REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class |
Trading Symbol ( s ) |
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☒ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Emerging growth company |
☒ |
☐ International Financial Reporting Standards as issuedby the International Accounting Standards Board |
☐ Other |
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• | “ ADRs |
• | “ ADSs |
• | “ China PRC |
• | “ EUR |
• | “ leased hotels leased-and-operated hotels; |
• | “ manachised hotels franchised-and-managed hotels; |
• | “ Ordinary shares |
• | “ RMB Renminbi |
• | “ US$ U.S. dollars |
• | “ We us our company our Huazhu |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
Year Ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||||||||
(In millions, except share, per share and per ADS data) |
||||||||||||||||||||||||
Selected Consolidated Statement of Comprehensive Income Data: |
||||||||||||||||||||||||
Net revenues |
5,775 |
6,573 |
8,229 |
10,063 |
11,212 |
1,611 |
||||||||||||||||||
Operating costs and expenses (1) |
5,205 |
5,715 |
6,874 |
7,945 |
9,236 |
1,326 |
||||||||||||||||||
Income from operations |
601 |
841 |
1,426 |
2,344 |
2,108 |
304 |
||||||||||||||||||
Income before income taxes |
639 |
1,047 |
1,597 |
1,393 |
2,565 |
369 |
||||||||||||||||||
Net income |
439 |
774 |
1,228 |
727 |
1,761 |
253 |
||||||||||||||||||
Net income attributable to Huazhu Group Limited |
437 |
782 |
1,228 |
716 |
1,769 |
254 |
||||||||||||||||||
Earnings per share/ADS (2) : |
||||||||||||||||||||||||
Basic |
1.74 |
2.84 |
4.40 |
2.54 |
6.22 |
0.89 |
||||||||||||||||||
Diluted |
1.70 |
2.76 |
4.21 |
2.49 |
5.94 |
0.85 |
||||||||||||||||||
Weighted average number of shares used in computation: |
||||||||||||||||||||||||
Basic |
250,533,204 |
275,139,070 |
279,272,140 |
281,717,485 |
284,305,138 |
284,305,138 |
||||||||||||||||||
Diluted |
256,104,167 |
282,889,494 |
293,073,978 |
303,605,809 |
304,309,890 |
304,309,890 |
(1) | Includes share-based compensation expenses as follows: |
Year Ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||||||||
(In millions) |
||||||||||||||||||||||||
Share-based compensation expenses |
53 |
55 |
66 |
83 |
110 |
15 |
(2) | On May 25, 2018, we changed our ADS to ordinary share ratio from one ADS representing four ordinary shares to one ADS representing one ordinary share. Therefore, we recalculated previous years’ earnings per ADS using the new ratio. |
As of December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||||||||
(In millions) |
||||||||||||||||||||||||
Selected Consolidated Balance Sheet Data: |
||||||||||||||||||||||||
Cash and cash equivalents |
1,238 |
3,235 |
3,475 |
4,262 |
3,234 |
465 |
||||||||||||||||||
Restricted cash |
361 |
1 |
481 |
622 |
10,765 |
1,546 |
||||||||||||||||||
Prepaid rent |
430 |
446 |
660 |
955 |
— |
— |
||||||||||||||||||
Property and equipment, net |
3,806 |
3,710 |
4,523 |
5,018 |
5,854 |
841 |
||||||||||||||||||
Intangible assets, net |
145 |
343 |
1,644 |
1,834 |
1,662 |
239 |
||||||||||||||||||
Operating lease right-of-use assets |
— |
— |
— |
— |
20,875 |
2,998 |
||||||||||||||||||
Long-term investments |
344 |
1,064 |
2,362 |
6,152 |
1,929 |
277 |
||||||||||||||||||
Goodwill |
108 |
172 |
2,265 |
2,630 |
2,657 |
382 |
||||||||||||||||||
Total assets |
7,694 |
10,071 |
17,508 |
23,993 |
52,983 |
7,611 |
||||||||||||||||||
Accounts payable |
585 |
585 |
766 |
890 |
1,176 |
169 |
||||||||||||||||||
Short-term debt |
325 |
298 |
131 |
948 |
8,499 |
1,220 |
||||||||||||||||||
Operating lease liabilities, current |
— |
— |
— |
— |
3,082 |
443 |
||||||||||||||||||
Long-term debt |
— |
— |
4,922 |
8,812 |
8,084 |
1,161 |
||||||||||||||||||
Deferred rent-long-term |
945 |
1,024 |
1,380 |
1,507 |
— |
— |
||||||||||||||||||
Operating lease liabilities, noncurrent |
— |
— |
— |
— |
18,496 |
2,657 |
||||||||||||||||||
Deferred revenue |
886 |
1,232 |
1,341 |
1,463 |
1,738 |
249 |
||||||||||||||||||
Total liabilities |
4,253 |
4,887 |
11,274 |
17,674 |
45,483 |
6,533 |
||||||||||||||||||
Total equity |
3,441 |
5,184 |
6,234 |
6,319 |
7,500 |
1,078 |
Year Ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||||||||
(In millions) |
||||||||||||||||||||||||
Selected Consolidated Statement of Cash Flow Data: |
||||||||||||||||||||||||
Net cash provided by operating activities |
1,763 |
2,066 |
2,453 |
3,049 |
3,293 |
473 |
||||||||||||||||||
Net cash used in investing activities |
1,550 |
176 |
6,235 |
6,345 |
285 |
41 |
||||||||||||||||||
Net cash provided by (used in) financing activities |
219 |
(266 |
) | 4,536 |
4,248 |
6,045 |
868 |
• | changes and volatility in national, regional and local economic conditions in China; |
• | competition from other hotels, the attractiveness of our hotels to customers, and our ability to maintain and increase sales to existing customers and attract new customers; |
• | adverse weather conditions, natural disasters or travelers’ fears of exposure to contagious diseases and social unrest; |
• | changes in travel patterns or in the desirability of particular locations; |
• | increases in operating costs and expenses due to inflation and other factors; |
• | local market conditions such as an oversupply of, or a reduction in demand for, hotel rooms; |
• | the quality and performance of managers and other employees of our hotels; |
• | the availability and cost of capital to fund construction and renovation of, and make other investments in, our hotels; |
• | seasonality of the lodging business and national or regional special events; |
• | the possibility that leased properties may be subject to challenges as to their compliance with the relevant government regulations; and |
• | maintenance and infringement of our intellectual property. |
• | continuing our growth while trying to achieve and maintain our profitability; |
• | preserving and enhancing our competitive position in the lodging industry in China; |
• | offering innovative products to attract recurring and new customers; |
• | implementing our strategy and modifying it from time to time to respond effectively to competition and changes in customer preferences and needs; |
• | increasing awareness of our brands and products and continuing to develop customer loyalty; |
• | attracting, training, retaining and motivating qualified personnel; and |
• | renewing leases for our leased hotels on commercially viable terms after the initial lease terms expire. |
• | actual or anticipated fluctuations in our quarterly operating results; |
• | changes in financial estimates by securities research analysts; |
• | conditions in the travel and lodging industries; |
• | changes in the economic performance or market valuations of other lodging companies; |
• | announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments; |
• | addition or departure of key personnel; |
• | fluctuations of exchange rates between the RMB and U.S. dollar or other foreign currencies; |
• | potential litigation or administrative investigations; |
• | release of lock-up or other transfer restrictions on our outstanding ADSs or ordinary shares or sales of additional ADSs; and |
• | general economic or political conditions in China. |
ITEM 4. |
INFORMATION ON THE COMPANY |
• | Economy hotel brands: HanTing Hotel Hi Inn Elan Hotel Zleep Hotels and Ibis |
• | Midscale hotel brands: Starway Hotel JI Hotel Orange Hotel Ibis Styles Mercure |
• | Upper midscale hotel brands: Manxin Hotel Crystal Orange Hotel IntercityHotel Novotel |
• | Upscale hotel brands: Blossom Hill Hotels & Resorts MAXX by Steigenberger Jaz in the City Grand Mercure Madison Hotel |
• | Upper upscale brands: Joya Hotel Steigenberger Hotels & Resorts |
Leased and Owned Hotels |
Manachised Hotels |
Franchised Hotels |
Leased and Owned Hotels Under Development (1) |
Manachised and Franchised Hotels Under Development (1) |
||||||||||||||||
Shanghai, Beijing, Guangzhou, Shenzhen and Hangzhou |
242 |
1,108 |
107 |
18 |
391 |
|||||||||||||||
Other cities |
446 |
3,411 |
304 |
25 |
1,828 |
|||||||||||||||
Total |
688 |
4,519 |
411 |
43 |
2,219 |
|||||||||||||||
(1) | Include hotels for which we have entered into binding leases, purchase agreements of land use right or property, or franchise agreements but that have not yet commenced operations. The inactive projects are excluded from this list according to management judgment. |
Pre-conversion Period (1) |
Conversion Period (2) |
Total |
||||||||||
Leased and owned hotels |
9 |
34 |
43 |
|||||||||
Manachised and franchised hotels |
733 |
1,486 |
2,219 |
|||||||||
Total |
742 |
1,520 |
2,262 |
(1) | Includes hotels for which we have entered into binding leases or franchise agreements but of which the property has not been delivered by the respective lessors or property owners, as the case may be. The inactive projects are excluded from this list according to management judgment. |
(2) | Includes hotels for which we have commenced conversion activities but that have not yet commenced operations. The inactive projects are excluded from this list according to management judgment. |
Number of Leases |
||||
2020 |
40 |
|||
2021 |
41 |
|||
2022 |
68 |
|||
2023 |
56 |
|||
2024 |
59 |
|||
2025-2027 |
181 |
|||
2028-2030 |
136 |
|||
2031 and onward |
141 |
|||
Total |
722 |
|||
As of December 31, |
||||||||||||||||||||||||||||||||||||||||
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|||||||||||||||||||||||||||||||
Leased and owned hotels |
243 |
344 |
465 |
565 |
611 |
616 |
624 |
671 |
699 |
688 |
||||||||||||||||||||||||||||||
Manachised hotels |
195 |
295 |
516 |
835 |
1,376 |
2,067 |
2,471 |
2,874 |
3,309 |
4,519 |
||||||||||||||||||||||||||||||
Franchised hotels |
— |
— |
54 |
25 |
8 |
80 |
174 |
201 |
222 |
411 |
||||||||||||||||||||||||||||||
Total |
438 |
639 |
1,035 |
1,425 |
1,995 |
2,763 |
3,269 |
3,746 |
4,230 |
5,618 |
||||||||||||||||||||||||||||||
• | Economy hotel brands: HanTing Hotel Hi Inn Elan Hotel Zleep Hotels Ibis |
• | Midscale hotel brands: Starway Hotel JI Hotel Orange Hotel Ibis Styles Mercure |
• | Upper midscale hotel brands: Manxin Hotel Crystal Orange Hotel IntercityHotel Novotel |
• | Upscale hotel brands: Blossom Hill Hotels & Resorts MAXX by Steigenberger Jaz in the City Grand Mercure Madison Hotel |
• | Upper upscale brands: Joya Hotel Steigenberger Hotels & Resorts |
• | to ensure that commodities and services meet with certain safety requirements; |
• | to protect the safety of consumers; |
• | to disclose serious defects of a commodity or a service and to adopt preventive measures against damage occurrence; |
• | to provide consumers with accurate information and to refrain from conducting false advertising; |
• | to obtain consents of consumers and to disclose the rules for the collection and/or use of information when collecting data or information from consumers; to take technical measures and other necessary measures to protect the personal information collected from consumers; not to divulge, sell, or illegally provide consumers’ information to others; not to send commercial information to consumers without the consent or request of consumers or with a clear refusal from consumers; |
• | not to set unreasonable or unfair terms for consumers or alleviate or release itself from civil liability for harming the legal rights and interests of consumers by means of standard contracts, circulars, announcements, shop notices or other means; |
• | to remind consumers in a conspicuous manner to pay attention to the quality, quantity and prices or fees of commodities or services, duration and manner of performance, safety precautions and risk warnings, after-sales service, civil liability and other terms and conditions vital to the interests of consumers under a standard form of agreement prepared by the business operators, and to provide explanations as required by consumers; and |
• | not to insult or slander consumers or to search the person of, or articles carried by, a consumer or to infringe upon the personal freedom of a consumer. |
• | the name, domiciles, legal representative, registered capital, scope of business and basic information relating to its commercial franchising; |
• | basic information relating to the registered trademark, logo, patent, know-how and business model; |
• | the type, amount and method of payment of franchise fees (including payment of deposit and the conditions and method of refund of deposit); |
• | the price and conditions for the franchisor to provide goods, service and equipment to the franchisee; |
• | the detailed plan, provision and implementation plan of consistent services including operational guidance, technical support and business training provided to the franchisee; |
• | detailed measures for guiding and supervising the operation of the franchisor; |
• | investment budget for all franchised hotels of the franchisee; |
• | the current numbers, territory and operation evaluation of the franchisees within China; |
• | a summary of accounting statements audited by an accounting firm and a summary of audit reports for the previous two years; |
• | information on any lawsuit in which the franchisor has been involved in the previous five years; |
• | basic information regarding whether the franchisor and its legal representative have any record of material violation; and |
• | other information required to be disclosed by the MOC. |
Major Subsidiaries |
Percentage of Ownership |
Date of Incorporation/Acquisition |
Place of Incorporation |
|||||||||
China Lodging Holdings (HK) Limited |
100 |
% | October 22, 2008 |
Hong Kong |
||||||||
China Lodging Holdings Singapore Pte. Ltd. |
100 |
% | April 14, 2010 |
Singapore |
||||||||
Shanghai HanTing Hotel Management Group, Ltd. |
100 |
% | November 17, 2004 |
PRC |
||||||||
HanTing Xingkong (Shanghai) Hotel Management Co., Ltd. |
100 |
% | March 3, 2006 |
PRC |
||||||||
HanTing (Tianjin) Investment Consulting Co., Ltd |
100 |
% | January 16, 2008 |
PRC |
||||||||
Yiju (Shanghai) Hotel Management Co., Ltd. |
100 |
% | April 12, 2007 |
PRC |
||||||||
HanTing Technology (Suzhou) Co., Ltd. |
100 |
% | December 3, 2008 |
PRC |
||||||||
HanTing (Shanghai) Enterprise Management Co., Ltd. |
100 |
% | December 14, 2010 |
PRC |
||||||||
Starway Hotels (Hong Kong) Limited |
100 |
% | May 1, 2012 |
Hong Kong |
||||||||
Starway Hotel Management (Shanghai) Co., Ltd. |
100 |
% | May 1, 2012 |
PRC |
||||||||
HuaZhu Hotel Management Co., Ltd. |
100 |
% | August 16, 2012 |
PRC |
||||||||
Jizhu Information Technology (Shanghai) Co., Ltd. |
100 |
% | February 26, 2014 |
PRC |
||||||||
ACL Greater China Limited |
100 |
% | May 9, 2016 |
Hong Kong |
||||||||
Ibis China Investment Limited |
100 |
% | April 22, 2016 |
Hong Kong |
||||||||
TAHM Investment Limited |
100 |
% | August 4, 2016 |
Hong Kong |
Huazhu Investment I Limited |
100 |
% | November 10, 2017 |
Hong Kong |
||||||||
Yagao Meihua Hotel Management Co., Ltd. |
100 |
% | February 16, 2015 |
PRC |
||||||||
Crystal Orange Hotel Holdings Limited |
100 |
% | May 25, 2017 |
BVI |
||||||||
Orange Hotel Hong Kong Limited |
100 |
% | May 25, 2017 |
Hong Kong |
||||||||
Orange Hotel Management (China) Co., Ltd. |
100 |
% | May 25, 2017 |
PRC |
||||||||
Beijing Crystal Orange Hotel Management Consulting Co., Ltd. |
100 |
% | May 25, 2017 |
PRC |
||||||||
Huazhu Hotel Management (Ningbo) Co., Ltd. |
100 |
% | July 20, 2018 |
PRC |
||||||||
Steigenberger Hotels Aktiengesellschaft |
100 |
% | January 2, 2020 |
Germany |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
• | Economy hotel brands: HanTing Hotel Hi Inn Elan Hotel Zleep Hotels Ibis |
• | Midscale hotel brands: Starway Hotel JI Hotel Orange Hotel Ibis Styles Mercure |
• | Upper midscale hotel brands: Manxin Hotel Crystal Orange Hotel IntercityHotel Novotel |
• | Upscale hotel brands: Blossom Hill Hotels & Resorts MAXX by Steigenberger Jaz in the City Grand Mercure Madison Hotel |
• | Upper upscale brands: Joya Hotel Steigenberger Hotels & Resorts |
• | The total number of hotels and hotel rooms in our hotel network |
• | The fixed-cost nature of our business |
• | The number of new leased and owned hotels under development ramp-up and mature operations. During the development stage, leased and owned hotels generally incur pre-opening expenses generally ranging from approximately RMB1.5 million to RMB20.0 million per hotel and generate no revenue. During periods when a large number of new leased and owned hotels are under development, the pre-opening expenses incurred may have a significant negative impact on our financial performance. |
• | The mix of mature leased and owned hotels, new leased and owned hotels, manachised hotels and franchised hotels ramp-up stage, the occupancy rate is relatively low and the room rate may be subject to discount. Revenues generated by these hotels are lower than those generated by mature hotels and may be insufficient to cover their operating costs, which are relatively fixed in nature and are similar to those of mature hotels. The lower profitability during the ramp-up stage for leased and owned hotels may have a significant negative impact on our financial performance. The length of ramp-up stage may be affected by factors such as hotel size, seasonality and location. New hotels opened in lower-tier cities generally have longer ramp-up period. On average, it takes our hotels approximately six months to ramp up. We define mature leased and owned hotels as those that have been in operation for more than six months. Our mature leased and owned hotels have been and will continue to be the main contributor to our revenues. |
As of December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Total hotels in operation |
3,746 |
4,230 |
5,618 |
|||||||||
Leased and owned hotels |
671 |
699 |
688 |
|||||||||
Manachised hotels |
2,874 |
3,309 |
4,519 |
|||||||||
Franchised hotels |
201 |
222 |
411 |
|||||||||
Total hotel rooms in operation |
379,675 |
422,747 |
536,876 |
|||||||||
Leased and owned hotels |
85,018 |
86,787 |
87,465 |
|||||||||
Manachised hotels |
275,065 |
314,932 |
418,700 |
|||||||||
Franchised hotels |
19,592 |
21,028 |
30,711 |
|||||||||
Total hotel room-nights available for sale |
128,761,738 |
144,497,182 |
171,660,048 |
|||||||||
Leased and owned hotels |
30,198,307 |
31,448,206 |
32,018,639 |
|||||||||
Manachised hotels |
92,582,541 |
105,917,757 |
130,860,614 |
|||||||||
Franchised hotels |
5,980,890 |
7,131,219 |
8,780,795 |
|||||||||
Number of cities |
378 |
403 |
437 |
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
RevPAR (1) (in RMB) |
||||||||||||
Leased and owned hotels |
211 |
237 |
240 |
|||||||||
Manachised hotels |
171 |
186 |
189 |
|||||||||
Franchised hotels |
158 |
188 |
174 |
|||||||||
Total hotels in operation |
180 |
197 |
198 |
|||||||||
Average daily room rate (1) (in RMB) |
||||||||||||
Leased and owned hotels |
237 |
267 |
276 |
|||||||||
Manachised hotels |
191 |
213 |
223 |
|||||||||
Franchised hotels |
216 |
248 |
240 |
|||||||||
Total hotels in operation |
203 |
226 |
234 |
|||||||||
Occupancy rate (as a percentage) |
||||||||||||
Leased and owned hotels |
89 |
89 |
87 |
|||||||||
Manachised hotels |
89 |
88 |
85 |
|||||||||
Franchised hotels |
73 |
76 |
73 |
|||||||||
Total hotels in operation |
88 |
87 |
84 |
|||||||||
Weight of hotel room-nights available for sale contributed by leased and owned hotels less than 6 months (as a percentage) |
8 |
4 |
4 |
(1) |
The RevPAR and average daily room rates disclosed in this annual report are based on the tax-inclusive room rates. |
For the Three Months Ended |
||||||||||||||||||||||||||||||||
March 31, 2018 |
June 30, 2018 |
September 30, 2018 |
December 31, 2018 |
March 31, 2019 |
June 30, 2019 |
September 30, 2019 |
December 31, 2019 |
|||||||||||||||||||||||||
RevPAR (in RMB): |
||||||||||||||||||||||||||||||||
Leased and owned hotels |
208 |
246 |
257 |
238 |
216 |
252 |
259 |
235 |
||||||||||||||||||||||||
Manachised hotels |
163 |
190 |
205 |
185 |
169 |
195 |
206 |
183 |
||||||||||||||||||||||||
Franchised hotels |
159 |
195 |
213 |
185 |
162 |
185 |
189 |
161 |
||||||||||||||||||||||||
Total hotels in operation |
173 |
203 |
217 |
196 |
178 |
206 |
215 |
191 |
For the Three Months Ended |
||||||||||||||||||||||||||||||||
March 31, 2018 |
June 30, 2018 |
September 30, 2018 |
December 31, 2018 |
March 31, 2019 |
June 30, 2019 |
September 30, 2019 |
December 31, 2019 |
|||||||||||||||||||||||||
Number of hotels in operation for at least 18 months |
2,813 |
2,866 |
2,908 |
2,980 |
3,189 |
3,277 |
3,361 |
3,417 |
||||||||||||||||||||||||
RevPAR (RMB) |
165 |
194 |
207 |
189 |
176 |
202 |
211 |
188 |
||||||||||||||||||||||||
Same-hotel RevPAR change (as a percentage) |
6.5 |
7.9 |
4.2 |
3.9 |
(0.4 |
) | (2.1 |
) | (3.8 |
) | (5.4 |
) |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
(RMB) |
% |
(RMB) |
% |
(RMB) |
(US$) |
% |
||||||||||||||||||||||
(In millions except percentages) |
||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||
Leased and owned hotels |
6,338 |
77.0 |
7,470 |
74.2 |
7,718 |
1,109 |
68.8 |
|||||||||||||||||||||
Manachised and franchised hotels |
1,851 |
22.5 |
2,527 |
25.1 |
3,342 |
480 |
29.8 |
|||||||||||||||||||||
Others |
40 |
0.5 |
66 |
0.7 |
152 |
22 |
1.4 |
|||||||||||||||||||||
Net revenues |
8,229 |
100.0 |
10,063 |
100.0 |
11,212 |
1,611 |
100.0 |
|||||||||||||||||||||
• | Leased and Owned Hotels |
• | The total number of room nights available from the leased and owned hotels in our hotel group |
• | RevPAR achieved by our leased and owned hotels, which represents the product of average daily rates and occupancy rates Non-financial Key Performance Indicators – RevPAR.” |
• | Manachised and Franchised Hotels |
• | Manachised Hotels |
• | Franchised Hotels |
• | Other Revenues |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
(RMB) |
% |
(RMB) |
% |
(RMB) |
(US$) |
% |
||||||||||||||||||||||
(In millions except percentages) |
||||||||||||||||||||||||||||
Net revenues |
8,229 |
100.0 |
10,063 |
100.0 |
11,212 |
1,611 |
100.0 |
|||||||||||||||||||||
Operating costs and expenses |
||||||||||||||||||||||||||||
Hotel operating costs: |
||||||||||||||||||||||||||||
Rents |
2,059 |
25.0 |
2,406 |
23.9 |
2,624 |
377 |
23.4 |
|||||||||||||||||||||
Utilities |
366 |
4.4 |
399 |
4.0 |
404 |
58 |
3.6 |
|||||||||||||||||||||
Personnel costs |
1,388 |
16.9 |
1,663 |
16.5 |
1,854 |
266 |
16.5 |
|||||||||||||||||||||
Depreciation and amortization |
773 |
9.4 |
869 |
8.6 |
960 |
138 |
8.5 |
|||||||||||||||||||||
Consumables, food and beverage |
551 |
6.7 |
673 |
6.7 |
793 |
114 |
7.1 |
|||||||||||||||||||||
Others |
538 |
6.6 |
466 |
4.7 |
555 |
80 |
5.0 |
|||||||||||||||||||||
Total hotel operating costs |
5,675 |
69.0 |
6,476 |
64.4 |
7,190 |
1,033 |
64.1 |
|||||||||||||||||||||
Other operating costs |
17 |
0.2 |
15 |
0.1 |
57 |
8 |
0.5 |
|||||||||||||||||||||
Selling and marketing expenses |
285 |
3.5 |
348 |
3.5 |
426 |
61 |
3.8 |
|||||||||||||||||||||
General and administrative expenses |
691 |
8.4 |
851 |
8.5 |
1,061 |
152 |
9.5 |
|||||||||||||||||||||
Pre-opening expenses |
206 |
2.5 |
255 |
2.5 |
502 |
72 |
4.5 |
|||||||||||||||||||||
Total operating costs and expenses |
6,874 |
83.6 |
7,945 |
79.0 |
9,236 |
1,326 |
82.4 |
|||||||||||||||||||||
• | Hotel Operating Costs |
• | Selling and Marketing Expenses |
• | General and Administrative Expenses |
• | Pre-opening Expenses pre-opening expenses consist primarily of rents, personnel cost, and other miscellaneous expenses incurred prior to the opening of a new leased and owned hotel. |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Rents |
192 |
221 |
460 |
66 |
||||||||||||
Personnel cost |
6 |
18 |
14 |
2 |
||||||||||||
Others |
8 |
16 |
28 |
4 |
||||||||||||
Total pre-opening expenses |
206 |
255 |
502 |
72 |
||||||||||||
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
(RMB) |
% |
(RMB) |
% |
(RMB) |
(US$) |
% |
||||||||||||||||||||||
(In millions except percentages) |
||||||||||||||||||||||||||||
Hotel operating costs |
20 |
29.7 |
27 |
32.8 |
35 |
5 |
31.8 |
|||||||||||||||||||||
Selling and marketing expenses |
1 |
2.3 |
3 |
3.1 |
3 |
0 |
2.7 |
|||||||||||||||||||||
General and administrative expenses |
45 |
68.0 |
53 |
64.1 |
72 |
10 |
65.5 |
|||||||||||||||||||||
Total share-based compensation expenses |
66 |
100.0 |
83 |
100.0 |
110 |
15 |
100.0 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Non-GAAP Financial Data |
||||||||||||||||
EBITDA (1) |
2,348 |
2,272 |
3,555 |
510 |
||||||||||||
Adjusted EBITDA (1) |
2,379 |
3,269 |
3,349 |
481 |
(1) | We believe that EBITDA is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions and income taxes. Given the significant investments that we have made in leasehold improvements, depreciation and amortization expense comprises a significant portion of our cost structure. In addition, we believe that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of our financial performance. We believe that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. We also use Adjusted EBITDA, which is defined as EBITDA before share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities. We present Adjusted EBITDA because it is used by our management to evaluate our operating performance. We also believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. Our calculation of EBITDA and Adjusted EBITDA does not deduct foreign exchange loss of RMB18 million, RMB144 million, and RMB35 million (US$5 million) in 2017, 2018 and 2019, respectively. The presentation of EBITDA and Adjusted EBITDA should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business. |
For the Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Net income attributable to our company |
1,228 |
716 |
1,769 |
254 |
For the Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Interest income |
(113 |
) | (148 |
) | (160 |
) | (23 |
) | ||||||||
Interest expense |
87 |
244 |
315 |
45 |
||||||||||||
Income tax expense |
357 |
569 |
640 |
92 |
||||||||||||
Depreciation and amortization |
789 |
891 |
991 |
142 |
||||||||||||
EBITDA (Non-GAAP) |
2,348 |
2,272 |
3,555 |
510 |
||||||||||||
Share-based compensation expenses |
66 |
83 |
110 |
15 |
||||||||||||
Unrealized (gains) losses from fair value changes of equity securities |
(35 |
) | 914 |
(316 |
) | (44 |
) | |||||||||
Adjusted EBITDA (Non-GAAP) |
2,379 |
3,269 |
3,349 |
481 |
||||||||||||
• | Intellectual Property (“IP”) license |
• | Pre-opening services |
• | System maintenance services |
• | Hotel management services day-to-day management services of the hotels for the franchisees. |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
(RMB) |
(US$) |
% |
||||||||||||||||||||||
(In millions except percentages) |
||||||||||||||||||||||||||||
Consolidated Statement of Comprehensive Income Data: |
||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||
Leased and owned hotels |
6,338 |
77.0 |
7,470 |
74.2 |
7,718 |
1,109 |
68.8 |
|||||||||||||||||||||
Manachised and franchised hotels |
1,851 |
22.5 |
2,527 |
25.1 |
3,342 |
480 |
29.8 |
|||||||||||||||||||||
Others |
40 |
0.5 |
66 |
0.7 |
152 |
22 |
1.4 |
|||||||||||||||||||||
Total revenues |
8,229 |
100.0 |
10,063 |
100.0 |
11,212 |
1,611 |
100.0 |
|||||||||||||||||||||
Net revenues |
8,229 |
100.0 |
10,063 |
100.0 |
11,212 |
1,611 |
100.0 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
(RMB) |
(US$) |
% |
||||||||||||||||||||||
(In millions except percentages) |
||||||||||||||||||||||||||||
Operating costs and expenses (1) : |
||||||||||||||||||||||||||||
Hotel operating costs |
5,675 |
69.0 |
6,476 |
64.4 |
7,190 |
1,033 |
64.1 |
|||||||||||||||||||||
Other operating costs |
17 |
0.2 |
15 |
0.1 |
57 |
8 |
0.5 |
|||||||||||||||||||||
Selling and marketing expenses |
285 |
3.5 |
348 |
3.5 |
426 |
61 |
3.8 |
|||||||||||||||||||||
General and administrative expenses |
691 |
8.4 |
851 |
8.5 |
1,061 |
152 |
9.5 |
|||||||||||||||||||||
Pre-opening expenses |
206 |
2.5 |
255 |
2.5 |
502 |
72 |
4.5 |
|||||||||||||||||||||
Total operating costs and expenses |
6,874 |
83.6 |
7,945 |
79.0 |
9,236 |
1,326 |
82.4 |
|||||||||||||||||||||
Other operating (expense) income, net |
71 |
0.9 |
226 |
2.3 |
132 |
19 |
1.2 |
|||||||||||||||||||||
Income from operations |
1,426 |
17.3 |
2,344 |
23.3 |
2,108 |
304 |
18.8 |
|||||||||||||||||||||
Interest income |
113 |
1.4 |
148 |
1.5 |
160 |
23 |
1.4 |
|||||||||||||||||||||
Interest expenses |
87 |
1.1 |
244 |
2.4 |
315 |
45 |
2.8 |
|||||||||||||||||||||
Other income, net |
128 |
1.6 |
203 |
2.0 |
331 |
48 |
3.0 |
|||||||||||||||||||||
Unrealized gain (loss) from fair value changes of equity securities |
35 |
0.4 |
(914 |
) | (9.1 |
) | 316 |
44 |
2.8 |
|||||||||||||||||||
Foreign exchange gain (loss) |
(18 |
) | (0.2 |
) | (144 |
) | (1.4 |
) | (35 |
) | (5 |
) | (0.3 |
) | ||||||||||||||
Income before income taxes |
1,597 |
19.4 |
1,393 |
13.9 |
2,565 |
369 |
22.9 |
|||||||||||||||||||||
Income tax expense |
357 |
4.3 |
569 |
5.7 |
640 |
92 |
5.7 |
|||||||||||||||||||||
Income (loss) from equity method investments |
(12 |
) | (0.2 |
) | (97 |
) | (1.0 |
) | (164 |
) | (24 |
) | (1.5 |
) | ||||||||||||||
Net income |
1,228 |
14.9 |
727 |
7.2 |
1,761 |
253 |
15.7 |
|||||||||||||||||||||
Less: net (loss) income attributable to noncontrolling interest |
0 |
0 |
11 |
0.1 |
(8 |
) | (1 |
) | (0.1 |
) | ||||||||||||||||||
Net income attributable to Huazhu Group Limited |
1,228 |
14.9 |
716 |
7.1 |
1,769 |
254 |
15.8 |
|||||||||||||||||||||
(1) | Includes share-based compensation expenses as follows: |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Share-based compensation expenses |
66 |
83 |
110 |
15 |
• | Leased and Owned Hotels |
|
• | Manachised and Franchised Hotels |
• | Other Revenues. |
• | Hotel Operating Costs |
• | Selling and Marketing Expenses |
• | General and Administrative Expenses |
• | Pre-opening Expenses pre-opening expenses increased from RMB255 million in 2018 to RMB502 million (US$72 million) in 2019. The increase was mainly attributable to the construction of upscale-brand flag-ship hotels in 2019. Our pre-opening expenses as a percentage of net revenues increased from 2.5% in 2018 to 4.5% in 2019. |
• | Leased and Owned Hotels |
• | Manachised and Franchised Hotels |
• | Other Revenues. |
• | Hotel Operating Costs |
• | Selling and Marketing Expenses |
• | General and Administrative Expenses |
• | Pre-opening Expenses pre-opening expenses increased from RMB206 million in 2017 to RMB255 million in 2018. The increase was mainly attributable to more leased midscale and upscale hotels opened or under construction in 2018. Our pre-opening expenses as a percentage of net revenues remained stable at 2.5% in both 2017 and 2018. |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
(RMB) |
(RMB) |
(RMB) |
(US$) |
|||||||||||||
(In millions) |
||||||||||||||||
Net cash provided by operating activities |
2,453 |
3,049 |
3,293 |
473 |
||||||||||||
Net cash used in investing activities |
6,235 |
6,345 |
285 |
41 |
||||||||||||
Net cash provided by financing activities |
4,536 |
4,248 |
6,045 |
868 |
||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(34 |
) | (24 |
) | 62 |
9 |
||||||||||
Net increase in cash, cash equivalents and restricted cash |
720 |
928 |
9,115 |
1,309 |
||||||||||||
Cash, cash equivalents and restricted cash at the beginning of the year |
3,236 |
3,956 |
4,884 |
702 |
||||||||||||
Cash, cash equivalents and restricted cash at the end of the year |
3,956 |
4,884 |
13,999 |
2,011 |
||||||||||||
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
(RMB) |
(RMB) |
(RMB) |
||||||||||
(In millions, except per share data) |
||||||||||||
Aggregate amount |
24 |
31 |
45 |
|||||||||
Per share effect—basic |
0.09 |
0.11 |
0.16 |
|||||||||
Per share effect—diluted |
0.08 |
0.10 |
0.15 |
Payment Due in the Year Ending December 31, |
Payment Due Thereafter |
|||||||||||||||||||||||||||
Total |
2020 |
2021 |
2022 |
2023 |
2024 |
|||||||||||||||||||||||
(In RMB millions) |
||||||||||||||||||||||||||||
Operating Lease Obligations |
33,653 |
3,236 |
3,231 |
3,157 |
3,031 |
2,921 |
18,077 |
|||||||||||||||||||||
Purchase Obligations |
221 |
221 |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Bank Borrowing and Other Debt, with Principal and Interest |
14,222 |
5,544 |
830 |
7,386 |
312 |
150 |
— |
|||||||||||||||||||||
Convertible Senior Notes with Principal and Interest |
3,326 |
3,326 |
— |
— |
— |
— |
— |
|||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||||||
Total |
51,422 |
12,327 |
4,061 |
10,543 |
3,343 |
3,071 |
18,077 |
|||||||||||||||||||||
• | our anticipated growth strategies, including developing new hotels at desirable locations in a timely and cost-effective manner and launching a new hotel brand; |
• | our future business development, results of operations and financial condition; |
• | expected changes in our revenues and certain cost or expense items; |
• | our ability to attract customers and leverage our brand; |
• | trends and competition in the lodging industry; and |
• | health epidemics, pandemics and similar outbreaks, including COVID-19. |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Directors and Executive Officers |
Age |
Position/Title | ||||
Qi Ji |
53 |
Founder, Executive Chairman of the Board of Directors, Chief Executive Officer | ||||
John Jiong Wu |
52 |
Co-founder, Independent Director | ||||
Tong Tong Zhao |
53 |
Co-founder, Independent Director | ||||
Xiaofan Wang |
44 |
Director | ||||
Shangzhi Zhang |
66 |
Director | ||||
Jian Shang |
52 |
Independent Director | ||||
Sébastien Bazin |
58 |
Director | ||||
Gaurav Bhushan |
48 |
Alternate Director to Sébastien Bazin | ||||
Min (Jenny) Zhang |
46 |
Executive Vice-chairlady | ||||
Teo Nee Chuan |
49 |
Chief Financial Officer | ||||
Hui Jin |
42 |
Co-President | ||||
Xinxin Liu |
42 |
Co-President |
• | Options |
• | Share Purchase Rights |
• | Options |
• | Restricted Stock and Restricted Stock Units |
• | Other Stock-based Awards |
Name |
Ordinary Shares Underlying Options Awarded |
Exercise Price (US$/Share) |
Date of Grant |
Date of Expiration |
||||||||||||
Qi Ji |
400,000 |
1.53 |
October 1, 2009 |
October 1, 2019 |
||||||||||||
436,348 |
2.7525 |
July 17, 2012 |
July 17, 2018 |
|||||||||||||
Tong Tong Zhao |
100,000 |
1.53 |
October 1, 2009 |
October 1, 2019 |
||||||||||||
John Jiong Wu |
100,000 |
1.53 |
October 1, 2009 |
October 1, 2019 |
||||||||||||
Min (Jenny) Zhang |
1,470,000 |
1.40 |
October 1, 2007 |
October 1, 2017 |
||||||||||||
300,000 |
1.53 |
November 20, 2009 |
November 20, 2019 |
|||||||||||||
207,784 |
2.7525 |
July 17, 2012 |
July 17, 2018 |
|||||||||||||
Hui Jin |
* |
0.50 |
February 4, 2007 |
February 4, 2017 |
||||||||||||
* |
4.265 |
March 31, 2011 |
March 31, 2017 |
|||||||||||||
* |
5.415 |
May 13, 2014 |
May 13, 2020 |
|||||||||||||
* |
4.925 |
March 31, 2015 |
March 31, 2021 |
|||||||||||||
Xinxin Liu |
* |
5.415 |
May 13, 2014 |
May 13, 2020 |
||||||||||||
Other individuals as a group |
16,917,570 |
0.50-5.415 |
February 4, 2007 – April 1, 2015 |
February 4, 2017 – April 1, 2021 |
Name |
Ordinary Shares Underlying Restricted Stocks Awarded |
Date of Grant | ||||
Qi Ji |
200,000 |
August 6, 2011 | ||||
897,880 |
July 17, 2012 | |||||
1,697,187 |
March 17, 2015 | |||||
1,098,224 |
March 26, 2015 | |||||
Shangzhi Zhang |
* |
January 18, 2012 | ||||
* |
January 10, 2013 | |||||
* |
December 10, 2014 | |||||
* |
March 13, 2017 | |||||
Min (Jenny) Zhang |
313,944 |
July 17, 2012 | ||||
73,188 |
March 16, 2015 | |||||
1,697,187 |
March 17, 2015 | |||||
1,098,224 |
March 26, 2015 | |||||
Hui Jin |
* |
March 31, 2011 | ||||
* |
July 2, 2012 | |||||
* |
July 1,2013 | |||||
* |
July 17, 2014 | |||||
* |
March 26, 2015 | |||||
Jian Shang |
* |
May 5, 2014 | ||||
Teo Nee Chuan |
* |
January 15, 2016 | ||||
Xinxin Liu |
* |
January 10, 2013 | ||||
* |
July 1, 2013 | |||||
* |
July 17, 2014 | |||||
* |
March 26, 2015 | |||||
* |
March 17, 2017 | |||||
* |
March 27, 2018 | |||||
* |
March 7, 2019 | |||||
Other individuals as a group |
11,766,117 |
February 7, 2011 – December 4, 2019 |
* | Upon exercise of all options granted and vesting restricted stock granted, would beneficially own less than 1% of our outstanding ordinary shares. |
• | selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
• | setting clear hiring policies for employees or former employees of the independent auditors; |
• | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
• | reviewing and approving all proposed related-party transactions; |
• | discussing the annual audited financial statements with management and the independent auditors; |
• | discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; |
• | reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; |
• | reviewing with management and the independent auditors related-party transactions and off-balance sheet transactions and structures; |
• | reviewing with management and the independent auditors the effect of regulatory and accounting initiatives and actions; |
• | reviewing policies with respect to risk assessment and risk management; |
• | reviewing our disclosure controls and procedures and internal control over financial reporting; |
• | timely reviewing reports from the independent auditors regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within GAAP that have been discussed with management and all other material written communications between the independent auditors and management; |
• | establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; |
• | annually reviewing and reassessing the adequacy of our audit committee charter; |
• | such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and |
• | meeting separately, periodically, with management, the internal auditors and the independent auditors. |
• | reviewing and approving the compensation for our senior executives; |
• | reviewing and evaluating our executive compensation and benefits policies generally; |
• | reporting to our board of directors periodically; |
• | evaluating its own performance and reporting to our board of directors on such evaluation; |
• | periodically reviewing and assessing the adequacy of the compensation committee charter and recommending any proposed changes to our board of directors; and |
• | such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. |
• | each of our directors and executive officers; and |
• | each person known to us to own beneficially more than 5% of our ordinary shares. |
Ordinary Shares Beneficially Owned (1) |
||||||||
Number |
% |
|||||||
Directors and Executive Officers: |
||||||||
Qi Ji |
99,592,728 |
(2) |
33.6 |
% | ||||
John Jiong Wu |
7,674,388 |
(4) |
2.6 |
% | ||||
Tong Tong Zhao |
26,324,652 |
(3) |
8.9 |
% | ||||
Xiaofan Wang |
— |
— |
||||||
Shangzhi Zhang |
* |
* |
||||||
Jian Shang |
* |
* |
||||||
Sébastien Bazin |
— |
— |
||||||
Gaurav Bhushan |
— |
— |
||||||
Min (Jenny) Zhang |
* |
* |
||||||
Teo Nee Chuan |
* |
* |
||||||
Hui Jin |
* |
* |
||||||
Xinxin Liu |
* |
* |
||||||
All Directors and Executive Officers as a Group |
107,995,487 |
(5) |
36.4 |
% | ||||
Principal Shareholders: |
||||||||
Winner Crown Holdings Limited |
72,344,905 |
(6) |
24.4 |
% | ||||
Accor |
15,543,167 |
(7) |
5.2 |
% | ||||
East Leader International Limited |
26,224,652 |
(8) |
8.8 |
% | ||||
Invesco Ltd. |
35,980,590 |
(9) |
12.1 |
% | ||||
Trip.com Group Limited |
22,049,446 |
(10) |
7.4 |
% |
* | Less than 1%. |
(1) | The number of ordinary shares outstanding in calculating the percentages for each listed person or group includes the ordinary shares underlying options held by such person or group exercisable within 60 days after March 31, 2020. Percentage of beneficial ownership of each listed person or group is based on (i) 296,828,271 ordinary shares outstanding as of March 31, 2020, and (ii) the ordinary shares underlying share options exercisable by such person within 60 days after March 31, 2020. |
(2) | Includes (i) 72,344,905 ordinary shares held by Winner Crown Holdings Limited, or Winner Crown, a British Virgin Islands company wholly owned by Sherman Holdings Limited, a Bahamas company, which is in turn wholly owned by Credit Suisse Trust Limited, or CS Trustee. CS Trustee acts as trustee of the Ji Family Trust, of which Mr. Qi Ji and his family members are the beneficiaries, (ii) 1,023,171 ordinary shares held by Mr. Qi Ji, and (iii) 16,000,000 ADSs representing 16,000,000 ordinary shares, which have been pledged to a third party financial institution to secure a borrowing, and 10,224,652 ordinary shares held by East Leader, over which Mr. Ji has voting power pursuant to a power of attorney dated November 27, 2014. East Leader is wholly owned by Perfect Will Holdings Limited, or Perfect Will, a British Virgin Islands company, which is in turn wholly owned by Asia Square Holdings Ltd., or Asia Square, as nominee for J. Safra Sarasin Trust Company (Singapore) Ltd., or Sarasin Trust. Sarasin Trust acts as trustee of the Tanya Trust, of which Ms. Tong Tong Zhao and her family members are the beneficiaries. |
(3) | Includes (i) 100,000 ordinary shares, and (ii) 16,000,000 ADSs representing 16,000,000 ordinary shares, which have been pledged to a third party financial institution to secure a borrowing, and 10,224,652 ordinary shares held by East Leader, a British Virgin Islands company wholly owned by Perfect Will, a British Virgin Islands company, which is in turn wholly owned by Asia Square, as nominee for Sarasin Trust. Sarasin Trust acts as trustee of the Tanya Trust, of which Ms. Tong Tong Zhao and her family members are the beneficiaries. Ms. Zhao is the sole director of East Leader. |
(4) | Includes 7,674,388 ordinary shares held by Mr. John Jiong Wu. |
(5) | Includes ordinary shares and ordinary shares issuable upon exercise of all of the options that are exercisable within 60 days after March 31, 2020 held by all of our directors and executive officers as a group. |
(6) | Winner Crown is a British Virgin Islands company wholly owned by Sherman Holdings Limited, a Bahamas company, which is in turn wholly owned by Credit Suisse Trust Limited, or CS Trustee. CS Trustee acts as trustee of the Ji Family Trust, of which Mr. Qi Ji, our founder and executive chairman, and his family members, are the beneficiaries. Mr. Ji is the sole director of Winner Crown. The address of Winner Crown is Vistra Corporate Service Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. |
(7) | Includes (i) 10,563,167 ordinary shares issued to AAPC, as reported in a Schedule 13D filed by Accor and AAPC on December 10, 2019, and (ii) 4,980,000 ADSs representing 4,980,000 ordinary shares that Accor acquired in the open market between December 14, 2014 and May 7, 2015 and transferred to AAPC on May 7, 2015. Accor is a company incorporated under the laws of France and its registered office is 82 rue Henri Farman, 92130 Issy-les-Moulineaux. AAPC is a company incorporated in Hong Kong and its registered office is Room 803, 8/F, AXA Centre, 151, Gloucester Road, Wan Chai, Hong Kong. |
(8) | East Leader is a British Virgin Islands company wholly owned by Perfect Will Holdings Limited, a British Virgin Islands company, which is in turn wholly owned by Asia Square Holdings Ltd., as nominee for Sarasin Trust Company Guernsey Limited, or Sarasin Trust. Sarasin Trust acts as trustee of the Tanya Trust, of which Ms. Tong Tong Zhao and her family members, are the beneficiaries. Ms. Zhao is the sole director of East Leader. The address of East Leader is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. |
(9) | Based on Amendment No. 1 to Schedule 13G filed with the SEC on February 7, 2020 by Invesco Ltd. |
(10) | Includes (i) 7,202,482 ordinary shares that Ctrip purchased from us, (ii) an aggregate of 11,646,964 of our ordinary shares that Ctrip purchased from the Chengwei Funds, CDH Courtyard Limited, the IDG Funds, the Northern Light Funds and Pinpoint Capital 2006 A Limited, and (iii) 3,200,000 ADSs representing 3,200,000 ordinary shares that Ctrip subscribed in our initial public offering. Ctrip is a Cayman Islands company and its address is 968 Jin Zhong Road, Shanghai 200335, People’s Republic of China. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
ITEM 8. |
FINANCIAL INFORMATION |
ITEM 9. |
THE OFFER AND LISTING |
ITEM 10. |
ADDITIONAL INFORMATION |
• | Enterprise Income Tax |
• | Value-added Tax |
• | certain financial institutions; |
• | dealers or traders in securities who use a mark-to-market method of tax accounting; |
• | persons holding ordinary shares or ADSs as part of a straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the ordinary shares or ADSs; |
• | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
• | entities classified as partnerships for U.S. federal income tax purposes; |
• | tax-exempt entities; |
• | persons that own or are deemed to own ten percent or more of our stock (measured by voting power or value); |
• | persons who acquired our ordinary shares or ADSs pursuant to the exercise of an employee stock option or otherwise as compensation; or |
• | persons holding shares in connection with a trade or business conducted outside of the United States. |
• | a citizen or individual resident of the United States; |
• | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (ii) that has otherwise elected to be treated as a U.S. person under applicable U.S. Treasury regulations. |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Service |
Fees | |
• Issuance of ADSs |
Up to U.S. 5¢ per ADS issued | |
• Cancellation of ADSs |
Up to U.S. 5¢ per ADS canceled | |
• Distribution of cash dividends or other cash distributions |
Up to U.S. 5¢ per ADS held | |
• Distribution of ADSs pursuant to stock dividends, free stock distributions or exercise of rights |
Up to U.S. 5¢ per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to U.S. 5¢ per ADS held | |
• Depositary Services |
Up to U.S. 5¢ per ADS held on the applicable record date(s) established by the Depositary (U.S. 2¢ per ADS for the year of 2019) |
• | Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares). |
• | Expenses incurred for converting foreign currency into U.S. dollars. |
• | Expenses for cable, telex and fax transmissions and for delivery of securities. |
• | Taxes and duties upon the transfer of securities (i.e., when ordinary shares are deposited or withdrawn from deposit). |
• | Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. |
CONTROLS AND PROCEDURES |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year Ended December 31, |
||||||||
2018 |
2019 |
|||||||
US$ |
US$ |
|||||||
(In millions) |
||||||||
Audit Fees (1) |
1.2 |
1.2 |
||||||
Tax Fees (2) |
0 |
0.2 |
||||||
Total |
1.2 |
1.4 |
||||||
(1) |
Audit Fees. This category includes the aggregate fees billed for the professional services rendered by our principal auditors for the interim review of quarterly financial statements and the audit of our annual financial statements. |
(2) |
Tax Fees. This category includes the aggregate fees billed for the professional services rendered by our principal auditors for tax compliance and tax advice. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
• | We follow home country practice that permits our board of directors not to have a majority of independent directors in lieu of complying with Rule 5605(b)(1) of the NASDAQ. |
• | We follow home country practice that permits our independent directors not to hold regularly scheduled meetings at which only independent directors are present in lieu of complying with Rule 5605(b)(2) of the NASDAQ. |
• | We follow home country practice that permits our board of directors not to implement a nominations committee, in lieu of complying with Rule 5605(e) of the NASDAQ Rules that requires the implementation of a nominations committee. |
• | We follow home country practice that permits our audit committee may comprise two directors rather than three required under Rule 5605(c)(2) of the NASDAQ. |
• | We followed home country practice that permits us not to disclose in our annual report or website the material terms of all agreements or arrangements between any director, nominee for director and any person or entity other than our company relating to compensation or other payment in connection with that person’s candidacy or services as a director of our company, in lieu of complying with Rule 5250(b)(3) of the NASDAQ. |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
ITEM 19. |
EXHIBITS |
Exhibit Number |
Description of Document | |||
1.1 |
||||
1.2 |
||||
1.3 |
||||
2.1 |
||||
2.2 |
||||
2.3 |
||||
2.4* |
||||
4.1 |
||||
4.2 |
||||
4.3 |
||||
4.4 |
||||
4.5 |
||||
4.6 |
||||
4.7 |
||||
4.8 |
||||
4.9 |
||||
4.10 |
4.11 |
||||
4.12 |
||||
4.13 |
||||
4.14 |
||||
4.15 |
||||
4.16 |
||||
4.17 |
||||
8.1* |
||||
11.1 |
||||
12.1* |
||||
12.2* |
||||
13.1** |
||||
15.1* |
||||
101.INS* |
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
101.SCH* |
Inline XBRL Taxonomy Extension Schema Document | |||
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
104.* |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Filed with this Annual Report on Form 20-F. |
** | Furnished with this Annual Report on Form 20-F. |
HUAZHU GROUP LIMITED | ||
By: |
/s/ Qi Ji | |
Name: |
Qi Ji | |
Title: |
Chief Executive Officer and Executive Chairman of the Board of Directors |
F- 2 |
||||
F- 5 |
||||
F- 6 |
||||
F- 7 |
||||
F- 8 |
||||
F- 9 |
||||
F- 44 |
||||
F- 48 |
(1). | We tested the effectiveness of controls over management’s intangible assets impairment evaluation, including those over the determination of the fair value of brand names, such as controls related to management’s forecasts of future revenue, operating margin and selection of the discount rate related to Crystal Orange. |
(2). | We evaluated management’s ability to accurately forecast future revenue, operating margin by comparing actual amounts to management’s historical forecasts. |
(3). | We evaluated the reasonableness of management’s forecasts of future revenue, operating margin and gross margin by comparing management’s forecasts with: |
• | Historical revenue and operating margin. |
• | Internal communications to management and the Board of Directors. |
• | Forecasted information included in the Company’s press releases as well as in the analyst and industry reports of the Company and selected companies in its peer group. |
(4). | With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates and royalty saving rate by developing a range of independent estimates and comparing those to the related rates selected by management. |
(5). | We evaluated the accuracy of cash flow forecast calculations prepared by management. |
(6). | The outbreak of COVID-19 resulted in significant disruption to the Company’s operating results starting in January 2020. We assessed this impact to be a post-balance sheet event. |
As of December 31, |
||||||||||||
2018 |
2019 |
2019 |
||||||||||
US$’million (Note 2) |
||||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
|
|
|
|
||||||||
Restricted cash |
|
|
|
|||||||||
Short-term investments measured at fair value |
|
|
|
|||||||||
Accounts receivable, net of allowance of RMB |
|
|
|
|||||||||
Loan receivables, ne t |
|
|
|
|||||||||
Amounts due from related parties |
|
|
|
|||||||||
Prepaid rent |
|
— |
— |
|||||||||
Inventories |
|
|
|
|||||||||
Other current assets |
|
|
|
|||||||||
Total current assets |
|
|
|
|||||||||
Property and equipment, net |
|
|
|
|||||||||
Intangible assets, net |
|
|
|
|||||||||
Operating lease right-of-use assets |
— |
|
|
|||||||||
Land use rights, net |
|
|
|
|||||||||
Long-term investments, including marketable securities measured at fair value of RMB |
|
|
|
|||||||||
Goodwill |
|
|
|
|||||||||
Loan receivables, net |
|
|
|
|||||||||
Other assets |
|
|
|
|||||||||
Deferred tax assets |
|
|
|
|||||||||
Total assets |
|
|
|
|||||||||
LIABILITIES AND EQUITY |
||||||||||||
Current liabilities: |
||||||||||||
Short-term debt |
|
|
|
|||||||||
Accounts payable |
|
|
|
|||||||||
Amounts due to related parties |
|
|
|
|||||||||
Salary and welfare payables |
|
|
|
|||||||||
Deferred revenue |
|
|
|
|||||||||
Operating lease liabilities, current |
— |
|
|
|||||||||
Accrued expenses and other current liabilities |
|
|
|
|||||||||
Dividends payable |
|
|
|
|||||||||
Income tax payable |
|
|
|
|||||||||
Total current liabilities |
|
|
|
|||||||||
Long-term debt |
|
|
|
|||||||||
Deferred rent |
|
— |
— |
|||||||||
Operating lease liabilities, noncurrent |
— |
|
|
|||||||||
Deferred revenue |
|
|
|
|||||||||
Other long-term liabilities |
|
|
|
|||||||||
Deferred tax liabilities |
|
|
|
|||||||||
Total liabilities |
|
|
|
|||||||||
Commitments and contingencies (Note 21 ) |
||||||||||||
Equity: |
||||||||||||
Ordinary shares (US$ |
|
|
|
|||||||||
Treasury shares ( |
( |
) | ( |
) | ( |
) | ||||||
Additional paid-in capital |
|
|
|
|||||||||
Retained earnings |
|
|
|
|||||||||
Accumulated other comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ||||||
Total Huazhu Group Limited shareholders’ equity |
|
|
|
|||||||||
Noncontrolling interest |
|
|
|
|||||||||
Total equity |
|
|
|
|||||||||
Total liabilities and equity |
|
|
|
|||||||||
Years Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
2019 |
|||||||||||||
US$’million (Note 2) |
||||||||||||||||
Revenues: |
||||||||||||||||
Leased and owned hotels |
|
|
|
|
||||||||||||
Manachised and franchised hotels |
|
|
|
|
||||||||||||
Others |
|
|
|
|
||||||||||||
Net revenues |
|
|
|
|
||||||||||||
Operating costs and expenses: |
||||||||||||||||
Hotel operating costs |
|
|
|
|
||||||||||||
Other operating costs |
|
|
|
|
||||||||||||
Selling and marketing expenses |
|
|
|
|
||||||||||||
General and administrative expenses |
|
|
|
|
||||||||||||
Pre-opening expenses |
|
|
|
|
||||||||||||
Total operating costs and expenses |
|
|
|
|
||||||||||||
Other operating (expenses) income, net |
|
|
|
|
||||||||||||
Income from operations |
|
|
|
|
||||||||||||
Interest income |
|
|
|
|
||||||||||||
Interest expense |
|
|
|
|
||||||||||||
Other income, net |
|
|
|
|
||||||||||||
Unrealized gains (losses) from fair value changes of equity securities |
|
( |
) | |
|
|||||||||||
Foreign exchange gain (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income before income taxes |
|
|
|
|
||||||||||||
Income tax expense |
|
|
|
|
||||||||||||
Income (loss) from equity method investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net income |
|
|
|
|
||||||||||||
Less: net (loss) income attributable to noncontrolling interest |
( |
) | |
( |
) | ( |
) | |||||||||
Net income attributable to Huazhu Group Limited |
|
|
|
|
||||||||||||
Other comprehensive income |
||||||||||||||||
Unrealized securities holding gains, net of tax of ( respectively |
|
— |
— |
— |
||||||||||||
Reclassification of realized gains to net income, net of tax |
( |
) | — |
— |
— |
|||||||||||
Foreign currency translation adjustments, net of tax of |
|
( |
) | ( |
) | ( |
) | |||||||||
Comprehensive income |
|
|
|
|
||||||||||||
Less: comprehensive (loss) income attributable to the noncontrolling interest |
( |
) | |
( |
) | ( |
) | |||||||||
Comprehensive income attributable to Huazhu Group Limited |
|
|
|
|
||||||||||||
Earnings per share: |
||||||||||||||||
Basic |
|
|
|
|
||||||||||||
Diluted |
|
|
|
|
||||||||||||
Weighted average number of shares used in computation: |
||||||||||||||||
Basic |
|
|
|
|
||||||||||||
Diluted |
|
|
|
|
Ordinary Shares |
Treasury Shares |
Accumulated Other |
||||||||||||||||||||||||||||||||||||||
Issued shares |
Outstanding shares |
Amount |
Share |
Amount |
Additional Paid-in Capital |
Retained Earnings |
Comprehensive (Loss) Income |
Noncontrolling Interest |
Total Equity |
|||||||||||||||||||||||||||||||
Balance at January 1, 2017 |
|
|
|
|
( |
) | |
|
( |
) | |
|
||||||||||||||||||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks |
|
|
|
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Share-based compensation |
— |
— |
— |
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Issuance of ordinary shares under ADS lending arrangement |
|
— |
|
— |
— |
— |
— |
— |
— |
|
||||||||||||||||||||||||||||||
Capped Call options in connection with issuance of convertible senior notes |
— |
— |
— |
— |
— |
( |
) | — |
— |
— |
( |
) | ||||||||||||||||||||||||||||
ADS lending arrangement in connection with issuance of convertible senior notes |
— |
— |
— |
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Noncontrolling interest recognized in connection with acquisitions |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
— |
|
|
||||||||||||||||||||||||||||||
Cash dividends paid |
— |
— |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||||||||||||||
Unrealized securities holding gains, net of tax |
— |
— |
— |
— |
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||
Reclassification of realized gains to net income, net of tax |
— |
— |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||||||||
Dividends paid to noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Capital contribution from noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Noncontrolling interest recognized from partial disposal |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Acquisition of noncontrolling interest |
— |
— |
— |
— |
— |
|
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Disposal of noncontrolling interest for deconsolidation |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||
Balance at December 31, 2017 |
|
|
|
|
( |
) | |
|
|
|
|
|||||||||||||||||||||||||||||
Cumulative effect of the adoption of ASU 2016-01 |
— |
— |
— |
— |
— |
— |
|
( |
) | — |
— |
|||||||||||||||||||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks |
|
|
|
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Share-based compensation |
— |
— |
— |
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
— |
|
|
||||||||||||||||||||||||||||||
Cash dividends declared |
— |
— |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||||||||||||||
Dividends paid to noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Capital contribution from noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Noncontrolling interest recognized in connection with acquisitions |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Acquisition of noncontrolling interest |
— |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ( |
) | |||||||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||||||||
Balance at December 31, 2018 |
|
|
|
|
( |
) | |
|
( |
) | |
|
||||||||||||||||||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks |
|
|
|
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Share-based compensation |
— |
— |
— |
— |
— |
|
— |
— |
— |
|
||||||||||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
— |
( |
) | |
|||||||||||||||||||||||||||||
Cash dividends approved |
— |
— |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||||||||||||||
Dividends paid to noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Capital contribution from noncontrolling interest holders |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Acquisition of noncontrolling interest |
— |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ( |
) | |||||||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||||||||
Disposal of noncontrolling interest for deconsolidation |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
|
|
|
|
( |
) | |
|
( |
) | |
|
||||||||||||||||||||||||||||
Years Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
2019 |
|||||||||||||
US$’million (Note 2) |
||||||||||||||||
Operating activities: |
||||||||||||||||
Net income |
|
|
|
|
||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Share-based compensation |
|
|
|
|
||||||||||||
Depreciation and amortization |
|
|
|
|
||||||||||||
Amortization of issuance cost of convertible senior notes |
|
|
|
|
||||||||||||
Deferred taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Bad debt expenses |
|
|
|
|
||||||||||||
Deferred rent |
|
|
— |
— |
||||||||||||
Loss ( from disposal of property and equipment gain ) |
|
|
( |
) | ( |
) | ||||||||||
Impairment loss |
|
|
|
|
||||||||||||
Loss (Income) from equity method investments, net of dividends |
|
|
|
|
||||||||||||
Investment (income) loss |
( |
) | |
( |
) | ( |
) | |||||||||
Noncash lease expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
||||||||||||||||
Accounts receivable |
|
( |
) | ( |
) | ( |
) | |||||||||
Prepaid rent |
( |
) | ( |
) | — |
— |
||||||||||
Inventories |
|
( |
) | ( |
) | ( |
) | |||||||||
Amounts due from related parties |
( |
) | ( |
) | |
|
||||||||||
Other current assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Accounts payable |
|
|
( |
) | |
|||||||||||
Amounts due to related parties |
|
|
|
|
||||||||||||
Salary and welfare payables |
|
|
( |
) | ( |
) | ||||||||||
Deferred revenue |
|
|
|
|
||||||||||||
Accrued expenses and other current liabilities |
|
|
|
|
||||||||||||
Operating lease liability |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Income tax payable |
|
|
( |
) | ( |
) | ||||||||||
Other long-term liabilities |
|
|
|
|
||||||||||||
Net cash provided by operating activities |
|
|
|
|
||||||||||||
Investing activities: |
||||||||||||||||
Purchases of property and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchases of intangibles |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchases of land use rights |
— |
( |
) | ( |
) | |
||||||||||
Amount received as a result of government zoning |
|
|
|
|
||||||||||||
Acquisitions, net of cash received |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from disposal of subsidiary and branch, net of cash disposed |
|
|
|
|
||||||||||||
Purchase of long-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from maturity/sale and return of long-term investments |
|
|
|
|
||||||||||||
Payment for shareholder loan to equity investees |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Collection of shareholder loan from equity investees |
|
— |
|
|
||||||||||||
Purchases of short-term investments |
( |
) | — |
— |
— |
|||||||||||
Payment for the origination of loan receivables |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from collection of loan receivables |
|
|
|
|
||||||||||||
Net cash (used in) investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Financing activities: |
||||||||||||||||
Net proceeds from issuance of ordinary shares upon exercise of options |
|
|
|
|
||||||||||||
Proceeds from short-term bank borrowings |
|
|
|
|
||||||||||||
Repayment of short-term bank borrowings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from long-term bank borrowings |
|
|
|
|
||||||||||||
Repayment of long-term bank borrowings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Funds advanced from noncontrolling interest holders |
|
|
|
|
||||||||||||
Repayment of funds advanced from noncontrolling interest holders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Acquisitions of noncontrolling interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from amounts due to related parties |
— |
|
— |
— |
||||||||||||
Repayment of amounts due to related parties |
— |
( |
) | — |
— |
|||||||||||
Contribution from noncontrolling interest holders |
|
|
|
|
||||||||||||
Dividends paid to noncontrolling interest holders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Dividends paid |
( |
) | — |
( |
) | ( |
) | |||||||||
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option |
|
— |
— |
— |
||||||||||||
Direct financing costs paid |
( |
) | — |
— |
— |
|||||||||||
Proceeds from ADS lending |
|
— |
— |
— |
||||||||||||
Net cash (used in) provided by financing activities |
|
|
|
|
||||||||||||
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
( |
) | ( |
) | |
|
||||||||||
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
||||||||||||
Cash, cash equivalents and restricted cash at the beginning of the year |
|
|
|
|
||||||||||||
Cash, cash equivalents and restricted cash at the end of the year |
|
|
|
|
||||||||||||
Supplemental disclosure of cash flow information: |
||||||||||||||||
Interest paid, net of amounts capitalized |
|
|
|
|
||||||||||||
Income taxes paid |
|
|
|
|
||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Non-cash right-of-use assets obtained in exchange for operating lease liabilities |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash investing and financing activities: |
||||||||||||||||
Purchases of property and equipment included in payables |
|
|
|
|
||||||||||||
Consideration payable for business acquisition |
|
|
|
|
||||||||||||
Purchase of intangible assets included in payables |
|
|
|
|
||||||||||||
Reimbursement of government zoning included in receivables |
|
— |
— |
— |
||||||||||||
Cash dividends declared in payables |
— |
|
|
|
1. |
ORGANIZATION AND PRINCIPAL ACTIVITIES |
2. |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES |
• |
On April 17, 2020, the Group obtained an exemption approval for the EUR million and US$ |
• |
The Group has the ability to liquidate short-term investments that are readily convertible into cash, the fair value of which was approximately RMB |
• |
The Group has been proactively negotiating with landlords for rental reductions and deferment. Although the amount of reductions to be received is not currently determinable, the Group expects it is reasonably possible that a material amount can be obtained as a common market practice in this environment. |
• |
As of March 31, 2020, the Group had unused credit facilities of approximately RMB. Based on the Group’s historical experience, funding requests will be approved in the normal course of business provided that the Group submits the required supporting documentation and the amount is within the credit limit granted and the Group believes th is will continue ; |
• |
The Group may increase borrowings or raise capital to respond to any market conditions following the COVID-19 outbreak and potential redemption of the Group’s Convertible Senior Notes of US$ |
Leasehold improvements |
||
Buildings |
||
Furniture, fixtures and equipment |
||
Motor vehicles |
• | Intellectual Property (“IP”) license |
• | Pre-opening services |
• | System maintenance services |
• | Hotel management services day-to-day management services of the hotels for the franchisees. |
Fair Value Measurements at Reporting Date Using |
||||||||||||||||||
A s of December 31, |
Description |
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
2018 |
Equity securities with readily determinable fair value |
|||||||||||||||||
2018 |
Available-for-sale debt securities |
|||||||||||||||||
2019 |
Equity securities with readily determinable fair value |
|||||||||||||||||
2019 |
Available-for-sale debt securities |
Fair Value Measurements at Reporting Date Using |
||||||||||||||||||||||
Years Ended December 31, |
Description |
Fair Value for Years Ended December 31 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Loss for the Year |
||||||||||||||||
2017 |
Property and equipment |
|
||||||||||||||||||||
2018 |
Property and equipment |
|||||||||||||||||||||
2019 |
Property and equipment |
— |
— |
|||||||||||||||||||
2019 |
Long-term Investment |
— |
— |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Hotel operating costs |
|
|
|
|||||||||
Selling and marketing expenses |
|
|
|
|||||||||
General and administrative expenses |
|
|
|
|||||||||
Total |
|
|
|
|||||||||
December 31, 2018 |
January 1, 2019 |
|||||||||||
As reported |
Effect of adoption ASU 2016-02 |
As adjusted |
||||||||||
Assets |
||||||||||||
Prepaid rent |
|
( |
) |
— |
||||||||
Intangible assets, net |
|
( |
) |
|
||||||||
Operating lease right-of-use assets |
— |
|
|
|||||||||
Total assets |
|
|
|
|||||||||
Accrued expenses and other current liabilities |
|
( |
) |
|
||||||||
Deferred rent |
|
( |
) |
— |
||||||||
Other long-term liabilities |
|
( |
) |
|
||||||||
Operating lease liability, current |
— |
|
|
|||||||||
Operating lease liability, noncurrent |
— |
|
|
|||||||||
Total liabilities |
|
|
|
|||||||||
3. |
ACQUISITIONS |
4. |
REVENUE FROM CONTRACTS WITH CUSTOMERS |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Room revenues |
||||||||||||
Food and beverage revenues |
||||||||||||
Others |
||||||||||||
Leased and owned hotels revenue |
||||||||||||
Initial one-time franchise fee |
||||||||||||
On-going management and service fees |
||||||||||||
Central reservation system usage fees, other system maintenance and support fees |
||||||||||||
Reimbursements for hotel manager fees |
||||||||||||
Other fees |
||||||||||||
Manachised and franchised hotels revenue |
||||||||||||
Other revenues |
||||||||||||
Total revenues |
||||||||||||
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Current contract liabilities |
||||||||
Long-term contract liabilities |
||||||||
Total contract liabilities |
||||||||
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Initial fees received from franchisees owners |
||||||||
Cash received for membership fees and not recognized as revenue |
||||||||
Advances received from customers |
||||||||
Deferred revenue related to the loyalty program |
||||||||
Total |
||||||||
• | Revenues related to on-going management and franchise service fees, as they are considered sales-based royalty fees. |
• | Revenues related to central reservation system usage fees, other system maintenance and support fees, and reimbursement for hotel manager fee, as the related revenues from the satisfaction of these performance obligations is recognized when the Group is entitled to invoice the amount. |
5. |
PROPERTY AND EQUIPMENT, NET |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Cost: |
||||||||
Buildings |
||||||||
Leasehold improvements |
||||||||
Furniture, fixtures and equipment |
||||||||
Motor vehicles |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Construction in progress |
||||||||
Property and equipment, net |
||||||||
6. |
INTANGIBLE ASSETS, NET AND UNFAVORABLE LEASE |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Intangible assets with indefinite life: |
||||||||
Brand name (Note 3) |
||||||||
Master brand agreement |
||||||||
Intangible assets with definite life: |
||||||||
Franchise agreements |
||||||||
Favorable lease agreements |
1 3 |
|||||||
Purchased software |
||||||||
Other intangible assets |
— |
|||||||
Total |
||||||||
Less: Accumulated amortization |
( |
) | ( |
) | ||||
Total |
||||||||
As of December 31, 2018 |
||||
Unfavorable lease agreements |
||||
Less: Accumulated amortization |
( |
) | ||
Unfavorable lease agreements, net |
||||
Amortization for Intangible Assets |
||||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
Total |
||||
7. |
INVESTMENTS |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Equity securities with readily determinable fair values: |
||||||||
Accor |
||||||||
Other marketable securities |
||||||||
Equity securities without readily determinable fair values: |
||||||||
OYO |
||||||||
Other equity securities without readily determinable fair values |
||||||||
Cjia/Cjia Group |
||||||||
Equity-method investments: |
||||||||
AAPC LUB |
||||||||
Hotel related funds |
||||||||
Shared office management entities |
||||||||
Cjia/Cjia Group |
||||||||
China Hospitality JV |
||||||||
GOOAGOO/Data Driven |
||||||||
Other investments |
||||||||
Available-for-sale debt securities: |
||||||||
Cjia/Cjia Group |
||||||||
CREATER |
— |
|||||||
Total |
||||||||
8. |
GOODWILL |
Gross Amount |
Accumulated Impairment Loss |
Net Amount |
||||||||||
Balance at January 1, 2017 |
|
( |
) | |
||||||||
Increase in goodwill related to acquisitions |
|
— |
|
|||||||||
Balance at December 31, 2017 |
|
( |
) | |
||||||||
Increase in goodwill related to acquisitions |
|
— |
|
|||||||||
Balance at December 31, 2018 |
|
( |
) | |
||||||||
Increase in goodwill related to acquisitions |
|
— |
|
|||||||||
Balance at December 31, 2019 |
|
( |
) | |
||||||||
9. |
DEBT |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Short-term debt: |
||||||||
Long-term bank borrowings, current portion |
|
|
||||||
Short-term bank borrowings |
|
|
||||||
Convertible senior notes, current portion |
— |
|
||||||
Total |
|
|
||||||
Long-term debt: |
||||||||
Long-term bank borrowings, non-current portion |
|
|
||||||
Convertible senior notes, non-current portion |
|
— |
||||||
Total |
|
|
||||||
Year Ending December 31, |
||||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
|
||||
10. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Payable to franchisees |
|
|
||||||
Other payables |
|
|
||||||
Accrued rental, utilities and other accrued expenses |
|
|
||||||
Liabilities related to customer loyalty program |
|
|
||||||
Value-added tax, other tax and surcharge payables |
|
|
||||||
Payable to noncontrolling interest holders |
|
|
||||||
Payable for business acquisitions |
|
|
|
|
|
|
|
|
Deferred rent, current |
|
— |
||||||
Total |
|
|
||||||
11. |
HOTEL OPERATING COSTS |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Rents |
|
|
|
|||||||||
Utilities |
|
|
|
|||||||||
Personnel costs |
|
|
|
|||||||||
Depreciation and amortization |
|
|
|
|||||||||
Consumable, food and beverage |
|
|
|
|||||||||
Others |
|
|
|
|||||||||
Total |
|
|
|
|||||||||
12. |
PRE-OPENING EXPENSES |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Rents |
|
|
|
|||||||||
Personnel costs |
|
|
|
|||||||||
Others |
|
|
|
|||||||||
Total |
|
|
|
|||||||||
13. |
SHARE-BASED COMPENSATION |
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life |
Aggregate Intrinsic Value |
|||||||||||||
US$ |
Years |
US$’million |
||||||||||||||
Share options outstanding at January 1, 2019 |
|
|
||||||||||||||
Exercised |
( |
) | |
|||||||||||||
Share options outstanding at December 31, 2019 |
|
|
|
|
||||||||||||
Share options vested or expected to vest at December 31, 2019 |
|
|
|
|
||||||||||||
Share options exercisable at December 31, 2019 |
|
|
|
|
||||||||||||
Number of Restricted Stocks |
Weighted Average Grant Date Fair Value |
|||||||
US$ |
||||||||
Nonvested restricted stocks outstanding at January 1, 2019 |
|
|
||||||
Granted |
|
|
||||||
Forfeited |
( |
) |
|
|||||
Vested |
( |
) |
|
|||||
Adjusted for performance conditions |
( |
) |
|
|||||
Nonvested restricted stocks outstanding at December 31, 2019 |
|
|
||||||
14. |
EARNINGS PER SHARE |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Net income attributable to ordinary shareholders — basic |
|
|
|
|||||||||
Eliminate the dilutive effect of interest expense of convertible senior notes |
|
|
|
|||||||||
Net income attributable to ordinary shareholders — diluted |
|
|
|
|||||||||
Weighted average ordinary shares outstanding — basic |
|
|
|
|||||||||
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method |
|
|
|
|||||||||
Dilutive effect of convertible senior notes |
|
|
|
|||||||||
Weighted average ordinary shares outstanding — diluted |
|
|
|
|||||||||
Basic earnings per share |
|
|
|
|||||||||
Diluted earnings per share |
|
|
|
|||||||||
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Outstanding employee options and nonvested restricted stocks |
— |
|
|
|||||||||
15. |
Cash Dividend |
16. |
LEASES |
Year Ended December 31, 2019 |
||||
Lease cost: |
||||
Operating fixed lease cost |
||||
Variable lease cost |
||||
Total lease cost |
||||
Other information: |
||||
Weighted average remaining lease term |
||||
Weighted average discount rate |
% |
Year Ending December 31, |
|||||
2020 |
|||||
2021 |
|||||
2022 |
|||||
2023 |
|||||
2024 |
|||||
Thereafter |
|||||
Total minimum lease payments |
|||||
Less: amount representing interest |
( |
) | |||
Present value of minimum lease payments |
|||||
Year Ending December 31, |
||||
2019 |
||||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
Thereafter |
||||
Total |
||||
17. |
INCOME TAXES |
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Current Tax |
|
|
|
|||||||||
Deferred Tax |
( |
) | ( |
) | ( |
) | ||||||
Total |
|
|
|
|||||||||
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
PRC statutory tax rate |
|
% | |
% | |
% | ||||||
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit |
|
% | |
% | ( |
) % | ||||||
Effect of different tax rate of group entities operating in other jurisdictions |
|
% | |
% | |
% | ||||||
Effect of change in valuation allowance |
— |
( |
)% | |
% | |||||||
Effect of tax holiday |
( |
)% | ( |
)% | ( |
) % | ||||||
Effect of cash dividends |
( |
)% | |
% | |
% | ||||||
Effect of disposal of subsidiary |
— |
|
% | — |
||||||||
Effect of excess tax benefit of rewards |
( |
)% | ( |
)% | ( |
) % | ||||||
Effective tax rate |
|
% |
|
% |
|
% | ||||||
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Aggregate amount |
|
|
|
|||||||||
Per share effect—basic |
|
|
|
|||||||||
Per share effect—diluted |
|
|
|
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Deferred tax assets: |
||||||||
Net loss carryforward |
|
|
||||||
Deferred revenue |
|
|
||||||
Long-term assets |
|
|
||||||
Bad debt provision |
|
|
||||||
Accrued payroll |
|
|
||||||
Other accrued expenses |
|
|
||||||
Share-based compensation |
|
|
||||||
Others |
|
|
||||||
Valuation allowance |
( |
) | ( |
) | ||||
Total deferred tax assets |
|
|
||||||
Deferred tax liabilities: |
||||||||
Favorable lease, building and land use rights-fair value adjustment |
|
|
||||||
Others |
|
|
||||||
Total deferred tax liabilities |
|
|
||||||
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Balance at January 1 |
|
|
|
|||||||||
Addition for tax positions |
|
( |
) | |
||||||||
Balance at December 31 |
|
|
|
|||||||||
18. |
MAINLAND CHINA CONTRIBUTION PLAN |
19. |
RESTRICTED NET ASSETS |
20. |
RELATED PARTY TRANSACTIONS AND BALANCES |
Related Party |
Nature of the Party |
Relationship with the Group | ||
T rip.com Group Limited (“Ctrip”) |
Online travel services provider |
Mr. Qi Ji is a director | ||
Sheen Star Group Limited (“Sheen Star”) |
Investment holding company |
Equity method investee of the Group, controlled by Mr. Qi Ji | ||
Accor Hotels (“Accor”) |
Hotel Group |
Shareholder of the Group | ||
China Cjia Group Limited (“Cjia Group”) |
Apartment Management Group |
Equity method investee of the Group | ||
Shanghai CREATER Industrial Co., Ltd. (“CREATER”) |
Staged office space company |
Equity method investee of the Group | ||
Shanghai Zhuchuang Enterprise Management Co., Ltd. (“Zhuchuang”) |
Staged office space company |
Equity method investee of the Group | ||
China Hospitality JV, Ltd. (“China Hospitality JV”) |
Property management company |
Equity method investee of the Group | ||
Smart Lodging Group (Cayman) Limited(“Smart Lodging”) |
Hotel chain |
Equity method investee of the Group | ||
Shanghai Lianquan Hotel Management Co., Ltd.(“Lianquan”) |
Hotel management company |
Equity method investee of the Group |
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Sheen Star |
|
|
||||||
CREATER |
|
— |
||||||
Zhuchuang |
— |
|
||||||
Ctrip |
|
|
||||||
Cjia Group |
|
|
||||||
Accor |
|
|
||||||
Lianquan |
|
|
— |
|
|
|
|
|
Others |
|
|
||||||
Total |
|
|
||||||
As of December 31, |
||||||||
2018 |
2019 |
|||||||
Ctrip |
|
|
||||||
China Hospitality JV |
|
|
||||||
Accor |
|
|
||||||
Cjia Group |
|
|
||||||
Others |
|
|
||||||
Total |
|
|
||||||
Years Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Commission expenses to Ctrip |
|
|
|
|||||||||
Lease expenses to Ctrip |
— |
|
|
|||||||||
Brand use fee, reservation fee and other related service fee to Accor |
|
|
|
|||||||||
Marketing and training fee from Ctrip |
|
|
|
|||||||||
Service fee from Accor |
|
|
|
|||||||||
Service fee from China Hospitality JV |
— |
|
|
|||||||||
Service fee from Sheen Star |
— |
|
|
|||||||||
Goods sold and service provided to Cjia Group |
|
|
|
|||||||||
Sub l ease income from Cjia Group |
|
|
— |
|
|
|
— |
|
|
|
|
|
Service fee to Cjia Group |
|
|
— |
|
|
|
— |
|
|
|
|
|
Sub l ease income from Lianquan |
|
|
— |
|
|
|
— |
|
|
|
|
|
Interest income from Sheen Star |
— |
— |
|
|||||||||
Interest income from CREATER |
— |
|
|
|||||||||
Loan payment to Cjia Group |
|
— |
— |
|||||||||
Loan payment to CREATER |
|
— |
— |
|||||||||
Loan from Cjia Group |
— |
|
— |
|||||||||
Loan payment to Smart Lodging |
|
|
— |
|
|
|
— |
|
|
|
|
|
Loan payment to Lianquan |
|
|
— |
|
|
|
— |
|
|
|
|
|
21. |
COMMITMENTS AND CONTINGENCIES |
22. |
SUBSEQUENT EVENTS |
As of December 31, |
||||||||||||
2018 |
2019 |
2019 |
||||||||||
US$’million |
||||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
|
|
|
|||||||||
Short-term investments |
|
|
|
|||||||||
Other current assets |
|
|
|
|||||||||
Total current assets |
|
|
|
|||||||||
Other assets |
|
|
|
|||||||||
Investment in subsidiaries |
|
|
|
|||||||||
Total assets |
|
|
|
|||||||||
Liabilities and equity |
||||||||||||
Current liabilities: |
||||||||||||
Short-term debt |
— |
|
|
|||||||||
Dividends payable |
|
|
|
|||||||||
Amount due to related parties |
|
|
|
|||||||||
Accrued expenses and other current liabilities |
|
|
|
|||||||||
Total current liabilities |
|
|
|
|||||||||
Long-term debt |
|
— |
— |
|||||||||
Total liabilities |
|
|
|
|||||||||
Equity: |
||||||||||||
Ordinary shares(US$ outstanding as of December 31, 2018 and 2019, respectively) |
|
|
|
|||||||||
Treasury shares ( |
( |
) | ( |
) | ( |
) | ||||||
Additional paid-in capital |
|
|
|
|||||||||
Retained earnings |
|
|
|
|||||||||
Accumulated other comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ||||||
Total equity |
|
|
|
|||||||||
Total liabilities and equity |
|
|
|
|||||||||
Years Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
2019 |
|||||||||||||
US$’million |
||||||||||||||||
Operating costs and expenses: |
||||||||||||||||
General and administrative expenses |
|
|
|
|
||||||||||||
Total operating costs and expenses |
|
|
|
|
||||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income |
|
|
|
|
||||||||||||
Interest expense |
|
|
|
|
||||||||||||
Foreign exchange gain (loss) |
( |
) | |
|
|
|||||||||||
Other income, net |
|
|
|
|
||||||||||||
Unrealized gain (loss) from fair value changes of equity securities |
|
( |
) | ( |
) | ( |
) | |||||||||
Income in investment in subsidiaries |
|
|
|
|
||||||||||||
Net income attributable to Huazhu Group Limited |
|
|
|
|
||||||||||||
Other comprehensive income |
||||||||||||||||
Unrealized securities holding gains (losses), net of tax of ( ), |
|
— |
— |
— |
||||||||||||
Reclassification of realized gains to net income, net of tax |
( |
) | — |
— |
— |
|||||||||||
Foreign currency translation adjustments, net of tax of |
|
( |
) | ( |
) | ( |
) | |||||||||
Comprehensive income |
|
|
|
|
||||||||||||
Years Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
2019 |
|||||||||||||
US$’million |
||||||||||||||||
Net cash provided by (used in) operating activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Investing activities: |
||||||||||||||||
Investment in subsidiaries |
( |
) | — |
( |
) | ( |
) | |||||||||
Receipt of investment in subsidiaries |
— |
|
|
|
||||||||||||
Purchase of long-term investments |
( |
) | ( |
) | — |
— |
||||||||||
Proceeds from sale of long-term investments |
|
— |
— |
— |
||||||||||||
Purchase of short-term investments |
( |
) | — |
— |
— |
|||||||||||
Net cash provided by (used in) investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Financing activities: |
||||||||||||||||
Net proceeds from issuance of ordinary shares upon exercise of option |
|
|
|
|
||||||||||||
Proceeds of advances from subsidiaries |
|
|
|
|
||||||||||||
Proceeds from short-term bank borrowings |
|
— |
|
|
||||||||||||
Repayment of short-term bank borrowings |
( |
) | ( |
) | — |
— |
||||||||||
Proceeds from long-term bank borrowings |
|
|
|
|
||||||||||||
Repayment of long-term bank borrowings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from issuance of convertible senior notes, net of issuance cost and capped call option |
|
— |
— |
— |
||||||||||||
Debt financing costs paid |
( |
) | — |
— |
— |
|||||||||||
Proceeds from ADS lending |
|
— |
— |
— |
||||||||||||
Dividends paid |
( |
) | — |
( |
) | ( |
) | |||||||||
Net cash provided by (used in) financing activities |
|
|
|
|
||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | |
|
|
|||||||||||
Net increase (decrease) in cash and cash equivalents, and restricted cash |
|
|
( |
) | ( |
) | ||||||||||
Cash, cash equivalents and restricted cash at the beginning of the year |
|
|
|
|
||||||||||||
Cash, cash equivalents and restricted cash at the end of the year |
|
|
|
|
||||||||||||
Balance at Beginning of Year |
Charge to Costs and Expenses |
Addition Due to Acquisition |
Charge Taken Against Allowance |
Write off |
Balance at End of Year |
|||||||||||||||||||
(Renminbi in millions) |
||||||||||||||||||||||||
Allowance for doubtful accounts of accounts receivables and other receivables: |
||||||||||||||||||||||||
2017 |
|
|
— |
— |
( |
) | |
|||||||||||||||||
2018 |
|
|
|
— |
( |
) | |
|||||||||||||||||
2019 |
|
|
— |
— |
( |
) | |
|||||||||||||||||
Valuation allowance for deferred tax assets |
||||||||||||||||||||||||
2017 |
|
|
|
( |
) | ( |
) | |
||||||||||||||||
2018 |
|
|
— |
( |
) | ( |
) | |
||||||||||||||||
2019 |
|
|
— |
( |
) | ( |
) | |