H World Group Limited (NASDAQ: HTHT and HKEX: 1179) (“
H
World”, the “
Company”,
“
we” or “
our”), a key player in
the global hotel industry, today announced its unaudited financial
results for the second quarter and the first half ended June 30,
2024.
As of June 30, 2024, H World’s worldwide hotel
network in operation totaled 10,286 hotels and 1,001,865 rooms,
including 136 hotels and 27,552 rooms from DH. During the second
quarter of 2024, our Legacy-Huazhu business opened 567 hotels,
including 4 leased and owned hotels, and 563 manachised and
franchised hotels, and closed a total of 101 hotels, including 10
leased and owned hotels and 91 manachised and franchised hotels. As
of June 30, 2024, H World had a total of 3,294 unopened hotels in
the pipeline, including 3,266 hotels from the Legacy-Huazhu
business and 28 hotels from the Legacy-DH business.
Legacy-Huazhu
– Second Quarter of 2024 Operational
Highlights
As of June 30, 2024, Legacy-Huazhu had 10,150
hotels in operation, including 592 leased and owned hotels, and
9,558 manachised and franchised hotels. In addition, as of the same
date, Legacy-Huazhu had 974,313 hotel rooms in operation, including
84,814 rooms under the lease and ownership model, and 889,499 rooms
under the manachise and franchise models. Legacy-Huazhu also had
3,266 unopened hotels in its pipeline, including 8 leased and owned
hotels, and 3,258 manachised and franchised hotels. The following
discusses Legacy-Huazhu’s revenue per available room
(“RevPAR”), average daily room rate
(“ADR”) and occupancy rate for its leased and
owned hotels, as well as manachised and franchised hotels for the
periods indicated.
- The ADR was RMB296 in the second quarter of 2024, compared with
RMB305 in the second quarter of 2023 and RMB280 in the previous
quarter.
- The occupancy rate for all the Legacy-Huazhu hotels in
operation was 82.6% in the second quarter of 2024, compared with
81.8% in the second quarter of 2023 and 77.2% in the previous
quarter.
- Blended RevPAR was RMB244 in the second quarter of 2024,
compared with RMB250 in the second quarter of 2023 and RMB216 in
the previous quarter.
- For all the Legacy-Huazhu hotels which had been in operation
for at least 18 months, the same-hotel RevPAR was RMB248 in the
second quarter of 2024, representing a 3.6% decline from RMB257 in
the second quarter of 2023, with a 4.1% decrease in same-hotel ADR
partially offset by a 0.4 percentage-point increase in same-hotel
occupancy rate.
Legacy-DH –
Second Quarter of 2024 Operational Highlights
As of June 30, 2024, Legacy-DH had 136 hotels in
operation, including 87 leased hotels, and 49 manachised and
franchised hotels. In addition, as of the same date, Legacy-DH had
27,552 hotel rooms in operation, including 16,789 rooms under the
lease model, and 10,763 rooms under the manachise and franchise
models. Legacy-DH also had 28 unopened hotels in the pipeline,
including 13 leased hotels and 15 manachised and franchised hotels.
The following discusses Legacy-DH’s RevPAR, ADR and occupancy rate
for its leased as well as manachised and franchised hotels
(excluding hotels temporarily closed) for the periods
indicated.
- The ADR was EUR120 in the second quarter of 2024, compared with
EUR117 in the second quarter of 2023 and EUR104 in the previous
quarter.
- The occupancy rate for all Legacy-DH hotels in operation was
68.3% in the second quarter of 2024, compared with 67.1% in the
second quarter of 2023 and 55.8% in the previous quarter.
- Blended RevPAR was EUR82 in the second quarter of 2024,
compared with EUR78 in the second quarter of 2023 and EUR58 in the
previous quarter.
Jin Hui, CEO of H World commented: “We are
pleased to announce that the Group and Legacy-Huazhu has achieved a
remarkable 10,000-hotel milestone during the second quarter of
2024. This milestone also marked a new start for the Group. We
believe the Chinese market still presents huge opportunities and
growth potentials, and we are ready to scale new heights, moving
from 10,000+ hotels in over 1,000 cities to 20,000+ hotels in over
2,000 cities. In the second quarter of 2024, we continued our fast
high-quality network growth, opening 567 new hotels in China. While
Legacy-Huazhu’s blended RevPAR declined by 2% year-over-year in the
second quarter due mainly to a high ADR base in the same period
last year, our occupancy rate increased by 0.7 percentage-point
year-over-year despite our continued rapid rate of hotel network
expansion. In spite of the near-term volatilities in macro and
consumption, China’s overall travel demand remains robust. As for
Legacy-Huazhu, we will continue focusing on product upgrades,
service excellence, and membership programs to enhance our core
competitive edges and drive a long-term sustainable RevPAR
growth.”
“Regarding our business outside China, our
Legacy-DH recorded a 4.5% year-over-year blended RevPAR increase in
the second quarter of 2024. We are committed to extend our global
footprint, seeking growth opportunities in the Asia-Pacific (APAC)
and the Middle East.”
Second Quarter and Interim of 2024
Unaudited Financial Results
|
(RMB in millions) |
Q2 2023 |
Q1 2024 |
Q2 2024 |
H1 2023 |
H1 2024 |
|
Revenue: |
|
|
|
|
|
|
Leased and owned hotels |
3,592 |
3,099 |
3,681 |
6,466 |
6,780 |
|
Manachised and franchised hotels |
1,856 |
2,063 |
2,334 |
3,410 |
4,397 |
|
Others |
82 |
116 |
133 |
134 |
249 |
|
Total revenue |
5,530 |
5,278 |
6,148 |
10,010 |
11,426 |
|
|
|
|
|
|
|
Revenue in the second quarter
of 2024 was RMB6.1 billion (US$846 million), representing an 11.2%
year-over-year increase and a 16.5% quarter-over-quarter increase.
Revenue from the Legacy-Huazhu segment in the second quarter of
2024 was RMB4.8 billion, representing an 11.1% year-over-year
increase and a 13.7% quarter-over-quarter increase. The 11.1%
year-over-year increase was mainly driven by continued hotel
network expansion. Revenue from the Legacy-DH segment in the second
quarter of 2024 was RMB1.3 billion, representing an 11.6%
year-over-year increase and a 27.8% quarter-over-quarter increase.
The year-over-year increase was attributable to both business
recovery and network expansion, and the quarter-over-quarter
increase was mainly due to seasonality.
Revenue in the first half of 2024 was RMB11.4
billion (US$1.6 billion), representing an increase of 14.1% from
the first half of 2023. Revenue from Legacy-Huazhu in the first
half of 2024 was RMB9.1 billion, representing a 14.3%
year-over-year increase. Revenue from Legacy-DH in the first half
of 2024 was RMB2.4 billion, representing a 13.7% year-over-year
increase.
Revenue from leased and owned
hotels in the second quarter of 2024 was RMB3.7 billion
(US$507 million), representing a 2.5% year-over-year increase and a
18.8% quarter-over-quarter increase. Revenue from leased and owned
hotels from the Legacy-Huazhu segment in the second quarter of 2024
was RMB2.4 billion, representing a 2.9% year-over-year decrease,
due mainly to the net closure of leased and owned hotels in
operation. Revenue from leased hotels from the Legacy-DH segment in
the second quarter of 2024 was RMB1.3 billion, representing a 14.2%
year-over-year increase.
In the first half of 2024, revenue from our
leased and owned hotels was RMB6.8 billion (US$933 million),
representing a 4.9% year-over-year increase. Revenue from our
Legacy-Huazhu’s leased and owned hotels in the first half of 2024
was RMB4.5 billion, representing a 0.5% year-over-year increase.
Revenue from our Legacy-DH’s leased hotels in the first half of
2024 was RMB2.3 billion, representing a 14.8% year-over-year
increase.
Revenue from manachised and franchised
hotels in the second quarter of 2024 was RMB2.3 billion
(US$321million), representing a 25.8% year-over-year increase and a
13.1% quarter-over-quarter increase. Revenue from manachised and
franchised hotels from the Legacy-Huazhu segment in the second
quarter of 2024 was RMB2.3 billion, representing a 26.0%
year-over-year increase. Revenue from manachised and franchised
hotels from the Legacy-DH segment in the second quarter of 2024 was
RMB29 million, representing an 11.5% year-over-year increase.
In the first half of 2024, revenue from
manachised and franchised hotels was RMB4.4 billion (US$605
million), representing a 28.9% year-over-year increase. These
hotels accounted for 38.5% of revenue, compared to 34.1% of revenue
in the first half of 2023. Revenue from our Legacy-Huazhu’s
manachised and franchised hotels in the first half of 2024 was
RMB4.3 billion, representing a 29.1% year-over-year increase.
Revenue from our Legacy-DH’s manachised and franchised hotels in
the first half of 2024 was RMB50 million, representing a 13.6%
year-over-year increase.
Other revenue represents
revenue generated from businesses other than our hotel operations,
which mainly includes revenue from the provision of IT products and
services and Huazhu Mall™ and other revenue from the Legacy-DH
segment, totaling RMB133 million (US$18 million) in the second
quarter of 2024, compared to RMB82 million in the second quarter of
2023 and RMB116 million in the previous quarter.
In the first half of 2024, other revenue was
RMB249 million (US$34 million), compared to RMB134 million in the
first half of 2023.
|
(RMB in millions) |
Q2 2023 |
Q1 2024 |
Q2 2024 |
H1 2023 |
H1 2024 |
|
Operating costs and expenses: |
|
|
|
|
|
|
Hotel operating costs |
(3,482 |
) |
(3,565 |
) |
(3,731 |
) |
(6,732 |
) |
(7,296 |
) |
|
Other operating costs |
(6 |
) |
(9 |
) |
(6 |
) |
(17 |
) |
(15 |
) |
|
Selling and marketing expenses |
(262 |
) |
(260 |
) |
(317 |
) |
(457 |
) |
(577 |
) |
|
General and administrative expenses |
(477 |
) |
(509 |
) |
(602 |
) |
(902 |
) |
(1,111 |
) |
|
Pre-opening expenses |
(12 |
) |
(8 |
) |
(19 |
) |
(21 |
) |
(27 |
) |
|
Total operating costs and expenses |
(4,239 |
) |
(4,351 |
) |
(4,675 |
) |
(8,129 |
) |
(9,026 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating costs in the
second quarter of 2024 were RMB3.7 billion (US$512 million),
compared to RMB3.5 billion in the second quarter of 2023 and RMB3.6
billion in the previous quarter. The year-over-year increase was
mainly due to our hotel network expansion. Hotel operating costs
from the Legacy-Huazhu segment in the second quarter of 2024 were
RMB2.7 billion, which represented 56.7% of the quarter’s revenue,
compared to RMB2.6 billion or 58.9% of revenue in the second
quarter of 2023 and RMB2.6 billion or 61.6% in the previous
quarter. Hotel operating costs from the Legacy-DH segment in the
second quarter of 2024 were RMB995 million, which represented 75.4%
of revenue, compared to RMB923 million or 78.0% of revenue in the
second quarter of 2023, and RMB950 million or 92.0% in the previous
quarter.
In the first half of 2024, hotel operating costs
were RMB7.3 billion (US$1.0 billion), compared to RMB6.7 billion in
the first half of 2023. Hotel operating costs from Legacy-Huazhu in
the first half of 2024 were RMB5.4 billion, which represented 59.0%
of revenue, compared to 62.2% in the first half of 2023. Hotel
operating costs from Legacy-DH in the first half of 2024 were
RMB1.9 billion, which represented 82.7% of revenue, compared to
RMB1.8 billion or 86.5% in the first half of 2023.
Selling and marketing expenses
in the second quarter of 2024 were RMB317 million (US$44 million),
compared to RMB262 million in the second quarter of 2023 and RMB260
million in the previous quarter. Selling and marketing expenses
from the Legacy-Huazhu segment in the second quarter of 2024 were
RMB193 million, which represented 4.0% of this quarter’s revenue,
compared to RMB153 million or 3.5% of revenue in the second quarter
of 2023, and RMB159 million or 3.7% for the previous quarter. The
year-over-year expense increase was mainly due to continued
business expansion. Selling and marketing expenses from the
Legacy-DH segment in the second quarter of 2024 were RMB124
million, which represented 9.4% of revenue, compared to RMB109
million or 9.2% of revenue in the second quarter of 2023, and
RMB101 million or 9.8% for the previous quarter.
In the first half of 2024, selling and marketing
expenses were RMB577 million (US$79 million), compared to RMB457
million in the first half of 2023. Selling and marketing expenses
from Legacy-Huazhu in the first half of 2024 were RMB352 million,
which represented 3.9% of revenue, compared to RMB270 million or
3.4% of revenue in the first half of 2023. Selling and marketing
expenses from Legacy-DH in the first half of 2024 were RMB225
million, which represented 9.6% of revenue, compared to RMB187
million or 9.0% of revenue in the first half of 2023.
General and administrative
expenses in the second quarter of 2024 were RMB602 million
(US$83 million), compared to RMB477 million in the second quarter
of 2023 and RMB509 million in the previous quarter. General and
administrative expenses from the Legacy-Huazhu segment in the
second quarter of 2024 were RMB483 million, which represented 10.0%
of this quarter’s revenue, compared to RMB352 million or 8.1% of
revenue in the second quarter of 2023 and RMB395 million or 9.3% of
revenue in the previous quarter. The year-over-year expense
increase was mainly due to headcount normalization and a rise in
share-based compensation to secure and reward core employees for
our sustainable long-term business growth. General and
administrative expenses from the Legacy-DH segment in the second
quarter of 2024 were RMB119 million, which represented 9.0% of
revenue, compared to RMB125 million or 10.6% of revenue in the
second quarter of 2023 and RMB114 million or 11.0% in the previous
quarter.
In the first half of 2024, general and
administrative expenses were RMB1.1 billion (US$153 million),
compared to RMB902 million in the first half of 2023. General and
administrative expenses from Legacy-Huazhu in the first half of
2024 were RMB878 million, which represented 9.7% of revenue,
compared to RMB664 million or 8.4% of revenue in the first half of
2023. General and administrative expenses from Legacy-DH in the
first half of 2024 were RMB233 million, which represented 9.9% of
revenue, compared to RMB238 million or 11.5% of revenue in the
first half of 2023.
Pre-opening expenses in the
second quarter of 2024 were primarily related to the Legacy-Huazhu
segment and totaled RMB19 million (US$3 million), compared to RMB12
million in the second quarter of 2023 and RMB8 million in the
previous quarter.
Pre-opening expenses in the first half of 2024
were RMB27 million (US$4 million), compared to RMB21 million in the
first half of 2023. Pre-opening expenses from Legacy-Huazhu were
0.3% of revenue in the first half of 2024, the same as the 0.3% of
revenue in the first half of 2023.
Other operating income, net in
the second quarter of 2024 was RMB99 million (US$13 million),
compared to RMB94 million in the second quarter of 2023 and RMB76
million in the previous quarter.
Other operating income, net in the first half of
2024 was RMB175 million (US$24 million), compared to RMB168 million
in the first half of 2023.
Income from operations in the
second quarter of 2024 was RMB1.6 billion (US$216 million),
compared to income from operations of RMB1.4 billion in the second
quarter of 2023 and income from operations of RMB1.0 billion in the
previous quarter. Income from operations from the Legacy-Huazhu
segment in the second quarter of 2024 was RMB1.5 billion, compared
to income from operations of RMB1.3 billion in the second quarter
of 2023 and income from operations of RMB1.1 billion in the
previous quarter. The Legacy-DH segment had income from operations
of RMB73 million in the second quarter of 2024, compared to income
from operations of RMB35 million in the second quarter of 2023 and
a loss from operations of RMB128 million in the previous
quarter.
Income from operations in the first half of 2024
was RMB2.6 billion (US$354 million), compared to income from
operation of RMB2.0 billion in the first half of 2023. Income from
operations from Legacy-Huazhu in the first half of 2024 was RMB2.6
billion, compared to income from operations of RMB2.2 billion in
2023. Loss from operations from Legacy-DH in the first half of 2024
was RMB55 million, compared to a loss of RMB123 million in the
first half of 2023.
Operating margin, defined as income from
operations as a percentage of revenue, was 25.6% in the second
quarter of 2024, compared with 25.0% in the second quarter of 2023
and 19.0% for the previous quarter. The margin improvement was
mainly due to higher revenue contribution from Legacy-Huazhu’s
manachised and franchised business as well as margin improvement
from the Legacy-DH business. This was in line with our asset-light
expansion strategy. Operating margin from the Legacy-Huazhu segment
in the second quarter of 2024 was 31.0%, compared with 31.1% in the
second quarter of 2023 and 26.6% in the previous quarter. Operating
margin from the Legacy-DH segment in the second quarter of 2024 was
5.5%, compared with 3.0% in the second quarter of 2023 and a
negative 12.4% in the previous quarter.
Operating margin in the first half of 2024 was
22.5%, compared with 20.5% in the first half of 2023. Operating
margin from Legacy-Huazhu in the first half of 2024 was 29.0%,
compared with 27.4% in the first half of 2023. Operating margin
from Legacy-DH in the first half of 2024 was a negative 2.3%,
compared with a negative 5.9% in the first half of 2023.
Other income, net in the second
quarter of 2024 was RMB24 million (US$3 million), compared to RMB32
million in the second quarter of 2023 and RMB40 million in the
previous quarter.
Other income, net in the first half of 2024 was
RMB64 million (US$9 million), compared to RMB546 million in the
first half of 2023, which was mainly due to gains from selling
AccorHotels shares.
Gains (losses) from fair value changes
of equity securities in the second quarter of 2024 were
losses of RMB51 million (US$7 million), compared to losses of RMB19
million in the second quarter of 2023, and gains of RMB38 million
in the previous quarter. Gains (losses) from fair value changes of
equity securities mainly represent the unrealized gains (losses)
from our investments in equity securities with readily determinable
fair values.
In the first half of 2024, losses from fair
value changes of equity securities were RMB13 million (US$2
million), compared to losses of RMB6 million in the first half of
2023.
Income tax expense in the
second quarter of 2024 was RMB423 million (US$58 million), compared
to RMB308 million in the second quarter of 2023 and RMB279 million
in the previous quarter.
In the first half of 2024, income tax expense
was RMB702 million (US$97 million), compared to RMB502 million in
the first half of 2023.
Net income attributable to H World Group
Limited in the second quarter of 2024 was RMB1.1 billion
(US$147 million), compared with RMB1.0 billion in the second
quarter of 2023 and RMB659 million in the previous quarter. Net
income attributable to H World Group Limited from the Legacy-Huazhu
segment was RMB1.0 billion in the second quarter of 2024, compared
with RMB993 million in the second quarter of 2023 and RMB833
million in the previous quarter. Net income attributable to H World
Group Limited from the Legacy-DH segment was RMB34 million in the
second quarter of 2024, compared with RMB22 million in the second
quarter of 2023 and a net loss of RMB174 million in the previous
quarter.
Net income attributable to H World Group Limited
in the first half of 2024 was RMB1.7 billion (US$238 million),
compared with RMB2.0 billion in the first half of 2023. Net income
attributable to H World Group Limited from Legacy-Huazhu in the
first half of 2024 was RMB1.9 billion, compared to RMB2.1 billion
in the first half of 2023. Net loss attributable to H World Group
Limited from Legacy-DH in the first half of 2024 was RMB140
million, compared to a net loss of RMB143 million in the first half
of 2023.
EBITDA (non-GAAP) in the second
quarter of 2024 was RMB1.9 billion (US$255 million), compared with
RMB1.7 billion in the second quarter of 2023 and RMB1.3 billion in
the previous quarter.
EBITDA (non-GAAP) in the first half of 2024 was
RMB3.2 billion (US$436 million), compared with RMB3.4 billion in
the first half of 2023.
Adjusted EBITDA (non-GAAP),
which excluded share-based compensation expenses, gain (loss) from
fair value changes of equity securities, net foreign exchange gain
(loss), and gain (loss) on disposal of investments from EBITDA
(non-GAAP), was RMB2.0 billion (US$280 million) in the second
quarter of 2024, compared with RMB1.8 billion in the second quarter
of 2023 and RMB1.4 billion in the previous quarter. Adjusted EBITDA
from the Legacy-Huazhu segment, which is a segment measure, was
RMB1.9 billion in the second quarter of 2024, compared with RMB1.7
billion in the second quarter of 2023 and RMB1.5 billion in the
previous quarter. Adjusted EBITDA from the Legacy-DH segment, which
is a segment measure, was RMB131 million in the second quarter of
2024, compared with RMB97 million in the second quarter of 2023 and
a loss of RMB66 million in the previous quarter.
Adjusted EBITDA (non-GAAP) in the first half of
2024 was RMB3.5 billion (US$476 million), compared with RMB2.8
billion in the first half of 2023. Adjusted EBITDA from
Legacy-Huazhu, which is a segment measure, was RMB3.4 billion in
the first half of 2024, compared with RMB2.8 billion in the first
half of 2023. Adjusted EBITDA from Legacy-DH, which is a segment
measure, was RMB65 million in the first half of 2024.
To better reflect the profitability of our core
business, we have redefined the non-GAAP measure of adjusted
EBITDA, and therefore the above adjusted EBITDA for the second
quarter of 2023 and the first half of 2023 have been restated.
Cash flow. Operating cash
inflow in the second quarter of 2024 was RMB2.2 billion (US$307
million). Investing cash inflow in the second quarter of 2024 was
RMB346 million (US$47 million). Financing cash outflow in the
second quarter of 2024 was RMB1.1 billion (US$152 million).
Operating cash inflow in the first half of 2024
was RMB3.1 billion (US$430 million), compared to RMB4.1 billion in
the first half of 2023. Investing cash inflow in the first half of
2024 was RMB694 million (US$95 million), compared to RMB849 million
in the first half of 2023. Financing cash outflow in the first half
of 2024 was RMB3.4 billion (US$463 million), compared to RMB2.4
billion in the first half of 2023.
Cash, cash equivalents and restricted
cash. As of June 30, 2024, the Company had a total balance
of cash and cash equivalents of RMB7.8 billion (US$1.1 billion) and
restricted cash of RMB364 million (US$50 million).
Debt financing. As of June 30,
2024, the Company had a total debt and net cash balance of RMB5.5
billion (US$762 million) and RMB2.6 billion (US$361 million),
respectively; the unutilized credit facility available to the
Company was RMB3.1 billion.
Shareholder return planOn July
23 2024, the Company’s board of directors (the “Board”) has
announced a three-year shareholder return plan with an aggregate
amount of distribution that may be made to the Company’s
shareholders of up to US$2 billion, effective from July 23, 2024.
Under the shareholder return plan, the Board has the sole
discretion to: (i) declare and distribute ordinary dividends
semi-annually, the aggregate amount of which for each financial
year shall be no less than 60% of the Company’s net income in such
financial year, and (ii) declare and distribute, from time to time,
special dividends and/or make repurchases of the American
Depositary Shares of the Company (“ADS(s)”) pursuant to the share
repurchase program, considering the financial position of the
Company.
Semi-annual dividendThe Board
has declared a cash dividend for the first half of 2024 in the
aggregate amount of approximately US$200 million, of US$0.063 per
ordinary share, or US$0.63 per ADS.
Share repurchase programOn July
23 2024, the Board approved a five-year share repurchase program of
ADSs with an aggregate amount of up to US$1 billion, effective from
August 21, 2024. This share repurchase program replaces the
Company’s share repurchase program previously approved and adopted
on August 21, 2019 with an aggregate amount of up to US$750
million.
Guidance For the third quarter
of 2024, H World expects its revenue growth to be in the range of
2%-5% compared to the third quarter of 2023, or in the range of
1%-4% excluding DH.
We revise up our hotel opening guidance for the
full year of 2024, expecting to open over 2,200 hotels, and up from
our previous guidance of around 1,800 hotels.
The above forecast reflects the Company’s
current and preliminary view, which is subject to change.
Conference CallH World’s
management will host a conference call at 9 p.m. U.S. Eastern time
on Tuesday, August 20, 2024 (9 a.m. Hong Kong time on Wednesday,
August 21, 2024) following the announcement.
To join by phone, all participants must
pre-register this conference call using the Participant
Registration link of
https://register.vevent.com/register/BI29b37e1152634b2aaaec173dd6f6fb8a.
Upon registration, each participant will receive details for the
conference call, which include dial-in numbers, conference call
passcode and a unique access PIN.
A live webcast of the call can be accessed at
https://edge.media-server.com/mmc/p/8no94rwr or the Company’s
website at
https://ir.hworld.com/news-and-events/events-calendar.
A replay of the conference call will be
available for twelve months from the date of the conference at the
Company’s website,
https://ir.hworld.com/news-and-events/events-calendar.
Use of Non-GAAP Financial
MeasuresTo supplement the Company’s unaudited consolidated
financial results presented in accordance with U.S.
Generally-Accepted Accounting Principles (“GAAP”),
the Company uses the following non-GAAP measures defined as
non-GAAP financial measures by the U.S. Securities and Exchange
Commission (“SEC”): adjusted net income (loss)
attributable to H World Group Limited excluding share-based
compensation expenses, gain (loss) from fair value changes of
equity securities, foreign exchange gain (loss), net and gain
(loss) on disposal of investments; adjusted basic and diluted
earnings (losses) per share/ADS excluding share-based compensation
expenses, gain (loss) from fair value changes of equity securities,
foreign exchange gain (loss), net and gain (loss) on disposal of
investments; EBITDA; adjusted EBITDA excluding share-based
compensation expenses, gain (loss) from fair value changes of
equity securities, foreign exchange gain (loss), net and gain
(loss) on disposal of investments. The presentation of these
non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with U.S. GAAP. For more information on
these non-GAAP financial measures, please see the table captioned
“Unaudited Reconciliations of GAAP and non-GAAP Results” set forth
at the end of this release. The Company believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding Company performance by excluding share-based
compensation expenses, gain (loss) from fair value changes of
equity securities, foreign exchange gain (loss), net and gain
(loss) on disposal of investments that may not be indicative of
Company operating performance. The Company believes that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing Company performance and when
planning and forecasting future periods. These non-GAAP financial
measures also facilitate management’s internal comparisons to the
Company’s historical performance. The Company believes these
non-GAAP financial measures are also useful to investors in
allowing for greater transparency with respect to supplemental
information used regularly by Company management in financial and
operational decision-making. A limitation of using non-GAAP
financial measures excluding share-based compensation expenses,
gain (loss) from fair value changes of equity securities, foreign
exchange gain (loss), net and gain (loss) on disposal of
investments is that share-based compensation expenses, gain (loss)
from fair value changes of equity securities, foreign exchange gain
(loss), net and gain (loss) on disposal of investments have been
and may continue to be significant and recurring in the Company’s
business. Management compensates for these limitations by providing
specific information regarding the GAAP amounts excluded from each
non-GAAP measure. The accompanying tables have more details on the
reconciliations between GAAP financial measures that are most
directly comparable to non-GAAP financial measures.
The Company believes that EBITDA is a useful
financial metric to assess the operating and financial performance
before the impact of investing and financing transactions and
income taxes, given the significant investments that the Company
has made in leasehold improvements, depreciation and amortization
expense that comprise a significant portion of the Company’s cost
structure. In addition, the Company believes that EBITDA is widely
used by other companies in the lodging industry and may be used by
investors as a measure of financial performance. The Company
believes that EBITDA information provides investors with a useful
tool for comparability between periods because it excludes
depreciation and amortization expense attributable to capital
expenditures. The Company also uses adjusted EBITDA to assess
operating results of its hotels in operation. The Company believes
that the exclusion of share-based compensation expenses, gain
(loss) from fair value changes of equity securities, foreign
exchange gain (loss), net and gain (loss) on disposal of
investments helps facilitate year-over-year comparisons of the
results of operations as the share-based compensation expenses,
gain (loss) from fair value changes of equity securities, foreign
exchange gain (loss), net and gain (loss) on disposal of
investments may not be indicative of Company operating
performance.
Therefore, the Company believes adjusted EBITDA
more closely reflects the financial performance capability of our
hotels. The presentation of EBITDA and adjusted EBITDA should not
be construed as an indication that the Company’s future results
will be unaffected by other charges and gains considered to be
outside the ordinary course of business.
The use of EBITDA and adjusted EBITDA has
certain limitations. Depreciation and amortization expense for
various long-term assets (including land use rights), income tax,
interest expense and interest income have been and will be incurred
and are not reflected in the presentation of EBITDA. Share-based
compensation expenses, gain (loss) from fair value changes of
equity securities, foreign exchange gain (loss), net and gain
(loss) on disposal of investments have been and will be incurred
and are not reflected in the presentation of adjusted EBITDA. Each
of these items should also be considered in the overall evaluation
of the results. The Company compensates for these limitations by
providing the relevant disclosure of depreciation and amortization,
interest income, interest expense, income tax expense, share-based
compensation expenses, gain (loss) from fair value changes of
equity securities, foreign exchange gain (loss), net and gain
(loss) on disposal of investments all in the reconciliations to the
U.S. GAAP financial measures and in the consolidated financial
statements, all of which should be considered when evaluating the
performance of the Company.
The terms EBITDA and adjusted EBITDA are not
defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is
a measure of net income, operating income, operating performance or
liquidity presented in accordance with U.S. GAAP. When assessing
the operating and financial performance, investors should not
consider these data in isolation or as a substitute for the
Company’s net income, operating income or any other operating
performance measure that is calculated in accordance with U.S.
GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not
be comparable to EBITDA or adjusted EBITDA or similarly titled
measures utilized by other companies since such other companies may
not calculate EBITDA or adjusted EBITDA in the same manner as the
Company does.
Reconciliations of the Company’s non-GAAP
financial measures, including EBITDA and adjusted EBITDA, to the
consolidated statement of operations information are included at
the end of this press release.
About H World Group
LimitedOriginated in China, H World Group Limited is a key
player in the global hotel industry. As of June 30, 2024, H World
operated 10,286 hotels with 1,001,865 rooms in operation in 18
countries. H World’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, Ni Hao
Hotel, CitiGO Hotel, Steigenberger Hotels & Resorts, MAXX, Jaz
in the City, IntercityHotel, Zleep Hotels, Steigenberger Icon and
Song Hotels. In addition, H World 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.
H World’s business includes leased and owned,
manachised and franchised models. Under the lease and ownership
model, H World directly operates hotels typically located on leased
or owned properties. Under the manachise model, H World manages
manachised hotels through the on-site hotel managers that H World
appoints, and H World collects fees from franchisees. Under the
franchise model, H World provides training, reservations and
support services to the franchised hotels, and collects fees from
franchisees but does not appoint on-site hotel managers. H World
applies a consistent standard and platform across all of its
hotels. As of June 30, 2024, H World operated 10 percent of its
hotel rooms under the lease and ownership model, and 90 percent
under the manachise and franchise model.
For more information, please visit H World’s
website: https://ir.hworld.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.
H World 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.
—Financial Tables and Operational Data—
|
H World Group Limited |
|
Unaudited Condensed Consolidated Balance
Sheets |
|
|
December 31, 2023 |
|
June 30, 2024 |
|
|
RMB |
RMB |
US$3 |
|
|
(in millions) |
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
6,946 |
|
|
7,801 |
|
|
1,073 |
|
|
Restricted cash |
764 |
|
|
364 |
|
|
50 |
|
|
Short-term investments |
2,189 |
|
|
1,112 |
|
|
153 |
|
|
Accounts receivable, net |
755 |
|
|
840 |
|
|
116 |
|
|
Loan receivables, net |
184 |
|
|
163 |
|
|
23 |
|
|
Amounts due from related parties, current |
210 |
|
|
258 |
|
|
36 |
|
|
Inventories |
59 |
|
|
61 |
|
|
8 |
|
|
Other current assets, net |
949 |
|
|
868 |
|
|
119 |
|
|
Total current assets |
12,056 |
|
|
11,467 |
|
|
1,578 |
|
|
|
|
|
|
|
Property and equipment, net |
6,097 |
|
|
5,882 |
|
|
809 |
|
|
Intangible assets, net |
5,280 |
|
|
5,174 |
|
|
712 |
|
|
Operating lease right-of-use assets |
25,658 |
|
|
25,814 |
|
|
3,552 |
|
|
Finance lease right-of-use assets |
2,171 |
|
|
2,053 |
|
|
283 |
|
|
Land use rights, net |
181 |
|
|
177 |
|
|
24 |
|
|
Long-term investments |
2,564 |
|
|
2,499 |
|
|
344 |
|
|
Goodwill |
5,318 |
|
|
5,261 |
|
|
724 |
|
|
Amounts due from related parties, non-current |
25 |
|
|
21 |
|
|
3 |
|
|
Loan receivables, net |
163 |
|
|
158 |
|
|
22 |
|
|
Other assets, net |
663 |
|
|
672 |
|
|
93 |
|
|
Deferred tax assets |
1,043 |
|
|
1,035 |
|
|
142 |
|
|
Assets held for sale |
2,313 |
|
|
2,239 |
|
|
308 |
|
|
Total assets |
63,532 |
|
|
62,452 |
|
|
8,594 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term debt |
4,049 |
|
|
315 |
|
|
44 |
|
|
Accounts payable |
1,019 |
|
|
865 |
|
|
119 |
|
|
Amounts due to related parties |
77 |
|
|
119 |
|
|
16 |
|
|
Salary and welfare payables |
1,067 |
|
|
843 |
|
|
116 |
|
|
Deferred revenue |
1,637 |
|
|
1,760 |
|
|
242 |
|
|
Operating lease liabilities, current |
3,609 |
|
|
3,531 |
|
|
486 |
|
|
Finance lease liabilities, current |
45 |
|
|
45 |
|
|
6 |
|
|
Accrued expenses and other current liabilities |
3,261 |
|
|
3,599 |
|
|
495 |
|
|
Dividends payable |
2,085 |
|
|
- |
|
|
- |
|
|
Income tax payable |
562 |
|
|
782 |
|
|
107 |
|
|
Total current liabilities |
17,411 |
|
|
11,859 |
|
|
1,631 |
|
|
|
|
|
|
|
Long-term debt |
1,265 |
|
|
5,220 |
|
|
718 |
|
|
Operating lease liabilities, non-current |
24,215 |
|
|
24,334 |
|
|
3,348 |
|
|
Finance lease liabilities, non-current |
2,697 |
|
|
2,587 |
|
|
356 |
|
|
Deferred revenue |
1,072 |
|
|
1,182 |
|
|
163 |
|
|
Other long-term liabilities |
1,118 |
|
|
1,215 |
|
|
167 |
|
|
Deferred tax liabilities |
845 |
|
|
818 |
|
|
113 |
|
|
Retirement benefit obligations |
124 |
|
|
120 |
|
|
17 |
|
|
Liabilities held for sale |
2,536 |
|
|
2,400 |
|
|
330 |
|
|
Total liabilities |
51,283 |
|
|
49,735 |
|
|
6,843 |
|
|
|
|
|
|
|
Equity: |
|
|
|
|
Ordinary shares |
0 |
|
|
0 |
|
|
0 |
|
|
Treasury shares |
(906 |
) |
|
(1,569 |
) |
|
(216 |
) |
|
Additional paid-in capital |
11,861 |
|
|
11,300 |
|
|
1,555 |
|
|
Retained earnings |
794 |
|
|
2,520 |
|
|
347 |
|
|
Accumulated other comprehensive income |
386 |
|
|
331 |
|
|
46 |
|
|
Total H World Group Limited shareholders' equity |
12,135 |
|
|
12,582 |
|
|
1,732 |
|
|
Noncontrolling interest |
114 |
|
|
135 |
|
|
19 |
|
|
Total equity |
12,249 |
|
|
12,717 |
|
|
1,751 |
|
|
Total liabilities and equity |
63,532 |
|
|
62,452 |
|
|
8,594 |
|
|
H World Group Limited |
|
Unaudited Condensed Consolidated Statements of
Comprehensive Income |
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30,2023 |
|
March 31,2024 |
|
June 30, 2024 |
|
June 30,2023 |
|
June 30, 2024 |
|
|
RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
|
(in millions, except shares, per share and per ADS
data) |
|
Revenue: |
|
|
|
|
|
|
|
|
Leased and owned hotels |
3,592 |
|
|
3,099 |
|
|
3,681 |
|
|
507 |
|
|
6,466 |
|
|
6,780 |
|
|
933 |
|
|
Manachised and franchised hotels |
1,856 |
|
|
2,063 |
|
|
2,334 |
|
|
321 |
|
|
3,410 |
|
|
4,397 |
|
|
605 |
|
|
Others |
82 |
|
|
116 |
|
|
133 |
|
|
18 |
|
|
134 |
|
|
249 |
|
|
34 |
|
|
Total revenue |
5,530 |
|
|
5,278 |
|
|
6,148 |
|
|
846 |
|
|
10,010 |
|
|
11,426 |
|
|
1,572 |
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
Hotel operating costs: |
|
|
|
|
|
|
|
|
Rents |
(1,088 |
) |
|
(1,086 |
) |
|
(1,091 |
) |
|
(150 |
) |
|
(2,139 |
) |
|
(2,177 |
) |
|
(300 |
) |
|
Utilities |
(137 |
) |
|
(192 |
) |
|
(149 |
) |
|
(20 |
) |
|
(341 |
) |
|
(341 |
) |
|
(47 |
) |
|
Personnel costs |
(1,131 |
) |
|
(1,225 |
) |
|
(1,337 |
) |
|
(184 |
) |
|
(2,167 |
) |
|
(2,562 |
) |
|
(353 |
) |
|
Depreciation and amortization |
(332 |
) |
|
(319 |
) |
|
(315 |
) |
|
(43 |
) |
|
(678 |
) |
|
(634 |
) |
|
(87 |
) |
|
Consumables, food and beverage |
(335 |
) |
|
(293 |
) |
|
(327 |
) |
|
(45 |
) |
|
(613 |
) |
|
(620 |
) |
|
(85 |
) |
|
Others |
(459 |
) |
|
(450 |
) |
|
(512 |
) |
|
(70 |
) |
|
(794 |
) |
|
(962 |
) |
|
(132 |
) |
|
Total hotel operating costs |
(3,482 |
) |
|
(3,565 |
) |
|
(3,731 |
) |
|
(512 |
) |
|
(6,732 |
) |
|
(7,296 |
) |
|
(1,004 |
) |
|
Other operating costs |
(6 |
) |
|
(9 |
) |
|
(6 |
) |
|
(1 |
) |
|
(17 |
) |
|
(15 |
) |
|
(2 |
) |
|
Selling and marketing expenses |
(262 |
) |
|
(260 |
) |
|
(317 |
) |
|
(44 |
) |
|
(457 |
) |
|
(577 |
) |
|
(79 |
) |
|
General and administrative expenses |
(477 |
) |
|
(509 |
) |
|
(602 |
) |
|
(83 |
) |
|
(902 |
) |
|
(1,111 |
) |
|
(153 |
) |
|
Pre-opening expenses |
(12 |
) |
|
(8 |
) |
|
(19 |
) |
|
(3 |
) |
|
(21 |
) |
|
(27 |
) |
|
(4 |
) |
|
Total operating costs and expenses |
(4,239 |
) |
|
(4,351 |
) |
|
(4,675 |
) |
|
(643 |
) |
|
(8,129 |
) |
|
(9,026 |
) |
|
(1,242 |
) |
|
Other operating income (expense), net |
94 |
|
|
76 |
|
|
99 |
|
|
13 |
|
|
168 |
|
|
175 |
|
|
24 |
|
|
Income (loss) from operations |
1,385 |
|
|
1,003 |
|
|
1,572 |
|
|
216 |
|
|
2,049 |
|
|
2,575 |
|
|
354 |
|
|
Interest income |
57 |
|
|
51 |
|
|
56 |
|
|
8 |
|
|
101 |
|
|
107 |
|
|
15 |
|
|
Interest expense |
(94 |
) |
|
(83 |
) |
|
(84 |
) |
|
(12 |
) |
|
(224 |
) |
|
(167 |
) |
|
(23 |
) |
|
Other income (expense), net |
32 |
|
|
40 |
|
|
24 |
|
|
3 |
|
|
546 |
|
|
64 |
|
|
9 |
|
|
Gains (losses) from fair value changes of equity securities |
(19 |
) |
|
38 |
|
|
(51 |
) |
|
(7 |
) |
|
(6 |
) |
|
(13 |
) |
|
(2 |
) |
|
Foreign exchange gains (losses) |
(5 |
) |
|
(92 |
) |
|
(24 |
) |
|
(3 |
) |
|
99 |
|
|
(116 |
) |
|
(15 |
) |
|
Income (loss) before income taxes |
1,356 |
|
|
957 |
|
|
1,493 |
|
|
205 |
|
|
2,565 |
|
|
2,450 |
|
|
338 |
|
|
Income tax (expense) benefit |
(308 |
) |
|
(279 |
) |
|
(423 |
) |
|
(58 |
) |
|
(502 |
) |
|
(702 |
) |
|
(97 |
) |
|
Income (Loss) from equity method investments |
(12 |
) |
|
(11 |
) |
|
12 |
|
|
2 |
|
|
(27 |
) |
|
1 |
|
|
0 |
|
|
Net income (loss) |
1,036 |
|
|
667 |
|
|
1,082 |
|
|
149 |
|
|
2,036 |
|
|
1,749 |
|
|
241 |
|
|
Net (income) loss attributable to noncontrolling interest |
(21 |
) |
|
(8 |
) |
|
(15 |
) |
|
(2 |
) |
|
(31 |
) |
|
(23 |
) |
|
(3 |
) |
|
Net income (loss) attributable to H World Group Limited |
1,015 |
|
|
659 |
|
|
1,067 |
|
|
147 |
|
|
2,005 |
|
|
1,726 |
|
|
238 |
|
|
|
|
|
|
|
|
|
|
|
Gains(losses) from fair value changes of debt securities, net of
tax |
20 |
|
|
- |
|
|
(25 |
) |
|
(3 |
) |
|
20 |
|
|
(25 |
) |
|
(3 |
) |
|
Foreign currency translation adjustments, net of tax |
183 |
|
|
(31 |
) |
|
1 |
|
|
0 |
|
|
222 |
|
|
(30 |
) |
|
(4 |
) |
|
Comprehensive income (loss) |
1,239 |
|
|
636 |
|
|
1,058 |
|
|
146 |
|
|
2,278 |
|
|
1,694 |
|
|
234 |
|
|
Comprehensive (income) loss attributable to noncontrolling
interest |
(21 |
) |
|
(8 |
) |
|
(15 |
) |
|
(2 |
) |
|
(31 |
) |
|
(23 |
) |
|
(3 |
) |
|
Comprehensive income (loss) attributable to H World Group
Limited |
1,218 |
|
|
628 |
|
|
1,043 |
|
|
144 |
|
|
2,247 |
|
|
1,671 |
|
|
231 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (Losses) per share: |
|
|
|
|
|
|
|
|
Basic |
0.32 |
|
|
0.21 |
|
|
0.34 |
|
|
0.05 |
|
|
0.63 |
|
|
0.55 |
|
|
0.08 |
|
|
Diluted |
0.31 |
|
|
0.21 |
|
|
0.33 |
|
|
0.05 |
|
|
0.62 |
|
|
0.54 |
|
|
0.07 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (Losses) per ADS: |
|
|
|
|
|
|
|
|
Basic |
3.18 |
|
|
2.10 |
|
|
3.40 |
|
|
0.47 |
|
|
6.30 |
|
|
5.50 |
|
|
0.76 |
|
|
Diluted |
3.11 |
|
|
2.08 |
|
|
3.32 |
|
|
0.46 |
|
|
6.16 |
|
|
5.41 |
|
|
0.74 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation: |
|
|
|
|
|
|
Basic |
3,187,331,990 |
|
|
3,139,466,152 |
|
|
3,137,722,145 |
|
|
3,137,722,145 |
|
|
3,180,817,047 |
|
|
3,138,594,148 |
|
|
3,138,594,148 |
|
|
Diluted |
3,354,717,904 |
|
|
3,172,770,493 |
|
|
3,303,934,814 |
|
|
3,303,934,814 |
|
|
3,349,256,828 |
|
|
3,300,316,153 |
|
|
3,300,316,153 |
|
|
H World Group Limited |
|
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30,2023 |
|
March 31,2024 |
|
June 30, 2024 |
|
June 30,2023 |
|
June 30, 2024 |
|
|
RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
|
(in millions) |
|
Operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
1,036 |
|
|
667 |
|
|
1,082 |
|
|
149 |
|
|
2,036 |
|
|
1,749 |
|
|
241 |
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
34 |
|
|
58 |
|
|
112 |
|
|
15 |
|
|
61 |
|
|
170 |
|
|
23 |
|
|
Depreciation and amortization,and other |
359 |
|
|
345 |
|
|
337 |
|
|
46 |
|
|
744 |
|
|
682 |
|
|
94 |
|
|
Impairment loss |
80 |
|
|
- |
|
|
36 |
|
|
5 |
|
|
80 |
|
|
36 |
|
|
5 |
|
|
Loss (Income) from equity method investments, net of dividends |
68 |
|
|
11 |
|
|
30 |
|
|
4 |
|
|
83 |
|
|
41 |
|
|
6 |
|
|
Investment (income) loss and foreign exchange (gain) loss |
(96 |
) |
|
29 |
|
|
41 |
|
|
6 |
|
|
(640 |
) |
|
70 |
|
|
10 |
|
|
Changes in operating assets and liabilities |
712 |
|
|
(230 |
) |
|
750 |
|
|
103 |
|
|
1,732 |
|
|
520 |
|
|
71 |
|
|
Other |
45 |
|
|
6 |
|
|
(153 |
) |
|
(21 |
) |
|
(14 |
) |
|
(147 |
) |
|
(20 |
) |
|
Net cash provided by (used in) operating activities |
2,238 |
|
|
886 |
|
|
2,235 |
|
|
307 |
|
|
4,082 |
|
|
3,121 |
|
|
430 |
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
(171 |
) |
|
(281 |
) |
|
(203 |
) |
|
(28 |
) |
|
(393 |
) |
|
(484 |
) |
|
(67 |
) |
|
Purchase of investments |
(961 |
) |
|
(254 |
) |
|
(632 |
) |
|
(87 |
) |
|
(962 |
) |
|
(886 |
) |
|
(122 |
) |
|
Proceeds from maturity/sale and return of investments |
2 |
|
|
842 |
|
|
1,139 |
|
|
157 |
|
|
2,202 |
|
|
1,981 |
|
|
272 |
|
|
Loan advances |
(41 |
) |
|
(52 |
) |
|
(12 |
) |
|
(2 |
) |
|
(75 |
) |
|
(64 |
) |
|
(9 |
) |
|
Loan collections |
38 |
|
|
38 |
|
|
53 |
|
|
7 |
|
|
72 |
|
|
91 |
|
|
13 |
|
|
Other |
1 |
|
|
55 |
|
|
1 |
|
|
0 |
|
|
5 |
|
|
56 |
|
|
8 |
|
|
Net cash provided by (used in) investing activities |
(1,132 |
) |
|
348 |
|
|
346 |
|
|
47 |
|
|
849 |
|
|
694 |
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Net proceeds from issuance of ordinary shares |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,973 |
|
|
- |
|
|
- |
|
|
Payment of share repurchase |
- |
|
|
(544 |
) |
|
(132 |
) |
|
(18 |
) |
|
- |
|
|
(676 |
) |
|
(93 |
) |
|
Proceeds from debt |
300 |
|
|
536 |
|
|
53 |
|
|
7 |
|
|
728 |
|
|
589 |
|
|
81 |
|
|
Repayment of debt |
(4,103 |
) |
|
(137 |
) |
|
(292 |
) |
|
(40 |
) |
|
(4,992 |
) |
|
(429 |
) |
|
(59 |
) |
|
Dividend paid |
- |
|
|
(2,091 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(2,091 |
) |
|
(288 |
) |
|
Purchase of prepaid put option |
- |
|
|
- |
|
|
(710 |
) |
|
(98 |
) |
|
- |
|
|
(710 |
) |
|
(98 |
) |
|
Other |
(21 |
) |
|
(22 |
) |
|
(24 |
) |
|
(3 |
) |
|
(71 |
) |
|
(46 |
) |
|
(6 |
) |
|
Net cash provided by (used in) financing activities |
(3,824 |
) |
|
(2,258 |
) |
|
(1,105 |
) |
|
(152 |
) |
|
(2,362 |
) |
|
(3,363 |
) |
|
(463 |
) |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
202 |
|
|
(17 |
) |
|
10 |
|
|
2 |
|
|
181 |
|
|
(7 |
) |
|
(1 |
) |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
(2,516 |
) |
|
(1,041 |
) |
|
1,486 |
|
|
204 |
|
|
2,750 |
|
|
445 |
|
|
61 |
|
|
Less: net increase (decrease) in cash and cash equivalents
classified within assets held for sale |
- |
|
|
5 |
|
|
(15 |
) |
|
(2 |
) |
|
- |
|
|
(10 |
) |
|
(1 |
) |
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
10,352 |
|
|
7,710 |
|
|
6,664 |
|
|
917 |
|
|
5,086 |
|
|
7,710 |
|
|
1,061 |
|
|
Cash, cash equivalents and restricted cash at the end of the
period |
7,836 |
|
|
6,664 |
|
|
8,165 |
|
|
1,123 |
|
|
7,836 |
|
|
8,165 |
|
|
1,123 |
|
|
H World Group Limited |
|
Unaudited Reconciliation of GAAP and Non-GAAP
Results |
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30,2023 |
|
March 31,2024 |
|
June 30, 2024 |
|
June 30,2023 |
|
June 30, 2024 |
|
|
RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
|
(in millions, except shares, per share and per ADS
data) |
|
Net income (loss) attributable to H World Group Limited (GAAP) |
1,015 |
|
|
659 |
|
|
1,067 |
|
|
147 |
|
|
2,005 |
|
|
1,726 |
|
|
238 |
|
|
Share-based compensation expenses |
34 |
|
|
58 |
|
|
112 |
|
|
15 |
|
|
61 |
|
|
170 |
|
|
23 |
|
|
(Gain) loss from fair value changes of equity securities |
19 |
|
|
(38 |
) |
|
51 |
|
|
7 |
|
|
6 |
|
|
13 |
|
|
2 |
|
|
Foreign exchange (gain) loss, net |
5 |
|
|
92 |
|
|
24 |
|
|
3 |
|
|
(99 |
) |
|
116 |
|
|
15 |
|
|
(Gain) loss on disposal of investments |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(516 |
) |
|
- |
|
|
- |
|
|
Adjusted net income (loss) attributable to H World Group Limited
(non-GAAP) |
1,073 |
|
|
771 |
|
|
1,254 |
|
|
172 |
|
|
1,457 |
|
|
2,025 |
|
|
278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings (losses) per share (non-GAAP) |
|
|
|
|
|
|
Basic |
0.34 |
|
|
0.25 |
|
|
0.40 |
|
|
0.05 |
|
|
0.46 |
|
|
0.65 |
|
|
0.09 |
|
|
Diluted |
0.33 |
|
|
0.24 |
|
|
0.39 |
|
|
0.05 |
|
|
0.45 |
|
|
0.63 |
|
|
0.09 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings (losses) per ADS (non-GAAP) |
|
Basic |
3.37 |
|
|
2.46 |
|
|
3.99 |
|
|
0.55 |
|
|
4.58 |
|
|
6.45 |
|
|
0.89 |
|
|
Diluted |
3.29 |
|
|
2.43 |
|
|
3.88 |
|
|
0.53 |
|
|
4.51 |
|
|
6.31 |
|
|
0.87 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation |
|
|
|
|
|
|
Basic |
3,187,331,990 |
|
|
3,139,466,152 |
|
|
3,137,722,145 |
|
|
3,137,722,145 |
|
|
3,180,817,047 |
|
|
3,138,594,148 |
|
|
3,138,594,148 |
|
|
Diluted |
3,354,717,904 |
|
|
3,172,770,493 |
|
|
3,303,934,814 |
|
|
3,303,934,814 |
|
|
3,349,256,828 |
|
|
3,300,316,153 |
|
|
3,300,316,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30,2023 |
|
March 31,2024 |
|
June 30, 2024 |
|
June 30,2023 |
|
June 30, 2024 |
|
|
RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
|
(in millions, except per share and per ADS
data) |
|
Net income (loss) attributable to H World Group Limited
(GAAP) |
1,015 |
|
|
659 |
|
|
1,067 |
|
|
147 |
|
|
2,005 |
|
|
1,726 |
|
|
238 |
|
|
Interest income |
(57 |
) |
|
(51 |
) |
|
(56 |
) |
|
(8 |
) |
|
(101 |
) |
|
(107 |
) |
|
(15 |
) |
|
Interest expense |
94 |
|
|
83 |
|
|
84 |
|
|
12 |
|
|
224 |
|
|
167 |
|
|
23 |
|
|
Income tax expense |
308 |
|
|
279 |
|
|
423 |
|
|
58 |
|
|
502 |
|
|
702 |
|
|
97 |
|
|
Depreciation and amortization |
354 |
|
|
339 |
|
|
335 |
|
|
46 |
|
|
721 |
|
|
674 |
|
|
93 |
|
|
EBITDA (non-GAAP) |
1,714 |
|
|
1,309 |
|
|
1,853 |
|
|
255 |
|
|
3,351 |
|
|
3,162 |
|
|
436 |
|
|
Share-based compensation |
34 |
|
|
58 |
|
|
112 |
|
|
15 |
|
|
61 |
|
|
170 |
|
|
23 |
|
|
(Gain) loss from fair value changes of equity securities |
19 |
|
|
(38 |
) |
|
51 |
|
|
7 |
|
|
6 |
|
|
13 |
|
|
2 |
|
|
Foreign exchange (gain) loss, net |
5 |
|
|
92 |
|
|
24 |
|
|
3 |
|
|
(99 |
) |
|
116 |
|
|
15 |
|
|
(Gain) loss on disposal of investments |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(516 |
) |
|
- |
|
|
- |
|
|
Adjusted EBITDA (non-GAAP) |
1,772 |
|
|
1,421 |
|
|
2,040 |
|
|
280 |
|
|
2,803 |
|
|
3,461 |
|
|
476 |
|
|
H World Group Limited |
|
Segment Financial Summary |
|
|
Quarter Ended June 30, 2023 |
|
Quarter Ended March 31, 2024 |
|
Quarter Ended June 30, 2024 |
|
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
|
(in millions) |
(in millions) |
(in millions) |
|
Leased and owned hotels |
2,466 |
|
1,126 |
|
2,112 |
|
987 |
|
|
2,395 |
|
1,286 |
|
Manachised and franchised hotels |
1,830 |
|
26 |
|
2,042 |
|
21 |
|
|
2,305 |
|
29 |
|
Others |
51 |
|
31 |
|
91 |
|
25 |
|
|
128 |
|
5 |
|
Revenue |
4,347 |
|
1,183 |
|
4,245 |
|
1,033 |
|
|
4,828 |
|
1,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
294 |
|
60 |
|
280 |
|
59 |
|
|
279 |
|
56 |
|
Adjusted EBITDA |
1,675 |
|
97 |
|
1,487 |
|
(66 |
) |
|
1,909 |
|
131 |
|
H World Group Limited |
|
Segment Financial Summary |
|
|
Six Months Ended June 30, 2023 |
|
Six Months Ended June 30, 2024 |
|
|
Legacy- Huazhu |
|
Legacy- DH |
|
Legacy- Huazhu |
|
Legacy- DH |
|
|
RMB |
|
RMB |
|
RMB |
|
RMB |
|
|
(in millions) |
(in millions) |
|
Leased and owned hotels |
4,486 |
|
1,980 |
|
|
4,507 |
|
2,273 |
|
Manachised and franchised hotels |
3,366 |
|
44 |
|
|
4,347 |
|
50 |
|
Others |
89 |
|
45 |
|
|
219 |
|
30 |
|
Revenue |
7,941 |
|
2,069 |
|
|
9,073 |
|
2,353 |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
598 |
|
123 |
|
|
559 |
|
115 |
|
Adjusted EBITDA |
2,803 |
|
(0 |
) |
|
3,396 |
|
65 |
Operating Results:
Legacy-Huazhu(1)
|
|
Number of hotels |
|
Number of rooms |
|
|
Openedin Q2 2024 |
Closed (2)in Q2
2024 |
Net added in Q2 2024 |
As of June 30, 2024 |
|
As of June 30, 2024 |
|
Leased and owned hotels |
4 |
(10) |
(6) |
592 |
|
84,814 |
|
Manachised and franchised hotels |
563 |
(91) |
472 |
9,558 |
|
889,499 |
|
Total |
567 |
(101) |
466 |
10,150 |
|
974,313 |
|
(1) Legacy-Huazhu refers to H World and its subsidiaries,
excluding DH.(2) The reasons for hotel closures mainly included
non-compliance with our brand standards, operating losses, and
property-related issues. In Q2 2024, we temporarily closed 12
hotels for brand upgrade or business model change purposes. |
|
|
As of June 30, 2024 |
|
|
Number of hotels |
Unopened hotels in pipeline |
|
Economy hotels |
5,270 |
1,209 |
|
Leased and owned hotels |
313 |
0 |
|
Manachised and franchised hotels |
4,957 |
1,209 |
|
Midscale, upper-midscale hotels and others |
4,880 |
2,057 |
|
Leased and owned hotels |
279 |
8 |
|
Manachised and franchised hotels |
4,601 |
2,049 |
|
Total |
10,150 |
3,266 |
|
|
For the quarter ended |
|
|
|
June 30, |
March 31, |
June 30, |
yoy |
|
|
2023 |
2024 |
2024 |
change |
|
Average daily room rate (in RMB) |
|
|
|
|
|
Leased and owned hotels |
384 |
346 |
375 |
-2.2% |
|
Manachised and franchised hotels |
295 |
272 |
288 |
-2.3% |
|
Blended |
305 |
280 |
296 |
-2.9% |
|
Occupancy rate (as a percentage) |
|
|
|
|
|
Leased and owned hotels |
83.6% |
81.0% |
85.6% |
+2.0 p.p. |
|
Manachised and franchised hotels |
81.6% |
76.8% |
82.3% |
+0.6 p.p. |
|
Blended |
81.8% |
77.2% |
82.6% |
+0.7 p.p. |
|
RevPAR (in RMB) |
|
|
|
|
|
Leased and owned hotels |
321 |
280 |
321 |
0.1% |
|
Manachised and franchised hotels |
241 |
209 |
237 |
-1.6% |
|
Blended |
250 |
216 |
244 |
-2.0% |
|
Same-hotel operational data by class |
|
|
|
|
|
|
|
|
|
Mature hotels in operation for more than 18
months |
|
|
Number of hotels |
Same-hotel RevPAR |
Same-hotel ADR |
Same-hotel Occupancy |
|
|
As ofJune 30, |
For the quarter |
yoy |
For the quarter |
yoy |
For the quarter |
yoy |
|
|
ended June 30, |
change |
ended June 30, |
change |
ended June 30, |
change |
|
|
2023 |
2024 |
2023 |
2024 |
|
2023 |
2024 |
|
2023 |
|
2024 |
|
(p.p.) |
|
Economy hotels |
3,751 |
3,751 |
198 |
190 |
-4.2 |
% |
235 |
225 |
-4.1 |
% |
84.4 |
% |
84.3 |
% |
-0.1 |
|
Leased and owned hotels |
299 |
299 |
241 |
235 |
-2.6 |
% |
281 |
268 |
-4.6 |
% |
85.8 |
% |
87.5 |
% |
+1.7 |
|
Manachised and franchised hotels |
3,452 |
3,452 |
193 |
184 |
-4.5 |
% |
229 |
219 |
-4.1 |
% |
84.3 |
% |
83.9 |
% |
-0.3 |
|
Midscale, upper-midscale hotels and others |
3,169 |
3,169 |
308 |
299 |
-3.2 |
% |
377 |
361 |
-4.2 |
% |
81.7 |
% |
82.6 |
% |
+0.9 |
|
Leased and owned hotels |
260 |
260 |
397 |
390 |
-1.9 |
% |
481 |
461 |
-4.3 |
% |
82.5 |
% |
84.6 |
% |
+2.1 |
|
Manachised and franchised hotels |
2,909 |
2,909 |
296 |
286 |
-3.3 |
% |
363 |
348 |
-4.2 |
% |
81.6 |
% |
82.4 |
% |
+0.7 |
|
Total |
6,920 |
6,920 |
257 |
248 |
-3.6 |
% |
310 |
297 |
-4.1 |
% |
83.0 |
% |
83.4 |
% |
+0.4 |
Operating Results:
Legacy-DH(3)
|
|
Number of hotels |
|
Number ofrooms |
|
Unopened hotelsin pipeline |
|
|
Opened in Q2 2024 |
Closedin Q2 2024 |
Net added in Q2 2024 |
As of June 30,
2024(4) |
|
As of June 30, 2024 |
|
As ofJune 30, 2024 |
|
Leased hotels |
4 |
(1) |
3 |
87 |
|
16,789 |
|
13 |
|
Manachised and franchised hotels |
1 |
(1) |
- |
49 |
|
10,763 |
|
15 |
|
Total |
5 |
(2) |
3 |
136 |
|
27,552 |
|
28 |
|
(3) Legacy-DH refers to DH. (4) As of June 30, 2024, a total of 2
hotels were temporarily closed due to repair work. |
|
|
For the quarter ended |
|
|
|
June 30, |
March 31, |
June 30, |
yoy |
|
|
2023 |
2024 |
2024 |
change |
|
Average daily room rate (in EUR) |
|
|
|
|
|
Leased hotels |
119 |
110 |
124 |
4.0% |
|
Manachised and franchised hotels |
112 |
95 |
112 |
0.1% |
|
Blended |
117 |
104 |
120 |
2.7% |
|
Occupancy rate (as a percentage) |
|
|
|
|
|
Leased hotels |
69.4% |
55.4% |
71.2% |
+1.9 p.p. |
|
Manachised and franchised hotels |
63.8% |
56.4% |
63.8% |
+0.0 p.p. |
|
Blended |
67.1% |
55.8% |
68.3% |
+1.2 p.p. |
|
RevPAR (in EUR) |
|
|
|
|
|
Leased hotels |
83 |
61 |
88 |
6.8% |
|
Manachised and franchised hotels |
71 |
54 |
72 |
0.1% |
|
Blended |
78 |
58 |
82 |
4.5% |
Hotel Portfolio by Brand
|
|
As of June 30, 2024 |
|
|
Hotels |
Rooms |
Unopened hotels |
|
|
in operation |
in pipeline |
|
Economy hotels |
5,288 |
433,604 |
1,220 |
|
HanTing Hotel |
3,883 |
341,015 |
816 |
|
Hi Inn |
512 |
26,183 |
234 |
|
Ni Hao Hotel |
348 |
25,935 |
148 |
|
Elan Hotel |
299 |
15,734 |
- |
|
Ibis Hotel |
228 |
22,582 |
11 |
|
Zleep Hotels |
18 |
2,155 |
11 |
|
Midscale hotels |
4,028 |
430,320 |
1,465 |
|
Ibis Styles Hotel |
108 |
10,679 |
19 |
|
Starway Hotel |
712 |
58,791 |
168 |
|
JI Hotel |
2,472 |
282,926 |
954 |
|
Orange Hotel |
736 |
77,924 |
324 |
|
Upper midscale hotels |
801 |
110,897 |
515 |
|
Crystal Orange Hotel |
206 |
26,181 |
147 |
|
CitiGO Hotel |
35 |
5,248 |
7 |
|
Manxin Hotel |
147 |
13,441 |
87 |
|
Madison Hotel |
110 |
13,658 |
87 |
|
Mercure Hotel |
182 |
29,082 |
65 |
|
Novotel Hotel |
30 |
6,740 |
16 |
|
IntercityHotel(5) |
81 |
14,802 |
101 |
|
MAXX(6) |
10 |
1,745 |
5 |
|
Upscale hotels |
143 |
21,337 |
86 |
|
Jaz in the City |
3 |
587 |
1 |
|
Joya Hotel |
7 |
1,237 |
- |
|
Blossom House |
69 |
3,031 |
71 |
|
Grand Mercure Hotel |
9 |
1,796 |
2 |
|
Steigenberger Hotels & Resorts(7) |
55 |
14,686 |
12 |
|
Luxury hotels |
15 |
2,234 |
3 |
|
Steigenberger Icon(8) |
8 |
1,721 |
2 |
|
Song Hotels |
7 |
513 |
1 |
|
Others |
11 |
3,473 |
5 |
|
Other hotels(9) |
11 |
3,473 |
5 |
|
Total |
10,286 |
1,001,865 |
3,294 |
(5) As of June 30, 2024, 23 operational hotels and
96 pipeline hotels of IntercityHotel were in China.(6) As of June
30, 2024, 5 operational hotels and 4 pipeline hotels of MAXX were
in China.(7) As of June 30, 2024, 12 operational hotels and 5
pipeline hotels of Steigenberger Hotels & Resorts were in
China.(8) As of June 30, 2024, 3 operational hotels and 1
pipeline hotel of Steigenberger Icon were in China.(9) Other
hotels include other partner hotels and other hotel brands in
Yongle Huazhu Hotel & Resort Group (excluding Steigenberger
Hotels & Resorts and Blossom House).
_________________________________
1 Hotel turnover refers to total transaction value
of room and non-room revenue from H World hotels (i.e., leased and
operated, manachised and franchised hotels).2 The conversion of
Renminbi (“RMB”) into United States dollars
(“US$”) is based on the exchange rate of
US$1.00=RMB7.2672 on June 28, 2024, as set forth in H.10
statistical release of the U.S. Federal Reserve Board and available
at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.3
The conversion of Renminbi (“RMB”) into United
States dollars (“US$”) is based on the exchange
rate of US$1.00=RMB7.2672 on June 28, 2024, as set forth in H.10
statistical release of the U.S. Federal Reserve Board and available
at
http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.
Contact InformationInvestor RelationsTel: +86 (21)
6195 9561Email: ir@hworld.comhttps://ir.hworld.com
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