|
|
30,340 |
|
Adjusted EBITDA (non-GAAP) |
714,443 |
|
|
559,733 |
|
|
965,037 |
|
|
145,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huazhu Group
Limited |
Operational
Data |
|
|
|
|
As of |
|
June 30, |
March 31, |
June 30, |
|
2017 |
2018 |
2018 |
Total hotels in
operation: |
3,541 |
|
3,817 |
|
3,903 |
|
Leased
and owned hotels |
686 |
|
673 |
|
673 |
|
Manachised hotels |
2,654 |
|
2,943 |
|
3,024 |
|
Franchised hotels |
201 |
|
201 |
|
206 |
|
Total hotel rooms in
operation |
359,530 |
|
384,959 |
|
393,417 |
|
Leased
and owned hotels |
86,232 |
|
85,508 |
|
86,231 |
|
Manachised hotels |
253,469 |
|
280,133 |
|
287,398 |
|
Franchised hotels |
19,829 |
|
19,318 |
|
19,788 |
|
Number of cities |
369 |
|
382 |
|
384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended |
|
June 30, |
March 31, |
June 30, |
|
2017 |
2018 |
2018 |
Occupancy rate (as a
percentage) |
|
|
|
Leased
and owned hotels |
90.8 |
% |
85.6 |
% |
91.4 |
% |
Manachised hotels |
90.8 |
% |
84.0 |
% |
89.8 |
% |
Franchised hotels |
74.4 |
% |
69.8 |
% |
78.7 |
% |
Blended |
90.1 |
% |
83.7 |
% |
89.6 |
% |
Average daily room
rate (in RMB) |
|
|
|
Leased
and owned hotels |
232 |
|
243 |
|
270 |
|
Manachised hotels |
188 |
|
194 |
|
212 |
|
Franchised hotels |
203 |
|
228 |
|
248 |
|
Blended |
199 |
|
207 |
|
226 |
|
RevPAR (in
RMB) |
|
|
|
Leased
and owned hotels |
211 |
|
208 |
|
246 |
|
Manachised hotels |
171 |
|
163 |
|
190 |
|
Franchised hotels |
151 |
|
159 |
|
195 |
|
Blended |
179 |
|
173 |
|
203 |
|
|
|
|
|
|
|
|
|
Same-hotel
Operational Data: like-for-like performance for leased, manachised
and franchised hotels opened for at least 18 months during the
current quarter |
|
As of and for the quarter ended |
|
|
June 30, |
|
|
2017 |
2018 |
|
Total |
2,866 |
|
2,866 |
|
|
Leased
and owned hotels |
559 |
|
559 |
|
|
Manachised hotels |
2,307 |
|
2,307 |
|
|
Occupancy rate (as a
percentage) |
92.0 |
% |
92.2 |
% |
|
Average daily room rate
(in RMB) |
196 |
|
210 |
|
|
RevPAR (in RMB) |
180 |
|
194 |
|
|
|
|
|
|
Huazhu Group
Limited |
Operational
Data |
|
|
|
|
As of |
|
June 30, |
March 31, |
June 30, |
|
2017 |
2018 |
2018 |
Total hotels in
operation: |
3,541 |
|
3,817 |
|
3,903 |
|
Leased
and owned hotels |
686 |
|
673 |
|
673 |
|
Manachised hotels |
2,654 |
|
2,943 |
|
3,024 |
|
Franchised hotels |
201 |
|
201 |
|
206 |
|
Total hotel rooms in
operation |
359,530 |
|
384,959 |
|
393,417 |
|
Leased
and owned hotels |
86,232 |
|
85,508 |
|
86,231 |
|
Manachised hotels |
253,469 |
|
280,133 |
|
287,398 |
|
Franchised hotels |
19,829 |
|
19,318 |
|
19,788 |
|
Number of cities |
369 |
|
382 |
|
384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended |
|
June 30, |
March 31, |
June 30, |
|
2017 |
2018 |
2018 |
Occupancy rate (as a
percentage) |
|
|
|
Leased and owned
hotels |
90.8 |
% |
85.6 |
% |
91.4 |
% |
Manachised
hotels |
90.8 |
% |
84.0 |
% |
89.8 |
% |
Franchised
hotels |
74.4 |
% |
69.8 |
% |
78.7 |
% |
Blended |
90.1 |
% |
83.7 |
% |
89.6 |
% |
Average daily room
rate (in RMB) |
|
|
|
Leased and owned
hotels |
232 |
|
243 |
|
270 |
|
Manachised
hotels |
188 |
|
194 |
|
212 |
|
Franchised
hotels |
203 |
|
228 |
|
248 |
|
Blended |
199 |
|
207 |
|
226 |
|
RevPAR (in
RMB) |
|
|
|
Leased and owned
hotels |
211 |
|
208 |
|
246 |
|
Manachised
hotels |
171 |
|
163 |
|
190 |
|
Franchised
hotels |
151 |
|
159 |
|
195 |
|
Blended |
179 |
|
173 |
|
203 |
|
|
|
|
|
Same-hotel
Operational Data: like-for-like performance for leased, manachised
and franchised hotels opened for at least 18 months during the
current quarter |
|
As of and for the quarter ended |
|
|
|
June 30, |
|
|
2017 |
2018 |
|
Total |
2,866 |
|
2,866 |
|
|
Leased and owned
hotels |
559 |
|
559 |
|
|
Manachised
hotels |
2,307 |
|
2,307 |
|
|
Occupancy rate (as a
percentage) |
92.0 |
% |
92.2 |
% |
|
Average daily room rate
(in RMB) |
196 |
|
210 |
|
|
RevPAR (in RMB) |
180 |
|
194 |
|
|
|
|
|
|
Hotel breakdown by segment |
|
|
|
|
|
Number of Hotels in Operation |
Number of Hotel Rooms in Operation |
|
As of June 30, 2018 |
As of June 30, 2018 |
Economy
hotels |
2,857 |
259,504 |
HanTing
Hotel |
2,236 |
218,124 |
Leased
hotels |
428 |
49,474 |
Manachised hotels |
1,804 |
168,272 |
Franchised hotels |
4 |
378 |
Hi
Inn |
395 |
25,262 |
Leased
hotels |
29 |
2,661 |
Manachised hotels |
317 |
19,717 |
Franchised hotels |
49 |
2,884 |
Elan
Hotel |
218 |
15,277 |
Manachised hotels |
188 |
13,381 |
Franchised hotels |
30 |
1,896 |
Orange Hotel |
8 |
841 |
Leased
hotels |
6 |
678 |
Manachised hotels |
1 |
85 |
Franchised hotels |
1 |
78 |
Midscale hotels
and upscale hotels |
1,046 |
133,913 |
JI
Hotel |
452 |
61,033 |
Leased
hotels |
91 |
16,230 |
Manachised hotels |
359 |
44,601 |
Franchised hotels |
2 |
202 |
Starway
Hotel |
177 |
16,884 |
Leased
hotels |
2 |
386 |
Manachised hotels |
145 |
13,814 |
Franchised hotels |
30 |
2,684 |
Joya
Hotel |
7 |
1,207 |
Leased
hotels |
4 |
677 |
Manachised hotels |
2 |
374 |
Franchised hotels |
1 |
156 |
Manxin
Hotels & Resorts |
17 |
1,594 |
Leased
hotels |
3 |
447 |
Manachised hotels |
11 |
1,043 |
Franchised hotels |
3 |
104 |
HanTing
Premium Hotel |
45 |
4,255 |
Leased
hotels |
17 |
1,819 |
Manachised hotels |
28 |
2,436 |
ibis
Hotel |
112 |
14,588 |
Leased
and owned hotels |
19 |
3,423 |
Manachised hotels |
51 |
5,589 |
Franchised hotels |
42 |
5,576 |
ibis
Styles Hotel |
23 |
3,235 |
Leased
hotels |
1 |
102 |
Manachised hotels |
20 |
2,811 |
Franchised hotels |
2 |
322 |
Mercure
Hotel |
28 |
5,874 |
Leased
hotels |
4 |
910 |
Manachised hotels |
19 |
4,123 |
Franchised hotels |
5 |
841 |
Novotel
Hotel |
5 |
2,064 |
Manachised hotels |
4 |
1,741 |
Franchised hotels |
1 |
323 |
Grand
Mercure Hotel |
6 |
1,306 |
Leased
hotels |
1 |
317 |
Manachised hotels |
3 |
618 |
Franchised hotels |
2 |
371 |
Orange
Selected |
127 |
15,645 |
Leased
hotels |
48 |
6,289 |
Manachised hotels |
54 |
6,487 |
Franchised hotels |
25 |
2,869 |
Crystal
Orange |
47 |
6,228 |
Leased
hotels |
20 |
2,818 |
Manachised hotels |
18 |
2,306 |
Franchised hotels |
9 |
1,104 |
Total |
3,903 |
393,417 |
|
|
|
|
|
|
Same-hotel operational data by segment |
|
Number of hotels in operation |
Same-hotel RevPAR |
|
Same-hotel ADR |
|
Same-hotel Occupancy |
|
|
As ofJune 30, |
For the quarter endedJune 30, |
yoy |
For the quarter endedJune 30, |
yoy |
For the quarter endedJune 30, |
yoy |
|
2017 |
2018 |
2017 |
2018 |
change |
2017 |
2018 |
change |
2017 |
|
2018 |
|
change |
Economy hotels |
2,406 |
2,406 |
161 |
174 |
8.0 |
% |
172 |
186 |
8.1 |
% |
94.0 |
% |
93.8 |
% |
-0.1 |
% |
Leased
hotels |
459 |
459 |
168 |
189 |
12.2 |
% |
182 |
201 |
10.3 |
% |
92.2 |
% |
93.8 |
% |
1.7 |
% |
Manachised and franchised hotels |
1,947 |
1,947 |
159 |
170 |
6.6 |
% |
168 |
181 |
7.4 |
% |
94.5 |
% |
93.8 |
% |
-0.7 |
% |
Midscale and upscale hotels |
460 |
460 |
251 |
269 |
7.2 |
% |
297 |
312 |
4.8 |
% |
84.3 |
% |
86.3 |
% |
2.0 |
% |
Leased
and owned hotels |
100 |
100 |
313 |
332 |
6.1 |
% |
345 |
365 |
5.5 |
% |
90.6 |
% |
91.2 |
% |
0.5 |
% |
Manachised and franchised hotels |
360 |
360 |
226 |
243 |
7.8 |
% |
276 |
289 |
4.5 |
% |
81.8 |
% |
84.3 |
% |
2.5 |
% |
Total |
2,866 |
2,866 |
180 |
194 |
7.9 |
% |
196 |
210 |
7.5 |
% |
92.0 |
% |
92.2 |
% |
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Blossom Hill Hotels and Resorts |
|
|
Number of
hotels |
Number of
rooms |
In
operation |
22 |
590 |
Leased
hotels |
19 |
416 |
Manachised hotels |
3 |
174 |
In pipeline |
12 |
|
As of July
31, 2018 |
|
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