HWORLD(HTHT)2024-11-27 15:30Financial Data and Key Metrics Changes - Total turnover for Q3 2024 was RMB 26 billion, representing an 11% year-over-year increase, with Legacy-Huazhu's hotel turnover growing 11% year-over-year to RMB 24 billion [37] - Hotel revenue for the group increased 2.4% year-over-year to RMB 6.4 billion, while revenue from Legacy-Huazhu grew 1% year-over-year to RMB 5.2 billion [38] - Adjusted EBITDA decreased 9.5% year-over-year to RMB 2.1 billion, with Legacy-Huazhu's adjusted EBITDA down 7.5% year-over-year [44] Business Line Data and Key Metrics Changes - Legacy-Huazhu's RevPAR decreased 8.1% year-over-year to RMB 256, with ADR down 7% year-over-year to RMB 301 [10] - Revenue from Huazhu manachised and franchised hotels grew 14.7% year-over-year, driven by strong hotel openings [39] - Legacy-DH revenue rose 9% year-over-year to RMB 1.3 billion, attributed to business recovery and hotel network expansion [39] Market Data and Key Metrics Changes - The number of hotels in operation in Tier 3 and below cities accounted for 42%, up 2 percentage points year-over-year, while hotels in Tier 1 cities increased by 2 percentage points [17][18] - The number of active corporate clients exceeded 4,500, up 45% year-over-year [26] Company Strategy and Development Direction - The company continues to focus on high-quality growth, prioritizing quality over quantity in hotel openings [11] - The strategy includes cleaning up low-quality hotels and enhancing the overall service quality of the hotel portfolio [12] - The company aims to solidify its leading position in the limited service segment by expanding high-quality, value-for-money hotels [15] Management Comments on Operating Environment and Future Outlook - Management noted that the recovery of China's overall business travel demand remains stagnant, impacting RevPAR [25] - For Q4 2024, management expects RevPAR to decline in the mid-single digits year-over-year due to ADR pressure [53] - Looking ahead, management anticipates a stabilization and upward trend in RevPAR starting from next year, supported by government initiatives to boost domestic consumption [63] Other Important Information - The company closed 217 hotels in Q3 2024, with a focus on phasing out low-quality properties [12] - As of the end of Q3 2024, the company had RMB 9.3 billion in cash and cash equivalents, maintaining a solid net cash position of RMB 4 billion [46] - The company has bought back approximately USD 270 million worth of shares year-to-date [47] Q&A Session Summary Question: RevPAR trends in October and November and expectations for Q4 - Management indicated that business travel activity remains weak, impacting ADR and RevPAR, with expectations for a mid-single-digit decline in Q4 [51][53] Question: Strategy to enhance membership loyalty and increase direct sales ratio - Management is enhancing the membership program by improving benefits and seeking partnerships with airlines and car-hailing companies to boost membership growth [54][56][58] Question: Expectations for RevPAR next year and supply situation in China - Management expects RevPAR to stabilize and grow next year, with a focus on high-quality supply as low-quality hotels exit the market [62][64] Question: Full year opening targets and competition landscape - Management targets around 2,400 new openings for 2024, with a focus on maintaining quality and addressing competition in the midscale and upper-midscale segments [73][75] Question: Insights on leased and owned business strategy - Management confirmed ongoing closures of leased and owned hotels as part of a shift to a more asset-light model, with closures expected to continue but at a reduced pace compared to Q3 [83][84]