Financial Services Association, March 21 (Reporter Xu Cihao) Huazhu Hotel successfully reversed losses in 2023.

According to financial data recently released by Huazhu, in 2023, Huazhu Group achieved annual revenue of 21.9 billion yuan, an increase of 57.9%; turnover reached 80.4 billion yuan, an increase of 62.1% year on year; net profit attributable to Huazhu Group Co., Ltd. was 4.1 billion yuan, turning a loss into a profit year on year. In 2022, Huazhu Group's net profit was a loss of 1.8 billion yuan. Financial reports revealed that as of December 31, 2023, the number of hotels reached 9,394, and Huazhu is expected to open about 1,800 new hotels in 2024.

Notably, in addition to continuing to expand domestically, Huazhu is still looking for new growth engines and said it will increase investment in overseas markets in 2024.

“In 2024, Huazhu Group will continue to promote overseas asset-light transformation and explore incremental opportunities in the Asia-Pacific and Middle East regions.” Jin Hui, CEO of Huazhu Group, revealed at a performance analysis conference today.

As of the midday close today (21st), Huazhu Group closed at HK$30.75, down 1.6%, with a market value of HK$98.023 billion.

Expansion and sinking markets are still the main themes

Looking at the split revenue structure, for the full year of 2023, Huazhu Direct Hotel's revenue contributed 13.8 billion yuan, a year-on-year increase of 50.8%; of these, the fourth quarter of 2023 was 3.5 billion yuan, an increase of 40.9% over the previous year. The annual revenue of Huazhu Franchise Hotels in 2023 was 7.7 billion yuan, up 74.7% year on year; of this, the fourth quarter of 2023 was 2 billion yuan, an increase of 74.1% year on year.

Looking at the subregions, Huazhu's domestic business contributed a major increase. Financial reports show that in 2023, Huazhu China's direct-run hotel revenue was 9.5 billion yuan, up 57.1% year on year; franchise hotel revenue was 7.6 billion yuan, up 75.7% year on year.

According to financial data, many of Huazhu Group's business indicators in 2023 also caught up with the same period in 2019. According to financial reports, the average daily housing price of Huazhu China in 2023 was 299 yuan, an increase of 27.4% compared with the same period in 2019; the occupancy rate reached 81.1%.

Driven by high occupancy rates, Huazhu China RevPar (revenue per available room) also showed a good recovery trend during the same period. Since February 2023, Huazhu China's monthly RevPAR recovery rate has remained above 115% compared to 2019, and recovered to 122% of 2019 throughout the year.

However, when asked about the forecast for RevPAR (average rentable room revenue) for the full year of 2024, Jin Hui said that since last year, RevPAR has benefited from the resumption of growth in domestic tourism and leisure, but the recovery of business travel has continued to grow slowly. Currently, the travel and leisure market is growing strongly in the first quarter, but based on the high base of 2023 RevPAR, expectations for 2024 RevPAR are more cautious, and expectations are the same as last year or slightly higher.

As can be seen from financial reports, Huazhu Group's focus is still on budget and mid-range hotels.

Financial reports show that by the end of 2023, Huazhu Group operated 9394 hotels and 912,444 guest rooms in 18 countries. Among them, Huazhu China has 9263 active hotels, 1,641 new stores opened in 2023, and the number of hotels to be opened is 3,061, all of which have reached record highs. Of the operating hotels, 92% are budget and mid-range brands, 85% of the hotels to be opened are budget and mid-range brands, and 90% of the new stores to be opened in 2023 are budget and mid-range brands.

As for high-end brands, as of the fourth quarter of 2023, Huazhu China had 645 mid-range and high-end hotels in operation, up 23% year on year, up 7% month on month; the number of hotels to be opened reached 386, up 34% year on year, up 8% month on month. The total number of hotels to be opened in Yingjia was 1,031.

At the performance conference, Jin Hui believes that Huazhu's success in recent years is mainly due to seizing three major opportunities, namely the dividends of leading chains, which have become the leading brand in many segmented racetracks; the second is exploring sinking market opportunities and the middle and high-end layout of structured consumption such as travel.

Meanwhile, Jin Hui said that in 2024, Huazhu Group will continue to use the Iron Triangle brand as a starting point to further penetrate low-tier cities and empty markets, while taking into account the medium and high-end hotel market with a multi-brand strategy.

The search for a new engine will explore opportunities in the Middle East

Judging from the information revealed at the performance meeting, Huazhu Group will increase overseas markets in 2024.

According to Jin Hui at the performance analysis conference, in 2024, Huazhu Group will continue to promote overseas asset-light transformation, continue to focus on reducing costs and increasing efficiency, strengthen direct sales through the Huazhu Club global membership entitlement system, and explore incremental opportunities in the Asia-Pacific and Middle East regions.

In fact, Huazhu Group began to market overseas as early as 2019. In the same year, Hua stayed at the first overseas all-season hotel, the Ji Hotel Orchard Singapore (Ji Hotel Orchard Singapore), opened.

In January 2020, Huazhu Group completed the wholly-owned acquisition of Deutsche Hotels Group (DH). Three and a half years later, in July 2023, Huazhu Group appointed Oliver Bonke, CEO of its subsidiary Deutsche Hotels Group, as CEO of Huazhu International. At the same time, Huazhu Group also appointed Choon Wah Wong as the managing director of Deutsche Hotels and senior vice president of Huazhu International Finance. It can be seen that before, Huazhu Group had already prepared the layout of overseas business in advance through personnel appointments.

On February 29 this year, the German Hotel Group (DH), a subsidiary of Huazhu Group, changed its name to Huazhu International to promote Huazhu Group's growth in markets outside of China. Currently, Huazhu International's business has spread across Europe, the Middle East, India, Africa, and the Asia-Pacific region.

A reporter from New Consumer Daily learned that Huazhu Group recently signed five new projects. Among them, Huazhu International recently signed an agreement with Thailand's Tantakitt Co., Ltd., to jointly open Thailand's first Steigenberger Hotel in Surawongmeng, Bangkok; at the same time, they also signed an agreement to build a new Steigenberger Bayum Lakeside Resort on the shores of Lake Karen in Egypt.

Takamatsu Yuan, head of the Asia Lodging Big Data Research Institute in China and founder of Space Exploration, told the New Consumer Daily reporter that from a global perspective, “going global” is an inevitable trend when local hotels in China develop to a certain extent. Compared to hotels that went overseas more than 10 years ago, most of today's local hotel brands already have sufficient brand establishment and popularity in China, and have also tried many things in terms of service and operation, and are getting closer to international trends. This has laid a certain foundation for the brand to go overseas.

Takamatsu Hajime also pointed out that internationally, there are many high-end hotel brands with a long history and their own characteristics. If you want to get into this circle, you still have to show strength to compete. As for high-end hotels, Huazhu has always been working, but at present, there is still a long way to go.