Revenue Growth, Enhanced Profitability, and Milestone Reached
in Hotel Network
HONG
KONG, Aug. 20, 2024 /PRNewswire/ -- H World
Group Limited ("H World" or "the Group", NASDAQ: HTHT and HKEX:
1179.HK) announced its unaudited financial results for the
second quarter ("Q2 2024") and interim period ended
June 30, 2024.
In the first half of the year, revenue increased by 14.1%
year-over-year, with second quarter revenue growth slightly
exceeding the upper limit of guidance.
H World continues to prioritize customer-centricity,
continuously improving the quality of its products and services,
leading the industry toward high-quality development. In the first
half of 2024, the Group achieved revenue of RMB 11.4 billion (approximately USD 1.6 billion), a 14.1% increase compared to
the first half of 2023. Of this, revenue from H World's business in
China("Legacy-Huazhu") was
RMB 9.1 billion, a year-on-year
increase of 14.3%, while revenue from Huazhu International
("Legacy-DH" or "DH") was RMB
2.4 billion, up 13.7% year-on-year, with growth in both
domestic and international revenue. In the second quarter of 2024,
the Group continued to expand its hotel network, achieving revenue
of RMB 6.1 billion (approximately
USD 846 million), a
quarter-on-quarter increase of 16.5% and a year-on-year increase of
11.2%, reaching the upper limit of the previously announced
guidance of 7% to 11% growth compared to Q2 2023.
On the profitability front, in the first half of 2024, the Group
generated an income from operations of RMB
2.6 billion (approximately USD 354
million), representing a year-on-year increase from
RMB 2 billion in the first half of
2023. In Q2 2024, income from operations was RMB 1.6 billion (approximately USD 216 million), compared to RMB 1.4 billion in the second quarter of 2023 and
RMB 1 billion in the previous
quarter. In addition to the growth in both revenue and income from
operations, the Group has also improved its profitability through
the asset-light expansion strategy. In the first half of 2024, the
Group's operating margin (defined as income from operations as a
percentage of revenue) was 22.5%, up 2 percentage points from 20.5%
in the first half of 2023. In the second quarter of 2024, the
operating margin was 25.6%, an increase from 25.0% in the second
quarter of 2023 and 19.0% in the previous quarter, indicating
continued optimization of profitability.
In the second quarter of 2024, the Group earned a net income
attributable to H World Group Limited of RMB
1.1 billion (approximately USD 147
million), compared to RMB 1
billion in Q2 2023 and RMB 659
million in the previous quarter. In order to more
effectively reflect the profitability of the Group's core business,
adjusted EBITDA (non-GAAP) is used as a measure. In the second
quarter of 2024, the Group recorded an adjusted EBITDA (non-GAAP)
of RMB 2 billion (approximately
USD 280 million), compared with
RMB 1.8 billion in the second quarter
of 2023 and RMB 1.4 billion in the
previous quarter, with both year-over-year and quarter-over-quarter
growth.
Operational Efficiency Improves Quarter-over-Quarter, Strong
Brand Appeal
In the second quarter of 2024, Legacy-Huazhu's blended revenue
per available room ("RevPAR") for leased, owned, manachised
and franchised hotels was RMB 244,
with an average daily room rate ("ADR") of RMB 296 and an occupancy rate ("OCC") of
82.6%. In the previous quarter, these figures were RMB 216, RMB 280,
and 77.2%, respectively, while in the same period last year, they
were RMB 250, RMB 305, and 81.8%. In the second quarter of
2024, all three key operational indicators for Legacy-Huazhu showed
quarter-on-quarter increase. Compared to the same period last year,
although RevPAR saw a slight decline of 2% due to a high base from
the previous year, with 567 new hotels opened in China during the second quarter of 2024 , the
Group has kept a steady pace of openings while achieving a
year-over-year increase of 0.7 percentage points in occupancy rate,
reflecting strong market recognition and the Group's robust brand
appeal. The combination of new openings and rising occupancy rates
will maintain the Group's advantageous position in market
competition.
For Legacy-DH, the blended RevPAR for leased as well as
manachised and franchised hotels (excluding hotels temporarily
closed) was €82, with an ADR of €120 and an OCC of 68.3%. In the
previous quarter, these figures were €58, €104, and 55.8%, while in
the same period last year, they were €78, €117, and 67.1%. In Q2
2024, all three key operational indicators for Legacy-DH showed
improvements both quarter-over-quarter and year-over-year, with
continuous progress in the Group's overseas business and continuous
enhancement of operational efficiency.
Accelerated Expansion of Hotel Network, Upgraded Full Year
Hotel Opening Guidance for 2024
In terms of hotel openings, H World's hotel network is steadily
expanding. As of June 30, 2024, the
Group operates a total of 10,286 hotels worldwide, with
Legacy-Huazhu having 10,150 operating hotels and Legacy-DH having
136 operating hotels. H World and Legacy-Huazhu reached the
remarkable milestone of 10,000 hotels in the second quarter,
opening a new chapter for the group. H World has now grown from
over 10,000 hotels in more than 1,000 cities to over 20,000 hotels
in more than 2,000 cities, achieving high-quality expansion of its
hotel network, which signifies a new starting point for its
"Thousand Cities, Ten Thousand Hotels 2.0" strategy.
At the same time, Legacy-Huazhu will continue to focus on
product upgrades, excellent service, and membership programs to
enhance the competitive advantage of the H World and promote
sustainable growth in average revenue per available room. In terms
of overseas business, the group is keen to expand its global
footprint and transfer Legacy-DH into a more asset-light model.
As of June 30, 2024, the Company
has 3,294 hotels under development, including 3,266 for
Legacy-Huazhu and 28 for Legacy-DH. Additionally, the group
announced an upward revision of its guidance for hotel openings in
2024, expecting to open over 2,200 hotels, up from the previous
guidance of 1,800, further expanding its hotel network.
Dividends and Buybacks Reflect Corporate Confidence; Positive
Outlook for the Hotel Industry
On July 23, 2024, the board of
directors of H World announced a three-year shareholder return plan
effective immediately, which may distribute up to a total of
$2 billion to the group's
shareholders. It also approved a five-year share repurchase plan
for American Depositary Shares, effective from August 21, 2024, with a maximum total amount of
$1 billion. Notably, this share
repurchase plan replaces the previous plan approved and adopted on
August 21, 2019, with a maximum total
amount of $750 million. The increased
dividend and share repurchase total reflect the group's confidence
in its long-term development.
H World is a significant player in the global hospitality
industry. The main reason is that Chinese hotels have a strong
industry background due to the fact that they have the world's
largest tourist population and diverse forms of tourism. According
to official statistics, in the first half of 2024, the passenger
volume of railway and domestic flights was 2.096 billion and 350
million, respectively, representing year-on-year growth of 18.4%
and 23.5%; the Ministry of Culture and Tourism of China also reported that the number of
tourists during the Labour Day Holiday has returned to a level 28%
higher than that of 2019. With the follow-up publicity and
promotion of cultural tourism across different regions, residents'
willingness to travel has become stronger. In terms of cross-border
travel, inbound tourism is gaining popularity under the "China
Travel" trend. Statistics from the National Immigration
Administration of China shows that
in the first half of the year, 14.635 million foreign visitors
entered the country from various ports, a year-on-year increase of
152.7%; the China Tourism Academy also predicts that the number of
outbound tourists will reach 130 million in 2024. Overall, consumer
enthusiasm for travel is expected to continue to rise in the second
half of the year, and the recovery of the macroeconomy will bring
more business travel demand, indicating a promising outlook for the
hotel industry.
About H World Group Limited
Originated in China, H World
Group Limited is a key player in the global hotel industry. As of
June 30, 2024, H World operated
10,286 hotels with 1,001,865 rooms in operation in 18 countries. H
World's brands include Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel,
Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel,
Madison Hotel, Joya Hotel, Blossom
House, Ni Hao Hotel, CitiGO Hotel, Steigenberger Hotels
& Resorts, MAXX, Jaz in the City, IntercityHotel, Zleep Hotels,
Steigenberger Icon and Song Hotels. In addition, H World also has
the rights as master franchisee for Mercure, Ibis and Ibis Styles,
and co-development rights for Grand Mercure and Novotel, in the
pan-China region.
H World's business includes leased and owned, manachised and
franchised models. Under the lease and ownership model, H World
directly operates hotels typically located on leased or owned
properties. Under the manachise model, H World manages manachised
hotels through the on-site hotel managers that H World appoints,
and H World collects fees from franchisees. Under the franchise
model, H World provides training, reservations and support services
to the franchised hotels, and collects fees from franchisees but
does not appoint on-site hotel managers. H World applies a
consistent standard and platform across all of its hotels. As of
June 30, 2024, H World operated 10
percent of its hotel rooms under the lease and ownership model, and
90 percent under the manachise and franchise model.
For more information, please visit H World's website:
https://ir.hworld.com.
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SOURCE H World
