Huazhu Announces Income Decline, Stock Tumbles in Pre-market
Shares in Huazhu dropped 7 percent in pre-market trading Thursday, to $31.82 apiece, after the company posted lower-than-expected income for the first quarter.
Huazhu Group Ltd. (NYSE: HTHT) reported lower-than-expected income in the first quarter, sending its stock 7 percent lower in pre-market trading Thursday, to $31.84 per American depositary share.
The Shanghai-based hotel operator said in a statement after markets closed Wednesday that its revenue in the three months through March grew 14 percent year-over-year, to $356 million.
The company also reported net income of $16 million, compared with income of $18.7 million in the first quarter of 2018. Earnings per share were 6 cents.
As of Mar. 31, Huazhu had 4,396 hotels in operation, having opened an additional 226 hotels during the first quarter.
"Our mid- and up-scale room count increased by 45% year-over-year, accounting for approximately 40% in total rooms in operation. With 82% of our pipeline hotel rooms under the mid- and upscale brands, revenue contribution from this segment will continue to increase," Huazhu's chief executive officer, Jenny Zhang, said.
Looking forward, Zhang said, "We will continue to invest in our brands, hotel developments and IT capabilities. We believe these investments will strengthen our positions in the market and fuel our continuing future growth."
The company said it expects revenue increase of between 13 and 15 percent year-over-year in the second quarter of this year. Huazhu said it plans to open between 800 to 1,200 hotels this year, and hotel closure to 200 to 250 in 2019.