Slide 1: Second Quarter of 2022 Earnings Call
Second Quarter of 2022 Earnings Call H World Group Limited (NASDAQ: HTHT and HKEX: 1179) Aug us t 30, 202 2 1
Slide 2: Agenda
AGENDA • 2Q2022 Business Update • 2Q2022 Operational and Financial Review • Liquidity and Guidance • Q and A • Appendix 2
Slide 3: 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% 90% 86% 67% 65% 76% 74% 53% 56% Lockdown imposed in several cities 54% COVID-19 resurgenc
Slide 4: Key Achievements in Q2 for Legacy-Huazhu
Key Achievements in Q2 for Legacy-Huazhu 华住中国二季度主要成就 1. Cost Control •Achieved rental reduction of RMB60m+ in Q2 •Streamlined headquarter headcount in Q2 by ~10% 2. Franchisees Support •Waived franchisees’ management fee payment of ~RMB120m in Q2 3. Sustainable Quality Growth •Completed organization
Slide 5: Established Six Regional Headquarters to Support Sustainable Quality Growth
Established Six Regional Headquarters to Support Sustainable Quality Growth 建立六大区域分公司支撑未来精益增长 Northeast China North China East China West China Central China South China Company Company Company Company Company Company 北方公司 华北公司 华东公司 华西公司 华中公司 华南公司 • Shifted from brand-based to regional-based • Local
Slide 6: Accelerate Exit from Economy Soft Brand Hotel Market in Next 1-2 Years
Accelerate Exit from Economy Soft Brand Hotel Market in Next 1-2 Years 在未来1-2年加速退出经济型软品牌酒店市场 6
Slide 7: 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 June 30) Signings (hotels in operation and in pipeline) 8,051 2,199 989 2,000 + 37% 56% 561 Tier-1 1,130 cities, 6% 1016 40% 43% Tier-2 cities, 36% 31% 34% 20% 12% Tie-3 and 20% below cities, 10% 58
Slide 8: Progress in Upper Midscale and Upscale Segment
Progress in Upper Midscale and Upscale Segment 中高档市场发展有序推进 Brand-based Upper Midscale is Upscale Remains Structure Unchanged Ready to Harvest Taking Time • As of June 2022, we have 445 • Signing of newly-built upscale • We keep organization structure upper midscale hotels in operation hotels are imp
Slide 9: Legacy-DH Achieved Robust RevPAR Recovery Trend in 2022
Legacy-DH Achieved Robust RevPAR Recovery Trend in 2022 DH的RevPAR在2022年恢复势头良好 Blended RevPAR in 2022 as % of 2019 100% 103% 99% 80% 65% 56% 47% Jan Feb Mar Apr May Jun Jul * Numbers in this page refers to Legacy-DH business 9
Slide 10: Solid Recovery Continuous with Positive Recurring EBITDA Expected in 2022
Solid Recovery Continuous with Positive Recurring EBITDA Expected in 2022 DH 2022年将EBITDA有望转正 Business Recovery Further Cost Enhance Organization Continues Management Capability • Lean Headquarters: Execution of • Integration of H World • Blended RevPAR recovered to overhead cost reductions well dig
Slide 11: Agenda
AGENDA • 2Q2022 Business Update • 2Q2022 Operational and Financial Review • Liquidity and Guidance • Q and A • Appendix 11
Slide 12: 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 -10% 773,898 13,137 +12% Legacy-DH 692,284 Legacy-DH 425 11,785 24,956 Legacy-DH Legacy-DH 1,474 24,614 Legacy-Huazhu 10,311, Legacy-H
Slide 13: Legacy-Huazhu – Blended RevPAR Recovered to 75% of 2019 in Q2'22
Legacy-Huazhu – Including Requisitioned Hotels, Blended RevPAR Recovered to 75% of 2019 in Q2’22 华住中国-二季度混合RevPAR（含征用店）恢复到2019年的75% ADR -14.5% yoy and -7.8% Compared to 2019 (RMB) 255 RevPAR -32.9% yoy and -31.4% Compared to 2019 (RMB) 236 218 206 210 141 Q2'19 Q2'21 Q2'22 OCC -17.7 p.p. yoy and -22
Slide 14: Legacy-DH - Blended RevPAR Increased in Q2'22 YoY
Legacy-DH - Blended RevPAR Increased in Q2’22 YoY DH-二季度混合RevPAR同比增长 ADR +35.5% in Q2’22 (EUR) 110 82 RevPAR +233.3% in Q2’22 (EUR) 66 Q2’21 Q2’22 Occupancy +35.4 p.p. in Q2’22 60% 20 24% Q2’21 Q2’22 Q2’21 Q2’22 14
Slide 15: Revenue: Q2'22 Decreased 5.7% YoY
Revenue: Q2’22 Decreased 5.7% YoY 二季度营收同比下滑5.7% In million RMB 2Q22 2Q21 YoY 1Q22 QoQ Manachised and Franchised Hotels Revenue as % of Revenue Revenue from Legacy - Huazhu 2,461 3,363 -26.8% 2,275 8.2% Q2’21 Q2’22 - Leased & Owned Hotels 1,475 2,070 -28.7% 1,258 17.2% H World Group 35.5% 27.9% - Man
Slide 16: Q2'22 Operating Income Turn Positive
Q2’22 Operating Income Turn Positive 二季度经营利润环比转正 In million RMB 2Q22 2Q21 YoY 1Q22 QoQ • Hotel operating cost increased YoY mainly due to strong Hotel operating costs 2,972 2,739 8.5% 2,813 5.7% business recovery of Legacy-DH, while, Legacy-Huazhu saw a - Legacy-Huazhu 2,168 2,202 -1.5% 2,255 -3.9%
Slide 17: Adjusted EBITDA and Adjusted Net Income in Q2'22
Adjusted EBITDA and Adjusted Net Income in Q2’22 二季度经调整后的EBITDA和净利润情况 In million RMB 2Q22 2Q21 YoY 1Q22 QoQ • Legacy-Huazhu’s Adj. EBITDA Adjusted EBITDA 53 1,043 -94.9% -333 Nm decrease in QoQ due to the impact of Omicron variant - Legacy-Huazhu 23 1,115 -97.9% -93 Nm outbreak and foreign exchange
Slide 18: Agenda
AGENDA • 2Q2022 Business Update • 2Q2022 Operational and Financial Review • Liquidity and Guidance • Q and A • Appendix 18
Slide 19: Liquidity Position Update
Liquidity Position Update 流动性情况更新 Net Debt Cash Balance Unutilized Bank Facilities RMB 5.7bn RMB 4.7bn RMB 3.0bn Recently, we have successfully refinanced our syndication loan with a total amount of EUR340 million. • As of June 30, 2022 19
Slide 20: Guidance
Guidance 业绩指引 Q3 2022 Revenue vs. Q3 2021 • Increase 13%-17% • Excluding DH - Increase 5%-9% 20
Slide 21: Agenda
AGENDA • 2Q2022 Business Update • 2Q2022 Operational and Financial Review • Liquidity and Guidance • Q and A • Appendix 21
Slide 22: Agenda
AGENDA • 2Q2022 Business Update • 2Q2022 Operational and Financial Review • Liquidity and Guidance • Q and A • Appendix 22
Slide 23: 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 quarter ended For the quarter ended For the quarter ended June 30, June 30, June 30, June 30, yoy chan
Slide 24: Number of Hotels and Rooms
Number of Hotels and Rooms 酒店数量和房间数量 As of June 30, 2022 Total Hotels Rooms Unopened hotels in operation in pipeline Economy hotels 4,874 384,177 985 HanTing Hotel 3,124 277,284 626 Hi Inn 458 24,036 120 NiHao Hotel 106 7,503 188 Elan Hotel 952 50,910 7 Ibis Hotel 219 22,734 33 Zleep Hotels 15 1,710