H World Group Limited (“H World” or “the Group“, NASDAQ: HTHT and HKEX: 1179) announced its unaudited financial results in the third quarter ended September 30, 2023.
Year-on-Year Revenue Surges Over 53 per cent, Continues to Exceed Guidance
Relying on sophisticated and efficient regional headquarters to rapidly expand the hotel network, gradually reaching resilient low-tier cities, H World consistently maintains a leading position in the limited-service market through high-quality products. Meanwhile, the Group continues to refine its upper-midscale segment development to enhance market share and achieved relatively robust development in the third quarter. Revenue was RMB 6.3 billion (USD 861 million) in the third quarter of 2023, representing a 53.6 per cent year-over-year increase and a 13.7 per cent sequential increase. Revenue from the Legacy-Huazhu (refers to H World’s business in China) segment was 5.1 billion, representing a 61.8 per cent year-over-year increase and a 17.6 per cent sequential increase. Revenue from the DH segment was 1.2 billion, representing a 26.1 per cent year-over-year increase. The revenue growth for both the Group and Legacy-Huazhu exceeded the revenue guidance previously announced. The Group’s hotel turnover increased 55.1 per cent year-over-year to 23.5 billion. Excluding DH, hotel turnover increased 59.2 per cent year-over-year in the third quarter of 2023. Net income attributable to the Group was 1.3 billion (USD 183 million), compared with 1.0 billion in the previous quarter. EBITDA (non-GAAP) in the third quarter of 2023 was 2.1 billion (USD 293 million), compared with 1.7 billion in the previous quarter.
Focusing on Economy and Midscale Brands, Deepening Limited-Service Hotels to Meet Market Demand
As of September 30, 2023, H World’s worldwide hotel network in operation totaled 9,157 hotels and 885,756 rooms, including 129 hotels from DH. Among them, H World operates 5,007 economy hotels, accounting for 54.7 per cent, and 3,329 midscale hotels, accounting for 36.4 per cent. The Group is accelerating product iteration and structural upgrades, solidifying core business development, and driving brand growth with high quality. Meanwhile, the number of new openings by Legacy-Huazhu continues to accelerate. During the third quarter of 2023, Legacy-Huazhu opened 545 hotels, including 4 leased and owned hotels, and 541 manachised and franchised hotels. H World seizes diverse accommodation needs, continuously offering cost-effective and high-quality lodging products to further meet the extensive demands. Additionally, as of September 30, 2023, H World had a total of 2,970 unopened hotels in the pipeline, including 2,935 hotels from the Legacy-Huazhu and 35 hotels from the DH. The robust project pipeline reflects H World’s leadership strength and its determination for continued expansion, contributing to a steady growth momentum.
Impressive Performance in Legacy-Huazhu: RevPAR Recovers to 129 per cent of 2019 Levels
In the third quarter of 2023, driven by OCC and ADR, the Group’s blended RevPAR continued to grow. Among them, Legacy-Huazhu’s ADR was RMB 324 in the third quarter of 2023, compared with RMB 254 in the third quarter of 2022, RMB 305 in the previous quarter, and 245 billion in the third quarter of 2019. The OCC for all the Legacy-Huazhu hotels in operation was 85.9 per cent, with a year-on-year growth increase of 9.8 percentage points. The blended RevPAR was RMB 278, recovered to 129 per cent of the Q3 2019 level. Breaking down into monthly numbers, the RevPAR in July, August and September 2023 recovered to 132 per cent, 128 per cent and 128 per cent of the 2019 levels, respectively. For DH, the ADR was EUR114, and the OCC for all DH hotels in operation was 69.0 per cent. Blended RevPAR increased to EUR79.
As a leading player in the hotel industry in China and one of the fastest-growing hotel groups in the world, H World focuses on economy and midscale as the core products to serve the mass market, implements a strategy to further develop the upper-midscale segment to enrich its product structure, and achieves rapid expansion through an efficient management and franchise model. Jin Hui, CEO of H World commented: “We continue to outperform the China lodging industry, delivering robust operational results. We are pleased to report another quarter of strong RevPAR recovery in China, supported by China’s summer holiday travel season as well as continuous business travel recovery. Our ADR growth reflected a combination of product mix change and product upgrades, which should continue to support our ADR in the future.” Driven by the recovery of the industry and the peak travel season, H World continues to increase its pipeline projects, accelerate hotel expansion and signing processes, and gain momentum in RevPAR growth through ongoing brand and service upgrades.
Source: H World Group Limited
