HWORLD(HTHT)2021-05-27 05:22Financial Data and Key Metrics Changes - In Q1 2021, total hotel turnover grew by 66% year-on-year to RMB 8.2 billion, primarily due to network expansion and a low base from the previous year [25] - Adjusted net loss narrowed to RMB 451 million from RMB 1.1 billion a year ago, while legacy Huazhu recorded an adjusted net loss of RMB 150 million compared to RMB 981 million loss in Q1 2020 [31] - Legacy Huazhu's blended RevPAR for Q1 is RMB 138, recovering to 77% of 2019 levels, with ADR recovering to 95% of 2019 levels at RMB 209 [25][26] Business Line Data and Key Metrics Changes - Hotel rooms expanded by 15% in Q1 2021 to 662,000 compared to 575,000 in Q1 2020, with legacy Huazhu hotels expanding by 18% year-on-year [24] - Revenue from manachised and franchised hotels grew by 93% to RMB 897 million, driven by legacy Huazhu's growth [27] - Leased and owned revenue decreased by 8% year-on-year to RMB 1.4 billion, mainly due to a decrease in leased hotels in Europe [27] Market Data and Key Metrics Changes - RevPAR in lower-tier cities exceeded 2019 levels, with Tier 3 cities showing strong recovery [13] - As of March 2021, 38% of hotels in operation were located in Tier 3 and below cities, with 54% of pipelines from lower-tier cities [14] - Corporate customers contributed 9.7% of total room nights sold, with room nights from corporate customers reaching over 3.5 million [22] Company Strategy and Development Direction - The company emphasizes a quality hotel expansion strategy, focusing on improving standards for both existing and new hotels [10] - The acquisition of CitiGo Hotel aims to enhance the lifestyle brand portfolio and target younger generations [15] - The company plans to revise down its non-standardized hotel brand openings for the full year, focusing on quality over quantity [36] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of China's economy and business travel as vaccination rates increase [7] - The company remains cautiously optimistic about recovery trends despite ongoing COVID-19 resurgence in some areas [40] - For Q2 2021, total revenue is expected to grow by 87% to 89% compared to Q2 2020, with a 27% to 29% growth compared to the same period in 2019 [35] Other Important Information - The company maintained a cash balance of RMB 5.7 billion and unutilized bank facilities of RMB 6.5 billion, allowing for further debt repayment and unforeseen circumstances [31] - The average occupancy of the legacy DH business was 19% in Q1, with expectations for gradual recovery as travel restrictions ease [32] Q&A Session Summary Question: Current trend in May and RevPAR growth excluding holidays - Management confirmed that RevPAR in May showed satisfactory growth, achieving positive growth even when excluding holiday periods [40] Question: Confidence in achieving 10,000 hotels target by end of 2022 - Management remains confident in achieving the target, with new signings improving compared to last year [42] Question: Corporate customer contribution outlook - Corporate customers currently contribute about 10% of total room nights, with optimism for future growth through technology and direct sales [52] Question: Acquisition plans and market consolidation post-COVID - Management is open to M&A opportunities but has no confirmed targets yet, focusing on quality hotel strategy and market share growth [55]