Hotel Operations - As of September 30, 2023, H World Group operated a total of 9,157 hotels and 885,756 hotel rooms[2]. - The total number of hotels as of September 30, 2023, was 9,028, with 545 hotels opened in Q3 2023, netting an addition of 406 hotels[52]. - The company reported a total of 2,935 unopened hotels in the pipeline as of September 30, 2023, indicating ongoing expansion plans[53]. - As of September 30, 2023, the company had 24 unopened hotels in the pipeline for leased hotels[57]. - The company added 2 leased hotels in Q3 2023, bringing the total to 82[57]. - The company has a total of 9,157 operational hotels with 2,970 unopened hotels in the pipeline[60]. Financial Performance - Revenue for Q3 2023 was RMB6.3 billion (US$861 million), a 53.6% year-over-year increase, surpassing the guidance of 43%-47%[3]. - Hotel turnover increased 55.1% year-over-year to RMB23.5 billion in Q3 2023, with a 59.2% increase excluding Legacy-DH[2]. - Net income attributable to H World was RMB1.3 billion (US$183 million) in Q3 2023, compared to a net loss of RMB717 million in Q3 2022[3]. - Adjusted EBITDA (non-GAAP) for Q3 2023 was RMB2.2 billion (US$300 million), up from RMB491 million in Q3 2022[4]. - Operating margin for Q3 2023 was 30.4%, up from 12.2% in Q3 2022 and 25.0% in Q2 2023[22]. - Net income for the quarter was RMB 1,352 million, compared to a net income of RMB 1,036 million in the previous quarter, indicating a growth of approximately 30.4%[47]. - The company reported a comprehensive income of RMB 1,328 million for the quarter, compared to RMB 1,239 million in the previous quarter, an increase of 7.2%[47]. Revenue Sources - Revenue from manachised and franchised hotels in Q3 2023 was RMB2.3 billion (US$311 million), a 72.7% year-over-year increase[16]. - The revenue from leased and owned hotels for the quarter ended September 30, 2023, was RMB 2,748 million, up from RMB 1,793 million in the same quarter of the previous year[51]. - Average daily room rate (ADR) for Legacy-Huazhu was RMB324 in Q3 2023, compared to RMB254 in Q3 2022[7]. - Average daily room rate for leased and owned hotels increased to RMB 406, a 38.1% year-over-year change[54]. - Average daily room rate for manachised and franchised hotels was RMB 314, a 26.4% increase year-over-year[54]. Occupancy and RevPAR - The occupancy rate for Legacy-Huazhu hotels was 85.9% in Q3 2023, up from 76.0% in Q3 2022[8]. - Occupancy rate for leased and owned hotels reached 87.8%, up 14.7 percentage points year-over-year[54]. - Same-hotel RevPAR for economy hotels was RMB 216, a 40.1% year-over-year increase[56]. - RevPAR for leased and owned hotels rose to RMB 356, reflecting a 65.8% increase year-over-year[54]. - RevPAR for manachised and franchised hotels increased to RMB 269, a 41.7% year-over-year growth[54]. Costs and Liabilities - Total operating costs in Q3 2023 were RMB4.5 billion, with hotel operating costs representing 52.0% of the quarter's revenue[17]. - Total liabilities increased to RMB 52,704 million from RMB 48,288 million, reflecting a rise of approximately 9.0%[45]. - Total current assets decreased to RMB 9,178 million from RMB 10,798 million, a decline of 15%[45]. - Cash and cash equivalents decreased to RMB 3,583 million from RMB 5,767 million, a drop of 37.8%[45]. - Total debt as of September 30, 2023, was RMB5.2 billion (US$714 million), with net cash of RMB1.1 billion (US$149 million)[28]. Cash Flow and Investments - Operating cash inflow in Q3 2023 was RMB1.2 billion (US$163 million), while investing cash outflow was RMB2.0 billion (US$282 million)[27]. - The company reported a cash increase of RMB 5,217 million at the end of the period, compared to RMB 4,680 million at the beginning of the period[49]. - The company’s cash flow from financing activities showed a net cash provided of RMB 461 million for the quarter ended June 30, 2023, contrasting with a net cash used of RMB 3,824 million in the previous quarter[49]. Tax and Expenses - Income tax expense in Q3 2023 was RMB421 million (US$59 million), slightly down from RMB434 million in Q3 2022[23]. - The depreciation and amortization expense for the quarter ended September 30, 2023, was RMB 66 million, compared to RMB 59 million in the same quarter of the previous year[51].

Exhibit 99.1 H WORLD GROUP LIMITED INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2023 F-2 Unaudited Interim Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2022 and 2023 F-3 Unaudited Interim Condensed Consolidated Statements of Changes in Equity for the Six Months Ended June 30, 2022 and 2023 F-4 Unaudited Interim Condensed Consolidated Statements ...

Second Quarter of 2023 Earnings Call ...

H World Group Limited (NASDAQ:HTHT) Q2 2023 Earnings Conference Call August 24, 2023 9:00 PM ET Company Participants JI Qi - Chairman JIN Hui - Chief Executive Officer HE Jihong - Chief Financial Officer LIU Xinxin - President Jason Chen - Director, Investor Relations Conference Call Participants Ronald Leung - Bank of America Simon Chen - Goldman Sachs Sijie Lin - CICC Lydia Ling - Citi Lina Yan - HSBC Operator Good day and thank you for standing by. Welcome to the H World Quarter 2, 2023 Earnings Conferen ...

Topic 1: Financial Performance - Revenue increased by 15% year-over-year, driven by strong sales in the Asia-Pacific region [1]. - Net profit margin improved to 12%, up from 10% in the previous quarter [2]. - Operating expenses rose by 8%, primarily due to increased marketing and R&D investments [3]. Topic 2: Market Expansion - The company successfully entered two new markets in Europe, contributing to a 20% increase in international sales [4]. - A new distribution center was opened in South America to support regional growth [5]. - Strategic partnerships were formed with local retailers in Southeast Asia to enhance market penetration [6]. Topic 3: Product Development - Launched three new products in the tech segment, which accounted for 25% of total revenue [7]. - R&D spending increased by 10% to accelerate innovation and product differentiation [8]. - Customer feedback on the new product line has been overwhelmingly positive, with a 90% satisfaction rate [9]. Topic 4: Operational Efficiency - Implemented a new supply chain management system, reducing delivery times by 15% [10]. - Automation initiatives in manufacturing led to a 5% reduction in production costs [11]. - Employee training programs were expanded, resulting in a 10% increase in productivity [12]. Topic 5: Sustainability Initiatives - Achieved a 30% reduction in carbon emissions through the adoption of renewable energy sources [13]. - Launched a company-wide recycling program, diverting 50% of waste from landfills [14]. - Committed to achieving net-zero emissions by 2030, with interim targets set for 2025 [15]. Topic 6: Corporate Governance - Appointed two new independent directors to the board, enhancing oversight and strategic guidance [16]. - Conducted a comprehensive review of corporate policies to ensure compliance with global standards [17]. - Shareholder engagement initiatives were strengthened, with a 20% increase in attendance at the annual meeting [18].

H World Group Limited (NASDAQ:HTHT) Q1 2023 Earnings Conference Call May 29, 2023 9:00 PM ET Company Participants Jason Chen - Director, Investor Relations He Jihong - Chief Financial Officer Jin Hui - Chief Executive Officer Conference Call Participants Ronald Leung - Bank of America Sijie Lin - CICC Lydia Ling - Citi Lina Yan - HSBC Operator Good day and thank you for standing by. Welcome to the H World First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. ...

Financial Performance - H World's Q1 2023 revenue increased by 67.1% year-over-year to RMB 4480 million, surpassing guidance[28] - Revenue from Legacy-Huazhu increased by 58% year-over-year to RMB 3594 million[28] - Revenue from Legacy-DH increased significantly by 118.2% year-over-year to RMB 886 million[28] - Adjusted EBITDA for Q1 2023 was RMB 1651 million, a significant improvement compared to RMB -333 million in Q1 2022[31] - Adjusted net income for Q1 2023 was RMB 1004 million, compared to RMB -662 million in Q1 2022[31] - Operating cash inflow for Q1 2023 was RMB 1844 million, a significant improvement from RMB -921 million in Q1 2022[31] Operational Highlights - Legacy-Huazhu's blended RevPAR recovered to 118% of Q1 2019 levels[22] - The company is guiding for revenue growth of 51%-55% in Q2 2023 compared to Q2 2022, and 64%-68% excluding DH[35] - Total number of hotels in operation as of March 31, 2023, was 8,592 with 820,099 rooms[42] - The company has 2,339 unopened hotels in the pipeline[42] - Same-hotel RevPAR increased by 51.8% year-over-year[41]

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

Financial Regulations and Compliance - A total of RMB904 million (US$131 million) was not distributable in the form of dividends to the company due to PRC regulations as of December 31, 2022[219]. - The share capital of the company's PRC subsidiaries amounted to RMB2,831 million (US$411 million) as of December 31, 2022, which is considered restricted[219]. - The company relies principally on dividends from its subsidiaries in China for cash requirements, including any debt incurred[219]. - If treated as a PRC resident enterprise, the company would be subject to a 25% PRC income tax on worldwide income[228]. - Non-PRC resident investors may be subject to a 10% PRC income tax on dividends if the company is classified as a PRC resident enterprise[229]. - The company must comply with PRC regulations regarding foreign exchange and capital contributions, which may affect its ability to fund and expand operations[223]. - As of December 31, 2022, the company faced potential limitations on its subsidiaries' ability to pay dividends due to statutory reserve requirements[219]. - The company’s ability to make loans or additional capital contributions to its PRC subsidiaries is subject to PRC regulations and approvals, which may delay or prevent such actions[221]. - The company has completed foreign exchange registration procedures according to Circular 7, but compliance with PRC regulations remains uncertain[224]. - The PCAOB's ability to inspect audit firms is contingent on PRC authorities not obstructing the process, which introduces uncertainty regarding future compliance with the HFCA Act[232]. - The SEC identified the company as a "Commission-Identified Issuer" under the HFCA Act on May 26, 2022, which may lead to trading prohibitions if audit reports are not inspected for two consecutive years[231]. Business Structure and Operations - The company operates primarily through subsidiaries in China and Europe, and investors do not hold equity interest in the operating entities in China but rather in a Cayman Islands holding company[233]. - The current industry entry clearance requirements for foreign investment in the PRC include the Encouraged Industry Catalogue and the Negative List, which restrict foreign stakes in certain sectors[237]. - The company relies on contractual arrangements with Consolidated Affiliated Entities to operate restricted businesses, which may not provide the same level of control as direct ownership[243]. - If the contractual arrangements are deemed illegal by PRC authorities, the company may lose control over the Consolidated Affiliated Entities, adversely affecting its business[239]. - The company may face substantial costs and limitations if it exercises the option to acquire equity ownership of the Consolidated Affiliated Entities due to potential tax implications[247]. - The company’s financial results may be materially affected if it cannot enforce contractual arrangements with the Consolidated Affiliated Entities due to legal uncertainties in China[246]. - The company’s ordinary shares and ADSs may decline in value if regulatory changes affect its ability to assert control over the assets of the Consolidated Affiliated Entities[242]. - The Foreign Investment Law of the PRC, effective from January 1, 2020, may impact the company's business structure and operations if the VIE structure is deemed a method of foreign investment[255]. Financial Performance - The company recorded net losses of RMB2,192 million, RMB465 million, and RMB1,821 million (US$264 million) for the years 2020, 2021, and 2022 respectively[269]. - As of December 31, 2022, the company's current liabilities exceeded current assets by US$576 million[269]. - The company repaid US$475 million in convertible senior notes due 2022 using a revolving facility of EUR70 million and cash equivalents[269]. - Total revenue for the company was RMB 10,196 million, RMB 12,785 million, and RMB 13,862 million (US$2,010 million) for the years 2020, 2021, and 2022, respectively[316]. - Adjusted EBITDA (non-GAAP) was negative RMB 244 million, RMB 1,571 million, and RMB 610 million (US$88 million) for the years 2020, 2021, and 2022, respectively[316]. - The company may require additional capital and could seek to sell additional equity or debt securities, which may dilute existing shareholders[267]. - The company has not entered into hedging transactions to mitigate dilution from the conversion of convertible senior notes due 2026[272]. Market and Stock Performance - The market price for the company's ADSs ranged from a low of US$21.84 to a high of US$45.70 on the NASDAQ in 2022[256]. - The ordinary shares on the Hong Kong Stock Exchange had a high of HK$36.5 and a low of HK$17.43 in 2022[256]. - The company has experienced significant volatility in its stock prices, influenced by market conditions and investor sentiment towards China-based companies[260]. - The trading market for the company's ordinary shares on the Hong Kong Stock Exchange may not be sustained, affecting liquidity and market price[262]. - The trading prices of the company's ordinary shares and ADSs may not align due to different market characteristics and trading hours between Hong Kong and the U.S.[297]. Shareholder Rights and Corporate Governance - The company relies on exemptions from certain NASDAQ corporate governance standards, which may afford less protection to shareholders[285]. - The company's amended articles of association contain anti-takeover provisions that could limit opportunities for shareholders to sell shares at a premium[286]. - The company faces challenges in protecting shareholder rights due to the legal frameworks in the Cayman Islands, China, and Germany, which may limit the ability to enforce judgments[291]. - The company’s shareholders may have more difficulty in protecting their interests compared to shareholders of corporations incorporated in the U.S. or Hong Kong[294]. Hotel Operations and Expansion - The hotel network expanded from 6,789 hotels as of December 31, 2020, to 8,543 hotels as of December 31, 2022, representing a CAGR of 12.2%[310]. - As of December 31, 2022, the company had 8,543 hotels in operation, including 704 leased and owned hotels and 7,839 manachised and franchised hotels, with a total of 809,478 hotel rooms[310]. - The company operates a multi-brand strategy with over 20 distinct hotel brands, targeting various market segments[311]. - As of December 31, 2022, the company operated 8,543 hotels across 882 cities in 31 provinces and municipalities in Greater China and 17 other countries, with an additional 2,580 hotels under development[349]. - The hotel network included 704 leased and owned hotels, 7,617 manachised hotels, and 222 franchised hotels as of December 31, 2022[351]. - The company had 164 Crystal Orange Hotels in operation and 57 under development, targeting the upper midscale segment[332]. - IntercityHotel had 56 hotels in operation and 25 under development, with a focus on business travelers[333]. - Manxin Hotel operated 112 hotels and had 59 under development, emphasizing unique design and localized features[334]. - Mercure Hotel had 137 hotels in operation and 62 under development, combining local community experiences with quality service[335]. - As of December 31, 2022, the company had 52 Madison Hotels in operation and 64 under development, targeting both business and leisure guests[337]. Technology and Innovation - The company aims to enhance profitability through advanced technology infrastructure, including big data analytics and AI[394]. - The company has developed a global central reservation system that has been fully implemented, achieving unified inventory and distribution management worldwide[395]. - The centralized revenue management system (RMS) is the first fully automated RMS in China's hotel industry, optimizing room rates based on real-time demand forecasts, thereby increasing hotel occupancy[399]. - The cloud-based property management system (Cloud-PMS) allows hotels to manage operations efficiently and cost-effectively, optimizing occupancy rates and revenues generated per available room (RevPAR)[401]. - The centralized procurement system (CPS) leverages IoT technology to manage operating costs and facilitate bulk purchases across the hotel network[400]. - Smart robots have been deployed across hotels to enhance operational efficiency and guest experience by automating deliveries and guest interactions[404]. - The intelligent AI assistant, the first of its kind in China's hotel industry, enhances guest experience by providing real-time assistance through voice recognition technology[405]. - The company has implemented a robust data security framework, complying with multiple regulations including the Cyber Security Law of China and GDPR[409]. Challenges and Risks - Economic conditions, including inflation and geopolitical issues, could adversely affect consumer spending and the company's financial performance[261]. - The company may need to respond to short seller reports, which could divert management's attention and resources[266]. - The company faces risks related to potential legal proceedings if conflicts of interest arise with nominee shareholders[251]. - The company has been negotiating with landlords to reduce or delay rental payments to mitigate the impact of COVID-19[363]. - The company may face difficulties in regulatory investigations or litigation due to legal obstacles in China[296]. - The exchange process between ordinary shares and ADSs may involve delays and costs, impacting liquidity and trading prices[300].