Huazhu Group Limited (NASDAQ: HTHT) reported Q1 EPS of ($1.05), $0.58 better than the analyst estimate of ($1.63). Revenue for the quarter came in at $214 million.

• A total of 5,953 hotels or 575,488 hotel rooms in operation and 2,375 unopened hotels in pipeline as of March 31, 2020. Excluding Deutsche Hospitality (“DH”), a total of 5,838 hotels or 552,362 hotel room in operation.
• Hotel turnover1 decreased 32% year-over-year to RMB5 billion for the first quarter. Excluding DH, hotel turnover decreased 49%.
• Net revenues decreased 15.7% year-over-year to RMB2.0 billion (US$284 million)2 for the first quarter, in line with revenue guidance previously announced of 15% to 20% decrease. Excluding DH, net revenue decreased 46.0% year-over-year.
• Due to the COVID-19 outbreak, net revenue of Legacy-Huazhu decreased by RMB1.1 billion year-over-year. We took cost mitigation measures to reduce costs and expenditures, but some measures to reduce rental, personnel costs and general and administrative expenses could only affect future quarters. Therefore, the reduction in net revenue directly affected operating income, EBITDA and net income.
• Net loss attributable to Huazhu Group Limited was RMB2.1 billion (US$301 million) for the first quarter of 2020, compared with net income attributable to Huazhu Group Limited of RMB106 million in the first quarter of 2019 and net income attributable to Huazhu Group Limited of RMB619 million in the previous quarter.
• Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted net loss attributable to Huazhu Group Limited (non-GAAP) for the first quarter of 2020 was RMB1.1 billion (US$155 million), compared with adjusted net income attributable to Huazhu Group Limited (non-GAAP) of RMB222 million for the first quarter of 2019.
• EBITDA (non-GAAP) for the first quarter of 2020 was negative RMB1.7 billion (US$245 million), compared with positive RMB412 million for the first quarter of 2019.
• Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) for the first quarter of 2020 was negative RMB704 million (US$99 million), compared to positive RMB528 million for the first quarter of 2019.
• In the second quarter of 2020, Huazhu expects net revenues to decline 32% to 34% year-over-year or 35% to 37% if excluding the addition of Deutsche Hospitality.

Ji Qi, founder, Executive Chairman and CEO of Huazhu commented: “In the fight against COVID-19 pandemic, Huazhu worked hard to take good care of our customers and employees, to keep our hotels open, and to provide support to our franchisees. Thanks to our persistence and outperformance, an increasing number of franchisees are now joining Huazhu family. From March through June, the number of new signings of hotels has increased compared to the same period of last year. ”

“Market consolidation will accelerate,” continued Mr. Ji, “and Huazhu has prepared to expand share after the crisis. For the next three years, we expect to penetrate into additional lower-tier cities in China where customers’ brand awareness and demand for quality have risen. In the meantime, our exploration in upscale segment continues under Joya and Blossom House brands, as well as Steigenberger and Intercity brands.”

Guidance
In the second quarter of 2020, Huazhu expects net revenues to decline 32% to 34% year-over-year or 35% to 37% if excluding the addition of Deutsche Hospitality. Given the uncertainties amid the mix of recovery in China and wider spread of COVID-19 outside of China, we are not able to provide meaningful revenue guidance for the full year 2020 at this time. We will continue to closely monitor these developments and provide more updates when possible.

The above forecast reflects the Company’s current and preliminary view, which is subject to change.

For earnings history and earnings-related data on Huazhu Group Limited (HTHT) click here.