H World Group Limited Announces Preliminary Results for Hotel Operations in the First Quarter of 2023

Rhea-AI Summary

H World Group Limited (NASDAQ: HTHT) reported preliminary Q1 2023 results, showing a robust recovery in hotel operations. The company’s RevPAR for its Legacy-Huazhu business reached 118% of 2019 levels, with monthly recoveries at 96%, 140%, and 120% respectively. Strong average daily rate (ADR) growth supported this recovery amid pent-up demand. Despite COVID-19 impacts leading to hotel closures, H World signed over 670 new hotels in the quarter. The Legacy-DH segment also demonstrated promising recovery with a blended RevPAR of 94% compared to 2019. Operational metrics revealed an increase in occupancy rates and ADRs across different hotel categories, indicating a positive trend in the hospitality sector.

Positive

• RevPAR for Legacy-Huazhu reached 118% of 2019 levels.
• More than 670 new hotel signings in Q1 2023.
• Average daily room rate increased by 28.4% for leased hotels.

Negative

• Hotel closures were carried over from previous year due to COVID-19.
• Temporary closures of 7 hotels for brand upgrades.

SINGAPORE and SHANGHAI, China, April 25, 2023 (GLOBE NEWSWIRE) -- H World Group Limited (NASDAQ: HTHT and HKEX: 1179) (“H World”, “we” or “our”), a key player in the global hotel industry, today announced preliminary results for hotel operations in the first quarter (“Q1 2023”) ended March 31, 2023.

Business update
For our Legacy-Huazhu business, our RevPAR in Q1 2023 recovered to 118% of the 2019 level. Breaking down into monthly numbers, our RevPAR in January, February and March 2023 recovered to 96%, 140% and 120% of the 2019 levels, respectively. The strong recovery was primarily due to the pent-up demand in Q1 2023, and largely driven by ADR growth. During the quarter, a large part of our hotel closures were carried over from last year due to the impact of COVID-19. In line with our ‘Sustainable High Quality Growth’ strategy, we also conducted a round of thorough review of our existing pipeline and eliminated lower-quality pipeline hotels. This resulted in a quarter-over-quarter decline in the number of unopened hotels in pipeline. Our new hotel signings gained momentum quickly, reaching over 670 new hotels during the quarter, in tandem with the market recovery.

Steigenberger Hotels GmbH and its subsidiaries (“DH”, or “Legacy-DH”) continued with promising business recovery. Q1 2023 Blended RevPAR recovered to 94% of the 2019 levels mainly driven by ADR recovery.

Operating Results: Legacy-Huazhu⁽¹⁾

	Number of hotels								Number of rooms
	Opened in Q1 2023		Closed (2) in Q1 2023		Net added in Q1 2023		As of March 31, 2023		As of March 31, 2023
Leased and owned hotels	2		(5	)	(3	)	620		88,416
Manachised and franchised hotels	260		(204	)	56		7,844		705,511
Total	262		(209	)	53		8,464		793,927
(1)   Legacy-Huazhu refers to H World and its subsidiaries, excluding DH. (2)   The reasons for hotel closures mainly included non-compliance with our brand standards, operating losses, and property-related issues. In Q1 2023, we temporarily closed 7 hotels for brand upgrade and business model change purposes.

	As of March 31, 2023
	Number of hotels		Unopened hotels in pipeline
Economy hotels	4,880		903
Leased and owned hotels	348		1
Manachised and franchised hotels	4,532		902
Midscale and upscale hotels	3,584		1,401
Leased and owned hotels	272		12
Manachised and franchised hotels	3,312		1,389
Total	8,464		2,304

	For the quarter ended
	March 31,		December 31,		March 31,		yoy
	2022		2022		2023		change
Average daily room rate (in RMB)
Leased and owned hotels	263		279		337		28.4	%
Manachised and franchised hotels	218		236		269		23.4	%
Blended	224		240		277		23.9	%
Occupancy Rate (as a percentage)
Leased and owned hotels	56.7	%	63.1	%	76.3	%	+19.6 p.p.
Manachised and franchised hotels	59.6	%	66.6	%	75.5	%	+16.0 p.p.
Blended	59.2	%	66.2	%	75.6	%	+16.4 p.p.
RevPAR (in RMB)
Leased and owned hotels	149		176		257		72.9	%
Manachised and franchised hotels	130		157		203		56.4	%
Blended	132		159		210		58.3	%

	For the quarter ended
	March 31,		March 31,		yoy
	2019		2023		change
Average daily room rate (in RMB)
Leased and owned hotels	258		337		30.8	%
Manachised and franchised hotels	211		269		27.4	%
Blended	221		277		25.4	%
Occupancy Rate (as a percentage)
Leased and owned hotels	83.6	%	76.3	%	-7.3p.p.
Manachised and franchised hotels	79.8	%	75.5	%	-4.3p.p.
Blended	80.6	%	75.6	%	-5.0p.p.
RevPAR (in RMB)
Leased and owned hotels	216		257		19.4	%
Manachised and franchised hotels	169		203		20.5	%
Blended	178		210		17.6	%

Same-hotel operational data by class
Mature hotels in operation for more than 18 months
	Number of hotels		Same-hotel RevPAR				Same-hotel ADR				Same-hotel Occupancy
	As of March 31,		For the quarter		yoy		For the quarter		yoy		For the quarter				yoy
			ended March 31,		change		ended March 31,		change		ended March 31,				change
	2022	2023	2022	2023			2022	2023			2022		2023		(p.p.)
Economy hotels	3,427	3,427	111	160	44.6	%	171	208	21.3	%	64.7	%	77.1	%	+12.4
Leased and owned hotels	332	332	116	190	63.2	%	188	241	28.5	%	62.0	%	78.7	%	+16.7
Manachised and franchised hotels	3,095	3,095	110	155	41.4	%	168	202	19.8	%	65.2	%	76.9	%	+11.7
Midscale and upscale hotels	2,433	2,433	167	263	57.1	%	292	344	18.0	%	57.3	%	76.3	%	+19.0
Leased and owned hotels	250	250	187	319	71.1	%	355	426	20.2	%	52.7	%	75.0	%	+22.3
Manachised and franchised hotels	2,183	2,183	164	253	54.4	%	282	330	17.3	%	58.1	%	76.5	%	+18.4
Total	5,860	5,860	138	210	51.8	%	227	274	20.8	%	61.1	%	76.7	%	+15.7

Operating Results: Legacy-DH⁽³⁾

	Number of hotels								Number of rooms		Unopened hotels in pipeline
	Opened in Q1 2023		Closed in Q1 2023		Net added in Q1 2023		As of March 31, 2023(4)		As of March 31,2023		As of March 31,2023
Leased hotels	1		(2	)	(1	)	80		15,497		25
Manachised and franchised hotels	1		(4	)	(3	)	48		10,675		10
Total	2		(6	)	(4	)	128		26,172		35
(3)   Legacy-DH refers to DH. (4)   As of March 31, 2023, a total of 2 hotels were temporarily closed. 1 hotel was closed due to flood damage, and 1 hotel was closed due to repair work.

	For the quarter ended
	March 31,		December 31,		March 31,		yoy
	2022		2022		2023		change
Average daily room rate (in EUR)
Leased hotels	90		114		108		19.9	%
Manachised and franchised hotels	85		134		97		13.9	%
Blended	88		122		104		17.7	%
Occupancy rate (as a percentage)
Leased hotels	34.1	%	60.0	%	53.0	%	+18.9 p.p.
Manachised and franchised hotels	44.0	%	58.3	%	54.1	%	+10.2 p.p.
Blended	38.0	%	59.3	%	53.5	%	+15.5 p.p.
RevPAR (in EUR)
Leased hotels	31		68		57		86.2	%
Manachised and franchised hotels	38		78		53		40.1	%
Blended	33		72		55		65.8	%

Hotel Portfolio by Brand

	As of March 31, 2023
	Hotels		Rooms		Unopened hotels
	in operation				in pipeline
Economy hotels	4,896		387,694		916
HanTing Hotel	3,285		291,489		596
Hi Inn	445		23,193		129
Ni Hao Hotel	184		13,553		153
Elan Hotel	747		35,255		1
Ibis Hotel	219		22,308		24
Zleep Hotels	16		1,896		13
Midscale hotels	2,956		322,093		1,103
Ibis Styles Hotel	87		9,114		34
Starway Hotel	563		47,691		206
JI Hotel	1,758		206,410		639
Orange Hotel	548		58,878		224
Upper midscale hotels	590		84,317		250
CitiGO Hotel	34		5,337		5
Crystal Orange Hotel	164		21,239		60
Manxin Hotel	114		10,903		57
Madison Hotel	56		7,369		41
Mercure Hotel	139		22,532		47
Novotel Hotel	19		4,734		12
IntercityHotel(5)	56		10,742		23
MAXX (6)	8		1,461		5
Upscale hotels	126		20,494		59
Jaz in the City	3		587		1
Joya Hotel	8		1,368		-
Blossom House	53		2,470		46
Grand Mercure Hotel	8		1,674		4
Steigenberger Hotels & Resorts(7)	54		14,395		8
Luxury hotels	15		2,318		5
Steigenberger Icon(8)	9		1,847		1
Song Hotels	6		471		4
Others	9		3,183		6
Other hotels(9)	9		3,183		6
Total	8,592		820,099		2,339
(5)   As of March 31, 2023, 5 operational hotels and 10 pipeline hotels of IntercityHotel were in China.
(6)   As of March 31, 2023, 3 operational hotels and 5 pipeline hotels of MAXX were in China.
(7)   As of March 31, 2023, 11 operational hotels and 3 pipeline hotels of Steigenberger Hotels & Resorts were in China.
(8)   As of March 31, 2023, 3 operational hotels of Steigenberger Icon were in China.
(9)   Other hotels include other partner hotels and other hotel brands in Yongle Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).

About H World Group Limited
Originated in China, H World Group Limited is a key player in the global hotel industry. As of March 31, 2023, H World operated 8,592 hotels with 820,099 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 March 31, 2023, H World operates 13 percent of its hotel rooms under lease and ownership model, and 87 percent under manachise and franchise models.

For more information, please visit H World’s website: https://ir.hworld.com.

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995: The information in this release contains forward-looking statements which involve risks and uncertainties. Such factors and risks include our anticipated growth strategies; our future results of operations and financial condition; economic conditions; the regulatory environment; our ability to attract and retain customers and leverage our brands; trends and competition in the lodging industry; the expected growth of demand for lodging; and other factors and risks detailed in our filings with the U.S. Securities and Exchange Commission. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, which may be identified by terminology such as “may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “forecast,” “project” or “continue,” the negative of such terms or other comparable terminology. Readers should not rely on forward-looking statements as predictions of future events or results.

H World undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@hworld.com
https://ir.hworld.com

FAQ

What are the preliminary results for H World Group (HTHT) in Q1 2023?

H World Group reported a RevPAR recovery of 118% compared to 2019 levels for Q1 2023.

How many new hotels did H World Group sign in Q1 2023?

H World signed over 670 new hotels during Q1 2023.

What was the average daily room rate increase for leased hotels in Q1 2023?

The average daily room rate for leased hotels increased by 28.4% in Q1 2023.

What challenges did H World Group face in Q1 2023?

H World faced hotel closures carried over from the previous year due to COVID-19 impacts.

What was the blended RevPAR for Legacy-DH in Q1 2023?

The blended RevPAR for Legacy-DH recovered to 94% of 2019 levels in Q1 2023.