华住集团有限公司呈报2020年第四季度及全年财务业绩

24/03/2021
  • A total of 6,789 hotels or 652,162 hotel rooms in operation as of December 31, 2020.
  • Hotel turnover1 increased 17.5% year-over-year to RMB11 billion for the fourth quarter, and decreased 5.6% to RMB33 billion for the full year of 2020. Excluding DH, hotel turnover increased 13.2% year-over-year for the fourth quarter and decreased 12.5% year-over-year for the full year of 2020.
  • Net revenues increased 5.5% year-over-year to RMB3.1 billion (US$471 million)2 for the fourth quarter, better than revenue guidance previously announced of 0% to 3%, and decreased 9.1% to RMB10.2 billion (US$1.6 billion) for the full year of 2020. Excluding DH, net revenues for the fourth quarter decreased 3.1% year-over-year, better than our guidance previously announced of a decline of 4 to 7%.
  • Net income attributable to Huazhu Group Limited was RMB703 million (US$108 million) for the fourth quarter of 2020, compared with RMB619 million for the fourth quarter of 2019 and net loss attributable to Huazhu Group Limited of RMB212 million in the previous quarter. Net loss attributable to Huazhu Group Limited was RMB2.2 billion (US$336 million) for the full year of 2020. Excluding DH, net income attributable to Huazhu Group Limited was RMB1.0 billion for the fourth quarter of 2020 and was negative RMB847 million for the full year of 2020.
  • Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted net income (non-GAAP) for the fourth quarter of 2020 was negative RMB8 million (US$1 million), compared with RMB411 million for the fourth quarter of 2019, and adjusted net income (non-GAAP) for the full year of 2020 was negative RMB1.8 billion (US$275 million), compared with RMB1.6 billion for the full year of 2019. Excluding DH, adjusted net income attributable to Huazhu Group Limited (non-GAAP) for the fourth quarter of 2020 was RMB300 million and was negative RMB459 million for the full year of 2020.
  • EBITDA (non-GAAP) for the fourth quarter of 2020 increased 2.3% year-over-year to RMB1.1 billion (US$167 million). EBITDA (non-GAAP) for the full year of 2020 was negative RMB631 million (US$96 million). Excluding DH, EBITDA (non-GAAP) increased 38.8% year-over-year to RMB1.5 billion for the fourth quarter of 2020 and was RMB736 million for the full year of 2020.
  • Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) was RMB375 million (US$58 million) for the fourth quarter and was negative RMB244 million (US$35 million) for the full year of 2020. Excluding DH, adjusted EBITDA (non-GAAP) was RMB764 million for the fourth quarter of 2020 and was RMB1.1 billion for the full year of 2020.
  • In the first quarter of 2021, Huazhu expects net revenues growth to range from an 8% to a 10% increase compared to the first quarter of 2020, or to range from an increase of 61-63% if excluding DH. For the full year of 2021, we expect the net revenue growth to range from a 50% to 54%, or to range from 50% to 54% if excluding DH. To provide a more meaningful guidance considering the impact of COVID-19, the net revenue guidance mentioned above if compared to 2019 represents a decline of 7% to 9% in the first quarter of 2021 (or a decline of 12-14% if excluding DH), and growth of 36% to 40% for the full year in 2021 (or 15% to 19% if excluding DH). In order to contain the spread of COVID-19 during the Chinese New Year, Chinese government imposed strict “stay local” guidance, which impacted travel demand in January and February 2021. Upon the relaxation of travel restrictions from mid-March, we recorded a strong recovery in RevPAR. Excluding the impact of January and February, our revenue guidance for Q1 2021 compared to Q1 2019 would have been a growth of 7%-9%, (or 1%-3% if excluding DH), and 45%-49% (36%-40% if excluding DH) for the full year 2021 compared to 2019.  

SHANGHAI, China, March 24, 2021 (GLOBE NEWSWIRE) -- 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, 2020.

As of December 31, 2020, Huazhu’s worldwide hotel network in operation totaled 6,789 hotels and 652,162 rooms, including 120 hotels from DH. For the full year of 2020, the Company opened 40 leased hotels and 1,609 manachised hotels and franchised hotels, and closed 41 leased hotels and 556 manachised and franchised hotels. During the fourth quarter of 2020, Legacy-Huazhu3 business opened 393 hotels, including 4 leased (or leased-and-operated) hotels and 389 manachised (or franchised-and-managed) hotels and franchised hotels, and closed a total of 114 hotels, including 10 leased hotels and 104 manachised and franchised hotels. For the full year of 2020, Legacy-Huazhu opened 32 leased hotels and 1,605 manachised hotels and franchised hotels, and closed 39 leased hotels and 547 manachised and franchised hotels. During the fourth quarter of 2020, the Legacy-DH4 business opened 3 hotels, including 2 leased hotels and 1 manachised and franchised hotel. For the full year of 2020, Legacy-DH opened 8 leased hotels and 4 manachised hotels and franchised hotels, and closed 2 leased hotels and 9 manachised and franchised hotels. As of December 31, 2020, Huazhu had a total of 2,449 unopened hotels in the pipeline, including 2,411 hotels from Legacy-Huazhu business and 38 hotels from the Legacy-DH business.

Legacy-Huazhu Only Fourth Quarter and Full Year of 2020 Operational Highlights

As of December 31, 2020, Legacy-Huazhu had 6,669 hotels in operation, including 681 leased and owned hotels and 5,988 manachised hotels and franchised hotels. In addition, as of the same date, Legacy-Huazhu had 628,135 hotel rooms in operation, including 90,942 under the lease and ownership model and 537,193 under the manachise and franchise models. Legacy-Huazhu also had 2,411 hotels in the pipeline, including 18 leased and owned hotels and 2,393 manachised and franchised hotels. As of December 31, 2020, approximately 99% of Legacy-Huazhu’s hotels (excluding 74 hotels under governmental requisition) had resumed operations. 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.

  • The ADR was RMB231 in the fourth quarter of 2020, compared with RMB232 in the fourth quarter of 2019 and RMB218 in the previous quarter. The ADR was RMB210 for the full year of 2020, compared with RMB234 for the previous year.
  • The occupancy rate for all Legacy-Huazhu hotels in operation was 80.6% in the fourth quarter of 2020, compared with 82.2% in the fourth quarter of 2019 and 82.0% in the previous quarter. The occupancy rate was 71.0% for the full year of 2020, compared with 84.4% for the previous year.
  • Blended RevPAR was RMB186 in the fourth quarter of 2020, compared with RMB191 in the fourth quarter of 2019 and RMB179 in the previous quarter. Blended RevPAR was RMB149 for the full year of 2020, compared with RMB198 for the previous year.
  • For all hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB186 for the fourth quarter of 2020, representing a 7.6% decrease from RMB201 for the fourth quarter of 2019, with a 3.9% decrease in ADR and a 3.3-percentage-point decrease in occupancy rate. The same-hotel RevPAR was RMB148 for the full year of 2020, representing a 27.9% decrease from RMB205 for the full year of 2019, with a 13.1% decrease in ADR and a 14.8-percentage-point decrease in occupancy rate.

Legacy-DH Only Fourth Quarter and Full Year of 2020 Operational Highlights

As of December 31, 2020, Legacy-DH had 120 hotels in operation, including 72 leased and owned hotels and 48 manachised hotels and franchised hotels. In addition, as of the same date, Legacy-DH had 24,027 hotel rooms in operation, including 13,371 under the lease and ownership model and 10,656 under the manachise and franchise models. Legacy-DH also had 38 hotels in the pipeline, including 26 leased and owned hotels and 12 manachised and franchised hotels. The following discusses Legacy-DH’s RevPAR, average daily room rate (“ADR”) and occupancy rate for its leased as well as manachised and franchised hotels (excluding hotels temporarily closed) for the periods indicated. 

  • The ADR was EUR76 in the fourth quarter of 2020, compared with EUR97 in the fourth quarter of 2019 and EUR93 in the previous quarter. The ADR was EUR88 for the full year of 2020, compared with EUR97 for the previous year.
  • The occupancy rate for all Legacy-DH hotels in operation was 22.5% in the fourth quarter of 2020, compared with 68.0% in the fourth quarter of 2019 and 37.9% in the previous quarter. The occupancy rate was 34.8% for the full year of 2020, compared with 69.1% for the previous year.
  • Blended RevPAR was EUR17 in the fourth quarter of 2020, compared with EUR66 in the fourth quarter of 2019 and EUR35 in the previous quarter. Blended RevPAR was EUR31 for the full year of 2020, compared with EUR67 for the previous year.

Ji Qi, Founder, Executive Chairman and CEO of Huazhu commented: “COVID-19 has caused very significant challenges to both our China and European businesses in 2020. However, our China business achieved strong recovery throughout the year, especially in the second half of 2020 despite several resurgences of the COVID-19 pandemic in various regions. In the second half, we achieved over RMB1.6 billion of adjusted EBITDA for our China business. More importantly, we continued to expand our hotel network and pipeline, thanks to our dedicated employees, our powerful brand portfolio and solid execution. Although our European business is still being impacted by COVID-19 pandemic, we have continued to advance our digitalization plan. Moreover, we also took the opportunity to streamline our organizational structure to prepare well for future recovery.”

“Looking ahead, we believe the COVID-19 pandemic has not changed the long-term growth potential of China’s lodging industry. Under the China’s ’Dual circulation‘ economy model, we continue to emphasize our China-focus strategy, together with our unique Three-in-One ’Super Composite’ business model for further hotel network expansion. More importantly, our future expansion will not focus on speed only, but more on quality as we see customers become more quality-oriented after COVID-19. Additionally, we are continuously improving and upgrading our technology and organizational capabilities to support our long-term strategy execution.”

Fourth Quarter and Full Year of 2020 Financial Results
The fourth quarter and full year of 2020 financial results included results of the Legacy-DH business, which was not included in the fourth quarter and full year of 2019 financial results. In the fourth quarter and full year of 2020, both Legacy-Huazhu business and Legacy-DH businesses were affected by the COVID-19 pandemic compared with the fourth quarter of 2019 and full year of 2020.


(RMB in millions)
Q4 2019 Q3 2020 Q4 2020 2019FY 2020FY
Revenues:          
Leased and owned hotels 1,921 2,131 2,024 7,718 6,908
Manachised and franchised hotels 938 995 999 3,342 3,136
Others 51 32 48 152 152
Net revenues 2,910 3,158 3,071 11,212 10,196

Net revenues for the fourth quarter of 2020 were RMB3.1 billion (US$471 million), representing a 5.5% year-over-year increase and a 2.8% sequential decrease. Excluding DH, our net revenues for the fourth quarter of 2020 were RMB2.8 billion, representing a 3.1% year-over-year decrease.

Net revenues for the full year of 2020 were RMB10.2 billion (US$1.6 billion), representing a decrease of 9.1% from the full year of 2019. Excluding DH, our net revenues for the full year of 2020 were RMB8.7 billion, representing a 22.7% year-over-year decrease.

Net revenues from leased and owned hotels for the fourth quarter of 2020 were RMB2.0 billion (US$310 million), representing a 5.4% year-over-year increase and a 5.0% sequential decrease. Excluding DH, our net revenues from leased and owned hotels for the fourth quarter of 2020 were RMB1.8 billion, representing a 6.8% year-over-year decrease.

For the full year of 2020, net revenues from leased and owned hotels were RMB6.9 billion (US$1.1 billion), representing a 10.5% year-over-year decrease. Excluding DH, our net revenues from leased and owned hotels for the full year of 2020 were RMB5.4 billion, representing a 29.5% year-over-year decrease.

Net revenues from manachised and franchised hotels for the fourth quarter of 2020 were RMB999 million (US$153 million), representing a 6.5% year-over-year increase and a 0.4% sequential increase. Excluding DH, our net revenues from manachised and franchised hotels for the fourth quarter of 2020 were RMB990 million, representing a 5.5% year-over-year increase.

For the full year of 2020, net revenues from manachised and franchised hotels were RMB3.1 billion (US$481 million), representing a 6.2% year-over-year decrease. These hotels accounted for 30.8% of net revenues, compared to 29.8% of net revenues for the full year of 2019. Excluding DH, our net revenues from manachised and franchised hotels for the full year of 2020 were RMB3.1 billion, representing a 7.5% year-over-year decrease.

Other revenues represent revenues generated from businesses other than the hotel operation, which mainly include revenues from the provision of IT products and services to hotels and revenues from Huazhu Mall™ and other revenues from Legacy-DH business, totaling RMB48 million (US$8 million) in the fourth quarter of 2020, compared to RMB51 million in the fourth quarter of 2019 and RMB32 million in the previous quarter.

For the full year of 2020, other revenues were RMB152 million (US$23 million), same as in 2019.



(RMB in millions)
Q4 2019 Q3 2020 Q4 2020 2019FY 2020FY
Operating costs and expenses:          
Hotel operating costs 1,879 2,470 2,748 7,190 9,729
Other operating costs 21 15 22 57 52
Selling and marketing expenses 134 162 181 426 597
General and administrative expenses 330 343 336 1,061 1,259
Pre-opening expenses 149 42 36 502 288
Total operating costs and expenses 2,513 3,032 3,323 9,236 11,925
           

Hotel operating costs for the fourth quarter of 2020 were RMB2.7 billion (US$420 million), compared to RMB1.9 billion in the fourth quarter of 2019 and RMB2.5 billion in the previous quarter. Excluding DH, hotel operating costs for the fourth quarter of 2020 were RMB2.1 billion, which represented 73.4% of the quarter’s net revenues, compared to 64.6% for the fourth quarter in 2019 and 70.4% for the previous quarter.

For the full year of 2020, hotel operating costs were RMB9.7 billion (US$1.5 billion), compared to RMB7.2 billion in 2019. Excluding DH, hotel operating costs for the full year of 2020 were RMB7.4 billion, which represented 85.1% of the net revenues, compared to 64.1% for 2019.

Selling and marketing expenses for the fourth quarter of 2020 were RMB181 million (US$28 million), compared to RMB134 million in the fourth quarter of 2019 and RMB162 million in the previous quarter. Excluding DH, selling and marketing expenses for the fourth quarter of 2020 were RMB149 million, which represented 5.3% of the quarter’s net revenues, compared to RMB134 million or 4.6% of net revenues for the fourth quarter in 2019, and RMB102 million or 3.7% of net revenues for the previous quarter. The increase was mainly due to expansion of direct sales team, promotional events including but not limited to several Huazhu World conferences in different parts of China to attract potential franchisees.

For the full year of 2020, selling and marketing expenses were RMB597 million (US$91 million), compared to RMB426 million in 2019. Excluding DH, selling and marketing expenses for the full year of 2020 were RMB388 million, which represented 4.5% of the net revenues, compared to RMB426 million or 3.8% of net revenues for the full year of 2019.

General and administrative expenses for the fourth quarter of 2020 were RMB336 million (US$52 million), compared to RMB330 million in the fourth quarter of 2019 and RMB343 million in the previous quarter. Excluding DH, general and administrative expenses for the fourth quarter of 2020 were RMB257 million, which represented 9.1% of the quarter’s net revenues, compared to RMB330 million for the fourth quarter in 2019 and RMB235 million for the previous quarter. 

For the full year of 2020, general and administrative expenses were RMB1.3 billion (US$193 million), compared to RMB1.1 billion in 2019. Excluding DH, general and administrative expenses for the full year of 2020 were RMB893 million, which represented 10.3% of the net revenues, compared to RMB1.1 billion or 9.5% of net revenues for the full year of 2019. The decline was mainly due to our cost-cutting initiatives, such as streamlining of head office headcounts during 2020.

Pre-opening expenses for the fourth quarter of 2020 were mostly related to Legacy-Huazhu totaling RMB36 million (US$6 million), compared to RMB149 million in the fourth quarter of 2019 and RMB42 million in the previous quarter.

Pre-opening expenses for the full year of 2020 were RMB288 million (US$44 million), compared to RMB502 million in 2019, representing a year-over-year decrease of 42.6%. Pre-opening expenses as a percentage of net revenues were 2.8% in 2020, compared to 4.5% in 2019.

Other operating income, net for the fourth quarter of 2020 was RMB118 million (US$18 million), compared to RMB89 million in the fourth quarter of 2019 and RMB110 million in the previous quarter.

Other operating income, net for the full year of 2020 was RMB480 million (US$74 million), compared to RMB132 million in 2019. The year-over-year increase was mainly attributable to subsidy income and insurance income from DH due to COVID-19 impact.

Income from operations for the fourth quarter of 2020 was negative RMB134 million (US$20 million). Excluding share-based compensation expenses, adjusted loss from operations (non-GAAP) for the fourth quarter of 2020 was RMB112 million (US$16 million), compared to adjusted income from operations (non-GAAP) of RMB508 million in the fourth quarter of 2019 and adjusted loss from operations (non-GAAP) of RMB168 million in the previous quarter. Excluding DH, our income from operations for the fourth quarter of 2020 was RMB315 million, compared to income from operations of RMB486 million in the fourth quarter of 2019 and income from operations of RMB523 million in the previous quarter.

Income from operations for the full year of 2020 was negative RMB1.7 billion (US$257 million). Excluding share-based compensation expenses, adjusted loss from operations (non-GAAP) for the full year of 2020 was RMB1.6 billion (US$238 million), compared to adjusted income from operations (non-GAAP) of RMB2.2 billion in 2019. Excluding DH, our income from operations for the full year of 2020 was negative RMB100 million, compared to income from operations of RMB2.1 billion in 2019.

Operating margin, defined as income from operations as a percentage of net revenues, for the fourth quarter of 2020, was a negative 4.4%. Excluding DH, the operating margin for the fourth quarter of 2020 was 11.2%, compared with 16.7% in the fourth quarter of 2019 and 19.1% in the previous quarter.

Operating margin for the full year of 2020 was a negative 16.5%. Excluding DH, the operating margin for the full year of 2020 was a negative 1.2%, compared with 18.8% in 2019.

Other income, net for the fourth quarter of 2020 was negative RMB8 million (US$2 million), compared to a positive RMB45 million for the fourth quarter of 2019 and negative RMB1 million for the previous quarter.

Other income, net for the full year of 2020 was negative RMB89 million (US$14 million), compared to a positive RMB331 million in 2019. The decrease was mainly due to impairment loss on investments totaling RMB92 million in 2020.

Unrealized gains from fair value changes of equity securities for the fourth quarter of 2020 was RMB733 million (US$113 million), compared to unrealized gains from fair value changes of equity securities of RMB230 million in the fourth quarter of 2019 and unrealized gains from fair value changes of equity securities of RMB39 million in the previous quarter. Unrealized gains (losses) from fair value changes of equity securities mainly represents the unrealized gains (losses) from our investment in equity securities with readily determinable fair values, such as AccorHotels.

For the full year of 2020, unrealized losses from fair value changes of equity securities were RMB265 million (US$42 million), compared to unrealized gains from fair value changes of equity securities of RMB316 million in 2019.

Income tax benefit for the fourth quarter of 2020 was RMB66 million (US$10 million), compared to income tax expense of RMB133 million in the same period of 2019 and income tax benefit of RMB50 million in the previous quarter. For the full year of 2020, income tax benefit was RMB215 million (US$33 million), compared to income tax expense of RMB640 million in 2019.

Net income attributable to Huazhu Group Limited for the fourth quarter of 2020 was RMB703 million (US$108 million). Excluding share-based compensation expenses and the unrealized gains (losses) from fair value changes of equity securities, adjusted net loss attributable to Huazhu Group Limited (non-GAAP) for the fourth quarter of 2020 was RMB8 million (US$1 million). Excluding DH, the net income attributable to Huazhu Group Limited for the fourth quarter of 2020 was RMB1.0 billion, compared to net income attributable to Huazhu Group Limited of RMB619 million in the fourth quarter of 2019 and net income attributable to Huazhu Group Limited of RMB482 million in the previous quarter. Excluding DH, the adjusted net income attributable to Huazhu Group Limited (non-GAAP) for the fourth quarter of 2020 was RMB300 million, compared with adjusted net income attributable to Huazhu Group Limited (non-GAAP) of RMB411 million in the fourth quarter of 2019 and an adjusted net income attributable to Huazhu Group Limited (non-GAAP) of RMB476 million in the previous quarter.

Net loss attributable to Huazhu Group Limited for the full year of 2020 was RMB2.2 billion (US$336 million). Excluding share-based compensation expenses and the unrealized gains (losses) from fair value changes of equity securities, adjusted net loss attributable to Huazhu Group Limited (non-GAAP) for the full year of 2020 was RMB1.8 billion (US$275 million). Excluding DH, the net loss attributable to Huazhu Group Limited for the full year of 2020 was RMB847 million, compared to net income attributable to Huazhu Group Limited of RMB1.8 billion in 2019. Excluding DH, the adjusted net loss attributable to Huazhu Group Limited (non-GAAP) for the full year of 2020 was RMB459 million, compared with adjusted net income attributable to Huazhu Group Limited (non-GAAP) of RMB1.6 billion in 2019.

Basic and diluted earnings per share/ADS. For the fourth quarter of 2020, basic and diluted earnings per share were RMB2.27 (US$0.35) and RMB2.16 (US$0.33), respectively. Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted basic and diluted losses per share (non-GAAP) were RMB0.02 (US$0.00).

For the full year of 2020, basic losses per share were RMB7.49 (US$1.15). Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted basic and diluted losses per share (non-GAAP) were RMB6.16 (US$0.94).

EBITDA (non-GAAP) for the fourth quarter of 2020 was RMB1.1 billion (US$167 million). Excluding DH, the EBITDA (non-GAAP) for the fourth quarter of 2020 was RMB1.5 billion (US$226 million), compared with RMB1.1 billion in the fourth quarter of 2019 and RMB859 million in the previous quarter. Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) for the fourth quarter of 2020 was RMB375 million (US$58 million). Excluding DH, the adjusted EBITDA (non-GAAP) for the fourth quarter of 2020 was RMB764 million (US$118 million), compared with RMB854 million in the fourth quarter of 2019 and RMB853 million in the previous quarter.

EBITDA (non-GAAP) for the full year of 2020 was negative RMB631 million (US$96 million). Excluding DH, the EBITDA (non-GAAP) for the full year of 2020 was RMB736 million (US$112 million), compared with RMB3.6 billion in 2019. 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 2020 was negative RMB244 million (US$35 million). Excluding DH, the adjusted EBITDA (non-GAAP) for the full year of 2020 was RMB1.1 billion (US$172 million), compared with RMB3.3 billion in 2019.

Adjusted EBITDA margin (non-GAAP), defined as adjusted EBITDA as a percentage of net revenues, for the fourth quarter of 2020 was 12.2%, compared to 29.3% in the fourth quarter of 2019 and 5.8% in previous quarter. Excluding to DH, adjusted EBITDA margin (non-GAAP) for the fourth quarter of 2020 was 27.1%, compared to 29.3% in the fourth quarter of 2019 and 31.2% in the previous quarter. Adjusted EBITDA margin (non-GAAP) for the year of 2020 was a negative 2.4%, compared to a positive 29.9% in 2019. Excluding to DH, adjusted EBITDA margin (non-GAAP) for the year of 2020 was 13.0%, compared to 29.9% in 2019.

We achieved very strong recovery in the second half of 2020. Adjusted EBITDA margin (non-GAAP) for the second half of 2020 was 9.0%, compared to 29.4% in the second half of 2019 and a negative 20.2% in the first half of 2020. Excluding to DH, adjusted EBITDA margin (non-GAAP) for the second half of 2020 was 29.1%, compared to 29.4% in the second half of 2019 and a negative 15.9% in the first half of 2020.

Cash flow. Operating cash inflow for the fourth quarter of 2020 was RMB304 million (US$46 million). Investing cash outflow for the fourth quarter of 2020 was RMB515 million (US$79 million). Financing cash outflow for the fourth quarter of 2020 was RMB410 million (US$62 million).

Operating cash inflow for the full year of 2020 was RMB609 million (US$93 million), representing a decrease of 81.5% from 2019. Investing cash outflow for the full year of 2020 was RMB8.1 billion (US$1.2 billion), compared to RMB285 million in 2019. Financing cash inflow for the full year of 2020 was RMB883 million (US$134 million), compared to RMB6.0 billion in 2019.

Cash and cash equivalents and Restricted cash. As of December 31, 2020, the Company had a total balance of cash and cash equivalents of RMB7.0 billion (US$1.1 billion) and restricted cash of RMB64 million (US$10 million).

Debt financing. As of December 31, 2020, the Company had a total debt balance of RMB12.0 billion (US$1.8 billion) and the unutilized credit facility available to the Company was RMB6.6 billion. Subsequent to the year end of 2020, we continue to repay our outstanding loans and further reduce our debt position.

COVID-19 update
During Q4 2020, despite numerous recurrences of COVID-19 in several cities and provinces in mainland China, such as Shanghai, Chengdu, and the Northeastern area of China, our business continued to recover, thanks to China’s effective and precise control of the COVID-19 pandemic. More importantly, we noticed that demand for travel shows resilience and recovery in previously-affected cities, with acceleration after the COVID-19 risk level was moved downward in those cities (from mid-to-high risk to low risk). This recovery trend was temporarily paused in the first two months of 2021 due to another COVID-19 resurgence in Shanghai, Beijing and Hebei Province. Accordingly, the Chinese government introduced “stay local” guidance prior to the Chinese New Year holiday (CNY) which further pressured the recovery in February. However, our performance started to recover steadily again post the CNY holiday. RevPAR in March 2021 recovered to 87% of 2019 from only 56% of 2019 in February 2021. Particularly, after the National People’s Congress and the Chinese People’s Political Consultative Conference during the first week of March, the Chinese government further eased travel restrictions which were in effect from March 16, 2021. After that, we saw hotel demand in the Beijing area recovering immediately and at a strong pace.

Steigenberger Hotels AG and its subsidiaries (“DH”) suffered from the second wave and third wave of COVID-19 outbreak in European countries since late September 2020. Given that the Europe has been encountering several resurgences of the COVID-19 pandemic, the lockdown period there has been extended several times, and currently is scheduled to end on April 18, 2021. Despite these resurgences, the Q4 2020 DH net revenues remain within our previous guidance. European countries began their vaccination process in December 2020. However, due to the uncertainty of the completion of the vaccination process, and consequently the timing of business recovery, we are taking further cost reduction and cash flow measures, such as negotiating with landlords to reduce our rental costs, reducing or eliminating discretionary corporate spending and capital expenditures, etc. We also actively sought new business opportunities in the government’s fight against COVID-19, such as offering Huazhu hotels to support governmental agencies for pandemic prevention and control. The extension of lockdown impacts are partially offset by extension of the scope and duration of European government subsidy programs.

Guidance
Huazhu anticipates the gross opening of 1,800-2,000 hotels in 2021, considering the COVID-19 resurgence happened in January and February. In 2021, Huazhu is expected to close 500-550 hotels.

In the first quarter of 2021, Huazhu expects net revenues growth to range from an 8% to a 10% increase compared to the first quarter of 2020, or to range from an increase of 61-63% if excluding DH. For the full year of 2021, we expect the net revenue growth to range from a 50% to 54%, or to range from 50% to 54% if excluding DH.

To provide a more meaningful guidance considering the impact of COVID-19, the net revenue guidance mentioned above if compared to 2019 represents a decline of 7% to 9% in the first quarter of 2021 (or a decline of 12-14% if excluding DH), and growth of 36% to 40% for the full year in 2021 (or 15% to 19% if excluding DH). In order to contain the spread of COVID-19 during the Chinese New Year, Chinese government imposed strict “stay local” guidance, which impacted travel demand in January and February 2021. Upon the relaxation of travel restrictions from mid-March, we recorded a strong recovery in RevPAR. Excluding the impact of January and February, our revenue guidance for Q1 2021 compared to Q1 2019 would have been a growth of 7%-9%, (or 1%-3% if excluding DH), and 45%-49% (36%-40% if excluding DH) for the full year 2021 compared to 2019.

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

Conference Call
The Company’s management will host a conference call beginning at 9:00 a.m. Hong Kong time on Thursday, March 25, 2021 (or 9:00 p.m. U.S. Eastern time on Wednesday, March 24, 2021) following the announcement of the results. 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/1749583 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 promptly. 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 April 1, 2021. Please dial +1 (855) 452 5696 (for callers in the U.S.); 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 1749583.

Use of Non-GAAP Financial Measures
To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: hotel operating costs excluding share-based compensation expenses; general and administrative expenses excluding share-based compensation expenses; selling and marketing expenses excluding share-based compensation expenses; adjusted income from operations excluding share-based compensation expenses; adjusted net income 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 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; and adjusted EBITDA margin. 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 will provide 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 the 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 comparison 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.

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

Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of 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 the 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.

About Huazhu Group Limited
Originated in China, Huazhu Group Limited is a world-leading hotel group. As of December 31, 2020, Huazhu operated 6,789 hotels with 652,162 rooms in operation in 16 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, and Ni Hao 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 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 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, 2020, Huazhu operates 16 percent of its hotel rooms under lease and ownership model, and 84 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 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
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com

---Financial Tables and Operational Data Follow---

 
Huazhu Group Limited
Unaudited Condensed Consolidated Balance Sheets
  December 31, 2019         December 31, 2020    
                 
  RMB   RMB     US$    
  (in millions)
   
ASSETS
Current assets:
Cash and cash equivalents 3,234     7,026     1,077    
Restricted cash 10,765     64     10    
Short-term investments 2,908     3,903     598    
Accounts receivable, net 218     404     62    
Loan receivables, net 193     304     47    
Amounts due from related parties 182     178     27    
Inventories 57     89     14    
Other current assets, net 699     914     140    
Total current assets 18,256     12,882     1,975    
       
Property and equipment, net 5,854     6,682     1,024    
Intangible assets, net 1,662     5,945     911    
Operating lease right-of-use assets 20,875     28,980     4,441    
Finance lease right-of-use assets -     2,041     313    
Land use rights, net 215     213     33    
Long-term investments 1,929     1,923     295    
Goodwill 2,657     4,988     764    
Loan receivables, net 280     135     21    
Other assets, net 707     743     114    
Deferred tax assets 548     1,266     193    
Total assets 52,983     65,798     10,084    
                   
       
LIABILITIES AND EQUITY      
Current liabilities:      
Short-term debt 8,499     1,142     175    
Accounts payable 1,176     1,241     190    
Amounts due to related parties 95     132     20    
Salary and welfare payables 491     526     81    
Deferred revenue 1,179     1,272     195    
Operating lease liabilities, current 3,082     3,406     522    
Finance lease liabilities, current -     31     5    
Accrued expenses and other current liabilities 1,856     2,440     374    
Dividends payable 678     -     -    
Income tax payable 231     339     52    
Total current liabilities 17,287     10,529     1,614    
       
Long-term debt 8,084     10,856     1,664    
Operating lease liabilities, noncurrent 18,496     27,048     4,145    
Finance lease liabilities, noncurrent -     2,497     383    
Deferred revenue 559     662     101    
Other long-term liabilities 566     771     118    
Deferred tax liabilities 491     1,824     280    
Retirement benefit obligations -     179     27    
Total liabilities 45,483     54,366     8,332    
                   
       
Equity:      
Ordinary shares 0     0     0    
Treasury shares (107 )   (107 )   (16 )  
Additional paid-in capital 3,834     9,808     1,503    
Retained earnings 3,701     1,502     230    
Accumulated other comprehensive income (loss) (49 )   127     19    
Total Huazhu Group Limited shareholders' equity 7,379     11,330     1,736    
Noncontrolling interest 121     102     16    
Total equity 7,500     11,432     1,752    
Total liabilities and equity 52,983     65,798     10,084    
                   

 

 
Huazhu Group Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income
  Quarter Ended     Year Ended    
  December
31, 2019
    September
30, 2020
    December
31, 2020
    December
31, 2019
    December
31, 2020
   
  RMB     RMB     RMB     US$     RMB     RMB     US$    
  (in millions, except shares, per share and per ADS data)
Revenues:              
Leased and owned hotels 1,921     2,131     2,024     310     7,718     6,908     1,059    
Manachised and franchised hotels 938     995     999     153     3,342     3,136     481    
Others 51     32     48     8     152     152     23    
Net revenues 2,910     3,158     3,071     471     11,212     10,196     1,563    
                                           
               
Operating costs and expenses:              
Hotel operating costs:              
Rents (663 )   (859 )   (929 )   (142 )   (2,624 )   (3,485 )   (534 )  
Utilities (91 )   (136 )   (120 )   (18 )   (404 )   (478 )   (73 )  
Personnel costs (490 )   (611 )   (738 )   (113 )   (1,854 )   (2,501 )   (383 )  
Depreciation and amortization (257 )   (337 )   (348 )   (53 )   (960 )   (1,316 )   (202 )  
Consumables, food and beverage (215 )   (253 )   (257 )   (39 )   (793 )   (885 )   (136 )  
Others (163 )   (274 )   (356 )   (55 )   (555 )   (1,064 )   (163 )  
Total hotel operating costs (1,879 )   (2,470 )   (2,748 )   (420 )   (7,190 )   (9,729 )   (1,491 )  
Other operating costs (21 )   (15 )   (22 )   (3 )   (57 )   (52 )   (8 )  
Selling and marketing expenses (134 )   (162 )   (181 )   (28 )   (426 )   (597 )   (91 )  
General and administrative expenses (330 )   (343 )   (336 )   (52 )   (1,061 )   (1,259 )   (193 )  
Pre-opening expenses (149 )   (42 )   (36 )   (6 )   (502 )   (288 )   (44 )  
Total operating costs and expenses (2,513 )   (3,032 )   (3,323 )   (509 )   (9,236 )   (11,925 )   (1,827 )  
Goodwill impairment loss -     (437 )   -     -     -     (437 )   (67 )  
Other operating income (expense), net 89     110     118     18     132     480     74    
Income (losses) from operations 486     (201 )   (134 )   (20 )   2,108     (1,686 )   (257 )  
Interest income 39     31     33     5     160     119     18    
Interest expense (83 )   (136 )   (118 )   (18 )   (315 )   (533 )   (82 )  
Other (expense) income, net 45     (1 )   (8 )   (2 )   331     (89 )   (14 )  
Unrealized gains (losses) from fair value changes of equity securities 230     39     733     113     316     (265 )   (42 )  
Foreign exchange (loss) gain 69     48     151     23     (35 )   175     27    
Income (Loss) before income taxes 786     (220 )   657     101     2,565     (2,279 )   (350 )  
Income tax (expense) benefit (133 )   50     66     10     (640 )   215     33    
Gain (Loss) from equity method investments (28 )   (35 )   (11 )   (2 )   (164 )   (140 )   (21 )  
Net income (loss) 625     (205 )   712     109     1,761     (2,204 )   (338 )  
Net (income) loss attributable to noncontrolling interest (6 )   (7 )   (9 )   (1 )   8     12     2    
Net income (loss) attributable to Huazhu Group Limited 619     (212 )   703     108     1,769     (2,192 )   (336 )  
                                           
               
Other comprehensive income              
Gain arising from defined benefit plan, net of tax -     (7 )   (27 )   (4 )   -     (27 )   (4 )  
Foreign currency translation adjustments, net of tax 29     237     (8 )   (1 )   (7 )   203     31    
Comprehensive income (loss) 654     25     677     104     1,754     (2,028 )   (311 )  
Comprehensive (income) loss attributable to noncontrolling interest (6 )   (7 )   (9 )   (1 )   8     12     2    
Comprehensive income (loss) attributable to Huazhu Group Limited 648     18     668     103     1,762     (2,016 )   (309 )  
                                           
               
Earnings (Losses) per share/ADS:              
Basic 2.17     (0.73 )   2.27     0.35     6.22     (7.49 )   (1.15 )  
Diluted 2.07     (0.73 )   2.16     0.33     5.94     (7.49 )   (1.15 )  
               
Weighted average number of shares used in computation:          
Basic 285,256,343     291,675,396     309,752,462     309,752,462     284,305,138     292,739,841     292,739,841    
Diluted 304,319,151     291,675,396     326,326,640     326,326,640     304,309,890     292,739,841     292,739,841    
                                           

 

 
Huazhu Group Limited
Unaudited Condensed Consolidated Statements of Cash Flows
  Quarter Ended     Year Ended    
  December
31, 2019
    September
30, 2020
    December
31, 2020
    December
31,2019
    December
31, 2020
   
  RMB     RMB     RMB     US$     RMB     RMB     US$    
  ( in millions)
Operating activities:              
Net (loss) income 625     (205 )   712     109     1,761     (2,204 )   (338 )  
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation 22     33     22     4     110     122     19    
Depreciation and amortization,
and other
273     367     384     59     1,019     1,445     221    
Impairment loss 10     453     138     21     13     709     109    
Loss (Income) from equity method
investments,
net of dividends
37     14     38     6     213     145     22    
Investment (income) loss (353 )   (89 )   (881 )   (135 )   (477 )   108     17    
Changes in operating assets and
liabilities
387     747     399     61     482     339     52    
Other (22 )   (181 )   (508 )   (79 )   172     (55 )   (9 )  
Net cash provided by operating activities 979     1,139     304     46     3,293     609     93    
                                           
               
Investing activities:              
Capital expenditures (459 )   (452 )   (501 )   (77 )   (1,535 )   (1,776 )   (272 )  
Acquisitions, net of cash received (160 )   (3 )   (1 )   0     (244 )   (5,060 )   (775 )  
Purchase of investments (63 )   (1,631 )   (71 )   (11 )   (329 )   (1,702 )   (261 )  
Proceeds from maturity/sale of
investments
1,281     14     12     2     2,002     396     61    
Loan advances (76 )   (48 )   (15 )   (2 )   (541 )   (145 )   (22 )  
Loan collections 92     51     60     9     347     182     28    
Other 20     0     1     0     15     4     1    
Net cash provided by (used in) investing activities 635     (2,069 )   (515 )   (79 )   (285 )   (8,101 )   (1,240 )  
                                           
               
Financing activities:              
Net proceeds from issuance of ordinary shares 4     5,245     774     119     14     6,019     922    
Proceeds from debt 11,064     1,468     311     48     15,392     6,906     1,058    
Repayment of debt (3,136 )   (2,844 )   (1,410 )   (216 )   (8,682 )   (11,207 )   (1,718 )  
Dividend paid -     -     -     -     (658 )   (678 )   (104 )  
Other (2 )   (33 )   (85 )   (13 )   (21 )   (157 )   (24 )  
Net cash provided by (used in) financing activities 7,930     3,836     (410 )   (62 )   6,045     883     134    
                                           
               
Effect of exchange rate changes on cash, cash equivalents and restricted cash 4     (73 )   (189 )   (29 )   62     (300 )   (45 )  
Net increase (decrease) in cash, cash equivalents and restricted cash 9,548     2,833     (810 )   (124 )   9,115     (6,909 )   (1,058 )  
Cash, cash equivalents and restricted cash at the beginning of the period 4,451     5,067     7,900     1,211     4,884     13,999     2,145    
Cash, cash equivalents and restricted cash at the end of the period 13,999     7,900     7,090     1,087     13,999     7,090     1,087    
                                           

 

 
Huazhu Group Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
  Quarter Ended December 31, 2020
  GAAP Result     % of Net
Revenues
    Share-based Compensation   % of Net
Revenues
    Non-GAAP
Result
    % of Net
Revenues
   
                                   
  RMB   RMB     RMB  
  (in millions)
Hotel operating costs 2,748     89.5 %   10   0.3 %   2,738     89.2 %  
Other operating costs 22     0.7 %   -   0.0 %   22     0.7 %  
Selling and marketing expenses 181     5.9 %   1   0.0 %   180     5.9 %  
General and administrative expenses 336     10.9 %   11   0.4 %   325     10.5 %  
Pre-opening expenses 36     1.2 %   -   0.0 %   36     1.2 %  
                                   
                                   
                                   
Total operating costs and expenses 3,323     108.2 %   22   0.7 %   3,301     107.5 %  
                                   
                                   
                                   
Income from operations (134 )   -4.4 %   22   0.7 %   (112 )   -3.7 %  
                                   
                                   
                                   
               
  Quarter Ended December 31, 2020
  GAAP Result     % of Net
Revenues
    Share-based Compensation   % of Net
Revenues
    Non-GAAP
Result
    % of Net
Revenues
   
                                   
  US$   US$     US$  
  (in millions)
Hotel operating costs 420     89.5 %   2   0.3 %   418     89.2 %  
Other operating costs 3     0.7 %   -   0.0 %   3     0.7 %  
Selling and marketing expenses 28     5.9 %   0   0.0 %   28     5.9 %  
General and administrative expenses 52     10.9 %   2   0.4 %   50     10.5 %  
Pre-opening expenses 6     1.2 %   -   0.0 %   6     1.2 %  
Total operating costs and expenses 509     108.2 %   4   0.7 %   505     107.5 %  
                                   
                                   
Income from operations (20 )   -4.4 %   4   0.7 %   (16 )   -3.7 %  
                                   
                                   
   
  Quarter Ended September 30, 2020
  GAAP Result     % of Net
Revenues
    Share-based Compensation   % of Net
Revenues
    Non-GAAP
Result
    % of Net
Revenues
   
  RMB           RMB         RMB          
  (in millions)
Hotel operating costs 2,470     78.2 %   12   0.4 %   2,458     77.8 %  
Other operating costs 15     0.5 %   -   0.0 %   15     0.5 %  
Selling and marketing expenses 162     5.1 %   1   0.0 %   161     5.1 %  
General and administrative expenses 343     10.9 %   20   0.6 %   323     10.3 %  
Pre-opening expenses 42     1.3 %   -   0.0 %   42     1.3 %  
Total operating costs and expenses 3,032     96.0 %   33   1.0 %   2,999     95.0 %  
                                   
                                   
Income from operations (201 )   -6.4 %   33   1.0 %   (168 )   -5.4 %  
                                   
                                   
   
  Quarter Ended December 31, 2019
  GAAP Result     % of Net
Revenues
    Share-based Compensation   % of Net
Revenues
    Non-GAAP
Result
    % of Net
Revenues
   
                                   
  RMB           RMB         RMB      
  (in millions)
Hotel operating costs 1,879     64.6 %   7   0.2 %   1,872     64.4 %  
Other operating costs 21     0.7 %   -   0.0 %   21     0.7 %  
Selling and marketing expenses 134     4.6 %   1   0.0 %   133     4.6 %  
General and administrative expenses 330     11.3 %   14   0.5 %   316     10.8 %  
Pre-opening expenses 149     5.1 %   -   0.0 %   149     5.1 %  
Total operating costs and expenses 2,513     86.3 %   22   0.7 %   2,491     85.6 %  
Income from operations 486     16.7 %   22   0.7 %   508     17.4 %  
                                   

 

   
  Year Ended December 31, 2020
  GAAP Result % of Net
Revenues
Share-based Compensation % of Net
Revenues
Non-GAAP
Result
% of Net
Revenues
  RMB   RMB   RMB  
  (in millions)
Hotel operating costs 9,729   95.4 % 42 0.4 % 9,687   95.0 %
Other operating costs 52   0.5 % - 0.0 % 52   0.5 %
Selling and marketing expenses 597   5.9 % 4 0.0 % 593   5.9 %
General and administrative expenses 1,259   12.3 % 76 0.7 % 1,183   11.6 %
Pre-opening expenses 288   2.8 % - 0.0 % 288   2.8 %
Total operating costs and expenses 11,925   116.9 % 122 1.1 % 11,803   115.8 %
Income from operations (1,686 ) -16.5 % 122 1.1 % (1,564 ) -15.4 %
                       

 

   
  Year Ended December 31, 2020
  GAAP Result % of Net
Revenues
Share-based Compensation % of Net
Revenues
Non-GAAP
Result
% of Net
Revenues
  US$   US$   US$  
  (in millions)
Hotel operating costs 1,491   95.4 % 6 0.4 % 1,485   95.0 %
Other operating costs 8   0.5 % - 0.0 % 8   0.5 %
Selling and marketing expenses 91   5.9 % 1 0.0 % 90   5.9 %
General and administrative expenses 193   12.3 % 12 0.7 % 181   11.6 %
Pre-opening expenses 44   2.8 % - 0.0 % 44   2.8 %
Total operating costs and expenses 1,827   116.9 % 19 1.1 % 1,808   115.8 %
Income from operations (257 ) -16.5 % 19 1.1 % (238 ) -15.4 %
                       

 

   
  Year Ended December 31, 2019
  GAAP Result % of Net
Revenues
Share-based Compensation % of Net
Revenues
Non-GAAP
Result
% of Net
Revenues
  RMB   RMB   RMB  
  (in millions)
Hotel operating costs 7,190 64.1 % 35 0.3 % 7,155 63.8 %
Other operating costs 57 0.5 % - 0.0 % 57 0.5 %
Selling and marketing expenses 426 3.8 % 3 0.0 % 423 3.8 %
General and administrative expenses 1,061 9.5 % 72 0.6 % 989 8.9 %
Pre-opening expenses 502 4.5 % - 0.0 % 502 4.5 %
Total operating costs and expenses 9,236 82.4 % 110 0.9 % 9,126 81.5 %
Income from operations 2,108 18.8 % 110 0.9 % 2,218 19.7 %
                   

 

 
Huazhu Group Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
  Quarter Ended   Year Ended
  December
31, 2019
  September
30,2020
  December
31, 2020
  December
31, 2019
  December
31, 2020
                       
  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) 619     (212 )   703     108     1,769     (2,192 )   (336 )  
Share-based compensation expenses 22     33     22     4     110     122     19    
Unrealized (gains) losses from fair value changes of equity securities (230 )   (39 )   (733 )   (113 )   (316 )   265     42    
Adjusted net income attributable to Huazhu Group Limited (non-GAAP) 411     (218 )   (8 )   (1 )   1,563     (1,805 )   (275 )  
                                           
               
               
Adjusted earnings (losses) per share/ADS (non-GAAP)          
Basic 1.44     (0.75 )   (0.02 )   (0.00 )   5.50     (6.16 )   (0.94 )  
Diluted 1.38     (0.75 )   (0.02 )   (0.00 )   5.27     (6.16 )   (0.94 )  
               
Weighted average number of shares used in computation          
Basic 285,256,343     291,675,396     309,752,462     309,752,462     284,305,138     292,739,841     292,739,841    
Diluted 304,319,151     291,675,396     309,752,462     309,752,462     304,309,890     292,739,841     292,739,841    
               
  Quarter Ended   Year Ended
  December
31, 2019
  September
30, 2020
  December
31, 2020
  December
31, 2019
  December
31, 2020
                   
  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) 619     (212 )   703     108     1,769     (2,192 )   (336 )  
Interest income (39 )   (31 )   (33 )   (5 )   (160 )   (119 )   (18 )  
Interest expense 83     136     118     18     315     533     82    
Income tax expense 133     (50 )   (66 )   (10 )   640     (215 )   (33 )  
Depreciation and amortization 266     347     364     56     991     1,362     209    
EBITDA (non-GAAP) 1,062     190     1,086     167     3,555     (631 )   (96 )  
Share-based compensation 22     33     22     4     110     122     19    
Unrealized (gains) losses from fair value changes of equity securities (230 )   (39 )   (733 )   (113 )   (316 )   265     42    
Adjusted EBITDA (non-GAAP) 854     184     375     58     3,349     (244 )   (35 )  
                                           



Operating Results: Legacy-Huazhu(1)

       
  Number of hotels   Number of rooms
  Opened
in Q4 2020
 
Closed (2)
in Q4 2020
 
Net added
in Q4 2020
 
As of
December 31, 2020 (3)
 
  As of
December 31, 2020
 
   
Leased and owned hotels 4 (10 ) (6 ) 681   90,942
Manachised and franchised hotels 389 (104 ) 285   5,988   537,193
Total 393 (114 ) 279   6,669   628,135
                 
(1)   Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.
(2)   The reasons for hotel closures mainly include non-compliance with our brand standards, operating losses, and property-related issues. In Q4 2020, we temporarily closed 6 hotels for brand upgrade and business model change purposes.
(3)   As of December 31, 2020, 74 hotels were requisitioned by governmental authorities.
 

 

   
  As of December 31, 2020
  Number of hotels Unopened hotels in pipeline
Economy hotels 4,362 1,183
Leased and owned hotels 438 4
Manachised and franchised hotels 3,924 1,179
Midscale and upscale hotels 2,307 1,228
Leased and owned hotels 243 14
Manachised and franchised hotels 2,064 1,214
Total 6,669 2,411
     

 

 
 
Operational hotels (excluding hotels under requisition)  
  For the quarter ended    
  December 31, September 30, December 31, yoy  
  2019 2020 2020 change  
Average daily room rate (in RMB)          
Leased and owned hotels 277 255 272 -1.8%  
Manachised and franchised hotels 223 211 224 0.6%  
Blended 232 218 231 -0.5%  
Occupancy rate (as a percentage)          
Leased and owned hotels 84.7% 82.9% 79.6% -5.2p.p.  
Manachised and franchised hotels 81.6% 81.8% 80.8% -0.9p.p.  
Blended 82.2% 82.0% 80.6% -1.6p.p.  
RevPAR (in RMB)          
Leased and owned hotels 235 211 217 -7.8%  
Manachised and franchised hotels 182 173 181 -0.5%  
Blended 191 179 186 -2.4%  
   

 

  For the year ended
  December 31, December 31, yoy
  2019 2020 change
Average daily room rate (in RMB)      
Leased and owned hotels 276 241 -12.8%
Manachised and franchised hotels 224 204 -8.9%
Blended 234 210 -10.3%
Occupancy rate (as a percentage)      
Leased and owned hotels 87.0% 68.9% -18.1p.p.
Manachised and franchised hotels 83.8% 71.4% -12.4p.p.
Blended 84.4% 71.0% -13.4p.p.
RevPAR (in RMB)      
Leased and owned hotels 240 166 -30.9%
Manachised and franchised hotels 188 146 -22.3%
Blended 198 149 -24.5%

 

                 
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
December 31,
 
For the quarter yoy For the quarter yoy For the quarter yoy
  ended
December 31,
change ended
December 31,
change ended
December 31,
change
  2019 2020 2019 2020   2019 2020   2019   2020   (p.p.)
Economy hotels 2,651 2,651 162 151 -6.7 % 185 178 -3.7 % 87.6 % 84.9 % -2.7
Leased and owned hotels 412 412 184 167 -8.9 % 210 199 -5.2 % 87.7 % 84.3 % -3.4
Manachised and franchised hotels 2,239 2,239 157 147 -6.1 % 179 173 -3.3 % 87.5 % 85.0 % -2.5
Midscale and upscale hotels 1,225 1,225 266 243 -8.5 % 322 311 -3.4 % 82.5 % 78.2 % -4.3
Leased and owned hotels 190 190 327 272 -16.7 % 392 365 -6.8 % 83.4 % 74.5 % -8.8
Manachised and franchised hotels 1,035 1,035 250 236 -5.6 % 303 298 -1.9 % 82.3 % 79.2 % -3.1
Total 3,876 3,876 201 186 -7.6 % 235 225 -3.9 % 85.7 % 82.4 % -3.3

 

 
 
  Number of hotels Same-hotel RevPAR Same-hotel ADR Same-hotel Occupancy
  As of
December 31,
 
For the year   yoy For the year   yoy For the year   yoy
  ended
December 31,
change ended
December 31,
change ended
December 31,
change
  2019 2020 2019 2020   2019 2020   2019   2020   (p.p.)
Economy hotels 2,651 2,651 169 121 -28.8 % 189 162 -14.1 % 89.7 % 74.3 % -15.4
Leased and owned hotels 412 412 191 128 -32.8 % 211 176 -16.4 % 90.5 % 72.8 % -17.7
Manachised and franchised hotels 2,239 2,239 164 118 -27.7 % 183 159 -13.4 % 89.4 % 74.7 % -14.8
Midscale and upscale hotels 1,225 1,225 272 198 -27.0 % 328 287 -12.4 % 82.8 % 69.0 % -13.8
Leased and owned hotels 190 190 332 211 -36.4 % 395 328 -17.0 % 84.1 % 64.5 % -19.7
Manachised and franchised hotels 1,035 1,035 254 194 -23.4 % 308 276 -10.3 % 82.5 % 70.4 % -12.1
Total 3,876 3,876 205 148 -27.9 % 234 204 -13.1 % 87.3 % 72.5 % -14.8



Operating Results: Legacy-DH(4)

           
  Number of hotels   Number of rooms   Unopened hotels in pipeline
  Opened
in Q4 2020
 
Closed
in Q4 2020
 
Net added
in Q4 2020
 
As of
December 31, 2020(5)
 
 

 
 
As of
December 31,
2020

 
 

 
 
As of
December 31,
2020

 
 
Leased hotels 2 - 2 72   13,371   26
Manachised and franchised hotels 1 - 1 48   10,656   12
Total 3 - 3 120   24,027   38
                 
(4)    Legacy-DH refers to DH.
(5)   As of December 31, 2020, a total of 18 DH brand hotels were temporarily closed due to COVID-19.

 

     
  For the quarter ended  
  December 31, September 30, December 31, yoy
  2019 2020 2020 change
Average daily room rate (in EUR)        
Leased hotels 108 88 78 -27.2%
Manachised and franchised hotels 85 101 73 -13.7%
Blended 97 93 76 -21.5%
Occupancy rate (as a percentage)      
Leased hotels 73.3% 38.2% 20.9% -52.6p.p.
Manachised and franchised hotels 62.6% 37.5% 25.4% -37.2p.p.
Blended 68.0% 37.9% 22.5% -45.5p.p.
RevPAR (in EUR)        
Leased hotels 79 34 16 -79.3%
Manachised and franchised hotels 53 38 19 -64.9%
Blended 66 35 17 -74.0%

 

   
  For the year ended
  December 31, December 31, yoy
  2019 2020 change
Average daily room rate (in EUR)      
Leased hotels 105 89 -14.8%
Manachised and franchised hotels 88 85 -3.2%
Blended 97 88 -9.9%
Occupancy rate (as a percentage)    
Leased hotels 72.8% 33.9% -38.9p.p.
Manachised and franchised hotels 65.0% 36.3% -28.7p.p.
Blended 69.1% 34.8% -34.3p.p.
RevPAR (in EUR)      
Leased hotels 76 30 -60.4%
Manachised and franchised hotels 57 31 -45.8%
Blended 67 31 -54.6%



Hotel Portfolio by Brand

   
  As of December 31, 2020
  Hotels Rooms Unopened hotels
  in operation in pipeline
Economy hotels 4,376 361,435 1,192
HanTing Hotel 2,780 254,106 597
Hi Inn 439 25,282 91
Elan Hotel(6) 938 58,753 448
Ibis Hotel 205 21,633 47
Zleep Hotel 14 1,661 9
Midscale and upscale hotels 2,413 290,727 1,257
Ibis Styles Hotel 69 7,992 22
Starway Hotel 455 38,657 252
JI Hotel 1,105 135,737 512
Orange Hotel 320 36,167 174
Crystal Orange Hotel 114 15,400 66
Manxin Hotel 61 6,009 47
Madison Hotel 22 2,950 42
Mercure Hotel 104 17,486 61
Novotel Hotel 12 3,387 14
Joya Hotel 10 1,842 -
Blossom House 28 1,249 23
Grand Mercure Hotel 7 1,485 7
Steigenberger Hotels & Resorts 49 11,574 7
IntercityHotel(7) 45 8,056 23
Maxx by Steigenberger(8) 5 777 4
Jaz in the City 2 424 2
Other partner hotels 5 1,535 1
Total 6,789 652,162 2,449
(6)   As of December 31, 2020, 5 Ni Hao Hotels were included in the operational hotel total for Elan Hotels and 74 Ni Hao hotels were included in the pipeline total for Elan Hotels.
(7)   As of December 31, 2020, 5 pipeline hotels of IntercityHotel were in China.
(8)   As of December 31, 2020, 3 pipeline hotels of Maxx by Steigenberger were in China.

 

__________________________________________________________
1
Hotel turnover refers to total transaction value of room and non-room revenues from Huazhu hotels (i.e., leased and operated, manachised and franchised hotels).
2 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.5250 on December 31, 2020 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.
3 Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.
4 Legacy-DH refers to DH.

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