華住集團有限公司呈報2018年第二季度財務業績
- A total of 3,903 hotels or 393,417 hotel rooms in operation as of
June 30, 2018 . - Net revenues increased 25.9% year-over-year from
RMB2,002.4 million to RMB2,521.3 million (US$381.0 million ) [1] for the second quarter of 2018, hitting high-end of Q2 revenue guidance. - Income from operations increased 53.2% year-over-year from
RMB438.0 million to RMB671.0 million (US$101.4 million) for the second quarter of 2018. The operating margin improved from 21.9% to 26.6%. - Net income attributable to
Huazhu Group Limited was RMB338.4 million (US$51.1 million) for the second quarter of 2018, compared withRMB386.1 million for the second quarter of 2017. Excluding unrealized losses from fair value changes of equity securities and share based compensation, adjusted net income attributable toHuazhu Group Limited (non-GAAP) increased 38.7% year over year fromRMB402.1 million to RMB557.8 million (US$84.3 million ) for the second quarter of 2018. - Excluding unrealized losses from fair value changes of equity securities and share based compensation, adjusted EBITDA (non-GAAP) increased 35.1% year-over-year from RMB714.4 million to RMB965.0 million (US$145.8 million)for the second quarter of 2018.
- The Company provides guidance for Q3 2018 net revenues growth of 10.5%-12.5% year over year, and maintains the full year net revenues growth estimate range of 18%-22%.
1 The conversion of Renminbi (“RMB”) into
Second Quarter of 2018 Operational Highlights
- During the second quarter of 2018,
Huazhu opened 147 hotels, including 7 leased (“leased-and-operated”) hotels and 140 manachised (“franchised-and-managed”) hotels and franchised hotels.
- The Company closed a total of 61 hotels, including 7 leased hotels and 54 manachised and franchised hotels, during the second quarter of 2018. This was mainly due to:
a) The Company's strategic focus to upgrade the quality of the product and service. The Company closed 2 hotels for brand upgrade purposes and permanently removed 15 hotels from its network for their non-compliance with the brand and operating standards. These hotels were mainly under HanTing and Hi Inn brands. By removing hotels of lower quality, the Company is able to provide a more consistent customer experience, which will help enhance both the brands and future profitability.
b) Property related issues, including rezoning, and expiry of leases, which resulted in the closure of 29 hotels.
c) Operating losses from hotels located mainly in selected 3rd or lower tier cities which resulted in the closure of 15 hotels.
- As of
June 30, 2018 , the Company had 673 leased hotels, 3,024 manachised hotels, and 206 franchised hotels in operation in 384 cities. The number of hotel rooms in operation totaled 393,417, an increase of 9.4% from a year ago.
- The ADR, which is defined as the average daily rate for all hotels in operation, was
RMB226 in the second quarter of 2018, compared withRMB199 in the second quarter of 2017 andRMB207 in the previous quarter. The year-over-year increase of 13.8% was due to both an increase in ADR of the mature hotels, as well as an increase in the proportion of mid- and up-scale hotels with higher ADR in the Company’s brand mix. The sequential increase resulted mainly from seasonality.
- The occupancy rate for all hotels in operation was 89.6% in the second quarter of 2018, compared with 90.1% in the second quarter of 2017 and 83.7% in the previous quarter. The year-over-year decrease of 0.5 percentage point was due to an increase in the proportion of mid- and up-scale hotels with lower average occupancy rate compared to the economy hotels, as well as more newly added mid- and up-scale hotels that were still under the ramp-up period. The sequential increase was mainly due to seasonality.
- RevPAR, defined as revenue per available room for all hotels in operation, was
RMB203 in the second quarter of 2018, compared withRMB179 in the second quarter of 2017 andRMB173 in the previous quarter. The year-over-year increase of 13.2% was attributable to higher ADR. The sequential increase was mainly due to seasonality.
- For all hotels which had been in operation for at least 18 months, the same-hotel RevPAR was
RMB194 for the second quarter of 2018, representing a 7.9% increase fromRMB180 for the second quarter of 2017, with a 7.5% increase in ADR and a 0.3-percentage-point increase in occupancy rate. The economy hotels registered an 8.0% same-hotel RevPAR improvement, driven by an 8.1% increase in ADR. The midscale and upscale hotels recorded a 7.2% same-hotel RevPAR improvement, driven by a 4.8% increase in ADR and a 2.0-percentage-point increase in occupancy rate. Crystal Orange Hotels were not included in the same-hotel RevPAR statistics as they have not been inHuazhu system for 18 months.
- As of
June 30, 2018 , the Company’s loyalty program had approximately 113 million members, who contributed approximately 75% of room nights sold during the second quarter of 2018 and approximately 86% of room nights were sold through the Company’s own direct channels.
“We are excited about the strong performance in the second quarter. Our same-hotel RevPAR grew by 7.9% year-over-year despite a high comparison base during the same period in 2017. The strong demand allowed us to drive higher room rates while maintaining occupancy rate as high as 92.2% for our mature hotels. Our hotel expansion is also well on track. In the first half of 2018, we opened a total of 274 hotels (gross opening) with 65% under mid- and up-scale brands. The number of hotels in pipeline reached 839, a record high number,” commented Ms.
“In addition, the developments of our acquired brands were also very remarkable. For example, we have refreshed Mercure hotel layout tailored to the taste of the Chinese middle-class customers. We have also improved the Mercure brand’s operating model so that it is ready for fast expansion by improving the RevPar performances and costs efficiencies since we took over the brand in early 2016. The integration of
Second Quarterof 2018 Financial Results
Since the first quarter of 2018, the Company adopted new revenue recognition standards and all prior year numbers are restated using the new standards. Please see the “Adoption of New Revenue Recognition Accounting Standards” section of this release for more information.
(RMB in thousands) | Q2 2017 | Q1 2018 | Q2 2018 |
Revenues: | |||
Leased and owned hotels | 1,541,383 | 1,575,977 | 1,899,707 |
Manachised and franchised hotels | 450,461 | 508,792 | 615,976 |
Others | 10,512 | 6,455 | 5,597 |
Net revenues | 2,002,356 | 2,091,224 | 2,521,280 |
Net revenues for the second quarter of 2018 were
Net revenues from leased and owned hotels for the second quarter of 2018 were
Net revenues from manachised and franchised hotels for the second quarter of 2018 were
Other revenues represent revenues generated from other than hotel businesses, which mainly include revenues from
(RMB in thousands) |
Q2 2017 | Q1 2018 | Q2 2018 |
Operating costs and expenses: | |||
Hotel operating costs | 1,348,269 | 1,506,035 | 1,575,100 |
Other operating costs | 3,739 | 2,842 | 2,137 |
Selling and marketing expenses | 63,126 | 65,826 | 83,090 |
General and administrative expenses | 135,689 | 158,752 | 189,514 |
Pre-opening expenses | 43,134 | 75,271 | 65,612 |
Total operating costs and expenses | 1,593,957 | 1,808,726 | 1,915,453 |
Hotel operating costs for the second quarter of 2018 were
Selling and marketing expenses for the second quarter of 2018 were
General and administrative expenses for the second quarter of 2018 were
Pre-opening expenses for the second quarter of 2018 were
Other operating income, net for the second quarter of 2018 were
Income from operations for the second quarter of 2018 was
Other income, net for the second quarter of 2018 was
Unrealized losses from fair value changes of equity securities for the second quarter of 2018 was
Net income attributable to
Basic and diluted earnings per share/ADS. For the second quarter of 2018, basic earnings per share were
EBITDA (non-GAAP) for the second quarter of 2018 was
Cash flow. Operating cash inflow for the second quarter of 2018 was
Cash and cash equivalents and Restricted cash. As of
Debt financing. As of
Adoption of New Revenue Recognition Accounting Standards
The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) on
The most meaningful impacts of the adoption of ASU 2014-09 are as follows:
Under previous guidance, initial one-time franchise fee was recognized when the hotels opened for business and the Company had fulfilled its commitments and obligations. Upon adoption of new revenue standards the one-time franchise fee will be recognized over the term of the franchise contract.
Under previous guidance, the Company adopted the incremental cost model to account for customer loyalty program. The estimated incremental costs, net of the reimbursement received from the franchisees, are accrued and recorded as accruals for customer loyalty program as members accumulate points and are recognized as cost and expense in the accompanying consolidated statements of comprehensive income. Under new revenue standards, loyalty program is considered a separate performance obligation and the consideration allocated to the loyalty program will be recognized as revenue upon point redemption, net of any cost paid to the franchisees and other third parties.
Acquisition of Blossom Hill
In
Considering the realization of the future earnings from the pipeline hotels, and revenue and costs synergies after integration into
Guidance
The Company expects net revenues for the third quarter to grow 10.5%-12.5% year-over-year. For the full year of 2018, the Company reaffirms the net revenues growth range of 18%-22%. Considering the acquisition of Blossom Hill, the full year target for gross hotel opening has been revised upwards from 650-700 to 680-730. As part of our quality control exercise, we will also tighten up our quality control by terminating certain franchisees who fail to maintain quality standards through product upgrades and procuring from the authorized suppliers through
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call
Huazhu Group’s management will host a conference call at
A recording of the conference call will be available after the conclusion of the conference call through
The conference call will also be webcast live over the Internet and can be accessed by all interested parties at the Company’s website, http://ir.huazhu.com.
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
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
The Company's business includes leased and owned, manachised and franchised models. Under the lease and ownership model, the Company directly operates hotels typically located on leased or owned properties. Under the manachise model, the Company manages manachised hotels through the on-site hotel managers it appoints and collects fees from franchisees. Under the franchise model, the Company provides training, reservation and support services to the franchised hotels and collects fees from franchisees but does not appoint on-site hotel managers. The Company applies a consistent standard and platform across all of its hotels. As of
For more information, please visit the Company’s website: http://ir.huazhu.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy and expectations. 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. Any or all of the Company’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions, risks and uncertainties and other factors which could cause actual events or results to be materially different from those expressed or implied in the forward-looking statements. In evaluating these statements, readers should consider various factors, including the anticipated growth strategies of the Company, the future results of operations and financial condition of the Company, the economic conditions of
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, 2017 | June 30, 2018 | |||||||
RMB | RMB | US$ | ||||||
(in thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 3,474,719 | 4,146,471 | 626,630 | |||||
Restricted cash | 481,348 | 340,439 | 51,448 | |||||
Short-term investments | 129,911 | 108,984 | 16,470 | |||||
Accounts receivable, net | 162,910 | 204,840 | 30,956 | |||||
Loan receivables | 380,580 | 115,660 | 17,479 | |||||
Amounts due from related parties | 118,537 | 124,081 | 18,751 | |||||
Prepaid rent | 659,973 | 562,048 | 84,939 | |||||
Inventories | 24,006 | 30,139 | 4,555 | |||||
Other current assets | 329,140 | 357,850 | 54,080 | |||||
Total current assets | 5,761,124 | 5,990,512 | 905,308 | |||||
Property and equipment, net | 4,522,878 | 4,676,562 | 706,739 | |||||
Intangible assets, net | 1,643,972 | 1,624,259 | 245,464 | |||||
Land use rights | 140,108 | 137,413 | 20,766 | |||||
Long-term investments | 2,361,969 | 5,889,394 | 890,026 | |||||
Goodwill | 2,264,758 | 2,264,758 | 342,259 | |||||
Loan receivables | 42,330 | 123,924 | 18,728 | |||||
Other assets | 364,660 | 362,560 | 54,791 | |||||
Deferred tax assets | 405,975 | 399,424 | 60,362 | |||||
Total assets | 17,507,774 | 21,468,806 | 3,244,443 | |||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | 130,815 | 290,132 | 43,846 | |||||
Accounts payable | 766,565 | 810,151 | 122,433 | |||||
Amounts due to related parties | 36,890 | 175,338 | 26,498 | |||||
Salary and welfare payables | 427,070 | 343,935 | 51,977 | |||||
Deferred revenue | 942,651 | 1,028,480 | 155,428 | |||||
Accrued expenses and other current liabilities | 1,249,032 | 1,348,283 | 203,756 | |||||
Income tax payable | 218,238 | 126,077 | 19,053 | |||||
Total current liabilities | 3,771,261 | 4,122,396 | 622,991 | |||||
Long-term debt | 4,921,774 | 7,984,121 | 1,206,589 | |||||
Deferred rent | 1,380,484 | 1,427,450 | 215,721 | |||||
Deferred revenue | 398,303 | 407,484 | 61,581 | |||||
Other long-term liabilities | 380,578 | 403,942 | 61,045 | |||||
Deferred tax liabilities | 422,090 | 417,439 | 63,085 | |||||
Total liabilities | 11,274,490 | 14,762,832 | 2,231,012 | |||||
Equity: | ||||||||
Ordinary shares | 212 | 213 | 32 | |||||
Treasury shares | (107,331 | ) | (107,331 | ) | (16,220 | ) | ||
Additional paid-in capital | 3,624,135 | 3,667,568 | 554,256 | |||||
Retained earnings | 2,512,719 | 3,020,310 | 456,440 | |||||
Accumulated other comprehensive income | 167,965 | 85,754 | 12,960 | |||||
Total Huazhu Group Limited shareholders' equity | 6,197,700 | 6,666,514 | 1,007,468 | |||||
Noncontrolling interest | 35,584 | 39,460 | 5,963 | |||||
Total equity | 6,233,284 | 6,705,974 | 1,013,431 | |||||
Total liabilities and equity | 17,507,774 | 21,468,806 | 3,244,443 | |||||
Huazhu Group Limited | |||||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income | |||||||||||
Quarter Ended | |||||||||||
June 30, 2017 | March 31, 2018 | June 30, 2018 | |||||||||
RMB | RMB | RMB | US$ | ||||||||
(in thousands, except per share and per ADS data) | |||||||||||
Revenues: | |||||||||||
Leased and owned hotels | 1,541,383 | 1,575,977 | 1,899,707 | 287,090 | |||||||
Manachised and franchised hotels | 450,461 | 508,792 | 615,976 | 93,089 | |||||||
Others | 10,512 | 6,455 | 5,597 | 846 | |||||||
Net revenues | 2,002,356 | 2,091,224 | 2,521,280 | 381,025 | |||||||
Operating costs and expenses: | |||||||||||
Hotel operating costs: | |||||||||||
Rents | (502,353 | ) | (564,372 | ) | (585,283 | ) | (88,450 | ) | |||
Utilities | (69,941 | ) | (125,534 | ) | (76,263 | ) | (11,525 | ) | |||
Personnel costs | (329,025 | ) | (375,935 | ) | (421,573 | ) | (63,710 | ) | |||
Depreciation and amortization | (185,419 | ) | (211,111 | ) | (219,122 | ) | (33,115 | ) | |||
Consumables, food and beverage | (137,139 | ) | (144,432 | ) | (169,893 | ) | (25,675 | ) | |||
Others | (124,392 | ) | (84,651 | ) | (102,966 | ) | (15,561 | ) | |||
Total hotel operating costs | (1,348,269 | ) | (1,506,035 | ) | (1,575,100 | ) | (238,036 | ) | |||
Other operating costs | (3,739 | ) | (2,842 | ) | (2,137 | ) | (323 | ) | |||
Selling and marketing expenses | (63,126 | ) | (65,826 | ) | (83,090 | ) | (12,557 | ) | |||
General and administrative expenses | (135,689 | ) | (158,752 | ) | (189,514 | ) | (28,640 | ) | |||
Pre-opening expenses | (43,134 | ) | (75,271 | ) | (65,612 | ) | (9,915 | ) | |||
Total operating costs and expenses | (1,593,957 | ) | (1,808,726 | ) | (1,915,453 | ) | (289,471 | ) | |||
Other operating income (expense), net | 29,619 | 24,088 | 65,209 | 9,855 | |||||||
Income from operations | 438,018 | 306,586 | 671,036 | 101,409 | |||||||
Interest income | 21,792 | 34,193 | 39,000 | 5,894 | |||||||
Interest expense | (15,870 | ) | (51,457 | ) | (58,827 | ) | (8,890 | ) | |||
Other income (expense), net | 74,312 | (8,836 | ) | 194,989 | 29,467 | ||||||
Unrealized gains (losses) from fair value changes of equity securities | - | (136,680 | ) | (200,763 | ) | (30,340 | ) | ||||
Foreign exchange gain (loss) | (4,577 | ) | 30,012 | (131,646 | ) | (19,895 | ) | ||||
Income before income taxes | 513,675 | 173,818 | 513,789 | 77,645 | |||||||
Income tax expense | (129,011 | ) | (44,465 | ) | (163,575 | ) | (24,720 | ) | |||
(Loss) from equity method investments | (978 | ) | (3,560 | ) | (10,663 | ) | (1,611 | ) | |||
Net income | 383,686 | 125,793 | 339,551 | 51,314 | |||||||
Less: net loss (income) attributable to noncontrolling interest | 2,437 | 2,731 | (1,124 | ) | (170 | ) | |||||
Net income attributable to Huazhu Group Limited | 386,123 | 128,524 | 338,427 | 51,144 | |||||||
Other comprehensive income | |||||||||||
Unrealized securities holding gains, net of tax | (13,511 | ) | - | - | - | ||||||
Reclassification of gains realized to net income, net of tax | (1,545 | ) | - | - | - | ||||||
Foreign currency translation adjustments, net of tax | 46,190 | 125,174 | (166,745 | ) | (25,199 | ) | |||||
Comprehensive income | 414,820 | 250,967 | 172,806 | 26,115 | |||||||
Comprehensive loss (income) attributable to noncontrolling interest | 2,437 | 2,731 | (1,124 | ) | (170 | ) | |||||
Comprehensive income attributable to Huazhu Group Limited | 417,257 | 253,698 | 171,682 | 25,945 | |||||||
Earnings per share/ADS2: | |||||||||||
Basic | 1.38 | 0.46 | 1.20 | 0.18 | |||||||
Diluted | 1.34 | 0.44 | 1.14 | 0.17 | |||||||
Weighted average number of shares used in computation: | |||||||||||
Basic | 279,101 | 280,701 | 281,495 | 281,495 | |||||||
Diluted | 288,316 | 293,243 | 303,963 | 303,963 |
____________________________
2 As of
Huazhu Group Limited | |||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
Quarter Ended | |||||||||||
June 30, 2017 | March 31, 2018 | June 30, 2018 | |||||||||
RMB | RMB | RMB | US$ | ||||||||
(in thousands) | |||||||||||
Operating activities: | |||||||||||
Net income | 383,686 | 125,793 | 339,551 | 51,314 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Share-based compensation | 16,021 | 17,129 | 18,630 | 2,815 | |||||||
Depreciation and amortization | 189,210 | 215,671 | 223,815 | 33,824 | |||||||
Amortization of issuance cost of convertible senior notes | - | 7,958 | 6,455 | 976 | |||||||
Deferred taxes | (2,088 | ) | 2,672 | (429 | ) | (65 | ) | ||||
Bad debt expenses | 601 | 542 | 741 | 112 | |||||||
Deferred rent | 48,485 | 23,882 | 29,181 | 4,410 | |||||||
Loss (Gain) from disposal of property and equipment | 11,388 | (460 | ) | (5,762 | ) | (871 | ) | ||||
Impairment loss | 44,439 | - | - | - | |||||||
Loss from equity method investments | 978 | 3,560 | 10,663 | 1,611 | |||||||
Investment (income) loss | (37,773 | ) | 137,126 | 267,239 | 40,387 | ||||||
Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||||||
Accounts receivable | (4,904 | ) | (36,160 | ) | (13,166 | ) | (1,990 | ) | |||
Prepaid rent | 3,770 | 96,452 | 1,472 | 223 | |||||||
Inventories | (4,697 | ) | (3,210 | ) | (2,950 | ) | (446 | ) | |||
Amounts due from related parties | (3,553 | ) | (11,574 | ) | 11,967 | 1,809 | |||||
Other current assets | 4,362 | 13,857 | (34,287 | ) | (5,182 | ) | |||||
Other assets | (14,403 | ) | 13,044 | (10,943 | ) | (1,654 | ) | ||||
Accounts payable | 1,432 | (11,315 | ) | 8,618 | 1,302 | ||||||
Amounts due to related parties | (752 | ) | (2,448 | ) | 20,366 | 3,078 | |||||
Salary and welfare payables | 57,289 | (183,447 | ) | 101,500 | 15,339 | ||||||
Deferred revenue | (7,461 | ) | 58,644 | 35,499 | 5,365 | ||||||
Accrued expenses and other current liabilities | 33,224 | 51,030 | 102,041 | 15,421 | |||||||
Income tax payable | 83,089 | (119,020 | ) | 26,859 | 4,059 | ||||||
Other long-term liabilities | 11,886 | 20,453 | 2,974 | 449 | |||||||
Net cash provided by operating activities | 814,229 | 420,179 | 1,140,034 | 172,286 | |||||||
Investing activities: | |||||||||||
Purchases of property and equipment | (156,840 | ) | (370,977 | ) | (160,555 | ) | (24,263 | ) | |||
Purchases of intangibles | (247 | ) | - | (1,441 | ) | (218 | ) | ||||
Amount received as a result of government zoning | - | 2,528 | 4,660 | 704 | |||||||
Acquisitions, net of cash received | (2,980,236 | ) | - | (39,042 | ) | (5,900 | ) | ||||
Proceeds from disposal of subsidiary and branch, net of cash disposed | - | 1,185 | 4,667 | 705 | |||||||
Purchases of long-term investments | (216,917 | ) | (3,789,845 | ) | (152,808 | ) | (23,093 | ) | |||
Proceeds from maturity/sale of long-term investments | 87,593 | 2,182 | 105,207 | 15,899 | |||||||
Payment for shareholder loan to equity investees | (775 | ) | (6,240 | ) | - | - | |||||
Collection of shareholder loan from joint venture | 48,500 | - | - | - | |||||||
Payment for the origination of loan receivables | (47,000 | ) | (132,170 | ) | (49,500 | ) | (7,480 | ) | |||
Proceeds from collection of loan receivables | 4,526 | 270,026 | 94,970 | 14,352 | |||||||
Net cash used in investing activities | (3,261,396 | ) | (4,023,311 | ) | (193,842 | ) | (29,294 | ) | |||
Huazhu Group Limited | |||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
Quarter Ended | |||||||||||
June 30, 2017 | March 31, 2018 | June 30, 2018 | |||||||||
RMB | RMB | RMB | US$ | ||||||||
(in thousands) | |||||||||||
Financing activities: | |||||||||||
Net proceeds from issuance of ordinary shares upon exercise of options | 4,428 | 47 | 11,959 | 1,807 | |||||||
Proceeds from short-term bank borrowings | 135,488 | 220,000 | 70,000 | 10,579 | |||||||
Repayment of short-term bank borrowings | (266,764 | ) | - | (128,288 | ) | (19,387 | ) | ||||
Proceeds from long-term bank borrowings | 3,633,174 | 3,450,652 | - | - | |||||||
Repayment of long-term bank borrowings | - | - | (507,207 | ) | (76,651 | ) | |||||
Funds advanced from noncontrolling interest holders | 13,950 | - | 5,630 | 851 | |||||||
Repayment of funds advanced from noncontrolling interest holders |
(1,677 | ) | (2,250 | ) | (1,680 | ) | (254 | ) | |||
Acquisition of noncontrolling interest | - | - | (2,091 | ) | (316 | ) | |||||
Proceeds from amounts due to related parties | - | 86,371 | 16,786 | 2,537 | |||||||
Contribution from noncontrolling interest holders | 6,631 | 4,070 | 757 | 114 | |||||||
Dividends paid to noncontrolling interest holders | (1,680 | ) | (1,422 | ) | (407 | ) | (62 | ) | |||
Net cash provided by (used in) financing activities | 3,523,550 | 3,757,468 | (534,541 | ) | (80,782 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (4,500 | ) | (65,696 | ) | 30,552 | 4,617 | |||||
Net increase (decrease) in cash and cash equivalents, and restricted cash | 1,071,883 | 88,640 | 442,203 | 66,827 | |||||||
Cash, cash equivalents and restricted cash at the beginning of the period | 2,375,992 | 3,956,067 | 4,044,707 | 611,251 | |||||||
Cash, cash equivalents and restricted cash at the end of the period | 3,447,875 | 4,044,707 | 4,486,910 | 678,078 | |||||||
Huazhu Group Limited | ||||||||||||||
Unaudited Reconciliation of GAAP and Non-GAAP Results | ||||||||||||||
Quarter Ended June 30, 2018 | ||||||||||||||
GAAP Result | % of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||
RMB | RMB | RMB | ||||||||||||
(in thousands) | ||||||||||||||
Hotel operating costs | 1,575,100 | 62.5 | % | 6,964 | 0.3 | % | 1,568,136 | 62.2 | % | |||||
Other operating costs | 2,137 | 0.1 | % | - | 0.0 | % | 2,137 | 0.1 | % | |||||
Selling and marketing expenses | 83,090 | 3.3 | % | 322 | 0.0 | % | 82,768 | 3.3 | % | |||||
General and administrative expenses | 189,514 | 7.5 | % | 11,344 | 0.4 | % | 178,170 | 7.1 | % | |||||
Pre-opening expenses | 65,612 | 2.6 | % | - | 0.0 | % | 65,612 | 2.6 | % | |||||
Total operating costs and expenses | 1,915,453 | 76.0 | % | 18,630 | 0.7 | % | 1,896,823 | 75.3 | % | |||||
Income from operations | 671,036 | 26.6 | % | 18,630 | 0.7 | % | 689,666 | 27.3 | % | |||||
. | ||||||||||||||
Quarter Ended June 30, 2018 | ||||||||||||||
GAAP Result | % of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||
US$ | US$ | US$ | ||||||||||||
(in thousands) | ||||||||||||||
Hotel operating costs | 238,036 | 62.5 | % | 1,052 | 0.3 | % | 236,984 | 62.2 | % | |||||
Other operating costs | 323 | 0.1 | % | - | 0.0 | % | 323 | 0.1 | % | |||||
Selling and marketing expenses | 12,557 | 3.3 | % | 49 | 0.0 | % | 12,508 | 3.3 | % | |||||
General and administrative expenses | 28,640 | 7.5 | % | 1,714 | 0.4 | % | 26,926 | 7.1 | % | |||||
Pre-opening expenses | 9,915 | 2.6 | % | - | 0.0 | % | 9,915 | 2.6 | % | |||||
Total operating costs and expenses | 289,471 | 76.0 | % | 2,815 | 0.7 | % | 286,656 | 75.3 | % | |||||
Income from operations | 101,409 | 26.6 | % | 2,815 | 0.7 | % | 104,224 | 27.3 | % | |||||
Quarter Ended March 31, 2018 | ||||||||||||||
GAAP Result | % of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||
RMB | RMB | RMB | ||||||||||||
(in thousands) | ||||||||||||||
Hotel operating costs | 1,506,035 | 72.0 | % | 5,038 | 0.2 | % | 1,500,997 | 71.8 | % | |||||
Other operating costs | 2,842 | 0.1 | % | - | 0.0 | % | 2,842 | 0.1 | % | |||||
Selling and marketing expenses | 65,826 | 3.1 | % | 1,120 | 0.1 | % | 64,706 | 3.0 | % | |||||
General and administrative expenses | 158,752 | 7.6 | % | 10,971 | 0.5 | % | 147,781 | 7.1 | % | |||||
Pre-opening expenses | 75,271 | 3.6 | % | - | 0.0 | % | 75,271 | 3.6 | % | |||||
Total operating costs and expenses | 1,808,726 | 86.4 | % | 17,129 | 0.8 | % | 1,791,597 | 85.6 | % | |||||
Income from operations | 306,586 | 14.7 | % | 17,129 | 0.8 | % | 323,715 | 15.5 | % | |||||
Quarter Ended June 30, 2017 | ||||||||||||||
GAAP Result | % of Net Revenues |
Share-based Compensation |
% of Net Revenues |
Non-GAAP Result |
% of Net Revenues |
|||||||||
RMB | RMB | RMB | ||||||||||||
(in thousands) | ||||||||||||||
Hotel operating costs | 1,348,269 | 67.3 | % | 4,502 | 0.2 | % | 1,343,767 | 67.1 | % | |||||
Other operating costs | 3,739 | 0.2 | % | - | 0.0 | % | 3,739 | 0.2 | % | |||||
Selling and marketing expenses | 63,126 | 3.2 | % | 371 | 0.0 | % | 62,755 | 3.2 | % | |||||
General and administrative expenses | 135,689 | 6.8 | % | 11,148 | 0.6 | % | 124,541 | 6.2 | % | |||||
Pre-opening expenses | 43,134 | 2.2 | % | - | 0.0 | % | 43,134 | 2.2 | % | |||||
Total operating costs and expenses | 1,593,957 | 79.7 | % | 16,021 | 0.8 | % | 1,577,936 | 78.9 | % | |||||
Income from operations | 438,018 | 21.9 | % | 16,021 | 0.8 | % | 454,039 | 22.7 | % | |||||
Huazhu Group Limited | |||||||||||
Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||
Quarter Ended | |||||||||||
June 30, 2017 | March 31, 2018 | June 30, 2018 | |||||||||
RMB | RMB | RMB | US$ | ||||||||
(in thousands, except per share and per ADS data) | |||||||||||
Net income attributable to Huazhu Group Limited (GAAP) | 386,123 | 128,524 | 338,427 | 51,144 | |||||||
Share-based compensation expenses | 16,021 | 17,129 | 18,630 | 2,815 | |||||||
Unrealized losses (gains) from fair value changes of equity securities | - | 136,680 | 200,763 | 30,340 | |||||||
Adjusted net income attributable to Huazhu Group Limited (non-GAAP) | 402,144 | 282,333 | 557,820 | 84,299 | |||||||
Earnings per share/ADS (GAAP) | |||||||||||
Basic | 1.38 | 0.46 | 1.20 | 0.18 | |||||||
Diluted | 1.34 | 0.44 | 1.14 | 0.17 | |||||||
Adjusted earnings per share/ADS (non-GAAP) | |||||||||||
Basic | 1.44 | 1.01 | 1.98 | 0.30 | |||||||
Diluted | 1.39 | 0.96 | 1.87 | 0.28 | |||||||
Weighted average number of shares used in computation | |||||||||||
Basic | 279,101 | 280,701 | 281,495 | 281,495 | |||||||
Diluted | 288,316 | 293,243 | 303,963 | 303,963 | |||||||
Quarter Ended | |||||||||||
June 30, 2017 | March 31, 2018 | June 30, 2018 | |||||||||
RMB | RMB | RMB | US$ | ||||||||
(in thousands) | |||||||||||
Net income attributable to Huazhu Group Limited (GAAP) | 386,123 | 128,524 | 338,427 | 51,144 | |||||||
Interest income | (21,792 | ) | (34,193 | ) | (39,000 | ) | (5,894 | ) | |||
Interest expense | 15,870 | 51,457 | 58,827 | 8,890 | |||||||
Income tax expense | 129,011 | 44,465 | 163,575 | 24,720 | |||||||
Depreciation and amortization | 189,210 | 215,671 | 223,815 | 33,824 | |||||||
EBITDA (non-GAAP) | 698,422 | 405,924 | 745,644 | 112,684 | |||||||
Share-based compensation | 16,021 | 17,129 | 18,630 | 2,815 | |||||||
Unrealized losses (gains) from fair value changes of equity securities | - | 136,680 | 200,763 | 30,340 | |||||||
Adjusted EBITDA (non-GAAP) | 714,443 | 559,733 | 965,037 | 145,839 | |||||||
Huazhu Group Limited | ||||||
Operational Data | ||||||
As of | ||||||
June 30, | March 31, | June 30, | ||||
2017 | 2018 | 2018 | ||||
Total hotels in operation: | 3,541 | 3,817 | 3,903 | |||
Leased and owned hotels | 686 | 673 | 673 | |||
Manachised hotels | 2,654 | 2,943 | 3,024 | |||
Franchised hotels | 201 | 201 | 206 | |||
Total hotel rooms in operation | 359,530 | 384,959 | 393,417 | |||
Leased and owned hotels | 86,232 | 85,508 | 86,231 | |||
Manachised hotels | 253,469 | 280,133 | 287,398 | |||
Franchised hotels | 19,829 | 19,318 | 19,788 | |||
Number of cities | 369 | 382 | 384 | |||
For the quarter ended | ||||||
June 30, | March 31, | June 30, | ||||
2017 | 2018 | 2018 | ||||
Occupancy rate (as a percentage) | ||||||
Leased and owned hotels | 90.8 | % | 85.6 | % | 91.4 | % |
Manachised hotels | 90.8 | % | 84.0 | % | 89.8 | % |
Franchised hotels | 74.4 | % | 69.8 | % | 78.7 | % |
Blended | 90.1 | % | 83.7 | % | 89.6 | % |
Average daily room rate (in RMB) | ||||||
Leased and owned hotels | 232 | 243 | 270 | |||
Manachised hotels | 188 | 194 | 212 | |||
Franchised hotels | 203 | 228 | 248 | |||
Blended | 199 | 207 | 226 | |||
RevPAR (in RMB) | ||||||
Leased and owned hotels | 211 | 208 | 246 | |||
Manachised hotels | 171 | 163 | 190 | |||
Franchised hotels | 151 | 159 | 195 | |||
Blended | 179 | 173 | 203 | |||
Same-hotel Operational Data: like-for-like performance for leased, manachised and franchised hotels opened for at least 18 months during the current quarter | ||||||
As of and for the quarter ended | ||||||
June 30, | ||||||
2017 | 2018 | |||||
Total | 2,866 | 2,866 | ||||
Leased and owned hotels | 559 | 559 | ||||
Manachised hotels | 2,307 | 2,307 | ||||
Occupancy rate (as a percentage) | 92.0 | % | 92.2 | % | ||
Average daily room rate (in RMB) | 196 | 210 | ||||
RevPAR (in RMB) | 180 | 194 | ||||
Huazhu Group Limited | ||||||
Operational Data | ||||||
As of | ||||||
June 30, | March 31, | June 30, | ||||
2017 | 2018 | 2018 | ||||
Total hotels in operation: | 3,541 | 3,817 | 3,903 | |||
Leased and owned hotels | 686 | 673 | 673 | |||
Manachised hotels | 2,654 | 2,943 | 3,024 | |||
Franchised hotels | 201 | 201 | 206 | |||
Total hotel rooms in operation | 359,530 | 384,959 | 393,417 | |||
Leased and owned hotels | 86,232 | 85,508 | 86,231 | |||
Manachised hotels | 253,469 | 280,133 | 287,398 | |||
Franchised hotels | 19,829 | 19,318 | 19,788 | |||
Number of cities | 369 | 382 | 384 | |||
For the quarter ended | ||||||
June 30, | March 31, | June 30, | ||||
2017 | 2018 | 2018 | ||||
Occupancy rate (as a percentage) | ||||||
Leased and owned hotels | 90.8 | % | 85.6 | % | 91.4 | % |
Manachised hotels | 90.8 | % | 84.0 | % | 89.8 | % |
Franchised hotels | 74.4 | % | 69.8 | % | 78.7 | % |
Blended | 90.1 | % | 83.7 | % | 89.6 | % |
Average daily room rate (in RMB) | ||||||
Leased and owned hotels | 232 | 243 | 270 | |||
Manachised hotels | 188 | 194 | 212 | |||
Franchised hotels | 203 | 228 | 248 | |||
Blended | 199 | 207 | 226 | |||
RevPAR (in RMB) | ||||||
Leased and owned hotels | 211 | 208 | 246 | |||
Manachised hotels | 171 | 163 | 190 | |||
Franchised hotels | 151 | 159 | 195 | |||
Blended | 179 | 173 | 203 | |||
Same-hotel Operational Data: like-for-like performance for leased, manachised and franchised hotels opened for at least 18 months during the current quarter | ||||||
As of and for the quarter ended | ||||||
June 30, | ||||||
2017 | 2018 | |||||
Total | 2,866 | 2,866 | ||||
Leased and owned hotels | 559 | 559 | ||||
Manachised hotels | 2,307 | 2,307 | ||||
Occupancy rate (as a percentage) | 92.0 | % | 92.2 | % | ||
Average daily room rate (in RMB) | 196 | 210 | ||||
RevPAR (in RMB) | 180 | 194 | ||||
Hotel breakdown by segment | ||
Number of Hotels in Operation | Number of Hotel Rooms in Operation | |
As of June 30, 2018 | As of June 30, 2018 | |
Economy hotels | 2,857 | 259,504 |
HanTing Hotel | 2,236 | 218,124 |
Leased hotels | 428 | 49,474 |
Manachised hotels | 1,804 | 168,272 |
Franchised hotels | 4 | 378 |
Hi Inn | 395 | 25,262 |
Leased hotels | 29 | 2,661 |
Manachised hotels | 317 | 19,717 |
Franchised hotels | 49 | 2,884 |
Elan Hotel | 218 | 15,277 |
Manachised hotels | 188 | 13,381 |
Franchised hotels | 30 | 1,896 |
Orange Hotel | 8 | 841 |
Leased hotels | 6 | 678 |
Manachised hotels | 1 | 85 |
Franchised hotels | 1 | 78 |
Midscale hotels and upscale hotels | 1,046 | 133,913 |
JI Hotel | 452 | 61,033 |
Leased hotels | 91 | 16,230 |
Manachised hotels | 359 | 44,601 |
Franchised hotels | 2 | 202 |
Starway Hotel | 177 | 16,884 |
Leased hotels | 2 | 386 |
Manachised hotels | 145 | 13,814 |
Franchised hotels | 30 | 2,684 |
Joya Hotel | 7 | 1,207 |
Leased hotels | 4 | 677 |
Manachised hotels | 2 | 374 |
Franchised hotels | 1 | 156 |
Manxin Hotels & Resorts | 17 | 1,594 |
Leased hotels | 3 | 447 |
Manachised hotels | 11 | 1,043 |
Franchised hotels | 3 | 104 |
HanTing Premium Hotel | 45 | 4,255 |
Leased hotels | 17 | 1,819 |
Manachised hotels | 28 | 2,436 |
ibis Hotel | 112 | 14,588 |
Leased and owned hotels | 19 | 3,423 |
Manachised hotels | 51 | 5,589 |
Franchised hotels | 42 | 5,576 |
ibis Styles Hotel | 23 | 3,235 |
Leased hotels | 1 | 102 |
Manachised hotels | 20 | 2,811 |
Franchised hotels | 2 | 322 |
Mercure Hotel | 28 | 5,874 |
Leased hotels | 4 | 910 |
Manachised hotels | 19 | 4,123 |
Franchised hotels | 5 | 841 |
Novotel Hotel | 5 | 2,064 |
Manachised hotels | 4 | 1,741 |
Franchised hotels | 1 | 323 |
Grand Mercure Hotel | 6 | 1,306 |
Leased hotels | 1 | 317 |
Manachised hotels | 3 | 618 |
Franchised hotels | 2 | 371 |
Orange Selected | 127 | 15,645 |
Leased hotels | 48 | 6,289 |
Manachised hotels | 54 | 6,487 |
Franchised hotels | 25 | 2,869 |
Crystal Orange | 47 | 6,228 |
Leased hotels | 20 | 2,818 |
Manachised hotels | 18 | 2,306 |
Franchised hotels | 9 | 1,104 |
Total | 3,903 | 393,417 |
Same-hotel operational data by segment | ||||||||||||||||
Number of hotels in operation | Same-hotel RevPAR | Same-hotel ADR | Same-hotel Occupancy | |||||||||||||
As of June 30, |
For the quarter ended June 30, |
yoy | For the quarter ended June 30, |
yoy |
For the quarter ended June 30, |
yoy | ||||||||||
2017 | 2018 | 2017 | 2018 | change | 2017 | 2018 | change | 2017 | 2018 | change | ||||||
Economy hotels | 2,406 | 2,406 | 161 | 174 | 8.0 | % | 172 | 186 | 8.1 | % | 94.0 | % | 93.8 | % | -0.1 | % |
Leased hotels | 459 | 459 | 168 | 189 | 12.2 | % | 182 | 201 | 10.3 | % | 92.2 | % | 93.8 | % | 1.7 | % |
Manachised and franchised hotels | 1,947 | 1,947 | 159 | 170 | 6.6 | % | 168 | 181 | 7.4 | % | 94.5 | % | 93.8 | % | -0.7 | % |
Midscale and upscale hotels | 460 | 460 | 251 | 269 | 7.2 | % | 297 | 312 | 4.8 | % | 84.3 | % | 86.3 | % | 2.0 | % |
Leased and owned hotels | 100 | 100 | 313 | 332 | 6.1 | % | 345 | 365 | 5.5 | % | 90.6 | % | 91.2 | % | 0.5 | % |
Manachised and franchised hotels | 360 | 360 | 226 | 243 | 7.8 | % | 276 | 289 | 4.5 | % | 81.8 | % | 84.3 | % | 2.5 | % |
Total | 2,866 | 2,866 | 180 | 194 | 7.9 | % | 196 | 210 | 7.5 | % | 92.0 | % | 92.2 | % | 0.3 | % |
Blossom Hill Hotels and Resorts | |||
Number of hotels | Number of rooms | ||
In operation | 22 | 590 | |
Leased hotels | 19 | 416 | |
Manachised hotels | 3 | 174 | |
In pipeline | 12 | ||
As of July 31, 2018 |
Source: Huazhu Group Limited