Cover Page
Cover Page | 9 Months Ended |
Sep. 30, 2022 | |
Document and Entity Information | |
Document Type | 6-K |
Document Period End Date | Sep. 30, 2022 |
Entity Registrant Name | H World Group Limited |
Entity Central Index Key | 0001483994 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
UNAUDITED INTERIM CONDENSED CON
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 5,177 | $ 728 | ¥ 5,116 |
Restricted cash | 40 | 6 | 25 |
Short-term investments measured at fair value | 1,915 | 269 | 2,589 |
Accounts receivable, net of allowance of RMB50 and RMB62 as of December 31, 2021 and September 30, 2022, respectively | 1,231 | 173 | 521 |
Loan receivables - current, net of allowance of RMB2 and RMB2 as of December 31, 2021 and September 30, 2022 respectively | 161 | 23 | 218 |
Amounts due from related parties, net of allowance of RMB38 and RMB18 as of December 31, 2021 and September 30, 2022 respectively | 177 | 25 | 149 |
Inventories | 83 | 12 | 88 |
Other current assets, net of allowance of RMB5 and RMB1 as of December 31, 2021 and September 30, 2022, respectively | 779 | 109 | 847 |
Total current assets | 9,563 | 1,345 | 9,553 |
Property and equipment, net | 6,804 | 957 | 7,056 |
Intangible assets, net | 5,240 | 737 | 5,385 |
Operating lease right-of-use assets | 28,610 | 4,022 | 29,942 |
Finance lease right-of-use assets | 2,372 | 333 | 2,235 |
Land use rights, net | 201 | 28 | 206 |
Long-term investments | 1,865 | 262 | 1,965 |
Goodwill | 5,069 | 713 | 5,132 |
Amounts due from a related party, net of RMB0 and RMB0 as of December 31, 2021 and September 30, 2022 respectively | 6 | 1 | 1 |
Loan receivables, net of RMB3 and RMB2 as of December 31, 2021 and September 30, 2022 respectively | 115 | 16 | 98 |
Other assets, net of allowance of RMB1 and RMB1 as of December 31, 2021 and September 30, 2022, respectively | 696 | 98 | 834 |
Deferred tax assets | 846 | 119 | 862 |
Total assets | 61,387 | 8,631 | 63,269 |
Current liabilities: | |||
Short-term debt | 5,144 | 723 | 6,232 |
Accounts payable | 810 | 114 | 968 |
Amounts due to related parties | 85 | 12 | 197 |
Salary and welfare payables | 459 | 64 | 591 |
Deferred revenue | 1,280 | 180 | 1,366 |
Operating lease liabilities, current | 3,732 | 525 | 3,628 |
Finance lease liabilities, current | 45 | 6 | 41 |
Accrued expenses and other current liabilities | 2,054 | 289 | 1,838 |
Income tax payable | 126 | 18 | 418 |
Total current liabilities | 13,735 | 1,931 | 15,279 |
Long-term debt | 6,091 | 856 | 3,565 |
Operating lease liabilities, non-current | 27,216 | 3,826 | 28,012 |
Finance lease liabilities, non-current | 2,857 | 402 | 2,684 |
Deferred revenue | 822 | 116 | 785 |
Other long-term liabilities | 967 | 136 | 903 |
Retirement benefit obligations | 138 | 19 | 144 |
Deferred tax liabilities | 798 | 112 | 853 |
Total liabilities | 52,624 | 7,398 | 52,225 |
Commitments and contingencies | |||
Equity: | |||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,255,971,250 and 3,262,285,720 shares issued as of December 31, 2021 and September 30, 2022, 3,120,746,090 and 3,109,265,860 shares outstanding as of December 31, 2021 and September 30, 2022, respectively) | 0 | 0 | 0 |
Treasury shares (30,974,040 and 48,768,740 shares as of December 31, 2021 and September 30, 2022, respectively) | (441) | (62) | (107) |
Additional paid-in capital | 10,127 | 1,424 | 9,964 |
Retained earnings | (1,076) | (151) | 1,037 |
Accumulated other comprehensive income | 70 | 10 | 41 |
Total H World Group Limited shareholders' equity | 8,680 | 1,221 | 10,935 |
Noncontrolling interest | 83 | 12 | 109 |
Total equity | 8,763 | 1,233 | 11,044 |
Total liabilities and equity | ¥ 61,387 | $ 8,631 | ¥ 63,269 |
UNAUDITED INTERIM CONDENSED C_2
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Millions | Sep. 30, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares |
Accounts receivable, allowance | ¥ 62 | ¥ 50 |
Loan receivables - current, net of allowance | 53 | 48 |
Amounts due from related parties current, net of allowance | 37 | 17 |
Other current assets, net of allowance | 5 | 6 |
Amounts due from related parties , net of allowance | 0 | 0 |
Loan receivables, net of allowance | 6 | 4 |
Other assets, net of allowance | ¥ 1 | ¥ 1 |
Ordinary shares, shares authorized | shares | 80,000,000,000 | 80,000,000,000 |
Ordinary shares, shares issued | shares | 3,262,285,720 | 3,255,971,250 |
Ordinary shares, shares outstanding | shares | 3,109,265,860 | 3,120,746,090 |
Treasury shares, shares | shares | 48,768,740 | 30,974,040 |
UNAUDITED INTERIM CONDENSED C_3
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) ¥ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 CNY (¥) ¥ / shares shares | |
Revenues: | |||
Total revenues | ¥ 10,156 | $ 1,428 | ¥ 9,437 |
Operating costs and expenses: | |||
Hotel operating costs | 8,830 | 1,242 | 8,087 |
Other operating costs | 39 | 5 | 38 |
Selling and marketing expenses | 445 | 63 | 457 |
General and administrative expenses | 1,235 | 174 | 1,108 |
Pre-opening expenses | 82 | 12 | 52 |
Total operating costs and expenses | 10,631 | 1,496 | 9,742 |
Other operating income, net | 275 | 39 | 431 |
Income (loss) from operations | (200) | (29) | 126 |
Interest income | 60 | 8 | 64 |
Interest expense | (292) | (41) | (313) |
Other income (expense), net | 74 | 10 | 205 |
Unrealized gains (losses) from fair value changes of equity securities | (499) | (70) | 120 |
Foreign exchange (loss) gain | (822) | (116) | (204) |
Loss before income taxes | (1,679) | (238) | (2) |
Income tax expense (benefit) | 4 | 1 | (3) |
Loss from equity method investments | 39 | 5 | 18 |
Net loss | (1,722) | (244) | (17) |
Less: net loss attributable to noncontrolling interest | (25) | (4) | (10) |
Net loss attributable to H World Group Limited | (1,697) | (240) | (7) |
Other comprehensive income (loss) | |||
Gain (loss) arising from defined benefit plan, net of tax of RMB0 and RMB0 for the nine months ended September 30, 2021 and 2022, respectively | 0 | 0 | 0 |
Foreign currency translation adjustments, net of tax of nil for the nine months ended September 30, 2021 and 2022, respectively | 29 | 4 | (106) |
Comprehensive loss | (1,693) | (240) | (123) |
Less: comprehensive loss attributable to the noncontrolling interest | (25) | (4) | (10) |
Comprehensive loss attributable to H World Group Limited | ¥ (1,668) | $ (236) | ¥ (113) |
Losses per share: | |||
Basic | (per share) | ¥ (0.55) | $ (0.08) | ¥ 0 |
Diluted | (per share) | ¥ (0.55) | $ (0.08) | ¥ 0 |
Weighted average number of shares used in computation: | |||
Basic (in shares) | 3,111,759,089 | 3,111,759,089 | 3,112,910,313 |
Diluted (in shares) | 3,111,759,089 | 3,111,759,089 | 3,112,910,313 |
Leased and owned hotels | |||
Revenues: | |||
Total revenues | ¥ 6,698 | $ 942 | ¥ 6,025 |
Manachised and franchised hotels | |||
Revenues: | |||
Total revenues | 3,247 | 456 | 3,300 |
Others | |||
Revenues: | |||
Total revenues | ¥ 211 | $ 30 | ¥ 112 |
UNAUDITED INTERIM CONDENSED C_4
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Gain arising from defined benefit plan, tax | ¥ 0 | ¥ 0 |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 |
UNAUDITED INTERIM CONDENSED C_5
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Millions, $ in Millions | Ordinary Shares CNY (¥) shares | Treasury Shares CNY (¥) shares | Additional Paid-in Capital CNY (¥) | Retained Earnings CNY (¥) | Accumulated Other Comprehensive (Loss) Income CNY (¥) | Noncontrolling Interest CNY (¥) | CNY (¥) shares | USD ($) shares |
Balance at beginning issued (in shares) at Dec. 31, 2020 | shares | 3,243,644,440 | |||||||
Balance at beginning outstanding (in shares) at Dec. 31, 2020 | shares | 3,108,425,680 | |||||||
Balance at beginning at Dec. 31, 2020 | ¥ 0 | ¥ 9,808 | ¥ 1,502 | ¥ 127 | ¥ 102 | ¥ 11,432 | ||
Treasury shares, balance (in shares) at Dec. 31, 2020 | shares | 30,967,640 | |||||||
Treasury shares, balance at Dec. 31, 2020 | ¥ (107) | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 0 | 0 | 0 | |||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 8,465,600 | |||||||
Conversion of Convertible Senior Notes due 2022 (In shares) | shares | 1,340 | |||||||
Conversion of Convertible Senior Notes due 2022 | ¥ 0 | 0 | 0 | |||||
Share-based compensation | 94 | 94 | ||||||
Net loss | (7) | (10) | (17) | |||||
Dividends paid to noncontrolling interest holders | (1) | (1) | ||||||
Capital contribution from noncontrolling interest holders | 1 | 1 | ||||||
Acquisition of noncontrolling interest | (3) | (7) | (10) | |||||
Foreign currency translation adjustments | (106) | (106) | ||||||
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | 50 | ||||||
Noncontrolling interest recognized in connection with acquisitions | 21 | 21 | ||||||
Income arising from defined benefit plan, net of tax | 0 | 0 | ||||||
Balance at ending issued (in shares) at Sep. 30, 2021 | shares | 3,252,111,380 | |||||||
Balance at ending outstanding (in shares) at Sep. 30, 2021 | shares | 3,116,892,620 | |||||||
Balance at ending at Sep. 30, 2021 | ¥ 0 | 9,949 | 1,495 | 21 | 106 | ¥ 11,464 | ||
Treasury shares, balance (in shares) at Sep. 30, 2021 | shares | 30,967,640 | |||||||
Treasury shares, balance at Sep. 30, 2021 | ¥ (107) | |||||||
Balance at beginning issued (in shares) at Dec. 31, 2021 | shares | 3,255,971,250 | 3,255,971,250 | 3,255,971,250 | |||||
Balance at beginning outstanding (in shares) at Dec. 31, 2021 | shares | 3,120,746,090 | 3,120,746,090 | 3,120,746,090 | |||||
Balance at beginning at Dec. 31, 2021 | ¥ 0 | 9,964 | 1,037 | 41 | 109 | ¥ 11,044 | ||
Treasury shares, balance (in shares) at Dec. 31, 2021 | shares | 30,974,040 | 30,974,040 | 30,974,040 | |||||
Treasury shares, balance at Dec. 31, 2021 | ¥ (107) | ¥ (107) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 0 | 0 | ||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 6,314,470 | |||||||
Share-based compensation | 77 | 77 | ||||||
Net loss | (1,697) | (25) | (1,722) | $ (244) | ||||
Dividends paid to noncontrolling interest holders | (1) | (1) | ||||||
Capital contribution from noncontrolling interest holders | 0 | 0 | ||||||
Acquisition of noncontrolling interest | 0 | (1) | (1) | |||||
Foreign currency translation adjustments | 29 | 29 | 4 | |||||
Repurchase of shares, Value | ¥ (334) | (334) | ||||||
Repurchase of shares (in ordinary shares) | shares | (17,794,700) | |||||||
Repurchase of shares (in Treasury Shares) | shares | 17,794,700 | |||||||
Cash dividends declared | (416) | (416) | ||||||
Noncontrolling interest recognized in connection with acquisitions | 1 | 1 | ||||||
Income arising from defined benefit plan, net of tax | 0 | 0 | $ 0 | |||||
Termination of Capped Call | 86 | ¥ 86 | ||||||
Balance at ending issued (in shares) at Sep. 30, 2022 | shares | 3,262,285,720 | 3,262,285,720 | 3,262,285,720 | |||||
Balance at ending outstanding (in shares) at Sep. 30, 2022 | shares | 3,109,265,860 | 3,109,265,860 | 3,109,265,860 | |||||
Balance at ending at Sep. 30, 2022 | ¥ 0 | ¥ 10,127 | ¥ (1,076) | ¥ 70 | ¥ 83 | ¥ 8,763 | $ 1,233 | |
Treasury shares, balance (in shares) at Sep. 30, 2022 | shares | 48,768,740 | 48,768,740 | 48,768,740 | |||||
Treasury shares, balance at Sep. 30, 2022 | ¥ (441) | ¥ (441) | $ (62) |
UNAUDITED INTERIM CONDENSED C_6
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | Sep. 30, 2022 shares |
ADS Lending Arrangement | |
Share issued but not outstanding | 104,251,120 |
UNAUDITED INTERIM CONDENSED C_7
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | |
Operating activities: | |||
Net loss | ¥ (1,722) | $ (244) | ¥ (17) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Share-based compensation | 77 | 11 | 94 |
Depreciation and amortization and other | 1,143 | 161 | 1,126 |
Impairment loss | 101 | 14 | 60 |
Loss from equity method investments, net of dividends received | 88 | 12 | 22 |
Investment loss (income) | 434 | 61 | (354) |
Foreign currency exchange loss | 590 | 83 | 175 |
Noncash lease expense | 1,940 | 273 | 1,604 |
Changes in operating assets and liabilities | (2,167) | (305) | (2,103) |
Others | 36 | 6 | (134) |
Changes in operating assets and liabilities, net of effect of acquisitions: | |||
Net cash provided by operating activities | 520 | 72 | 473 |
Investing activities: | |||
Capital expenditures | (824) | (116) | (1,207) |
Acquisitions, net of cash received | (59) | (8) | (741) |
Purchases of investments | (377) | (53) | (472) |
Proceeds from maturity/sale and return of investments | 568 | 80 | 1,430 |
Loan advances | (152) | (21) | (85) |
Loan collections | 172 | 24 | 149 |
Others | 2 | 0 | 27 |
Net cash used in investing activities | (670) | (94) | (899) |
Financing activities: | |||
Net proceeds from issuance of ordinary shares | 1 | ||
Payment of share repurchase | (334) | (47) | |
Proceeds from debt | 4,813 | 677 | 2,217 |
Repayment of debt | (4,111) | (578) | (3,403) |
Dividend paid | (416) | (58) | |
Cash received for the termination of Capped Call | 86 | 12 | |
Others | (32) | (4) | (17) |
Net cash provided by (used in) financing activities | 6 | 2 | (1,202) |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 220 | 31 | (51) |
Net change in cash, cash equivalents and restricted cash | 76 | 11 | (1,679) |
Cash, cash equivalents and restricted cash at the beginning of the period | 5,141 | 723 | 7,090 |
Cash, cash equivalents and restricted cash at the end of the period | 5,217 | 734 | 5,411 |
Supplemental disclosure of cash flow information: | |||
Cash and cash equivalents | 5,177 | 5,385 | |
Restricted cash | 40 | 26 | |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 5,217 | 5,411 | |
Interest paid, net of amounts capitalized | 150 | 21 | 203 |
Income taxes paid | 319 | 45 | 377 |
Cash paid for amounts included in the measurement of operating lease liabilities | 2,393 | 336 | 2,895 |
Cash paid for amounts included in the measurement of finance lease liabilities | 75 | 10 | 71 |
Non-cash right-of-use assets obtained in exchange for operating lease liabilities | 802 | 113 | 1,604 |
Non-cash right-of-use assets obtained in exchange for finance lease liabilities | 259 | 36 | |
Non-cash right-of-use assets obtained in acquisition for operating lease | 173 | 5 | 1,710 |
Non-cash lease liabilities obtained in acquisition for operating lease | 144 | 20 | 1,692 |
Supplemental schedule of non-cash investing and financing activities: | |||
Purchases of property and equipment included in payables | 433 | 61 | 431 |
Consideration payable for business acquisition | ¥ 35 | $ 5 | 85 |
Purchase of intangible assets included in payables | ¥ 2 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. H World Group Limited (the “Company”), formerly, Huazhu Group Limited was incorporated in the Cayman Islands under the laws of the Cayman Islands on January 4, 2007. The principal business activities of the Company and its subsidiaries and consolidated variable interest entities (the “Group”) are to develop leased and owned, manachised and franchised hotels mainly in the People’s Republic of China(“PRC”). On January 2, 2020, the Group completed the acquisition of 100% equity interest of Steigenberger Hotels Aktiengesellschaft Germany (“Deutsche Hospitality” or “DH”). Deutsche Hospitality was engaged in the business of leasing, franchising, operating and managing hotels under five brands in the midscale and upscale market in Europe, the Middle East and Africa. After the acquisition, “legacy DH” refers to Deutsche Hospitality and its subsidiaries and “legacy Huazhu” refers to the Group excluding Deutsche Hospitality. The Group completed public offering in Hong Kong in September 2020 with proceeds of RMB6,018 and the trading of ordinary shares on the Hong Kong Stock Exchange commenced on September 22, 2020 under the stock code “1179”. In June 2021, the Company effected a share split that each issued and unissued ordinary share of the Company with a par value of US$0.0001 was sub-divided into 10 ordinary shares with a par value of US$0.00001 each. The ratio of ADS to ordinary share was adjusted from one (1) ADS representing one (1) ordinary share to one (1) ADS representing ten (10) ordinary shares. Except otherwise stated, the share split has been retrospectively applied for all periods presented In June 2022, the English name of the Company was changed from “Huazhu Group Limited” to “H World Group Limited”. Leased and owned hotels The Group leases hotel properties from property owners or purchases properties directly and is responsible for all aspects of hotel operations and management, including hiring, training and supervising the managers and employees required to operate the hotels. In addition, the Group is responsible for hotel development and customization to conform to the standards of the Group brands at the beginning of the lease or the construction, as well as repairs and maintenance, operating expenses and management of properties over the term of the lease or the land and building certificate. As of December 31, 2021 and September 30, 2022, the Group had 738 and 710 leased and owned hotels in operation, respectively. Manachised and franchised hotels Typically the Group enters into certain franchise and management arrangements with franchisees for which the Group is responsible for providing branding, quality assurance, training, reservation, hiring and appointing of the hotel general manager and various other support services relating to the hotel renovation and operation. Those hotels are classified as manachised hotels. Under typical franchise and management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees, the majority of which are equal to a certain percentage of the revenues of the hotel. The franchisee is responsible for the costs of hotel development, renovation and the costs of its operations. The term of the franchise and management agreements are typically 8 to 10 years for legacy Huazhu and 15 10 |
SUMMARY OF PRINCIPAL ACCOUNTING
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 2. Basis of presentation The accompanying unaudited interim condensed consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Regarding interim financial reporting of the securities and Exchange Commission and applicable rules and regulations, certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements, accounting policies and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results for the full years. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, to support its working capital requirements. The Group’s businesses have been significantly impacted by the global outbreak of COVID-19 since year 2020 and still incurred net losses during the nine months ended September 30, 2022. As of September 30, 2022, the Group’s total current liabilities exceeded its total current assets by RMB4,172 (US$586 million). These conditions may raise substantial doubt about the Group’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Group is unable to continue as a going concern. However, the management has evaluated the significance of the above conditions and regards the going concern assumption as appropriate based on the following considerations: ● ● Management believes the relevant conditions that raise substantial doubt on going concern are mitigated by the following plans and actions: ● ● Based on the above factors, management believes that adequate sources of liquidity exist to fund the Group’s working capital and capital expenditures requirements, and to meet its other liabilities and commitments as they become due for at least twelve months from the issuance of these consolidated financial statements. Basis of consolidation The unaudited interim condensed consolidated financial statements include the financial statements of the Company, its majority-owned subsidiaries and consolidated variable interest entities (the “VIEs”). All intercompany transactions and balances are eliminated on consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses and has the rights to receive benefits that are potentially significant to the entities. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels to identify potential variable interest entities. Generally, these entities qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include the impairment of property and equipment, right-of-use assets and intangible assets with definite lives, valuation allowance of deferred tax assets, purchase price allocation, impairment of investment, goodwill and intangible assets without definite lives and incremental borrowing rate used to measure lease liabilities. Intangible assets, net Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise or manachise agreements, favorable leases and purchased software. For its indefinite-lives intangible assets of legacy Huazhu and legacy DH, there was no impairment loss recognized for the nine months ended September 30, 2021 and 2022. Impairment of long-lived assets The Group evaluates its long-lived assets including property and equipment, net, right-of-use assets and finite lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the long-lived assets exceeded the future undiscounted net cash flows, and recognized an impairment loss of RMB60 and RMB101 during the nine months ended September 30, 2021 and 2022, respectively. Fair value of the long-lived assets was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. Leases As a lessee ASU 2016-02, Leases (Topic 842) generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. All of the Group’s leases were classified under ASC Topic 842 as operating leases upon this adoption and there are both capital lease and operating lease under legacy DH since the acquisition of DH. The Group elected the practical expedients under ASU 2016-02 which includes the use of hindsight in determining the lease term and the practical expedient package to not reassess whether any expired or existing contracts are or contain leases, to not reassess the classification of any expired or existing leases, and to not reassess initial direct costs for any existing leases. The Group recognizes a lease liability for future fixed lease payments and variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date and a ROU asset representing the right to use the underlying asset for the lease term. Lease liabilities are recognized at commencement date based on the present value of fixed lease payments and variable lease payments that depend on an index or a rate (initially measured using the index or rate as at the commencement date) over the lease term using the rate implicit in the lease, if available, or the Group’s incremental borrowing rate. As its leases do not provide an implicit borrowing rate, the Group uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. Upon adoption of ASU 2016-02, the Group elected to use the remaining lease term as of January 1, 2019 in the estimation of the applicable discount rate for leases that were in place at adoption. For the initial measurement of the lease liability for leases commencing after January 1, 2019, the Group uses the discount rate as of the commencement date of the lease, incorporating the entire lease term. Current maturities of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, current and finance lease liabilities, current, respectively, in the Group’s consolidated balance sheets. Long-term portions of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, non-current and finance lease liabilities, non-current, respectively, in the Group’s consolidated balance sheets. Most leases have initial terms ranging from 10 to 20 years for legacy Huazhu, and from 20 to 25 years for legacy DH. The lease term includes lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that the Group will exercise such extension options and not exercise such early termination options, respectively. The Group’s lease agreements may include nonlease components, mainly common area maintenance, which are combined with the lease components as the Group elects to account for these components as a single lease component, as permitted. The Group elected the practical expedient of not to separate land components outside PRC from leases of specified property and equipment at the ASC842 transition date. Besides, the Group’s lease payments are generally fixed and certain agreements contain variable lease payments based on the operating performance of the leased property and the changes in the index of consumer pricing index (“CPI”). Almost all the lease agreements with variable lease payments based on the changes in CPI are held by legacy DH. For operating leases, the Group recognizes lease expense on a straight-line basis over the lease term and variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period in which the obligation for those payments is incurred. The operating lease expense is recognized as hotel operating costs, general and administrative expenses and pre-opening expenses in the consolidated statements of comprehensive income. For finance lease, lease expense is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis over the shorter of the lease term or useful life of the underlying asset within hotel operating costs in the consolidated statements of comprehensive income, but interest expense on the lease liability is recognized in interest expense in the consolidated statements of comprehensive income using the effective interest method which results in more expense during the early years of the lease. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities. The Group’s lease agreements do not contain any significant residual value guarantees or restricted covenants. The ROU assets are measured at the amount of the lease liabilities with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by the Group, deferred rent and lease incentives, and any off-market terms (that is, favorable or unfavorable terms) present in the lease when the Group acquired leases in a business combination in which the acquiree acts as a lessee. The Group evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group. The Group excludes the lease obligation from the carrying value of the asset group. Accordingly, the lease payments (both principal and interest) don’t reduce the undiscounted expected future cash flows used to test the asset group for recoverability. If the carrying value of the asset group cannot be recoverable and is in excess of the estimated fair value, the Group records an impairment loss in the consolidated statements of comprehensive income. Noncash lease expense are used as the noncash add-back for the amortization of the operating ROU assets to the operating section of the consolidated statements of cash flow. The Group reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon modification of the contract. The Group will derecognize ROU assets and liabilities, with difference recognized in the consolidated statements of comprehensive income on the contract termination. In April 2020, the FASB released a Q&A which allows lessees and lessors to make an election to either apply the lease modification guidance or the variable rents guidance under ASC 840 and ASC 842 for lease concessions related to COVID-19 as long as the total cash flows as a result of the concession are substantially the same or less than those in the contract before the concession. A preparer can make this election without the need to determine whether a force majeure clause exists in the lease. The Group has elected to account for the lease concessions as variable lease expenses. The favorable lease agreements and unfavorable lease agreements in which the Group acts as a lessee were reclassified to operating lease right-of-use assets on January 1, 2019, upon adoption of ASC 842, Leases, which are amortized combining with right-of-use assets over remaining operating lease terms. These estimated useful lives are generally as follows: Favorable lease agreements acquired before the adoption of ASC 842 Remaining lease terms from 1 to 20 years Unfavorable lease agreements Remaining lease terms from 3 to 13 years Sublease The Group subleases property which are not suitable to operate hotels to third parties under operating leases. In accordance with the provisions of ASC 842, since the Group has not been relieved as the primary obligor of the head lease, the Group cannot net the sublease income against its lease payment to calculate the lease liability and ROU asset. The Group’s practice has been, and will continue to, straight-line the sub-lease income over the term of the sublease. Income taxes Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. For a particular tax-paying component of an entity and within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related valuation allowance, shall be offset and presented as a single noncurrent amount. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax-paying components of the entity or to different tax jurisdictions. According to ASC 740-270 Interim Reporting, an estimated annual effective tax rate (AETR) on full year estimated ordinary income should first be determined by the Company and the estimated AETR is then applied to year-to-date ordinary income to compute the interim tax provision on ordinary income. Foreign currency translation The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar (“US$”). Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured in functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred. Transaction gains and losses are recognized in the statements of comprehensive income. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income. The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies. Fair value The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. The Group’s financial instruments include cash and cash equivalent, restricted cash, structured financial products, loan receivables current and non-current portion, receivables, payables, short-term debts, long-term debts. The carrying amounts of these short-term financial instruments approximates their fair value due to their short-term nature. The long-term debts and long-term loan receivables approximate their fair values, because the bearing interest rate approximates market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. The carrying amounts of convertible senior notes were RMB6,186 and RMB6,899 and the corresponding fair value estimated based on quoted market price were RMB6,681 and RMB7,224, as of December 31, 2021 and September 30, 2022, respectively. As of December 31, 2021 and September 30, 2022, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs December 31, Description Fair Value (Level 1) (Level 2) (Level 3) 2021 Equity securities with readily determinable fair value 2,589 2,589 — — 2021 Available-for-sale debt securities 220 — 220 — 2021 Employee benefit plan assets 5 5 — — Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs September 30, Description Fair Value (Level 1) (Level 2) (Level 3) 2022 Equity securities with readily determinable fair value 1,615 1,615 — — 2022 Available-for-sale debt securities 220 — 220 — 2022 Employee benefit plan assets 8 8 — — 2022 Structured financial product 300 — 300 — The following table presents the Group’s assets measured at fair value on a non-recurring basis as of December 31, 2021 and September 30, 2022: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Total As of Assets Inputs Inputs Loss for December 31, Description Fair Value (Level 1) (Level 2) (Level 3) the Year 2021 Property and equipment 33 — — 33 24 2021 Operating lease right-of-use assets 88 — — 88 48 2021 Intangible assets 2,556 — — 2,556 245 2021 Long-term investment — — — — 63 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Total Identical Observable Unobservable Loss for As of Assets Inputs Inputs the Nine Months September 30, Description Fair Value (Level 1) (Level 2) (Level 3) Ended 2022 Property and equipment 8 — — 8 39 2022 Operating lease right-of-use assets 40 — — 40 59 2022 Intangible assets 141 — — 141 3 Share-based compensation The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of likely future performance and will be adjusted in future periods based on the actual performance. The share-based compensation expenses have been categorized as either hotel operating costs, general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees. For the nine months ended September 30, 2021 and 2022, the Group recognized share-based compensation expenses of RMB94 and RMB77, respectively, which were classified as follows: Nine Months Ended September 30, 2021 2022 Hotel operating costs 32 29 Selling and marketing expenses 3 4 General and administrative expenses 59 44 Total 94 77 Earnings (losses) per share Basic earnings (losses) per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and ordinary shares issuable upon the exercise of stock options and vest of nonvested restricted stocks (using the treasury stock method). The loaned shares under the ADS lending agreement are excluded from both the basic and diluted earnings (losses) per share calculation unless default of the ADS lending arrangement occurs which the Group considered the possibility is remote. Translation into United States Dollars The financial statements of the Group are stated in RMB. Translations of amounts from RMB into United States dollars are solely for the convenience of the reader and were calculated at the rate of US$1 = RMB7.1135, on September 30, 2022, as set forth in H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into United States dollars at that rate on September 30, 2022, or at any other rate. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 3. Citigo Acquisition On April 30,2021, the Group completed the acquisition of 100% equity interest of CitiGO hotels from Cjia Group, a related party of the Group. CitiGO brand is a light luxury and social hotel brand, which are mainly distributed in first and second-tier cities in China. The aggregated consideration was RMB783, among which RMB749 was paid in cash as of September 30, 2021. Other acquisitions During the nine months ended September 30, 2021 and 2022, the Group acquired another three and seven individual companies for total cash consideration of RMB51 and RMB9, respectively. The business acquisitions were accounted for under purchase accounting. The assets and liabilities of these hotels and companies acquired in the nine months ended September 30, 2021 and 2022 were immaterial to the consolidated financial statements. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 4. Disaggregated Revenues The following tables present the Group’s revenues disaggregated by the nature of the product or service: Nine Months Ended September 30, 2021 2022 Room revenues 5,228 5,612 Food and beverage revenues 475 752 Others 322 334 Leased and owned hotels revenue 6,025 6,698 Initial one-time franchise fee 81 79 On-going management and service fees 1,105 1,002 Central reservation system usage fees, other system maintenance and support fees 1,048 940 Reimbursements for hotel manager fees 684 806 Other fees 382 420 Manachised and franchised hotels revenue 3,300 3,247 Other revenues 112 211 Total revenues 9,437 10,156 Contract Balances The Group’s contract assets are insignificant at December 31, 2021 and September 30, 2022. As of December 31, September 30, 2021 2022 Current contract liabilities 1,366 1,280 Long-term contract liabilities 785 822 Total contract liabilities 2,151 2,102 The contract liabilities balances above which are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2021 and September 30, 2022 were comprised of the following: As of December 31, September 30, 2021 2022 Initial fees received from franchisees owners 1,074 1,047 Cash received for membership fees and not recognized as revenue 519 517 Advances received from customers 505 484 Deferred revenue related to the loyalty program 53 54 Total 2,151 2,102 The Group recognized revenues that were previously deferred as contract liabilities of RMB494 and RMB510 during the nine months ended September 30, 2021 and 2022, respectively. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 5. Property and equipment, net consist of the following: As of December 31, September 30, 2021 2022 Cost: Buildings 305 305 Leasehold improvements 10,467 10,741 Furniture, fixtures and equipment 2,348 2,402 Motor vehicles 3 3 13,123 13,451 Less: Accumulated depreciation 6,845 7,500 6,278 5,951 Construction in progress 778 853 Property and equipment, net 7,056 6,804 Depreciation expense was RMB970 and RMB985 for the nine months ended September 30, 2021 and 2022, respectively. The Group occasionally demolishes certain leased hotels due to local government zoning requirements, which typically results in receiving compensation from the government. The Group performed a recoverability test of its hotels property and equipment with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the hotels property and equipment exceeded the future undiscounted net cash flows, and recognized an impairment loss of RMB9 and RMB39 during the nine months ended September 30, 2021 and 2022, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 6. Intangible assets, net consist of the following: As of December 31, September 30, 2021 2022 Intangible assets with indefinite lives: Brand names 5,010 4,896 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 366 353 Favorable lease agreements from sublease 11 5 Purchased software 142 129 Other intangible assets 70 72 Total 5,791 5,647 Less: Accumulated amortization 163 168 Less: Accumulated impairment loss 243 239 Total 5,385 5,240 The values of favorable lease agreements were determined based on the estimated present value of the amount the Group has avoided paying as a result of entering into the lease agreements. Amortization expense of intangible assets for the nine months ended September 30, 2021 and 2022 amounted to RMB48 and RMB32, respectively. The Group recorded an impairment charge of RMB48 and RMB3 related to the franchise or manachise agreements and other intangible assets of legacy DH for the nine months ended September 30, 2021 and 2022, respectively. The estimated amortization expense for the above intangible assets excluding brand names and master brand agreement for the following years is as follows: Amortization for Intangible Assets Remainder of 2022 8 2023 35 2024 32 2025 31 2026 28 Thereafter 173 Total 307 |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2022 | |
INVESTMENTS. | |
INVESTMENTS | 7. The investments as of December 31, 2021 and September 30, 2022 were as follows: As of December 31, 2021 September 30, 2022 Equity securities with readily determinable fair values: Accor 2,508 1,540 Other marketable securities 81 75 Equity securities without readily determinable fair values: Cjia/Cjia Group 168 136 OYO 54 54 Other equity securities without readily determinable fair values 71 71 Equity-method investments: AAPC LUB 525 487 Hotel related funds 488 448 China Hospitality JV 99 56 Commerz Real Institute 85 80 Other investments 255 313 Available-for-sale debt securities: Cjia/Cjia Group 220 220 Debt securities: Structured financial product — 300 Total 4,554 3,780 During the nine months ended September 30, 2022, the Group sold 2,017,078 of Accor shares for a cash consideration of RMB478 with a gain of RMB64 realized upon disposal. As of September 30, 2022, the Group accumulatively hold 10,195,474 shares of Accor, which accounts for less than 5% of Accor total outstanding shares where the Group does not have the ability to significantly influence the operations of this entity. The Group recognized unrealized gains and loss from fair value changes of Accor of RMB127 and RMB485, respectively for the nine months ended September 30, 2021 and 2022. The Group recognized investment loss of RMB18 and RMB32 for its equity method investment in Cjia Group in income (loss) from equity method investments respectively for the nine months ended September 30, 2021 and 2022. The Group received cash dividend from AAPC LUB of nil and RMB47 for the nine months ended September 30, 2021 and 2022, which was recognized as return on investment. During the nine months ended September 30, 2022, the Group received RMB54 cash dividend from China Hospitality JV, Ltd., which was recognized as return of investment. Among “other investments”, the Group further increased investments in Azure Hospitality Fund I Limited Partnership of RMB64 during the nine months ended September 30, 2022. The structured financial products are mainly deposits due within 3 months with secured principal and variable interest rates and are restricted as to withdrawal before maturity. The Company elects to adopt the fair value option in accordance with ASC 825 Financial Instruments for such financial products. Changes in the fair value of the investments are recorded as interest income in the consolidated statements of operations, and immaterial for the nine months ended September 30, 2022. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
DEBT | 8. The short-term and long-term debt as of December 31, 2021 and September 30, 2022 were as follows: As of December 31, September 30, 2021 2022 Short-term debt: Long-term bank borrowings, current portion 2,464 193 Short-term bank borrowings 692 1,535 Convertible senior notes, current portion 3,029 3,372 FF&E liability, current portion 47 44 Total 6,232 5,144 Long-term debt: Long-term bank borrowings, non-current portion 211 2,332 Convertible senior notes, non-current portion 3,158 3,527 FF&E liability, non-current portion 180 217 Others 16 15 Total 3,565 6,091 Bank borrowings In December 2019, the Group entered into a EUR440 million term facility and US$500 million revolving credit facility agreement with several banks. As of December 31, 2021, the outstanding loan amount was EUR338 million and had been reclassified to long-term bank borrowings, current portion. As of September 30, 2022, the outstanding loan amount of EUR338 million has been fully paid off. In January 2021, the Group entered into a twelve-year In August 2022, the Group entered into a 3-year long-term facility of EUR220 million and RMB-equivalent of EUR110 million term facility, and EUR70 million revolving credit facility agreement with several banks. The EUR70 million revolving credit facility is available for 35 months after the date of the agreement. The interest rate on the loan for each interest period is the aggregate of the applicable Margin and EURIBOR or one-year benchmark LPR. The margin for each loan depends on the currency of loan, a loan denominated in EUR means 1.55% per annum and a loan denominated in RMB means -0.15% per annum. There are some financial covenants including interest cover, leverage and book equity related to this facility. As of September 30, 2022, the Group had drawn down EUR220 million and RMB equivalent of EUR110 million under the facility agreement and repaid nil. For the nine months ended September 30, 2022, the weighted average interest rate of borrowings drawn under this agreement was 2.58% and 3.55% for the EUR220 million term facility and RMB equivalent of EUR110 million term facility respectively. Convertible Senior Notes due 2022 On November 3, 2017, the Group issued US$475 million of Convertible Senior Notes (the “2022 Notes”). The 2022 Notes mature on November 1, 2022 and bear interest at a rate of 0.375% per annum, payable in arrears semi-annually on May 1 and November 1, beginning May 1, 2018. The Group had subsequently redeemed US$475 million of 2022 Notes on November 1, 2022 through utilizing the revolving facility of EUR70 million and its cash and cash equivalents on hand. Capped Call Options In connection with the issuance of the 2022 Notes, the Group entered into capped call option transactions with some of the initial purchasers or their affiliates (the “Option Counterparties”) to reduce the potential dilution to existing shareholders of the Group upon conversion of the 2022 Notes. In June 2022, the Group and Option Counterparties terminated these capped call transactions before the conversion date of convertible notes on November 1, 2022 with the settlement amount of US$12.8 million, which was received by the Group in July 2022. The settlement amount of US$12.8 million was recorded as an increase to additional paid-in capital. Debt Maturities The contractual maturities of the Group’s debt as of September 30, 2022 were as follows: Principle Amounts Remainder of 2022 3,547 2023 1,704 2024 3,791 2025 2,091 2026 27 Thereafter 97 Total 11,257 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 . As of December 31, September 30, 2021 2022 Payable to franchisees 710 297 Other payables 535 955 Accrued rental, utilities and other accrued expenses 209 359 Liabilities related to customer loyalty program 135 156 Value-added tax, other tax and surcharge payables 132 193 Payable to noncontrolling interest holders 117 94 Total 1,838 2,054 Payable to franchisees mainly represents room charges received on behalf of franchisees and are payable within one year. From time to time, the Group receives cash advances from noncontrolling interest holders of entities that are not wholly owned by the Group. Such advances are non-interest bearing and are payable within one year or on demand. |
HOTEL OPERATING COSTS
HOTEL OPERATING COSTS | 9 Months Ended |
Sep. 30, 2022 | |
HOTEL OPERATING COSTS. | |
HOTEL OPERATING COSTS | 10. Hotel operating costs include all direct costs incurred in the operation of the leased and owned hotels, manachised and franchised hotels and consist of the following: Nine Months Ended September 30, 2021 2022 Rents 2,903 2,973 Utilities 384 441 Personnel costs 2,180 2,701 Depreciation and amortization 1,047 1,063 Consumable, food and beverage 688 737 Others 885 915 Total 8,087 8,830 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 11. In February 2007, the Group adopted the 2007 Global Share Plan which allows the Group to offer incentive awards to employees, officers, directors and consultants or advisors (the “Participants”). Under the 2007 Global Share Plan, the Group may issue incentive awards to the Participants to purchase not more than 100,000,000 ordinary shares. In June 2007, the Group adopted the 2008 Global Share Plan which allows the Group to offer incentive awards to Participants to purchase up to 30,000,000 ordinary shares. In October 2008, the Group increased the maximum number of incentive awards available under the 2008 Global Share Plan to 70,000,000. In September 2009, the Group adopted the 2009 Share Incentive Plan which allows the Group to offer incentive awards to Participants. Under the 2009 Share Incentive Plan, the Group may issue incentive awards to purchase up to 30,000,000 ordinary shares. In August 2010, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 150,000,000. In March 2015, the Group increased the maximum number of incentive awards available under the 2009 Share Incentive Plan to 430,000,000. The 2007 and 2008 Global Share Plans and 2009 Share Incentive Plan (collectively, the “Incentive Award Plans”) contain the same terms and conditions. The incentive awards granted under the Incentive Award Plans typically have a maximum life of ten years and vest in typical ways as listed below: a.) b.) As of September 30, 2022, the Group had granted 245,776,690 options and 280,351,030 nonvested restricted stocks, which were subject to adjustment on performance condition. Share options No share options were granted during the nine months ended September 30, 2021 and 2022. As of September 30, 2022, total unrecognized compensation expense related to the option arrangements was nil. Nonvested restricted stocks The fair value of nonvested restricted stock with service conditions or performance conditions is based on the fair market value of the underlying ordinary shares on the date of grant. During the nine months ended September 30, 2022, the Group granted 37,291,960 nonvested restricted stocks to certain officers and employees with no consideration. 50% vests on the second anniversary of the vesting commencement date with the remaining 50% vesting ratably over the following two years. The following table summarized the Group’s nonvested restricted stock activities during the nine months ended September 30, 2022. Weighted Average Grant Number of Restricted Date Stocks Fair Value US$ Nonvested restricted stocks outstanding at January 1, 2022 53,696,490 1.20 Granted 37,291,960 2.50 Forfeited (1,904,140) 1.21 Vested (6,314,470) 1.73 Nonvested restricted stocks outstanding at September 30, 2022 82,769,840 1.74 As of September 30, 2022, there was RMB862 in unrecognized compensation costs, net of estimated forfeitures, related to unvested restricted stocks, which is expected to be recognized over a weighted-average period of 3.66 years. The total fair value of nonvested restricted stocks vested was RMB279 and RMB143 for the nine months ended September 30, 2021 and September 30, 2022 respectively. |
LOSSES PER SHARE
LOSSES PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
LOSSES PER SHARE | |
LOSSES PER SHARE | 12. The following table sets forth the computation of basic and diluted losses per share for the nine months ended September 30, 2021 and 2022 indicated: Nine Months Ended September 30, 2021 2022 Net loss attributable to ordinary shareholders — basic (7) (1,697) Net loss attributable to ordinary shareholders — diluted (7) (1,697) Weighted average ordinary shares outstanding — basic and diluted 3,112,910,313 3,111,759,089 Basic and diluted losses per share (0.00) (0.55) For the nine months ended September 30, 2021 and 2022, the Group had securities which could potentially dilute basic earnings per share in the future, but which were excluded from the computation of diluted earnings per share as their effects would have been anti-dilutive. Such outstanding securities consist of the following at non-weighted basis: As of September 30, September 30, 2021 2022 Outstanding employee options and nonvested restricted stocks 60,278,930 82,769,840 Shares of convertible senior notes 226,827,410 228,239,310 Total 287,106,340 311,009,150 |
SEGMENT
SEGMENT | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT | |
SEGMENT | 13. SEGMENT The Group identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information. The Group’s chief operating decision maker has been identified as the chief executive officer. After the acquisition of DH, CODM regularly reviews the operating data and EBITDA, which is defined as earnings before interest income, interest expense, income tax expense (benefit) and depreciation and amortization, a financial measure for legacy Huazhu and legacy DH separately to evaluate their performance. Therefore, the group operates in two operating segments which are legacy Huazhu and legacy DH. In identifying its reportable segments, the Group assesses nature of operating segments and evaluates the operating results of each reporting segments. Both operating segments meet the quantitative thresholds and should be considered as two reportable segments. The following table provides a summary of the Group’s reportable segment results for the nine months ended September 30, 2021 and 2022. Nine Months Ended September 30, 2021 2022 Legacy Legacy Huazhu Legacy DH Total Huazhu Legacy DH Total Total revenues 8,471 966 9,437 7,899 2,257 10,156 Operating costs and expenses 7,736 2,006 9,742 8,023 2,608 10,631 Income (loss) from operations 830 (704) 126 54 (254) (200) Net (loss) income attributable to H World Group Limited 571 (578) (7) (1,336) (361) (1,697) Income tax expense (benefit) 213 (216) (3) 36 (32) 4 Interest income 64 — 64 60 — 60 Interest expense 226 87 313 194 98 292 Depreciation and amortization 903 179 1,082 917 179 1,096 EBITDA 1,849 (528) 1,321 (249) (116) (365) The following table presents total assets for operating segments, reconciled to consolidated amounts: As of December 31, 2021 September 30, 2022 Legacy Legacy Huazhu Legacy DH Total Huazhu Legacy DH Total Total assets 45,353 17,916 63,269 44,002 17,385 61,387 The following tables represent revenues and property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill by geographical region. Revenues : Nine Months Ended September 30, 2021 2022 China 8,459 7,881 Germany 799 1,717 All others 179 558 Total 9,437 10,156 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2021 September 30, 2022 China 33,143 31,902 Germany 13,884 13,424 All others 2,929 2,970 Total 49,956 48,296 Other than China and Germany, there were no countries that individually represented more than 10% of the total revenue and certain long lived assets for the nine months ended September 30, 2021 and 2022. |
Cash Dividend
Cash Dividend | 9 Months Ended |
Sep. 30, 2022 | |
Cash Dividend | |
Cash Dividend | 14. The Group did not declare cash dividend to its shareholders in 2021. On March 03, 2022, the Group approved and declared a cash dividend of US$0.021 per ordinary share on its outstanding shares as of the close of trading on March 24, 2022. Such dividend of US$68 million was fully paid in April 2022. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
LEASES | 15. The Group’s leases mainly related to building and the rights to use the land. The total expense related to short-term leases were insignificant for the nine months ended September 30, 2021 and 2022, and sublease income of the Group which is recognized in revenues in the unaudited interim consolidated statements of comprehensive income were RMB100 and RMB89 for the nine months ended September 30, 2021 and 2022, respectively. For lease concession related to the Covid-19, the Group recognizes a negative lease expense of RMB52 and RMB199 for the nine months ended September 30, 2021 and 2022 under the relief as the Group elects using the variable lease expense approach. The Group recorded an impairment charge of the operating lease right-of-use assets of RMB3 and RMB59 for the nine months ended September 30, 2021 and 2022, respectively. A summary of supplemental information related to operating leases in the nine months ended September 30, 2021 and 2022 is as follows: Nine Months Ended September 30, 2021 2022 Lease cost: Operating fixed lease cost 2,999 3,165 Finance lease cost — Amortization of ROU assets 59 69 — Interest on lease liabilities 72 86 Short term lease cost 0 0 Operating variable lease cost (12) (87) Total lease cost 3,118 3,233 Other information: Weighted average remaining lease term Operating leases 13 years 13 years Finance leases 28 years 28 years Weighted average discount rate Operating leases 6.22 % 6.31 % Finance leases 3.97 % 3.98 % As of September 30, 2022, the maturities of lease liabilities in accordance with ASC 842 in each of the next five years and thereafter are as follows: Total Operating Leases Total Finance Leases Remainder of 2022 1,097 39 2023 4,099 162 2024 4,146 167 2025 3,924 166 2026 3,724 168 Thereafter 27,070 4,143 Total minimum lease payments 44,060 4,845 Less: amount representing interest 13,112 1,943 Present value of minimum lease payments 30,948 2,902 As of September 30, 2022, the Group has entered 32 lease contracts that the Group expects to account for as operating or finance leases, the future undiscounted lease payments for these non-cancellable lease contracts are RMB9,040, which is not reflected in the consolidated balance sheets. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2022 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 16. Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits were RMB388 and RMB479 for the nine months ended September 30, 2021 and 2022 Retirement benefit obligation result all from the German pension plan after the completion of the acquisition of DH as this pension plan is the most significant defined benefit plan in the Group. The following table presents the amount of net periodic benefit cost recognized for the nine months ended September 30, 2021 and 2022 for legacy DH: Nine Months Ended September 30, Pension benefits Other benefits 2021 2022 2021 2022 Service cost 8 6 0 0 Interest cost 2 1 — — Expected return on plan assets (0) (0) — — Amortization of net loss 3 4 — — Regular Net Periodic Pension Cost 13 11 0 0 Total Recognized in Net Periodic Pension Cost 13 11 0 0 Furthermore, the Group pays contribution to governmental and private pension insurance organizations based on legal regulations in some countries out of China. The contributions are recognized as expense and amount RMB37 and RMB52 for the nine months ended September 30, 2021 and 2022. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 17. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. The following entities are considered to be related parties to the Group. The related parties mainly act as service providers and service recipients to the Group. The Group is not obligated to provide any type of financial support to these related parties. Related Party Nature of the Party Relationship with the Group Trip.com Group Limited (“Trip.com”) 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 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 Suzhou Huali Jinshi Construction Decoration Co., Ltd. ( “Huali Jinshi”) Building decoration company Equity method investee of the Group Shenzhen Hitone Investment Fund Partnership (LLP) ( “Hitone”) Fund Equity method investee of the Group AZURE Hospitality Fund I Limited Partnership ( “AZURE”) Fund Equity method investee of the Group AAPC Hotel Management Co., Ltd. ( “AAPC”) Hotel management company Equity method investee of the Group Accor ceased to be related parties of the Group from December 2021. Huali Jinshi ceased to be related parties of the Group from August 2022. (a) Related party balances Amounts due from related parties were mainly comprised of shareholder loans to Sheen Star, Cjia Group, Zhuchuang and Lianquan, which are short-term in nature and mainly payable on demand, service fee and room charges withheld by Trip.com and long-term shareholder loan to one equity method investee. The Group recorded credit losses of RMB17 and RMB37 for the nine months ended September 30, 2021 and 2022. As of December 31, September 30, 2021 2022 Sheen Star 33 31 Zhuchuang 27 27 Trip.com 17 71 Cjia Group 29 29 Lianquan 49 44 Others 12 18 Allowance for expected credit losses (17) (37) Total 150 183 Amounts due to related parties were mainly comprised of payables for reservation fee and other service fee to Trip.com, acquisition consideration, consultation fee to and cash received on behalf of Cjia Group and payables for construction service fee to Huali Jinshi, which are short-term in nature and payable on demand. As of December 31, September 30, 2021 2022 Trip.com 44 51 Cjia Group 101 27 Huali Jinshi 47 — Others 5 7 Total 197 85 (b) Related party transactions During the nine months ended September 30, 2021 and September 30, 2022, significant related party transactions were as follows: Nine Months Ended September 30, 2021 2022 Commission expenses to Trip.com 78 43 Lease expenses to Trip.com 14 14 Lease expenses to Cjia Group — 25 Service fee to Huali Jinshi 10 — Service fee to AAPC — 3 Brand use fee, reservation fee and other related service fee to Accor 15 — Goods sold and service provided to Cjia Group 10 — Loan payment to Hitone 5 — Service fee from Trip.com 52 49 Service fee from AAPC 3 2 Service fee from China Hospitality JV 2 1 Service fee from Sheen Star 3 3 Service fee from AZURE — 3 Sublease income from Lianquan 8 9 Sublease income from Cjia Group 5 4 Business acquisition of CitiGO from Cjia Group 783 — Business acquisition of one individual company from Cjia Group 51 — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 18. COMMITMENTS AND CONTINGENCIES (a) Commitments As of September 30, 2022, the Group’s commitments related to leasehold improvements and installation of equipment for hotel operations was RMB371, which is expected to be incurred within one (b) Contingencies The Group is subject to periodic legal or administrative proceedings in the ordinary course of the Group’s business, including lease contract terminations and disputes, and management agreement disputes. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material adverse effect on the financial statements. As of September 30, 2022, there are no accrued contingent liabilities from such proceedings. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS In October 2022, the Group entered into a one-year USD dominated facility agreement that it could draw down no more than RMB1,000 with interest rate to be determined case-by-case, and another one-year US$123 million facility agreement with 5.4% fixed rate per annum. As disclosed in Note 8, the Group had subsequently redeemed US$475 million of 2022 Notes on November 1, 2022. |
SUMMARY OF PRINCIPAL ACCOUNTI_2
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The accompanying unaudited interim condensed consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Regarding interim financial reporting of the securities and Exchange Commission and applicable rules and regulations, certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements, accounting policies and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results for the full years. The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, to support its working capital requirements. The Group’s businesses have been significantly impacted by the global outbreak of COVID-19 since year 2020 and still incurred net losses during the nine months ended September 30, 2022. As of September 30, 2022, the Group’s total current liabilities exceeded its total current assets by RMB4,172 (US$586 million). These conditions may raise substantial doubt about the Group’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Group is unable to continue as a going concern. However, the management has evaluated the significance of the above conditions and regards the going concern assumption as appropriate based on the following considerations: ● ● Management believes the relevant conditions that raise substantial doubt on going concern are mitigated by the following plans and actions: ● ● Based on the above factors, management believes that adequate sources of liquidity exist to fund the Group’s working capital and capital expenditures requirements, and to meet its other liabilities and commitments as they become due for at least twelve months from the issuance of these consolidated financial statements. |
Basis of consolidation | Basis of consolidation The unaudited interim condensed consolidated financial statements include the financial statements of the Company, its majority-owned subsidiaries and consolidated variable interest entities (the “VIEs”). All intercompany transactions and balances are eliminated on consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses and has the rights to receive benefits that are potentially significant to the entities. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels to identify potential variable interest entities. Generally, these entities qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include the impairment of property and equipment, right-of-use assets and intangible assets with definite lives, valuation allowance of deferred tax assets, purchase price allocation, impairment of investment, goodwill and intangible assets without definite lives and incremental borrowing rate used to measure lease liabilities. |
Intangible assets, net | Intangible assets, net Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise or manachise agreements, favorable leases and purchased software. For its indefinite-lives intangible assets of legacy Huazhu and legacy DH, there was no impairment loss recognized for the nine months ended September 30, 2021 and 2022. |
Impairment of long-lived assets | Impairment of long-lived assets The Group evaluates its long-lived assets including property and equipment, net, right-of-use assets and finite lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets. The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued underperformance relative to the projected operating results, of which the carrying amount of the long-lived assets exceeded the future undiscounted net cash flows, and recognized an impairment loss of RMB60 and RMB101 during the nine months ended September 30, 2021 and 2022, respectively. Fair value of the long-lived assets was determined by the Group based on the income approach using the discounted cash flow associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of management and projected trends of current operating results. |
Leases | Leases As a lessee ASU 2016-02, Leases (Topic 842) generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. All of the Group’s leases were classified under ASC Topic 842 as operating leases upon this adoption and there are both capital lease and operating lease under legacy DH since the acquisition of DH. The Group elected the practical expedients under ASU 2016-02 which includes the use of hindsight in determining the lease term and the practical expedient package to not reassess whether any expired or existing contracts are or contain leases, to not reassess the classification of any expired or existing leases, and to not reassess initial direct costs for any existing leases. The Group recognizes a lease liability for future fixed lease payments and variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date and a ROU asset representing the right to use the underlying asset for the lease term. Lease liabilities are recognized at commencement date based on the present value of fixed lease payments and variable lease payments that depend on an index or a rate (initially measured using the index or rate as at the commencement date) over the lease term using the rate implicit in the lease, if available, or the Group’s incremental borrowing rate. As its leases do not provide an implicit borrowing rate, the Group uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. Upon adoption of ASU 2016-02, the Group elected to use the remaining lease term as of January 1, 2019 in the estimation of the applicable discount rate for leases that were in place at adoption. For the initial measurement of the lease liability for leases commencing after January 1, 2019, the Group uses the discount rate as of the commencement date of the lease, incorporating the entire lease term. Current maturities of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, current and finance lease liabilities, current, respectively, in the Group’s consolidated balance sheets. Long-term portions of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, non-current and finance lease liabilities, non-current, respectively, in the Group’s consolidated balance sheets. Most leases have initial terms ranging from 10 to 20 years for legacy Huazhu, and from 20 to 25 years for legacy DH. The lease term includes lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that the Group will exercise such extension options and not exercise such early termination options, respectively. The Group’s lease agreements may include nonlease components, mainly common area maintenance, which are combined with the lease components as the Group elects to account for these components as a single lease component, as permitted. The Group elected the practical expedient of not to separate land components outside PRC from leases of specified property and equipment at the ASC842 transition date. Besides, the Group’s lease payments are generally fixed and certain agreements contain variable lease payments based on the operating performance of the leased property and the changes in the index of consumer pricing index (“CPI”). Almost all the lease agreements with variable lease payments based on the changes in CPI are held by legacy DH. For operating leases, the Group recognizes lease expense on a straight-line basis over the lease term and variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period in which the obligation for those payments is incurred. The operating lease expense is recognized as hotel operating costs, general and administrative expenses and pre-opening expenses in the consolidated statements of comprehensive income. For finance lease, lease expense is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis over the shorter of the lease term or useful life of the underlying asset within hotel operating costs in the consolidated statements of comprehensive income, but interest expense on the lease liability is recognized in interest expense in the consolidated statements of comprehensive income using the effective interest method which results in more expense during the early years of the lease. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities. The Group’s lease agreements do not contain any significant residual value guarantees or restricted covenants. The ROU assets are measured at the amount of the lease liabilities with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by the Group, deferred rent and lease incentives, and any off-market terms (that is, favorable or unfavorable terms) present in the lease when the Group acquired leases in a business combination in which the acquiree acts as a lessee. The Group evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group. The Group excludes the lease obligation from the carrying value of the asset group. Accordingly, the lease payments (both principal and interest) don’t reduce the undiscounted expected future cash flows used to test the asset group for recoverability. If the carrying value of the asset group cannot be recoverable and is in excess of the estimated fair value, the Group records an impairment loss in the consolidated statements of comprehensive income. Noncash lease expense are used as the noncash add-back for the amortization of the operating ROU assets to the operating section of the consolidated statements of cash flow. The Group reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon modification of the contract. The Group will derecognize ROU assets and liabilities, with difference recognized in the consolidated statements of comprehensive income on the contract termination. In April 2020, the FASB released a Q&A which allows lessees and lessors to make an election to either apply the lease modification guidance or the variable rents guidance under ASC 840 and ASC 842 for lease concessions related to COVID-19 as long as the total cash flows as a result of the concession are substantially the same or less than those in the contract before the concession. A preparer can make this election without the need to determine whether a force majeure clause exists in the lease. The Group has elected to account for the lease concessions as variable lease expenses. The favorable lease agreements and unfavorable lease agreements in which the Group acts as a lessee were reclassified to operating lease right-of-use assets on January 1, 2019, upon adoption of ASC 842, Leases, which are amortized combining with right-of-use assets over remaining operating lease terms. These estimated useful lives are generally as follows: Favorable lease agreements acquired before the adoption of ASC 842 Remaining lease terms from 1 to 20 years Unfavorable lease agreements Remaining lease terms from 3 to 13 years Sublease The Group subleases property which are not suitable to operate hotels to third parties under operating leases. In accordance with the provisions of ASC 842, since the Group has not been relieved as the primary obligor of the head lease, the Group cannot net the sublease income against its lease payment to calculate the lease liability and ROU asset. The Group’s practice has been, and will continue to, straight-line the sub-lease income over the term of the sublease. |
Income taxes | Income taxes Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. For a particular tax-paying component of an entity and within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related valuation allowance, shall be offset and presented as a single noncurrent amount. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax-paying components of the entity or to different tax jurisdictions. According to ASC 740-270 Interim Reporting, an estimated annual effective tax rate (AETR) on full year estimated ordinary income should first be determined by the Company and the estimated AETR is then applied to year-to-date ordinary income to compute the interim tax provision on ordinary income. |
Foreign currency translation | Foreign currency translation The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar (“US$”). Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured in functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred. Transaction gains and losses are recognized in the statements of comprehensive income. Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income. The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies. |
Fair value | Fair value The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. The Group’s financial instruments include cash and cash equivalent, restricted cash, structured financial products, loan receivables current and non-current portion, receivables, payables, short-term debts, long-term debts. The carrying amounts of these short-term financial instruments approximates their fair value due to their short-term nature. The long-term debts and long-term loan receivables approximate their fair values, because the bearing interest rate approximates market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. The carrying amounts of convertible senior notes were RMB6,186 and RMB6,899 and the corresponding fair value estimated based on quoted market price were RMB6,681 and RMB7,224, as of December 31, 2021 and September 30, 2022, respectively. As of December 31, 2021 and September 30, 2022, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs December 31, Description Fair Value (Level 1) (Level 2) (Level 3) 2021 Equity securities with readily determinable fair value 2,589 2,589 — — 2021 Available-for-sale debt securities 220 — 220 — 2021 Employee benefit plan assets 5 5 — — Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs September 30, Description Fair Value (Level 1) (Level 2) (Level 3) 2022 Equity securities with readily determinable fair value 1,615 1,615 — — 2022 Available-for-sale debt securities 220 — 220 — 2022 Employee benefit plan assets 8 8 — — 2022 Structured financial product 300 — 300 — The following table presents the Group’s assets measured at fair value on a non-recurring basis as of December 31, 2021 and September 30, 2022: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Total As of Assets Inputs Inputs Loss for December 31, Description Fair Value (Level 1) (Level 2) (Level 3) the Year 2021 Property and equipment 33 — — 33 24 2021 Operating lease right-of-use assets 88 — — 88 48 2021 Intangible assets 2,556 — — 2,556 245 2021 Long-term investment — — — — 63 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Total Identical Observable Unobservable Loss for As of Assets Inputs Inputs the Nine Months September 30, Description Fair Value (Level 1) (Level 2) (Level 3) Ended 2022 Property and equipment 8 — — 8 39 2022 Operating lease right-of-use assets 40 — — 40 59 2022 Intangible assets 141 — — 141 3 |
Share-based compensation | Share-based compensation The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of likely future performance and will be adjusted in future periods based on the actual performance. The share-based compensation expenses have been categorized as either hotel operating costs, general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees. For the nine months ended September 30, 2021 and 2022, the Group recognized share-based compensation expenses of RMB94 and RMB77, respectively, which were classified as follows: Nine Months Ended September 30, 2021 2022 Hotel operating costs 32 29 Selling and marketing expenses 3 4 General and administrative expenses 59 44 Total 94 77 |
Earnings (losses) per share | Earnings (losses) per share Basic earnings (losses) per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and ordinary shares issuable upon the exercise of stock options and vest of nonvested restricted stocks (using the treasury stock method). The loaned shares under the ADS lending agreement are excluded from both the basic and diluted earnings (losses) per share calculation unless default of the ADS lending arrangement occurs which the Group considered the possibility is remote. |
Translation into United States Dollars | Translation into United States Dollars The financial statements of the Group are stated in RMB. Translations of amounts from RMB into United States dollars are solely for the convenience of the reader and were calculated at the rate of US$1 = RMB7.1135, on September 30, 2022, as set forth in H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into United States dollars at that rate on September 30, 2022, or at any other rate. |
SUMMARY OF PRINCIPAL ACCOUNTI_3
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Schedule of estimated useful life of lease agreements | Favorable lease agreements acquired before the adoption of ASC 842 Remaining lease terms from 1 to 20 years Unfavorable lease agreements Remaining lease terms from 3 to 13 years |
Schedule of information about inputs into the fair value measurements of the assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs December 31, Description Fair Value (Level 1) (Level 2) (Level 3) 2021 Equity securities with readily determinable fair value 2,589 2,589 — — 2021 Available-for-sale debt securities 220 — 220 — 2021 Employee benefit plan assets 5 5 — — Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs September 30, Description Fair Value (Level 1) (Level 2) (Level 3) 2022 Equity securities with readily determinable fair value 1,615 1,615 — — 2022 Available-for-sale debt securities 220 — 220 — 2022 Employee benefit plan assets 8 8 — — 2022 Structured financial product 300 — 300 — |
Schedule of assets measured at fair value on a non-recurring basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Total As of Assets Inputs Inputs Loss for December 31, Description Fair Value (Level 1) (Level 2) (Level 3) the Year 2021 Property and equipment 33 — — 33 24 2021 Operating lease right-of-use assets 88 — — 88 48 2021 Intangible assets 2,556 — — 2,556 245 2021 Long-term investment — — — — 63 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Total Identical Observable Unobservable Loss for As of Assets Inputs Inputs the Nine Months September 30, Description Fair Value (Level 1) (Level 2) (Level 3) Ended 2022 Property and equipment 8 — — 8 39 2022 Operating lease right-of-use assets 40 — — 40 59 2022 Intangible assets 141 — — 141 3 |
Schedule of share-based compensation expense recognized | Nine Months Ended September 30, 2021 2022 Hotel operating costs 32 29 Selling and marketing expenses 3 4 General and administrative expenses 59 44 Total 94 77 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
Schedule of disaggregated revenues | Nine Months Ended September 30, 2021 2022 Room revenues 5,228 5,612 Food and beverage revenues 475 752 Others 322 334 Leased and owned hotels revenue 6,025 6,698 Initial one-time franchise fee 81 79 On-going management and service fees 1,105 1,002 Central reservation system usage fees, other system maintenance and support fees 1,048 940 Reimbursements for hotel manager fees 684 806 Other fees 382 420 Manachised and franchised hotels revenue 3,300 3,247 Other revenues 112 211 Total revenues 9,437 10,156 |
Schedule of contract balances | The Group’s contract assets are insignificant at December 31, 2021 and September 30, 2022. As of December 31, September 30, 2021 2022 Current contract liabilities 1,366 1,280 Long-term contract liabilities 785 822 Total contract liabilities 2,151 2,102 The contract liabilities balances above which are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2021 and September 30, 2022 were comprised of the following: As of December 31, September 30, 2021 2022 Initial fees received from franchisees owners 1,074 1,047 Cash received for membership fees and not recognized as revenue 519 517 Advances received from customers 505 484 Deferred revenue related to the loyalty program 53 54 Total 2,151 2,102 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | As of December 31, September 30, 2021 2022 Cost: Buildings 305 305 Leasehold improvements 10,467 10,741 Furniture, fixtures and equipment 2,348 2,402 Motor vehicles 3 3 13,123 13,451 Less: Accumulated depreciation 6,845 7,500 6,278 5,951 Construction in progress 778 853 Property and equipment, net 7,056 6,804 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets with indefinite life | As of December 31, September 30, 2021 2022 Intangible assets with indefinite lives: Brand names 5,010 4,896 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 366 353 Favorable lease agreements from sublease 11 5 Purchased software 142 129 Other intangible assets 70 72 Total 5,791 5,647 Less: Accumulated amortization 163 168 Less: Accumulated impairment loss 243 239 Total 5,385 5,240 |
Schedule of estimated amortization expense | Amortization for Intangible Assets Remainder of 2022 8 2023 35 2024 32 2025 31 2026 28 Thereafter 173 Total 307 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INVESTMENTS. | |
Schedule of investments | As of December 31, 2021 September 30, 2022 Equity securities with readily determinable fair values: Accor 2,508 1,540 Other marketable securities 81 75 Equity securities without readily determinable fair values: Cjia/Cjia Group 168 136 OYO 54 54 Other equity securities without readily determinable fair values 71 71 Equity-method investments: AAPC LUB 525 487 Hotel related funds 488 448 China Hospitality JV 99 56 Commerz Real Institute 85 80 Other investments 255 313 Available-for-sale debt securities: Cjia/Cjia Group 220 220 Debt securities: Structured financial product — 300 Total 4,554 3,780 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
Schedule of short-term and long-term debt | As of December 31, September 30, 2021 2022 Short-term debt: Long-term bank borrowings, current portion 2,464 193 Short-term bank borrowings 692 1,535 Convertible senior notes, current portion 3,029 3,372 FF&E liability, current portion 47 44 Total 6,232 5,144 Long-term debt: Long-term bank borrowings, non-current portion 211 2,332 Convertible senior notes, non-current portion 3,158 3,527 FF&E liability, non-current portion 180 217 Others 16 15 Total 3,565 6,091 |
Schedule of contractual maturities of the group's long-term debt | Principle Amounts Remainder of 2022 3,547 2023 1,704 2024 3,791 2025 2,091 2026 27 Thereafter 97 Total 11,257 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, September 30, 2021 2022 Payable to franchisees 710 297 Other payables 535 955 Accrued rental, utilities and other accrued expenses 209 359 Liabilities related to customer loyalty program 135 156 Value-added tax, other tax and surcharge payables 132 193 Payable to noncontrolling interest holders 117 94 Total 1,838 2,054 |
HOTEL OPERATING COSTS (Tables)
HOTEL OPERATING COSTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
HOTEL OPERATING COSTS. | |
Schedule of hotel operating costs | Nine Months Ended September 30, 2021 2022 Rents 2,903 2,973 Utilities 384 441 Personnel costs 2,180 2,701 Depreciation and amortization 1,047 1,063 Consumable, food and beverage 688 737 Others 885 915 Total 8,087 8,830 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SHARE-BASED COMPENSATION | |
Summary of the Group's nonvested restricted stock activity | Weighted Average Grant Number of Restricted Date Stocks Fair Value US$ Nonvested restricted stocks outstanding at January 1, 2022 53,696,490 1.20 Granted 37,291,960 2.50 Forfeited (1,904,140) 1.21 Vested (6,314,470) 1.73 Nonvested restricted stocks outstanding at September 30, 2022 82,769,840 1.74 |
LOSSES PER SHARE (Tables)
LOSSES PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LOSSES PER SHARE | |
Schedule of computation of basic and diluted losses per share | Nine Months Ended September 30, 2021 2022 Net loss attributable to ordinary shareholders — basic (7) (1,697) Net loss attributable to ordinary shareholders — diluted (7) (1,697) Weighted average ordinary shares outstanding — basic and diluted 3,112,910,313 3,111,759,089 Basic and diluted losses per share (0.00) (0.55) |
Schedule of outstanding securities excluded from the computation of diluted earnings per share | As of September 30, September 30, 2021 2022 Outstanding employee options and nonvested restricted stocks 60,278,930 82,769,840 Shares of convertible senior notes 226,827,410 228,239,310 Total 287,106,340 311,009,150 |
SEGMENT (Tables)
SEGMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT | |
Summary of reportable segment results | Nine Months Ended September 30, 2021 2022 Legacy Legacy Huazhu Legacy DH Total Huazhu Legacy DH Total Total revenues 8,471 966 9,437 7,899 2,257 10,156 Operating costs and expenses 7,736 2,006 9,742 8,023 2,608 10,631 Income (loss) from operations 830 (704) 126 54 (254) (200) Net (loss) income attributable to H World Group Limited 571 (578) (7) (1,336) (361) (1,697) Income tax expense (benefit) 213 (216) (3) 36 (32) 4 Interest income 64 — 64 60 — 60 Interest expense 226 87 313 194 98 292 Depreciation and amortization 903 179 1,082 917 179 1,096 EBITDA 1,849 (528) 1,321 (249) (116) (365) |
Schedule of total assets for operating segments, reconciled to consolidated amounts | As of December 31, 2021 September 30, 2022 Legacy Legacy Huazhu Legacy DH Total Huazhu Legacy DH Total Total assets 45,353 17,916 63,269 44,002 17,385 61,387 |
Schedule of revenues and property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill by geographical region | Revenues : Nine Months Ended September 30, 2021 2022 China 8,459 7,881 Germany 799 1,717 All others 179 558 Total 9,437 10,156 As of December 31, 2021 September 30, 2022 China 33,143 31,902 Germany 13,884 13,424 All others 2,929 2,970 Total 49,956 48,296 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
Schedule of supplemental information related to operating leases | Nine Months Ended September 30, 2021 2022 Lease cost: Operating fixed lease cost 2,999 3,165 Finance lease cost — Amortization of ROU assets 59 69 — Interest on lease liabilities 72 86 Short term lease cost 0 0 Operating variable lease cost (12) (87) Total lease cost 3,118 3,233 Other information: Weighted average remaining lease term Operating leases 13 years 13 years Finance leases 28 years 28 years Weighted average discount rate Operating leases 6.22 % 6.31 % Finance leases 3.97 % 3.98 % |
Schedule of maturities of operating and finance lease liabilities | Total Operating Leases Total Finance Leases Remainder of 2022 1,097 39 2023 4,099 162 2024 4,146 167 2025 3,924 166 2026 3,724 168 Thereafter 27,070 4,143 Total minimum lease payments 44,060 4,845 Less: amount representing interest 13,112 1,943 Present value of minimum lease payments 30,948 2,902 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
EMPLOYEE BENEFIT PLANS | |
Schedule of net periodic benefit cost recognized | Nine Months Ended September 30, Pension benefits Other benefits 2021 2022 2021 2022 Service cost 8 6 0 0 Interest cost 2 1 — — Expected return on plan assets (0) (0) — — Amortization of net loss 3 4 — — Regular Net Periodic Pension Cost 13 11 0 0 Total Recognized in Net Periodic Pension Cost 13 11 0 0 |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
Schedule of related parties | Related Party Nature of the Party Relationship with the Group Trip.com Group Limited (“Trip.com”) 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 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 Suzhou Huali Jinshi Construction Decoration Co., Ltd. ( “Huali Jinshi”) Building decoration company Equity method investee of the Group Shenzhen Hitone Investment Fund Partnership (LLP) ( “Hitone”) Fund Equity method investee of the Group AZURE Hospitality Fund I Limited Partnership ( “AZURE”) Fund Equity method investee of the Group AAPC Hotel Management Co., Ltd. ( “AAPC”) Hotel management company Equity method investee of the Group |
Schedule of amounts due from related parties | As of December 31, September 30, 2021 2022 Sheen Star 33 31 Zhuchuang 27 27 Trip.com 17 71 Cjia Group 29 29 Lianquan 49 44 Others 12 18 Allowance for expected credit losses (17) (37) Total 150 183 |
Schedule of amounts due to related party | As of December 31, September 30, 2021 2022 Trip.com 44 51 Cjia Group 101 27 Huali Jinshi 47 — Others 5 7 Total 197 85 |
Schedule of significant related party transactions | Nine Months Ended September 30, 2021 2022 Commission expenses to Trip.com 78 43 Lease expenses to Trip.com 14 14 Lease expenses to Cjia Group — 25 Service fee to Huali Jinshi 10 — Service fee to AAPC — 3 Brand use fee, reservation fee and other related service fee to Accor 15 — Goods sold and service provided to Cjia Group 10 — Loan payment to Hitone 5 — Service fee from Trip.com 52 49 Service fee from AAPC 3 2 Service fee from China Hospitality JV 2 1 Service fee from Sheen Star 3 3 Service fee from AZURE — 3 Sublease income from Lianquan 8 9 Sublease income from Cjia Group 5 4 Business acquisition of CitiGO from Cjia Group 783 — Business acquisition of one individual company from Cjia Group 51 — |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) ¥ in Millions | 1 Months Ended | 9 Months Ended | |||||
Jun. 30, 2021 $ / shares | Sep. 30, 2020 CNY (¥) | Sep. 30, 2022 item $ / shares | Sep. 30, 2021 CNY (¥) | Dec. 31, 2021 item $ / shares | May 31, 2021 $ / shares | Jan. 02, 2020 | |
Organization and presentation activities | |||||||
Proceeds from issuance of ordinary shares | ¥ | ¥ 6,018 | ¥ 1 | |||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.0001 | |||
Share split conversion ratio | 10 | ||||||
Legacy Huazhu | Minimum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 8 years | ||||||
Legacy Huazhu | Maximum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 10 years | ||||||
Leased and owned hotels | |||||||
Organization and presentation activities | |||||||
Number of hotels | 710 | 738 | |||||
Manachised hotels | |||||||
Organization and presentation activities | |||||||
Number of hotels | 7,459 | 6,824 | |||||
Manachised hotels | Legacy DH | Minimum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 15 years | ||||||
Manachised hotels | Legacy DH | Maximum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 20 years | ||||||
Franchised hotels | |||||||
Organization and presentation activities | |||||||
Number of hotels | 233 | 268 | |||||
Franchised hotels | Legacy DH | Minimum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 10 years | ||||||
Franchised hotels | Legacy DH | Maximum | |||||||
Organization and presentation activities | |||||||
Term of franchise and management agreement | 15 years | ||||||
Deutsche Hospitality | |||||||
Organization and presentation activities | |||||||
Percent of ownership acquired (as percent) | 100% |
SUMMARY OF PRINCIPAL ACCOUNTI_4
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Basis of presentation- Debt (Details) € in Millions, ¥ in Millions, $ in Millions | 9 Months Ended | |||||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 EUR (€) | Dec. 31, 2021 CNY (¥) | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | ||||||
Working capital deficit | ¥ 4,172 | $ 586 | ||||
Unused facilities | ¥ | 2,900 | |||||
Net Cash Provided by (Used in) Operating Activities | 520 | $ 72 | ¥ 473 | |||
Equity securities with readily determinable fair value | ¥ 1,915 | $ 269 | ¥ 2,589 | |||
Revolving credit facility [Member] | ||||||
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | ||||||
Unused facilities | € | € 70 |
SUMMARY OF PRINCIPAL ACCOUNTI_5
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Intangible assets (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Impairment loss on intangible assets | ¥ 245 | ||
Legacy DH [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment loss on intangible assets | ¥ 0 | ¥ 0 | |
Minimum | Favorable lease agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 1 year | ||
Minimum | Unfavorable lease agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 3 years | ||
Maximum | Favorable lease agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 20 years | ||
Maximum | Unfavorable lease agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 13 years |
SUMMARY OF PRINCIPAL ACCOUNTI_6
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Land use rights (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting policies | ||
Long-lived asset impairment loss | ¥ 101 | ¥ 60 |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Hotel Operating Cost | Hotel Operating Cost |
Net revenues | ¥ 10,156 | ¥ 9,437 |
Minimum | Legacy Huazhu | ||
Accounting policies | ||
Initial lease term | 10 years | |
Minimum | Legacy DH | ||
Accounting policies | ||
Initial lease term | 20 years | |
Maximum | Legacy Huazhu | ||
Accounting policies | ||
Initial lease term | 20 years | |
Maximum | Legacy DH | ||
Accounting policies | ||
Initial lease term | 25 years |
SUMMARY OF PRINCIPAL ACCOUNTI_7
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Fair value (Details) ¥ in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2021 CNY (¥) | Dec. 31, 2021 CNY (¥) | Sep. 30, 2022 USD ($) | |
Fair value | ||||
Equity securities with readily determinable fair value | ¥ 1,915 | ¥ 2,589 | $ 269 | |
Structured financial product | 300 | |||
Property and equipment | 39 | |||
Intangible assets | 3 | |||
Operating lease right-of-use assets | 59 | |||
Operating lease right-of-use assets | 28,610 | 29,942 | $ 4,022 | |
Intangible assets carrying value | 307 | |||
Impairment charge of intangible assets | 245 | |||
Property and equipment, impairment loss | 24 | |||
Long-term investment, impairment loss | 63 | |||
Operating lease right-of-use assets, impairment loss | 48 | |||
Long-lived asset impairment loss | 101 | ¥ 60 | ||
Operating lease, impairment loss | 59 | 3 | ||
Franchise or manachise agreements | ||||
Fair value | ||||
Impairment charge of intangible assets | ¥ 48 | |||
Other intangible assets of legacy DH | ||||
Fair value | ||||
Impairment charge of intangible assets | 3 | |||
Convertible Debt | ||||
Fair value | ||||
Long-term bank borrowings, current portion | 3,372 | 3,029 | ||
Carrying amounts of convertible senior notes | 6,899 | 6,186 | ||
Fair value of convertible senior notes | 7,224 | 6,681 | ||
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Fair value | ||||
Equity securities with readily determinable fair value | 1,615 | 2,589 | ||
Employee benefit plan assets | 8 | 5 | ||
Recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Fair value | ||||
Available-for-sale debt securities | 220 | 220 | ||
Structured financial product | 300 | |||
Non-recurring basis | ||||
Fair value | ||||
Property and equipment | 8 | 33 | ||
Intangible assets | 141 | 2,556 | ||
Operating lease right-of-use assets | 40 | 88 | ||
Non-recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Fair value | ||||
Property and equipment | 8 | 33 | ||
Intangible assets | 141 | 2,556 | ||
Operating lease right-of-use assets | 40 | 88 | ||
Fair value | Recurring basis | ||||
Fair value | ||||
Equity securities with readily determinable fair value | 1,615 | 2,589 | ||
Available-for-sale debt securities | 220 | 220 | ||
Employee benefit plan assets | 8 | ¥ 5 | ||
Structured financial product | ¥ 300 |
SUMMARY OF PRINCIPAL ACCOUNTI_8
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Share-based compensation and Treasury shares (Details) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 CNY (¥) segment $ / ¥ | Sep. 30, 2021 CNY (¥) | |
Share-based compensation | ||
Recognized share-based compensation expenses | ¥ 77 | ¥ 94 |
Number of operating segments | segment | 2 | |
Translation into United States Dollars | ||
Foreign exchange rate used to translate amounts denominated in RMB to US dollar | $ / ¥ | 7.1135 | |
Hotel operating costs | ||
Share-based compensation | ||
Recognized share-based compensation expenses | ¥ 29 | 32 |
Selling and marketing expenses | ||
Share-based compensation | ||
Recognized share-based compensation expenses | 4 | 3 |
General and administrative expenses | ||
Share-based compensation | ||
Recognized share-based compensation expenses | ¥ 44 | ¥ 59 |
ACQUISITIONS - Citigo acuquisit
ACQUISITIONS - Citigo acuquisition and Other acquisitions (Details) - CNY (¥) ¥ in Millions | 5 Months Ended | 9 Months Ended | ||
Apr. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CitiGo Hotels | ||||
Acquisitions | ||||
Percentage of ownership interest acquired | 100% | |||
Aggregated consideration | ¥ 783 | |||
Cash consideration | ¥ 749 | |||
Other acquisitions | ||||
Acquisitions | ||||
Cash consideration | ¥ 9 | ¥ 51 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregated Revenues (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregated Revenues | ||
Total revenues | ¥ 10,156 | ¥ 9,437 |
Leased and owned hotels | ||
Disaggregated Revenues | ||
Total revenues | 6,698 | 6,025 |
Room Revenues | ||
Disaggregated Revenues | ||
Total revenues | 5,612 | 5,228 |
Food and Beverage Revenues | ||
Disaggregated Revenues | ||
Total revenues | 752 | 475 |
Others | ||
Disaggregated Revenues | ||
Total revenues | 334 | 322 |
Manachised and franchised hotels | ||
Disaggregated Revenues | ||
Total revenues | 3,247 | 3,300 |
Initial one-time franchise fee | ||
Disaggregated Revenues | ||
Total revenues | 79 | 81 |
On-going management and service fees | ||
Disaggregated Revenues | ||
Total revenues | 1,002 | 1,105 |
Central reservation system usage fees, other system maintenance and support fees | ||
Disaggregated Revenues | ||
Total revenues | 940 | 1,048 |
Reimbursements for hotel manager fees | ||
Disaggregated Revenues | ||
Total revenues | 806 | 684 |
Other fees | ||
Disaggregated Revenues | ||
Total revenues | 420 | 382 |
Others | ||
Disaggregated Revenues | ||
Total revenues | ¥ 211 | ¥ 112 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances (Details) ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Contract with Customer, Liability | |||
Current contract liabilities | ¥ 1,280 | $ 180 | ¥ 1,366 |
Long-term contract liabilities | 822 | $ 116 | 785 |
Total contract liabilities | ¥ 2,102 | ¥ 2,151 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances - Contract liabilities (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Contract with Customer, Liability | |||
Initial fees received from franchisees owners | ¥ 1,047 | ¥ 1,074 | |
Cash received for membership fees and not recognized as revenue | 517 | 519 | |
Advances received from customers | 484 | 505 | |
Deferred revenue related to the loyalty program | 54 | 53 | |
Total contract liabilities | 2,102 | ¥ 2,151 | |
Revenue recognized | ¥ 510 | ¥ 494 |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule (Details) ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Cost: | |||
Property and equipment, gross | ¥ 13,451 | ¥ 13,123 | |
Less: Accumulated depreciation | 7,500 | 6,845 | |
Property and equipment net excluding construction in process | 5,951 | 6,278 | |
Construction in progress | 853 | 778 | |
Property and equipment, net | 6,804 | $ 957 | 7,056 |
Buildings | |||
Cost: | |||
Property and equipment, gross | 305 | 305 | |
Leasehold improvements | |||
Cost: | |||
Property and equipment, gross | 10,741 | 10,467 | |
Furniture, fixtures and equipment | |||
Cost: | |||
Property and equipment, gross | 2,402 | 2,348 | |
Motor vehicles | |||
Cost: | |||
Property and equipment, gross | ¥ 3 | ¥ 3 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT, NET | ||
Depreciation expense | ¥ 985 | ¥ 970 |
Long-lived asset impairment loss | ¥ 39 | ¥ 9 |
INTANGIBLE ASSETS, NET - Schedu
INTANGIBLE ASSETS, NET - Schedule (Details) ¥ in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2021 CNY (¥) | Dec. 31, 2021 CNY (¥) | Sep. 30, 2022 USD ($) | |
Intangible assets, net | ||||
Intangible assets, gross | ¥ 5,647 | ¥ 5,791 | ||
Less: Accumulated amortization | 168 | 163 | ||
Less: Accumulated impairment loss | 239 | 243 | ||
Total | 5,240 | 5,385 | $ 737 | |
Unfavorable lease | ||||
Amortization expense of intangible assets | 32 | ¥ 48 | ||
Impairment loss on intangible assets | 245 | |||
Manachised and franchised hotels | ||||
Intangible assets, net | ||||
Intangible assets, gross | 353 | 366 | ||
Favorable lease agreements | ||||
Intangible assets, net | ||||
Intangible assets, gross | 5 | 11 | ||
Purchased software | ||||
Intangible assets, net | ||||
Intangible assets, gross | 129 | 142 | ||
Other intangible assets | ||||
Intangible assets, net | ||||
Intangible assets, gross | 72 | 70 | ||
Brand names | ||||
Intangible assets, net | ||||
Intangible assets, gross | 4,896 | 5,010 | ||
Franchise or manachise agreements | ||||
Unfavorable lease | ||||
Impairment loss on intangible assets | ¥ 48 | |||
Other intangible assets | ||||
Unfavorable lease | ||||
Impairment loss on intangible assets | 3 | |||
Master brand agreement | ||||
Intangible assets, net | ||||
Intangible assets, gross | ¥ 192 | ¥ 192 |
INTANGIBLE ASSETS, NET - Amorti
INTANGIBLE ASSETS, NET - Amortization for Intangible Assets (Details) ¥ in Millions | Sep. 30, 2022 CNY (¥) |
Estimated amortization expense | |
Remainder of 2022 | ¥ 8 |
2023 | 35 |
2024 | 32 |
2025 | 31 |
2026 | 28 |
Thereafter | 173 |
Total | ¥ 307 |
INVESTMENTS - Schedule (Details
INVESTMENTS - Schedule (Details) ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
INVESTMENTS | |||
Equity securities with readily determinable fair values: | ¥ 1,915 | $ 269 | ¥ 2,589 |
Structured financial product | 300 | ||
Investments | 3,780 | 4,554 | |
Accor | |||
INVESTMENTS | |||
Equity securities with readily determinable fair values: | 1,540 | 2,508 | |
Other marketable securities | |||
INVESTMENTS | |||
Equity securities with readily determinable fair values: | 75 | 81 | |
Cjia Group | |||
INVESTMENTS | |||
Equity securities without readily determinable fair values: | 136 | 168 | |
Available-for-sale debt securities: | 220 | 220 | |
OYO | |||
INVESTMENTS | |||
Equity securities without readily determinable fair values: | 54 | 54 | |
Other equity securities without readily determinable fair values | |||
INVESTMENTS | |||
Equity securities without readily determinable fair values: | 71 | 71 | |
AAPC LUB | |||
INVESTMENTS | |||
Equity-method investments: | 487 | 525 | |
Hotel related funds | |||
INVESTMENTS | |||
Equity-method investments: | 448 | 488 | |
China Hospitality JV | |||
INVESTMENTS | |||
Equity-method investments: | 56 | 99 | |
Commerz Real Institute | |||
INVESTMENTS | |||
Equity-method investments: | 80 | 85 | |
Other investments | |||
INVESTMENTS | |||
Equity-method investments: | ¥ 313 | ¥ 255 |
INVESTMENTS - Equity securities
INVESTMENTS - Equity securities with readily determinable fair values (Details) ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 CNY (¥) | |
Equity securities with readily determinable fair values | |||
Unrealized gain (loss) from fair value | ¥ (499) | $ (70) | ¥ 120 |
Accor | |||
Equity securities with readily determinable fair values | |||
Number of ordinary shares acquired | 2,017,078 | 2,017,078 | |
Number of ordinary shares sold | 478 | 478 | |
Gain (loss) realized | ¥ | ¥ 64 | ||
Number of shares held in investment | 10,195,474 | 10,195,474 | |
Investment in equity securities (in percentage) | 5% | 5% | |
Unrealized gain (loss) from fair value | ¥ | ¥ 485 | ¥ 127 |
INVESTMENTS - Equity-method inv
INVESTMENTS - Equity-method investments (Details) ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | |
Equity-method investments | |||
Income (Loss) from Equity Method Investments | ¥ (39) | $ (5) | ¥ (18) |
Investment income (loss) | (39) | $ (5) | (18) |
AAPC LUB | |||
Equity-method investments | |||
Received cash dividend | 47 | ||
China Hospitality JV | |||
Equity-method investments | |||
Received cash dividend | 54 | ||
Azure Hospitality Fund I Limited Partnership | |||
Equity-method investments | |||
Increased investments | 64 | ||
China Cjia Group Limited [Member] | |||
Equity-method investments | |||
Income (Loss) from Equity Method Investments | 32 | 18 | |
Investment income (loss) | ¥ 32 | ¥ 18 |
DEBT - Components (Details)
DEBT - Components (Details) € in Millions, ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 EUR (€) |
DEBT | ||||
Short-term Debt | ¥ 5,144 | $ 723 | ¥ 6,232 | |
Total | 5,144 | 6,232 | ||
Long-term debt, non-current portion | 6,091 | $ 856 | 3,565 | |
Long-term debt | 6,091 | 3,565 | € 338 | |
Bank borrowings | ||||
DEBT | ||||
Long-term debt, current portion | 193 | 2,464 | ||
Long-term debt, non-current portion | 2,332 | 211 | ||
Convertible Debt [Member] | ||||
DEBT | ||||
Long-term debt, current portion | 3,372 | 3,029 | ||
Long-term debt, non-current portion | 3,527 | 3,158 | ||
FF&E liability | ||||
DEBT | ||||
Long-term debt, current portion | 44 | 47 | ||
Long-term debt, non-current portion | 217 | 180 | ||
Others | ||||
DEBT | ||||
Long-term debt, non-current portion | 15 | 16 | ||
Bank borrowings | ||||
DEBT | ||||
Short-term Debt | ¥ 1,535 | ¥ 692 |
DEBT - Bank borrowings (Details
DEBT - Bank borrowings (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | 9 Months Ended | ||||||||||||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 EUR (€) | Aug. 31, 2022 CNY (¥) | Jan. 31, 2021 CNY (¥) | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 EUR (€) | Aug. 31, 2022 EUR (€) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 EUR (€) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 EUR (€) | |
Debt | ||||||||||||||
Long-term debt, non-current portion | ¥ 6,091 | ¥ 6,091 | $ 856 | ¥ 3,565 | ||||||||||
Long-term debt | 6,091 | 6,091 | 3,565 | € 338 | ||||||||||
Outstanding loan paid off | ¥ 4,111 | $ 578 | ¥ 3,403 | |||||||||||
Euro | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 220 | |||||||||||||
Percentage points added to the reference rate | 1.55% | |||||||||||||
Weighted average interest rate (as a percent) | 2.58% | 2.58% | ||||||||||||
Credit facility drawn down amount | € 220 | |||||||||||||
RMB | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | ¥ | 110 | ¥ 110 | ¥ 110 | |||||||||||
Percentage points added to the reference rate | (0.15%) | |||||||||||||
Weighted average interest rate (as a percent) | 3.55% | 3.55% | ||||||||||||
Credit facility drawn down amount | ¥ | 110 | |||||||||||||
Repayment of line of credit facility | ¥ | ¥ 0 | |||||||||||||
Term facility | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 220 | |||||||||||||
Term of debt instrument | 35 months | |||||||||||||
Revolving credit facility | ||||||||||||||
Debt | ||||||||||||||
Term of debt instrument | 35 months | |||||||||||||
Revolving credit facility | Euro | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | 70 | |||||||||||||
Term of debt instrument | 3 years | |||||||||||||
Term Facility Expiring December 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 440 | |||||||||||||
Long-term debt | € 338 | |||||||||||||
Revolving Credit Facility Expiring December 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | $ | $ 500 | |||||||||||||
Revolving Credit Facility Expiring December 2022 | Euro | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 70 | |||||||||||||
Five Year Term Facility | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 338 | |||||||||||||
Syndicated Loan Facility Expiring in December 2032 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | ¥ | ¥ 650 | |||||||||||||
Long-term debt | ¥ | ¥ 53 | ¥ 53 | ¥ 53 | |||||||||||
Term of debt instrument | 12 years | |||||||||||||
Weighted average interest rate (as a percent) | 4.21% | 4.21% | ||||||||||||
Interest capitalized amount | ¥ | ¥ 1 | |||||||||||||
Syndicated Loan Facility Expiring in December 2032 | Prime Rate | ||||||||||||||
Debt | ||||||||||||||
Percentage points added to the reference rate | 0.24% | |||||||||||||
Syndicated Loan Facility Expiring in December 2032 | RMB | ||||||||||||||
Debt | ||||||||||||||
Interest capitalized amount | ¥ | ¥ 2 |
DEBT - Capped Call Options (Det
DEBT - Capped Call Options (Details) - Call Option $ in Millions | 1 Months Ended |
Jul. 31, 2022 USD ($) | |
DEBT | |
Settlement amount of call option | $ 12.8 |
Increase of additional paid in capital by settlement of capped call option | $ 12.8 |
DEBT - Convertible Senior Notes
DEBT - Convertible Senior Notes (Details) - Convertible Debt - Convertible Senior Notes Due 2022 € in Millions, $ in Millions | Nov. 01, 2022 USD ($) | Nov. 01, 2022 EUR (€) | Nov. 03, 2017 USD ($) |
DEBT | |||
Aggregate principal amount | $ 475 | ||
Fixed interest rate (as a percent) | 0.375% | ||
Note repurchased | $ 475 | ||
Utilizing revolving facility | € | € 70 |
DEBT - Schedule of contractual
DEBT - Schedule of contractual maturities of the group's long-term debt (Details) ¥ in Millions | Sep. 30, 2022 CNY (¥) |
Contractual maturities | |
Remainder of 2022 | ¥ 3,547 |
2023 | 1,704 |
2024 | 3,791 |
2025 | 2,091 |
2026 | 27 |
Thereafter | 97 |
Total | ¥ 11,257 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Payable to franchisees | ¥ 297 | ¥ 710 | |
Other payables | 955 | 535 | |
Accrued rental, utilities and other accrued expenses | 359 | 209 | |
Liabilities related to customer loyalty program | 156 | 135 | |
Value-added tax, other tax and surcharge payables | 193 | 132 | |
Payable to noncontrolling interest holders | 94 | 117 | |
Total | ¥ 2,054 | $ 289 | ¥ 1,838 |
Additional disclosures | |||
Payable to franchisees, term (in years) | 1 year | ||
Payable to noncontrolling interest holders, term (in years) | 1 year |
HOTEL OPERATING COSTS (Details)
HOTEL OPERATING COSTS (Details) ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | |
HOTEL OPERATING COSTS. | |||
Rents | ¥ 2,973 | ¥ 2,903 | |
Utilities | 441 | 384 | |
Personnel costs | 2,701 | 2,180 | |
Depreciation and amortization | 1,063 | 1,047 | |
Consumable, food and beverage | 737 | 688 | |
Others | 915 | 885 | |
Total | ¥ 8,830 | $ 1,242 | ¥ 8,087 |
SHARE-BASED COMPENSATION - Plan
SHARE-BASED COMPENSATION - Plan (Details) - shares | 9 Months Ended | |||||||
Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2015 | Aug. 31, 2010 | Sep. 30, 2009 | Oct. 31, 2008 | Jun. 30, 2007 | Feb. 28, 2007 | |
Share options | ||||||||
Share based compensation | ||||||||
Granted (in shares) | 0 | 0 | ||||||
Restricted stocks | ||||||||
Share based compensation | ||||||||
Vesting period | 2 years | |||||||
Incentive Award Plans | ||||||||
Share based compensation | ||||||||
Vesting period | 10 years | |||||||
Incentive Award Plans | Maximum [Member] | ||||||||
Share based compensation | ||||||||
Share-based payment award, contractual term | 10 years | |||||||
Incentive Award Plans | Share options | ||||||||
Share based compensation | ||||||||
Share-based payment award, option granted (in shares) | 245,776,690 | |||||||
Incentive Award Plans | Restricted stocks | ||||||||
Share based compensation | ||||||||
Share-based payment award, nonvested restricted stocks (in shares) | 280,351,030 | |||||||
Incentive Award Plans | Second anniversary of the stated vesting commencement date | ||||||||
Share based compensation | ||||||||
Share-based payment award, vesting percentage | 50% | |||||||
Incentive Award Plans | Vesting ratably over the following two years | ||||||||
Share based compensation | ||||||||
Share-based payment award, vesting percentage | 50% | |||||||
Vesting period | 2 years | |||||||
2007 Global Share Plan | ||||||||
Share based compensation | ||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 100,000,000 | |||||||
2008 Global Share Plan | ||||||||
Share based compensation | ||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 70,000,000 | 30,000,000 | ||||||
2009 Global Share Plan | ||||||||
Share based compensation | ||||||||
Share-based payment award, maximum number of incentive award available (in shares) | 430,000,000 | 150,000,000 | 30,000,000 |
SHARE-BASED COMPENSATION - Nonv
SHARE-BASED COMPENSATION - Nonvested restricted stocks (Details) ¥ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) shares | Sep. 30, 2022 CNY (¥) $ / shares | Sep. 30, 2021 CNY (¥) | |
Weighted Average Grant Date Fair Value | |||
Total fair value of nonvested restricted stocks, vested | ¥ | ¥ 143 | ||
Restricted stocks | |||
Share based compensation | |||
Period for remaining percentage vested | 2 years | ||
Number of Restricted Stocks | |||
Nonvested restricted stocks outstanding at the beginning of the period (in shares) | shares | 53,696,490 | ||
Granted (in shares) | shares | 37,291,960 | ||
Forfeited (in shares) | shares | (1,904,140) | ||
Vested (in shares) | shares | (6,314,470) | ||
Nonvested restricted stocks outstanding at the end of the period (in shares) | shares | 82,769,840 | ||
Weighted Average Grant Date Fair Value | |||
Nonvested restricted stocks outstanding at the beginning of the period (in dollars per shares) | $ / shares | $ 1.20 | ||
Granted (in dollars per shares) | $ / shares | 2.50 | ||
Forfeited (in dollars per shares) | $ / shares | 1.21 | ||
Vested (in dollars per shares) | $ / shares | 1.73 | ||
Nonvested restricted stocks outstanding at the end of the period (in dollars per shares) | $ / shares | $ 1.74 | ||
Total unrecognized compensation expense | ¥ | ¥ 862 | $ 862 | |
Weighted-average period for recognition of unrecognized compensation costs | 3 years 7 months 28 days | ||
Total fair value of nonvested restricted stocks, vested | ¥ | ¥ 279 | ||
Restricted stocks | Vesting on the second anniversary | |||
Share based compensation | |||
Share-based payment award, vesting percentage | 50% | ||
Restricted stocks | Vesting ratably over the following two years | |||
Share based compensation | |||
Share-based payment award, vesting percentage | 50% | ||
Share options | |||
Weighted Average Grant Date Fair Value | |||
Total unrecognized compensation expense | ¥ | ¥ 0 | $ 0 |
LOSSES PER SHARE (Details)
LOSSES PER SHARE (Details) ¥ / shares in Units, ¥ in Millions | 9 Months Ended | ||
Sep. 30, 2022 $ / shares | Sep. 30, 2022 CNY (¥) ¥ / shares shares | Sep. 30, 2021 CNY (¥) ¥ / shares shares | |
LOSSES PER SHARE | |||
Net loss attributable to ordinary shareholders - basic | ¥ | ¥ (1,697) | ¥ (7) | |
Net loss attributable to ordinary shareholders - diluted | ¥ | ¥ (1,697) | ¥ (7) | |
Weighted average ordinary shares outstanding - basic | shares | 3,111,759,089 | 3,112,910,313 | |
Weighted average ordinary shares outstanding - diluted | shares | 3,111,759,089 | 3,112,910,313 | |
Basic losses per share | (per share) | $ (0.08) | ¥ (0.55) | ¥ 0 |
Diluted losses per share | (per share) | $ (0.08) | ¥ (0.55) | ¥ 0 |
LOSSES PER SHARE - Computation
LOSSES PER SHARE - Computation of diluted earnings (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
EARNINGS (LOSSES) PER SHARE | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 311,009,150 | 287,106,340 |
Outstanding employee options and nonvested restricted stocks | ||
EARNINGS (LOSSES) PER SHARE | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 82,769,840 | 60,278,930 |
Shares of convertible senior notes | ||
EARNINGS (LOSSES) PER SHARE | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 228,239,310 | 226,827,410 |
SEGMENT (Details)
SEGMENT (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
SEGMENT | |
Number of Operating Segments | 2 |
Number of Reportable Segments | 2 |
SEGMENT - Group's reportable se
SEGMENT - Group's reportable segment results (Details) ¥ in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | |
SEGMENT | |||
Total revenues | ¥ 10,156 | $ 1,428 | ¥ 9,437 |
Operating costs and expenses | 10,631 | 1,496 | 9,742 |
Income (loss) from operations | (200) | (29) | 126 |
Net (loss) income attributable to H World Group Limited | (1,697) | (240) | (7) |
Income tax expense (benefit) | 4 | 1 | (3) |
Interest income | 60 | 8 | 64 |
Interest expense | 292 | $ 41 | 313 |
Depreciation and amortization | 1,096 | 1,082 | |
EBITDA | (365) | 1,321 | |
Legacy Huazhu | |||
SEGMENT | |||
Total revenues | 7,899 | 8,471 | |
Operating costs and expenses | 8,023 | 7,736 | |
Income (loss) from operations | 54 | 830 | |
Net (loss) income attributable to H World Group Limited | (1,336) | 571 | |
Income tax expense (benefit) | 36 | 213 | |
Interest income | 60 | 64 | |
Interest expense | 194 | 226 | |
Depreciation and amortization | 917 | 903 | |
EBITDA | (249) | 1,849 | |
Legacy DH | |||
SEGMENT | |||
Total revenues | 2,257 | 966 | |
Operating costs and expenses | 2,608 | 2,006 | |
Income (loss) from operations | (254) | (704) | |
Net (loss) income attributable to H World Group Limited | (361) | (578) | |
Income tax expense (benefit) | (32) | (216) | |
Interest expense | 98 | 87 | |
Depreciation and amortization | 179 | 179 | |
EBITDA | ¥ (116) | ¥ (528) |
SEGMENT - Total assets for oper
SEGMENT - Total assets for operating segments (Details) ¥ in Millions, $ in Millions | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
SEGMENT | |||
Total assets | ¥ 61,387 | $ 8,631 | ¥ 63,269 |
Legacy Huazhu | |||
SEGMENT | |||
Total assets | 44,002 | 45,353 | |
Legacy DH | |||
SEGMENT | |||
Total assets | ¥ 17,385 | ¥ 17,916 |
SEGMENT - Property and equipmen
SEGMENT - Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill (Details) ¥ in Millions, $ in Millions | 9 Months Ended | |||
Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SEGMENT | ||||
Total | ¥ 10,156 | $ 1,428 | ¥ 9,437 | |
Total | 48,296 | ¥ 49,956 | ||
China | ||||
SEGMENT | ||||
Total | 7,881 | 8,459 | ||
Total | 31,902 | 33,143 | ||
Germany | ||||
SEGMENT | ||||
Total | 1,717 | 799 | ||
Total | 13,424 | 13,884 | ||
All others | ||||
SEGMENT | ||||
Total | 558 | ¥ 179 | ||
Total | ¥ 2,970 | ¥ 2,929 |
Cash Dividend (Details)
Cash Dividend (Details) $ / shares in Units, $ in Millions | Mar. 03, 2022 USD ($) $ / shares |
Cash dividends declared (per share) | $ / shares | $ 0.021 |
Dividends payable | $ | $ 68 |
LEASES - Supplemental Informati
LEASES - Supplemental Information Related to Operating Leases (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Lease cost: | ||
Operating fixed lease cost | ¥ 3,165 | ¥ 2,999 |
- Amortization of ROU assets | 69 | 59 |
- Interest on lease liabilities | 86 | 72 |
Short term lease cost | 0 | 0 |
Operating variable lease cost | (87) | (12) |
Total lease cost | ¥ 3,233 | ¥ 3,118 |
Other information: | ||
Weighted average remaining lease term, Operating leases | 13 years | 13 years |
Weighted average remaining lease term, Finance leases | 28 years | 28 years |
Weighted average discount rate, Operating leases | 6.31% | 6.22% |
Weighted average discount rate, Finance leases | 3.98% | 3.97% |
LEASES - Schedule Of Maturities
LEASES - Schedule Of Maturities Of Lease Liabilities (Details) ¥ in Millions | Sep. 30, 2022 CNY (¥) |
Total Operating Leases | |
Remainder of 2022 | ¥ 1,097 |
2023 | 4,099 |
2024 | 4,146 |
2025 | 3,924 |
2026 | 3,724 |
Thereafter | 27,070 |
Total minimum lease payments | 44,060 |
Less: amount representing interest | 13,112 |
Present value of minimum lease payments | 30,948 |
Total Finance Leases | |
Remainder of 2022 | 39 |
2023 | 162 |
2024 | 167 |
2025 | 166 |
2026 | 168 |
Thereafter | 4,143 |
Total minimum lease payments | 4,845 |
Less: amount representing interest | 1,943 |
Present value of minimum lease payments | ¥ 2,902 |
LEASES - Schedule Of Future Min
LEASES - Schedule Of Future Minimum Payments (Details) ¥ in Millions | Sep. 30, 2022 CNY (¥) |
Total Operating Leases | |
2022 | ¥ 4,099 |
2023 | 4,146 |
2024 | 3,924 |
2025 | 3,724 |
Total minimum lease payments | 44,060 |
Less: amount representing interest | 13,112 |
Present value of minimum lease payments | 30,948 |
Total Finance Leases | |
2022 | 162 |
2023 | 167 |
2024 | 166 |
2025 | 168 |
Total minimum lease payments | 4,845 |
Less: amount representing interest | 1,943 |
Present value of minimum lease payments | ¥ 2,902 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 CNY (¥) contract | Sep. 30, 2021 CNY (¥) | |
LEASES | ||
Sublease income | ¥ 89 | ¥ 100 |
Negative lease expense recognized under the relief using variable lease expense approach | 199 | 52 |
Impairment charge of the operating lease right-of-use assets | ¥ 59 | ¥ 3 |
Number of lease contracts | contract | 32 | |
Non-cancellable lease contracts not reflected in consolidate balance sheets | ¥ 9,040 |
EMPLOYEE BENEFIT PLANS - Net pe
EMPLOYEE BENEFIT PLANS - Net periodic benefit cost recognized (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Pension benefits | ||
EMPLOYEE BENEFIT PLANS | ||
Service cost | ¥ 6 | ¥ 8 |
Interest cost | 1 | 2 |
Expected return on plan assets | 0 | 0 |
Amortization of net loss | 4 | 3 |
Regular Net Periodic Pension Cost | 11 | 13 |
Total Recognized in Net Periodic Pension Cost | 11 | 13 |
Other benefits | ||
EMPLOYEE BENEFIT PLANS | ||
Service cost | 0 | 0 |
Regular Net Periodic Pension Cost | 0 | 0 |
Total Recognized in Net Periodic Pension Cost | ¥ 0 | ¥ 0 |
EMPLOYEE BENEFIT PLANS - Additi
EMPLOYEE BENEFIT PLANS - Additional information (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
EMPLOYEE BENEFIT PLANS | ||
Total contribution for employee benefits | ¥ 479 | ¥ 388 |
Contributions recognized as expense | ¥ 52 | ¥ 37 |
RELATED PARTY TRANSACTIONS AN_3
RELATED PARTY TRANSACTIONS AND BALANCES (Details) - CNY (¥) ¥ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Allowance for expected credit losses | ¥ (37) | ¥ (17) | |
Total | 183 | 150 | |
Due to related party | 85 | 197 | |
Sheen Star | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 31 | 33 | |
Sheen Star | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 3 | ¥ 3 | |
Zhuchuang | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 27 | 27 | |
Trip.com | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 71 | 17 | |
Due to related party | 51 | 44 | |
Trip.com | Commission expenses | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 43 | 78 | |
Trip.com | Lease expenses | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 14 | 14 | |
Trip.com | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 49 | 52 | |
Cjia Group | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 29 | 29 | |
Due to related party | 27 | 101 | |
Cjia Group | Lease expenses | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 25 | ||
Cjia Group | Goods sold and service provided | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 10 | ||
Cjia Group | Sublease income | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 4 | 5 | |
Cjia Group | Business acquisition of CitiGO | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 783 | ||
Cjia Group | Business acquisition | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 51 | ||
Lianquan | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 44 | 49 | |
Lianquan | Sublease income | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 9 | 8 | |
Others | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Amounts due from related parties | 18 | 12 | |
Due to related party | 7 | 5 | |
Huali Jinshi | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Due to related party | ¥ 47 | ||
Huali Jinshi | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 10 | ||
AAPC | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 3 | ||
Revenue from related parties | 2 | 3 | |
Accor | Brand use fee, reservation fee and other related service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Expenses with related parties | 15 | ||
Hitone | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Loan payment | 5 | ||
China Hospitality JV | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 1 | 2 | |
AZURE | Service fee | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Revenue from related parties | 3 | ||
ASU 2016-13 | |||
RELATED PARTY TRANSACTIONS AND BALANCES | |||
Credit losses | ¥ 37 | ¥ 17 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) ¥ in Millions | Sep. 30, 2022 CNY (¥) |
COMMITMENTS AND CONTINGENCIES | |
Purchase commitments expected to be incurred within one year related to leasehold improvements and installation of equipment for hotel operations | ¥ 371 |
Accrued contingencies | ¥ 0 |
Minimum | |
COMMITMENTS AND CONTINGENCIES | |
Purchase obligation expectation period | 1 year |
Maximum | |
COMMITMENTS AND CONTINGENCIES | |
Purchase obligation expectation period | 2 years |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | ||||
Nov. 01, 2022 USD ($) | Oct. 31, 2022 USD ($) | Nov. 01, 2022 EUR (€) | Oct. 31, 2022 CNY (¥) | Nov. 03, 2017 | |
Convertible Senior Notes Due 2022 | Convertible Debt | |||||
SUBSEQUENT EVENTS | |||||
Fixed interest rate (as a percent) | 0.375% | ||||
Note repurchased | $ 475 | ||||
Utilizing revolving facility | € | € 70 | ||||
Subsequent Event | One year term facility | |||||
SUBSEQUENT EVENTS | |||||
Term of debt instrument | 1 year | ||||
Maximum borrowing amount | $ 123 | ¥ 1,000 | |||
Fixed interest rate (as a percent) | 5.40% | 5.40% | |||
Subsequent Event | Convertible Senior Notes Due 2022 | Convertible Debt | |||||
SUBSEQUENT EVENTS | |||||
Note repurchased | $ 475 |