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Nov 05,2020

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

SHANGHAI, China, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) (“Huazhu”, “we” or “our”), a world-leading hotel group, today announced preliminary results for hotel operations in the third quarter ended September 30, 2020 (“Q3 2020”).

Recovery continued in Q3 2020

During Q3 2020, despite some mini-outbreaks in several cities, our occupancy rate recovery continued, thanks to China’s effective control of the COVID-19 pandemic. In addition, our average daily room rate had also recovered gradually along with the occupancy rate. More importantly, leisure traveling was the key driver to lead this recovery, which had resulted in outstanding performance of our upper-midscale and upscale brand hotels.

Steigenberger Hotels AG and its subsidiaries (“DH”) operating performances had also recovered steadily from July until mid-September 2020. However, this recovery trend was temporarily paused since late September due to the second wave of COVID-19 outbreak in European countries. To mitigate the effects of this situation, we are taking further cost and cash flow measures, such as deferred rental payments, reducing or eliminating discretionary corporate spending and capital expenditures, etc. As of October 31, 2020, 91% or 107 of DH hotels were in operation.

Starting from Q3 2020, we have been evaluating our soft brand hotel portfolio and removing hotels with poor product quality or those that do not fit Huazhu’s long-term development strategy from our portfolio. We believe this will help to improve the hotels’ performance and attract like-minded franchisees to join our network. Accordingly, we are now revising our hotel closure target to 550-600 hotels for 2020, up from our initial expectation of 350-450 hotels.

In Q3 2020, Huazhu expects net revenues to increase 0% to 2% year-over-year or to decline 10% to 12% if excluding the addition of DH.

Operating Results: Legacy-Huazhu(1)

                   
        Number of hotels       Number of rooms  
    Opened
in Q3 2020
  Closed(2)
in Q3 2020
  Net added
in Q3 2020
  As of
 September 30,
2020
(3)
  As of
 September 30,
2020
 
Leased and owned hotels   9   (12 ) (3 ) 687   91,218  
Manachised and franchised hotels   511   (189 ) 322   5,703   519,547  
Total   520   (201 ) 319   6,390   610,765  
                       

 

       
    As of September 30, 2020  
    Number of hotels   Unopened hotels in pipeline  
Economy hotels   4,213   1,097  
Leased and owned hotels   446   4  
Manachised and franchised hotels   3,767   1,093  
Midscale and upscale hotels   2,177   1,175  
Leased and owned hotels   241   18  
Manachised and franchised hotels   1,936   1,157  
Total   6,390   2,272  
           

Operational hotels (excluding hotels under requisition)

           
    For the quarter ended      
    September
30,
  June 30,   September
30,
  yoy  
    2019   2020   2020   change  
Average daily room rate (in RMB)                  
Leased and owned hotels   288   205   255   -11.4 %
Manachised and franchised hotels   235   181   211   -10.3 %
Blended   245   185   218   -11.1 %
Occupancy rate (as a percentage)                  
Leased and owned hotels   90.0 % 67.4 % 82.9 % -7.1 p.p.
Manachised and franchised hotels   87.2 % 69.1 % 81.8 % -5.3 p.p.
Blended   87.7 % 68.8 % 82.0 % -5.7 p.p.
RevPAR (in RMB)                  
Leased and owned hotels   259   138   211   -18.5 %
Manachised and franchised hotels   205   125   173   -15.8 %
Blended   215   127   179   -16.9 %
                   

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
 September 30,
  For the quarter
ended
 September 30,
  yoy
change
  For the quarter
ended
 September 30,
  yoy
change
  For the quarter
ended
 September 30,
  yoy
change
 
    2019   2020   2019   2020       2019   2020       2019   2020   (p.p.)  
Economy hotels   2,604   2,604   185   144   -21.9 % 199   168   -15.7 % 92.7 % 85.9 % -6.8  
Leased and owned hotels   421   421   207   159   -23.0 % 222   184   -17.2 % 93.4 % 86.9 % -6.6  
Manachised and franchised hotels   2,183   2,183   179   140   -21.6 % 193   164   -15.3 % 92.6 % 85.7 % -6.9  
Midscale and upscale hotels   1,108   1,108   289   238   -17.4 % 335   298   -11.2 % 86.1 % 80.1 % -6.0  
Leased and owned hotels   188   188   352   269   -23.5 % 402   345   -14.2 % 87.4 % 78.0 % -9.4  
Manachised and franchised hotels   920   920   271   230   -15.2 % 316   284   -9.9 % 85.8 % 80.7 % -5.0  
Total   3,712   3,712   222   178   -19.8 % 245   212   -13.5 % 90.4 % 83.8 % -6.5  
                                               

Operating Results: Legacy-DH(4)

               
        Number of   Unopened hotels  
    Number of hotels   rooms   in pipeline  
                As of   As of   As of  
    Opened   Closed   Net added   September   September 30,   September 30,  
    in Q3 2020   in Q3 2020   in Q3 2020   30, 2020(5)   2020   2020  
Leased hotels   2     2   70   12,820   28  
Manachised and franchised hotels   1   (2 ) (1 ) 47   10,502   13  
Total   3   (2 ) 1   117   23,322   41  
                           


           
    For the quarter ended      
    September 30,   June 30,   September 30,   yoy  
    2019   2020   2020   change  
Average daily room rate (in EUR)                  
Leased hotels   100   82   88   -11.8 %
Manachised and franchised hotels   94   97   101   6.9 %
Blended   98   87   93   -4.7 %
Occupancy rate (as a percentage)                  
Leased hotels   78.7 % 18.7 % 38.2 % -51.4 p.p.
Manachised and franchised hotels   72.3 % 17.3 % 37.5 % -48.2 p.p.
Blended   75.7 % 18.3 % 37.9 % -49.9 p.p.
RevPAR (in EUR)                  
Leased hotels   79   15   34   -57.1 %
Manachised and franchised hotels   68   17   38   -44.6 %
Blended   74   16   35   -52.2 %
                   

Hotel Portfolio by Brand

       
    As of September 30, 2020  
    Hotels   Rooms   Unopened hotels  
    in operation   in pipeline  
Economy hotels   4,226   355,402   1,107  
HanTing Hotel   2,722   253,155   477  
Hi Inn   443   25,946   103  
Elan Hotel(6)   849   53,471   461  
Ibis Hotel   199   21,323   56  
Zleep Hotel   13   1,507   10  
Midscale and upscale hotels   2,281   278,685   1,206  
Ibis Styles Hotel   63   7,470   28  
Starway Hotel   428   37,137   307  
JI Hotel   1,033   128,994   453  
Orange Hotel   308   35,101   171  
Crystal Orange Hotel   110   14,896   50  
Manxin Hotel   59   5,854   34  
Madison Hotel   23   2,953   24  
Mercure Hotel   98   16,685   60  
Novotel Hotel   12   3,387   13  
Joya Hotel   10   1,926   1  
Blossom House   26   978   25  
Grand Mercure Hotel   7   1,489   8  
Steigenberger Hotels & Resorts   49   11,556   8  
IntercityHotel   44   7,827   20  
Maxx by Steigenberger   5   777   1  
Jaz in the City   2   424   2  
Other partner hotels   4   1,231   1  
Total   6,507   634,087   2,313  
               

About Huazhu Group Limited

Originated in China, Huazhu Group Limited is a world-leading hotel group. As of September 30, 2020, Huazhu operated 6,507 hotels with 634,087 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 September 30, 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
Huazhu Investor Relations
Tel: 86 (21) 6195 9561
Email: ir@huazhu.com
http://ir.huazhu.com

 ______________________
(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 Q3 2020, we temporarily closed 17 hotels for brand upgrade and business model change purposes.
(3) As of September 30, 2020, 83 hotels were requisitioned by governmental authorities.
(4) Legacy-DH refers to DH.
(5) As of September 30, 2020, a total of 12 DH brand hotels were temporarily closed due to COVID-19.
(6) As of September 30, 2020, 4 Ni Hao hotels were included in the operational hotel total for Elan Hotels and 27 Ni Hao hotels were included in the pipeline total for Elan Hotels.


Source: Huazhu Group Limited

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