H World Group Limited Reports Second Quarter and Interim of

• A complete of 8,176 inns or 773,898 resort rooms in operation as of June 30, 2022.
• Hotel turnover¹ decreased 10.3% year-over-year to RMB11.8 billion within the second quarter of 2022. Excluding Steigenberger Hotels AG and its subsidiaries (“DH”, or “Legacy-DH”), resort turnover decreased 18.9% year-over-year within the second quarter of 2022.
• Revenue decreased 5.7% year-over-year to RMB3.4 billion (US$504 million)² within the second quarter of 2022, in step with the income steering beforehand introduced of a 2% to six% lower in comparison with the second quarter of 2021. Revenue from Legacy-Huazhu phase within the second quarter of 2022 decreased 26.8% year-over-year, in step with income steering beforehand introduced of a 23% to 27% lower.
• Net loss attributable to H World Group Limited was RMB350 million (US$52 million) within the second quarter of 2022, in contrast with internet earnings attributable to H World Group Limited of RMB378 million within the second quarter of 2021 and internet loss attributable to H World Group Limited of RMB630 million within the earlier quarter. Net loss attributable to H World Group Limited from Legacy-Huazhu phase was RMB298 million within the second quarter of 2022, in contrast with internet earnings attributable to H World Group Limited from Legacy-Huazhu phase of RMB492 million within the second quarter of 2021 and internet loss attributable to H World Group Limited from Legacy-Huazhu phase of RMB307 million within the earlier quarter.
• EBITDA (non-GAAP) within the second quarter of 2022 was unfavourable RMB213 million (US$33 million), in contrast with RMB957 million within the second quarter of 2021 and unfavourable RMB301 million within the earlier quarter. EBITDA from Legacy-Huazhu phase, which is a phase measure, was unfavourable RMB243 million within the second quarter of 2022, in contrast with RMB1.0 billion within the second quarter of 2021 and unfavourable RMB61 million within the earlier quarter.
• Adjusted EBITDA (non-GAAP), which excluded share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, was RMB53 million (US$7 million) within the second quarter of 2022, in contrast with RMB1.0 billion within the second quarter of 2021 and unfavourable RMB333 million within the earlier quarter. Adjusted EBITDA from Legacy-Huazhu phase (non-GAAP) was RMB23 million within the second quarter of 2022, in contrast with RMB1.1 billion within the second quarter of 2021 and unfavourable RMB93 million within the earlier quarter.
• In the third quarter of 2022, H World expects income to extend 13% to 17% in comparison with the third quarter of 2021, or to extend 5% to 9% if excluding DH.

SHANGHAI, China, Aug. 29, 2022 (GLOBE NEWSWIRE) — H World Group Limited (NASDAQ: HTHT and HKEX: 1179) (“H World”, “the Company”, “we” or “our”), a key participant within the world resort business, at this time introduced its unaudited monetary leads to the second quarter and the primary half ended June 30, 2022.

As of June 30, 2022, H World’s worldwide resort community in operation totaled 8,176 inns and 773,898 rooms, together with 125 inns from DH. During the second quarter of 2022, our Legacy-Huazhu business opened 269 inns, together with 5 leased (or leased-and-operated) inns and 264 manachised (or franchised-and-managed) inns and franchised inns, and closed a complete of 86 inns, together with 12 leased inns and 74 manachised and franchised inns. During the second quarter of 2022, the Legacy-DH business opened 5 inns, together with 2 leased inns and 3 manachised and franchised inns. As of June 30, 2022, H World had a complete of 2,236 unopened inns in our pipeline, together with 2,199 inns from the Legacy-Huazhu business and 37 inns from the Legacy-DH business.

Legacy-Huazhu Only – Second Quarter of 2022 Operational Highlights

As of June 30, 2022, Legacy-Huazhu had 8,051 inns in operation, together with 646 leased and owned inns, and 7,405 manachised and franchised inns. In addition, as of the identical date, Legacy-Huazhu had 748,942 resort rooms in operation, together with 91,171 rooms below the lease and possession mannequin, and 657,771 rooms below the manachise and franchise fashions. Legacy-Huazhu additionally had 2,199 unopened inns in its pipeline, together with 20 leased and owned inns and 2,179 manachised and franchised inns. The following discusses Legacy-Huazhu’s RevPAR, common every day room charge (“ADR”) and occupancy charge for its leased and owned inns, in addition to manachised and franchised inns (excluding inns below governmental requisition) for the intervals indicated.

• The ADR was RMB218 within the second quarter of 2022, in contrast with RMB255 within the second quarter of 2021, RMB224 within the earlier quarter, and RMB236 within the second quarter of 2019.
• The occupancy charge for all Legacy-Huazhu inns in operation was 64.6% within the second quarter of 2022, in contrast with 82.3% within the second quarter of 2021, 59.2% within the earlier quarter, and 86.9% within the second quarter of 2019.
• Blended RevPAR was RMB141 within the second quarter of 2022, in contrast with RMB210 within the second quarter of 2021, RMB132 within the earlier quarter, and RMB206 within the second quarter of 2019.
• For all Legacy-Huazhu inns which had been in operation for not less than 18 months, the same-hotel RevPAR was RMB138 within the second quarter of 2022, representing a 36.2% lower from RMB217 within the second quarter of 2021, with a 16.7% lower in ADR and an 19.9-percentage-point lower in occupancy charge; evaluating the second quarter of 2022 with the pre-COVID second quarter of 2019, same-hotel RevPAR represented a 40.4% lower from RMB217 within the second quarter of 2019, with a 16.3% lower in ADR, and a 25.9-percentage-point lower in occupancy charge.

Legacy-DH Only – Second Quarter of 2022 Operational Highlights

As of June 30, 2022, Legacy-DH had 125 inns in operation, together with 79 leased and owned inns and 46 manachised and franchised inns. In addition, as of the identical date, Legacy-DH had 24,956 resort rooms in operation, together with 14,939 rooms below the lease and possession mannequin, and 10,017 rooms below the manachise and franchise fashions. Legacy-DH additionally had unopened 37 inns in our pipeline, together with 25 leased and owned inns and 12 manachised and franchised inns. The following discusses Legacy-DH’s RevPAR, ADR and occupancy charge for its leased in addition to manachised and franchised inns (excluding inns quickly closed) for the intervals indicated. 

• The ADR was EUR110 within the second quarter of 2022, in contrast with EUR82 within the second quarter of 2021 and EUR88 within the earlier quarter.
• The occupancy charge for all Legacy-DH inns in operation was 59.8% within the second quarter of 2022, in contrast with 24.4% within the second quarter of 2021 and 38.0% within the earlier quarter.
• Blended RevPAR was EUR66 within the second quarter of 2022, in contrast with EUR20 within the second quarter of 2021 and EUR33 within the earlier quarter.

Jin Hui, CEO of H World commented: “During the second quarter, a large-scale outbreak of the Omicron variant in China again significantly affected our China business, especially in April and May due to the extensive lockdowns in various cities. However, with a gradual lifting of the lockdowns since late May 2022, our RevPAR started to recover and improved to 86% of the 2019 level in June 2022, and further improved to 90% of the 2019 level in July 2022. Although COVID has been affecting our business from time to time over the last two-and-a-half years, our long-term strategy remains intact. In order to further increase our hotel coverage and penetration rate in China, we need to move our organization and management closer to the local market. Therefore, in the second quarter, we established six regional headquarters and shifted from brand-based to regional-based organizational structure for our economy and midscale brands. By doing so, we believe we can become even closer to our local customers, franchisees, and employees, and create more value for all of them in a more efficient, agile, and precise manner. Moreover, localized management and operational capabilities would achieve better regional synergy and result in higher operational efficiency. Different from the approach we adopted for the economy and midscale segments, we are keeping our brand-based organizational structure unchanged for our upper-midscale and upscale brands due to the importance of differentiated brand positioning and a unique customer experience for each of our upper-midscale and upscale brands. Lastly, as we mentioned before, we will no longer develop soft brands in the economy segment in the future. We will accelerate our exit from this particular segment through retiring our existing hotels in the next one to two years, thereby continuously enhancing the overall quality of hotels in our network. It also closely aligns with our long-term ‘Sustainable Quality Growth’ strategy.”

“In Europe, the DH business further improved in the second quarter with RevPAR recovering to 93% of the 2019 level. This upward trend continued in July. However, against the background of surging inflation in Europe and the resulting substantial increase in costs as well as uncertainties about the future development of COVID and energy supplies, a comprehensive cash flow improvement program remains critical. Therefore, DH’s near-term focus will remain on efficiency improvements, renegotiation of further lease waivers, and personnel cost optimization.”

Second Quarter and Interim of 2022 Unaudited Financial Results

Revenue within the second quarter of 2022 was RMB3.4 billion (US$504 million), representing a 5.7% year-over-year lower and a 26.1% sequential enhance. Revenue from the Legacy-Huazhu phase within the second quarter of 2022 was RMB2.5 billion, representing a 26.8% year-over-year lower and an 8.2% sequential enhance. The lower was primarily as a result of lockdowns in a number of cities in China brought on by the huge unfold of the Omicron variant. Revenue from the Legacy-DH phase within the second quarter of 2022 was RMB921 million, representing a 311.2% year-over-year enhance and a 126.8% sequential enhance. The enhance was primarily because of the sturdy restoration of our European business since Europe’s opening-up ranging from mid-February.

Revenue within the first half of 2022 was RMB6.1 billion (US$906 million), representing a rise of 2.5% from the primary half of 2021. Revenue from Legacy-Huazhu within the first half of 2022 was RMB4.7 billion, representing a 14.5% year-over-year lower. Revenue from the Legacy-DH phase within the first half of 2022 was RMB1.3 billion, representing a 252.9% year-over-year enhance.

Revenue from leased and owned inns within the second quarter of 2022 was RMB2.4 billion (US$352 million), representing a 3.5% year-over-year enhance and a 43.8% sequential enhance. Revenue from leased and owned inns from the Legacy-Huazhu phase within the second quarter of 2022 was RMB1.5 billion, representing a 28.7% year-over-year lower. Revenue from leased and owned inns from the Legacy-DH phase within the second quarter of 2022 was RMB886 million, representing a 317.9% year-over-year enhance.

In the primary half of 2022, income from our leased and owned inns was RMB4.0 billion (US$598 million), representing an 8.8% year-over-year enhance. Revenue from our Legacy-Huazhu leased and owned inns within the first half of 2022 was RMB2.7 billion, representing a 17.8% year-over-year lower. Revenue from our Legacy-DH leased and owned inns within the first half of 2022 was RMB1.3 billion, representing a 257.7% year-over-year enhance.

Revenue from manachised and franchised inns within the second quarter of 2022 was RMB945 million (US$141 million), representing a 25.9% year-over-year lower and a 4.4% sequential lower. Revenue from our Legacy-Huazhu phase from manachised and franchised inns within the second quarter of 2022 was RMB929 million, representing a 26.7% year-over-year lower. Revenue from manachised and franchised inns from the Legacy-DH phase within the second quarter of 2022 was RMB16 million, representing a 100.0% year-over-year enhance.

In the primary half of 2022, income from manachised and franchised inns was RMB1.9 billion (US$289 million), representing an 11.0% year-over-year lower. These inns accounted for 31.9% of income, in comparison with 36.7% of income within the first half of 2021. Revenue from our Legacy-Huazhu manachised and franchised inns within the first half of 2022 was RMB1.9 billion, representing a 11.8% year-over-year lower.

Other income represents income generated from companies apart from our resort operations, which primarily consists of income from the availability of IT merchandise and companies and Huazhu Mall™ and different income from the Legacy-DH phase business, totaling RMB76 million (US$11 million) within the second quarter of 2022, in comparison with RMB30 million within the second quarter of 2021 and RMB50 million within the earlier quarter.

In the primary half of 2022, different income was RMB126 million (US$19 million), in comparison with RMB62 million within the first half of 2021.

Hotel working prices within the second quarter of 2022 had been RMB3.0 billion (US$443 million), in comparison with RMB2.7 billion within the second quarter of 2021 and RMB2.8 billion within the earlier quarter. The year-over-year enhance was primarily as a result of continued resort community growth of Legacy-Huazhu, and business restoration of Legacy-DH. Hotel working prices from the Legacy-Huazhu phase within the second quarter of 2022 had been RMB2.2 billion, which represented 88.1% of the quarter’s income, in comparison with RMB2.2 billion or 65.5% of income within the second quarter in 2021 and RMB2.3 billion or 99.1% of income for the earlier quarter. The sequential lower was primarily as a result of our value management measures to realize rental discount.

In the primary half of 2022, resort working prices had been RMB5.8 billion (US$864 million), in comparison with RMB5.2 billion in 2021. Hotel working prices from Legacy-Huazhu within the first half of 2022 had been RMB4.4 billion, which represented 93.4% of income, in comparison with 76.2% in 2021.

Selling and advertising and marketing bills within the second quarter of 2022 had been RMB142 million (US$21 million), in comparison with RMB161 million within the second quarter of 2021 and RMB122 million within the earlier quarter. Selling and advertising and marketing bills from Legacy-Huazhu phase within the second quarter of 2022 had been RMB65 million, which represented 2.6% of the quarter’s income, in comparison with RMB129 million or 3.8% of income within the second quarter in 2021, and RMB78 million or 3.4% of income for the earlier quarter.

In the primary half of 2022, promoting and advertising and marketing bills had been RMB264 million (US$40 million), in comparison with RMB268 million in 2021. Selling and advertising and marketing bills from Legacy-Huazhu within the first half of 2022 had been RMB143 million, which represented 3.0% of income, in comparison with RMB201 million or 3.6% of income within the first half of 2021.

General and administrative bills within the second quarter of 2022 had been RMB368 million (US$55 million), in comparison with RMB392 million within the second quarter of 2021 and RMB462 million within the earlier quarter. General and administrative bills from Legacy-Huazhu phase within the second quarter of 2022 had been RMB267 million, which represented 10.8% of the quarter’s income, in comparison with RMB294 million or 8.7% within the second quarter in 2021 and RMB346 million or 15.2% for the earlier quarter. The lower was primarily as a result of our streamlining headquarter bills.

In the primary half of 2022, basic and administrative bills had been RMB830 million (US$123 million), in comparison with RMB720 million in 2021. General and administrative bills from Legacy-Huazhu within the first half of 2022 had been RMB613 million, which represented 12.9% of income, in comparison with RMB549 million or 9.9% of income within the first half of 2021.

Pre-opening bills within the second quarter of 2022 had been principally associated to the Legacy-Huazhu phase and totaled RMB31 million (US$5 million), in comparison with RMB16 million within the second quarter of 2021 and RMB26 million within the earlier quarter.

Pre-opening bills within the first half of 2022 had been RMB57 million (US$8 million), in comparison with RMB37 million in 2021. Pre-opening bills from Legacy-Huazhu as a share of income was 1.2% within the first half of 2022, in comparison with 0.7% within the first half of 2021.

Other working earnings, internet within the second quarter of 2022 was RMB154 million (US$23 million), in comparison with RMB362 million within the second quarter of 2021 which primarily associated to governmental subsidies for the Legacy-DH business and RMB45 million within the earlier quarter.

Other working earnings, internet within the first half of 2022 was RMB199 million (US$29 million), in comparison with RMB391 million in 2021.

Income from operations within the second quarter of 2022 was RMB8 million (US$1 million), in comparison with earnings from operations of RMB629 million within the second quarter of 2021 and a loss from operations of RMB708 million within the earlier quarter. Income from operations from the Legacy-Huazhu phase within the second quarter of 2022 was RMB21 million, in comparison with earnings from operations from the Legacy-Huazhu phase of RMB763 million within the second quarter of 2021 and a loss from operations from the Legacy-Huazhu phase of RMB416 million within the earlier quarter. Loss from operations from the Legacy-DH phase within the second quarter of 2022 was RMB13 million, in comparison with RMB134 million within the second quarter of 2021 and RMB292 million within the earlier quarter.

Loss from operations within the first half of 2022 was RMB700 million (US$104 million), in comparison with earnings from operations of RMB54 million in 2021. Loss from operations from Legacy-Huazhu within the first half of 2022 was RMB395 million, in comparison with earnings from operations of RMB592 million in 2021. Loss from operations from Legacy-DH within the first half of 2022 was RMB305 million, in comparison with RMB538 million in 2021.

Operating margin, outlined as earnings from operations as a share of revenues, within the second quarter of 2022 was 0.2%, in contrast with 17.5% within the second quarter of 2021 and unfavourable 26.4% for the earlier quarter. Operating margin from the Legacy-Huazhu phase within the second quarter of 2022 was 0.9%, in contrast with 22.7% within the second quarter of 2021 and unfavourable 18.3% within the earlier quarter.

Operating margin within the first half of 2022 was unfavourable 11.5%. Operating margin from Legacy-Huazhu within the first half of 2022 was unfavourable 8.3%, in contrast with 10.7% in 2021.

Other earnings, internet within the second quarter of 2022 was RMB29 million (US$4 million), in comparison with different expense, internet of RMB61 million within the second quarter of 2021 and different earnings, internet of RMB59 million for the earlier quarter.

Other earnings, internet within the first half of 2022 was RMB88 million (US$13 million), in comparison with RMB201 million in 2021 which was primarily as a result of good points from promoting AccorHotels shares.

Unrealized losses from truthful worth adjustments of fairness securities within the second quarter of 2022 had been RMB240 million (US$36 million), in comparison with unrealized losses from truthful worth adjustments of fairness securities of RMB58 million within the second quarter of 2021, and unrealized good points from truthful worth adjustments of RMB54 million within the earlier quarter. Unrealized good points (losses) from truthful worth adjustments of fairness securities primarily symbolize the unrealized good points (losses) from our funding in fairness securities with readily determinable truthful values, similar to AccorHotels.

In the primary half of 2022, unrealized losses from truthful worth adjustments of fairness securities had been RMB186 million (US$28 million), in comparison with unrealized good points from truthful worth adjustments of fairness securities of RMB180 million in 2021.

Income tax profit within the second quarter of 2022 was RMB299 million (US$45 million), in comparison with earnings tax expense of RMB132 million within the second quarter of 2021 and earnings tax profit of RMB131 million within the earlier quarter. In the primary half of 2022, earnings tax profit was RMB430 million (US$64 million), in comparison with earnings tax expense of RMB10 million in 2021.

Net loss attributable to H World Group Limited within the second quarter of 2022 was RMB350 million (US$52 million), in comparison with internet earnings attributable to H World Group Limited of RMB378 million within the second quarter of 2021 and a internet loss attributable to H World Group Limited of RMB630 million within the earlier quarter. Net loss attributable to H World Group Limited from the Legacy-Huazhu phase within the second quarter of 2022 was RMB298 million, in comparison with internet earnings attributable to H World Group Limited from the Legacy-Huazhu phase of RMB492 million within the second quarter of 2021 and a internet loss attributable to H World Group Limited from the Legacy-Huazhu phase of RMB307 million within the earlier quarter.

Net loss attributable to H World Group Limited within the first half of 2022 was RMB980 million (US$146 million), in contrast with internet earnings attributable to H World Group Limited of RMB130 million in 2021. Net loss attributable to H World Group Limited from Legacy-Huazhu within the first half of 2022 was RMB605 million, in comparison with internet earnings attributable to H World Group Limited of RMB545 million in 2021.

Basic and diluted losses per share/American depositary share (ADS). In the second quarter of 2022, fundamental and diluted losses per share had been RMB0.11 (US$0.02). Adjusted fundamental and diluted losses per share (non-GAAP), which excluded share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, had been RMB0.03 (US$0.00). Basic and diluted losses per ADS had been RMB1.13 (US$0.17). Adjusted fundamental and diluted losses per ADS (non-GAAP), which excluded share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, had been RMB0.27 (US$0.04).

In the primary half of 2022, fundamental and diluted losses per share had been RMB0.31 (US$0.05). Excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, adjusted fundamental and diluted losses per share (non-GAAP) had been RMB0.24 (US$0.04). Basic and diluted losses per ADS had been RMB3.15 (US$0.47). Excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, adjusted fundamental and diluted losses per ADS (non-GAAP) had been RMB2.40 (US$0.36).

EBITDA (non-GAAP) within the second quarter of 2022 was unfavourable RMB213 million (US$33 million), in contrast with RMB957 million within the second quarter of 2021 and unfavourable RMB301 million within the earlier quarter. EBITDA from the Legacy-Huazhu phase within the second quarter of 2022 was a unfavourable RMB243 million, in contrast with RMB1.0 billion within the second quarter of 2021 and unfavourable RMB61 million within the earlier quarter. Adjusted EBITDA (non-GAAP), which excluded share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, within the second quarter of 2022 was RMB53 million (US$7 million), in contrast with RMB1.0 billion within the second quarter of 2021 and unfavourable RMB333 million within the earlier quarter. The adjusted EBITDA from the Legacy-Huazhu phase (non-GAAP) within the second quarter of 2022 was RMB23 million, in contrast with RMB1.1 billion within the second quarter of 2021 and unfavourable RMB93 million within the earlier quarter.

EBITDA (non-GAAP) within the first half of 2022 was unfavourable RMB514 million (US$76 million), in contrast with RMB1.0 billion in 2021. EBITDA (non-GAAP) from Legacy-Huazhu within the first half of 2022 was unfavourable RMB304 million, in contrast with RMB1.4 billion in 2021. Excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, adjusted EBITDA (non-GAAP) within the first half of 2022 was unfavourable RMB280 million (US$41 million), in contrast with RMB910 million in 2021. The adjusted EBITDA (non-GAAP) from Legacy-Huazhu within the first half of 2022 was unfavourable RMB70 million, in contrast with RMB1.3 billion in 2021.

Cash movement. Operating money influx within the second quarter of 2022 was RMB989 million (US$147 million). Investing money influx within the second quarter of 2022 was RMB56 million (US$10 million). Financing money outflow within the second quarter of 2022 was RMB601 million (US$90 million).

Operating money influx within the first half of 2022 was RMB68 million (US$11 million), in comparison with RMB281 million money influx in 2021. Investing money outflow within the first half of 2022 was RMB145 million (US$22 million), in comparison with RMB132 million money influx in 2021. Financing money outflow within the first half of 2022 was RMB455 million (US$68 million), in comparison with RMB1.2 billion in 2021.

Cash and money equivalents and Restricted money. As of June 30, 2022, the Company had a complete stability of money and money equivalents of RMB4.6 billion (US$693 million) and restricted money of RMB38 million (US$6 million).

Debt financing. As of June 30, 2022, the Company had a complete debt stability of RMB10.4 billion (US$1.6 billion) and the unutilized credit score facility obtainable to the Company was RMB3.0 billion. Recently, we now have efficiently refinanced our syndication mortgage with a complete quantity of EUR340 million.

COVID replace
For our Legacy-Huazhu business, the large-scale outbreak of the Omicron variant in China since early-March 2022 led to in depth lockdowns in varied cities and a pointy decline within the demand for each business and leisure journey. As a end result, our RevPAR within the second quarter of 2022 solely recovered to 69% of the 2019 stage. Breaking down into every month, April and May 2022 had been the hardest-hit months with RevPAR solely having reached to 53% and 65% of the 2019 ranges, respectively. However, RevPAR improved in June 2022 to 86% of the 2019 stage as a result of a gradual carry of lockdowns since late May 2022. In addition, if we contemplate the affect of requisitioned inns, our RevPAR restoration in Q2 2022 would have been 75% of the 2019 stage.

DH have seen an accelerating RevPAR restoration in Q2 2022. While RevPAR in March 2022 was 35% decrease than the 2019 stage, June 2022 RevPAR was just one% decrease than the 2019 stage. However, towards the background of surging inflation in Europe and the ensuing substantial enhance in prices in addition to uncertainties in regards to the future growth of COVID and power provides, DH has been specializing in money movement enchancment measures. As a end result, DH will proceed to concentrate on effectivity enhancements, re-negotiation of lease contracts, and personnel value optimization.

Guidance
Since March 2022, the extremely infectious Omicron variant has been spreading quickly in China which has critically affected our near-term business efficiency. In addition, the present COVID prevention coverage has rendered business efficiency extra unpredictable for the foreseeable future. Under such circumstances, we’ll droop offering or updating steering in phrases of annual income and resort openings till the state of affairs improves. Nevertheless, we’ll proceed to offer quarterly steering primarily based on our greatest understanding of the latest state of affairs.

In the third quarter of 2022, H World expects income to extend 13% to 17% in comparison with the third quarter of 2021, or to extend 5% to 9% if excluding DH.

The above forecast displays the Company’s present and preliminary view, which is topic to alter.

Conference Call
H World’s administration will host a convention name at 9 p.m. U.S. Eastern time on Monday, August 29, 2022, or 9 a.m. Hong Kong time on Tuesday, August 30, 2022 following the announcement.

To be a part of by telephone, all members should pre-register for this convention name utilizing the Participant Registration hyperlink of https://register.vevent.com/register/BI86e44585a1874a5ca083113a1d669ffa. Upon registration, every participant will obtain particulars for the convention name, together with dial-in numbers, convention name passcode and a singular entry PIN.

A stay webcast of the decision will be accessed at https://edge.media-server.com/mmc/p/fvsd2n66 or the Company’s web site at https://ir.hworld.com/news-and-events/events-calendar.

A replay of the convention name will probably be obtainable for twelve months from the date of the convention on the Company’s web site, https://ir.hworld.com/news-and-events/events-calendar.

Use of Non-GAAP Financial Measures
To complement the Company’s unaudited consolidated monetary outcomes introduced in accordance with U.S. Generally-Accepted Accounting Principles (“GAAP”), the Company makes use of the next non-GAAP measures outlined as non-GAAP monetary measures by the U.S. Securities and Exchange Commission (“SEC”): adjusted internet earnings (loss) attributable to H World Group Limited excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities; adjusted fundamental and diluted earnings (losses) per share/ADS excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities; EBITDA; adjusted EBITDA, adjusted EBITDA from the Legacy-Huazhu phase and adjusted EBITDA from the Legacy-DH phase excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities. The presentation of these non-GAAP monetary measures is just not meant to be thought-about in isolation or as an alternative choice to the monetary info ready and introduced in accordance with U.S. GAAP. For extra info on these non-GAAP monetary measures, please see the desk captioned “Unaudited Reconciliations of GAAP and non-GAAP Results” set forth on the finish of this launch. The Company believes that these non-GAAP monetary measures present significant supplemental info relating to Company efficiency by excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities that will not be indicative of Company working efficiency. The Company believes that each administration and buyers profit from referring to those non-GAAP monetary measures in assessing Company efficiency and when planning and forecasting future intervals. These non-GAAP monetary measures additionally facilitate administration’s inner comparisons to the Company’s historic efficiency. The Company believes these non-GAAP monetary measures are additionally helpful to buyers in permitting for larger transparency with respect to supplemental info used frequently by Company administration in monetary and operational decision-making. A limitation of utilizing non-GAAP monetary measures excluding share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities is that share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities have been and will proceed to be vital and recurring within the Company’s business. Management compensates for these limitations by offering particular info relating to the GAAP quantities excluded from every non-GAAP measure. The accompanying tables have extra particulars on the reconciliations between GAAP monetary measures which are most straight akin to non-GAAP monetary measures.

The Company believes that EBITDA is a helpful monetary metric to evaluate the working and monetary efficiency earlier than the affect of investing and financing transactions and earnings taxes, given the numerous investments that the Company has made in leasehold enhancements, depreciation and amortization expense that comprise a good portion of the Company’s value construction. In addition, the Company believes that EBITDA is extensively utilized by different corporations within the lodging business and could also be utilized by buyers as a measure of monetary efficiency. The Company believes that EBITDA info gives buyers with a useful gizmo for comparability between intervals as a result of it excludes depreciation and amortization expense attributable to capital expenditures. The Company additionally makes use of adjusted EBITDA, which is outlined as EBITDA earlier than share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities, to evaluate working outcomes of its inns in operation. The Company believes that the exclusion of share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities helps facilitate year-on-year comparisons of the outcomes of operations because the share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities will not be indicative of Company working efficiency.

The Company believes that unrealized good points and losses from adjustments in truthful worth of fairness securities are usually meaningless in understanding the Company’s reported outcomes or evaluating the financial efficiency of its companies. These good points and losses have brought about and will proceed to trigger vital volatility in reported periodic earnings.

Therefore, the Company believes adjusted EBITDA extra intently displays the efficiency functionality of our inns. The presentation of EBITDA and adjusted EBITDA shouldn’t be construed as a sign that the Company’s future outcomes will probably be unaffected by different prices and good points thought-about to be outdoors the peculiar course of business.

The use of EBITDA and adjusted EBITDA has sure limitations. Depreciation and amortization expense for varied long-term property (together with land use rights), earnings tax, curiosity expense and curiosity earnings have been and will probably be incurred and are usually not mirrored within the presentation of EBITDA. Share-based compensation bills and unrealized good points (losses) from truthful worth adjustments of fairness securities have been and will probably be incurred and are usually not mirrored within the presentation of adjusted EBITDA. Each of these things must also be thought-about within the general analysis of the outcomes. The Company compensates for these limitations by offering the related disclosure of depreciation and amortization, curiosity earnings, curiosity expense, earnings tax expense, share-based compensation bills, and unrealized good points (losses) from truthful worth adjustments of fairness securities and different related objects each within the reconciliations to the U.S. GAAP monetary measures and within the consolidated monetary statements, all of which ought to be thought-about when evaluating the efficiency of the Company.

The phrases EBITDA and adjusted EBITDA are usually not outlined below U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of internet earnings, working earnings, working efficiency or liquidity introduced in accordance with U.S. GAAP. When assessing the working and monetary efficiency, buyers shouldn’t contemplate these information in isolation or as an alternative choice to the Company’s internet earnings, working earnings or another working efficiency measure that’s calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA will not be akin to EBITDA or adjusted EBITDA or equally titled measures utilized by different corporations since such different corporations could not calculate EBITDA or adjusted EBITDA in the identical method because the Company does.

Reconciliations of the Company’s non-GAAP monetary measures, together with EBITDA and adjusted EBITDA, to the consolidated assertion of operations info are included on the finish of this press launch.

About H World Group Limited
Originated in China, H World Group Limited is a key participant within the world resort business. As of June 30, 2022, H World operated 8,176 inns with 773,898 rooms in operation in 17 international locations. H World’s manufacturers embody Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel, Madison Hotel, Joya Hotel, Blossom House, Ni Hao Hotel, CitiGO Hotel, Steigenberger Hotels & Resorts, MAXX, Jaz within the City, IntercityHotel, Zleep Hotels, Steigenberger Icon and Song Hotels. In addition, H World additionally has the rights as grasp franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, within the pan-China area.

H World’s business consists of leased and owned, manachised and franchised fashions. Under the lease and possession mannequin, H World straight operates inns usually situated on leased or owned properties. Under the manachise mannequin, H World manages manachised inns via the on-site resort managers that H World appoints, and H World collects charges from franchisees. Under the franchise mannequin, H World gives coaching, reservations and assist companies to the franchised inns, and collects charges from franchisees however doesn’t appoint on-site resort managers. H World applies a constant normal and platform throughout all of its inns. As of June 30, 2022, H World operates 14 p.c of its resort rooms below lease and possession mannequin, and 86 p.c below manachise and franchise fashions.

For extra info, please go to H World’s web site: https://ir.hworld.com

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995: The info on this launch accommodates forward-looking statements which contain dangers and uncertainties. Such elements and dangers embody our anticipated progress methods; our future outcomes of operations and monetary situation; financial circumstances; the regulatory setting; our means to draw and retain clients and leverage our manufacturers; tendencies and competitors within the lodging business; the anticipated progress of demand for lodging; and different elements and dangers detailed in our filings with the U.S. Securities and Exchange Commission. Any statements contained herein that aren’t statements of historic reality could also be deemed to be forward-looking statements, which can be recognized by terminology similar to “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project” or “continue,” the unfavourable of such phrases or different comparable terminology. Readers shouldn’t depend on forward-looking statements as predictions of future occasions or outcomes.

H World undertakes no obligation to replace or revise any forward-looking statements, whether or not consequently of new info, future occasions or in any other case, until required by relevant legislation.

—Financial Tables and Operational Data Follow—

Operating Results: Legacy-Huazhu⁽¹⁾

(4) If together with inns below requisition, RevPAR in Q2 2022 would have been 75% of the 2019 stage.

Operating Results: Legacy-DH⁽⁵⁾

Hotel Portfolio by Brand

(7) As of June 30, 2022, 2 operational inns and 9 pipeline inns of IntercityHotel had been in China.
(8) As of June 30, 2022, 11 operational inns and 2 pipeline inns of Steigenberger Hotels & Resorts had been in China.
(9) As of June 30, 2022, 2 operational inns and 8 pipeline inns of MAXX had been in China.
(10) As of June 30, 2022, 3 operational inns of Steigenberger Icon had been in China.
(11) Other inns embody different associate inns and different resort manufacturers in Yongle Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).

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1 Hotel turnover refers to complete transaction worth of room and non-room income from H World inns (i.e., leased and operated, manachised and franchised inns).
2 The conversion of Renminbi (“RMB”) into United States {dollars} (“US$”) is predicated on the trade charge of US$1.00=RMB6.6981 on June 30, 2022 as set forth in H.10 statistical launch of the U.S. Federal Reserve Board and obtainable at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.
3 The conversion of Renminbi (“RMB”) into United States {dollars} (“US$”) is predicated on the trade charge of US$1.00=RMB6.6981 on June 30, 2022 as set forth in H.10 statistical launch of the U.S. Federal Reserve Board and obtainable at http://www.federalreserve.gov/releases/h10/hist/dat00_ch.htm.

Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: [email protected]
https://ir.hworld.com