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]
华住集团-S(01179) - 2022 Q2 - 季度财报