Huazhu Group Limited Announces Preliminary Results for Hotel Operations in the Second Quarter of 2020


SHANGHAI, China, July 16, 2020 (GLOBE NEWSWIRE) -- Huazhu Group Limited (NASDAQ: HTHT) (“Huazhu”, “we” or “our”), a world-leading hotel group, today announced preliminary results for hotel operations in the second quarter ended June 30, 2020.

COVID-19 Impact in Q2 2020
The recovery continued in Q2 2020, with our occupancy rate improving steadily from March through mid-June. Since June 11, 2020, however, there were new COVID-19 cases discovered in Beijing. Beijing reinstituted strict travel restrictions to curb the spread of COVID-19 once again. Since then, our occupancy rate in Beijing and its nearby cities and provinces, such as Tianjin and Heibei, was affected. Since early July, with the containment of mini outbreak of COVID-19 in Beijing, our occupancy rate in China gradually improved once again, reaching more than 80% by mid-July. As China kept COVID-19 largely under control, 97% hotels resumed operation in Q2 2020. As of June 30, 2020, Huazhu had 139 hotels under governmental requisition, compared to 374 as of March 31, 2020.

Deutsche Hospitality (“DH”) has been affected since the outbreak of COVID-19 in Europe since early March. At the end of March 2020, 74% or 85 of hotels of DH hotels were temporarily closed. With the containment of the pandemic, Germany and some European countries started to stop land border checks and remove travel restrictions, and the lodging industry in Europe started to recover. As of June 30, 2020, 21% or 24 of hotels of DH hotels were temporarily closed, including 5 leased hotels and 19 manachised and franchised hotels.

In the second quarter of 2020, Huazhu expects net revenues to decline 32% to 34% year-over-year or 35% to 37% if excluding the addition of Deutsche Hospitality.

Operating Results: Legacy-Huazhu

 Number of hotels  Number of rooms
 Opened 
in Q2 2020
Closed (1)
in Q2 2020
Net added
in Q2 2020
As of 
June 30, 2020 (2)
 As of 
June 30, 2020
  
Leased and owned hotels9(8) 1690 89,599
Manachised and franchised hotels419(187) 2325,381 486,312
Total428(195) 2336,071 575,911
(1)  The reasons for hotel closures mainly include non-compliance to brand standards, operating losses, and property-related issues. In Q2 2020, we had 45 hotels closed for brand upgrade and business model change purposes
(2)  As of June 30, 2020, 139 hotels were requisitioned by the government authorities


 As of June 30, 2020
 Number of hotels Unopened hotels in pipeline
Economy hotels4,1271,123
Leased and owned hotels4555
Manachised and franchised hotels3,6721,118
Midscale and upscale hotels1,9441,212
Leased and owned hotels23522
Manachised and franchised hotels1,7091,190
Total6,0712,335


Operational hotels (excluding hotels under requisition) 
 For the quarter ended  
 June 30,March 31,June 30,yoy 
 201920202020change 
Average daily room rate (in RMB)     
Leased and owned hotels281211205-27.3% 
Manachised and franchised hotels225184181-19.8% 
Blended236189185-22.0% 
Occupancy rate (as a percentage)     
Leased and owned hotels89.4%43.8%67.4%-22.1p.p. 
Manachised and franchised hotels86.3%47.4%69.1%-17.2p.p. 
Blended86.9%46.7%68.8%-18.1p.p. 
RevPAR (in RMB)     
Leased and owned hotels25292138-45.2% 
Manachised and franchised hotels19487125-35.8% 
Blended20688127-38.2% 
  


Same-hotel operational data by class 
Mature hotels in operation for more than 18 months (excluding hotels under requisition)
 Number of hotelsSame-hotel RevPARSame-hotel ADRSame-hotel Occupancy
 As of
For the quarter  yoyFor the quarter  yoyFor the quarter 
yoy
 June 30,ended June 30,changeended June 30,changeended June 30,change
 2019202020192020 20192020 2019 2020 (p.p.)
Economy hotels2,5522,552175102-41.6%191143-25.0%91.9%71.5%-20.4
 Leased and owned hotels419419199106-46.7%214151-29.5%93.1%70.4%-22.8
 Manachised and franchised hotels2,1332,133169101-40.1%185141-23.6%91.6%71.9%-19.8
Midscale and upscale hotels987987281169-39.9%333252-24.2%84.4%66.9%-17.5
 Leased and owned hotels185185348177-49.1%404279-30.9%86.1%63.5%-22.6
 Manachised and franchised hotels802802260166-36.0%310244-21.1%83.9%68.0%-15.8
Total3,5393,539211125-40.8%236178-24.4%89.4%70.0%-19.4


Operating Results: Legacy-DH

 Number of hotels Number of
rooms
 Unopened hotels in pipeline
 Opened 
in Q2 2020
Closed
in Q2 2020
Net added
in Q2 2020
As of 
June 30,
2020(3)
 

 
As of 
June 30, 2020
 

 
As of
June 30, 2020
 
Leased hotels1-168 12,525 27
Manachised and franchised hotels---48 10,799 13
Total1-1116 23,324 40
(3)   As of June 30, 2020, a total of 24 hotels were temporarily closed due to COVID-19 outbreak.


 For the quarter ended 
 June 30,March 31,June 30,yoy
 201920202020change
Average daily room rate  (in EUR)    
Leased hotels1089782-24.0%
Manachised and franchised hotels8980978.6%
Blended1008987-13.4%
Occupancy rate (as a percentage)   
Leased hotels74.3%52.6%18.7%-55.6p.p.
Manachised and franchised hotels66.6%50.4%17.3%-49.3p.p.
Blended70.7%51.7%18.3%-52.4p.p.
RevPAR  (in EUR)    
Leased hotels815115-80.9%
Manachised and franchised hotels594017-71.8%
Blended714616-77.6%


Hotel Portfolio by Brand

 As of June 30, 2020
 HotelsRoomsUnopened hotels
 in operationin pipeline
Economy hotels4,140347,498  1,132
HanTing Hotel2,638246,979523
Hi Inn46427,388102
Elan Hotel(4)83851,484434
Ibis Hotel18720,20164
Zleep Hotel131,4469
Midscale and upscale hotels2,047251,7371,243
Ibis Styles Hotel607,09330
Starway Hotel39234,323288
JI Hotel926115,928478
Orange Hotel26530,418180
Crystal Orange Hotel9913,25557
Manxin Hotel534,96634
Madison Hotel182,92923
Mercure Hotel8013,87776
Novotel Hotel113,24611
Joya Hotel91,5883
Blossom House2591924
Grand Mercure Hotel61,3178
Steigenberger Hotels & Resorts5011,9098
IntercityHotel427,53719
Maxx by Steigenberger57771
Jaz in the City24242
Other partner hotels41,2311
Total6,187599,235  2,375
(4)  As of June 30, 2020, 17 H hotels were included in the pipeline of Elan Hotel.


About Huazhu Group Limited
Originated in China, Huazhu Group Limited is a world-leading hotel operator and franchisor. As of June 30, 2020, Huazhu operated 6,187 hotels with 599,235 rooms in operation in 15 countries. Huazhu’s brands include Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel, Madison Hotel, Joya Hotel, and Blossom House. Upon the completion of Deutsche Hospitality acquisition on January 2, 2020, Huazhu added 5 brands to our portfolio, including Steigenberger Hotels & Resorts, Maxx by Steigenberger, Jaz in the City, 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 Huazhu appoints and collects fees from franchisees. Under the franchise model, Huazhu provides training, reservations and support services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers. Huazhu applies a consistent standard and platform across all of its hotels. As of June 30, 2020, Huazhu operates 17 percent of its hotel rooms under lease and ownership model, and 83 percent under manachise and franchise models.

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

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

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

Contact Information
Huazhu Investor Relations
Tel: 86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com