Cover Page
Cover Page | 12 Months Ended |
Dec. 31, 2021shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2021 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-34656 |
Entity Registrant Name | Huazhu Group Limited |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | No. 699 Wuzhong 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 | 3,224,997,210 |
Entity Address, Postal Zip Code | 201103 |
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 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | FY |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Business Contact [Member] | |
Document Information [Line Items] | |
Contact Personnel Name | Hui Chen |
Entity Address, Address Line One | No. 699 Wuzhong Road |
Entity Address, City or Town | Shanghai |
Entity Address, Country | CN |
City Area Code | 86 |
Local Phone Number | (21) 6195-2011 |
Contact Personnel Email Address | cj-chenhui@huazhu.com |
Entity Address, Postal Zip Code | 201103 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | |
Current assets: | ||||
Cash and cash equivalents | ¥ 5,116 | $ 803 | ¥ 7,026 | |
Restricted cash | 25 | 4 | 64 | |
Short-term investments measured at fair value | 2,589 | 406 | 3,903 | |
Accounts receivable, net of allowance of RMB41 and RMB50 as of December 31, 2020 and 2021, respectively | 521 | 82 | 404 | |
Loan receivables - current, net | 218 | 34 | 304 | |
Amounts due from related parties, net | 149 | 23 | 178 | |
Inventories | 88 | 14 | 89 | |
Other current assets, net | 847 | 133 | 914 | |
Total current assets | 9,553 | 1,499 | 12,882 | |
Property and equipment, net | 7,056 | 1,107 | 6,682 | |
Intangible assets, net | 5,385 | 845 | 5,945 | |
Operating lease right-of-use assets | 29,942 | 4,698 | 28,980 | |
Finance lease right-of-use assets | 2,235 | 351 | 2,041 | |
Land use rights, net | 206 | 32 | 213 | |
Long-term investments | 1,965 | 308 | 1,923 | |
Goodwill | 5,132 | 805 | 4,988 | |
Amounts due from a related party | 1 | 0 | ||
Loan receivables, net | 98 | 15 | 135 | |
Other assets, net | 834 | 131 | 743 | |
Deferred tax assets | 862 | 136 | 623 | |
Total assets | 63,269 | 9,927 | 65,155 | |
Current liabilities: | ||||
Short-term debt | 6,232 | 978 | 1,142 | |
Accounts payable | 968 | 152 | 1,241 | |
Amounts due to related parties | 197 | 31 | 132 | |
Salary and welfare payables | 591 | 93 | 526 | |
Deferred revenue | 1,366 | 214 | 1,272 | |
Operating lease liabilities, current | 3,628 | 569 | 3,406 | |
Finance lease liabilities, current | 41 | 6 | 31 | |
Accrued expenses and other current liabilities | 1,838 | 288 | 2,440 | |
Income tax payable | 418 | 66 | 339 | |
Total current liabilities | 15,279 | 2,397 | 10,529 | |
Long-term debt | 3,565 | 559 | 10,856 | |
Operating lease liabilities, non-current | 28,012 | 4,396 | 27,048 | |
Finance lease liabilities, non-current | 2,684 | 421 | 2,497 | |
Deferred revenue | 785 | 123 | 662 | |
Other long-term liabilities | 903 | 142 | 771 | |
Retirement benefit obligations | 144 | 23 | 179 | |
Deferred tax liabilities | 853 | 134 | 1,181 | |
Total liabilities | 52,225 | 8,195 | 53,723 | |
Commitments and contingencies (Note 21) | ||||
Equity: | ||||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,243,644,440 and 3,255,971,250 shares issued as of December 31, 2020 and 2021, and 3,108,425,680 and 3,120,746,090 shares outstanding as of December 31, 2020 and 2021, respectively) | [1] | 0 | 0 | 0 |
Treasury shares (30,967,640 and 30,974,040 shares as of December 31, 2020 and 2021, respectively) | (107) | (17) | (107) | |
Additional paid-in capital | 9,964 | 1,563 | 9,808 | |
Retained earnings | 1,037 | 163 | 1,502 | |
Accumulated other comprehensive income | 41 | 6 | 127 | |
Total Huazhu Group Limited shareholders' equity | 10,935 | 1,715 | 11,330 | |
Noncontrolling interest | 109 | 17 | 102 | |
Total equity | 11,044 | 1,732 | 11,432 | |
Total liabilities and equity | ¥ 63,269 | $ 9,927 | ¥ 65,155 | |
[1] | In June 2021, the Company effected a share split that each issued and unissued ordinary share of the Company with a par value of US$ 0.0001 was sub-divided into 10 ordinary shares with a par value of US$ 0.00001 each. The ratio of ADS to ordinary share was adjusted from one (1) ADS representing one (1) ordinary share to one (1) ADS representing ten (10) ordinary shares. Except otherwise stated, the share split has been retrospectively applied for all periods presented. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Millions | Dec. 31, 2021CNY (¥)shares | Dec. 31, 2020CNY (¥)shares |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance | ¥ | ¥ 50 | ¥ 41 |
Ordinary shares, shares authorized | 80,000,000,000 | 80,000,000,000 |
Ordinary shares, shares issued | 3,255,971,250 | 3,243,644,440 |
Ordinary shares, shares outstanding | 3,120,746,090 | 3,108,425,680 |
Treasury shares, shares | 30,974,040 | 30,967,640 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)¥ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | |
Revenues: | ||||
Total revenues | ¥ 12,785 | $ 2,006 | ¥ 10,196 | ¥ 11,212 |
Operating costs and expenses: | ||||
Hotel operating costs | 11,282 | 1,770 | 9,729 | 7,190 |
Other operating costs | 58 | 9 | 52 | 57 |
Selling and marketing expenses | 641 | 101 | 597 | 426 |
General and administrative expenses | 1,545 | 242 | 1,259 | 1,061 |
Pre-opening expenses | 81 | 13 | 288 | 502 |
Total operating costs and expenses | 13,607 | 2,135 | 11,925 | 9,236 |
Goodwill impairment loss | ¥ | 0 | 437 | 0 | |
Other operating income, net | 986 | 155 | 480 | 132 |
Income (loss) from operations | 164 | 26 | (1,686) | 2,108 |
Interest income | 89 | 14 | 119 | 160 |
Interest expense | 405 | 64 | 533 | 315 |
Other income (expense), net | 157 | 25 | (89) | 331 |
Unrealized gains (losses) from fair value changes of equity securities | (96) | (15) | (265) | 316 |
Foreign exchange (loss) gain | (317) | (50) | 175 | (35) |
Income (loss) before income taxes | (408) | (64) | (2,279) | 2,565 |
Income tax expense (benefit) | 12 | 2 | (215) | 640 |
Loss from equity method investments | (60) | (9) | (140) | (164) |
Net income (loss) | (480) | (75) | (2,204) | 1,761 |
Less: net loss attributable to noncontrolling interest | (15) | (2) | (12) | (8) |
Net income (loss) attributable to Huazhu Group Limited | (465) | (73) | (2,192) | 1,769 |
Other comprehensive income (loss) | ||||
Gain (loss) arising from defined benefit plan, net of tax of nil, a loss of RMB 13, and nil for 2019, 2020 and 2021, respectively | 13 | 2 | (27) | |
Foreign currency translation adjustments, net of tax of nil for 2019, 2020 and 2021, respectively | (99) | (16) | 203 | (7) |
Comprehensive income (loss) | (566) | (89) | (2,028) | 1,754 |
Less: comprehensive (loss) income attributable to the noncontrolling interest | (15) | (2) | (12) | (8) |
Comprehensive income (loss) attributable to Huazhu Group Limited | ¥ (551) | $ (87) | ¥ (2,016) | ¥ 1,762 |
Earnings (Losses) per share: | ||||
Basic | (per share) | ¥ (0.15) | $ (0.02) | ¥ (0.75) | ¥ 0.62 |
Diluted | (per share) | ¥ (0.15) | $ (0.02) | ¥ (0.75) | ¥ 0.59 |
Weighted average number of shares used in computation: | ||||
Basic (in shares) | 3,114,124,244 | 3,114,124,244 | 2,927,398,409 | 2,843,051,378 |
Diluted (in shares) | 3,114,124,244 | 3,114,124,244 | 2,927,398,409 | 3,043,098,899 |
Leased and owned hotels | ||||
Revenues: | ||||
Total revenues | ¥ 8,118 | $ 1,274 | ¥ 6,908 | ¥ 7,718 |
Franchise or manachise agreements | ||||
Revenues: | ||||
Total revenues | 4,404 | 691 | 3,136 | 3,342 |
Other revenues | ||||
Revenues: | ||||
Total revenues | ¥ 263 | $ 41 | ¥ 152 | ¥ 152 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Gain arising from defined benefit plan, tax | ¥ 4 | ¥ 13 | ¥ 0 |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Millions | Ordinary SharesCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥)shares | Ordinary SharesCNY (¥)shares | Ordinary SharesUSD ($)shares | Treasury SharesCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥)shares | Treasury SharesCNY (¥)shares | Additional Paid-in CapitalCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥) | Additional Paid-in CapitalCNY (¥) | Retained EarningsCumulative Effect, Period of Adoption, Adjustment [Member]CNY (¥) | Retained EarningsCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥) | Retained EarningsCNY (¥) | Accumulated Other Comprehensive (Loss) IncomeCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥) | Accumulated Other Comprehensive (Loss) IncomeCNY (¥) | Noncontrolling InterestCumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥) | Noncontrolling InterestCNY (¥) | Cumulative Effect, Period of Adoption, Adjustment [Member]CNY (¥) | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]CNY (¥) | CNY (¥)shares | USD ($)shares |
Balance at Dec. 31, 2018 | ¥ 0 | ¥ (107) | ¥ 3,713 | ¥ 2,610 | ¥ (42) | ¥ 145 | ¥ 6,319 | |||||||||||
Balance issued (in shares) at Dec. 31, 2018 | shares | 2,965,978,880 | 2,965,978,880 | ||||||||||||||||
Balance outstanding (in shares) at Dec. 31, 2018 | shares | 2,830,760,120 | 2,830,760,120 | ||||||||||||||||
Treasury shares, balance (in shares) at Dec. 31, 2018 | shares | 30,967,640 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks | ¥ 0 | 14 | 14 | |||||||||||||||
Issuance of ordinary shares upon exercise of options and vesting of restricted stocks (in shares) | shares | 28,265,970 | 28,265,970 | ||||||||||||||||
Share-based compensation | 110 | 110 | ||||||||||||||||
Net income | 1,769 | (8) | 1,761 | |||||||||||||||
Cash dividends declared/paid/approved | (678) | (678) | ||||||||||||||||
Dividends paid to noncontrolling interest holders | (5) | (5) | ||||||||||||||||
Capital contribution from noncontrolling interest holders | 22 | 22 | ||||||||||||||||
Disposal of noncontrolling interest for deconsolidation | 3 | 3 | ||||||||||||||||
Acquisition of noncontrolling interest | (3) | (36) | (39) | |||||||||||||||
Foreign currency translation adjustments | (7) | (7) | ||||||||||||||||
Balance (ASU 2016-13) at Dec. 31, 2019 | ¥ 0 | ¥ (107) | ¥ 3,834 | ¥ (7) | ¥ 3,694 | ¥ (49) | ¥ 121 | ¥ (7) | ¥ 7,493 | |||||||||
Balance at Dec. 31, 2019 | ¥ 0 | ¥ (107) | 3,834 | 3,701 | (49) | 121 | 7,500 | |||||||||||
Balance issued (in shares) (ASU 2016-13) at Dec. 31, 2019 | shares | 2,994,244,850 | |||||||||||||||||
Balance issued (in shares) at Dec. 31, 2019 | shares | 2,994,244,850 | 2,994,244,850 | ||||||||||||||||
Balance outstanding (in shares) (ASU 2016-13) at Dec. 31, 2019 | shares | 2,859,026,090 | |||||||||||||||||
Balance outstanding (in shares) at Dec. 31, 2019 | shares | 2,859,026,090 | 2,859,026,090 | ||||||||||||||||
Treasury shares, balance (in shares) (ASU 2016-13) at Dec. 31, 2019 | shares | 30,967,640 | |||||||||||||||||
Treasury shares, balance (in shares) at Dec. 31, 2019 | shares | 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 | ||||||||||||||||
Share-based compensation | 122 | 122 | ||||||||||||||||
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 | ||||||||||||||||
Conversion of Convertible Senior Notes due 2022 | ¥ 0 | $ 2,020 | 0 | 0 | ||||||||||||||
Conversion of Convertible Senior Notes due 2022 (In shares) | shares | 2,020 | 2,020 | ||||||||||||||||
Noncontrolling interest recognized from partial disposal | 2 | 2 | ||||||||||||||||
Noncontrolling interest recognized in connection with acquisitions | 3 | 3 | ||||||||||||||||
Net income | (2,192) | (12) | (2,204) | |||||||||||||||
Dividends paid to noncontrolling interest holders | (4) | (4) | ||||||||||||||||
Capital contribution from noncontrolling interest holders | 10 | 10 | ||||||||||||||||
Disposal of noncontrolling interest for deconsolidation | 0 | 0 | ||||||||||||||||
Loss arising from defined benefit plan, net of tax | (27) | (27) | ||||||||||||||||
Acquisition of noncontrolling interest | (118) | (18) | (136) | |||||||||||||||
Foreign currency translation adjustments | 203 | 203 | ||||||||||||||||
Balance at Dec. 31, 2020 | ¥ 0 | ¥ (107) | 9,808 | 1,502 | 127 | 102 | ¥ 11,432 | |||||||||||
Balance issued (in shares) at Dec. 31, 2020 | shares | 3,243,644,440 | 3,243,644,440 | 3,243,644,440 | 3,243,644,440 | ||||||||||||||
Balance outstanding (in shares) at Dec. 31, 2020 | shares | 3,108,425,680 | 3,108,425,680 | 3,108,425,680 | 3,108,425,680 | ||||||||||||||
Treasury shares, balance (in shares) at Dec. 31, 2020 | shares | 30,967,640 | 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 | ||||||||||||||||
Share-based compensation | 109 | 109 | ||||||||||||||||
Conversion of Convertible Senior Notes due 2022 | ¥ 0 | 0 | 0 | |||||||||||||||
Conversion of Convertible Senior Notes due 2022 (In shares) | shares | 1,340 | 1,340 | ||||||||||||||||
Noncontrolling interest recognized in connection with acquisitions | 21 | 21 | ||||||||||||||||
Net income | (465) | (15) | (480) | $ (75,000,000) | ||||||||||||||
Dividends paid to noncontrolling interest holders | (4) | (4) | ||||||||||||||||
Capital contribution from noncontrolling interest holders | 16 | 16 | ||||||||||||||||
Loss arising from defined benefit plan, net of tax | 13 | 13 | 2,000,000 | |||||||||||||||
Acquisition of noncontrolling interest | (3) | (11) | (14) | |||||||||||||||
Repurchase of shares, Value | ¥ 0 | ¥ 0 | 0 | 0 | ||||||||||||||
Repurchase of shares (in ordinary shares) | shares | (6,400) | (6,400) | ||||||||||||||||
Repurchase of shares (in Treasury Shares) | shares | 6,400 | |||||||||||||||||
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | 50 | ||||||||||||||||
Foreign currency translation adjustments | (99) | (99) | (16,000,000) | |||||||||||||||
Balance at Dec. 31, 2021 | ¥ 0 | ¥ (107) | ¥ 9,964 | ¥ 1,037 | ¥ 41 | ¥ 109 | ¥ 11,044 | $ 1,732,000,000 | ||||||||||
Balance issued (in shares) at Dec. 31, 2021 | shares | 3,255,971,250 | 3,255,971,250 | 3,255,971,250 | 3,255,971,250 | ||||||||||||||
Balance outstanding (in shares) at Dec. 31, 2021 | shares | 3,120,746,090 | 3,120,746,090 | 3,120,746,090 | 3,120,746,090 | ||||||||||||||
Treasury shares, balance (in shares) at Dec. 31, 2021 | shares | 30,974,040 | 30,974,040 | 30,974,040 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Operating activities: | ||||
Net income (loss) | ¥ (480) | $ (75) | ¥ (2,204) | ¥ 1,761 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Share-based compensation | 109 | 17 | 122 | 110 |
Depreciation and amortization | 1,503 | 236 | 1,362 | 991 |
Amortization of issuance cost of convertible senior notes and upfront fee of bank borrowings | 60 | 9 | 83 | 28 |
Deferred taxes | (543) | (85) | (553) | (38) |
Credit loss | 105 | 16 | 65 | 21 |
Loss (gain) from disposal of property and equipment | (14) | (2) | 1 | (10) |
Impairment loss | 380 | 60 | 709 | 13 |
Loss from equity method investments, net of dividends | 60 | 9 | 145 | 213 |
Investment loss (income) | 67 | 11 | 108 | (477) |
Interest accretion for finance lease | 4 | 1 | 27 | |
Noncash lease expense | 2,306 | 361 | 2,063 | 2,235 |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||
Accounts receivable | (113) | (18) | 35 | (34) |
Inventories | 2 | 0 | 0 | (17) |
Amounts due from related parties | 12 | 2 | (14) | 32 |
Other current assets | 6 | 1 | (147) | (80) |
Other assets | (64) | (9) | (86) | (175) |
Accounts payable | 7 | 1 | 31 | (1) |
Amounts due to related parties | (4) | (1) | 20 | 17 |
Salary and welfare payables | 72 | 11 | (46) | (28) |
Deferred revenue | 224 | 35 | (52) | 279 |
Accrued expenses and other current liabilities | (439) | (69) | 445 | 408 |
Operating lease liabilities | (2,123) | (333) | (1,640) | (2,036) |
Income tax payable | 83 | 13 | 94 | (35) |
Other long-term liabilities | 122 | 19 | 41 | 116 |
Net cash provided by operating activities | 1,342 | 210 | 609 | 3,293 |
Investing activities: | ||||
Purchases of property and equipment | (1,658) | (260) | (1,745) | (1,527) |
Purchases of intangibles | (17) | (3) | (28) | (5) |
Purchases of land use rights | (3) | (3) | ||
Amount received as a result of government zoning | 33 | 5 | 13 | |
Acquisitions, net of cash received | (742) | (116) | (5,060) | (244) |
Proceeds from disposal of subsidiary and branch, net of cash disposed | 3 | 1 | 4 | 2 |
Purchases of short term and long term investments | (521) | (82) | (1,702) | (328) |
Proceeds from maturity/sale and return of investments | 1,494 | 235 | 396 | 2,002 |
Payment for shareholder loan to equity investees | (5) | (1) | (15) | (87) |
Collection of shareholder loan from equity investees | 25 | 4 | 15 | 88 |
Payment for the origination of loan receivables | (176) | (27) | (130) | (454) |
Proceeds from collection of loan receivables | 162 | 25 | 167 | 258 |
Net cash used in investing activities | (1,402) | (219) | (8,101) | (285) |
Financing activities: | ||||
Proceeds from issuance of ordinary shares in Hong Kong public offering | 6,018 | |||
Payment of ordinary share issuance costs | (19) | (3) | (32) | |
Net settlement on shares repurchased for withholding taxes related to share-based awards | 50 | 7 | ||
Net proceeds from issuance of ordinary shares upon exercise of options | 1 | 0 | 1 | 14 |
Payment of share repurchase | 0 | 0 | ||
Proceeds from short-term bank borrowings | 2,288 | 359 | 1,658 | 2,214 |
Repayment of short-term bank borrowings | (2,474) | (389) | (1,993) | (1,902) |
Proceeds from long-term bank borrowings | 53 | 8 | 1,652 | 13,176 |
Repayment of long-term bank borrowings | (1,650) | (259) | (9,163) | (6,760) |
Funds advanced from noncontrolling interest holders | 4 | 1 | 14 | 2 |
Repayment of funds advanced from noncontrolling interest holders | (1) | 0 | (9) | (19) |
Acquisitions of noncontrolling interest | (29) | (4) | (98) | (39) |
Contribution from noncontrolling interest holders | 16 | 3 | 10 | 22 |
Proceeds from long-term finance liabilities (failed sale and leaseback "failed SLB") | 38 | 6 | 83 | |
Repayment of long-term finance liabilities (failed SLB) | (46) | (7) | (42) | |
Dividends paid to noncontrolling interest holders | (4) | (1) | (4) | (5) |
Dividends paid | (678) | (658) | ||
Repayment of convertible senior notes | 0 | 0 | ||
Proceeds from issuance of convertible senior notes | 3,499 | |||
Direct financing costs paid | (10) | |||
Principal payments of finance lease | (28) | (4) | (23) | |
Net cash provided by (used in) financing activities | (1,801) | (283) | 883 | 6,045 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | (88) | (14) | (300) | 62 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,949) | (306) | (6,909) | 9,115 |
Cash, cash equivalents and restricted cash at the beginning of the year | 7,090 | 1,113 | 13,999 | 4,884 |
Cash, cash equivalents and restricted cash at the end of the year | 5,141 | 807 | 7,090 | 13,999 |
Supplemental disclosure of cash flow information: | ||||
Cash and cash equivalents | 5,116 | 7,026 | 3,234 | |
Restricted cash | 25 | 64 | 10,765 | |
Interest paid, net of amounts capitalized | 297 | 47 | 476 | 414 |
Income taxes paid | 477 | 75 | 238 | 712 |
Cash paid for amounts included in the measurement of operating lease liabilities | 3,770 | 592 | 3,309 | 2,905 |
Cash paid for amounts included in the measurement of finance lease liabilities | 92 | 14 | 63 | |
Non-cash right-of-use assets obtained in exchange for operating lease liabilities | 2,565 | 403 | 1,422 | 4,176 |
Non-cash right-of-use assets obtained in exchange for finance lease liabilities | 501 | 79 | 270 | |
Non-cash right-of-use assets obtained in acquisition for operating lease | 1,710 | 268 | 8,645 | 22 |
Non-cash right-of-use assets obtained in acquisition for finance lease | 1,794 | |||
Non-cash lease liabilities obtained in acquisition for operating lease | 1,692 | 266 | 8,849 | |
Non-cash lease liabilities obtained in acquisition for finance lease | 2,187 | |||
Supplemental schedule of non-cash investing and financing activities: | ||||
Purchases of property and equipment included in payables | 486 | 76 | 736 | 963 |
Consideration payable for business acquisition | 86 | 13 | 16 | |
Purchase of intangible assets included in payables | ¥ 2 | $ 0 | 5 | 3 |
Reimbursement of government zoning included in receivables | ¥ 2 | |||
Cash dividends declared | ¥ 678 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2021 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. Huazhu 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”). On January 2, 2020, the Group completed the acquisition of 100% equity interest of Steigenberger Hotels Aktiengesellschaft Germany (“Deutsche Hospitality” or “DH”). Deutsche Hospitality was engaged in the business of leasing, franchising, operating and managing hotels under five brands in the midscale and upscale market in Europe, the Middle East and Africa. After the acquisition, “legacy DH” refers to Deutsche Hospitality and its subsidiaries and “legacy Huazhu” refers to the Group excluding Deutsche Hospitality. The Group completed public offering in Hong Kong in September 2020 with proceeds of RMB6,018 and the trading of ordinary shares on the Hong Kong Stock Exchange commenced on September 22, 2020 under the stock code “1179”. In June 2021, the Company effected a share split that each issued and unissued ordinary share of the Company with a par value of US$0.0001 was sub-divided into 10 ordinary shares with a par value of US$0.00001 each. The ratio of ADS to ordinary share was adjusted from one (1) ADS representing one (1) ordinary share to one (1) ADS representing ten (10) ordinary shares. Except otherwise stated, the share split has been retrospectively applied for all periods presented. 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, 2020 and 2021, the Group had 753 and 738 leased and owned hotels in operation, respectively. Manachised and franchised hotels Typically the Group enters into certain franchise and management arrangements with franchisees for which the Group is responsible for providing branding, quality assurance, training, reservation, hiring and appointing of the hotel general manager and various other support services relating to the hotel renovation and operation. Those hotels are classified as manachised hotels. Under typical franchise and management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees, the majority of which are equal to a certain percentage of the revenues of the hotel. The franchisee is responsible for the costs of hotel development, renovation and the costs of its operations. The term of the franchise and management agreements are typically eight |
SUMMARY OF PRINCIPAL ACCOUNTING
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
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”). The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, to support its working capital requirements. The Group’s businesses have been significantly impacted by the global outbreak of COVID-19 and as a result, incurred net losses during the year ended December 31, 2020 and 2021. As of December 31, 2021, the Group’s total current liabilities exceeded its total current assets by RMB5,726 (US$898 million), which mainly attributed to the scheduled repayments of the Group’s Convertible Senior Notes of US$475 million (RMB3,027) due in November 2022, and the outstanding bank borrowing of EUR338 million (RMB2,440) under its long-term bank credit facility of EUR440 million (RMB3,177) due in December 2022. These conditions may raise substantial doubt about the Group’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Group is unable to continue as a going concern. However, the management has evaluated the significance of the conditions and regards the going concern assumption as appropriate based on the following considerations: ● The Group generated positive cash flow from operations for several consecutive years with a net operating cash inflow of RMB1,342 for the year ended December 31, 2021; ● The Group has performed a review of its cash flow forecasts for the twelve month period after the date that the financial statements are issued and believes that its operating cash flow will be positive. Management believes the relevant conditions that raise substantial doubt on going concern are mitigated by the following plans and actions: ● The Group has the ability to sell its short-term investments that can be readily convertible into cash, the fair value of which was approximately RMB2,589 as of December 31, 2021; ● As of March 31, 2022, the Group had unused bank credit facilities of approximately RMB2,994. Based on the Group’s historical experience, requests for drawdowns will be approved by the banks provided that the Group submits the required supporting documentation and the amount is within the credit limit granted; In addition, the Group is in the process to obtain long term credit facilities from commercial banks. While final approval has not been obtained, management of the Group believe it is likely such credit facilities can be obtained to replace its existing long-term bank credit facility of EUR 440 million (RMB3,177) due in December 2022. Based on the above factors, management believes that adequate sources of liquidity exist to fund the Group’s working capital and capital expenditures requirements, and to meet its other liabilities and commitments as they become due for at least twelve months from the issuance of these consolidated financial statements. Basis of consolidation The 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, 2020 and 2021, the Group consolidated eight and seven entities under VIE model, and the impact of the consolidated VIEs are immaterial to the Group’s consolidated financial statements. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels and the funds that it serves as general partner or fund manager to identify potential variable interest entities. Generally, these entities that operate the manachised and franchised hotels qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. For the disclosure of significant non-consolidated variable interest entities, see Note 7 Investments. 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 Investments represent equity-method investments, equity investments with readily determinable fair values, equity investments without readily determinable fair values and available-for-sale debt securities. The Group accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in 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. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than- temporary. 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 unrealized gains and losses from fair value changes recognized in net income in the consolidated statements of comprehensive income. Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the amount by which the carrying value exceeds the fair value of the investment. Debt securities that the company has no 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. Available-for-sale debt securities are reported at fair value, with unrealized gains and losses (other than impairment losses) recognized in accumulated other comprehensive income or loss. Realized gains and losses on debt securities are recognized in the net income in the consolidated statements of comprehensive income. Before the adoption of Accounting Standards Update (“ASU”) 2016-13 (codified as ASC 326), Measurement of Credit Losses on Financial Instruments, the amount of the total impairment related to the credit loss was recognized in the income statement and the amount related to all other factors is recognized in other comprehensive income, net of applicable taxes, and the impairment losses recognized in the income statement cannot be reversed for any future recoveries. After the adoption of ASC 326 on January 1, 2020, 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. As a result of the impairment analysis, the Group recorded an impairment of RMB10, RMB92 and RMB63 in 2019, 2020 and 2021, respectively. Accounts receivable, loan receivables and other financial assets Accounts receivable, net Accounts receivable mainly consist of franchise fee receivables, amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice or accrued amount less an allowance for credit losses. Before the year 2020, the Group established an allowance for doubtful accounts primarily based on the aging of the receivables and factors surrounding the credit risk of specific customers. After the adoption of ASC 326 Financial instruments- credit losses on January 1, 2020, the accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for credit losses. The Group establishes current expected credit losses (“CECL”) for pools of assets with similar risk characteristics by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. 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. The Group mainly focuses on historical collection experience and considers aging or specific customer circumstance. Additionally, the Group records an allowance on other forms of financial assets, including other current assets, other assets and amounts due from related parties with the similar approach of accounts receivable. Loan receivables, net The Group entered into entrusted loan agreements with certain franchisees with the typical terms to be two Inventories Inventories mainly consist of small appliances, bedding and daily consumables, operating supplies, food and beverage inventory items. Small appliances and bedding for new hotels opened are stated at cost, less accumulated amortization, and are amortized over their estimated useful lives, generally one year, from the time they are put into use. Daily consumables and beddings replacement are expensed when used. 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 acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets, including brand name, master brand agreement, non-compete agreements, franchise or manachise agreements, favorable lease agreements and other intangible assets acquired from business combination are recognized and measured at fair value upon acquisition. Non-compete agreements and franchise or manachise agreements are amortized over the expected useful life and remaining franchise contract terms, respectively. Purchased software is stated at cost less accumulated amortization. The favorable lease agreements in which the Group acts as a lessor were accounted as intangible assets as before, which are amortized over remaining operating lease terms. 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 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. Master brand agreement, acquired in Accor acquisition, granted the Group certain franchise rights with initial term of 70 years, and can be renewed without substantial obstacles. As a result, the useful life is determined to be indefinite. 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. The Group measures the impairment by comparing the fair value of brand names and master brand agreement with its carrying amount. If the carrying amount of brand names and master brand agreement exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The Group measures the fair value of the brand names under the relief-from-royalty method, the master brand agreement under the multi-period excess earnings method. The determination of the fair value requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margin, royalty saving rate and discount rates to estimate the net present value of future cash flows. Management performs its annual brand names and master brand agreement impairment test on November 30 and when triggering events occurred. As of December 31, 2020 and 2021, the estimated fair value of the indefinite-lives intangible assets of legacy Huazhu significantly exceeded of its carrying value. Therefore, there was no impairment loss recognized for the years ended December 31, 2019, 2020 and 2021. For its indefinite-lives intangible assets of legacy DH, there were 3 brand names acquired in DH acquisition. The estimated fair value of one brand name was lower than its carrying amount, and an impairment of RMB160 was recognized, which reduced the carrying value by 6%. A 5% increase in the discount rate or decrease in royalty royalty 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, which are amortized on a straight-line basis over the remaining term of the land certificates, between 30 to 50 years. Amortization expense of land use rights for the years ended December 31, 2019, 2020 and 2021 amounted to RMB8, RMB7 and RMB7, respectively. 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 RMB3, RMB180 and RMB157 during the years ended December 31, 2019, 2020 and 2021, 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 represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. Before the adoption of ASU No. 2017-04, Intangibles-Goodwill and Other, the Group performed a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. A reporting unit is identified as an operating segment or one level below an operating segment (also known as a component) for which discrete financial information is available and is regularly reviewed by segment manager. Before the acquisition of Deutsche Hospitality, all the acquired business has been migrated to the Group’s business, and the Group’s management regularly reviews operation data including industrial metrics of revenue per available room, occupancy rate, and number of hotels by scale/brand, rather than discrete financial information for the purpose of performance evaluation and resource allocation at brand level. The Group concluded that it had only one reporting unit, and therefore the goodwill impairment testing was performed on consolidation level. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. The Group adopted ASU No. 2017-04, Intangibles-Goodwill and Other on January 1, 2020, which requires a one-step impairment test in which an entity 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 since the segment manager regularly reviews discrete financial information for legacy Huazhu and legacy DH separately. 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. Fair value of the equity value 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. Management performs its annual goodwill impairment test on November 30 and when triggering events occurred. The Group recorded an impairment of nil, RMB437 and nil for the years ended December 31, 2019, 2020 and 2021. The Group considered assumptions based on the current economic environment in its annual impairment assessment, including the inherent risk and uncertainty due to the stay-in-place measures enacted, consumer confidence levels, and the ongoing impact of the COVID-19 pandemic on the hospitality industry. Based on the analysis, the Group concluded that the goodwill of legacy Huazhu was not impaired for the years ended December 31, 2019, 2020 and 2021 as the estimated fair value of the reporting unit of legacy Huazhu far exceeded its carrying value as of the end of each year. For the goodwill of legacy DH, the Group performed impairment test and recorded an impairment of RMB437 during the year of 2020. The estimated fair value of the reporting unit of legacy DH exceeded its carrying value, as such no impairment charges were recorded for the year ended December 31, 2021. As of December 31, 2020 and 2021, the estimated fair value of the reporting unit of legacy Huazhu exceeded over 100%of its carrying value. As of December 31, 2020 and 2021, the estimated fair value of the reporting unit of legacy DH exceeded its carrying value by approximately RMB244 and RMB421, which accounted for 6% and 13% of its carrying value. A 5% decline in the underlying projected cash flow or increase in the discount rate could have resulted in goodwill impairment charges of approximately RMB42 and RMB175 in 2020. A 5% decline in the underlying projected cash flows or increase in the discount rate could have reduced the fair value of approximately RMB313 and RMB359 in 2021. 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, food and beverage sales 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 The manachise and franchise agreement contains the following promised services: ● Intellectual Property (“IP”) license ● Pre-opening services ● System maintenance services ● Hotel management services The promises to provide pre-opening services and system maintenance services are not distinct performance obligation because they are attendant to the license of IP. Therefore, the promises to provide pre-opening services and system maintenance services are combined with the license of IP to form a single performance obligation. Hotel management services forms a single distinct performance obligation. Manachised and franchised hotel revenues are derived from franchise or manachise agreements where the franchisees are primarily required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) 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 franchise fee On-going management and franchise service fees Central reservation system usage fees, other system maintenance and support fees Reimbursements for hotel manager fees . Above policies are only applicable to legacy Huazhu. For manachised hotels under Deutsche Hospitality, the franchisees have historically been required to pay Deutsche Hospitality an on-going management fees consisting of a base fee as a percentage of the hotel’s gross revenues and an incentive fee as a percentage of the hotel’s gross adjusted profit. For franchised hotels under Deutsche Hospitality, the franchisees have historically been required to pay Deutsche Hospitality a license fee, a franchise fee and a central service fee. The manachised and franchised hotel revenues of Deutsche Hospitality are recognized over time as services are rendered. The Group is gradually conforming the terms of Deutsche Hospitality’s franchise and management agreements to those of hotels under legacy Huazhu. Since the COVID-19 outbreak in January 2020, the Group has offered one-time reduction on continuing franchise fees of approximately RMB132 and RMB105 for 2020 and 2021 to help franchisees meet their short-term working capital needs. There is no change to the scope of services or other terms of the agreements. Previously recognized revenue on the original contract was not adjusted. Other Revenues Other revenues Loyalty Program Under the loyalty program the Group administers, members earn loyalty points that 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 recognize 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, the portion of revenue deferred by manachised and franchised hotels are collected by the Group which will be refunded upon redemption of points at manachised and franchised hotels. The estimated breakage for points earned in manachised and franchised hotels are recognized as manachised and franchised revenue for each period. The Group estimates breakage based on the Group’s historical experience and expectations of future member behavior and will true up the estimated breakage at end of each period. Above policies are only applicable to legacy Huazhu. The loyalty program initiated by Deutsche Hospitality has substantially the same rights, nature and redeemable approaches as legacy Huazhu, therefore the accounting treatment is the same. As of December 31, 2021, the contract liabilities related to Deutsche Hospitality were immaterial and the loyalty program of Deutsche Hospitality was in the progress of being migrated to that of legacy Huazhu. Membership fees from the Group’s customer loyalty program are all from legacy Huazhu, which are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels and also applicable to legacy Huazhu only. Such duration is estimated based on the Group’s and management’s experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be two Contract Balances The Group’s payments from customers are based on the billing terms established in contracts. Customer billings are classified as accounts receivable when the Group’s right to consideration is unconditional. If the right to consideration is conditional on future performance under the contract, the balance is classified as a contract asset. Payments received in advance of performance under the contract are classified as current or non-current contract liabilities on the Group’s consolidated balance sheets and are recognized as revenue as the Group performs under the contract. Value-Added Taxes and surcharges The accommodation services of the Group in PRC and Germany are subject to a range from 6% to 19% of Value-Added Taxes, respectively. The Group is subject to education surtax and urban maintenance and construction tax, on the services provided in the PRC. 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 RMB99, RMB150 and RMB165 for the years ended December 31, 2019, 2020 and 2021, respectively. Government grants Government grants represent cash received by the Group in the PRC from local governments as incentives for investing in certain local districts, and are typically granted based on the amount of inve |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2021 | |
ACQUISITIONS | |
ACQUISITIONS | 3. (i) During the years ended December 31, 2019, 2020 and 2021, the Group acquired three, three and three individual companies for total cash consideration of RMB54, RMB26 and RMB51, respectively. The business acquisitions were accounted for under purchase accounting. The assets and liabilities of these hotels and companies acquired in 2019, 2020 and 2021 were immaterial to the consolidated financial statements. (ii) On January 2, 2020, the Group completed the 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 total revenue and net loss of the acquiree included in the consolidated statements of comprehensive income for the year ended December 31, 2020 were RMB1,532 and RMB1,345, respectively. The following table summarizes unaudited pro forma results of operation for the years ended December 31, 2019 and 2020 assuming that the acquisition occurred as of January 1, 2019. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2019. Period Ended December 31, 2019 2020 Pro forma total revenue 14,995 10,196 Pro forma net income (loss) attributable to Huazhu Group Limited 1,780 (2,204) The Group incurred transaction cost of RMB70 for the acquisition, which was expensed in 2019. These expenses are non-recurring in nature, and were eliminated from the calculation of pro forma net income above. 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. None of the Goodwill is expected to be deductible for tax purposes. (iii) 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 total revenue and net loss of the acquiree included in the consolidated statements of comprehensive income for the year ended December 31, 2021 were RMB184 and RMB34, respectively. The following table summarizes unaudited pro forma results of operation for the years ended December 31, 2020 and 2021 assuming that the acquisition of CitiGO hotels occurred as of January 1, 2020. The transaction cost incurred was not material. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2020. Period Ended December 31, 2020 2021 Pro forma total revenue 10,346 12,861 Pro forma net loss attributable to Huazhu Group Limited (2,318) (480) 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. None of the Goodwill is expected to be deductible for tax purposes. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 4. Disaggregated Revenues The following tables present the Group’s revenues disaggregated by the nature of the product or service: Years Ended December 31, 2019 2020 2021 Room revenues 7,057 5,735 7,024 Food and beverage revenues 351 608 694 Others 310 565 400 Leased and owned hotels revenue 7,718 6,908 8,118 Initial one-time franchise fee 93 110 109 On-going management and service fees 1,228 1,057 1,479 Central reservation system usage fees, other system maintenance and support fees 908 908 1,399 Reimbursements for hotel manager fees 581 657 897 Other fees 532 404 520 Manachised and franchised hotels revenue 3,342 3,136 4,404 Other revenues 152 152 263 Total revenues 11,212 10,196 12,785 Contract Balances The Group’s contract assets are insignificant at December 31, 2020 and 2021. As of December 31, 2020 2021 Current contract liabilities 1,272 1,366 Long-term contract liabilities 662 785 Total contract liabilities 1,934 2,151 The contract liabilities balances above which are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2020 and 2021 were comprised of the following: As of December 31, 2020 2021 Initial fees received from franchisees owners 924 1,074 Cash received for membership fees and not recognized as revenue 430 519 Advances received from customers 529 505 Deferred revenue related to the loyalty program 51 53 Total 1,934 2,151 The Group classifies initial fees received from franchisees into current liabilities when the hotel has not yet opened. Initial fees received from franchisees for pre-opening hotels are RMB429 and RMB496 as of December 31, 2020 and 2021, respectively. Once the hotel opens, initial one-time franchise fee will be recognized as revenue over the term of the franchise contract and the initial fees received from franchisees that has not been recognized as revenue will be reclassified into current contract liabilities and long-term contract liabilities, respectively. The Group recognized revenues that were previously deferred as contract liabilities of RMB748 and RMB613 during the years ended December 31, 2020 and 2021, respectively. Revenue Allocated to Remaining Performance Obligations Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of December 31, 2021, the Group had RMB53 of deferred revenues related to unsatisfied performance obligations under H Rewards that will be recognized as revenues when the points are redeemed, which the Group estimate will occur over the next two years. The Group had RMB1,074 of deferred revenues related to initial fees received from franchisees owners are expected to be recognized as revenues over the remaining contract periods over generally one one The Group did not estimate revenues expected to be recognized related to the Group’s unsatisfied performance for the following: ● Revenues related to on-going management and franchise service fees, as they are considered sales-based royalty fees. ● Revenues related to central reservation system usage fees, other system maintenance and support fees, and reimbursement for hotel manager fee, as the related revenues from the satisfaction of these performance obligations is recognized when the Group is entitled to invoice the amount. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 5. Property and equipment, net consist of the following: As of December 31, 2020 2021 Cost: Buildings 247 305 Leasehold improvements 9,542 10,467 Furniture, fixtures and equipment 2,008 2,348 Motor vehicles 1 3 11,798 13,123 Less: Accumulated depreciation 5,764 6,845 6,034 6,278 Construction in progress 648 778 Property and equipment, net 6,682 7,056 Depreciation expense was RMB967, RMB1,219 and RMB1,352 for the years ended December 31, 2019, 2020 and 2021, respectively. The Group occasionally demolishes certain leased hotels due to local government zoning requirements, which typically results in receiving compensation from the government. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 6. Intangible assets, net consist of the following: As of December 31, 2020 2021 Intangible assets with indefinite lives: Brand names (Note 3) 5,319 5,010 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 356 366 Favorable lease agreements from sublease 12 11 Purchased software 108 142 Other intangible assets 70 70 Total 6,057 5,791 Less: Accumulated amortization 112 163 Less: Accumulated impairment loss(Note2) — 243 Total 5,945 5,385 The values of favorable lease agreements were determined based on the estimated present value of the amount the Group has avoided paying as a result of entering into the lease agreements. Amortization expense of intangible assets for the years ended December 31, 2019, 2020 and 2021 amounted to RMB16, RMB62, and RMB65, respectively. 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 2022 37 2023 36 2024 32 2025 31 2026 28 Thereafter 180 Total 344 |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2021 | |
INVESTMENTS. | |
INVESTMENTS | 7. The investments as of December 31, 2020 and 2021 were as follows: As of December 31, 2020 2021 Equity securities with readily determinable fair values: Accor 3,849 2,508 Other marketable securities 54 81 Equity securities without readily determinable fair values: Cjia/Cjia Group 183 168 OYO 66 54 Other equity securities without readily determinable fair values 72 71 Equity-method investments: AAPC LUB 490 525 Hotel related funds 476 488 China Hospitality JV 103 99 Zleep 88 68 Commerz Real Institute — 85 Other investments 225 187 Available-for-sale debt securities: Cjia/Cjia Group 220 220 Total 5,826 4,554 Equity securities with readily determinable fair values: In 2019, 2020 and 2021, the Group purchased 282,787 and 8,737,987 and 1,180,000 ordinary shares of Accor, respectively,a hotel group listed in Paris stock exchange, from open market. In 2020 and 2021, the Group sold out 1,003,654 and 5,172,458 of these shares with losses of RMB21 and gains of RMB209 realized, respectively. As of December 31, 2021, the Group accumulatively hold 12,212,552 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 2020 and 2021, the Group recognized unrealized losses from fair value changes of Accor of RMB253 and RMB94, respectively. At December 31, 2020 and 2021, the Group had RMB54 and RMB81, respectively, of other marketable securities, which represent investments in entities in hospitality or related industries where the Group does not have the ability to significantly influence the operations of these entities. In 2019, 2020 and 2021, the Group recognized unrealized losses from fair value changes of other marketable securities of RMB35, RMB12 and RMB2, respectively. Equity securities without readily determinable fair values: As of December 31, 2018, the Group had approximately 17% equity interest and US$45 million in preferred shares of China Cjia Group Limited (“Cjia Group”). In addition, the Group had RMB 252 convertible notes in Cjia Group. In 2019, Cjia Group repurchased from the Group part of its ordinary shares and preferred shares and issued new shares to an unrelated investor. As a result, the Group recognized a gain of RMB9 in other income in 2019. As of December 31, 2020 and 2021, the Group had approximately 15% and 16% ordinary shares of Cjia Group, respectively. The Group accounted for the ordinary shares in Cjia Group under equity-method as the Group has the ability to exert significant influence. The convertible notes are recorded as available-for-sale debt securities. The preferred shares are accounted for as equity securities without readily determined fair value as they are not in substance ordinary shares. The Group recognized investment loss of RMB45, RMB49 and RMB15 in income (loss) from equity method investments in 2019, 2020 and 2021, respectively. Loss from equity method investments reduced the cost of equity-method investment to zero and further adjusted the carrying amount of preferred shares and convertible notes. 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, the Group owned less than 1% equity interest of OYO. The Group accounted the investment as equity securities without readily determinable fair values since the Group does not have the ability to exert significant influence over 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 RMB45 and nil for these equity securities for the year ended December 31, 2020 and 2021, 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 RMB47, RMB21 and RMB35 in income (loss) from equity method investments in 2019, 2020 and 2021, respectively. In 2019, 2020 and 2021, the Group received cash dividend from AAPC LUB of RMB39, nil and nil which was recognized as return on investment. As of December 31, 2020 and 2021, the Group had RMB476 and RMB488, respectively, of investments in hotel related funds. Those funds were VIEs and were managed by or power shared with unrelated 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 income of RMB11, investment loss of RMB16 and RMB55, in income (loss) from equity method investments in 2019, 2020 and 2021, 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 RMB488 that the Group holds as of December 31, 2021. 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. The Group recognized investment loss of RMB2, RMB12, and RMB4 in income (loss) from equity method investments in 2019, 2020 and 2021, 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 RMB23 and RMB12 in income (loss) from equity method investments in 2020 and 2021. 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 in income (loss) from equity method investments in 2021. 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 RMB47 and RMB63 for these equity investments for the year ended December 31,2020 and 2021. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL. | |
GOODWILL | 8. The changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2021 were as follows: Legacy Huazhu Legacy DH Total Balance at January 1, 2020 Goodwill 2,661 — 2,661 Accumulated impairment loss (4) — (4) 2,657 — 2,657 Goodwill acquired during the year (Note 3) 3 2,694 2,697 Impairment loss — (437) (437) Net foreign exchange-goodwill — 74 74 Net foreign exchange-impairment loss — (3) (3) Balance at December 31, 2020 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 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
DEBT | |
DEBT | 9. The short-term and long-term debt as of December 31, 2020 and 2021 were as follows: As of December 31, 2020 2021 Short-term debt: Long-term bank borrowings, current portion 251 2,464 Short-term bank borrowings 851 692 Convertible senior notes, current portion — 3,029 FF&E liability, current portion 40 47 Total 1,142 6,232 Long-term debt: Long-term bank borrowings, non-current portion 4,384 211 Convertible senior notes, non-current portion 6,318 3,158 FF&E liability, non-current portion 135 180 Others 19 16 Total 10,856 3,565 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. The US$500 million revolving credit facility is available for 35 months after the date of the agreement. The interest rate on the loan for each interest period is the aggregate of the applicable Margin and LIBOR or EURIBOR in relation to any loan in EUR. The Margin for each loan depends on the applicable leverage range, generally means 2.0% per annum. There are some financial covenants including interest coverage ratio, leverage and book equity related to this facility. On April 17, 2020, the Group obtained an exemption approval for the EUR440 million and US$500 million long-term credit facility, providing that with satisfaction of amended covenants, the original financial covenants will not be applicable until the six-month period ending June 30, 2021. The amended covenants include book equity, borrowings, EBITDA and minimum cash related to this facility. On December 11, 2020, the Group obtained a further waiver, which released certain covenants included in the amended covenants signed on April 17, 2020. The Group was fully in compliance with the further amended covenants for the years ended December 31, 2020 and 2021. The Group had drawn down EUR440 million and US$500 million as of December 31, 2019 under the facility agreement and repaid nil in 2019. The Group had drawn down US$200 million as of December 31, 2020 under the facility agreement and repaid EUR1 million and US$700 million in 2020. The US$500 million revolving credit had been fully paid off as of December 31, 2020. In 2021, the Group did not draw down any revolving credit loan and the available credit facility under this agreement of US$500 million was terminated in August 2021. Regarding the EUR440 million term facility, the Group had repaid EUR101 million in 2021. As of December 31, 2021, the outstanding loan amount was EUR338 million and has been reclassified to long-term bank borrowings, current portion. The weighted average interest rate of borrowings drawn under this agreement was 2.89% and 2.73% for the years ended December 31, 2020 and 2021 respectively. In March 2019, the Group entered into a five-year RMB1,190 bank loan contract expiring in March 2024. The interest rate resets every six months, and is based on the People’s Bank of China five-year benchmark interest rate on the pricing date. The loan contains certain financial covenants including interest coverage ratio and net tangible assets and the Group was in compliance as of December 31, 2019. In 2020, the Group obtained an exemption approval for the RMB1,190 long-term credit facility, providing that with satisfaction of amended covenants, the original financial covenants of interest coverage ratio will not be applicable until the six-month period ending June 30, 2021. The amended covenants include borrowings, EBITDA and cash dividend distribution limitation related to this facility. The Group was fully in compliance with the amended covenants for the years ended December 31, 2020 and 2021. The Group had repaid RMB179 in 2020 in accordance with the agreed repayment schedule. During the year ended December 31, 2021, the Group had repaid all the bank borrowings. The weighted average interest rate of borrowings drawn under this agreement was 4.75% for the years ended December 31, 2020 and 2021. In January 2021, the Group entered into a twelve-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. In 2017, proceeds to the Company were RMB3,093 (equivalently US$467 million), net of issuance costs of RMB54 (equivalently US$8 million). 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. During the year 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. 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 year ended December 31, 2020 and 2021, RMB0.04 and nil of the 2022 Notes had been repurchased in cash upon the holders’ request. The conversion option meets the definition of a derivative. However, since the conversion option is considered indexed to the Company’s own stock and classified in stockholders’ equity, the scope exception is met, accordingly the bifurcation of conversion option from the 2022 Notes is not required. There is no beneficial conversion feature (“BCF”) attribute to the 2022 Notes as the set conversion prices for the 2022 Notes are greater than the respective fair values of the ordinary share price at date of issuance. The feature of mandatory redemption upon maturity is clearly and closely related to the debt host and this feature is no need to be bifurcated. Furthermore, the Company concluded that the feature of contingent put options upon tax events or fundamental changes does not need to be considered as an embedded derivative to be bifurcated. Therefore, the Company accounted for the 2022 Notes in accordance with ASC 470, as a single instrument. Issuance costs related to the 2022 Notes was recorded in consolidated balance sheet as a direct deduction from the principal amount of the 2022 Notes, and was amortized over the period from November 3, 2017, the date of issuance, to November 1, 2020, the first put date of the 2022 Notes, using the effective interest method. On December 31, 2019, the Group reclassified the 2022 Notes as short-term debt as the 2022 Notes holders have a put option which can be exercised within one year. After November 2, 2020, the Group reclassified the 2022 Notes as long-term debt as the put option was expired. As of December 31, 2021, the Group reclassified the 2022 Notes as short-term debt as the 2022 Notes will mature 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. 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, 2019, 2020 and 2021, the outstanding number of Loaned ADSs was 10,425,112. 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 accordance with FASB ASC Sub-topic 470-20, the Company has accounted for the ADS lending agreement initially at fair value and recognized it as an issuance cost associated with the convertible debt offering. As a result, additional debt issuance costs of RMB26 (equivalently US$4 million) were recorded on the issuance date with a corresponding increase to additional paid-in-capital. This debt issuance costs have also been amortized from the date of issuance to the put date of Notes, using the effective interest method. 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. As of December 31, 2021, it is not probable that the ADS Borrower or the counterparty to the ADS lending arrangement will default. Capped Call Options In connection with the issuance of the 2022 Notes, the Group has 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. The cap price of the capped call transactions will initially be US$221.31 per ADS before the ADSs split, subject to adjustment under the terms of the capped call transactions. The total premium paid by the Group for the capped call transactions was RMB177 (equivalently US$27 million) on the purchased date. The capped call option is classified in stockholders’ equity, recorded at the cost with no subsequent changes in fair value be recorded. 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 conversion option meets the definition of a derivative. However, since the conversion option is considered indexed to the Company’s own stock and classified in stockholders’ equity, the scope exception is met, accordingly the bifurcation of conversion option from the 2026 Notes is not required. There is no beneficial conversion feature (“BCF”) attribute to the 2026 Notes as the set conversion prices for the 2026 Notes are greater than the respective fair values of the ordinary share price at date of issuance. The feature of mandatory redemption upon maturity is clearly and closely related to the debt host and this feature is no need to be bifurcated. Furthermore, the Company concluded that the feature of contingent put options upon tax events or fundamental changes does not need to be considered as an embedded derivative to be bifurcated. The Company believes that the likelihood of occurrence of events considered a fundamental change is remote. Therefore, the Company accounted for the 2026 Notes in accordance with ASC 470, 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, 2021 were as follows: Year Ending December 31, Principle Amounts 2022 6,232 2023 111 2024 3,314 2025 71 2026 23 Thereafter 76 Total 9,827 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10. As of December 31, 2020 2021 Payable to franchisees 1,349 710 Other payables 535 535 Accrued rental, utilities and other accrued expenses 245 209 Liabilities related to customer loyalty program 111 135 Value-added tax, other tax and surcharge payables 124 132 Payable to noncontrolling interest holders 76 117 Total 2,440 1,838 Payable to franchisees mainly represents room charges received on behalf of franchisees and are payable within one year. From time to time, the Group receives cash advances from noncontrolling interest holders of entities that are not wholly owned by the Group. Such advances are non-interest bearing and are payable within one year. |
HOTEL OPERATING COSTS
HOTEL OPERATING COSTS | 12 Months Ended |
Dec. 31, 2021 | |
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, 2019 2020 2021 Rents 2,624 3,485 3,900 Utilities 404 478 507 Personnel costs 1,854 2,501 3,022 Depreciation and amortization 960 1,316 1,413 Consumable, food and beverage 793 885 969 Others 555 1,064 1,471 Total 7,190 9,729 11,282 |
PRE-OPENING EXPENSES
PRE-OPENING EXPENSES | 12 Months Ended |
Dec. 31, 2021 | |
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, 2019 2020 2021 Rents 460 251 68 Personnel costs 14 15 5 Others 28 22 8 Total 502 288 81 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
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 and vest in typical ways as listed below: a.) b.) As of December 31, 2021, the Group had granted 245,776,690 options and 243,059,070 nonvested restricted stocks, which were subject to adjustment on performance condition. Share options No share options were granted during the years 2019, 2020 and 2021. As of December 31, 2021, total unrecognized compensation expense related to the option arrangements was nil. During the years ended December 31, 2019, 2020 and 2021, 10,883,580, 466,320 and nil options were exercised with an aggregate intrinsic value of RMB255, RMB11 and nil, respectively. 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 2019, 2020 and 2021, the Group granted 2,217,120, nil and nil 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 2021. Weighted Average Grant Number of Restricted Date Stocks Fair Value US$ Nonvested restricted stocks outstanding at January 1, 2021 70,954,080 1.18 Granted 2,163,420 4.20 Forfeited (4,607,340) 1.64 Vested (12,325,470) 1.58 Adjusted for performance conditions (2,488,200) 0.61 Nonvested restricted stocks outstanding at December 31, 2021 53,696,490 1.20 As of December 31, 2021, there was RMB355 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 3.30 years. The total fair value of nonvested restricted stocks vested in 2019, 2020 and 2021 was RMB443, RMB368 and RMB389, respectively. |
EARNINGS (LOSSES) PER SHARE
EARNINGS (LOSSES) PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
EARNINGS (LOSSES) PER SHARE | |
EARNINGS (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, 2019 2020 2021 Net income (loss) attributable to ordinary shareholders — basic 1,769 (2,192) (465) Eliminate the dilutive effect of interest expense of convertible senior notes 40 — — Net income attributable to ordinary shareholders — diluted 1,809 (2,192) (465) Weighted average ordinary shares outstanding — basic 2,843,051,378 2,927,398,409 3,114,124,244 Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method 93,975,271 — — Dilutive effect of convertible senior notes 106,072,250 — — Weighted average ordinary shares outstanding — diluted 3,043,098,899 2,927,398,409 3,114,124,244 Basic earnings (losses) per share 0.62 (0.75) (0.15) Diluted earnings (losses) per share 0.59 (0.75) (0.15) For the years ended December 31, 2019, 2020 and 2021, 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, 2019 2020 2021 Outstanding employee options and nonvested restricted stocks — 70,954,080 53,696,490 Shares of convertible senior notes — 226,827,410 226,827,410 Total — 297,781,490 280,523,900 |
Cash Dividend
Cash Dividend | 12 Months Ended |
Dec. 31, 2021 | |
Cash Dividend | |
Cash Dividend | 15. In November 2019, the Group approved a cash dividend in the total amount of approximately US$100 million on its outstanding shares as of the close of trading on January 10, 2020. Such dividend of RMB678 was recorded as dividends payable as of December 31, 2019, and fully paid in February 2020. 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 of US$68 million was fully paid in April 2022. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
LEASES | 16. 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 2019, 2020 and 2021, and sublease income of the Group which is recognized in revenues in the consolidated statements of comprehensive income were RMB121, RMB112 and RMB134 for the years ended December 31, 2019, 2020 and 2021, respectively. The Group recognizes a negative lease expense of RMB250 and RMB88 for 2020 and 2021 under the relief as the Group elects using the variable lease expense approach. A summary of supplemental information related to operating leases in 2020 and 2021 is as follows: Years Ended December 31, 2020 2021 Lease cost: Operating fixed lease cost 3,964 4,074 Finance lease cost — Amortization of ROU assets 74 79 — Interest on lease liabilities 90 96 Short term lease cost 0 0 Operating variable lease cost (171) (25) Total lease cost 3,957 4,224 Other information: Weighted average remaining lease term Operating leases 14 years 13 years Finance leases 29 years 28 years Weighted average discount rate Operating leases 6.23 % 6.31 % Finance leases 3.96 % 3.97 % Lease expense for all the Group’s leases (including fixed lease cost, variable lease cost and short-term lease cost) for the year ended December 31, 2019 were RMB3,104. As of December 31, 2021, 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 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 As of December 31, 2021, the Group has entered 32 lease contracts that the Group expects to account for as operating or finance leases, the future undiscounted lease payments for these non-cancellable lease contracts are RMB8,732, which is not reflected in the consolidated balance sheets. As of December 31, 2020, 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 2021 3,858 129 2022 3,826 144 2023 3,733 146 2024 3,660 147 2025 3,466 147 Thereafter 25,730 3,575 Total minimum lease payments 44,273 4,288 Less: amount representing interest 13,819 1,760 Present value of minimum lease payments 30,454 2,528 As of December 31, 2020, the Group has entered 31 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 RMB8,511, which is not reflected in the consolidated balance sheets. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
INCOME TAXES | 17. 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 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%-17%. 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. 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. 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. Pursuant to the relevant regulations applicable to small and micro businesses, from January 1, 2019 to December 31, 2021, several PRC subsidiaries enjoy a preferential tax rate of 20% with a discount to taxable income. 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%. 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. Income (loss) before income taxes consists of: Years Ended December 31, 2019 2020 2021 PRC including Hong Kong and Taiwan 2,334 (392) 617 Germany — (1,606) (632) Other 231 (281) (393) Total 2,565 (2,279) (408) Income tax expense (benefit) is comprised of the following: Years Ended December 31, 2019 2020 2021 Current Tax 678 338 555 Deferred Tax (38) (553) (543) Total 640 (215) 12 A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: Years Ended December 31, 2019 2020 2021 PRC statutory tax rate 25 % 25 % 25 % Tax effect of non-deductible expenses and non-taxable income in determining taxable profit (3) % (6) % (6) % Effect of different tax rate of group entities operating in other jurisdictions 1 % (2) % (6) % Effect of change in valuation allowance 2 % (10) % (24) % Effect of tax holiday (2) % 1 % 9 % Effect of cash dividends 4 % 0 % (8) % Effect of excess tax benefit of share-based rewards (2) % 1 % 7 % Effective tax rate 25 % 9 % (3) % The aggregate amount and per share effect of the tax holidays are as follows: Years Ended December 31, 2019 2020 2021 Aggregate amount 45 31 37 Per share effect—basic 0.02 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, 2020 and 2021 are as follows: As of December 31, 2020 2021 Deferred tax assets: Net loss carryforward 888 1,271 Deferred revenue 283 326 Long-term assets 388 238 Bad debt provision 18 40 Accrued payroll 69 45 Other accrued expenses 3 3 Share-based compensation 31 29 Others 12 150 Valuation allowance (369) (466) Total deferred tax assets, net of valuation allowance 1,323 1,636 Deferred tax liabilities: Fair value adjustment for Building, land use rights and identified intangible assets due to acquisition 1,782 1,596 Others 99 31 Total deferred tax liabilities 1,881 1,627 Net deferred tax (liabilities) assets (558) 9 Analysis as: Deferred tax assets 623 862 Deferred tax liabilities 1,181 853 Net deferred tax (liabilities) assets (558) 9 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, 2019 2020 2021 Balance at the beginning of the year (107) (152) (369) Provided (79) (249) (151) Reversed 24 32 37 Written off 10 — 17 Balance at the end of the year (152) (369) (466) As of December 31, 2021, the Group’s PRC subsidiaries had tax loss carryforwards of RMB2,115, which will expire between 2022 and 2026 if not used, and RMB1,532, which will expire between 2022 and 2028 if not used. The Germany Companies had tax loss carry forwards of RMB1,192, 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, 2020 and 2021, the Group had recorded liabilities for uncertain tax benefit of approximately RMB50 and RMB60 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, 2019, 2020 and 2021. In 2022, the Group will decrease its income tax liability by RMB 0.1 for unrecognized tax benefits previously recorded in 2012 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, 2019 2020 2021 Balance at January 1 14 18 50 Addition for tax positions 4 32 10 Balance at December 31 18 50 60 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. Other than these dividends distributions, the Group intends to indefinitely reinvest the remaining undistributed earnings of RMB3,763 of the Group’s 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 2017 through 2021 on non-transfer pricing matters, and from 2012 through 2021 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, 2021 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 18. a. Defined Benefit Plans Retirement benefit obligation result all from the German pension plan after the completion of the acquisition of DH as this pension plan is the most significant defined benefit plan in the Group. The Group is required to recognize the funded status of the pension plan, which is the difference between the fair value of plan assets and projected benefit obligations, in the consolidated balance sheets and make corresponding adjustments for changes in the value through accumulated other comprehensive income(loss), net of taxes. The following table presents the projected benefit obligation, fair value of plan assets, funded status and accumulated benefit obligation for the plans during the years ended December 31, 2020 and 2021: Year Ended December 31, Change in Projected Benefit Obligation: 2020 2021 Begin of the year 147 193 Current service cost 5 5 Interest cost 1 0 Contributions by plan participants 1 1 Actuarial loss (gain) 38 (14) Foreign currency translation 3 (19) Benefits paid (7) (9) Settlements (1) — Administrative Expenses, Taxes and Premiums Paid 0 0 Curtailments (1) — Acquisitions — 0 Effect of other economic events 7 — End of the year 193 157 Year Ended December 31, 2020 2021 Change in Plan Assets: Begin of the year 32 6 Actual return (loss) on plan assets (2) 0 Foreign currency translation 1 (0) Employer contributions 9 1 Employee contributions 1 0 Benefits paid (8) (2) Acquisitions — 0 Other economic events (27) — End of the year 6 5 Excess of defined benefit obligation over the fair value of plan assets 187 152 Accumulated benefit obligation 193 157 Amounts recognized in the consolidated balance sheets consisted of the following: As of December 31, 2020 2021 Salary and welfare payables 8 8 Retirement benefit obligation 179 144 Liability in the balance sheet 187 152 The net amount recognized in accumulated other comprehensive gain or loss was RMB27 loss and RMB13 gain for the year ended December 31, 2020 and 2021, respectively. The net periodic pension cost (credit) and the estimated unrecognized prior service cost and net loss that will be amortized into net periodic pension cost (credit) during the years ended December 31,2020 and 2021 is immaterial. The principal actuarial assumptions used were as follows: As of December 31, 2020 2021 Discount rate- Germany 0.33 % 0.89 % Discount rate- other 0.12 % 0.39 % Inflation rate 1.00 % 1.00 % Future salary increases 1.50 % 2.17 % Future pension increases 1.80 % 1.69 % The investment objectives for the various plans are preservation of capital, current income and long-term growth of capital. All plan assets are managed by outside investment managers. Asset allocations are reviewed periodically by the investment managers. Expected long-term returns on plan assets are determined using historical performance for debt and equity securities held by the Group’s plans, actual performance of plan assets and current and expected market conditions. Expected returns are formulated based on the target asset allocation. The target asset allocation for the plan, as a percentage of total plan assets, as of December 31, 2021 was 26 percent in funds that invest in equity securities and 29 percent in funds that invest in debt securities. The following tables present the fair value hierarchy of total plan assets measured at fair value by asset category as of December 31, 2020 and 2021: As of December 31, 2020 2021 Level 1 Equity funds 1 1 Bond funds 2 2 Property 2 1 Other 1 1 Total 6 5 The Group expect to contribute approximately RMB1 to the plan in 2022. As of December 31, 2021, the benefits expected to be paid in the year ended December 31, 2022 are RMB9. 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 RMB413, RMB283 and RMB544 for the years ended December 31, 2019, 2020 and 2021, 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 in 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 and RMB55 for the years ended December 31, 2020 and 2021. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 19. Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries of the Group in the PRC must make appropriations from after-tax profit to non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires 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 their registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for specific purposes of offsetting future losses, enterprise expansion and staff bonus and welfare and are not distributable as cash dividends and amounted to RMB604, RMB771 and RMB826 as of December 31, 2019, 2020 and 2021, respectively. In addition, due to restrictions on the distribution of share capital from the Group’s PRC subsidiaries, the PRC subsidiaries share capital of RMB2,852 at December 31, 2021 is considered restricted. As a result of these PRC laws and regulations, as of December 31, 2021, approximately RMB3,678 is not available for distribution to the Group by its PRC subsidiaries in the form of dividends, loans or advances. Pursuant to laws applicable to entities incorporated in the Europe, certain subsidiaries of the Group must make appropriations from after-tax profit to non-distributable reserve funds. These reserve funds include general reserve which is not distributable as cash dividends or other cash disbursements and amounted to RMB11 as of December 31, 2021. In addition, due to restrictions on the distribution of share capital from the Deutsche Hospitality and its subsidiaries, the share capital of RMB4 at December 31, 2021 is considered restricted. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 20. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. The following entities are considered to be related parties to the Group. The related parties mainly act as service providers and service recipients to the Group. The Group is not obligated to provide any type of financial support to these related parties. Related Party Nature of the Party Relationship with the Group Trip.com Group Limited (“Trip.com”) Online travel services provider Mr. Qi Ji is a director Sheen Star Group Limited (“Sheen Star”) Investment holding company Equity method investee of the Group, controlled by Mr. Qi Ji Accor Hotels (“Accor”) Hotel Group Shareholder of the Group China Cjia Group Limited (“Cjia Group”) Apartment Management Group Equity method investee of the Group Shanghai CREATER Industrial Co., Ltd. (“CREATER”) Staged office space company Equity method investee of the Group Shanghai Zhuchuang Enterprise Management Co., Ltd. (“Zhuchuang”) Staged office space company Equity method investee of the Group China Hospitality JV, Ltd. (“China Hospitality JV”) Property management company Equity method investee of the Group Smart Lodging Group (Cayman) Limited(“Smart Lodging”) Hotel chain Equity method investee of the Group Shanghai Lianquan Hotel Management Co., Ltd. (“Lianquan”) Hotel management company Equity method investee of the Group Suzhou Huali Jinshi Construction Decoration Co., Ltd. Building decoration company Equity method investee of the Group Shenzhen Hitone Investment Fund Partnership (LLP) ( “Hitone”) Fund Equity method investee of the Group CREATER ceased to be related parties of the Group from August 2019. Accor ceased to be related parties of the Group from December 2021. (a) Related party balances Amounts due from related parties were mainly comprised of shareholder loans to Sheen Star, Cjia Group, Zhuchuang and Lianquan, which are short-term in nature and mainly payable on demand, service fee and room charges withheld by Trip.com. As the Group adopted ASU 2016-13 on January 1, 2020 utilizing the modified retrospective approach, the Group recorded credit losses of RMB18 and RMB17 for the years ended December 31, 2020 and 2021. As of December 31, 2020 2021 Sheen Star 52 33 Zhuchuang 27 27 Trip.com 22 17 Cjia Group 22 29 Accor 1 — Lianquan 58 49 Others 14 12 Allowance for expected credit losses (18) (17) Total 178 150 Amounts due to related parties were mainly comprised of payables for brand use fee, reservation fee and other service fee to Trip.com and Accor, acquisition consideration, consultation fee to and cash received on behalf of Cjia Group and payables for construction service fee to Huali Jinshi, which are short-term in nature and payable on demand. As of December 31, 2020 2021 Trip.com 48 44 Accor 8 — Cjia Group 42 101 Huali Jinshi 29 47 Others 5 5 Total 132 197 (b) Related party transactions During the years ended December 31, 2019, 2020 and 2021, significant related party transactions were as follows: Years Ended December 31, 2019 2020 2021 Commission expenses to Trip.com 72 78 99 Lease expenses to Trip.com 18 18 19 Lease expenses to Cjia Group — — 12 Service fee to Huali Jinshi 99 41 42 Service fee to Cjia Group 6 17 — Brand use fee, reservation fee and other related service fee to Accor 28 17 22 Goods sold and service provided to Cjia Group 21 18 11 Early termination compensation of sublease to Cjia Group — 8 — Loan payment to Smart Lodging 30 — — Loan payment to Lianquan 32 — — Loan payment to Hitone — — 5 Service fee from Trip.com 41 66 62 Service fee from Accor 9 3 3 Service fee from China Hospitality JV 6 1 2 Service fee from Sheen Star 4 4 5 Sublease income from Lianquan 7 12 10 Sublease income from Cjia Group 14 9 6 Early termination compensation of franchise agreement from China Hospitality JV — 26 — Purchase of property and equipment from Cjia Group — 11 — Interest income from Sheen Star 8 1 0 Interest income from CREATER 6 — — 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, 2021 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 21. COMMITMENTS AND CONTINGENCIES (a) Commitments As of December 31, 2021, the Group’s commitments related to leasehold improvements and installation of equipment for hotel operations was RMB413, which is expected to be incurred within one 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, 2021, the accrued contingent liability was RMB54. |
SCHEDULE I FINANCIAL INFORMATIO
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | 12 Months Ended |
Dec. 31, 2021 | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | |
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY | ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I HUAZHU 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, 2020 2021 2021 US$’million (Note 2) Assets Current assets: Cash and cash equivalents 1,892 581 91 Short-term investments 51 81 13 Other current assets 16 1 0 Total current assets 1,959 663 104 Investment in subsidiaries 16,103 16,928 2,656 Total assets 18,062 17,591 2,760 Liabilities and equity Current liabilities: Short-term debt — 3,028 475 Amount due to subsidiaries 273 257 40 Accrued expenses and other current liabilities 141 213 34 Total current liabilities 414 3,498 549 Long-term debt 6,318 3,158 496 Total liabilities 6,732 6,656 1,045 Equity: Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,243,644,440 and 3,255,971,250 shares issued as of December 31, 2020 and 2021, and 3,108,425,680 and 3,120,746,090 shares outstanding as of December 31, 2020 and 2021, respectively) 0 0 0 Treasury shares (30,967,640 and 30,974,040 shares as of December 31, 2020 and 2021, respectively) (107) (107) (17) Additional paid-in capital 9,808 9,964 1,563 Retained earnings 1,502 1,037 163 Accumulated other comprehensive income 127 41 6 Total equity 11,330 10,935 1,715 Total liabilities and equity 18,062 17,591 2,760 ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I HUAZHU GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME (Renminbi in millions, unless otherwise stated) Years Ended December 31, 2019 2020 2021 2021 US$ ’ million (Note 2) Operating costs and expenses: General and administrative expenses 115 155 110 17 Total operating costs and expenses 115 155 110 17 Loss from operations (115) (155) (110) (17) Interest income 10 2 8 1 Interest expense 201 154 128 20 Foreign exchange gain (loss) 5 (8) (3) (0) Other income, net 30 32 15 2 Unrealized loss from fair value changes of equity securities (27) (10) (2) (0) Income (loss) in investment in subsidiaries 2,067 (1,899) (245) (39) Net income (loss) attributable to Huazhu Group Limited 1,769 (2,192) (465) (73) Other comprehensive (loss) income, net of tax (7) 176 (86) (14) Comprehensive income (loss) 1,762 (2,016) (551) (87) ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I HUAZHU GROUP LIMITED FINANCIAL INFORMATION FOR PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Renminbi in millions, unless otherwise stated) Years Ended December 31, 2019 2020 2021 2021 US$ ’ million (Note 2) Net cash (used in) provided by operating activities (212) 49 9 2 Investing activities: Investment in subsidiaries (1,039) (6,267) (1,050) (165) Receipt of investment in subsidiaries 9 — — — Purchase of short-term investments — — (34) (5) Net cash used in investing activities (1,030) (6,267) (1,084) (170) Financing activities: Proceeds from issuance of ordinary shares in Hong Kong public offering — 6,018 — — Payment of ordinary share issuance costs — (10) (15) (2) Net settlement on shares repurchased for withholding taxes related to share-based awards — — 50 7 Payment of share repurchase — — (0) (0) Net proceeds from issuance of ordinary shares upon exercise of option 14 1 1 0 Proceeds of advances from subsidiaries 109 — 0 0 Proceeds from short-term bank borrowings 1,265 — — — Repayment of short-term bank borrowings — (282) A — — Proceeds from long-term bank borrowings 5,206 — — — Repayment of long-term bank borrowings (5,169) — — — Proceeds from issuance of convertible senior notes — 3,499 — — Repayment of convertible senior notes — (0) (0) (0) Debt financing costs paid — (9) — — Dividends paid (658) (678) — — Net cash provided by financing activities 767 8,539 36 5 Effect of exchange rate changes on cash and cash equivalents 141 (790) (272) (43) Net (decrease) increase in cash and cash equivalents (334) 1,531 (1,311) (206) Cash, cash equivalents at the beginning of the year 695 361 1,892 297 Cash, cash equivalents at the end of the year 361 1,892 581 91 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 HUAZHU 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, 2021, 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, 2021 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ADDITION INFORMATION — FINANCIAL STATEMENTS SCHEDULE II HUAZHU 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 Addition Due to Charge Taken Balance at Year Expenses Accounts Acquisition Against Allowance Write off End of Year (Renminbi in millions) Allowance for accounts receivable, loan receivables and other financial assets: 2019 17 21 — — — (16) 22 2020 22 65 7 — — (7) 87 2021 87 105 — — — (64) 128 Valuation allowance for deferred tax assets 2019 107 79 — — (24) (10) 152 2020 152 249 — — (32) — 369 2021 369 151 — — (37) (17) 466 ****** |
SUMMARY OF PRINCIPAL ACCOUNTI_2
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
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”). The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, to support its working capital requirements. The Group’s businesses have been significantly impacted by the global outbreak of COVID-19 and as a result, incurred net losses during the year ended December 31, 2020 and 2021. As of December 31, 2021, the Group’s total current liabilities exceeded its total current assets by RMB5,726 (US$898 million), which mainly attributed to the scheduled repayments of the Group’s Convertible Senior Notes of US$475 million (RMB3,027) due in November 2022, and the outstanding bank borrowing of EUR338 million (RMB2,440) under its long-term bank credit facility of EUR440 million (RMB3,177) due in December 2022. These conditions may raise substantial doubt about the Group’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Group is unable to continue as a going concern. However, the management has evaluated the significance of the conditions and regards the going concern assumption as appropriate based on the following considerations: ● The Group generated positive cash flow from operations for several consecutive years with a net operating cash inflow of RMB1,342 for the year ended December 31, 2021; ● The Group has performed a review of its cash flow forecasts for the twelve month period after the date that the financial statements are issued and believes that its operating cash flow will be positive. Management believes the relevant conditions that raise substantial doubt on going concern are mitigated by the following plans and actions: ● The Group has the ability to sell its short-term investments that can be readily convertible into cash, the fair value of which was approximately RMB2,589 as of December 31, 2021; ● As of March 31, 2022, the Group had unused bank credit facilities of approximately RMB2,994. Based on the Group’s historical experience, requests for drawdowns will be approved by the banks provided that the Group submits the required supporting documentation and the amount is within the credit limit granted; In addition, the Group is in the process to obtain long term credit facilities from commercial banks. While final approval has not been obtained, management of the Group believe it is likely such credit facilities can be obtained to replace its existing long-term bank credit facility of EUR 440 million (RMB3,177) due in December 2022. Based on the above factors, management believes that adequate sources of liquidity exist to fund the Group’s working capital and capital expenditures requirements, and to meet its other liabilities and commitments as they become due for at least twelve months from the issuance of these consolidated financial statements. |
Basis of consolidation | Basis of consolidation The 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, 2020 and 2021, the Group consolidated eight and seven entities under VIE model, and the impact of the consolidated VIEs are immaterial to the Group’s consolidated financial statements. The Group evaluates its business activities and arrangements with the entities that operate the manachised and franchised hotels and the funds that it serves as general partner or fund manager to identify potential variable interest entities. Generally, these entities that operate the manachised and franchised hotels qualify for the business scope exception, therefore consolidation is not appropriate under the variable interest entity consolidation guidance. For the disclosure of significant non-consolidated variable interest entities, see Note 7 Investments. |
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 Investments represent equity-method investments, equity investments with readily determinable fair values, equity investments without readily determinable fair values and available-for-sale debt securities. The Group accounts for equity investment in entities with significant influence under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of comprehensive income. Dividends received reduce the carrying amount of the investment. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of comprehensive income to the extent and as an adjustment to the carrying amount of its other investments in 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. Impairment losses are recognized in other expense when a decline in value is deemed to be other-than- temporary. 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 unrealized gains and losses from fair value changes recognized in net income in the consolidated statements of comprehensive income. Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the amount by which the carrying value exceeds the fair value of the investment. Debt securities that the company has no 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. Available-for-sale debt securities are reported at fair value, with unrealized gains and losses (other than impairment losses) recognized in accumulated other comprehensive income or loss. Realized gains and losses on debt securities are recognized in the net income in the consolidated statements of comprehensive income. Before the adoption of Accounting Standards Update (“ASU”) 2016-13 (codified as ASC 326), Measurement of Credit Losses on Financial Instruments, the amount of the total impairment related to the credit loss was recognized in the income statement and the amount related to all other factors is recognized in other comprehensive income, net of applicable taxes, and the impairment losses recognized in the income statement cannot be reversed for any future recoveries. After the adoption of ASC 326 on January 1, 2020, 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. As a result of the impairment analysis, the Group recorded an impairment of RMB10, RMB92 and RMB63 in 2019, 2020 and 2021, respectively. |
Accounts receivable, net | Accounts receivable, net Accounts receivable mainly consist of franchise fee receivables, amounts due from corporate customers, travel agents, hotel guests and credit card receivables, which are recognized and carried at the original invoice or accrued amount less an allowance for credit losses. Before the year 2020, the Group established an allowance for doubtful accounts primarily based on the aging of the receivables and factors surrounding the credit risk of specific customers. After the adoption of ASC 326 Financial instruments- credit losses on January 1, 2020, the accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for credit losses. The Group establishes current expected credit losses (“CECL”) for pools of assets with similar risk characteristics by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. 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. The Group mainly focuses on historical collection experience and considers aging or specific customer circumstance. Additionally, the Group records an allowance on other forms of financial assets, including other current assets, other assets and amounts due from related parties with the similar approach of accounts receivable. |
Loan receivables, net | Loan receivables, net The Group entered into entrusted loan agreements with certain franchisees with the typical terms to be two |
Inventories | Inventories Inventories mainly consist of small appliances, bedding and daily consumables, operating supplies, food and beverage inventory items. Small appliances and bedding for new hotels opened are stated at cost, less accumulated amortization, and are amortized over their estimated useful lives, generally one year, from the time they are put into use. Daily consumables and beddings replacement are expensed when used. |
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 acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets, including brand name, master brand agreement, non-compete agreements, franchise or manachise agreements, favorable lease agreements and other intangible assets acquired from business combination are recognized and measured at fair value upon acquisition. Non-compete agreements and franchise or manachise agreements are amortized over the expected useful life and remaining franchise contract terms, respectively. Purchased software is stated at cost less accumulated amortization. The favorable lease agreements in which the Group acts as a lessor were accounted as intangible assets as before, which are amortized over remaining operating lease terms. 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 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. Master brand agreement, acquired in Accor acquisition, granted the Group certain franchise rights with initial term of 70 years, and can be renewed without substantial obstacles. As a result, the useful life is determined to be indefinite. 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. The Group measures the impairment by comparing the fair value of brand names and master brand agreement with its carrying amount. If the carrying amount of brand names and master brand agreement exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The Group measures the fair value of the brand names under the relief-from-royalty method, the master brand agreement under the multi-period excess earnings method. The determination of the fair value requires management to make significant estimates and assumptions related to forecasts of future revenues, operating margin, royalty saving rate and discount rates to estimate the net present value of future cash flows. Management performs its annual brand names and master brand agreement impairment test on November 30 and when triggering events occurred. As of December 31, 2020 and 2021, the estimated fair value of the indefinite-lives intangible assets of legacy Huazhu significantly exceeded of its carrying value. Therefore, there was no impairment loss recognized for the years ended December 31, 2019, 2020 and 2021. For its indefinite-lives intangible assets of legacy DH, there were 3 brand names acquired in DH acquisition. The estimated fair value of one brand name was lower than its carrying amount, and an impairment of RMB160 was recognized, which reduced the carrying value by 6%. A 5% increase in the discount rate or decrease in royalty royalty |
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, which are amortized on a straight-line basis over the remaining term of the land certificates, between 30 to 50 years. Amortization expense of land use rights for the years ended December 31, 2019, 2020 and 2021 amounted to RMB8, RMB7 and RMB7, respectively. |
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 RMB3, RMB180 and RMB157 during the years ended December 31, 2019, 2020 and 2021, 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 represents the excess of the cost of an acquisition over the fair value of the identifiable assets less liabilities acquired. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. Before the adoption of ASU No. 2017-04, Intangibles-Goodwill and Other, the Group performed a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. A reporting unit is identified as an operating segment or one level below an operating segment (also known as a component) for which discrete financial information is available and is regularly reviewed by segment manager. Before the acquisition of Deutsche Hospitality, all the acquired business has been migrated to the Group’s business, and the Group’s management regularly reviews operation data including industrial metrics of revenue per available room, occupancy rate, and number of hotels by scale/brand, rather than discrete financial information for the purpose of performance evaluation and resource allocation at brand level. The Group concluded that it had only one reporting unit, and therefore the goodwill impairment testing was performed on consolidation level. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. The Group adopted ASU No. 2017-04, Intangibles-Goodwill and Other on January 1, 2020, which requires a one-step impairment test in which an entity 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 since the segment manager regularly reviews discrete financial information for legacy Huazhu and legacy DH separately. 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. Fair value of the equity value 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. Management performs its annual goodwill impairment test on November 30 and when triggering events occurred. The Group recorded an impairment of nil, RMB437 and nil for the years ended December 31, 2019, 2020 and 2021. The Group considered assumptions based on the current economic environment in its annual impairment assessment, including the inherent risk and uncertainty due to the stay-in-place measures enacted, consumer confidence levels, and the ongoing impact of the COVID-19 pandemic on the hospitality industry. Based on the analysis, the Group concluded that the goodwill of legacy Huazhu was not impaired for the years ended December 31, 2019, 2020 and 2021 as the estimated fair value of the reporting unit of legacy Huazhu far exceeded its carrying value as of the end of each year. For the goodwill of legacy DH, the Group performed impairment test and recorded an impairment of RMB437 during the year of 2020. The estimated fair value of the reporting unit of legacy DH exceeded its carrying value, as such no impairment charges were recorded for the year ended December 31, 2021. As of December 31, 2020 and 2021, the estimated fair value of the reporting unit of legacy Huazhu exceeded over 100%of its carrying value. As of December 31, 2020 and 2021, the estimated fair value of the reporting unit of legacy DH exceeded its carrying value by approximately RMB244 and RMB421, which accounted for 6% and 13% of its carrying value. A 5% decline in the underlying projected cash flow or increase in the discount rate could have resulted in goodwill impairment charges of approximately RMB42 and RMB175 in 2020. A 5% decline in the underlying projected cash flows or increase in the discount rate could have reduced the fair value of approximately RMB313 and RMB359 in 2021. |
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, food and beverage sales 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 The manachise and franchise agreement contains the following promised services: ● Intellectual Property (“IP”) license ● Pre-opening services ● System maintenance services ● Hotel management services The promises to provide pre-opening services and system maintenance services are not distinct performance obligation because they are attendant to the license of IP. Therefore, the promises to provide pre-opening services and system maintenance services are combined with the license of IP to form a single performance obligation. Hotel management services forms a single distinct performance obligation. Manachised and franchised hotel revenues are derived from franchise or manachise agreements where the franchisees are primarily required to pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) 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 franchise fee On-going management and franchise service fees Central reservation system usage fees, other system maintenance and support fees Reimbursements for hotel manager fees . Above policies are only applicable to legacy Huazhu. For manachised hotels under Deutsche Hospitality, the franchisees have historically been required to pay Deutsche Hospitality an on-going management fees consisting of a base fee as a percentage of the hotel’s gross revenues and an incentive fee as a percentage of the hotel’s gross adjusted profit. For franchised hotels under Deutsche Hospitality, the franchisees have historically been required to pay Deutsche Hospitality a license fee, a franchise fee and a central service fee. The manachised and franchised hotel revenues of Deutsche Hospitality are recognized over time as services are rendered. The Group is gradually conforming the terms of Deutsche Hospitality’s franchise and management agreements to those of hotels under legacy Huazhu. Since the COVID-19 outbreak in January 2020, the Group has offered one-time reduction on continuing franchise fees of approximately RMB132 and RMB105 for 2020 and 2021 to help franchisees meet their short-term working capital needs. There is no change to the scope of services or other terms of the agreements. Previously recognized revenue on the original contract was not adjusted. Other Revenues Other revenues Loyalty Program Under the loyalty program the Group administers, members earn loyalty points that 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 recognize 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, the portion of revenue deferred by manachised and franchised hotels are collected by the Group which will be refunded upon redemption of points at manachised and franchised hotels. The estimated breakage for points earned in manachised and franchised hotels are recognized as manachised and franchised revenue for each period. The Group estimates breakage based on the Group’s historical experience and expectations of future member behavior and will true up the estimated breakage at end of each period. Above policies are only applicable to legacy Huazhu. The loyalty program initiated by Deutsche Hospitality has substantially the same rights, nature and redeemable approaches as legacy Huazhu, therefore the accounting treatment is the same. As of December 31, 2021, the contract liabilities related to Deutsche Hospitality were immaterial and the loyalty program of Deutsche Hospitality was in the progress of being migrated to that of legacy Huazhu. Membership fees from the Group’s customer loyalty program are all from legacy Huazhu, which are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels and also applicable to legacy Huazhu only. Such duration is estimated based on the Group’s and management’s experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be two Contract Balances The Group’s payments from customers are based on the billing terms established in contracts. Customer billings are classified as accounts receivable when the Group’s right to consideration is unconditional. If the right to consideration is conditional on future performance under the contract, the balance is classified as a contract asset. Payments received in advance of performance under the contract are classified as current or non-current contract liabilities on the Group’s consolidated balance sheets and are recognized as revenue as the Group performs under the contract. |
Value-Added Taxes and surcharges | Value-Added Taxes and surcharges The accommodation services of the Group in PRC and Germany are subject to a range from 6% to 19% of Value-Added Taxes, respectively. The Group is subject to education surtax and urban maintenance and construction tax, on the services provided in the PRC. |
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 RMB99, RMB150 and RMB165 for the years ended December 31, 2019, 2020 and 2021, respectively. |
Government grants | Government grants Government grants represent cash received by the Group in the PRC from local governments as incentives for investing in certain local districts, and are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts under legacy Huazhu. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. The local governments have final discretion as to whether the Group has met all criteria to be entitled to the subsidies. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized by legacy Huazhu were RMB148, RMB154 and RMB110 for the years ended December 31, 2019, 2020 and 2021, respectively, which were recorded as other operating income. Government grants represent cash received by the Group as compensation for COVID-19 impacts in various countries under legacy DH. The grants consist of short term work compensation, fixed costs compensation and revenue based compensation. Short term work compensation recognized by legacy DH was RMB244 and RMB197 for the year ended December 31, 2020 and 2021, which was netted with operating costs and expenses. Other grants recognized by legacy DH were RMB17 and RMB765 for the year ended December 31, 2020 and 2021, which were recorded as other operating income. |
Leases | Leases As a lessee Starting from January 1, 2019, the Group adopted ASU 2016-02, Leases (Topic 842), which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. All of the Group’s leases were classified under ASC Topic 842 as operating leases upon this adoption and there are both capital lease and operating lease under legacy DH since the acquisition of DH. The Group elected the practical expedients under ASU 2016-02 which includes the use of hindsight in determining the lease term and the practical expedient package to not reassess whether any expired or existing contracts are or contain leases, to not reassess the classification of any expired or existing leases, and to not reassess initial direct costs for any existing leases. The adoption of ASU 2016-02 did not materially affect the consolidated statements of income or consolidated statements of cash flows and had no impact on the debt covenant compliance under the current agreements. The Group recognizes a lease liability for future fixed lease payments and variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date and a ROU asset representing the right to use the underlying asset for the lease term. Lease liabilities are recognized at commencement date based on the present value of fixed lease payments and variable lease payments that depend on an index or a rate (initially measured using the index or rate as at the commencement date) over the lease term using the rate implicit in the lease, if available, or the Group’s incremental borrowing rate. As its leases do not provide an implicit borrowing rate, the Group uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. Upon adoption of ASU 2016-02, the Group elected to use the remaining lease term as of January 1, 2019 in the estimation of the applicable discount rate for leases that were in place at adoption. For the initial measurement of the lease liability for leases commencing after January 1, 2019, the Group uses the discount rate as of the commencement date of the lease, incorporating the entire lease term. Current maturities of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, current and finance lease liabilities, current, respectively, in the Group’s consolidated balance sheets. Long-term portions of operating lease liabilities and finance lease liabilities are classified as operating lease liabilities, non-current and finance lease liabilities, non-current, respectively, in the Group’s consolidated balance sheets. Most leases have initial terms ranging from 10 to 20 years for legacy Huazhu, and from 20 to 25 years for legacy DH. The lease term includes lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that the Group will exercise such extension options and not exercise such early termination options, respectively. The Group’s lease agreements may include nonlease components, mainly common area maintenance, which are combined with the lease components as the Group elects to account for these components as a single lease component, as permitted. The Group elected the practical expedient of not to separate land components outside PRC from leases of specified property and equipment at the ASC842 transition date. Besides, the Group’s lease payments are generally fixed and certain agreements contain variable lease payments based on the operating performance of the leased property and the changes in the index of consumer pricing index (“CPI”). Almost all the lease agreements with variable lease payments based on the changes in CPI are held by legacy DH. For operating leases, the Group recognizes lease expense on a straight-line basis over the lease term and variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period in which the obligation for those payments is incurred. The operating lease expense is recognized as hotel operating costs, general and administrative expenses and pre-opening expenses in the consolidated statements of comprehensive income. For finance lease, lease expense is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis over the shorter of the lease term or useful life of the underlying asset within hotel operating costs in the consolidated statements of comprehensive income, but interest expense on the lease liability is recognized in interest expense in the consolidated statements of comprehensive income using the effective interest method which results in more expense during the early years of the lease. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities. The Group’s lease agreements do not contain any significant residual value guarantees or restricted covenants. The ROU assets are measured at the amount of the lease liabilities with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by the Group, deferred rent and lease incentives, and any off-market terms (that is, favorable or unfavorable terms) present in the lease when the Group acquired leases in a business combination in which the acquiree acts as a lessee. The Group evaluates the carrying value of ROU assets if there are indicators of impairment and reviews the recoverability of the related asset group. The Group excludes the lease obligation from the carrying value of the asset group. Accordingly, the lease payments (both principal and interest) don’t reduce the undiscounted expected future cash flows used to test the asset group for recoverability. If the carrying value of the asset group cannot be recoverable and is in excess of the estimated fair value, the Group records an impairment loss in the consolidated statements of comprehensive income. Noncash lease expense are used as the noncash add-back for the amortization of the operating ROU assets to the operating section of the consolidated statements of cash flow. The Group reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon modification of the contract. The Group will derecognize ROU assets and liabilities, with difference recognized in the consolidated statements of comprehensive income on the contract termination. In April 2020, the FASB released a Q&A which allows lessees and lessors to make an election to either apply the lease modification guidance or the variable rents guidance under ASC 840 and ASC 842 for lease concessions related to COVID-19 as long as the total cash flows as a result of the concession are substantially the same or less than those in the contract before the concession. A preparer can make this election without the need to determine whether a force majeure clause exists in the lease. The Group has elected to account for the lease concessions as variable lease expenses. The favorable lease agreements and unfavorable lease agreements in which the Group acts as a lessee were reclassified to operating lease right-of-use assets on January 1, 2019, upon adoption of ASC 842, Leases, which are amortized combining with right-of-use assets over remaining operating lease terms. These estimated useful lives are generally as follows: Favorable lease agreements acquired before the adoption of ASC 842 Remaining lease terms from 1 to 20 years Unfavorable lease agreements Remaining lease terms from 3 to 13 years Sublease The Group subleases property which are not suitable to operate hotels to third parties under operating leases. In accordance with the provisions of ASC 842, since the Group has not been relieved as the primary obligor of the head lease, the Group cannot net the sublease income against its lease payment to calculate the lease liability and ROU asset. The Group’s practice has been, and will continue to, straight-line the sub-lease income over the term of the sublease, which is consistent with the accounting treatment under ASC840. |
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. |
Comprehensive income | Comprehensive income Comprehensive income includes all changes in equity except for those resulting from investments by owners and distributions to owners and is comprised of net income, foreign-currency translation adjustments and gain (loss) arising from defined benefit plan. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term and long-term investments, loan receivables, amount due from related parties, other current assets, other assets and accounts receivable. All of the Group’s cash and cash equivalents and restricted cash are held with financial institutions that Group’s management believes to be high credit quality. In addition, the Group’s investment policy limits its exposure to concentrations of credit risk and the Group’s short-term and long-term investments consist of equity investments in listing and private companies. The Group’s loan receivables are lent to entities with high credit quality. The Group conducts credit evaluations on its group and agency customers and generally does not require collateral or other security from such customers. The Group periodically evaluates the creditworthiness of the existing customers in determining credit losses for accounts receivable, loan receivable and financial assets, including other current assets, other assets and amounts due from related parties based on the expectation of future economic conditions, historical collection experience and a loss-rate approach. |
Fair value | Fair value The Group defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. The Group’s financial instruments include cash and cash equivalent, restricted cash, loan receivables current and non-current portion, receivables, payables, short-term debts, long-term debts. The carrying amounts of these short-term financial instruments approximates their fair value due to their short-term nature. The long-term debts and long-term loan receivables approximate their fair values, because the bearing interest rate approximates market interest rate, and market interest rates have not fluctuated significantly since the commencement of loan contracts signed. The carrying amounts of convertible senior notes were RMB3,290, RMB6,318 and RMB6,186 and the corresponding fair value estimated based on quoted market price were RMB3,711, RMB7,747 and RMB6,681, as of December 31, 2019, 2020 and 2021, respectively. The fair value of pension plan assets is discussed in Note 18. As of December 31, 2020 and 2021, information about inputs into the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs December 31, Description Fair Value (Level 1) (Level 2) (Level 3) 2020 Equity securities with readily determinable fair value 3,903 3,903 — — 2020 Available-for-sale debt securities 220 — 220 — 2020 Employee benefit plan assets 6 6 — — 2021 Equity securities with readily determinable fair value 2,589 2,589 — — 2021 Available-for-sale debt securities 220 — 220 — 2021 Employee benefit plan assets 5 5 — — The following table presents the Group’s assets measured at fair value on a non-recurring basis for the years ended December 31, 2020 and 2021: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Fair Value for Identical Observable Unobservable Total Years Ended Years Ended Assets Inputs Inputs Loss for December 31, Description December 31 (Level 1) (Level 2) (Level 3) the Year 2020 Property and equipment 2 — — 2 41 2020 Operating lease right-of-use assets 71 — — 71 139 2020 Long-term investment — — — — 92 2020 Goodwill 2,328 — — 2,328 437 2021 Property and equipment 33 — — 33 24 2021 Operating lease right-of-use assets 88 — — 88 48 2021 Intangible assets 2,556 — — 2,556 245 2021 Long-term investment — — — — 63 As a result of reduced expectations of future cash flows from certain leased hotels, the Group determined that the hotels property and equipment with a carrying amount of RMB3, RMB43 and RMB57 was not fully recoverable and consequently recorded an impairment charge of RMB3, RMB41 and RMB24 for the years ended December 31, 2019, 2020 and 2021, respectively. The Group also determined that the operating lease right-of-use assets amount with a carrying amount of nil, RMB210 and RMB136 was not fully recoverable and recorded an impairment charge of nil, RMB139 and RMB48 for the years ended December 31, 2019, 2020 and 2021, respectively. Fair value of the property and equipment and operating lease right-of-use assets impairment testing were 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. As a result, the Group has determined that the majority of the inputs used to value its long-lived assets held and used and its reporting units are unobservable inputs that fall within Level 3 of the fair value hierarchy. 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 20%, respectively, for the years ended December 31, 2019, 2020 and 2021, respectively. As a result of the impairment assessment, the Group determined that the intangible assets amount with a carrying amount of nil, nil and RMB2,801 exceeded their fair value and recorded an impairment charge of nil, nil and RMB245 for the years ended December 31, 2019, 2020 and 2021, respectively. As a result of the impairment assessment, the Group determined that the long-term investment amount with a carrying amount of RMB10, RMB92 and RMB63 was fully impaired as a result of the impairment assessment for the years ended December 31, 2019, 2020 and 2021, respectively. As a result of the impairment assessment, the Group determined that the goodwill amount with a carrying amount of nil, RMB2,768 and nil was impaired and recorded an impairment charge of nil, RMB437 and nil for the years ended December 31, 2019, 2020 and 2021, 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. The share-based compensation expenses have been categorized as either hotel operating costs, general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees. For the years ended December 31, 2019, 2020 and 2021, the Group recognized share-based compensation expenses of RMB110, RMB122 and RMB109, respectively, which were classified as follows: Years Ended December 31, 2019 2020 2021 Hotel operating costs 35 42 39 Selling and marketing expenses 3 4 4 General and administrative expenses 72 76 66 Total 110 122 109 |
Earnings (losses) per share | Earnings (losses) per share Basic earnings (losses) per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and ordinary shares issuable upon the exercise of stock options and vest of nonvested restricted stocks (using the treasury stock method). The loaned shares under the ADS lending agreement are excluded from both the basic and diluted earnings (losses) per share calculation unless default of the ADS lending arrangement occurs which the Group considered the possibility is remote. |
Segment and geography information | Segment and geography information The Group identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information. The Group’s chief operating decision maker has been identified as the chief executive officer. Before the acquisition of DH completed on January 2, 2020, CODM regularly reviews the operation data, such as industrial metrics of revenue per available room, occupancy rate, and number of hotels by scale/brand, to assess the performance and allocate the resources at brand level. All the acquired business including Accor, Crystal Orange and Blossom Hotel Management has been migrated to the Group’s business, and the Group operates and manages its business as a single segment. After the acquisition of DH, CODM regularly reviews the operating data and EBITDA, which is defined as earnings before interest income, interest expense, income tax expense (benefit) and depreciation and amortization, a financial measure for legacy Huazhu and legacy DH separately to evaluate their performance. Therefore, 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, 2020 and 2021. The Group presents segment information after elimination of intercompany transactions. Years Ended December 31, 2020 2021 Legacy Legacy Legacy Legacy Huazhu DH Total Huazhu DH Total Total revenues 8,664 1,532 10,196 11,247 1,538 12,785 Operating costs and expenses 8,978 2,947 11,925 10,549 3,058 13,607 Goodwill impairment loss — 437 437 — — — Other operating income, net 214 266 480 193 793 986 Interest income 118 1 119 88 1 89 Interest expense 427 106 533 291 114 405 Other (expenses) income, net (92) 3 (89) 139 18 157 Unrealized (losses) gains from fair value changes of equity securities (266) 1 (265) (96) — (96) Foreign exchange gain (loss) 176 (1) 175 (294) (23) (317) (Loss) income before income tax (591) (1,688) (2,279) 437 (845) (408) Income tax expense (benefit) 151 (366) (215) 249 (237) 12 (Loss) from equity method investments (117) (23) (140) (50) (10) (60) Net loss attributable to noncontrolling interest (12) — (12) (15) — (15) Net (loss) income attributable to Huazhu Group Limited (847) (1,345) (2,192) 153 (618) (465) Income tax expense (benefit) 151 (366) (215) 249 (237) 12 Interest income 118 1 119 88 1 89 Interest expense 427 106 533 291 114 405 Depreciation and amortization 1,123 239 1,362 1,222 281 1,503 EBITDA 736 (1,367) (631) 1,827 (461) 1,366 The following table presents total assets for operating segments, reconciled to consolidated amounts: As of December 31, 2020 2021 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total assets 46,243 18,912 65,155 45,353 17,916 63,269 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, 2020 2021 China 8,647 11,231 Germany 1,212 1,263 All others 337 291 Total 10,196 12,785 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2020 2021 China 30,635 33,143 Germany 15,670 13,884 All others 2,544 2,929 Total 48,849 49,956 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, 2020 and 2021. |
Treasury shares | Treasury shares Treasury shares represent shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury shares are accounted for under the cost method. As of December 31, 2020 and 2021, under the repurchase plan, the Company had repurchased an aggregate of 30,967,640 and 30,974,040 ordinary shares on the open market for cash consideration of RMB107 and RMB107, respectively. The repurchased shares were presented as “treasury shares” in shareholders’ equity on the Group’s consolidated balance sheets. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adopted Accounting Standards In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020, with early adoption permitted. The Group adopted the guidance on January 1, 2021, 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. In December 2019, the FASB has issued ASU No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes. The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. This ASU also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Group adopted the guidance on January 1, 2021, 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. In January 2020, the FASB has issued ASU No. 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 — a consensus of the FASB Emerging Issues Task Force. This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted the guidance on January 1, 2021, 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 November 2021, the FASB issued ASU 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 does not expect this ASU would have a material 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 = RMB6.3726, on December 30, 2021, 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, 2021, or at any other rate. |
SUMMARY OF PRINCIPAL ACCOUNTI_3
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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 estimated useful life of lease agreements | Favorable lease agreements acquired before the adoption of ASC 842 Remaining lease terms from 1 to 20 years Unfavorable lease agreements Remaining lease terms from 3 to 13 years |
Schedule of information about inputs into the fair value measurements of the assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Identical Significant Other Unobservable As of Assets Observable Inputs Inputs December 31, Description Fair Value (Level 1) (Level 2) (Level 3) 2020 Equity securities with readily determinable fair value 3,903 3,903 — — 2020 Available-for-sale debt securities 220 — 220 — 2020 Employee benefit plan assets 6 6 — — 2021 Equity securities with readily determinable fair value 2,589 2,589 — — 2021 Available-for-sale debt securities 220 — 220 — 2021 Employee benefit plan assets 5 5 — — |
Schedule of assets measured at fair value on a non-recurring basis | Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Fair Value for Identical Observable Unobservable Total Years Ended Years Ended Assets Inputs Inputs Loss for December 31, Description December 31 (Level 1) (Level 2) (Level 3) the Year 2020 Property and equipment 2 — — 2 41 2020 Operating lease right-of-use assets 71 — — 71 139 2020 Long-term investment — — — — 92 2020 Goodwill 2,328 — — 2,328 437 2021 Property and equipment 33 — — 33 24 2021 Operating lease right-of-use assets 88 — — 88 48 2021 Intangible assets 2,556 — — 2,556 245 2021 Long-term investment — — — — 63 |
Schedule of share-based compensation expense recognized | Years Ended December 31, 2019 2020 2021 Hotel operating costs 35 42 39 Selling and marketing expenses 3 4 4 General and administrative expenses 72 76 66 Total 110 122 109 |
Summary of operating segment results | Years Ended December 31, 2020 2021 Legacy Legacy Legacy Legacy Huazhu DH Total Huazhu DH Total Total revenues 8,664 1,532 10,196 11,247 1,538 12,785 Operating costs and expenses 8,978 2,947 11,925 10,549 3,058 13,607 Goodwill impairment loss — 437 437 — — — Other operating income, net 214 266 480 193 793 986 Interest income 118 1 119 88 1 89 Interest expense 427 106 533 291 114 405 Other (expenses) income, net (92) 3 (89) 139 18 157 Unrealized (losses) gains from fair value changes of equity securities (266) 1 (265) (96) — (96) Foreign exchange gain (loss) 176 (1) 175 (294) (23) (317) (Loss) income before income tax (591) (1,688) (2,279) 437 (845) (408) Income tax expense (benefit) 151 (366) (215) 249 (237) 12 (Loss) from equity method investments (117) (23) (140) (50) (10) (60) Net loss attributable to noncontrolling interest (12) — (12) (15) — (15) Net (loss) income attributable to Huazhu Group Limited (847) (1,345) (2,192) 153 (618) (465) Income tax expense (benefit) 151 (366) (215) 249 (237) 12 Interest income 118 1 119 88 1 89 Interest expense 427 106 533 291 114 405 Depreciation and amortization 1,123 239 1,362 1,222 281 1,503 EBITDA 736 (1,367) (631) 1,827 (461) 1,366 |
Summary of total assets for operating segments, reconciled to consolidated amounts | As of December 31, 2020 2021 Legacy Huazhu Legacy DH Total Legacy Huazhu Legacy DH Total Total assets 46,243 18,912 65,155 45,353 17,916 63,269 |
Summary 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, 2020 2021 China 8,647 11,231 Germany 1,212 1,263 All others 337 291 Total 10,196 12,785 Property and equipment, net, intangible assets, net, right-of-use assets, land use rights, net and goodwill: As of December 31, 2020 2021 China 30,635 33,143 Germany 15,670 13,884 All others 2,544 2,929 Total 48,849 49,956 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
CitiGo Hotels | |
Business Acquisition [Line Items] | |
Summary of unaudited pro forma results of operation | The following table summarizes unaudited pro forma results of operation for the years ended December 31, 2020 and 2021 assuming that the acquisition of CitiGO hotels occurred as of January 1, 2020. The transaction cost incurred was not material. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2020. Period Ended December 31, 2020 2021 Pro forma total revenue 10,346 12,861 Pro forma net loss attributable to Huazhu Group Limited (2,318) (480) |
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. | |
Business Acquisition [Line Items] | |
Summary of unaudited pro forma results of operation | The following table summarizes unaudited pro forma results of operation for the years ended December 31, 2019 and 2020 assuming that the acquisition occurred as of January 1, 2019. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred as of January 1, 2019. Period Ended December 31, 2019 2020 Pro forma total revenue 14,995 10,196 Pro forma net income (loss) attributable to Huazhu Group Limited 1,780 (2,204) |
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 C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
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, 2019 2020 2021 Room revenues 7,057 5,735 7,024 Food and beverage revenues 351 608 694 Others 310 565 400 Leased and owned hotels revenue 7,718 6,908 8,118 Initial one-time franchise fee 93 110 109 On-going management and service fees 1,228 1,057 1,479 Central reservation system usage fees, other system maintenance and support fees 908 908 1,399 Reimbursements for hotel manager fees 581 657 897 Other fees 532 404 520 Manachised and franchised hotels revenue 3,342 3,136 4,404 Other revenues 152 152 263 Total revenues 11,212 10,196 12,785 |
Schedule of contract balances | The Group’s contract assets are insignificant at December 31, 2020 and 2021. As of December 31, 2020 2021 Current contract liabilities 1,272 1,366 Long-term contract liabilities 662 785 Total contract liabilities 1,934 2,151 The contract liabilities balances above which are classified as deferred revenue on the consolidated balance sheet, as of December 31, 2020 and 2021 were comprised of the following: As of December 31, 2020 2021 Initial fees received from franchisees owners 924 1,074 Cash received for membership fees and not recognized as revenue 430 519 Advances received from customers 529 505 Deferred revenue related to the loyalty program 51 53 Total 1,934 2,151 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | Property and equipment, net consist of the following: As of December 31, 2020 2021 Cost: Buildings 247 305 Leasehold improvements 9,542 10,467 Furniture, fixtures and equipment 2,008 2,348 Motor vehicles 1 3 11,798 13,123 Less: Accumulated depreciation 5,764 6,845 6,034 6,278 Construction in progress 648 778 Property and equipment, net 6,682 7,056 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets with indefinite life | Intangible assets, net consist of the following: As of December 31, 2020 2021 Intangible assets with indefinite lives: Brand names (Note 3) 5,319 5,010 Master brand agreement 192 192 Intangible assets with finite lives: Franchise or manachise agreements 356 366 Favorable lease agreements from sublease 12 11 Purchased software 108 142 Other intangible assets 70 70 Total 6,057 5,791 Less: Accumulated amortization 112 163 Less: Accumulated impairment loss(Note2) — 243 Total 5,945 5,385 |
Schedule of annual estimated amortization expense for intangible assets and unfavorable lease excluding brand name and master brand agreement | 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 2022 37 2023 36 2024 32 2025 31 2026 28 Thereafter 180 Total 344 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INVESTMENTS. | |
Schedule of investments | As of December 31, 2020 2021 Equity securities with readily determinable fair values: Accor 3,849 2,508 Other marketable securities 54 81 Equity securities without readily determinable fair values: Cjia/Cjia Group 183 168 OYO 66 54 Other equity securities without readily determinable fair values 72 71 Equity-method investments: AAPC LUB 490 525 Hotel related funds 476 488 China Hospitality JV 103 99 Zleep 88 68 Commerz Real Institute — 85 Other investments 225 187 Available-for-sale debt securities: Cjia/Cjia Group 220 220 Total 5,826 4,554 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL. | |
Schedule of changes in the carrying amount of goodwill | Legacy Huazhu Legacy DH Total Balance at January 1, 2020 Goodwill 2,661 — 2,661 Accumulated impairment loss (4) — (4) 2,657 — 2,657 Goodwill acquired during the year (Note 3) 3 2,694 2,697 Impairment loss — (437) (437) Net foreign exchange-goodwill — 74 74 Net foreign exchange-impairment loss — (3) (3) Balance at December 31, 2020 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 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
DEBT | |
Schedule of short-term and long-term debt | The short-term and long-term debt as of December 31, 2020 and 2021 were as follows: As of December 31, 2020 2021 Short-term debt: Long-term bank borrowings, current portion 251 2,464 Short-term bank borrowings 851 692 Convertible senior notes, current portion — 3,029 FF&E liability, current portion 40 47 Total 1,142 6,232 Long-term debt: Long-term bank borrowings, non-current portion 4,384 211 Convertible senior notes, non-current portion 6,318 3,158 FF&E liability, non-current portion 135 180 Others 19 16 Total 10,856 3,565 |
Schedule of contractual maturities of the group's long-term debt | The contractual maturities of the Group’s debt as of December 31, 2021 were as follows: Year Ending December 31, Principle Amounts 2022 6,232 2023 111 2024 3,314 2025 71 2026 23 Thereafter 76 Total 9,827 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2020 2021 Payable to franchisees 1,349 710 Other payables 535 535 Accrued rental, utilities and other accrued expenses 245 209 Liabilities related to customer loyalty program 111 135 Value-added tax, other tax and surcharge payables 124 132 Payable to noncontrolling interest holders 76 117 Total 2,440 1,838 |
HOTEL OPERATING COSTS (Tables)
HOTEL OPERATING COSTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
HOTEL OPERATING COSTS. | |
Schedule of hotel operating costs | Years Ended December 31, 2019 2020 2021 Rents 2,624 3,485 3,900 Utilities 404 478 507 Personnel costs 1,854 2,501 3,022 Depreciation and amortization 960 1,316 1,413 Consumable, food and beverage 793 885 969 Others 555 1,064 1,471 Total 7,190 9,729 11,282 |
PRE-OPENING EXPENSES (Tables)
PRE-OPENING EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
PRE-OPENING EXPENSES | |
Schedule of pre-opening expenses incurred during the hotel pre-opening period | Years Ended December 31, 2019 2020 2021 Rents 460 251 68 Personnel costs 14 15 5 Others 28 22 8 Total 502 288 81 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 70,954,080 1.18 Granted 2,163,420 4.20 Forfeited (4,607,340) 1.64 Vested (12,325,470) 1.58 Adjusted for performance conditions (2,488,200) 0.61 Nonvested restricted stocks outstanding at December 31, 2021 53,696,490 1.20 |
EARNINGS (LOSSES) PER SHARE (Ta
EARNINGS (LOSSES) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
EARNINGS (LOSSES) PER SHARE | |
Schedule of computation of basic and diluted earnings per share | Years Ended December 31, 2019 2020 2021 Net income (loss) attributable to ordinary shareholders — basic 1,769 (2,192) (465) Eliminate the dilutive effect of interest expense of convertible senior notes 40 — — Net income attributable to ordinary shareholders — diluted 1,809 (2,192) (465) Weighted average ordinary shares outstanding — basic 2,843,051,378 2,927,398,409 3,114,124,244 Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method 93,975,271 — — Dilutive effect of convertible senior notes 106,072,250 — — Weighted average ordinary shares outstanding — diluted 3,043,098,899 2,927,398,409 3,114,124,244 Basic earnings (losses) per share 0.62 (0.75) (0.15) Diluted earnings (losses) per share 0.59 (0.75) (0.15) |
Schedule of outstanding securities excluded from the computation of diluted earnings per share | As of December 31, 2019 2020 2021 Outstanding employee options and nonvested restricted stocks — 70,954,080 53,696,490 Shares of convertible senior notes — 226,827,410 226,827,410 Total — 297,781,490 280,523,900 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
Summary of supplemental information related to operating leases | Years Ended December 31, 2020 2021 Lease cost: Operating fixed lease cost 3,964 4,074 Finance lease cost — Amortization of ROU assets 74 79 — Interest on lease liabilities 90 96 Short term lease cost 0 0 Operating variable lease cost (171) (25) Total lease cost 3,957 4,224 Other information: Weighted average remaining lease term Operating leases 14 years 13 years Finance leases 29 years 28 years Weighted average discount rate Operating leases 6.23 % 6.31 % Finance leases 3.96 % 3.97 % |
Schedule of maturities of operating lease liabilities | As of December 31, 2021, 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 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 As of December 31, 2020, 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 2021 3,858 129 2022 3,826 144 2023 3,733 146 2024 3,660 147 2025 3,466 147 Thereafter 25,730 3,575 Total minimum lease payments 44,273 4,288 Less: amount representing interest 13,819 1,760 Present value of minimum lease payments 30,454 2,528 |
Schedule of maturities of finance lease liabilities | 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 Year Ending December 31, Total Operating Leases Total Finance Leases 2021 3,858 129 2022 3,826 144 2023 3,733 146 2024 3,660 147 2025 3,466 147 Thereafter 25,730 3,575 Total minimum lease payments 44,273 4,288 Less: amount representing interest 13,819 1,760 Present value of minimum lease payments 30,454 2,528 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Summary of income (loss) before income taxes | Years Ended December 31, 2019 2020 2021 PRC including Hong Kong and Taiwan 2,334 (392) 617 Germany — (1,606) (632) Other 231 (281) (393) Total 2,565 (2,279) (408) |
Schedule of tax expense (benefit) | Years Ended December 31, 2019 2020 2021 Current Tax 678 338 555 Deferred Tax (38) (553) (543) Total 640 (215) 12 |
Schedule of a reconciliation between the effective income tax rate and PRC statutory income tax rate | Years Ended December 31, 2019 2020 2021 PRC statutory tax rate 25 % 25 % 25 % Tax effect of non-deductible expenses and non-taxable income in determining taxable profit (3) % (6) % (6) % Effect of different tax rate of group entities operating in other jurisdictions 1 % (2) % (6) % Effect of change in valuation allowance 2 % (10) % (24) % Effect of tax holiday (2) % 1 % 9 % Effect of cash dividends 4 % 0 % (8) % Effect of excess tax benefit of share-based rewards (2) % 1 % 7 % Effective tax rate 25 % 9 % (3) % |
Schedule of the aggregate amount and per share effect of the tax holidays | Years Ended December 31, 2019 2020 2021 Aggregate amount 45 31 37 Per share effect—basic 0.02 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, 2020 2021 Deferred tax assets: Net loss carryforward 888 1,271 Deferred revenue 283 326 Long-term assets 388 238 Bad debt provision 18 40 Accrued payroll 69 45 Other accrued expenses 3 3 Share-based compensation 31 29 Others 12 150 Valuation allowance (369) (466) Total deferred tax assets, net of valuation allowance 1,323 1,636 Deferred tax liabilities: Fair value adjustment for Building, land use rights and identified intangible assets due to acquisition 1,782 1,596 Others 99 31 Total deferred tax liabilities 1,881 1,627 Net deferred tax (liabilities) assets (558) 9 Analysis as: Deferred tax assets 623 862 Deferred tax liabilities 1,181 853 Net deferred tax (liabilities) assets (558) 9 |
Summary of movement of the valuation allowance | Years Ended December 31, 2019 2020 2021 Balance at the beginning of the year (107) (152) (369) Provided (79) (249) (151) Reversed 24 32 37 Written off 10 — 17 Balance at the end of the year (152) (369) (466) |
Schedule of unrecognized tax benefits | Years Ended December 31, 2019 2020 2021 Balance at January 1 14 18 50 Addition for tax positions 4 32 10 Balance at December 31 18 50 60 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
EMPLOYEE BENEFIT PLANS | |
Schedule of projected benefit obligation, fair value of plan assets, funded status and accumulated benefit obligation for the plans | Year Ended December 31, Change in Projected Benefit Obligation: 2020 2021 Begin of the year 147 193 Current service cost 5 5 Interest cost 1 0 Contributions by plan participants 1 1 Actuarial loss (gain) 38 (14) Foreign currency translation 3 (19) Benefits paid (7) (9) Settlements (1) — Administrative Expenses, Taxes and Premiums Paid 0 0 Curtailments (1) — Acquisitions — 0 Effect of other economic events 7 — End of the year 193 157 Year Ended December 31, 2020 2021 Change in Plan Assets: Begin of the year 32 6 Actual return (loss) on plan assets (2) 0 Foreign currency translation 1 (0) Employer contributions 9 1 Employee contributions 1 0 Benefits paid (8) (2) Acquisitions — 0 Other economic events (27) — End of the year 6 5 Excess of defined benefit obligation over the fair value of plan assets 187 152 Accumulated benefit obligation 193 157 |
Schedule of amounts recognized in the consolidated balance sheets | As of December 31, 2020 2021 Salary and welfare payables 8 8 Retirement benefit obligation 179 144 Liability in the balance sheet 187 152 |
Schedule of principal actuarial assumptions | As of December 31, 2020 2021 Discount rate- Germany 0.33 % 0.89 % Discount rate- other 0.12 % 0.39 % Inflation rate 1.00 % 1.00 % Future salary increases 1.50 % 2.17 % Future pension increases 1.80 % 1.69 % |
Schedule of fair value hierarchy of total plan assets measured at fair value by asset category | As of December 31, 2020 2021 Level 1 Equity funds 1 1 Bond funds 2 2 Property 2 1 Other 1 1 Total 6 5 |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
Schedule of related parties | Related Party Nature of the Party Relationship with the Group Trip.com Group Limited (“Trip.com”) Online travel services provider Mr. Qi Ji is a director Sheen Star Group Limited (“Sheen Star”) Investment holding company Equity method investee of the Group, controlled by Mr. Qi Ji Accor Hotels (“Accor”) Hotel Group Shareholder of the Group China Cjia Group Limited (“Cjia Group”) Apartment Management Group Equity method investee of the Group Shanghai CREATER Industrial Co., Ltd. (“CREATER”) Staged office space company Equity method investee of the Group Shanghai Zhuchuang Enterprise Management Co., Ltd. (“Zhuchuang”) Staged office space company Equity method investee of the Group China Hospitality JV, Ltd. (“China Hospitality JV”) Property management company Equity method investee of the Group Smart Lodging Group (Cayman) Limited(“Smart Lodging”) Hotel chain Equity method investee of the Group Shanghai Lianquan Hotel Management Co., Ltd. (“Lianquan”) Hotel management company Equity method investee of the Group Suzhou Huali Jinshi Construction Decoration Co., Ltd. Building decoration company Equity method investee of the Group 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, 2020 2021 Sheen Star 52 33 Zhuchuang 27 27 Trip.com 22 17 Cjia Group 22 29 Accor 1 — Lianquan 58 49 Others 14 12 Allowance for expected credit losses (18) (17) Total 178 150 |
Schedule of amounts due to related party | As of December 31, 2020 2021 Trip.com 48 44 Accor 8 — Cjia Group 42 101 Huali Jinshi 29 47 Others 5 5 Total 132 197 |
Schedule of significant related party transactions | Years Ended December 31, 2019 2020 2021 Commission expenses to Trip.com 72 78 99 Lease expenses to Trip.com 18 18 19 Lease expenses to Cjia Group — — 12 Service fee to Huali Jinshi 99 41 42 Service fee to Cjia Group 6 17 — Brand use fee, reservation fee and other related service fee to Accor 28 17 22 Goods sold and service provided to Cjia Group 21 18 11 Early termination compensation of sublease to Cjia Group — 8 — Loan payment to Smart Lodging 30 — — Loan payment to Lianquan 32 — — Loan payment to Hitone — — 5 Service fee from Trip.com 41 66 62 Service fee from Accor 9 3 3 Service fee from China Hospitality JV 6 1 2 Service fee from Sheen Star 4 4 5 Sublease income from Lianquan 7 12 10 Sublease income from Cjia Group 14 9 6 Early termination compensation of franchise agreement from China Hospitality JV — 26 — Purchase of property and equipment from Cjia Group — 11 — Interest income from Sheen Star 8 1 0 Interest income from CREATER 6 — — 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$ / shares | Sep. 30, 2020CNY (¥) | Dec. 31, 2021item$ / shares | May 31, 2021$ / shares | Dec. 31, 2020item$ / shares | Jan. 02, 2020 | |
Organization and presentation activities | ||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.0001 | $ 0.00001 | ||
Share split conversion ratio | 10 | |||||
Proceeds from issuance of ordinary shares | ¥ | ¥ 6,018 | |||||
Legacy Huazhu [Member] | Minimum | ||||||
Organization and presentation activities | ||||||
Term of franchise and management agreement | 8 years | |||||
Legacy Huazhu [Member] | Maximum | ||||||
Organization and presentation activities | ||||||
Term of franchise and management agreement | 10 years | |||||
Leased and owned hotels | ||||||
Organization and presentation activities | ||||||
Number of hotels | 738 | 753 | ||||
Manachised hotels | ||||||
Organization and presentation activities | ||||||
Number of hotels | 6,824 | 5,746 | ||||
Manachised hotels | Legacy DH [member] | Minimum | ||||||
Organization and presentation activities | ||||||
Term of franchise and management agreement | 15 years | |||||
Manachised hotels | Legacy DH [member] | Maximum | ||||||
Organization and presentation activities | ||||||
Term of franchise and management agreement | 20 years | |||||
Franchised hotels | ||||||
Organization and presentation activities | ||||||
Number of hotels | 268 | 290 | ||||
Franchised hotels | Legacy DH [member] | Minimum | ||||||
Organization and presentation activities | ||||||
Term of franchise and management agreement | 10 years | |||||
Franchised hotels | Legacy DH [member] | 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) | 100.00% |
SUMMARY OF PRINCIPAL ACCOUNTI_4
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Basis of presentation- Debt (Details) € in Millions, ¥ in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Mar. 31, 2022CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2021EUR (€) | Nov. 03, 2017USD ($) | |
Debt Instrument [Line Items] | ||||||||
Working capital deficit | ¥ 5,726 | $ 898 | ||||||
Outstanding balance of long-term debt | 3,565 | ¥ 10,856 | ||||||
Unused facilities | ¥ 2,994 | |||||||
Net Cash Provided by (Used in) Operating Activities | 1,342 | $ 210 | 609 | ¥ 3,293 | ||||
Equity securities with readily determinable fair value | 2,589 | ¥ 3,903 | 406 | |||||
Term Facility Expiring December 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding balance of long-term debt | 2,440 | € 338 | ||||||
Term Facility Expiring December 2022 | Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | 3,177 | € 440 | ||||||
Convertible senior notes | 2022 Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | ¥ 3,027 | $ 475 | $ 475 |
SUMMARY OF PRINCIPAL ACCOUNTI_5
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Variable Interest Entities (Details) - item | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
VIEs | ||
Variable Interest Entities | ||
Number of entities consolidated | 7 | 8 |
SUMMARY OF PRINCIPAL ACCOUNTI_6
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Investments, Loan receivables and Inventories (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments | |||
Impairment loss | ¥ 63 | ¥ 92 | ¥ 10 |
Inventories | |||
Estimated useful life of small appliances and bedding | 1 year | ||
Minimum | Certain franchisees | |||
Loan receivables | |||
Term of loan agreement | 2 years | ||
Interest rate (as a percent) | 8.00% | ||
Minimum | Un-related third-parties | |||
Loan receivables | |||
Interest rate (as a percent) | 4.80% | ||
Maximum | Certain franchisees | |||
Loan receivables | |||
Term of loan agreement | 3 years | ||
Interest rate (as a percent) | 8.50% | ||
Maximum | Un-related third-parties | |||
Loan receivables | |||
Interest rate (as a percent) | 15.00% |
SUMMARY OF PRINCIPAL ACCOUNTI_7
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Property and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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_8
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Intangible assets (Details) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021CNY (¥)item | Dec. 31, 2020CNY (¥) | |
Finite-Lived Intangible Assets [Line Items] | ||
Franchise fee reduction offered to franchisee to since the COVID-19 outbreak | ¥ 105 | ¥ 132 |
Legacy Huazhu [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Percentage of fair value exceeded the carrying value | 100.00% | 100.00% |
Legacy DH [member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Fair value exceeded carrying value | ¥ 421 | ¥ 244 |
Percentage of fair value exceeded the carrying value | 13.00% | 6.00% |
Hypothetical decline in projected cash flow (as a percent) | 5.00% | 5.00% |
Short term work compensation | ¥ 197 | ¥ 244 |
Other Operating Income | Legacy DH [member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other grants recognized | ¥ 765 | 17 |
Master brand agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Initial term | 70 years | |
Deutsche Hospitality | ||
Finite-Lived Intangible Assets [Line Items] | ||
Percentage of fair value exceeded the carrying value | 6.00% | |
Deutsche Hospitality | Legacy DH [member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Hypothetical goodwill impairment in 5% decline in projected cash flow | ¥ 313 | 42 |
Hypothetical goodwill impairment in 5% increase in discount rate | ¥ 359 | ¥ 175 |
Deutsche Hospitality | Brand names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of brand names acquired | item | 2 | |
Deutsche Hospitality | Brand name, one | ||
Finite-Lived Intangible Assets [Line Items] | ||
Fair value exceeded carrying value | ¥ 82 | |
Percentage of fair value exceeded the carrying value | 13.00% | |
Hypothetical indefinite life intangible asset impairment in 5% increase in discount rate | ¥ 48 | |
Hypothetical indefinite life intangible asset impairment in 5% decrease in royalty saving rate | 36 | |
Deutsche Hospitality | Brand name, two | ||
Finite-Lived Intangible Assets [Line Items] | ||
Fair value exceeded carrying value | ¥ 57 | |
Percentage of fair value exceeded the carrying value | 14.00% | |
Hypothetical increase in discount rate | 5.00% | |
Hypothetical decrease in royalty saving rate | 5.00% | |
Hypothetical indefinite life intangible asset impairment in 5% increase in discount rate | ¥ 33 | |
Hypothetical indefinite life intangible asset impairment in 5% decrease in royalty saving rate | ¥ 23 | |
Deutsche Hospitality | Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Hypothetical increase in discount rate | 5.00% | |
Hypothetical decrease in royalty saving rate | 5.00% | |
Hypothetical indefinite life intangible asset impairment in 5% increase in discount rate | ¥ 160 | |
Hypothetical indefinite life intangible asset impairment in 5% decrease in royalty saving rate | 120 | |
Impairment loss recognized | ¥ 160 | |
Minimum | Franchise or manachise agreements | ||
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 | Favorable lease agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 1 year | |
Minimum | Purchased software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 3 years | |
Minimum | Unfavorable lease agreements | ||
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 | Franchise or manachise agreements | ||
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 | Favorable lease agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 20 years | |
Maximum | Purchased software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 10 years | |
Maximum | Unfavorable lease agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 13 years | |
Maximum | Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining contract terms | 15 years |
SUMMARY OF PRINCIPAL ACCOUNTI_9
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Land use rights (Details) € in Millions, ¥ in Millions | 12 Months Ended | ||||
Dec. 31, 2021CNY (¥)item | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥)item | Apr. 17, 2020EUR (€) | Dec. 31, 2019EUR (€) | |
Accounting policies | |||||
Amortization expense | ¥ 65 | ¥ 62 | ¥ 16 | ||
Long-lived asset impairment loss | ¥ 157 | 180 | ¥ 3 | ||
Number of reporting units | item | 2 | 1 | |||
Contract liabilities | ¥ 2,151 | 1,934 | |||
Net revenues | 12,785 | 10,196 | ¥ 11,212 | ||
Advertising related expenses | 165 | 150 | 99 | ||
Other Operating Income | Legacy Huazhu [Member] | |||||
Accounting policies | |||||
Unrestricted government subsidies from local governmental agencies | 110 | 154 | 148 | ||
Hotel related funds | |||||
Accounting policies | |||||
Investments in funds | 488 | 476 | |||
Term Facility Expiring December 2022 | |||||
Accounting policies | |||||
Line of Credit Facility, Maximum Borrowing Capacity | € | € 440 | € 440 | |||
Loyalty program | |||||
Accounting policies | |||||
Net revenues | 243 | 223 | 224 | ||
Land use rights | |||||
Accounting policies | |||||
Amortization expense | ¥ 7 | ¥ 7 | ¥ 8 | ||
Minimum | |||||
Accounting policies | |||||
Estimated membership duration | 2 years | ||||
VAT (as a percent) | 6.00% | ||||
Minimum | Legacy Huazhu [Member] | |||||
Accounting policies | |||||
Initial lease term | 10 years | ||||
Minimum | Legacy DH [member] | |||||
Accounting policies | |||||
Initial lease term | 20 years | ||||
Minimum | Land use rights | |||||
Accounting policies | |||||
Remaining contractual term | 30 years | ||||
Minimum | Favorable lease agreements | |||||
Accounting policies | |||||
Estimated useful life of intangible assets | 1 year | ||||
Minimum | Unfavorable lease agreements | |||||
Accounting policies | |||||
Estimated useful life of intangible assets | 3 years | ||||
Maximum | |||||
Accounting policies | |||||
Estimated membership duration | 5 years | ||||
VAT (as a percent) | 19.00% | ||||
Maximum | Legacy Huazhu [Member] | |||||
Accounting policies | |||||
Initial lease term | 20 years | ||||
Maximum | Legacy DH [member] | |||||
Accounting policies | |||||
Initial lease term | 25 years | ||||
Maximum | Land use rights | |||||
Accounting policies | |||||
Remaining contractual term | 50 years | ||||
Maximum | Favorable lease agreements | |||||
Accounting policies | |||||
Estimated useful life of intangible assets | 20 years | ||||
Maximum | Unfavorable lease agreements | |||||
Accounting policies | |||||
Estimated useful life of intangible assets | 13 years |
SUMMARY OF PRINCIPAL ACCOUNT_10
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Fair value (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2021USD ($) | |
Fair value | ||||
Equity securities with readily determinable fair value | ¥ 2,589,000 | ¥ 3,903,000 | $ 406 | |
Retirement benefit obligation | 144,000 | 179,000 | 23 | |
Property and equipment - Total Loss for the Year | 157,000 | 180,000 | ¥ 3,000 | |
Operating lease right-of-use assets | 29,942,000 | 28,980,000 | 4,698 | |
Goodwill | 5,132,000 | 4,988,000 | 2,657,000 | $ 805 |
Intangible assets carrying value | 2,801 | 0 | 0 | |
Impairment charge of intangible assets | 245,000 | 0 | 0 | |
Goodwill, Impairment Loss | 0 | 437,000 | 0 | |
Property and equipment, impairment loss | 24,000 | 41,000 | ||
Long-term investment, impairment loss | 63,000 | 92,000 | 10,000 | |
Operating lease right-of-use assets, impairment loss | 48,000 | 139,000 | ||
Long-lived asset impairment loss | 157,000 | 180,000 | 3,000 | |
Operating lease, impairment loss | 48,000 | 139,000 | 0 | |
Leased hotels | ||||
Fair value | ||||
Property and equipment - Total Loss for the Year | 24,000 | 3,000 | ||
Property and equipment, impairment loss | 41,000 | |||
Long-lived asset impairment loss | 24,000 | 3,000 | ||
Convertible senior notes | ||||
Fair value | ||||
Long-term bank borrowings, current portion | 3,029,000 | |||
Carrying amounts of convertible senior notes | 6,186,000 | 6,318,000 | 3,290,000 | |
Fair value of convertible senior notes | 6,681,000 | 7,747,000 | ¥ 3,711,000 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Fair value | ||||
Equity securities with readily determinable fair value | 2,589,000 | 3,903,000 | ||
Retirement benefit obligation | 5,000 | 6,000 | ||
Recurring basis | Significant Other Observable Inputs (Level 2) | ||||
Fair value | ||||
Available-for-sale debt securities | 220,000 | 220,000 | ||
Non-recurring basis | ||||
Fair value | ||||
Property and equipment | 33,000 | 2,000 | ||
Intangible assets | 2,556,000 | |||
Operating lease right-of-use assets | 88,000 | 71,000 | ||
Goodwill | 2,328,000 | |||
Non-recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Fair value | ||||
Property and equipment | 33,000 | 2,000 | ||
Intangible assets | 2,556,000 | |||
Operating lease right-of-use assets | ¥ 88,000 | 71,000 | ||
Goodwill | ¥ 2,328,000 | |||
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 | 20 | 20 | 20 | 20 |
Fair value | Recurring basis | ||||
Fair value | ||||
Equity securities with readily determinable fair value | ¥ 2,589,000 | ¥ 3,903,000 | ||
Available-for-sale debt securities | 220,000 | 220,000 | ||
Retirement benefit obligation | 5,000 | 6,000 | ||
Carrying value | Non-recurring basis | ||||
Fair value | ||||
Long-term investments | 63,000 | 92,000 | ¥ 10,000 | |
Operating lease right-of-use assets | 136,000 | 210,000 | 0 | |
Goodwill | 0 | 2,768,000 | 0 | |
Carrying value | Non-recurring basis | Leased hotels | ||||
Fair value | ||||
Property and equipment | ¥ 57,000 | ¥ 43,000 | ¥ 3,000 |
SUMMARY OF PRINCIPAL ACCOUNT_11
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Share-based compensation and Treasury shares (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)segmentshares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2019CNY (¥) | Dec. 31, 2021USD ($)shares | |
Share-based compensation | ||||
Recognized share-based compensation expenses | ¥ 109 | ¥ 122 | ¥ 110 | |
Number of operating segments | segment | 2 | |||
Treasury shares | ||||
Aggregate treasury shares (in shares) | shares | 30,974,040 | 30,967,640 | 30,974,040 | |
Cash consideration paid for ordinary shares repurchased | ¥ 107 | ¥ 107 | $ 17 | |
Hotel operating costs | ||||
Share-based compensation | ||||
Recognized share-based compensation expenses | 39 | 42 | 35 | |
Selling and marketing expenses | ||||
Share-based compensation | ||||
Recognized share-based compensation expenses | 4 | 4 | 3 | |
General and administrative expenses | ||||
Share-based compensation | ||||
Recognized share-based compensation expenses | ¥ 66 | ¥ 76 | ¥ 72 |
SUMMARY OF PRINCIPAL ACCOUNT_12
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Earnings (losses) per share, Segment and geography information (Details) ¥ in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2020CNY (¥) | Dec. 31, 2021CNY (¥)segment | Dec. 31, 2021USD ($)segment | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Number of operating segments | segment | 2 | 2 | |||
Number of reportable segments | segment | 2 | 2 | |||
Total revenues | ¥ 12,785 | $ 2,006 | ¥ 10,196 | ¥ 11,212 | |
Operating costs and expenses | 13,607 | 2,135 | 11,925 | 9,236 | |
Goodwill impairment loss | 0 | 437 | 0 | ||
Other operating income, net | 986 | 155 | 480 | 132 | |
Interest income | 89 | 14 | 119 | 160 | |
Interest expense | 405 | 64 | 533 | 315 | |
Other income (expense), net | 157 | 25 | (89) | 331 | |
Unrealized loss from fair value changes of equity securities | (96) | (15) | (265) | 316 | |
Foreign exchange gain (loss) | (317) | (50) | 175 | (35) | |
Income (loss) before income taxes | (408) | (64) | (2,279) | 2,565 | |
Income tax expense (benefit) | 12 | 2 | (215) | 640 | |
Loss from equity method investments | (60) | (9) | (140) | (164) | |
Net loss attributable to noncontrolling interest | (15) | (2) | (12) | (8) | |
Net income (loss) attributable to Huazhu Group Limited | (465) | (73) | (2,192) | 1,769 | |
Income tax expense (benefit) | 12 | 2 | (215) | 640 | |
Interest expense | 405 | 64 | 533 | 315 | |
Depreciation and amortization | 1,503 | $ 236 | 1,362 | ¥ 991 | |
EBITDA | 1,366 | (631) | |||
Legacy Huazhu [Member] | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Total revenues | 11,247 | 8,664 | |||
Operating costs and expenses | 10,549 | 8,978 | |||
Other operating income, net | 193 | 214 | |||
Interest income | 88 | 118 | |||
Interest expense | 291 | 427 | |||
Other income (expense), net | 139 | (92) | |||
Unrealized loss from fair value changes of equity securities | (96) | (266) | |||
Foreign exchange gain (loss) | (294) | 176 | |||
Income (loss) before income taxes | 437 | (591) | |||
Income tax expense (benefit) | 249 | 151 | |||
Loss from equity method investments | (50) | (117) | |||
Net loss attributable to noncontrolling interest | (15) | (12) | |||
Net income (loss) attributable to Huazhu Group Limited | 153 | (847) | |||
Income tax expense (benefit) | 249 | 151 | |||
Interest expense | 291 | 427 | |||
Depreciation and amortization | 1,222 | 1,123 | |||
EBITDA | 1,827 | 736 | |||
Legacy DH [member] | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Total revenues | 1,538 | 1,532 | |||
Operating costs and expenses | 3,058 | 2,947 | |||
Goodwill impairment loss | ¥ 437 | 437 | |||
Other operating income, net | 793 | 266 | |||
Interest income | 1 | 1 | |||
Interest expense | 114 | 106 | |||
Other income (expense), net | 18 | 3 | |||
Unrealized loss from fair value changes of equity securities | 1 | ||||
Foreign exchange gain (loss) | (23) | (1) | |||
Income (loss) before income taxes | (845) | (1,688) | |||
Income tax expense (benefit) | (237) | (366) | |||
Loss from equity method investments | (10) | (23) | |||
Net income (loss) attributable to Huazhu Group Limited | (618) | (1,345) | |||
Income tax expense (benefit) | (237) | (366) | |||
Interest expense | 114 | 106 | |||
Depreciation and amortization | 281 | 239 | |||
EBITDA | ¥ (461) | ¥ (1,367) |
SUMMARY OF PRINCIPAL ACCOUNT_13
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Segment and geography information -2 (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) |
Segment Reporting Information [Line Items] | |||
Total assets | ¥ 63,269 | $ 9,927 | ¥ 65,155 |
Legacy Huazhu | |||
Segment Reporting Information [Line Items] | |||
Total assets | 45,353 | 46,243 | |
Legacy DH | |||
Segment Reporting Information [Line Items] | |||
Total assets | ¥ 17,916 | ¥ 18,912 |
SUMMARY OF PRINCIPAL ACCOUNT_14
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Segment and geography information -3 (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | ¥ 12,785 | $ 2,006 | ¥ 10,196 | ¥ 11,212 |
Long-Lived Assets | 49,956 | 48,849 | ||
China | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 11,231 | 8,647 | ||
Long-Lived Assets | 33,143 | 30,635 | ||
GERMANY | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 1,263 | 1,212 | ||
Long-Lived Assets | 13,884 | 15,670 | ||
Others | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 291 | 337 | ||
Long-Lived Assets | ¥ 2,929 | ¥ 2,544 |
SUMMARY OF PRINCIPAL ACCOUNT_15
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 30, 2021$ / ¥ | Dec. 31, 2020CNY (¥) |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | ||||
Adjustment to retained earnings | ¥ 1,037 | $ 163 | ¥ 1,502 | |
Translation into United States Dollars | ||||
Foreign exchange rate used to translate amounts denominated in RMB to US dollar | 6.3726 |
ACQUISITIONS - Hotels and Compa
ACQUISITIONS - Hotels and Companies (Details) - Series of Individually Immaterial Business Acquisitions [Member] ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021CNY (¥)item | Dec. 31, 2020CNY (¥)item | Dec. 31, 2019CNY (¥)item | |
Acquisitions | |||
Cash consideration | ¥ | ¥ 51 | ¥ 26 | ¥ 54 |
Number of hotels acquired | item | 3 | 3 | 3 |
ACQUISITIONS - Deutsche Hospita
ACQUISITIONS - Deutsche Hospitality (Details) - Deutsche Hospitality. € in Millions, ¥ in Millions | Jan. 02, 2020EUR (€)item | Jan. 02, 2020CNY (¥)item | Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) |
Business Acquisition [Line Items] | ||||
Percentage of ownership interest acquired | 100.00% | 100.00% | ||
Number of brands in which entity is operating | item | 5 | 5 | ||
Aggregated consideration | € 720 | ¥ 5,624 | ||
Net revenue of the acquiree included in the consolidated statements of comprehensive income | ¥ 184 | ¥ 1,532 | ||
Net loss of the acquiree included in the consolidated statements of comprehensive income | ¥ 34 | ¥ 1,345 |
ACQUISITIONS - Deutsche Hospi_2
ACQUISITIONS - Deutsche Hospitality, Unaudited proforma results of operations (Details) - Deutsche Hospitality. - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Pro forma results of operation | ||
Pro forma total revenue | ¥ 10,196 | ¥ 14,995 |
Pro forma net income (loss) attributable to Huazhu Group Limited | ¥ (2,204) | 1,780 |
Transaction cost | ¥ 70 |
ACQUISITIONS - Deutsche Hospi_3
ACQUISITIONS - Deutsche Hospitality, allocation of purchase price (Details) ¥ in Millions, $ in Millions | Jan. 02, 2020CNY (¥) | Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2019CNY (¥) |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Goodwill | ¥ 5,132 | ¥ 4,988 | $ 805 | ¥ 2,657 | |
Franchise or manachise agreements | Minimum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 10 years | ||||
Franchise or manachise agreements | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 20 years | ||||
Non-compete agreement | Minimum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 2 years | ||||
Non-compete agreement | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 10 years | ||||
Deutsche Hospitality. | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Current assets | ¥ 785 | ||||
Property and equipment, net | 586 | ||||
Operating lease right-of-use assets | 8,616 | ||||
Other non-current assets | 280 | ||||
Goodwill | 2,694 | ||||
Operating lease liabilities, current | (296) | ||||
Other current liabilities | (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 [Abstract] | |||||
Estimated useful life of property, plant and equipment | 2 years | ||||
Deutsche Hospitality. | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of property, plant and equipment | 25 years | ||||
Deutsche Hospitality. | Franchise or manachise agreements | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Intangible assets, finite life | 270 | ||||
Deutsche Hospitality. | Non-compete agreement | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
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 [Abstract] | |||||
Intangible assets, Indefinite life | ¥ 3,873 |
ACQUISITIONS - CitiGo Hotels (D
ACQUISITIONS - CitiGo Hotels (Details) - CitiGo Hotels - CNY (¥) ¥ in Millions | Apr. 30, 2021 | Dec. 31, 2021 |
Acquisitions | ||
Percentage of ownership interest acquired | 100.00% | |
Aggregated consideration | ¥ 783 | |
Cash consideration | ¥ 749 |
ACQUISITIONS - CitiGo Hotels, U
ACQUISITIONS - CitiGo Hotels, Unaudited proforma results of operations (Details) - CitiGo Hotels - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Pro forma results of operation | ||
Pro forma total revenue | ¥ 12,861 | ¥ 10,346 |
Pro forma net income (loss) attributable to Huazhu Group Limited | ¥ (480) | ¥ (2,318) |
ACQUISITIONS - CitiGo Hotels, a
ACQUISITIONS - CitiGo Hotels, allocation of purchase price (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Apr. 30, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Goodwill | ¥ 5,132 | $ 805 | ¥ 4,988 | ¥ 2,657 | |
Franchise or manachise agreements | Minimum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 10 years | ||||
Franchise or manachise agreements | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 20 years | ||||
Non-compete agreement | Minimum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 2 years | ||||
Non-compete agreement | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Estimated useful life of intangible assets | 10 years | ||||
CitiGo Hotels | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
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) | ||||
Other current liabilities | (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 [Abstract] | |||||
Estimated useful life of property, plant and equipment | 5 years | ||||
CitiGo Hotels | Maximum | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
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 [Abstract] | |||||
Intangible assets, finite life | 61 | ||||
CitiGo Hotels | Brand names | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Intangible assets, Indefinite life | ¥ 90 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregated Revenues (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregated Revenues | |||
Total revenues | ¥ 12,785 | ¥ 10,196 | ¥ 11,212 |
Leased and owned hotels | |||
Disaggregated Revenues | |||
Total revenues | 8,118 | 6,908 | 7,718 |
Room Revenues | |||
Disaggregated Revenues | |||
Total revenues | 7,024 | 5,735 | 7,057 |
Food and Beverage Revenues | |||
Disaggregated Revenues | |||
Total revenues | 694 | 608 | 351 |
Others | |||
Disaggregated Revenues | |||
Total revenues | 400 | 565 | 310 |
Franchise or manachise agreements | |||
Disaggregated Revenues | |||
Total revenues | 4,404 | 3,136 | 3,342 |
Initial one-time franchise fee | |||
Disaggregated Revenues | |||
Total revenues | 109 | 110 | 93 |
On-going management and service fees | |||
Disaggregated Revenues | |||
Total revenues | 1,479 | 1,057 | 1,228 |
Central reservation system usage fees, other system maintenance and support fees | |||
Disaggregated Revenues | |||
Total revenues | 1,399 | 908 | 908 |
Reimbursements for hotel manager fees | |||
Disaggregated Revenues | |||
Total revenues | 897 | 657 | 581 |
Other fees | |||
Disaggregated Revenues | |||
Total revenues | 520 | 404 | 532 |
Other revenues | |||
Disaggregated Revenues | |||
Total revenues | ¥ 263 | ¥ 152 | ¥ 152 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) |
Contract with Customer, Liability [Abstract] | |||
Current contract liabilities | ¥ 1,366 | $ 214 | ¥ 1,272 |
Long-term contract liabilities | 785 | $ 123 | 662 |
Total contract liabilities | ¥ 2,151 | ¥ 1,934 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances - Contract liabilities (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Contract with Customer, Liability | ||
Initial fees received from franchisees owners | ¥ 1,074 | ¥ 924 |
Cash received for membership fees and not recognized as revenue | 519 | 430 |
Advances received from customers | 505 | 529 |
Deferred revenue related to the loyalty program | 53 | 51 |
Total contract liabilities | 2,151 | 1,934 |
Initial fee on pre opening hotels received as current liabilities | 496 | 429 |
Revenue recognized | ¥ 613 | ¥ 748 |
REVENUE FROM CONTRACTS WITH C_6
REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances - Unsatisfied performance obligations (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenues related to unsatisfied performance obligations of loyalty program | ¥ 53 | ¥ 51 |
Deferred revenue related to initial fees | 1,074 | 924 |
Deferred revenue related to membership fees | 519 | 430 |
Deferred revenues related to advances received from customers, expected to recognize revenue in future periods | ¥ 505 | ¥ 529 |
Minimum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining contract period | 1 year | |
Remaining membership life | 1 year | |
Maximum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining contract period | 10 years | |
Remaining membership life | 5 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenues related to unsatisfied performance obligations of loyalty program | ¥ 53 | |
Deferred revenue, recognized as revenue, estimated period | 2 years |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) |
Cost: | |||
Property and equipment, gross | ¥ 13,123 | ¥ 11,798 | |
Less: Accumulated depreciation | 6,845 | 5,764 | |
Property and equipment net excluding construction in process | 6,278 | 6,034 | |
Construction in progress | 778 | 648 | |
Property and equipment, net | 7,056 | $ 1,107 | 6,682 |
Buildings | |||
Cost: | |||
Property and equipment, gross | 305 | 247 | |
Leasehold improvements | |||
Cost: | |||
Property and equipment, gross | 10,467 | 9,542 | |
Furniture, fixtures and equipment | |||
Cost: | |||
Property and equipment, gross | 2,348 | 2,008 | |
Motor vehicles | |||
Cost: | |||
Property and equipment, gross | ¥ 3 | ¥ 1 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |||
Depreciation expense | ¥ 1,352 | ¥ 1,219 | ¥ 967 |
INTANGIBLE ASSETS, NET - Schedu
INTANGIBLE ASSETS, NET - Schedule (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2021USD ($) | |
Intangible assets, net | ||||
Intangible assets, gross | ¥ 5,791 | ¥ 6,057 | ||
Less: Accumulated amortization | 163 | 112 | ||
Less: Accumulated impairment loss(Note2) | 243 | |||
Total | 5,385 | 5,945 | $ 845 | |
Unfavorable lease | ||||
Amortization expense of intangible assets | 65 | 62 | ¥ 16 | |
Franchise or manachise agreements | ||||
Intangible assets, net | ||||
Intangible assets, gross | 366 | 356 | ||
Favorable lease agreements | ||||
Intangible assets, net | ||||
Intangible assets, gross | 11 | 12 | ||
Purchased software | ||||
Intangible assets, net | ||||
Intangible assets, gross | 142 | 108 | ||
Other intangible assets | ||||
Intangible assets, net | ||||
Intangible assets, gross | 70 | 70 | ||
Brand names | ||||
Intangible assets, net | ||||
Intangible assets, gross | 5,010 | 5,319 | ||
Master brand agreement | ||||
Intangible assets, net | ||||
Intangible assets, gross | ¥ 192 | ¥ 192 |
INTANGIBLE ASSETS, NET - Amorti
INTANGIBLE ASSETS, NET - Amortization (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Amortization for Intangible Assets | |||
Total | ¥ 2,801 | ¥ 0 | ¥ 0 |
Intangible assets excluding brand names and master brand agreement | |||
Amortization for Intangible Assets | |||
2022 | 37,000 | ||
2023 | 36,000 | ||
2024 | 32,000 | ||
2025 | 31,000 | ||
2026 | 28,000 | ||
Thereafter | 180,000 | ||
Total | ¥ 344,000 |
INVESTMENTS - Schedule (Details
INVESTMENTS - Schedule (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) |
Equity securities with readily determinable fair values: | ¥ 2,589 | $ 406 | ¥ 3,903 |
Investments | 4,554 | 5,826 | |
Accor | |||
Equity securities with readily determinable fair values: | 2,508 | 3,849 | |
Other marketable securities | |||
Equity securities with readily determinable fair values: | 81 | 54 | |
OYO | |||
Equity securities without readily determinable fair values: | 54 | 66 | |
Other equity securities | |||
Equity securities without readily determinable fair values: | 71 | 72 | |
Cjia Group | |||
Equity securities without readily determinable fair values: | 168 | 183 | |
Equity-method investments: | 0 | ||
Available-for-sale debt securities: | 220 | 220 | |
AAPC LUB | |||
Equity-method investments: | 525 | 490 | |
Hotel related funds | |||
Equity-method investments: | 488 | 476 | |
China Hospitality JV | |||
Equity-method investments: | 99 | 103 | |
Zleep | |||
Equity-method investments: | 68 | 88 | |
Commerz | |||
Equity-method investments: | 85 | ||
Other investments | |||
Equity-method investments: | ¥ 187 | ¥ 225 |
INVESTMENTS - Equity securities
INVESTMENTS - Equity securities with readily determinable fair values (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)shares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2021USD ($)shares | |
Equity securities with readily determinable fair values | ||||
Equity securities with readily determinable fair value | ¥ 2,589 | ¥ 3,903 | $ 406 | |
Accor. | ||||
Equity securities with readily determinable fair values | ||||
Number of ordinary shares acquired | shares | 1,180,000 | 8,737,987 | 282,787 | |
Number of ordinary shares sold | shares | 5,172,458 | 1,003,654 | ||
Gain (loss) realized | ¥ 209 | ¥ (21) | ||
Number of shares held in investment | shares | 12,212,552 | 12,212,552 | ||
Investment in equity securities (in percentage) | 5.00% | 5.00% | ||
Unrealized losses from fair value | ¥ 94 | 253 | ||
Equity securities with readily determinable fair value | 2,508 | 3,849 | ||
Other marketable securities | ||||
Equity securities with readily determinable fair values | ||||
Unrealized losses from fair value | 2 | 12 | ¥ 35 | |
Equity securities with readily determinable fair value | ¥ 81 | ¥ 54 |
INVESTMENTS - Equity securiti_2
INVESTMENTS - Equity securities without readily determinable fair values (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||||
Sep. 30, 2017 | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | |
Investment income (loss) | ¥ (60) | $ (9) | ¥ (140) | ¥ (164) | |||
Investment income recognized | (67) | $ (11) | (108) | 477 | |||
Impairment of equity securities with out readily determinable fair value | ¥ 0 | ¥ 45 | |||||
Cjia Group | |||||||
Equity interest owned (as a percent) | 16.00% | 15.00% | 17.00% | ||||
Amount invested in convertible note | ¥ 252 | ||||||
Gain recognized on deemed disposal | 9 | ||||||
Investment income (loss) | ¥ (15) | ¥ 49 | ¥ (45) | ||||
Equity Method Investments | 0 | ||||||
Equity securities without readily determinable fair values: | 168 | 183 | |||||
Cjia Group | Preferred Stock | |||||||
Equity securities without readily determinable fair values: | $ | $ 45 | ||||||
OYO | |||||||
Percentage of equity interest acquired | 1.00% | ||||||
Investment income recognized | ¥ 52 | ||||||
Equity interest owned (as a percent) | 1.00% | ||||||
Equity securities without readily determinable fair values: | ¥ 54 | ¥ 66 |
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, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2021EUR (€) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018 | |
Equity-method investments | ||||||||
Investment income (loss) | ¥ (60) | $ (9) | ¥ (140) | ¥ (164) | ||||
Long-term investment, impairment loss | 63 | 92 | 10 | |||||
Covid 19 | Equity-method investments | ||||||||
Equity-method investments | ||||||||
Long-term investment, impairment loss | 63 | 47 | ||||||
AAPC LUB | ||||||||
Equity-method investments | ||||||||
Investment income (loss) | 35 | 21 | 47 | |||||
Proceeds from Dividends Received | 0 | 0 | 39 | |||||
Equity Method Investments | 525 | 490 | ||||||
Percentage of equity interest acquired | 28.00% | |||||||
Hotel related funds | ||||||||
Equity-method investments | ||||||||
Investment income (loss) | 55 | (16) | 11 | |||||
Equity Method Investments | 488 | 476 | ||||||
Maximum potential loss, in loss of value of interests in investments | 488 | |||||||
China Hospitality JV | ||||||||
Equity-method investments | ||||||||
Investment income (loss) | 4 | (12) | ¥ (2) | |||||
Equity Method Investments | 99 | 103 | ||||||
Percentage of equity interest acquired | 20.00% | |||||||
Zleep | ||||||||
Equity-method investments | ||||||||
Investment income (loss) | 12 | (23) | ||||||
Equity Method Investments | ¥ 68 | ¥ 88 | ||||||
Percentage of equity interest acquired | 51.00% | |||||||
Commerz | ||||||||
Equity-method investments | ||||||||
Equity-method investments ownership percentage | 34.00% | |||||||
Investment income (loss) | ¥ 1 | |||||||
Equity Method Investments | ¥ 85 | |||||||
Consideration for purchase of investments | € | € 12 |
GOODWILL - Changes in carrying
GOODWILL - Changes in carrying amount (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)item | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥)item | Dec. 31, 2021USD ($) | |
Goodwill [Line Items] | ||||
Gross carrying values | ¥ 5,532 | ¥ 5,432 | ¥ 2,661 | |
Accumulated impairment losses | (400) | (444) | (4) | |
Goodwill | ¥ 5,132 | 4,988 | 2,657 | $ 805 |
Goodwill acquired during the year (Note 3) | 378 | 2,697 | ||
Impairment loss | (437) | |||
Net foreign exchange-goodwill | (278) | 74 | ||
Net foreign exchange-impairment loss | 44 | ¥ (3) | ||
Number of reporting units | item | 2 | 1 | ||
Legacy Huazhu [Member] | ||||
Goodwill [Line Items] | ||||
Gross carrying values | ¥ 3,036 | 2,664 | ¥ 2,661 | |
Accumulated impairment losses | (4) | (4) | (4) | |
Goodwill | 3,032 | 2,660 | 2,657 | |
Goodwill acquired during the year (Note 3) | 372 | 3 | ||
Legacy DH [member] | ||||
Goodwill [Line Items] | ||||
Gross carrying values | 2,496 | 2,768 | ||
Accumulated impairment losses | (396) | (440) | ||
Goodwill | ¥ 2,100 | 2,328 | ||
Goodwill acquired during the year (Note 3) | 6 | 2,694 | ||
Impairment loss | (437) | |||
Net foreign exchange-goodwill | (278) | 74 | ||
Net foreign exchange-impairment loss | ¥ 44 | ¥ (3) |
DEBT - Components (Details)
DEBT - Components (Details) ¥ in Millions, $ in Millions | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) |
DEBT | |||
Short-term Debt | ¥ 6,232 | $ 978 | ¥ 1,142 |
Total | 6,232 | 1,142 | |
Long-term debt, non-current portion | 3,565 | $ 559 | 10,856 |
Long-term debt | 3,565 | 10,856 | |
Bank borrowings | |||
DEBT | |||
Long-term debt, current portion | 2,464 | 251 | |
Long-term debt, non-current portion | 211 | 4,384 | |
Convertible senior notes | |||
DEBT | |||
Long-term debt, current portion | 3,029 | ||
Long-term debt, non-current portion | 3,158 | 6,318 | |
FF&E liability | |||
DEBT | |||
Long-term debt, current portion | 47 | 40 | |
Long-term debt, non-current portion | 180 | 135 | |
Others | |||
DEBT | |||
Long-term debt | 16 | 19 | |
Bank borrowings | |||
DEBT | |||
Short-term Debt | ¥ 692 | ¥ 851 |
DEBT - Bank borrowings (Details
DEBT - Bank borrowings (Details) € in Millions, ¥ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||||
Jan. 31, 2021CNY (¥) | Dec. 31, 2019EUR (€) | Mar. 31, 2019CNY (¥) | Dec. 31, 2021EUR (€) | Dec. 31, 2021USD ($) | Dec. 31, 2020EUR (€) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Apr. 17, 2020EUR (€) | Apr. 17, 2020USD ($) | Dec. 31, 2019USD ($) | |
Debt | |||||||||||||||
Repayment of line of credit facility | $ | $ 0 | ||||||||||||||
Revolving credit loan and the available credit facility terminated | $ | $ 500,000,000 | ||||||||||||||
Long-term debt | ¥ | ¥ 10,856 | ¥ 3,565 | |||||||||||||
Term facility and revolving credit facility | |||||||||||||||
Debt | |||||||||||||||
Percentage points added to the reference rate | 2.00% | 2.00% | |||||||||||||
Weighted average interest rate (as a percent) | 2.73% | 2.73% | 2.89% | 2.89% | 2.89% | ||||||||||
Term Facility Expiring December 2022 | |||||||||||||||
Debt | |||||||||||||||
Maximum borrowing amount | € | € 440 | € 440 | € 440 | ||||||||||||
Credit facility drawn down amount | € | € 1 | € 440 | |||||||||||||
Repayment of line of credit facility | € | € 101 | ||||||||||||||
Long-term debt | € 338 | 2,440 | |||||||||||||
Revolving Credit Facility Expiring December 2022 | |||||||||||||||
Debt | |||||||||||||||
Term of debt instrument | 35 months | ||||||||||||||
Maximum borrowing amount | $ | $ 500,000,000 | $ 500,000,000 | |||||||||||||
Credit facility drawn down amount | ¥ 200 | $ 700,000,000 | $ 500,000,000 | ||||||||||||
Repayment of line of credit facility | $ | $ 500,000,000 | ||||||||||||||
Available credit facility | $ | $ 500,000,000 | ||||||||||||||
Five Year Term Facility | |||||||||||||||
Debt | |||||||||||||||
Term of debt instrument | 5 years | ||||||||||||||
Maximum borrowing amount | ¥ | ¥ 1,190 | 1,190 | |||||||||||||
Repayment of line of credit facility | ¥ | ¥ 179 | ||||||||||||||
Weighted average interest rate (as a percent) | 4.75% | 4.75% | 4.75% | 4.75% | 4.75% | ||||||||||
Syndicated Loan Facility Expiring in December 2032 | |||||||||||||||
Debt | |||||||||||||||
Term of debt instrument | 12 years | ||||||||||||||
Maximum borrowing amount | ¥ | ¥ 650 | ||||||||||||||
Long-term debt | ¥ | ¥ 53 | ||||||||||||||
Weighted average interest rate (as a percent) | 4.41% | 4.41% | |||||||||||||
Syndicated Loan Facility Expiring in December 2032 | Prime Rate | |||||||||||||||
Debt | |||||||||||||||
Percentage points added to the reference rate | 0.24% |
DEBT - Convertible Senior Notes
DEBT - Convertible Senior Notes (Details) | May 12, 2020USD ($)$ / shares | May 12, 2020CNY (¥) | Nov. 03, 2017USD ($)$ / shares | Nov. 03, 2017CNY (¥) | Dec. 31, 2021USD ($)shares | Dec. 31, 2021CNY (¥)shares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2021CNY (¥) | May 12, 2020CNY (¥) | Nov. 03, 2017CNY (¥) |
Debt Instrument [Line Items] | ||||||||||
Amount converted | ¥ 0 | ¥ 0 | ||||||||
Note repurchased | $ 0 | 0 | ||||||||
Convertible senior notes | 2022 Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount | $ 475,000,000 | $ 475,000,000 | ¥ 3,027,000,000 | |||||||
Fixed interest rate (as a percent) | 0.375% | 0.375% | ||||||||
Initial conversion rate per ADS | 5.4869 | 5.4869 | ||||||||
Increment used for debt conversion | $ | $ 1,000 | |||||||||
Initial conversion price | $ / shares | $ 182.25 | |||||||||
Repurchase price as a percentage of principal amount | 100.00% | 100.00% | ||||||||
Proceeds from issuance of debt | $ 467,000,000 | ¥ 3,093,000,000 | ||||||||
Debt issuance costs | $ 8,000,000 | ¥ 54,000,000 | ||||||||
Amount converted | ¥ 40,000 | ¥ 60,000 | ||||||||
Number of shares converted | shares | 134 | 134 | 202 | |||||||
Note repurchased | ¥ 0 | ¥ 40,000 | ||||||||
Beneficial conversion feature | ¥ 0 | |||||||||
Convertible senior notes | 2026 Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount | $ | $ 450,000,000 | |||||||||
Additional aggregate maximum amount of notes to purchase | $ | $ 50,000,000 | |||||||||
Fixed interest rate (as a percent) | 3.00% | 3.00% | ||||||||
Initial conversion rate per ADS | 41.72 | 41.72 | ||||||||
Increment used for debt conversion | $ | $ 1,000 | |||||||||
Initial conversion price | $ / shares | $ 23.971 | |||||||||
Repurchase price as a percentage of principal amount | 100.00% | 100.00% | ||||||||
Proceeds from issuance of debt | $ 493,000,000 | ¥ 3,499,000,000 | ||||||||
Debt issuance costs | $ 7,000,000 | ¥ 49,000,000 | ||||||||
Beneficial conversion feature | ¥ 0 |
DEBT - ADS Lending Arrangement
DEBT - ADS Lending Arrangement (Details) $ / shares in Units, ¥ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2017CNY (¥)shares | Dec. 31, 2021shares | Dec. 31, 2020shares | Dec. 31, 2019shares | May 31, 2018shares | Dec. 31, 2017USD ($)$ / shares | |
Debt Instrument [Line Items] | ||||||
ADS to ordinary share ratio | 1 | |||||
ADS Lending Arrangement | ||||||
Debt Instrument [Line Items] | ||||||
Number of Loaned ADS lent | 2,606,278 | |||||
ADS par value per share | $ / shares | $ 0.0004 | |||||
ADS to ordinary share ratio | 4 | |||||
Loand ADS outstanding | 10,425,112 | 10,425,112 | 10,425,112 | |||
Debt issuance costs | ¥ 26 | $ 4 |
DEBT - Capped Call Options (Det
DEBT - Capped Call Options (Details) - Call Option ¥ in Millions, $ in Millions | Nov. 03, 2017CNY (¥)$ / item | Nov. 03, 2017USD ($)$ / item |
Debt Instrument [Line Items] | ||
Cap price of the capped call transactions per ADS | 221.31 | 221.31 |
Premium paid for capped call transactions | ¥ 177 | $ 27 |
DEBT - Schedule of contractual
DEBT - Schedule of contractual maturities of the group's long-term debt (Details) ¥ in Millions | Dec. 31, 2021CNY (¥) |
Contractual maturities | |
2022 | ¥ 6,232 |
2023 | 111 |
2024 | 3,314 |
2025 | 71 |
2026 | 23 |
Thereafter | 76 |
Total | ¥ 9,827 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Payable to franchisees | ¥ 710 | ¥ 1,349 | |
Other payables | 535 | 535 | |
Accrued rental, utilities and other accrued expenses | 209 | 245 | |
Liabilities related to customer loyalty program | 135 | 111 | |
Value-added tax, other tax and surcharge payables | 132 | 124 | |
Payable to noncontrolling interest holders | 117 | 76 | |
Total | ¥ 1,838 | $ 288 | ¥ 2,440 |
Additional disclosures | |||
Payable to franchisees, term (in years) | 1 year | ||
Payable to noncontrolling interest holders, term (in years) | 1 year |
HOTEL OPERATING COSTS (Details)
HOTEL OPERATING COSTS (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
HOTEL OPERATING COSTS. | ||||
Rents | ¥ 3,900 | ¥ 3,485 | ¥ 2,624 | |
Utilities | 507 | 478 | 404 | |
Personnel costs | 3,022 | 2,501 | 1,854 | |
Depreciation and amortization | 1,413 | 1,316 | 960 | |
Consumable, food and beverage | 969 | 885 | 793 | |
Others | 1,471 | 1,064 | 555 | |
Total | ¥ 11,282 | $ 1,770 | ¥ 9,729 | ¥ 7,190 |
PRE-OPENING EXPENSES (Details)
PRE-OPENING EXPENSES (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
PRE-OPENING EXPENSES | ||||
Rents | ¥ 68 | ¥ 251 | ¥ 460 | |
Personnel costs | 5 | 15 | 14 | |
Others | 8 | 22 | 28 | |
Total | ¥ 81 | $ 13 | ¥ 288 | ¥ 502 |
SHARE-BASED COMPENSATION - Plan
SHARE-BASED COMPENSATION - Plan (Details) - shares | 12 Months Ended | ||||||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2015 | Aug. 31, 2010 | Sep. 30, 2009 | Oct. 31, 2008 | Jun. 30, 2007 | Feb. 28, 2007 | |
Share options | |||||||||
Share based compensation | |||||||||
Granted (in shares) | 0 | 0 | 0 | ||||||
Incentive Award Plans | |||||||||
Share based compensation | |||||||||
Vesting period | 10 years | ||||||||
Incentive Award Plans | Maximum | |||||||||
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) | 243,059,070 | ||||||||
Incentive Award Plans | Second anniversary of the stated vesting commencement date | |||||||||
Share based compensation | |||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||
Incentive Award Plans | Vesting ratably over the following two years | |||||||||
Share based compensation | |||||||||
Share-based payment award, vesting percentage | 50.00% | ||||||||
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 - Opti
SHARE-BASED COMPENSATION - Option assumptions and Activity (Details) - Share options - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | |||
Exercised (in shares) | 0 | (466,320) | (10,883,580) |
Aggregate intrinsic value of options exercised | ¥ 0 | ¥ 11 | ¥ 255 |
SHARE-BASED COMPENSATION - Nonv
SHARE-BASED COMPENSATION - Nonvested restricted stocks (Details) ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)trancheshares | Dec. 31, 2021CNY (¥)$ / shares | Dec. 31, 2020CNY (¥)trancheshares | Dec. 31, 2019CNY (¥)trancheshares | |
Restricted stocks | ||||
Number of Restricted Stocks | ||||
Nonvested restricted stocks outstanding at the beginning of the period (in shares) | 70,954,080 | |||
Granted (in shares) | 2,163,420 | |||
Forfeited (in shares) | (4,607,340) | |||
Vested (in shares) | (12,325,470) | |||
Adjusted for performance conditions (in shares) | (2,488,200) | |||
Nonvested restricted stocks outstanding at the end of the period (in shares) | 53,696,490 | 70,954,080 | ||
Weighted Average Grant Date Fair Value | ||||
Nonvested restricted stocks outstanding at the beginning of the period (in dollars per shares) | $ / shares | $ 1.18 | |||
Granted (in dollars per shares) | $ / shares | 4.20 | |||
Forfeited (in dollars per shares) | $ / shares | 1.64 | |||
Vested (in dollars per shares) | $ / shares | 1.58 | |||
Adjusted for performance conditions (in dollars per share) | $ / shares | 0.61 | |||
Nonvested restricted stocks outstanding at the end of the period (in dollars per shares) | $ / shares | $ 1.20 | |||
Total unrecognized compensation expense | ¥ | ¥ 355 | $ 355 | ||
Weighted-average period for recognition of unrecognized compensation costs | 3 years 3 months 18 days | |||
Total fair value of nonvested restricted stocks, vested | ¥ | ¥ 389 | ¥ 368 | ¥ 443 | |
Restricted stocks | Performance Condition | ||||
Share based compensation | ||||
Number of tranche | tranche | 10 | 10 | 10 | |
Number of Restricted Stocks | ||||
Granted (in shares) | 0 | 0 | 2,217,120 | |
Restricted stocks | Performance Condition | Second anniversary of the stated vesting commencement date | ||||
Share based compensation | ||||
Share-based payment award, vesting percentage | 50.00% | |||
Restricted stocks | Performance Condition | Vesting ratably over the following two years | ||||
Share based compensation | ||||
Share-based payment award, vesting percentage | 50.00% | |||
Period for remaining percentage vested | 2 years | |||
Share options | ||||
Weighted Average Grant Date Fair Value | ||||
Total unrecognized compensation expense | ¥ | ¥ 0 | $ 0 |
EARNINGS (LOSSES) PER SHARE (De
EARNINGS (LOSSES) PER SHARE (Details) ¥ / shares in Units, ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2021$ / shares | Dec. 31, 2021CNY (¥)¥ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | |
EARNINGS (LOSSES) PER SHARE | ||||
Net income (loss) attributable to ordinary shareholders - basic | ¥ | ¥ (465) | ¥ (2,192) | ¥ 1,769 | |
Eliminate the dilutive effect of interest expense of convertible senior notes | ¥ | 40 | |||
Net income attributable to ordinary shareholders - diluted | ¥ | ¥ (465) | ¥ (2,192) | ¥ 1,809 | |
Weighted average ordinary shares outstanding - basic | 3,114,124,244 | 2,927,398,409 | 2,843,051,378 | |
Incremental weighted-average ordinary shares from assumed exercise of share options and nonvested restricted stocks using the treasury stock method | 93,975,271 | |||
Dilutive effect of convertible senior notes | 106,072,250 | |||
Weighted average ordinary shares outstanding - diluted | 3,114,124,244 | 2,927,398,409 | 3,043,098,899 | |
Basic earnings (losses) per share | (per share) | $ (0.02) | ¥ (0.15) | ¥ (0.75) | ¥ 0.62 |
Diluted earnings (losses) per share | (per share) | $ (0.02) | ¥ (0.15) | ¥ (0.75) | ¥ 0.59 |
EARNINGS (LOSSES) PER SHARE - C
EARNINGS (LOSSES) PER SHARE - Computation of diluted earnings (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 280,523,900 | 297,781,490 |
Outstanding employee options and nonvested restricted stocks | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 53,696,490 | 70,954,080 |
Shares of convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities which could potentially dilute basic earnings per share which were excluded from the computation of diluted earnings per share | 226,827,410 | 226,827,410 |
Cash Dividend (Details)
Cash Dividend (Details) $ / shares in Units, ¥ in Millions, $ in Millions | Mar. 03, 2022USD ($)$ / shares | Dec. 31, 2019CNY (¥) | Nov. 30, 2019USD ($) |
Cash Dividend | |||
Cash dividends declared (Per share) | $ 0.021 | ||
Dividends payable | $ 68 | ¥ 678 | $ 100 |
LEASES - Supplemental Informati
LEASES - Supplemental Information Related to Operating Leases (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease cost: | ||
Operating fixed lease cost | ¥ 4,074 | ¥ 3,964 |
- Amortization of ROU assets | 79 | 74 |
- Interest on lease liabilities | 96 | 90 |
Short term lease cost | 0 | 0 |
Operating variable lease cost | (25) | (171) |
Total lease cost | ¥ 4,224 | ¥ 3,957 |
Other information: | ||
Weighted average remaining lease term, Operating leases | 13 years | 14 years |
Weighted average remaining lease term, Finance leases | 28 years | 29 years |
Weighted average discount rate, Operating leases | 6.31% | 6.23% |
Weighted average discount rate, Finance leases | 3.97% | 3.96% |
LEASES - Schedule Of Maturities
LEASES - Schedule Of Maturities Of Lease Liabilities (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Total Operating Leases | ||
2022 | ¥ 4,055 | ¥ 3,858 |
2023 | 4,066 | 3,826 |
2024 | 4,037 | 3,733 |
2025 | 3,871 | 3,660 |
2026 | 3,655 | 3,466 |
Thereafter | 26,035 | 25,730 |
Total minimum lease payments | 45,719 | 44,273 |
Less: amount representing interest | 14,079 | 13,819 |
Present value of minimum lease payments | 31,640 | 30,454 |
Total Finance Leases | ||
2022 | 140 | 129 |
2023 | 155 | 144 |
2024 | 157 | 146 |
2025 | 157 | 147 |
2026 | 158 | 147 |
Thereafter | 3,824 | 3,575 |
Total minimum lease payments | 4,591 | 4,288 |
Less: amount representing interest | 1,866 | 1,760 |
Present value of minimum lease payments | ¥ 2,725 | ¥ 2,528 |
LEASES - Schedule Of Future Min
LEASES - Schedule Of Future Minimum Payments (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Total Operating Leases | ||
2021 | ¥ 4,055 | ¥ 3,858 |
2022 | 4,066 | 3,826 |
2023 | 4,037 | 3,733 |
2024 | 3,871 | 3,660 |
2025 | 3,655 | 3,466 |
Thereafter | 26,035 | 25,730 |
Total minimum lease payments | 45,719 | 44,273 |
Less: amount representing interest | 14,079 | 13,819 |
Present value of minimum lease payments | 31,640 | 30,454 |
Total Finance Leases | ||
2021 | 140 | 129 |
2022 | 155 | 144 |
2023 | 157 | 146 |
2024 | 157 | 147 |
2025 | 158 | 147 |
Thereafter | 3,824 | 3,575 |
Total minimum lease payments | 4,591 | 4,288 |
Less: amount representing interest | 1,866 | 1,760 |
Present value of minimum lease payments | ¥ 2,725 | ¥ 2,528 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021CNY (¥)contract | Dec. 31, 2020CNY (¥)contract | Dec. 31, 2019CNY (¥) | |
LEASES | |||
Sublease Income | ¥ 134,000 | ¥ 112,000 | ¥ 121,000 |
Negative lease expense recognized under the relief using variable lease expense approach | ¥ 88,000 | ¥ 250,000 | |
Lease expense | ¥ 3,104,000 | ||
Number of lease contracts | contract | 32 | 31 | |
Non-cancellable lease contracts not reflected in consolidate balance sheets | ¥ 8,732 | ¥ 8,511,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |||||||||||||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | |
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 25.00% | 25.00% | 25.00% | |||||||||||||
Percentage holding of the PRC company | 25 | |||||||||||||||
Cash dividends paid | ¥ 678 | |||||||||||||||
Income (loss) before income taxes | ||||||||||||||||
Total | ¥ (408) | ¥ (2,279) | ¥ 2,565 | |||||||||||||
Minimum | ||||||||||||||||
Income tax | ||||||||||||||||
Extended limitation tax evasion period | 5 years | |||||||||||||||
Maximum | ||||||||||||||||
Income tax | ||||||||||||||||
Extended limitation tax evasion period | 10 years | |||||||||||||||
China | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | ||
Preferential income tax rate (as a percent) | 20.00% | 20.00% | 20.00% | |||||||||||||
Percentage of reduction for the first RMB 1 million of taxable income | 75.00% | 75.00% | 75.00% | |||||||||||||
Percentage of reduction for annual taxable income between RMB 1 million and 3 million | 50.00% | 50.00% | 50.00% | |||||||||||||
Income (loss) before income taxes | ||||||||||||||||
PRC including Hong Kong and Taiwan | ¥ 617 | ¥ (392) | ¥ 2,334 | |||||||||||||
GERMANY | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 15.00% | |||||||||||||||
Effective income tax rate including solidarity surcharge | 15.825% | |||||||||||||||
Income (loss) before income taxes | ||||||||||||||||
Income taxes foreign | ¥ (632) | (1,606) | ||||||||||||||
GERMANY | Minimum | ||||||||||||||||
Income tax | ||||||||||||||||
Municipal Trade Tax | 7.00% | |||||||||||||||
GERMANY | Maximum | ||||||||||||||||
Income tax | ||||||||||||||||
Municipal Trade Tax | 17.00% | |||||||||||||||
Others | ||||||||||||||||
Income (loss) before income taxes | ||||||||||||||||
Income taxes foreign | ¥ (393) | ¥ (281) | ¥ 231 | |||||||||||||
Others | Minimum | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 9.00% | |||||||||||||||
Others | Maximum | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 25.00% | |||||||||||||||
Jizhu Shanghai | China | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 15.00% | 15.00% | 15.00% | 15.00% | 15.00% | 15.00% | ||||||||||
Jiangsu Mengguang | China | ||||||||||||||||
Income tax | ||||||||||||||||
Effective tax rate (as a percent) | 15.00% | 15.00% | 15.00% |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) ¥ / shares in Units, ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥)¥ / shares | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥)¥ / shares | Dec. 31, 2019CNY (¥)¥ / shares | |
Tax expense (benefit) | ||||
Current Tax | ¥ | ¥ 555 | ¥ 338 | ¥ 678 | |
Deferred Tax | (543) | $ (85) | (553) | (38) |
Total | ¥ 12 | $ 2 | ¥ (215) | ¥ 640 |
Reconciliation between the effective income tax rate and the PRC statutory income tax rate | ||||
PRC statutory tax rate | 25.00% | 25.00% | 25.00% | 25.00% |
Tax effect of non-deductible expenses and non-taxable income in determining taxable profit | (6.00%) | (6.00%) | (6.00%) | (3.00%) |
Effect of different tax rate of group entities operating in other jurisdictions | (6.00%) | (6.00%) | (2.00%) | 1.00% |
Effect of change in valuation allowance | (24.00%) | (24.00%) | (10.00%) | 2.00% |
Effect of tax holiday | 9.00% | 9.00% | 1.00% | (2.00%) |
Effect of cash dividends | (8.00%) | (8.00%) | 0.00% | 4.00% |
Effect of excess tax benefit of share based rewards | 7.00% | 7.00% | 1.00% | (2.00%) |
Effective tax rate | (3.00%) | (3.00%) | 9.00% | 25.00% |
Aggregate amount and per share effect of the tax holidays | ||||
Aggregate amount | ¥ | ¥ 37 | ¥ 31 | ¥ 45 | |
Per share effect-basic | ¥ / shares | ¥ 0.01 | ¥ 0.01 | ¥ 0.02 | |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets: | |||
Net loss carryforward | ¥ 1,271 | ¥ 888 | |
Deferred revenue | 326 | 283 | |
Long-term assets | 238 | 388 | |
Bad debt provision | 40 | 18 | |
Accrued payroll | 45 | 69 | |
Other accrued expenses | 3 | 3 | |
Share-based compensation | 29 | 31 | |
Others | 150 | 12 | |
Valuation allowance | (466) | (369) | ¥ (152) |
Total deferred tax assets | 1,636 | 1,323 | |
Deferred tax liabilities: | |||
Favorable lease, building and land use rights-fair value adjustment | 1,596 | 1,782 | |
Others | 31 | 99 | |
Total deferred tax liabilities | 1,627 | 1,881 | |
Net deferred tax (liabilities) assets | 9 | (558) | |
Analysis as: | |||
Deferred tax assets | 862 | 623 | |
Deferred tax liabilities | 853 | 1,181 | |
Net deferred tax (liabilities) assets | 9 | (558) | |
Movement of the valuation allowance | |||
Balance at the beginning of the year | (369) | (152) | (107) |
Provided | (151) | (249) | (79) |
Reversed | 37 | 32 | 24 |
Written off | 17 | 10 | |
Balance at the end of the year | ¥ (466) | ¥ (369) | ¥ (152) |
INCOME TAXES - Valuation allowa
INCOME TAXES - Valuation allowance (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2022USD ($) | Dec. 31, 2022CNY (¥) | Dec. 31, 2021CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Uncertain tax benefits | |||||
Interest or penalty expense | ¥ 0 | ¥ 0 | ¥ 0 | ||
Roll-forward of the unrecognized tax benefits | |||||
Beginning balance | ¥ 60 | 50 | 18 | 14 | |
Addition for tax positions | 10 | 32 | 4 | ||
Ending balance | ¥ 60 | ¥ 50 | 18 | ||
Withholding income tax rate (as a percentage) | 10.00% | ||||
Withholding income tax rate with Hong Kong as holding company (as a percentage) | 5.00% | ||||
PRC dividend withholding tax accrued | ¥ 32 | ||||
Additional provision for PRC dividend withholding tax accrued | ¥ 0 | ||||
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 | ¥ 678 | |||
Undistributed Earnings | ¥ 3,763 | ||||
GERMANY | |||||
Valuation allowance | |||||
Tax loss carryforwards | 1,192 | ||||
China | |||||
Valuation allowance | |||||
Tax loss carryforwards, expire between 2022 and 2026 | 2,115 | ||||
Tax loss carryforwards, expire between 2022 and 2028 | ¥ 1,532 | ||||
Maximum | |||||
Uncertain tax benefits | |||||
Market capitalization percent | 2.00% | ||||
Minimum | |||||
Uncertain tax benefits | |||||
Market capitalization percent | 0.50% |
EMPLOYEE BENEFIT PLANS _ Change
EMPLOYEE BENEFIT PLANS _ Change in Projected Benefit Obligations and Change in Plan Assets (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Change in Projected Benefit Obligation | ||
Begin of the year | ¥ 193 | ¥ 147 |
Current service cost | 5 | 5 |
Interest cost | 0 | 1 |
Contributions by plan participants | 1 | 1 |
Actuarial loss (gain) | (14) | 38 |
Foreign currency translation | (19) | 3 |
Benefits paid | (9) | (7) |
Settlements | (1) | |
Administrative Expenses, Taxes and Premiums Paid | 0 | 0 |
Curtailments | (1) | |
Acquisitions | 0 | |
Effect of other economic events | 7 | |
End of the year | 157 | 193 |
Change in Plan Assets | ||
Begin of the year | 6 | 32 |
Actual return on plan assets | 0 | (2) |
Foreign currency translation | 0 | 1 |
Employer contributions | 1 | 9 |
Employee contributions | 0 | 1 |
Benefits paid | (2) | (8) |
Acquisitions | 0 | |
Other economic events | (27) | |
End of the year | 5 | 6 |
Excess of defined benefit obligation over the fair value of plan assets | 152 | 187 |
Accumulated benefit obligation | ¥ 157 | ¥ 193 |
EMPLOYEE BENEFIT PLANS - Amount
EMPLOYEE BENEFIT PLANS - Amounts recognized in the consolidated balance sheets (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2021USD ($) | |
Defined Benefit Plan, Amounts for Asset (Liability) Recognized in Statement of Financial Position [Abstract] | ||||
Salary and welfare payables | ¥ 8 | ¥ 8 | ||
Retirement benefit obligation | 144 | 179 | $ 23 | |
Liability in the balance sheet | 152 | 187 | ||
Net amount recognized in accumulated other comprehensive loss | ¥ (13) | $ (2) | ¥ 27 |
EMPLOYEE BENEFIT PLANS - Princi
EMPLOYEE BENEFIT PLANS - Principal actuarial assumptions (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Principal actuarial assumptions | |||
Inflation rate | 1.00% | 1.00% | |
Future salary increases | 2.17% | 1.50% | |
Future pension increases | 1.69% | 1.80% | |
Fair value hierarchy of total plan assets measured at fair value by asset | ¥ 5 | ¥ 6 | ¥ 32 |
Expect to contribute | 1 | ||
Benefits expected to be paid in 2022 | ¥ 9 | ||
Germany | |||
Principal actuarial assumptions | |||
Discount rate | 0.89% | 0.33% | |
Other | |||
Principal actuarial assumptions | |||
Discount rate | 0.39% | 0.12% | |
Equity securities | |||
Principal actuarial assumptions | |||
Target asset allocation for the plan, as a percentage of total plan assets | 26.00% | ||
Debt securities | |||
Principal actuarial assumptions | |||
Target asset allocation for the plan, as a percentage of total plan assets | 29.00% | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Principal actuarial assumptions | |||
Fair value hierarchy of total plan assets measured at fair value by asset | ¥ 5 | ¥ 6 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity funds | |||
Principal actuarial assumptions | |||
Fair value hierarchy of total plan assets measured at fair value by asset | 1 | 1 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Bond funds | |||
Principal actuarial assumptions | |||
Fair value hierarchy of total plan assets measured at fair value by asset | 2 | 2 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Property | |||
Principal actuarial assumptions | |||
Fair value hierarchy of total plan assets measured at fair value by asset | 1 | 2 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | |||
Principal actuarial assumptions | |||
Fair value hierarchy of total plan assets measured at fair value by asset | ¥ 1 | ¥ 1 |
EMPLOYEE BENEFIT PLANS - Define
EMPLOYEE BENEFIT PLANS - Defined Contribution Plans (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
EMPLOYEE BENEFIT PLANS | |||
Total contribution for employee benefits | ¥ 544 | ¥ 283 | ¥ 413 |
Contributions recognized as expense | ¥ 55 | ¥ 129 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Minimum required percentage of after tax profit appropriated to general reserve fund | 10.00% | ||
Threshold percentage of general reserve fund to registered capital | 50.00% | ||
Reserve funds not distributed as cash dividends | ¥ 826 | ¥ 771 | ¥ 604 |
Restricted share capital | 2,852 | ||
Restricted net assets not available for distribution to the Company in the form of dividends, loans or advances | 3,678 | ||
General reserve not distributable as cash dividends or other cash disbursements | 11 | ||
Deutsche Hospitality | |||
Restricted share capital | ¥ 4 |
RELATED PARTY TRANSACTIONS AN_3
RELATED PARTY TRANSACTIONS AND BALANCES (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Related party transaction | ||||
Allowance for expected credit losses | ¥ (17) | ¥ (18) | ||
Total | 150 | 178 | ||
Due to related party | 197 | 132 | ||
Loan payment | 5 | $ 1 | 15 | ¥ 87 |
Sheen Star | ||||
Related party transaction | ||||
Amounts due from related parties | 33 | 52 | ||
Sheen Star | Service fee | ||||
Related party transaction | ||||
Revenue from related parties | 5 | 4 | 4 | |
Sheen Star | Interest income | ||||
Related party transaction | ||||
Interest income from related party | 0 | 1 | 8 | |
CREATER | Interest income | ||||
Related party transaction | ||||
Interest income from related party | 6 | |||
Zhuchuang | ||||
Related party transaction | ||||
Amounts due from related parties | 27 | 27 | ||
Trip.com | ||||
Related party transaction | ||||
Amounts due from related parties | 17 | 22 | ||
Due to related party | 44 | 48 | ||
Trip.com | Service fee | ||||
Related party transaction | ||||
Revenue from related parties | 62 | 66 | 41 | |
Trip.com | Commission expenses | ||||
Related party transaction | ||||
Expenses with related parties | 99 | 78 | 72 | |
Trip.com | Lease expenses | ||||
Related party transaction | ||||
Expenses with related parties | 19 | 18 | 18 | |
China Hospitality JV. | Service fee | ||||
Related party transaction | ||||
Revenue from related parties | 2 | 1 | 6 | |
China Hospitality JV. | Early termination compensation | ||||
Related party transaction | ||||
Expenses with related parties | 26 | |||
Cjia Group | ||||
Related party transaction | ||||
Amounts due from related parties | 29 | 22 | ||
Due to related party | 101 | 42 | ||
Cjia Group | Service fee | ||||
Related party transaction | ||||
Expenses with related parties | 17 | 6 | ||
Cjia Group | Lease expenses | ||||
Related party transaction | ||||
Expenses with related parties | 12 | |||
Cjia Group | Goods sold and service provided | ||||
Related party transaction | ||||
Revenue from related parties | 11 | 18 | 21 | |
Cjia Group | Sublease Income | ||||
Related party transaction | ||||
Revenue from related parties | 6 | 9 | 14 | |
Cjia Group | Early termination compensation | ||||
Related party transaction | ||||
Expenses with related parties | 8 | |||
Cjia Group | Purchase of property, plant and equipment | ||||
Related party transaction | ||||
Expenses with related parties | 11 | |||
Cjia Group | Business Acquisition Of CitiGo [Member] | ||||
Related party transaction | ||||
Expenses with related parties | 783 | |||
Cjia Group | Business acquisition | ||||
Related party transaction | ||||
Expenses with related parties | 51 | |||
Huali Jinshi | ||||
Related party transaction | ||||
Due to related party | 47 | 29 | ||
Huali Jinshi | Service fee | ||||
Related party transaction | ||||
Expenses with related parties | 42 | 41 | 99 | |
Accor | ||||
Related party transaction | ||||
Amounts due from related parties | 1 | |||
Due to related party | 8 | |||
Accor | Service fee | ||||
Related party transaction | ||||
Revenue from related parties | 3 | 3 | 9 | |
Accor | Brand use fee, reservation fee and other related service fee | ||||
Related party transaction | ||||
Expenses with related parties | 22 | 17 | 28 | |
Lianquan | ||||
Related party transaction | ||||
Amounts due from related parties | 49 | 58 | ||
Loan payment | 32 | |||
Lianquan | Sublease Income | ||||
Related party transaction | ||||
Revenue from related parties | 10 | 12 | 7 | |
Others | ||||
Related party transaction | ||||
Amounts due from related parties | 12 | 14 | ||
Due to related party | 5 | 5 | ||
Smart Lodging | ||||
Related party transaction | ||||
Loan payment | ¥ 30 | |||
Hitone | ||||
Related party transaction | ||||
Loan payment | 5 | |||
ASU 2016-13 | ||||
Related party transaction | ||||
Credit allowance | ¥ 17 | ¥ 18 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) ¥ in Millions | Dec. 31, 2021CNY (¥) |
COMMITMENTS AND CONTINGENCIES. | |
Purchase commitments expected to be incurred within one year related to leasehold improvements and installation of equipment for hotel operations | ¥ 413 |
Accrued contingencies | ¥ 54 |
SCHEDULE I FINANCIAL INFORMAT_2
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Details) ¥ in Millions, $ in Millions | Mar. 03, 2022USD ($) | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Nov. 30, 2019USD ($) | |
Current assets: | |||||||
Cash and cash equivalents | ¥ 5,116 | $ 803 | ¥ 7,026 | ¥ 3,234 | |||
Other current assets, net | 847 | 133 | 914 | ||||
Total current assets | 9,553 | 1,499 | 12,882 | ||||
Other assets, net | 834 | 131 | 743 | ||||
Total assets | 63,269 | 9,927 | 65,155 | ||||
Current liabilities: | |||||||
Short-term debt | 6,232 | 978 | 1,142 | ||||
Dividends payable | $ 68 | ¥ 678 | $ 100 | ||||
Amount due to subsidiaries | 197 | 31 | 132 | ||||
Accrued expenses and other current liabilities | 1,838 | 288 | 2,440 | ||||
Total current liabilities | 15,279 | 2,397 | 10,529 | ||||
Long-term debt | 3,565 | 559 | 10,856 | ||||
Total liabilities | 52,225 | 8,195 | 53,723 | ||||
Equity: | |||||||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,243,644,440 and 3,255,971,250 shares issued as of December 31, 2020 and 2021, and 3,108,425,680 and 3,120,746,090 shares outstanding as of December 31, 2020 and 2021, respectively) | [1] | 0 | 0 | 0 | |||
Treasury shares (30,967,640 and 30,974,040 shares as of December 31, 2020 and 2021, respectively) | (107) | (17) | (107) | ||||
Additional paid-in capital | 9,964 | 1,563 | 9,808 | ||||
Retained earnings | 1,037 | 163 | 1,502 | ||||
Accumulated other comprehensive income | 41 | 6 | 127 | ||||
Total equity | 10,935 | 1,715 | 11,330 | ||||
Total liabilities and equity | 63,269 | 9,927 | 65,155 | ||||
Parent Company | |||||||
Current assets: | |||||||
Cash and cash equivalents | 581 | 91 | 1,892 | ||||
Short-term investments | 81 | 13 | 51 | ||||
Other current assets, net | 1 | 0 | 16 | ||||
Total current assets | 663 | 104 | 1,959 | ||||
Investment in subsidiaries | 16,928 | 2,656 | 16,103 | ||||
Total assets | 17,591 | 2,760 | 18,062 | ||||
Current liabilities: | |||||||
Short-term debt | 3,028 | 475 | |||||
Amount due to subsidiaries | 257 | 40 | 273 | ||||
Accrued expenses and other current liabilities | 213 | 34 | 141 | ||||
Total current liabilities | 3,498 | 549 | 414 | ||||
Long-term debt | 3,158 | 496 | 6,318 | ||||
Total liabilities | 6,656 | 1,045 | 6,732 | ||||
Equity: | |||||||
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,243,644,440 and 3,255,971,250 shares issued as of December 31, 2020 and 2021, and 3,108,425,680 and 3,120,746,090 shares outstanding as of December 31, 2020 and 2021, respectively) | 0 | 0 | 0 | ||||
Treasury shares (30,967,640 and 30,974,040 shares as of December 31, 2020 and 2021, respectively) | (107) | (17) | (107) | ||||
Additional paid-in capital | 9,964 | 1,563 | 9,808 | ||||
Retained earnings | 1,037 | 163 | 1,502 | ||||
Accumulated other comprehensive income | 41 | 6 | 127 | ||||
Total equity | 10,935 | 1,715 | 11,330 | ||||
Total liabilities and equity | ¥ 17,591 | $ 2,760 | ¥ 18,062 | ||||
[1] | In June 2021, the Company effected a share split that each issued and unissued ordinary share of the Company with a par value of US$ 0.0001 was sub-divided into 10 ordinary shares with a par value of US$ 0.00001 each. The ratio of ADS to ordinary share was adjusted from one (1) ADS representing one (1) ordinary share to one (1) ADS representing ten (10) ordinary shares. Except otherwise stated, the share split has been retrospectively applied for all periods presented. |
SCHEDULE I FINANCIAL INFORMAT_3
SCHEDULE I FINANCIAL INFORMATION FOR PARENT COMPANY - BALANCE SHEETS (Parenthetical) (Details) - $ / shares | Dec. 31, 2021 | Jun. 30, 2021 | May 31, 2021 | Dec. 31, 2020 |
BALANCE SHEETS | ||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.0001 | $ 0.00001 |
Ordinary shares, shares authorized | 80,000,000,000 | 80,000,000,000 | ||
Ordinary shares, shares issued | 3,255,971,250 | 3,243,644,440 | ||
Ordinary shares, shares outstanding | 3,120,746,090 | 3,108,425,680 | ||
Treasury shares, shares | 30,974,040 | 30,967,640 | ||
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 | 3,255,971,250 | 3,243,644,440 | ||
Ordinary shares, shares outstanding | 3,120,746,090 | 3,108,425,680 | ||
Treasury shares, shares | 30,974,040 | 30,967,640 |
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, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Operating costs and expenses: | ||||
General and administrative expenses | ¥ 1,545 | $ 242 | ¥ 1,259 | ¥ 1,061 |
Total operating costs and expenses | 13,607 | 2,135 | 11,925 | 9,236 |
Loss from operations | 164 | 26 | (1,686) | 2,108 |
Interest income | 89 | 14 | 119 | 160 |
Interest expense | (405) | (64) | (533) | (315) |
Foreign exchange gain (loss) | (317) | (50) | 175 | (35) |
Other income, net | 157 | 25 | (89) | 331 |
Unrealized loss from fair value changes of equity securities | (96) | (15) | (265) | 316 |
Net income (loss) attributable to Huazhu Group Limited | (465) | (73) | (2,192) | 1,769 |
Other comprehensive income | ||||
Loss / Gain arising from defined benefit plan, net of tax | (13) | (2) | 27 | |
Foreign currency translation adjustments | (99) | (16) | 203 | (7) |
Comprehensive income (loss) attributable to Huazhu Group Limited | (551) | (87) | (2,016) | 1,762 |
Parent Company | ||||
Operating costs and expenses: | ||||
General and administrative expenses | 110 | 17 | 155 | 115 |
Total operating costs and expenses | 110 | 17 | 155 | 115 |
Loss from operations | (110) | (17) | (155) | (115) |
Interest income | 8 | 1 | 2 | 10 |
Interest expense | 128 | 20 | 154 | 201 |
Foreign exchange gain (loss) | (3) | 0 | (8) | 5 |
Other income, net | 15 | 2 | 32 | 30 |
Unrealized loss from fair value changes of equity securities | (2) | 0 | (10) | (27) |
Income (loss) in investment in subsidiaries | (245) | (39) | (1,899) | 2,067 |
Net income (loss) attributable to Huazhu Group Limited | (465) | (73) | (2,192) | 1,769 |
Other comprehensive income | ||||
Foreign currency translation adjustments | (86) | (14) | 176 | (7) |
Comprehensive income (loss) attributable to Huazhu Group Limited | ¥ (551) | $ (87) | ¥ (2,016) | ¥ 1,762 |
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, 2020CNY (¥) | Dec. 31, 2021CNY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Adjustments to reconcile net income to net cash used in operating activities: | |||||
Net cash provided by operating activities | ¥ 1,342 | $ 210 | ¥ 609 | ¥ 3,293 | |
Investing activities: | |||||
Net cash used in investing activities | (1,402) | (219) | (8,101) | (285) | |
Financing activities: | |||||
Proceeds from issuance of ordinary shares | ¥ 6,018 | ||||
Payment of ordinary share issuance costs | (19) | (3) | (32) | ||
Payment of share repurchase | 0 | 0 | |||
Net proceeds from issuance of ordinary shares upon exercise of option | 1 | 0 | 1 | 14 | |
Proceeds from short-term bank borrowings | 2,288 | 359 | 1,658 | 2,214 | |
Repayment of short-term bank borrowings | (2,474) | (389) | (1,993) | (1,902) | |
Proceeds from long-term bank borrowings | 53 | 8 | 1,652 | 13,176 | |
Repayment of long-term bank borrowings | (1,650) | (259) | (9,163) | (6,760) | |
Proceeds from issuance of convertible senior notes | 3,499 | ||||
Direct financing costs paid | (10) | ||||
Dividends paid | (678) | (658) | |||
Net cash provided by (used in) financing activities | (1,801) | (283) | 883 | 6,045 | |
Effect of exchange rate changes on cash and cash equivalents | (88) | (14) | (300) | 62 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,949) | (306) | (6,909) | 9,115 | |
Cash, cash equivalents and restricted cash at the beginning of the year | 7,090 | 1,113 | 13,999 | 4,884 | |
Cash, cash equivalents and restricted cash at the end of the year | 5,141 | 807 | 7,090 | 13,999 | |
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 provided by operating activities | 9 | 2 | 49 | (212) | |
Investing activities: | |||||
Investment in subsidiaries | (1,050) | (165) | (6,267) | (1,039) | |
Receipt of investment in subsidiaries | 9 | ||||
Purchase of short-term investments | (34) | (5) | |||
Net cash used in investing activities | (1,084) | (170) | (6,267) | (1,030) | |
Financing activities: | |||||
Proceeds from issuance of ordinary shares | 6,018 | ||||
Payment of ordinary share issuance costs | (15) | (2) | (10) | ||
Net settlement on shares repurchased for withholding taxes related to share-based awards | (50) | (7) | |||
Payment of share repurchase | 0 | 0 | |||
Net proceeds from issuance of ordinary shares upon exercise of option | 1 | 0 | 1 | 14 | |
Proceeds of advances from subsidiaries | 0 | 0 | 109 | ||
Proceeds from short-term bank borrowings | 1,265 | ||||
Repayment of short-term bank borrowings | (282) | ||||
Proceeds from long-term bank borrowings | 5,206 | ||||
Repayment of long-term bank borrowings | (5,169) | ||||
Proceeds from issuance of convertible senior notes | 3,499 | ||||
Repayment of convertible senior notes | 0 | 0 | 0 | ||
Direct financing costs paid | (9) | ||||
Dividends paid | (678) | (658) | |||
Net cash provided by (used in) financing activities | 36 | 5 | 8,539 | 767 | |
Effect of exchange rate changes on cash and cash equivalents | (272) | (43) | (790) | 141 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,311) | (206) | 1,531 | (334) | |
Cash, cash equivalents and restricted cash at the beginning of the year | 1,892 | 297 | 361 | 695 | |
Cash, cash equivalents and restricted cash at the end of the year | ¥ 581 | $ 91 | ¥ 1,892 | ¥ 361 |
SCHEDULE II VALUATION AND QUA_2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for doubtful accounts of accounts receivables and other receivables: | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | ¥ 87 | ¥ 22 | ¥ 17 |
Charge to Costs and Expenses | 105 | 65 | 21 |
Charge to Other Accounts | 7 | ||
Write off | (64) | (7) | (16) |
Balance at End of Year | 128 | 87 | 22 |
Valuation allowance for deferred tax assets | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Year | 369 | 152 | 107 |
Charge to Costs and Expenses | 151 | 249 | 79 |
Charge Taken Against Allowance | (37) | (32) | (24) |
Write off | (17) | (10) | |
Balance at End of Year | ¥ 466 | ¥ 369 | ¥ 152 |