UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2022

 

Commission File Number: 001-34656

 

Huazhu Group Limited

(Registrant’s name)

 

No. 699 Wuzhong Road

Minhang District

Shanghai 201103
People’s Republic of China
(86) 21 6195-2011
(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (7): ¨

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit Number   Description
Exhibit 99.1   Huazhu Group Limited Reports Repurchase Plan and Reports Fourth Quarter and Full Year 2021 Unaudited Financial Results

 

2 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    Huazhu Group Limited
    (Registrant)
     
     
Date: March 23, 2022 By: /s/ Qi Ji
  Name: Qi Ji
  Title: Executive Chairman of the Board of Directors

 

3 

  

 

Exhibit 99.1

 

 

 

Contact Information

Investor Relations

Tel: +86 (21) 6195 9561

Email: ir@huazhu.com

http://ir.huazhu.com

 

Huazhu Group Limited Reports Fourth Quarter and Full Year 2021 Unaudited Financial Results

 

A total of 7,830 hotels or 753,216 hotel rooms in operation as of December 31, 2021.

 

Hotel turnover1 increased 8.3% year-over-year to RMB11.9 billion for the fourth quarter of 2021, and increased 36.4% year-over-year to RMB45.4 billion for the full year of 2021. Excluding Steigenberger Hotels AG and its subsidiaries (“DH”, or “Legacy-DH”), hotel turnover increased 2.2% year-over-year for the fourth quarter and increased 38.3% year-over-year for the full year of 2021.

 

Revenue increased 9.1% year-over-year to RMB3.4 billion (US$526 million)2 for the fourth quarter of 2021, in line with revenue guidance previously announced of 6% to 10% compared to the fourth quarter of 2020, and increased 25.4% year-over-year to RMB12.8 billion (US$2.0 billion) for the full year of 2021. Revenue from Legacy-Huazhu segment for the fourth quarter of 2021 decreased 1.6% year-over-year, better than revenue guidance previously announced of negative 4% to negative 8%.

 

Net loss attributable to Huazhu Group Limited was RMB459 million (US$72 million) for the fourth quarter of 2021, compared with net income attributable to Huazhu Group Limited of RMB703 million for the fourth quarter of 2020 and net loss attributable to Huazhu Group Limited of RMB137 million in the previous quarter. Net loss attributable to Huazhu Group Limited was RMB465 million (US$73 million) for the full year of 2021, compared with RMB2.2 billion for the full year of 2020. Net loss attributable to Huazhu Group Limited from Legacy-Huazhu segment was RMB419 million for the fourth quarter of 2021, compared with net income attributable to Huazhu Group Limited from Legacy-Huazhu segment of RMB1.0 billion for the fourth quarter of 2020. Net income attributable to Huazhu Group Limited from Legacy-Huazhu segment was RMB153 million for the full year of 2021, compared with net loss attributable to Huazhu Group Limited from Legacy-Huazhu segment of RMB847 million for the full year of 2020.

 

EBITDA (non-GAAP) for the fourth quarter of 2021 was RMB46 million (US$7 million), compared with RMB1.1 billion for the fourth quarter of 2020. EBITDA (non-GAAP) for the full year of 2021 was RMB1.4 billion (US$215 million), compared with negative RMB631 million for the full year of 2020. EBITDA (non-GAAP) from Legacy-Huazhu segment was negative RMB23 million for the fourth quarter of 2021, compared with RMB1.5 billion for the fourth quarter of 2020. EBITDA (non-GAAP) from Legacy-Huazhu segment was RMB1.8 billion for the full year of 2021, compared with RMB736 million for the full year of 2020.

 

 
1Hotel turnover refers to total transaction value of room and non-room revenue from Huazhu hotels (i.e., leased and operated, manachised and franchised hotels).
2The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.3726 on December 30, 2021 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.

 

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Adjusted EBITDA (non-GAAP), which excluded share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, was RMB278 million (US$43 million) for the fourth quarter of 2021, compared with RMB375 million for the fourth quarter of 2020. Adjusted EBITDA (non-GAAP) for the full year of 2021 was RMB1.6 billion (US$247 million), compared with negative RMB244 million for the full year of 2020. Adjusted EBITDA (non-GAAP) from Legacy-Huazhu segment was RMB209 million for the fourth quarter of 2021, compared with RMB764 million for the fourth quarter of 2020. Adjusted EBITDA (non-GAAP) from Legacy-Huazhu segment was RMB2.0 billion for the full year of 2021, compared with RMB1.1 billion for the full year of 2020.

 

In the first quarter of 2022, Huazhu expects revenue growth to be in the range of 11%-15% compared to the first quarter of 2021, or to range from 1% to 5% if excluding DH. For the full year of 2022, we expect revenue growth to range from 15% to 20% compared to the full year of 2021, or to range from 4% to 9% if excluding DH.

 

Shanghai, China, March 23, 2022 – Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) (“Huazhu”, “the Company”, “we” or “our”), a world-leading hotel group, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021.

 

As of December 31, 2021, Huazhu’s worldwide hotel network in operation totaled 7,830 hotels and 753,216 rooms, including 124 hotels from DH. For the full year of 2021, the Company opened 33 leased hotels and 1,507 manachised and franchised hotels, and closed 48 leased hotels and 451 manachised and franchised hotels. During the fourth quarter of 2021, our Legacy-Huazhu business opened 443 hotels, including 7 leased (or leased-and-operated) hotels and 436 manachised (or franchised-and-managed) hotels and franchised hotels, and closed a total of 82 hotels, including 8 leased hotels and 74 manachised and franchised hotels. For the full year of 2021, Legacy-Huazhu opened 29 leased hotels and 1,503 manachised and franchised hotels, and closed 48 leased hotels and 447 manachised and franchised hotels. During the fourth quarter of 2021, the Legacy-DH business opened 1 leased hotel and 3 manachised and franchised hotels, and closed 1 manachised and franchised hotel. For the full year of 2021, Legacy-DH opened 4 leased hotels and 4 manachised and franchised hotels, and closed 4 manachised and franchised hotels. As of December 31, 2021, Huazhu had a total of 2,608 unopened hotels in our pipeline, including 2,571 hotels from the Legacy-Huazhu business and 37 hotels from the Legacy-DH business.

 

Legacy-Huazhu Only Fourth Quarter and Full Year of 2021 Operational Highlights

 

As of December 31, 2021, Legacy-Huazhu had 7,706 hotels in operation, including 662 leased and owned hotels, and 7,044 manachised and franchised hotels. In addition, as of the same date, Legacy-Huazhu had 728,143 hotel rooms in operation, including 91,284 rooms under the lease and ownership model, and 636,859 rooms under the manachise and franchise models. Legacy-Huazhu also had 2,571 unopened hotels in our pipeline, including 18 leased and owned hotels and 2,553 manachised and franchised hotels. The following discusses Legacy-Huazhu’s RevPAR, average daily room rate (“ADR”) and occupancy rate for its leased and owned hotels, as well as manachised and franchised hotels (excluding hotels under governmental requisition) for the periods indicated.

 

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• The ADR was RMB239 in the fourth quarter of 2021, compared with RMB231 in the fourth quarter of 2020, RMB246 in the previous quarter, and RMB232 in the fourth quarter of 2019. The ADR was RMB239 for the full year of 2021, compared with RMB210 for the previous year, and RMB234 for the 2019.

 

• The occupancy rate for all Legacy-Huazhu hotels in operation was 68.2% in the fourth quarter of 2021, compared with 80.6% in the fourth quarter of 2020, 71.9% in the previous quarter, and 82.2% in the fourth quarter of 2019. The occupancy rate was 72.2% for the full year of 2021, compared with 71.0% for the previous year, and 84.4% for the 2019.

 

• Blended RevPAR was RMB163 in the fourth quarter of 2021, compared with RMB186 in the fourth quarter of 2020, RMB177 in the previous quarter, and RMB191 in the fourth quarter of 2019. Blended RevPAR was RMB172 for the full year of 2021, compared with RMB149 for the previous year, and RMB198 for the 2019.

 

• For all Legacy-Huazhu hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB162 for the fourth quarter of 2021, representing a 15.6% decrease from RMB192 for the fourth quarter of 2020, with a 0.3% increase in ADR and an 13.1-percentage-point decrease in occupancy rate; comparing the fourth quarter of 2021 with the pre-COVID-19 fourth quarter of 2019, RevPAR represented a 21.7% decrease from RMB204 for the fourth quarter of 2019, with a 3.5% decrease in ADR, and a 16.2-percentage-point decrease in occupancy rate. The same-hotel RevPAR was RMB172 for the full year of 2021, representing a 10.2% increase from RMB156 for the full year of 2020, with a 10.0% increase in ADR and a 0.1-percentage-point increase in occupancy rate; comparing the full year of 2021 with the full year of 2019, RevPAR represented a 20.1% decrease from RMB209, with a 4.7% decrease in ADR, and a 14.2-percentage-point decrease in occupancy rate.

 

Legacy-DH Only Fourth Quarter and Full Year of 2021 Operational Highlights

 

As of December 31, 2021, Legacy-DH had 124 hotels in operation, including 76 leased and owned hotels and 48 manachised and franchised hotels. In addition, as of the same date, Legacy-DH had 25,073 hotel rooms in operation, including 14,264 rooms under the lease and ownership model, and 10,809 rooms under the manachise and franchise models. Legacy-DH also had unopened 37 hotels in our pipeline, including 28 leased and owned hotels and 9 manachised and franchised hotels. The following discusses Legacy-DH’s RevPAR, ADR and occupancy rate for its leased as well as manachised and franchised hotels (excluding hotels temporarily closed) for the periods indicated.

 

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• The ADR was EUR94 in the fourth quarter of 2021, compared with EUR76 in the fourth quarter of 2020 and EUR99 in the previous quarter. The ADR was EUR90 for the full year of 2021, compared with EUR88 for the previous year.

 

• The occupancy rate for all Legacy-DH hotels in operation was 46.1% in the fourth quarter of 2021, compared with 22.5% in the fourth quarter of 2020 and 48.6% in the previous quarter. The occupancy rate was 35.2% for the full year of 2021, compared with 34.8% for the previous year.

 

• Blended RevPAR was EUR43 in the fourth quarter of 2021, compared with EUR17 in the fourth quarter of 2020 and EUR48 in the previous quarter. Blended RevPAR was EUR32 for the full year of 2021, compared with EUR31 for the previous year.

 

Jin Hui, CEO of Huazhu commented: “An upsurge of COVID-19 in more than 20 Chinese provinces has occurred since November 2021 and negatively affected our business recovery in the fourth quarter, with RevPAR recovering to 86% of the same period of 2019. Since the beginning of 2022, travelling restrictions due to the Beijing Olympic Winter Games added more pressures to our business in addition to the pandemic. Unfortunately, the situation has not improved since March 2022 as the highly infectious Omicron variant has been spreading rapidly in China. As China’s “zero-COVID” policy remains in place, these near-term uncertainties and fluctuations are inevitable. For our European business, it was impacted again by tightened governmental control measures and testing requirements due to the third and fourth waves of the COVID-19 pandemic in European countries. As a result, the recovery trend of DH was also disrupted in November 2021. The RevPAR in the fourth quarter recovered to 66% of the same period of 2019, similar to last quarter.”

 

“2021 was another challenging year due to COVID-19, especially in the second half,” Mr. Jin continued. “Although the near-term business performance could still inevitably see some volatilities, not only from the pandemic but also from various global macro factors, our long-term view on the Chinese lodging industry remains optimistic and unchanged. We are unswervingly implementing our “Sustainable Quality Growth” strategy which means that while growth is still the main theme, quality and sustainability are two critical prerequisites. We are continuously putting greater emphasis on our customers’ satisfaction and our franchisees’ profitability. Last but not least, Germany was gradually reopening since mid-February 2022, which could help reaccelerate our RevPAR recovery. Additionally, operational efficiency improvement and continuous digital transformation will remain as our near-term focus.”

 

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Fourth Quarter and Full Year of 2021 Unaudited Financial Results

 

(RMB in millions)   Q4 2020    Q3 2021    Q4 2021    2020FY    2021FY 
Revenue:                         
Leased and owned hotels   2,024    2,345    2,093    6,908    8,118 
Manachised and franchised hotels   999    1,128    1,098    3,136    4,398 
Others   48    50    159    152    271 
Total revenue   3,071    3,523    3,350    10,196    12,787 

 

Revenue for the fourth quarter of 2021 was RMB3.4 billion (US$526 million), representing a 9.1% year-over-year increase and a 4.9% sequential decrease. Revenue from Legacy-Huazhu segment for the fourth quarter of 2021 was RMB2.8 billion, representing a 1.6% year-over-year decrease and a 5.4% sequential decrease. The decrease was mainly due to the widespread COVID-19 outbreaks in more than 20 provinces of China. Revenue from Legacy-DH segment for the fourth quarter of 2021 was RMB574 million, representing a 129.6% year-over-year increase and 2.5% sequential decrease. The sequential decrease was mainly due disruption of the recovery of our European business when a fourth wave of the pandemic hit Europe in November.

 

Revenue for the full year of 2021 was RMB12.8 billion (US$2.0 billion), representing an increase of 25.4% from the full year of 2020. Revenue from Legacy-Huazhu segment for the full year of 2021 was RMB11.2 billion, representing a 29.8% year-over-year increase. Revenue from Legacy-DH segment for the full year of 2021 was RMB1.5 billion, representing a 0.5% year-over-year increase.

 

Revenue from leased and owned hotels for the fourth quarter of 2021 was RMB2.1 billion (US$329 million), representing a 3.4% year-over-year increase and a 10.7% sequential decrease. Revenue from leased and owned hotels from Legacy-Huazhu segment for the fourth quarter of 2021 was RMB1.6 billion, representing a 12.6% year-over-year decrease. Revenue from leased and owned hotels from Legacy-DH segment for the fourth quarter of 2021 was RMB528 million, representing a 125.6% year-over-year increase.

 

For the full year of 2021, revenue from leased and owned hotels was RMB8.1 billion (US$1.3 billion), representing an increase of 17.5% from the full year of 2020. Revenue from leased and owned hotels from Legacy-Huazhu segment for the full year of 2021 was RMB6.7 billion, representing a 22.7% year-over-year increase. Revenue from leased and owned hotels from Legacy-DH segment for the full year of 2021 was RMB1.4 billion, representing a 1.7% year-over-year decrease.

 

Revenue from manachised and franchised hotels for the fourth quarter of 2021 was RMB1.1 billion (US$172 million), representing a 9.9% year-over-year increase and a 2.7% sequential decrease. Revenue from Legacy-Huazhu segment from manachised and franchised hotels for the fourth quarter of 2021 was RMB1.1 billion, representing an 8.4% year-over-year increase. Revenue from manachised and franchised hotels from Legacy-DH segment for the fourth quarter of 2021 was RMB25 million, representing a 177.8% year-over-year increase.

 

For the full year of 2021, revenue from manachised and franchised hotels was RMB4.4 billion (US$690 million), representing an increase of 40.2% from the full year of 2020. Revenue from manachised and franchised hotels from Legacy-Huazhu segment for the full year of 2021 was RMB4.3 billion, representing a 40.4% year-over-year increase. Revenue from manachised and franchised hotels from Legacy-DH segment for the full year of 2021 was RMB56 million, representing a 30.2% year-over-year increase.

 

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Other revenue represents revenue generated from businesses other than our hotel operations, which mainly includes revenue from the provision of IT products and services to hotels, and revenue from Huazhu Mall™ and other revenue from the Legacy-DH segment business, totaling RMB159 million (US$25 million) in the fourth quarter of 2021, compared to RMB48 million in the fourth quarter of 2020 and RMB50 million in the previous quarter.

 

For the full year of 2021, other revenue was RMB271 million (US$43 million), compared with RMB152 million for the full year of 2020.

 

(RMB in millions)  Q4 2020   Q3 2021   Q4 2021   2020FY  2021FY
Operating costs and expenses:                    
Hotel operating costs  (2,748)  (2,885)  (3,197)  (9,729)  (11,286)
Other operating costs  (22)  (14)  (19)  (52)  (58)
Selling and marketing expenses  (181)  (189)  (183)  (597)  (641)
General and administrative expenses  (336)  (388)  (441)  (1,259)  (1,547)
Pre-opening expenses  (36)  (15)  (30)  (288)  (81)
Total operating costs and expenses  (3,323)  (3,491)  (3,870)  (11,925)  (13,613)

 

Hotel operating costs for the fourth quarter of 2021 were RMB3.2 billion (US$501 million), compared to RMB2.7 billion in the fourth quarter of 2020 and RMB2.9 billion in the previous quarter. The increase was mainly due to higher rental costs for our leased and owned upscale hotels and acquired CitiGO hotels, higher personnel costs from continuous hotel network expansion, and impairment loss totaling RMB257 million,which was mainly related to DH. Hotel operating costs from Legacy-Huazhu segment for the fourth quarter of 2021 were RMB2.3 billion, which represented 84.0% of the quarter’s revenue, compared to 73.4% for the fourth quarter in 2020 and 76.9% for the previous quarter.

 

For the full year of 2021, hotel operating costs were RMB11.3 billion (US$1.8 billion), compared to RMB9.7 billion in 2020. Hotel operating costs from Legacy-Huazhu segment for the full year of 2021 were RMB8.8 billion, which represented 78.3% of revenue, compared to 85.1% for 2020.

 

Selling and marketing expenses for the fourth quarter of 2021 were RMB183 million (US$29 million), compared to RMB181 million in the fourth quarter of 2020 and RMB189 million in the previous quarter. Selling and marketing expenses from Legacy-Huazhu segment for the fourth quarter of 2021 were RMB129 million, which represented 4.6% of the quarter’s revenue, compared to RMB149 million or 5.3% of revenue for the fourth quarter in 2020, and RMB129 million or 4.4% of revenue for the previous quarter.

 

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For the full year of 2021, selling and marketing expenses were RMB641 million (US$101 million), compared to RMB597 million in 2020. Selling and marketing expenses from Legacy-Huazhu segment for the full year of 2021 were RMB460 million, which represented 4.1% of revenue, compared to RMB388 million or 4.5% of revenue for the full year of 2020.

 

General and administrative expenses for the fourth quarter of 2021 were RMB441 million (US$70 million), compared to RMB336 million in the fourth quarter of 2020 and RMB388 million in the previous quarter. General and administrative expenses from Legacy-Huazhu segment for the fourth quarter of 2021 were RMB308 million, which represented 11.1% of the quarter’s revenue, compared to RMB257 million or 9.1% for the fourth quarter in 2020 and RMB306 million or 10.4% for the previous quarter. The increase was mainly due to investments in our business development team, our information technology, and our upscale hotel division.

 

For the full year of 2021, general and administrative expenses were RMB1.5 billion (US$242 million), compared to RMB1.3 billion in 2020. General and administrative expenses from Legacy-Huazhu segment for the full year of 2021 were RMB1.2 billion, which represented 10.3% of revenue, compared to RMB894 million or 10.3% of revenue for the full year of 2020. The increase was mainly due to investments in our business development team, our information technology, and our upscale hotel division.

 

Pre-opening expenses for the fourth quarter of 2021 were mostly related to Legacy-Huazhu segment and totaled RMB30 million (US$5 million), compared to RMB36 million in the fourth quarter of 2020 and RMB15 million in the previous quarter.

 

Pre-opening expenses for the full year of 2021 were RMB81 million (US$13 million), compared to RMB288 million in 2020, representing a year-over-year decrease of 71.9%. Pre-opening expenses as a percentage of revenue were 0.6% in 2021, compared to 2.8% in 2020.

 

Other operating income, net for the fourth quarter of 2021 was RMB559 million (US$88 million), compared to RMB118 million in the fourth quarter of 2020 and RMB40 million in the previous quarter. The increase was mainly attributable to subsidy income in our DH business due to COVID-19 impact.

 

Other operating income, net for the full year of 2021 was RMB990 million (US$155 million), compared to RMB480 million in 2020. The year-over-year increase was mainly attributable to subsidy income in our DH business due to COVID-19 impact.

 

Income from operations for the fourth quarter of 2021 was RMB39 million (US$6 million), compared to loss from operations of RMB134 million in the fourth quarter of 2020 and income from operations of RMB72 million in the previous quarter. Income from operations from Legacy-Huazhu segment for the fourth quarter of 2021 was RMB60 million, compared to RMB315 million in the fourth quarter of 2020 and RMB239 million in the previous quarter.

 

Income from operations for the full year of 2021 was RMB164 million (US$26 million). Income from operations from Legacy-Huazhu segment for the full year of 2021 was RMB891 million, compared to a loss from operations of RMB100 million in 2020.

  

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Operating margin, defined as income from operations as a percentage of revenues, for the fourth quarter of 2021, was 1.2%. Operating margin from Legacy-Huazhu segment for the fourth quarter of 2021 was 2.2%, compared with 11.2% in the fourth quarter of 2020 and 8.1% in the previous quarter.

 

Operating margin for the full year of 2021 was 1.3%. Operating margin from Legacy-Huazhu segment for the full year of 2021 was 7.9%, compared with a negative 1.2% in 2020.

 

Other expense, net for the fourth quarter of 2021 was RMB47 million (US$7 million), compared to other expense, net of RMB8 million for the fourth quarter of 2020 and other income, net of RMB4 million for the previous quarter.

 

Other income, net for the full year of 2021 was RMB157 million (US$25 million), compared to other expense, net of RMB89 million in 2020.

 

Unrealized losses from fair value changes of equity securities for the fourth quarter of 2021 were RMB217 million (US$34 million), compared to unrealized gains from fair value changes of equity securities of RMB733 million in the fourth quarter of 2020, and unrealized losses from fair value changes of RMB60 million in the previous quarter. Unrealized gains (losses) from fair value changes of equity securities mainly represent the unrealized gains (losses) from our investment in equity securities with readily determinable fair values, such as AccorHotels.

 

For the full year of 2021, unrealized losses from fair value changes of equity securities were RMB96 million (US$15 million), compared to unrealized losses from fair value changes of equity securities of RMB265 million in 2020.

 

Income tax expense for the fourth quarter of 2021 was RMB16 million (US$3 million), compared to income tax benefit of RMB66 million in the same period of 2020 and RMB13 million in the previous quarter. For the full year of 2021, income tax expense was RMB12 million (US$2 million), compared to income tax benefit of RMB215 million in 2020.

 

Net loss attributable to Huazhu Group Limited for the fourth quarter of 2021 was RMB459 million (US$72 million), compared to a net income of RMB703 million in the fourth quarter of 2020 and a net loss of RMB137 million in the previous quarter. Net loss attributable to Huazhu Group Limited from Legacy-Huazhu segment for the fourth quarter of 2021 was RMB419 million, compared to net income attributable to Huazhu Group Limited from Legacy-Huazhu segment of RMB1.0 billion in the fourth quarter of 2020 and net income attributable to Huazhu Group Limited from Legacy-Huazhu segment of RMB27 million in the previous quarter.

 

Net loss attributable to Huazhu Group Limited for the full year of 2021 was RMB465 million (US$73 million).

 

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Basic and diluted losses per share/American depositary share (ADS). For the fourth quarter of 2021, basic and diluted losses per share were RMB0.15 (US$0.02). Adjusted basic and diluted losses per share (non-GAAP), which excluded share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, were RMB0.07 (US$0.01). Basic and diluted losses per ADS were RMB1.47 (US$0.23). Adjusted basic and diluted losses per ADS (non-GAAP), which excluded share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, were RMB0.73 (US$0.11).

 

For the full year of 2021, basic and diluted losses per share were RMB0.15 (US$0.02). Adjusted basic and diluted losses per share (non-GAAP) were RMB0.08 (US$0.01). Basic and diluted losses per ADS were RMB1.49 (US$0.23). Adjusted basic and diluted losses per ADS (non-GAAP) were RMB0.83 (US$0.13).

 

EBITDA (non-GAAP) for the fourth quarter of 2021 was RMB46 million (US$7 million), compared with RMB1.1 billion in the fourth quarter of 2020 and RMB294 million in the previous quarter. EBITDA (non-GAAP) from Legacy-Huazhu segment for the fourth quarter of 2021 was negative RMB23 million, compared with RMB1.5 billion in the fourth quarter of 2020 and RMB409 million in the previous quarter. Adjusted EBITDA (non-GAAP), which excluded share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, for the fourth quarter of 2021 was RMB278 million (US$43 million), compared with RMB375 million in the fourth quarter of 2020 and RMB385 million in the previous quarter. The adjusted EBITDA (non-GAAP) from Legacy-Huazhu segment for the fourth quarter of 2021 was RMB209 million, compared with RMB764 million in the fourth quarter of 2020 and RMB500 million in the previous quarter.

 

EBITDA (non-GAAP) for the full year of 2021 was RMB1.4 billion (US$215 million), compared with a negative RMB631 million in 2020. EBITDA (non-GAAP) from Legacy-Huazhu segment for the full year of 2021 was RMB1.8 billion, compared with RMB736 million in 2020. Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) for the full year of 2021 was RMB1.6 billion (US$247 million). The adjusted EBITDA (non-GAAP) from Legacy-Huazhu segment for the full year of 2021 was RMB2.0 billion, compared with RMB1.1 billion in 2020.

 

Cash flow. Operating cash inflow for the fourth quarter of 2021 was RMB867 million (US$136 million). Investing cash outflow for the fourth quarter of 2021 was RMB503 million (US$79 million). Financing cash outflow for the fourth quarter of 2021 was RMB598 million (US$94 million).

 

Operating cash inflow for the full year of 2021 was RMB1.3 billion (US$210 million), representing an increase of 120.4% from 2020. Investing cash outflow for the full year of 2021 was RMB1.4 billion (US$219 million), compared to RMB8.1 billion in 2020. Financing cash outflow for the full year of 2021 was RMB1.8 billion (US$283 million), compared to financing cash inflow of RMB883 million in 2020.

 

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Cash and cash equivalents and Restricted cash. As of December 31, 2021, the Company had a total balance of cash and cash equivalents of RMB5.1 billion (US$803 million) and restricted cash of RMB25 million (US$4 million).

 

Debt financing. As of December 31, 2021, the Company had a total debt balance of RMB9.8 billion (US$1.5 billion) and the unutilized credit facility available to the Company was RMB3.3 billion.

 

COVID-19 update

 

For our Legacy-Huazhu business, RevPAR recovery in Q4 2021 was still significantly impacted by several COVID-19 resurgences in China. In terms of monthly breakdown, our RevPAR recovered to 90%, 76%, and 90% of the levels in October, November, and December 2019, respectively. Entering into 2022, our RevPAR recovery in January and February was 75% and 83% of the corresponding levels in 2019, respectively, which slowed down from Q4 2021. It was mainly due to the effects of the new Omicron variant, another year of “stay local” guidance during the Chinese Lunar New Year holiday, as well as strict travel restrictions in Beijing and its surrounding areas during the Beijing Winter Olympic Games. Unfortunately, the situation has not yet improved in March 2022 as the highly infectious Omicron variant has continued to spread in China. As long as China’s “zero-COVID” policy remains in place, these near-term uncertainties and fluctuations are inevitable.

 

After a good business recovery in Q3 2021 – thanks to the progress of vaccination campaigns and easing of restrictions – our DH business in Q4 2021 was impacted by tightened governmental control measures and testing requirements due to the third and fourth waves of the COVID-19 pandemic in European countries. As a result, the recovery trend of DH was disrupted in November 2021, as RevPAR and occupancy numbers declined compared to those in the summer. However, an opening-up plan has been unfolding since mid-February 2022, and this is expected to lead to substantially normalized circumstances for public and business life. With the continuous implementation of opening-up plans, our RevPAR recovery should see reacceleration.

 

Meanwhile, DH continues its effort to implement a comprehensive cash flow improvement program, especially focusing on efficiency improvements, negotiation of further lease waivers, and personnel cost optimization. In addition, a government subsidy of EUR60 million was received in December 2021, and the short-time work compensation program has been extended until June 30, 2022.

 

Guidance

 

Since March 2022, the highly infectious Omicron variant has been spreading rapidly in China which again seriously affected our business performance. Also, China’s unchanged “zero-COVID” policy has rendered business recovery more unpredictable in the foreseeable future. Moreover, the recent global unrest may further bring uncertainties to our international business recovery. Therefore, the guidance is only reflecting our current views based on our best understanding of the recent situation.

 

Page 10 of 26

 

 

 

 

 

Huazhu expects to open around 1,500 hotels and close 500-550 hotels in 2022.

 

In the first quarter of 2022, Huazhu expects revenue growth to be in the range of 11%-15% compared to the first quarter of 2021, or to range from 1% to 5% if excluding DH.

 

For the full year of 2022, we expect revenue growth to range from 15% to 20% compared to the full year of 2021, or to range from 4% to 9% if excluding DH.

 

The above forecast reflects the Company’s current and preliminary view, which is subject to change.

 

Repurchase plan

 

Huazhu may from time to time make repurchases of its securities, including American depositary shares and convertible notes, in open market transactions, privately negotiated transactions or otherwise, subject to market conditions and other factors.

 

Conference Call

 

Huazhu’s management will host a conference call at 9 p.m. (U.S. Eastern time) on Wednesday, March 23, 2022 (or 9 a.m. (Hong Kong time) on Thursday, March 24, 2022) following the announcement. The conference call will be a Direct Event call. All participants must preregister online prior to the call. Please use the link http://apac.directeventreg.com/registration/event/4278849 to complete the online registration at least 15 minutes prior to the commencement of the conference call. Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID. To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly. Please dial in approximately 10 minutes before the scheduled time of the call.

 

A recording of the conference call will be available after the conclusion of the conference call through March 31, 2022. Please dial +1 (855) 452 5696 (for callers in the US), 400 632 2162 (for callers in mainland China), 800 963 117 (for callers in Hong Kong) or +61 2 8199 0299 (for callers outside the U.S., mainland China and Hong Kong) and enter the passcode 4278849.

 

The conference call will also be webcast live over the Internet and can be accessed by all interested parties at the Company’s website, https://ir.huazhu.com.

 

Page 11 of 26

 

 

 

 

Use of Non-GAAP Financial Measures

 

To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. Generally-Accepted Accounting Principles (“GAAP”), the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission (“SEC”): adjusted net income (loss) attributable to Huazhu Group Limited excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities; adjusted basic and diluted earnings (losses) per share/ADS excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities; EBITDA; adjusted EBITDA excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding Company performance by excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities that may not be indicative of Company operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Company performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are also useful to investors in allowing for greater transparency with respect to supplemental information used regularly by Company management in financial and operational decision-making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities is that share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities have been and will continue to be significant and recurring in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

 

The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and financing transactions and income taxes, given the significant investments that the Company has made in leasehold improvements, depreciation and amortization expense that comprise a significant portion of the Company’s cost structure. In addition, the Company believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that EBITDA information provides investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The Company also uses adjusted EBITDA, which is defined as EBITDA before share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, to assess operating results of its hotels in operation. The Company believes that the exclusion of share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities helps facilitate year-on-year comparisons of the results of operations as the share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities may not be indicative of Company operating performance.

 

Page 12 of 26

 

 

 

 

The Company believes that unrealized gains and losses from changes in fair value of equity securities are generally meaningless in understanding the Company’s reported results or evaluating its economic performance of its businesses. These gains and losses have caused and will continue to cause significant volatility in reported periodic earnings.

 

Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of our hotels. The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered to be outside the ordinary course of business.

 

The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets (including land use rights), income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. The Company compensates for these limitations by providing the relevant disclosure of depreciation and amortization, interest income, interest expense, income tax expense, share-based compensation expenses, and unrealized gains (losses) from fair value changes of equity securities and other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should be considered when evaluating the performance of the Company.

 

The terms EBITDA and adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial performance, investors should not consider these data in isolation or as a substitute for the Company’s net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or adjusted EBITDA in the same manner as the Company does.

 

Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, to the consolidated statement of operations information are included at the end of this press release.

 

Page 13 of 26

 

 

 

 

About Huazhu Group Limited

 

Originated in China, Huazhu Group Limited is a world-leading hotel group. As of December 31, 2021, Huazhu operated 7,830 hotels with 753,216 rooms in operation in 17 countries. Huazhu’s brands include Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel, Madison Hotel, Joya Hotel, Blossom House, Ni Hao Hotel and CitiGO Hotel. Upon the completion of the acquisition of DH on January 2, 2020, Huazhu added five brands to its portfolio, including Steigenberger Hotels & Resorts, MAXX by Steigenberger, Jaz in the City, IntercityHotel and Zleep Hotels. In addition, Huazhu also has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in the pan-China region.

 

Huazhu’s business includes leased and owned, manachised and franchised models. Under the lease and ownership model, Huazhu directly operates hotels typically located on leased or owned properties. Under the manachise model, Huazhu manages manachised hotels through the on-site hotel managers that Huazhu appoints, and Huazhu collects fees from franchisees. Under the franchise model, Huazhu provides training, reservations and support services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers. Huazhu applies a consistent standard and platform across all of its hotels. As of December 31, 2021, Huazhu operates 14 percent of its hotel rooms under lease and ownership model, and 86 percent under manachise and franchise models.

 

For more information, please visit Huazhu’s website: http://ir.huazhu.com.

 

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; economic conditions; the regulatory environment; our ability to attract and retain customers and leverage our brands; trends and competition in the lodging industry; the expected growth of demand for lodging; and other factors and risks detailed in our filings with the SEC. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, which may be identified by terminology such as “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project” or “continue,” the negative of such terms or other comparable terminology. Readers should not rely on forward-looking statements as predictions of future events or results.

 

Huazhu undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

 

—Financial Tables and Operational Data Follow—

 

Page 14 of 26

 

 

 

 

Huazhu Group Limited
Unaudited Condensed Consolidated Balance Sheets
 
   December 31, 2020   December 31, 2021 
   RMB   RMB   US$3 
   (in millions) 
ASSETS               
Current assets:               
Cash and cash equivalents   7,026    5,116    803 
Restricted cash   64    25    4 
Short-term investments   3,903    2,589    406 
Accounts receivable, net   404    521    82 
Loan receivables, net   304    218    34 
Amounts due from related parties   178    149    23 
Inventories   89    88    14 
Other current assets, net   914    847    133 
Total current assets   12,882    9,553    1,499 
                
Property and equipment, net   6,682    7,056    1,107 
Intangible assets, net   5,945    5,385    845 
Operating lease right-of-use assets   28,980    29,942    4,698 
Finance lease right-of-use assets   2,041    2,235    351 
Land use rights, net   213    206    32 
Long-term investments   1,923    1,965    308 
Goodwill   4,988    5,132    805 
Amounts due from related parties, non-current   -    1    0 
Loan receivables, net   135    98    15 
Other assets, net   743    834    131 
Deferred tax assets   623    862    136 
Total assets   65,155    63,269    9,927 
                
LIABILITIES AND EQUITY               
Current liabilities:               
Short-term debt   1,142    6,232    978 
Accounts payable   1,241    968    152 
Amounts due to related parties   132    197    31 
Salary and welfare payables   526    591    93 
Deferred revenue   1,272    1,366    214 
Operating lease liabilities, current   3,406    3,628    569 
Finance lease liabilities, current   31    41    6 
Accrued expenses and other current liabilities   2,440    1,838    288 
Income tax payable   339    418    66 
Total current liabilities   10,529    15,279    2,397 
                
Long-term debt   10,856    3,565    559 
Operating lease liabilities, non-current   27,048    28,012    4,396 
Finance lease liabilities, non-current   2,497    2,684    421 
Deferred revenue   662    785    123 
Other long-term liabilities   771    903    142 
Deferred tax liabilities   1,181    853    134 
Retirement benefit obligations   179    144    23 
Total liabilities   53,723    52,225    8,195 
                
Equity:               
Ordinary shares   0    0    0 
Treasury shares   (107)   (107)   (17)
Additional paid-in capital   9,808    9,964    1,563 
Retained earnings   1,502    1,037    163 
Accumulated other comprehensive income   127    41    6 
Total Huazhu Group Limited shareholders' equity   11,330    10,935    1,715 
Noncontrolling interest   102    109    17 
Total equity   11,432    11,044    1,732 
Total liabilities and equity   65,155    63,269    9,927 

 

 

3 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.3726 on December 30, 2021 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.

 

Page 15 of 26

 

 

 

 

Huazhu Group Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
   Quarter Ended   Year Ended 
   December 31, 2020   September 30, 2021   December
31, 2021
   December  31, 2020   December
31, 2021
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
   (in millions, except shares, per share and per ADS data) 
Revenue:                                   
Leased and owned hotels   2,024    2,345    2,093    329    6,908    8,118    1,274 
Manachised and franchised hotels   999    1,128    1,098    172    3,136    4,398    690 
Others   48    50    159    25    152    271    43 
Total revenue   3,071    3,523    3,350    526    10,196    12,787    2,007 
                                    
Operating costs and expenses:                                   
Hotel operating costs:                                   
Rents   (929)   (1,009)   (998)   (157)   (3,485)   (3,900)   (612)
Utilities   (120)   (137)   (122)   (19)   (478)   (507)   (80)
Personnel costs   (738)   (793)   (841)   (132)   (2,501)   (3,022)   (474)
Depreciation and amortization   (348)   (356)   (365)   (57)   (1,316)   (1,413)   (222)
Consumables, food and beverage   (257)   (264)   (282)   (44)   (885)   (970)   (152)
Others   (356)   (326)   (589)   (92)   (1,064)   (1,474)   (231)
Total hotel operating costs   (2,748)   (2,885)   (3,197)   (501)   (9,729)   (11,286)   (1,771)
Other operating costs   (22)   (14)   (19)   (3)   (52)   (58)   (9)
Selling and marketing expenses   (181)   (189)   (183)   (29)   (597)   (641)   (101)
General and administrative expenses   (336)   (388)   (441)   (70)   (1,259)   (1,547)   (242)
Pre-opening expenses   (36)   (15)   (30)   (5)   (288)   (81)   (13)
Total operating costs and expenses   (3,323)   (3,491)   (3,870)   (608)   (11,925)   (13,613)   (2,136)
Goodwill impairment loss   -    -    -    -    (437)   -    - 
Other operating income (expense), net   118    40    559    88    480    990    155 
Income (losses) from operations   (134)   72    39    6    (1,686)   164    26 
Interest income   33    25    23    4    119    89    14 
Interest expense   (118)   (101)   (92)   (14)   (533)   (405)   (64)
Other (expense) income, net   (8)   4    (47)   (7)   (89)   157    25 
Unrealized gains (losses) from fair value changes of equity securities   733    (60)   (217)   (34)   (265)   (96)   (15)
Foreign exchange (loss) gain   151    (92)   (112)   (18)   175    (317)   (50)
Income (loss) before income taxes   657    (152)   (406)   (63)   (2,279)   (408)   (64)
Income tax benefit (expense)   66    13    (16)   (3)   215    (12)   (2)
Income (loss) from equity method investments   (11)   3    (42)   (7)   (140)   (60)   (9)
Net income (loss)   712    (136)   (464)   (73)   (2,204)   (480)   (75)
Net (income) loss attributable to noncontrolling interest   (9)   (1)   5    1    12    15    2 
Net income (loss) attributable to Huazhu Group Limited   703    (137)   (459)   (72)   (2,192)   (465)   (73)
                                    
Other comprehensive income                                   
Gain arising from defined benefit plan, net of tax   (27)   1    13    2    (27)   13    2 
Foreign currency translation adjustments, net of tax   (8)   (28)   7    1    203    (99)   (16)
Comprehensive income (loss)   677    (163)   (444)   (70)   (2,028)   (566)   (89)
Comprehensive (income) loss attributable to noncontrolling interest   (9)   (1)   5    1    12    15    2 
Comprehensive income (loss) attributable to Huazhu Group Limited   668    (164)   (439)   (69)   (2,016)   (551)   (87)
                                    
Earnings (losses) per share(1):                                   
Basic   0.23    (0.04)   (0.15)   (0.02)   (0.75)   (0.15)   (0.02)
Diluted   0.22    (0.04)   (0.15)   (0.02)   (0.75)   (0.15)   (0.02)
                                    
Earnings (losses) per ADS:                                   
Basic   2.27    (0.44)   (1.47)   (0.23)   (7.49)   (1.49)   (0.23)
Diluted   2.16    (0.44)   (1.47)   (0.23)   (7.49)   (1.49)   (0.23)
                                    
Weighted average number of shares used in computation:                                   
Basic   3,097,524,615    3,115,104,798    3,117,745,440    3,117,745,440    2,927,398,409    3,114,124,244    3,114,124,244 
Diluted   3,263,266,396    3,115,104,798    3,117,745,440    3,117,745,440    2,927,398,409    3,114,124,244    3,114,124,244 

 

(1) In 2021Q2, the Company's shareholders approved a share split that each issued and unissued ordinary share and preferred share of the Company with a par value of US$0.0001 each will be sub-divided into 10 ordinary shares and 10 preferred shares, respectively with a par value of US$0.00001 each. All share and per share data in these financial statements has been retrospectively adjusted to account for this stock split for all periods presented.

 

 

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Huazhu Group Limited
Unaudited Condensed Consolidated Statements of Cash Flows
   Quarter Ended   Year Ended 
   December 31, 2020   September 30, 2021   December
31, 2021
   December 31,2020   December
31, 2021
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
   ( in millions) 
Operating activities:                                   
Net income (loss)   712    (136)   (464)   (73)   (2,204)   (480)   (75)
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation   22    31    15    2    122    109    17 
Depreciation and amortization, and other   384    383    436    68    1,445    1,563    245 
Impairment loss   138    51    320    50    709    380    60 
Loss (income) from equity method investments, net of dividends   38    1    38    6    145    60    9 
Investment (income) loss   (881)   135    245    38    108    67    11 
Changes in operating assets and liabilities   399    (305)   458    72    339    (92)   (14)
Other   (508)   32    (181)   (27)   (55)   (265)   (43)
Net cash provided by operating activities   304    192    867    136    609    1,342    210 
                                    
Investing activities:                                   
Capital expenditures   (501)   (346)   (469)   (73)   (1,776)   (1,675)   (263)
Acquisitions, net of cash received   (1)   (395)   -    -    (5,060)   (742)   (116)
Purchase of investments   (71)   (303)   (49)   (8)   (1,702)   (521)   (82)
Proceeds from maturity/sale of investments   12    -    64    10    396    1,494    235 
Loan advances   (15)   (32)   (96)   (15)   (145)   (181)   (28)
Loan collections   60    41    38    6    182    187    29 
Other   1    4    9    1    4    36    6 
Net cash provided by (used in) investing activities   (515)   (1,031)   (503)   (79)   (8,101)   (1,402)   (219)
                                    
Financing activities:                                   
Net proceeds from issuance of ordinary shares   774    -    -    -    6,019    1    0 
Proceeds from debt   311    491    167    26    6,906    2,383    374 
Repayment of debt   (1,410)   (497)   (768)   (120)   (11,207)   (4,171)   (655)
Dividend paid   -    -    -    -    (678)   -    - 
Other   (85)   (11)   3    -    (157)   (14)   (2)
Net cash provided by (used in) financing activities   (410)   (17)   (598)   (94)   883    (1,801)   (283)
                                    
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (189)   9    (36)   (6)   (300)   (88)   (14)
Net increase (decrease) in cash, cash equivalents and restricted cash   (810)   (847)   (270)   (43)   (6,909)   (1,949)   (306)
Cash, cash equivalents and restricted cash at the beginning of the period   7,900    6,258    5,411    850    13,999    7,090    1,113 
Cash, cash equivalents and restricted cash at the end of the period   7,090    5,411    5,141    807    7,090    5,141    807 

 

 

Page 17 of 26

 

 

 

Huazhu Group Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
   Quarter Ended   Year Ended 
   December 31, 2020   September
 30,2021
   December
31, 2021
   December 
31, 2020
   December
31, 2021
 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
   (in millions, except shares, per share and per ADS data) 
Net income (loss) attributable to Huazhu Group Limited (GAAP)   703    (137)   (459)   (72)   (2,192)   (465)   (73)
Share-based compensation expenses   22    31    15    2    122    109    17 
Unrealized (gains) losses from fair value changes of equity securities   (733)   60    217    34    265    96    15 
Adjusted net income (loss) attributable to Huazhu Group Limited (non-GAAP)   (8)   (46)   (227)   (36)   (1,805)   (260)   (41)
                                    
Adjusted earnings (losses) per share (non-GAAP)(2)                                   
  Basic   (0.00)   (0.01)   (0.07)   (0.01)   (0.62)   (0.08)   (0.01)
  Diluted   (0.00)   (0.01)   (0.07)   (0.01)   (0.62)   (0.08)   (0.01)
                                    
Adjusted earnings (losses) per ADS (non-GAAP)    
  Basic   (0.02)   (0.15)   (0.73)   (0.11)   (6.16)   (0.83)   (0.13)
  Diluted   (0.02)   (0.15)   (0.73)   (0.11)   (6.16)   (0.83)   (0.13)
                                    
                                    
Weighted average number of shares used in computation (Non-GAAP)                                   
  Basic   3,097,524,615    3,115,104,798    3,117,745,440    3,117,745,440    2,927,398,409    3,114,124,244    3,114,124,244 
  Diluted   3,097,524,615    3,115,104,798    3,117,745,440    3,117,745,440    2,927,398,409    3,114,124,244    3,114,124,244 

 

(2) In 2021Q2, the Company's shareholders approved a share split that each issued and unissued ordinary share and preferred share of the Company with a par value of US$0.0001 each will be sub-divided into 10 ordinary shares and 10 preferred shares, respectively with a par value of US$0.00001 each. All share and per share data in these financial statements has been retrospectively adjusted to account for this stock split for all periods presented.

 

Page 18 of 26

 

 

 

 

 

   Quarter Ended   Year Ended 
  

December

31, 2020

   September 30,2021  

December

31, 2021

   December 31, 2020  

December

31, 2021

 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
   (in millions, except per share and per ADS data) 
Net income (loss) attributable to Huazhu Group Limited (GAAP)   703    (137)   (459)   (72)   (2,192)   (465)   (73)
Interest income   (33)   (25)   (23)   (4)   (119)   (89)   (14)
Interest expense   118    101    92    14    533    405    64 
Income tax expense   (66)   (13)   16    3    (215)   12    2 
Depreciation and amortization   364    368    420    66    1,362    1,503    236 
EBITDA (non-GAAP)   1,086    294    46    7    (631)   1,366    215 
Share-based compensation   22    31    15    2    122    109    17 
Unrealized (gains) losses from fair value changes of equity securities   (733)   60    217    34    265    96    15 
Adjusted EBITDA (non-GAAP)   375    385    278    43    (244)   1,571    247

 

Huazhu Group Limited

 

Segment Financial Summary(3)

 

  

Quarter Ended December 31,
2021

   Quarter Ended December 31,
2020
   Quarter Ended September 30,
2021
 
   Legacy
Huazhu
   Legacy
DH
   Total   Legacy
Huazhu
   Legacy
DH
   Total   Legacy
Huazhu
   Legacy
DH
   Total 
   RMB   RMB   RMB   USD   RMB   RMB   RMB   RMB   RMB   RMB 
   (in millions)   (in millions)   (in millions) 
Leased and owned hotels   1,565    528    2,093    329    1,790    234    2,024    1,784    561    2,345 
Manachised and franchised hotels   1,073    25    1,098    172    990    9    999    1,110    18    1,128 
Others   138    21    159    25    41    7    48    40    10    50 
Revenue   2,776    574    3,350    526    2,821    250    3,071    2,934    589    3,523 
                                                   
Hotel operating costs   (2,331)   (866)   (3,197)   (501)   (2,071)   (677)   (2,748)   (2,255)   (630)   (2,885)
Selling and marketing expenses   (129)   (54)   (183)   (29)   (149)   (32)   (181)   (129)   (60)   (189)
General and administrative expenses   (308)   (133)   (441)   (70)   (257)   (79)   (336)   (306)   (82)   (388)
Pre-opening expenses   (30)   0    (30)   (5)   (36)   0    (36)   (15)   -    (15)
                                                   
Income (losses) from operations   60    (21)   39    6    315    (449)   (134)   239    (167)   72 
                                                   
Net income (losses) attributable to Huazhu Group Limited   (419)   (40)   (459)   (72)   1,010    (307)   703    27    (164)   (137)
                                                   
Interest income   (23)   0    (23)   (4)   (32)   (1)   (33)   (25)   0    (25)
Interest expense   64    28    92    14    87    31    118    72    29    101 
Income tax expense   37    (21)   16    3    110    (176)   (66)   29    (42)   (13)
Depreciation and amortization   318    102    420    66    300    64    364    306    62    368 
EBITDA (non-GAAP)   (23)   69    46    7    1,475    (389)   1,086    409    (115)   294 
Share-based Compensation   15    -    15    2    22    -    22    31    -    31 
Unrealized (gains) losses from fair value changes of equity securities   217    -    217    34    (733)   -    (733)   60    -    60 
Adjusted EBITDA (non-GAAP)   209    69    278    43    764    (389)   375    500    (115)   385 

 

(3) The Company presents segment information after elimination of intercompany transactions.

 

Page 19 of 26

 

 

 

 

Huazhu Group Limited

 

Segment Financial Summary(4)

 

   Year Ended December 31, 2021   Year Ended December 31, 2020 
   Legacy
Huazhu
   Legacy
DH
   Total   Legacy
Huazhu
   Legacy
DH
   Total 
   RMB   RMB   RMB   USD   RMB   RMB   RMB 
   (in millions)   (in millions) 
Leased and owned hotels   6,674    1,444    8,118    1,274    5,439    1,469    6,908 
Manachised and franchised hotels   4,342    56    4,398    690    3,093    43    3,136 
Others   231    40    271    43    132    20    152 
Revenue   11,247    1,540    12,787    2,007    8,664    1,532    10,196 
                                    
Hotel operating costs   (8,806)   (2,480)   (11,286)   (1,771)   (7,369)   (2,360)   (9,729)
Selling and marketing expenses   (460)   (181)   (641)   (101)   (388)   (209)   (597)
General and administrative expenses   (1,164)   (383)   (1,547)   (242)   (893)   (366)   (1,259)
Pre-opening expenses   (81)   0    (81)   (13)   (288)   0    (288)
                                    
Income (losses) from operations   891    (727)   164    26    (100)   (1,586)   (1,686)
                                    
Net income (losses) attributable to Huazhu Group Limited   153    (618)   (465)   (73)   (847)   (1,345)   (2,192)
                                    
Interest income   (88)   (1)   (89)   (14)   (118)   (1)   (119)
Interest expense   291    114    405    64    427    106    533 
Income tax expense   249    (237)   12    2    151    (366)   (215)
Depreciation and amortization   1,222    281    1,503    236    1,123    239    1,362 
EBITDA (non-GAAP)   1,827    (461)   1,366    215    736    (1,367)   (631)
Share-based Compensation   109    -    109    17    122    -    122 
Unrealized (gains) losses from fair value changes of equity securities   96    -    96    15    265    -    265 
Adjusted EBITDA (non-GAAP)   2,032    (461)   1,571    247    1,123    (1,367)   (244)

 

(4) The Company presents segment information after elimination of intercompany transactions.

 

Operating Results: Legacy-Huazhu(1)

 

   Number of hotels   Number of rooms 
   Opened
in Q4 2021
  

Closed (2)

in Q4 2021

   Net added
in Q4 2021
   As of
December 31,
2021 (3)
   As of
December 31,
2021
 
Leased and owned hotels   7    (8)   (1)   662    91,284 
Manachised and franchised hotels   436    (74)   362    7,044    636,859 
Total   443    (82)   361    7,706    728,143 

 

(1)       Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.

 

(2)       The reasons for hotel closures mainly included non-compliance with our brand standards, operating losses, and property-related issues. In Q4 2021, we temporarily closed 9 hotels for brand upgrade and business model change purposes.

 

(3)       As of December 31, 2021, 147 hotels were requisitioned by governmental authorities.

 

   As of December 31, 2021 
   Number of hotels   Unopened hotels in pipeline 
Economy hotels   4,772    1,194 
  Leased and owned hotels   397    3 
  Manachised and franchised hotels   4,375    1,191 
Midscale and upscale hotels   2,934    1,377 
  Leased and owned hotels   265    15 
  Manachised and franchised hotels   2,669    1,362 
Total   7,706    2,571 

 

Page 20 of 26

 

 

 

 

 

Operational hotels excluding hotels under requisition

 

   For the quarter ended     
   December 31,   September 30,   December 31,   yoy 
   2020   2021   2021   change 
Average daily room rate (in RMB)                
Leased and owned hotels   272    296    286    5.1%
Manachised and franchised hotels   224    238    232    3.9%
Blended   231    246    239    3.7%
Occupancy Rate (as a percentage)                    
Leased and owned hotels   79.6%   69.7%   67.4%   -12.2p.p. 
Manachised and franchised hotels   80.8%   72.2%   68.4%   -12.4p.p. 
Blended   80.6%   71.9%   68.2%   -12.4p.p. 
RevPAR (in RMB)                    
Leased and owned hotels   217    206    193    -11.0%
Manachised and franchised hotels   181    172    159    -12.1%
Blended   186    177    163    -12.2%

 

   For the quarter ended 
   December 31,   December 31,   yoy 
   2019   2021   change 
Average daily room rate (in RMB)               
Leased and owned hotels   277    286    3.2%
Manachised and franchised hotels   223    232    4.5%
Blended   232    239    3.1%
Occupancy Rate (as a percentage)               
Leased and owned hotels   84.7%   67.4%   -17.4p.p. 
Manachised and franchised hotels   81.6%   68.4%   -13.3p.p. 
Blended   82.2%   68.2%   -13.9p.p. 
RevPAR (in RMB)               
Leased and owned hotels   235    193    -17.9%
Manachised and franchised hotels   182    159    -12.5%
Blended   191    163    -14.4%

 

Page 21 of 26

 

 

 

 

   For the year ended 
   December 31,   December 31,   yoy 
   2020   2021   change 
Average daily room rate  (in RMB)               
Leased and owned hotels   241    286    18.7%
Manachised and franchised hotels   204    232    13.3%
Blended   210    239    13.8%
Occupancy Rate (as a percentage)               
Leased and owned hotels   68.9%   70.6%   +1.7 p.p. 
Manachised and franchised hotels   71.4%   72.4%   +1.0 p.p. 
Blended   71.0%   72.2%   +1.2 p.p. 
RevPAR (in RMB)               
Leased and owned hotels   166    202    21.7%
Manachised and franchised hotels   146    168    14.9%
Blended   149    172    15.6%

 

   For the year ended 
   December 31,   December 31,   yoy 
   2019   2021   change 
Average daily room rate  (in RMB)               
Leased and owned hotels   276    286    3.5%
Manachised and franchised hotels   224    232    3.2%
Blended   234    239    2.0%
Occupancy Rate (as a percentage)               
Leased and owned hotels   87.0%   70.6%   -16.3p.p. 
Manachised and franchised hotels   83.8%   72.4%   -11.4p.p. 
Blended   84.4%   72.2%   -12.2p.p. 
RevPAR (in RMB)               
Leased and owned hotels   240    202    -15.9%
Manachised and franchised hotels   188    168    -10.8%
Blended   198    172    -12.7%

 

Page 22 of 26

 

 

 

 

 

 

Same-hotel operational data by class
 
Mature hotels in operation for more than 18 months (excluding hotels under requisition)

 

   Number of hotels   Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy 
  

As of

December 31,

   For the quarter
ended
December 31,
   yoy
change
   For the quarter
ended
December 31,
   yoy
change
   For the quarter
ended
December 31,
   yoy
change
 
   2020   2021   2020   2021       2020   2021       2020   2021   (p.p.) 
Economy hotels   3,341    3,341    152    128    -15.6%   179    180    0.8%   85.2%   71.4%   -13.8 
Leased and owned hotels   388    388    170    146    -14.1%   201    204    1.1%   84.6%   71.9%   -12.7 
Manachised and franchised hotels   2,953    2,953    149    125    -15.9%   174    175    0.6%   85.3%   71.3%   -14.0 
Midscale and upscale hotels   1,734    1,734    247    208    -15.7%   314    312    -0.5%   78.7%   66.7%   -12.0 
Leased and owned hotels   222    222    280    238    -15.1%   378    378    0.2%   74.2%   62.8%   -11.4 
Manachised and franchised hotels   1,512    1,512    240    202    -15.9%   301    299    -0.8%   79.7%   67.6%   -12.1 
                                                        
Total   5,075    5,075    192    162    -15.6%   232    233    0.3%   82.5%   69.4%   -13.1 

 

 
   Number of hotels   Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy 
  

As of

December 31,

   For the quarter ended
December 31,
   yoy
change
   For the quarter
ended
December 31,
   yoy
change
   For the quarter
ended
December 31,
   yoy
change
 
   2019   2021   2019   2021       2019   2021       2019   2021   (p.p.) 
Economy hotels   2,442    2,442    163    130    -20.1%   186    181    -2.8%   87.9%   72.2%   -15.7 
Leased and owned hotels   380    380    185    145    -21.8%   211    202    -4.4%   87.7%   71.7%   -16.0 
Manachised and franchised hotels   2,062    2,062    158    127    -19.7%   179    175    -2.4%   87.9%   72.3%   -15.6 
Midscale and upscale hotels   1,160    1,160    269    206    -23.5%   325    313    -3.7%   82.9%   65.9%   -17.0 
Leased and owned hotels   187    187    329    229    -30.6%   394    369    -6.5%   83.5%   62.0%   -21.5 
Manachised and franchised hotels   973    973    253    200    -21.0%   305    298    -2.4%   82.7%   66.9%   -15.8 
Total   3,602    3,602    204    160    -21.7%   237    229    -3.5%   86.0%   69.7%   -16.2 

 

Page 23 of 26

 

 

 

 

 

Same-hotel operational data by class
 
Mature hotels in operation for more than 18 months (excluding hotels under requisition)

 

   Number of hotels   Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy 
  

As of

December 31,

   For the year
ended

December 31,
   yoy
change
   For the year
ended
December 31,
   yoy
change
   For the year
ended
December 31,
   yoy
change
 
   2020   2021   2020   2021       2020   2021       2020   2021   (p.p.) 
Economy hotels   3,341    3,341    125    138    10.8%   164    182    10.8%   75.8%   75.8%   +0.0 
Leased and owned hotels   388    388    131    153    17.3%   179    206    15.0%   73.0%   74.5%   +1.5 
Manachised and franchised hotels   2,953    2,953    123    135    9.3%   161    177    9.7%   76.4%   76.1%   -0.3 
Midscale and upscale hotels   1,734    1,734    202    221    9.3%   289    315    8.8%   69.8%   70.1%   +0.3 
Leased and owned hotels   222    222    219    250    14.2%   338    378    11.7%   64.8%   66.2%   +1.4 
Manachised and franchised hotels   1,512    1,512    198    214    8.1%   279    301    8.0%   70.9%   71.0%   +0.1 
Total   5,075    5,075    156    172    10.2%   213    234    10.0%   73.3%   73.5%   +0.1 

 

 
   Number of hotels   Same-hotel RevPAR   Same-hotel ADR   Same-hotel Occupancy 
  

As of

December 31,

   For the year
ended
December 31,
   yoy
change
   For the year
ended
December 31,
   yoy
change
   For the year
ended
December 31,
   yoy
change
 
   2019   2021   2019   2021       2019   2021       2019   2021   (p.p.) 
Economy hotels   2,442    2,442    172    138    -19.8%   190    182    -4.7%   90.2%   75.9%   -14.3 
Leased and owned hotels   380    380    193    151    -21.6%   213    203    -4.4%   90.7%   74.4%   -16.3 
Manachised and franchised hotels   2,062    2,062    166    134    -19.3%   185    176    -4.7%   90.1%   76.3%   -13.7 
Midscale and upscale hotels   1,160    1,160    275    218    -20.8%   331    315    -4.8%   83.0%   69.0%   -14.0 
Leased and owned hotels   187    187    335    244    -26.9%   398    371    -6.8%   84.1%   65.9%   -18.2 
Manachised and franchised hotels   973    973    256    209    -18.4%   310    299    -3.6%   82.7%   70.0%   -12.7 
Total   3,602    3,602    209    167    -20.1%   238    227    -4.7%   87.6%   73.4%   -14.2 

 

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Operating Results: Legacy-DH(4)

 

   Number of hotels   Number of   Unopened hotels 
   Opened
in Q4 2021
   Closed
in Q4 2021
   Net added
in Q4 2021
   As of
December
31, 2021(5)
   rooms
As of
December
31,2021
   in pipeline
As of
December
31,2021
 
Leased hotels   1    -    1    76    14,264    28 
Manachised and franchised hotels   3    (1)   2    48    10,809    9 
Total   4    (1)   3    124    25,073    37 

 

 

(4)Legacy-DH refers to DH.

 

(5)As of December 31, 2021, a total of 4 hotels were temporarily closed. 1 hotel was closed for renovation and 1 hotel was closed due to flood damage. Additionally, 1 hotel was in winter break and 1 hotel was temporarily closed due to low demand.

 

   For the quarter ended     
   December 31,   September 30,   December 31,   yoy 
   2020   2021   2021   change 
Average daily room rate (in EUR)                    
Leased hotels   78    94    95    21.6%
Manachised and franchised hotels   73    104    93    26.6%
Blended   76    99    94    23.5%
Occupancy rate (as a percentage)                    
Leased hotels   20.9%   48.0%   42.8%   +22.0 p.p. 
Managed and franchised hotels   25.4%   49.4%   50.7%   +25.3 p.p. 
Blended   22.5%   48.6%   46.1%   +23.6 p.p. 
RevPAR (in EUR)                    
Leased hotels   16    45    41    149.6%
Managed and franchised hotels   19    52    47    152.7%
Blended   17    48    43    152.6%

 

   For the year ended 
   December 31,   December 31,   yoy 
   2020   2021   change 
Average daily room rate (in EUR)               
Leased and owned hotels   89    91    2.2%
Manachised and franchised hotels   85    89    4.8%
Blended   88    90    3.0%
Occupancy rate (as a percentage)               
Leased and owned hotels   33.9%   31.6%   -2.3 p.p. 
Manachised and franchised hotels   36.3%   40.5%   +4.2 p.p. 
Blended   34.8%   35.2%   +0.3 p.p. 
RevPAR (in EUR)               
Leased and owned hotels   30    29    -4.6%
Manachised and franchised hotels   31    36    16.8%
Blended   31    32    4.0%

 

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Hotel Portfolio by Brand

 

   As of December 31, 2021 
   Hotels   Rooms   Unopened hotels 
   in operation   in pipeline 
Economy hotels   4,786    387,895    1,206 
HanTing Hotel   3,027    274,118    696 
Hi Inn   443    24,674    117 
Elan Hotel(6)   1,083    64,606    353 
Ibis Hotel   219    22,834    28 
Zleep Hotels   14    1,663    12 
Midscale hotels   2,450    271,421    1,072 
Ibis Styles Hotel   79    8,404    21 
Starway Hotel   528    44,016    252 
JI Hotel   1,381    166,836    575 
Orange Hotel   432    47,393    217 
CitiGO Hotel   30    4,772    7 
Upper midscale hotels   454    67,068    264 
Crystal Orange Hotel   144    19,190    58 
Manxin Hotel   84    8,273    62 
Madison Hotel   37    5,490    56 
Mercure Hotel   125    21,217    50 
Novotel Hotel   15    4,032    13 
IntercityHotel(7)   49    8,866    25 
Upscale hotels   125    23,056    61 
Jaz in the City   3    587    1 
Joya Hotel   9    1,760    0 
Blossom House   34    1,658    39 
Grand Mercure Hotel   7    1,485    3 
Steigenberger Hotels & Resorts(8)   65    16,389    12 
MAXX (9)   7    1,177    6 
Others   15    3,776    5 
Other hotels(10)   15    3,776    5 
Total   7,830    753,216    2,608 

 

 

(6)As of December 31, 2021, 70 Ni Hao Hotels were included in the operational hotel for Elan Hotels and 163 Ni Hao Hotels were included in the pipeline for Elan Hotels.

 

(7)As of December 31, 2021, 2 operational hotels and 8 pipeline hotels of IntercityHotel were in China.

 

(8)As of December 31, 2021, 14 operational hotels and 6 pipeline hotels of Steigenberger Hotels & Resorts were in China.

 

(9)As of December 31, 2021, 2 operational hotels and 5 pipeline hotels of MAXX were in China.

 

(10)Other hotels include other partner hotels and other hotel brands in Yongle Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).

 

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