FAST NEWS: Huazhu Loss Doubles in Q1, Sees Q2 Revenue Contraction

The latest: Hotel operator Huazhu Group Ltd. (HTHT.US, 1179.HK) reported its net loss widened by 154% to 630 million yuan ($94 million) in the first quarter from a year earlier, despite a 16.4% increase in hotel turnover to 9.5 billion yuan, according to its latest results published on Monday.

Looking up: The company’s own first-quarter revenue grew 15.2% to 2.68 billion yuan, slightly outperforming its previously announced guidance for 11% to 15% growth, mainly due to a 17.5% increase in leased and owned hotel revenue to 1.64 billion yuan.

Take Note: The wider loss owed mostly to a 307 million yuan loss for the company’s Leju-Huazhu segment, which owns 302 hotels, compared to a 53 million yuan net profit for that segment in the same period last year.

Digging Deeper: Huazhu’s management had previously expressed concern about the company’s performance in the first quarter as the Covid-19 omicron variant started spreading in China during that time. Although the company’s revenue still grew year-over-year during the quarter, the figure was down 20% from the 3.35 billion yuan in last year’s fourth quarter. Looking ahead, CEO Jin Hui estimated the company’s revenue will decline by 2% to 6% year-over-year in the second quarter as cities like Jilin and Shanghai remained under citywide lockdowns for extended periods during that time. He said the company will save costs by streamlining staff and expenses, focusing resources on key strategies and negotiating rent reductions.

Market Reaction: After opening slightly lower on Tuesday, Huazhu’s Hong Kong-listed shares moved steadily upward and closed ahead by 6.2% at HK$26.75 at the midday break. But the shares still trade at the lower end of their 52-week range.

Translation by Jony Ho

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