Huazhu : Announces Preliminary Results for Hotel Operations in the Fourth Quarter and the Full Year of 2021 - Form 6-K

Huazhu Group Limited Announces Preliminary Results for Hotel Operations

in the Fourth Quarter and the Full Year of 2021

Shanghai, China, January 20, 2022 - Huazhu Group Limited (NASDAQ: HTHT and HKEX: 1179) ("Huazhu", "we" or "our"), a world-leading hotel group, today announced preliminary results for hotel operations in the fourth quarter ("Q4 2021") and the full year ended December 31, 2021.

COVID-19 update

For our Legacy-Huazhu business, RevPAR recovery in Q4 2021 was still significantly impacted by several COVID-19 resurgences in China. In terms of monthly breakdown, our RevPAR recovered to 90%, 76%, and 90% of the levels in October, November, and December 2019, respectively. Entering into 2022, we saw that the COVID-19 pandemic was still lingering in several cities and provinces, such as Xi'an, Tianjin and Henan Province, etc. Additionally, the new Omicron variant was also detected recently in several cities in China. More importantly, travelling restrictions are expected to be stricter in Beijing and its surrounding areas in anticipation of the upcoming Beijing Olympic Winter Games. Therefore, all the above factors would increase uncertainties and pressures to our RevPAR recovery in the first quarter of 2022.

After continuous business recovery in Q3 2021 thanks to the progress of vaccination campaign and easing of restrictions, Steigenberger Hotels AG and its subsidiaries ("DH") in Q4 2021 were impacted by tightened governmental control measures and testing requirements due to the third and fourth waves of the COVID-19 pandemic in European countries. As a result, the recovery trend of DH was disrupted in November 2021, as RevPAR and occupancy numbers declined compared to those in the summer. In terms of vaccination, as of January 18, 2022, approximately 75% of the entire German population has received at least one dose and approximately 72% of the population has been fully vaccinated, and 47% has received the third dose. RevPAR recovery in the near-term is expected to remain under pressure due to the recent Omicron variant. However, we believe that the RevPAR recovery trend will quickly resume once the number of COVID cases start to decline.

Meanwhile, DH continues its effort to implement a comprehensive cash and cash flow improvement program, especially focusing on personnel cost reduction, process optimization and negotiation of further lease waivers. In addition, government subsidy was received in December 2021.

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Operating Results: Legacy-Huazhu⁽¹⁾

			Number of hotels				Number of rooms
			Opened in Q4 2021				Closed (2) in Q4 2021				Net added in Q4 2021				As of December 31, 2021 (3)				As of December 31, 2021
Leased and owned hotels			7				(8	)			(1	)			662				91,284
Manachised and franchised hotels			436				(74	)			362				7,044				636,859
Total			443				(82	)			361				7,706				728,143

(1) Legacy-Huazhu refers to Huazhu and its subsidiaries, excluding DH.

(2) The reasons for hotel closures mainly included non-compliance with our brand standards, operating losses, and property-related issues. In Q4 2021, we temporarily closed 9 hotels for brand upgrade and business model change purposes.

(3) As of December 31, 2021, 147 hotels were requisitioned by governmental authorities.

		As of December 31, 2021
		Number of hotels			Unopened hotels in pipeline
Economy hotels			4,772				1,194
Leased and owned hotels			397				3
Manachised and franchised hotels			4,375				1,191
Midscale and upscale hotels			2,934				1,377
Leased and owned hotels			265				15
Manachised and franchised hotels			2,669				1,362
Total			7,706				2,571

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Operational hotels excluding hotels under requisition
		For the quarter ended
		December 31,			September 30,			December 31,			yoy
		2020			2021			2021			change
Average daily room rate (in RMB)
Leased and owned hotels			272				296				286				5.1	%
Manachised and franchised hotels			224				238				232				3.9	%
Blended			231				246				239				3.7	%
Occupancy Rate (as a percentage)
Leased and owned hotels			79.6	%			69.7	%			67.4	%			-12.2	p.p.
Manachised and franchised hotels			80.8	%			72.2	%			68.4	%			-12.4	p.p.
Blended			80.6	%			71.9	%			68.2	%			-12.4	p.p.
RevPAR (in RMB)
Leased and owned hotels			217				206				193				-11.0	%
Manachised and franchised hotels			181				172				159				-12.1	%
Blended			186				177				163				-12.2	%

		For the quarter ended
		December 31,			December 31,			yoy
		2019			2021			change
Average daily room rate (in RMB)
Leased and owned hotels			277				286				3.2	%
Manachised and franchised hotels			223				232				4.5	%
Blended			232				239				3.1	%
Occupancy Rate (as a percentage)
Leased and owned hotels			84.7	%			67.4	%			-17.4	p.p.
Manachised and franchised hotels			81.6	%			68.4	%			-13.3	p.p.
Blended			82.2	%			68.2	%			-13.9	p.p.
RevPAR (in RMB)
Leased and owned hotels			235				193				-17.9	%
Manachised and franchised hotels			182				159				-12.5	%
Blended			191				163				-14.4	%

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		For the year ended
		December 31,			December 31,			yoy
		2020			2021			change
Average daily room rate (in RMB)
Leased and owned hotels			241				286				18.7	%
Manachised and franchised hotels			204				232				13.3	%
Blended			210				239				13.8	%
Occupancy Rate (as a percentage)
Leased and owned hotels			68.9	%			70.6	%			+1.7 p.p.
Manachised and franchised hotels			71.4	%			72.4	%			+1.0 p.p.
Blended			71.0	%			72.2	%			+1.2 p.p.
RevPAR (in RMB)
Leased and owned hotels			166				202				21.7	%
Manachised and franchised hotels			146				168				14.9	%
Blended			149				172				15.6	%

		For the year ended
		December 31,			December 31,			yoy
		2019			2021			change
Average daily room rate (in RMB)
Leased and owned hotels			276				286				3.5	%
Manachised and franchised hotels			224				232				3.2	%
Blended			234				239				2.0	%
Occupancy Rate (as a percentage)
Leased and owned hotels			87.0	%			70.6	%			-16.3p.p.
Manachised and franchised hotels			83.8	%			72.4	%			-11.4p.p.
Blended			84.4	%			72.2	%			-12.2p.p.
RevPAR (in RMB)
Leased and owned hotels			240				202				-15.9	%
Manachised and franchised hotels			188				168				-10.8	%
Blended			198				172				-12.7	%

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Same-hotel operational data by class

Mature hotels in operation for more than 18 months (excluding hotels under requisition)

		Number of hotels			Same-hotel RevPAR			Same-hotel ADR			Same-hotel Occupancy
		As of December 31,			For the quarter ended December 31,				yoy change			For the quarter ended December 31,				yoy change				For the quarter ended December 31,				yoy change
			2020				2021				2020				2021							2020				2021							2020				2021				(p.p.)
Economy hotels			3,341				3,341				152				128				-15.6	%			179				180				0.8	%			85.2	%			71.4	%			-13.8
Leased and owned hotels			388				388				170				146				-14.1	%			201				204				1.1	%			84.6	%			71.9	%			-12.7
Manachised and franchised hotels			2,953				2,953				149				125				-15.9	%			174				175				0.6	%			85.3	%			71.3	%			-14.0
Midscale and upscale hotels			1,734				1,734				247				208				-15.7	%			314				312				-0.5	%			78.7	%			66.7	%			-12.0
Leased and owned hotels			222				222				280				238				-15.1	%			378				378				0.2	%			74.2	%			62.8	%			-11.4
Manachised and franchised hotels			1,512				1,512				240				202				-15.9	%			301				299				-0.8	%			79.7	%			67.6	%			-12.1
Total			5,075				5,075				192				162				-15.6	%			232				233				0.3	%			82.5	%			69.4	%			-13.1

		Number of hotels			Same-hotel RevPAR			Same-hotel ADR			Same-hotel Occupancy
		As of December 31,			For the quarter ended December 31,				yoy change			For the quarter ended December 31,				yoy change				For the quarter ended December 31,				yoy change
		2019			2021			2019			2021						2019			2021						2019			2021			(p.p.)
Economy hotels			2,442				2,442				163				130				-20.1	%			186				181				-2.8	%			87.9	%			72.2	%			-15.7
Leased and owned hotels			380				380				185				145				-21.8	%			211				202				-4.4	%			87.7	%			71.7	%			-16.0
Manachised and franchised hotels			2,062				2,062				158				127				-19.7	%			179				175				-2.4	%			87.9	%			72.3	%			-15.6
Midscale and upscale hotels			1,160				1,160				269				206				-23.5	%			325				313				-3.7	%			82.9	%			65.9	%			-17.0
Leased and owned hotels			187				187				329				229				-30.6	%			394				369				-6.5	%			83.5	%			62.0	%			-21.5
Manachised and franchised hotels			973				973				253				200				-21.0	%			305				298				-2.4	%			82.7	%			66.9	%			-15.8
Total			3,602				3,602				204				160				-21.7	%			237				229				-3.5	%			86.0	%			69.7	%			-16.2

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Same-hotel operational data by class

Mature hotels in operation for more than 18 months (excluding hotels under requisition)

		Number of hotels		Same-hotel RevPAR			Same-hotel ADR			Same-hotel Occupancy
				For the year					For the year					For the year
		As of December 31,		ended December 31,		yoy change			ended December 31,		yoy change			ended December 31,			yoy change
		2020		2021		2020		2021					2020		2021					2020			2021			(p.p.)
Economy hotels		3,341		3,341		125		138		10.8	%		164		182		10.8	%		75.8	%		75.8	%		+0.0
Leased and owned hotels		388		388		131		153		17.3	%		179		206		15.0	%		73.0	%		74.5	%		+1.5
Manachised and franchised hotels		2,953		2,953		123		135		9.3	%		161		177		9.7	%		76.4	%		76.1	%		-0.3
Midscale and upscale hotels		1,734		1,734		202		221		9.3	%		289		315		8.8	%		69.8	%		70.1	%		+0.3
Leased and owned hotels		222		222		219		250		14.2	%		338		378		11.7	%		64.8	%		66.2	%		+1.4
Manachised and franchised hotels		1,512		1,512		198		214		8.1	%		279		301		8.0	%		70.9	%		71.0	%		+0.1
Total		5,075		5,075		156		172		10.2	%		213		234		10.0	%		73.3	%		73.5	%		+0.1

		Number of hotels		Same-hotel RevPAR			Same-hotel ADR			Same-hotel Occupancy
				For the year				For the year				For the year
		As of December 31,		ended December 31,		yoy change			ended December 31,		yoy change			ended December 31,			yoy change
		2019		2021		2019		2021					2019		2021					2019			2021			(p.p.)
Economy hotels		2,442		2,442		172		138		-19.8	%		190		182		-4.7	%		90.2	%		75.9	%		-14.3
Leased and owned hotels		380		380		193		151		-21.6	%		213		203		-4.4	%		90.7	%		74.4	%		-16.3
Manachised and franchised hotels		2,062		2,062		166		134		-19.3	%		185		176		-4.7	%		90.1	%		76.3	%		-13.7
Midscale and upscale hotels		1,160		1,160		275		218		-20.8	%		331		315		-4.8	%		83.0	%		69.0	%		-14.0
Leased and owned hotels		187		187		335		244		-26.9	%		398		371		-6.8	%		84.1	%		65.9	%		-18.2
Manachised and franchised hotels		973		973		256		209		-18.4	%		310		299		-3.6	%		82.7	%		70.0	%		-12.7
Total		3,602		3,602		209		167		-20.1	%		238		227		-4.7	%		87.6	%		73.4	%		-14.2

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Operating Results: Legacy-DH⁽⁴⁾

		Number of hotels			Number of rooms			Unopened hotels in pipeline
		Opened in Q4 2021			Closed in Q4 2021			Net added in Q4 2021			As of December 31, 2021(5)			As of December 31,2021			As of December 31,2021
Leased hotels			1				-				1				76				14,264				28
Manachised and franchised hotels			3				(1	)			2				48				10,809				9
Total			4				(1	)			3				124				25,073				37

(4)	Legacy-DH refers to DH.

(5)	As of December 31, 2021, a total of 4 hotels were temporarily closed. 1 hotel was closed for renovation and 1 hotel was closed due to flood damage. Additionally, 1 hotel was in winter break and 1 hotel was temporarily closed due to low demand.

		For the quarter ended
		December 31,			September 30,			December 31,			yoy
		2020			2021			2021			change
Average daily room rate (in EUR)
Leased hotels			78				94				95				21.6	%
Manachised and franchised hotels			73				104				93				26.6	%
Blended			76				99				94				23.5	%
Occupancy rate (as a percentage)
Leased hotels			20.9	%			48.0	%			42.8	%			+22.0	p.p.
Managed and franchised hotels			25.4	%			49.4	%			50.7	%			+25.3	p.p.
Blended			22.5	%			48.6	%			46.1	%			+23.6	p.p.
RevPAR (in EUR)
Leased hotels			16				45				41				149.6	%
Managed and franchised hotels			19				52				47				152.7	%
Blended			17				48				43				152.6	%

		For the year ended
		December 31,			December 31,			yoy
		2020			2021			change
Average daily room rate (in EUR)
Leased and owned hotels			89				91				2.2	%
Manachised and franchised hotels			85				89				4.8	%
Blended			88				90				3.0	%
Occupancy rate (as a percentage)
Leased and owned hotels			33.9	%			31.6	%			-2.3	p.p.
Manachised and franchised hotels			36.3	%			40.5	%			+4.2	p.p.
Blended			34.8	%			35.2	%			+0.3	p.p.
RevPAR (in EUR)
Leased and owned hotels			30				29				-4.6	%
Manachised and franchised hotels			31				36				16.8	%
Blended			31				32				4.0	%

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Hotel Portfolio by Brand

		As of December 31, 2021
		Hotels			Rooms			Unopened hotels
		in operation			in pipeline
Economy hotels			4,786				387,895				1,206
HanTing Hotel			3,027				274,118				696
Hi Inn			443				24,674				117
Elan Hotel(6)			1,083				64,606				353
Ibis Hotel			219				22,834				28
Zleep Hotels			14				1,663				12
Midscale hotels			2,450				271,421				1,072
Ibis Styles Hotel			79				8,404				21
Starway Hotel			528				44,016				252
JI Hotel			1,381				166,836				575
Orange Hotel			432				47,393				217
CitiGO Hotel			30				4,772				7
Upper midscale hotels			454				67,068				264
Crystal Orange Hotel			144				19,190				58
Manxin Hotel			84				8,273				62
Madison Hotel			37				5,490				56
Mercure Hotel			125				21,217				50
Novotel Hotel			15				4,032				13
IntercityHotel(7)			49				8,866				25
Upscale hotels			125				23,056				61
Jaz in the City			3				587				1
Joya Hotel			9				1,760				0
Blossom House			34				1,658				39
Grand Mercure Hotel			7				1,485				3
Steigenberger Hotels & Resorts(8)			65				16,389				12
MAXX (9)			7				1,177				6
Others			15				3,776				5
Other hotels(10)			15				3,776				5
Total			7,830				753,216				2,608

(6)	As of December 31, 2021, 70 Ni Hao Hotels were included in the operational hotel for Elan Hotels and 163 Ni Hao Hotels were included in the pipeline for Elan Hotels.

(7)	As of December 31, 2021, 2 operational hotels and 8 pipeline hotels of IntercityHotel were in China.

(8)	As of December 31, 2021, 14 operational hotels and 6 pipeline hotels of Steigenberger Hotels & Resorts were in China.

(9)	As of December 31, 2021, 2 operational hotels and 5 pipeline hotels of MAXX were in China.

(10)	Other hotels include other partner hotels and other hotel brands in Yongle Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).

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About Huazhu Group Limited

Originated in China, Huazhu Group Limited is a world-leading hotel group. As of December 31, 2021, Huazhu operated 7,830 hotels with 753,216 rooms in operation in 17 countries. Huazhu's brands include Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel, Madison Hotel, Joya Hotel, Blossom House, Ni Hao Hotel and CitiGO Hotel. Upon the completion of the acquisition of DH on January 2, 2020, Huazhu added five brands to its portfolio, including Steigenberger Hotels & Resorts, MAXX by Steigenberger, Jaz in the City, IntercityHotel and Zleep Hotels. In addition, Huazhu also has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in the pan-China region.

Huazhu's business includes leased and owned, manachised and franchised models. Under the lease and ownership model, Huazhu directly operates hotels typically located on leased or owned properties. Under the manachise model, Huazhu manages manachised hotels through the on-site hotel managers that Huazhu appoints, and Huazhu collects fees from franchisees. Under the franchise model, Huazhu provides training, reservations and support services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers. Huazhu applies a consistent standard and platform across all of its hotels. As of December 31, 2021, Huazhu operates 14 percent of its hotel rooms under lease and ownership model, and 86 percent under manachise and franchise models.

For more information, please visit Huazhu's website: http://ir.huazhu.com.

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; economic conditions; the regulatory environment; our ability to attract and retain customers and leverage our brands; trends and competition in the lodging industry; the expected growth of demand for lodging; and other factors and risks detailed in our filings with the U.S. Securities and Exchange Commission. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, which may be identified by terminology such as "may," "should," "will," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "forecast," "project" or "continue," the negative of such terms or other comparable terminology. Readers should not rely on forward-looking statements as predictions of future events or results.

Huazhu undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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