分组1 - H World Group reported quarterly earnings of $0.34 per share, missing the Zacks Consensus Estimate of $0.42 per share, and showing an increase from $0.29 per share a year ago, resulting in an earnings surprise of -19.05% [1] - The company posted revenues of $744 million for the quarter ended March 2025, which was 1.34% below the Zacks Consensus Estimate, but an increase from $731 million year-over-year [2] - H World Group shares have increased approximately 12.4% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $883.55 million, and for the current fiscal year, it is $1.89 on revenues of $3.47 billion [7] - The Hotels and Motels industry, to which H World Group belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Business Performance - H World Group's Legacy-Huazhu RevPAR decreased by 3.9% year-over-year in Q1 2025, with OCC declining by 1.0 percentage point and ADR decreasing by 2.6%[9] - Legacy-DH RevPAR increased by 12.7% year-over-year in Q1 2025, driven by a 5.3 percentage point increase in OCC and a rise in ADR[30, 31] - Total revenue increased by 2.2% year-over-year to RMB 5395 million in Q1 2025[47] - Adjusted EBITDA reached RMB 1496 million in Q1 2025, a 5.3% increase year-over-year[55] Network Expansion and Product Upgrade - The number of hotels in operation for Legacy-Huazhu increased to 11,564 as of March 31, 2025[14] - The number of hotels in pipeline for Legacy-Huazhu was 2,865 as of March 31, 2025[11, 14] - The company is stepping up the development of upper-midscale segment, with the number of upper-midscale hotels in operation increasing by 74% year-over-year[16, 17] - Hanting 3.5 and above accounted for 71% of Hanting hotels in operation, while JI 4.0 and above accounted for 78% of JI Hotels in operation in Q1 2025[19] - Orange 2.0 and above accounted for 66% of Orange Hotels in operation in Q1 2025[22] Strategic Focus - H World is enhancing its presence in lower-tier cities, with 54% of hotels in pipeline located in Tier-3, 4 and below cities as of March 31, 2025[24] - Direct booking through H World CRS increased by 5.4 percentage points year-over-year to 65.1% in Q1 2025[28] - The company is transforming to an asset-light model, with revenue from manachised & franchised hotels increasing for both Legacy-Huazhu (21.1% YoY) and Legacy-DH (34.8% YoY)[47, 49]

```markdown [Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Q1 2025 Key Financial & Operational Highlights](index=1&type=section&id=Q1%202025%20Key%20Financial%20%26%20Operational%20Highlights) H World Group Limited reported increased Q1 2025 hotel turnover and net income, driven by network expansion, despite slightly lower revenue growth Q1 2025 Key Financial Highlights | Metric | Q1 2025 (RMB million) | Q1 2024 (RMB million) | YoY Change | Previous Quarter (RMB million) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | :------------------------------ | | Hotel Turnover | 22,500 | 19,685 | +14.3% | - | | Revenue | 5,400 | 5,278 | +2.2% | 6,023 | | Net Income Attributable to H World | 894 | 659 | +35.7% | 49 | | EBITDA (non-GAAP) | 1,600 | 1,300 | +23.1% | 974 | | Adjusted EBITDA (non-GAAP) | 1,500 | 1,400 | +7.1% | 1,200 | - Total hotels in operation reached **11,685** with **1,142,158** rooms as of March 31, 2025[3](index=3&type=chunk)[6](index=6&type=chunk) - Manachised and franchised revenue increased **21.1%** year-over-year to **RMB2.5 billion**, aligning with the high end of guidance[3](index=3&type=chunk)[16](index=16&type=chunk) [Q2 2025 Outlook](index=2&type=section&id=Q2%202025%20Outlook) H World Group anticipates continued revenue growth for the second quarter of 2025, with specific guidance provided for overall revenue and manachised and franchised revenue Q2 2025 Revenue Growth Guidance | Metric | Q2 2025 YoY Growth Range | | :-------------------------------- | :----------------------- | | Total Revenue | 1%-5% | | Total Revenue (excluding DH) | 3%-7% | | Manachised and Franchised Revenue | 18%-22% | [Operational Performance](index=2&type=section&id=Operational%20Performance) [Overall Hotel Network Expansion](index=2&type=section&id=Overall%20Hotel%20Network%20Expansion) H World's global hotel network expanded to 11,685 hotels and 1,142,158 rooms by March 31, 2025, with significant activity in the Legacy-Huazhu segment, including new openings and a substantial pipeline - As of March 31, 2025, H World operated **11,685** hotels and **1,142,158** rooms globally[6](index=6&type=chunk) - The company had a total of **2,888** unopened hotels in its pipeline, with **2,865** from Legacy-Huazhu and **23** from Legacy-DH[6](index=6&type=chunk) [Legacy-Huazhu Operational Highlights](index=2&type=section&id=Legacy-Huazhu%20Operational%20Highlights) The Legacy-Huazhu segment continued its network expansion with 694 new hotel openings in Q1 2025, contributing to a total of 11,564 hotels. However, key operational metrics like ADR, occupancy, and RevPAR saw slight year-over-year decreases - Legacy-Huazhu opened **694** hotels and closed **155** in Q1 2025, resulting in **11,564** hotels in operation[6](index=6&type=chunk)[7](index=7&type=chunk) Legacy-Huazhu Key Performance Indicators (Q1 2025) | Metric | Q1 2025 (RMB) | Q1 2024 (RMB) | YoY Change | Previous Quarter (RMB) | | :---------------- | :------------ | :------------ | :--------- | :--------------------- | | ADR | 272 | 280 | -2.9% | 277 | | Occupancy Rate | 76.2% | 77.2% | -1.0 p.p. | 80.0% | | Blended RevPAR | 208 | 216 | -3.7% | 222 | - Same-hotel RevPAR for Legacy-Huazhu decreased by **8.3%** year-over-year to **RMB205**, driven by a **5.3%** decrease in ADR and a **2.5 percentage-point** decrease in occupancy rate[10](index=10&type=chunk)[70](index=70&type=chunk) [Legacy-DH Operational Highlights](index=3&type=section&id=Legacy-DH%20Operational%20Highlights) The Legacy-DH segment reported 121 hotels in operation and a pipeline of 23 unopened hotels. This segment showed positive year-over-year growth in ADR, occupancy, and RevPAR - Legacy-DH had **121** hotels in operation and **23** unopened hotels in its pipeline as of March 31, 2025[11](index=11&type=chunk)[71](index=71&type=chunk) Legacy-DH Key Performance Indicators (Q1 2025) | Metric | Q1 2025 (EUR) | Q1 2024 (EUR) | YoY Change | Previous Quarter (EUR) | | :---------------- | :------------ | :------------ | :--------- | :--------------------- | | ADR | 107 | 104 | +2.8% | 115 | | Occupancy Rate | 61.1% | 55.8% | +5.3 p.p. | 70.5% | | Blended RevPAR | 65 | 58 | +12.7% | 81 | [CEO Commentary & Strategic Focus](index=3&type=section&id=CEO%20Commentary%20%26%20Strategic%20Focus) CEO Jin Hui highlighted rapid China network expansion and an asset-light strategy, with Legacy-DH focusing on operational enhancement and cost reduction - Continued rapid network expansion with **694** new hotel openings in China, on track for a full-year target of approximately **2,300** gross openings[13](index=13&type=chunk) - Strategic focus on advancing asset-light strategy, high-quality network expansion, enhancing brand positioning, **'service excellence'**, and strengthening sales capabilities centered around the H Rewards membership program[13](index=13&type=chunk) - For Legacy-DH, the strategy includes enhancing hotel operations, focusing on cost reduction and efficiency improvement, and developing an asset-light portfolio[13](index=13&type=chunk) [Financial Results (Unaudited)](index=4&type=section&id=Financial%20Results%20(Unaudited)) [Revenue Analysis](index=4&type=section&id=Revenue%20Analysis) Total revenue for Q1 2025 increased by 2.2% year-over-year to RMB5.4 billion, primarily driven by network expansion in the Legacy-Huazhu segment and strong growth in manachised and franchised hotels, while revenue from leased and owned hotels decreased due to the asset-light strategy Revenue Breakdown (RMB million) | Revenue Type | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | QoQ Change | | :------------------------ | :------ | :------ | :--------- | :------ | :--------- | | Leased and owned hotels | 2,789 | 3,099 | -10.0% | 3,373 | -17.3% | | Manachised and franchised hotels | 2,499 | 2,063 | +21.1% | 2,499 | 0.0% | | Others | 107 | 116 | -7.7% | 151 | -29.1% | | **Total Revenue** | **5,395** | **5,278** | **+2.2%** | **6,023** | **-10.4%** | - Legacy-Huazhu segment revenue increased **5.5%** YoY to **RMB4.5 billion**, driven by hotel network expansion[14](index=14&type=chunk) - Legacy-DH segment revenue decreased **11.3%** YoY to **RMB918 million**, partly due to exiting **11** leased hotels[14](index=14&type=chunk)[15](index=15&type=chunk) [Operating Costs and Expenses](index=4&type=section&id=Operating%20Costs%20and%20Expenses) Total operating costs and expenses remained relatively stable year-over-year. Hotel operating costs increased slightly, while SG&A expenses decreased, reflecting the company's asset-light strategy and cost optimization efforts, particularly in the Legacy-DH segment Operating Costs and Expenses (RMB million) | Expense Type | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :------------------------------ | :------ | :------ | :--------- | :------ | | Hotel operating costs | (3,604) | (3,565) | +1.1% | (4,190) | | Selling and marketing expenses | (243) | (260) | -6.5% | (296) | | General and administrative expenses | (512) | (509) | +0.6% | (725) | | **Total operating costs and expenses** | **(4,373)** | **(4,351)** | **+0.5%** | **(5,220)** | - Hotel operating costs as a percentage of revenue decreased by **0.7 percentage points** year-over-year, in line with the asset-light strategy[19](index=19&type=chunk) - SG&A expenses decreased by **1.8%** YoY, primarily due to an **11.1%** decline in Legacy-DH from restructuring and cost optimization, partially offset by a **1.6%** increase in Legacy-Huazhu due to higher share-based compensation[20](index=20&type=chunk) [Profitability Metrics](index=5&type=section&id=Profitability%20Metrics) H World demonstrated improved profitability in Q1 2025, with income from operations increasing by 7.9% year-over-year and operating margin expanding to 20.1%. Net income attributable to H World Group Limited saw a significant 35.7% year-over-year increase Key Profitability Metrics (RMB million) | Metric | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :--------------------------------------- | :------ | :------ | :--------- | :------ | | Income from operations | 1,082 | 1,003 | +7.9% | 902 | | Operating margin | 20.1% | 19.0% | +1.1 p.p. | 15.0% | | Net income attributable to H World Group Limited | 894 | 659 | +35.7% | 49 | | Income tax expense | (377) | (279) | +35.1% | (578) | - Operating margin improved to **20.1%** from **19.0%** YoY, mainly due to a higher revenue contribution from the manachised and franchised business, aligning with the asset-light expansion strategy[22](index=22&type=chunk) - The higher income tax expense in Q1 2025 was due to withholding tax related to dividend distributions[25](index=25&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) Both EBITDA and Adjusted EBITDA (non-GAAP) showed strong year-over-year growth in Q1 2025, reflecting improved operational performance. Adjusted EBITDA for Legacy-Huazhu increased, while Legacy-DH continued to report a loss, albeit a reduced one quarter-over-quarter Non-GAAP Profitability Metrics (RMB million) | Metric | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :----------------------- | :------ | :------ | :--------- | :------ | | EBITDA (non-GAAP) | 1,615 | 1,309 | +23.4% | 974 | | Adjusted EBITDA (non-GAAP) | 1,496 | 1,421 | +5.3% | 1,246 | | Adjusted EBITDA (Legacy-Huazhu) | 1,573 | 1,487 | +5.8% | 1,493 | | Adjusted EBITDA (Legacy-DH) | (77) | (66) | -16.7% | (247) | [Cash Flow and Liquidity](index=6&type=section&id=Cash%20Flow%20and%20Liquidity) H World generated positive operating and investing cash inflows in Q1 2025, contributing to a healthy cash and cash equivalents balance. The company maintains a strong liquidity position with available credit facilities Cash Flow Summary (RMB million) | Cash Flow Type | Q1 2025 | Q1 2024 | Q4 2024 | | :-------------------------------- | :------ | :------ | :------ | | Operating cash inflow | 580 | 886 | 2,704 | | Investing cash inflow | 757 | 348 | (3,099) | | Financing cash outflow | (628) | (2,258) | (37) | - As of March 31, 2025, cash and cash equivalents totaled **RMB8.2 billion** (**US$1.1 billion**) and restricted cash was **RMB121 million** (**US$16 million**)[29](index=29&type=chunk)[52](index=52&type=chunk) - The company had a net cash balance of **RMB3.0 billion** (**US$418 million**) and unutilized credit facilities of **RMB3.0 billion**[30](index=30&type=chunk) [Guidance](index=6&type=section&id=Guidance) [Q2 2025 Revenue Guidance](index=6&type=section&id=Q2%202025%20Revenue%20Guidance) H World expects its revenue growth for the second quarter of 2025 to be between 1%-5% year-over-year, or 3%-7% excluding DH. Manachised and franchised revenue growth is projected to be in the range of 18%-22% Q2 2025 Revenue Growth Guidance | Metric | Q2 2025 YoY Growth Range | | :-------------------------------- | :----------------------- | | Total Revenue | 1%-5% | | Total Revenue (excluding DH) | 3%-7% | | Manachised and Franchised Revenue | 18%-22% | [Company Information & Disclosures](index=6&type=section&id=Company%20Information%20%26%20Disclosures) [Conference Call Details](index=6&type=section&id=Conference%20Call%20Details) H World's management hosted a conference call on May 20, 2025, to discuss the Q1 2025 financial results. Details for registration, live webcast, and replay access were provided - Conference call held on Tuesday, May 20, 2025, at 8 a.m. (U.S. Eastern time) / 8 p.m. (Hong Kong time)[33](index=33&type=chunk) - Participants could pre-register via a provided link to receive dial-in details, and a live webcast was accessible on the company's investor relations website[35](index=35&type=chunk)[36](index=36&type=chunk) [Use of Non-GAAP Financial Measures](index=7&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures%20(Explanation)) The company uses non-GAAP measures like adjusted net income and EBITDA to supplement GAAP results, excluding specific non-operating items for performance assessment - Non-GAAP measures include adjusted net income, adjusted basic/diluted EPS/ADS, EBITDA, and adjusted EBITDA[37](index=37&type=chunk) - These measures exclude share-based compensation, gain/loss from fair value changes of equity securities, foreign exchange gain/loss, and gain/loss on disposal of investments[37](index=37&type=chunk)[39](index=39&type=chunk) - The company believes these non-GAAP measures provide meaningful supplemental information for assessing performance and facilitating comparisons, especially for the lodging industry, but acknowledge limitations and are not a substitute for GAAP[37](index=37&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) [About H World Group Limited](index=9&type=section&id=About%20H%20World%20Group%20Limited) H World Group Limited is a global hotel industry player originating in China, operating 11,685 hotels across 19 countries under various brands. The company employs leased and owned, manachised, and franchised business models, with 92% of its rooms under asset-light manachise and franchise models - H World operated **11,685** hotels with **1,142,158** rooms in **19** countries as of March 31, 2025[45](index=45&type=chunk) - The company's business models include leased and owned (**8%** of rooms) and asset-light manachised and franchised models (**92%** of rooms)[46](index=46&type=chunk) - H World's brand portfolio includes HanTing Hotel, JI Hotel, Steigenberger Hotels & Resorts, and master franchisee rights for Mercure, Ibis, and Ibis Styles in pan-China[45](index=45&type=chunk) [Safe Harbor Statement](index=10&type=section&id=Safe%20Harbor%20Statement) This report contains forward-looking statements subject to inherent risks and uncertainties, which H World does not undertake to update unless legally required - The release contains forward-looking statements regarding anticipated growth strategies, future results, economic conditions, and the regulatory environment[49](index=49&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events or results due to inherent risks and uncertainties[49](index=49&type=chunk) - H World undertakes no obligation to update or revise any forward-looking statements unless required by applicable law[50](index=50&type=chunk) [Detailed Financial Statements](index=11&type=section&id=Detailed%20Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, shows a slight decrease in total assets and total equity compared to December 31, 2024, while total liabilities increased. Key changes include an increase in cash and cash equivalents, a decrease in short-term investments, and a significant increase in dividends payable Key Balance Sheet Items (RMB million) | Item | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Total assets | 61,559 | 62,552 | (993) | | Total liabilities | 50,937 | 50,281 | 656 | | Total H World Group Limited shareholders' equity | 10,495 | 12,177 | (1,682) | | Cash and cash equivalents | 8,184 | 7,474 | 710 | | Short-term investments | 2,682 | 3,603 | (921) | | Dividends payable | 2,137 | 0 | 2,137 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=13&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) The statement of comprehensive income for Q1 2025 shows a significant increase in net income attributable to H World Group Limited, driven by higher income from operations and a positive foreign exchange gain, despite increased income tax expense Key Comprehensive Income Items (RMB million) | Item | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :--------------------------------------- | :------ | :------ | :--------- | :------ | | Total revenue | 5,395 | 5,278 | +2.2% | 6,023 | | Total operating costs and expenses | (4,373) | (4,351) | +0.5% | (5,220) | | Income from operations | 1,082 | 1,003 | +7.9% | 902 | | Foreign exchange gain (loss) | 208 | (92) | N/A | (155) | | Net income attributable to H World Group Limited | 894 | 659 | +35.7% | 49 | | Basic Earnings per ADS | 2.91 | 2.10 | +38.6% | 0.16 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement for Q1 2025 indicates positive net cash provided by operating and investing activities, leading to a net increase in cash, cash equivalents, and restricted cash. This was supported by significant proceeds from maturity/sale and return of investments Cash Flow Activities (RMB million) | Activity | Q1 2025 | Q1 2024 | Q4 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net cash provided by operating activities | 580 | 886 | 2,704 | | Net cash provided by investing activities | 757 | 348 | (3,099) | | Net cash used in financing activities | (628) | (2,258) | (37) | | Net increase in cash, cash equivalents and restricted cash | 779 | (1,041) | (411) | - Proceeds from maturity/sale and return of investments significantly increased to **RMB3,031 million** in Q1 2025 from **RMB842 million** in Q1 2024[59](index=59&type=chunk) - Financing cash outflow was primarily driven by payment of share repurchase (**RMB430 million**) and repayment of debt (**RMB166 million**)[59](index=59&type=chunk) [Reconciliations of GAAP and Non-GAAP Results](index=15&type=section&id=Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) [Adjusted Net Income (Loss) Attributable to H World Group Limited](index=15&type=section&id=Adjusted%20Net%20Income%20(Loss)%20Attributable%20to%20H%20World%20Group%20Limited) Adjusted net income attributable to H World Group Limited, a non-GAAP measure, increased year-over-year to RMB775 million in Q1 2025, after excluding items such as share-based compensation, fair value changes, and foreign exchange gains/losses Adjusted Net Income Reconciliation (RMB million) | Item | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :--------------------------------------- | :------ | :------ | :--------- | :------ | | Net income (loss) attributable to H World Group Limited (GAAP) | 894 | 659 | +35.7% | 49 | | Share-based compensation expenses | 77 | 58 | +32.8% | 73 | | (Gain) loss from fair value changes of equity securities | 12 | (38) | N/A | 19 | | Foreign exchange (gain) loss, net | (208) | 92 | N/A | 155 | | Adjusted net income (loss) attributable to H World Group Limited (non-GAAP) | 775 | 771 | +0.5% | 321 | | Adjusted earnings (losses) per ADS (non-GAAP) | 2.53 | 2.46 | +2.8% | 1.04 | [EBITDA and Adjusted EBITDA](index=17&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) EBITDA and Adjusted EBITDA, non-GAAP measures, both showed significant year-over-year increases in Q1 2025, reflecting improved operational profitability before the impact of non-operating items. Adjusted EBITDA for Legacy-Huazhu grew, while Legacy-DH's loss narrowed quarter-over-quarter EBITDA and Adjusted EBITDA Reconciliation (RMB million) | Item | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :-------------------------------- | :------ | :------ | :--------- | :------ | | Net income (loss) attributable to H World Group Limited (GAAP) | 894 | 659 | +35.7% | 49 | | EBITDA (non-GAAP) | 1,615 | 1,309 | +23.4% | 974 | | Adjusted EBITDA (non-GAAP) | 1,496 | 1,421 | +5.3% | 1,246 | Adjusted EBITDA by Segment (RMB million) | Segment | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :---------------- | :------ | :------ | :--------- | :------ | | Legacy-Huazhu | 1,573 | 1,487 | +5.8% | 1,493 | | Legacy-DH | (77) | (66) | -16.7% | (247) | [Segment Financial Summary](index=17&type=section&id=Segment%20Financial%20Summary) [Revenue by Segment](index=17&type=section&id=Revenue%20by%20Segment) The segment financial summary highlights that Legacy-Huazhu continues to be the primary revenue driver, showing year-over-year growth, while Legacy-DH experienced a revenue decline in Q1 2025 Revenue by Segment (RMB million) | Segment | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :---------------- | :------ | :------ | :--------- | :------ | | Legacy-Huazhu | 4,481 | 4,246 | +5.5% | 4,789 | | Legacy-DH | 918 | 1,035 | -11.3% | 1,241 | | Total Revenue | 5,395 | 5,278 | +2.2% | 6,023 | [Adjusted EBITDA by Segment](index=17&type=section&id=Adjusted%20EBITDA%20by%20Segment) Legacy-Huazhu's Adjusted EBITDA continued its positive trend with a 5.8% year-over-year increase, while Legacy-DH's Adjusted EBITDA remained a loss, though it significantly improved from the previous quarter Adjusted EBITDA by Segment (RMB million) | Segment | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | | :---------------- | :------ | :------ | :--------- | :------ | | Legacy-Huazhu | 1,573 | 1,487 | +5.8% | 1,493 | | Legacy-DH | (77) | (66) | -16.7% | (247) | [Detailed Operational Data](index=18&type=section&id=Detailed%20Operational%20Data) [Legacy-Huazhu Detailed Operating Results](index=18&type=section&id=Legacy-Huazhu%20Detailed%20Operating%20Results) Legacy-Huazhu's detailed operational data shows continued network expansion with 539 net added hotels in Q1 2025, reaching 11,564 hotels. While overall ADR, occupancy, and RevPAR saw slight YoY declines, the segment maintains a strong pipeline, particularly in midscale and upper-midscale hotels Legacy-Huazhu Hotel Network (Q1 2025) | Hotel Type | Opened in Q1 2025 | Closed in Q1 2025 | Net Added in Q1 2025 | As of March 31, 2025 (Hotels) | As of March 31, 2025 (Rooms) | | :------------------------ | :---------------- | :---------------- | :------------------- | :---------------------------- | :--------------------------- | | Leased and owned hotels | 2 | (7) | (5) | 552 | 81,736 | | Manachised and franchised hotels | 692 | (148) | 544 | 11,012 | 1,034,664 | | **Total** | **694** | **(155)** | **539** | **11,564** | **1,116,400** | Legacy-Huazhu ADR, Occupancy, RevPAR (Q1 2025) | Metric | Q1 2025 (RMB) | Q1 2024 (RMB) | YoY Change | Q4 2024 (RMB) | | :------------------------ | :------------ | :------------ | :--------- | :------------ | | Blended ADR | 272 | 280 | -2.6% | 277 | | Blended Occupancy rate | 76.2% | 77.2% | -1.0 p.p. | 80.0% | | Blended RevPAR | 208 | 216 | -3.9% | 222 | Legacy-Huazhu Same-Hotel RevPAR (Q1 2025) | Hotel Class | Q1 2025 RevPAR (RMB) | Q1 2024 RevPAR (RMB) | YoY Change | Q1 2025 ADR (RMB) | Q1 2024 ADR (RMB) | YoY Change | Q1 2025 Occupancy | Q1 2024 Occupancy | YoY Change (p.p.) | | :-------------------------------- | :------------------- | :------------------- | :--------- | :---------------- | :---------------- | :--------- | :---------------- | :---------------- | :------------------ | | Economy hotels | 156 | 172 | -9.1% | 201 | 213 | -5.7% | 77.9% | 80.8% | -2.9 | | Midscale, upper-midscale hotels and others | 245 | 266 | -7.9% | 325 | 343 | -5.3% | 75.4% | 77.5% | -2.1 | | **Total** | **205** | **224** | **-8.3%** | **269** | **284** | **-5.3%** | **76.5%** | **79.0%** | **-2.5** | [Legacy-DH Detailed Operating Results](index=21&type=section&id=Legacy-DH%20Detailed%20Operating%20Results) Legacy-DH's detailed operational data for Q1 2025 shows a net decrease of 1 hotel, with 10 new manachised/franchised hotels offsetting 11 leased hotel closures. The segment demonstrated positive year-over-year growth across ADR, occupancy, and RevPAR, particularly strong in manachised and franchised hotels Legacy-DH Hotel Network (Q1 2025) | Hotel Type | Opened in Q1 2025 | Closed in Q1 2025 | Net Added in Q1 2025 | As of March 31, 2025 (Hotels) | As of March 31, 2025 (Rooms) | | :------------------------ | :---------------- | :---------------- | :------------------- | :---------------------------- | :--------------------------- | | Leased hotels | - | (11) | (11) | 65 | 13,749 | | Manachised and franchised hotels | 10 | - | 10 | 56 | 12,009 | | **Total** | **10** | **(11)** | **(1)** | **121** | **25,758** | Legacy-DH ADR, Occupancy, RevPAR (Q1 2025) | Metric | Q1 2025 (EUR) | Q1 2024 (EUR) | YoY Change | Q4 2024 (EUR) | | :------------------------ | :------------ | :------------ | :--------- | :------------ | | Blended ADR | 107 | 104 | +2.8% | 115 | | Blended Occupancy rate | 61.1% | 55.8% | +5.3 p.p. | 70.5% | | Blended RevPAR | 65 | 58 | +12.7% | 81 | [Hotel Portfolio by Brand](index=23&type=section&id=Hotel%20Portfolio%20by%20Brand) H World's hotel portfolio as of March 31, 2025, comprises 11,685 hotels across various segments, with economy and midscale hotels forming the largest portions. The company also has a significant pipeline of 2,888 unopened hotels, indicating future growth potential across its diverse brand offerings Hotel Portfolio by Segment (As of March 31, 2025) | Segment | Hotels in operation | Rooms | Unopened hotels in pipeline | | :---------------- | :------------------ | :------ | :-------------------------- | | Economy hotels | 5,677 | 464,841 | 1,123 | | Midscale hotels | 4,835 | 517,060 | 1,116 | | Upper midscale hotels | 994 | 132,474 | 527 | | Upscale hotels | 152 | 22,016 | 112 | | Luxury hotels | 16 | 2,325 | 5 | | Others | 11 | 3,442 | 5 | | **Total** | **11,685** | **1,142,158** | **2,888** | - HanTing Hotel is the largest brand with **4,269** hotels and **370,138** rooms, followed by JI Hotel with **3,092** hotels and **351,344** rooms[75](index=75&type=chunk) - The pipeline for midscale hotels (**1,116**) and economy hotels (**1,123**) represents the largest growth areas[75](index=75&type=chunk) ```

Group 1 - The core financial performance of Huazhu Group for Q1 2025 shows total revenue of 5.395 billion RMB, a year-on-year increase of 2.22%, and a net profit of 899 million RMB, reflecting a 34.78% increase [1] - The hotel revenue for Q1 2025 increased by 14.3% to 22.5 billion RMB, with a 15.3% increase when excluding Steigenberger Hotels GmbH and its subsidiaries [1] - The net profit attributable to Huazhu Group Limited was 894 million RMB, marking a 35.66% year-on-year increase, with basic earnings per share at 0.29 RMB [1] Group 2 - As of March 31, 2025, Huazhu operates a total of 11,685 hotels and 1.1422 million rooms globally, including 11,564 hotels from Legacy-Huazhu and 121 from Legacy-DH [2] - In Q1 2025, Huazhu opened 694 new hotels while closing 155, with a target of approximately 2,300 new openings for the year [2] - The Legacy-DH segment reported a 12.7% year-on-year increase in average daily room revenue, with a 2.8% rise in daily room rates and a 5.3 percentage point increase in occupancy rate [2]

Core Viewpoint - H World Group Limited reported its unaudited financial results for Q1 2025, showing a year-over-year revenue increase of 2.2% to RMB5.4 billion (US$744 million) and a significant net income growth of 35.7% to RMB894 million (US$123 million) [4][21][22]. Financial Performance - Total hotel turnover increased by 14.3% year-over-year to RMB22.5 billion in Q1 2025, with a 15.3% increase excluding Legacy-DH [4]. - Revenue from manachised and franchised hotels rose by 21.1% year-over-year to RMB2.5 billion (US$344 million) [12]. - Revenue from the Legacy-Huazhu segment was RMB4.5 billion, a 5.5% year-over-year increase, while the Legacy-DH segment saw a decline of 11.3% to RMB918 million [4][9]. Operational Highlights - As of March 31, 2025, H World operated 11,685 hotels with 1,142,158 rooms, including 11,564 hotels from Legacy-Huazhu and 121 from Legacy-DH [2][37]. - The company opened 694 hotels in Q1 2025, contributing to a total of 2,888 hotels in the pipeline [2][8]. - The average daily room rate (ADR) for Legacy-Huazhu hotels was RMB272, with an occupancy rate of 76.2% [5][6]. Cost and Expenses - Total operating costs and expenses in Q1 2025 were RMB4.4 billion, reflecting a slight increase of 0.5% year-over-year [14]. - Hotel operating costs were RMB3.6 billion, a 1.1% year-over-year increase, primarily due to a 4.2% increase in Legacy-Huazhu costs [14]. Cash Flow and Debt - Operating cash inflow for Q1 2025 was RMB580 million (US$80 million), while investing cash inflow was RMB757 million (US$103 million) [24]. - As of March 31, 2025, the company had total cash and cash equivalents of RMB8.2 billion (US$1.1 billion) and total debt of RMB5.3 billion (US$726 million) [25][24]. Future Guidance - For Q2 2025, H World expects revenue growth in the range of 1%-5%, or 3%-7% excluding Legacy-DH, with manachised and franchised revenue growth anticipated at 18%-22% [26].

Financial Performance - Hotel revenue for Q1 2025 increased by 14.3% year-over-year to RMB 22.5 billion, and by 15.3% excluding Steigenberger Hotels GmbH[6] - Total revenue for Q1 2025 grew by 2.2% year-over-year to RMB 5.4 billion (approximately $744 million), aligning with previous guidance[6] - Net profit attributable to the company for Q1 2025 was RMB 894 million (approximately $123 million), compared to RMB 659 million in Q1 2024[6] - EBITDA for Q1 2025 was RMB 1.6 billion (approximately $222 million), up from RMB 1.3 billion in Q1 2024[6] - Adjusted EBITDA for Q1 2025 was RMB 1.5 billion (approximately $206 million), compared to RMB 1.4 billion in Q1 2024[6] - Operating profit for Q1 2025 was RMB 1.1 billion (approximately $149 million), a year-over-year increase of 7.9%[16] - The company recorded a net profit attributable to Huazhu Group Limited of RMB 894 million (approximately $123 million), a year-over-year increase of 35.7%[17] - The adjusted net profit (non-GAAP) for the quarter was RMB 771 million, compared to RMB 321 million in the previous quarter, indicating strong operational performance[41] - The adjusted EBITDA for the same quarter was RMB 1,421 million, up from RMB 1,246 million in the previous quarter, reflecting a strong operational performance[42] Revenue Expectations - The company expects Q2 2025 revenue to grow between 1% to 5% year-over-year, or 3% to 7% excluding DH[7] - The company expects revenue growth for Q2 2025 to be between 1% to 5% compared to Q2 2024, or between 3% to 7% excluding DH[20] - Management and franchise income is projected to increase by 18% to 22% compared to Q2 2024[20] Hotel Operations - As of March 31, 2025, the company operated 11,685 hotels with a total of 1,142,158 rooms[6] - The company opened 694 hotels in Q1 2025 and closed 155 hotels during the same period[8] - In Q1 2025, the company opened 694 new hotels in China, aiming for a total of approximately 2,300 new hotels for the year[11] - The total number of hotels as of March 31, 2025, was 11,564, with a net increase of 539 hotels during the first quarter of 2025[45] - The company has 2,865 hotels in the pipeline, indicating ongoing expansion plans[46] - The company has 2,888 hotels in the pipeline, indicating significant future expansion potential[52] Financial Position - As of March 31, 2025, the company's total cash and cash equivalents amounted to RMB 8.2 billion (approximately $1.1 billion), with restricted cash of RMB 121 million (approximately $16 million)[19] - The total debt and net cash balance as of March 31, 2025, were RMB 5.3 billion (approximately $726 million) and RMB 3.0 billion (approximately $418 million), respectively[19] - Total assets decreased from RMB 62,552 million on December 31, 2024, to RMB 61,559 million by March 31, 2025[32] - Total liabilities increased from RMB 50,281 million to RMB 50,937 million during the same period[33] - The company reported a decrease in total equity from RMB 12,271 million to RMB 10,622 million[33] - Short-term debt decreased slightly from RMB 880 million to RMB 849 million[33] - The company has a total of RMB 1,864 million in deferred revenue as of March 31, 2025[33] - Huazhu Group's goodwill increased from RMB 5,221 million to RMB 5,300 million[32] Market Strategy - The company continues to implement a light-asset strategy, focusing on quality network expansion and enhancing brand positioning[11] - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency and customer experience[40] Non-GAAP Measures - The company utilizes non-GAAP financial measures such as adjusted net profit and adjusted EBITDA to provide meaningful supplemental information regarding its performance[23] - EBITDA is considered a useful financial indicator reflecting operational and financial performance before financing and tax impacts[24] - The company believes that adjusted EBITDA better reflects its financial performance capabilities[25] - The use of EBITDA and adjusted EBITDA has certain limitations, as it does not account for depreciation, amortization, interest expenses, and income taxes[25] - The company emphasizes that non-GAAP measures should not be viewed as substitutes for GAAP financial measures[26] Hotel Segment Performance - Revenue from the Legacy-Huazhu segment in Q1 2025 was RMB 4.5 billion, a year-over-year increase of 5.5% driven by ongoing hotel network expansion[13] - The average daily rate for Legacy-Huazhu hotels in Q1 2025 was RMB 272, down from RMB 280 in Q1 2024[9] - The occupancy rate for Legacy-Huazhu hotels in Q1 2025 was 76.2%, compared to 77.2% in Q1 2024[9] - The occupancy rate for all operating Legacy-DH hotels in Q1 2025 was 61.1%, up from 55.8% in Q1 2024 but down from 70.5% in the previous quarter[12] - The revenue from management franchise and licensed hotels in Q1 2025 was RMB 2.5 billion (approximately $344 million), a year-over-year increase of 21.1%[14] - The average daily room rate for leased and owned hotels decreased by 2.2% year-over-year to RMB 346, while the occupancy rate dropped by 1.3 percentage points to 81.0%[47] - The average revenue per available room (RevPAR) for leased and owned hotels decreased by 3.8% year-over-year to RMB 280[47] Conference Call - The company will hold a conference call on May 20, 2025, to discuss its financial results[22]

Group 1: Travel Trends and Market Insights - The upcoming Dragon Boat Festival holiday is expected to see a steady growth in travel demand, with local and nearby travel accounting for 50% of the market share [1] - There is a significant increase in searches for cultural experience products related to the Dragon Boat Festival, with keywords like "Dragon Boat" and "Zongzi" seeing a 220% increase in search volume [1] - The trend of "central city sinking to surrounding areas" is prominent, with popular short-distance routes identified in regions like the Yangtze River Delta and Beijing-Tianjin-Hebei [1] Group 2: Family and Inbound Travel - The overlap of the Dragon Boat Festival with Children's Day has boosted family travel, with family travel orders accounting for 35% of total orders on the Ctrip platform [2] - Inbound travel is gaining traction, with hotel search heat for inbound travel exceeding 100% year-on-year, indicating a strong appeal of China as a travel destination for foreign tourists [2] - The top ten source countries for inbound tourism include Malaysia, South Korea, and the United States, with major destinations being Shanghai, Beijing, and Guangzhou [2] Group 3: Financial Performance of Travel Companies - Ctrip Group reported a net operating income of 13.8 billion RMB for Q1 2025, a 16% increase year-on-year, with a net profit of 4.3 billion RMB [4] - Tongcheng Travel is projected to achieve revenues of 19.91 billion RMB in 2025, with a target price set at 28.00 HKD per share based on strong fundamentals [4] - Huazhu Group's adjusted EBITDA for Q4 2024 is expected to grow by 10%, leading to an upward revision of its target price to 31.5 HKD [5] Group 4: Market Outlook and Recommendations - The tourism industry is anticipated to continue its recovery, supported by domestic demand policies and improving consumer confidence [3] - Key investment recommendations include focusing on leisure travel platforms and quality scenic area operators, as well as business travel recovery stocks [3] - Companies like Xiangyuan Cultural Tourism and Huangshan Tourism are highlighted as potential investment opportunities in the leisure travel sector [3]

Core Insights - The Chinese hotel industry is undergoing a significant efficiency revolution driven by AI technology, transforming service models and competitive logic [1][8] - AI is expected to replace a portion of hotel labor, potentially saving up to 30% in labor costs while shifting roles from repetitive tasks to high-value services [1][6] AI Implementation in Hotels - AI technologies such as smart front desk robots and AI digital managers are being integrated into hotel operations, enhancing efficiency and customer service [3][4] - Companies like Huazhu and Shoulv Rujia are leveraging AI for self-service check-ins and backend management, improving operational decision-making [3][4] Cost Reduction and Efficiency Gains - AI applications are reported to reduce labor costs by 30% and improve operational efficiency by 50% in processes like order inquiries and room assignments [6][4] - The use of AI digital managers has allowed hotel groups to automate 60% of repetitive tasks, freeing up human resources for more strategic roles [4][6] Market Trends and Challenges - The hotel industry is facing declining average daily rates (ADR) and occupancy rates (OCC), prompting a focus on cost reduction through AI [7][6] - Despite the benefits, challenges remain in AI adoption, including technology maturity and employee skill gaps [8][9] Future Outlook - The trend towards increased digital training and skill enhancement in the hotel workforce is expected to continue, with a shift towards a more technology-driven operational model [10][9] - The integration of AI is anticipated to evolve the hotel industry from a labor-intensive model to a human-machine collaborative approach [8][10]

Core Viewpoint - The hotel industry is undergoing a new retail revolution as major hotel groups like Huazhu and Shoulv Rujia expand into new retail, selling "hotel-style" products, which is becoming a new growth driver for the industry [1][3] Group 1: New Retail Trends - Almost all hotel groups surveyed by Deep Blue Think Tank have ventured into new retail, selling hotel-branded bedding and toiletries, making new retail a standard in the hotel industry [3] - With changing consumer habits, hotel groups are targeting new retail to enhance revenue, with Huazhu Group selling products like pillows and toiletries [3] - The retail business is becoming a second growth curve for companies like Atour Group, which reported a GMV of 2.592 billion yuan in 2024, a 127.7% increase from 2023 [4] Group 2: Market Challenges - Over 80% of hotel groups mentioned "providing incremental value to consumers" and "increasing revenue" as reasons for entering new retail [6] - The hotel market is returning to rational growth after explosive growth in 2023, with many hotel groups experiencing declines in key operational metrics [6] - The competitive landscape is becoming crowded, prompting hotels to diversify into retail to boost revenue [7] Group 3: Future Directions - The future of the hotel industry will involve integrating various business models, moving beyond traditional services to create multi-functional spaces [10][11] - Hotels need to focus on differentiation and unique experiences to avoid low-level competition, as product homogeneity is a significant challenge [9] - The integration of cross-border e-commerce with new retail is being explored by hotel groups like Shoulv Rujia to enhance consumer engagement [9]

Core Insights - Shangmei Smart Hotel Group has initiated a strategic partnership with various cultural and tourism sectors in Gansu, marking a significant milestone in its expansion in the northwest region of China [1] - The recovery of tourism demand has led to a surge in hotel accommodation needs in the northwest, with over 40 million visitors and a spending of over 22 billion yuan during the 2025 Spring Festival [2] - The northwest region is seen as a hotbed for investment due to favorable rental conditions and government policies supporting the hotel industry [2] Group 1: Shangmei Smart Hotel Group's Expansion - Shangmei Smart Hotel Group has established over 700 hotels in the northwest region by March 31, 2025, with 142 located in Gansu [2][3] - The group aims to play a dual role as an "investment model innovator" and "industry upgrade enabler" to capture value in the northwest hotel market [3] Group 2: Competitors in the Northwest Market - Major hotel groups like Jinjiang and Huazhu have also expanded in Gansu, with over 500 hotels opened collectively by these three groups [4][5] - Jinjiang has over 200 hotels in Gansu and nearly 300 signed contracts, while Huazhu's main brands have a significant presence in the region [5][6] Group 3: Market Dynamics and Future Outlook - The northwest hotel market is entering a new competitive phase, with various hotel groups vying for market share [7] - The region's vast potential and low hotel chain penetration make it an attractive target for expansion, with several groups already establishing a presence [9][10] - The competition is expected to intensify as major players like Jinjiang, Huazhu, and Shangmei Smart Hotel Group continue to expand their footprints in the region [11][12]