Strong Brands Drive Growth, Balancing Scale
and Quality, Global Expansion Reaches New Heights
HONG
KONG, Nov. 26, 2024 /PRNewswire/ -- H World
Group Limited ("H World" or "the Group", NASDAQ: HTHT and HKEX:
1179.HK) announced its unaudited financial results for the
third quarter of 2024 ("Q3 2024"), with both revenue and
hotel turnover showing growth. According to the announcement, H
World's revenue increased 2.4% year-over-year to RMB6.4 billion in the third quarter of 2024.
Among this, revenue from H World's business in China ("Legacy-Huazhu" or
"Huazhu") increased 1.0% year-over-year; and revenue from H
World International ("Legacy-DH" or "DH") increased
8.9% year-over-year. Meanwhile, the Group's hotel turnover
increased 10.7% year-over-year to RMB26.0
billion. Hotel turnover from the Legacy-Huazhu segment
increased 11.0% year-over-year; and hotel turnover from the
Legacy-DH segment increased 7.8% year-over-year. The Group's
business scale further expanded both domestically and
internationally.
H World was founded in 2005 and has since grown into one of the
world's leading hotel management groups. With outstanding product
innovation and brand operations, H World has gradually established
a leading position in the market and continues to drive the
development of the hotel industry. As of the end of the third
quarter, H World operated 10,845 hotels in 18 countries, with 2,925
unopened hotels in the pipeline.
Jin Hui, CEO of H World
commented: "After reaching the milestone of 10,000 hotels in the
second quarter, we continued our fast-paced, high-quality network
growth and opened 774 new hotels in China in the third quarter of 2024. Our
occupancy rate remained solid at 85% despite our ongoing rapid
hotel network expansion. Going forward, we will continue to
emphasize the importance of sustainable high-quality growth. We aim
to expand our presence across all regions and continue penetrating
into lower-tier cities in China,
thereby reaching more of China's
hotel market with our high-quality hotel products with excellent
services. Regarding our business outside China, We continued focusing on cost reduction
in our European business, while at the same time seeking growth
opportunities in the Asia-Pacific
(APAC) and in the Middle East
areas."
Net Income Reaches RMB 1.3
Billion, Demonstrating Strong Market Competitiveness
In the third quarter of 2024, despite facing the challenge of an
overall industry downturn, H World demonstrated its strong market
competitiveness, with revenue reaching RMB6.4 billion, significantly exceeding the
industry average (based on statistics from eight domestic and
international peers that have released their Q3 2024 financial
reports to date). Among this, Legacy-DH saw an 8.9% year-over-year
growth, showing steady growth in the global market. Furthermore,
amidst the general decline in industry net profits, H World
achieved a net income attributable to H World of RMB1.3 billion, far surpassing the industry
average, demonstrating strong profitability.
In terms of operating margin, H World's operating margin reached
26.7%, an increase of 1.1 percentage points compared to the
previous quarter, indicating a steady recovery. Notably,
Legacy-Huazhu achieved an operating margin of 34.2%, a 3.2
percentage point increase quarter-over-quarter, further
consolidating the Group's leading position in the Chinese
market.
Diverse Brand Portfolio Drives Robust Hotel Network
Expansion
As a youthful group, H World, with its keen market insight into
consumer trends and the hotel industry, as well as its product
innovation capabilities, continuously nurtures outstanding
proprietary brands. Products such as HanTing Hotel and JI Hotel are
all self-developed by the group and occupy leading positions in
their respective price segments, forming the core foundation of the
group. At the same time, the Group has also continuously enriched
its brand matrix through external partnerships and acquisitions.
Currently, H World operates over 30 brands, covering all market
segments, including Economy hotels, Midscale hotels, Upper midscale
hotels, Upscale hotels, Luxury hotels and other market segments.
This diverse brand portfolio not only expands the Group's user base
but also enables it to more accurately capture the needs of
different franchisees and consumers, further enhancing its market
competitiveness.
With its strong brand appeal, H World has attracted increasing
attention from franchisees. Combined with the Group's light-asset
business model, it has been able to rapidly expand, focusing on
both lower-tier markets and high-end growth. In the third quarter
of 2024, Legacy-Huazhu successfully opened 774 new hotels in the
Chinese market, a year-over-year increase of 42%, further
accelerating the expansion of its hotel network. This pace of new
openings is among the fastest in the hotel industry, fully
demonstrating the Group's powerful market expansion capabilities
and brand influence.
In the third quarter, the share of hotels in third-tier and
lower cities reached 42% of Legacy-Huazhu's total operating hotels,
an increase of 2 percentage points year-over-year. The Group
continues to penetrate lower-tier markets, improving the
long-standing lack of quality supply in these cities. Additionally,
the Group has aligned with the mid-to-high-end development trend in
the hotel industry, driven by an upgrade in consumer demand, and
has seized the opportunity in the mid-to-high-end market with its
expanding brand portfolio. Data shows that in the third quarter,
the number of mid-to-high-end hotels operated by Legacy-Huazhu
increased by 33% year-over-year to 803 hotels. By the end of the
reporting period, the number of hotels under development increased
by 36% year-over-year. Among them, H World's upper midscale hotels
brand, IntercityHotel, acquired overseas, has performed
exceptionally well in China.
Within five years, the number of operating and unopened hotels has
reached 125.
In addition, with the increase in business activities, the
demand for hotel services by business travelers is gradually
recovering, and H World's performance is expected to see new growth
drivers. According to the 2023 Global Business Travel Index Annual
Outlook Report published by the Global Business Travel Association
(GBTA), global business travel spending is projected to reach
$1.5 trillion in 2024, with
China's business travel
expenditure expected to reach $370
billion, an 8.8% increase compared to 2023. Against this
backdrop, H World is actively responding to changes in market
demand. In September this year, the group's upper midscale hotel
brand, Crystal Orange Hotel, underwent an in-depth iteration and
launched its latest version 2.5. This version introduces the
concept of "pure sleep," returning to the essence of business
travel hotels and focusing on enhancing the core experience of
"high-quality sleep" for business travelers.
Balancing "Quantity" and "Quality": Significant Results from
the High-Quality Development Strategy
As the consumer market returns to rationality, consumers have
become more discerning, seeking better value for money while also
raising their expectations for quality consumption. As a result,
while H World continues to pursue store expansion and scale, it
also strictly implements its high-quality development strategy.
According to the latest financial report, H World currently
operates 10,845 hotels, with 10,707 of them located in China, placing it among the leaders in the
industry in terms of the number of operating hotels. Despite such a
high base of hotels, the group's occupancy rates
("OCC") remains at a relatively high level. In
particular, Legacy-Huazhu's OCC steadily increased in the first
three quarters, with the third-quarter OCC reaching approximately
85%, which also exceeds the industry average. H World has
maintained a high occupancy rate during its ongoing store
expansion. This is attributed to the targeted optimization of its
sales channels. Legacy-Huazhu has effectively strengthened the
customer acquisition and sales capabilities of its stores, further
emphasizing the importance of direct sales and membership for the
company's long-term sustainable development. Data shows that in the
third quarter, the contribution of central reservations to
Legacy-Huazhu's room nights reached 64.2%, marking a year-on-year
increase of 2.2 percentage points and a quarter-on-quarter increase
of 4.3 percentage points. The number of members has approached 260
million.
Accelerating Global Expansion: Exciting Prospects
Ahead
In 2019, H World announced the opening of the first overseas
direct-operated hotel of its brand, "JI Hotel" in Singapore, marking the official launch of the
Group's overseas development strategy. In 2020, the Group expanded
its international presence through the full acquisition of Deutsche
Hospitality, using it as a "springboard" to explore additional
market opportunities in other overseas regions. Going forward, H
World will continue to actively explore international development
and seek growth opportunities in the Asia-Pacific and Middle East regions, gradually advancing its
globalization process. As of September 30,
2024, Legacy-DH operates 138 hotels, with 26 more in the
pipeline. In the third quarter, Legacy-DH reported an average daily
room rate ("ADR") of €117, a 2.5% year-on-year increase; an
OCC of 69.8%, up 0.8 percentage points year-on-year; and a revenue
per available room ("RevPAR") of €82, which increased by
3.7% year-on-year, demonstrating an overall improvement in
operational efficiency.
In early November 2024, the Group
made its debut at the China International Import Expo
("CIIE"), showcasing the innovative model of China's hotel industry to the world. This also
conveyed Huazhu's confidence in the Chinese market, reflecting its
commitment to the development strategy of "rooted in China, reaching the world." H World's CEO,
Jin Hui, stated: "A world-class
hotel group must ensure that its brand and management meet
world-class standards. Today, China's hotel industry has already developed
some core competitive advantages, such as leading integration
efficiency and technology application. H World is confident that
through high-quality development, we will bring China's hotel industry to world-class
heights."
-End-
About H World Group Limited
Originated in China, H World
Group Limited is a key player in the global hotel industry. As of
September 30, 2024, H World operated
10,845 hotels with 1,062,546 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
September 30, 2024, H World operated
9 percent of its hotel rooms under the lease and ownership model,
and 91 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
