HTHT - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Huazhu Group 2021 Q4 and Full Year Earnings Conference Call. Please be advised that today's conference is being recorded. At this time all participants are in a listen-only mode. It is now my pleasure to introduce IR director, Jason Chen.

Jason Chen

Andrew. you, Thank good and Good evening morning everyone. joining for today. Thanks us fourth full year to Huazhu conference and XXXX Group's Welcome earnings quarter call.

Ms. Jin Joining and us Deputy of our CFO, Mr. our Fei; Hui; Jihong. international Chairman, Founder our President, Hui; CEO Mr. Ji Ms. Ms. today Qi; our our is Chen Liu Xinxin; our business and He CFO, Ye CEO, Ms.

questions. will remarks, their management be available answer prepared your Following to

the include continue, Harbor please the forward-looking note the statements States provision Safe will United Reform under we of Before Act Litigation discussion made that Securities today XXXX. Private of

involve risks statements Forward-looking inherent and uncertainties.

our Group of different laws. from potential does obligations to not such, with forward-looking in the number uncertainties may and filings A outlined undertake except applicable are any today. As by be any as required risks our update results Huazhu views statements, SEC. materially public expressed the

comparable our found was discussion today of those On during measures the distributed also to the information financial call mention release performance. that Reconciliation our adjusted earnings GAAP we can of yesterday. will measures in be

will ir.huazhu.com. over of that, this Mr. on reminder, webcast recorded. Huazhu The is well conference website please. slide call, is to as Group's Mr. at being Qi a conference as I available call call now supplementary As turn Ji, this the presentation With Ji.

Ji Qi

development. lodging strategy resurgence high-quality growth good also China's economic the everyone. At are and of from complex. and is COVID-XX Since of year, macro to industry. changing high-speed variation XXXX global evening the and the morning many cost increasingly Good was another development same to and challenging becoming conditions course, time, uncertainties

growth high-quality focusing development. also adjusted hotel upscale for quality sustainable goals, our on We from strategy previous

and sustainable growth a the brand, unique be our is the Under which greater the With thing. make the unique on traffic able growth strategy, should franchisees the three-in-one industry quality customers, our to we growth created the employees [ph] [equal] still and leveraging main sustainable and technology. new by and achieve value to model, quality the strategy, include

is However, Moreover, requires high to the more precise technology or growth as efficiency benchmark relies by order accuracy, quality. world-class on accurate us see to and it on We precision talent a Hotel as people-oriented cultivation, in [indiscernible]. also two leveraging conditions. operations capability companies well innovative called precision achieve One, organization from and can critical the to in staff the the company. on and reservation, efficiency Huazhu maximize

service failure core for details simplicity, should good In important. becomes changed is also and or more more business. for and addition, Hence enough determined strategy. previously, Success by often and more on precision focused perfection both products hotel tiny not be concentration, in

the countries. emission called least, to we creation, social With focus we're Another Also, our employees, benefit. and discuss that corporate the shareholders, owners, protection, development, would welfare and chain along our Also, to franchisees, long-term values continuously but Jin environmental benefits It ESG we and will will to social call focus. customers, value greater our value to reduction, carbon Hui responsibility bring on or condition long-term stakeholders focused difficult lodging. focus. focus of benefit. on insist means and doing creating things not on is value other social development the I turn and to communities long-term also Last

Jin Hui

Language] [Foreign Ji Thank Qi. you,

challenging Ji was year. by a again earlier, XXXX mentioned As Qi

Please achieve we several Slide to the implementing achievements to continuously Four. on However, and turn year. great insist for our strategies

penetrated opened joint by hotels during into in we XX venture defined Maxx Steigenberger Quality We operation achieved lower brand Moreover, and our Hotel expansion We the the of Quality we On hotels XXX this of standard the market. front, XXXX year, into new and XXX tier successfully with introduced hotels. cities coverage of openings the XXXX end again China net program Comfort roughly had of in Hotel. we China further Intercity XXXX. with added brand the through Also, year. with in cities, Sunac,

Blossom to another to XXX of of Lastly, tap multi-dimensional House leisure we members like regards our of million In further growth achieved year the had sales solid direct member into domestic XX% XXXX. end traveling market. the to by booming

from XX% same launched version XXXX to also H-world further Also, officially fourth We quarter. quarter in improved room our integrate customer from nights improved and offline. contribution X.X our further online XX% in app services to the the to to customers contributed CRS corporate

course, of COVID zero recovery. DH Please our terms Of COVID China Chinese traveling of RevPAR in researchers week-over-week a out in saw policy, global of stricter gradually implementing In affected our large our basis. Slide recovered on result turn platform, technology would February, significantly [Foreign RevPAR every restriction, affected the the relative New we and Digital had scale our recovery. hence in roll hotels. consistently Year, for steadily post resurgence to Five. COVID we started Lastly, Global Platform lately, Language] of RevPAR One our Since remains

However, infectious since Omicron trend. China, been RevPAR rapidly which has March, spreading recovery in our virus interrupted highly the

RevPAR [Foreign to March Six. Slide XX, Please the only same Language] our month-to-date XX% period turn recovered of As to of of XXXX.

are many implement growth strategy. facing will challenges, we sustainable difficulties Although unswervingly and our we quality

penetrate lower into Slide into firstly, break developing Eight. further cities; into continuously the tier Firstly, upscale I thirdly, include following Huazhu’s strategy. through have in we and penetrate of each strategy cities. for strategy, discuss strategy, Please upper-mid and hotel We digitalization to the to Slide the lower segment. Growth includes turn tier turn on [Foreign strategic brand Language] growth Language] fourth which [Foreign formulated will secondly, three in strategy forecast forecast mainly Please China to strategy market; details will Seven. slides. these less-penetrated XXXX membership areas;

covered signed have XXXX and we of and As from during XX% there XXXX XXXX At contributed with are for cities new total. in in tier hotel hotels XX% cities cities. came XX% of of up from pipeline lower totally XXXX, tier respectively. end them We lower operations the XXXX, hotels

have to to markets XXXX empty we [Foreign Our be which cover over Language] around target Nine. penetrated. Slide turn is to future XXXX Please still means cities,

four China. Western China's national Our The to strategy penetrate regions, zones, key slide. of Southern next shown focused includes economic the key as are development on regions parts and

penetrations good Delta Ji agglomeration have area. in and We Jing-Jin ChangJiang

to circle can strategy had However, develop year, in and to we balanced By upper-mid I [Foreign Guangdong Chengdu-Chongquing for us. upper-mid using our Hong would to two Last regional to franchisees Language] development headquarters segment, market. so, develop Area established areas. we penetrated upscale turn more we very Greater XX. regions Shenzhen Kong-Macao local market. In Chengdu less and still multi-brand discuss across Bay these doing Attract and achieve much local all economic to the Please penetrate the the in like on China. hotel Slide insist segment. Lastly, our a and

Mercure Man Madison, brands Crystal Our Intercity, and Novotel. include Orange, Xin,

As middle of in XXX a and operation upper we have hotels XXX in XXXX, pipeline.

pipelines of are divided progressing We is XXXX. upscale Our [Foreign the XX. parts. Please and our into over steadily. also end three upscale targeting operations Language] hotel turn to in by XXXX We hotels hotels achieve segment Slide to

we of upscale through expanding the are the Firstly, joint hotels number Sunac. venture with

of pipeline. XXXX, in As of milestone achieved we operations total apps and good XXX hotels our first

tap traveling House market. Secondly, our leisure into to domestic booming further brands we Blossom the use

House signed During XX brand. XXXX, hotels Blossom we of up total

we brands focusing Lastly, China's in we Suites the conversion Bund using Shanghai. brand had we area hotels. Maxx with market Please by Orient terms are of China Language] [Foreign turn of in seek also opportunities into existing Les enter Maxx In strategy, to the three at to using Slide CBD divided XX. our parts. cooperated on to for example The upscale independent Shanghai brands is best Hotels

brand the recognition one First we upgrade is different product the constantly enhance and quality. product for our to by products the Upgrade, brands

our versions continuously the example, upgrade brand flagship introduce market. and For to product hunting, economic we the new

hotels open the locations invest core awareness. hotels. to cities at We our Second flagship the one in is our on improve flagship brand selectively and core

year. flagship Shanghai our of example, For Orange in X.X Crystal we opened version hotels new last

should unique past sharpened differentiated from our its order customers positioning we brand provide leading have brands positioning, gradually the services and leading its function to to in to rather own in products transit the to future. in Huazhu each talking to and products Lastly,

the to who choose and China youngsters let's Now Please market membership move targeting Language] preferred mass value the are to hotel. is the they healthy, for while brands choice the represents We brand Orange become strategy. seeking For energetic example, XX. [Foreign new money. highest the and Huazhu sunny. turn help Slide for customers to

with membership channels, mainly sales be in-house direct customers through and which will and to We corporate focusing expand industry the attract new on allies basis. sales, our now across customers our

operations. conducting Our the [Foreign Language] Page core critical H-world to customer's turn Please XX. deep a is platform

continuously year Over continuously XXXX a CRS CAGR contribution achieved grows the XX% to of the improved. few membership steadily. of turn years, from We Our year also [Foreign Language] XXXX. XX. of Please Slide had to growth last our

the to CRS XXXX, points of XX%. three For improved the year percentage full contribution year-over-year by

cities. are contributions to in our slightly also Language] the one only lower tier from cities importantly, than More two Contributions Please tier further Slide [Foreign customers XX. the corporate CRS improved. turn tier lower or

room full XXXX customers For XX.X%, year the nights for points percentage computed XXXX. improved from corporate X.X accounted from of roughly the

Specifically, the Slide gradually and the corporate turn the customers upper Let's segment. Language] [Foreign to mid Please in to now also contribution XX. strategy. improved digitalization upscale move

GOP that there first Today, the hotel several many and many online management, our past capabilities. where it processes [indiscernible] we further digitalization functions to digitalization Language] and In operated the level quality franchisees level. the Therefore, find guest limited our the constants we of hotels digital to model. at part the online can efficiency XX. XX. further of achieved digitally. managed the digitalization service comprehensive to are improve offline hotel that for of think and management experiences, limited the several the deeply reviewed our Please Slide we previously the is created more comprehensive hotels its [Foreign of strategy the the development, hotel had Transferring future include can functions management the Language] extra, development digitalization can years Slide Please management, process, Over turn the out still already level. digitalization at services be service time to achieve to offline sales, turn [Foreign lifetime

management is the this chain model. And model full digitalization business of experiment. there's for to hotel also second service part In terms is digital hotel hotel, Huazhu very cloud-based service limited a transform from Therefore, to full to strategy hotels. to single the area hotel different management of new the service our the

potential Huazhu we among incorporated has our related internal operational platform will supply release finish my that, in China's improvement call carbon of same prepared Before business the utilization report please. Huazhu to ESG globally into on since of each year, to concern again future. any already Fei, would Fei Language] ESG Slide time, very XXXX as importance experimenting a Please to turn platform in the quarter Huazhu. assessment a will shared the the as divisions many online as the an remarks, I target, released such achieve chain performance. food full of to started hotel for discuss ESG ESG We our financial and accounting human continue has [Foreign online sustainable digital ever the background At and increasing fourth finance level, growth in the management Language] build turn are I our strategic upscale [Foreign Last hotels. emphasize of on resources, planning. Under also to I With offline long-term and like functions order comprehensive to to listing XX. the Ms. first seek to service move at service matters. shared and up to and year among well Ye

Ye Fei

jumped a to guard Good everyone. little good and morning evening Thank bit. the you. I

financial Let's year move on full and XXXX. quarter and to the for review of our operational fourth

to hotels networks XXXX As of expanded by hotel compared XX% shown XXXk in our in XXXX. on XXXX XXXk of Slide XXXX with hotels, XX, rooms combined rooms

XXXX. Excluding year-over-year six by rooms to network Huazhu XXXk XXXX DH in Hotel of expanded Legacy roughly XX% hotels

mainly of China For turnover to grew network low XXXX. XXXX, and hotel at in the our XX% to expansion total in RMB base XXXX. turnover our This in XX billion due year-over-year hotel was continuous our

in Huazhu in Turn grew to was RMB up Legacy DH, XXXX. XX XXX, XXXX XX. than mainly the compared This billion due XXXX. QX Legacy by lower points to RMB to Huazhu level. in was blended XX% COVID-XX hotel ADR occupancy 'XX level X% Page to RMB is resurgence RevPAR year-over-year the XX.X for was QX turnover compared XXXX while November. Excluding XX% lower at in percentage QX XXX, to The

was DH compared was to ADR is RevPAR the mainly by Well XXXX. year XX% fourth XXXX with XXXX. XXXX half. QX with years full see grew decline by full Total lower compared blended RMB to occupancy XX recovery blended increase increased points the Huazhu the level. the in interrupted quarter by increase DHs through a But XXXX, in to Euro due rebounded For in driven X.X XXX% by XXXX, XXXX. ADR DH blended on by between DH the in XXXX flattish an the X% rate to X% variant yearly 'XX And improved a especially by in COVID saw in QX XXXX XXXX. billion on outbreaks Legacy QX was of year-over-year mainly RevPAR XX XX by percentage up of financial mainly was roughly XX Legacy for occupancy from XX. revenue year Page XX% XXX% our pre-COVID Slide XXX The since strong was results by RMB to Euro Despite XX% XX% later than ADR quarter X% XXXX, Omicron the 'XX. slightly XXXX XXXX. as XX. only of the XXX QX of increase to points of Please first by Europe. the in It basis. November, business RMB driven Fr compared Turn improved percentage net at by to X% fourth XXXX. to several compared and from occupancy revenue the to quarter X% our lower XX XX The compared Euro recovery is RevPAR was QX

year-over-year our manachised X% previous a year-over-year and the to leased in Due and since billion line owned revenue XX% year-over-year resurgence revenue. However, over COVID-XX. franchised an saw China's in guidance. X.X XX Legacy in X% provinces decline recorded with growth partially RMB to Huazhu offset November, hotels of revenue decline by

hotels For full billion to guidance. revenue DH to Breaking down grew net total growth excluding the RMB leased from XX% in revenue XX% XX% full line RMB to XX.X grew hotel XX% own XXXX billion. SLIs and XX.X X.X of and to revenue year-over-year revenue by manachised revenue; by billion compared increased franchised Huazhu year business franchised XX% XX and XXXX the of with recorded level. to a at and in contributed of revenue year-over-year billion total RMB year-over-year in manachised previous from Legacy RMB X.X our The by group XXXX, year

franchised increased by driven mainly Legacy to the manachised business also XX% whose XX% is this portion moment, Huazhu’s XXXX. and the For from in

improvement QX profitability weaker positive mainly XX government to RMB to move 'XX, million on XX reported let's the million euro XXX before. year-over-year QX million RMB cost Now, session XX. received income DH a Business the but quarter by was and The year, China in driven the In Performance. the and recovery offset million, the subsidy operating and by Slide XX compared of was a last loss business

basis, dollar billion Excluding income last turned full income million, hotel X.X RMB mainly operating related year the by which million, cost operating year-over-year. [ph] was to a million quarter. a XXX reported the XXX total to year, QX the of a RMB XXXX included to XX resurgences DH. European the XXX totally was RMB during RMB quarter impairment X.X last The XXX quarter in DH, loss significantly loss Legacy of XXXX second in ago. an of recorded million year. million] RMB increase cost XXXX Huazhu’s several million The from [XXX.X government RMB a to and narrowed loss X.X to non-cash of subsidy, year was Legacy in of RMB increased RMB DH despite compared billion XX% XXX million its billion RMB Legacy fourth million, a and to million for On compared XXXX. operating RMB last from operating income Huazhu RMB received fourth Thanks XXX loss XXX COVID in positive

upper-mid new recorded and the the it's indicating costs, as of increase upscale mainly RMB well related upper-mid we're of costs to in existing also Legacy costs acquisition. rapidly D&A growth. cost higher impact of hotel expanding hotels as upscale consolidation Huazhu billion year-over-year a The a hotel rental and upgrading which were recent operating physical opening personal higher as For a network was to hotels our and X.X higher attributable hotels, XX% and

XX% to So million variable of increase growth. RMB RMB growth a reasons grew indicating mentioned XX% billion total increased operating above. it Legacy XXX with along a year-over-year by million due was of hotel DH, mainly recorded RMB mentioned Legacy driven XXX full above. with On Huazhu well costs loss costs year XX% operating year-over-year of cost basis, year-over-year XX.X similar hotel mainly recovery, as impairment to The non-cash business as

of mentioned in significantly use XX% million Therefore, XX% The we SLIs million by expansion RMB year-over-year full in previous to by year-over-year costs XX mainly As XXXX. model. of RMB declined the future pre-opening will pre-opening only hotel quarters, costs declined only our upscale XX to QX. for year

RMB in the year-over-year SG&A increased million driven in and Legacy Huazhu Our by the DH. QX Legacy increase both XX% by XXX to

increased by IT was DH, which for X% the increase least, the but upscale Excluding increase headcount we Legacy invest not attributable for of strategically RMB sales business BD million. are Huazhu in. the team, year-over-year to The SG&A XXX to and teams, unit, team areas mainly last

As while which driven mainly recorded of by SG&A Huazhu, the you is the from XXXX, DH DH chart, side. impact as from Legacy X% see of also the increase part side savings the can from reclassification

ago. QX compared of related compared last in income to which year, the adjusted Turning but XX the to government positive QX, RMB RMB been we EBITDA the XXX mainly of XXX non-cash million, our year million RMB the to EBITDA by would offset to XXX was adjusted DH million million, non-cash If exclude year-over-year have and DH, recovery loss a was XXX to thanks RMB Page a XX, million loss impairment subsidy, growth. loss. in XX% million business to ‘XX representing EBITDA XXX turn a RMB impact

recorded Excluding XXX adjusted due recorded mainly positive DH million EBITDA the Full of declined income RMB an turned loss RMB QX driven RMB year XXXX. resurgence of quarter. fourth XXXX million to the from This impact loss Legacy in as X of billion XX% in RMB In Huazhu of loss Huazhu’s EBITDA Legacy XX% of large an of QX EBITDA was COVID-XX of million in EBITDA loss adjusted well a XXX X.X billion, adjusted in DH by a XXX adjusted XXXX, the net million as by of in RMB million. of X XXX of a we narrowed adjusted from growth of XXXX. RMB QX

DH, in Legacy million net adjusted narrowed from Excluding to recorded of loss an XXXX Huazhu million, a full in QX net billion X.X XXXX. million RMB loss RMB year ago. income of XXX in XXX compared XXXX. the compared Coming Adjusted XXX RMB Legacy the of XXX for of turned RMB year to loss Huazhu RMB cash positive profit million position. to XXX million, RMB a a to

RMB Our the [loan] syndication breaching dollar there's net of debt and XXX remaining risk of remains end QX, the healthy European financial of [ph]. no million billion X.X by of amount the covenants at

cash and Our unutilized balance was billion. RMB were X.X facilities billion, X.X bank the RMB

occupancy percentage spending last words three the few cautious year, trend COVID point to recovery cash. in Omicron the by on again variant. uncertain was November capital XX% keep discretional rate foreseeable to spending more impact compared quarter and preserve to remains since DH, a by dropped Its interrupted ago. Given DH's on we'll future, A

plans initial the mid-Feb the and it applied to in in future. unfolded opening reaccelerate later government German to should recovery help March RevPAR as X, our However,

mitigation short-time deferral negotiation optimization, measures, efficiency continue to June until remain be major waiver, valid and improvements, will compensation worker cost additionally, the lease a CapEx, implement would the of we XX, However, on of to as XXXX. emphasis further cautious personnel

to XX Turning guidance. Page on

Russia the XXXX, which has only reflect know, guidance the business. since may As negatively highly and also you understanding the of our impact business short-term European performance, our view Therefore, the the seriously Ukraine infectious our variant recovery. policy China, between uncertainty and can affected Moreover, great spreading rapidly business of China's been to may be current war situation. zero-COVID Omicron March adds in and

to COVID our hotel open construction, of year. around on around now hotels in close XXXX, presumption China. after contained for XXX is reviewing existing our plan under in in the terms will spread opening and and hotels that XXX In expect a to we the be X,XXX built pipeline reasonable This hotels timeframe

or we revenue XXXX, the of to XX% guidance X% of revenue of compared range DH. in to if to excluding the range terms growth for the of to to quarter first quarter first be In XXXX XX% X% the expect of

market considering of we our excluding current our the may negotiated compared other to factors. conditions of not depository With American growth from full-year the the full-year range subject make subject XXXX, XXXX notes reflect range and the above DH. otherwise transactions of to time or Q&A. change. that, Last, least, privately For to to the views, if to securities, to convertible the shares in the market only which from XX% including transactions, to but and we from Again, let's guidance condition, XX% X% repurchase open revenue for X% expect open time are or to current

Operator

Our Thank America. you. of comes line of [Operator Billy first with from Bank Ng the question Instructions]

Billy Ng

one you Language] of just [Foreign upgrade, the mentioned driver. in as the the I PPT, of in terms that growth wonder product guys think I like

product that that are the helping But actually going case significantly case? can we the upgrade, forward if do understand is of in we in the -- a upgrade? I large plan that's product So enhance the for past, franchisees upgrade also to and existing doing And like the terms scale still [indiscernible].

Unidentified Speaker

Hi and Language] consumption China. but is cater So JI trend upgrade into upgrading product our strategy Orange It's to the key also in only Hotel, Inn. the [Foreign like happening HanTing, not to

of by customers is product least the in the the the comparable Language] brought well [Foreign is as to economy of hotels franchisees. bring to which upgrade Huazhu pushing return been -- also good [Foreign upgrade has level existing the at hotels RevPAR very received think Language] has the Arguably, China, I only HanTing improvement us. the new franchisees one

Billy Ng

outbreak I -- question is Language] basically now we my was in severe So China. second Omicron like, right pretty like noticed is [Foreign think

open this whether So this of the I has the decide they incentive outbreak wonder impact has for to just whether changed? franchisees year and

Unidentified Speaker

Language] and March [Foreign that, impact the the having the franchisees, also reflected in but negative has I said our two would The COVID the you're zero-COVID number, and Certainly, also China's a the factors of especially current mitigation. situation Okay. right. also policy performance mention as interest

of this -- very First Two bureau. and been current market. Tier the in it's tier in our city further is further markets. China XX% for the and our the of the signing running That's the X,XXX is large X the of by Actually stimulating franchisees in good, Tier very all, those franchisees one. This big tough has hotels cities. or to hotels lower is requisition important help of hotel government especially of are current the to through than go Currently, portfolio. time, the new hotels our requisition, more our hotels under X roughly number

Billy Ng

Language] [Foreign

Operator

from question Sijie And line Thank of our comes with you. next the Lin CICC.

Sijie Lin

that Thank first but and we what implying better may know the from that people say to my you. of ADR question when full-year may for recover quality revenue rates? question not considering some environment? some my RevPAR think people And continue so two that's what's the So consumption soft than COVID-XX? recover faster increase we questions. Because strong brands, for trend my future the because that ADR [Foreign see in is the So ADR Language] second we XXXX, the in is recovery what's guidance, pursue

Unidentified Speaker

Okay. Language] [Foreign

Group, RevPAR the markets internal pretty in a to full regarding the corporate there recovery budgeted this COVID. your of sensitivity, answer challenge -- festival, number, both actually, admit on to and evaluation your based of those guidance customers, become of our especially -- leisure question both the creating From opportunity we of and terms, Chinese XXXX our the from more compared budget of our to price also level, consumer very sensitive, also of February is we China of who value good terms side reaction, I and sensitivity kinds is revenue the customers. XX% latest cost a impact all in it is the decent recovery the also also customers' high-efficient low Legacy for of spectrum corporate and regarding And and assessment January XX% second edge us especially in question own and we for to have competitive would yes, actually we of markets a So further creates our our we product, Huazhu business the for are say because travel customers. travel. capture have a for business especially franchisees -- model we price to

question. next the for wait Let's

Operator

question Thank line with you. And our next the comes from of [Indiscernible] Goldman Sachs.

Unidentified Analyst

on into whether last third tier margins? So second and secondly, we relation concentrations, hotel you operations, you. even huge part expectation in a in wondering well Language] that you Thank dilutions for the of and to China, any cities, X,XXX the And cities the the as bit a know you another your first any geographically, your year exposure X,XXX question the of was also as or related in cost the because guidance in margin to [Foreign cost margin we expanding and Northern price saw X,XXX tier, China wondering whether would have Eastern guidance cities? or have have

Unidentified Speaker

Language] [Foreign Okay.

Let me translate the question second first.

first in China So, lower city, mainly are X,XXX have and share were China. penetrated Southern the much fifth The the -- tier third from incremental secondly, relatively, And like cities up-tier cities we of to the Western coming less is lower and market certainly fourth we even all, county. cities. compared tier

there of So area a for further lot is Huazhu growth as well.

And X, lower XX% city So penetration Tier of it through will coming coming all from in to from cities brands. summary, Tier and China in our -- all full tier through of and in further our were spectrum is strategy be our XX% portfolio, full below X -- tier cities.

for to by second the lower like increase economy penetration House HanTing example, And more upscale X brands same by our share that's X and enhance mid and market and Steigenberger, cetera. going in we we're upscale to Tier products question. answer question mid-scale tier and will Yeah, our example, For the JI Hotel. -- in time, Tier city, and Blossom and et

the efficiency. to this also we in internally, further the analyzed change pressure improve further mounting more -- overarching next EBITDA of for a strategy, areas the there there Under strategy, question, improvement and detailed sudden and also quality time. first terms because on key -- measures period is For We're we certainly, we penetration, our of cost the upper further Two, and due revenue key admit management is That's we'll pressure upscale course and have one. is growth number of situation. even develop under in sustainable midscale the the focus along going digitalization. of areas to COVID

Unidentified Analyst

Language] [Foreign

Unidentified Speaker

Simon. you, Thank

Operator

Thank from you. line of question comes with next HSBC. the Yan And our Lina

Lina Yan

Hello?

Unidentified Speaker

[Foreign Language]

Lina Yan

Okay, And just a one like revenue, RevPAR breakeven the have estimate level like breakeven for for an for Do revenue Legacy okay. Huazhu that? the and level you also you breakeven DH? of question. have I have do

Unidentified Speaker

Sorry.

separately? You're asking a and DH RevPAR for breakeven Huazhu

Lina Yan

yes. yes. Yes, Yes,

Unidentified Speaker

we a ballpark the that is EURXX. is have to roughly for like DH and Historically, EURXX -- estimate China side around RMBXXX for around and

Lina Yan

have you revenue do like breakeven thing? a for this And okay. Okay,

Unidentified Speaker

it's it will we is be relatively is gave moving certainly very the I The market to going breakeven the the number be I'm EBITDA about subject quickly, to talking COVID before, recovery, about and think. level to as

Lina Yan

Okay, you much. okay. very Thank

Unidentified Speaker

Maybe --

Operator

from comes you. question Bruce UBS. of Lee the our next Thank And line with

Bruce Lee

year, performance management. QX in is two in first the My Hi, the the the relatively that disruption January two question revenue first I recovery despite the have RevPAR March, saw questions. And is the Language] this we February COVID better. in on [Foreign for resurgence months and first --

in So ask revenue may about I and February this January the performance year?

Unidentified Speaker

Language] [Foreign

Bruce Lee

[Foreign Language]

Unidentified Speaker

Language] [Foreign

Bruce Lee

is question second cost on front. My Language] [Foreign the

that saw I gross the quarters. the compared declined in previous QX with So margin

the main reason and I saw cost. in to is -- the the increase So and that rental, other due personnel I'm

personnel increase is Thank in may how the main owned increase is and contributor increase impact double in check So I and much due that, the rental is to you. the mainly other the And acquisition also CitiGO? cost and from of the on cost in the cost leased hotels? number of

Unidentified Speaker

this continued growth mentioned is model going control the certainly, size we upper The cost a the hotel and CitiGO be upscale -- mainly investment right. hotels. very the come -- we're so you're as the hotels relatively increase Actually, of in further will light, in leased asset to small. the area. from has mid And the impact later, acquisition

is So It's limited It's contribution. the RMBXX side level. relatively than cost just the more limited. a contribution million to like

Unidentified Speaker

[Foreign Language]

Bruce Lee

Language] [Foreign

Operator

back I'll Thank Chen IR for closing remarks. any over call now turn Jason you. the Director, to

Jason Chen

your Thank the upcoming we in again. today. you, And time for Thank everyone, taking forward quarter. Bye-bye. with to you with again contact us you look

Operator

conference and disconnect. Thank participating. now you gentlemen, call. today's this Ladies for And you concludes may

H World Group Limited (HTHT) 24 Mar 222021 Q4 Earnings call transcript