HAGENS BERMAN, NATIONAL TRIAL ATTORNEYS, Encourages Huazhu (HTHT) Investors with Losses to Contact Its Attorneys: Firm Investigating Possible Securities Fraud

SAN FRANCISCO, Oct. 7, 2020

Relevant Period: Before Sept. 21, 2020
Visit: www.hbsslaw.com/investor-fraud/HTHT
Contact An Attorney Now: HTHT@hbsslaw.com
844-916-0895

Huazhu Group Limited (HTHT) Investigation:

The investigation centers on whether Huazhu manipulated its financial results by under reporting the number of hotels it owns and their related operating costs to appear more profitable.

Since 2017, Huazhu has attracted investor interest by reporting profits significantly better than its direct Chinese-listed competitors. Recently, however, the legitimacy of Huazhu's outsized profits from its Chinese operations was called into question.

Specifically, on Sep. 21, 2020, analyst Bonitas Research released a scathing report, claiming the company "lied about the ownership of its hotel portfolio to produce fake financials." According to the Bonitas report, while the company claims it operates 688 hotels, it secretly controls 1,952 hotels, either through Huazhu subsidiaries or related third parties.  Moreover, the Bonitas report states that Huazhu understated its employee count by at least 16%. According to Bonitas, by failing to account for these "off-book hotels," "Huazhu generated significantly less profit and held significantly less PP&E [Property, plant, and equipment] assets than reported in both its SEC filings and HKEX Global Offering." Specifically, Bonitas calculates fake profits took the form of $300M of fake PP&E on its CYE 2019 balance sheet.