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April 23, 2020, 10:00 p.m. EDT

Huazhu Group Limited Announces Leverage Covenant Waiver for Existing Syndication Loan and Preliminary Results for Hotel Operations in the First Quarter of 2020

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SHANGHAI, China, Apr 23, 2020 (GLOBE NEWSWIRE via COMTEX) -- Huazhu Group Limited /zigman2/quotes/205109633/composite HTHT +1.75% ("Huazhu", "we" or "our"), 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 ("DH") on January 2, 2020, we 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, we provide separate operating results for Legacy-Huazhu and Legacy-DH.

Leverage Covenant Waiver for Existing Syndication Loan

On April 17, 2020, our syndication banks approved to release Huazhu from the original six-month-tested financial covenants for a period up to June 30, 2021, subject to the satisfaction of certain amended covenants. The 3-year syndication loan consists of USD500 million and EUR440 million, due in December 2022. The amended covenants mainly include: (1) minimum EBITDA requirement of RMB1 billion for the second half of 2020; (2) net asset value should be more than zero; and (3) no cash dividend during the waiver period.

COVID-19 Impact in Q1 2020

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 our 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 our 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 our hotels under governmental requisition) year-over-year. We don't recognize the revenues from our 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 14% to 16% year-over-year.

Heading into Q2 2020, more business and leisure travel demand continues to recover in China. We are now accelerating new hotel openings and signings of new franchisees to help us keep on track toward our 2020 growth target.

Operating Results: Legacy-Huazhu







        �??                              Number of hotels                                                                                                  �?? Number of rooms
        �??                              Opened                      Closed                        Net added                   As of                       �?? As of
                                         in Q1 2020                  in Q1 2020                    in Q1 2020                  March 31, 2020                  March 31, 2020
        �??                                                                                                                                                �??
        Leased and owned hotels          10                          (9                          ) 1                           689                             88,355
        Manachised and franchised hotels 286                         (67                         ) 219                         5,149                           464,007
        Total                            296                         (76                         ) 220                         5,838                           552,362
        (1)  The reasons for hotel closures mainly include non-compliance to brand standards, operating losses, and property-related issues. In Q1 2020, we had
		 14 hotels closed for brand upgrade and business model change purposes
        








        �??                              As of March 31, 2020
        �??                              Number of hotels Unopened hotels in pipeline
        Economy hotels                   3,992            1,128
        Leased and owned hotels          460              6
        Manachised and franchised hotels 3,532            1,122
        Midscale and upscale hotels      1,846            1,206
        Leased and owned hotels          229              29
        Manachised and franchised hotels 1,617            1,177
        Total                            5,838            2,334
        








        
        All hotels (excluding hotels under requisition)
        �??                              For the quarter ended            �??
        �??                              March 31, December 31, March 31, yoy
        �??                              2019      2019         2020      change
        Average daily room rate (in RMB) �??       �??          �??       �??
        Leased and owned hotels          258       277          211       -18.4%
        Manachised and franchised hotels 211       223          184       -12.8%
        Blended                          221       232          189       -14.6%
        Occupancy rate (as a percentage) �??       �??          �??       �??
        Leased and owned hotels          83.6%     84.7%        40.3%     -43.3p.p.
        Manachised and franchised hotels 79.8%     81.6%        39.4%     -40.4p.p.
        Blended                          80.6%     82.2%        39.6%     -41.0p.p.
        RevPAR (in RMB)                  �??       �??          �??       �??
        Leased and owned hotels          216       235          85        -60.6%
        Manachised and franchised hotels 169       182          73        -56.9%
        Blended                          178       191          75        -58.1%
        








        Operational hotels (excluding �'�hotels under requisition, �'�hotels temporarily closed)
        �??                              For the quarter ended              �??
        �??                              March 31,  December 31, March 31,  yoy
        �??                              2019       2019         2020       change
        Average daily room rate (in RMB) �??        �??          �??        �??
        Leased and owned hotels          258        277          211        -18.4%
        Manachised and franchised hotels 211        223          184        -12.8%
        Blended                          221        232          189        -14.6%
        Occupancy rate (as a percentage) �??        �??          �??        �??
        Leased and owned hotels          83.6%      84.7%        43.8%      -39.8p.p.
        Manachised and franchised hotels 79.8%      81.6%        47.4%      -32.5p.p.
        Blended                          80.6%      82.2%        46.7%      -33.9p.p.
        RevPAR (in RMB)                  �??        �??          �??        �??
        Leased and owned hotels          216        235          92         -57.2%
        Manachised and franchised hotels 169        182          87         -48.3%
        Blended                          178        191          88         -50.5%
        








        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               For the quarter ended yoy     For the quarter ended yoy     For the quarter ended yoy
                                         March 31,           March 31,             change  March 31,             change  March 31,             change
                                         2019      2020      2019       2020               2019       2020               2019    2020          (p.p.)
        Economy hotels                   2,421     2,421     155        76         -50.6 % 179        150        -16.2 % 86.3  % 50.9  %       -35.4
        Leased and owned hotels          411       411       173        78         -55.2 % 197        160        -18.8 % 87.8  % 48.5  %       -39.3
        Manachised and franchised hotels 2,010     2,010     150        76         -49.2 % 174        147        -15.4 % 85.9  % 51.6  %       -34.3
        Midscale and upscale hotels      850       850       247        108        -56.2 % 320        259        -18.9 % 77.3  % 41.7  %       -35.5
        Leased and owned hotels          173       173       299        112        -62.7 % 378        291        -23.1 % 79.1  % 38.3  %       -40.8
        Manachised and franchised hotels 677       677       229        107        -53.4 % 299        248        -17.0 % 76.6  % 43.0  %       -33.6
        Total                            3,271     3,271     184        87         -52.8 % 220        180        -17.9 % 83.5  % 48.0  %       -35.5
        


Operating Results: Legacy-DH







        �??                              Number of hotels                                              �?? Number of      �??      Unopened hotels
                                                                                                           rooms                   in pipeline
        �??                              Opened                 Closed        Net added As of          �?? As of          �??      As of
                                         in Q1 2020             in Q1 2020    in Q1 2020March 31, 2020 �?? March 31, 2020 �??      March 31, 2020
        �??
        Leased hotels                    3                      (2         )  1         67                 12,327                  28
        Manachised and franchised hotels 2                      (7         )  (5    )   48                 10,799                  13
        Total                            5                      (9         )  (4    )   115                23,126                  41
        �??
        �??                                               For the quarter ended                                      �??
        �??                                               March 31,     December 31,              March 31,          yoy
        �??                                               2019          2019                      2020               change
        Average daily room rate (in EUR)
        Leased hotels                                     104           105                       97                 -6.9     %
        Manachised and franchised hotels                  83            88                        80                 -4.4     %
        Blended                                           95            97                        89                 -5.9     %
        Occupancy rate (as a percentage)
        Leased hotels                                     64.8      %   72.8                 %    52.6          %    -12.2p.p.
        Manachised and franchised hotels                  58.6      %   65.0                 %    50.4          %    -8.2p.p.
        Blended                                           61.9      %   69.1                 %    51.7          %    -10.3p.p.
        RevPAR (in EUR)
        Leased hotels                                     67            76                        51                 -24.4    %
        Manachised and franchised hotels                  49            57                        40                 -17.7    %
        Blended                                           59            67                        46                 -21.6    %
        


DH hotels by region







                     Number of hotels
                     As of March 31, 2020
                     All    Leased Manachised and franchised
        Europe       93     67     26
        -Germany     70     51     19
        North Africa 17     0      17
        Asia         5      0      5
        Total        115    67     48
        


/zigman2/quotes/205109633/composite
US : U.S.: Nasdaq
$ 34.93
+0.60 +1.75%
Volume: 748,642
Aug. 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$10.00 billion
Rev. per Employee
$112,446
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