`Good day, and thank you for standing by. Welcome to Huazhu Group Limited first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Now, I'd like to hand the conference over to Mr. Jason Chen, IR Director of Huazhu Group Limited. Thank you. Please go ahead, sir.
Thank you, Amber. Good morning and good evening, everyone. Thanks for joining us today. Welcome to Huazhu Group first quarter 2022 earnings conference call. Joining us today is our founder and chairman, Mr. Ji Qi, our CEO, Mr. Jin Hui, our president, Ms. Liu Xin Xin, our CFO, Ms. Chen Hui, our deputy CFO, Ms. Ye Fei, and our CEO of international business, Mr. He Jih ong. Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under Safe Harbor Provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC.
Huazhu Group does not undertake any obligations to update any forward-looking statements except as required under applicable laws. On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation of those measures to comparable GAAP information can be found in our earnings release that was distributed yesterday. As a reminder, this conference call is being recorded. The webcast of this conference call as well as supplementary slide presentation is available on Huazhu Group's website at ir.huazhu.com. With that, now I will turn the call over to Mr. Ji Qi. Mr. Ji, please. I'm sorry. I think Mr. Ji's line is having some connection technical issues. Please give us a few minutes. Please wait. Sorry.
Okay.
Please go ahead, Mr. Ji.
Hello?
Hello? Okay, we're back.
Mm-hmm. Can you hear us?
Yes. Yes, we can hear you.
Okay. We're gonna disconnect from the main line and just use this number.
Hello?
Is this Amber?
Mr. Ji, you're live. Please go ahead.
Can you hear us?
Yes, we can.
Okay, we got disconnected.
Please go ahead. Your conference is live now. Please continue.
Okay. This line's changed.
Is, uh... No. But it's not our-- We are-
It's not the right one.
No.
We can actually hear you. Mr. Ji can just start.
Hello?
Hey, you're live now. Please continue. Thank you.
Is Jason, are you there?
Yes, I'm here. I can hear you clearly.
Okay. Jason, I'm going to put Mr. Ji back into the line now. Okay? We are gonna stay on this. Hold on.
Okay. Thank you.
Okay, Jason. Jason, please go ahead.
Wait. Hello? Okay.
Good morning and good evening, everyone. As you may notice that Omicron virus has been spreading widely in China in the past two to three months. The pandemic came suddenly and lasted a very long period this time. Its development trend and the impacts are far over people's expectation. The pandemic outbreak and the traffic control once again brought huge challenges and difficulties to our China business operations. On the other thing, surviving in the face of the old life. Under the current situation, the first thing we should consider is how to overcome the current difficulties. On the premise of ensuring safety and health of our customers and our employees, as well as the needs and the cooperation with the government requirement, we are initializing cost optimization, rent waiver of negotiation, and the marketing and sales strategic adjustment to overcome this period.
More importantly, our franchisees are facing more difficulties and pressures due to the pandemic. As the franchisees are our important hotel partners, we needed to provide support, to help them to go through this difficult period together. Obviously, we are currently experiencing a long and cold winter. However, I always believe that every cold winter will bring a golden harvest. Over the past decades, Huazhu had faced many crises, that we became stronger after each crisis. In addition, every coin has two sides. Although the winter is cold, it provide to us a good opportunity to review that what we have done and rethinking what we should do in the future. First, we needed to build our long-term core competency by focusing company's limited resources to core strategies.
Moreover, we should also take this opportunity to improve our internal skill through culture building, organizational upgrade, training of talent, customer experience improvement, technology upgrades, and product development. By doing so, we can be very well prepared the warmer season after the current cold winter. Impacts and uncertainties from pandemic, war, and global macro factors are avoidable. We needed to insist on the faith that we should insist on, and believe the truth that we should believe. In the long term, we will continuously center on customers, franchisees, and employees to implement our sustainable quality growth strategy and build our capability to ride through the economic cycle in the long run. With that, I will turn the call to Jin Hui to discuss our recent business development in detail. Jin Hui, please.
Thank you, Ji Qi. As Ji Qi just mentioned, the COVID prevention measures remain very strict in China. Since March, the Omicron variant has been spreading widely in China, which has resulted in cities like Shanghai and Jilin imposing lockdown prevention measures again. It has been significantly affecting our RevPAR recovery since then. Please turn to page three. Our RevPAR recovery was on track and in uptrend in January and February. However, it was seriously interrupted since March. The recovery declined to only 67% of 2019 level, and further lowered to the bottom of 53% in April. May saw a slightly better RevPAR recovery than April, with the month-to-date RevPAR recovered to roughly 58% of 2019 level.
The RevPAR number that I just mentioned only reflects our hotels in normal operations. If we included those hotels under requisitions, our April and May RevPAR recovery would be roughly at 65% for both months, which indicates roughly 7-12 percentage points better than hotels in normal operations. Since May, we are seeing the normal hotel is gradually improving in terms of the performance, and the impacts of the requisition is gradually decreasing.
在疫情严控的情况下，我们华住也采取了一系列措施进行应对，渡过难关。首先，我们在华住中国加强成本管控，请大家翻到第四页。具体措施有三个方面，第一是人力成本和费用的优化。我们针对总部平台部门进行了进一步的优化，人员编制将减少15%到20%。第二是战略聚焦，将资源投放到重点战略上，减少非必要的支出。第三是疫情下的租金减免。公司内部组织团队为直营店和加盟店租金减免提供支持，降低公司和加盟商的经营成本。
Under the situation of the strict COVID prevention control, we are implementing several mitigation measures to overcome the difficulties. Firstly, we have started our reinforcement of cost control for domestic operations. Please turn to page four. The cost control will mainly from three specific aspects. First, streamlining headcounts and expenses. We are further optimizing our headquarters with a plan of headcount reduction by roughly 15%-20%. Second, we are concentrating company's resources to our key strategies and reducing any unnecessary expenditures. Third, negotiating lease waivers or reductions due to the pandemic. We have formed a special team internally to conduct the lease waiver or reduction negotiation for both our leased and owned hotels and the managed and the franchised hotel to reduce operational cost.
华住作为行业里的龙头公司，也积极承担企业社会责任，提供征用酒店。请大家翻到第五页。三月以来，公司的征用门店数量从两百多家增长至最高的一千八百多家，四月中下旬征用门店的数量达到了最高峰。随着疫情逐步解封，征用店的数量也在逐步减少。从另外一个角度来说，在疫情期间提供征用店对公司来说也是一个双赢的选择，因为常规的商务及休闲需求降到了最低，而征用需求能够帮助酒店填满客源，让酒店在疫情期间也能持续地经营。
As one of the leading companies in the industry, we are also undertaking the corporate social responsibilities during the pandemic by providing many requisition hotels. Please turn to page five. Since early March, our number of hotels under requisition increased massively from just over 200 to the highest of more than 1,800 hotels. Since the pandemic is gradually under control recently, our number of hotels under requisition start to decline from the peak in April. In fact, from another perspective, it is actually a win-win choice for us to provide hotels for requisition purpose during the pandemic period. Given the normal business and the leisure traveling demand declined sharply due to the traffic restriction during the pandemic period, the requisition actually helps hotels to achieve relatively better occupancy rate and support the hotel's operational performance.
请大家翻到第六页。公司在疫情阶段也在积极地进行营销抢夺。首先积极满足疫情相关住宿需求，主要包括刚才提到的征用需求。公司为直营和加盟的门店对接隔离、医护、快递、政府部门以及企业复工复产等需求。以受疫情影响最为较为严重的上海为例，在封城期间，公司在上海的酒店接待了超过9,500多个医护人员，以及超过5,000个快递小哥。除此以外，公司还提供满足疫情下特殊需求的产品，比如网课房、居家办公房等。其次，在营销策略上，公司将原有垂直于品牌的营销策略调整为跨品牌的统一营销策略，尤其对于一些疫情影响不大的区域，公司能够更有针对性的营销，挖掘本地需求。最后，我们也对会员采取了等级保留、权益积分递延等措施，提升客户会员的忠诚度。同时也与外部OTA流量合作，积极进行预售等活动，提前布局疫情后需求恢复的机会。
Please turn to page six. Despite the pandemic impacts, we remain striving hard to grab any sales opportunities during the period to improve our performance. Firstly, we actively seek COVID-related accommodation needs, such as requisition hotels, as I just mentioned before. We actively seek any accommodation needs of quarantine, medical teams, delivery riders, governmental officers, and corporates for both leased and owned, and managed and franchised hotels. Taking Shanghai as an example, which is the most affected city by the pandemic this time. Our hotel served over 9,500 medical staff and over 5,000 delivery riders during the lockdown period. In addition, we also initiated several creative product packages to meet the special needs during the pandemic, such as online class hotel rooms, work from hotels and so on.
Secondly, we adjusted our sales strategy from previously brand-based to a new regional-based unified sales and marketing strategy. By doing so, we can more precisely target and explore local demands for specific regions, especially for those areas that have less impact from the pandemic. Lastly, we extended the expiration dates of our members' privileges and the points and maintain their member status to further improve our members' loyalty. At the same time, we are also actively cooperating with external traffic platform and participating in various marketing campaigns organized by different OTA platforms to capture the recovery opportunities post-COVID through pre-sales activities. The pandemic and the lockdown have resulted in a physical shutdown of our headquarters in Shanghai. However, we are still able to maintain high working and operational efficiency through remote work. Please turn to page seven.
H- Tone, an internal information platform, provides a solid foundation and a connector to our hotel staff, headquarters employees, franchisees and suppliers for efficient remote work. For example, for our headquarters employees in Shanghai, there are over 10,000 online meetings were hosted. There are over 250,000 daily messages were sent and received, and over 7,000 online documents were used per day on the H-Tone platform. The pandemic and lockdown demonstrated our digitalization capability. In the long run, we think the strong technology capability and cloud-based information platform will be critical foundation for our future broader regional and international business collaboration and synergy. Please turn to page eight. From cost control to acquisition hotels, to marketing and sales efforts during the pandemic, and then to highly efficient remote work. These are all measures that we have taken in the current pandemic period.
From a longer term perspective, despite the market conditions remains uncertain, we would continuously center on our customers, franchisees and employees to build capabilities to ride through the ups and downs of economic cycles. Firstly is by caring for our customers. Please turn to page nine. I would like to share two letters of thanks from our customers recently. First letter is from our customers from Tangyin County. He stayed in Huazhu's hotels due to the quarantine need. He feels that our hotel provides the warmth of home and would become our loyal customers in the future. The second letter is from our customers in Shanghai who was trapped in Shanghai due to city lockdown. He has chosen Huazhu's hotel to stay, not only because that he is a loyal member, but also his high trust in Huazhu.
In conclusion, we will continuously upgrade and improve our products and service qualities to meet our customers' needs for better experiences and satisfaction.
今年针对中高风险地区的持续加盟费和新签约酒店的一次性加盟费，公司也仍然有相对应的减免和递延政策。其次，对于国家出台的优惠和帮扶政策，公司也有针对性地帮助加盟商获取相关信息和支持，包括帮助他们获得增值税减免，为加盟商的租金减免谈判提供法律支持，以及帮助加盟商从金融机构获得贷款等。此外，在疫情期间，物资流动受限，公司的供应链部门也为加盟酒店提供了食品以及日常运营保障物资，保障其正常经营，以及为管道酒店的营业提供物资保障。
Secondly, by caring for our franchisees. Please turn to page 10. Franchisees are our critical and reliable partners. Given the recent difficulties, we have provided a series of supportive measures and policies to help our franchisees to tide over the tough period. Last year, Huazhu was the only company which constantly providing fee waivers or reductions to franchisees. This year, we again provided new fee waiver or deferral payment policies for hotels in medium and high risk areas and also for the new signed hotels. Moreover, we also assist our franchisees to obtain relevant information and take advantage of any government's preferential and assistance policies released during the pandemic. We help them to apply value added tax refund or reduction, provided legal support for franchisees on rental waiver negotiation, and help the franchisees to apply financial supports from external financial institutions.
In addition, despite the strict traffic restriction due to the pandemic outbreak, our supply chain team still strive very hard to provide sufficient food and supplies to our managed and franchised hotels to ensure their hotels in normal operations, as well as provided goods and supplies to hotels under constructions in pipeline.
最后是员工层面，请大家翻到第十一页。一线员工是华住宝贵的资产。与2020年一样，我们仍然选择保持一线员工不裁员、不减薪，保证酒店的正常运营。同时我们也关注员工成长。疫情期间组织了超过一千场的线上培训，修炼技能。此外，我们还成立了抗疫特别基金，帮助感染员工，奖励征用酒店工作员工，以及疫情期间有突出贡献的个人。
Lastly, by caring for employees. Please turn to page 11. We always value our frontline staff as valuable assets for our company. Similar to what we had done in 2020, we retained our whole frontline staff during the pandemic period to keep our hotels in operation. At the same time, we constantly focus on our employees' future career development. Even during the pandemic period, we had organized over 1,000 online training programs for our employees to further help them improve their skill sets. In addition, we also established a special COVID fund to support or reward employees who are infected by COVID, who are working at requisition hotels, and who have any outstanding contributions during the period.
请大家翻到第十二页。尽管外部环境有所动荡，但华住也将坚定经营增长战略不动摇。
Please turn to page 12. Despite the uncertainties, our long term sustainable quality growth strategy remains unchanged.
坚持低线城市的渗透。请大家翻到第十三页。截止一季度末，华住在营和新签约酒店中的低一线城市酒店占比分别为37%和55%，仍然在提升。一季度新签约酒店中也有一半以上来自于低线城市。当然，我们也必须坦诚地告诉大家，虽然一季度新签约数据是高于去年同期的，但是四月受到疫情管控的影响，新签约较去年已经出现一定程度的下滑。
We still insist on further lower tier cities penetrations. Please turn to page 13. By the end of the first quarter, lower tier cities contribution was still improving. It contributed 37% and 55% of hotels in operations and pipeline respectively. For the new signings in the first quarter, nearly half of them were attributed from lower tier cities. However, we have to be very honest to update you the most recent situation. Although our new signings still grow in the first quarter, the pandemic outbreak and lockdown seriously affected our new signings in April. The signing numbers in April declined significantly compared to last year.
尽管中国经营有压力，但DH的经营仍然在持续向好。请大家翻到第十四页。今年一到四月，DH的RevPAR相较2019年的恢复度一直保持上升态势，4月已经恢复到2019年的80%，并且五月的数据仍然在持续改善。
Although the pandemic tremendously affected our domestic operations. Our Deutsche Hospitality business performance achieved a very robust recovery recently. Please turn to page 14. Our DH RevPAR recovery was constantly in uptrend from January to April, with April RevPAR recovered to 80% of 2019 level, and the recovery trend is further improving in May. Please turn to page 15. Thanks to continuous easing of traveling restriction in Germany and Europe, DH's occupancy rate improved to 51% in April compared to only 30% in January. Leisure traveling was the main driver for the strong recovery in the first quarter. We expect that business traveling will also gradually recover in the next couple of months, mainly driven by the resumption of meetings, conference, and exhibitions events.
However, given the recovery is still at early stage, together with the current impacts of inflation in Europe, we would constantly implement our cost and revenue measures that we mentioned in previous few quarters. It mainly includes cost reduction, operational efficiency improvements, cash flow management, and ADR recovery. In terms of the strategic focus post-COVID, we will mainly focus on cost reduction for sustained margin improvement, execution of digital strategy for process efficiency and analytics, evaluating the growth potential of limited service hotel segment, and building up the H-Rewards global loyalty program. With that, I will turn the call to Ms. Ye Fei to discuss our 2022 first quarter's operational and financial performance.
Thank you, Jin Hui. Good morning or good evening to everyone, wherever you are. Let's move on to our operational and financial review for the first quarter of 2022. As shown on slide 17, our hotel network expanded by 15% in the first quarter of 2022 to 765K rooms compared to 663K rooms in Q1 2021. Excluding DH, Legacy-Huazhu's hotel network expanded by 16% year-on-year to roughly 740K rooms, in which mid-scale hotels contribute most of the growth. For our hotel turnover in the first quarter of 2022, our total hotel revenue grew 16% year-on-year to RMB 9.5 billion. This was mainly due to our continuous network expansion in China and strong business recovery of our European business.
Legacy-Huazhu hotel turnover grew 11% year-on-year to RMB 8.8 billion in the quarter, and DH recorded a 170% growth to the turnover of RMB 683 million. Turn to page 18. The blended RevPAR of Legacy-Huazhu for Q1 declined 25% compared to 2019. The ADR in Q1 was up by 1.2% compared to 2019 level as RMB 224, mainly driven by the mix change from midscale and upper midscale hotels. The occupancy in Q1 is 21 percentage points lower compared to 2019 due to the impact of Omicron variant outbreaks in mid-March. Turn to page 19. Legacy-DH business is still impacted by Omicron variant in the beginning of this year.
However, due to the opening up in Germany since mid-February, its RevPAR recovery was accelerating since then. Therefore, DH blended RevPAR for Q1 2022 grew 158% to EUR 33 compared with Q1 2021. The occupancy improved by 19 percentage points compared with Q1 2021, and the ADR improved by 28% to EUR 88. Please see our financial results on slide 20. Total revenue grew by 15% year-on-year to RMB 2.7 billion in Q1 2022, mainly driven by 165% revenue growth of Legacy- DH in Q1 2022. Excluding DH, Legacy- Huazhu recorded a 4.6% year-on-year revenue growth to RMB 2.3 billion. Revenue was in line with our previous guidance.
Leased and owned revenue of Legacy- Huazhu was flattish at RMB 1.3 billion, caused by the large scale of Omicron variant outbreak since March. Net revenue from managed and franchised hotel grew by 9% to RMB 974 million, mainly driven by the network growth of over 1,100 managed hotels. DH's revenue growth is mainly driven by leased hotel recovery. Therefore, overall, the group's managed and franchised revenue contribution temporarily shrank to 37% in Q1 2022, compared with 38% in Q1 2021 at group level. However, for Legacy- Huazhu, due to further expansion with asset-light model, the managed and franchised revenue contribution further expanded to 43% compared with 41% a year ago. Now, let's move to the cost and profitability section on slide 21.
In Q1 2022, the reported operating loss was RMB 708 million, compared to a loss of RMB 575 million last year, and a positive RMB 39 million a quarter ago, mainly due to the weaker China business performance. Excluding DH, Legacy- Huazhu's operating loss in Q1 2022 was RMB 416 million, compared to RMB 172 million last year, and a positive income of RMB 60 million a quarter ago. The hotel operating cost for Q1 2022 was RMB 2.8 billion, increased by 14% year-over-year. For Legacy- Huazhu, it recorded RMB 2.3 billion hotel operating cost, indicating an 11.7% year-over-year growth.
The increase was mainly attributable to higher rental cost of the newly opened leased hotels, higher personal costs as we keep growing hotel networks, and a higher D&A depreciation amortization cost, which were related to the upscale hotel opening and upgrading of existing hotels, as well as the consolidation impact of CitiGO acquisition. For Legacy-DH, it recorded RMB 558 million hotel operating cost, indicating a 25% year-over-year growth. The increase was mainly due to the variable cost increase along with business recovery. Our pre-opening costs increased by 24% year-over-year to RMB 26 million in Q1 2022, from RMB 21 million last year. The absolute dollar amount of pre-opening cost remains low, as our future expansion will mainly use asset-light model, as mentioned in previous quarters as well.
Our SG&A in Q1 2022 increased by 34% year-over-year to RMB 584 million, driven by the increase in both Legacy-Huazhu and the Legacy-DH. SG&A for Legacy-Huazhu increased by 29% to RMB 424 million. The increase was mainly attributable to the increase of headcounts for our BD team to support penetration into the lower tier city, operation team in Southern and Western China, sales team for corporate customer expansion, enhanced IT team, as well as the expansion of upscale hotel division. However, given the significant impact of recent Omicron outbreak, we have started implementing strict cost control measures by streamlining overheads like headcounts and expenses. DH SG&A increased 48% compared with last year, driven by the OTA commission increase alongside with business recovery and one-time restructuring cost of the organization. Turning to page 22.
Our adjusted EBITDA loss was RMB 333 million in Q1 2022, compared to a loss of RMB 133 million a year ago. DH's EBITDA loss narrowed in Q1 to RMB 240 million, compared to a loss of RMB 340 million last year, thanks to the reopening in Germany, which accelerates business recovery. Excluding DH, Legacy-Huazhu recorded an adjusted EBITDA loss of RMB 93 million, compared to a positive EBITDA of RMB 207 million in Q1 2021, due to the impact of the large-scale Omicron outbreak, and also the higher cost. In Q1 2022, we recorded adjusted net loss of RMB 662 million, enlarged from a loss of RMB 451 million a year ago.
Excluding DH, Legacy-Huazhu recorded an adjusted net loss of RMB 339 million, compared to a loss of RMB 150 million in Q1 2021. Coming to the cash position, our net debt increased to RMB 6 billion by the end of Q1, from RMB 4.7 billion last quarter. It was mainly due to the decline in cash from operations. This quarter, our cash balance was RMB 4.1 billion and the unutilized bank facilities were RMB 3 billion. Given the COVID impact remains uncertain in the foreseeable future, we have reduced the CapEx and expenses budget to preserve cash. In addition, we are also prepared to meet our upcoming syndicated loan repayments and possible redemption of 2017 convertible bonds through various available funding sources. Turning to page 25 on guidance.
Since March, this highly infectious Omicron variant has been spreading rapidly in China, which seriously affects our business performance now. Also, the current COVID prevention policy has rendered business performance more unpredictable in the foreseeable future. Under such circumstances, we will suspend providing or updating guidance in respect of any revenue and hotel openings until the situation sustainably improves. Nevertheless, we will continue to provide quarterly guidance based on our best understanding of the most recent situation. In the second quarter of 2022, Huazhu Group expects revenue to decline 2%-6% compared to the second quarter of 2021, or to decline 23%-27% if excluding DH, mainly due to the large impact from the Omicron outbreak in China. DH itself expects a 3 x revenue increase since its recovery is on a healthy track.
Again, above guidance only reflects our current view, which is subject to further change. With that, let's open up for Q&A.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question now, please press star one on your telephone and wait for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Please stand by while we compile the question and answer roster. Once again, that's star one for questions. Our first question comes from the line of Billy Ng from Bank of America. Please go ahead.
Actually, when we see from the presentation, we saw that there were about 700 new sign-ups year- to- date, up till April, which actually on track for almost like 2,000 for this year. So my question is, have you seen very recently any slowdown from the new sign- up? And also if you can give some colors on the new opening as well, like I remember in 1 Q you guys opened 300 hotels. Just wonder, have you seen slowdown on new opening in the last couple weeks or the last couple of months? Thanks. That's my first question.
Thanks for your questions. Yes, I think you are right. In the first quarter, given we have been investing quite a lot of resource and expenses in terms of expanding our BD team last year. We actually achieved a relatively great new signings for the first quarter. Since the Omicron outbreak, starting from the late March, this has very obviously impacted our new signings due to the pandemic, due to the strict traffic control, as well as the franchisees' confidence level is declining as well. Definitely we are seeing some of the slowdown of the new signing recently.
In terms of the construction, again, the pandemic has huge impact on the construction, as well, especially on the transportation limits and the supply chain management due to the traffic control, and especially for the months of April and May, the construction process has been slowed significantly, which gonna have some negative impact on our new openings for the year.
Thank you. My second question.
在成本上控制会多一点的，SG&A也好，各方面也好，我想问就是有没有一个具体的数字可以分享，就是未来九个月相对于1Q的那个run rate，我们可以expect有多少的一个空间可以去减呢？ My second question is regarding to the streamlining cost, and just wonder if you have a little bit more detail, in terms of the numbers and in the next few quarters, what kind of run rates we can expect compared to the first quarter if we comparing, the SG&A number or the hotel operating cost number?
是的，我们疫情遇到了非常大的挑战，但华住坚定在深耕中国以及经营正常的战略，不会变化，但是依然会对整个组织做出人员的精简，特别是对于总部平台的人员的精简和裁换，是这个阶段的工作。我可以披露一个具体的数字，在整个公司的平台人员的这样的一个精简大概在20%。不过随着未来，我们可能还会进一步的减少我们平台的这样的人。但是我还是强调，对于一线和运营的一线的干部的保留，依然是华住要坚持去做的战略，因为这是华住最宝贵的管理财富。所以分两部分，第一部分我们总部会进行进一步的提效，降低管理成本。人员我们计划精简是20%以上。另外，对于一线和运营干部，我们采取坚决保留，甚至帮助他们提升管理的这样的一个管理动作，都在有序地开展中。
Basically the pandemic definitely give us a lot of challenges and difficulties, but we still insist on our China focus as well as long-term sustainable quality growth strategies unchanged. In terms of the cost savings, what I can share to you is that we are going to focus on our headquarters in terms of the streamlining of the headcounts. We are planning to reduce the headcounts by at least 20%, and we will further see if we need to reduce any more according to the market conditions. However, as I mentioned in my presentation, the frontline and operational staffs are very valuable assets for us, so we will still retain those frontline staff and operational staffs. Our cost savings will be mainly focused on our headquarters. Thank you.
Thank you.
All right, thank you. Next question comes from 林思洁 from CICC. Please go ahead.
好，谢谢万里鹏。我也有两个问题，第一个呢，就是对于这个华南这块的一个拓展，就不知道现在进展怎么样了，有没有什么我们觉得超预期或者是不及预期的地方。So my first question is regarding the expansion to Southern China. How is it progressing? Is there anything above or below expectations?
好，我第一个问题先回答一下，确实南方区域是华住过去比较薄弱，但是对中国整个无论是经济版图还是未来的酒店发展版图都是极为重要的一个市场。华住去年开始了整个南方战略的倾斜。我很高兴地可以告诉大家，虽然受到疫情的影响，总的签约数字还不如我们的预期，但是我们在一季度的签约已经超越了竞品，成为了南方市场一季度签约速度规模最快的这样一个企业。
So, as you may know, the southern part of China, Huazhu was pretty weak previously. However, this region is not only important for the entire Chinese economy, but also it's very important market for Huazhu. Despite, the impact of the pandemic, the Omicron outbreak since March. I'm very glad to tell you that despite the new signings have been somewhat negatively impacted by the Omicron, but it is not yet achieved to our internal expectation. However, our new signings in the first quarter has already exceeded compared to our peers. Huazhu is the one who has the largest new signings in southern part of China, in the first quarter.
好，然后第二个问题就是，一般来说供给收缩以后，然后这个需求修复的时候，酒店行业表现比较好嘛，但是现在的这个宏观和消费环境呢，有可能会给需求，尤其是商务需求的修复带来一些压力。那么综合这两个因素呢，就是你们觉得这一轮复苏周期的一个表现会怎么样？Generally speaking, the reduced supply is a positive factor for the industry recovery. Meanwhile, the soft macro and consumption environment may be a negative factor. So how should we expect the coming industry recovery? Thank you.
谢谢你的问题。大家知道中国的经济的复苏和政策具有强关联性，包括政府还是采用比较动态清零的措施在应对疫情。虽然我们展开了非常强有力的本地的客户的和获取。当然我们要看到这个市场波动性，为此我们做了多重准备。一方面我觉得应对这种不确定，华住还是要自己围绕着本地化营销的和会员发展能力要进一步的夯实和强化，包括抢夺复工生产的这些客源，非传统意义的商务客人的这些需求，我们依然要作为很重要的营销策略去抢夺。另外，我还是强调华住的整个效率的改善和成本的这样的一个控制，也是我们下一阶段非常重要的一个课题。我面对这个不确定，我们要接受这个不确定，但是同时在这个不确定当中，夯实华住自身的管理能力、品牌能力和下层的对市场的这样的管理能力。谢谢。
I think as you may know that the business recovery in China is very much tied up with the policy. I n terms of the pandemic provision, China is continuously using the dynamic zero-COVID policy, which is putting some of the uncertainties in the foreseeable future. However , despite the uncertain market conditions, we are still insisting on our own strategies, which including our local sales capability to capture the local demand as well as during the pandemic we have to capture some of unusual business traveling demand, which including those corporates which needs the hotels for the resumption of production and work. Also, as I just mentioned before, the cost control as well as improved efficiency will remain key focus in the near future. Thank you.
Thank you .
Thank you. Next question comes from the line of Dan Xu from Morgan Stanley. Please go ahead.
感谢管理层给我这个提问的机会。我是大摩的酒店分析师Dan Xu。那我想请教管理层一个关于流动性的问题，还有这个资本资源，就是想请教管理层，目前未偿还的这个债务中，我们有可转债大概4.75亿美金，还有剩下的3.38亿欧元的这个银行信贷。想请教管理层目前对这个十一月和十二月到期的这样的一个偿还计划，还有目前的一个进度，因为我们挺关心的，非常感谢。那.
Please allow me to translate my question. First I would like to thank you very much, the management for this opportunity to ask the question, it's Dan from Morgan Stanley. My question is about the debt management, so can you share with us, the current plan and progress for the $475 million convertible bond expiring in November this year, and the remaining of that EUR 338 million credit facility expiring in December this year. What are the current plans and progress, please? Thank you very much.
Thank you for the question. Certainly we have various approach to solve these issues. Number one, we have offshore cash on our balance sheet. Second is, we are preparing a new bank loan to repay the current upcoming due bank loan in the later half of this year. Also regarding the potential redemption of the CB, we also have a similar approach like bank loans and also other financial approach to solve the issues. Currently, everything is looking good.
Thank you. Thank you very much. That's my only question. Thank you.
Thank you. Next question comes from Simon Cheung from Goldman Sachs. Please go ahead.
你好，谢谢管理层。我有两个问题，第一个问题想请教的是，从签约加店以及RevPAR的恢复的程度来讲的话，如果你看现在的疫情跟前几次的疫情，过去两年最大的分别是什么样呢？因为你刚才也讲到，可能从四月开始，我们看到可能开店以及签约可能比较慢一点点，可是前几次感觉上我们看不到这个slow down，想了解一下，你觉得这一次跟前几次有什么分别？然后，如果比如说现在我们上海已经开始慢慢通关，你觉得以后大概要多长时间才可以看到那个加店的速度开始会加快一点点呢？
My first question is in relation to new hotel sign-up, the addition of hotel completion as well as the RevPAR recovery. I wanted to get a sense of how the cycle this time around is different from the last several shutdowns when there's also viral resurgence, and if the management can provide us with some sort of guidance or expectations on how quick the recovery this time around is going to be, now that we have Shanghai gradually reopening as well. So that's my first question. Thank you.
谢谢你的问题。我必须很诚实地回答：由于这一轮的疫情是经历两年之后的反复的疫情，对中国投资者的信心以及他们的现金流造成了非常大的影响，这个影响只会在我开场的这样的一个数据里面，我也提到，从四月份开始，明显的签约和市场的信心受到了严重的这个影响。这个是必须我们正视的。当然我们也开始采取针对中西部、华中、华南以及一些三四线城市受疫情影响小的区域，我们依然在保持开发和发展的渗透，这个工作我们也在积极地开展，但是必须得承认，市场的信心和加盟商的这个现金流是受到了巨大的这个冲击的，包括一部分房地产持有者受到房地产这一轮的管控和经济的影响也是比较明显的，我想这个可能是中国全方面的。至于上海疫情，因为今天开始，明天开始，我们上海可以全面地复工。当然这个随着供应链的恢复，我相信在六月份很多的工地和营建项目会恢复。但签约的恢复，我认为不仅仅是疫情政策的调整，还有来自于市场整个信心的恢复。我觉得这个时间需要一些时间，我的乐观判断应该需要一个季度时间，在没有大规模疫情反复的前提下。谢谢。
Thanks for your questions. I have to be very honest to you. This round of Omicron outbreak has been , after two years since the initial outbreak back to 2020.
It has been two years that franchisees are quite suffering as well as the potential investors of the hotel industry. Basically their confidence, their cash flow has significantly impacted over the last two to three years. As I mentioned in my prepared remarks, so we have been seeing the new signings that the market sentiment, the investors, confidence level has been declining since in April. Although we are still striving very hard to penetrate into some of the regions which has less impacts from the outbreak, such as the middle part of China, southern part of China. However, the overall confidence level or the market sentiment is relatively weak at this moment, as well as some of the negative impacts from the real estate industry.
We cannot deny those facts. In terms of the Shanghai, starting from tomorrow, everything should be gradually resume to normal. I believe, along with the supply chain transportation gradually resume, the construction work should be gradually resume as well, starting from next month. However, in terms of the new signings, I think it's going to take much longer, because it's not directly related to the pandemic, because it takes more time for rebuild investors' confidence level. I think, my best estimate for now, I believe it's going to take around one quarter to resume to normal. Thank you.
好的，谢谢。我另外一个问题是想问DH的，看到你比如说给第二季度的指引，如果我back out去算一下的话，可能你给第二季度跟上一年去比的话，可能你的收入可能翻三倍左右吧，然后你的RevPAR可能也基本上超过四十块钱Euro。我的问题是，如果真的实现到的话，那你觉得你的EBITDA会转成正数吗？这个DH在第二季度的情况之下，谢谢。
My second question related to DH. If I, based on the company guidance for the second quarter back it out, supposedly, the DH guidance or revenue gonna grow at about 3x on a year-on-year basis, and that RevPAR should exceed about EUR 70 . Under these circumstances, if achieved, would you be able to achieve EBITDA positive in the second quarter for DH? Thank you.
Yeah, certainly I think the DH is on a very healthy recovery trajectory quarter- by- quarter. I think we are budgeting like a growth line toward the Q4 of 2020, we're targeting like a 90% recovery compared to 2019. I think there's a chance for us , from the whole year perspective, we think there's a chance for us to go back to the EBITDA positive line. Certainly that's our target.
You're saying that not only would you see EBITDA positive in the second quarter, there might actually be a possibility that you get to positive EBITDA for the full year for DH.
I'm just talking about the full year target, but for the Q2 it's still a recovery mode, so it might be a little bit early to say that. Yeah. We will discuss more details once ready.
Okay, understood. Thanks a lot. 谢谢管理层，谢谢。
Right. Thank you. Next question comes from 刘乐文 from CSC Financial. Please go ahead.
好的，谢谢。感谢各位管理层，我是中信建投的刘乐文。我这边有一个问题想请教一下，因为上次我们参与交流，咱们也提到，就是在这个区域总部，像这个深圳、成都这些方面，我们去设计这样的一个区域总部，我们能不能就是再更新一下这块，这个区域总部的几个建设的进度，以及包括一些这个成果。 My question is about our regional headquarters, especially like in Shenzhen and Chengdu. Can you draw some color on this regional headquarters? Thank you.
Thanks for your questions. As you may know that, hotel management is, or actually hotel business, a very localized business. Along with our strategy with China focus, we are trying to penetrate in every market in China, in not only the hotels but also the brands. We want to be as close as possible to our targeted market, our customers, and our franchisees, as well as the employees. Actually, last week we have just established some new regional headquarters. In the remaining of this year, especially during the pandemic period, we are adjusting. We will be more using the regional based management mode. We are seeing that actually it becomes more efficient, especially during the pandemic period. Thank you.
Right. Thank you. We have reached the end of the question and answer session. I'll now turn the call back to the management team for closing remarks.
Thank you everyone for taking your time with us today, and we look forward to connect with you again in upcoming quarter. Thank you. Bye-bye.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.