Core Viewpoint - Huazhu Group is undergoing a painful transformation while advancing its asset-light strategy, facing challenges such as aging hotel properties and declining key performance indicators [7][12]. Financial Performance - In the first half of 2025, Huazhu Group reported revenue of approximately 11.8 billion yuan, a year-on-year increase of 3.5%. Revenue from Legacy-Huazhu (mainly Huazhu's China operations) was 9.6 billion yuan, up 5.6%, while revenue from Legacy-DH (mainly Huazhu's German operations) was 2.2 billion yuan, down 4.9% [1]. - Hotel operating costs for the first half of 2025 were about 7.4 billion yuan, compared to approximately 7.3 billion yuan in the first half of 2024, indicating that costs have not significantly decreased despite the ongoing strategy [1]. Hotel Network and Renovation Needs - As of June 30, 2025, Huazhu had over 12,100 operating hotels globally, with more than 1.1849 million rooms. Many of these rooms, particularly in first- and second-tier cities, require significant renovation, which poses a substantial financial burden [1]. - The company plans to accelerate the upgrade and renovation of aging hotels, particularly older HanTing hotels, which are facing significant challenges due to outdated facilities and high renovation costs [8][9]. Expansion Plans - Huazhu Group is committed to expanding its hotel network, with plans to open a total of 2,300 hotels in 2025, as stated by CEO Jin Hui [2]. Brand and Market Position - HanTing, as Huazhu's core economy hotel brand, has a high market share but is facing challenges due to the aging of early-opening stores, particularly in first- and second-tier cities [5][6]. - The company has recognized the need to improve service quality and operational models in its existing hotels to attract younger consumers who have higher expectations for service [10][11]. Key Performance Indicators - Huazhu Group is experiencing declines in key performance indicators: - Average Daily Rate (ADR) decreased by 1.9% to 290 yuan in Q2 2025 [15]. - Occupancy Rate (OCC) fell by 1.6 percentage points to 81% [17]. - Revenue per Available Room (RevPAR) dropped by 3.8% to 235 yuan [18]. - The decline in these metrics raises concerns about the company's competitiveness and profitability, especially in a saturated market where many hotels are resorting to price cuts to attract customers [14][18]. Market Challenges - The hotel industry is facing intense competition, with a significant increase in supply over the past two years, leading to aggressive pricing strategies that have affected Huazhu's pricing and occupancy rates [15][17]. - The company's stock price has seen a significant decline, dropping 42% from its peak of 47.16 HKD per share in 2021 to 28.16 HKD as of August 26, 2023, reflecting investor concerns about its future performance [18].