Huazhu Group, a world-leading hotel group, today announced leverage covenant waiver for existing syndication loan and preliminary results for hotel operations in the first quarter ended March 31, 2020. Upon the completion of Deutsche Hospitality on January 2, 2020, the company added 5 new hotel brands, including Steigenberger Hotels & Resorts, Maxx by Steigenberger, Jaz in the City, Intercity Hotel and Zleep Hotel. In this press release, Huazhu provides separate operating results for Legacy-Huazhu and Legacy-DH.
China, where COVID-19 first started to have an impact in late January, has experienced steadily improving trends. Domestic travel is gradually rebuilding with eased travel restrictions and national policy for resuming production and work. The number of the temporarily closed hotels declined from the peak of 2,310 hotels in mid-February down to 369 hotels as of March 31, 2020. During Q1 2020, the governmental authorities requisitioned accumulatively 610 Huazhu hotels (2 million room nights, 12% of which were from the leased hotels) at various locations and periods for medical support workers and quarantine purposes. As of March 31, 2020, Huazhu had 374 hotels under governmental requisition.
Since the COVID-19 outbreak in Europe in March, DH has temporarily closed its hotels. 85 DH hotels were temporarily closed as of March 31, 2020, including 49 leased hotels and 36 manachised and franchised hotels.
Excluding the addition of DH, net revenues for Q1 2020 are expected to decline 45% to 47% (not fully reflecting the revenues from the hotels under governmental requisition) year-over-year. Huazhu doesn’t recognize the revenues from the hotels under governmental requisition until the settlement from governmental authorities. Including the revenue contribution from DH, net revenues for Q1 2020 are expected to decline by 14% to 16% year-over-year.
Heading into Q2 2020, more business and leisure travel demand continues to recover in China. Huazhu is now accelerating new hotel openings and signings of new franchisees to help us keep on track toward the 2020 growth target.
Read Original Report