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Cover Page	12 Months Ended
Cover Page	Dec. 31, 2019 shares
Document Information [Line Items]
Entity Registrant Name	Huazhu Group Limited
Entity Central Index Key	0001483994
Document Type	20-F
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Trading Symbol	HTHT
Document Period End Date	Dec. 31, 2019
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding	296,327,721
Entity Interactive Data Current	Yes
Entity File Number	001-34656
Entity Incorporation, State or Country Code	E9
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Registration Statement	false
Document Accounting Standard	U.S. GAAP
Entity Address, Address Line One	No. 2266 Hongqiao Road
Entity Address, Country	CN
Entity Address, City or Town	Shanghai
Entity Address, Postal Zip Code	200336
Title of 12(b) Security	American Depositary Shares
Security Exchange Name	NASDAQ
Business Contact [Member]
Document Information [Line Items]
Contact Personnel Name	Teo Nee Chuan
Entity Address, Address Line One	No. 2266 Hongqiao Road
Local Phone Number	21-6195-2011
City Area Code	86
Entity Address, Country	CN
Entity Address, City or Town	Shanghai
Contact Personnel Email Address	TeoNeeChuan@huazhu.com
Entity Address, Postal Zip Code	200336

CONSOLIDATED BALANCE SHEETS ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Current assets:
Cash and cash equivalents	¥ 3,234	$ 465	¥ 4,262
Restricted cash	10,765	1,546	622
Short-term investments measured at fair value	2,908	418	89
Accounts receivable, net of allowance of RMB17 and RMB17 as of December 31, 2018 and 2019, respectively	218	31	195
Loan receivables, net	193	28	94
Amounts due from related parties	182	26	176
Prepaid rent			955
Inventories	57	8	41
Other current assets	699	100	540
Total current assets	18,256	2,622	6,974
Property and equipment, net	5,854	841	5,018
Intangible assets, net	1,662	239	1,834
Operating lease right-of-use assets	20,875	2,998
Land use rights, net	215	31	220
Long-term investments, including marketable securities measured at fair value of RMB4,022 and nil as of December 31, 2018 and 2019, respectively	1,929	277	6,152
Goodwill	2,657	382	2,630
Loan receivables, net	280	40	189
Other assets	707	102	471
Deferred tax assets	548	79	505
Total assets	52,983	7,611	23,993
Current liabilities:
Short-term debt	8,499	1,220	948
Accounts payable	1,176	169	890
Amounts due to related parties	95	14	75
Salary and welfare payables	491	71	521
Deferred revenue	1,179	169	1,005
Operating lease liabilities, current	3,082	443
Accrued expenses and other current liabilities	1,856	267	1,607
Dividends payable	678	97	658
Income tax payable	231	33	265
Total current liabilities	17,287	2,483	5,969
Long-term debt	8,084	1,161	8,812
Deferred rent			1,507
Operating lease liabilities, noncurrent	18,496	2,657
Deferred revenue	559	80	458
Other long-term liabilities	566	81	453
Deferred tax liabilities	491	71	475
Total liabilities	45,483	6,533	17,674
Commitments and contingencies (Note 21)
Equity:
Ordinary shares (US$0.0001 par value per share; 8,000,000,000 shares authorized; 296,597,888 and 299,424,485 shares issued as of December 31, 2018 and 2019, and 283,076,012 and 285,902,609 shares outstanding as of December 31, 2018 and 2019, respectively)	0	0	0
Treasury shares (3,096,764 and 3,096,764 shares as of December 31, 2018 and 2019, respectively)	(107)	(15)	(107)
Additional paid-in capital	3,834	551	3,713
Retained earnings	3,701	532	2,610
Accumulated other comprehensive income (loss)	(49)	(7)	(42)
Total Huazhu Group Limited shareholders' equity	7,379	1,061	6,174
Noncontrolling interest	121	17	145
Total equity	7,500	1,078	6,319
Total liabilities and equity	¥ 52,983	$ 7,611	¥ 23,993

CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Millions	Dec. 31, 2019 CNY (¥) shares	Dec. 31, 2018 CNY (¥) shares
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance \| ¥	¥ 17	¥ 17
Long-term investments, marketable securities measured at fair value \| ¥		¥ 4,022
Ordinary shares, shares authorized	8,000,000,000	8,000,000,000
Ordinary shares, shares issued	299,424,485	296,597,888
Ordinary shares, shares outstanding	285,902,609	283,076,012
Treasury stock, shares	3,096,764	3,096,764

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) ¥ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 CNY (¥) ¥ / shares shares	Dec. 31, 2017 CNY (¥) ¥ / shares shares
Revenues:
Net revenues	¥ 11,212	$ 1,611	¥ 10,063	¥ 8,229
Operating costs and expenses:
Hotel operating costs	7,190	1,033	6,476	5,675
Other operating costs	57	8	15	17
Selling and marketing expenses	426	61	348	285
General and administrative expenses	1,061	152	851	691
Pre-opening expenses	502	72	255	206
Total operating costs and expenses	9,236	1,326	7,945	6,874
Other operating (expenses) income, net	132	19	226	71
Income from operations	2,108	304	2,344	1,426
Interest income	160	23	148	113
Interest expense	315	45	244	87
Other income, net	331	48	203	128
Unrealized gains (losses) from fair value changes of equity securities	316	44	(914)	35
Foreign exchange gain (loss)	(35)	(5)	(144)	(18)
Income before income taxes	2,565	369	1,393	1,597
Income tax expense	640	92	569	357
Income (loss) from equity method investments	(164)	(24)	(97)	(12)
Net income	1,761	253	727	1,228
Less: net (loss) income attributable to noncontrolling interest	(8)	(1)	11	0
Net income attributable to Huazhu Group Limited	1,769	254	716	1,228
Other comprehensive income
Unrealized securities holding gains, net of tax of (8), nil and nil for 2017, 2018 and 2019, respectively \| ¥				1
Reclassification of realized gains to net income, net of tax \| ¥				(5)
Foreign currency translation adjustments, net of tax of nil for 2017, 2018 and 2019, respectively	(7)	(1)	(169)	177
Comprehensive income	1,754	252	558	1,401
Less: comprehensive (loss) income attributable to the noncontrolling interest	(8)	(1)	11	0
Comprehensive income attributable to Huazhu Group Limited	¥ 1,762	$ 253	¥ 547	¥ 1,401
Earnings per share:
Basic (in RMB and dollars per share) \| (per share)	¥ 6.22	$ 0.89	¥ 2.54	¥ 4.40
Diluted (in RMB and dollars per share) \| (per share)	¥ 5.94	$ 0.85	¥ 2.49	¥ 4.21
Weighted average number of shares used in computation:
Basic (in shares) \| shares	284,305,138	284,305,138	281,717,485	279,272,140
Diluted (in shares) \| shares	304,309,890	304,309,890	303,605,809	293,073,978
Leased and owned hotels
Revenues:
Net revenues	¥ 7,718	$ 1,109	¥ 7,470	¥ 6,338
Manachised and franchised hotels
Revenues:
Net revenues	3,342	480	2,527	1,851
Other revenues
Revenues:
Net revenues	¥ 152	$ 22	¥ 66	¥ 40

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unrealized securities holding gains (losses), tax	¥ 0	¥ 0	¥ (8)
Foreign currency translation adjustments, tax	¥ 0	¥ 0	¥ 0

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Millions, $ in Millions	CNY (¥) shares	USD ($) shares	Ordinary Shares CNY (¥) shares	Treasury Shares CNY (¥) shares	Additional Paid-in Capital CNY (¥)	Retained Earnings CNY (¥)	Accumulated Other Comprehensive (Loss) Income CNY (¥)	Noncontrolling Interest CNY (¥)
Balance at Dec. 31, 2016	¥ 5,184		¥ 0	¥ (107)	¥ 3,699	¥ 1,580	¥ (5)	¥ 17
Balance issued (in shares) at Dec. 31, 2016 \| shares			281,379,130
Balance outstanding (in shares) at Dec. 31, 2016 \| shares	278,282,366	278,282,366
Treasury shares, balance (in shares) at Dec. 31, 2016 \| shares				3,096,764
Increase (Decrease) in Stockholders' Equity
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks	¥ 9		¥ 0		9
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) \| shares	2,235,992	2,235,992	2,235,992
Share-based compensation	¥ 66				66
Issuance of ordinary shares under ADS lending arrangement	0		¥ 0
Issuance of ordinary shares under ADS lending arrangement (in shares) \| shares			10,425,112
Capped Call options in connection with issuance of convertible senior notes	(177)				(177)
ADS lending arrangement in connection with issuance of convertible senior notes	27				27
Noncontrolling interest recognized in connection with acquisitions	4							4
Net income	1,228					1,228		0
Cash dividends declared/paid/approved	(295)					(295)
Unrealized securities holding gains, net of tax	1						1
Reclassification of realized gains to net income, net of tax	(5)						(5)
Dividends paid to noncontrolling interest holders	(3)							(3)
Capital contribution from noncontrolling interest holders	26							26
Disposal of noncontrolling interest for deconsolidation	(4)							(4)
Noncontrolling interest recognized from partial disposal	0							0
Acquisition of noncontrolling interest	(4)				0			(4)
Foreign currency translation adjustments	177						177
Balance at Dec. 31, 2017	¥ 6,234		¥ 0	¥ (107)	3,624	2,513	168	36
Balance issued (in shares) at Dec. 31, 2017 \| shares			294,040,234
Balance outstanding (in shares) at Dec. 31, 2017 \| shares	280,518,358	280,518,358
Treasury shares, balance (in shares) at Dec. 31, 2017 \| shares				3,096,764
Increase (Decrease) in Stockholders' Equity
Cumulative effect of the adoption of ASU \| ASU 2016-01						41	(41)
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks	¥ 14		¥ 0		14
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) \| shares	2,557,654	2,557,654	2,557,654
Share-based compensation	¥ 83				83
Noncontrolling interest recognized in connection with acquisitions	150							150
Net income	727					716		11
Cash dividends declared/paid/approved	(660)					(660)
Dividends paid to noncontrolling interest holders	(5)							(5)
Capital contribution from noncontrolling interest holders	29							29
Acquisition of noncontrolling interest	(84)				(8)			(76)
Foreign currency translation adjustments	(169)						(169)
Balance at Dec. 31, 2018	¥ 6,319		¥ 0	¥ (107)	3,713	2,610	(42)	145
Balance issued (in shares) at Dec. 31, 2018 \| shares	296,597,888	296,597,888	296,597,888
Balance outstanding (in shares) at Dec. 31, 2018 \| shares	283,076,012	283,076,012
Treasury shares, balance (in shares) at Dec. 31, 2018 \| shares	3,096,764	3,096,764		3,096,764
Increase (Decrease) in Stockholders' Equity
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks	¥ 14		¥ 0		14
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) \| shares	2,826,597	2,826,597	2,826,597
Share-based compensation	¥ 110				110
Net income	1,761	$ 253				1,769		(8)
Cash dividends declared/paid/approved	(678)					(678)
Dividends paid to noncontrolling interest holders	(5)							(5)
Capital contribution from noncontrolling interest holders	22							22
Disposal of noncontrolling interest for deconsolidation	3							3
Acquisition of noncontrolling interest	(39)				(3)			(36)
Foreign currency translation adjustments	(7)	(1)					(7)
Balance at Dec. 31, 2019	¥ 7,500	$ 1,078	¥ 0	¥ (107)	¥ 3,834	¥ 3,701	¥ (49)	¥ 121
Balance issued (in shares) at Dec. 31, 2019 \| shares	299,424,485	299,424,485	299,424,485
Balance outstanding (in shares) at Dec. 31, 2019 \| shares	285,902,609	285,902,609
Treasury shares, balance (in shares) at Dec. 31, 2019 \| shares	3,096,764	3,096,764		3,096,764

CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Operating activities:
Net income	¥ 1,761	$ 253	¥ 727	¥ 1,228
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	110	15	83	66
Depreciation and amortization	991	142	891	789
Amortization of issuance cost of convertible senior notes	28	4	28	3
Deferred taxes	(38)	(5)	(91)	(79)
Bad debt expenses	21	3	10	2
Deferred rent			140	209
Loss (gain) from disposal of property and equipment	(10)	(1)	0	13
Impairment loss	13	2	35	169
Loss (Income) from equity method investments, net of dividends	213	31	157	12
Investment (income) loss	(477)	(68)	1,009	(160)
Noncash lease expense	2,235	321
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(34)	(5)	(36)	4
Prepaid rent			(283)	(189)
Inventories	(17)	(2)	(14)	3
Amounts due from related parties	32	5	(32)	(31)
Other current assets	(80)	(12)	(56)	(76)
Other assets	(175)	(25)	(32)	(54)
Accounts payable	(1)	0	11	8
Amounts due to related parties	17	2	38	3
Salary and welfare payables	(28)	(4)	91	133
Deferred revenue	279	40	114	26
Accrued expenses and other current liabilities	408	58	140	278
Operating lease liability	(2,036)	(293)
Income tax payable	(35)	(5)	48	45
Other long-term liabilities	116	17	71	51
Net cash provided by operating activities	3,293	473	3,049	2,453
Investing activities:
Purchases of property and equipment	(1,527)	(219)	(1,115)	(819)
Purchases of intangibles	(5)	(1)	(4)	(8)
Purchases of land use rights	(3)	0	(76)
Amount received as a result of government zoning	13	2	7	3
Acquisitions, net of cash received	(244)	(35)	(496)	(3,746)
Proceeds from disposal of subsidiary and branch, net of cash disposed	2	0	8	14
Purchase of long-term investments	(328)	(48)	(4,959)	(1,328)
Proceeds from maturity/sale and return of long-term investments	2,002	288	177	128
Payment for shareholder loan to equity investees	(87)	(13)	(7)	(113)
Collection of shareholder loan from equity investees	88	13		120
Purchases of short-term investments				(96)
Payment for the origination of loan receivables	(454)	(65)	(313)	(446)
Proceeds from collection of loan receivables	258	37	433	56
Net cash (used in) investing activities	(285)	(41)	(6,345)	(6,235)
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of options	14	2	14	9
Proceeds from short-term bank borrowings	2,214	318	928	137
Repayment of short-term bank borrowings	(1,902)	(273)	(128)	(295)
Proceeds from long-term bank borrowings	13,176	1,893	4,275	3,633
Repayment of long-term bank borrowings	(6,760)	(971)	(799)	(1,651)
Funds advanced from noncontrolling interest holders	2	0	36	84
Repayment of funds advanced from noncontrolling interest holders	(19)	(3)	(8)	(9)
Acquisitions of noncontrolling interest	(39)	(5)	(84)	(4)
Proceeds from amounts due to related parties			103
Repayment of amounts due to related parties			(113)
Contribution from noncontrolling interest holders	22	3	29	26
Dividends paid to noncontrolling interest holders	(5)	(1)	(5)	(3)
Dividends paid	(658)	(95)		(306)
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option				2,925
Direct financing costs paid				(10)
Proceeds from ADS lending				0
Net cash (used in) provided by financing activities	6,045	868	4,248	4,536
Net increase in cash, cash equivalents and restricted cash	9,115	1,309	928	720
Effect of exchange rate changes on cash and cash equivalents, and restricted cash	62	9	(24)	(34)
Cash, cash equivalents and restricted cash at the beginning of the year	4,884	702	3,956	3,236
Cash, cash equivalents and restricted cash at the end of the year	13,999	2,011	4,884	3,956
Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized	414	59	239	187
Income taxes paid	712	102	613	380
Cash paid for amounts included in the measurement of operating lease liabilities	2,905	417
Non-cash right-of-use assets obtained in exchange for operating lease liabilities	4,176	600
Supplemental schedule of non-cash investing and financing activities:
Purchases of property and equipment included in payables	963	138	688	613
Consideration payable for business acquisition	16	2	40	118
Purchase of intangible assets included in payables	3	0	5	6
Reimbursement of government zoning included in receivables				¥ 2
Cash dividends declared in payables	¥ 678	$ 97	¥ 658

ORGANIZATION AND PRINCIPAL ACTIVITIES

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND PRINCIPAL ACTIVITIES

ORGANIZATION AND PRINCIPAL ACTIVITIES

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

Huazhu Group Limited (the “Company”) was incorporated in the Cayman Islands under the laws of the Cayman Islands on January 4, 2007. The principal business activities of the Company and its subsidiaries and consolidated variable interest entities (the “Group”) are to develop leased and owned, manachised and franchised hotels mainly in the People’s Republic of China (“PRC”).

Leased and owned hotels

The Group leases hotel properties from property owners or purchases properties directly and is responsible for all aspects of hotel operations and management, including hiring, training and supervising the managers and employees required to operate the hotels. In addition, the Group is responsible for hotel development and customization to conform to the standards of the Group brands at the beginning of the lease or the construction, as well as repairs and maintenance, operating expenses and management of properties over the term of the lease or the land and building certificate.

Under the lease arrangements, the Group typically receives rental holidays of two to

six months

and pays rent on a quarterly or biannual basis. Rent is typically subject to the fixed escalations of three to five percent every three to

five years

. The Group recognizes rental expense on a straight-line basis over the lease term.

As of December 31, 2018 and 2019, the Group had 699 and 688 leased and owned hotels in operation, respectively.

Manachised and franchised hotels

Typically the Group enters into certain franchise and management arrangements with franchisees for which the Group is responsible for providing branding, quality assurance, training, reservation, hiring and appointing of the hotel general manager and various other support services relating to the hotel renovation and operation. Those hotels are classified as manachised hotels. Under typical franchise and management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees, the majority of which are equal to a certain percentage of the revenues of the hotel. The franchisee is responsible for the costs of hotel development, renovation and the costs of its operations. The term of the franchise and management agreements are typically eight to

ten years

and are renewable upon mutual agreement between the Group and the franchisee. The Group also has some franchised hotels in which cases the Group does not provide a hotel general manager. As of December 31, 2018 and 2019, the Group had 3,309 and 4,519 manachised hotels in operation and 222 and 411 franchised hotels in operation, respectively.

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

2.	SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, to support its working capital requirements.

Due to the outbreak of COVID-19, the Group’s businesses have been significantly impacted by the global outbreak of COVID-19 and began to experience operating losses and negative operating cash flows in the first quarter of 2020. If the trend were to continue the Group would be at risk of breaching certain financial covenants of the long-term credit facility of EUR

440

million and revolving credit facility of US$500 million. Further, holders of the Group’s Convertible Senior Notes due in 2022 of US$

475

million have the right to require the Group to redeem the notes on November 2, 2020. These conditions and events may raise substantial doubt about the Group’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Group is unable to continue as a going concern.

To improve the operating performance and cash flows, the Group has taken various hotel operating measures, such as implementing intelligent non-contact room service, helping franchisees to obtain low-interest bank loans to meet their short-term working capital needs, negotiating with landlords for rental reductions and/or deferment, reducing management labor costs and other sale and management expenses, and reducing and postponing discretional capital expenditures.

Management believes the relevant conditions and events that may raise substantial doubt about the Group’s ability to continue as a going concern are mitigated by the following plans and actions:

•

On April 17, 2020, the Group obtained an exemption approval for the EUR

440

million and US$500 million long-term credit facility, providing that with satisfaction of amended covenants, the original financial covenants will not be applicable until the six-month period ending June 30, 2021. The Group is and expects to be able to remain fully in compliance with the amended covenants;

•

The Group has the ability to liquidate short-term investments that are readily convertible into cash, the fair value of which was approximately RMB1,539 as of March 31, 2020. The Group also has investments in funds totaling RMB507 as of December 31, 2019 that, should circumstances warrant, could be disposed of within a relatively short period of time;

•

The Group has been proactively negotiating with landlords for rental reductions and deferment. Although the amount of reductions to be received is not currently determinable, the Group expects it is reasonably possible that a material amount can be obtained as a common market practice in this environment.

•

As of March 31, 2020, the Group had unused

credit

facilities of approximately RMB2,049

Based on the Group’s historical experience, funding requests will be approved in the normal course of business provided that the Group submits the required supporting documentation and the amount is within the credit limit granted

and the

Group believes th

is will continue

;

•

The Group may increase borrowings or raise capital to respond to any market conditions following the COVID-19 outbreak and potential redemption of the Group’s Convertible Senior Notes of US$475 million on November 2, 2020.

Based on the above actions, management believes that adequate sources of liquidity exist to fund the Group’s working capital and capital expenditures requirements, and to meet its other liabilities and commitments as they become due for at least twelve months from the issuance of these financial statements.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company, its majority-owned subsidiaries and consolidated variable interest entities (the “VIEs”). All intercompany transactions and balances are eliminated on consolidation.

Variable Interest Entities

The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

The Company is deemed as the primary beneficiary of and consolidates variable interest entities when the Company has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses and has the rights to receive benefits that are potentially significant to the entities.

As of December 31, 2018 and 2019, the Group consolidated

six

and

eight

entities under VIE model, and the assets and liabilities of the consolidated VIEs are immaterial to the Group’s consolidated financial statements.

The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels and the funds that it serves as general partner or fund manager to identify potential variable interest entities. Generally, these entities that operate the manachised and franchised hotels qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. For the disclosure of significant

non-consolidated

variable interest entities, see Note7 Investments.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include the useful lives and impairment of property and equipment and intangible assets, valuation allowance of deferred tax assets, purchase price allocation, impairment of goodwill, fair value measurement and impairment of investments, share-based compensation, estimates involved in the accounting for its customer loyalty program,

contingent liabilities and discount rate

used to measure lease liabilities.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased.

Restricted cash

Restricted cash mainly represents deposits used as security against borrowings, deposits restricted due to contract disputes or lawsuit and cash restricted for special purposes. As of December 31, 2019,

RMB5,404

of restricted cash related to the subsequent acquisition of Deutsche Hospitality has been paid out in January 2020.

Investments

Investments represent equity-method investments, equity investments with readily determinable fair values, equity investments without readily determinable fair values and

available-for-sale

debt securities.

The Group accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than- temporary.

Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with unrealized gains and losses from fair value changes recognized in net income in the consolidated statements of comprehensive income.

Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the amount by which the carrying value exceeds the fair value of the investment.

Debt securities that the company has no intent to hold till maturity or may sell the security in response to the changes in economic conditions are classified as

available-for-sale

debt securities.

Available-for-sale

debt securities are reported at fair value, with unrealized gains and losses (other than impairment losses) recognized in accumulated other comprehensive income or loss. Realized gains and losses on debt securities are recognized in the net income in the consolidated statements of comprehensive income. The Group monitors its investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information.

As a result of the impairment analysis, the Group recorded an impairment of

nil

and RMB

in 2017, 2018 and 2019, respectively.

Accounts receivable, net of allowance

Accounts receivable mainly consist of franchise fee receivables, amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Group establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers.

Loan receivables

Loan receivables are measured at amortized cost with interest accrued based on the contract rate. The Group classified loan receivables as long-term or short-term investments according to their contractual maturity or expected holding time. The Group evaluates the credit risk associated with the loans, and estimates the cash flow expected to be collected over the life of loans on an individual basis based on the Group’s past experiences, the borrowers’ financial position, their financial performance and their ability to continue to generate sufficient cash flows. A valuation allowance will be established for the loans unable to collect.

As a result of the assessment, the Group recorded a

valuation allowance

of nil, nil and RMB4

in 2017, 2018

and

2019

, respectively

. The Group entered into entrusted loan agreements with certain franchisees with the typical terms to be two to

three years

and annual interest rates ranging from 8.0% to 8.5%, and with other

un-related

third-parties with the annual interest rates ranging from 6% to 15%.

Inventories

Inventories mainly consist of small appliances, bedding and daily consumables. Small appliances and bedding for new hotels opened are stated at cost, less accumulated amortization, and are amortized over their estimated useful lives, generally

one year

, from the time they are put into use. Daily consumables and beddings replacement are expensed when used.

Property and equipment, net

Property and equipment, net are stated at cost less accumulated depreciation

The renovations, betterments and interest cost incurred during construction are capitalized. Depreciation of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows:


Leasehold improvements		Shorter of the lease term or their estimated useful lives
Buildings		20-40 years
Furniture, fixtures and equipment		3-10 years
Motor vehicles		5 years

Construction in progress represents leasehold improvements and property under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use.

Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying amount of the underlying asset.

Intangible assets, net and unfavorable lease

Intangible assets consist primarily of brand name, master brand agreement,

non-compete

agreements, franchise agreements and favorable leases acquired in business combinations

before the adoption of ASC Topic 842,

Leases

(“ASC 842”) and purchased software. Intangible assets acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets, including brand name, master brand agreement,

non-compete

agreements, franchise agreements, favorable lease agreements and other intangible assets acquired from business combination are recognized and measured at fair value upon acquisition.

The favorable lease agreements and unfavorable lease agreements in which the Group acts as a lessee were reclassified to operating lease right-of-use assets on January 1, 2019, upon adoption of ASC 842, Leases, which are amortized combining with right-of-use assets over remaining operating lease terms. The favorable lease agreements in which the Group acts as a lessor were accounted as intangible assets as before, which are amortized over remaining operating lease terms.

Non-compete

agreements and franchise agreements are amortized over the expected useful life and remaining franchise contract terms respectively. Purchased software is stated at cost less accumulated amortization.

Brand name is considered to have an indefinite life. Master brand agreement, acquired in Accor acquisition, granted the Group certain franchise rights with initial term of 70 years, and can be renewed without substantial obstacles. As a result, the useful life is determined to be indefinite. The Group evaluates the brand name and master brand agreement each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Impairment is tested annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group measures the impairment by comparing the fair value of brand name and master brand agreement with its carrying amount. If the carrying amount of brand name and master brand agreement exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The Group measures the fair value of the brand name under the relief-from-royalty method, the master brand agreement under the multi-period excess earnings method. The determination of the fair value requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margin, royalty saving rate and discount rates to estimate the net present value of future cash flows. Management performs its annual brand n

ame

and master brand agreement impairment test on November 30.

Land use rights

The land use rights represent the operating lease prepayments for the rights to use the land in the PRC under ASC 842, which are amortized on a straight-line basis over the remaining term of the land certificates, between

30 to 50 years. Amortization expense of land use rights for the years ended December 31, 2017, 2018 and 2019 amounted to RMB5, RMB5 and RMB8, respectively.

Impairment of long-lived assets

The Group evaluates its long-lived assets and finite lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets.

The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the property and equipment exceed the future undiscounted net cash flows, and recognized an impairment loss of RMB169, RMB35 and RMB3 during the years ended December 31, 2017, 2018 and 2019, respectively.

Fair value of the property and equipment was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group completes a

two-step

goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. A reporting unit is identified as a component for which discrete financial information is available and is regularly reviewed by management. All the acquired business has been migrated to the Group’s business, and the Group’s management regularly reviews operation data including industrial metrics of revenue per available room, occupancy rate, and number of hotels by scale/brand, rather than discrete financial information for the purpose of performance evaluation and resource allocation at brand level. The Company concluded that it had only one reporting unit, and therefore the goodwill impairment testing was performed on consolidation level. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized in general and administrative expenses for any excess in the carrying value of goodwill over the implied fair value of goodwill. Management performs its annual goodwill impairment test on November 30.

The Group had not recognized any goodwill impairment for years ended December 31, 2017, 2018 and 2019.

Revenue recognition

Revenue are primarily derived from products and services in leased and owned hotels, contracts of manachised and franchised hotels with third-party franchisees as well as activities other than the operation of hotel businesses.

Leased and owned hotel revenues

Leased and owned hotel revenues are primarily derived from the rental of rooms, food and beverage sales and other ancillary goods and services, including but not limited to souvenir, laundry, parking and conference reservation. Each of these products and services represents an individual performance obligation and, in exchange for these services, the Group receives fixed amounts based on published rates or negotiated contracts. Payment is due in full at the time when the services are rendered or the goods are provided. Room rental revenue is recognized on a daily basis when rooms are occupied. Food and beverage revenue and other goods and services revenue are recognized when they have been delivered or rendered to the guests as the respective performance obligations are satisfied.

Manachised and franchised hotel revenues

The manachised and franchised agreement contains the following promised services:

•

Intellectual Property (“IP”) license

grant the right to access the Group’s hotel system IP, including brand names.

•

Pre-opening services

include providing services (e.g., install IT information system and provide access to purchase platform, help to obtain operational qualification, and help to recruit and train employees) to the franchisees to assist in preparing for the hotel opening.

•

System maintenance services

include providing standardization hotel property management system (PMS), central reservation system (CRS) and other internet related services.

•

Hotel management services

include providing

day-to-day

management services of the hotels for the franchisees.

The promises to provide

pre-opening

services and system maintenance services are not distinct performance obligation because they are attendant to the license of IP. Therefore, the promises to provide

pre-opening

services and system maintenance services are combined with the license of IP to form a single performance obligation. Hotel management services forms a single distinct performance obligation.

Manachised and franchised hotel revenues are derived from franchise agreements where the franchisees are primarily required to pay (i) an initial

one-time

franchise fee, and (ii) continuing franchise fees, which mainly consist of (a)

on-going

management and franchise service fees, (b) central reservation system usage fees, system maintenance and support fees and (c) reimbursements for hotel manager fees.

Initial one-time franchise fee

, is typically fixed and collected upfront and recognized as revenue over the term of the franchise contract. The Group does not consider this advance consideration to include a significant financing component, since it is used to protect the Group from the franchisees failing to adequately complete some or all of its obligations under the contract.

On-going management and franchise service fees

are

generally calculated as a certain percentage of the room revenues of the franchised hotel. Generally, management and franchise service fees are due and payable on a monthly basis as services are provided and revenue is recognized over time as services are rendered.

Central reservation system usage fees, other system maintenance and support fees

are typically billed and collected monthly along with base management and franchise fees, and revenue is generally recognized as services are provided.

Reimbursements for hotel manager fees

, which cover the manachised hotel managers’ payroll, social welfare benefits and certain other

out-of-pocket

expenses that the Group incurs on behalf of the manachised hotels. The reimbursements are recognized over time within revenues for the reimbursement of costs incurred on behalf of manachised hotels

Other Revenues

Other revenues

are derived from activities other than the operation of hotel businesses, which mainly include revenues from Hua Zhu mall and the provision of IT products and services to hotels. Revenues from Hua Zhu mall are commissions charged from suppliers for goods sold through the platform and are recognized upon delivery of goods to end customers when its suppliers’ obligation is fulfilled. Revenues from IT products are recognized when goods are delivered and revenues from IT services are recognized when services are rendered.

Loyalty Program

Under the loyalty program the Group administers, members earn loyalty points that can be redeemed for future products and services. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future. The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members. The Group is responsible for arranging for the redemption of points, but the Group does not directly fulfill the redemption obligation except at leased and owned hotels. Therefore, the Group is the agent with respect to this performance obligation for manachised and franchised hotels, and is the principal with respect to leased and owned hotels.

For leased and owned hotels, a portion of the leased and owned revenues is deferred until a member redeems points. The amount of revenue the Group recognize upon point redemption is impacted by the estimate of the “breakage” for points that members will never redeem in the Group’s owned and leased hotels.

For manachised and franchised hotels, the portion of revenue deferred by manachised and franchised hotels are collected by the Group which will be refunded upon redemption of points at manachised and franchised hotels. The estimated breakage for points earned in manachised and franchised hotels are recognized as manachised and franchised revenue for each period. The Group estimates breakage based on the Group’s historical experience and expectations of future member behavior and will true up the estimated breakage at end of each period.

Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. Such duration is estimated based on the Group’s and management’s experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be two to

five years

which reflects the expected membership retention. Revenues recognized from membership fees were RMB160, RMB192 and RMB224 for the years ended December 31, 2017, 2018 and 2019, respectively, which amount were included in revenues from leased and owned hotel or revenues from manachised and franchised hotels depending on the type of hotels the membership was sold at.

Contract Balances

The Group’s payments from customers are based on the billing terms established in contracts. Customer billings are classified as accounts receivable when the Group’s right to consideration is unconditional. If the right to consideration is conditional on future performance under the contract, the balance is classified as a contract asset. Payments received in advance of performance under the contract are classified as current or

non-current

contract liabilities on the Group’s consolidated balance sheets and are recognized as revenue as the Group performs under the contract.

PRC

Value-Added

Taxes and surcharges

Starting from May 2016, the accommodation services of the Group are subject to 6% of Value-Added Taxes.

The Group is subject to education surtax and urban maintenance and construction tax, on the services provided in the PRC.

Advertising and promotional expenses

Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the consolidated statements of comprehensive income as incurred, and amounted to RMB91, RMB103 and RMB99 for the years ended December 31, 2017, 2018 and 2019, respectively.

Government grants

Government grants represent cash received by the Group in the PRC from local governments as incentives for investing in certain local districts, and are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. The local governments have final discretion as to whether the Group has met all criteria to be entitled to the subsidies. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized were RMB55, RMB106 and RMB148 for the years ended December 31, 2017, 2018 and 2019, respectively, which were recorded as other operating income.

Leases

Before January 1, 2019, the Group adopted the ASC Topic 840,

Leases

, each lease is classified at the inception date as either a capital lease or an operating lease. All the Group’s leases are classified as operating lease under ASC Topic 840. The Group’s reporting for periods prior to January 1, 2019 continued to be reported in accordance with

Leases

(Topic 840).

In evaluating whether an agreement constitute a lease upon adoption of the new lease accounting standard ASC 842, the Group reviews the contractual terms to determine which party obtains both the economic benefits and control of the assets at the inception of the contract. The Group categorizes leases with contractual terms longer than twelve months as either operating or finance lease at the commencement date of a lease. However, the Group has no finance leases for any of the periods presented.

The Group recognizes a lease liability for future fixed lease payments and a right-of-use (“ROU”) asset representing the right to use the underlying asset for the lease term. Lease liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term using the rate implicit in the lease, if available, or the Group’s incremental borrowing rate. As its leases do not provide an implicit borrowing rate, the Group uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. Current maturities of operating lease liabilities are classified as operating lease liabilities, current in the Group’s consolidated balance sheets. Most leases have initial terms ranging from

ten to 20

years. The lease term includes lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that the Group will exercise such extension options and not exercise such early termination options, respectively. The Group’s lease agreements may include

nonlease

components, mainly common area maintenance, which are combined with the lease components as the Group elects to account for these components as a single lease component, as permitted. Besides, the Group’s lease payments are generally fixed and certain agreements contain variable lease payments based on the operating performance of the leased property. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term, and lease expense related to variable payments is expensed as incurred. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities. The Group’s lease agreements do not contain any significant residual value guarantees or restricted covenants.

The ROU assets are measured at the amount of the lease liabilities with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by the Group, deferred rent and lease incentives, and any off-market terms (that is, favorable or unfavorable terms) present in the lease when the Group acquired leases in a business combination in which the acquiree acts as a lessee. The Group evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group. If the carrying value of the asset group determined to not be recoverable and is in excess of the estimated fair value, the Group records an impairment loss in the consolidated statement of operations. Noncash lease expense are used as the noncash add-back for the amortization of the ROU assets to the operating section of the consolidated statements of cash flow.

The Group reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon modification of the contract. The Group will derecognize ROU assets and liabilities, with difference recognized in the income statement on the contract termination.

Income taxes

Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations.

Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-

likely-than-not

that some portion or all of the deferred tax assets will not be realized.

Foreign currency translation

The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar (“US$”). Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured in functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred. Transaction gains and losses are recognized in the statements of comprehensive income.

Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income.

The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies.

Comprehensive income

Comprehensive income includes all changes in equity except for those resulting from investments by owners and distributions to owners and is comprised of net income, foreign-currency translation adjustments and unrealized gains (losses) associated with investments in securities accounted for as available-for-sale.

Concentration of credit risk

Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term and long-term investments, loan receivables, amount due from related parties and accounts receivable.

All of the Group’s cash and cash equivalents and restricted cash are held with financial institutions that Group management believes to be high credit quality. In addition, the Group’s investment policy limits its exposure to concentrations of credit risk and the Group’s short-term and long-term investments consist of equity investments in listing and private companies. The Group’s loan receivables are lent to entities with high credit quality. The Group conducts credit evaluations on its group and agency customers and generally does not require collateral or other security from such customers. The Group periodically evaluates the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

Fair value

The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Group’s financial instruments include cash and cash equivalent, restricted cash, loan receivables current and

non-current

portion, receivables, payables, short-term debts, long-term debts. The carrying amounts of these short-term financial instruments approximates their fair value due to their short-term nature. The long-term debts and long-term loan receivables approximate their fair values, because the bearing interest rate approximates market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. The fair value of convertible senior notes with carrying amount of RMB3,290 is approximately RMB3,711 as of December 31, 2019, which is estimated based on quoted market price.

When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates.

As of December 31, 2018 and 2019, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:


				Fair Value Measurements at Reporting Date Using
A s of December 31,	Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2018	Equity securities with readily determinable fair value		4,111		4,111
2018	Available-for-sale debt securities		320				320
2019	Equity securities with readily determinable fair value		2,908		2,908
2019	Available-for-sale debt securities		220				220

The following table presents the Group’s assets measured at fair value on a

non-recurring

basis for the years ended December 31, 2017, 2018 and 2019:


				Fair Value Measurements at Reporting Date Using
Years Ended December 31,	Description	Fair Value for Years Ended December 31		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss for the Year
2017	Property and equipment		52				52		169
2018	Property and equipment		10				10		35
2019	Property and equipment		—				—		3
2019	Long-term Investment		—				—		10

As a result of reduced expectations of future cash flows from certain leased hotels, the Group determined that the hotels property and equipment with a carrying amount of RMB221, RMB45 and RMB3 was not fully recoverable and consequently recorded an impairment charge of RMB169, RMB35 and RMB3 for the years ended December 31, 2017, 2018 and 2019, respectively.

Fair value of the property and equipment impairment testing was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. As a result, the Group has determined that the majority of the inputs used to value its long-lived assets held and used and its reporting units are unobservable inputs that fall within Level 3 of the fair value hierarchy. The revenue growth rate and the discount rate were the significant unobservable input used in the fair value measurement, which are 4% and 20%, respectively, for the years ended December 31, 2017

and 201

, respectively.

As a result of the impairment assessment, the Group determined that the long-term investment amount with a carrying amount of nil, nil and RMB10 was impaired as a result of the impairment assessment for the years ended December 31, 2017, 2018 and 2019, respectively.

Share-based compensation

The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of likely future performance and will be adjusted in future periods based on the actual performance. The share-based compensation expenses have been categorized as either hotel operating costs, general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees. For the years ended December 31, 2017, 2018 and 2019, the Group recognized share-based compensation expenses of RMB66, RMB83 and RMB110, respectively, which was classified as follows:


	Years Ended December 31,
	2017		2018		2019
Hotel operating costs		20		27		35
Selling and marketing expenses		2		3		3
General and administrative expenses		44		53		72

Total		66		83		110

Earnings per share

Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary shares issuable upon the conversion of the convertible senior notes (using the

if-converted

method) and ordinary shares issuable upon the exercise of stock options and vest of nonvested restricted stocks (using the treasury stock method).

The loaned shares under the ADS lending agreement are excluded from both the basic and diluted earnings per share calculation unless default of the ADS lending arrangement occurs which the Group considered the possibility is remote.

Segment reporting

The Group identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information. The Group’s chief operating decision maker has been identified as the chief executive officer. CODM regularly reviews the operation data, such as industrial metrics of revenue per available room, occupancy rate, and number of hotels by scale/brand, to assess the performance and allocate the resources at brand level. All the acquired business including Accor, Crystal Orange and Blossom Hill has been migrated to the Group’s business, and the Group operates and manages its business as a single segment. Therefore, the Group has one single operating segment.

The Group primarily generates its revenues from customers in the PRC during the reporting period. Substantially all of the Group’s long-lived assets are located in the PRC.

Treasury shares

Treasury shares represent shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury shares are accounted for under the cost method. As of December 31, 2019, under the repurchase plan, the Company had repurchased an aggregate of 3,096,764 ordinary shares on the open market for total cash consideration of RMB107. The repurchased shares were presented as “treasury shares” in shareholders’ equity on the Group’s consolidated balance sheets.

Recently Issued Accounting

Pronouncements

Adopted Accounting Standards

In February 2016, the FASB issued

Accounting Standards Update No. 2016-02 (“

ASU

2016-02

”),

Leases (Topic 842)

to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities with certain practical expedients available on the balance sheet and disclosing key information about leasing arrangements. Subsequent to ASU

2016-02,

the FASB issued related ASUs, including Accounting Standards Update No.

2018-11

(“ASU

2018-11

”),

Leases (Topic 842): Targeted Improvements,

which provides for another transition method in addition to the modified retrospective approach required by ASU

2016-02.

This option allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative adjustment to the opening balance of retained earnings in the period of adoption

rather than retrospectively adjusting prior periods and the package of practical expedients, which allowed the Group to (1) not reassess whether existing contracts contain leases, (2) carry forward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases. Upon adoption of Topic 842, the Group elected to use the remaining lease term as of January 1, 2019 in estimation of the applicable discount rate for leases that were in place at adoption.

By applying ASU

2016-02

at the adoption date, as opposed to at the beginning of the earliest period presented, the reporting for periods prior to January 1, 2019 continued to be reported in accordance with

Leases

(Topic 840).

As a result of adoption, the Group recognized ROU assets

of RMB

18,940

and related lease liabilities of RMB

19,438

for operating leases. The Group reclassified from assets and liabilities RMB

498

net to ROU assets. The adoption of ASU

2016-02

did not materially affect the consolidated statements of income or consolidated statements of cash flows and had no impact on the debt covenant compliance under the current agreements.

The impact on the Group’s consolidated balance sheet upon adoption of ASU 2016-02 was as follows:


	December 31, 2018		January 1, 2019
	As reported		Effect of adoption ASU 2016-02			As adjusted
Assets
Prepaid rent		955		(955	)		—
Intangible assets, net		1,834		(181	)		1,653
Operating lease right-of-use assets		—		18,940			18,940

Total assets		2,789		17,804			20,593

Accrued expenses and other current liabilities		1,607		(126	)		1,481
Deferred rent		1,507		(1,507	)		—
Other long-term liabilities		453		(1	)		452
Operating lease liability, current		—		2,733			2,733
Operating lease liability, noncurrent		—		16,705			16,705

Total liabilities		3,567		17,804			21,371

Accounting Standards Not Yet Adopted

In January 2017, the FASB issued

Accounting Standards Update No.

2017-04,

Intangibles-Goodwill and Other

, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of

step 2 of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the ASU clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment. The ASU also clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. For public business entities, the ASU is effective prospectively for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Group

does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In June 2016, the FASB released Accounting Standards Update

No.2016-13

(“ASU

2016-13”),

Financial Instruments - Credit Losses (Topic 326)

Measurement of Credit Losses on Financial Instruments.

ASU

2016-13

replaces the existing impairment model for most financial assets from an incurred loss impairment model to a current expected credit loss model, which requires an entity to recognize an impairment allowance equal to its current estimate of all contractual cash flows the entity does not expect to collect. ASU

2016-13

also requires credit losses relating to AFS debt securities to be recognized through an allowance for credit losses.

In April 2019, the FASB issued ASU 2019-04,

Codification Improvements to Topic 326

, clarifies the modification of accounting for available for sale debt securities excluding applicable accrued interest, which must be individually assessed for credit losses when fair value is less than the amortized cost basis

In May 2019, the FASB issued ASU 2019-05,

Financial Instruments - Credit Losses

(Topic 326)

- Targeted Transition Relief

, which provide

entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for certain financial assets upon the adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. In December 2019, FASB issued ASU No. 2019-11, Codification Improvements to Topic 326,

Financial Instruments - Credit Losses

which

introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis.

In March 2020, FASB issued ASU No. 2020-03,

Codification Improvements to Financial Instruments

, clarified that the contractual term of a net investment in a lease determined in accordance with Topic 842 should be the contractual term used to measure expected credit losses under Topic 326.

The standards are to be applied using a modified retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. The Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In August 2018, the FASB released Accounting Standards Update No.

2018-13

(“ASU

2018-13”),

Fair Value Measurement (Topic 820)

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement

. ASU

2018-13

modifies the disclosure requirements on fair value measurements. The provisions of ASU

2018-13

are to be applied using a prospective or retrospective approach, depending on the amendment, and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. The

Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In August 2018, the FASB released Accounting Standards Update No.

2018-15

(“ASU

2018-15”),

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. ASU

2018-15

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain

internal-use

software. The provisions of ASU

2018-15

are to be applied using a prospective or retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. The Group

does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17,

Consolidation

(Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities

. The new standard changes how entities evaluate decision-making fees under the variable interest entity guidance. The new standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance. The standard should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. The Group expects that the adoption of this ASU will not have a material impact on the Group’s consolidated financial statements.

In December 2019, the FASB has issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes. The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. This ASU also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted, and is not expected to have a material impact on the Group’s consolidated financial statements.

Translation into United States Dollars

The financial statements of the Group are stated in RMB. Translations of amounts from RMB into United States dollars are solely for the convenience of the reader and were calculated at the rate of US$1 = RMB6.9618, on December 31, 2019, as set forth in H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into United States dollars at that rate on December 31, 2019, or at any other rate.

ACQUISITIONS

12 Months Ended

Dec. 31, 2019

ACQUISITIONS

ACQUISITIONS

3.	ACQUISITIONS

(i) On May 25, 2017, the Group completed the acquisition of 100% of the equity interest of Crystal Orange Hotel Holdings Limited (the “Crystal Orange”) engaged in the business of owning, leasing, franchising, operating and managing hotels under Crystal Orange brands in the midscale market in the PRC, with an aggregated consideration in cash of approximately RMB3,765.

(ii) In August,

2018

, the Group completed the acquisition of

% equity interest of Blossom Hill Hotel Investment Management (

Kunshan

) Co., Ltd. (the “Blossom Hill”). Blossom Hill was engaged in the business of owning, leasing, franchising, operating and managing hotels under Blossom Hill brand in the upscale market in the PRC. The aggregated consideration RMB

536

consisted of RMB

463

cash consideration transferred and RMB

implied fair value of the

% equity interest originally owned by the Group. The previously held

% equity interest that was accounted for using cost method was remeasured to fair value on the acquisition date, resulting in a gain of RMB

recognized in investment income.

Assuming the acquisition occurred as of January 1, 2017, the pro forma net revenue was RMB8,331 and RMB10,124 for the years ended December 2017 and 2018 respectively, the pro forma net income was RMB1,214 and RMB701 for the years ended December 2017 and 2018 respectively. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2017.

In August 2018, the Group purchased 11% noncontrolling interest from several minority shareholders for total cash consideration of RMB73.

In September 2019, the Group purchased 5% noncontrolling interest from several minority shareholders for total cash consideration of RMB34.

The purchase of the

noncontrolling

interest is treated as an equity transaction. As of December

201

, the Group owns

% equity interest of Blossom Hill in total.

(iii) During the years ended December 31, 2017, 2018 and 2019, the Group acquired two individual hotels, two individual hotels and three individual companies for total cash consideration of nil, RMB7 and RMB54 respectively. The business acquisitions were accounted for under purchase accounting.

The assets and liabilities of these hotels and companies acquired in 2017, 2018 and 2019 were immaterial to the consolidated financial statements.

Goodwill was recognized as a result of expected synergies from combining operations of the Group and acquired business and other intangible assets that don’t qualify for separate recognition. Goodwill is not amortized and is not deductible for tax purposes. In accordance with ASC

350

, the Group assigned and assessed goodwill for impairment at the reporting unit level. All the acquired business has been migrated to the Group’s business. The Group concluded that it had only

one

reporting unit. Accordingly, goodwill is allocated to one single reporting unit.

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2019

REVENUE FROM CONTRACT WITH CUSTOMERS

REVENUE FROM CONTRACT WITH CUSTOMERS

4.	REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Revenues

The following tables present

the

Group’s

revenues disaggregated by the nature of the product or service:


	Years Ended December 31,
	2017		2018		2019
Room revenues		5,842		6,894		7,057
Food and beverage revenues		249		304		351
Others		247		272		310

Leased and owned hotels revenue		6,338		7,470		7,718
Initial one-time franchise fee		59		79		93
On-going management and service fees		759		983		1,228
Central reservation system usage fees, other system maintenance and support fees		436		630		908
Reimbursements for hotel manager fees		371		455		581
Other fees		226		380		532

Manachised and franchised hotels revenue		1,851		2,527		3,342
Other revenues		40		66		152

Total revenues		8,229		10,063		11,212

Contract Balances

The

Group’s

contract assets are insignificant at December

2018

and

2019


	As of December 31,
	2018		2019
Current contract liabilities		1,005		1,179
Long-term contract liabilities		458		559

Total contract liabilities		1,463		1,738

The contract liabilities balances above

which are classified as deferred revenue on the consolidated balance sheet

, as of December

2018

and

2019

were comprised of the following:


	As of December 31,
	2018		2019
Initial fees received from franchisees owners		674		869
Cash received for membership fees and not recognized as revenue		357		400
Advances received from customers		374		412
Deferred revenue related to the loyalty program		58		57

Total		1,463		1,738

The Group classifies initial fees received from franchisees into current liabilities when the hotel has not yet opened. Initial fees received from franchisees for pre-opening hotels are RMB329 and RMB448 as of December 31, 2018 and 2019, respectively. Once the hotel opens, initial one-time franchise fee will be recognized as revenue over the term of the franchise contract and the initial fees received from franchisees that has not been recognized as revenue will be reclassified into current contract liabilities and long-term contract liabilities respectively.

The Group

recognized revenues that were previously deferred as contract liabilities of RMB468 and RMB491 during the years ended December 31, 2018 and 2019, respectively.

Revenue Allocated to Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

As of December 31,

2019, we had RMB57 of deferred revenues related to unsatisfied performance obligations under HUAZHU Rewards that will be recognized as revenues when the points are redeemed, which we estimate will occur over the next

two years

. We had RMB869 of deferred revenues related to initial fees received from franchisees owners are expected to be recognized as revenues over the remaining contract periods over

generally

one to

ten years

. Additionally, we had RMB400 of deferred revenues related to membership fees that are expected to be recognized as revenues over the remaining membership life, which is estimated to be one to

five years

. We also had RMB412 of deferred revenues related to advances received from customers, which are expected to be recognized as revenues in future periods over the terms of the related contracts.

We did not estimate revenues expected to be recognized related to our unsatisfied performance for the following:

•

Revenues related to

on-going

management and franchise service fees, as they are considered sales-based royalty fees.

•

Revenues related to central reservation system usage fees, other system maintenance and support fees, and reimbursement for hotel manager fee, as the related revenues from the satisfaction of these performance obligations is recognized when the Group is entitled to invoice the amount.

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET

5.	PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:


	As of December 31,
	2018			2019
Cost:
Buildings		247			247
Leasehold improvements		7,389			8,414
Furniture, fixtures and equipment		1,162			1,270
Motor vehicles		1			1

		8,799			9,932
Less: Accumulated depreciation		(4,344	)		(4,918	)

		4,455			5,014
Construction in progress		563			840

Property and equipment, net		5,018			5,854

Depreciation expense was RMB753, RMB847 and RMB967 for the years ended December 31, 2017, 2018 and 2019, respectively.

The Group occasionally demolishes certain leased hotels due to local government zoning requirements, which typically results in receiving compensation from the government.

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

6.	INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

Intangible assets, net consist of the following:


	As of December 31,
	2018			2019
Intangible assets with indefinite life:
Brand name (Note 3)		1,340			1,340
Master brand agreement		192			192
Intangible assets with definite life:
Franchise agreements		95			95
Favorable lease agreements		278			1 3
Purchased software		69			72
Other intangible assets		—			20

Total		1,974			1,732
Less: Accumulated amortization		(140	)		(70	)

Total		1,834			1,662

Unfavorable lease


	As of December 31, 2018
Unfavorable lease agreements		3
Less: Accumulated amortization		(2	)

Unfavorable lease agreements, net		1

The values of favorable lease agreements were determined based on the estimated present value of the amount the Group has avoided paying as a result of entering into the lease agreements. Unfavorable lease agreements

were determined based on the estimated present value of the acquired lease that exceeded market prices and are recognized as other long-term liabilities. The value of favorable and unfavorable lease agreements is amortized using the straight-line method over the remaining lease term

before January 1, 2019

Favorable lease agreements and unfavorable lease agreements in which the Group acts as a lessee were reclassified to operating lease right-of-use assets on January 1, 2019, upon adoption of ASC 842

For the favorable lease agreements in which the Group acts as a lessor were accounted as intangible assets as before.

Amortization expense of intangible assets for the years ended December 31

, 2017

, 2018

and 20

amounted to RMB31, RMB39 and RMB16, respectively.

The annual estimated amortization expense for the above intangible assets excluding brand name and master brand agreement for the following years is as follows:

	Amortization for Intangible Assets
2020		14
2021		14
2022		13
2023		13
2024		12
Thereafter		64

Total		130

INVESTMENTS

12 Months Ended

Dec. 31, 2019

INVESTMENTS.

INVESTMENTS

7.	INVESTMENTS

The investments as of December 31, 2018 and 2019 were as follows:


	As of December 31,
	2018		2019
Equity securities with readily determinable fair values:
Accor		3,816		2,770
Other marketable securities		295		138
Equity securities without readily determinable fair values:
OYO		66		66
Other equity securities without readily determinable fair values		113		100
Cjia/Cjia Group		298		232
Equity-method investments:
AAPC LUB		461		469
Hotel related funds		503		507
Shared office management entities		111		10
Cjia/Cjia Group		—		—
China Hospitality JV		117		115
GOOAGOO/Data Driven		52		49
Other investments		89		161
Available-for-sale debt securities:
Cjia/Cjia Group		220		220
CREATER		100		—

Total		6,241		4,837

Equity securities with readily determinable fair values:

In 2017, 2018 and 2019, the Group purchased 2,309,981

and

10,782,131 and 282,787 ordinary shares of Accor, a hotel group listed in Paris stock exchange, from open market. In 2019, the Group sold out 4,904,222 of these shares with gains of RMB52 realized. As of December 31, 2019, the Group accumulatively hold 8,470,677 shares of Accor, which accounts for less than 4% of Accor total outstanding shares where the Group does not have the ability to significantly influence the operations of this entity. In 2018 and 2019, the Group recognized unrealized losses from fair value changes of Accor of RMB794 and

unrealized gains from fair valu

e chan

s of Accor

RMB351,

respectively.

At December 31, 2018 and 2019, the Group had RMB295

and RMB138, respectively, of other marketable securities, which represent investments in entities in hospitality or related industries where the Group do

not have the ability to significantly influence the operations of these entities. In 2018 and 2019, the Group recognized unrealized losses from fair value changes of other marketable securities of RMB120 and RMB35, respectively.

Equity securities without readily determinable fair values:

In September 2017, the Group purchased approximately 1% equity interest of Oravel Stays Private limited (“OYO”), an India leading hospitality company. The Group accounted the investment as equity securities without readily determinable fair values since the Group does not have the ability to exert significant influence over OYO.

Other equity securities without readily determinable fair values included several insignificant investments in certain privately-held companies.

Equity-method investments:

In January 2016, the Group acquired approximately 28% equity interest in AAPC LUB. The Group accounted for the investment in AAPC LUB under equity-method as the Group has the ability to exert significant influence. The Group recognized investment income of RMB43 and RMB47 in income (loss) from equity method investments in 2018 and 2019, respectively. In 2018 and 2019, the Group received cash dividend from AAPC LUB of RMB60 and RMB

which was recognized as return on investment.

As of December 31, 2018 and 2019, the Group had RMB503 and RMB507, respectively, of investments in hotel related funds. Those funds were VIEs and were managed by or power shared with

un-related

third-parties. However, the Group determined that they were not the primary beneficiary of those VIEs since the Group did not have the power to direct the activities of these VIEs that most significantly impacted its economic performance. The Group accounted for the investment under equity-method. The Group recognized investment loss of RMB

and

investment income of RMB11

in income (loss) from equity method investments in 2018 and 2019, respectively. The maximum potential financial statement loss the Group could incur if the investment funds were to default on all of their obligations is the loss of value of the interests in such investments of RMB507 that the Group holds as of December 31, 2019.

In 2016, the Group sold its subsidiary, Chengjia Hotel Management Co., Ltd. to Chengjia (Shanghai) Apartment Management Co., Limited (“Cjia”), the Group’s equity investee. As of December 31, 2016, the Group had approximately 23% equity interest of Cjia and a sixty-month convertible note with original value of RMB52. In 2017, the Group invested in Cjia for convertible notes totaled RMB200. With the injection from an unrelated investor to Cjia, the Group recognized gain on deemed disposal of RMB40 in other income in 2017. In 2018, Cjia completed its restructuring, and accordingly the Company’s equity interest of 17% in Cjia was transformed to be the Group’s equity interest of 17% in China Cjia Group Limited (“Cjia Group”). In addition, the Group made further investment in preferred shares of Cjia Group of US$45 million in 2018. Meanwhile, the convertible notes of Cjia could be replaced by convert

ible

notes of Cjia Group in the next four years. In 2019, Cjia

roup

repurchased from the Group part of its ordinary shares and preferred shares and issued new shares to an unrelated investor. As a result, the Group recognized a gain of RMB

in other income in 2019. As of December 31, 2019, the Group had approximately 15%

ordinary shares

of Cjia

Group.

The Group accounted for the

ordinary shares

in Cjia

Group

under equity-method as the Group has the ability to exert significant influence. The convertible notes are recorded as

available-for-sale

debt securities.

The preferred shares are accounted for as equity securities without readily determined fair value as they are not in substance ordinary shares.

The Group recognized investment loss of RMB33, RMB38 and RMB

in income (loss) from equity method investments in 2017, 2018 and 2019, respectively. Loss from equity method investments reduced the cost of equity-method investment to zero and further adjusted the carrying amount of

convertible note

and

preferred

shares.

In 2018, the Group partnered with an unrelated third party investor to form China Hospitality JV, Ltd. (“China Hospitality JV”), of which the Group holds 20% equity interest. The business of China Hospitality JV was to acquire and operate two hotel properties. As of December 31, 2019, the Group had approximately 20% equity interest of China Hospitality JV. The Group accounted for the investment in China Hospitality JV under equity-method as the Group has the ability to exert significant influence. The Group recognized investment loss of RMB11 and RMB

in income (loss) from equity method investments in 2018 and 2019, respectively.

As of December 31, 2018, the Group had approximately 41% equity interest of Gooagoo Group Holdings Limited (“GOOAGOO”), a high-tech service provider for Offline-To-Online data processing and platform operation, and accounted for as

equity-method investments as the Group has the ability to exert significant influence through the increased voting power. After the restructuring of GOOAGOO and further investment of the Group in 2019, all the equity interests of the GOOAGOO were repurchased and the Group had approximately

% equity interest of Beijing Data Driven Technology Co., Ltd. The Group recognized investment loss of RMB

and RMB

in income (loss) from equity method investments in 2018 and 2019.

Other investments included several insignificant equity investments in certain privately-held companies.

Available-for-sale

debt securities:

In September 2017, the Group invested in Shanghai CREATER Industrial Co., Ltd. (“CREATER”), a staged office space company in China, for

two-year

convertible notes amounted RMB100 with an interest rate of 10% per year. The convertible notes with equity pledge are convertible upon satisfaction of certain conditions or at the option of the Group to ordinary shares in the last month before the expiration. The convertible notes were recorded as

available-for-sale

debt securities and were redeemed on maturity in 2019.

GOODWILL

12 Months Ended

Dec. 31, 2019

GOODWILL.

GOODWILL

The changes in the carrying amount of goodwill for the years ended December 31, 2017, 2018 and 2019 were as follows:


	Gross Amount		Accumulated Impairment Loss			Net Amount
Balance at January 1, 2017		176		(4	)		172
Increase in goodwill related to acquisitions		2,093		—			2,093

Balance at December 31, 2017		2,269		(4	)		2,265
Increase in goodwill related to acquisitions		365		—			365

Balance at December 31, 2018		2,634		(4	)		2,630
Increase in goodwill related to acquisitions		27		—			27

Balance at December 31, 2019		2,661		(4	)		2,657

DEBT

12 Months Ended

Dec. 31, 2019

DEBT

DEBT

The short-term and long-term debt as of December 31, 201

and 201

were as follows:


	As of December 31,
	2018		2019
Short-term debt:
Long-term bank borrowings, current portion		0		3,953
Short-term bank borrowings		948		1,256
Convertible senior notes, current portion		—		3,290

Total		948		8,499

Long-term debt:
Long-term bank borrowings, non-current portion		5,603		8,084
Convertible senior notes, non-current portion		3,209		—

Total		8,812		8,084

Bank borrowings

In May 2017, the Group entered into an US$250 million term facility and US$250 million revolving credit facility agreement with several banks. The US$250 million revolving credit facility is available for 35 months after the date of the agreement. The interest rate on the loan is

IBOR

plus 1.75%. There are some financial covenants including interest coverage ratio, leverage and tangible net worth related to this facility and the Group was in compliance as of December 31, 2018 and 2019. The Group had drawn down US$250 million under the term facility agreement in 2017 and repaid nil in 2017, 2018 and 2019. For revolving credit facility agreement, the Group had drawn down total US$250 million, US$370 million and US$755 million in succession under the revolving facility agreement and repaid US$250 million, US$120 million and US$755 million in 2017, 2018 and 2019, respectively. The weighted average interest rate of borrowings drawn under this agreement was

3.04%, 3.93% and 4.24% for the years ended December 31, 2017, 2018 and 2019, respectively.

In February 2018, the Group entered into a three-year term facility agreement under which the Group can borrow up to EUR260 million within 30 London business days. The interest rate on the loan for each interest period is the aggregate of the applicable EURIBOR and a spread of 1.70%. The Group had pledged 13,092,112 shares of Accor the Group acquired from open market in 2017 and 2018 as collateral. The loan contains certain financial covenants including debt ratio and the value of pledged shares and the Group was in compliance as of December 31, 2018 and 2019. The Group had drawn down EUR241 million in 2018 under the term facility agreement and repaid EUR193 million in 2019

with 10,492,780 shares of Accor released from pledge.

The weighted average interest rate of borrowings drawn under this agreement was

1.70

% for the year ended December

2018

and

2019

In March 2019, the Group entered into a five years RMB1,190 bank loan contract expiring in March 2024. The interest rate resets every six months, and is based on the People’s Bank of China five-year benchmark interest rate on the pricing date. The loan contains certain financial covenants including interest coverage ratio and net tangible assets and the Group was in compliance as of December 31, 2019. The Group had repaid RMB89 in 2019. The weighted average interest rate of borrowings drawn under this agreement was 4.75% for the year ended December 31, 2019.

In October 2019, the Group entered into a one-year term facility agreement under which the Group can borrow up to US$

180

million within two months

secured by deposit at least equal to loan facility amount with accrued interest and any cost.

The interest rate was fixed at

2.52

%. In 2019, the Group had drawn down US$

180

million under this agreement

with US$185 million deposit and

repaid nil.

In December 2019, the Group entered into a EUR440 million term facility and US$500 million revolving credit facility agreement

with several banks.

The US$500 million revolving credit facility is available for 35 months after the date of the agreement.

The interest rate on the loan for each interest period is the aggregate of the applicable Margin and LIBOR or EURIBOR in relation to any

oan in euro. The Margin for each

oan depends on the applicable leverage range, generally means 2.0% per annum. There are some financial covenants including interest coverage ratio, leverage and book equity related to this facility and the Group was in compliance as of December 31, 2019. The Group had drawn down EUR440 million and US$500 million under the facility agreement and repaid nil in 2019. The weighted average interest rate of borrowings drawn under this agreement was 2.86% for the year ended December 31, 2019.

Convertible Senior Notes due 2022

On November 3, 2017, the Company issued US$475 million of Convertible Senior Notes (“the Notes”). The Notes mature on November 1, 2022 and bear interest at a rate of 0.375% per annum, payable in arrears semi-annually on May 1 and November 1, beginning May 1, 2018.

In 2017, proceeds to the Company were RMB3,093 (equivalently US$467 million), net of issuance costs of RMB54 (equivalently US$8 million).

Holders of the Notes have the option to convert their Notes at any time prior to the close of business on the second business day immediately preceding the maturity date. The Notes can be converted into the Company’s ADSs at an initial conversion rate of 5.4869 of the Company’s ADSs per US$1,000 principal amount of the Notes (equivalent to an initial conversion price of US$182.25 per ADS). The conversion rate is subject to adjustment in some events but is not adjusted for any accrued and unpaid interest. In addition, following a make-whole fundamental change (as defined in the Indenture) that occur prior to the maturity date or following the Company’s delivery of a notice of a tax redemption, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or such tax redemption.

The holders may require the Company to repurchase all or portion of the Notes for cash on November

, 2020, or upon a fundamental change, at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. The Company believes that the likelihood of occurrence of events considered a fundamental change is remote.

The conversion option meets the definition of a derivative. However, since the conversion option is considered indexed to the Company’s own stock and classified in stockholders’ equity, the scope exception is met, accordingly the bifurcation of conversion option from the Notes is not required. There is no beneficial conversion feature (“BCF”) attribute to the Notes as the set conversion prices for the Notes are greater than the respective fair values of the ordinary share price at date of issuance.

The feature of mandatory redemption upon maturity is clearly and closely related to the debt host and this feature is no need to be bifurcated. Furthermore, the Company concluded that the feature of contingent put options upon tax events or fundamental changes does not need to be considered as an embedded derivative to be bifurcated.

Therefore, the Company accounted for the Notes in accordance with ASC 470, as a single instrument. Issuance costs related to the Notes is recorded in consolidated balance sheet as a direct deduction from the principal amount of the Notes, and is amortized over the period from November 3, 2017, the date of issuance, to November 1, 2020, the first put date of the Notes, using the effective interest method. As of December 31, 2019, the Group reclassified the Notes as short-term debt as the Notes holders have a put option which can be exercised within one year.

ADS Lending Arrangement

Concurrent with the offering of the Notes, the Company entered into ADS lending agreements with the affiliates of the initial purchasers of the Notes (“ADS Borrowers”), pursuant to which the Company lent to the ADS Borrowers 2,606,278 ADSs (the “Loaned ADSs”) at a price equal to par, or $0.0004 per ADS (“ADS lending arrangement”). The purpose of the ADS lending arrangements is to facilitate privately negotiated transactions in which the ultimate holders of the Notes may elect to hedge their investment in the related notes. As of December 31, 2017

2018 and 2019, the outstanding number of Loaned ADSs was 2,606,278.

The Loaned ADSs must be returned to the Company by the earliest of (a) the maturity date of the Notes, November 1, 2022, (b) upon the Company’s election to terminate the ADS lending agreement at any time after the later of (x) the date on which the entire principal amount of the Notes ceases to be outstanding, and (y) the date on which the entire principal amount of any additional convertible securities that the Company has in writing consented to permit the ADS Borrower to hedge under the ADS lending agreement ceases to be outstanding, in each case, whether as a result of conversion, redemption, repurchase, cancellation or otherwise; and (c) the termination of the ADS lending agreement. The Company is not required to make any payment to the initial purchasers or ADS Borrower upon the return of the Loaned ADSs. The ADS Borrowers do not have the choice or option to pay cash in exchange for the return of the Loaned ADSs.

No collateral is required to be posted for the Loaned ADSs. The initial purchasers are required to remit to the Company any dividends paid to the holders of the Loaned ADSs. An ADS Borrower has the ability to vote without restriction. However, the ADS Borrowers have agreed not to vote on the Loaned ADSs.

In accordance with FASB ASC

Sub-topic

470-20,

the Company has accounted for the ADS lending agreement initially at fair value and recognized it as an issuance cost associated with the convertible debt offering. As a result, additional debt issuance costs of RMB26 (equivalently US$4 million) were recorded on the issuance date with a corresponding increase to additional

paid-in-capital.

This debt issuance costs have also been amortized from the date of issuance to the put date of Notes, using the effective interest method.

In accordance with ASC Topic

470-20,

although legally issued, the Loaned ADSs are not considered outstanding, and then excluded from basic and diluted earnings per share unless default of the ADS lending arrangement occurs, at which time the Loaned ADSs would be included in the basic and diluted earnings per share calculation. As of December 31, 2019, it is not probable that the ADS Borrower or the counterparty to the ADS lending arrangement will default.

Capped Call Options

In connection with the issuance of the Notes, the Company has entered into capped call option transactions with some of the initial purchasers or their affiliates (the “Option Counterparties”) to reduce the potential dilution to existing shareholders of the Company upon conversion of the Notes. The cap price of the capped call transactions will initially be US$221.31 per ADS, subject to adjustment under the terms of the capped call transactions. The total premium paid by the Company for the capped call transactions was RMB177 (equivalently US$27 million) on the purchased date. The capped call option is classified in stockholders’ equity, recorded at the cost with no subsequent changes in fair value be recorded.

ebt Maturities

The contractual maturities of the Group’s long-term debt as of December 31, 2019 were as follows:


Year Ending December 31,
2020			7,267
2021			590
2022			7,187
2023			298
2024			149
			15,491

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

10.	ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES


	As of December 31,
	2018		2019
Payable to franchisees		698		1,028
Other payables		261		394
Accrued rental, utilities and other accrued expenses		187		133
Liabilities related to customer loyalty program		154		110
Value-added tax, other tax and surcharge payables		90		90
Payable to noncontrolling interest holders		107		85
Payable for business acquisitions		39		16
Deferred rent, current		71		—

Total		1,607		1,856

From time to time, the Group receives cash advances from noncontrolling interest holders of hotels that are not wholly owned by the Group. Such advances are

non-interest

bearing and are payable within one year. Payable to franchisees mainly represents room charges received on behalf of franchisees and are payable within one year.

HOTEL OPERATING COSTS

12 Months Ended

Dec. 31, 2019

HOTEL OPERATING COSTS.

HOTEL OPERATING COSTS

11.	HOTEL OPERATING COSTS

Hotel operating costs include all direct costs incurred in the operation of the leased and owned hotels, manachised and franchised hotels and consist of the following:


	Years Ended December 31,
	2017		2018		2019
Rents		2,059		2,406		2,624
Utilities		366		399		404
Personnel costs		1,388		1,663		1,854
Depreciation and amortization		773		869		960
Consumable, food and beverage		551		673		793
Others		538		466		555

Total		5,675		6,476		7,190

PRE-OPENING EXPENSES

12 Months Ended

Dec. 31, 2019

PRE-OPENING EXPENSES

PRE-OPENING EXPENSES

12.	PRE-OPENING EXPENSES

The Group expenses all costs incurred in connection with

start-up

activities, including

pre-operating

costs associated with new hotel facilities and costs incurred with the formation of the subsidiaries, such as organization costs.

Pre-opening

expenses primarily include rental expenses and employee costs incurred during the hotel

pre-opening

period.


	Years Ended December 31,
	2017		2018		2019
Rents		192		221		460
Personnel costs		6		18		14
Others		8		16		28

Total		206		255		502

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

13.	SHARE-BASED COMPENSATION

In February 2007, the Group adopted the 2007 Global Share Plan which allows the Group to offer incentive awards to employees, officers, directors and consultants or advisors (the “Participants”). Under the 2007 Global Share Plan, the Group may issue incentive awards to the Participants to purchase not more than 10,000,000 ordinary shares. In June 2007, the Group adopted the 2008 Global Share Plan which allows the Group to offer incentive awards to Participants to purchase up to 3,000,000 ordinary shares. In October 2008, the Group increased the maximum number of incentive awards available under the 2008 Global Share Plan to 7,000,000. In September 2009, the Group adopted the 2009 Share Incentive Plan which allows the Group to offer incentive awards to Participants. Under the 2009 Share Incentive Plan, the Group may issue incentive awards to purchase up to 3,000,000 ordinary shares. In August 2010, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 15,000,000. In March 2015, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 43,000,000. The 2007 and 2008 Global Share Plans and 2009 Share Incentive Plan (collectively, the “Incentive Award Plans”) contain the same terms and conditions. The incentive awards granted under the Incentive Award Plans typically have a maximum life of ten years and vest in typical ways as listed below:

a.) Vest 50% on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the following two years;

b.) Vest over a period of ten years in equal yearly installments;

As of December 31, 2019, the Group had granted 24,577,669 options and 24,409,581 nonvested restricted stocks.

Share options

No share options were granted during the years 2017, 2018 and 2019.

The following table summarized the Group’s share option activity under the option plans:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
				US$		Years		US$’million
Share options outstanding at January 1, 2019		1,135,990			1.89
Exercised		(1,088,358	)		1.76

Share options outstanding at December 31, 2019		47,632			4.95		1.06		2

Share options vested or expected to vest at December 31, 2019		47,103			4.95		1.05		2

Share options exercisable at December 31, 2019		45,710			4.97		1.01		2

As of December 31, 2019, total unrecognized compensation expense related to unvested share-based compensation arrangements was immaterial, which is expected to be recognized over a weighted-average period of 0.22 years.

During the years ended December 31, 2017, 2018 and 2019, 609,224, 876,715 and 1,088,358 options were exercised with an aggregate intrinsic value of RMB77, RMB194 and RMB255 respectively.

Nonvested restricted stocks

The fair value of nonvested restricted stock with service conditions or performance conditions is based on the fair market value of the underlying ordinary shares on the date of grant.

In 201

, 2018 and 2019, the Group granted

nil

661,973 and 221,712 nonvested restricted stocks, respectively to senior officers and managers, each was in ten tranches with performance conditions. Each tranche is accounted for as a separate award with the same grant date, its own service inception date and requisite service period. The share-based compensation cost is recognized for each vesting tranche during the respective service period based on the estimated performance conditions at the service inception date. The Group reassesses the performance condition at each reporting period for true up. For each tranche, 50% vests on the second anniversary of the vesting commencement date with the remaining 50% vesting ratably over the following two years.

The following table summarized the Group’s nonvested restricted stock activity in 2019.


	Number of Restricted Stocks			Weighted Average Grant Date Fair Value
				US$
Nonvested restricted stocks outstanding at January 1, 2019		12,096,616			8.89
Granted		678,043			31.14
Forfeited		(727,479	)		15.57
Vested		(1,738,239	)		8.76
Adjusted for performance conditions		(63,551	)		15.45

Nonvested restricted stocks outstanding at December 31, 2019		10,245,390			9.87

As of December 31, 2019, there was RMB614 in unrecognized compensation costs, net of estimated forfeitures, related to unvested restricted stocks, which is expected to be recognized over a weighted-average period of 3.78 years.

The total fair value of nonvested restricted stocks vested in 2017, 2018 and 2019 was RMB274, RMB183 and RMB443, respectively.

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

EARNINGS PER SHARE

14.	EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the years indicated:


	Years Ended December 31,
	2017		2018		2019
Net income attributable to ordinary shareholders — basic		1,228		716		1,769
Eliminate the dilutive effect of interest expense of convertible senior notes		5		40		40

Net income attributable to ordinary shareholders — diluted		1,233		756		1,809

Weighted average ordinary shares outstanding — basic		279,272,140		281,717,485		284,305,138
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method		12,202,369		11,463,212		9,397,527
Dilutive effect of convertible senior notes		1,599,469		10,425,112		10,607,225
Weighted average ordinary shares outstanding — diluted		293,073,978		303,605,809		304,309,890

Basic earnings per share		4.40		2.54		6.22

Diluted earnings per share		4.21		2.49		5.94

For the years ended December 31, 2017, 2018 and 2019, the Group had securities which could potentially dilute basic earnings per share in the future, but which were excluded from the computation of diluted earnings per share as their effects would have been anti-dilutive. Such outstanding securities consist of the following:


	Years Ended December 31,
	2017		2018		2019
Outstanding employee options and nonvested restricted stocks		—		530,009		—

CASH DIVIDEND

12 Months Ended

Dec. 31, 2019

CASH DIVIDEND

CASH DIVIDEND

15.	Cash Dividend

On October 23, 2017, the Group approved and declared a cash dividend of US$0.16 per ordinary share on its outstanding shares as of the close of trading on December 15, 2017. Such dividend of RMB295 was recorded as a reduction against retained earnings, and the dividend of RMB11 attributable to ADS issued under the ADS lending arrangement was recorded as a receivable in other current assets as of December 31, 2017 and had been received in January 2018.

On December 13, 2018, the Group approved and declared a cash dividend of US$0.34 per ordinary share on its outstanding shares as of the close of trading on January 2, 2019. Such dividend of RMB658 was recorded as dividends payable as of December 31, 2018, and fully paid in

January 2019.

In November 2019, the Group approved a cash dividend in the total amount of approximately

US$100

million

on its outstanding shares as of the close of trading on January 10, 2020. Such dividend of RMB678 was recorded as dividends payable as of December 31, 2019, and fully paid in February 2020.

LEASES

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASES

16.

LEASES

The Group’s operating leases mainly related to building and the rights to use the land in the PRC. The total expense related to short-term leases were insignificant for

period of 2017, 2018 and

2019, and sublease income of the Group were

RMB79, RMB123 and

RMB121

for the years ended December 31, 2017, 2018 and

2019

respectively.

A summary of supplemental information related to operating leases in 2019 is as follows:


	Year Ended December 31, 2019
Lease cost:
Operating fixed lease cost		3,094
Variable lease cost		10

Total lease cost		3,104


Other information:
Weighted average remaining lease term		11 years
Weighted average discount rate		7.34	%

Lease expense for

all

the Group’s operating leases

(including fixed lease cost, variable lease cost and short-term lease cost)

for the years ended December 31, 2017 and 2018 were RMB

2,262

and RMB

2,641

, respectively.

The maturities of lease liabilities in accordance with

ASC

842 in each of the next five years and thereafter are as follows:


Year Ending December 31,
2020	3,236
2021	3,231
2022	3,157
2023	3,031
2024	2,921
Thereafter	18,077

Total minimum lease payments	33,653

Less: amount representing interest	(11,598	)

Present value of minimum lease payments	22,055

As of December 31, 2019, the Group has entered six lease contracts that the Group expects to account for as operating leases which is not reflected in the consolidated balance sheets but reflected in the table above as the leases have not commenced.

The undiscounted future minimum payments under non-cancelable operating leases as of December 31, 2018, prior to the adoption of ASC 842 was as follows:


Year Ending December 31,
2019			2,854
2020			2,863
2021			2,777
2022			2,661
2023			2,548
Thereafter			15,669

Total			29,372

INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES

INCOME TAXES

17.	INCOME TAXES

The Group is subject to different income tax rates in various countries and jurisdictions under laws and relevant interpretations depending on the place of formation. Under the current laws of the Cayman Islands, the British Virgin Islands and Seychelles,

companies

are not subject to tax on income or capital gain.

Under the current laws of Singapore, companies are subject to Singapore corporate income tax at a rate of 17%. Under the current laws of German

companies are subject to income tax at a

standard

rate of

15% (15.825% including solidarity surcharge), plus municipal trade tax of 7%-17%. Companies established in Japan are subject to Japan corporate income tax at a rate of 23.2% (

30%

-34% including local taxes).

Companies established in Hong Kong are subject to Hong Kong profit tax at a rate of

16.5

. Companies established in Taiwan are subject to Taiwan corporate income tax at a rate of 20%.

Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), which was effective from January 1, 2008, domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25

%, and the industries and projects that are encouraged and supported by the State may enjoy tax preferential treatment.

Jizhu

Information and Technology (Shanghai) Co., Ltd. (“

Jizhu

Shanghai”), which once called

Mengguang

Information and Technology (Shanghai) Co., Ltd, is a recognized software development entity located in Shanghai of PRC.

Jizhu

Shanghai is entitled to a

two-year

exemption and

three

-year

% reduction tax holiday starting from the first profit making year after absorbing all prior years’ tax losses, and has entered into the first tax profitable year in 2014. Therefore, it applied tax exemption from 2014 to 2015, and tax rate of

12.5

% from 2016 to 2018. In November 2018,

Jizhu

Shanghai was qualified as high and new tech enterprise, resulting

Jizhu

Shanghai subject to a reduced tax rate of

% in 2019.

Tax expense (benefit) is comprised of the following:


	Years Ended December 31,
	2017			2018			2019
Current Tax		436			660			678
Deferred Tax		(79	)		(91	)		(38	)

Total		357			569			640

A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows:


	Years Ended December 31,
	2017			2018			2019
PRC statutory tax rate		25	%		25	%		25	%
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit		1	%		15	%		(3	) %
Effect of different tax rate of group entities operating in other jurisdictions		1	%		4	%		1	%
Effect of change in valuation allowance		—			(1	)%		2	%
Effect of tax holiday		(1	)%		(3	)%		(2	) %
Effect of cash dividends		(1	)%		5	%		4	%
Effect of disposal of subsidiary		—			1	%		—
Effect of excess tax benefit of rewards		(3	)%		(5	)%		(2	) %

Effective tax rate		22	%		41	%		25	%

The aggregate amount and per share effect of the tax holidays are as follows:


	Years Ended December 31,
	2017		2018		2019
Aggregate amount		24		31		45
Per share effect—basic		0.09		0.11		0.16
Per share effect—diluted		0.08		0.10		0.15

The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2018 and 2019 are as follows:


	As of December 31,
	2018			2019
Deferred tax assets:
Net loss carryforward		181			243
Deferred revenue		223			260
Long-term assets		149			125
Bad debt provision		6			7
Accrued payroll		16			23
Other accrued expenses		19			19
Share-based compensation		17			23
Others		1			0
Valuation allowance		(107	)		(152	)

Total deferred tax assets		505			548

Deferred tax liabilities:
Favorable lease, building and land use rights-fair value adjustment		447			449
Others		28			42

Total deferred tax liabilities		475			491

For the years ended December 31, 2018 and 2019, valuation allowance of RMB36 and RMB79 were provided, respectively,

nil

and

nil

were added due to acquisition, respectively, RMB

and RMB24 were reversed, respectively, and RMB9 and RMB10 were written off, respectively. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carryforward periods provided for in the tax law.

As of December 31, 2019, the

Group’s PRC subsidiaries had tax loss carryforwards

of RMB

965

, which will expire between

2020

and

2024

if not used.

The Group determines whether or not a tax position is

“more-likely-than-not”

of being sustained upon audit based solely on the technical merits of the position. At December 31, 2018 and 2019, the Group had recorded liabilities for uncertain tax benefit of approximately RMB14 and RMB18 associated with the interests on intercompany loans, respectively.

interest or penalty expense was recorded for the years ended December 31, 2017, 2018 and 2019. The Group does not anticipate any significant changes to its liability for unrecognized tax benefits within the next 12 months.


	Years Ended December 31,
	2017		2018			2019
Balance at January 1		20		26			14
Addition for tax positions		6		(12	)		4

Balance at December 31		26		14			18

In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. If there is a favorable tax treaty between mainland China and the jurisdiction of the foreign holding company, the income tax rate may be reduced. For example, holding companies in Hong Kong that are also tax residents in Hong Kong are eligible for a 5% withholding tax on dividends under the Tax Memorandum between China and the Hong Kong Special Administrative Region if the holding company is the beneficial owner of the dividends. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. In 2018, the Group revised its dividend policy to maintain a moderate dividend distribution

every

year

with the range of 0.5% to 2.0% of its market capitalization

from current year net income starting from 2018.

The Group’s board of directors has complete discretion in deciding whether to distribute dividends and the dividend amounts within the approved range.

In 2019,

the Group paid dividends from mainland China subsidiaries to Hong Kong subsidiaries amounted to about RMB1,467 to facilitate these dividends to investors. In 2018 and 2019, PRC dividend withholding tax of

RMB

and

RMB

was accrued. As of December

2019

, the accrued PRC dividend withholding tax liability ending balance was RMB

. Other than these dividends distributions, the Group intends to indefinitely reinvest the remaining undistributed earnings of the Group’s PRC subsidiaries, and therefore,

additional provision for PRC dividend withholding tax was accrued.

According to the PRC Tax Administration and Collection Law, the statute of limitations is

three years

if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to

five years

under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB0.1 is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is

ten years

. There is no statute of limitations in the case of tax evasion. The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from 2015 through 2019 on

non-transfer

pricing matters, and from 2010 through 2019 on transfer pricing matters.

MAINLAND CHINA CONTRIBUTION PLAN

12 Months Ended

Dec. 31, 2019

MAINLAND CHINA CONTRIBUTION PLAN

MAINLAND CHINA CONTRIBUTION PLAN

18.	MAINLAND CHINA CONTRIBUTION PLAN

Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits were RMB264, RMB321 and RMB413 for the years ended December 31, 2017, 2018 and 2019, respectively. The Group has no ongoing obligation to its employees subsequent to its contributions to the PRC plan.

RESTRICTED NET ASSETS

12 Months Ended

Dec. 31, 2019

RESTRICTED NET ASSETS

RESTRICTED NET ASSETS

19.	RESTRICTED NET ASSETS

Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries of the Group in the PRC must make appropriations from

after-tax

profit to

non-distributable

reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriation of 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each

year-end)

until the accumulative amount of such reserve fund reaches 50% of their registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for specific purposes of offsetting future losses, enterprise expansion and staff bonus and welfare and are not distributable as cash dividends and amounted to RMB379, RMB502 and RMB604 as of December 31, 2017, 2018 and 2019, respectively. In addition, due to restrictions on the distribution of share capital from the Company’s PRC subsidiaries, the PRC subsidiaries share capital of RMB2,777 at December 31, 2019 is considered restricted. As a result of these PRC laws and regulations, as of December 31, 2019, approximately RMB3,381 is not available for distribution to the Company by its PRC subsidiaries in the form of dividends, loans or advances.

RELATED PARTY TRANSACTIONS AND BALANCES

12 Months Ended

Dec. 31, 2019

RELATED PARTY TRANSACTIONS AND BALANCES

20.	RELATED PARTY TRANSACTIONS AND BALANCES

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

The following entities are considered to be related parties to the Group. The related parties mainly act as service providers and service recipients to the Group. The Group is not obligated to provide any type of financial support to these related parties.


Related Party	Nature of the Party	Relationship with the Group
T rip.com Group Limited (“Ctrip”)	Online travel services provider	Mr. Qi Ji is a director
Sheen Star Group Limited (“Sheen Star”)	Investment holding company	Equity method investee of the Group, controlled by Mr. Qi Ji
Accor Hotels (“Accor”)	Hotel Group	Shareholder of the Group
China Cjia Group Limited (“Cjia Group”)	Apartment Management Group	Equity method investee of the Group
Shanghai CREATER Industrial Co., Ltd. (“CREATER”)	Staged office space company	Equity method investee of the Group
Shanghai Zhuchuang Enterprise Management Co., Ltd. (“Zhuchuang”)	Staged office space company	Equity method investee of the Group
China Hospitality JV, Ltd. (“China Hospitality JV”)	Property management company	Equity method investee of the Group
Smart Lodging Group (Cayman) Limited(“Smart Lodging”)	Hotel chain	Equity method investee of the Group
Shanghai Lianquan Hotel Management Co., Ltd.(“Lianquan”)	Hotel management company	Equity method investee of the Group

Shanghai CREATER Industrial Co., Ltd. ceased to be related parties of the Group

from

August 2019

(a) Related party balances

Amounts due from related parties were mainly comprised of shareholder loans to Sheen Star, CREATER, Cjia Group, Zhuchuang and Lianquan

which are short-term in nature and mainly payable on demand, and receivable for service fee from Accor, service fee and room charges withheld by Ctrip.


	As of December 31,
	2018		2019
Sheen Star		44		52
CREATER		40		—
Zhuchuang		—		27
Ctrip		34		16
Cjia Group		23		16
Accor		2		1
Lianquan		—		50
Others		33		20

Total		176		182

Amounts due to related parties were mainly comprised of payables for brand use fee, reservation fee and other service fee to Ctrip, and Accor, and cash received on behalf of Cjia Group and China Hospitality JV, which are short-term in nature and payable on demand.


	As of December 31,
	2018		2019
Ctrip		25		33
China Hospitality JV		25		25
Accor		8		11
Cjia Group		7		17
Others		10		9

Total		75		95

(b) Related party transactions

During the years ended December 31, 2017, 2018 and 2019, significant related party transactions were as follows:


	Years Ended December 31,
	2017		2018		2019
Commission expenses to Ctrip		77		61		72
Lease expenses to Ctrip		—		18		18
Brand use fee, reservation fee and other related service fee to Accor		11		18		28
Marketing and training fee from Ctrip		24		12		41
Service fee from Accor		8		14		9
Service fee from China Hospitality JV		—		10		6
Service fee from Sheen Star		—		2		4
Goods sold and service provided to Cjia Group		8		30		21
Sub l ease income from Cjia Group		—		—		14
Service fee to Cjia Group		—		—		6
Sub l ease income from Lianquan		—		—		7
Interest income from Sheen Star		—		—		8
Interest income from CREATER		—		10		6
Loan payment to Cjia Group		85		—		—
Loan payment to CREATER		27		—		—
Loan from Cjia Group		—		103		—
Loan payment to Smart Lodging		—		—		30
Loan payment to Lianquan		—		—		32

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

21.	COMMITMENTS AND CONTINGENCIES

(a) Purchase Commitments

As of December 31, 2019, the Group’s commitments related to leasehold improvements and installation of equipment for hotel operations was RMB221, which is expected to be incurred within one year.

(b) Contingencies

The Group is subject to periodic legal or administrative proceedings in the ordinary course of

the Group’s business, including lease contract terminations and disputes, and construction contract disputes. The Group does not believe that any

currently pending legal or administrative proceeding to which the Group is a party will have a material adverse effect on the financial statements.

As of December 31, 2019, the accrued contingent liability was RMB23.

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2019

Subsequent Event [Line Items]

SUBSEQUENT EVENTS

22.	SUBSEQUENT EVENTS

On January 2, 2020, the Group paid cash consideration of

EUR

690

million related to acquisition of Deutsche Hospitality, subject to customary post-closing adjustments. As of that day, all the cash consideration had been paid and the acquisition completed. The Group partially financed the acquisition with a EUR440 million term facility agreement (see Note 9). Deutsche Hospitality is a leading German hotel operator with multi-national experience since 1930. The acquisition will enrich the Group’s product and geographic offering to customers and franchisees. Due to the limited period since the acquisition date and the impact of the outbreak of COVID-19, it was impracticable for the Group to compile pro-forma financial information and complete preliminary purchase accounting estimates in accordance with ASC 805 “Business Combinations” as of the issuance date of the financial statements.

In January 2020, the Group had repaid US$250 million term loan and US$250 million revolving loan borrowed under the credit facilities the Group entered into in May 2017, which was due in May 2020.

Since the COVID-19 outbreak in January 2020, the Group has taken various preventative measures, such as intelligent non-contact services, across its hotels to help protect employees and customers. In addition to timely delivery of needed hotel supplies that were coordinated and managed by the Group’s centralized procurement team, the Group has also offered temporary franchise fee reductions and has helped franchisees to obtain lower-interest bank loans to help meet their short-term working capital needs. The Group is working diligently to keep all of its hotels in operation as long as the Group is permitted by local regulations to do so.

The Chinese government has implemented strict nationwide containment measures against COVID-19, including but not limited to travel restrictions, lock-down of certain cities, hotel closures, etc. Such containment measures negatively affected hotels’ occupancy and revenue. The Chinese government also announced a number of relief measures to Chinese companies, including but not limited to encouraged rental waiver, reduction and delayed payment of social insurance and taxes, continued support from financial institutions, etc. These measures are expected to partially offset the impact of the Group’s loss of revenues, in an amount not yet determinable.

Due to the Chinese government’s containment measures of COVID-19 during this period, which have been effective to date, there has been an initial recovery in the Group’s hotel operations since early March. As of March 31, 2020, more than

90% of

the

Group’s hotels

have resumed operations with an occupancy rate above 60%.

The situation remains dynamic, and the Group will continue to monitor and access the impact of COVID-19 on its financial statements.

As COVID-19 spreads globally, the operations of Deutsche Hospitality in Europe have also been affected since early March 2020. In order to contain the spread of COVID-19, local governments in Europe have introduced policies to discourage tourism, and a number of Deutsche Hospitality hotels have to be temporarily closed. Given the dynamic nature of these circumstances, the duration of business disruption, reduced customer traffic and related financial impact cannot be reasonably estimated at this time.

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY

12 Months Ended

Dec. 31, 2019

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY

ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I

HUAZHU GROUP LIMITED

FINANCIAL INFORMATION FOR PARENT COMPANY

BALANCE SHEETS

(Renminbi in millions, except share and per share data, unless otherwise stated)


	As of December 31,
	2018			2019			2019
							US$’million
Assets
Current assets:
Cash and cash equivalents		695			361			52
Short-term investments		89			64			9
Other current assets		29			24			4

Total current assets		813			449			65
Other assets		11			155			22
Investment in subsidiaries		13,454			16,472			2,361

Total assets		14,278			17,076			2,448

Liabilities and equity
Current liabilities:
Short-term debt		—			8,312			1,191
Dividends payable		658			678			97
Amount due to related parties		477			594			84
Accrued expenses and other current liabilities		54			113			15

Total current liabilities		1,189			9,697			1,387

Long-term debt		6,915			—			—

Total liabilities		8,104			9,697			1,387

Equity:
Ordinary shares(US$ 0.0001 par value per share; 8,000,000,000 shares authorized; 296,597,888 and 299,424,485 shares issued as of December 31, 2018 and 2019, and 283,076,012 and 285,902,609 shares outstanding as of December 31, 2018 and 2019, respectively)		0			0			0
Treasury shares ( 3,096,764 and 3,096,764 shares as of December 31, 2018 and 2019, respectively)		(107	)		(107	)		(15	)
Additional paid-in capital		3,713			3,834			551
Retained earnings		2,610			3,701			532
Accumulated other comprehensive income (loss)		(42	)		(49	)		(7	)

Total equity		6,174			7,379			1,061

Total liabilities and equity		14,278			17,076			2,448

ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I

HUAZHU GROUP LIMITED

FINANCIAL INFORMATION FOR PARENT COMPANY

STATEMENTS OF COMPREHENSIVE INCOME

(Renminbi in millions, unless otherwise stated)


	Years Ended December 31,
	2017			2018			2019			2019
										US$’million
Operating costs and expenses:
General and administrative expenses		69			89			115			16

Total operating costs and expenses		69			89			115			16

Loss from operations		(69	)		(89	)		(115	)		(16	)
Interest income		2			1			10			1
Interest expense		87			198			201			29
Foreign exchange gain (loss)		(14	)		17			5			1
Other income, net		7			50			30			5
Unrealized gain (loss) from fair value changes of equity securities		35			(45	)		(27	)		(4	)
Income in investment in subsidiaries		1,354			980			2,067			296

Net income attributable to Huazhu Group Limited		1,228			716			1,769			254

Other comprehensive income
Unrealized securities holding gains (losses), net of tax of (8 ), nil and nil for 2017, 2018 and 2019, respectively		1			—			—			—
Reclassification of realized gains to net income, net of tax		(5	)		—			—			—
Foreign currency translation adjustments, net of tax of nil for 2017, 2018 and 2019, respectively		177			(169	)		(7	)		(1	)

Comprehensive income		1,401			547			1,762			253

ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I

HUAZHU GROUP LIMITED

FINANCIAL INFORMATION FOR PARENT COMPANY

CONDENSED

STATEMENTS OF CASH FLOWS

(Renminbi in millions, unless otherwise stated)


	Years Ended December 31,
	2017			2018			2019			2019
										US$’million
Net cash provided by (used in) operating activities		(131	)		(60	)		(212	)		(30	)

Investing activities:
Investment in subsidiaries		(3,250	)		—			(1,039	)		(149	)
Receipt of investment in subsidiaries		—			2,121			9			1
Purchase of long-term investments		(760	)		(3,782	)		—			—
Proceeds from sale of long-term investments		58			—			—			—
Purchase of short-term investments		(96	)		—			—			—

Net cash provided by (used in) investing activities		(4,048	)		(1,661	)		(1,030	)		(148	)

Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option		9			14			14			2
Proceeds of advances from subsidiaries		90			149			109			16
Proceeds from short-term bank borrowings		136			—			1,265			181
Repayment of short-term bank borrowings		(294	)		(128	)		—			—
Proceeds from long-term bank borrowings		3,633			2,409			5,206			746
Repayment of long-term bank borrowings		(1,651	)		(786	)		(5,169	)		(741	)
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option		2,925			—			—			—
Debt financing costs paid		(10	)		—			—			—
Proceeds from ADS lending		0			—			—			—
Dividends paid		(306	)		—			(658	)		(95	)

Net cash provided by (used in) financing activities		4,532			1,658			767			109

Effect of exchange rate changes on cash and cash equivalents		(170	)		201			141			21

Net increase (decrease) in cash and cash equivalents, and restricted cash		183			138			(334	)		(48	)
Cash, cash equivalents and restricted cash at the beginning of the year		374			557			695			100

Cash, cash equivalents and restricted cash at the end of the year		557			695			361			52

The accompanying notes are an integral part of these consolidated financial statements

ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I

HUAZHU GROUP LIMITED

FINANCIAL INFORMATION FOR PARENT COMPANY

Note to Schedule I

Schedule I has been provided pursuant to the requirements of Rule

12-04(a)

and

5-04-(c)

of Regulation S-X, which require condensed financial information as to the financial position, change in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. Such investments in subsidiaries are presented on the balance sheets as investment in subsidiaries and the profit of the subsidiaries is presented as income in investment in subsidiaries.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements.

As of December 31, 2019, there are no material contingencies, mandatory dividend, and significant provision of long-term obligation or guarantee of the Company, except for those which have separately disclosed in the consolidated financial statements.

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2019

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

ADDITION INFORMATION — FINANCIAL STATEMENTS SCHEDULE II

HUAZHU GROUP LIMITED

This financial information has been prepared in conformity with accounting principles generally accepted in the United States.

VALUATION AND QUALIFYING ACCOUNTS


	Balance at Beginning of Year		Charge to Costs and Expenses		Addition Due to Acquisition		Charge Taken Against Allowance			Write off			Balance at End of Year
	(Renminbi in millions)
Allowance for doubtful accounts of accounts receivables and other receivables:
2017		12		2		—		—			(3	)		11
2018		11		10		4		—			(8	)		17
2019		17		21		—		—			(16	)		22
Valuation allowance for deferred tax assets

2017		115		60		3		(47	)		(8	)		123
2018		123		36		—		(43	)		(9	)		107
2019		107		79		—		(24	)		(10	)		152

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

440

million and revolving credit facility of US$500 million. Further, holders of the Group’s Convertible Senior Notes due in 2022 of US$

475

Management believes the relevant conditions and events that may raise substantial doubt about the Group’s ability to continue as a going concern are mitigated by the following plans and actions:

•

On April 17, 2020, the Group obtained an exemption approval for the EUR

440

•

As of March 31, 2020, the Group had unused

credit

facilities of approximately RMB2,049

and the

Group believes th

is will continue

;

•

Basis of consolidation

Variable Interest Entities

As of December 31, 2018 and 2019, the Group consolidated

six

and

eight

entities under VIE model, and the assets and liabilities of the consolidated VIEs are immaterial to the Group’s consolidated financial statements.

non-consolidated

variable interest entities, see Note7 Investments.

Use of estimates

contingent liabilities and discount rate

used to measure lease liabilities.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased.

Restricted cash

RMB5,404

of restricted cash related to the subsequent acquisition of Deutsche Hospitality has been paid out in January 2020.

Investments

Investments represent equity-method investments, equity investments with readily determinable fair values, equity investments without readily determinable fair values and

available-for-sale

debt securities.

Debt securities that the company has no intent to hold till maturity or may sell the security in response to the changes in economic conditions are classified as

available-for-sale

debt securities.

Available-for-sale

As a result of the impairment analysis, the Group recorded an impairment of

nil

and RMB

in 2017, 2018 and 2019, respectively.

Accounts receivable, net of allowance

Loan receivables

As a result of the assessment, the Group recorded a

valuation allowance

of nil, nil and RMB4

in 2017, 2018

and

2019

, respectively

. The Group entered into entrusted loan agreements with certain franchisees with the typical terms to be two to

three years

and annual interest rates ranging from 8.0% to 8.5%, and with other

un-related

third-parties with the annual interest rates ranging from 6% to 15%.

Inventories

one year

, from the time they are put into use. Daily consumables and beddings replacement are expensed when used.

Property and equipment, net

Property and equipment, net are stated at cost less accumulated depreciation


Leasehold improvements		Shorter of the lease term or their estimated useful lives
Buildings		20-40 years
Furniture, fixtures and equipment		3-10 years
Motor vehicles		5 years

Intangible assets, net and unfavorable lease

Intangible assets consist primarily of brand name, master brand agreement,

non-compete

agreements, franchise agreements and favorable leases acquired in business combinations

before the adoption of ASC Topic 842,

Leases

non-compete

agreements, franchise agreements, favorable lease agreements and other intangible assets acquired from business combination are recognized and measured at fair value upon acquisition.

Non-compete

ame

and master brand agreement impairment test on November 30.

Land use rights

30 to 50 years. Amortization expense of land use rights for the years ended December 31, 2017, 2018 and 2019 amounted to RMB5, RMB5 and RMB8, respectively.

Impairment of long-lived assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group completes a

two-step

The Group had not recognized any goodwill impairment for years ended December 31, 2017, 2018 and 2019.

Revenue recognition

Leased and owned hotel revenues

Manachised and franchised hotel revenues

The manachised and franchised agreement contains the following promised services:

•

Intellectual Property (“IP”) license

grant the right to access the Group’s hotel system IP, including brand names.

•

Pre-opening services

•

System maintenance services

include providing standardization hotel property management system (PMS), central reservation system (CRS) and other internet related services.

•

Hotel management services

include providing

day-to-day

management services of the hotels for the franchisees.

The promises to provide

pre-opening

services and system maintenance services are not distinct performance obligation because they are attendant to the license of IP. Therefore, the promises to provide

pre-opening

services and system maintenance services are combined with the license of IP to form a single performance obligation. Hotel management services forms a single distinct performance obligation.

Manachised and franchised hotel revenues are derived from franchise agreements where the franchisees are primarily required to pay (i) an initial

one-time

franchise fee, and (ii) continuing franchise fees, which mainly consist of (a)

on-going

management and franchise service fees, (b) central reservation system usage fees, system maintenance and support fees and (c) reimbursements for hotel manager fees.

Initial one-time franchise fee

On-going management and franchise service fees

are

Central reservation system usage fees, other system maintenance and support fees

are typically billed and collected monthly along with base management and franchise fees, and revenue is generally recognized as services are provided.

Reimbursements for hotel manager fees

, which cover the manachised hotel managers’ payroll, social welfare benefits and certain other

out-of-pocket

expenses that the Group incurs on behalf of the manachised hotels. The reimbursements are recognized over time within revenues for the reimbursement of costs incurred on behalf of manachised hotels

Other Revenues

Other revenues

Loyalty Program

five years

Contract Balances

non-current

contract liabilities on the Group’s consolidated balance sheets and are recognized as revenue as the Group performs under the contract.

PRC Value-Added Taxes and surcharges

PRC

Value-Added

Taxes and surcharges

Starting from May 2016, the accommodation services of the Group are subject to 6% of Value-Added Taxes.

The Group is subject to education surtax and urban maintenance and construction tax, on the services provided in the PRC.

Advertising and promotional expenses

Government grants

Leases

Before January 1, 2019, the Group adopted the ASC Topic 840,

Leases

(Topic 840).

ten to 20

nonlease

Income taxes

Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations.

likely-than-not

that some portion or all of the deferred tax assets will not be realized.

Foreign currency translation

The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies.

Comprehensive income

Concentration of credit risk

Fair value

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Group’s financial instruments include cash and cash equivalent, restricted cash, loan receivables current and

non-current


				Fair Value Measurements at Reporting Date Using
A s of December 31,	Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2018	Equity securities with readily determinable fair value		4,111		4,111
2018	Available-for-sale debt securities		320				320
2019	Equity securities with readily determinable fair value		2,908		2,908
2019	Available-for-sale debt securities		220				220

The following table presents the Group’s assets measured at fair value on a

non-recurring

basis for the years ended December 31, 2017, 2018 and 2019:


				Fair Value Measurements at Reporting Date Using
Years Ended December 31,	Description	Fair Value for Years Ended December 31		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss for the Year
2017	Property and equipment		52				52		169
2018	Property and equipment		10				10		35
2019	Property and equipment		—				—		3
2019	Long-term Investment		—				—		10

and 201

, respectively.

Share-based compensation


	Years Ended December 31,
	2017		2018		2019
Hotel operating costs		20		27		35
Selling and marketing expenses		2		3		3
General and administrative expenses		44		53		72

Total		66		83		110

Earnings per share

if-converted

method) and ordinary shares issuable upon the exercise of stock options and vest of nonvested restricted stocks (using the treasury stock method).

Segment reporting

The Group primarily generates its revenues from customers in the PRC during the reporting period. Substantially all of the Group’s long-lived assets are located in the PRC.

Treasury shares

Recently Issued Accounting Pronouncements

Recently Issued Accounting

Pronouncements

Adopted Accounting Standards

In February 2016, the FASB issued

Accounting Standards Update No. 2016-02 (“

ASU

2016-02

”),

Leases (Topic 842)

2016-02,

the FASB issued related ASUs, including Accounting Standards Update No.

2018-11

(“ASU

2018-11

”),

Leases (Topic 842): Targeted Improvements,

which provides for another transition method in addition to the modified retrospective approach required by ASU

2016-02.

This option allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative adjustment to the opening balance of retained earnings in the period of adoption

By applying ASU

2016-02

at the adoption date, as opposed to at the beginning of the earliest period presented, the reporting for periods prior to January 1, 2019 continued to be reported in accordance with

Leases

(Topic 840).

As a result of adoption, the Group recognized ROU assets

of RMB

18,940

and related lease liabilities of RMB

19,438

for operating leases. The Group reclassified from assets and liabilities RMB

498

net to ROU assets. The adoption of ASU

2016-02

did not materially affect the consolidated statements of income or consolidated statements of cash flows and had no impact on the debt covenant compliance under the current agreements.

The impact on the Group’s consolidated balance sheet upon adoption of ASU 2016-02 was as follows:


	December 31, 2018		January 1, 2019
	As reported		Effect of adoption ASU 2016-02			As adjusted
Assets
Prepaid rent		955		(955	)		—
Intangible assets, net		1,834		(181	)		1,653
Operating lease right-of-use assets		—		18,940			18,940

Total assets		2,789		17,804			20,593

Accrued expenses and other current liabilities		1,607		(126	)		1,481
Deferred rent		1,507		(1,507	)		—
Other long-term liabilities		453		(1	)		452
Operating lease liability, current		—		2,733			2,733
Operating lease liability, noncurrent		—		16,705			16,705

Total liabilities		3,567		17,804			21,371

Accounting Standards Not Yet Adopted

In January 2017, the FASB issued

Accounting Standards Update No.

2017-04,

Intangibles-Goodwill and Other

, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of

does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In June 2016, the FASB released Accounting Standards Update

No.2016-13

(“ASU

2016-13”),

Financial Instruments - Credit Losses (Topic 326)

Measurement of Credit Losses on Financial Instruments.

ASU

2016-13

also requires credit losses relating to AFS debt securities to be recognized through an allowance for credit losses.

In April 2019, the FASB issued ASU 2019-04,

Codification Improvements to Topic 326

In May 2019, the FASB issued ASU 2019-05,

Financial Instruments - Credit Losses

(Topic 326)

- Targeted Transition Relief

, which provide

Financial Instruments - Credit Losses

which

introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis.

In March 2020, FASB issued ASU No. 2020-03,

Codification Improvements to Financial Instruments

, clarified that the contractual term of a net investment in a lease determined in accordance with Topic 842 should be the contractual term used to measure expected credit losses under Topic 326.

In August 2018, the FASB released Accounting Standards Update No.

2018-13

(“ASU

2018-13”),

Fair Value Measurement (Topic 820)

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement

. ASU

2018-13

modifies the disclosure requirements on fair value measurements. The provisions of ASU

2018-13

Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In August 2018, the FASB released Accounting Standards Update No.

2018-15

(“ASU

2018-15”),

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. ASU

2018-15

internal-use

software. The provisions of ASU

2018-15

are to be applied using a prospective or retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. The Group

does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17,

Consolidation

(Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities

Translation into United States Dollars

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2019

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Schedule of expected useful lives of property and equipment


Leasehold improvements		Shorter of the lease term or their estimated useful lives
Buildings		20-40 years
Furniture, fixtures and equipment		3-10 years
Motor vehicles		5 years

Schedule of information about inputs into the fair value measurements of the assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition


				Fair Value Measurements at Reporting Date Using
A s of December 31,	Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2018	Equity securities with readily determinable fair value		4,111		4,111
2018	Available-for-sale debt securities		320				320
2019	Equity securities with readily determinable fair value		2,908		2,908
2019	Available-for-sale debt securities		220				220

Schedule of assets measured at fair value on a non-recurring basis


				Fair Value Measurements at Reporting Date Using
Years Ended December 31,	Description	Fair Value for Years Ended December 31		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss for the Year
2017	Property and equipment		52				52		169
2018	Property and equipment		10				10		35
2019	Property and equipment		—				—		3
2019	Long-term Investment		—				—		10

Schedule of share-based compensation expense recognized


	Years Ended December 31,
	2017		2018		2019
Hotel operating costs		20		27		35
Selling and marketing expenses		2		3		3
General and administrative expenses		44		53		72

Total		66		83		110

Summary of group's consolidated balance sheet upon adoption of ASU 2016-02

The impact on the Group’s consolidated balance sheet upon adoption of ASU 2016-02 was as follows:


	December 31, 2018		January 1, 2019
	As reported		Effect of adoption ASU 2016-02			As adjusted
Assets
Prepaid rent		955		(955	)		—
Intangible assets, net		1,834		(181	)		1,653
Operating lease right-of-use assets		—		18,940			18,940

Total assets		2,789		17,804			20,593

Accrued expenses and other current liabilities		1,607		(126	)		1,481
Deferred rent		1,507		(1,507	)		—
Other long-term liabilities		453		(1	)		452
Operating lease liability, current		—		2,733			2,733
Operating lease liability, noncurrent		—		16,705			16,705

Total liabilities		3,567		17,804			21,371

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Dec. 31, 2019

REVENUE FROM CONTRACT WITH CUSTOMERS

Schedule of disaggregated revenues

The following tables present

the

Group’s

revenues disaggregated by the nature of the product or service:


	Years Ended December 31,
	2017		2018		2019
Room revenues		5,842		6,894		7,057
Food and beverage revenues		249		304		351
Others		247		272		310

Leased and owned hotels revenue		6,338		7,470		7,718
Initial one-time franchise fee		59		79		93
On-going management and service fees		759		983		1,228
Central reservation system usage fees, other system maintenance and support fees		436		630		908
Reimbursements for hotel manager fees		371		455		581
Other fees		226		380		532

Manachised and franchised hotels revenue		1,851		2,527		3,342
Other revenues		40		66		152

Total revenues		8,229		10,063		11,212

Schedule of contract balances

The

Group’s

contract assets are insignificant at December

2018

and

2019


	As of December 31,
	2018		2019
Current contract liabilities		1,005		1,179
Long-term contract liabilities		458		559

Total contract liabilities		1,463		1,738

The contract liabilities balances above

which are classified as deferred revenue on the consolidated balance sheet

, as of December

2018

and

2019

were comprised of the following:


	As of December 31,
	2018		2019
Initial fees received from franchisees owners		674		869
Cash received for membership fees and not recognized as revenue		357		400
Advances received from customers		374		412
Deferred revenue related to the loyalty program		58		57

Total		1,463		1,738

PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT, NET

Schedule of property and equipment, net

Property and equipment, net consist of the following:


	As of December 31,
	2018			2019
Cost:
Buildings		247			247
Leasehold improvements		7,389			8,414
Furniture, fixtures and equipment		1,162			1,270
Motor vehicles		1			1

		8,799			9,932
Less: Accumulated depreciation		(4,344	)		(4,918	)

		4,455			5,014
Construction in progress		563			840

Property and equipment, net		5,018			5,854

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE (Tables)

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

Schedule of intangible assets, net

6.	INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE

Intangible assets, net consist of the following:


	As of December 31,
	2018			2019
Intangible assets with indefinite life:
Brand name (Note 3)		1,340			1,340
Master brand agreement		192			192
Intangible assets with definite life:
Franchise agreements		95			95
Favorable lease agreements		278			1 3
Purchased software		69			72
Other intangible assets		—			20

Total		1,974			1,732
Less: Accumulated amortization		(140	)		(70	)

Total		1,834			1,662

Schedule of unfavorable lease


	As of December 31, 2018
Unfavorable lease agreements		3
Less: Accumulated amortization		(2	)

Unfavorable lease agreements, net		1

Schedule of annual estimated amortization expense for intangible assets and unfavorable lease excluding brand name and master brand agreement

The annual estimated amortization expense for the above intangible assets excluding brand name and master brand agreement for the following years is as follows:

	Amortization for Intangible Assets
2020		14
2021		14
2022		13
2023		13
2024		12
Thereafter		64

Total		130

INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2019

INVESTMENTS.

Schedule of investments

The investments as of December 31, 2018 and 2019 were as follows:


	As of December 31,
	2018		2019
Equity securities with readily determinable fair values:
Accor		3,816		2,770
Other marketable securities		295		138
Equity securities without readily determinable fair values:
OYO		66		66
Other equity securities without readily determinable fair values		113		100
Cjia/Cjia Group		298		232
Equity-method investments:
AAPC LUB		461		469
Hotel related funds		503		507
Shared office management entities		111		10
Cjia/Cjia Group		—		—
China Hospitality JV		117		115
GOOAGOO/Data Driven		52		49
Other investments		89		161
Available-for-sale debt securities:
Cjia/Cjia Group		220		220
CREATER		100		—

Total		6,241		4,837

GOODWILL (Tables)

12 Months Ended

Dec. 31, 2019

GOODWILL.

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2017, 2018 and 2019 were as follows:


	Gross Amount		Accumulated Impairment Loss			Net Amount
Balance at January 1, 2017		176		(4	)		172
Increase in goodwill related to acquisitions		2,093		—			2,093

Balance at December 31, 2017		2,269		(4	)		2,265
Increase in goodwill related to acquisitions		365		—			365

Balance at December 31, 2018		2,634		(4	)		2,630
Increase in goodwill related to acquisitions		27		—			27

Balance at December 31, 2019		2,661		(4	)		2,657

DEBT (Tables)

12 Months Ended

Dec. 31, 2019

DEBT

Schedule of short-term and long-term debt

The short-term and long-term debt as of December 31, 201

and 201

were as follows:


	As of December 31,
	2018		2019
Short-term debt:
Long-term bank borrowings, current portion		0		3,953
Short-term bank borrowings		948		1,256
Convertible senior notes, current portion		—		3,290

Total		948		8,499

Long-term debt:
Long-term bank borrowings, non-current portion		5,603		8,084
Convertible senior notes, non-current portion		3,209		—

Total		8,812		8,084

Schedule of contractual maturities of the group's long-term debt

The contractual maturities of the Group’s long-term debt as of December 31, 2019 were as follows:


Year Ending December 31,
2020			7,267
2021			590
2022			7,187
2023			298
2024			149
			15,491

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Schedule of accrued expenses and other current liabilities


	As of December 31,
	2018		2019
Payable to franchisees		698		1,028
Other payables		261		394
Accrued rental, utilities and other accrued expenses		187		133
Liabilities related to customer loyalty program		154		110
Value-added tax, other tax and surcharge payables		90		90
Payable to noncontrolling interest holders		107		85
Payable for business acquisitions		39		16
Deferred rent, current		71		—

Total		1,607		1,856

HOTEL OPERATING COSTS (Tables)

12 Months Ended

Dec. 31, 2019

HOTEL OPERATING COSTS.

Schedule of hotel operating costs


	Years Ended December 31,
	2017		2018		2019
Rents		2,059		2,406		2,624
Utilities		366		399		404
Personnel costs		1,388		1,663		1,854
Depreciation and amortization		773		869		960
Consumable, food and beverage		551		673		793
Others		538		466		555

Total		5,675		6,476		7,190

PRE-OPENING EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

PRE-OPENING EXPENSES

Schedule of pre-opening expenses incurred during the hotel pre-opening period


	Years Ended December 31,
	2017		2018		2019
Rents		192		221		460
Personnel costs		6		18		14
Others		8		16		28

Total		206		255		502

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2019

SHARE-BASED COMPENSATION

Summary of the Group's share option activity under the option plans


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
				US$		Years		US$’million
Share options outstanding at January 1, 2019		1,135,990			1.89
Exercised		(1,088,358	)		1.76

Share options outstanding at December 31, 2019		47,632			4.95		1.06		2

Share options vested or expected to vest at December 31, 2019		47,103			4.95		1.05		2

Share options exercisable at December 31, 2019		45,710			4.97		1.01		2

Summary of the Group's nonvested restricted stock activity


	Number of Restricted Stocks			Weighted Average Grant Date Fair Value
				US$
Nonvested restricted stocks outstanding at January 1, 2019		12,096,616			8.89
Granted		678,043			31.14
Forfeited		(727,479	)		15.57
Vested		(1,738,239	)		8.76
Adjusted for performance conditions		(63,551	)		15.45

Nonvested restricted stocks outstanding at December 31, 2019		10,245,390			9.87

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

Schedule of computation of basic and diluted earnings per share


	Years Ended December 31,
	2017		2018		2019
Net income attributable to ordinary shareholders — basic		1,228		716		1,769
Eliminate the dilutive effect of interest expense of convertible senior notes		5		40		40

Net income attributable to ordinary shareholders — diluted		1,233		756		1,809

Weighted average ordinary shares outstanding — basic		279,272,140		281,717,485		284,305,138
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method		12,202,369		11,463,212		9,397,527
Dilutive effect of convertible senior notes		1,599,469		10,425,112		10,607,225
Weighted average ordinary shares outstanding — diluted		293,073,978		303,605,809		304,309,890

Basic earnings per share		4.40		2.54		6.22

Diluted earnings per share		4.21		2.49		5.94

Schedule of outstanding securities excluded from the computation of diluted earnings per share


	Years Ended December 31,
	2017		2018		2019
Outstanding employee options and nonvested restricted stocks		—		530,009		—

LEASES (Table)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Lease Cost Supplemental Cash Flow Information And Other Information Operating Leases

A summary of supplemental information related to operating leases in 2019 is as follows:


	Year Ended December 31, 2019
Lease cost:
Operating fixed lease cost		3,094
Variable lease cost		10

Total lease cost		3,104


Other information:
Weighted average remaining lease term		11 years
Weighted average discount rate		7.34	%

Schedule of maturities of lease liabilities with leases

The maturities of lease liabilities in accordance with

ASC

842 in each of the next five years and thereafter are as follows:


Year Ending December 31,
2020	3,236
2021	3,231
2022	3,157
2023	3,031
2024	2,921
Thereafter	18,077

Total minimum lease payments	33,653

Less: amount representing interest	(11,598	)

Present value of minimum lease payments	22,055

Schedule of Future Minimum Rental Payments for Operating Leases

The undiscounted future minimum payments under non-cancelable operating leases as of December 31, 2018, prior to the adoption of ASC 842 was as follows:


Year Ending December 31,
2019			2,854
2020			2,863
2021			2,777
2022			2,661
2023			2,548
Thereafter			15,669

Total			29,372

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAXES

Schedule of tax expense (benefit)


	Years Ended December 31,
	2017			2018			2019
Current Tax		436			660			678
Deferred Tax		(79	)		(91	)		(38	)

Total		357			569			640

Schedule of a reconciliation between the effective income tax rate and PRC statutory income tax rate


	Years Ended December 31,
	2017			2018			2019
PRC statutory tax rate		25	%		25	%		25	%
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit		1	%		15	%		(3	) %
Effect of different tax rate of group entities operating in other jurisdictions		1	%		4	%		1	%
Effect of change in valuation allowance		—			(1	)%		2	%
Effect of tax holiday		(1	)%		(3	)%		(2	) %
Effect of cash dividends		(1	)%		5	%		4	%
Effect of disposal of subsidiary		—			1	%		—
Effect of excess tax benefit of rewards		(3	)%		(5	)%		(2	) %

Effective tax rate		22	%		41	%		25	%

Schedule of the aggregate amount and per share effect of the tax holidays


	Years Ended December 31,
	2017		2018		2019
Aggregate amount		24		31		45
Per share effect—basic		0.09		0.11		0.16
Per share effect—diluted		0.08		0.10		0.15

Schedule of the principal components of the Group's deferred income tax assets and liabilities


	As of December 31,
	2018			2019
Deferred tax assets:
Net loss carryforward		181			243
Deferred revenue		223			260
Long-term assets		149			125
Bad debt provision		6			7
Accrued payroll		16			23
Other accrued expenses		19			19
Share-based compensation		17			23
Others		1			0
Valuation allowance		(107	)		(152	)

Total deferred tax assets		505			548

Deferred tax liabilities:
Favorable lease, building and land use rights-fair value adjustment		447			449
Others		28			42

Total deferred tax liabilities		475			491

Schedule of unrecognized tax benefits


	Years Ended December 31,
	2017		2018			2019
Balance at January 1		20		26			14
Addition for tax positions		6		(12	)		4

Balance at December 31		26		14			18

RELATED PARTY TRANSACTIONS AND BALANCES (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of related parties


Related Party	Nature of the Party	Relationship with the Group
T rip.com Group Limited (“Ctrip”)	Online travel services provider	Mr. Qi Ji is a director
Sheen Star Group Limited (“Sheen Star”)	Investment holding company	Equity method investee of the Group, controlled by Mr. Qi Ji
Accor Hotels (“Accor”)	Hotel Group	Shareholder of the Group
China Cjia Group Limited (“Cjia Group”)	Apartment Management Group	Equity method investee of the Group
Shanghai CREATER Industrial Co., Ltd. (“CREATER”)	Staged office space company	Equity method investee of the Group
Shanghai Zhuchuang Enterprise Management Co., Ltd. (“Zhuchuang”)	Staged office space company	Equity method investee of the Group
China Hospitality JV, Ltd. (“China Hospitality JV”)	Property management company	Equity method investee of the Group
Smart Lodging Group (Cayman) Limited(“Smart Lodging”)	Hotel chain	Equity method investee of the Group
Shanghai Lianquan Hotel Management Co., Ltd.(“Lianquan”)	Hotel management company	Equity method investee of the Group

Schedule of amounts due from related parties


	As of December 31,
	2018		2019
Sheen Star		44		52
CREATER		40		—
Zhuchuang		—		27
Ctrip		34		16
Cjia Group		23		16
Accor		2		1
Lianquan		—		50
Others		33		20

Total		176		182

Schedule of amounts due to related party


	As of December 31,
	2018		2019
Ctrip		25		33
China Hospitality JV		25		25
Accor		8		11
Cjia Group		7		17
Others		10		9

Total		75		95

Schedule of significant related party transactions


	Years Ended December 31,
	2017		2018		2019
Commission expenses to Ctrip		77		61		72
Lease expenses to Ctrip		—		18		18
Brand use fee, reservation fee and other related service fee to Accor		11		18		28
Marketing and training fee from Ctrip		24		12		41
Service fee from Accor		8		14		9
Service fee from China Hospitality JV		—		10		6
Service fee from Sheen Star		—		2		4
Goods sold and service provided to Cjia Group		8		30		21
Sub l ease income from Cjia Group		—		—		14
Service fee to Cjia Group		—		—		6
Sub l ease income from Lianquan		—		—		7
Interest income from Sheen Star		—		—		8
Interest income from CREATER		—		10		6
Loan payment to Cjia Group		85		—		—
Loan payment to CREATER		27		—		—
Loan from Cjia Group		—		103		—
Loan payment to Smart Lodging		—		—		30
Loan payment to Lianquan		—		—		32

ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) - item	12 Months Ended
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) - item	Dec. 31, 2019	Dec. 31, 2018
Leased and owned hotels
Organization and presentation activities
Number of hotels	688	699
Manachised hotels
Organization and presentation activities
Number of hotels	4,519	3,309
Franchised hotels
Organization and presentation activities
Number of hotels	411	222
Minimum
Organization and presentation activities
Term of franchise and management agreement	8 years
Minimum \| Leased and owned hotels
Organization and presentation activities
Period of rental holiday	2 months
Fixed escalation in rent (as a percent)	3.00%
Period before rent escalations	3 years
Maximum
Organization and presentation activities
Term of franchise and management agreement	10 years
Maximum \| Leased and owned hotels
Organization and presentation activities
Period of rental holiday	6 months
Fixed escalation in rent (as a percent)	5.00%
Period before rent escalations	5 years

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Variable Interest Entities (Details) - item	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
VIEs
Variable Interest Entities
Number of entities consolidated	8	6

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Investments, Loan receivables and Inventories (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Investments
Impairment loss	¥ 10	¥ 0	¥ 0
Loan receivables
Valuation allowance for uncollectible loans	¥ 4	¥ 0	¥ 0
Inventories
Estimated useful life of small appliances and bedding	1 year
Minimum \| Certain franchisees
Loan receivables
Term of loan agreement	2 years
Interest rate (as a percent)	8.00%
Minimum \| Un-related third-parties
Loan receivables
Interest rate (as a percent)	6.00%
Maximum \| Certain franchisees
Loan receivables
Term of loan agreement	3 years
Interest rate (as a percent)	8.50%
Maximum \| Un-related third-parties
Loan receivables
Interest rate (as a percent)	15.00%

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Property and equipment, net (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Leasehold improvements
Property and equipment, net
Property and equipment, estimated useful life	Shorter of the lease term or their estimated useful lives	Shorter of the lease term or their estimated useful lives	Shorter of the lease term or their estimated useful lives
Buildings \| Minimum
Property and equipment, net
Property and equipment, estimated useful life	20 years	20 years	20 years
Buildings \| Maximum
Property and equipment, net
Property and equipment, estimated useful life	40 years	40 years	40 years
Furniture, fixtures and equipment \| Minimum
Property and equipment, net
Property and equipment, estimated useful life	3 years	3 years	3 years
Furniture, fixtures and equipment \| Maximum
Property and equipment, net
Property and equipment, estimated useful life	10 years	10 years	10 years
Motor vehicles
Property and equipment, net
Property and equipment, estimated useful life	5 years	5 years	5 years

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Details) € in Millions, ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) item	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)	Nov. 02, 2020 USD ($)	Apr. 17, 2020 USD ($)	Apr. 17, 2020 EUR (€)	Mar. 31, 2020 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 EUR (€)
Accounting policies
Amortization expense	¥ 16	¥ 39	¥ 31
Long-lived asset impairment loss	¥ 3	35	169
Number of reporting units \| item	1
Net revenues	¥ 11,212	10,063	8,229
VAT (as a percent)	6.00%							6.00%	6.00%
Advertising related expenses	¥ 99	103	91
Unrestricted government subsidies from local governmental agencies	148	106	55
Unused facility							¥ 2,049
Escrow Deposit	5,404
Hotel related funds
Accounting policies
Investments in funds	507	503
Equity-method investments \| Hotel related funds
Accounting policies
Investments in funds	507	503
Short-term Investments [Member] \| Subsequent Event [Member]
Accounting policies
Short-term investments							¥ 1,539
Term Facility Expiring December 2022
Accounting policies
Long term line of credit					$ 500	€ 440
Line of Credit Facility, Maximum Borrowing Capacity								$ 500	€ 440
Convertible Debt \| Subsequent Event [Member]
Accounting policies
Debt Instrument, Face Amount \| $				$ 475
Loyalty program
Accounting policies
Net revenues	224	192	160
Land use rights
Accounting policies
Amortization expense	¥ 8	¥ 5	¥ 5
Master brand agreement
Accounting policies
Initial term	70 years
Minimum
Accounting policies
Estimated membership duration	2 years
Lessee, Operating Lease, Term of Contract	10 years							10 years	10 years
Minimum \| Land use rights
Accounting policies
Remaining contractual term	30 years
Maximum
Accounting policies
Estimated membership duration	5 years
Lessee, Operating Lease, Term of Contract	20 years							20 years	20 years
Maximum \| Land use rights
Accounting policies
Remaining contractual term	50 years

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Fair value (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2019 USD ($)
Fair value
Equity securities with readily determinable fair value	¥ 2,908	¥ 89		$ 418
Property and equipment - Total Loss for the Year	3	35	¥ 169
Impairment loss of investment	10	0	0
Long-lived asset impairment loss	3	¥ 35	¥ 169
Convertible senior notes
Fair value
Long-term bank borrowings, current portion	3,290
Fair value of long term debt	¥ 3,711
Revenue growth rate
Fair value
Measurement input	4	4	4	4
Discount rate
Fair value
Measurement input	20	20	20	20
Recurring basis \| Fair value
Fair value
Equity securities with readily determinable fair value	¥ 2,908	¥ 4,111
Available-for-sale debt securities	220	320
Recurring basis \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value
Equity securities with readily determinable fair value	2,908	4,111
Recurring basis \| Significant Other Observable Inputs (Level 2)
Fair value
Available-for-sale debt securities	220	320
Non-recurring basis
Fair value
Property and equipment		10	¥ 52
Non-recurring basis \| Carrying value
Fair value
Property and equipment	3	45	221
Long-term investments	¥ 10	0	0
Non-recurring basis \| Significant Unobservable Inputs (Level 3)
Fair value
Property and equipment		¥ 10	¥ 52

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Share-based compensation and Treasury shares (Details) ¥ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) segment shares	Dec. 31, 2018 CNY (¥) shares	Dec. 31, 2017 CNY (¥)
Share-based compensation
Recognized share-based compensation expenses	¥ 110	¥ 83	¥ 66
Number of operating segments \| segment	1
Treasury shares
Repurchase of ordinary shares (in shares) \| shares	3,096,764	3,096,764
Cash consideration paid for ordinary shares repurchased	¥ 107
Hotel operating costs
Share-based compensation
Recognized share-based compensation expenses	35	¥ 27	20
Selling and marketing expenses
Share-based compensation
Recognized share-based compensation expenses	3	3	2
General and administrative expenses
Share-based compensation
Recognized share-based compensation expenses	¥ 72	¥ 53	¥ 44

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥) ¥ / $	Dec. 31, 2019 USD ($) ¥ / $	Jan. 01, 2019 CNY (¥)
Recently issued accounting pronouncements
Right-to-use assets	¥ 20,875	$ 2,998
Lease liabilities	¥ 22,055
Translation into United States Dollars
Foreign exchange rate used to translate amounts denominated in RMB to US dollar \| ¥ / $	6.9618	6.9618
ASU 2016-02
Recently issued accounting pronouncements
Right-to-use assets			¥ 18,940
Lease liabilities			19,438
Net to right-to-use lease assets			¥ 498

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Group's consolidated balance sheet (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Jan. 01, 2019 CNY (¥)	Dec. 31, 2018 CNY (¥)
Assets
Prepaid rent				¥ 955
Intangible assets, net	¥ 1,662	$ 239		1,834
Operating lease right-of-use assets	20,875	2,998
Total assets	52,983	7,611		23,993
liabilities
Accrued expenses and other current liabilities	1,856	267		1,607
Deferred rent				1,507
Other long-term liabilities	566	81		453
Operating lease liability, current	3,082	443
Operating lease liability, noncurrent	18,496	2,657
Total liabilities	¥ 45,483	$ 6,533		17,674
Previously Reported [Member]
Assets
Prepaid rent				955
Intangible assets, net				1,834
Total assets				2,789
liabilities
Accrued expenses and other current liabilities				1,607
Deferred rent				1,507
Other long-term liabilities				453
Total liabilities				¥ 3,567
Restatement Adjustment [Member]
Assets
Prepaid rent			¥ (955)
Intangible assets, net			(181)
Operating lease right-of-use assets			18,940
Total assets			17,804
liabilities
Accrued expenses and other current liabilities			(126)
Deferred rent			(1,507)
Other long-term liabilities			(1)
Operating lease liability, current			2,733
Operating lease liability, noncurrent			16,705
Total liabilities			17,804
As Adjustment [Member]
Assets
Intangible assets, net			1,653
Operating lease right-of-use assets			18,940
Total assets			20,593
liabilities
Accrued expenses and other current liabilities			1,481
Other long-term liabilities			452
Operating lease liability, current			2,733
Operating lease liability, noncurrent			16,705
Total liabilities			¥ 21,371

ACQUISITIONS - Crystal Orange & Blossom Hill (Details) ¥ in Millions, $ in Millions		1 Months Ended		12 Months Ended
	May 25, 2017 CNY (¥)	Sep. 30, 2019 CNY (¥)	Aug. 31, 2018 CNY (¥)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Business acquisition, pro forma information
Cash consideration to noncontrolling interests				¥ 39	$ 5	¥ 84	¥ 4
Crystal Orange
Acquisitions
Percentage of ownership interest acquired	100.00%
Cash consideration	¥ 3,765
Blossom Hill
Acquisitions
Percentage of ownership interest acquired			83.00%	99.00%	99.00%
Aggregated consideration			¥ 536
Cash consideration			463
Implied fair value of equity interests			¥ 73
Percentage of equity interests transferred			11.00%
Gain on remeasurement			¥ 13
Business acquisition, pro forma information
Pro forma net revenue						10,124	8,331
Pro forma net income						¥ 701	¥ 1,214
Percentage of noncontrolling interest acquired		5.00%	11.00%
Cash consideration to noncontrolling interests		¥ 34	¥ 73

ACQUISITIONS - Hotels (Details)	12 Months Ended
ACQUISITIONS - Hotels (Details)	Dec. 31, 2019 CNY (¥) item	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Acquisitions
Number of reporting units \| item	1
Two individual hotels acquired in 2017
Acquisitions
Cash consideration			¥ 0
Two individual hotels acquired in 2018
Acquisitions
Cash consideration		¥ 7,000,000
Three individual companies acquired in 2019
Acquisitions
Cash consideration	¥ 54,000,000

REVENUE FROM CONTRACT WITH CUSTOMERS - Disaggregated Revenues (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregated Revenues
Total revenues	¥ 11,212	¥ 10,063	¥ 8,229
Leased and owned hotels
Disaggregated Revenues
Total revenues	7,718	7,470	6,338
Room Revenues
Disaggregated Revenues
Total revenues	7,057	6,894	5,842
Food and Beverage Revenues
Disaggregated Revenues
Total revenues	351	304	249
Others
Disaggregated Revenues
Total revenues	310	272	247
Manachised and franchised hotels
Disaggregated Revenues
Total revenues	3,342	2,527	1,851
Initial one-time franchise fee
Disaggregated Revenues
Total revenues	93	79	59
On-going management and service fees
Disaggregated Revenues
Total revenues	1,228	983	759
Central reservation system usage fees, other system maintenance and support fees
Disaggregated Revenues
Total revenues	908	630	436
Reimbursements for hotel manager fees
Disaggregated Revenues
Total revenues	581	455	371
Other fees
Disaggregated Revenues
Total revenues	532	380	226
Other revenues
Disaggregated Revenues
Total revenues	¥ 152	¥ 66	¥ 40

REVENUE FROM CONTRACT WITH CUSTOMERS - Contract Balances (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Contract with Customer, Liability [Abstract]
Current contract liabilities	¥ 1,179	$ 169	¥ 1,005
Long-term contract liabilities	559	$ 80	458
Total contract liabilities	1,738		1,463
Initial fee on pre opening hotels	¥ 448		¥ 329

REVENUE FROM CONTRACT WITH CUSTOMERS - Contract Balances - Contract liabilities (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Contract with Customer, Liability [Abstract]
Initial fees received from franchise owners	¥ 869	¥ 674
Cash received for membership fees and not recognized as revenue	400	357
Advances received from customers	412	374
Deferred revenue related to the loyalty program	57	58
Total contract liabilities	1,738	1,463
Revenue recognized	¥ 491	¥ 468

REVENUE FROM CONTRACT WITH CUSTOMERS - Contract Balances - Unsatisfied performance obligations (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenues related to unsatisfied performance obligations of loyalty program	¥ 57	¥ 58
Deferred revenue related to initial fees	869	674
Deferred revenue related to membership fees	400	357
Deferred revenues related to advances received from customers, expected to recognize revenue in future periods	¥ 412	¥ 374
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining contract period	1 year
Remaining membership life	1 year
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining contract period	10 years
Remaining membership life	5 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenues related to unsatisfied performance obligations of loyalty program	¥ 57
Deferred revenue, recognized as revenue, estimated period	2 years

PROPERTY AND EQUIPMENT, NET - Schedule (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Cost:
Property and equipment, gross	¥ 9,932		¥ 8,799
Less: Accumulated depreciation	(4,918)		(4,344)
Property and equipment net excluding construction in process	5,014		4,455
Construction in progress	840		563
Property and equipment, net	5,854	$ 841	5,018
Buildings
Cost:
Property and equipment, gross	247		247
Leasehold improvements
Cost:
Property and equipment, gross	8,414		7,389
Furniture, fixtures and equipment
Cost:
Property and equipment, gross	1,270		1,162
Motor vehicles
Cost:
Property and equipment, gross	¥ 1		¥ 1

PROPERTY AND EQUIPMENT, NET - Narrative (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
PROPERTY AND EQUIPMENT, NET
Depreciation expense	¥ 967	¥ 847	¥ 753

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE - Schedule (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2019 USD ($)
Intangible assets, net
Intangible assets, gross	¥ 1,732	¥ 1,974
Less: Accumulated amortization	(70)	(140)
Total	1,662	1,834		$ 239
Unfavorable lease
Unfavorable lease agreements		3
Less: Accumulated amortization		(2)
Unfavorable lease agreements, net		1
Amortization expense of intangible assets	16	39	¥ 31
Franchise agreement
Intangible assets, net
Intangible assets, gross	95	95
Favorable lease agreements
Intangible assets, net
Intangible assets, gross		278
Purchased software
Intangible assets, net
Intangible assets, gross	72	69
Other intangible assets
Intangible assets, net
Intangible assets, gross	20
Brand name
Intangible assets, net
Intangible assets, gross	1,340	1,340
Master brand agreement
Intangible assets, net
Intangible assets, gross	¥ 192	¥ 192

INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE - Amortization (Details) ¥ in Millions	Dec. 31, 2019 CNY (¥)
Amortization for Intangible Assets
2020	¥ 14
2022	14
2021	13
2023	13
2024	12
Thereafter	64
Amortization for Intangible Assets, Total	¥ 130

INVESTMENTS - Schedule (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Equity Securities, FV-NI	¥ 2,908	$ 418	¥ 89
Investments	4,837		6,241
Accor
Equity Securities, FV-NI	2,770		3,816
Other marketable securities
Equity Securities, FV-NI	138		295
OYO
Equity Securities without Readily Determinable Fair Value, Amount	66		66
Other equity securities
Equity Securities without Readily Determinable Fair Value, Amount	100		113
Cjia Group
Equity Securities without Readily Determinable Fair Value, Amount	232		298
Hotel related funds
Equity Method Investments	507		503
Equity-method investments \| Beijing Data Driven Technology Co., Ltd.
Equity Method Investments	49		52
Equity-method investments \| Cjia Group
Equity Method Investments
Equity-method investments \| AAPC LUB
Equity Method Investments	469		461
Equity-method investments \| Hotel related funds
Equity Method Investments	507		503
Equity-method investments \| Shared office management entities
Equity Method Investments	10		111
Equity-method investments \| China Hospitality JV
Equity Method Investments	115		117
Equity-method investments \| Other investments
Equity Method Investments	161		89
Available-for-sale debt securities \| Cjia Group
Available-for-sale debt securities	¥ 220		220
Available-for-sale debt securities \| CREATER
Available-for-sale debt securities			¥ 100

INVESTMENTS - Equity securities with readily determinable fair values (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) shares	Dec. 31, 2018 CNY (¥) shares	Dec. 31, 2017 shares	Dec. 31, 2019 USD ($) shares
Equity securities with readily determinable fair values
Equity Securities, FV-NI	¥ 2,908	¥ 89		$ 418
Accor
Equity securities with readily determinable fair values
Number of ordinary shares acquired \| shares	282,787	10,782,131	2,309,981
Number of shares held in investment \| shares	8,470,677			8,470,677
Equity Securities, FV-NI	¥ 2,770	¥ 3,816
Unrealized losses from fair value		794
Unrealized gain from fair value	¥ 351
Number of ordinary shares sold \| shares	4,904,222
Gain On Ordinary Shares Sold	¥ 52
Accor \| Maximum
Equity securities with readily determinable fair values
Investment in equity securities (in percentage)	4.00%			4.00%
Other marketable securities
Equity securities with readily determinable fair values
Equity Securities, FV-NI	¥ 138	295
Unrealized losses from fair value	¥ 35	¥ 120

INVESTMENTS - Equity securities without readily determinable fair values (Details)	Sep. 30, 2017
OYO
Equity interest owned (as a percent)	1.00%

INVESTMENTS - Equity-method investments (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2016 CNY (¥)	Jan. 31, 2016
Equity-method investments
Investment income (loss)	¥ (164)	$ (24)	¥ (97)		¥ (12)
Consideration for purchase of investments	328	$ 48	4,959		1,328
AAPC LUB
Equity-method investments
Equity-method investments ownership percentage							28.00%
Investment income (loss)	47		43
Proceeds from Dividends Received	39		60
Hotel related funds
Equity-method investments
Investment income (loss)	11		(28)
Equity Method Investments	507		¥ 503
Maximum potential loss, in loss of value of interests in investments	¥ 507
Cjia Group
Equity-method investments
Equity-method investments ownership percentage	15.00%		17.00%			23.00%
Investment income (loss)	¥ 45		¥ 38		33
Consideration for purchase of investments \| $				$ 45
Convertible notes term						60 months
Amount invested in convertible note					200
Gain recognized on deemed disposal	¥ 9				¥ 40
Original value of convertible notes invested						¥ 52
China Hospitality JV
Equity-method investments
Equity-method investments ownership percentage	20.00%
Investment income (loss)	¥ 2		¥ 11
Percentage of equity interest acquired			20.00%	20.00%
BJ GOOAGOO/GOOAGOO
Equity-method investments
Equity-method investments ownership percentage			41.00%
Beijing Data Driven Technology Co
Equity-method investments
Equity-method investments ownership percentage	20.00%
Investment income (loss)	¥ 3		¥ 14

INVESTMENTS - Available-for-sale debt securities (Details) - CREATER ¥ in Millions	1 Months Ended
	Sep. 30, 2017 CNY (¥)
Available-for-sale debt securities
Convertible notes term	2 years
Amount invested in convertible note	¥ 100
Interest rate	10.00%

GOODWILL (Details) ¥ in Millions, $ in Millions	12 Months Ended
GOODWILL (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Changes in carrying amount of goodwill
Balance at the beginning of the period, Gross Amount	¥ 2,634		¥ 2,269	¥ 176
Balance at the beginning of the period, Accumulated Impairment Loss	(4)		(4)	(4)
Balance at the beginning of the period, Net Amount	2,630		2,265	172
Increase in goodwill related to acquisitions	27		365	2,093
Balance at the end of the period, Gross Amount	2,661		2,634	2,269
Balance at the end of the period, Accumulated Impairment Loss	(4)		(4)	(4)
Balance at the end of the period, Net Amount	¥ 2,657	$ 382	¥ 2,630	¥ 2,265

DEBT - Components (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Debt
Short-term Debt	¥ 8,499	$ 1,220	¥ 948
Total	8,499		948
Long-term bank borrowings, non-current portion	8,084	$ 1,161	8,812
Long-term debt	8,084		8,812
Bank borrowings
Debt
Short-term Debt	1,256		948
Bank borrowings
Debt
Long-term bank borrowings, current portion	3,953		0
Long-term bank borrowings, non-current portion	8,084		5,603
Convertible senior notes
Debt
Long-term bank borrowings, current portion	3,290
Short-term Debt	¥ 3,290
Long-term bank borrowings, non-current portion			¥ 3,209

DEBT - Bank borrowings (Details) € in Millions, ¥ in Millions, $ in Millions	1 Months Ended			12 Months Ended
	Oct. 31, 2019 USD ($)	Feb. 28, 2018 EUR (€) shares	May 31, 2017 USD ($)	Dec. 31, 2019 CNY (¥) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2019 EUR (€) shares	Dec. 31, 2018 USD ($)	Dec. 31, 2018 EUR (€)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 EUR (€)	Mar. 31, 2019 CNY (¥)
Term facility
Debt
Maximum borrowing amount			$ 250
Line of credit draw down amount									$ 250
Repayment of line of credit facility					$ 0		$ 0		$ 0
Weighted average interest rate (as a percent)				4.24%	4.24%	4.24%	3.93%	3.93%	3.04%
Revolving bank credit facility
Debt
Term of debt instrument			35 months
Maximum borrowing amount			$ 250
Line of credit draw down amount			$ 250		$ 755		$ 370		$ 250
Repayment of line of credit facility					$ 755		$ 120		$ 250
Revolving bank credit facility \| Libor
Debt
Percentage points added to the reference rate			1.75%
Three-year term facility
Debt
Term of debt instrument		3 years
Maximum borrowing amount \| €		€ 260
Line of credit draw down amount \| €								€ 241
Period to obtain loan amount		30 days
Shares pledged \| shares		13,092,112
Shares of Accor released from pledge \| shares				10,492,780	10,492,780	10,492,780
Repayment of line of credit facility \| €						€ 193
Weighted average interest rate (as a percent)				1.70%	1.70%	1.70%	1.70%	1.70%
Three-year term facility \| EURIBOR
Debt
Percentage points added to the reference rate		1.70%
One Year Term Facility
Debt
Term of debt instrument	1 year
Maximum borrowing amount					$ 180
Interest rate (as a percent)					2.52%					2.52%
Line of credit draw down amount					$ 180
Repayment of line of credit facility					0
Debt Instrument, Collateral Amount	$ 185
Term Facility Expiring December 2022
Debt
Maximum borrowing amount					$ 500					€ 440
Percentage points added to the reference rate				2.00%	2.00%	2.00%
Line of credit draw down amount \| €						€ 440
Repayment of line of credit facility \| €						€ 0
Weighted average interest rate (as a percent)				2.86%	2.86%	2.86%
Revolving Credit Facility Expiring December 2022
Debt
Term of debt instrument				35 months	35 months	35 months
Maximum borrowing amount					$ 500
Percentage points added to the reference rate				2.00%	2.00%	2.00%
Line of credit draw down amount					$ 500
Repayment of line of credit facility					$ 0
Weighted average interest rate (as a percent)				2.86%	2.86%	2.86%
Five Year Term Facility
Debt
Maximum borrowing amount \| ¥											¥ 1,190
Repayment of line of credit facility \| ¥				¥ 89
Weighted average interest rate (as a percent)				4.75%	4.75%	4.75%

DEBT - Convertible Senior Notes due 2022 (Details) - Convertible senior notes - The Notes $ / shares in Units, ¥ in Millions	Nov. 03, 2017 CNY (¥)	Nov. 03, 2017 USD ($)	Nov. 03, 2017 USD ($) $ / shares
Debt Instrument [Line Items]
Aggregate principal amount			$ 475,000,000
Fixed interest rate (as a percent)	0.375%		0.375%
Initial conversion rate per ADS	5.4869	5.4869
Increment used for debt conversion		$ 1,000
Initial conversion price \| $ / shares			$ 182.25
Repurchase price as a percentage of principal amount	100.00%	100.00%
Proceeds from issuance of debt	¥ 3,093	$ 467,000,000
Debt issuance costs	¥ 54		$ 8,000,000

DEBT - ADS Lending Arrangement (Details) - ADS Lending Arrangement $ / shares in Units, ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 CNY (¥) shares	Dec. 31, 2017 shares
Debt Instrument [Line Items]
Number of Loaned ADS lent	2,606,278
ADS par value per share \| $ / shares	$ 0.0004
ADS outstanding	2,606,278	2,606,278	2,606,278
Debt issuance costs	$ 4	¥ 26

DEBT - Capped Call Options (Details) - Call Option ¥ in Millions, $ in Millions		12 Months Ended
	Oct. 26, 2017 USD ($)	Dec. 31, 2019 CNY (¥) $ / item
Debt Instrument [Line Items]
Cap price of the capped call transactions per ADS		221.31
Premium paid for capped call transactions	$ 27	¥ 177

DEBT - Schedule of contractual maturities of the group's long-term debt (Details) ¥ in Millions	Dec. 31, 2019 CNY (¥)
Maturities of Long-term Debt [Abstract]
2020	¥ 7,267
2021	590
2022	7,187
2023	298
2024	149
Total	¥ 15,491

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Payable to franchisees	¥ 1,028		¥ 698
Other payables	394		261
Accrued rental, utilities and other accrued expenses	133		187
Liabilities related to customer loyalty program	110		154
Value-added tax, other tax and surcharge payables	90		90
Payable to noncontrolling interest holders	85		107
Payable for business acquisitions	16		39
Deferred rent, current			71
Total	¥ 1,856	$ 267	¥ 1,607
Additional disclosures
Payable to franchisees, term (in years)	one year

HOTEL OPERATING COSTS (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
HOTEL OPERATING COSTS.
Rents	¥ 2,624		¥ 2,406	¥ 2,059
Utilities	404		399	366
Personnel costs	1,854		1,663	1,388
Depreciation and amortization	960		869	773
Consumable, food and beverage	793		673	551
Others	555		466	538
Total	¥ 7,190	$ 1,033	¥ 6,476	¥ 5,675

PRE-OPENING EXPENSES (Details) ¥ in Millions, $ in Millions	12 Months Ended
PRE-OPENING EXPENSES (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
PRE-OPENING EXPENSES
Rents	¥ 460		¥ 221	¥ 192
Personnel costs	14		18	6
Others	28		16	8
Total	¥ 502	$ 72	¥ 255	¥ 206

SHARE-BASED COMPENSATION - Plan (Details) - shares	12 Months Ended
SHARE-BASED COMPENSATION - Plan (Details) - shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2015	Aug. 31, 2010	Sep. 30, 2009	Oct. 31, 2008	Jun. 30, 2007	Feb. 28, 2007
Share options
Share based compensation
Granted (in shares)	0	0	0
Incentive Award Plans
Share based compensation
Vesting period	10 years
Incentive Award Plans \| Maximum
Share based compensation
Share-based payment award, contractual term	10 years
Incentive Award Plans \| Share options
Share based compensation
Share-based payment award, option granted (in shares)	24,577,669
Incentive Award Plans \| Restricted stocks
Share based compensation
Share-based payment award, nonvested restricted stocks (in shares)	24,409,581
Incentive Award Plans \| Second anniversary of the stated vesting commencement date
Share based compensation
Share-based payment award, vesting percentage	50.00%
Incentive Award Plans \| Vesting ratably over the following two years
Share based compensation
Share-based payment award, vesting percentage	50.00%
Vesting period	2 years
2007 Global Share Plan
Share based compensation
Share-based payment award, maximum number of incentive award available (in shares)									10,000,000
2008 Global Share Plan
Share based compensation
Share-based payment award, maximum number of incentive award available (in shares)							7,000,000	3,000,000
2009 Share Incentive Plan
Share based compensation
Share-based payment award, maximum number of incentive award available (in shares)				43,000,000	15,000,000	3,000,000

SHARE-BASED COMPENSATION - Option assumptions and Activity (Details) - Share options $ / shares in Units, ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 CNY (¥) shares	Dec. 31, 2017 CNY (¥) shares
Number of Options
Share options outstanding at the beginning of the period (in shares) \| shares	1,135,990
Exercised (in shares) \| shares	(1,088,358)		(876,715)	(609,224)
Share options vested or expected to vest (in shares) \| shares		47,103
Share options exercisable (in shares) \| shares		45,710
Share options outstanding at the end of the period (in shares) \| shares	47,632		1,135,990
Weighted Average Exercise Price
Share options outstanding at the beginning of the period (in dollars per shares) \| $ / shares		$ 1.89
Exercised (in dollars per shares) \| $ / shares		1.76
Share options outstanding at the end of the period (in dollars per shares) \| $ / shares		4.95
Share options vested or expected to vest (in dollars per shares) \| $ / shares		4.95
Share options exercisable (in dollars per shares) \| $ / shares		$ 4.97
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value
Share options outstanding, Weighted average remaining contractual life	1 year 21 days
Share options vested or expected to vest, Weighted average remaining contractual life	1 year 18 days
Share options exercisable, Weighted average remaining contractual life	1 year 3 days
Share options outstanding, Aggregate intrinsic value \| $		$ 2
Share options vested or expected to vest, Aggregate intrinsic value \| $		2
Share options exercisable, Aggregate intrinsic value \| $		$ 2
Weighted-average period for recognition of unrecognized compensation costs	2 months 19 days
Aggregate intrinsic value of options exercised \| ¥	¥ 255		¥ 194	¥ 77

SHARE-BASED COMPENSATION - Nonvested restricted stocks (Details) ¥ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) tranche shares	Dec. 31, 2019 CNY (¥) $ / shares	Dec. 31, 2018 CNY (¥) tranche shares	Dec. 31, 2017 CNY (¥) tranche shares
Share based compensation
Number of tranche \| tranche	10		10	10
Restricted stocks
Number of Restricted Stocks
Nonvested restricted stocks outstanding at the beginning of the period (in shares)	12,096,616
Granted (in shares)	678,043
Forfeited (in shares)	(727,479)
Vested (in shares)	(1,738,239)
Adjusted (in shares)	(63,551)
Nonvested restricted stocks outstanding at the end of the period (in shares)	10,245,390		12,096,616
Weighted Average Grant Date Fair Value
Nonvested restricted stocks outstanding at the beginning of the period (in dollars per shares) \| $ / shares		$ 8.89
Granted (in dollars per shares) \| $ / shares		31.14
Forfeited (in dollars per shares) \| $ / shares		15.57
Vested (in dollars per shares) \| $ / shares		8.76
Adjusted for performance conditions (in dollars per share) \| $ / shares		15.45
Nonvested restricted stocks outstanding at the end of the period (in dollars per shares) \| $ / shares		$ 9.87
Total unrecognized compensation expense \| ¥	¥ 614	$ 614
Weighted-average period for recognition of unrecognized compensation costs	3 years 9 months 10 days
Total fair value of nonvested restricted stocks, vested \| ¥	¥ 443		¥ 183	¥ 274
Restricted stocks \| Performance Condition
Number of Restricted Stocks
Granted (in shares)	221,712		661,973	0
Restricted stocks \| Performance Condition \| Second anniversary of the stated vesting commencement date
Share based compensation
Share-based payment award, vesting percentage	50.00%
Restricted stocks \| Performance Condition \| Vesting ratably over the following two years
Share based compensation
Share-based payment award, vesting percentage	50.00%
Period for remaining percentage vested	2 years

EARNINGS PER SHARE (Details) ¥ / shares in Units, ¥ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) ¥ / shares shares	Dec. 31, 2019 $ / shares	Dec. 31, 2018 CNY (¥) ¥ / shares shares	Dec. 31, 2017 CNY (¥) ¥ / shares shares
EARNINGS PER SHARE
Net income attributable to ordinary shareholders - basic \| ¥	¥ 1,769		¥ 716	¥ 1,228
Eliminate the dilutive effect of interest expense of convertible senior notes \| ¥	40		40	5
Net income attributable to ordinary shareholders - diluted \| ¥	¥ 1,809		¥ 756	¥ 1,233
Weighted average ordinary shares outstanding - basic	284,305,138		281,717,485	279,272,140
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method	9,397,527		11,463,212	12,202,369
Dilutive effect of convertible senior notes	10,607,225		10,425,112	1,599,469
Weighted average ordinary shares outstanding - diluted	304,309,890		303,605,809	293,073,978
Basic earnings per share (in RMB and USD per share) \| (per share)	¥ 6.22	$ 0.89	¥ 2.54	¥ 4.40
Diluted earnings per share (in RMB and USD per share) \| (per share)	¥ 5.94	$ 0.85	¥ 2.49	¥ 4.21
Outstanding employee options and nonvested restricted stocks (in shares)	0		530,009

Cash Dividend (Details) $ / shares in Units, ¥ in Millions, $ in Millions				12 Months Ended
	Dec. 13, 2018 $ / shares	Dec. 31, 2017 CNY (¥)	Oct. 23, 2017 $ / shares	Dec. 31, 2019 CNY (¥)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2019 USD ($)	Nov. 30, 2019 USD ($)
CASH DIVIDEND
Cash dividends declared (Per share) \| $ / shares	$ 0.34		$ 0.16
Cash dividends recorded as a reduction against retained earnings		¥ 295		¥ 678	¥ 660	¥ 295
Cash dividends recorded as a receivable in other current assets		¥ 11				¥ 11
Dividends payable				¥ 678	¥ 658		$ 97	$ 100

LEASES - Lease Cost Supplemental Cash Flow Information And Other Information Operating Leases (Details) ¥ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)
Lease cost:
Operating lease cost	¥ 3,094
Variable lease cost	10
Total lease cost	¥ 3,104
Other information:
Weighted average remaining lease term	11 years
Weighted average discount rate	7.34%

LEASES - Schedule Of Maturities Of Lease Liabilities With Leases (Details) ¥ in Millions	Dec. 31, 2019 CNY (¥)
Leases [Abstract]
2020	¥ 3,236
2021	3,231
2022	3,157
2023	3,031
2024	2,921
Thereafter	18,077
Total minimum lease payments	33,653
Less: amount representing interest	(11,598)
Present value of minimum lease payments	¥ 22,055

LEASES - Schedule Of Future Minimum Payments (Details) ¥ in Millions	Dec. 31, 2018 CNY (¥)
Leases [Abstract]
2019	¥ 2,854
2020	2,863
2021	2,777
2022	2,661
2023	2,548
Thereafter	15,669
Total minimum lease payments	¥ 29,372

LEASES -Narrative (Details) - CNY (¥) ¥ in Millions	12 Months Ended
LEASES -Narrative (Details) - CNY (¥) ¥ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Lessee, Lease, Description [Line Items]
Sublease Income	¥ 121	¥ 123	¥ 79
Lease expense		¥ 2,641	¥ 2,262

INCOME TAXES (Details) - CNY (¥) ¥ in Millions		12 Months Ended
INCOME TAXES (Details) - CNY (¥) ¥ in Millions	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Income tax
Effective tax rate (as a percent)		25.00%	25.00%	25.00%
Cash dividends paid	¥ 295	¥ 678	¥ 660	¥ 295
Hong Kong subsidiaries [Member]
Income tax
Effective tax rate (as a percent)		16.50%	16.50%
Cash dividends paid		¥ 1,467
Singapore
Income tax
Effective tax rate (as a percent)		17.00%
PRC
Income tax
Effective tax rate (as a percent)		25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%
GERMANY
Income tax
Effective tax rate (as a percent)		15.00%
Effective income tax rate including solidarity surcharge		15.825%
GERMANY \| Minimum
Income tax
Municipal Trade Tax		7.00%
GERMANY \| Maximum
Income tax
Municipal Trade Tax		17.00%
JP
Income tax
Effective tax rate (as a percent)		23.20%
JP \| Minimum
Income tax
Effective Tax Rate Including Local Taxes		30.00%
JP \| Maximum
Income tax
Effective Tax Rate Including Local Taxes		34.00%
Taiwan
Income tax
Effective tax rate (as a percent)		20.00%
Jizhu Shanghai \| PRC
Income tax
Effective tax rate (as a percent)		15.00%	12.50%	12.50%	12.50%
Income tax exemption period		2 years
Period of income tax rate reduction		3 years
Percentage of tax reduction		50.00%

INCOME TAXES - Reconciliation (Details) ¥ / shares in Units, ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥) ¥ / shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥) ¥ / shares	Dec. 31, 2017 CNY (¥) ¥ / shares
Tax expense (benefit)
Current Tax \| ¥	¥ 678		¥ 660	¥ 436
Deferred Tax	(38)	$ (5)	(91)	(79)
Total	¥ 640	$ 92	¥ 569	¥ 357
Reconciliation between the effective income tax rate and the PRC statutory income tax rate
PRC statutory tax rate	25.00%	25.00%	25.00%	25.00%
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit	(3.00%)	(3.00%)	15.00%	1.00%
Effect of different tax rate of group entities operating in other jurisdictions	1.00%	1.00%	4.00%	1.00%
Effect of change in valuation allowance	2.00%	2.00%	(1.00%)
Effect of tax holiday	(2.00%)	(2.00%)	(3.00%)	(1.00%)
Effect of cash dividends	4.00%	4.00%	5.00%	(1.00%)
Effect of disposal of subsidiary			1.00%
Effect of excess tax benefit of rewards	(2.00%)	(2.00%)	(5.00%)	(3.00%)
Effective tax rate	25.00%	25.00%	41.00%	22.00%
Aggregate amount and per share effect of the tax holidays
Aggregate amount \| ¥	¥ 45		¥ 31	¥ 24
Per share effect - basic (in RMB per share) \| ¥ / shares	¥ 0.16		¥ 0.11	¥ 0.09
Per share effect - diluted (in RMB per share) \| ¥ / shares	¥ 0.15		¥ 0.10	¥ 0.08

INCOME TAXES - Deferred income tax assets and liabilities (Details) - CNY (¥) ¥ in Millions	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net loss carryforward	¥ 243	¥ 181
Deferred revenue	260	223
Long-term assets	125	149
Bad debt provision	7	6
Accrued payroll	23	16
Other accrued expenses	19	19
Share-based compensation	23	17
Others	0	1
Valuation allowance	(152)	(107)
Total deferred tax assets	548	505
Deferred tax liabilities:
Favorable lease, building and land use rights-fair value adjustment	449	447
Others	42	28
Total deferred tax liabilities	¥ 491	¥ 475

INCOME TAXES - Valuation allowance (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Valuation allowance
Valuation allowance additions due to acquisition	¥ 0.0	¥ 0.0
Loss carryforwards	965.0
Uncertain tax benefits
Interest or penalty expense	0.0	0.0	¥ 0.0
Roll-forward of the unrecognized tax benefits
Beginning balance	14.0	26.0	20.0
Addition for tax positions	4.0	(12.0)	6.0
Ending balance	¥ 18.0	14.0	26.0
Withholding income tax rate (as a percentage)	10.00%
Withholding income tax rate with Hong Kong as holding company (as a percentage)	5.00%
PRC dividend withholding tax accrued	¥ 73.0	34.0
PRC dividend withholding tax liability	18.0
Additional provision for PRC dividend withholding tax accrued	¥ 0.0
Period of statute of limitations	3 years
Period of statute of limitations, if the underpayment is more than the specified amount	5 years
Minimum amount of underpayment of taxes for statute of limitations to be extended to five years	¥ 0.1
Period of statute of limitations for transfer pricing issues	10 years
Maximum [Member]
Uncertain tax benefits
Market capitalization percent	2.00%
Minimum [Member]
Uncertain tax benefits
Market capitalization percent	0.50%
Valuation allowance for deferred tax assets
Valuation allowance
Charge to costs and expenses	¥ 79.0	36.0	60.0
Valuation allowance additions due to acquisition			3.0
Charge taken against allowance	24.0	43.0	47.0
Write off	¥ 10.0	¥ 9.0	¥ 8.0

MAINLAND CHINA CONTRIBUTION PLAN (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
MAINLAND CHINA CONTRIBUTION PLAN
Employee benefit contributions	¥ 413	¥ 321	¥ 264

RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Millions	12 Months Ended
RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
RESTRICTED NET ASSETS
Minimum required percentage of after tax profit appropriated to general reserve fund	10.00%
Threshold percentage of general reserve fund to registered capital	50.00%
Reserve funds not distributed as cash dividends	¥ 604	¥ 502	¥ 379
Restricted share capital of PRC subsidiaries	2,777
Restricted net assets not available for distribution to the Company in the form of dividends, loans or advances	¥ 3,381

RELATED PARTY TRANSACTIONS AND BALANCES (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2019 USD ($)
Related party transaction
Amount due from related parties	¥ 182		¥ 176		$ 26
Due to related party	95		75
Loan payment	87	$ 13	7	¥ 113
Loan from related party			103
Sheen Star
Related party transaction
Amount due from related parties	52		44
Sheen Star \| Service fee
Related party transaction
Revenue from related parties	4		2
Sheen Star \| Interest income
Related party transaction
Interest income from related party	8
CREATER
Related party transaction
Amount due from related parties			40
Loan payment				27
CREATER \| Interest income
Related party transaction
Interest income from related party	6		10
Zhuchuang
Related party transaction
Amount due from related parties	27
Ctrip
Related party transaction
Amount due from related parties	16		34
Due to related party	33		25
Ctrip \| Marketing and training fee
Related party transaction
Revenue from related parties	41		12	24
Ctrip \| Commission expenses
Related party transaction
Expenses with related parties	72		61	77
Ctrip \| Lease expenses
Related party transaction
Expenses with related parties	18		18
China Hospitality JV
Related party transaction
Due to related party	25		25
China Hospitality JV \| Service fee
Related party transaction
Revenue from related parties	6		10
Cjia Group
Related party transaction
Amount due from related parties	16		23
Due to related party	17		7
Loan payment				85
Loan from related party			103
Cjia Group \| Service fee
Related party transaction
Expenses with related parties	6
Cjia Group \| Goods sold and service provided
Related party transaction
Revenue from related parties	21		30	8
Cjia Group \| Sublease Income [Member]
Related party transaction
Revenue from related parties	14
Accor
Related party transaction
Amount due from related parties	1		2
Due to related party	11		8
Accor \| Service fee
Related party transaction
Revenue from related parties	9		14	8
Accor \| Brand use fee, reservation fee and other related service fee
Related party transaction
Expenses with related parties	28		18	¥ 11
Lianquan
Related party transaction
Amount due from related parties	50
Loan payment	32
Lianquan \| Sublease Income [Member]
Related party transaction
Revenue from related parties	7
Others
Related party transaction
Amount due from related parties	20		33
Due to related party	9		¥ 10
Smart Lodging
Related party transaction
Loan payment	¥ 30

COMMITMENTS AND CONTINGENCIES - Narrative (Details) ¥ in Millions	Dec. 31, 2019 CNY (¥)
COMMITMENTS AND CONTINGENCIES.
Purchase commitments expected to be incurred within one year related to leasehold improvements and installation of equipment for hotel operations	¥ 221
Accured contingencies	¥ 23

SUBSEQUENT EVENTS - Narrative (Details) € in Millions, $ in Millions			1 Months Ended	12 Months Ended
	Mar. 31, 2020	Jan. 02, 2020 EUR (€)	Jan. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	May 31, 2017 USD ($)
Term facility
Subsequent Event [Line Items]
Repayment of line of credit facility				$ 0	$ 0	$ 0
Maximum borrowing amount							$ 250
Revolving bank credit facility
Subsequent Event [Line Items]
Repayment of line of credit facility				$ 755	$ 120	$ 250
Maximum borrowing amount							$ 250
Subsequent Event [Member]
Subsequent Event [Line Items]
Percentage Of Hotels Resumed Operations	90.00%
Percentage Of Occupancy In Hotels	60.00%
Subsequent Event [Member] \| Term facility
Subsequent Event [Line Items]
Repayment of line of credit facility			$ 250
Subsequent Event [Member] \| Revolving bank credit facility
Subsequent Event [Line Items]
Repayment of line of credit facility			$ 250
Subsequent Event [Member] \| Steigenberger Hotels Aktiengesellschaft Germany [Member]
Subsequent Event [Line Items]
Consideration for purchase of investments \| €		€ 690
Maximum borrowing amount \| €		€ 440

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Details) ¥ in Millions, $ in Millions	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Nov. 30, 2019 USD ($)	Dec. 31, 2018 CNY (¥)
Current assets:
Cash and Cash Equivalents, at Carrying Value	¥ 3,234	$ 465		¥ 4,262
Other current assets	699	100		540
Total current assets	18,256	2,622		6,974
Other assets	707	102		471
Total assets	52,983	7,611		23,993
Current liabilities:
Short-term debt	8,499	1,220		948
Dividends payable	678	97	$ 100	658
Amount due to related parties	95	14		75
Accrued expenses and other current liabilities	1,856	267		1,607
Total current liabilities	17,287	2,483		5,969
Long-term debt	8,084	1,161		8,812
Total liabilities	45,483	6,533		17,674
Equity:
Ordinary shares(US$0.0001 par value per share; 8,000,000,000 shares authorized; 296,597,888 and 299,424,485 shares issued as of December 31, 2018 and 2019, and 283,076,012 and 285,902,609 shares outstanding as of December 31, 2018 and 2019, respectively)	0	0		0
Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2017 and 2018, respectively)	(107)	(15)		(107)
Additional paid-in capital	3,834	551		3,713
Retained earnings	3,701	532		2,610
Accumulated other comprehensive income (loss)	(49)	(7)		(42)
Total equity	7,379	1,061		6,174
Total liabilities and equity	52,983	7,611		23,993
Parent Company
Current assets:
Cash and Cash Equivalents, at Carrying Value	361	52		695
Short-term investments	64	9		89
Other current assets	24	4		29
Total current assets	449	65		813
Other assets	155	22		11
Investment in subsidiaries	16,472	2,361		13,454
Total assets	17,076	2,448		14,278
Current liabilities:
Short-term debt	8,312	1,191
Dividends payable	678	97		658
Amount due to related parties	594	84		477
Accrued expenses and other current liabilities	113	15		54
Total current liabilities	9,697	1,387		1,189
Long-term debt				6,915
Total liabilities	9,697	1,387		8,104
Equity:
Ordinary shares(US$0.0001 par value per share; 8,000,000,000 shares authorized; 296,597,888 and 299,424,485 shares issued as of December 31, 2018 and 2019, and 283,076,012 and 285,902,609 shares outstanding as of December 31, 2018 and 2019, respectively)	0	0		0
Treasury shares (3,096,764 and 3,096,764 shares as of December 31 2017 and 2018, respectively)	(107)	(15)		(107)
Additional paid-in capital	3,834	551		3,713
Retained earnings	3,701	532		2,610
Accumulated other comprehensive income (loss)	(49)	(7)		(42)
Total equity	7,379	1,061		6,174
Total liabilities and equity	¥ 17,076	$ 2,448		¥ 14,278

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Parenthetical) (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
BALANCE SHEETS
Ordinary shares, par value (in dollars per share)	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	8,000,000,000	8,000,000,000
Ordinary shares, shares issued	299,424,485	296,597,888
Ordinary shares, shares outstanding	285,902,609	283,076,012	280,518,358	278,282,366
Treasury stock, shares	3,096,764	3,096,764
Parent Company
BALANCE SHEETS
Ordinary shares, par value (in dollars per share)	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	8,000,000,000	8,000,000,000
Ordinary shares, shares issued	299,424,485	296,597,888
Ordinary shares, shares outstanding	285,902,609	283,076,012
Treasury stock, shares	3,096,764	3,096,764

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Operating costs and expenses:
General and administrative expenses	¥ 1,061	$ 152	¥ 851	¥ 691
Total operating costs and expenses	9,236	1,326	7,945	6,874
Loss from operations	2,108	304	2,344	1,426
Interest income	160	23	148	113
Interest expense	(315)	(45)	(244)	(87)
Foreign exchange gain (loss)	(35)	(5)	(144)	(18)
Other income, net	331	48	203	128
Unrealized gain (loss) from fair value changes of equity securities	316	44	(914)	35
Net income attributable to Huazhu Group Limited	1,769	254	716	1,228
Other comprehensive income
Unrealized securities holding gains (losses), net of tax of (8), nil and nil for 2017, 2018 and 2019, respectively				1
Reclassification of realized gains to net income, net of tax				(5)
Foreign currency translation adjustments, net of tax of nil for 2017, 2018 and 2019, respectively	(7)	(1)	(169)	177
Comprehensive income attributable to Huazhu Group Limited	1,762	253	547	1,401
Parent Company
Operating costs and expenses:
General and administrative expenses	115	16	89	69
Total operating costs and expenses	115	16	89	69
Loss from operations	(115)	(16)	(89)	(69)
Interest income	10	1	1	2
Interest expense	201	29	198	87
Foreign exchange gain (loss)	5	1	17	(14)
Other income, net	30	5	50	7
Unrealized gain (loss) from fair value changes of equity securities	(27)	(4)	(45)	35
Income in investment in subsidiaries	2,067	296	980	1,354
Net income attributable to Huazhu Group Limited	1,769	254	716	1,228
Other comprehensive income
Unrealized securities holding gains (losses), net of tax of (8), nil and nil for 2017, 2018 and 2019, respectively				1
Reclassification of realized gains to net income, net of tax				(5)
Foreign currency translation adjustments, net of tax of nil for 2017, 2018 and 2019, respectively	(7)	(1)	(169)	177
Comprehensive income attributable to Huazhu Group Limited	¥ 1,762	$ 253	¥ 547	¥ 1,401

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
STATEMENTS OF COMPREHENSIVE INCOME
Unrealized securities holding gains, tax	¥ 0	¥ 0	¥ (8)
Foreign currency translation adjustments, tax	0	0	0
Parent Company
STATEMENTS OF COMPREHENSIVE INCOME
Unrealized securities holding gains, tax	0	0	(8)
Foreign currency translation adjustments, tax	¥ 0	¥ 0	¥ 0

SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2017 CNY (¥)
Adjustments to reconcile net income to net cash used in operating activities:
Net cash provided by operating activities	¥ 3,293	$ 473	¥ 3,049	¥ 2,453
Investing activities:
Purchase of long-term investments	(328)	(48)	(4,959)	(1,328)
Purchase of short-term investments				(96)
Net cash (used in) investing activities	(285)	(41)	(6,345)	(6,235)
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option	14	2	14	9
Proceeds from short-term bank borrowings	2,214	318	928	137
Repayment of short-term bank borrowings	(1,902)	(273)	(128)	(295)
Proceeds from long-term bank borrowings	13,176	1,893	4,275	3,633
Repayment of long-term bank borrowings	(6,760)	(971)	(799)	(1,651)
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option				2,925
Direct financing costs paid				(10)
Proceeds from ADS lending				0
Dividends paid	(658)	(95)		(306)
Net cash (used in) provided by financing activities	6,045	868	4,248	4,536
Effect of exchange rate changes on cash and cash equivalents	62	9	(24)	(34)
Net increase in cash, cash equivalents and restricted cash	9,115	1,309	928	720
Cash, cash equivalents and restricted cash at the beginning of the year	4,884	702	3,956	3,236
Cash, cash equivalents and restricted cash at the end of the year	13,999	2,011	4,884	3,956
Parent Company
Adjustments to reconcile net income to net cash used in operating activities:
Net cash provided by operating activities	(212)	(30)	(60)	(131)
Investing activities:
Investment in subsidiaries	(1,039)	(149)		(3,250)
Receipt of investment in subsidiaries	9	1	2,121
Purchase of long-term investments			(3,782)	(760)
Proceeds from sale of long-term investments				58
Purchase of short-term investments				(96)
Net cash (used in) investing activities	(1,030)	(148)	(1,661)	(4,048)
Financing activities:
Net proceeds from issuance of ordinary shares upon exercise of option	14	2	14	9
Proceeds of advances from subsidiaries	109	16	149	90
Proceeds from short-term bank borrowings	1,265	181		136
Repayment of short-term bank borrowings			(128)	(294)
Proceeds from long-term bank borrowings	5,206	746	2,409	3,633
Repayment of long-term bank borrowings	(5,169)	(741)	(786)	(1,651)
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option				2,925
Direct financing costs paid				(10)
Proceeds from ADS lending				0
Dividends paid	(658)	(95)		(306)
Net cash (used in) provided by financing activities	767	109	1,658	4,532
Effect of exchange rate changes on cash and cash equivalents	141	21	201	(170)
Net increase in cash, cash equivalents and restricted cash	(334)	(48)	138	183
Cash, cash equivalents and restricted cash at the beginning of the year	695	100	557	374
Cash, cash equivalents and restricted cash at the end of the year	¥ 361	$ 52	¥ 695	¥ 557

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Valuation And Qualifying Accounts
Addition Due to Acquisition	¥ 0	¥ 0
Allowance for doubtful accounts of accounts receivables and other receivables:
Valuation And Qualifying Accounts
Balance at Beginning of Year	17	11	¥ 12
Charge to Costs and Expenses	21	10	2
Addition Due to Acquisition		4
Write off	(16)	(8)	(3)
Balance at End of Year	22	17	11
Valuation allowance for deferred tax assets
Valuation And Qualifying Accounts
Balance at Beginning of Year	107	123	115
Charge to Costs and Expenses	79	36	60
Addition Due to Acquisition			3
Charge Taken Against Allowance	(24)	(43)	(47)
Write off	(10)	(9)	(8)
Balance at End of Year	¥ 152	¥ 107	¥ 123