Huazhu Stock Continues Slide After Q2 Outlook

The Shanghai-based hotel operator reported a decline in the RevPAR for the second quarter.

Author: Belinda Zhou   

Huazhu Group Ltd. (NYSE: HTHT) announced its metrics for the second quarter with an addition of 269 hotels, but its lower-than-expected revenue per room (RevPAR) sent its stock on a decline for two consecutive days in New York.

The Shanghai-based hotel operator said in a statement Wednesday that the number of its hotels in operation reached a historical high of 4,600 with about 463,000 rooms in total.

The 2.1 percent decline in the RevPAR from a year ago fell short of expectations, however, and the shares in Huazhu slid 8 percent Wednesday and another 2 percent today, trading at $31.24 per ADS by midday.

"Given weakening business traveling demand and a potential uptick in marketing expenses, we think HTHT's share price might go through another round of correction on earnings cuts," analysts at China Renaissance said in a Wednesday report.

The company, which previously focused on economy stay, increased its midscale and upscale hotels in the second quarter. The number of mid- and upscale hotels was 1,675, or 36 percent of all units, with the same segment representing 72 percent of hotels under development, according to the report.

Jenny Zhang, Huazhu's chief executive officer, said in a May earnings report for the first quarter that the company expects to see increased revenue contribution in that sector.

Huazhu said it estimates revenue growth of between 13 and 15 percent year-over-year for the second quarter, unchanged from the preceding guidance.