Cover Page
Cover Page | 12 Months Ended |
Dec. 31, 2022 shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-34656 |
Entity Registrant Name | H World Group Limited |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | No. 1299 Fenghua Road |
Entity Address, City or Town | Shanghai |
Entity Address, Country | CN |
Title of 12(b) Security | American Depositary Shares |
Trading Symbol | HTHT |
Security Exchange Name | NASDAQ |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
Document Registration Statement | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 3,112,413,730 |
Entity Address, Postal Zip Code | 201803 |
ICFR Auditor Attestation Flag | true |
Auditor Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
Auditor Firm ID | 1113 |
Auditor Location | Shanghai, China |
Entity Central Index Key | 0001483994 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Business contact | |
Document and Entity Information | |
Contact Personnel Name | Jihong He |
Entity Address, Address Line One | 11 Penang Lane |
Entity Address, Country | SG |
City Area Code | 65 |
Local Phone Number | 8655-0278 |
Entity Address, Postal Zip Code | 238485 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 3,583 | $ 520 | ¥ 5,116 |
Restricted cash | 1,503 | 218 | 25 |
Short-term investments | 1,788 | 259 | 2,589 |
Accounts receivable, net | 1,113 | 161 | 521 |
Loan receivables - current, net | 134 | 19 | 218 |
Amounts due from related parties, net | 178 | 26 | 149 |
Inventories | 70 | 10 | 88 |
Other current assets, net | 809 | 117 | 847 |
Total current assets | 9,178 | 1,330 | 9,553 |
Property and equipment, net | 6,784 | 984 | 7,056 |
Intangible assets, net | 5,278 | 765 | 5,385 |
Operating lease right-of-use assets | 28,970 | 4,200 | 29,942 |
Finance lease right-of-use assets | 2,047 | 297 | 2,235 |
Land use rights, net | 199 | 29 | 206 |
Long-term investments | 1,945 | 282 | 1,965 |
Goodwill | 5,195 | 753 | 5,132 |
Amounts due from a related party | 6 | 1 | 1 |
Loan receivables, net | 124 | 18 | 98 |
Other assets, net | 688 | 101 | 834 |
Deferred income tax assets | 1,093 | 158 | 862 |
Total assets | 61,507 | 8,918 | 63,269 |
Current liabilities: | |||
Short-term debt and current portion of long-term debt | 3,288 | 477 | 6,232 |
Accounts payable | 1,171 | 170 | 968 |
Amounts due to related parties | 71 | 10 | 197 |
Salary and welfare payables | 657 | 95 | 591 |
Deferred revenue | 1,308 | 190 | 1,366 |
Operating lease liabilities, current | 3,773 | 547 | 3,628 |
Finance lease liabilities, current | 41 | 6 | 41 |
Accrued expenses and other current liabilities | 2,337 | 339 | 1,838 |
Income tax payable | 500 | 72 | 418 |
Total current liabilities | 13,146 | 1,906 | 15,279 |
Long-term debt | 6,635 | 962 | 3,565 |
Operating lease liabilities, non-current | 27,637 | 4,007 | 28,012 |
Finance lease liabilities, non-current | 2,513 | 364 | 2,684 |
Deferred revenue | 828 | 120 | 785 |
Other long-term liabilities | 977 | 142 | 903 |
Retirement benefit obligations | 110 | 16 | 144 |
Deferred income tax liabilities | 858 | 124 | 853 |
Total liabilities | 52,704 | 7,641 | 52,225 |
Commitments and contingencies (Note 22) | |||
Equity: | |||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,255,971,250 and 3,265,433,590 shares issued as of December 31, 2021 and 2022, and 3,120,746,090 and 3,112,413,730 shares outstanding as of December 31, 2021 and 2022, respectively) | 0 | 0 | 0 |
Treasury shares (30,974,040 and 153,019,860 shares as of December 31, 2021 and 2022, respectively) | (441) | (64) | (107) |
Additional paid-in capital | 10,138 | 1,470 | 9,964 |
Retained earnings | (1,200) | (174) | 1,037 |
Accumulated other comprehensive income | 232 | 34 | 41 |
Total H World Group Limited shareholders' equity | 8,729 | 1,266 | 10,935 |
Noncontrolling interest | 74 | 11 | 109 |
Total equity | 8,803 | 1,277 | 11,044 |
Total liabilities and equity | ¥ 61,507 | $ 8,918 | ¥ 63,269 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | |||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.0001 | ||
Ordinary shares, shares authorized | 80,000,000,000 | 80,000,000,000 | |||
Ordinary shares, shares issued | 3,265,433,590 | 3,255,971,250 | |||
Ordinary shares, shares outstanding | 3,112,413,730 | 3,120,746,090 | 3,108,425,680 | 2,859,026,090 | |
Treasury shares, shares | 153,019,860 | 30,974,040 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Revenues: | ||||
Total revenues | ¥ 13,862 | $ 2,010 | ¥ 12,785 | ¥ 10,196 |
Operating costs and expenses: | ||||
Hotel operating costs | 12,260 | 1,777 | 11,282 | 9,729 |
Other operating costs | 62 | 9 | 58 | 52 |
Selling and marketing expenses | 613 | 89 | 641 | 597 |
General and administrative expenses | 1,675 | 243 | 1,545 | 1,259 |
Pre-opening expenses | 95 | 14 | 81 | 288 |
Total operating costs and expenses | 14,705 | 2,132 | 13,607 | 11,925 |
Goodwill impairment loss | ¥ | 437 | |||
Other operating income, net | 549 | 79 | 986 | 480 |
(Loss) income from operations | (294) | (43) | 164 | (1,686) |
Interest income | 87 | 13 | 89 | 119 |
Interest expense | 409 | 59 | 405 | 533 |
Other (expense) income, net | 10 | 1 | 157 | (89) |
Losses from fair value changes of equity securities, net | (359) | (52) | (96) | (265) |
Foreign exchange gain (loss), net | (641) | (93) | (317) | 175 |
Loss before income taxes | (1,606) | (233) | (408) | (2,279) |
Income tax (benefit) expense | 207 | 30 | 12 | (215) |
Loss from equity method investments | (36) | (5) | (60) | (140) |
Net loss | (1,849) | (268) | (480) | (2,204) |
Less: net loss attributable to noncontrolling interest | (28) | (4) | (15) | (12) |
Net loss attributable to H World Group Limited | (1,821) | (264) | (465) | (2,192) |
Other comprehensive income (loss) | ||||
(Loss) gain arising from defined benefit plan, net of tax of RMB13,RMB4 and RMB10 for the year ended 2020, 2021 and 2022, respectively | 22 | 3 | 13 | (27) |
Gains from fair value changes of debt securities, net of tax of nil, nil and RMB19 for 2020,2021 and 2022, respectively | 57 | 8 | ||
Foreign currency translation adjustments, net of tax of nil for the year ended 2020, 2021 and 2022, respectively | 112 | 16 | (99) | 203 |
Comprehensive loss | (1,658) | (241) | (566) | (2,028) |
Less: comprehensive loss attributable to the noncontrolling interest | (28) | (4) | (15) | (12) |
Comprehensive loss attributable to H World Group Limited | ¥ (1,630) | $ (237) | ¥ (551) | ¥ (2,016) |
Losses per share: | ||||
Basic | (per share) | ¥ (0.59) | $ (0.08) | ¥ (0.15) | ¥ (0.75) |
Diluted | (per share) | ¥ (0.59) | $ (0.08) | ¥ (0.15) | ¥ (0.75) |
Weighted average number of shares used in computation: | ||||
Basic (in shares) | 3,111,196,757 | 3,111,196,757 | 3,114,124,244 | 2,927,398,409 |
Diluted (in shares) | 3,111,196,757 | 3,111,196,757 | 3,114,124,244 | 2,927,398,409 |
Leased and owned hotels | ||||
Revenues: | ||||
Total revenues | ¥ 9,148 | $ 1,326 | ¥ 8,118 | ¥ 6,908 |
Manachised and franchised hotels | ||||
Revenues: | ||||
Total revenues | 4,405 | 639 | 4,404 | 3,136 |
Others | ||||
Revenues: | ||||
Total revenues | ¥ 309 | $ 45 | ¥ 263 | ¥ 152 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Loss / Income arising from defined benefit plan, tax | ¥ 10 | ¥ 4 | ¥ 13 |
Unrealized gains(losses) from fair value changes of debt securities | 19 | 0 | 0 |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Millions | Ordinary Shares Convertible Senior Notes Due 2022 CNY (¥) | Ordinary Shares CNY (¥) | Treasury Shares CNY (¥) shares | Treasury Shares USD ($) shares | Additional Paid-in Capital Convertible Senior Notes Due 2022 CNY (¥) | Additional Paid-in Capital CNY (¥) | Retained Earnings CNY (¥) | Accumulated Other Comprehensive (Loss) Income CNY (¥) | Noncontrolling Interest CNY (¥) | Convertible Senior Notes Due 2022 CNY (¥) shares | CNY (¥) shares | USD ($) shares |
Balance at beginning outstanding (in shares) at Dec. 31, 2019 | shares | 2,859,026,090 | 2,859,026,090 | ||||||||||
Balance at beginning at Dec. 31, 2019 | ¥ 0 | ¥ (107) | ¥ 3,834 | ¥ 3,694 | ¥ (49) | ¥ 121 | ¥ 7,493 | |||||
Treasury shares, balance (in shares) at Dec. 31, 2019 | shares | 30,967,640 | 30,967,640 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | 0 | 2 | ¥ 2 | |||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 14,543,070 | 14,543,070 | ||||||||||
Return of loaned ADS in connection with issuance of Convertible Senior Notes due 2022 (in shares) | shares | 2,020 | |||||||||||
Return of loaned ADS in connection with issuance of Convertible Senior Notes due 2022 | ¥ 0 | ¥ 0 | ¥ 0 | |||||||||
Share-based compensation | 122 | ¥ 122 | ||||||||||
Net loss | (2,192) | (12) | (2,204) | |||||||||
Dividends to noncontrolling interest holders | (4) | (4) | ||||||||||
Capital contribution from noncontrolling interest holders | 10 | 10 | ||||||||||
Acquisition of noncontrolling interest | (118) | (18) | (136) | |||||||||
Foreign currency translation adjustments, net of tax of nil | 203 | 203 | ||||||||||
Noncontrolling interest recognized in connection with acquisitions | 3 | 3 | ||||||||||
Issuance of ordinary shares in Hong Kong public offering | 0 | 5,968 | ¥ 5,968 | |||||||||
Issuance of ordinary shares in Hong Kong public offering (in shares) | shares | 234,854,500 | 234,854,500 | ||||||||||
Noncontrolling interest recognized from partial disposal | 2 | ¥ 2 | ||||||||||
Disposal of noncontrolling interest for deconsolidation | 0 | 0 | ||||||||||
Loss / Income arising from defined benefit plan, net of tax | (27) | ¥ (27) | ||||||||||
Balance at ending outstanding (in shares) at Dec. 31, 2020 | shares | 3,108,425,680 | 3,108,425,680 | ||||||||||
Balance at ending at Dec. 31, 2020 | 0 | ¥ (107) | 9,808 | 1,502 | 127 | 102 | ¥ 11,432 | |||||
Treasury shares, balance (in shares) at Dec. 31, 2020 | shares | 30,967,640 | 30,967,640 | ||||||||||
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 | 12,325,470 | 12,325,470 | ||||||||||
Return of loaned ADS in connection with issuance of Convertible Senior Notes due 2022 (in shares) | shares | 1,340 | |||||||||||
Return of loaned ADS in connection with issuance of Convertible Senior Notes due 2022 | ¥ 0 | ¥ 0 | ¥ 0 | |||||||||
Share-based compensation | 109 | ¥ 109 | ||||||||||
Net loss | (465) | (15) | (480) | |||||||||
Dividends to noncontrolling interest holders | (4) | (4) | ||||||||||
Capital contribution from noncontrolling interest holders | 16 | 16 | ||||||||||
Acquisition of noncontrolling interest | (3) | (11) | (14) | |||||||||
Foreign currency translation adjustments, net of tax of nil | (99) | (99) | ||||||||||
Repurchase of ordinary shares | ¥ 0 | ¥ 0 | ||||||||||
Repurchase of shares (in ordinary shares) | shares | (6,400) | (6,400) | ||||||||||
Repurchase of shares (in Treasury Shares) | shares | 6,400 | 6,400 | ||||||||||
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | ¥ 50 | ||||||||||
Noncontrolling interest recognized in connection with acquisitions | 21 | 21 | ||||||||||
Loss / Income arising from defined benefit plan, net of tax | 13 | ¥ 13 | ||||||||||
Balance at ending outstanding (in shares) at Dec. 31, 2021 | shares | 3,120,746,090 | 3,120,746,090 | ||||||||||
Balance at ending at Dec. 31, 2021 | 0 | ¥ (107) | 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 | 30,974,040 | ||||||||
Treasury shares, balance at Dec. 31, 2021 | ¥ (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 | 9,462,340 | 9,462,340 | ||||||||||
Return of loaned ADS in connection with issuance of Convertible Senior Notes due 2022 | $ | $ 104,251,120 | |||||||||||
Share-based compensation | 87 | ¥ 87 | ||||||||||
Net loss | (1,821) | (28) | (1,849) | $ (268,000,000) | ||||||||
Dividends to noncontrolling interest holders | (6) | (6) | ||||||||||
Capital contribution from noncontrolling interest holders | 0 | 0 | ||||||||||
Gains from fair value changes of debt securities, net of tax of RMB19 | 57 | 57 | 8,000,000 | |||||||||
Acquisition of noncontrolling interest | 1 | (2) | (1) | |||||||||
Foreign currency translation adjustments, net of tax of nil | 112 | 112 | $ 16,000,000 | |||||||||
Cash dividends declared | (416) | (416) | ||||||||||
Repurchase of ordinary shares | ¥ 334 | $ (17,794,700) | ¥ 334 | |||||||||
Repurchase of ordinary shares (in shares) | shares | (17,794,700) | (17,794,700) | ||||||||||
Noncontrolling interest recognized in connection with acquisitions | 1 | ¥ 1 | ||||||||||
Loss / Income arising from defined benefit plan, net of tax | 22 | 22 | $ 3,000,000 | |||||||||
Termination of Capped Call | 86 | ¥ 86 | ||||||||||
Balance at ending outstanding (in shares) at Dec. 31, 2022 | shares | 3,112,413,730 | 3,112,413,730 | ||||||||||
Balance at ending at Dec. 31, 2022 | ¥ 0 | ¥ 10,138 | ¥ (1,200) | ¥ 232 | ¥ 74 | ¥ 8,803 | $ 1,277,000,000 | |||||
Treasury shares, balance (in shares) at Dec. 31, 2022 | shares | 153,019,860 | 153,019,860 | 153,019,860 | 153,019,860 | ||||||||
Treasury shares, balance at Dec. 31, 2022 | ¥ (441) | ¥ (441) | $ (64,000,000) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
Loss / Income arising from defined benefit plan, tax | 10 | 4 | 13 |
Unrealized gains from fair value changes of debt securities, net of tax | ¥ 19 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Operating activities: | ||||
Net loss | ¥ (1,849) | $ (268) | ¥ (480) | ¥ (2,204) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
Share-based compensation | 87 | 13 | 109 | 122 |
Depreciation and amortization | 1,456 | 211 | 1,503 | 1,362 |
Amortization of issuance cost of convertible senior notes and upfront fee on bank borrowings | 57 | 8 | 60 | 83 |
Deferred income taxes | (268) | (39) | (543) | (553) |
Credit loss | 82 | 12 | 105 | 65 |
Loss (gain) from disposal of property and equipment | (4) | (1) | (14) | 1 |
Impairment loss | 491 | 71 | 380 | 709 |
Loss from equity method investments, net of dividends | 85 | 12 | 60 | 145 |
Foreign currency exchange loss (gain) | 341 | 49 | 255 | (176) |
Investment loss (income) | 321 | 47 | (188) | 284 |
Interest accretion for finance lease | 16 | 2 | 4 | 27 |
Noncash lease expense | 2,257 | 327 | 2,306 | 2,063 |
Gain on reassessment of finance lease payments | (66) | (10) | ||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||
Accounts receivable | (621) | (90) | (113) | 35 |
Inventories | 20 | 3 | 2 | 0 |
Amounts due from related parties | (57) | (8) | 12 | (14) |
Other current assets | 43 | 7 | 6 | (147) |
Other assets | 149 | 22 | (64) | (86) |
Accounts payable | 9 | 1 | 7 | 31 |
Amounts due to related parties | (30) | (4) | (4) | 20 |
Salary and welfare payables | 63 | 9 | 72 | (46) |
Deferred revenue | (19) | (3) | 224 | (52) |
Accrued expenses and other current liabilities | 507 | 74 | (439) | 445 |
Operating lease liabilities | (1,608) | (233) | (2,123) | (1,640) |
Income tax payable | 82 | 12 | 83 | 94 |
Other long-term liabilities | 20 | 3 | 122 | 41 |
Net cash provided by operating activities | 1,564 | 227 | 1,342 | 609 |
Investing activities: | ||||
Purchases of property and equipment | (1,049) | (152) | (1,658) | (1,745) |
Purchases of intangibles | (4) | (1) | (17) | (28) |
Purchases of land use rights | 0 | 0 | (3) | |
Amount received as a result of government zoning | 4 | 0 | 33 | |
Acquisitions, net of cash received | (57) | (8) | (742) | (5,060) |
Proceeds from disposals of subsidiary and branch, net of cash disposed | 6 | 1 | 3 | 4 |
Purchases of investments | (401) | (58) | (521) | (1,702) |
Proceeds from maturity/sale and return of investments | 937 | 136 | 1,494 | 396 |
Payment for shareholder loans to equity investees | (7) | (1) | (5) | (15) |
Collection of shareholder loans from equity investees | 12 | 2 | 25 | 15 |
Origination of loan receivables | (175) | (25) | (176) | (130) |
Collection of loan receivables | 212 | 30 | 162 | 167 |
Net cash used in investing activities | (522) | (76) | (1,402) | (8,101) |
Financing activities: | ||||
Proceeds from issuance of ordinary shares in Hong Kong public offering | 6,018 | |||
Proceeds from Termination of Capped Call | 86 | 12 | ||
Payment of ordinary share issuance costs | 0 | 0 | (19) | (32) |
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | |||
Net proceeds from issuance of ordinary shares upon exercise of options | 1 | 1 | ||
Payment of repurchases of ordinary shares | (334) | (48) | 0 | |
Proceeds from short-term debt | 4,249 | 616 | 2,288 | 1,658 |
Repayment of short-term debt | (1,935) | (281) | (2,474) | (1,993) |
Proceeds from long-term debt | 2,797 | 407 | 53 | 1,652 |
Repayment of long-term debt | (2,364) | (342) | (1,650) | (9,163) |
Funds advanced from noncontrolling interest holders | 1 | 0 | 4 | 14 |
Repayment of funds advanced from noncontrolling interest holders | (27) | (4) | (1) | (9) |
Acquisitions of noncontrolling interest | (1) | 0 | (29) | (98) |
Capital contributions from noncontrolling interest holders | 0 | 0 | 16 | 10 |
Proceeds from long-term finance liabilities | 55 | 8 | 38 | 83 |
Repayment of long-term finance liabilities | (49) | (7) | (46) | (42) |
Dividends paid to noncontrolling interest holders | (6) | (1) | (4) | (4) |
Dividends paid | (416) | (60) | (678) | |
Repayment of convertible senior notes | (3,406) | (494) | 0 | |
Proceeds from issuance of convertible senior notes | 3,499 | |||
Direct financing costs paid | (4) | (1) | (10) | |
Principal payments of finance lease | (40) | (6) | (28) | (23) |
Net cash provided by (used in) financing activities | (1,394) | (201) | (1,801) | 883 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 297 | 43 | (88) | (300) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (55) | (7) | (1,949) | (6,909) |
Cash, cash equivalents and restricted cash at the beginning of the year | 5,141 | 745 | 7,090 | 13,999 |
Cash, cash equivalents and restricted cash at the end of the year | 5,086 | 738 | 5,141 | 7,090 |
Cash and cash equivalents | 3,583 | 5,116 | 7,026 | |
Restricted cash | 1,503 | 25 | 64 | |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 5,086 | 5,141 | 7,090 | |
Supplemental disclosure of cash flow information: | ||||
Interest paid, net of amounts capitalized | 256 | 37 | 297 | 476 |
Income taxes paid | 385 | 56 | 477 | 238 |
Supplemental schedule of non-cash investing and financing activities: | ||||
Purchases of property and equipment included in payables | 652 | 95 | 486 | 736 |
Consideration payable for business acquisition | ¥ 5 | $ 1 | 86 | |
Purchase of intangible assets included in payables | ¥ 2 | 5 | ||
Reimbursement of government zoning included in receivables | ¥ 2 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. H World Group Limited (the “Company”) 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”) and Europe. 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 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. The share split has been retrospectively applied for all periods presented in the financial statements. 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 2022, the Group had 738 and 704 leased and owned hotels in operation, respectively. Manachised and franchised hotels The Group enters into 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 hotel renovation and operations. Those hotels are classified as manachised hotels. Under the typical franchise and management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees, which typically 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 franchise and management agreements typically range from eight |
SUMMARY OF PRINCIPAL ACCOUNTING
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 2. Basis of presentation The 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”). Basis of consolidation The 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. Variable Interest Entities 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 Company is deemed as the primary beneficiary of and consolidates variable interest entities when the Company 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. As of December 31, 2021 and 2022, the Group consolidated seven and seven entities under VIE model, and the impact of the consolidated VIEs are immaterial to the Group’s consolidated financial statements. 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 useful lives and 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. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. Restricted cash Restricted cash mainly represents deposits used as security against borrowings, deposits restricted due to contract disputes or lawsuit and cash restricted for special purposes. Investments The Group uses the equity method of accounting to account for equity investment with significant influence, no control over the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with gains and losses from fair value changes recognized in net income in the consolidated statements of comprehensive income. Equity investments without readily determinable fair values are measured at cost, less impairment, plus or minus observable price changes. The Group classifies debt securities for which it does not have an intent to hold till maturity or may sell the security in response to the changes in economic conditions are classified as available-for-sale debt securities. These securities are carried at estimated fair value with unrealized holding gains and losses, net of tax impact, if any, reported as a net amount in a separate component of shareholders’ equity, accumulated other comprehensive income, until realized. Credit-related impairment is measured as the difference between the debt security’s amortized cost basis and the present value of expected cash flows and is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. The allowance should not exceed the amount by which the amortized cost basis exceeds fair value. Allowances for Losses on Certain Financial Assets The Group establishes allowances for credit losses on accounts receivable, loans receivables and certain other similar financial assets. For accounts receivables and other financial assets, the adequacy of these allowances is assessed regularly for pools of assets with similar risk characteristics by evaluating of factors such as historical levels of credit losses, current economic condition that may affect a customer’s ability to pay, customer credit ratings, and age of the receivable. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. For loan receivables, the Group estimate current expected credit losses based on the expectation of future economic conditions, historical collection experience and a loss-rate approach whereby the allowance is calculated using the probability of default and recovery rates and multiplying it by the asset’s amortized cost at the balance sheet date Property and equipment, net Property and equipment, net are stated at cost less accumulated depreciation. The renovations, betterments and interest cost incurred during construction are capitalized. Depreciation of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 1-20 years Motor vehicles 5 years Construction in progress represents leasehold improvements and property under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying amount of the underlying asset. Intangible assets, net Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise or manachise agreements and purchased software. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives over which the assets are expected to contribute directly or indirectly to the future cash flows of the Group. These estimated useful lives are generally as follows: Franchise or manachise agreements Remaining contract terms from 10 to 20 years Non-compete agreements 2 - 10 years based on specified non-compete period Purchased software 3 - 10 years based on the estimated usage period Other intangible assets including trademark, licenses and other rights 2 - 15 years based on the contractual term, the length of license agreements and the effective terms of other legal rights Almost all the brand names and master brand agreement acquired by the Group are considered to have indefinite useful lives since there are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these brands and these brands can be renewed at nominal cost. The Group evaluates the brand name and master brand agreement each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Impairment is tested annually or more frequently if events or changes in circumstances indicate that it might be impaired. Land use rights The land use rights represent the operating lease prepayments for the rights to use the land in the PRC under ASC 842, Leases 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 RMB180, RMB157 and RMB297 during the years ended December 31, 2020, 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. Goodwill Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group performs a one-step impairment test in which it compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. Upon the acquisition of Deutsche Hospitality, the Group concludes there are two reporting units, which are legacy Huazhu and legacy DH. The goodwill impairment testing was performed at each reporting unit level. If the carrying amount of a reporting unit exceeds its fair value, an impairment amounts to that excess should be recognized in the statement of comprehensive income. Revenue recognition Revenue are primarily derived from products and services in leased and owned hotels, contracts of manachised and franchised hotels with third-party franchisees as well as activities other than the operation of hotel businesses. Leased and owned hotel revenues Leased and owned hotel revenues are primarily derived from the rental of rooms, sales of food, beverage and other ancillary goods and services, including but not limited to souvenir, laundry, parking and conference reservation. Each of these products and services represents an individual performance obligation and, in exchange for these services, the Group receives fixed amounts based on published rates or negotiated contracts. Payment is due in full at the time when the services are rendered or the goods are provided. Room rental revenue is recognized on a daily basis when rooms are occupied. Food and beverage revenue and other goods and services revenue are recognized when they have been delivered or rendered to the guests as the respective performance obligations are satisfied. Manachised and franchised hotel revenues Manachised and franchised hotel revenues are derived from franchise or manachise agreements where the franchisees are required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) primarily on-going management and franchise service fees, (b) central reservation system usage fees, system maintenance and support fees and (c) reimbursements for hotel manager fees. Initial one-time license/franchise fee On-going management and franchise service/royalty fees: Central reservation system usage fees, other system maintenance and support fees: Reimbursements for hotel manager fees Other Revenues Other revenues Loyalty Program H Reward loyalty program members earn loyalty points based on nights and other consumptions that they spent at the Group’s hotels and Huazhu Mall. These loyalty points can be redeemed for future products and services. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future. The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members. The Group is responsible for arranging for the redemption of points, but the Group does not directly fulfill the redemption obligation except at leased and owned hotels. Therefore, the Group is the agent with respect to this performance obligation for manachised and franchised hotels, and is the principal with respect to leased and owned hotels. For leased and owned hotels, a portion of the leased and owned revenues is deferred until a member redeems points. The amount of revenue the Group recognizes upon point redemption is impacted by the estimate of the “breakage” for points that members will never redeem in the Group’s owned and leased hotels. For manachised and franchised hotels, we receive monthly cash contributions from manachised and franchised hotels determined based on the value of qualified spend by Loyalty Program members (when the points earned). We recognize these contributions into revenue as we provide the related service. The amount of revenue we recognize is based on a blend of historical funding rates and is impacted by our estimate of the “breakage” for points that members will never redeem. Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. The membership duration is estimated to be two Advertising and promotional expenses Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the consolidated statements of comprehensive income as incurred, and amounted to RMB150, RMB165 and RMB128 for the years ended December 31, 2020, 2021 and 2022, respectively. Leases The Group determines if an arrangement is a lease or contains a lease at the inception of the contract. A lease arrangement is being evaluated for classification as operating or financing upon lease commencement. Lease liabilities, which represent the Group’s obligation to make lease payments arising from the lease, and corresponding right of-use assets, which represent the Group’s right to use an underlying asset for the lease term, are recognized at the commencement date of the lease based on the present value of fixed future 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, calculated using the discount rate implicit in the lease, if available, or the Group’s incremental borrowing rate. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is expensed as incurred. For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset. 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 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. 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. 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 established fair value hierarchy by U.S. GAAP has three levels based on the reliability of the inputs used to measure fair value: 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. The Group’s financial instruments include cash and cash equivalent, restricted cash, loan receivables, other receivables, payables, short-term debts, long-term debts. The carrying amounts of the 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 rates approximate market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. Convertible senior notes are measured at amortized costs of RMB6,318, RMB6,186 and RMB3,463 and the corresponding fair value estimated based on quoted market price were RMB7,747, RMB6,681 and RMB4,283, as of December 31, 2020, 2021 and 2022, respectively. The following table presents our assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. As of December 31, 2021 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 2,589 — — Available-for-sale debt securities — 220 — Employee benefit plan assets 5 — — As of December 31, 2022 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 1,788 — — Available-for-sale debt securities — — 296 Employee benefit plan assets 13 — — Equity securities with readily determinable fair value and employee benefit plan assets are valued using a market approach based on the quoted market prices or broker/dealer quotes of identical or comparable instruments. Level 3 fair value of available-for-sale debt securities is determined based on income approach using various unobservable inputs. The determination of the fair value required significant judgement by management with respect to the assumptions and estimates for the revenue growth rate, weighted average cost of capital, lack of marketability discounts, expected volatility and probability in equity allocation. Certain assets are measured at a non-recurring basis. The following table presents the asset classification, the fair value and the non-recurring losses recognized for the years ended December 31, 2021 and 2022 due to impairment of the related assets. As of December 31, 2021 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 33 33 24 Operating lease right-of-use assets 88 88 48 Intangible assets 2,556 2,556 245 Long-term investment — — 63 As of December 31, 2022 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 38 38 218 Operating lease right-of-use assets 336 336 76 Intangible assets 388 388 170 Long-term investment 11 11 27 Property and equipment, operating lease right-of-use assets and intangible assets were primarily valued using the income approach based on discounted cash flows associated with the underlying assets, which incorporate 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. The revenue growth rate and the discount rate were the significant unobservable input used in the fair value measurement, which are ranged between negative 15% and 4%, 8.64% and 12% respectively, for the years ended December 31, 2020, 2021 and 2022, respectively. 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. 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). Recently Issued Accounting Pronouncements Adopted Accounting Standards In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832) — Disclosures by Business Entities about Government Assistance. The amendments in this ASU require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments in this ASU are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Group adopted the guidance on January 1, 2022, as required. There was no material impact on the Group’s consolidated financial statements and related disclosures as a result of adopting this new standard. Accounting Standards Not Yet Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments create an exception to the general recognition and measurement principal in ASC 805, Business Combinations to measure assets and liabilities acquired in a business combination at fair value. Instead, an acquirer in a business combination will be required to apply ASC 606 to recognize and measure contract assets and contract liabilities that result from contracts accounted for under ASC 606 on the acquisition date and will generally result in the acquirer recognizing amounts consistent with those recorded by the acquiree immediately before the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements. 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 = RMB6.8972, on December 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 December 30, 2022, or at any other rate. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 3. On January 2, 2020, the Group completed an acquisition of 100% equity interest of Deutsche Hospitality. 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. The aggregated consideration was EUR720 million (equivalent to RMB5,624) which has been fully paid in cash as of January 2, 2020. The allocation of the purchase price as of the date of acquisition is summarized as follows: Amortization Period Current assets 785 Property and equipment, net 586 2-25 years Operating lease right-of-use assets 8,616 Remaining lease terms Financing lease right-of-use assets 1,794 Shorter of estimated useful lives of the assets and the lease terms Franchise or manachise agreements 270 Remaining contract terms Brand names 3,873 Indefinite-life Non-compete agreement 10 2 years Goodwill 2,694 Deferred tax assets 170 Other non-current assets 280 Operating lease liabilities, current (296) Finance lease liabilities, current (21) Other current liabilities (784) Operating lease liabilities, non-current (8,553) Finance lease liabilities, non-current (2,166) Other noncurrent liabilities (330) Deferred tax liabilities (1,304) Total 5,624 Goodwill was recognized as a result of expected synergies from combining operations of the Group and acquired business and other intangible assets that don’t qualify for separate recognition. The goodwill generated from the DH acquisition is allocated to the reporting unit of legacy DH.Goodwill is not deductible for tax purposes. 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 and RMB749 was paid in cash as of December 31, 2021. The allocation of the purchase price as of the date of acquisition is summarized as follows: Amortization Period Current assets 34 Property and equipment 296 5-12 years Operating lease right-of-use assets 1,119 Remaining lease terms Other non-current assets 33 Franchise agreement 61 Remaining contract terms Brand names 90 Indefinite-life Goodwill 372 Operating lease liabilities, current (153) Other current liabilities (23) Operating lease liabilities, non-current (987) Other noncurrent liabilities (5) Deferred tax liabilities (33) Noncontrolling interest (21) Total 783 Goodwill was recognized as a result of expected synergies from combining operations of the Group and acquired business and other intangible assets that don’t qualify for separate recognition. All the acquired business has been migrated to the Group’s business. The goodwill generated from the CitiGO acquisition is allocated to the reporting unit of legacy Huazhu. Goodwill is not deductible for tax purposes. During the years ended December 31, 2020, 2021 and 2022, the Group acquired three, three and seven individual companies for total cash consideration of RMB26, RMB51 and RMB9, respectively. The business acquisitions were accounted for under purchase accounting. The assets and liabilities of these hotels and companies acquired in 2020, 2021 and 2022 were immaterial to the consolidated financial statements. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE | |
REVENUE | 4. Disaggregated Revenues The following tables present the Group’s revenues disaggregated by the nature of the product or service: Years Ended December 31, 2020 2021 2022 Room revenues 5,735 7,024 7,571 Food and beverage revenues 608 694 1,049 Others 565 400 528 Leased and owned hotels revenue 6,908 8,118 9,148 Initial one-time license/franchise fee 110 109 106 On-going management and service/royalty fees 1,057 1,479 1,375 Central reservation system usage fees, other system maintenance and support fees 908 1,399 1,262 Reimbursements for hotel manager fees 657 897 1,103 Other fees 404 520 559 Manachised and franchised hotels revenue 3,136 4,404 4,405 Other revenues 152 263 309 Total revenues 10,196 12,785 13,862 Contract Balances The Group’s contract assets are insignificant at December 31, 2021 and 2022. As of December 31, 2021 2022 Current contract liabilities 1,366 1,308 Long-term contract liabilities 785 828 Total contract liabilities 2,151 2,136 The contract liabilities balances above are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2021 and 2022. The Group recognized revenues that were previously deferred as contract liabilities of RMB613 and RMB655 during the years ended December 31, 2021 and 2022, respectively. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 5. Property and equipment, net consist of the following: As of December 31, 2021 2022 Cost: Buildings 305 843 Leasehold improvements 10,467 10,952 Furniture, fixtures and equipment 2,348 2,520 Motor vehicles 3 3 13,123 14,318 Less: Accumulated depreciation 6,845 7,727 6,278 6,591 Construction in progress 778 193 Property and equipment, net 7,056 6,784 Depreciation expense was RMB1,219, RMB1,352 and RMB1,312 for the years ended December 31, 2020, 2021 and 2022, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 6. Intangible assets, net consist of the following: As of December 31, 2021 2022 Intangible assets with indefinite lives: Brand names 5,010 5,111 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 366 368 Purchased software 142 128 Other intangible assets 81 77 Total 5,791 5,876 Less: Accumulated amortization 163 178 Less: Accumulated impairment loss(Note2) 243 420 Total 5,385 5,278 Amortization expense of intangible assets for the years ended December 31, 2020, 2021 and 2022 amounted to RMB62, RMB65, and RMB45, respectively. There were 3 brand names with indefinite lives acquired in DH acquisition. In 2021, the estimated fair value of one brand name was determined to be lower than its carrying amount, as such, an impairment loss In 2022, the estimated fair value of one brand name was determined to be lower than its carrying amount, as such, an impairment loss The annual 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 2023 36 2024 33 2025 31 2026 29 2027 28 Thereafter 151 Total 308 |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS. | |
INVESTMENTS | 7. The investments as of December 31, 2021 and 2022 were as follows: As of December 31, 2021 2022 Short-term investments Equity securities with readily determinable fair values: Accor 2,508 1,701 Other marketable securities 81 87 Total 2,589 1,788 Long-term investments Equity securities without readily determinable fair values: Cjia Group-preferred shares 168 138 OYO 54 54 Other equity securities without readily determinable fair values 71 65 Subtotal 293 257 Equity-method investments: AAPC LUB 525 494 Hotel related funds 488 443 China Hospitality JV 99 67 Zleep 68 70 Commerz Real Institute 85 80 Other investments 187 238 Subtotal 1,452 1,392 Available-for-sale debt securities: Cjia Group-convertible notes 220 296 Total 1,965 1,945 Equity securities with readily determinable fair values: In 2020, 2021 and 2022, the Group purchased 8,737,987 and 1,180,000 and nil ordinary shares of Accor, respectively, a hotel group listed in Paris stock exchange, from open market. The Group sold 5,172,458 and 2,397,596 of these shares with gains of RMB209 and RMB74 realized, for the years ended December 31, 2021 and 2022 respectively. As of December 31, 2022, the Group hold 9,814,956 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. In 2021 and 2022, the Group recognized losses from fair value changes of Accor of RMB94 and RMB358, respectively. Equity securities without readily determinable fair values: As of December 31, 2022 the Group held RMB138 preferred shares of Cjia Group. The preferred shares are accounted for as equity securities without readily determineable fair value as they are not in substance ordinary shares. In September 2017, the Group purchased approximately 1% equity interest of Oravel Stays Private limited (“OYO”), an India leading hospitality company. During the year ended December 31, 2021, the group sold part of equity interest, and recognized investment income of RMB52 in 2021. As of December 31, 2021 and 2022, the Group owned less than 1% equity interest of OYO. Other equity securities without readily determinable fair values included several insignificant investments in certain privately-held companies. As a result of the COVID-19 pandemic, the Group recognized an impairment of nil and RMB7 for these equity securities for the year ended December 31, 2021 and 2022, respectively. Equity-method investments: In January 2016, the Group acquired approximately 28% equity interest in AAPC LUB. The Group accounted for the investment in AAPC LUB under equity-method as the Group has the ability to exert significant influence. The Group recognized investment income of RMB21, RMB35 and RMB16 in income (loss) from equity method investments in 2020, 2021 and 2022, respectively. In 2020, 2021 and 2022, the Group received cash dividend from AAPC LUB of nil, nil and RMB47 which was recognized as return on investment. As of December 31, 2021 and 2022, the Group had RMB488 and RMB443, respectively, of investments in hotel related funds. Those funds were VIEs and were managed by or power shared with un-related third-parties. However, the Group determined that they were not the primary beneficiary of those VIEs since the Group did not have the power to direct the activities of these VIEs that most significantly impacted their economic performance. The Group accounted for the investment under equity-method as the Group’s influence over the funds is more than minor. The Group recognized investment loss of RMB16, RMB55 and RMB31, in income (loss) from equity method investments in 2020, 2021 and 2022, respectively. The maximum potential financial statement loss the Group could incur if the investment funds were to default on all of their obligations is the loss of value of the interests in such investments of RMB443 that the Group holds as of December 31, 2022. In 2018, the Group partnered with an unrelated third party investor to form China Hospitality JV, Ltd. (“China Hospitality JV”), of which the Group holds 20% equity interest. The business of China Hospitality JV was to acquire and operate two hotel properties, one of which has been converted into office buildings in 2020. The Group accounted for the investment in China Hospitality JV under equity-method as the Group has the ability to exert significant influence. During the year ended December 31, 2022, the Group received cash dividend of RMB54 which was recognized as return of investment. The Group recognized investment loss of RMB12, RMB4, and investment income of RMB22 in income (loss) from equity method investments in 2020, 2021 and 2022, respectively. In February 2019, Deutsche Hospitality acquired 51% of the shares in Zleep Hotels A/S (“Zleep”), a hotel brand in Scandinavia. The Group’s interest in Zleep is accounted for using the equity method in the consolidated financial statements because the Group has joint control only in the business and finance decisions due to voting right restrictions. The Group recognized investment loss of RMB12 and RMB0 in income (loss) from equity method investments in 2021 and 2022. In 2021, the Group partnered with an unrelated third party investor who acted as a general partner to form Commerz Real Institute, of which the Group holds 34% equity interest as a limited shareholder at the consideration of EUR12 million. Commerz Real Institute was designed as an open-ended investment fund to build a portfolio of hotels in prestigious locations. The Group accounted for the investment in Commerz Real Institute under equity-method as the Group’s significant influence over the funds is more than minor. The Group recognized investment loss of RMB1 and RMB7 in income (loss) from equity method investments in 2021 and 2022. Other investments included several insignificant equity investments in certain privately-held companies. As a result of the COVID-19 pandemic, the Group recognized an impairment of RMB63 and RMB20 for these equity investments for the year ended December 31, 2021 and 2022. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL. | |
GOODWILL | 8. The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2022 were as follows: Legacy Huazhu Legacy DH Total Balance at January 1, 2021 Goodwill 2,664 2,768 5,432 Accumulated impairment loss (4) (440) (444) 2,660 2,328 4,988 Goodwill acquired during the year (Note 3) 372 6 378 Net foreign exchange-goodwill — (278) (278) Net foreign exchange-impairment loss — 44 44 Balance at December 31, 2021 Goodwill 3,036 2,496 5,532 Accumulated impairment loss (4) (396) (400) 3,032 2,100 5,132 Goodwill acquired during the year — 4 4 Net foreign exchange-goodwill — 70 70 Net foreign exchange-impairment loss — (11) (11) Balance at December 31, 2022 Goodwill 3,036 2,570 5,606 Accumulated impairment loss (4) (407) (411) 3,032 2,163 5,195 The goodwill of legacy Huazhu was not impaired for the years ended December 31, 2021 and 2022. The Group recorded an impairment loss of RMB437 against goodwill of legacy DH for the year ended December 31, 2020. As the estimated fair value of the reporting unit of legacy DH exceeded its carrying value, no impairment loss was recorded for the years ended December 31, 2021 and 2022. As of December 31, 2021 and 2022, the estimated fair value of the reporting unit of legacy Huazhu exceeded over 100% of its carrying value. As of December 31, 2021 and 2022, the estimated fair value of the reporting unit of legacy DH exceeded its carrying value by approximately RMB421 and RMB769, which accounted for 13% and 25% of its carrying value, respectively. A 5% decline in the underlying projected cash flow or increase in the discount rate could have resulted in goodwill impairment loss of approximately RMB313 and RMB359 in 2021. A 5% decline in the underlying projected cash flows or increase in the discount rate could not result in an impairment loss in 2022. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
DEBT | 9. The short-term and long-term debt as of December 31, 2021 and 2022 were as follows: As of December 31, 2021 2022 Short-term debt: Long-term bank borrowings, current portion 2,464 208 Short-term bank borrowings 692 3,035 Convertible senior notes, current portion 3,029 — FF&E liability, current portion 47 45 Total 6,232 3,288 Long-term debt: Long-term bank borrowings, non-current portion 211 2,929 Convertible senior notes, non-current portion 3,158 3,463 FF&E liability, non-current portion 180 228 Others 16 15 Total 3,565 6,635 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 December 31, 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 In October 2022, the Group entered into a one-year uncommitted term loan facility of up to US$123 million which is to be made by single drawing only. The Group had drawn down US$121 million under this agreement, the interest rate was fixed at 5.4% per annum. As of December 31, 2022, the outstanding loan amount was US$121 million. In October 2022, the Group entered into a one-year Convertible Senior Notes due 2022 On November 3, 2017, the Company 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. Holders of the 2022 Notes have the option to convert their Notes at any time prior to the close of business on the second business day immediately preceding the maturity date. The 2022 Notes can be converted into the Company’s ADSs at an initial conversion rate of 5.4869, before the ADSs split, of the Company’s ADSs per US$1,000 principal amount of the 2022 Notes (equivalent to an initial conversion price of US$182.25 per ADS before the ADSs split effected in May 2018). The conversion rate is subject to adjustment in some events but is not adjusted for any accrued and unpaid interest. In addition, following a make-whole fundamental change (as defined in the Indenture) that occur prior to the maturity date or following the Company’s delivery of a notice of a tax redemption, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or such tax redemption. The holders were able to require the Company to repurchase all or portion of the 2022 Notes for cash on November 2, 2020, or upon a fundamental change, at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. During the years ended December 31, 2020 and 2021, RMB0.06 and RMB0.04 of the 2022 Notes had been converted into 202 ADSs and 134 ADSs upon the holders’ request, respectively. As of December 31, 2021, the Group reclassified the 2022 Notes as short-term debt as the 2022 Notes mature on November 1, 2022. The Group had redeemed the remaining part of US$475 million of 2022 Notes on November 1, 2022. ADS Lending Arrangement Concurrent with the offering of the 2022 Notes, the Company entered into ADS lending agreements with the affiliates of the initial purchasers of the 2022 Notes (“ADS Borrowers”), pursuant to which the Company lent to the ADS Borrowers 2,606,278 ADSs (the “Loaned ADSs”) at a price equal to par, or $0.0004 per ADS before the ADSs split (“ADS lending arrangement”). The purpose of the ADS lending arrangements is to facilitate privately negotiated transactions in which the ultimate holders of the 2022 Notes may elect to hedge their investment in the related notes. The Loaned ADSs must be returned to the Company by the earliest of (a) the maturity date of the 2022 Notes, November 1, 2022, (b) upon the Company’s election to terminate the ADS lending agreement at any time after the later of (x) the date on which the entire principal amount of the 2022 Notes ceases to be outstanding, and (y) the date on which the entire principal amount of any additional convertible securities that the Company has in writing consented to permit the ADS Borrower to hedge under the ADS lending agreement ceases to be outstanding, in each case, whether as a result of conversion, redemption, repurchase, cancellation or otherwise; and (c) the termination of the ADS lending agreement. The Company is not required to make any payment to the initial purchasers or ADS Borrower upon the return of the Loaned ADSs. The ADS Borrowers do not have the choice or option to pay cash in exchange for the return of the Loaned ADSs. No collateral is required to be posted for the Loaned ADSs. The initial purchasers are required to remit to the Company any dividends paid to the holders of the Loaned ADSs. An ADS Borrower has the ability to vote without restriction. However, the ADS Borrowers have agreed not to vote on the Loaned ADSs. In May 2018, the Company changed the ADS to ordinary share ratio from one ADS representing four ordinary shares to one ADS representing one ordinary share. Therefore, as of December 31, 2020 and 2021, the outstanding number of Loaned ADSs was 10,425,112. All these Loaned ADSs had been returned to the Company with the maturity of 2022 Notes, and was accounted for as an increase to the treasury shares. 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. Convertible Senior Notes due 2026 On May 12, 2020, the Company issued US$450 million Convertible Senior Notes (the “2026 Notes”). On May 26, 2020, the Company issued an additional US$50 million in aggregate principal amount of the 2026 Notes pursuant to the exercise in full by the initial purchasers of an option to purchase additional notes. The 2026 Notes will mature on May 1, 2026 and bear interest at a rate of 3.00% per annum, payable in arrears semi-annually on May 1 and November 1 of each year, beginning on November 1, 2020. In 2020, proceeds to the Company were RMB3,499 (equivalently US$493 million), net of issuance costs of RMB49 (equivalently US$7 million). Holders of the 2026 Notes have the option to convert their Notes at any time prior to the close of business on the second business day immediately preceding the maturity date. The 2026 Notes can be converted into the Company’s ADSs at an initial conversion rate of 23.971 of the Company’s ADSs per US$1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of US$41.72 per ADS). The conversion rate is subject to adjustment in some events but is not adjusted for any accrued and unpaid interest. In addition, following a make-whole fundamental change (as defined in the Indenture) that occur prior to the maturity date or following the Company’s delivery of a notice of a tax redemption, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or such tax redemption. The holders may require the Company to repurchase all or portion of the 2026 Notes for cash on May 1, 2024, or in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. The Company accounted for the 2026 Notes as a single instrument. Issuance costs related to the 2026 Notes is recorded in consolidated balance sheet as a direct deduction from the principal amount of the 2026 Notes, and is amortized over the period from May 12, 2020, the date of issuance, to May 1, 2024, the first put date of the 2026 Notes, using the effective interest method. FF&E Liability The Group entered into several contracts with lessors to install furniture, fixtures and equipment (“FF&E”) in various leased hotels prior to the respective commencement date. Those transactions are classified as “failed” sale and leaseback transactions, as the control of the furniture, fixtures and equipment does not transfer to the lessor. Consequently, the received consideration from the lessor is accounted for as a liability. The current portion and non-current portion of FF&E liability are recorded in short-term debt and long-term debt, respectively. Debt Maturities The contractual maturities of the Group’s debt as of December 31, 2022 were as follows: Year Ending December 31, Principal Amounts 2023 3,287 2024 3,755 2025 2,735 2026 34 2027 28 Thereafter 100 Total 9,939 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10. As of December 31, 2021 2022 Payable to franchisees 710 652 Other payables 535 850 Accrued utilities and other accrued expenses 209 332 Liabilities related to customer loyalty program 135 166 Value-added tax, other tax and surcharge payables 132 234 Advance from noncontrolling interest holders 117 103 Total 1,838 2,337 |
HOTEL OPERATING COSTS
HOTEL OPERATING COSTS | 12 Months Ended |
Dec. 31, 2022 | |
HOTEL OPERATING COSTS. | |
HOTEL OPERATING COSTS | 11. 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: Years Ended December 31, 2020 2021 2022 Rents 3,485 3,900 3,927 Utilities 478 507 603 Personnel costs 2,501 3,022 3,683 Depreciation and amortization 1,316 1,413 1,414 Consumable, food and beverage 885 969 1,026 Others 1,064 1,471 1,607 Total 9,729 11,282 12,260 |
PRE-OPENING EXPENSES
PRE-OPENING EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
PRE-OPENING EXPENSES | |
PRE-OPENING EXPENSES | 12. The Group expenses all costs incurred in connection with start-up activities, including pre-operating costs associated with new hotel facilities and costs incurred with the formation of the subsidiaries, such as organization costs. Pre-opening expenses primarily include rental expenses and employee costs incurred during the hotel pre-opening period. Years Ended December 31, 2020 2021 2022 Rents 251 68 84 Personnel costs 15 5 5 Others 22 8 6 Total 288 81 95 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 13. 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 a.) two years b.) ten years As of December 31, 2022, the Group had granted a total of 245,776,690 options and 277,921,390 nonvested restricted stocks in total, which were subject to adjustment on performance condition. Share options No share options were outstanding as of December 31, 2022. 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. In 2020, 2021 and 2022, the Group granted nil, nil and 31,683,100 nonvested restricted stocks, respectively to senior officers and managers, each was in ten tranches with performance conditions. Each tranche is accounted for as a separate award with the same grant date, its own service inception date and requisite service period. The share-based compensation cost is recognized for each vesting tranche during the respective service period based on the estimated performance conditions at the service inception date. The Group reassesses the performance condition at each reporting period for true up. For each tranche, 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 in 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 39,153,240 2.53 Forfeited (2,157,320) 1.41 Vested (9,462,340) 1.40 Adjusted for performance conditions (4,290,920) 0.63 Nonvested restricted stocks outstanding at December 31, 2022 76,939,150 1.88 For the years ended December 31, 2020, 2021 and 2022, the Group recognized share-based compensation expenses of RMB122, RMB109 and RMB87, respectively, which were classified as follows: Years Ended December 31, 2020 2021 2022 Hotel operating costs 42 39 33 Selling and marketing expenses 4 4 4 General and administrative expenses 76 66 50 Total 122 109 87 As of December 31, 2022, there was RMB823 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 3.62 years. |
EARNINGS (LOSSES) PER SHARE
EARNINGS (LOSSES) PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
EARNINGS (LOSSES) PER SHARE | |
LOSSES PER SHARE | 14. The following table sets forth the computation of basic and diluted earnings (losses) per share for the years indicated: Years Ended December 31, 2020 2021 2022 Net loss attributable to ordinary shareholders — basic (2,192) (465) (1,821) Net loss attributable to ordinary shareholders — diluted (2,192) (465) (1,821) Weighted average ordinary shares outstanding — basic 2,927,398,409 3,114,124,244 3,111,196,757 Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method — — — Dilutive effect of convertible senior notes — — — Weighted average ordinary shares outstanding — diluted 2,927,398,409 3,114,124,244 3,111,196,757 Basic earnings (losses) per share (0.75) (0.15) (0.59) Diluted earnings (losses) per share (0.75) (0.15) (0.59) For the years ended December 31, 2020, 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 December 31, 2020 2021 2022 Outstanding employee options and nonvested restricted stocks 70,954,080 53,696,490 76,939,150 Shares of convertible senior notes 226,827,410 226,827,410 120,601,000 Total 297,781,490 280,523,900 197,540,150 In accordance with ASC Topic 470-20, although legally issued, the loaned ADSs are not considered outstanding, and then excluded from basic and diluted earnings per share unless default of the ADS lending arrangement occurs, at which time the Loaned ADSs would be included in the basic and diluted earnings per share calculation. The loaned shares under the ADS lending agreement are excluded from both the basic and diluted earnings (losses) per share calculation for the years ended December 31, 2020, 2021 and 2022. |
SEGMENT
SEGMENT | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT | |
SEGMENT | 15. SEGMENT The Group’s chief operating decision maker (“CODM”) has been identified as the chief executive officer. CODM regularly reviews the operating data, EBITDA, which is defined as earnings before interest income, interest expense, income tax expense (benefit) and depreciation and amortization. Therefore, in January 2020, the Group modified its operating segment structure to be two operating segments which are legacy Huazhu and legacy DH as a result of a change in the way management intends to evaluate results and allocate resources within the Group. 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 operating segment results for the years ended December 31, 2021 and 2022. The Group presents segment information after elimination of intercompany transactions. Years Ended December 31, 2020 2021 2022 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total revenues 8,664 1,532 10,196 11,247 1,538 12,785 10,655 3,207 13,862 EBITDA 736 (1,367) (631) 1,827 (461) 1,366 282 (118) 164 Interest income 119 89 87 Interest expense 533 405 409 Income tax expense (benefit) (215) 12 207 Depreciation and amortization 1,362 1,503 1,456 Net (loss) income attributable to H World Group Limited (2,192) (465) (1,821) The following table presents total assets for operating segments, reconciled to consolidated amounts: As of December 31, 2021 2022 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total assets 45,353 17,916 63,269 43,729 17,778 61,507 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: Years Ended December 31, 2021 2022 China 11,231 10,637 Germany 1,263 2,458 All others 291 767 Total 12,785 13,862 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2021 2022 China 33,143 31,684 Germany 13,884 13,501 All others 2,929 3,288 Total 49,956 48,473 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 years ended and as of December 31, 2021 and 2022. |
CASH DIVIDEND
CASH DIVIDEND | 12 Months Ended |
Dec. 31, 2022 | |
CASH DIVIDEND | |
Cash Dividend | 16. The Group did not declare cash dividend to its shareholders in 2020 and 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 equivalent of RMB416 was fully paid in April 2022. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | 17. 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 period of 2020, 2021 and 2022, and sublease income of the Group which is recognized in revenues in the consolidated statements of comprehensive income were RMB112, RMB134 and RMB119 for the years ended December 31, 2020, 2021 and 2022, respectively. The Group recognizes a negative lease expense of RMB88 and RMB281 for 2021 and 2022 under the relief of lease concession from COVID-19 as the Group elects using the variable lease expense approach. A summary of supplemental information related to operating leases in 2021 and 2022 is as follows: Years Ended December 31, 2021 2022 Lease cost: Operating fixed lease cost 4,074 4,186 Finance lease cost — Amortization of ROU assets 79 93 — Interest on lease liabilities 96 116 Short term lease cost 0 0 Operating variable lease cost (25) (144) Total lease cost 4,224 4,251 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 6.31 % 6.28 % Finance leases 3.97 % 3.98 % As of December 31, 2022, the maturities of lease liabilities in accordance with ASC 842 in each of the next five years and thereafter are as follows: Year Ending December 31, Total Operating Leases Total Finance Leases 2023 4,209 142 2024 4,196 146 2025 3,989 146 2026 3,793 148 2027 3,605 151 Thereafter 24,547 3,539 Total minimum lease payments 44,339 4,272 Less: amount representing interest 12,929 1,718 Present value of minimum lease payments 31,410 2,554 As of December 31, 2022, the Group has entered 34 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 RMB8,387, which is not reflected in the consolidated balance sheets. As of December 31, 2021, the maturities of lease liabilities in accordance with ASC 842 in each of the next five years and thereafter were as follows: Year Ending December 31, Total Operating Leases Total Finance Leases 2022 4,055 140 2023 4,066 155 2024 4,037 157 2025 3,871 157 2026 3,655 158 Thereafter 26,035 3,824 Total minimum lease payments 45,719 4,591 Less: amount representing interest 14,079 1,866 Present value of minimum lease payments 31,640 2,725 Supplemental cash flow information related to leases for the years ended December 31, 2021 and 2022 are as follows: Years Ended December, 31 2021 2022 Cash paid for amounts included in the measurement of operating lease liabilities 3,770 3,295 Cash paid for amounts included in the measurement of finance lease liabilities 92 106 Non-cash right-of-use assets obtained in exchange for operating lease liabilities 2,565 1,010 Non-cash right-of-use assets obtained in exchange for finance lease liabilities, net of reassessment of finance lease payments 501 (161) Non-cash right-of-use assets obtained in acquisition for operating lease 1,710 171 Non-cash lease liabilities obtained in acquisition for operating lease 1,692 144 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 18. The Group is subject to different income tax rates in various countries and jurisdictions under laws and relevant interpretations depending on the place of formation. Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), which was effective from January 1, 2008, domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25%, and the industries and projects that are encouraged and supported by the State may enjoy tax preferential treatment. Jizhu Information and Technology (Shanghai) Co., Ltd. (“Jizhu Shanghai”), which once called Mengguang Information and Technology (Shanghai) Co., Ltd, is a recognized software development entity located in Shanghai of PRC. In November 2018, Jizhu Shanghai was qualified as high and new tech enterprise, resulting Jizhu Shanghai subject to a reduced tax rate of 15% in 2018, 2019 and 2020. In December 2021, Jizhu Shanghai was qualified as high and new tech enterprise, resulting Jizhu Shanghai subject to a reduced tax rate of 15% in 2021, 2022 and 2023. H-World Information and Technology Co., Ltd. (“H-World Information”) is qualified as high and new tech enterprise, resulting H-World Information and Technology Co., Ltd. subject to a reduced tax rate of 15% in 2019, 2020 and 2021. In December 2022, H-World Information was qualified as high and new tech enterprise, resulting H-World Information subject to a reduced tax rate of 15% in 2022, 2023 and 2024. Pursuant to the relevant regulations applicable to small and micro businesses, several PRC subsidiaries enjoy a preferential tax rate of 20% with a discount to taxable income. From January 1, 2019 to December 31, 2020, for taxable income less than RMB1, 75% of the taxable income would be exempted in tax computation, and for taxable income over RMB1 but less than RMB3, the discount would be 50%. From January 1, 2021 to December 31, 2021, for taxable income less than RMB1, 87.5% of the taxable income would be exempted in tax computation, and for taxable income over RMB1 but less than RMB3, the discount would be 50%. From January 1, 2022 to December 31, 2022, for taxable income less than RMB1, 87.5% of the taxable income would be exempted in tax computation, and for taxable income over RMB1 but less than RMB3, the discount would be 75%. From January 1, 2023 to December 31, 2024, for taxable income less than RMB3, 75% of the taxable income would be exempted in tax computation. Entities qualified as small and micro businesses shall be engaged in industries not restricted or prohibited by the state, which simultaneously meet the following three conditions: annual taxable income does not exceed RMB3, the number of employees does not exceed 300, and the total assets does not exceed RMB50. Under the current laws of Germany, companies are subject to income tax at a standard rate of 15% (15.825% including solidarity surcharge), plus municipal trade tax of 7%-21%. The income tax rates in other countries and jurisdictions are of little effect on the financial statements. In other major jurisdictions, including Austria, Netherlands and Belgium, the Group is subject to a range from 9% to 25% of the statutory income tax rate, respectively. Income (loss) before income taxes consists of: Years Ended December 31, 2020 2021 2022 PRC including Hong Kong and Taiwan (392) 617 (483) Germany (1,606) (632) (410) Other (281) (393) (713) Total (2,279) (408) (1,606) Income tax expense (benefit) is comprised of the following: Years Ended December 31, 2020 2021 2022 Current Tax 338 555 475 Deferred Tax (553) (543) (268) Total (215) 12 207 A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: Years Ended December 31, 2020 2021 2022 PRC statutory tax rate 25 % 25 % 25 % Tax effect of non-deductible expenses and non-taxable income in determining taxable profit (6) % (6) % (6) % Effect of different tax rate of group entities operating in other jurisdictions (2) % (6) % (10) % Effect of change in valuation allowance (10) % (24) % (15) % Effect of tax holiday 1 % 9 % 1 % Effect of cash dividends 0 % (8) % (6) % Effect of excess tax benefit of share-based rewards 1 % 7 % (2) % Effective tax rate 9 % (3) % (13) % The aggregate amount and per share effect of the tax holidays are as follows: Years Ended December 31, 2020 2021 2022 Aggregate amount 31 37 22 Per share effect—basic 0.01 0.01 0.01 Per share effect—diluted 0.01 0.01 0.01 The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2021 and 2022 are as follows: As of December 31, 2021 2022 Deferred tax assets: Net loss carryforward 1,271 1,678 Deferred revenue 326 349 Long-term assets 238 303 Bad debt provision 40 59 Accrued payroll 45 41 Other accrued expenses 3 (9) Share-based compensation 29 31 Others 150 150 Valuation allowance (466) (731) Total deferred tax assets, net of valuation allowance 1,636 1,871 Deferred tax liabilities: Fair value adjustment for Building, land use rights and identified intangible assets due to acquisition 1,596 1,596 Others 31 40 Total deferred tax liabilities 1,627 1,636 Net deferred tax assets 9 235 Analysis as: Deferred tax assets 862 1,093 Deferred tax liabilities 853 858 Net deferred tax assets 9 235 Deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to do so, and intends to settle on a net basis. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carryforward periods provided for in the tax law. Movement of the valuation allowance is as follows: Years Ended December 31, 2020 2021 2022 Balance at the beginning of the year (152) (369) (466) Provided (249) (151) (338) Reversed 32 37 41 Written off — 17 32 Balance at the end of the year (369) (466) (731) As of December 31, 2022, the Group’s PRC subsidiaries had tax loss carryforwards of RMB4,901, which will expire between 2023 and 2027 if not used. The Germany Companies had tax loss carry forwards of RMB1,555, which can be offset in the future without anytime restriction. The Group determines whether or not a tax position is “more-likely-than-not” of being sustained upon audit based solely on the technical merits of the position. At December 31, 2021 and 2022, the Group had recorded liabilities for uncertain tax benefit of approximately RMB60 and RMB65 mainly associated with the interests on intercompany loans and other permanent differences related to Corporate Income and Trade Taxes, respectively. No interest or penalty expense was recorded for the years ended December 31, 2020, 2021 and 2022. In 2023, the Group will decrease its income tax liability by RMB 0.1 for unrecognized tax benefits previously recorded in 2013 as the statute of limitations for the tax liabilities of certain tax positions will expire under the PRC Tax Administration and Collection Law. Years Ended December 31, 2020 2021 2022 Balance at January 1 18 50 60 Addition for tax positions 32 10 5 Balance at December 31 50 60 65 In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. If there is a favorable tax treaty between mainland China and the jurisdiction of the foreign holding company, the income tax rate may be reduced. For example, holding companies in Hong Kong that are also tax residents in Hong Kong are eligible for a 5% withholding tax on dividends under the Tax Memorandum between China and the Hong Kong Special Administrative Region if the holding company is the beneficial owner of the dividends and holds more than 25% of the PRC company. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. In 2018, the Group revised its dividend policy that it may make a moderate dividend distribution every year with the range of 0.5% to 2.0% of its market capitalization from current year net income starting from 2018. The Group’s board of directors has complete discretion in deciding whether to distribute dividends and the dividend amounts within the approved range. The Group was restricted from distributing cash dividends until June 30, 2021 pursuant to the waiver from certain financial covenants that the Group obtained on April 17, 2020 for the syndicated bank loans and therefore did not accrue PRC dividend withholding tax in 2020. In March 2022, the Group announced that its board of directors declared a cash dividend of approximately US$68 million. To facilitate this dividend distribution and meet the oversea treasury demand, certain amount of dividends from the Group’s PRC subsidiaries to its oversea subsidiaries was planned. PRC dividend withholding tax of RMB32 was accrued as of December 31, 2021. PRC dividend withholding tax of RMB100 was accrued as of December 31, 2022. Other than these dividends distributions, the Group intends to indefinitely reinvest the remaining undistributed earnings of PRC subsidiaries, and therefore, no additional provision for PRC dividend withholding tax was accrued. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB0.1 is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from 2018 through 2022 on non-transfer pricing matters, and from 2013 through 2022 on transfer pricing matters. Generally, the statute of limitations for the assessment and collection of taxes is four years. The four-year period usually starts at the end of the year in which the tax return is filed. If no tax return is filed, the statute of limitations starts with the end of the third year following the year in which the tax arose. Extended limitations of 5 and 10 years will apply in the event of tax evasion or tax fraud. The statute of limitations may be suspended for a variety of reasons, for example, appeal of assessment by taxpayers, announcement or start of a tax audit, obvious mistake in tax assessment, etc. According to the German General Fiscal Code, the statute of limitations for the assessment and collection of taxes is four years. The four-year period usually starts at the end of the year in which the tax return is filed. If no tax return is filed, the statute of limitations starts with the end of the third year following the year in which the tax arose. Extended limitations of 5 and 10 years will apply in the event of tax evasion or tax fraud. The statute of limitations may be suspended for a variety of reasons, for example, appeal of assessment by taxpayers, announcement or start of a tax audit, obvious mistake in tax assessment, etc. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 19. a. Defined Benefit Plans The Group maintains a German pension plan after the completion of the acquisition of DH. As of December 31, 2021 and 2022, accumulated benefit obligation net of plan assets recognized in the consolidated balance sheets consist of the following: As of December 31, 2021 2022 Salary and welfare payables 8 10 Retirement benefit obligation 144 110 Liability in the balance sheet 152 120 b. Defined Contribution Plans 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 RMB283, RMB544 and RMB645 for the years ended December 31, 2020, 2021 and 2022, respectively. The Group has no ongoing obligation to its employees subsequent to its contribution to the PRC plan. In an attempt to mitigate the adverse financial effects of the COVID-19 pandemic on employers, the Chinese Government had announced temporary reductions in, and exemptions from, the payment of contributions in 2020. The supportive policies have been gradually reduced since 2021. 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 RMB129, RMB55 and RMB74 for the years ended December 31, 2020, 2021 and 2022. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 20. Pursuant to laws applicable to entities incorporated in the PRC, our subsidiaries in the PRC must make appropriations from after-tax profit to non-distributable reserve funds. In particular, subject to certain cumulative limits, the statutory reserve fund requires an annual appropriation of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserve fund reaches 50% of a PRC subsidiary’s registered capital. These reserve funds can only be used for such specific purposes as provided in PRC laws, and are not distributable as cash dividends, amounted to RMB771, RMB826 and RMB904 as of December 31, 2020, 2021 and 2022, respectively. In addition, due to restrictions on the distribution of share capital from the Group’s PRC subsidiaries, the PRC subsidiaries share capital of RMB2,831 at December 31, 2022 is considered restricted. As a result of these PRC laws and regulations, as of December 31, 2022, approximately RMB3,735 is not available for distribution to the Group by its PRC subsidiaries in the form of dividends, loans or advances. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 21. 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 up to December 2021 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 Shanghai Lianquan Hotel Management Co., Ltd. (“Lianquan”) Hotel management company Equity method investee of the Group Suzhou Huali Jinshi Construction Decoration Co., Ltd. Building decoration company Equity method investee of the Group up to August 2022 Shenzhen Hitone Investment Fund Partnership (LLP) ( “Hitone”) Fund Equity method investee of the Group (a) Related party balances Amounts due from related parties consist of the following: As of December 31, 2021 2022 Trip.com 17 73 Lianquan 49 46 Sheen Star 33 29 Cjia Group 29 28 Zhuchuang 27 24 Others 12 21 Allowance for expected credit losses (17) (37) Total 150 184 Amounts due to related parties consist of the following: As of December 31, 2021 2022 Trip.com 44 38 Cjia Group 101 26 Huali Jinshi 47 — Others 5 7 Total 197 71 (b) Related party transactions During the years ended December 31, 2020, 2021 and 2022, significant related party transactions were as follows: Years Ended December 31, 2020 2021 2022 Commission expenses to Trip.com 78 99 55 Lease expenses to Trip.com 18 19 19 Lease expenses to Cjia Group — 12 31 Service fee to Huali Jinshi 41 42 — Service fee to Cjia Group 17 — — Brand use fee, reservation fee and other related service fee to Accor 17 22 — Goods sold and service provided to Cjia Group 18 11 4 Early termination compensation of sublease to Cjia Group 8 — — Loan payment to Hitone — 5 — Service fee from Trip.com 66 62 93 Service fee from Accor 3 3 — Service fee from Sheen Star 4 5 4 Sublease income from Lianquan 12 10 12 Sublease income from Cjia Group 9 6 5 Early termination compensation of franchise agreement from China Hospitality JV 26 — — Purchase of property and equipment from Cjia Group 11 — — Business acquisition of CitiGO from Cjia Group — 783 — Business acquisition of one individual company from Cjia Group — 51 — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 22. COMMITMENTS AND CONTINGENCIES (a) Commitments As of December 31, 2022, the Group’s commitments related to leasehold improvements and installation of equipment for hotel operations was RMB294, which is expected to be incurred within one to two year. (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 December 31, 2022, there are no accrued contingent liabilities from such proceedings. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS In January 2023, the Group successfully completed a follow-on public offering of 7,118,500 ADSs with proceeds of approximately US$300 million (equivalent of RMB2,012). In March 2023, the Group disposed all of its holdings in Accor’s ordinary share for net proceeds to approximately EUR300 million (equivalent of RMB2,185). In April 2023, the Group repaid the outstanding principal and interests of EUR220 million term loan (equivalent of RMB1,608) and EUR70 million revolving credit facility (equivalent of RMB525). |
SCHEDULE I FINANCIAL INFORMATIO
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | 12 Months Ended |
Dec. 31, 2022 | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I H WORLD GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY BALANCE SHEETS (Renminbi in millions, except share and per share data, unless otherwise stated) As of December 31, 2021 2022 2022 US$’ in millions (Note 2) Assets Current assets: Cash and cash equivalents 581 1,204 175 Short-term investments 81 87 13 Other current assets 1 8 1 Total current assets 663 1,299 189 Investment in and amount due from subsidiaries 16,928 12,390 1,796 Total assets 17,591 13,689 1,985 Liabilities and equity Current liabilities: Short-term debt 3,028 453 66 Amount due to subsidiaries 257 858 124 Accrued expenses and other current liabilities 213 181 26 Total current liabilities 3,498 1,492 216 Long-term debt 3,158 3,463 502 Other non-current liabilities — 5 1 Total liabilities 6,656 4,960 719 Equity: Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,255,971,250 and 3,265,433,590 shares issued as of December 31, 2021 and 2022, and 3,120,746,090 and 3,112,413,730 shares outstanding as of December 31, 2021 and 2022, respectively) 0 0 0 Treasury shares (30,974,040 and 153,019,860 shares as of December 31, 2021 and 2022, respectively) (107) (441) (64) Additional paid-in capital 9,964 10,138 1,470 Retained earnings 1,037 (1,200) (174) Accumulated other comprehensive income 41 232 34 Total equity 10,935 8,729 1,266 Total liabilities and equity 17,591 13,689 1,985 ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I H WORLD GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME (Renminbi in millions, unless otherwise stated) Years Ended December 31, 2020 2021 2022 2022 US$’ in millions (Note 2) Operating costs and expenses: General and administrative expenses 155 110 93 14 Total operating costs and expenses 155 110 93 14 Loss from operations (155) (110) (93) (14) Interest income 2 8 15 2 Interest expense 154 128 130 19 Foreign exchange gain (loss) (8) (3) (223) (32) Other income, net 32 15 6 1 Loss from fair value changes of equity securities, net (10) (2) (1) (0) Income (loss) in investment in subsidiaries (1,899) (245) (1,395) (202) Net income (loss) attributable to H World Group Limited (2,192) (465) (1,821) (264) Other comprehensive (loss) income, net of tax 176 (86) 191 27 Comprehensive income (loss) (2,016) (551) (1,630) (237) ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I H WORLD GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Renminbi in millions, unless otherwise stated) Years Ended December 31, 2020 2021 2022 2022 US$’ in millions (Note 2) Net cash (used in) provided by operating activities 49 9 (136) (19) Investing activities: Loans to subsidiaries (6,267) (1,050) (750) (109) Repayment of loans by subsidiaries — — 4,165 604 Purchase of short-term investments — (34) — — Net cash (used in) provided by investing activities (6,267) (1,084) 3,415 495 Financing activities: Proceeds from issuance of ordinary shares in Hong Kong public offering 6,018 — — — Proceeds from termination of Capped Call — — 86 12 Payment of ordinary share issuance costs (10) (15) (0) (0) Net settlement on shares repurchased for withholding taxes related to share-based awards — 50 — — Payment of share repurchase — (0) (334) (48) Loans from subsidiaries — — 798 116 Net proceeds from issuance of ordinary shares upon exercise of option 1 1 — — Proceeds from short-term bank borrowings — — 453 66 Repayment of short-term bank borrowings (282) A — — — Proceeds from issuance of convertible senior notes 3,499 — — — Repayment of convertible senior notes (0) (0) (3,406) (494) Debt financing costs paid (9) — — — Dividends paid (678) — (416) (60) Net cash provided by (used in) financing activities 8,539 36 (2,819) (408) Effect of exchange rate changes on cash and cash equivalents (790) (272) 163 24 Net (decrease) increase in cash and cash equivalents 1,531 (1,311) 623 91 Cash, cash equivalents at the beginning of the year 361 1,892 581 84 Cash, cash equivalents at the end of the year 1,892 581 1,204 175 A—In 2020, Except for repayment of short-term bank borrowings by cash, short-term bank borrowings of RMB 4,628 was settled by investment in subsidiaries. The accompanying notes are an integral part of these consolidated financial statements ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I H WORLD GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY Note to Schedule I Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04-(c) of Regulation S-X, which require condensed financial information as to the financial position, change in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. Such investments in subsidiaries are presented on the balance sheets as investment in subsidiaries and the profit of the subsidiaries is presented as income in investment in subsidiaries. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements. As of December 31, 2022, there are no material contingencies, mandatory dividend, and significant provision of long-term obligation or guarantee of the Company, except for those which have separately disclosed in the consolidated financial statements. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2022 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ADDITION INFORMATION — FINANCIAL STATEMENTS SCHEDULE II H WORLD GROUP LIMITED This financial information has been prepared in conformity with accounting principles generally accepted in the United States. VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Charge to Costs and Charge to Other Charge Taken Balance at Year Expenses Accounts Against Allowance Write off End of Year (Renminbi in millions) Allowance for accounts receivable, loan receivables and other financial assets: 2020 22 65 7 — (7) 87 2021 87 105 — — (64) 128 2022 128 82 — — (7) 203 Valuation allowance for deferred tax assets 2020 152 249 — (32) — 369 2021 369 151 — (37) (17) 466 2022 466 338 — (41) (32) 731 ****** |
SUMMARY OF PRINCIPAL ACCOUNTI_2
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The 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”). |
Basis of consolidation | Basis of consolidation The 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. |
Variable Interest Entities | Variable Interest Entities 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 Company is deemed as the primary beneficiary of and consolidates variable interest entities when the Company 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. As of December 31, 2021 and 2022, the Group consolidated seven and seven entities under VIE model, and the impact of the consolidated VIEs are immaterial to the Group’s consolidated financial statements. |
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 useful lives and 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. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. |
Restricted cash | Restricted cash Restricted cash mainly represents deposits used as security against borrowings, deposits restricted due to contract disputes or lawsuit and cash restricted for special purposes. |
Investments | Investments The Group uses the equity method of accounting to account for equity investment with significant influence, no control over the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with gains and losses from fair value changes recognized in net income in the consolidated statements of comprehensive income. Equity investments without readily determinable fair values are measured at cost, less impairment, plus or minus observable price changes. The Group classifies debt securities for which it does not have an intent to hold till maturity or may sell the security in response to the changes in economic conditions are classified as available-for-sale debt securities. These securities are carried at estimated fair value with unrealized holding gains and losses, net of tax impact, if any, reported as a net amount in a separate component of shareholders’ equity, accumulated other comprehensive income, until realized. Credit-related impairment is measured as the difference between the debt security’s amortized cost basis and the present value of expected cash flows and is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. The allowance should not exceed the amount by which the amortized cost basis exceeds fair value. |
Allowances for Losses on Certain Financial Assets | Allowances for Losses on Certain Financial Assets The Group establishes allowances for credit losses on accounts receivable, loans receivables and certain other similar financial assets. For accounts receivables and other financial assets, the adequacy of these allowances is assessed regularly for pools of assets with similar risk characteristics by evaluating of factors such as historical levels of credit losses, current economic condition that may affect a customer’s ability to pay, customer credit ratings, and age of the receivable. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. For loan receivables, the Group estimate current expected credit losses based on the expectation of future economic conditions, historical collection experience and a loss-rate approach whereby the allowance is calculated using the probability of default and recovery rates and multiplying it by the asset’s amortized cost at the balance sheet date |
Property and equipment, net | Property and equipment, net Property and equipment, net are stated at cost less accumulated depreciation. The renovations, betterments and interest cost incurred during construction are capitalized. Depreciation of property and equipment is provided using the straight line method over their expected useful lives. The expected useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 1-20 years Motor vehicles 5 years Construction in progress represents leasehold improvements and property under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying amount of the underlying asset. |
Intangible assets, net | Intangible assets, net Intangible assets consist primarily of brand name, master brand agreement, non-compete agreements, franchise or manachise agreements and purchased software. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives over which the assets are expected to contribute directly or indirectly to the future cash flows of the Group. These estimated useful lives are generally as follows: Franchise or manachise agreements Remaining contract terms from 10 to 20 years Non-compete agreements 2 - 10 years based on specified non-compete period Purchased software 3 - 10 years based on the estimated usage period Other intangible assets including trademark, licenses and other rights 2 - 15 years based on the contractual term, the length of license agreements and the effective terms of other legal rights Almost all the brand names and master brand agreement acquired by the Group are considered to have indefinite useful lives since there are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these brands and these brands can be renewed at nominal cost. The Group evaluates the brand name and master brand agreement each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Impairment is tested annually or more frequently if events or changes in circumstances indicate that it might be impaired. |
Land use rights | Land use rights The land use rights represent the operating lease prepayments for the rights to use the land in the PRC under ASC 842, Leases |
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 RMB180, RMB157 and RMB297 during the years ended December 31, 2020, 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. |
Goodwill | Goodwill Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group performs a one-step impairment test in which it compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. Upon the acquisition of Deutsche Hospitality, the Group concludes there are two reporting units, which are legacy Huazhu and legacy DH. The goodwill impairment testing was performed at each reporting unit level. If the carrying amount of a reporting unit exceeds its fair value, an impairment amounts to that excess should be recognized in the statement of comprehensive income. |
Revenue recognition | Revenue recognition Revenue are primarily derived from products and services in leased and owned hotels, contracts of manachised and franchised hotels with third-party franchisees as well as activities other than the operation of hotel businesses. Leased and owned hotel revenues Leased and owned hotel revenues are primarily derived from the rental of rooms, sales of food, beverage and other ancillary goods and services, including but not limited to souvenir, laundry, parking and conference reservation. Each of these products and services represents an individual performance obligation and, in exchange for these services, the Group receives fixed amounts based on published rates or negotiated contracts. Payment is due in full at the time when the services are rendered or the goods are provided. Room rental revenue is recognized on a daily basis when rooms are occupied. Food and beverage revenue and other goods and services revenue are recognized when they have been delivered or rendered to the guests as the respective performance obligations are satisfied. Manachised and franchised hotel revenues Manachised and franchised hotel revenues are derived from franchise or manachise agreements where the franchisees are required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) primarily on-going management and franchise service fees, (b) central reservation system usage fees, system maintenance and support fees and (c) reimbursements for hotel manager fees. Initial one-time license/franchise fee On-going management and franchise service/royalty fees: Central reservation system usage fees, other system maintenance and support fees: Reimbursements for hotel manager fees Other Revenues Other revenues Loyalty Program H Reward loyalty program members earn loyalty points based on nights and other consumptions that they spent at the Group’s hotels and Huazhu Mall. These loyalty points can be redeemed for future products and services. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future. The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members. The Group is responsible for arranging for the redemption of points, but the Group does not directly fulfill the redemption obligation except at leased and owned hotels. Therefore, the Group is the agent with respect to this performance obligation for manachised and franchised hotels, and is the principal with respect to leased and owned hotels. For leased and owned hotels, a portion of the leased and owned revenues is deferred until a member redeems points. The amount of revenue the Group recognizes upon point redemption is impacted by the estimate of the “breakage” for points that members will never redeem in the Group’s owned and leased hotels. For manachised and franchised hotels, we receive monthly cash contributions from manachised and franchised hotels determined based on the value of qualified spend by Loyalty Program members (when the points earned). We recognize these contributions into revenue as we provide the related service. The amount of revenue we recognize is based on a blend of historical funding rates and is impacted by our estimate of the “breakage” for points that members will never redeem. Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. The membership duration is estimated to be two |
Advertising and promotional expenses | Advertising and promotional expenses Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the consolidated statements of comprehensive income as incurred, and amounted to RMB150, RMB165 and RMB128 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Leases | Leases The Group determines if an arrangement is a lease or contains a lease at the inception of the contract. A lease arrangement is being evaluated for classification as operating or financing upon lease commencement. Lease liabilities, which represent the Group’s obligation to make lease payments arising from the lease, and corresponding right of-use assets, which represent the Group’s right to use an underlying asset for the lease term, are recognized at the commencement date of the lease based on the present value of fixed future 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, calculated using the discount rate implicit in the lease, if available, or the Group’s incremental borrowing rate. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is expensed as incurred. For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset. 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 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. |
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. |
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 established fair value hierarchy by U.S. GAAP has three levels based on the reliability of the inputs used to measure fair value: 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. The Group’s financial instruments include cash and cash equivalent, restricted cash, loan receivables, other receivables, payables, short-term debts, long-term debts. The carrying amounts of the 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 rates approximate market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. Convertible senior notes are measured at amortized costs of RMB6,318, RMB6,186 and RMB3,463 and the corresponding fair value estimated based on quoted market price were RMB7,747, RMB6,681 and RMB4,283, as of December 31, 2020, 2021 and 2022, respectively. The following table presents our assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. As of December 31, 2021 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 2,589 — — Available-for-sale debt securities — 220 — Employee benefit plan assets 5 — — As of December 31, 2022 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 1,788 — — Available-for-sale debt securities — — 296 Employee benefit plan assets 13 — — Equity securities with readily determinable fair value and employee benefit plan assets are valued using a market approach based on the quoted market prices or broker/dealer quotes of identical or comparable instruments. Level 3 fair value of available-for-sale debt securities is determined based on income approach using various unobservable inputs. The determination of the fair value required significant judgement by management with respect to the assumptions and estimates for the revenue growth rate, weighted average cost of capital, lack of marketability discounts, expected volatility and probability in equity allocation. Certain assets are measured at a non-recurring basis. The following table presents the asset classification, the fair value and the non-recurring losses recognized for the years ended December 31, 2021 and 2022 due to impairment of the related assets. As of December 31, 2021 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 33 33 24 Operating lease right-of-use assets 88 88 48 Intangible assets 2,556 2,556 245 Long-term investment — — 63 As of December 31, 2022 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 38 38 218 Operating lease right-of-use assets 336 336 76 Intangible assets 388 388 170 Long-term investment 11 11 27 Property and equipment, operating lease right-of-use assets and intangible assets were primarily valued using the income approach based on discounted cash flows associated with the underlying assets, which incorporate 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. The revenue growth rate and the discount rate were the significant unobservable input used in the fair value measurement, which are ranged between negative 15% and 4%, 8.64% and 12% respectively, for the years ended December 31, 2020, 2021 and 2022, respectively. |
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. |
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). |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adopted Accounting Standards In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832) — Disclosures by Business Entities about Government Assistance. The amendments in this ASU require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments in this ASU are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Group adopted the guidance on January 1, 2022, as required. There was no material impact on the Group’s consolidated financial statements and related disclosures as a result of adopting this new standard. Accounting Standards Not Yet Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments create an exception to the general recognition and measurement principal in ASC 805, Business Combinations to measure assets and liabilities acquired in a business combination at fair value. Instead, an acquirer in a business combination will be required to apply ASC 606 to recognize and measure contract assets and contract liabilities that result from contracts accounted for under ASC 606 on the acquisition date and will generally result in the acquirer recognizing amounts consistent with those recorded by the acquiree immediately before the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements. In June 2022, the FASB issued ASU No. 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The Group does not expect the adoption of this ASU will have a significant impact on the consolidated financial statements. |
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 = RMB6.8972, on December 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 December 30, 2022, or at any other rate. |
SUMMARY OF PRINCIPAL ACCOUNTI_3
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Schedule of expected useful lives of property and equipment | Leasehold improvements Shorter of the lease term or their estimated useful lives Buildings 20-40 years Furniture, fixtures and equipment 1-20 years Motor vehicles 5 years |
Schedule of estimated useful lives of intangible assets | Franchise or manachise agreements Remaining contract terms from 10 to 20 years Non-compete agreements 2 - 10 years based on specified non-compete period Purchased software 3 - 10 years based on the estimated usage period Other intangible assets including trademark, licenses and other rights 2 - 15 years based on the contractual term, the length of license agreements and the effective terms of other legal rights |
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 | As of December 31, 2021 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 2,589 — — Available-for-sale debt securities — 220 — Employee benefit plan assets 5 — — As of December 31, 2022 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Description Assets (Level 1) (Level 2) Inputs (Level 3) Equity securities with readily determinable fair value 1,788 — — Available-for-sale debt securities — — 296 Employee benefit plan assets 13 — — |
Schedule of assets measured at fair value on a non-recurring basis | As of December 31, 2021 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 33 33 24 Operating lease right-of-use assets 88 88 48 Intangible assets 2,556 2,556 245 Long-term investment — — 63 As of December 31, 2022 Fair Value Measurements at Reporting Date Using Significant Unobservable Total Loss for Description Fair Value Inputs (Level 3) the Year Property and equipment 38 38 218 Operating lease right-of-use assets 336 336 76 Intangible assets 388 388 170 Long-term investment 11 11 27 |
Summary of total assets for operating segments, reconciled to consolidated amounts | As of December 31, 2021 2022 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total assets 45,353 17,916 63,269 43,729 17,778 61,507 |
Schedule of revenues and property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill by geographical region | 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: Years Ended December 31, 2021 2022 China 11,231 10,637 Germany 1,263 2,458 All others 291 767 Total 12,785 13,862 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2021 2022 China 33,143 31,684 Germany 13,884 13,501 All others 2,929 3,288 Total 49,956 48,473 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CitiGo Hotels | |
Acquisitions | |
Schedule of allocation of the purchase price as of the date of acquisition | The allocation of the purchase price as of the date of acquisition is summarized as follows: Amortization Period Current assets 34 Property and equipment 296 5-12 years Operating lease right-of-use assets 1,119 Remaining lease terms Other non-current assets 33 Franchise agreement 61 Remaining contract terms Brand names 90 Indefinite-life Goodwill 372 Operating lease liabilities, current (153) Other current liabilities (23) Operating lease liabilities, non-current (987) Other noncurrent liabilities (5) Deferred tax liabilities (33) Noncontrolling interest (21) Total 783 |
Deutsche Hospitality | |
Acquisitions | |
Schedule of allocation of the purchase price as of the date of acquisition | The allocation of the purchase price as of the date of acquisition is summarized as follows: Amortization Period Current assets 785 Property and equipment, net 586 2-25 years Operating lease right-of-use assets 8,616 Remaining lease terms Financing lease right-of-use assets 1,794 Shorter of estimated useful lives of the assets and the lease terms Franchise or manachise agreements 270 Remaining contract terms Brand names 3,873 Indefinite-life Non-compete agreement 10 2 years Goodwill 2,694 Deferred tax assets 170 Other non-current assets 280 Operating lease liabilities, current (296) Finance lease liabilities, current (21) Other current liabilities (784) Operating lease liabilities, non-current (8,553) Finance lease liabilities, non-current (2,166) Other noncurrent liabilities (330) Deferred tax liabilities (1,304) Total 5,624 |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE | |
Schedule of disaggregated revenues | The following tables present the Group’s revenues disaggregated by the nature of the product or service: Years Ended December 31, 2020 2021 2022 Room revenues 5,735 7,024 7,571 Food and beverage revenues 608 694 1,049 Others 565 400 528 Leased and owned hotels revenue 6,908 8,118 9,148 Initial one-time license/franchise fee 110 109 106 On-going management and service/royalty fees 1,057 1,479 1,375 Central reservation system usage fees, other system maintenance and support fees 908 1,399 1,262 Reimbursements for hotel manager fees 657 897 1,103 Other fees 404 520 559 Manachised and franchised hotels revenue 3,136 4,404 4,405 Other revenues 152 263 309 Total revenues 10,196 12,785 13,862 |
Schedule of contract balances | The Group’s contract assets are insignificant at December 31, 2021 and 2022. As of December 31, 2021 2022 Current contract liabilities 1,366 1,308 Long-term contract liabilities 785 828 Total contract liabilities 2,151 2,136 The contract liabilities balances above are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2021 and 2022. |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | Property and equipment, net consist of the following: As of December 31, 2021 2022 Cost: Buildings 305 843 Leasehold improvements 10,467 10,952 Furniture, fixtures and equipment 2,348 2,520 Motor vehicles 3 3 13,123 14,318 Less: Accumulated depreciation 6,845 7,727 6,278 6,591 Construction in progress 778 193 Property and equipment, net 7,056 6,784 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets with indefinite life | As of December 31, 2021 2022 Intangible assets with indefinite lives: Brand names 5,010 5,111 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 366 368 Purchased software 142 128 Other intangible assets 81 77 Total 5,791 5,876 Less: Accumulated amortization 163 178 Less: Accumulated impairment loss(Note2) 243 420 Total 5,385 5,278 |
Schedule of annual estimated amortization expense for intangible assets and unfavorable lease excluding brand name and master brand agreement | Amortization for Intangible Assets 2023 36 2024 33 2025 31 2026 29 2027 28 Thereafter 151 Total 308 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS. | |
Schedule of investments | As of December 31, 2021 2022 Short-term investments Equity securities with readily determinable fair values: Accor 2,508 1,701 Other marketable securities 81 87 Total 2,589 1,788 Long-term investments Equity securities without readily determinable fair values: Cjia Group-preferred shares 168 138 OYO 54 54 Other equity securities without readily determinable fair values 71 65 Subtotal 293 257 Equity-method investments: AAPC LUB 525 494 Hotel related funds 488 443 China Hospitality JV 99 67 Zleep 68 70 Commerz Real Institute 85 80 Other investments 187 238 Subtotal 1,452 1,392 Available-for-sale debt securities: Cjia Group-convertible notes 220 296 Total 1,965 1,945 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL. | |
Schedule of changes in the carrying amount of goodwill | Legacy Huazhu Legacy DH Total Balance at January 1, 2021 Goodwill 2,664 2,768 5,432 Accumulated impairment loss (4) (440) (444) 2,660 2,328 4,988 Goodwill acquired during the year (Note 3) 372 6 378 Net foreign exchange-goodwill — (278) (278) Net foreign exchange-impairment loss — 44 44 Balance at December 31, 2021 Goodwill 3,036 2,496 5,532 Accumulated impairment loss (4) (396) (400) 3,032 2,100 5,132 Goodwill acquired during the year — 4 4 Net foreign exchange-goodwill — 70 70 Net foreign exchange-impairment loss — (11) (11) Balance at December 31, 2022 Goodwill 3,036 2,570 5,606 Accumulated impairment loss (4) (407) (411) 3,032 2,163 5,195 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Schedule of short-term and long-term debt | The short-term and long-term debt as of December 31, 2021 and 2022 were as follows: As of December 31, 2021 2022 Short-term debt: Long-term bank borrowings, current portion 2,464 208 Short-term bank borrowings 692 3,035 Convertible senior notes, current portion 3,029 — FF&E liability, current portion 47 45 Total 6,232 3,288 Long-term debt: Long-term bank borrowings, non-current portion 211 2,929 Convertible senior notes, non-current portion 3,158 3,463 FF&E liability, non-current portion 180 228 Others 16 15 Total 3,565 6,635 |
Schedule of contractual maturities of the group's long-term debt | The contractual maturities of the Group’s debt as of December 31, 2022 were as follows: Year Ending December 31, Principal Amounts 2023 3,287 2024 3,755 2025 2,735 2026 34 2027 28 Thereafter 100 Total 9,939 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2021 2022 Payable to franchisees 710 652 Other payables 535 850 Accrued utilities and other accrued expenses 209 332 Liabilities related to customer loyalty program 135 166 Value-added tax, other tax and surcharge payables 132 234 Advance from noncontrolling interest holders 117 103 Total 1,838 2,337 |
HOTEL OPERATING COSTS (Tables)
HOTEL OPERATING COSTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
HOTEL OPERATING COSTS. | |
Schedule of hotel operating costs | Years Ended December 31, 2020 2021 2022 Rents 3,485 3,900 3,927 Utilities 478 507 603 Personnel costs 2,501 3,022 3,683 Depreciation and amortization 1,316 1,413 1,414 Consumable, food and beverage 885 969 1,026 Others 1,064 1,471 1,607 Total 9,729 11,282 12,260 |
PRE-OPENING EXPENSES (Tables)
PRE-OPENING EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PRE-OPENING EXPENSES | |
Schedule of pre-opening expenses incurred during the hotel pre-opening period | Years Ended December 31, 2020 2021 2022 Rents 251 68 84 Personnel costs 15 5 5 Others 22 8 6 Total 288 81 95 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 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 39,153,240 2.53 Forfeited (2,157,320) 1.41 Vested (9,462,340) 1.40 Adjusted for performance conditions (4,290,920) 0.63 Nonvested restricted stocks outstanding at December 31, 2022 76,939,150 1.88 |
Schedule of share-based compensation expense recognized | Years Ended December 31, 2020 2021 2022 Hotel operating costs 42 39 33 Selling and marketing expenses 4 4 4 General and administrative expenses 76 66 50 Total 122 109 87 |
EARNINGS (LOSSES) PER SHARE (Ta
EARNINGS (LOSSES) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EARNINGS (LOSSES) PER SHARE | |
Schedule of computation of basic and diluted losses per share | Years Ended December 31, 2020 2021 2022 Net loss attributable to ordinary shareholders — basic (2,192) (465) (1,821) Net loss attributable to ordinary shareholders — diluted (2,192) (465) (1,821) Weighted average ordinary shares outstanding — basic 2,927,398,409 3,114,124,244 3,111,196,757 Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method — — — Dilutive effect of convertible senior notes — — — Weighted average ordinary shares outstanding — diluted 2,927,398,409 3,114,124,244 3,111,196,757 Basic earnings (losses) per share (0.75) (0.15) (0.59) Diluted earnings (losses) per share (0.75) (0.15) (0.59) |
Schedule of outstanding securities excluded from the computation of diluted earnings per share | As of December 31, 2020 2021 2022 Outstanding employee options and nonvested restricted stocks 70,954,080 53,696,490 76,939,150 Shares of convertible senior notes 226,827,410 226,827,410 120,601,000 Total 297,781,490 280,523,900 197,540,150 |
SEGMENT (Tables)
SEGMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT | |
Summary of segment information after elimination of intercompany transactions | Years Ended December 31, 2020 2021 2022 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total revenues 8,664 1,532 10,196 11,247 1,538 12,785 10,655 3,207 13,862 EBITDA 736 (1,367) (631) 1,827 (461) 1,366 282 (118) 164 Interest income 119 89 87 Interest expense 533 405 409 Income tax expense (benefit) (215) 12 207 Depreciation and amortization 1,362 1,503 1,456 Net (loss) income attributable to H World Group Limited (2,192) (465) (1,821) |
Schedule of total assets for operating segments, reconciled to consolidated amounts | As of December 31, 2021 2022 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total assets 45,353 17,916 63,269 43,729 17,778 61,507 |
Schedule of revenues and property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill by geographical region | 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: Years Ended December 31, 2021 2022 China 11,231 10,637 Germany 1,263 2,458 All others 291 767 Total 12,785 13,862 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2021 2022 China 33,143 31,684 Germany 13,884 13,501 All others 2,929 3,288 Total 49,956 48,473 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of supplemental information related to operating leases | Years Ended December 31, 2021 2022 Lease cost: Operating fixed lease cost 4,074 4,186 Finance lease cost — Amortization of ROU assets 79 93 — Interest on lease liabilities 96 116 Short term lease cost 0 0 Operating variable lease cost (25) (144) Total lease cost 4,224 4,251 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 6.31 % 6.28 % Finance leases 3.97 % 3.98 % |
Schedule of maturities of operating and finance lease liabilities | As of December 31, 2022, the maturities of lease liabilities in accordance with ASC 842 in each of the next five years and thereafter are as follows: Year Ending December 31, Total Operating Leases Total Finance Leases 2023 4,209 142 2024 4,196 146 2025 3,989 146 2026 3,793 148 2027 3,605 151 Thereafter 24,547 3,539 Total minimum lease payments 44,339 4,272 Less: amount representing interest 12,929 1,718 Present value of minimum lease payments 31,410 2,554 As of December 31, 2021, the maturities of lease liabilities in accordance with ASC 842 in each of the next five years and thereafter were as follows: Year Ending December 31, Total Operating Leases Total Finance Leases 2022 4,055 140 2023 4,066 155 2024 4,037 157 2025 3,871 157 2026 3,655 158 Thereafter 26,035 3,824 Total minimum lease payments 45,719 4,591 Less: amount representing interest 14,079 1,866 Present value of minimum lease payments 31,640 2,725 |
Schedule of supplemental cash flow information related to leases | Years Ended December, 31 2021 2022 Cash paid for amounts included in the measurement of operating lease liabilities 3,770 3,295 Cash paid for amounts included in the measurement of finance lease liabilities 92 106 Non-cash right-of-use assets obtained in exchange for operating lease liabilities 2,565 1,010 Non-cash right-of-use assets obtained in exchange for finance lease liabilities, net of reassessment of finance lease payments 501 (161) Non-cash right-of-use assets obtained in acquisition for operating lease 1,710 171 Non-cash lease liabilities obtained in acquisition for operating lease 1,692 144 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Summary of income (loss) before income taxes | Years Ended December 31, 2020 2021 2022 PRC including Hong Kong and Taiwan (392) 617 (483) Germany (1,606) (632) (410) Other (281) (393) (713) Total (2,279) (408) (1,606) |
Schedule of tax expense (benefit) | Years Ended December 31, 2020 2021 2022 Current Tax 338 555 475 Deferred Tax (553) (543) (268) Total (215) 12 207 |
Schedule of a reconciliation between the effective income tax rate and PRC statutory income tax rate | Years Ended December 31, 2020 2021 2022 PRC statutory tax rate 25 % 25 % 25 % Tax effect of non-deductible expenses and non-taxable income in determining taxable profit (6) % (6) % (6) % Effect of different tax rate of group entities operating in other jurisdictions (2) % (6) % (10) % Effect of change in valuation allowance (10) % (24) % (15) % Effect of tax holiday 1 % 9 % 1 % Effect of cash dividends 0 % (8) % (6) % Effect of excess tax benefit of share-based rewards 1 % 7 % (2) % Effective tax rate 9 % (3) % (13) % |
Schedule of the aggregate amount and per share effect of the tax holidays | Years Ended December 31, 2020 2021 2022 Aggregate amount 31 37 22 Per share effect—basic 0.01 0.01 0.01 Per share effect—diluted 0.01 0.01 0.01 |
Schedule of the principal components of the Group's deferred income tax assets and liabilities | As of December 31, 2021 2022 Deferred tax assets: Net loss carryforward 1,271 1,678 Deferred revenue 326 349 Long-term assets 238 303 Bad debt provision 40 59 Accrued payroll 45 41 Other accrued expenses 3 (9) Share-based compensation 29 31 Others 150 150 Valuation allowance (466) (731) Total deferred tax assets, net of valuation allowance 1,636 1,871 Deferred tax liabilities: Fair value adjustment for Building, land use rights and identified intangible assets due to acquisition 1,596 1,596 Others 31 40 Total deferred tax liabilities 1,627 1,636 Net deferred tax assets 9 235 Analysis as: Deferred tax assets 862 1,093 Deferred tax liabilities 853 858 Net deferred tax assets 9 235 |
Summary of movement of the valuation allowance | Years Ended December 31, 2020 2021 2022 Balance at the beginning of the year (152) (369) (466) Provided (249) (151) (338) Reversed 32 37 41 Written off — 17 32 Balance at the end of the year (369) (466) (731) |
Schedule of unrecognized tax benefits | Years Ended December 31, 2020 2021 2022 Balance at January 1 18 50 60 Addition for tax positions 32 10 5 Balance at December 31 50 60 65 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFIT PLANS | |
Schedule of amounts recognized in the consolidated balance sheets | As of December 31, 2021 2022 Salary and welfare payables 8 10 Retirement benefit obligation 144 110 Liability in the balance sheet 152 120 |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 12 Months Ended |
Dec. 31, 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 up to December 2021 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 Shanghai Lianquan Hotel Management Co., Ltd. (“Lianquan”) Hotel management company Equity method investee of the Group Suzhou Huali Jinshi Construction Decoration Co., Ltd. Building decoration company Equity method investee of the Group up to August 2022 Shenzhen Hitone Investment Fund Partnership (LLP) ( “Hitone”) Fund Equity method investee of the Group |
Schedule of amounts due from related parties | As of December 31, 2021 2022 Trip.com 17 73 Lianquan 49 46 Sheen Star 33 29 Cjia Group 29 28 Zhuchuang 27 24 Others 12 21 Allowance for expected credit losses (17) (37) Total 150 184 |
Schedule of amounts due to related party | As of December 31, 2021 2022 Trip.com 44 38 Cjia Group 101 26 Huali Jinshi 47 — Others 5 7 Total 197 71 |
Schedule of significant related party transactions | Years Ended December 31, 2020 2021 2022 Commission expenses to Trip.com 78 99 55 Lease expenses to Trip.com 18 19 19 Lease expenses to Cjia Group — 12 31 Service fee to Huali Jinshi 41 42 — Service fee to Cjia Group 17 — — Brand use fee, reservation fee and other related service fee to Accor 17 22 — Goods sold and service provided to Cjia Group 18 11 4 Early termination compensation of sublease to Cjia Group 8 — — Loan payment to Hitone — 5 — Service fee from Trip.com 66 62 93 Service fee from Accor 3 3 — Service fee from Sheen Star 4 5 4 Sublease income from Lianquan 12 10 12 Sublease income from Cjia Group 9 6 5 Early termination compensation of franchise agreement from China Hospitality JV 26 — — Purchase of property and equipment from Cjia Group 11 — — 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 | 12 Months Ended | ||||
Jun. 30, 2021 | Sep. 30, 2020 CNY (¥) | Dec. 31, 2022 item $ / shares | Dec. 31, 2021 item $ / shares | May 31, 2021 $ / shares | Jan. 02, 2020 | |
Organization and presentation activities | ||||||
Proceeds from issuance of ordinary shares in Hong Kong public offering | ¥ | ¥ 6,018 | |||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 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 | 704 | 738 | ||||
Manachised hotels | ||||||
Organization and presentation activities | ||||||
Number of hotels | 7,617 | 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 | 222 | 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 - Variable Interest Entities (Details) - entity | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
VIEs | ||
Variable Interest Entities | ||
Number of entities consolidated | 7 | 7 |
SUMMARY OF PRINCIPAL ACCOUNTI_5
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Property and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Leasehold improvements | |
Property and equipment, net | |
Property and equipment, estimated useful life | Shorter of the lease term or their estimated useful lives |
Buildings | Minimum | |
Property and equipment, net | |
Property and equipment, estimated useful life | 20 years |
Buildings | Maximum | |
Property and equipment, net | |
Property and equipment, estimated useful life | 40 years |
Furniture, fixtures and equipment | Minimum | |
Property and equipment, net | |
Property and equipment, estimated useful life | 1 year |
Furniture, fixtures and equipment | Maximum | |
Property and equipment, net | |
Property and equipment, estimated useful life | 20 years |
Motor vehicles | |
Property and equipment, net | |
Property and equipment, estimated useful life | 5 years |
SUMMARY OF PRINCIPAL ACCOUNTI_6
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Intangible assets (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Jan. 02, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 25 years | ||
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Operating Income (Expense), Net | Other Operating Income (Expense), Net | |
Impairment loss on intangible assets | ¥ 245 | ||
Minimum | Manachised and franchised hotels | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 10 years | ||
Minimum | Non-compete agreement | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 2 years | ||
Minimum | Purchased software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 3 years | ||
Minimum | Other intangible assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 2 years | ||
Maximum | Manachised and franchised hotels | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 20 years | ||
Maximum | Non-compete agreement | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 10 years | ||
Maximum | Purchased software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 10 years | ||
Maximum | Other intangible assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Remaining contract terms | 15 years |
SUMMARY OF PRINCIPAL ACCOUNTI_7
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Land use rights (Details) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) item | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Accounting policies | |||
Long-lived asset impairment loss | ¥ 297 | ¥ 157 | ¥ 180 |
Impairment Long Lived Asset Held For Use Statement Of Income Or Comprehensive Income Extensible Enumeration Not Disclosed Flag | true | ||
Number of reporting units | item | 2 | ||
Net revenues | ¥ 13,862 | 12,785 | 10,196 |
Advertising related expenses | 128 | 165 | 150 |
Loyalty program | |||
Accounting policies | |||
Net revenues | ¥ 267 | ¥ 243 | ¥ 223 |
Minimum | |||
Accounting policies | |||
Estimated membership duration | 2 years | ||
Minimum | Legacy Huazhu | |||
Accounting policies | |||
Initial lease term | 10 years | ||
Minimum | Legacy DH | |||
Accounting policies | |||
Initial lease term | 20 years | ||
Minimum | Land use rights | |||
Accounting policies | |||
Remaining contractual term | 30 years | ||
Maximum | |||
Accounting policies | |||
Estimated membership duration | 5 years | ||
Maximum | Legacy Huazhu | |||
Accounting policies | |||
Initial lease term | 20 years | ||
Maximum | Legacy DH | |||
Accounting policies | |||
Initial lease term | 25 years | ||
Maximum | Land use rights | |||
Accounting policies | |||
Remaining contractual term | 50 years |
SUMMARY OF PRINCIPAL ACCOUNTI_8
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Fair value (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Fair value | ||||
Total equity securities with readily determinable fair values | ¥ 1,788 | ¥ 2,589 | $ 259 | |
Operating lease right-of-use assets | 28,970 | 29,942 | 4,200 | |
Impairment charge of intangible assets | 245 | |||
Goodwill, Impairment Loss | ¥ 437 | |||
Property and equipment, impairment loss | 24 | |||
Operating lease right-of-use assets, impairment loss | 48 | |||
Long-term investment, impairment loss | 63 | |||
Goodwill | 5,195 | 5,132 | 4,988 | $ 753 |
Long-lived asset impairment loss | 297 | 157 | 180 | |
Convertible Debt | ||||
Fair value | ||||
Long-term bank borrowings, current portion | 3,029 | |||
Carrying amounts of convertible senior notes | 3,463 | 6,186 | 6,318 | |
Fair value of convertible senior notes | 4,283 | 6,681 | ¥ 7,747 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Fair value | ||||
Total equity securities with readily determinable fair values | 1,788 | 2,589 | ||
Employee benefit plan assets | 13 | 5 | ||
Recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Fair value | ||||
Available-for-sale debt securities | 220 | |||
Recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Fair value | ||||
Available-for-sale debt securities | 296 | |||
Non-recurring basis | ||||
Fair value | ||||
Property and equipment | 33 | |||
Intangible assets | 2,556 | |||
Operating lease right-of-use assets | 88 | |||
Non-recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Fair value | ||||
Property and equipment | 38 | |||
Intangible assets | 388 | |||
Long-term investments | 11 | |||
Operating lease right-of-use assets | 336 | |||
Non-recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Fair value | ||||
Property and equipment | 38 | |||
Intangible assets | 388 | |||
Long-term investments | 11 | |||
Operating lease right-of-use assets | 336 | |||
Non-recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Fair value | ||||
Property and equipment | 218 | 33 | ||
Intangible assets | 170 | 2,556 | ||
Long-term investments | 27 | |||
Operating lease right-of-use assets | ¥ 76 | ¥ 88 | ||
Revenue growth rate | Minimum | ||||
Fair value | ||||
Measurement input | (15) | (15) | (15) | (15) |
Revenue growth rate | Maximum | ||||
Fair value | ||||
Measurement input | 4 | 4 | 4 | 4 |
Discount rate | Minimum | ||||
Fair value | ||||
Measurement input | 8.64 | 8.64 | 8.64 | 8.64 |
Discount rate | Maximum | ||||
Fair value | ||||
Measurement input | 12 | 12 | 12 | 12 |
SUMMARY OF PRINCIPAL ACCOUNTI_9
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Treasury shares (Details) | Dec. 30, 2022 $ / ¥ |
Translation into United States Dollars | |
Foreign exchange rate used to translate amounts denominated in RMB to US dollar | 6.8972 |
ACQUISITIONS - Citigo acquisiti
ACQUISITIONS - Citigo acquisition and Other acquisitions (Details) € in Millions, ¥ in Millions | 12 Months Ended | |||||
Apr. 30, 2021 CNY (¥) | Jan. 02, 2020 EUR (€) item | Jan. 02, 2020 CNY (¥) item | Dec. 31, 2022 CNY (¥) item | Dec. 31, 2021 CNY (¥) item | Dec. 31, 2020 CNY (¥) item | |
CitiGo Hotels | ||||||
Acquisitions | ||||||
Percentage of ownership interest acquired | 100% | |||||
Aggregated consideration | ¥ 783 | |||||
Cash consideration | ¥ 749 | |||||
Other acquisitions | ||||||
Acquisitions | ||||||
Cash consideration | ¥ 9 | ¥ 51 | ¥ 26 | |||
Number of hotels acquired | item | 7 | 3 | 3 | |||
Deutsche Hospitality | ||||||
Acquisitions | ||||||
Percentage of ownership interest acquired | 100% | 100% | ||||
Aggregated consideration | € 720 | ¥ 5,624 | ||||
Number of brands in which entity is operating | item | 5 | 5 |
ACQUISITIONS - Allocation of pu
ACQUISITIONS - Allocation of purchase price (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||||
Jan. 02, 2020 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Apr. 30, 2021 CNY (¥) | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Goodwill | ¥ 5,195 | ¥ 5,132 | ¥ 4,988 | $ 753 | ||
Estimated useful life of intangible assets | 25 years | |||||
Manachised and franchised hotels | Minimum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of intangible assets | 10 years | |||||
Manachised and franchised hotels | Maximum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of intangible assets | 20 years | |||||
Non-compete agreement | Minimum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of intangible assets | 2 years | |||||
Non-compete agreement | Maximum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of intangible assets | 10 years | |||||
Deutsche Hospitality | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Current assets | ¥ 785 | |||||
Property and equipment, net | 586 | |||||
Operating lease right-of-use assets | 8,616 | |||||
Other non-current assets | 280 | |||||
Intangible assets, finite life | 270 | |||||
Goodwill | 2,694 | |||||
Operating lease liabilities, current | (296) | |||||
Others | (784) | |||||
Operating lease liabilities, non-current | (8,553) | |||||
Other noncurrent liabilities | (330) | |||||
Deferred tax liabilities | (1,304) | |||||
Financing lease right-of-use assets | 1,794 | |||||
Deferred tax assets | 170 | |||||
Finance lease liabilities, current | (21) | |||||
Finance lease liabilities, non-current | (2,166) | |||||
Total | 5,624 | |||||
Deutsche Hospitality | Minimum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of property, plant and equipment | 2 years | |||||
Deutsche Hospitality | Non-compete agreement | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Intangible assets, finite life | ¥ 10 | |||||
Estimated useful life of intangible assets | 2 years | |||||
Deutsche Hospitality | Brand names | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Intangible assets, Indefinite life | ¥ 3,873 | |||||
CitiGo Hotels | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Current assets | ¥ 34 | |||||
Property and equipment, net | 296 | |||||
Operating lease right-of-use assets | 1,119 | |||||
Other non-current assets | 33 | |||||
Goodwill | 372 | |||||
Operating lease liabilities, current | (153) | |||||
Others | (23) | |||||
Operating lease liabilities, non-current | (987) | |||||
Other noncurrent liabilities | (5) | |||||
Deferred tax liabilities | (33) | |||||
Noncontrolling interest | (21) | |||||
Total | 783 | |||||
CitiGo Hotels | Minimum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of property, plant and equipment | 5 years | |||||
CitiGo Hotels | Maximum | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Estimated useful life of property, plant and equipment | 12 years | |||||
CitiGo Hotels | Franchise agreement | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Intangible assets, finite life | 61 | |||||
CitiGo Hotels | Brand names | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | ||||||
Intangible assets, Indefinite life | ¥ 90 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregated Revenues (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregated Revenues | |||
Total revenues | ¥ 13,862 | ¥ 12,785 | ¥ 10,196 |
Leased and owned hotels | |||
Disaggregated Revenues | |||
Total revenues | 9,148 | 8,118 | 6,908 |
Room Revenues | |||
Disaggregated Revenues | |||
Total revenues | 7,571 | 7,024 | 5,735 |
Food and Beverage Revenues | |||
Disaggregated Revenues | |||
Total revenues | 1,049 | 694 | 608 |
Others | |||
Disaggregated Revenues | |||
Total revenues | 528 | 400 | 565 |
Manachised and franchised hotels | |||
Disaggregated Revenues | |||
Total revenues | 4,405 | 4,404 | 3,136 |
Initial one-time license/franchise fee | |||
Disaggregated Revenues | |||
Total revenues | 106 | 109 | 110 |
On-going management and service/royalty fees | |||
Disaggregated Revenues | |||
Total revenues | 1,375 | 1,479 | 1,057 |
Central reservation system usage fees, other system maintenance and support fees | |||
Disaggregated Revenues | |||
Total revenues | 1,262 | 1,399 | 908 |
Reimbursements for hotel manager fees | |||
Disaggregated Revenues | |||
Total revenues | 1,103 | 897 | 657 |
Other fees | |||
Disaggregated Revenues | |||
Total revenues | 559 | 520 | 404 |
Others | |||
Disaggregated Revenues | |||
Total revenues | ¥ 309 | ¥ 263 | ¥ 152 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Contract with Customer, Liability | |||
Current contract liabilities | ¥ 1,308 | $ 190 | ¥ 1,366 |
Long-term contract liabilities | 828 | $ 120 | 785 |
Total contract liabilities | ¥ 2,136 | ¥ 2,151 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances - Contract liabilities (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contract with Customer, Liability | ||
Total contract liabilities | ¥ 2,136 | ¥ 2,151 |
Revenue recognized | ¥ 655 | ¥ 613 |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Cost: | |||
Property and equipment, gross | ¥ 14,318 | ¥ 13,123 | |
Less: Accumulated depreciation | 7,727 | 6,845 | |
Property and equipment net excluding construction in process | 6,591 | 6,278 | |
Construction in progress | 193 | 778 | |
Property and equipment, net | 6,784 | $ 984 | 7,056 |
Buildings | |||
Cost: | |||
Property and equipment, gross | 843 | 305 | |
Leasehold improvements | |||
Cost: | |||
Property and equipment, gross | 10,952 | 10,467 | |
Furniture, fixtures and equipment | |||
Cost: | |||
Property and equipment, gross | 2,520 | 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 | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |||
Depreciation expense | ¥ 1,312 | ¥ 1,352 | ¥ 1,219 |
INTANGIBLE ASSETS, NET - Schedu
INTANGIBLE ASSETS, NET - Schedule (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) item | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Intangible assets, net | ||||
Intangible assets, gross | ¥ 5,876 | ¥ 5,791 | ||
Less: Accumulated amortization | 178 | 163 | ||
Less: Accumulated impairment loss | 420 | 243 | ||
Total | 5,278 | 5,385 | $ 765 | |
Amortization expense of intangible assets | ¥ 45 | ¥ 65 | ¥ 62 | |
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Operating Income (Expense), Net | Other Operating Income (Expense), Net | ||
Legacy DH | ||||
Intangible assets, net | ||||
Number of brand names acquired | item | 3 | |||
Manachised and franchised hotels | ||||
Intangible assets, net | ||||
Intangible assets, gross | ¥ 368 | ¥ 366 | ||
Purchased software | ||||
Intangible assets, net | ||||
Intangible assets, gross | 128 | 142 | ||
Other intangible assets | ||||
Intangible assets, net | ||||
Intangible assets, gross | 77 | 81 | ||
Brand names | ||||
Intangible assets, net | ||||
Intangible assets, gross | 5,111 | 5,010 | ||
One brand name | ||||
Intangible assets, net | ||||
Impairment loss recognized | 167 | 160 | ||
Master brand agreement | ||||
Intangible assets, net | ||||
Intangible assets, gross | ¥ 192 | ¥ 192 |
INTANGIBLE ASSETS, NET - Amorti
INTANGIBLE ASSETS, NET - Amortization (Details) - Intangible assets excluding brand names and master brand agreement ¥ in Millions | Dec. 31, 2022 CNY (¥) |
Amortization for Intangible Assets | |
2023 | ¥ 36 |
2024 | 33 |
2025 | 31 |
2026 | 29 |
2027 | 28 |
Thereafter | 151 |
Total | ¥ 308 |
INVESTMENTS - Schedule (Details
INVESTMENTS - Schedule (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
INVESTMENTS | |||
Total equity securities with readily determinable fair values | ¥ 1,788 | $ 259 | ¥ 2,589 |
Equity securities without readily determinable fair values: | 257 | 293 | |
Equity-method investments: | 1,392 | 1,452 | |
Investments | 1,945 | 1,965 | |
Accor | |||
INVESTMENTS | |||
Total equity securities with readily determinable fair values | 1,701 | 2,508 | |
Other marketable securities | |||
INVESTMENTS | |||
Total equity securities with readily determinable fair values | 87 | 81 | |
Cjia/Cjia Group | |||
INVESTMENTS | |||
Equity securities without readily determinable fair values: | 138 | 168 | |
Available-for-sale debt securities: | 296 | 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: | 65 | 71 | |
AAPC LUB | |||
INVESTMENTS | |||
Equity-method investments: | 494 | 525 | |
Hotel related funds | |||
INVESTMENTS | |||
Equity-method investments: | 443 | 488 | |
China Hospitality JV | |||
INVESTMENTS | |||
Equity-method investments: | 67 | 99 | |
Zleep | |||
INVESTMENTS | |||
Equity-method investments: | 70 | 68 | |
Commerz Real Institute | |||
INVESTMENTS | |||
Equity-method investments: | 80 | 85 | |
Other investments | |||
INVESTMENTS | |||
Equity-method investments: | ¥ 238 | ¥ 187 |
INVESTMENTS - Equity securities
INVESTMENTS - Equity securities with readily determinable fair values (Details) - Accor - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity securities with readily determinable fair values | |||
Number of ordinary shares acquired | 0 | 1,180,000 | 8,737,987 |
Number of ordinary shares sold | 2,397,596 | 5,172,458 | |
Gain realized | ¥ 74 | ¥ 209 | |
Number of shares held in investment | 9,814,956 | ||
Investment in equity securities (in percentage) | 5% | ||
Unrealized losses from fair value | ¥ 358 | ¥ 94 |
INVESTMENTS - Equity securiti_2
INVESTMENTS - Equity securities without readily determinable fair values (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 EUR (€) | Dec. 31, 2020 CNY (¥) | |
INVESTMENTS | ||||||
Equity securities without readily determinable fair values: | ¥ 257 | ¥ 293 | ||||
Investment loss (income) | (321) | $ (47) | 188 | ¥ (284) | ||
Impairment of equity securities with out readily determinable fair value | 7 | 0 | ||||
Preferred shares | ||||||
INVESTMENTS | ||||||
Equity securities without readily determinable fair values: | 138 | |||||
Cjia/Cjia Group | ||||||
INVESTMENTS | ||||||
Equity securities without readily determinable fair values: | ¥ 138 | ¥ 168 | ||||
Commerz Real Institute | ||||||
INVESTMENTS | ||||||
Consideration for purchase of investments | € | € 12 | |||||
OYO | ||||||
INVESTMENTS | ||||||
Equity interest owned (as a percent) | 1% | 1% | ||||
Percentage of equity interest acquired | 1% | |||||
Equity securities without readily determinable fair values: | ¥ 54 | ¥ 54 | ||||
Investment loss (income) | ¥ 52 |
INVESTMENTS - Equity-method inv
INVESTMENTS - Equity-method investments (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||
Feb. 28, 2019 | Jan. 31, 2016 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 EUR (€) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2018 | |
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | ¥ (36) | $ (5) | ¥ (60) | ¥ (140) | ||||
Equity-method investments: | 1,392 | 1,452 | ||||||
Impairment loss | 63 | |||||||
Covid 19 | Equity-method investments | ||||||||
Equity-method investments | ||||||||
Impairment loss | 20 | 63 | ||||||
AAPC LUB | ||||||||
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | 16 | 35 | 21 | |||||
Received cash dividend | 47 | 0 | 0 | |||||
Percentage of equity interest acquired | 28% | |||||||
Equity-method investments: | 494 | 525 | ||||||
China Hospitality JV | ||||||||
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | 22 | (4) | (12) | |||||
Received cash dividend | 54 | |||||||
Percentage of equity interest acquired | 20% | |||||||
Equity-method investments: | 67 | 99 | ||||||
Commerz Real Institute | ||||||||
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | (7) | (1) | ||||||
Equity-method investments: | 80 | ¥ 85 | ||||||
Equity method investment, ownership percentage | 34% | |||||||
Consideration for purchase of investments | € | € 12 | |||||||
Hotel related funds | ||||||||
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | (31) | ¥ (55) | ¥ (16) | |||||
Equity-method investments: | 443 | 488 | ||||||
Maximum potential loss, in loss of value of interests in investments | 443 | |||||||
Zleep | ||||||||
Equity-method investments | ||||||||
Income (Loss) from Equity Method Investments | 0 | (12) | ||||||
Percentage of equity interest acquired | 51% | |||||||
Equity-method investments: | ¥ 70 | ¥ 68 |
GOODWILL - Changes in carrying
GOODWILL - Changes in carrying amount (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
GOODWILL | ||||
Gross carrying values | ¥ 5,606 | ¥ 5,532 | ¥ 5,432 | |
Accumulated impairment loss | (411) | (400) | (444) | |
Goodwill | 5,195 | 5,132 | 4,988 | $ 753 |
Goodwill acquired during the year (Note 3) | 4 | 378 | ||
Net foreign exchange-goodwill | 70 | (278) | ||
Net foreign exchange-impairment loss | ¥ (11) | ¥ 44 | ||
Hypothetical decline in projected cash flow or increase in the discount rate (as a percent) | 5% | 5% | ||
Hypothetical decline in projected cash flow (as a percent) | 5% | |||
Hypothetical goodwill impairment in 5% decline in projected cash flow | ¥ 313 | |||
Hypothetical goodwill impairment in 5% increase in discount rate | 359 | |||
Legacy Huazhu | ||||
GOODWILL | ||||
Gross carrying values | ¥ 3,036 | 3,036 | 2,664 | |
Accumulated impairment loss | (4) | (4) | (4) | |
Goodwill | ¥ 3,032 | 3,032 | 2,660 | |
Goodwill acquired during the year (Note 3) | ¥ 372 | |||
Percentage of fair value exceeded the carrying value | 100% | 100% | 100% | |
Legacy DH | ||||
GOODWILL | ||||
Gross carrying values | ¥ 2,570 | ¥ 2,496 | 2,768 | |
Accumulated impairment loss | (407) | (396) | (440) | |
Goodwill | 2,163 | 2,100 | 2,328 | |
Goodwill acquired during the year (Note 3) | 4 | 6 | ||
Net foreign exchange-goodwill | 70 | (278) | ||
Net foreign exchange-impairment loss | (11) | 44 | ||
Impairment loss | ¥ 0 | ¥ 0 | ¥ 437 | |
Percentage of fair value exceeded the carrying value | 25% | 13% | 25% | |
Fair value exceeded carrying value | ¥ 769 | ¥ 421 |
DEBT - Components (Details)
DEBT - Components (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
DEBT | |||
Short-term debt | ¥ 3,288 | $ 477 | ¥ 6,232 |
Total | 3,288 | 6,232 | |
Long-term debt, non-current portion | 6,635 | $ 962 | 3,565 |
Long-term debt | 6,635 | 3,565 | |
Bank borrowings | |||
DEBT | |||
Long-term debt, current portion | 208 | 2,464 | |
Long-term debt, non-current portion | 2,929 | 211 | |
Convertible Debt [Member] | |||
DEBT | |||
Long-term debt, current portion | 3,029 | ||
Long-term debt, non-current portion | 3,463 | 3,158 | |
FF&E liability | |||
DEBT | |||
Long-term debt, current portion | 45 | 47 | |
Long-term debt, non-current portion | 228 | 180 | |
Others | |||
DEBT | |||
Long-term debt | 15 | 16 | |
Bank borrowings | |||
DEBT | |||
Short-term debt | ¥ 3,035 | ¥ 692 |
DEBT - Bank borrowings (Details
DEBT - Bank borrowings (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||
Oct. 31, 2022 USD ($) | Aug. 31, 2022 EUR (€) | Jan. 31, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | Oct. 31, 2022 CNY (¥) | Oct. 31, 2022 USD ($) | Dec. 31, 2021 EUR (€) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 EUR (€) | |
Debt | ||||||||||||||
Long-term debt, non-current portion | ¥ 6,635 | ¥ 3,565 | $ 962 | |||||||||||
Long-term debt | ¥ | 6,635 | 3,565 | ||||||||||||
Short-term Debt | 3,288 | 6,232 | 477 | |||||||||||
Note repurchased | ¥ 3,406 | $ 494 | 0 | |||||||||||
Euro | ||||||||||||||
Debt | ||||||||||||||
Percentage points added to the reference rate | 1.55% | |||||||||||||
RMB | ||||||||||||||
Debt | ||||||||||||||
Percentage points added to the reference rate | 0.15% | |||||||||||||
One year term facility | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | ¥ | ¥ 1,000 | |||||||||||||
Term of debt instrument | 1 year | |||||||||||||
Credit facility drawn down amount | $ | $ 65 | |||||||||||||
Term Facility Expiring December 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 440 | |||||||||||||
Bank borrowings entered in August 2022 | ||||||||||||||
Debt | ||||||||||||||
Weighted average interest rate (as a percent) | 3.01% | 3.01% | 3.01% | |||||||||||
Repayment of line of credit facility | ¥ | ¥ 0 | |||||||||||||
Long-term facility entered in August 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 220 | |||||||||||||
Term of debt instrument | 3 years | |||||||||||||
Credit facility drawn down amount | € 220 | |||||||||||||
Term facility entered in August 2022 | RMB | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 110 | |||||||||||||
Credit facility drawn down amount | 110 | |||||||||||||
Revolving credit facility entered in August 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 70 | |||||||||||||
Term of debt instrument | 35 months | |||||||||||||
Credit facility drawn down amount | € 70 | |||||||||||||
Revolving Credit Facility Expiring December 2022 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | € 338 | € 338 | $ 500 | |||||||||||
One-Year Uncommitted Term Loan | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | $ | $ 123 | |||||||||||||
Term of debt instrument | 1 year | |||||||||||||
Fixed interest rate (as a percent) | 5.40% | 5.40% | ||||||||||||
Credit facility drawn down amount | $ | $ 121 | |||||||||||||
Short-term Debt | $ | $ 121 | |||||||||||||
Syndicated Loan Facility Expiring in December 2032 | ||||||||||||||
Debt | ||||||||||||||
Maximum borrowing amount | ¥ | ¥ 650 | |||||||||||||
Long-term debt | ¥ | ¥ 53 | ¥ 53 | ||||||||||||
Term of debt instrument | 12 years | |||||||||||||
Weighted average interest rate (as a percent) | 4.19% | 4.19% | 4.19% | 4.41% | ||||||||||
Interest capitalized amount | ¥ | ¥ 2 | ¥ 1 |
DEBT - ADS Lending Arrangement
DEBT - ADS Lending Arrangement (Details) - ADS Lending Arrangement - $ / shares | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2021 | Dec. 31, 2020 | May 31, 2018 | Apr. 30, 2018 | |
Debt Instrument [Line Items] | |||||
Number of Loaned ADS lent | 2,606,278 | ||||
ADS par value per share | $ 0.0004 | ||||
ADS to ordinary share ratio | 1 | 4 | |||
Loand ADS outstanding | 10,425,112 | 10,425,112 |
DEBT - Capped Call Options (Det
DEBT - Capped Call Options (Details) $ in Millions | 1 Months Ended |
Jun. 30, 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) $ / shares in Units, ¥ in Thousands | 12 Months Ended | |||||||||
May 12, 2020 CNY (¥) | May 12, 2020 USD ($) | Nov. 03, 2017 USD ($) $ / shares | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2020 CNY (¥) shares | Nov. 01, 2022 USD ($) | May 26, 2020 USD ($) | May 12, 2020 USD ($) $ / shares | |
DEBT | ||||||||||
Note repurchased | ¥ 3,406,000 | $ 494,000,000 | ¥ 0 | |||||||
Convertible Senior Notes Due 2022 | ||||||||||
DEBT | ||||||||||
Number of shares converted | shares | 1,340 | 2,020 | ||||||||
Amount converted | ¥ | ¥ 0 | ¥ 0 | ||||||||
Convertible Debt | Convertible Senior Notes Due 2022 | ||||||||||
DEBT | ||||||||||
Aggregate principal amount | $ 475,000,000 | |||||||||
Fixed interest rate (as a percent) | 0.375% | |||||||||
Initial conversion price | $ / shares | $ 182.25 | |||||||||
Repurchase price as a percentage of principal amount | 100% | |||||||||
Initial conversion rate per ADS | 5.4869 | |||||||||
Increment used for debt conversion | $ 1,000 | |||||||||
Number of shares converted | shares | 134 | 202 | ||||||||
Amount converted | ¥ | ¥ 40 | ¥ 60 | ||||||||
Notes redeemed | $ 475,000,000 | |||||||||
Convertible Debt | 2026 Notes | ||||||||||
DEBT | ||||||||||
Aggregate principal amount | $ 450,000,000 | |||||||||
Additional aggregate maximum amount of notes to purchase | $ 50,000,000 | |||||||||
Fixed interest rate (as a percent) | 3% | 3% | ||||||||
Proceeds from issuance of debt | ¥ 3,499,000 | $ 493,000,000 | ||||||||
Debt issuance costs | ¥ 49,000 | $ 7,000,000 | ||||||||
Initial conversion price | $ / shares | $ 23.971 | |||||||||
Repurchase price as a percentage of principal amount | 100% | 100% | ||||||||
Initial conversion rate per ADS | 41.72 | 41.72 | ||||||||
Increment used for debt conversion | $ 1,000 |
DEBT - Schedule of contractual
DEBT - Schedule of contractual maturities of the group's long-term debt (Details) ¥ in Millions | Dec. 31, 2022 CNY (¥) |
Contractual maturities | |
2023 | ¥ 3,287 |
2024 | 3,755 |
2025 | 2,735 |
2026 | 34 |
2027 | 28 |
Thereafter | 100 |
Total | ¥ 9,939 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Payable to franchisees | ¥ 652 | ¥ 710 | |
Other payables | 850 | 535 | |
Accrued utilities and other accrued expenses | 332 | 209 | |
Liabilities related to customer loyalty program | 166 | 135 | |
Value-added tax, other tax and surcharge payables | 234 | 132 | |
Advance from noncontrolling interest holders | 103 | 117 | |
Total | ¥ 2,337 | $ 339 | ¥ 1,838 |
HOTEL OPERATING COSTS (Details)
HOTEL OPERATING COSTS (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
HOTEL OPERATING COSTS. | ||||
Rents | ¥ 3,927 | ¥ 3,900 | ¥ 3,485 | |
Utilities | 603 | 507 | 478 | |
Personnel costs | 3,683 | 3,022 | 2,501 | |
Depreciation and amortization | 1,414 | 1,413 | 1,316 | |
Consumable, food and beverage | 1,026 | 969 | 885 | |
Others | 1,607 | 1,471 | 1,064 | |
Total | ¥ 12,260 | $ 1,777 | ¥ 11,282 | ¥ 9,729 |
PRE-OPENING EXPENSES (Details)
PRE-OPENING EXPENSES (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
PRE-OPENING EXPENSES | ||||
Rents | ¥ 84 | ¥ 68 | ¥ 251 | |
Personnel costs | 5 | 5 | 15 | |
Others | 6 | 8 | 22 | |
Total | ¥ 95 | $ 14 | ¥ 81 | ¥ 288 |
SHARE-BASED COMPENSATION - Plan
SHARE-BASED COMPENSATION - Plan (Details) - shares | 12 Months Ended | |||||||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2015 | Aug. 31, 2010 | Sep. 30, 2009 | Oct. 31, 2008 | Jun. 30, 2007 | Feb. 28, 2007 | |
Share options | ||||||||
Share based compensation | ||||||||
Share options outstanding (in shares) | 0 | |||||||
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) | 277,921,390 | |||||||
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) - Restricted stocks ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) tranche $ / shares shares | Dec. 31, 2021 tranche $ / shares shares | Dec. 31, 2020 tranche shares | |
Number of Restricted Stocks | |||
Nonvested restricted stocks outstanding at the beginning of the period (in shares) | 53,696,490 | ||
Granted (in shares) | 39,153,240 | ||
Forfeited (in shares) | (2,157,320) | ||
Vested (in shares) | (9,462,340) | ||
Adjusted for performance conditions (in shares) | (4,290,920) | ||
Nonvested restricted stocks outstanding at the end of the period (in shares) | 76,939,150 | 53,696,490 | |
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 | 2.53 | ||
Forfeited (in dollars per shares) | $ / shares | 1.41 | ||
Vested (in dollars per shares) | $ / shares | 1.40 | ||
Adjusted for performance conditions (in dollars per share) | $ / shares | 0.63 | ||
Nonvested restricted stocks outstanding at the end of the period (in dollars per shares) | $ / shares | $ 1.88 | $ 1.20 | |
Total unrecognized compensation expense | ¥ | $ 823 | ||
Weighted-average period for recognition of unrecognized compensation costs | 3 years 7 months 13 days | ||
Performance Condition | |||
Share based compensation | |||
Number of tranche | tranche | 10 | 10 | 10 |
Number of Restricted Stocks | |||
Granted (in shares) | 31,683,100 | 0 | 0 |
Performance Condition | Second anniversary of the stated vesting commencement date | |||
Share based compensation | |||
Share-based payment award, vesting percentage | 50% | ||
Performance Condition | Vesting ratably over the following two years | |||
Share based compensation | |||
Share-based payment award, vesting percentage | 50% | ||
Period for remaining percentage vested | 2 years |
SHARE-BASED COMPENSATION - Reco
SHARE-BASED COMPENSATION - Recognized share-based compensation expenses (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Recognized share-based compensation expenses | ¥ 87 | ¥ 109 | ¥ 122 |
Hotel operating costs | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Recognized share-based compensation expenses | 33 | 39 | 42 |
Selling and marketing expenses | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Recognized share-based compensation expenses | 4 | 4 | 4 |
General and administrative expenses | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Recognized share-based compensation expenses | ¥ 50 | ¥ 66 | ¥ 76 |
EARNINGS (LOSSES) PER SHARE (De
EARNINGS (LOSSES) PER SHARE (Details) ¥ / shares in Units, ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2022 $ / shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
EARNINGS (LOSSES) PER SHARE | ||||
Net loss attributable to ordinary shareholders - basic | ¥ | ¥ (1,821) | ¥ (465) | ¥ (2,192) | |
Net loss attributable to ordinary shareholders - diluted | ¥ | ¥ (1,821) | ¥ (465) | ¥ (2,192) | |
Weighted average ordinary shares outstanding - basic | shares | 3,111,196,757 | 3,114,124,244 | 2,927,398,409 | |
Weighted average ordinary shares outstanding - diluted | shares | 3,111,196,757 | 3,114,124,244 | 2,927,398,409 | |
Basic earnings (losses) per share | (per share) | $ (0.08) | ¥ (0.59) | ¥ (0.15) | ¥ (0.75) |
Diluted earnings (losses) per share | (per share) | $ (0.08) | ¥ (0.59) | ¥ (0.15) | ¥ (0.75) |
EARNINGS (LOSSES) PER SHARE - C
EARNINGS (LOSSES) PER SHARE - Computation of diluted earnings (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
EARNINGS (LOSSES) PER SHARE | |||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 197,540,150 | 280,523,900 | 297,781,490 |
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 | 76,939,150 | 53,696,490 | 70,954,080 |
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 | 120,601,000 | 226,827,410 | 226,827,410 |
SEGMENT (Details)
SEGMENT (Details) | 1 Months Ended |
Jan. 31, 2020 segment | |
SEGMENT | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
SEGMENT - Segment information (
SEGMENT - Segment information (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
SEGMENT | ||||
Total revenues | ¥ 13,862 | $ 2,010 | ¥ 12,785 | ¥ 10,196 |
Operating costs and expenses | 14,705 | 2,132 | 13,607 | 11,925 |
Income (Losses) from operations | (294) | (43) | 164 | (1,686) |
Net (loss) income attributable to H World Group Limited | (1,821) | (264) | (465) | (2,192) |
Interest income | 87 | 13 | 89 | 119 |
Interest expense | 409 | 59 | 405 | 533 |
Income tax (benefit) expense | 207 | 30 | 12 | (215) |
Depreciation and amortization | 1,456 | 211 | 1,503 | 1,362 |
EBITDA | 164 | 1,366 | (631) | |
Share-based compensation | 87 | $ 13 | 109 | 122 |
Legacy Huazhu | ||||
SEGMENT | ||||
Total revenues | 10,655 | 11,247 | 8,664 | |
EBITDA | 282 | 1,827 | 736 | |
Legacy DH | ||||
SEGMENT | ||||
Total revenues | 3,207 | 1,538 | 1,532 | |
EBITDA | ¥ (118) | ¥ (461) | ¥ (1,367) |
SEGMENT - Total assets for oper
SEGMENT - Total assets for operating segments (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
SEGMENT | |||
Total assets | ¥ 61,507 | $ 8,918 | ¥ 63,269 |
Legacy Huazhu | |||
SEGMENT | |||
Total assets | 43,729 | 45,353 | |
Legacy DH | |||
SEGMENT | |||
Total assets | ¥ 17,778 | ¥ 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 | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
SEGMENT | ||||
Revenues | ¥ 13,862 | $ 2,010 | ¥ 12,785 | ¥ 10,196 |
Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill | 48,473 | 49,956 | ||
China | ||||
SEGMENT | ||||
Revenues | 10,637 | 11,231 | ||
Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill | 31,684 | 33,143 | ||
Germany | ||||
SEGMENT | ||||
Revenues | 2,458 | 1,263 | ||
Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill | 13,501 | 13,884 | ||
All others | ||||
SEGMENT | ||||
Revenues | 767 | 291 | ||
Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill | ¥ 3,288 | ¥ 2,929 |
CASH DIVIDEND (Details)
CASH DIVIDEND (Details) ¥ in Millions | Mar. 03, 2022 CNY (¥) $ / shares |
CASH DIVIDEND | |
Cash dividends declared (per share) | $ / shares | $ 0.021 |
Dividends payable | ¥ | $ 416 |
LEASES - Supplemental Informati
LEASES - Supplemental Information Related to Operating Leases (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease cost: | ||
Operating fixed lease cost | ¥ 4,186 | ¥ 4,074 |
- Amortization of ROU assets | 93 | 79 |
- Interest on lease liabilities | 116 | 96 |
Short term lease cost | 0 | 0 |
Operating variable lease cost | (144) | (25) |
Total lease cost | ¥ 4,251 | ¥ 4,224 |
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 | 6.28% | 6.31% |
Weighted average discount rate, Finance leases | 3.98% | 3.97% |
LEASES - Schedule Of Maturities
LEASES - Schedule Of Maturities Of Lease Liabilities (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Total Operating Leases | ||
2023 | ¥ 4,209 | ¥ 4,055 |
2024 | 4,196 | 4,066 |
2025 | 3,989 | 4,037 |
2026 | 3,793 | 3,871 |
2027 | 3,605 | 3,655 |
Thereafter | 24,547 | 26,035 |
Total minimum lease payments | 44,339 | 45,719 |
Less: amount representing interest | 12,929 | 14,079 |
Present value of minimum lease payments | 31,410 | 31,640 |
Total Finance Leases | ||
2023 | 142 | 140 |
2024 | 146 | 155 |
2025 | 146 | 157 |
2026 | 148 | 157 |
2027 | 151 | 158 |
Thereafter | 3,539 | 3,824 |
Total minimum lease payments | 4,272 | 4,591 |
Less: amount representing interest | 1,718 | 1,866 |
Present value of minimum lease payments | ¥ 2,554 | ¥ 2,725 |
LEASES - Schedule Of Future Min
LEASES - Schedule Of Future Minimum Payments (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Total Operating Leases | ||
2022 | ¥ 4,209 | ¥ 4,055 |
2023 | 4,196 | 4,066 |
2024 | 3,989 | 4,037 |
2025 | 3,793 | 3,871 |
2026 | 3,605 | 3,655 |
Thereafter | 24,547 | 26,035 |
Total minimum lease payments | 44,339 | 45,719 |
Less: amount representing interest | 12,929 | 14,079 |
Present value of minimum lease payments | 31,410 | 31,640 |
Total Finance Leases | ||
2022 | 142 | 140 |
2023 | 146 | 155 |
2024 | 146 | 157 |
2025 | 148 | 157 |
2026 | 151 | 158 |
Thereafter | 3,539 | 3,824 |
Total minimum lease payments | 4,272 | 4,591 |
Less: amount representing interest | 1,718 | 1,866 |
Present value of minimum lease payments | ¥ 2,554 | ¥ 2,725 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) contract | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
LEASES | |||
Sublease income | ¥ 119 | ¥ 134 | ¥ 112 |
Negative lease expense recognized under the relief using variable lease expense approach | ¥ 281 | ¥ 88 | |
Number of lease contracts | contract | 34 | ||
Non-cancellable lease contracts not reflected in consolidate balance sheets | ¥ 8,387 |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information related to leases (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for amounts included in the measurement of operating lease liabilities | ¥ 3,295 | ¥ 3,770 |
Cash paid for amounts included in the measurement of finance lease liabilities | 106 | 92 |
Non-cash right-of-use assets obtained in exchange for operating lease liabilities | 1,010 | 2,565 |
Non-cash right-of-use assets obtained in exchange for finance lease liabilities, net of reassessment of finance lease payments | 501 | |
Non-cash right-of-use assets obtained in exchange for finance lease liabilities, net of reassessment of finance lease payments | (161) | |
Non-cash right-of-use assets obtained in acquisition for operating lease | 171 | 1,710 |
Non-cash lease liabilities obtained in acquisition for operating lease | ¥ 144 | ¥ 1,692 |
INCOME TAXES (Details)
INCOME TAXES (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | 24 Months Ended | ||||||||
Dec. 31, 2022 | Dec. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2024 | Dec. 31, 2020 | |
Income tax | |||||||||||
Effective tax rate (as a percent) | 25% | 25% | 25% | 25% | |||||||
Percentage holding of the PRC company | 25 | 25 | |||||||||
Percentage of reduction for the first RMB 3 million of taxable income | 75% | ||||||||||
Income (loss) before income taxes | |||||||||||
Loss before income taxes | ¥ (1,606) | $ (233) | ¥ (408) | ¥ (2,279) | |||||||
Minimum [Member] | |||||||||||
Income tax | |||||||||||
Extended limitation tax evasion period | 5 years | 5 years | |||||||||
Maximum [Member] | |||||||||||
Income tax | |||||||||||
Extended limitation tax evasion period | 10 years | 10 years | |||||||||
China | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 25% | 25% | |||||||||
Preferential income tax rate (as a percent) | 20% | 20% | |||||||||
Percentage of reduction for the first RMB 1 million of taxable income | 87.50% | 87.50% | 87.50% | 75% | |||||||
Percentage of reduction for annual taxable income between RMB 1 million and 3 million | 75% | 75% | 50% | 50% | |||||||
Income (loss) before income taxes | |||||||||||
PRC including Hong Kong and Taiwan | ¥ (483) | ¥ 617 | (392) | ||||||||
GERMANY | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 15% | 15% | |||||||||
Effective income tax rate including solidarity surcharge | 15.825% | 15.825% | |||||||||
Income (loss) before income taxes | |||||||||||
Income taxes foreign | ¥ (410) | (632) | (1,606) | ||||||||
GERMANY | Minimum [Member] | |||||||||||
Income tax | |||||||||||
Municipal Trade Tax | 7% | 7% | |||||||||
GERMANY | Maximum [Member] | |||||||||||
Income tax | |||||||||||
Municipal Trade Tax | 21% | 21% | |||||||||
Countries Other Than China And Germany [Member] | |||||||||||
Income (loss) before income taxes | |||||||||||
Income taxes foreign | ¥ (713) | ¥ (393) | ¥ (281) | ||||||||
Countries Other Than China And Germany [Member] | Minimum [Member] | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 9% | 9% | |||||||||
Countries Other Than China And Germany [Member] | Maximum [Member] | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 25% | 25% | |||||||||
Jizhu Shanghai | China | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 15% | 15% | 15% | 15% | 15% | 15% | 15% | ||||
H-World Information | China | |||||||||||
Income tax | |||||||||||
Effective tax rate (as a percent) | 15% | 15% | 15% | ||||||||
Preferential income tax rate (as a percent) | 15% | 15% | 15% |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) ¥ / shares in Units, ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) ¥ / shares | Dec. 31, 2020 CNY (¥) ¥ / shares | |
Tax expense (benefit) | ||||
Current Tax | ¥ | ¥ 475 | ¥ 555 | ¥ 338 | |
Deferred Tax | (268) | $ (39) | (543) | (553) |
Total | ¥ 207 | $ 30 | ¥ 12 | ¥ (215) |
Reconciliation between the effective income tax rate and the PRC statutory income tax rate | ||||
PRC statutory tax rate | 25% | 25% | 25% | 25% |
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit | (6.00%) | (6.00%) | (6.00%) | (6.00%) |
Effect of different tax rate of group entities operating in other jurisdictions | (10.00%) | (10.00%) | (6.00%) | (2.00%) |
Effect of change in valuation allowance | (15.00%) | (15.00%) | (24.00%) | (10.00%) |
Effect of tax holiday | 1% | 1% | 9% | 1% |
Effect of cash dividends | (6.00%) | (6.00%) | (8.00%) | 0% |
Effect of excess tax benefit of share based rewards | (2.00%) | (2.00%) | 7% | 1% |
Effective tax rate | (13.00%) | (13.00%) | (3.00%) | 9% |
Aggregate amount and per share effect of the tax holidays | ||||
Aggregate amount | ¥ | ¥ 22 | ¥ 37 | ¥ 31 | |
Per share effect-basic | ¥ / shares | ¥ 0.01 | ¥ 0.01 | ¥ 0.01 | |
Per share effect-diluted | ¥ / shares | ¥ 0.01 | ¥ 0.01 | ¥ 0.01 |
INCOME TAXES - Deferred income
INCOME TAXES - Deferred income tax assets and liabilities (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred tax assets: | |||
Net loss carryforward | ¥ 1,678 | ¥ 1,271 | |
Deferred revenue | 349 | 326 | |
Long-term assets | 303 | 238 | |
Bad debt provision | 59 | 40 | |
Accrued payroll | 41 | 45 | |
Other accrued expenses | 3 | ||
Other accrued expenses | (9) | ||
Share-based compensation | 31 | 29 | |
Others | 150 | 150 | |
Valuation allowance | (731) | (466) | ¥ (369) |
Total deferred tax assets | 1,871 | 1,636 | |
Deferred tax liabilities: | |||
Fair value adjustment for Building, land use rights and identified intangible assets due to acquisition | 1,596 | 1,596 | |
Others | 40 | 31 | |
Total deferred tax liabilities | 1,636 | 1,627 | |
Net deferred tax assets | 235 | 9 | |
Analysis as: | |||
Deferred tax assets | 1,093 | 862 | |
Deferred tax liabilities | 858 | 853 | |
Net deferred tax assets | 235 | 9 | |
Movement of the valuation allowance | |||
Balance at the beginning of the year | (466) | (369) | (152) |
Provided | (338) | (151) | (249) |
Reversed | 41 | 37 | 32 |
Written off | 32 | 17 | |
Balance at the end of the year | ¥ (731) | ¥ (466) | ¥ (369) |
INCOME TAXES - Valuation allowa
INCOME TAXES - Valuation allowance (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2022 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2018 | |
Uncertain tax benefits | ||||||
Interest or penalty expense | ¥ 0 | ¥ 0 | ¥ 0 | |||
Roll-forward of the unrecognized tax benefits | ||||||
Beginning balance | ¥ 65 | 60 | 50 | 18 | ||
Addition for tax positions | 5 | 10 | 32 | |||
Ending balance | ¥ 65 | 60 | ¥ 50 | |||
Withholding income tax rate (as a percentage) | 10% | |||||
Withholding income tax rate with Hong Kong as holding company (as a percentage) | 5% | |||||
PRC dividend withholding tax accrued | ¥ 100 | ¥ 32 | ||||
Period of statute of limitations | 3 years | |||||
Period of statute of limitations, if the underpayment is more than the specified amount | 5 years | |||||
Minimum amount of underpayment of taxes for statute of limitations to be extended to five years | ¥ 0.1 | |||||
Period of statute of limitations for transfer pricing issues | 10 years | |||||
Tax liability reduction due to unrecognized tax benefits | ¥ 0.1 | |||||
Cash dividends declared | $ | $ 68 | |||||
GERMANY | ||||||
Valuation allowance | ||||||
Tax loss carryforwards | ¥ 1,555 | |||||
China | ||||||
Valuation allowance | ||||||
Tax loss carryforwards, expire between 2022 and 2026 | ¥ 4,901 | |||||
Maximum [Member] | ||||||
Uncertain tax benefits | ||||||
Market capitalization percent | 2% | |||||
Minimum [Member] | ||||||
Uncertain tax benefits | ||||||
Market capitalization percent | 0.50% |
EMPLOYEE BENEFIT PLANS - Amount
EMPLOYEE BENEFIT PLANS - Amounts recognized in the consolidated balance sheets (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position [Abstract] | |||||
Salary and welfare payables | ¥ 10 | ¥ 8 | |||
Retirement benefit obligation | 110 | 144 | $ 16 | ||
Liability in the balance sheet | 120 | 152 | |||
(Loss) gain arising from defined benefit plan, net of tax of RMB13,RMB4 and RMB10 for the year ended 2020, 2021 and 2022, respectively | ¥ 22 | $ 3 | ¥ 13 | ¥ (27) |
EMPLOYEE BENEFIT PLANS - Define
EMPLOYEE BENEFIT PLANS - Defined Contribution Plans (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
EMPLOYEE BENEFIT PLANS | |||
Total contribution for employee benefits | ¥ 645 | ¥ 544 | ¥ 283 |
Contributions recognized as expense | ¥ 74 | ¥ 55 | ¥ 129 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
RESTRICTED NET ASSETS | |||
Minimum required percentage of after tax profit appropriated to general reserve fund | 10% | ||
Threshold percentage of general reserve fund to registered capital | 50% | ||
Reserve funds not distributed as cash dividends | ¥ 904 | ¥ 826 | ¥ 771 |
Restricted share capital | 2,831 | ||
Restricted net assets not available for distribution to the Company in the form of dividends, loans or advances | ¥ 3,735 |
RELATED PARTY TRANSACTIONS AN_3
RELATED PARTY TRANSACTIONS AND BALANCES (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Due to related party | ¥ 71 | ¥ 197 | ||
Loan payment | 7 | $ 1 | 5 | ¥ 15 |
Allowance for expected credit losses | (37) | (17) | ||
Total | 184 | 150 | ||
Sheen Star | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 29 | 33 | ||
Sheen Star | Service fee | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 4 | 5 | 4 | |
Zhuchuang | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 24 | 27 | ||
Trip.com | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 73 | 17 | ||
Due to related party | 38 | 44 | ||
Trip.com | Commission expenses | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 55 | 99 | 78 | |
Trip.com | Lease expenses | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 19 | 19 | 18 | |
Trip.com | Service fee | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 93 | 62 | 66 | |
Cjia/Cjia Group | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 28 | 29 | ||
Due to related party | 26 | 101 | ||
Cjia/Cjia Group | Lease expenses | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 31 | 12 | ||
Cjia/Cjia Group | Service fee | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 17 | |||
Cjia/Cjia Group | Goods sold and service provided | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 4 | 11 | 18 | |
Cjia/Cjia Group | Sublease income | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 5 | 6 | 9 | |
Cjia/Cjia Group | Business acquisition of CitiGO | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 783 | |||
Cjia/Cjia Group | Business acquisition | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 51 | |||
Cjia/Cjia Group | Early termination compensation | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 8 | |||
Cjia/Cjia Group | Purchase of property, plant and equipment | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 11 | |||
Lianquan | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 46 | 49 | ||
Lianquan | Sublease income | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 12 | 10 | 12 | |
Others | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Amounts due from related parties | 21 | 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 | 42 | 41 | ||
Accor | Service fee | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Revenue from related parties | 3 | 3 | ||
Accor | Brand use fee, reservation fee and other related service fee | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | 22 | 17 | ||
Hitone | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Loan payment | ¥ 5 | |||
China Hospitality JV | Early termination compensation | ||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||
Expenses with related parties | ¥ 26 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) ¥ in Millions | Dec. 31, 2022 CNY (¥) |
COMMITMENTS AND CONTINGENCIES. | |
Purchase commitments expected to be incurred within one to two year related to leasehold improvements and installation of equipment for hotel operations | ¥ 294 |
Accrued contingent liabilities | ¥ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) € in Millions, ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||||
Apr. 30, 2023 CNY (¥) | Apr. 30, 2023 EUR (€) | Mar. 31, 2023 EUR (€) | Jan. 31, 2023 CNY (¥) shares | Jan. 31, 2023 USD ($) shares | Sep. 30, 2020 CNY (¥) | Dec. 31, 2020 shares | |
SUBSEQUENT EVENTS | |||||||
Number of shares issued | 234,854,500 | ||||||
Proceeds from shares issued | ¥ | ¥ 6,018 | ||||||
Subsequent Event | |||||||
SUBSEQUENT EVENTS | |||||||
Repaid outstanding principle revolving credit facility agreement | ¥ 1,608 | € 220 | |||||
Repaid interest for revolving credit facility | ¥ 525 | € 70 | |||||
Subsequent Event | Accor | |||||||
SUBSEQUENT EVENTS | |||||||
Net proceeds from sale of investment | € 300 | ¥ 2,185 | |||||
Subsequent Event | Follow-on public offering | ADSs | |||||||
SUBSEQUENT EVENTS | |||||||
Number of shares issued | 7,118,500 | 7,118,500 | |||||
Proceeds from shares issued | ¥ 2,012 | $ 300 |
SCHEDULE I FINANCIAL INFORMAT_2
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Details) ¥ in Millions, $ in Millions | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Mar. 03, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) |
Current assets: | |||||
Cash and cash equivalents | ¥ 3,583 | $ 520 | ¥ 5,116 | ¥ 7,026 | |
Other current assets | 809 | 117 | 847 | ||
Total current assets | 9,178 | 1,330 | 9,553 | ||
Total assets | 61,507 | 8,918 | 63,269 | ||
Current liabilities: | |||||
Short-term debt | 3,288 | 477 | 6,232 | ||
Dividends payable | ¥ 416 | ||||
Amount due to subsidiaries | 71 | 10 | 197 | ||
Accrued expenses and other current liabilities | 2,337 | 339 | 1,838 | ||
Total current liabilities | 13,146 | 1,906 | 15,279 | ||
Long-term debt | 6,635 | 962 | 3,565 | ||
Other non-current liabilities | 977 | 142 | 903 | ||
Total liabilities | 52,704 | 7,641 | 52,225 | ||
Equity: | |||||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,255,971,250 and 3,265,433,590 shares issued as of December 31, 2021 and 2022, and 3,120,746,090 and 3,112,413,730 shares outstanding as of December 31, 2021 and 2022, respectively) | 0 | 0 | 0 | ||
Treasury shares (30,974,040 and 153,019,860 shares as of December 31, 2021 and 2022, respectively) | (441) | (64) | (107) | ||
Additional paid-in capital | 10,138 | 1,470 | 9,964 | ||
Retained earnings | (1,200) | (174) | 1,037 | ||
Accumulated other comprehensive income | 232 | 34 | 41 | ||
Total equity | 8,729 | 1,266 | 10,935 | ||
Total liabilities and equity | 61,507 | 8,918 | 63,269 | ||
Parent Company | |||||
Current assets: | |||||
Cash and cash equivalents | 1,204 | 175 | 581 | ||
Short-term investments | 87 | 13 | 81 | ||
Other current assets | 8 | 1 | 1 | ||
Total current assets | 1,299 | 189 | 663 | ||
Investment in and amount due from subsidiaries | 12,390 | 1,796 | 16,928 | ||
Total assets | 13,689 | 1,985 | 17,591 | ||
Current liabilities: | |||||
Short-term debt | 453 | 66 | 3,028 | ||
Amount due to subsidiaries | 858 | 124 | 257 | ||
Accrued expenses and other current liabilities | 181 | 26 | 213 | ||
Total current liabilities | 1,492 | 216 | 3,498 | ||
Long-term debt | 3,463 | 502 | 3,158 | ||
Other non-current liabilities | 5 | 1 | |||
Total liabilities | 4,960 | 719 | 6,656 | ||
Equity: | |||||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,255,971,250 and 3,265,433,590 shares issued as of December 31, 2021 and 2022, and 3,120,746,090 and 3,112,413,730 shares outstanding as of December 31, 2021 and 2022, respectively) | 0 | 0 | 0 | ||
Treasury shares (30,974,040 and 153,019,860 shares as of December 31, 2021 and 2022, respectively) | (441) | (64) | (107) | ||
Additional paid-in capital | 10,138 | 1,470 | 9,964 | ||
Retained earnings | (1,200) | (174) | 1,037 | ||
Accumulated other comprehensive income | 232 | 34 | 41 | ||
Total equity | 8,729 | 1,266 | 10,935 | ||
Total liabilities and equity | ¥ 13,689 | $ 1,985 | ¥ 17,591 |
SCHEDULE I FINANCIAL INFORMAT_3
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Parenthetical) (Details) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
BALANCE SHEETS | |||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.0001 | ||
Ordinary shares, shares authorized | 80,000,000,000 | 80,000,000,000 | |||
Ordinary shares, shares issued | 3,265,433,590 | 3,255,971,250 | |||
Ordinary shares, shares outstanding | 3,112,413,730 | 3,120,746,090 | 3,108,425,680 | 2,859,026,090 | |
Treasury shares, shares | 153,019,860 | 30,974,040 | |||
Parent Company | |||||
BALANCE SHEETS | |||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Ordinary shares, shares authorized | 80,000,000,000 | 80,000,000,000 | |||
Ordinary shares, shares issued | 3,265,433,590 | 3,255,971,250 | |||
Ordinary shares, shares outstanding | 3,112,413,730 | 3,120,746,090 | |||
Treasury shares, shares | 153,019,860 | 30,974,040 |
SCHEDULE I FINANCIAL INFORMAT_4
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - STATEMENTS OF COMPREHENSIVE INCOME (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Operating costs and expenses: | ||||
General and administrative expenses | ¥ 1,675 | $ 243 | ¥ 1,545 | ¥ 1,259 |
Total operating costs and expenses | 14,705 | 2,132 | 13,607 | 11,925 |
Loss from operations | (294) | (43) | 164 | (1,686) |
Interest income | 87 | 13 | 89 | 119 |
Interest expense | 409 | 59 | 405 | 533 |
Foreign exchange gain (loss) | (641) | (93) | (317) | 175 |
Other income, net | 10 | 1 | 157 | (89) |
Net loss attributable to H World Group Limited | (1,821) | (264) | (465) | (2,192) |
Other comprehensive income | ||||
Foreign currency translation adjustments, net of tax of nil | 112 | 16 | (99) | 203 |
Comprehensive loss attributable to H World Group Limited | (1,630) | (237) | (551) | (2,016) |
Parent Company | ||||
Operating costs and expenses: | ||||
General and administrative expenses | 93 | 14 | 110 | 155 |
Total operating costs and expenses | 93 | 14 | 110 | 155 |
Loss from operations | (93) | (14) | (110) | (155) |
Interest income | 15 | 2 | 8 | 2 |
Interest expense | 130 | 19 | 128 | 154 |
Foreign exchange gain (loss) | (223) | (32) | (3) | (8) |
Other income, net | 6 | 1 | 15 | 32 |
Loss from fair value changes of equity securities, net | (1) | 0 | (2) | (10) |
Income (loss) in investment in subsidiaries | (1,395) | (202) | (245) | (1,899) |
Net loss attributable to H World Group Limited | (1,821) | (264) | (465) | (2,192) |
Other comprehensive income | ||||
Foreign currency translation adjustments, net of tax of nil | 191 | 27 | (86) | 176 |
Comprehensive loss attributable to H World Group Limited | ¥ (1,630) | $ (237) | ¥ (551) | ¥ (2,016) |
SCHEDULE I FINANCIAL INFORMAT_5
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Adjustments to reconcile net income to net cash used in operating activities: | |||||
Net cash (used in) provided by operating activities | ¥ 1,564 | $ 227 | ¥ 1,342 | ¥ 609 | |
Investing activities: | |||||
Loans to subsidiaries | 7 | 1 | 5 | 15 | |
Net cash (used in) provided by investing activities | (522) | (76) | (1,402) | (8,101) | |
Financing activities: | |||||
Proceeds from issuance of ordinary shares in Hong Kong public offering | ¥ 6,018 | ||||
Proceeds from Termination of Capped Call | 86 | 12 | |||
Payment of ordinary share issuance costs | 0 | 0 | (19) | (32) | |
Payment of share repurchase | 334 | 48 | 0 | ||
Net proceeds from issuance of ordinary shares upon exercise of option | 1 | 1 | |||
Proceeds from short-term bank borrowings | 4,249 | 616 | 2,288 | 1,658 | |
Repayment of short-term bank borrowings | (1,935) | (281) | (2,474) | (1,993) | |
Proceeds from long-term bank borrowings | 2,797 | 407 | 53 | 1,652 | |
Proceeds from issuance of convertible senior notes | 3,499 | ||||
Direct financing costs paid | (4) | (1) | (10) | ||
Dividends paid | (416) | (60) | (678) | ||
Net cash provided by (used in) financing activities | (1,394) | (201) | (1,801) | 883 | |
Effect of exchange rate changes on cash and cash equivalents | 297 | 43 | (88) | (300) | |
Net (decrease) increase in cash and cash equivalents | (55) | (7) | (1,949) | (6,909) | |
Cash, cash equivalents and restricted cash at the beginning of the year | 5,141 | 745 | 7,090 | 13,999 | |
Cash, cash equivalents and restricted cash at the end of the year | 5,086 | 738 | 5,141 | 7,090 | |
Short-term bank borrowings settled by investment in subsidiaries | 4,628 | ||||
Parent Company | |||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||
Net cash (used in) provided by operating activities | (136) | (19) | 9 | 49 | |
Investing activities: | |||||
Loans to subsidiaries | 750 | 109 | 1,050 | 6,267 | |
Repayment of loans by subsidiaries | 4,165 | 604 | |||
Purchase of short-term investments | (34) | ||||
Net cash (used in) provided by investing activities | 3,415 | 495 | (1,084) | (6,267) | |
Financing activities: | |||||
Proceeds from issuance of ordinary shares in Hong Kong public offering | 6,018 | ||||
Proceeds from Termination of Capped Call | 86 | 12 | |||
Payment of ordinary share issuance costs | 0 | 0 | (15) | (10) | |
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | ||||
Payment of share repurchase | 334 | 48 | 0 | ||
Loans from subsidiaries | 798 | 116 | |||
Net proceeds from issuance of ordinary shares upon exercise of option | 1 | 1 | |||
Proceeds from short-term bank borrowings | 453 | 66 | |||
Repayment of short-term bank borrowings | (282) | ||||
Proceeds from issuance of convertible senior notes | 3,499 | ||||
Repayment of convertible senior notes | (3,406) | (494) | 0 | 0 | |
Direct financing costs paid | (9) | ||||
Dividends paid | (416) | (60) | (678) | ||
Net cash provided by (used in) financing activities | (2,819) | (408) | 36 | 8,539 | |
Effect of exchange rate changes on cash and cash equivalents | 163 | 24 | (272) | (790) | |
Net (decrease) increase in cash and cash equivalents | 623 | 91 | (1,311) | 1,531 | |
Cash, cash equivalents and restricted cash at the beginning of the year | 581 | 84 | 1,892 | 361 | |
Cash, cash equivalents and restricted cash at the end of the year | ¥ 1,204 | $ 175 | ¥ 581 | ¥ 1,892 |
SCHEDULE II VALUATION AND QUA_2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Allowance for doubtful accounts of accounts receivables and other receivables: | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | ¥ 128 | ¥ 87 | ¥ 22 |
Charge to Costs and Expenses | 82 | 105 | 65 |
Charge to Other Accounts | 7 | ||
Write off | (7) | (64) | (7) |
Balance at End of Year | 203 | 128 | 87 |
Valuation allowance for deferred tax assets | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | 466 | 369 | 152 |
Charge to Costs and Expenses | 338 | 151 | 249 |
Charge Taken Against Allowance | (41) | (37) | (32) |
Write off | (32) | (17) | |
Balance at End of Year | ¥ 731 | ¥ 466 | ¥ 369 |