Huazhu net revenue increases by 13.4% to US$417 million in Q2
08/22/2019|9:09:12 AM|Huazhu

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

Second Quarter of 2019 Operational Highlights

During the second quarter of 2019, Huazhu opened 311 hotels, including 8 leased (“leased-and-operated”) hotels and 303 manachised (“franchised-and-managed”) hotels and franchised hotels.

Huazhu closed a total of 42 hotels, including 10 leased hotels and 32 manachised and franchised hotels, during the second quarter of 2019. 

As of June 30, 2019, Huazhu had 696 leased hotels, 3,692 manachised hotels, and 277 franchised hotels in operation in 413 China cities. The number of hotel rooms in operation totaled 463,296, an increase of 17.8% from a year ago. The rooms under midscale and upscale brands accounted for 43% of total rooms in operation, up 9 percentage points from 34% a year ago.

As of June 30, 2019, Huazhu had a total number of 1,553 unopened pipeline hotels contracted or under construction, including 55 leased hotels and 1,498 manachised and franchised hotels. The unopened hotels in our pipeline represented 33% of the number of hotels in operation as of the end of Q2 2019 compared to 21% a year ago, a 12-percentage-point increase.

The ADR was RMB236 in the second quarter of 2019, compared with RMB226 in the second quarter of 2018 and RMB221 in the previous quarter. The year-over-year increase of 4.4% was due to both an increase in ADR of mature hotels, as well as an increase in the proportion of midscale and upscale hotels with higher ADR in Huazhu’s brand mix.

The occupancy rate for all hotels in operation was 86.9% in the second quarter of 2019, compared with 89.6% in the second quarter of 2018 and 80.6% in the previous quarter. The year-over-year decrease of 2.7 percentage points was due to the deepening China economic slowdown. 

RevPAR was RMB206 in the second quarter of 2019, compared with RMB203 in the second quarter of 2018 and RMB178 in the previous quarter. The year-over-year increase of 1.3% was attributable to higher ADR.

For all of the mature hotels, the same-hotel RevPAR was RMB202 for the second quarter of 2019, representing a 2.1% decrease from RMB206 for the second quarter of 2018, with a 0.4% increase in ADR and a 2.3-percentage-point decrease in occupancy rate. 

As of June 30, 2019, Huazhu’s loyalty program had approximately 132 million members, who contributed approximately 75% of room nights sold during the second quarter of 2019, and approximately 84% of room nights were sold through Huazhu’s direct channels.

Second Quarter of 2019 Financial Results

A total of 4,665 hotels or 463,296 hotel rooms in operation as of June 30, 2019.

Hotel turnover increased by 18% year-over-year to RMB8.8 billion for the second quarter of 2019.

Net revenues increased 13.4% year-over-year to RMB2.9 billion (US$417 million) for the second quarter of 2019, in line with the revenue guidance previously announced of 13%-15%.

Net revenues from leased and owned hotels for the second quarter of 2019 were RMB2.0 billion (US$292 million), representing a 5.4% year-over-year increase.

Net revenues from manachised and franchised hotels for the second quarter of 2019 were RMB803 million (US$117 million), representing a 30.4% year-over-year increase. Net revenues from manachised and franchised hotels accounted for 28.1% of Huazhu’s net revenues in the second quarter of 2019, up from 24.4% a year ago.

EBITDA (non-GAAP) increased 59.2% year-over-year to RMB1.2 billion (US$173 million) for the second quarter of 2019.

Hotel operating costs for the second quarter of 2019 were RMB1.7 billion (US$253 million), compared to RMB1.6 billion in the second quarter of 2018, representing a 10.7% year-over-year increase.

Selling and marketing expenses for the second quarter of 2019 were RMB102 million (US$15 million), compared to RMB83 million in the second quarter of 2018.

General and administrative expenses for the second quarter of 2019 were RMB247 million (US$36 million), compared to RMB190 million in the second quarter of 2018.

Other operating income, net for the second quarter of 2019 was RMB29 million (US$4 million), compared to RMB66 million in the second quarter of 2018.

Net income attributable to Huazhu Group Limited increased 81.4% year-over-year to RMB613 million (US$89 million) for the second quarter of 2019.

Income from operations for the second quarter of 2019 was RMB657 million (US$96 million), compared to RMB671 million in the second quarter of 2018.

Other income, net for the second quarter of 2019 was RMB135 million (US$20 million), compared to RMB195 million for the second quarter of 2018.

As of June 30, 2019, Huazhu had a total balance of cash, cash equivalents and restricted cash of RMB4.1 billion (US$592 million).

Guidance 

Huazhu expects net revenues for the third quarter to grow 9%-11% year-over-year. For the full year of 2019, Huazhu adjusts the expected net revenues growth range to 10%-12%.

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