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03/22/2021

Huazhu Group Limited Announces Formation of Joint Venture with Sunac China Holdings Limited and Strategic Partner

Huazhu will provide operational support services to hotels which are developed and operated by the joint venture including central reservation system, membership loyalty program, hotel operating systems and technologies, as well as shared service centers etc.

Huazhu Group Limited (HTHT) (“Huazhu”, “we” or “our”), a world-leading hotel group, announced that Huazhu Hospitality (Hong Kong) Limited (a wholly-owned subsidiary of Huazhu), Chengdu Lingchuang Yipin Hotel Management Company Limited (成都领创逸品酒店管理有限公司) (a wholly-owned subsidiary of Sunac China Holdings Limited (SCCCF) (HKEX: 1918)) (“Sunac”, together with its subsidiaries the “Sunac Group”) and Chengdu Global Times Exhibition and Travel Development Company Limited (成都环球时代会展旅游发展有限公司) (the “Strategic Partner”) had formed a joint venture company, named as Yongle Huazhu Hotel & Resort Group (永乐华住酒店管理有限公司) in the People’s Republic of China (“China”) with a total registered capital of RMB 50 million. Each of Huazhu Hospitality (Hong Kong) Limited, Sunac, and the Strategic Partner holds 50%, 40%, and 10% of the equity interests in the JV, respectively. The JV is a non-wholly owned subsidiary of Huazhu.

We are pleased to further announce the following strategic plans of the JV.

Hotel management services
The JV will provide hotel management services to Sunac’s feasible hotel properties and potential leased and owned hotel properties of third parties.

Brand authorization
Huazhu and its wholly-owned subsidiary Steigenberger Hotels AG (“DH”) will authorize the right to develop and operate hotels under the brands of Blossom House (花间堂) and Steigenberger (施柏阁) in Mainland China to the JV. At the same time, Sunac will authorize the right to develop and operate hotels under Sunac’s own hotel brands, including Mauve Hill (堇山), Mauve Glamor (堇悦) and Arcadia Hotels (凤栖桃源) etc., in Mainland China to the JV. In terms of selection of hotel brands, the JV will give priority to Blossom House (花间堂) and Steigenberger (施柏阁) when a hotel property is available and suitable. The JV could also develop its own brands in the future, in addition to those above mentioned brands authorized by Huazhu, DH and Sunac.

Huazhu to provide operational support services to the JV 
Huazhu will provide operational support services to hotels which are developed and operated by the JV, including those under the brands of Blossom House (花间堂), Steigenberger (施柏阁), and Sunac’s brands. Such services include, but are not limited to, those relating to Huazhu’s central reservation system, membership loyalty program, hotel operating systems and technologies, as well as shared service centers etc. Huazhu will charge service fees on the services provided to the hotels developed and operated by the JV.

The JV’s Five-Year Target
By leveraging on the core competencies of Huazhu and Sunac, the JV targets to enter into management contracts with more than 200 hotel properties from both Sunac and third-parties in five years after its formation. The majority of the hotels managed by the JV is intended to be upscale or above, full service hotels and under long-term management contracts.