H World Group Limited · HKEX:1179
H World — Huazhu Group — Q4 2021 Earnings Presentation
35 slides from H World's earnings presentation, Mar 24, 2022
Slide 1: Fourth Quarter and Full Year of 2021 Earnings Call
Fourth Quarter and Full Year of 2021 Earnings Call Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) Ma r 24, 202 2 1
Slide 2: Sustainable Quality Growth
Sustainable Quality Growth 精益增长 2
Slide 3: Agenda
AGENDA • 2021 Strategic Review and 2022 Strategic Focus • 2021 Operational and Financial Review • COVID-19 Updates and Guidance • Q and A • Appendix 3
Slide 4: Our Achievements in 2021
Our Achievements in 2021 2021年主要成就 Key priorities Achievements • Defining standards of ‘Comfort 360’ and quality hotel 01 Rapid Expansion of Quality Hotel • Hotel in operation achieved to 7,830, with net openings of 1,041 in 2021 • Continued penetrating into lower-tier cities, added ~200 new cities
Slide 5: COVID-19 Resurgence Constantly Impact RevPAR Recovery
COVID-19 Resurgence Constantly Impact RevPAR Recovery 疫情不断反复持续影响RevPAR的恢复 Blended RevPAR in 2021 and 2022 as % of 2019 RevPAR Recovery in 2022 RevPAR Recovery in 2021 106% 103% 100% 100% 83% 95% 92% 90% 90% 75% 74% 64% 76% 56% Massive spread of Omicron Variant 54% COVID-19 resurgence to more than 28
Slide 6: Strategic Focus for 2022
Strategic Focus for 2022 2022年战略重点 1 Growth Strategy 增长战略 2 Brand Strategy 品牌战略 3 Membership Strategy 用户战略 4 Digitalization Strategy 数字化战略 6
Slide 7: Growth Strategy
Growth Strategy 增长战略 China Focus with Further Lower Tier Cities Penetration 1 重仓中国，下沉三四线 Breakthrough in Less-penetrated Market 2 突破薄弱市场 3 Accelerating Development in Upper-mid and Upscale Segment 加速发展中高档及高档酒店 7
Slide 8: Further Penetrating to Lower Tier Cities
Further Penetrating to Lower Tier Cities 低线城市持续渗透 Hotels Breakdown Number of New City Coverage (as of December 31) Signings (hotels in operation and in pipeline) 2,849 Tier-1cities, 11% 2,192 2,200 Tier-2 cities, 34% 40% 1,062 865 31% Tie-3 and below 20% cities, 55% 12% 2020 2021 2020 2021 Future Ta
Slide 9: Breakthrough in Southern and Western China
Breakthrough in Southern and Western China 华南华西市场突破 Jing-Jin-Ji urban agglomeration • Guangdong-Hong Kong-Macao Greater Bay Area and the Chengdu- Chongqing economic circle development are part of China National Strategy ChangJiang Delta • Huazhu established regional headquarters in Shenzhen and Chen
Slide 10: Multi-Brand Strategy in Upper Midscale Segment
Multi-Brand Strategy in Upper Midscale Segment 多品牌探索中高档酒店市场机会 • As of Q4’21: • Target: 454 hotels in operation 1,000+ Hotels in 2023 264 hotels in pipeline ( in operation and in pipeline) 10
Slide 11: Solid Progress in Upscale Segment
Solid Progress in Upscale Segment 高档市场发展有序推进 Fast Expansion in Tapping into Leisure Conversion Upscale Segment Segment Opportunities • Achieved the first milestone • Blossom House are well • Maxx brand is set for conversion opportunities of of 100 hotels in operation prepared to capture the booming
Slide 12: Brand Strategy
Brand Strategy 品牌战略 Product Upgrade Flagship Hotels Brand Positioning • Consistently upgrade • Selectively investing in • Sharpen brand positioning products to enhance flagship hotels in key cities by offering differentiated product quality and brand and regions to improve products and services to r
Slide 13: Membership Strategy
Membership Strategy 用户战略 H-World In-House Sales Corporate Customers Cross-industry Alliance 13
Slide 14: Solid Growth of Huazhu Members
Solid Growth of Huazhu Members 会员数量稳健增长 250 Number of Members (in millions) 200 193 169 153 150 122 103 100 79 49 50 0 2015 2016 2017 2018 2019 2020 2021 14
Slide 15: CRS Contribution Increased Across All City Tiers
CRS Contribution Increased Across All City Tiers 中央预定贡献占比持续增加 CRS Contribution CRS Contribution by Increased YoY City Tier in 2021 58% 59% 57% 55% 2020 2021 Tier 1&2 Cities Tier 3&below Cities * Numbers in this page refers to Legacy-Huazhu business 15
Slide 16: Corporate Members Contribution Increased
Corporate Members Contribution Increased 企业客户贡献占比持续增加 Corporate Members Corporate Members Contribution Contribution of Upper Midscale and Upscale Hotels 11.9% 9.4% 2020 2021 Upper Midscale Hotels 24.4% 28.9% Upscale Hotels 31.0% 31.2% 2020 2021 * Numbers in this page refers to Legacy-Huazhu business
Slide 17: Digitalization Strategy
Digitalization Strategy 数字化战略 Comprehensive Digitalization for Limited Service Hotels 1 有限服务酒店单店全面数字化 2 Experimenting Shared Service for Full Service Hotels 全服务酒店共享服务创新和突破 17
Slide 18: Comprehensive Digitalization at Hotel Level
Comprehensive Digitalization at Hotel Level 单店全面数字化 More Functions to Be Digitalized Online Guest Quality Digital Sales Experience Management GOP Management Franchisee Services AI Enabler 18
Slide 19: Shared Service for Full Service Hotels
Shared Service for Full Service Hotels 全服务高档酒店共享服务突破 From Single Hotel Management to Cloud-based Digital Chain Hotel Management Human Resource Accounting & Supply Chain Finance • Human resource system • Bookkeeping system • Procurement system • Work attendance system • Settlement system • Purchase s
Slide 20: Incorporate ESG into Long-term Strategic Planning
Incorporate ESG into Long-term Strategic Planning ESG将成为长远战略规划制定的重要一环 • Released first ESG report since listed in 2021 • To align with China’s “Carbon Neutralization” target as well as the increasing concern on sustainable growth globally • Huazhu has started a comprehensive internal assessment to s
Slide 21: Agenda
AGENDA • 2021 Strategic Review and 2022 Strategic Focus • 2021 Operational and Financial Review • COVID-19 Updates and Guidance • Q and A • Appendix 21
Slide 22: Hotel Network Continued to Expand
Hotel Network Continued to Expand 酒店网络持续扩张 Hotel Network Expansion Hotel Turnover (Number of rooms in operation) (in RMB millions) hotels in operation hotel turnover +36% 45,358 Legacy-DH 753,216 2,685 +15% 652,162 Legacy-DH 33,261 25,073 Legacy-DH Legacy-DH 24,027 2,408 Legacy-Huazhu 42,673, Legacy
Slide 23: Legacy-Huazhu - Blended RevPAR Recovered in Q4'21 & FY21
Legacy-Huazhu - Blended RevPAR recovered to 85% & 87% of 2019 in Q4’21 & FY21 华住中国-四季度和全年分别恢复到2019年的85%和87% Q4: ADR +3.7% yoy and +3.1% Compared to 2019 FY: ADR +13.8% yoy and +2.0% Compared to 2019 (RMB) Q4: RevPAR -12.2% yoy and -14.4% Compared to 2019 232 239 234 239 231 210 FY: RevPAR +15.6% yoy
Slide 24: Legacy-DH - Blended RevPAR Increased in Q4'21 and FY21 YoY
Legacy-DH - Blended RevPAR Increased in Q4’21 and FY21 YoY DH-四季度和全年混合RevPAR同比增长 ADR +23.5% in Q4’21 and +3.0% in FY21 (EUR) 94 90 88 76 RevPAR +152.6% in Q4’21 and +4.0% in FY21 (EUR) 43 Q4'20 Q4'21 2020 2021 31 32 17 Occupancy +23.6 p.p. in Q4’21 and +0.3 p.p. in FY21 46% Q4'20 Q4'21 2020 2021 35%
Slide 25: Net Revenues: Q4'21 Increased 9%, FY21 Increased 25%
Net Revenues: Q4’21 Increased 9%, FY21 Increased 25% 营收四季度增长9%，全年增长25% Manachised and Franchised Hotels In million RMB 4Q21 4Q20 YoY 3Q21 QoQ 2021 2020 YoY Revenue as % of Net Revenues Net revenues from Legacy - Huazhu 2,776 2,821 -2% 2,934 -5% 11,247 8,664 30% Q4’ Q4’ FY FY 20 21 20 21 - Leased & O
Slide 26: Q4'21 and FY21 Operating Income Turned Positive YoY
Q4’21 and FY21 Operating Income Turned Positive YoY 四季度和全年经营利润同比转正 In million RMB 4Q21 4Q20 YoY 3Q21 QoQ 2021 2020 YoY • Hotel operating cost increased mainly due to continuous hotel Hotel operating costs 3,197 2,748 16% 2,885 11% 11,286 9,729 16% network expansion and RMB257 - Legacy-Huazhu 2,331 2
Slide 27: Adjusted EBITDA and Adjusted Net Income in Q4'21 and FY21
Adjusted EBITDA and Adjusted Net Income in Q4’21 and FY21 四季度及全年调整后的EBITDA和净利润情况 In million RMB 4Q21 4Q20 YoY 3Q21 QoQ 2021 2020 YoY • Legacy-Huazhu’s Adj. EBITDA Adjusted EBITDA 278 375 -26% 385 -28% 1,571 -244 Nm in Q4 declined significantly due to the impact of COVID- - Legacy-Huazhu 209 764 -73%
Slide 28: Agenda
AGENDA • 2021 Strategic Review and 2022 Strategic Focus • 2021 Operational and Financial Review • COVID-19 Updates and Guidance • Q and A • Appendix 28
Slide 29: Healthy Liquidity Position
Healthy Liquidity Position 良好的流动性 Net Debt Cash Balance Unutilized Bank Facilities RMB 4.7bn RMB 5.1bn RMB 3.3bn • As of December 31, 2021 29
Slide 30: COVID-19 Update - Deutsche Hospitality
COVID-19 Update - Deutsche Hospitality DH疫情近况 Business Recovery Opening-up Plan Mitigation Measures • In year 2021, DH’s occupancy • Opening-up plan was initially • Short-time workers compensation unfolding since mid-Feb, 2022 continues until June 30, 2022 improved consecutively from 19% • Restricti
Slide 31: Guidance
Guidance 业绩指引 Q1 2022 Full year 2022 Net revenues vs. Q1 2021 Net revenue vs.2021 • Grow 11%-15% • Grow 15%-20% • Excluding DH - Grow 1%-5% • Excluding DH - Grow 4%-9% Gross opening target: ~1,500 hotels Closure of 500-550 hotels 31
Slide 32: Agenda
AGENDA • 2021 Strategic Review and 2022 Strategic Focus • 2021 Operational and Financial Review • COVID-19 Updates and Guidance • Q and A • Appendix 32
Slide 33: Agenda
AGENDA • 2021 Strategic Review and 2022 Strategic Focus • 2021 Operational and Financial Review • COVID-19 Updates and Guidance • Q and A • Appendix 33
Slide 34: Same-Hotel Operational Data by Segment
Same-Hotel Operational Data by Segment 同店经营数据 Operational hotels excluding hotels under requisition Number of hotels in operation Same-hotel RevPAR Same-hotel ADR Same-hotel Occupancy As of For the year ended For the year ended For the year ended December 31, December 31, December 31, December 31, y
Slide 35: Number of Hotels and Rooms
Number of Hotels and Rooms 酒店数量和房间数量 As of December 31, 2021 in operation in pipeline Hotels Rooms Unopened hotels Economy hotels 4,786 387,895 1,206 HanTing Hotel 3,027 274,118 696 Hi Inn 443 24,674 117 Elan Hotel 1,083 64,606 353 Ibis Hotel 219 22,834 28 Zleep Hotels 14 1,663 12 Midscale hotels 2,