SHANGHAI, China, April 23, 2020 (GLOBE NEWSWIRE) -- Huazhu Group Limited (NASDAQ: HTHT) (“Huazhu”, “we” or “our”), a world-leading hotel group, today announced leverage covenant waiver for existing syndication loan and preliminary results for hotel operations in the first quarter ended March 31, 2020. Upon the completion of Deutsche Hospitality (“DH”) on January 2, 2020, we added 5 new hotel brands, including Steigenberger Hotels & Resorts, Maxx by Steigenberger, Jaz in the City, Intercity Hotel and Zleep Hotel. In this press release, we provide separate operating results for Legacy-Huazhu and Legacy-DH.
Leverage Covenant Waiver for Existing Syndication Loan
On April 17, 2020, our syndication banks approved to release Huazhu from the original six-month-tested financial covenants for a period up to June 30, 2021, subject to the satisfaction of certain amended covenants. The 3-year syndication loan consists of USD500 million and EUR440 million, due in December 2022. The amended covenants mainly include: (1) minimum EBITDA requirement of RMB1 billion for the second half of 2020; (2) net asset value should be more than zero; and (3) no cash dividend during the waiver period.
COVID-19 Impact in Q1 2020
China, where COVID-19 first started to have an impact in late January, has experienced steadily improving trends. Domestic travel is gradually rebuilding with eased travel restrictions and national policy for resuming production and work. The number of our temporarily closed hotels declined from the peak of 2,310 hotels in mid-February down to 369 hotels as of March 31, 2020. During Q1 2020, the governmental authorities requisitioned accumulatively 610 Huazhu hotels (2 million room nights, 12% of which were from our leased hotels) at various locations and periods for medical support workers and quarantine purposes. As of March 31, 2020, Huazhu had 374 hotels under governmental requisition.
Since the COVID-19 outbreak in Europe in March, DH has temporarily closed its hotels. 85 DH hotels were temporarily closed as of March 31, 2020, including 49 leased hotels and 36 manachised and franchised hotels.
Excluding the addition of DH, net revenues for Q1 2020 are expected to decline 45% to 47% (not fully reflecting the revenues from our hotels under governmental requisition) year-over-year. We don’t recognize the revenues from our hotels under governmental requisition until the settlement from governmental authorities. Including the revenue contribution from DH, net revenues for Q1 2020 are expected to decline 14% to 16% year-over-year.
Heading into Q2 2020, more business and leisure travel demand continues to recover in China. We are now accelerating new hotel openings and signings of new franchisees to help us keep on track toward our 2020 growth target.
Operating Results: Legacy-Huazhu
| |
Number of hotels |
|
Number of rooms |
| |
Opened
in Q1 2020 |
Closed (1)
in Q1 2020 |
Net added
in Q1 2020 |
As of
March 31, 2020 |
|
As of
March 31, 2020 |
| |
|
| Leased and owned hotels |
10 |
(9 |
) |
1 |
689 |
|
88,355 |
| Manachised and franchised hotels |
286 |
(67 |
) |
219 |
5,149 |
|
464,007 |
| Total |
296 |
(76 |
) |
220 |
5,838 |
|
552,362 |
| |
| (1) The reasons for hotel closures mainly include non-compliance to brand standards, operating losses, and property-related issues. In Q1 2020, we had 14 hotels closed for brand upgrade and business model change purposes |
| |
As of March 31, 2020 |
| |
Number of hotels |
Unopened hotels in pipeline |
| Economy hotels |
3,992 |
1,128 |
| Leased and owned hotels |
460 |
6 |
| Manachised and franchised hotels |
3,532 |
1,122 |
| Midscale and upscale hotels |
1,846 |
1,206 |
| Leased and owned hotels |
229 |
29 |
| Manachised and franchised hotels |
1,617 |
1,177 |
| Total |
5,838 |
2,334 |
| |
|
|
| |
| All hotels (excluding hotels under requisition) |
|
| |
For the quarter ended |
|
|
| |
March 31, |
December 31, |
March 31, |
yoy |
|
| |
2019 |
2019 |
2020 |
change |
|
| Average daily room rate (in RMB) |
|
|
|
|
|
| Leased and owned hotels |
258 |
|
277 |
|
211 |
|
-18.4% |
|
|
| Manachised and franchised hotels |
211 |
|
223 |
|
184 |
|
-12.8% |
|
|
| Blended |
221 |
|
232 |
|
189 |
|
-14.6% |
|
|
| Occupancy rate (as a percentage) |
|
|
|
|
|
| Leased and owned hotels |
83.6% |
|
84.7% |
|
40.3% |
|
-43.3p.p. |
|
|
| Manachised and franchised hotels |
79.8% |
|
81.6% |
|
39.4% |
|
-40.4p.p. |
|
|
| Blended |
80.6% |
|
82.2% |
|
39.6% |
|
-41.0p.p. |
|
|
| RevPAR (in RMB) |
|
|
|
|
|
| Leased and owned hotels |
216 |
|
235 |
|
85 |
|
-60.6% |
|
|
| Manachised and franchised hotels |
169 |
|
182 |
|
73 |
|
-56.9% |
|
|
| Blended |
178 |
|
191 |
|
75 |
|
-58.1% |
|
|
| |
|
|
|
|
|
|
|
|
|
| Operational hotels (excluding ①hotels under requisition, ②hotels temporarily closed) |
| |
For the quarter ended |
|
| |
March 31, |
December 31, |
March 31, |
yoy |
| |
2019 |
2019 |
2020 |
change |
| Average daily room rate (in RMB) |
|
|
|
|
| Leased and owned hotels |
258 |
|
277 |
|
211 |
|
-18.4% |
|
| Manachised and franchised hotels |
211 |
|
223 |
|
184 |
|
-12.8% |
|
| Blended |
221 |
|
232 |
|
189 |
|
-14.6% |
|
| Occupancy rate (as a percentage) |
|
|
|
|
| Leased and owned hotels |
83.6% |
|
84.7% |
|
43.8% |
|
-39.8p.p. |
|
| Manachised and franchised hotels |
79.8% |
|
81.6% |
|
47.4% |
|
-32.5p.p. |
|
| Blended |
80.6% |
|
82.2% |
|
46.7% |
|
-33.9p.p. |
|
| RevPAR (in RMB) |
|
|
|
|
| Leased and owned hotels |
216 |
|
235 |
|
92 |
|
-57.2% |
|
| Manachised and franchised hotels |
169 |
|
182 |
|
87 |
|
-48.3% |
|
| Blended |
178 |
|
191 |
|
88 |
|
-50.5% |
|
| |
|
|
|
|
|
|
|
|
| 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 |
For the quarter ended |
yoy |
For the quarter ended |
yoy |
For the quarter ended |
yoy |
| |
March 31, |
March 31, |
change |
March 31, |
change |
March 31, |
change |
| |
2019 |
2020 |
2019 |
2020 |
|
2019 |
2020 |
|
2019 |
|
2020 |
|
(p.p.) |
| Economy hotels |
2,421 |
2,421 |
155 |
76 |
-50.6 |
% |
179 |
150 |
-16.2 |
% |
86.3 |
% |
50.9 |
% |
-35.4 |
| Leased and owned hotels |
411 |
411 |
173 |
78 |
-55.2 |
% |
197 |
160 |
-18.8 |
% |
87.8 |
% |
48.5 |
% |
-39.3 |
| Manachised and franchised hotels |
2,010 |
2,010 |
150 |
76 |
-49.2 |
% |
174 |
147 |
-15.4 |
% |
85.9 |
% |
51.6 |
% |
-34.3 |
| Midscale and upscale hotels |
850 |
850 |
247 |
108 |
-56.2 |
% |
320 |
259 |
-18.9 |
% |
77.3 |
% |
41.7 |
% |
-35.5 |
| Leased and owned hotels |
173 |
173 |
299 |
112 |
-62.7 |
% |
378 |
291 |
-23.1 |
% |
79.1 |
% |
38.3 |
% |
-40.8 |
| Manachised and franchised hotels |
677 |
677 |
229 |
107 |
-53.4 |
% |
299 |
248 |
-17.0 |
% |
76.6 |
% |
43.0 |
% |
-33.6 |
| Total |
3,271 |
3,271 |
184 |
87 |
-52.8 |
% |
220 |
180 |
-17.9 |
% |
83.5 |
% |
48.0 |
% |
-35.5 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Results: Legacy-DH
| |
Number of hotels |
|
Number of
rooms |
|
Unopened hotels
in pipeline |
| |
Opened
in Q1 2020 |
Closed
in Q1 2020 |
Net added
in Q1 2020 |
As of
March 31, 2020 |
|
As of
March 31, 2020 |
|
As of
March 31, 2020 |
| |
| Leased hotels |
3 |
(2 |
) |
1 |
|
67 |
|
12,327 |
|
28 |
| Manachised and franchised hotels |
2 |
(7 |
) |
(5 |
) |
48 |
|
10,799 |
|
13 |
| Total |
5 |
(9 |
) |
(4 |
) |
115 |
|
23,126 |
|
41 |
| |
|
|
|
|
|
|
|
|
|
|
| |
| |
|
| |
For the quarter ended |
|
|
| |
March 31, |
December 31, |
March 31, |
yoy |
|
| |
2019 |
2019 |
2020 |
change |
|
| Average daily room rate (in EUR) |
|
|
|
|
|
| Leased hotels |
104 |
|
105 |
|
97 |
|
-6.9 |
% |
|
| Manachised and franchised hotels |
83 |
|
88 |
|
80 |
|
-4.4 |
% |
|
| Blended |
95 |
|
97 |
|
89 |
|
-5.9 |
% |
|
| Occupancy rate (as a percentage) |
|
|
|
|
|
| Leased hotels |
64.8 |
% |
72.8 |
% |
52.6 |
% |
-12.2p.p. |
|
| Manachised and franchised hotels |
58.6 |
% |
65.0 |
% |
50.4 |
% |
-8.2p.p. |
|
| Blended |
61.9 |
% |
69.1 |
% |
51.7 |
% |
-10.3p.p. |
|
| RevPAR (in EUR) |
|
|
|
|
|
| Leased hotels |
67 |
|
76 |
|
51 |
|
-24.4 |
% |
|
| Manachised and franchised hotels |
49 |
|
57 |
|
40 |
|
-17.7 |
% |
|
| Blended |
59 |
|
67 |
|
46 |
|
-21.6 |
% |
|
| |
|
|
|
|
|
|
|
|
|
DH hotels by region
| |
Number of hotels |
| |
As of March 31, 2020 |
| |
All |
Leased |
Manachised and franchised |
| Europe |
93 |
67 |
26 |
| -Germany |
70 |
51 |
19 |
| North Africa |
17 |
0 |
17 |
| Asia |
5 |
0 |
5 |
| Total |
115 |
67 |
48 |
| |
|
|
|
Hotel Portfolio by Brand
Huazhu has realigned our brands for accelerated quality growth. During 2020: (1) we have reclassified our Ibis hotels as economy hotels; (2) we have consolidated HanTing Premium to HanTing; and (3) we have consolidated Grand Madison to Madison.
| |
As of March 31, 2020 |
| |
Hotels |
Rooms |
Unopened hotels |
| |
in operation |
in pipeline |
| Economy hotels |
4,004 |
336,004 |
1,138 |
| HanTing Hotel |
2,630 |
245,171 |
503 |
| Hi Inn |
464 |
26,956 |
130 |
| Elan Hotel |
713 |
42,375 |
424 |
| Ibis Hotel |
185 |
20,254 |
71 |
| Zleep Hotel |
12 |
1,248 |
10 |
| Midscale and upscale hotels |
1,949 |
239,484 |
1,237 |
| Ibis Styles Hotel |
59 |
7,120 |
33 |
| Starway Hotel |
367 |
31,616 |
281 |
| JI Hotel |
885 |
111,205 |
469 |
| Orange Hotel |
255 |
29,199 |
164 |
| Crystal Orange Hotel |
95 |
12,760 |
63 |
| Manxin Hotel |
52 |
4,702 |
35 |
| Madison Hotel |
15 |
1,933 |
28 |
| Mercure Hotel |
71 |
12,733 |
81 |
| Novotel Hotel |
9 |
2,818 |
13 |
| Joya Hotel |
8 |
1,407 |
4 |
| Blossom Hill Hotels & Resorts |
24 |
832 |
25 |
| Grand Mercure Hotel |
6 |
1,281 |
10 |
| Steigenberger Hotels & Resorts |
50 |
11,909 |
8 |
| Intercity Hotel |
42 |
7,537 |
19 |
| Maxx by Steigenberger |
5 |
777 |
1 |
| Jaz in the City |
2 |
424 |
2 |
| Other partner hotels |
4 |
1,231 |
1 |
| Total |
5,953 |
575,488 |
2,375 |
About Huazhu Group Limited
Originated in China, Huazhu Group Limited is a world-leading hotel operator and franchisor. As of March 31, 2020, Huazhu operated 5,953 hotels with 575,488 rooms in operation in 15 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, and Blossom Hill Hotels & Resorts. Upon the completion of Deutsche Hospitality acquisition on January 2, 2020, Huazhu added 5 brands to our portfolio, including Steigenberger Hotels & Resorts, Maxx by Steigenberger, Jaz in the City, Intercity Hotel and Zleep Hotel. 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 Huazhu appoints and 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 March 31, 2020, Huazhu operates 17 percent of its hotel rooms under lease and ownership model, and 83 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; the 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 U.S. Securities and Exchange Commission. 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.
Contact Information
Huazhu Investor Relations
Tel: 86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com
Source: Huazhu Group Limited
