Huazhu Group Limited Reports Fourth Quarter and Full Year 2019 Financial Results

March 26, 2020

A total of 5,618 hotels or 536,876 hotel rooms in operation as of December 31, 2019.
Hotel turnover1 increased 21% year-over-year to RMB9 billion for the fourth quarter, and increased 19% to RMB35 billion
for the full year of 2019.
Net revenues increased 8.5% year-over-year to RMB2.9 billion (US$418 million)2 for the fourth quarter, and increased
11.4% to RMB11.2 billion (US$1.6 billion) for the full year of 2019, in line with revenue guidance previously announced of
10% to 12%.
EBITDA (non-GAAP) for the fourth quarter of 2019 was RMB1.1 billion (US$152 million), compared with negative RMB46
million for the fourth quarter of 2018. EBITDA (non-GAAP) increased 56.5% to RMB3.6 billion (US$510 million) for the full
year of 2019.
Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities,
adjusted EBITDA (non-GAAP) for the fourth quarter increased 15.9% year-over-year to RMB854 million (US$122 million)
and increased 2.4% to RMB3.3 billion (US$481 million) for the full year of 2019.
Net income attributable to Huazhu Group Limited was RMB619 million (US$89 million) for the fourth quarter of 2019,
compared with net loss attributable to Huazhu Group Limited of RMB419 million in the fourth quarter of 2018 and net
income attributable to Huazhu Group Limited of RMB431 million in the previous quarter. Net income attributable to Huazhu
Group Limited increased 147.1% to RMB1.8 billion (US$254 million) for the full year of 2019.
Excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities,
adjusted net income (non-GAAP) for the fourth quarter of 2019 was RMB411 million (US$59 million), compared with
RMB364 million for the fourth quarter of 2018, and adjusted net income (non-GAAP) for the full year of 2019 was RMB1.6
billion (US$225 million), compared with RMB1.7 billion for the full year of 2018.
Huazhu completed the acquisition of Deutsche Hospitality on January 2, 2020.

SHANGHAI, China, March 26, 2020 (GLOBE NEWSWIRE) -- Huazhu Group Limited (NASDAQ: HTHT) (“Huazhu” or the “Company”), a leading and
fast-growing hotel group, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter of 2019 Operational Highlights

During the fourth quarter of 2019, Huazhu opened 630 hotels, including 11 leased (“leased-and-operated”) hotels and 619
manachised (“franchised-and-managed”) hotels and franchised hotels.

The Company closed a total of 163 hotels, which included 20 leased hotels and 143 manachised and franchised hotels,
during the fourth quarter of 2019. This was mainly due to three reasons:

a) With strategic focus to upgrade product and service quality, Huazhu temporarily closed 56 hotels for brand upgrade and
business model change purposes; and removed 42 hotels for non-compliance with Huazhu’s brand and operating
standards.

b) Property-related issues, including rezoning and expiry of leases, which resulted in the closure of 33 hotels.

c) 32 manachised hotels were closed due to operating losses.

The ADR, which is defined as the average daily rate for all hotels in operation, was RMB232 in the fourth quarter of 2019,
compared with RMB230 in the fourth quarter of 2018 and RMB245 in the previous quarter. The year-over-year increase of
0.9% was primarily due to an increase in the proportion of mid- and up-scale hotels with higher ADR in the Company’s
brand mix. The sequential decrease resulted mainly from seasonality.

The occupancy rate for all hotels in operation was 82.2% in the fourth quarter of 2019, compared with 85.2% in the fourth
quarter of 2018 and 87.7% in the previous quarter. The year-over-year decrease of 3.0 percentage point was due to the
soft macro economy and a dilutive impact from newly-opened hotels. The sequential decrease resulted mainly from
seasonality.
 Blended RevPAR, defined as revenue per available room for all hotels in operation, was RMB191 in the fourth quarter of
2019, compared with RMB196 in the fourth quarter of 2018 and RMB215 in the previous quarter. The year-over-year
decrease of 2.7% was mainly attributable to the soft macro economy. Excluding our soft brands (Hi Inn, Elan, Starway,
Madison and Grand Madison), the blended RevPAR for the fourth quarter of 2019 would have declined by 0.5%
year-over-year. The sequential decrease resulted mainly from seasonality.

For all hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB188 for the fourth
quarter of 2019, representing a 5.4% decrease from RMB199 for the fourth quarter of 2018, with a 2.7% decrease in ADR
and a 2.4-percentage-point decrease in occupancy rate. The year-over-year decrease was mainly due to macroeconomic
softness and more promotions.

Operational Highlights of full year 2019

For the full year of 2019, the company opened 43 leased hotels and 1,672 manachised hotels and franchised hotels, and
closed 54 leased hotels and 273 manachised and franchised hotels. As of December 31, 2019, the Company had 688
leased and owned hotels, 4,519 manachised hotels, and 411 franchised hotels in operation in 437 cities in China and
Singapore. The number of hotel rooms in operation totaled 536,876, an increase of 27.0% from a year ago.

As of December 31, 2019, the Company had a total number of 2,262 hotels contracted or under construction, including 43
leased hotels and 2,219 manachised and franchised hotels. The pipeline represented 40% of the number of hotels in
operation as the end of 2019.

For the full year of 2019, the ADR for all hotels in operation was RMB234, increasing 3.6% year-over-year from RMB226 in
2018. The occupancy rate for all hotels in operation was 84.4%, compared with 87.3% in 2018. As a result, the blended
RevPAR for all hotels in operation was RMB198 in 2019, a 0.1% increase from RMB197 in 2018. Excluding our soft
brands, the blended RevPAR for 2019 would have increased by 0.8% year-over-year.

The same-hotel RevPAR was RMB194 in 2019, a 3.1% decrease from RMB201 in 2018, with a 0.3% decrease in ADR
and a 2.5-percentage-point decrease in occupancy rate. In 2019, the economy hotels and the midscale and upscale hotels
posted decreases of 3.0% and 3.2% in same-hotel RevPAR, respectively.

As of December 31, 2019, H Rewards (Huazhu’s loyalty program) had approximately 153 million members, who
contributed approximately 76% of room nights sold during the full year of 2019 and approximately 85% of room nights
were sold through the Company’s own direct channels.

Ji Qi, founder, Executive Chairman and CEO of Huazhu commented: “We concluded 2019 with strong hotel openings and pipeline against a
challenging macroeconomic background. Thanks to our dedicated employees, our powerful brand portfolio and solid execution, we have further
expanded our market share and achieved remarkable operational results.”

“Looking into 2020, the COVID-19 outbreak has been a major public health emergency in China and worldwide. Our top priority is the health and
safety of our employees and customers, and the operational sustainability of our hotels. Since the start of the outbreak in China, we have set up a
crisis task force comprised of a centralized command center, supported by 18 regional sub-command centers. This task force communicates on a
daily basis to mobilize all available resources and co-ordinate efforts from all parties from within and outside the Huazhu network. The objectives are to
keep our employees and customers safe, keep providing emergency supplies to all our hotels, and to keep our hotels open to our customers. In
addition, we are leveraging our internal information platform, a work app called H-Tone™, to communicate and organize our collaborative efforts so
that our employees and franchisees have timely access to critical information at their fingertips. Now, we have moved to the initial recovery stage and
are seeing gradual improvements in our hotel operations. Thanks to our well-established operational platform and multi-channel online and offline
sales efforts, we maintain our leading position and outperformed our peers in the hotel industry.”

“Despite this temporary challenge and disruption to our business, as the industry leader, we remain confident about the long-term growth potential of
China’s lodging industry and we will capture this opportunity to further consolidate the hotel industry. Huazhu will focus on our product qualities,
innovative technology applications and organizational capabilities, and will strive to become a world-class hotel network.” Mr. Ji added.

Fourth Quarter and Full Year of 2019 Financial Results

(RMB in millions) Q4 2018 Q3 2019 Q4 2019 2018FY 2019FY

Revenues:
Leased and owned hotels 1,942 2,089 1,921 7,470 7,718
Manachised and franchised hotels 703 939 938 2,527 3,342
Others 38 27 51 66 152
Net revenues 2,683 3,055 2,910 10,063 11,212

Net revenues for the fourth quarter of 2019 were RMB2.9 billion (US$418 million), representing an 8.5% year-over-year increase and a 4.7%
sequential decrease. The year-over-year increase was primarily attributable to our hotel network expansion; the sequential decrease was due to
seasonality.
Net revenues for the full year of 2019 were RMB11.2 billion (US$1.6 billion), representing an increase of 11.4% from the full year of 2018.

Net revenues from leased and owned hotels for the fourth quarter of 2019 were RMB1.9 billion (US$276 million), representing a 1.1%
year-over-year decrease and an 8.0% sequential decrease. The year-over-year decrease was mainly due to the decrease in RevPAR mainly caused
by macroeconomic softness and the decrease in number of hotels in operation mainly caused by temporary hotel closures as product and brand
upgrades were implemented.

For the full year of 2019, net revenues from leased and owned hotels were RMB7.7 billion (US$1.1 billion), representing a 3.3% year-over-year
increase.

Net revenues from manachised and franchised hotels for the fourth quarter of 2019 were RMB938 million (US$135 million), representing a 33.4%
year-over-year increase and a 0.1% sequential decrease.

For the full year of 2019, net revenues from manachised and franchised hotels were RMB3.3 billion (US$480 million), representing a 32.3%
year-over-year increase. These hotels accounted for 29.8% of net revenues, compared to 25.1% of net revenues for the full year of 2018.

Other revenues represent revenues generated from businesses other than the hotel operation, which mainly include revenues from the provision of IT
products and services to hotels and revenues from Huazhu Mall™, totalingRMB51 million (US$7 million) in the fourth quarter of 2019, compared to
RMB38 million in the fourth quarter of 2018 and RMB27 million in the previous quarter.

For the full year of 2019, other revenues were RMB152 million (US$22 million), compared to RMB66 million in 2018.

(RMB in millions) Q4 2018 Q3 2019 Q4 2019 2018FY 2019FY

Operating costs and expenses:
Hotel operating costs 1,737 1,834 1,879 6,476 7,190
Other operating costs 8 11 21 15 57
Selling and marketing expenses 108 113 134 348 426
General and administrative expenses 269 277 330 851 1,061
Pre-opening expenses 54 126 149 255 502
Total operating costs and expenses 2,176 2,361 2,513 7,945 9,236

Hotel operating costs for the fourth quarter of 2019 were RMB1.9 billion (US$270 million), compared to RMB1.7 billion in the fourth quarter of 2018
and RMB1.8 billion in the previous quarter, representing an 8.2% year-over-year increase and a 2.5% sequential increase. Total hotel operating costs
excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2019 were RMB1.9 billion (US$269 million), representing 64.4%
of net revenues, compared to 64.4% for the fourth quarter in 2018 and 59.7% for the previous quarter. The sequential increase in the percentage was
mainly due to seasonality.

For the full year of 2019, hotel operating costs were RMB7.2 billion (US$1.0 billion), compared to RMB6.5 billion in 2018. Excluding share-based
compensation, hotel operating costs (non-GAAP) were RMB7.2 billion (US$1.0 billion), representing 63.8% of net revenues, compared to 64.1% in
2018.

Selling and marketing expenses for the fourth quarter of 2019 were RMB134 million (US$19 million), compared to RMB108 million in the fourth
quarter of 2018 and RMB113 million in the previous quarter. Selling and marketing expenses excluding share-based compensation expenses
(non-GAAP) for the fourth quarter of 2019 were RMB133 million (US$19 million), or 4.6% of net revenues, compared to 4.0% for the fourth quarter of
2018 and 3.7% for the previous quarter. The year-over-year increase was mainly due to the expansion of our sales and marketing team to strengthen
our direct sales channels at hotel and regional level, increased bank charges for online payments, and higher commission fees to online travel
agencies.

For the full year of 2019, selling and marketing expenses were RMB426 million (US$61 million), compared to RMB348 million in 2018. Selling and
marketing expenses excluding share-based compensation expenses (non-GAAP) were RMB423 million (US$61 million), representing 3.8% of net
revenues, compared to 3.5% in 2018. The higher selling and marketing expenses as percentage of net revenues were due to reasons mentioned
above.

General and administrative expenses for the fourth quarter of 2019 were RMB330 million (US$47 million), compared to RMB269 million in the fourth
quarter of 2018 and RMB277 million in the previous quarter. General and administrative expenses excluding share-based compensation expenses
(non-GAAP) for the fourth quarter of 2019 were RMB316 million (US$45 million), representing 10.8% of net revenues, compared with 9.3% in the
fourth quarter of 2018 and 8.4% in the previous quarter. The year-over-year increase was mainly due to one-time acquisition-related costs for the
Deutsche Hospitality acquisition of RMB66 million in the fourth quarter of 2019.

For the full year of 2019, general and administrative expenses were RMB1.1 billion (US$152 million), compared to RMB851 million in 2018. General
and administrative expenses excluding share-based compensation expenses (non-GAAP) were RMB989 million (US$142 million), representing 8.9%
of net revenues, compared to 8.0% in 2018. The year-over-year increase was mainly due to our investments to expand our hotel development teams,
upscale-brand hotels and IT capabilities and one-time acquisition-related costs for the Deutsche Hospitality acquisition.

Pre-opening expenses for the fourth quarter of 2019 were RMB149 million (US$22 million), representing a 175.9% year-over-year increase and an
18.3% sequential increase.

Pre-opening expenses for the full year of 2019 were RMB502 million (US$72 million), compared to RMB255 million in 2018, representing a
year-over-year increase of 96.9%. The increase in pre-opening expenses was mainly attributable to the construction of upscale-brand flag-ship hotels
in 2019. Pre-opening expenses as a percentage of net revenues were 4.5% in 2019, compared to 2.5% in 2018.

Other operating income, net for the fourth quarter of 2019 was RMB89 million (US$13 million) mainly related to subsidy income, compared to
RMB85 million in the fourth quarter of 2018 and RMB9 million in the previous quarter.
Other operating income, net for the full year of 2019 was RMB132 million (US$19 million), compared to RMB226 million in 2018. The year-over-year
decrease was mainly attributable to one-time (i) the compensation of RMB35 million received from the selling shareholders of Crystal Orange as the
final settlement of the sales and purchase transaction and (ii) the variance as a result of a one-off lease related compensation receipt of RMB75 million
in 2018, and a one-off lease related compensation payment of RMB24 million in 2019，and (iii) partially offset by an increase in subsidies income
received related to taxes paid.

Income from operations for the fourth quarter of 2019 was RMB486 million (US$70 million), compared to RMB592 million in the fourth quarter of
2018 and RMB703 million in the previous quarter. Excluding share-based compensation expenses, adjusted income from operations (non-GAAP) for
the fourth quarter of 2019 was RMB508 million (US$73 million), compared to RMB619 million for the fourth quarter of 2018 and RMB734 million for the
previous quarter. Adjusted operating margin, defined as adjusted income from operations (non-GAAP) as percentage of net revenues, for the fourth
quarter of 2019 was 17.4%, compared with 23.1% in the fourth quarter of 2018 and 24.0% in the previous quarter. The year-over-year decrease in
adjusted operating margin was mainly due to our investments to accelerate our network expansion, acquisition-related costs for the Deutsche
Hospitality acquisition as well as pre-opening expenses for our upscale brands.

Income from operations for the full year of 2019 was RMB2.1 billion (US$304 million), compared to RMB2.3 billion in 2018. Excluding share-based
compensation expenses, adjusted income from operations (non-GAAP) for the full year of 2019 was RMB2.2 billion (US$319 million), compared to
RMB2.4 billion for the full year of 2018. The adjusted operating margin (non-GAAP) for the year of 2019 was 19.8%, compared with 24.1% for the full
year of 2018. The decrease of the adjusted operating margin was mainly attributable to our investments to accelerate our network expansion,
acquisition-related costs for the Deutsche Hospitality acquisition as well as pre-opening expenses for our upscale brands.

Other income, net for the fourth quarter of 2019 was RMB45 million (US$6 million), compared to RMB1 million for the fourth quarter of 2018 and
RMB86 million for the previous quarter.

Other income, net for the full year of 2019 was RMB331 million (US$48 million), compared to RMB203 million in 2018. The increase was mainly due to
higher gains realized from our sales of some equity securities in 2019.

Unrealized gains from fair value changes of equity securities for the fourth quarter of 2019 was RMB230 million (US$33 million), compared to
unrealized losses from fair value changes of equity securities of RMB756 million in the fourth quarter of 2018 and unrealized gains from fair value
changes of equity securities of RMB28 million in the previous quarter.

For the full year of 2019, unrealized gains from fair value changes of equity securities was RMB316 million (US$44 million), compared to unrealized
losses from fair value changes of equity securities of RMB914 million in 2018. Unrealized gains (losses) from fair value changes of equity securities
mainly represents the unrealized gains (losses) from our investment in equity securities with readily determinable fair values, such as AccorHotels.

Income tax expense for the fourth quarter of 2019 was RMB133 million (US$19 million), compared to RMB106 million in the same period of 2018 and
RMB191 million in the previous quarter. For the full year of 2019, income tax expense was RMB640 million (US$92 million), compared to RMB569
million in 2018.The change in our effective tax rate primarily reflected certain non-taxable loss of the fair value changes in equity securities
investments.

Net income attributable to Huazhu Group Limited for the fourth quarter of 2019 was RMB619 million (US$89 million), compared to a net loss
attributable to Huazhu Group Limited of RMB419 million in the fourth quarter of 2018 and net income attributable to Huazhu Group Limited of RMB431
million in the previous quarter. Excluding share-based compensation expenses and the unrealized gains (losses) from fair value changes of equity
securities, adjusted net income attributable to Huazhu Group Limited (non-GAAP) for the fourth quarter of 2019 was RMB411 million (US$59 million),
representing a 12.9% year-over-year increase and a 5.3% sequential decrease.

Net income attributable to Huazhu Group Limited for the full year of 2019 increased 147.1% to RMB1.8 billion (US$254 million). Excluding
share-based compensation expenses and the unrealized gains (losses) from fair value changes of equity securities, adjusted net income attributable
to Huazhu Group Limited (non-GAAP) for the full year of 2019 was RMB1.6 billion (US$225 million), compared to RMB1.7 billion in 2018. The
decrease of 8.8% was mainly attributable to our investments to accelerate our network expansion, acquisition-related costs for the Deutsche
Hospitality acquisition as well as pre-opening expenses for our upscale brands.

Basic and diluted earnings per share/ADS. For the fourth quarter of 2019, basic earnings per share were RMB2.17 (US$0.31), and diluted earnings
per share were RMB2.07 (US$0.30). For the fourth quarter of 2019, excluding share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities, adjusted basic earnings per share (non-GAAP) were RMB1.44 (US$0.21) and adjusted diluted earnings
per share (non-GAAP) were RMB1.38 (US$0.20).

For the full year of 2019, basic earnings per share were RMB6.22 (US$0.89) and diluted earnings per share were RMB5.94 (US$0.85). For the full
year of 2019, excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities, adjusted
basic earnings per share (non-GAAP) were RMB5.50 (US$0.79), while adjusted diluted earnings per share (non-GAAP) were RMB5.27 (US$0.76).

EBITDA (non-GAAP) for the fourth quarter of 2019 was RMB1.1 billion (US$152 million), compared with EBITDA (non-GAAP) of negative RMB46
million in the fourth quarter of 2018 and positive RMB898 million in the previous quarter. Excluding share-based compensation expenses and
unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) for the fourth quarter of 2019 was RMB854
million (US$122 million), representing a 15.9% year-over-year increase and a 5.2% sequential decrease.

EBITDA (non-GAAP) for the full year of 2019 increased 56.5% to RMB3.6 billion (US$510 million). Excluding share-based compensation expenses
and unrealized gains (losses) from fair value changes of equity securities, adjusted EBITDA (non-GAAP) for the full year of 2019 was RMB3.35 billion
(US$481 million), compared with RMB3.27 billion in 2018, representing a 2.4% year-over-year increase. The year-over-year increase was mainly due
to the expansion of the Company’s hotel network, and the higher proportion of manachised and franchised hotels. Adjusted EBITDA margin
(non-GAAP) for the year of 2019 was 29.9%, compared with 32.5% for the full year of 2018.

Cash flow. Operating cash inflow for the fourth quarter of 2019 was RMB979 million (US$140 million). Investing cash inflow for the fourth quarter was
RMB635 million (US$91 million). Financing cash inflow for the fourth quarter of 2019 was RMB7.9 billion (US$1.1 billion).

Operating cash inflow for the full year of 2019 was RMB3.3 billion (US$473 million), representing an increase of 8.0% from 2018. Investing cash
outflow for the full year of 2019 was RMB285 million (US$41 million), compared to RMB6.3 billion in 2018. Financing cash inflow for the full year of
2019 was RMB6.0 billion (US$868 million), compared to RMB4.2 billion in 2018.

Cash and cash equivalents and Restricted cash. As of December 31, 2019, the Company had a total balance of cash and cash equivalents of
RMB3.2 billion (US$465 million and restricted cash of RMB10.8 billion (US$1.5 billion). The restricted cash balance mainly comprised of cash
reserved for the acquisition of Deutsche Hospitality totaling approximately US$800 million, cash reserved for the refinancing of syndication loan
US$500 million, and US$220 million of cash pledged for certain bank borrowings.

Debt financing. As of December 31, 2019, the Company had a total loan balance of RMB16.6 billion (US$2.4 billion) and the unutilized credit facility
available to the Company was RMB1.7 billion. The short-term debt of RMB8.5 billion (US$1.2 billion) at December 31, 2019 mainly comprised of (1)
syndication loan US$500 million, (2) convertible note of US$472 million, (3) fully cash-backed bank debt of US$220 million, and (4) short-term portion
of long-term bank debts totaling US$28 million. The syndication loan of US$500 million had been refinanced by a new syndication bank loan due in
December 2022. We classified the convertible notes of US$472 million as short-term debt because the convertible note holders have a right to put the
convertible notes back to the Company in November, 2020. At any time prior to the close of business on the second scheduled trading day
immediately preceding the maturity date of the convertible notes (i.e., November 1, 2022), the convertible note holders have a right to convert the
notes into the Company’s ADSs at a predetermined conversion rate, or be repaid with the principal amount of the remaining notes on the maturity
date. Up to March 26, 2020, the unutilized credit facility available to the Company was RMB2.1 billion.

Completion of the Deutsche Hospitality Acquisition and Related Credit Activity

On January 2, 2020, Huazhu closed the Deutsche Hospitality acquisition. As of December 31, 2019, Deutsche Hospitality had 119 hotels or 23,353
rooms, and 39 unopened hotels in 20 countries.

In connection with the Deutsche Hospitality acquisition, China Lodging Holdings (HK) Limited, a subsidiary of the Company, has signed a EUR440
million term facility and US$500 million revolving credit facility agreement for a term of 3 years with a bank consortium led by JPMorgan Chase Bank,
N.A., acting through its Hong Kong Branch, Deutsche Bank AG, Singapore Branch and Morgan Stanley Senior Funding, Inc. The EUR440 million term
facility was to fund the payment of all amounts payable under or in connection with the acquisition. The US$500 million revolving credit facility due in
December 2022 was used to refinance the outstanding principal amount under the credit facilities the Company entered into in May 2017 in connection
with the Company’s acquisition of Crystal Orange Hotel Holdings Limited, which was due in May 2020.

COVID-19 outbreak: response and impact

Since the COVID-19 outbreak in January 2020, we have taken various preventative measures, such as intelligent non-contact services, across our
hotels to help protect our employees and customers. In addition to timely delivery of needed hotel supplies that were coordinated and managed by
Huazhu’s centralized procurement team, we have also offered temporary franchise fee reductions and have helped our franchisees to obtain lower-
interest bank loans to help meet their short-term working capital needs. We are working diligently to keep all of our hotels in operation as long as we
are allowed to keep them open.

The Chinese government has implemented strict nationwide containment measures against COVID-19, including but not limited to travel restrictions,
lock-down of certain cities, hotel closures, etc. Such containment measures negatively affected our hotels’ occupancy and revenue. We have taken
certain cost and cash flow mitigation measures to counter the negative impact of the lower revenue:

1. Discussion with our leased hotel landlords for rent reduction and deferment;
2. Reduced or eliminated our discretionary spending including marketing, non-essential training, and capital expenditures;
3. Frozen new recruitments, streamlined our head office, and placed a number of our hotel teams on a temporary furlough
and/or reduced workdays to adjust for the lower hotel occupancy.

The Chinese government also announced a number of relief measures to Chinese companies, including but not limited to encouraged rental waiver,
reduction and delayed payment of social insurance and taxes, continued support from financial institutions, etc. These measures will partially offset the
impact of our revenue loss.

It is possible that closure of our hotels and lower occupancy during this period, as a result of the Chinese government containment measures
mentioned above, may amount to a technical event of default under our banking arrangements. We are currently working with all relevant parties to
seek waivers wherever this is required. Since the outbreak, we have also received further support from our banks in the form of additional banking
facilities and lower interest rates.

Due to the Chinese government’s effective containment measures of COVID-19 and our employees’ great efforts during this period, we have observed
an initial recovery in our hotel operations since early March. We believe we have been through the lowest point when nearly 50% of our hotels in China
were required to close temporarily and occupancy rate dropped sharply to about 10% during the Chinese New Year holiday. As of March 26, 2020,
93.5% of our hotels have resumed operations with an occupancy rate 62% and continue to improve.

Since early March 2020, Deutsche Hospitality hotel operations have also been affected from the wider spread of COVID-19 in Europe. In order to
contain the spread of COVID-19, the local governments ordered a number of our hotels to be closed.

The German government announced certain relief measures including the contribution by the German government to salary costs of our furloughed
employees, the details of which are still being worked through. These government assistance measures should help lessen the negative effects of
these closures.

We have initiated a series of cost and cash flow mitigation measures such as reduction in discretionary expenses, headcount freeze, reduction and
deferment of capital expenditures, and rental payments, etc., to counter the impact due to hotel closures. We have also reached out to our banks for
additional bank facilities to support our operations in Europe during this period.

Guidance
Due to the impact of COVID-19, Huazhu now anticipates the gross opening of 1,600-1,800 hotels in 2020. In 2020, Huazhu is expected to close
350-450 hotels, including planned closure of 300-350 hotels and special closure of 50-100 hotels impacted by COVID-19.
In the first quarter of 2020, Huazhu expects net revenues to decline 15% to 20% year-over-year or 45% to 50% if excluding the addition of Deutsche
Hospitality. Given the uncertainties amid the mix of recovery in China and wider spread of COVID-19 outside of China, we are not able to provide
meaningful revenue guidance for the full year 2020 at this time. We will continue to closely monitor these developments and provide more updates
when possible.

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

Conference Call
Huazhu’s management will host a conference call at 9 p.m. ET, Thursday, March 26, 2020 (or 9 a.m. on Friday, March 27, 2020 in the Shanghai/Hong
Kong time zone) following the announcement. To participate in the event by telephone, please dial +1 (845) 675 0437 (for callers in the US), +86 400
620 8038 (for callers in China Mainland), +852 3018 6771 (for callers in Hong Kong) or +65 6713 5090 (for callers outside of the US, China Mainland,
and Hong Kong) and enter pass code 7678106. Please dial in approximately 10 minutes before the scheduled time of the call.

A recording of the conference call will be available after the conclusion of the conference call through April 3, 2020. Please dial +1 (855) 452 5696 (for
callers in the US) or +61 2 8199 0299 (for callers outside the US) and entering pass code 7678106.

The conference call will also be webcast live over the Internet and can be accessed by all interested parties at the Company’s Web site,
http://ir.huazhu.com.

Use of Non-GAAP Financial Measures

To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses the following
non-GAAP measures defined as non-GAAP financial measures by the SEC: hotel operating costs excluding share-based compensation expenses;
general and administrative expenses excluding share-based compensation expenses; selling and marketing expenses excluding share-based
compensation expenses; adjusted income from operations excluding share-based compensation expenses; adjusted net income attributable to
Huazhu Group Limited excluding share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities;
adjusted basic and diluted earnings per share/ADS excluding share-based compensation expenses and unrealized gains (losses) from fair value
changes of equity securities; EBITDA; and adjusted EBITDA excluding share-based compensation expenses and unrealized gains (losses) from fair
value changes of equity securities. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial
measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this release. The Company believes
that these non-GAAP financial measures provide meaningful supplemental information regarding Company performance by excluding share-based
compensation expenses and unrealized gains (losses) from fair value changes of equity securities that may not be indicative of Company operating
performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing
Company performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal
comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are also useful to investors in
allowing for greater transparency with respect to supplemental information used regularly by Company management in financial and operational
decision-making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses and unrealized gains (losses)
from fair value changes of equity securities is that share-based compensation expenses and unrealized gains (losses) from fair value changes of
equity securities have been and will continue to be significant and recurring in the Company’s business. Management compensates for these
limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have
more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and
financing transactions and income taxes, given the significant investments that the Company has made in leasehold improvements, depreciation and
amortization expense that comprise a significant portion of the Company’s cost structure. In addition, the Company believes that EBITDA is widely
used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that
EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense
attributable to capital expenditures. The Company also uses adjusted EBITDA, which is defined as EBITDA before share-based compensation
expenses and unrealized gains (losses) from fair value changes of equity securities, to assess operating results of the hotels in operation. The
Company believes that the exclusion of share-based compensation expenses and unrealized gains (losses) from fair value changes of equity
securities helps facilitate year-on-year comparison of the results of operations as the share-based compensation expenses and unrealized gains
(losses) from fair value changes of equity securities may not be indicative of Company operating performance.

The Company believes that unrealized gains and losses from changes in fair value of equity securities are generally meaningless in understanding our
reported results or evaluating our economic performance of our businesses. These gains and losses have caused and will continue to cause
significant volatility in periodic earnings.

Therefore, the Company believes adjusted EBITDA more closely reflects the performance capability of hotels. The presentation of EBITDA and
adjusted EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered
to be outside the ordinary course of business.

The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets (including land
use rights), income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA.
Share-based compensation expenses and unrealized gains (losses) from fair value changes of equity securities have been and will be incurred and
are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. The
Company compensates for these limitations by providing the relevant disclosure of the depreciation and amortization, interest income, interest
expense, income tax expense, share-based compensation expenses, and unrealized gains (losses) from fair value changes of equity securities and
other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should
be considered when evaluating the performance of the Company.

The terms EBITDA and adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of net income,
operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial
performance, investors should not consider these data in isolation or as a substitute for the Company’s net income, operating income or any other
operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not be
comparable to EBITDA or adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate
EBITDA or adjusted EBITDA in the same manner as the Company does.

Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, to the consolidated statement of operations
information are included at the end of this press release.

About Huazhu Group Limited

Huazhu Group Limited is a leading hotel operator and franchisor. As of December 31, 2019, Huazhu operated 5,618 hotels with 536,876 rooms in
operation. Huazhu’s brands include Hi Inn, Elan Hotel, HanTing Hotel, HanTing Premium Hotel, JI Hotel, Starway Hotel, Orange Hotel Select, Crystal
Orange Hotel, Manxin Hotels & Resorts, Joya Hotel, and Blossom Hill Hotels & Resorts. Huazhu also has the rights as master franchisee for Mercure,
Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel, in the pan-China region. Huazhu completed the acquisition of
Deutsche Hospitality on January 2, 2020, further expanding our portfolio of brands to include Steigenberger Hotels & Resorts, Maxx by Steigenberger,
Jaz Hotel, Intercity Hotel and Zleep Hotel.

Huazhu’s business includes leased and owned, manachised and franchised models. Under the lease and ownership model, Huazhu directly operates
hotels typically located on leased or owned properties. Under the manachise model, Huazhu manages manachised hotels through the on-site hotel
managers Huazhu appoints and collects fees from franchisees. Under the franchise model, Huazhu provides training, reservations and support
services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers. Huazhu applies a consistent
standard and platform across all of its hotels. As of December 31, 2019, Huazhu operates 16 percent of its hotel rooms under lease and ownership
model, and 84 percent under manachise and franchise models.

For more information, please visit the Company’s website: http://ir.huazhu.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements
which involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy and expectations. Any
statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, which may be identified by
terminology such as “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project,” or
“continue,” the negative of such terms or other comparable terminology. Readers should not rely on forward-looking statements as predictions of future
events or results. Any or all of the Company’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions,
risks and uncertainties and other factors which could cause actual events or results to be materially different from those expressed or implied in the
forward-looking statements. In evaluating these statements, readers should consider various factors, including the anticipated growth strategies of the
Company, the future results of operations and financial condition of the Company, the economic conditions of China, the regulatory environment in
China, the Company’s ability to attract customers and leverage its brands, trends and competition in the lodging industry, the expected growth of
demand for lodging in China and other factors and risks outlined in the Company’s filings with the U.S. Securities and Exchange Commission,
including its annual report on Form 20-F and other filings. These factors may cause the Company’s actual results to differ materially from any forward-
looking statement. In addition, new factors emerge from time to time and it is not possible for the Company to predict all factors that may cause actual
results to differ materially from those contained in any forward-looking statements. Any projections in this release are based on limited information
currently available to the Company, which is subject to change. This release also contains statements or projections that are based upon information
available to the public, as well as other information from sources which the Company believes to be reliable, but it is not guaranteed by the Company
to be accurate, nor does the Company purport it to be complete. The Company disclaims any obligation to publicly update any forward-looking
statements to reflect events or circumstances after the date of this document, except as required by applicable law.

1 Hotel turnover refers to total transaction value of room and non-room revenues from Huazhu hotels (i.e., leased and operated, manachised and
franchised hotels).

2 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US$1.00=RMB6.9618 on December 31,
2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at http://www.federalreserve.gov/releases/h10/hist
/dat00_ch.htm.

---Financial Tables and Operational Data Follow—

Huazhu Group Limited

Unaudited Condensed Consolidated Balance Sheets

December 31,
December 31, 2019
2018
RMB RMB US$
(in millions)

ASSETS
Current assets:
Cash and cash equivalents 4,262 3,234 465
Restricted cash 622 10,765 1,546
Short-term investments 89 2,908 418
Accounts receivable, net 195 218 31
Loan receivables, net 94 193 28
Amounts due from related parties 176 182 26
Prepaid rent 955 - -
 Inventories 41 57 8
Other current assets 540 699 100
Total current assets 6,974 18,256 2,622

Property and equipment, net 5,018 5,854 841

Intangible assets, net 1,834 1,662 239
Operating lease right-of-use assets - 20,875 2,998
Land use rights, net 220 215 31
Long-term investments 6,152 1,929 277
Goodwill 2,630 2,657 382
Loan receivables, net 189 280 40
Other assets 471 707 102
Deferred tax assets 505 548 79
Total assets 23,993 52,983 7,611

LIABILITIES AND EQUITY

Current liabilities:
Short-term debt 948 8,499 1,220
Accounts payable 890 1,176 169
Amounts due to related parties 75 95 14
Salary and welfare payables 521 491 71
Deferred revenue 1,005 1,179 169
Operating lease liabilities, current - 3,082 443
Accrued expenses and other current liabilities 1,607 1,856 267
Dividends payable 658 678 97
Income tax payable 265 231 33
Total current liabilities 5,969 17,287 2,483

Long-term debt 8,812 8,084 1,161

Deferred rent 1,507 - -
Operating lease liabilities, noncurrent - 18,496 2,657
Deferred revenue 458 559 80
Other long-term liabilities 453 566 81
Deferred tax liabilities 475 491 71
Total liabilities 17,674 45,483 6,533

Equity:
Ordinary shares 0 0 0
Treasury shares (107) (107) (15)
Additional paid-in capital 3,713 3,834 551
Retained earnings 2,610 3,701 532
Accumulated other comprehensive income (loss) (42) (49) (7)
Total Huazhu Group Limited shareholders' equity 6,174 7,379 1,061
Noncontrolling interest 145 121 17
Total equity 6,319 7,500 1,078
Total liabilities and equity 23,993 52,983 7,611

Huazhu Group Limited

Unaudited Condensed Consolidated Statements of Comprehensive Income
Quarter Ended Year Ended
 December September December December December
31, 2018 30, 2019 31, 2019 31, 2018 31, 2019
RMB RMB RMB US$ RMB RMB US$
(in millions, except shares, per share and per ADS data)
Revenues:
Leased and owned hotels 1,942 2,089 1,921 276 7,470 7,718 1,109
Manachised and franchised
703 939 938 135 2,527 3,342 480
hotels
Others 38 27 51 7 66 152 22
Net revenues 2,683 3,055 2,910 418 10,063 11,212 1,611

Operating costs and expenses:

Hotel operating costs:
Rents (662) (664) (663) (95) (2,406) (2,624) (377)
Utilities (87) (105) (91) (13) (399) (404) (58)
Personnel costs (436) (466) (490) (70) (1,663) (1,854) (266)
Depreciation and
(223) (243) (257) (37) (869) (960) (138)
amortization
Consumables, food and
(179) (203) (215) (31) (673) (793) (114)
beverage
Others (150) (153) (163) (24) (466) (555) (80)
Total hotel operating costs (1,737) (1,834) (1,879) (270) (6,476) (7,190) (1,033)
Other operating costs (8) (11) (21) (3) (15) (57) (8)
Selling and marketing
(108) (113) (134) (19) (348) (426) (61)
expenses
General and administrative
(269) (277) (330) (47) (851) (1,061) (152)
expenses
Pre-opening expenses (54) (126) (149) (22) (255) (502) (72)
Total operating costs and
expenses (2,176) (2,361) (2,513) (361) (7,945) (9,236) (1,326)
Other operating income
(expense), net 85 9 89 13 226 132 19
Income from operations 592 703 486 70 2,344 2,108 304
Interest income 32 46 39 6 148 160 23
Interest expense (70) (72) (83) (12) (244) (315) (45)
Other (expense) income, net 1 86 45 6 203 331 48
Unrealized gains (losses) from
fair value changes of equity (756) 28 230 33 (914) 316 44
securities
Foreign exchange (loss) gain (42) (108) 69 10 (144) (35) (5)
Income (Loss) before income
(243) 683 786 113 1,393 2,565 369
taxes
Income tax expense (106) (191) (133) (19) (569) (640) (92)
Gain (Loss) from equity method
investments (64) (60) (28) (4) (97) (164) (24)
Net income (loss) (413) 432 625 90 727 1,761 253
Net (income) loss attributable to
noncontrolling interest (6) (1) (6) (1) (11) 8 1
Net income (loss) attributable to
Huazhu Group Limited (419) 431 619 89 716 1,769 254

Other comprehensive income

Foreign currency translation
adjustments, net of tax 20 (65) 29 4 (169) (7) (1)
Comprehensive income (loss) (393) 367 654 94 558 1,754 252
Comprehensive (income) loss
attributable to noncontrolling
interest (6) (1) (6) (1) (11) 8 1
Comprehensive income (loss)
attributable to Huazhu Group
Limited (399) 366 648 93 547 1,762 253

Earnings (Losses) per

share/ADS:
Basic (1.48) 1.51 2.17 0.31 2.54 6.22 0.89
Diluted (1.48) 1.45 2.07 0.30 2.49 5.94 0.85

Weighted average number of

shares used in computation:
Basic 282,500,261 284,657,577 285,256,343 285,256,343 281,717,485 284,305,138 284,305,138
Diluted 282,500,261 304,311,266 304,319,151 304,319,151 303,605,809 304,309,890 304,309,890

Huazhu Group Limited

Unaudited Condensed Consolidated Statements of Cash Flows

Quarter Ended Year Ended

December September December December December
31, 2018 30, 2019 31, 2019 31, 2018 31, 2019
RMB RMB RMB US$ RMB RMB US$
( in millions)
Operating activities:
Net (loss) income (413) 432 625 90 727 1,761 253
Adjustments to reconcile net income to net
cash provided by operating activities:
Share-based compensation 27 31 22 3 83 110 15
Depreciation and amortization,
236 257 273 39 919 1,019 146
and other
Loss (Income) from equity method
124 99 37 5 157 213 31
investments, net of dividends
Investment (income) loss 798 (6) (353) (51) 1,009 (477) (68)
Changes in operating assets and
(225) 20 387 56 58 482 69
liabilities
Other 27 174 (12) (2) 96 185 27
Net cash provided by operating activities 574 1,007 979 140 3,049 3,293 473

Investing activities:
Capital expenditures (312) (390) (459) (66) (1,195) (1,535) (221)
Acquisitions, net of cash received (27) (23) (160) (23) (497) (244) (35)
Purchase of long-term investments (366) (118) (63) (9) (4,960) (329) (47)
Proceeds from maturity/sale of long-term
4 533 1,281 184 177 2,002 288
investments
Loan advances (55) (131) (76) (11) (320) (541) (78)
Loan collections 21 148 92 13 433 347 50
Other 3 (8) 20 3 16 15 2
Net cash provided by (used in) investing activities (732) 11 635 91 (6,346) (285) (41)

Financing activities:
 Net proceeds from issuance of ordinary shares
1 2 4 1 14 14 2
upon exercise of options
Proceeds from debt 850 2 11,064 1,589 5,239 15,392 2,211
Repayment of debt (294) (605) (3,136) (450) (936) (8,682) (1,247)
Dividend paid - - - - - (658) (95)
Other (74) (37) (2) - (69) (21) (3)
Net cash provided by (used in) financing activities 483 (638) 7,930 1,140 4,248 6,045 868

Effect of exchange rate changes on cash, cash

equivalents and restricted cash 12 6 4 1 (23) 62 9
Net increase (decrease) in cash, cash equivalents
337 386 9,548 1,372 928 9,115 1,309
and restricted cash
Cash, cash equivalents and restricted cash at the
beginning of the period 4,547 4,065 4,451 639 3,956 4,884 702
Cash, cash equivalents and restricted cash at the
end of the period 4,884 4,451 13,999 2,011 4,884 13,999 2,011

Huazhu Group Limited

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended December 31, 2019

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
RMB RMB RMB
(in millions)
Hotel operating costs 1,879 64.6% 7 0.2% 1,872 64.4%
Other operating costs 21 0.7% - 0.0% 21 0.7%
Selling and marketing expenses 134 4.6% 1 0.0% 133 4.6%
General and administrative expenses 330 11.3% 14 0.5% 316 10.8%
Pre-opening expenses 149 5.1% - 0.0% 149 5.1%
Total operating costs and expenses 2,513 86.3% 22 0.7% 2,491 85.6%
Income from operations 486 16.7% 22 0.7% 508 17.4%

Quarter Ended December 31, 2019

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
US$ US$ US$
(in millions)
Hotel operating costs 270 64.6% 1 0.2% 269 64.4%
Other operating costs 3 0.7% - 0.0% 3 0.7%
Selling and marketing expenses 19 4.6% 0 0.0% 19 4.6%
General and administrative expenses 47 11.3% 2 0.5% 45 10.8%
Pre-opening expenses 22 5.1% - 0.0% 22 5.1%
Total operating costs and expenses 361 86.3% 3 0.7% 358 85.6%
Income from operations 70 16.7% 3 0.7% 73 17.4%

Quarter Ended September 30, 2019

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
RMB RMB RMB
(in millions)
Hotel operating costs 1,834 60.0% 10 0.3% 1,824 59.7%
Other operating costs 11 0.4% - 0.0% 11 0.4%
Selling and marketing expenses 113 3.7% 1 0.0% 112 3.7%
General and administrative expenses 277 9.1% 20 0.7% 257 8.4%
Pre-opening expenses 126 4.1% - 0.0% 126 4.1%
Total operating costs and expenses 2,361 77.3% 31 1.0% 2,330 76.3%
Income from operations 703 23.0% 31 1.0% 734 24.0%

Quarter Ended December 31, 2018

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
RMB RMB RMB
(in millions)
Hotel operating costs 1,737 64.7% 9 0.3% 1,728 64.4%
Other operating costs 8 0.3% - 0.0% 8 0.3%
Selling and marketing expenses 108 4.0% 1 0.0% 107 4.0%
General and administrative expenses 269 10.0% 17 0.7% 252 9.3%
Pre-opening expenses 54 2.0% - 0.0% 54 2.0%
Total operating costs and expenses 2,176 81.0% 27 1.0% 2,149 80.0%
Income from operations 592 22.1% 27 1.0% 619 23.1%

Year Ended December 31, 2019

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
RMB RMB RMB
(in millions)
Hotel operating costs 7,190 64.1% 35 0.3% 7,155 63.8%
Other operating costs 57 0.5% - 0.0% 57 0.5%
Selling and marketing expenses 426 3.8% 3 0.0% 423 3.8%
General and administrative expenses 1,061 9.5% 72 0.6% 989 8.9%
Pre-opening expenses 502 4.5% - 0.0% 502 4.5%
Total operating costs and expenses 9,236 82.4% 110 0.9% 9,126 81.5%
Income from operations 2,108 18.8% 110 1.0% 2,218 19.8%

Year Ended December 31, 2019

GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
US$ US$ US$
(in millions)
Hotel operating costs 1,033 64.1% 5 0.3% 1,028 63.8%
Other operating costs 8 0.5% - 0.0% 8 0.5%
Selling and marketing expenses 61 3.8% 0 0.0% 61 3.8%
General and administrative expenses 152 9.5% 10 0.6% 142 8.9%
Pre-opening expenses 72 4.5% - 0.0% 72 4.5%
Total operating costs and expenses 1,326 82.4% 15 0.9% 1,311 81.5%
Income from operations 304 18.8% 15 1.0% 319 19.8%
 Year Ended December 31, 2018
GAAP % of Net Share-based % of Net Non-GAAP % of Net
Result Revenues Compensation Revenues Result Revenues
RMB RMB RMB
(in millions)
Hotel operating costs 6,476 64.4% 27 0.3% 6,449 64.1%
Other operating costs 15 0.1% - 0.0% 15 0.1%
Selling and marketing expenses 348 3.5% 3 0.0% 345 3.5%
General and administrative expenses 851 8.5% 53 0.5% 798 8.0%
Pre-opening expenses 255 2.5% - 0.0% 255 2.5%
Total operating costs and expenses 7,945 79.0% 83 0.8% 7,862 78.2%
Income from operations 2,344 23.3% 83 0.8% 2,427 24.1%

Huazhu Group Limited

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended Year Ended

December September December December December
31, 2018 30, 2019 31, 2019 31, 2018 31, 2019
RMB RMB RMB US$ RMB RMB US$
(in millions, except shares, per share and per ADS data)
Net income (loss) attributable to
Huazhu Group Limited (GAAP) (419) 431 619 89 716 1,769 254
Share-based compensation
expenses 27 31 22 3 83 110 15
Unrealized (gains) losses from fair
value changes of equity securities 756 (28) (230) (33) 914 (316) (44)
Adjusted net income attributable
to Huazhu Group Limited
(non-GAAP) 364 434 411 59 1,713 1,563 225

Adjusted earnings (losses) per

share/ADS (non-GAAP)
Basic 1.29 1.52 1.44 0.21 6.08 5.50 0.79
Diluted 1.23 1.46 1.38 0.20 5.77 5.27 0.76

Weighted average number of

shares used in computation
Basic 282,500,261 284,657,577 285,256,343 285,256,343 281,717,485 284,305,138 284,305,138
Diluted 282,500,261 304,311,266 304,319,151 304,319,151 303,605,809 304,309,890 304,309,890

Quarter Ended Year Ended

December September December December December
31, 2018 30, 2019 31, 2019 31, 2018 31, 2019
RMB RMB RMB US$ RMB RMB US$
(in millions, except per share and per ADS data)
Net income (loss) attributable to
Huazhu Group Limited (GAAP) (419) 431 619 89 716 1,769 254
Interest income (32) (46) (39) (6) (148) (160) (23)
Interest expense 70 72 83 12 244 315 45
Income tax expense 106 191 133 19 569 640 92
Depreciation and amortization 229 250 266 38 891 991 142
EBITDA (non-GAAP) (46) 898 1,062 152 2,272 3,555 510
Share-based compensation 27 31 22 3 83 110 15
Unrealized (gains) losses from fair
value changes of equity securities 756 (28) (230) (33) 914 (316) (44)
Adjusted EBITDA (non-GAAP) 737 901 854 122 3,269 3,349 481

Huazhu Group Limited

Operational Data
As of
December 31, September 30, December 31,
2018 2019 2019
Total hotels in operation: 4,230 5,151 5,618
Leased and owned hotels 699 697 688
Manachised hotels 3,309 4,087 4,519
Franchised hotels 222 367 411
Total hotel rooms in operation 422,747 504,414 536,876
Leased and owned hotels 86,787 88,206 87,465
Manachised hotels 314,932 387,174 418,700
Franchised hotels 21,028 29,034 30,711
Number of cities 403 420 437

Operating Metrics

　 For the quarter ended 　

　 December 31, September 30, December 31, yoy
　 2018 2019 2019 change
Average daily room rate (in RMB) 　 　 　 　
Leased and owned hotels 275 288 277 0.9%
Manachised and franchised hotels 218 235 223 2.1%
Blended 230 245 232 0.9%
Occupancy rate (as a percentage) 　 　 　 　
Leased and owned hotels 86.7% 90.0% 84.7% -2.0pp
Manachised and franchised hotels 84.8% 87.2% 81.6% -3.1pp
Blended 85.2% 87.7% 82.2% -3.0pp
RevPAR (in RMB) 　 　 　 　
Leased and owned hotels 238 259 235 -1.4%
Manachised and franchised hotels 185 205 182 -1.7%
Blended 196 215 191 -2.7%(2)

(2) Excluding our soft brands (Hi Inn, Elan, Starway, Madison and Grand Madison), the blended RevPAR for 2019Q4 declined by 0.5% year-over-year.

For the full year ended

December 31, December 31, yoy
2018 2019 change
Average daily room rate (in RMB)
Leased and owned hotels 267 276 3.6%
Manachised and franchised hotels 214 224 4.6%
Blended 226 234 3.6%
Occupancy rate (as a percentage)
 Leased and owned hotels 89.0% 87.0% -2.0%
Manachised and franchised hotels 86.9% 83.8% -3.1%
Blended 87.3% 84.4% -3.0%
RevPAR (in RMB)
Leased and owned hotels 237 240 1.2%
Manachised and franchised hotels 186 188 0.8%
Blended 197 198 0.1%(3)

(3) Excluding our soft brands (Hi Inn, Elan, Starway, Madison and Grand Madison), the blended RevPAR for 2019 grew by 0.8%.

Business Update by Segment

As of December 31, 2019

Number of
Number of Hotels
　 Rooms
in Operation
in Operation
Economy hotels 3,485 　 290,615
HanTing Hotel 2,372 224,626
Hi Inn 465 28,153
Elan Hotel 648 37,836
Midscale and upscale hotels 2,133 　 246,261
HanTing Premium Hotel 214 19,748
Ibis Hotel 185 20,533
Ibis Styles Hotel 55 6,681
Starway Hotel 350 30,363
JI Hotel 831 104,521
Orange Select Hotel 248 28,821
Crystal Orange Hotel 85 11,182
Manxin Hotels & Resorts 46 4,133
Madison Hotel 9 883
Mercure Hotel 68 12,502
Novotel Hotel 9 2,928
Grand Madison Hotel 4 772
Joya Hotel 6 1,250
Blossom Hill Hotels & Resorts 17 648
Grand Mercure Hotel 6 1,296
Total 5,618 　 536,876

Same-hotel operational data by segment

Number of Same-hotel RevPAR Same-hotel ADR Same-hotel Occupancy
hotels
As of For the yoy For the yoy For the quarter yoy
quarter quarter ended
ended ended
December December change December change December 31,
31, 31, 31, change
2018 2019 2018 2019 2018 2019 2018 2019 (p.p.)
Economy hotels 2,467 2,467 165 155 -6.2% 183 179 -2.4% 90.0% 86.5% -3.5
Leased and owned hotels 409 409 180 172 -4.4% 200 198 -0.7% 90.2% 86.9% -3.3
Manachised and franchised
2,058 2,058 161 151 -6.7% 179 174 -2.9% 90.0% 86.4% -3.6
hotels
Midscale and upscale hotels 950 950 266 253 -4.7% 324 309 -4.4% 82.0% 81.8% -0.2
 Leased and owned hotels 199 199 330 309 -6.3% 389 366 -5.9% 84.8% 84.4% -0.3
Manachised and franchised
751 751 243 233 -4.1% 300 289 -3.8% 81.1% 80.9% -0.2
hotels
Total 3,417 3,417 199 188 -5.4% 228 222 -2.7% 87.3% 84.9% -2.4

Number of Same-hotel RevPAR Same-hotel ADR Same-hotel Occupancy

hotels
As of For the year yoy For the year yoy For the year yoy
ended ended ended
December December change December change December 31,
31, 31, 31, change
2018 2019 2018 2019 2018 2019 2018 2019 (p.p.)
Economy hotels 2,467 2,467 170 164 -3.0% 184 184 0.3% 92.2% 89.1% -3.1
Leased and owned hotels 409 409 183 182 -0.4% 198 202 1.7% 92.0% 90.0% -2.0
Manachised and franchised 92.2% 88.9%
2,058 2,058 166 160 -3.8% 180 180 -0.2% -3.3
hotels
Midscale and upscale hotels 950 950 269 261 -3.2% 323 317 -1.8% 83.4% 82.2% -1.2
Leased and owned hotels 199 199 332 317 -4.6% 385 374 -3.0% 86.3% 84.9% -1.4
Manachised and franchised 82.3% 81.2%
751 751 245 239 -2.5% 298 294 -1.2% -1.1
hotels
Total 3,417 3,417 201 194 -3.1% 224 224 -0.3% 89.5% 87.0% -2.5

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Email: ir@huazhu.com
http://ir.huazhu.com

Source: Huazhu Group Limited