HWORLD(HTHT)2024-08-21 07:55Financial Data and Key Metrics - Legacy-Huazhu's RevPAR in Q2 2024 was RMB244, down 2% YoY, with ADR at RMB296, down 2.9% YoY, and occupancy rate at 82.6%, up 0.7 percentage points YoY [7] - Total revenue for the group increased 11% YoY to RMB6.1 billion, with Legacy-Huazhu revenue growing 11% YoY to RMB4.8 billion and Legacy-DH revenue rising 12% YoY to RMB1.3 billion [22] - Adjusted EBITDA increased 15% YoY to RMB2 billion, with Legacy-Huazhu's adjusted EBITDA growing 14% YoY to RMB1.9 billion and DH business generating RMB131 million adjusted EBITDA, turning profitable from a loss position [25][26] Business Line Performance - The company opened 567 new hotels in Q2 2024, with 101 hotel closures, and the number of hotels in the pipeline reached a record high of 3,266 [11] - Economy and middle-scale hotels accounted for 92%, 82%, and 89% of hotels in operation, hotels in pipeline, and hotel openings, respectively [12] - The proportion of HanTing 3.5 and above versions in operation increased to 36.3% in Q2 2024, up 6.5 percentage points compared to the end of last year [12] Market Performance - Domestic airline passengers increased 16.4% YoY and 12.4% compared to the same period in 2019, while high-speed railway passengers reached a record high of 2.1 billion, up 18.4% YoY [8] - The number of room nights sold in China increased by approximately 21% YoY, with occupancy rate increasing by 0.7 percentage points YoY [9] - DH RevPAR in Q2 2024 was EUR 82, up 4.5% YoY, driven by a 2.7% increase in ADR to EUR 120 and a 1.2 percentage point increase in occupancy rate to 68.3% [18] Company Strategy and Industry Competition - The company aims to achieve 20,000 hotels in 2,000 cities, focusing on service excellence-centric, sustainable quality growth strategy [6] - The company is focusing on product upgrades, service excellence, and membership programs to strengthen core competitive advantages and drive long-term sustainable growth [10] - The company is repositioning its HI Inn brand to focus on ultimate value for money, with a new HI Inn 6.0 version designed to meet customers' core accommodation needs [16] Management Commentary on Operating Environment and Future Outlook - The company expects RevPAR to gradually return to a healthier and sustainable growth trend, with Q3 2024 RevPAR expected to decline around mid-single digit YoY [30] - The company revised up its full-year growth hotel opening target to over 2,200 hotels, up from the previous guidance of around 1,800 hotels [27] - The company remains focused on lower-tier cities penetration and upper mid-segment penetration, with confidence in maintaining a strong competitive advantage in the industry [32] Other Important Information - The company announced a 3-year shareholder return plan with an aggregate amount of up to US$2 billion, including semi-annual ordinary dividends, special dividends, and share buybacks [27] - The company had RMB9.9 billion in cash, cash equivalents, restricted cash, and time deposits as of the end of June 2024, with a solid net cash position of RMB4.3 billion [26] Q&A Session Question: RevPAR expectations for Q3 2024 and full year 2024 - The company expects Q3 2024 RevPAR to decline around mid-single digit YoY, with a gradual return to a healthier and sustainable growth trend [30] Question: Investment appetite for franchisees - The company remains confident in franchisee sentiment, focusing on lower-tier cities penetration and upper mid-segment penetration, with a strong pipeline and high-quality growth strategy [32] Question: Hotel opening capacity and supply chain progress - The company is improving supply chain capability by replacing higher-quality suppliers and improving efficiency, with a focus on high-quality growth over scale [35][36] Question: Hotel supply impact on RevPAR and margins - The company believes the supply and demand will balance, with a focus on high-quality supply and maintaining core competitiveness through service excellence and product upgrades [38][41] Question: DH long-term targets and strategy - The company is focusing on asset-light transformation, cost control, and efficiency improvement for DH, with plans to leverage DH's brand and product in the Middle East and Asia Pacific [40]