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Huazhu net revenue increases by 10.4% to US$427 million in Q3

11/13/2019| 9:40:27 AM| 中文

Hotel turnover increased by 19% to RMB10 billion. Net revenues from leased and owned hotels were RMB2.1 billion, representing a 1.8% year-over-year increase.

Huazhu Group Limited today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter of 2019 Operational Highlights

During the third quarter of 2019, Huazhu opened 548 hotels, including 13 leased (“leased-and-operated”) hotels and 535 manachised (“franchised-and-managed”) hotels and franchised hotels.

Huazhu closed a total of 62 hotels, including 12 leased hotels and 50 manachised and franchised hotels, during the third quarter of 2019.

As of September 30, 2019, Huazhu had 697 leased hotels, 4,087 manachised hotels, and 367 franchised hotels in operation in 420 China cities. The number of hotel rooms in operation totaled 504,414, an increase of 23% from a year ago. The rooms under midscale and upscale brands accounted for 45% of total rooms in operation, up 9 percentage points from 36% a year ago.

As of September 30, 2019, Huazhu had a total number of 1,736 unopened pipeline hotels contracted or under construction, including 52 leased hotels and 1,684 manachised and franchised hotels. The unopened hotels in our pipeline represented 34% of the number of hotels in operation as of the end of Q3 2019 compared to 23% a year ago, an 11-percentage-point increase.

The ADR, which is defined as the average daily rate for all hotels in operation, was RMB245 in the third quarter of 2019, compared with RMB239 in the third quarter of 2018. The year-over-year increase of 2.6% was due to an increase in the proportion of midscale and upscale hotels with higher ADR in Huazhu’s brand mix, partially offset by a decrease in ADR of our mature hotels (where mature means those of our hotels which have been in operation for at least 18 months).

The occupancy rate for all hotels in operation was 87.7% in the third quarter of 2019, compared with 90.7% in the third quarter of 2018. The year-over-year decrease of 3.1 percentage points was mainly due to the deepening China economic slowdown.

RevPAR, defined as revenue per available room for all hotels in operation, was RMB215 in the third quarter of 2019, compared with RMB217 in the third quarter of 2018. The year-over-year decrease of 0.8% was attributable to higher ADR.

For all of our mature hotels, the same-hotel RevPAR was RMB211 for the third quarter of 2019, representing a 3.8% decrease from RMB219 for the third quarter of 2018, with a 1.1% decrease in ADR and a 2.5-percentage-point decrease in occupancy rate. The year-over-year weaker performance was mainly due to macroeconomic softness and more promotions during this year’s summer vacation season.

As of September 30, 2019, H Rewards (Huazhu’s loyalty program) had approximately 139 million members, who contributed approximately 76% of room nights sold during the third quarter of 2019 and approximately 85% of room nights were sold through Huazhu’s direct channels.

Third Quarter of 2019 Financial Results

A total of 5,151 hotels or 504,414 hotel rooms in operation as of September 30, 2019.

Hotel turnover increased 19% year-over-year to RMB10 billion for the third quarter of 2019.

Net revenues increased 10.4% year-over-year to RMB3.1 billion (US$427 million)2 for the third quarter of 2019, in line with the revenue guidance previously announced of 9%-11%.

The Company entered into a share purchase agreement to acquire all shares in Steigenberger Hotels Aktiengesellschaft, Germany (“Deutsche Hospitality”). The acquisition is expected to complete in January 2020.

Net revenues from leased and owned hotels for the third quarter of 2019 were RMB2.1 billion (US$292 million), representing a 1.8% year-over-year increase.

Net revenues from manachised and franchised hotels for the third quarter of 2019 were RMB939 million (US$131 million), representing a 34.3% year-over-year increase. Net revenues from manachised and franchised hotels accounted for 30.7% of Huazhu’s net revenues in the third quarter of 2019, up from 25.3% a year ago.

Hotel operating costs for the third quarter of 2019 were RMB1.8 billion (US$256 million), compared to RMB1.7 billion in the third quarter of 2018, representing a 10.6% year-over-year increase. 

Selling and marketing expenses for the third quarter of 2019 were RMB113 million (US$16 million), compared to RMB91 million in the third quarter of 2018.

General and administrative expenses for the third quarter of 2019 were RMB277 million (US$38 million), compared to RMB233 million in the third quarter of 2018.

Pre-opening expenses for the third quarter of 2019 were RMB126 million (US$18 million), representing a 110% year-over-year increase, mainly involving our upscale-brand hotels.

Other operating income, net for the third quarter of 2019 was RMB9 million (US$1 million), compared to RMB51 million in the third quarter of 2018.

Income from operations for the third quarter of 2019 was RMB703 million (US$98 million), compared to RMB775 million in the third quarter of 2018.

Other income, net for the third quarter of 2019 was RMB86 million (US$12 million), compared to RMB16 million for the third quarter of 2018.

Net income attributable to Huazhu Group Limitedfor the third quarter of 2019 was RMB431 million (US$60 million), compared to RMB668 million in the third quarter of 2018.

Basic and diluted earnings per share/ADS for the third quarter of 2019, basic earnings per share were RMB1.51(US$0.21) and diluted earnings per share were RMB1.45(US$0.20).

EBITDA (non-GAAP) for the third quarter of 2019 was RMB898 million (US$126 million), compared with RMB1.2 billion in the third quarter of 2018.

Guidance

For the full year of 2019, Huazhu maintains the net revenues growth range to be 10%-12%.

In 2020, Huazhu expects to accelerate the gross number of hotels opened to about 1,700, and about 75%-80% of which will be midscale and upscale brand properties.

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