Financial Performance - Hotel revenue for Q1 2023 increased by 71.3% year-over-year to RMB 16.2 billion, and by 68.8% excluding Steigenberger Hotels GmbH[2] - Total revenue for Q1 2023 grew by 67.1% year-over-year to RMB 4.5 billion (approximately USD 652 million), exceeding previous guidance of 61% to 65% growth[2] - Net profit attributable to the company for Q1 2023 was RMB 990 million (approximately USD 144 million), compared to a net loss of RMB 630 million in Q1 2022[2] - EBITDA for Q1 2023 was RMB 1.6 billion (approximately USD 238 million), a significant improvement from a negative RMB 301 million in Q1 2022[2] - Adjusted EBITDA for Q1 2023 was RMB 1.7 billion (approximately USD 240 million), compared to a negative RMB 333 million in Q1 2022[3] - Operating profit for Q1 2023 was RMB 664 million (approximately USD 97 million), compared to an operating loss of RMB 708 million in Q1 2022 and an operating loss of RMB 93 million in the previous quarter[12] - The operating profit margin for Q1 2023 was 14.8%, compared to -26.4% in Q1 2022 and -2.5% in the previous quarter[12] - The company recorded other net profit of RMB 514 million (approximately USD 75 million) in Q1 2023, significantly up from RMB 59 million in Q1 2022 and a loss of RMB 65 million in the previous quarter[13] - Adjusted EBITDA for Q1 2023 reached RMB 1,651 million, compared to RMB (333) million in Q1 2022, indicating a strong recovery[30] Revenue Breakdown - Revenue from the Legacy-Huazhu segment in Q1 2023 was RMB 3.6 billion, a year-over-year increase of 58.0%[8] - Revenue from the Legacy-DH segment in Q1 2023 was RMB 886 million, a year-over-year increase of 118.2%[8] - The revenue from leased and owned hotels in Q1 2023 was RMB 2.9 billion, a year-over-year increase of 75.0%[9] - Total revenue for Q1 2023 reached RMB 4,480 million, a 21% increase from RMB 3,706 million in Q4 2022[25] Hotel Operations - As of March 31, 2023, the company operated 8,592 hotels with a total of 820,099 rooms[4] - The company opened 262 hotels and closed 209 hotels in Q1 2023, with 2,339 hotels in the pipeline[4] - As of March 31, 2023, Legacy-DH operates 128 hotels with a total of 26,172 rooms, including 15,497 rooms under lease and 10,675 rooms under management and franchise models[7] - The company signed over 670 new hotel contracts in Q1 2023, reflecting strong confidence from franchisees[7] Occupancy and Rates - Average daily rate (ADR) for Legacy-Huazhu hotels in Q1 2023 was RMB 277, up from RMB 224 in Q1 2022[5] - Occupancy rate for all operating Legacy-Huazhu hotels in Q1 2023 was 75.6%, compared to 59.2% in Q1 2022[5] - In Q1 2023, the average daily rate was €104, up from €88 in Q1 2022 and down from €122 in the previous quarter[7] - The occupancy rate for all operating Legacy-DH hotels in Q1 2023 was 53.5%, compared to 38.0% in Q1 2022 and 59.3% in the previous quarter[7] - Average revenue per available room (RevPAR) for leased and owned hotels rose to RMB 257, reflecting a 72.9% increase year-over-year[34] - Average daily room rate for leased and owned hotels increased to RMB 337, a 28.4% year-over-year growth[34] - The overall occupancy rate for all hotel categories was 76.7%, an increase of 15.7 percentage points year-over-year[36] Cash and Debt Position - As of March 31, 2023, total cash and cash equivalents amounted to RMB 9 billion (approximately USD 1.3 billion) and restricted cash was RMB 1.4 billion (approximately USD 202 million)[15] - Total debt as of March 31, 2023, was RMB 9.4 billion (approximately USD 1.4 billion), with net cash of RMB 957 million (approximately USD 139 million)[15] - Cash and cash equivalents rose significantly from RMB 3,583 million to RMB 8,963 million, an increase of 150.5%[23] Growth Strategies - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[25] - Huazhu Group emphasizes its growth strategies and ability to attract and retain customers in a competitive hospitality market[21] - The company has made significant investments in lease renovations, which contribute to its cost structure and influence EBITDA calculations[19] Non-GAAP Measures - The company uses non-GAAP financial measures, including adjusted net profit and adjusted EBITDA, to provide meaningful supplemental information about its performance[18] - Adjusted EBITDA excludes stock-based compensation and fair value changes of equity securities, providing a clearer view of the company's financial performance[20] - The use of non-GAAP measures like EBITDA and adjusted EBITDA has limitations, as they do not represent net profit or operating profit as defined by GAAP[20]

Hotel Network Expansion and Development - The company expanded its hotel network from 6,789 hotels as of December 31, 2020, to 8,543 hotels as of December 31, 2022, with a compound annual growth rate of 12.2%[3] - As of December 31, 2022, the company had 8,543 operating hotels, including 704 leased and owned hotels and 7,839 managed and franchised hotels, totaling 809,478 hotel rooms[3] - The company is developing 2,580 new hotels, including 40 leased and owned hotels and 2,540 managed and franchised hotels[3] - The company operates over 20 distinctive hotel brands, covering all market segments[3] - The company operates 8,543 hotels as of December 31, 2022, with 2,580 hotels under development[33] - The company's hotel network covers 882 cities across 31 provinces, autonomous regions, and municipalities in Greater China, as well as 17 other countries[33] - The company has 704 leased and owned hotels, 7,617 managed and franchised hotels, and 222 franchised hotels as of December 31, 2022[33] - The company has 9 operating hotels under the 美侖美奐 brand, with 8 under development in China[24] - The company has 53 operating hotels under the 花間堂 brand, with 49 under development[26] - The company has 54 operating hotels under the 施柏閣 brand, with 8 under development, including 11 operating hotels and 3 under development in China[27] - The company has 9 operating hotels under the 施柏閣大觀 brand, with 1 under development[30] - The company has 6 operating hotels under the 宋品 brand, with 4 under development[31] - The company has 572 hotels in China temporarily requisitioned due to COVID-19 as of December 31, 2022[34] - 40 leased and owned hotels are under development, with 34 in the pre-conversion phase and 6 in the conversion phase, with a total budgeted development cost of RMB 164 million (USD 24 million)[36] - 2,540 managed and franchised hotels are under development, with 1,790 in the pre-conversion phase and 750 in the conversion phase[36] - 695 leased hotels and 9 owned hotels are in operation, accounting for approximately 8.2% of the company's total operating hotels[38] - 7,617 managed hotels and 222 franchised hotels are in operation, accounting for approximately 89% and 3% of the company's total operating hotels, respectively[40] - The company has 628 leases for operating and under-development hotels, with 58 leases expiring in 2023 and 143 leases expiring between 2028 and 2030[39] - The company renewed 25 leases, converted 17 to managed and franchised hotels, and terminated 25 leases out of 67 leases that expired in 2022[38] - The company primarily uses management franchise and franchise models to expand its network with lower capital intensity[45] - The company's development department analyzes economic data to determine target locations in each city and regularly formulates a three-year development plan for new hotels[45] - The investment committee evaluates potential management franchise and franchise opportunities based on factors such as location attractiveness, potential franchisee quality, and product compliance with standards[45] - The company seeks properties in economically developed cities with convenient locations, typically accommodating 80 to 300 rooms[48] - The company uses a centralized procurement system to purchase most construction materials and supplies for new hotels[48] - The company provides technical expertise and recommends pre-selected qualified suppliers to franchisees, and appoints or trains hotel managers to ensure consistent service quality[47] - The company's hotel network expanded from 6,789 hotels as of December 31, 2020, to 8,543 hotels as of December 31, 2022, with a compound annual growth rate of 12.2%[116] - The company is developing an additional 2,580 new hotels, including 40 leased and owned hotels and 2,540 managed and franchised hotels[116] - Total operating hotels increased from 6,669 in 2020 to 8,411 in 2022, with Legacy Huazhu accounting for the majority[122] - Total operating hotel rooms grew from 628,135 in 2020 to 783,174 in 2022, with Legacy Huazhu contributing the most[122] Loyalty Program and Sales Channels - The company's loyalty program, Huazhu Club, had over 199 million members as of December 31, 2022, with 76% of Legacy Huazhu room nights sold to individual or corporate members of Huazhu Club in 2022[3] - In 2022, approximately 87% of room nights were sold through the company's sales channels[3] - The company's loyalty program, Huazhu Club, had over 199 million members as of December 31, 2022[58] - 76% of Legacy Huazhu's room nights in 2022 were sold to Huazhu Club members[58] - Legacy Huzahu had 87% of room nights sold through its own sales channels in 2022, with the remaining 13% sold through intermediaries[58] - The company's integrated CRM system tracks member data, including booking history, points accumulation, and prepaid balances, to enhance customer loyalty and targeted promotions[52] Financial Performance - The company's total revenue for 2022 was RMB 13,862 million (USD 2,010 million), with a net loss attributable to Huazhu Group of RMB 1,821 million (USD 264 million)[4] - The company's adjusted EBITDA (non-GAAP) for 2022 was RMB 610 million (USD 88 million)[4] - Total revenue for 2020, 2021, and 2022 was RMB 10,196 million, RMB 12,785 million, and RMB 13,862 million (USD 2,010 million), respectively[116] - Net losses attributable to Huazhu Group for 2020, 2021, and 2022 were RMB 2,192 million, RMB 465 million, and RMB 1,821 million (USD 264 million), respectively[116] - Adjusted EBITDA (non-GAAP) for 2020, 2021, and 2022 was negative RMB 244 million, RMB 1,571 million, and RMB 610 million (USD 88 million), respectively[116] - Net cash generated from operating activities for 2020, 2021, and 2022 was RMB 609 million, RMB 1,342 million, and RMB 1,564 million (USD 227 million), respectively[116] - Revenue from leased and owned hotels accounted for 66.0% of total revenue in 2022, amounting to RMB 9,148 million (USD 1,326 million)[132] - Revenue from managed and franchised hotels increased from RMB 3,136 million in 2020 to RMB 4,405 million in 2022, representing 31.8% of total revenue[132] - Total revenue grew from RMB 10,196 million in 2020 to RMB 13,862 million in 2022, with a significant contribution from other income sources[132] - The company's Legacy Huazhu business accelerated recovery from mid-November 2022 following the modification of COVID policies by Chinese authorities[121] - Legacy DH hotels' RevPAR has been rebounding since March 2022, with all temporarily closed hotels resuming operations by December 31, 2022[121] - The company's available room nights for Legacy Huazhu increased from 193.8 million as of December 31, 2020, to 229.5 million as of December 31, 2022, excluding temporarily requisitioned or closed hotels[121] - Legacy Huazhu's RevPAR (Revenue per Available Room) for all operating hotels decreased from RMB 172 in 2021 to RMB 157 in 2022, impacted by the Omicron variant[125] - Legacy DH's RevPAR for all operating hotels increased from €32 in 2021 to €62 in 2022, showing significant recovery post-COVID-19 restrictions[126] - Legacy Huazhu had 572 hotels temporarily requisitioned and 10 hotels temporarily closed as of December 31, 2022, affecting operations[123] - Legacy Huazhu's quarterly average RevPAR (RMB) for leased and owned hotels increased from 156 in Q1 2021 to 176 in Q4 2022, with a peak of 252 in Q2 2021[128] - Legacy DH's quarterly average RevPAR (EUR) for franchised hotels rose from 20 in Q1 2021 to 82 in Q4 2022, showing consistent growth[129] - The number of Legacy Huazhu hotels operating for at least 18 months increased from 4,209 in Q1 2021 to 5,296 in Q4 2022[130] - Legacy Huazhu's same-store RevPAR change (YoY) showed a significant decline of 36.2% in Q2 2022 but recovered to a 3.9% increase in Q3 2022[130] - Total revenue increased by 8.4% from RMB 12,785 million in 2021 to RMB 13,862 million (USD 2,010 million) in 2022, driven by the strong recovery of European operations following the lifting of COVID-19 restrictions[149] - Revenue from leased and owned hotels grew by 12.7% from RMB 8,118 million in 2021 to RMB 9,148 million (USD 1,326 million) in 2022, with Legacy DH contributing significantly due to the European recovery[149] - Revenue from managed and franchised hotels remained stable at RMB 4,404 million in 2021 and RMB 4,405 million (USD 639 million) in 2022, with Legacy DH showing a 30.6% increase[149] - Other income increased by 17.5% from RMB 263 million in 2021 to RMB 309 million (USD 45 million) in 2022[150] - Total operating costs and expenses rose by 8.1% from RMB 13,607 million in 2021 to RMB 14,705 million (USD 2,132 million) in 2022[150] - Hotel operating costs increased by 8.7% from RMB 11,282 million in 2021 to RMB 12,260 million (USD 1,777 million) in 2022, with cost control measures partially offsetting the rise[150] - Legacy Huazhu's hotel operating costs accounted for 86.1% of its total revenue in 2022, compared to 78.3% in 2021[150] - The company recognized negative rental expenses of RMB 281 million in 2022 due to COVID-19-related rent reductions[150] - Net loss attributable to Huazhu Group Limited was RMB 1,821 million (USD 264 million) in 2022, compared to RMB 465 million in 2021[148] - Legacy Huazhu's total revenue decreased by 5.3% to RMB 10,655 million (USD 1,545 million) in 2022, primarily due to the negative impact of COVID-19 restrictions[149] - Sales and marketing expenses decreased by 4.4% from RMB 641 million in 2021 to RMB 613 million (USD 89 million) in 2022, with the expense ratio dropping from 5.0% to 4.4% of total revenue[151] - General and administrative expenses increased by 8.4% from RMB 1,545 million in 2021 to RMB 1,675 million (USD 243 million) in 2022, maintaining a stable ratio of 12.1% of total revenue[151] - Pre-opening expenses increased by 17.3% from RMB 81 million in 2021 to RMB 95 million (USD 14 million) in 2022, with the ratio rising from 0.6% to 0.7% of total revenue[151] - Operating loss of RMB 294 million (USD 43 million) in 2022, compared to an operating profit of RMB 164 million in 2021[152] - Net interest expense of RMB 322 million (USD 46 million) in 2022, with interest income of RMB 87 million (USD 13 million) and interest expense of RMB 409 million (USD 59 million)[152] - Unrealized loss on equity securities fair value changes of RMB 359 million (USD 52 million) in 2022, primarily due to the decline in Accor share prices[153] - Foreign exchange loss of RMB 641 million (USD 93 million) in 2022, mainly due to euro-denominated investments and receivables[153] - Net loss attributable to Huazhu Group Limited increased from RMB 465 million in 2021 to RMB 1,821 million (USD 264 million) in 2022[153] - Adjusted EBITDA (non-GAAP) decreased from RMB 1,571 million in 2021 to RMB 610 million (USD 88 million) in 2022[154] - Total revenue increased by 25.4% from RMB 10,196 million in 2020 to RMB 12,785 million in 2021, driven by recovery from COVID-19[155] - Total operating costs and expenses increased by 14.1% from RMB 11,925 million in 2020 to RMB 13,607 million in 2021[156] - Hotel operating costs rose by 16.0% from RMB 9,729 million in 2020 to RMB 11,282 million in 2021, with the cost-to-revenue ratio dropping from 95.4% to 88.3%[156] - Sales and marketing expenses increased by 7.4% from RMB 597 million in 2020 to RMB 641 million in 2021, with the cost-to-revenue ratio decreasing from 5.9% to 5.0%[157] - General and administrative expenses grew by 22.7% from RMB 1,259 million in 2020 to RMB 1,545 million in 2021, with the cost-to-revenue ratio slightly decreasing from 12.3% to 12.1%[157] - Pre-opening expenses decreased by 71.9% from RMB 288 million in 2020 to RMB 81 million in 2021, with the cost-to-revenue ratio dropping from 2.8% to 0.6%[157] - Operating profit for 2021 was RMB 164 million, compared to an operating loss of RMB 1,686 million in 2020[157] - Net interest expense decreased to RMB 316 million in 2021 from RMB 414 million in 2020, due to reduced bank borrowings[157] - Other net profit for 2021 was RMB 157 million, compared to a net expense of RMB 89 million in 2020, driven by realized gains from the sale of part of Accor shares[158] - EBITDA (non-GAAP) for 2021 was RMB 1,366 million, compared to a negative RMB 631 million in 2020, with adjusted EBITDA at RMB 1,571 million[159] - The company issued USD 500 million in 2026 notes with a 3.00% annual interest rate and secured a RMB 650 million syndicated loan for headquarters construction[160] - The company secured a one-year uncommitted term loan facility of up to $123 million in October 2022, with $121 million drawn at a fixed annual interest rate of 5.4%. As of December 31, 2022, the outstanding loan amount was $121 million[161] - As of December 31, 2022, the company's total debt balance was RMB 9.9 billion ($1.4 billion), with unused credit facilities of approximately RMB 2.1 billion[161] - The company had cash and cash equivalents of RMB 3.583 billion ($520 million) as of December 31, 2022[162] - The company expects to incur capital expenditures of approximately RMB 1.487 billion ($216 million) for the renovation and equipment installation of 40 leased and owned hotels, to be spent over the next one to two years[162] - Net cash generated from operating activities in 2022 was RMB 1.564 billion ($227 million), primarily due to non-cash lease expenses of RMB 2.257 billion ($327 million) and depreciation and amortization of RMB 1.456 billion ($211 million)[164] - Net cash used in investing activities in 2022 was RMB 522 million ($76 million), a decrease from RMB 1.402 billion in 2021, mainly due to reduced acquisition costs and lower purchases of property and equipment[165] - Net cash used in financing activities in 2022 was RMB 1.394 billion ($201 million), compared to RMB 1.801 billion in 2021, primarily due to proceeds from short-term and long-term debt, partially offset by repayments of convertible preferred notes and other debts[166] - The company's cash, cash equivalents, and restricted cash decreased by RMB 55 million ($7 million) in 2022, ending the year with RMB 5.086 billion ($738 million)[163] - Capital expenditures for 2020, 2021, and 2022 were RMB 1,776 million, RMB 1,675 million, and RMB 1,053 million (USD 153 million) respectively, with 2022 including RMB 1,049 million (USD 152 million) for property and equipment and RMB 4 million (USD 1 million) for software and licenses[167] - Variable interest entities contributed less than 2% of the company's retained earnings for 2020, 2021, and 2022[168] - Subsidiaries paid approximately RMB 29 million, RMB 34 million, and RMB 30 million (USD 4 million) to variable interest entities for telecommunications and internet-related services in 2020, 2021, and 2022 respectively[169] - Variable interest entities lent approximately RMB 14 million, RMB 21 million, and RMB 2 million (USD 0.3 million) to subsidiaries in 2020, 2021, and 2022 respectively, with subsidiaries repaying RMB 3 million, RMB 7 million, and RMB 5 million (USD 1 million) in the same periods[169] - Subsidiaries borrowed approximately RMB 6,267 million, RMB 1,050 million, and RMB 750 million (USD 109 million) from the company in 2020, 2021, and

Hotel Operations - As of December 31, 2022, the company operated 8,543 hotels with a total of 809,478 rooms[2] - As of December 31, 2022, Legacy-Huazhu operated 8,411 hotels with a total of 783,174 rooms, including 2,544 hotels under development[5] - As of December 31, 2022, there were 2,580 hotels in the pipeline, including 2,544 from Legacy-Huazhu and 36 from Legacy-DH[4] - The company operates 13% of its hotel rooms under lease and ownership models, while 87% are managed through franchise and management agreements[25] - The economy hotel segment includes 4,948 hotels with 389,383 rooms and 1,066 hotels under development[48] - The mid-range hotel segment consists of 2,898 hotels with 317,117 rooms and 1,146 hotels in the pipeline[48] - The upscale hotel segment has 134 hotels with 21,609 rooms and 72 hotels under development[48] - The company has 3,257 Hanting hotels with 288,956 rooms and 652 hotels in the pipeline[48] - The company has 456 Haiyou hotels with 23,998 rooms and 170 hotels under development[48] - The company has 567 Xingcheng hotels with 47,378 rooms and 242 hotels in the pipeline[48] - The company has 1,694 Quanjing hotels with 199,581 rooms and 611 hotels under development[48] - The company has 85 Ibis Styles hotels with 8,864 rooms and 25 hotels in the pipeline[48] - The company has 10 other hotels with 3,584 rooms and 5 hotels under development[49] Financial Performance - In Q4 2022, hotel revenue increased by 10.5% year-over-year to RMB 13.1 billion, while full-year revenue rose by 9.3% to RMB 49.6 billion[2] - For the full year 2022, the company reported a full-year net loss of RMB 1.8 billion, down from a net loss of RMB 465 million in 2021[2] - The company expects Q1 2023 revenue to grow between 61% to 65% year-over-year, or 53% to 57% excluding DH[3] - For the full year 2023, the company projects revenue growth of 42% to 46%, or 46% to 50% excluding DH[20] - The company reported a total revenue for the year ended December 31, 2022, of RMB 13,862 million, a decrease from RMB 14,785 million in 2021, representing a decline of 6.2%[36] - The operating profit for the year ended December 31, 2022, was RMB (294) million, compared to RMB 164 million in 2021, indicating a significant decrease[36] - The net profit attributable to Huazhu Group Limited for the year ended December 31, 2022, was RMB (1,821) million, compared to RMB (465) million in 2021[36] Costs and Expenses - In Q4 2022, hotel operating costs were RMB 3.43 billion (approximately USD 496 million), an increase from RMB 3.2 billion in Q4 2021 and RMB 3.0 billion in Q3 2022[11] - For the full year 2022, hotel operating costs totaled RMB 12.26 billion (approximately USD 1.8 billion), compared to RMB 11.28 billion in 2021[12] - In Q4 2022, sales and marketing expenses were RMB 169 million (approximately USD 25 million), down from RMB 183 million in Q4 2021 and RMB 181 million in Q3 2022[12] - For the full year 2022, sales and marketing expenses were RMB 613 million (approximately USD 89 million), a decrease from RMB 641 million in 2021[12] - In Q4 2022, general and administrative expenses were RMB 440 million (approximately USD 64 million), slightly up from RMB 438 million in Q4 2021 and RMB 405 million in Q3 2022[13] - For the full year 2022, general and administrative expenses reached RMB 1.7 billion (approximately USD 243 million), compared to RMB 1.5 billion in 2021[13] EBITDA and Adjusted EBITDA - EBITDA for Q4 2022 was RMB 529 million, significantly up from RMB 46 million in Q4 2021[3] - The adjusted EBITDA for Q4 2022 was RMB 398 million, compared to RMB 278 million in Q4 2021[3] - The adjusted EBITDA for the year ended December 31, 2022, was RMB 610 million, down from RMB 1,571 million in 2021[36] - The company emphasizes the importance of EBITDA as a financial metric to assess operational and financial performance before financing transactions and tax impacts[23] - Adjusted EBITDA is defined as EBITDA excluding stock-based compensation and unrealized gains (losses) from equity securities, providing a clearer view of hotel operating performance[23] - The company believes that adjusted EBITDA better reflects the operational capabilities of its hotels, as it excludes significant fluctuations from stock-based compensation and equity securities[23] Cash Flow and Liquidity - As of December 31, 2022, total cash and cash equivalents amounted to RMB 3.6 billion (equivalent to $520 million)[19] - The net cash generated from operating activities for Q4 2022 was RMB 1,042 million, a significant increase from RMB 452 million in Q3 2022[31] - The company experienced a cash decrease of RMB 131 million in Q4 2022, following an increase of RMB 537 million in Q3 2022[32] - The total cash and cash equivalents at the end of Q4 2022 were RMB 5,086 million, down from RMB 5,217 million at the end of Q3 2022[32] Debt and Equity - As of December 31, 2022, total debt was RMB 9.9 billion (equivalent to $1.4 billion)[19] - Long-term debt rose significantly from RMB 3,565 million in 2021 to RMB 6,635 million in 2022, an increase of about 86.63%[28] - Total equity decreased from RMB 11,044 million in 2021 to RMB 8,803 million in 2022, a decline of approximately 20.03%[28] Hotel Performance Metrics - In Q4 2022, the average daily rate (ADR) for Legacy-Huazhu hotels was RMB 240, a slight increase from RMB 239 in Q4 2021, but a decrease from RMB 254 in Q3 2022[5] - The occupancy rate for all operating Legacy-Huazhu hotels in Q4 2022 was 66.2%, down from 68.2% in Q4 2021 and 76.0% in Q3 2022[5] - The average revenue per available room (RevPAR) for the Legacy-Huazhu business in Q4 2022 returned to approximately 83% of 2019 levels, with monthly figures of 74%, 87%, and 91% for October, November, and December respectively[20] - The average occupancy rate for the total portfolio was 66.7%, down 5.3 percentage points compared to the previous year[42] - The average daily room rate for managed and franchised hotels increased by 3.0% to RMB 231 for the year ending December 31, 2022[41] - The average daily room revenue for economy hotels decreased by 13.6% to $123 for the year ending December 31, 2022, compared to $142 for the year ending December 31, 2021[43]

Hotel Operations - As of September 30, 2022, the company operated 8,402 hotels with a total of 797,489 rooms[5] - The company opened 429 hotels in Q3 2022, while closing 204 hotels during the same period[5] - The total number of hotels as of September 30, 2022, is 8,402, with 797,489 rooms and 2,313 hotels in the pipeline[48] - The total number of temporarily closed hotels as of September 30, 2022, is 4, due to renovations and seasonal closures[46] - The total number of hotels as of September 30, 2022, was 8,276, with a net increase of 225 hotels compared to the previous year[40] Financial Performance - Total revenue for Q3 2022 grew by 16.2% year-over-year to RMB 4.1 billion (approximately USD 575 million), aligning with previous guidance of 13% to 17% growth[2] - The net loss attributable to the company for Q3 2022 was RMB 717 million (approximately USD 101 million), compared to a net loss of RMB 137 million in Q3 2021[3] - Adjusted EBITDA for Q3 2022 was RMB 491 million (approximately USD 69 million), up from RMB 385 million in Q3 2021[4] - The company's operating profit for Q3 2022 was RMB 500 million (approximately USD 70 million), compared to RMB 72 million in Q3 2021 and RMB 8 million in Q2 2022, with an operating profit margin of 12.2%[16] - The company reported a significant increase in user data, with a notable rise in hotel management and franchise operations contributing to revenue growth[33] Revenue Metrics - Hotel revenue for Q3 2022 increased by 24.4% year-over-year to RMB 15.2 billion, while excluding Steigenberger Hotels AG, the growth was 21.6%[2] - Revenue from the Legacy-Huazhu segment in Q3 2022 was RMB 3,200 million, a year-over-year increase of 7.7% and a quarter-over-quarter increase of 28.4%[10] - The Legacy-DH segment reported revenue of RMB 932 million in Q3 2022, a year-over-year increase of 58.2% and a quarter-over-quarter increase of 1.2%[10] - The management franchise and licensed hotel revenue in Q3 2022 was RMB 1,313 million, a year-over-year increase of 16.4% and a quarter-over-quarter increase of 38.9%[11] Occupancy and Rates - The average daily rate (ADR) for Legacy-Huazhu hotels in Q3 2022 was RMB 254, compared to RMB 246 in Q3 2021[6] - The occupancy rate for all operating Legacy-Huazhu hotels in Q3 2022 was 76.0%, up from 71.9% in Q3 2021[6] - Average revenue per available room (RevPAR) in China recovered to 90% of 2019 levels in Q3 2022, driven by pent-up leisure travel demand during July and August, but slowed to 74% in October due to COVID-19 resurgence[9] - The average daily room rate for leased hotels increased by 19.7% year-over-year to €112.9 as of September 30, 2022[47] - The occupancy rate for leased hotels improved by 19.5 percentage points year-over-year to 67.4% as of September 30, 2022[47] Cash Flow and Debt - Operating cash inflow for Q3 2022 was RMB 452 million (approximately USD 64 million), while investment cash outflow was RMB 525 million (approximately USD 74 million)[21] - As of September 30, 2022, the total cash and cash equivalents amounted to RMB 5.2 billion (approximately USD 728 million) and restricted cash was RMB 400 million (approximately USD 6 million)[21] - The total debt balance as of September 30, 2022, was RMB 11.2 billion (approximately USD 1.6 billion), with available undrawn credit facilities of RMB 2.9 billion[21] - The company’s long-term debt rose to RMB 6,091 million as of September 30, 2022, from RMB 3,565 million as of December 31, 2021[32] Future Outlook - The company expects Q4 2022 revenue to grow by 7% to 11% year-over-year, or decline by 1% to 5% excluding DH[4] - The company plans to focus on cost control and cautious capital expenditure to ensure operational and cash flow safety amid ongoing COVID-19 challenges[9] - The company plans to expand its market presence and enhance customer retention strategies in the upcoming quarters[30] Non-GAAP Measures - The company believes that adjusted EBITDA better reflects the operational performance of its hotels, excluding the impact of stock-based compensation and unrealized gains or losses from equity securities[26] - The company emphasizes that EBITDA and adjusted EBITDA should not be viewed as indicators of future performance, as they do not account for depreciation, amortization, taxes, and interest expenses[27] - The company aims to enhance transparency in financial and operational decision-making by providing non-GAAP financial measures[25]

Financial Performance - In Q2 2022, hotel revenue decreased by 10.3% year-over-year to RMB 11.8 billion; excluding Steigenberger Hotels AG, the decline was 18.9%[4] - Revenue for Q2 2022 was RMB 3.4 billion (approximately $504 million), down 5.7% year-over-year, aligning with previous guidance of a 2% to 6% decline[4] - The net loss attributable to the company in Q2 2022 was RMB 350 million (approximately $52 million), compared to a net profit of RMB 378 million in Q2 2021[5] - Adjusted EBITDA for Q2 2022 was RMB 53 million (approximately $7 million), down from RMB 1 billion in Q2 2021[6] - Total revenue for Q2 2022 was RMB 3.382 billion (approximately $504 million), a year-over-year decrease of 5.7% but a quarter-over-quarter increase of 26.1%[13] - Revenue from the Legacy-DH segment in Q2 2022 was RMB 921 million, a year-over-year increase of 311.2% and a quarter-over-quarter increase of 126.8%[13] - Operating profit for Q2 2022 was RMB 8 million (approximately USD 1 million), a significant decrease from RMB 629 million in Q2 2021 and a loss of RMB 708 million in Q1 2022[21] - The operating profit margin for Q2 2022 was 0.2%, down from 17.5% in Q2 2021 and negative 26.4% in Q1 2022[22] - The company reported a basic loss per share of RMB 0.11 for the quarter ended June 30, 2022, compared to earnings of RMB 0.12 in the same quarter of 2021[43] Hotel Operations - As of June 30, 2022, the company operated 8,176 hotels with a total of 773,898 rooms[8] - The company opened 269 hotels in Q2 2022 while closing 86 hotels during the same period[8] - As of June 30, 2022, there were 2,236 hotels under development, including 2,199 from Legacy-Huazhu[8] - The average daily rate (ADR) for Legacy-Huazhu hotels in Q2 2022 was RMB 218, down from RMB 255 in Q2 2021[9] - The occupancy rate for all operating Legacy-Huazhu hotels in Q2 2022 was 64.6%, compared to 82.3% in Q2 2021[9] - The average daily rate was €110, up from €82 in Q2 2021 and €88 in Q1 2022[11] - The occupancy rate for all operating Legacy-DH hotels in Q2 2022 was 59.8%, compared to 24.4% in Q2 2021 and 38.0% in Q1 2022[11] - The company has paused providing full-year revenue and hotel opening guidance due to the impact of COVID-19 and related policies[31] Costs and Expenses - In Q2 2022, hotel operating costs were RMB 3 billion (approximately USD 443 million), an increase from RMB 2.7 billion in Q2 2021 and RMB 2.8 billion in Q1 2022[17] - For the first half of 2022, hotel operating costs totaled RMB 5.8 billion (approximately USD 864 million), compared to RMB 5.2 billion in the same period of 2021[18] - General and administrative expenses in Q2 2022 were RMB 368 million (approximately USD 55 million), compared to RMB 392 million in Q2 2021 and RMB 462 million in Q1 2022[19] - Total operating costs and expenses for the quarter ended June 30, 2022, were RMB 3,528 million, up from RMB 3,320 million in the same quarter of 2021[42] Cash Flow and Debt - Operating cash inflow for Q2 2022 was RMB 989 million (approximately USD 147 million)[27] - As of June 30, 2022, the total cash and cash equivalents amounted to RMB 4.6 billion (approximately USD 693 million), with restricted cash of RMB 38 million (approximately USD 6 million)[29] - The total debt balance as of June 30, 2022, was RMB 10.4 billion (approximately USD 1.6 billion), with available undrawn credit facilities of RMB 3 billion[29] - Cash and cash equivalents decreased from RMB 5,116 million at the end of 2021 to RMB 4,642 million by June 30, 2022, a reduction of about 9.3%[40] - Short-term debt increased from RMB 6,232 million to RMB 6,707 million, reflecting a rise of about 7.6%[41] - Huazhu's long-term debt increased from RMB 3,565 million to RMB 3,696 million, representing a rise of approximately 3.7%[41] Market Strategy and Future Outlook - The company expects Q3 2022 revenue to grow by 13% to 17% year-over-year, or 5% to 9% excluding DH[6] - The company plans to accelerate the exit from the economy soft brand hotel market within the next one to two years to improve overall hotel quality[12] - The company has outlined growth strategies that include enhancing customer retention and leveraging brand strength, although specific numerical targets were not disclosed[39] - The company continues to explore new strategies for market expansion and product development[61] Non-GAAP Measures and Financial Metrics - The company emphasizes the importance of EBITDA as a financial metric, which reflects operational and financial performance before financing transactions and tax impacts[33] - Adjusted EBITDA is used to evaluate the operating performance of hotels, excluding stock-based compensation and unrealized gains or losses from equity securities[34] - The company believes that adjusted EBITDA provides a more accurate reflection of hotel performance capabilities[34] - The company uses non-GAAP financial measures to provide meaningful supplemental information about its performance[36] - The company believes that the use of non-GAAP measures enhances transparency in financial and operational decision-making[36] Impairment and Investment - The company experienced a substantial increase in impairment losses, reporting RMB 91 million for the six months ended June 30, 2022, compared to RMB 9 million for the same period in 2021[44] - The company reported a significant increase in investment income, with a profit of RMB 531 million for the six months ended June 30, 2022, compared to a loss of RMB 314 million for the same period in 2021[44]

Hotel Operations - As of March 31, 2022, the company operated 7,988 hotels with a total of 764,859 rooms[2] - Legacy-Huazhu opened 302 hotels in Q1 2022 while closing 140 hotels during the same period[5] - As of March 31, 2022, there were 2,271 hotels under development, including 2,226 from Legacy-Huazhu[5] - The total number of hotels as of March 31, 2022, remained at 5,225, with an average revenue per available room (RevPAR) of 131, reflecting an 8.9% year-over-year decline[50] - The economy segment includes 4,824 operating hotels with 388,174 rooms and 951 hotels planned[55] - The mid-range segment has 2,554 operating hotels with 281,168 rooms and 977 hotels in development[55] - The upscale segment consists of 115 operating hotels with 20,691 rooms and 62 hotels planned[55] - The company has 3,096 Hanting hotels with 277,885 rooms and 608 hotels in the pipeline[55] - The company has a total of 447 Haiyou hotels with 24,682 rooms and 117 hotels planned[55] - The company has 83 Nihao hotels with 5,772 rooms and 178 hotels in the pipeline[55] Financial Performance - In Q1 2022, hotel revenue increased by 16.4% year-over-year to RMB 9.5 billion, and excluding Steigenberger Hotels AG, revenue grew by 11.4%[2] - Total revenue for Q1 2022 rose by 15.2% year-over-year to RMB 2.7 billion (approximately USD 423 million), aligning with previous guidance of 11% to 15% growth[2] - The net loss attributable to Huazhu Group in Q1 2022 was RMB 630 million (approximately USD 99 million), compared to a net loss of RMB 248 million in Q1 2021[3] - Adjusted EBITDA for Q1 2022 was a negative RMB 333 million (approximately USD 53 million), worsening from a negative RMB 133 million in Q1 2021[4] - The operating loss for Q1 2022 was RMB 708 million (approximately USD 112 million), compared to an operating loss of RMB 575 million in Q1 2021[17] - The operating profit margin for Q1 2022 was -26.4%, compared to -24.7% in Q1 2021[17] - The company anticipates a revenue decline of 2% to 6% for Q2 2022 compared to Q2 2021, or a decline of 23% to 27% excluding DH[4] - In Q1 2022, the net loss attributable to Huazhu Group Limited was RMB 630 million (approximately USD 99 million), compared to a net loss of RMB 248 million in Q1 2021 and RMB 459 million in the previous quarter[19] - The adjusted basic and diluted loss per share for Q1 2022 was RMB 0.21 (approximately USD 0.03) excluding stock-based compensation and unrealized gains/losses on equity securities[20] Revenue Metrics - The average daily rate (ADR) for Legacy-Huazhu hotels in Q1 2022 was RMB 224, compared to RMB 209 in Q1 2021[6] - The occupancy rate for all operating Legacy-Huazhu hotels in Q1 2022 was 59.2%, down from 66.2% in Q1 2021[6] - Revenue from Legacy-Huazhu in Q1 2022 was RMB 2.3 billion, a year-over-year increase of 4.6% and a quarter-over-quarter decrease of 18.0%[11] - Revenue from Legacy-DH in Q1 2022 was RMB 406 million, showing a significant year-over-year increase of 165.4% but a quarter-over-quarter decrease of 29.0%[11] - Average revenue per available room (RevPAR) for Legacy-DH in April 2022 recovered to 80% of 2019 levels, up from 47% in January 2022[10] - The average revenue per available room (RevPAR) for leased and owned hotels was RMB 149, a decrease of 4.4% from RMB 156 in the same quarter of 2021[49] - The average daily rate (ADR) for leased and owned hotels was RMB 263, an increase of 8.0% compared to RMB 243 in the same quarter of 2021[49] - The midscale hotel segment saw a RevPAR decline of 9.4% to 164, with an ADR of 177, down 9.9%, and an occupancy rate decrease of 7.6 percentage points to 56.8%[50] Cost Management - Operating costs in Q1 2022 totaled RMB 3.434 billion, compared to RMB 2.931 billion in Q1 2021, reflecting an increase due to the expansion of Legacy-Huazhu and the recovery of Legacy-DH[14][15] - The company implemented cost control measures, including staff reductions and resource allocation to key strategies, in response to the challenges posed by the Omicron variant[10] - Management fees were deferred to support franchisees during difficult times, alongside legal support for rent negotiations and tax refund applications[10] - The company is implementing various cost and cash flow management measures to mitigate risks associated with the ongoing COVID-19 situation[24] Cash Flow and Liquidity - Operating cash outflow in Q1 2022 was RMB 921 million (approximately USD 144 million)[22] - As of March 31, 2022, the total cash and cash equivalents amounted to RMB 4.1 billion (approximately USD 651 million) and restricted cash was RMB 240 million (approximately USD 4 million)[22] - The total debt balance as of March 31, 2022, was RMB 10.1 billion (approximately USD 1.6 billion) with available undrawn credit facilities of RMB 3 billion[23] - The company reported a net cash used in operating activities for Q1 2022 was RMB (921) million, compared to RMB 867 million generated in Q4 2021[40] - The company reported a net cash used in investing activities of RMB (201) million in Q1 2022, a decline from RMB (503) million in Q4 2021[40] - The financing activities resulted in a net cash inflow of RMB 146 million in Q1 2022, a recovery from a net outflow of RMB (598) million in Q4 2021[40] Strategic Focus - The company remains focused on long-term "lean growth" strategies, emphasizing customer, franchisee, and employee engagement[10] - The company plans to focus on expanding its market presence and enhancing its product offerings in the upcoming quarters[38] - The company is focusing on increasing its market share in the mid-range and upscale segments through new hotel openings and acquisitions[55] - The company is committed to enhancing its brand portfolio and improving operational efficiency across all segments[55]

Hotel Network Expansion - The company expanded its hotel network from 5,618 hotels as of December 31, 2019, to 7,830 hotels (including 124 Legacy DH hotels) as of December 31, 2021, with a compound annual growth rate of 18.1%[3] - As of December 31, 2021, the company had 7,830 operating hotels, including 738 leased and owned hotels and 7,092 managed and franchised hotels, totaling 753,216 hotel rooms[3] - The company is developing an additional 2,608 new hotels, including 46 leased and owned hotels and 2,562 managed and franchised hotels[3] - From December 31, 2019, to December 31, 2021, the company added a net total of 2,212 hotels (including 124 Legacy DH hotels), with 97.7% being managed and franchised hotels[8] - The company's hotel network has grown to 7,830 hotels as of December 31, 2021, covering 811 cities across 31 provinces and municipalities in Greater China and 16 other countries[13] - The company has 2,608 hotels under development, including 46 leased and owned hotels and 2,562 managed and franchised hotels[13] - In Greater China, the company operates 661 leased and owned hotels, 6,796 managed hotels, and 247 franchised hotels, with 2,552 hotels under development[15] - Outside Greater China, the company operates 77 leased and owned hotels, 28 managed hotels, and 21 franchised hotels, with 38 hotels under development[15] - The company has 1,702 hotels in the pre-conversion phase and 906 hotels in the conversion phase, totaling 2,608 hotels under development[18] - The company's hotel network expanded from 5,618 hotels as of December 31, 2019, to 7,830 hotels as of December 31, 2021, with a compound annual growth rate of 18.1%[134] - The company had 7,830 operating hotels as of December 31, 2021, including 738 leased and owned hotels and 7,092 managed and franchised hotels, totaling 753,216 hotel rooms[134] - The company is developing an additional 2,608 new hotels, including 46 leased and owned hotels and 2,562 managed and franchised hotels[134] - Total operating hotels increased from 5,618 in 2019 to 7,706 in 2021, with leased and owned hotels decreasing slightly from 688 to 662[145] - Total operating hotel rooms grew from 536,876 in 2019 to 728,143 in 2021, with leased and owned hotel rooms increasing from 87,465 to 91,284[145] - Available hotel room nights for sale rose from 171,660,048 in 2019 to 234,841,153 in 2021, with leased and owned hotels contributing 32,818,789 room nights in 2021[145] - As of December 31, 2021, the company had 46 leased and owned hotels under development[156] - The company had 2,562 managed and franchised hotels under development as of December 31, 2021[159] Membership Program - The company's membership program, Huazhu Club, had over 193 million members as of December 31, 2021, and accounted for approximately 75% of Legacy Huazhu's room nights sold in 2021[7] - Huazhu's loyalty program, Huazhu Club, had over 193 million members as of December 31, 2021, with approximately 75% of Legacy Huazhu's room nights sold to members in 2021[70] - The company's Huazhu Club had over 150 million members by 2019[126] Financial Performance - The company's total revenue for 2019, 2020, and 2021 was RMB 11,212 million, RMB 10,196 million, and RMB 12,785 million (USD 2,006 million), respectively[9] - The company reported net losses attributable to Huazhu Group of RMB 2,192 million in 2020 and RMB 465 million (USD 73 million) in 2021[9] - Adjusted EBITDA (non-GAAP) for 2019, 2020, and 2021 was RMB 3,349 million, negative RMB 244 million, and RMB 1,571 million (USD 247 million), respectively[9] - Net cash generated from operating activities for 2019, 2020, and 2021 was RMB 3,293 million, RMB 609 million, and RMB 1,342 million (USD 210 million), respectively[9] - Total revenue for 2019, 2020, and 2021 was RMB 11,212 million, RMB 10,196 million, and RMB 12,785 million (USD 2,006 million), respectively[135] - Net profit attributable to Huazhu Group was RMB 1,769 million in 2019, a net loss of RMB 2,192 million in 2020, and a net loss of RMB 465 million (USD 73 million) in 2021[135] - Adjusted EBITDA (non-GAAP) for 2019, 2020, and 2021 was RMB 3,349 million, negative RMB 244 million, and RMB 1,571 million (USD 247 million), respectively[135] - Total revenue increased by 25.4% from RMB 10,196 million in 2020 to RMB 12,785 million (USD 2,006 million) in 2021, driven by the recovery from COVID-19 in China[182] - Revenue from leased and owned hotels increased by 17.5% from RMB 6,908 million in 2020 to RMB 8,118 million (USD 1,274 million) in 2021, primarily due to the easing impact of COVID-19 in China[183] - Legacy Huazhu's total revenue from leased and owned hotels (excluding government requisitioned hotels) increased by 22.7% to RMB 6,674 million (USD 1,047 million) in 2021 compared to 2020[183] - Legacy Huazhu's total revenue in 2021 was RMB 11,247 million (USD 1,765 million), a 29.8% increase from 2020[182] - Operating profit (loss) was RMB 164 million (USD 26 million) in 2021, compared to a loss of RMB 1,686 million in 2020[180] - Net profit (loss) attributable to Huazhu Group Limited was a loss of RMB 465 million (USD 73 million) in 2021, compared to a loss of RMB 2,192 million in 2020[180] - Total operating costs and expenses increased to RMB 13,607 million (USD 2,135 million) in 2021, representing 106.4% of total revenue[180] - Hotel operating costs accounted for 88.3% of total revenue in 2021, amounting to RMB 11,282 million (USD 1,770 million)[180] - General and administrative expenses increased to RMB 1,545 million (USD 242 million) in 2021, representing 12.1% of total revenue[180] - Total revenue from managed and franchised hotels increased by 40.4% from RMB 3,136 million in 2020 to RMB 4,404 million (USD 691 million) in 2021, driven by the easing impact of COVID-19[184] - Legacy Huazhu's revenue from managed and franchised hotels reached RMB 4,342 million (USD 681 million) in 2021, a 40.4% increase compared to 2020[184] - Legacy-DH's revenue from managed and franchised hotels increased by 44.2% to RMB 62 million in 2021, attributed to the strong recovery of leisure travel, particularly in Egypt[184] - Other income rose by 73.0% from RMB 152 million in 2020 to RMB 263 million in 2021[184] - Total operating costs and expenses increased by 14.1% from RMB 11,925 million in 2020 to RMB 13,607 million (USD 2,135 million) in 2021[184] - Hotel operating costs increased by 16.0% from RMB 9,729 million in 2020 to RMB 11,282 million (USD 1,770 million) in 2021, primarily due to higher rental costs for upscale hotels and CitiGO hotels, increased employee costs, and impairment losses related to Legacy DH[184] - Sales and marketing expenses increased by 7.4% from RMB 597 million in 2020 to RMB 641 million (USD 101 million) in 2021, but decreased as a percentage of total revenue from 5.9% to 5.0%[185] - General and administrative expenses rose by 22.7% from RMB 1,259 million in 2020 to RMB 1,545 million (USD 242 million) in 2021, mainly due to investments in development teams, IT, and upscale hotel segments[185] - Operating profit for 2021 was RMB 164 million (USD 26 million), compared to an operating loss of RMB 1,686 million in 2020, with Legacy Huazhu contributing an operating profit of RMB 891 million (USD 140 million)[186] - EBITDA (non-GAAP) for 2021 was RMB 1,366 million (USD 215 million), a significant improvement from a negative RMB 631 million in 2020, with adjusted EBITDA (non-GAAP) reaching RMB 1,571 million (USD 247 million)[192] - Total revenue decreased by 9.1% from RMB 11,212 million in 2019 to RMB 10,196 million in 2020, primarily due to the impact of COVID-19 on hotel occupancy and average daily rate (ADR), as well as temporary closures of many hotels in China[193] - Revenue from leased and owned hotels decreased by 10.5% from RMB 7,718 million in 2019 to RMB 6,908 million in 2020, with ADR dropping from RMB 240 in 2019 to RMB 166 in 2020[194] - Revenue from managed and franchised hotels decreased by 6.2% from RMB 3,342 million in 2019 to RMB 3,136 million in 2020, with ADR dropping from RMB 188 in 2019 to RMB 146 in 2020[195] - Total operating costs and expenses increased by 29.1% from RMB 9,236 million in 2019 to RMB 11,925 million in 2020, primarily due to the consolidation of Deutsche Hospitality[195] - Hotel operating costs increased by 35.3% from RMB 7,190 million in 2019 to RMB 9,729 million in 2020, with the cost-to-revenue ratio rising from 64.1% in 2019 to 95.4% in 2020[196] - Sales and marketing expenses increased by 40.1% from RMB 426 million in 2019 to RMB 597 million in 2020, with the expense-to-revenue ratio rising from 3.8% in 2019 to 5.9% in 2020[198] - General and administrative expenses increased by 18.7% from RMB 1,061 million in 2019 to RMB 1,259 million in 2020, with the expense-to-revenue ratio rising from 9.5% in 2019 to 12.3% in 2020[198] - Pre-opening expenses decreased by 42.6% from RMB 502 million in 2019 to RMB 288 million in 2020, with the expense-to-revenue ratio dropping from 4.5% in 2019 to 2.8% in 2020[199] - The company recorded a goodwill impairment loss of RMB 437 million in 2020 related to the acquisition of Deutsche Hospitality[199] - Net interest expense increased from RMB 155 million in 2019 to RMB 414 million in 2020, primarily due to increased bank borrowings and the issuance of 2026 notes[199] COVID-19 Impact - Approximately 98% of Legacy Huazhu hotels in China (excluding those requisitioned by the government) had resumed operations by December 31, 2021[20] - As of December 31, 2021, 147 hotels in China were requisitioned by the government for COVID-19 related purposes[20] - All Deutsche Hospitality hotels in Europe that were temporarily closed due to COVID-19 had resumed operations by December 31, 2021[20] - The company's occupancy rate (excluding requisitioned hotels) dropped to approximately 59% in March 2022 due to COVID-19 outbreaks and city lockdowns in China[77] - As of March 31, 2022, 1,299 Legacy Huazhu hotels were requisitioned by the government for quarantine and medical purposes[78] - The average RevPAR (Revenue per Available Room) for Deutsche Hospitality hotels recovered to 65% of 2019 levels in March 2022, up from 47% in January 2022[80] - Over 2,000 hotels were temporarily closed during the peak of the COVID-19 outbreak in February 2020[77] - The company implemented cost-saving measures, including rent reductions, deferred payments, and workforce optimization, to mitigate COVID-19 impacts[79] - Deutsche Hospitality hotels resumed operations by December 31, 2021, after temporary closures due to COVID-19[79] - The company provided smart non-contact services and financial support to franchisees, including low-interest loans, to maintain hotel operations[78] - Government relief measures, such as wage subsidies and insurance compensations, partially offset the negative impacts of COVID-19 on operations[79] - The company secured exemptions from bank agreements and additional low-interest credit facilities to manage financial challenges during the pandemic[80] - COVID-19-related travel restrictions and lockdowns in Europe disrupted the recovery of Deutsche Hospitality's operations in Q4 2021[79] - Due to COVID-19, 610 hotels in China were temporarily closed in Q1 2020, and 147 hotels in China were requisitioned by the government as of December 31, 2021[142] - Legacy Huazhu's available room nights, excluding requisitioned or temporarily closed hotels, were 234.8 million as of December 31, 2021[142] - Legacy DH's available room nights, excluding a small number of hotels temporarily closed for reasons unrelated to COVID-19, were 8 million as of December 31, 2021[143] Franchise and Management Agreements - The company charges franchisees an initial franchise fee ranging from RMB 80,000 to RMB 1,000,000 per hotel and a monthly franchise fee of approximately 3% to 6.5% of the total revenue generated by each managed franchised hotel[26] - The company's franchise and managed franchise agreements typically have an initial term of 8 to 10 years, which can be extended upon mutual agreement between the company and the franchisee[26] - For Deutsche Hospitality's managed franchised hotels, the company charges a base fee of 0.5% to 3.5% of the hotel's revenue and an incentive fee of 6% to 10% of the hotel's adjusted total operating profit[27] - The company is gradually revising the terms of Deutsche Hospitality's franchise and management agreements to align with those of its other managed franchised hotels[27] - The company's franchise agreements for franchised hotels typically have an initial term of 8 to 10 years, which can be extended upon mutual agreement between the company and the franchisee[29] - Deutsche Hospitality franchisees typically pay a franchise fee of 0.5% to 4.0% of total room revenue or turnover, with some international hotels charged a fixed fee ranging from €40,000 to €150,000 annually[30] - The company charges franchisees an upfront franchise fee ranging from RMB 80,000 to RMB 1,000,000 per hotel for Legacy Huazhu managed franchise hotels, with monthly franchise fees of approximately 3% to 6.5% of total revenue generated by each hotel[161] - For Deutsche Hospitality managed franchise hotels, franchisees historically pay a base fee of 0.5% to 3.5% of the hotel's revenue and an incentive fee of 6% to 10% of the hotel's adjusted total operating profit[162] - The company is gradually adjusting the terms of Deutsche Hospitality's franchise and management agreements to align with those of other managed franchise hotels[162] - For Legacy Huazhu franchise hotels, the company charges fees similar to those for managed franchise hotels, but does not appoint hotel managers or charge monthly management service fees[163] - For Deutsche Hospitality franchise hotels, franchisees historically pay a franchise fee of approximately 0.5% to 4.0% of the hotel's total room revenue or turnover, with some hotels outside Germany paying a fixed annual franchise fee ranging from EUR 40,000 to EUR 150,000[164] Technology and Innovation - The company has implemented a proprietary, scalable technology infrastructure, leveraging advanced technologies like AI, big data, and IoT to enhance operational efficiency and profitability[61] - A global business integration plan was launched in 2021 to combine the company's rapid growth and digital expertise with Deutsche Hospitality's service excellence and international network[61] - The company's CRM system tracks member data, including booking history, spending patterns, and loyalty points, to provide targeted promotions and improve customer loyalty[61] - The company's Central Reservation System (CRS) operates 24/7, enabling real-time inventory management and improving booking efficiency, customer satisfaction, and profitability[62] - The Central Revenue Management System (RMS) automatically adjusts room rates across the hotel network in minutes, optimizing average daily rate (ADR) and occupancy rates[62] - The Central Procurement System (CPS) is one of the largest in China's hospitality industry, enabling cost-effective bulk purchasing of supplies[63] - The Cloud Property Management System (Cloud-PMS) integrates with CRS and CRM, enhancing operational efficiency and profitability across the hotel network[64] - The "Easy Room" digital system reduces the time between check-out and check-in, improving room turnover efficiency[65] - The company has deployed AI-driven smart robots in hotels to enhance operational efficiency and guest experience[65] - The AI-powered smart assistant, integrated into the mobile app, improves guest interaction and experience[66] - The company's payment systems comply with PCI DSS standards, and it holds ISO27001 and ISO27701 certifications for data security[67] -

Hotel Operations and Development - As of December 31, 2020, the total number of operating hotels reached 6,789, representing a compound annual growth rate (CAGR) of 26.7% from 4,230 hotels as of December 31, 2018[3]. - The company has a total of 652,162 hotel rooms across its operating hotels as of December 31, 2020[3]. - The company is developing 2,449 new hotels, including 44 leased and owned hotels and 2,405 management franchise hotels[3]. - From December 31, 2018, to December 31, 2020, the company net added 2,559 hotels, with 97.9% being management franchise and franchised hotels[5]. - The hotel network expanded to 6,789 hotels across 32 provinces and municipalities in Greater China and 15 other countries as of December 31, 2020[9]. - The number of managed franchise hotels increased significantly from 1,376 in 2014 to 5,746 in 2020[8]. - As of December 31, 2020, the company operated 6,667 hotels in China, with approximately 99% of Legacy Huazhu hotels having resumed operations after COVID-19 disruptions[13]. - The company had 753 leased hotels and 7 owned hotels, accounting for about 11.1% of its operating hotels as of December 31, 2020[14]. - The company managed 5,746 franchised hotels and 290 licensed hotels, representing approximately 84.6% and 4.3% of its operating hotels, respectively[16]. - The company operates over 20 distinct hotel brands, catering to various market segments, including economy, midscale, and upscale[3]. Financial Performance - In 2020, the company reported a net income of RMB 10,196 million (approximately USD 1,563 million), a decrease from RMB 11,212 million in 2019, primarily due to the impact of COVID-19[6]. - The adjusted EBITDA for 2020 was negative RMB 244 million (approximately USD 35 million), compared to RMB 3,349 million in 2019[6]. - The company reported a net loss of RMB 2,204 million in 2020, compared to a net profit of RMB 1,761 million in 2019[103]. - Net revenue for 2020 was RMB 10,196 million, a decrease of 9.0% compared to RMB 11,212 million in 2019[103]. - Operating costs and expenses increased to RMB 11,925 million in 2020, up 29.0% from RMB 9,236 million in 2019[103]. - The company’s basic earnings per share (EPS) for 2020 was a loss of RMB 7.49, compared to a profit of RMB 6.22 in 2019[103]. - The company’s net profit attributable to the parent company for 2020 was a loss of RMB 2,192 million, compared to a profit of RMB 1,769 million in 2019[138]. - The company generated net cash from operating activities of RMB 609 million in 2020, a decrease from RMB 3,293 million in 2019[105]. - The company incurred interest expenses of RMB 533 million in 2020, up from RMB 315 million in 2019[138]. Impact of COVID-19 - The company has engaged in discussions with property owners to negotiate rent reductions and defer rent payments to mitigate the impact of COVID-19[14]. - The company implemented various preventive measures, including contactless services, to protect employees and customers amid the pandemic[59]. - The effective control of COVID-19 in China has led to a gradual recovery in domestic travel demand, particularly in previously affected cities[59]. - The company provided temporary franchise fee reductions and assisted franchisees in obtaining low-interest bank loans to meet short-term operational funding needs[59]. - During the peak period in February 2020, over 2,000 hotels were temporarily closed due to COVID-19, with 369 hotels still closed as of March 31, 2020, out of a total of 5,838 hotels in China[59]. Digital Transformation and Technology - The company has established a comprehensive modular application system to enhance customer experience and operational efficiency[5]. - The company has implemented a digital transformation plan to optimize operational efficiency and cost structure across its hotels[5]. - The company has developed an advanced proprietary technology infrastructure and digital transformation plan, utilizing big data, AI, and IoT to enhance operational efficiency[47]. - The company monitors hotel performance in real-time through a cloud-based property management system, allowing for quick adjustments to sales strategies[45]. - The "Easy" series digital systems streamline hotel operations, significantly reducing the turnaround time between check-out and check-in[50]. Loyalty Program and Customer Engagement - The loyalty program, Huazhu Club, has over 169 million members as of December 31, 2020, contributing to approximately 74% of room nights sold in 2020[4]. - The integrated CRM system maintains data on Huzhu Club members, including booking history and consumption patterns, enhancing customer loyalty through targeted promotions[48]. - The company collaborates with leading financial institutions and airlines for joint promotions to recruit new loyalty program members[53]. Environmental and Sustainability Initiatives - The company is committed to reducing its environmental footprint through energy-saving initiatives, including the use of LED lights and eco-friendly systems in most hotels[58]. - An online energy consumption management system has been established to track energy usage accurately, helping to monitor consumption levels and detect anomalies[58]. - The company encourages guests staying more than one night to reuse towels and linens to promote sustainability[58]. Legal and Regulatory Compliance - The company must obtain a public health permit before opening hotels, with penalties for non-compliance including fines ranging from RMB 50,000 to RMB 100,000[63]. - The company is required to comply with consumer protection laws, ensuring the safety of goods and services and obtaining consumer consent for data collection[68]. - The company is subject to strict regulations regarding foreign investment and mergers, requiring security reviews for transactions that may affect national security[87]. Future Outlook and Strategic Goals - The company aims to expand its market share in the growing global accommodation industry[6]. - The company is actively seeking new business opportunities, such as providing hotel services to support government pandemic control efforts[60]. - The company is exploring potential acquisitions to enhance its service offerings, with a budget of up to RMB 500 million allocated for this purpose[73]. - The company has set a goal to reduce operational costs by 15% through efficiency improvements and technology upgrades[71].