H World Group Limited Reports First Quarter of 2024 Unaudited Financial Results
H World Group (NASDAQ: HTHT, HKEX: 1179) reported a 17.8% year-over-year increase in revenue to RMB 5.3 billion (USD 731 million) for Q1 2024, surpassing guidance. Legacy-Huazhu segment revenue rose 18.1%, while Legacy-DH segment saw a 16.6% revenue increase. Net income dropped to RMB 659 million, down from RMB 990 million in Q1 2023. Adjusted EBITDA grew 40% year-over-year to RMB 1.4 billion. The company operates 9,817 hotels with 955,657 rooms and plans to open 3,172 more. Q2 2024 revenue growth is projected at 7-11%. CEO Jin Hui noted strong results and ongoing network expansion despite potential near-term RevPAR fluctuations.
- Revenue increased 17.8% year-over-year to RMB 5.3 billion, exceeding guidance.
- Legacy-Huazhu segment revenue rose 18.1% year-over-year.
- Adjusted EBITDA increased 40% year-over-year to RMB 1.4 billion.
- Hotel turnover increased 21.1% year-over-year to RMB 19.7 billion.
- Revenue from manachised and franchised hotels grew 32.8% year-over-year.
- Operating margin improved to 19.0% from 14.8% in the previous year.
- Strong pipeline with 3,172 unopened hotels planned.
- Net income decreased to RMB 659 million from RMB 990 million in Q1 2023.
- Legacy-DH segment reported a net loss of RMB 174 million.
- Revenue from leased and owned hotels declined 10.3% quarter-over-quarter.
- Operating costs increased year-over-year to RMB 3.6 billion.
- Legacy-DH segment's operating margin was negative 12.4%.
Insights
H World Group Limited has posted a 21.1% increase in hotel turnover year-over-year for Q1 2024, demonstrating considerable growth momentum. The revenue increase of 17.8% YoY to
Interestingly, while the overall revenue increased, net income decreased to
The company's strong EBITDA performance also merits attention. Adjusted EBITDA rose to
From a broader perspective, the pipeline of 3,172 unopened hotels points to future growth potential. However, the slow recovery of the Legacy-DH segment highlights regional operational challenges. The company's revenue guidance for Q2 2024, indicating a growth of 7%-11%, shows cautious optimism but also reflects potential market volatility.
The growth in RevPAR for both Legacy-Huazhu and Legacy-DH segments indicates demand recovery in the hospitality sector. For the Legacy-Huazhu segment, RevPAR increased by 3.1%, driven by a higher occupancy rate of 77.2%. The slight increase in ADR to
The company's strategy to expand its network with a record number of hotel openings in Q1 2024 shows their competitive positioning and market confidence. However, the manachise and franchise model expansion could lead to higher revenue volatility and operational complexities. Investors should weigh these factors when considering long-term growth prospects.
Additionally, Legacy-DH's occupancy rate of 55.8% versus Legacy-Huazhu's 77.2% reveals different recovery paces. This discrepancy points to regional differences and the necessity for localized strategies. The shift to an asset-light model for Legacy-DH could mitigate some risks and improve margin stability.
Moreover, the company's focus on cost reduction and efficiency improvement, particularly in the Legacy-DH segment, reflects prudent management amidst regional uncertainties. The reliance on the H Rewards loyalty program to boost direct sales aligns with broader industry trends aiming to reduce reliance on OTAs (Online Travel Agencies), thereby improving profitability.
The operational metrics provided in the report offer significant insights into H World Group’s functioning. The Legacy-Huazhu segment has shown resilience with 569 hotel openings and only 148 closings, pointing to a strong growth pipeline. However, the Legacy-DH segment's performance remains an area of concern with a net loss, despite a 15.5% increase in turnover.
The company’s blended RevPAR for Legacy-Huazhu increased by 3.1% YoY to
The transition to a more asset-light model and focus on cost efficiency for DH segment show strategic alignment with industry trends. This move can potentially reduce capital expenditure and improve cash flows. Yet, the effectiveness of this transition remains to be seen and should be a critical point for investors to watch.
The high number of unopened hotels in the pipeline reflects the company's aggressive expansion strategy but also implies future capital commitments. Investors should consider the potential for overextension vs. the growth opportunities these new hotels represent. The company’s strategic emphasis on customer satisfaction and quality service highlights an intent to build long-term loyalty, which may provide sustainable revenue streams in the future.
- A total of 9,817 hotels or 955,657 hotel rooms in operation as of March 31, 2024.
- Hotel turnover1 increased
21.1% year-over-year to RMB19.7 billion in the first quarter of 2024. Excluding Steigenberger Hotels GmbH and its subsidiaries (“DH”, or “Legacy-DH”), hotel turnover increased21.6% year-over-year in the first quarter of 2024. Hotel turnover from the Legacy-DH segment increased15.5% in the first quarter of 2024. - Revenue increased
17.8% year-over-year to RMB5.3 billion (US$731 million )2 in the first quarter of 2024, surpassing the revenue guidance previously announced of a12% to16% increase compared to the first quarter of 2023. Revenue from the Legacy-Huazhu segment in the first quarter of 2024 was RMB4.2 billion, which increased18.1% year-over-year, exceeding the revenue guidance previously announced of an11% to15% increase. Revenue from the Legacy-DH segment in the first quarter of 2024 was RMB1.0 billion, which increased16.6% year-over-year. - Net income attributable to H World Group Limited was RMB659 million (US
$91 million ) in the first quarter of 2024, compared with RMB990 million in the first quarter of 2023 and RMB743 million in the previous quarter. Net income attributable to H World Group Limited from the Legacy-Huazhu segment was RMB833 million in the first quarter of 2024, compared with RMB1.2 billion in the first quarter of 2023 and RMB827 million in the previous quarter. Net loss attributable to H World Group Limited from the Legacy-DH segment was RMB174 million in the first quarter of 2024, compared with RMB165 million in the first quarter of 2023 and RMB84 million in the previous quarter. - EBITDA (non-GAAP) in the first quarter of 2024 was RMB1.3 billion (US
$181 million ), compared with RMB1.6 billion in the first quarter of 2023 and RMB1.4 billion in the previous quarter. - Adjusted EBITDA (non-GAAP), which excluded share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments from EBITDA (non-GAAP), was RMB1.4 billion (US
$197 million ) in the first quarter of 2024, compared with RMB1.0 billion in the first quarter of 2023 and RMB1.1 billion in the previous quarter. - Adjusted EBITDA is our segment measure. Adjusted EBITDA from the Legacy-Huazhu segment was RMB1.5 billion in the first quarter of 2024, compared with RMB1.1 billion in the first quarter of 2023 and RMB1.1 billion in the previous quarter. Adjusted EBITDA from the Legacy-DH segment was a loss of RMB66 million in the first quarter of 2024, compared with a loss of RMB98 million in the first quarter of 2023 and a loss of RMB6 million in the previous quarter.
- For the second quarter of 2024, H World expects its revenue growth to be in the range of
7% -11% compared to the second quarter of 2023 or in the range of7% -11% excluding DH.
SINGAPORE and SHANGHAI, China, May 17, 2024 (GLOBE NEWSWIRE) -- H World Group Limited (NASDAQ: HTHT and HKEX: 1179) (“H World”, the “Company”, “we” or “our”), a key player in the global hotel industry, today announced its unaudited financial results for the first quarter ended March 31, 2024.
As of March 31, 2024, H World’s worldwide hotel network in operation totaled 9,817 hotels and 955,657 rooms, including 9,684 hotels from Legacy-Huazhu and 133 hotels from DH. During the first quarter of 2024, our Legacy-Huazhu business opened 569 hotels, including 2 leased and owned hotels, and 567 manachised and franchised hotels, and closed a total of 148 hotels, including 11 leased and owned hotels, and 137 manachised and franchised hotels. As of March 31, 2024, H World had a total of 3,172 unopened hotels in the pipeline, including 3,138 hotels from the Legacy-Huazhu business and 34 hotels from the Legacy-DH business.
Legacy-Huazhu – First Quarter of 2024 Operational Highlights
As of March 31, 2024, Legacy-Huazhu had 9,684 hotels in operation, including 598 leased and owned hotels, and 9,086 manachised and franchised hotels. In addition, as of the same date, Legacy-Huazhu had 928,509 hotel rooms in operation, including 85,416 rooms under the lease and ownership model, and 843,093 rooms under the manachise and franchise models. Legacy-Huazhu also had 3,138 unopened hotels in its pipeline, including 10 leased and owned hotels, and 3,128 manachised and franchised hotels. The following discusses Legacy-Huazhu’s revenue per available room (“RevPAR”), average daily room rate (“ADR”) and occupancy rate for its leased and owned hotels, as well as manachised and franchised hotels for the periods indicated.
- The ADR was RMB280 in the first quarter of 2024, compared with RMB277 in the first quarter of 2023 and RMB284 in the previous quarter.
- The occupancy rate for all the Legacy-Huazhu hotels in operation was
77.2% in the first quarter of 2024, compared with75.6% in the first quarter of 2023 and80.5% in the previous quarter. - Blended RevPAR was RMB216 in the first quarter of 2024, compared with RMB210 in the first quarter of 2023 and RMB229 in the previous quarter.
- For all the Legacy-Huazhu hotels which had been in operation for at least 18 months, the same-hotel RevPAR was RMB218 in the first quarter of 2024, representing a
0.9% increase from RMB216 in the first quarter of 2023, with a0.6% decrease in same-hotel ADR and a 1.1 percentage-point increase in same-hotel occupancy rate.
Legacy-DH – First Quarter of 2024 Operational Highlights
As of March 31, 2024, Legacy-DH had 133 hotels in operation, including 84 leased hotels, and 49 manachised and franchised hotels. In addition, as of the same date, Legacy-DH had 27,148 hotel rooms in operation, including 16,369 rooms under the lease model, and 10,779 rooms under the manachise and franchise models. Legacy-DH also had 34 unopened hotels in the pipeline, including 19 leased hotels and 15 manachised and franchised hotels. The following discusses Legacy-DH’s RevPAR, ADR and occupancy rate for its leased as well as manachised and franchised hotels (excluding hotels temporarily closed) for the periods indicated.
- The ADR was EUR104 in the first quarter of 2024, compared with EUR104 in the first quarter of 2023 and EUR115 in the previous quarter.
- The occupancy rate for all Legacy-DH hotels in operation was
55.8% in the first quarter of 2024, compared with53.5% in the first quarter of 2023 and63.8% in the previous quarter. - Blended RevPAR was EUR58 in the first quarter of 2024, compared with EUR55 in the first quarter of 2023 and EUR73 in the previous quarter.
Jin Hui, CEO of H World commented: “We are pleased to report a strong first quarter result with revenue exceeding our expectation. In the first quarter of 2024, our Legacy-Huazhu’s blended RevPAR achieved a
“Regarding our business outside China, our Legacy-DH segment recorded a
First Quarter of 2024 Unaudited Financial Results
| (RMB in millions) | Q1 2023 | Q4 2023 | Q1 2024 | ||
| Revenue: | |||||
| Leased and owned hotels | 2,874 | 3,453 | 3,099 | ||
| Manachised and franchised hotels | 1,554 | 2,016 | 2,063 | ||
| Others | 52 | 116 | 116 | ||
| Total revenue | 4,480 | 5,585 | 5,278 | ||
Revenue in the first quarter of 2024 was RMB5.3 billion (US
Revenue from leased and owned hotels in the first quarter of 2024 was RMB3.1 billion (US
Revenue from manachised and franchised hotels in the first quarter of 2024 was RMB2.1 billion (US
Other revenue represents revenue generated from businesses other than our hotel operations, which mainly includes revenue from the provision of IT products, and services and Huazhu Mall™ and other revenue from the Legacy-DH segment, totaling RMB116 million (US
(RMB in millions) | Q1 2023 | Q4 2023 | Q1 2024 | |||||
| Operating costs and expenses: | ||||||||
| Hotel operating costs | (3,250 | ) | (3,996 | ) | (3,565 | ) | ||
| Other operating costs | (11 | ) | (10 | ) | (9 | ) | ||
| Selling and marketing expenses | (195 | ) | (326 | ) | (260 | ) | ||
| General and administrative expenses | (425 | ) | (644 | ) | (509 | ) | ||
| Pre-opening expenses | (9 | ) | (3 | ) | (8 | ) | ||
| Total operating costs and expenses | (3,890 | ) | (4,979 | ) | (4,351 | ) | ||
Hotel operating costs in the first quarter of 2024 were RMB3.6 billion (US
Selling and marketing expenses in the first quarter of 2024 were RMB260 million (US
General and administrative expenses in the first quarter of 2024 were RMB509 million (US
Pre-opening expenses in the first quarter of 2024 were primarily related to the Legacy-Huazhu segment and totaled RMB8 million, compared to RMB9 million in the first quarter of 2023 and RMB3 million in the previous quarter. The pre-opening expenses remained at a low level, which was attributable to more selective openings of leased and owned hotels.
Other operating income, net in the first quarter of 2024 was RMB76 million (US
Income from operations in the first quarter of 2024 was RMB1.0 billion (US
Operating margin, defined as income from operations as a percentage of revenue, was
Other income, net in the first quarter of 2024 was RMB40 million (US
Gain from fair value changes of equity securities in the first quarter of 2024 were RMB38 million (US
Income tax expense in the first quarter of 2024 was RMB279 million (US
Net income attributable to H World Group Limited in the first quarter of 2024 was RMB659 million (US
EBITDA (non-GAAP) in the first quarter of 2024 was RMB1.3 billion (US
Adjusted EBITDA, which excluded share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments from EBITDA (non-GAAP), was RMB1.4 billion (US
Cash flow. Operating cash inflow in the first quarter of 2024 was RMB886 million (US
Cash, cash equivalents and restricted cash. As of March 31, 2024, the Company had a total balance of cash and cash equivalents of RMB5.9 billion (US
Debt financing. As of March 31, 2024, the Company had a total debt and net cash balance of RMB5.7 billion (US
Guidance
For the second quarter of 2024, H World expects its revenue growth to be in the range of
The above forecast reflects the Company’s current and preliminary view, which is subject to change.
Conference Call
H World’s management will host a conference call at 9 p.m. U.S. Eastern time on Sunday, May 19, 2024 (9 a.m. Hong Kong time on Monday, May 20, 2024) following the announcement.
To join by phone, all participants must pre-register for this conference call using the Participant Registration link of https://register.vevent.com/register/BI09049d430bb54c5eb1c1a1b9e153b589. Upon registration, each participant will receive details for the conference call, including dial-in numbers, a conference call passcode and a unique access PIN.
A live webcast of the call can be accessed at https://edge.media-server.com/mmc/p/4qzbkdyj or the Company’s website at https://ir.hworld.com/news-and-events/events-calendar.
A replay of the conference call will be available for twelve months from the date of the conference call at the Company’s website, https://ir.hworld.com/news-and-events/events-calendar.
Use of Non-GAAP Financial Measures
To supplement the Company’s unaudited consolidated financial results presented in accordance with U.S. Generally-Accepted Accounting Principles (“GAAP”), the Company uses the following non-GAAP measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission (“SEC”): adjusted net income (loss) attributable to H World Group Limited excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments; adjusted basic and diluted earnings (losses) per share/ADS excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments; EBITDA; adjusted EBITDA excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and non-GAAP Results” set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding Company performance by excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments that may not be indicative of Company operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Company performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to the Company’s historical performance. The Company believes these non-GAAP financial measures are also useful to investors in allowing for greater transparency with respect to supplemental information used regularly by Company management in financial and operational decision-making. A limitation of using non-GAAP financial measures excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments is that share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments have been and may continue to be significant and recurring in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
The Company believes that EBITDA is a useful financial metric to assess the operating and financial performance before the impact of investing and financing transactions and income taxes, given the significant investments that the Company has made in leasehold improvements, depreciation and amortization expense that comprise a significant portion of the Company’s cost structure. In addition, the Company believes that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of financial performance. The Company believes that EBITDA information provides investors with a useful tool for comparability between periods because it excludes depreciation and amortization expense attributable to capital expenditures. The Company also uses adjusted EBITDA to assess operating results of its hotels in operation. The Company believes that the exclusion of share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments helps facilitate year-over-year comparisons of the results of operations as the share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments may not be indicative of Company operating performance.
Therefore, the Company believes adjusted EBITDA more closely reflects the financial performance capability of our hotels. The presentation of EBITDA and adjusted EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains considered to be outside the ordinary course of business.
The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets (including land use rights), income tax, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. The Company compensates for these limitations by providing the relevant disclosure of depreciation and amortization, interest income, interest expense, income tax expense, share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net and gain (loss) on disposal of investments all in the reconciliations to the U.S. GAAP financial measures and in the consolidated financial statements, all of which should be considered when evaluating the performance of the Company.
The terms EBITDA and adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor adjusted EBITDA is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing the operating and financial performance, investors should not consider these data in isolation or as a substitute for the Company’s net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA or adjusted EBITDA may not be comparable to EBITDA or adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or adjusted EBITDA in the same manner as the Company does.
Reconciliations of the Company’s non-GAAP financial measures, including EBITDA and adjusted EBITDA, to the consolidated statement of operations information are included at the end of this press release.
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, 2024, H World operated 9,817 hotels with 955,657 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, 2024, H World operates 11 percent of its hotel rooms under the lease and ownership model, and 89 percent under the manachise and franchise model.
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.
—Financial Tables and Operational Data Follow—
| H World Group Limited | |||||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||||
| December 31, 2023 | March 31, 2024 | ||||||||
| RMB | RMB | US$3 | |||||||
| (in millions) | |||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | 6,946 | 5,909 | 818 | ||||||
| Restricted cash | 764 | 755 | 105 | ||||||
| Short-term investments | 2,189 | 1,657 | 229 | ||||||
| Accounts receivable, net | 755 | 812 | 112 | ||||||
| Loan receivables - current, net | 184 | 185 | 26 | ||||||
| Amounts due from related parties, current | 210 | 191 | 26 | ||||||
| Inventories | 59 | 56 | 8 | ||||||
| Other current assets, net | 949 | 933 | 129 | ||||||
| Total current assets | 12,056 | 10,498 | 1,453 | ||||||
| Property and equipment, net | 6,097 | 6,002 | 831 | ||||||
| Intangible assets, net | 5,280 | 5,188 | 719 | ||||||
| Operating lease right-of-use assets | 25,658 | 25,532 | 3,536 | ||||||
| Finance lease right-of-use assets | 2,171 | 2,071 | 287 | ||||||
| Land use rights, net | 181 | 179 | 25 | ||||||
| Long-term investments | 2,564 | 2,552 | 354 | ||||||
| Goodwill | 5,318 | 5,265 | 729 | ||||||
| Amounts due from related parties, non-current | 25 | 25 | 3 | ||||||
| Loan receivables, net | 163 | 176 | 24 | ||||||
| Other assets, net | 663 | 664 | 92 | ||||||
| Deferred tax assets | 1,043 | 1,036 | 144 | ||||||
| Assets held for sale | 2,313 | 2,256 | 312 | ||||||
| Total assets | 63,532 | 61,444 | 8,509 | ||||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities: | |||||||||
| Short-term debt | 4,049 | 4,104 | 568 | ||||||
| Accounts payable | 1,019 | 900 | 125 | ||||||
| Amounts due to related parties | 77 | 81 | 11 | ||||||
| Salary and welfare payables | 1,067 | 756 | 105 | ||||||
| Deferred revenue | 1,637 | 1,674 | 232 | ||||||
| Operating lease liabilities, current | 3,609 | 3,588 | 497 | ||||||
| Finance lease liabilities, current | 45 | 45 | 6 | ||||||
| Accrued expenses and other current liabilities | 3,261 | 3,345 | 463 | ||||||
| Dividends payable | 2,085 | - | - | ||||||
| Income tax payable | 562 | 553 | 77 | ||||||
| Total current liabilities | 17,411 | 15,046 | 2,084 | ||||||
| Long-term debt | 1,265 | 1,645 | 228 | ||||||
| Operating lease liabilities, non-current | 24,215 | 24,117 | 3,340 | ||||||
| Finance lease liabilities, non-current | 2,697 | 2,594 | 359 | ||||||
| Deferred revenue | 1,072 | 1,126 | 156 | ||||||
| Other long-term liabilities | 1,118 | 1,145 | 159 | ||||||
| Deferred tax liabilities | 845 | 838 | 116 | ||||||
| Retirement benefit obligations | 124 | 121 | 17 | ||||||
| Liabilities held for sale | 2,536 | 2,414 | 334 | ||||||
| Total liabilities | 51,283 | 49,046 | 6,793 | ||||||
| Equity: | |||||||||
| Ordinary shares | 0 | 0 | 0 | ||||||
| Treasury shares | (906 | ) | (1,441 | ) | (200 | ) | |||
| Additional paid-in capital | 11,861 | 11,909 | 1,649 | ||||||
| Retained earnings | 794 | 1,453 | 201 | ||||||
| Accumulated other comprehensive income | 386 | 355 | 49 | ||||||
| Total H World Group Limited shareholders' equity | 12,135 | 12,276 | 1,699 | ||||||
| Noncontrolling interest | 114 | 122 | 17 | ||||||
| Total equity | 12,249 | 12,398 | 1,716 | ||||||
| Total liabilities and equity | 63,532 | 61,444 | 8,509 | ||||||
| H World Group Limited | ||||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income | ||||||||||||
| Quarter Ended | ||||||||||||
| March 31, 2023 | December 31, 2023 | March 31, 2024 | ||||||||||
| RMB | RMB | RMB | US$ | |||||||||
| (in millions, except shares, per share and per ADS data) | ||||||||||||
| Revenue: | ||||||||||||
| Leased and owned hotels | 2,874 | 3,453 | 3,099 | 429 | ||||||||
| Manachised and franchised hotels | 1,554 | 2,016 | 2,063 | 286 | ||||||||
| Others | 52 | 116 | 116 | 16 | ||||||||
| Total revenue | 4,480 | 5,585 | 5,278 | 731 | ||||||||
| Operating costs and expenses: | ||||||||||||
| Hotel operating costs: | ||||||||||||
| Rents | (1,051 | ) | (1,033 | ) | (1,086 | ) | (150 | ) | ||||
| Utilities | (204 | ) | (160 | ) | (192 | ) | (27 | ) | ||||
| Personnel costs | (1,036 | ) | (1,331 | ) | (1,225 | ) | (170 | ) | ||||
| Depreciation and amortization | (346 | ) | (320 | ) | (319 | ) | (44 | ) | ||||
| Consumables, food and beverage | (278 | ) | (361 | ) | (293 | ) | (41 | ) | ||||
| Others | (335 | ) | (791 | ) | (450 | ) | (62 | ) | ||||
| Total hotel operating costs | (3,250 | ) | (3,996 | ) | (3,565 | ) | (494 | ) | ||||
| Other operating costs | (11 | ) | (10 | ) | (9 | ) | (1 | ) | ||||
| Selling and marketing expenses | (195 | ) | (326 | ) | (260 | ) | (36 | ) | ||||
| General and administrative expenses | (425 | ) | (644 | ) | (509 | ) | (70 | ) | ||||
| Pre-opening expenses | (9 | ) | (3 | ) | (8 | ) | (1 | ) | ||||
| Total operating costs and expenses | (3,890 | ) | (4,979 | ) | (4,351 | ) | (602 | ) | ||||
| Goodwill impairment loss | - | (4 | ) | - | - | |||||||
| Other operating income (expense), net | 74 | 155 | 76 | 10 | ||||||||
| Income (loss) from operations | 664 | 757 | 1,003 | 139 | ||||||||
| Interest income | 44 | 85 | 51 | 7 | ||||||||
| Interest expense | (130 | ) | (76 | ) | (83 | ) | (11 | ) | ||||
| Other income (expense), net | 514 | 2 | 40 | 6 | ||||||||
| Gain (loss) from fair value changes of equity securities | 13 | 124 | 38 | 5 | ||||||||
| Foreign exchange gain (loss) | 104 | 140 | (92 | ) | (13 | ) | ||||||
| Income (loss) before income taxes | 1,209 | 1,032 | 957 | 133 | ||||||||
| Income tax (expense) benefit | (194 | ) | (281 | ) | (279 | ) | (39 | ) | ||||
| Income (Loss) from equity method investments | (15 | ) | (8 | ) | (11 | ) | (2 | ) | ||||
| Net income (loss) | 1,000 | 743 | 667 | 92 | ||||||||
| Net (income) loss attributable to noncontrolling interest | (10 | ) | (0 | ) | (8 | ) | (1 | ) | ||||
| Net income (loss) attributable to H World Group Limited | 990 | 743 | 659 | 91 | ||||||||
| Gain (loss) arising from defined benefit plan, net of tax | - | (9 | ) | - | - | |||||||
| Gain (loss) from fair value changes of debt securities, net of tax | - | (31 | ) | - | - | |||||||
| Foreign currency translation adjustments, net of tax | 39 | (23 | ) | (31 | ) | (4 | ) | |||||
| Comprehensive income (loss) | 1,039 | 680 | 636 | 88 | ||||||||
| Comprehensive (income) loss attributable to noncontrolling interest | (10 | ) | (0 | ) | (8 | ) | (1 | ) | ||||
| Comprehensive income (loss) attributable to H World Group Limited | 1,029 | 680 | 628 | 87 | ||||||||
| Earnings (Losses) per share: | ||||||||||||
| Basic | 0.31 | 0.23 | 0.21 | 0.03 | ||||||||
| Diluted | 0.30 | 0.23 | 0.21 | 0.03 | ||||||||
| Earnings (Losses) per ADS: | ||||||||||||
| Basic | 3.12 | 2.33 | 2.10 | 0.29 | ||||||||
| Diluted | 3.05 | 2.31 | 2.08 | 0.29 | ||||||||
| Weighted average number of shares used in computation: | ||||||||||||
| Basic | 3,174,229,716 | 3,182,802,226 | 3,139,466,152 | 3,139,466,152 | ||||||||
| Diluted | 3,343,723,364 | 3,217,737,686 | 3,172,770,493 | 3,172,770,493 | ||||||||
| H World Group Limited | |||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||
| Quarter Ended | |||||||||||
| March 31, 2023 | December 31, 2023 | March 31, 2024 | |||||||||
| RMB | RMB | RMB | US$ | ||||||||
| (in millions) | |||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | 1,000 | 743 | 667 | 92 | |||||||
| Share-based compensation | 27 | 38 | 58 | 8 | |||||||
| Depreciation and amortization, and other | 385 | 346 | 345 | 48 | |||||||
| Impairment loss | - | 430 | - | - | |||||||
| Loss (income) from equity method investments, net of dividends | 15 | 8 | 11 | 2 | |||||||
| Investment (income) loss and foreign exchange (gain) loss | (544 | ) | (452 | ) | 29 | 4 | |||||
| Changes in operating assets and liabilities | 1,020 | 1,359 | (230 | ) | (32 | ) | |||||
| Other | (59 | ) | (61 | ) | 6 | 1 | |||||
| Net cash provided by (used in) operating activities | 1,844 | 2,411 | 886 | 123 | |||||||
| Investing activities: | |||||||||||
| Capital expenditures | (222 | ) | (313 | ) | (281 | ) | (39 | ) | |||
| Acquisitions, net of cash received | - | (0 | ) | - | - | ||||||
| Purchase of investments | (1 | ) | (700 | ) | (254 | ) | (35 | ) | |||
| Proceeds from maturity/sale and return of investments | 2,200 | 771 | 842 | 117 | |||||||
| Loan advances | (34 | ) | (140 | ) | (52 | ) | (7 | ) | |||
| Loan collections | 34 | 36 | 38 | 5 | |||||||
| Other | 4 | 69 | 55 | 7 | |||||||
| Net cash provided by (used in) investing activities | 1,981 | (277 | ) | 348 | 48 | ||||||
| Financing activities: | |||||||||||
| Net proceeds from issuance of ordinary shares | 1,973 | - | - | - | |||||||
| Payment of share repurchase | - | (848 | ) | (544 | ) | (75 | ) | ||||
| Proceeds from debt | 428 | 370 | 536 | 74 | |||||||
| Repayment of debt | (889 | ) | (204 | ) | (137 | ) | (19 | ) | |||
| Dividend paid | - | - | (2,091 | ) | (290 | ) | |||||
| Other | (50 | ) | (62 | ) | (22 | ) | (3 | ) | |||
| Net cash provided by (used in) financing activities | 1,462 | (744 | ) | (2,258 | ) | (313 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (21 | ) | 41 | (17 | ) | (2 | ) | ||||
| Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within assets held for sale | 5,266 | 1,431 | (1,041 | ) | (144 | ) | |||||
| Less: net increase (decrease) in cash and cash equivalents classified within assets held for sale | - | 17 | 5 | 1 | |||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 5,086 | 6,296 | 7,710 | 1,068 | |||||||
| Cash, cash equivalents and restricted cash at the end of the period | 10,352 | 7,710 | 6,664 | 923 | |||||||
| H World Group Limited | ||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | ||||||||||
| Quarter Ended | ||||||||||
| March 31, 2023 | December 31, 2023 | March 31, 2024 | ||||||||
| RMB | RMB | RMB | US$ | |||||||
| (in millions, except shares, per share and per ADS data) | ||||||||||
| Net income (loss) attributable to H World Group Limited (GAAP) | 990 | 743 | 659 | 91 | ||||||
| Share-based compensation expenses | 27 | 38 | 58 | 8 | ||||||
| (Gain) loss from fair value changes of equity securities | (13 | ) | (124 | ) | (38 | ) | (5 | ) | ||
| Foreign exchange (gain) loss, net | (104 | ) | (140 | ) | 92 | 13 | ||||
| (Gain) loss on disposal of investments | (516 | ) | - | - | - | |||||
| Adjusted net income (loss) attributable to H World Group Limited (non-GAAP) | 384 | 517 | 771 | 107 | ||||||
| Adjusted earnings (losses) per share (non-GAAP) | ||||||||||
| Basic | 0.12 | 0.16 | 0.25 | 0.03 | ||||||
| Diluted | 0.12 | 0.16 | 0.24 | 0.03 | ||||||
| Adjusted earnings (losses) per ADS (non-GAAP) | ||||||||||
| Basic | 1.21 | 1.62 | 2.46 | 0.34 | ||||||
| Diluted | 1.19 | 1.61 | 2.43 | 0.34 | ||||||
| Weighted average number of shares used in computation | ||||||||||
| Basic | 3,174,229,716 | 3,182,802,226 | 3,139,466,152 | 3,139,466,152 | ||||||
| Diluted | 3,223,122,364 | 3,217,737,686 | 3,172,770,493 | 3,172,770,493 | ||||||
| Quarter Ended | ||||||||||
| March 31, 2023 | December 31, 2023 | March 31, 2024 | ||||||||
| RMB | RMB | RMB | US$ | |||||||
| (in millions, except per share and per ADS data) | ||||||||||
| Net income (loss) attributable to H World Group Limited (GAAP) | 990 | 743 | 659 | 91 | ||||||
| Interest income | (44 | ) | (85 | ) | (51 | ) | (7 | ) | ||
| Interest expense | 130 | 76 | 83 | 11 | ||||||
| Income tax expense | 194 | 281 | 279 | 39 | ||||||
| Depreciation and amortization | 367 | 341 | 339 | 47 | ||||||
| EBITDA (non-GAAP) | 1,637 | 1,356 | 1,309 | 181 | ||||||
| Share-based compensation | 27 | 38 | 58 | 8 | ||||||
| (Gain) loss from fair value changes of equity securities | (13 | ) | (124 | ) | (38 | ) | (5 | ) | ||
| Foreign exchange (gain) loss, net | (104 | ) | (140 | ) | 92 | 13 | ||||
| (Gain) loss on disposal of investments | (516 | ) | - | - | - | |||||
| Adjusted EBITDA (non-GAAP) | 1,031 | 1,130 | 1,421 | 197 | ||||||
| H World Group Limited | ||||||||||||||
| Segment Financial Summary | ||||||||||||||
| Quarter Ended March 31, 2023 | Quarter Ended December 31, 2023 | Quarter Ended March 31, 2024 | ||||||||||||
| Legacy- Huazhu | Legacy- DH | Legacy- Huazhu | Legacy- DH | Legacy- Huazhu | Legacy- DH | |||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||
| (in millions) | (in millions) | (in millions) | ||||||||||||
| Leased and owned hotels | 2,020 | 854 | 2,288 | 1,165 | 2,112 | 987 | ||||||||
| Manachised and franchised hotels | 1,536 | 18 | 1,992 | 24 | 2,042 | 21 | ||||||||
| Others | 38 | 14 | 104 | 12 | 91 | 25 | ||||||||
| Revenue | 3,594 | 886 | 4,384 | 1,201 | 4,245 | 1,033 | ||||||||
| Depreciation and amortization | 304 | 63 | 282 | 59 | 280 | 59 | ||||||||
| Adjusted EBITDA | 1,129 | (98 | ) | 1,136 | (6 | ) | 1,487 | (66 | ) | |||||
Operating Results: Legacy-Huazhu(1)
| Number of hotels | Number of rooms | |||||||
| Opened in Q1 2024 | Closed (2) in Q1 2024 | Net added in Q1 2024 | As of March 31, 2024 | As of March 31, 2024 | ||||
| Leased and owned hotels | 2 | (11 | ) | (9 | ) | 598 | 85,416 | |
| Manachised and franchised hotels | 567 | (137 | ) | 430 | 9,086 | 843,093 | ||
| Total | 569 | (148 | ) | 421 | 9,684 | 928,509 | ||
| (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 2024, we temporarily closed 12 hotels for brand upgrade and business model change purposes. | ||||||||
| As of March 31, 2024 | ||
| Number of hotels | Unopened hotels in pipeline | |
| Economy hotels | 5,102 | 1,171 |
| Leased and owned hotels | 321 | 1 |
| Manachised and franchised hotels | 4,781 | 1,170 |
| Midscale, upper-midscale hotels and others | 4,582 | 1,967 |
| Leased and owned hotels | 277 | 9 |
| Manachised and franchised hotels | 4,305 | 1,958 |
| Total | 9,684 | 3,138 |
| For the quarter ended | ||||||||
| March 31, | December 31, | March 31, | yoy | |||||
| 2023 | 2023 | 2024 | change | |||||
| Average daily room rate (in RMB) | ||||||||
| Leased and owned hotels | 337 | 356 | 346 | |||||
| Manachised and franchised hotels | 269 | 276 | 272 | |||||
| Blended | 277 | 284 | 280 | |||||
| Occupancy rate (as a percentage) | ||||||||
| Leased and owned hotels | +4.7 p.p. | |||||||
| Manachised and franchised hotels | +1.3 p.p. | |||||||
| Blended | +1.6 p.p. | |||||||
| RevPAR (in RMB) | ||||||||
| Leased and owned hotels | 257 | 298 | 280 | |||||
| Manachised and franchised hotels | 203 | 221 | 209 | |||||
| Blended | 210 | 229 | 216 | |||||
| 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 | ||||||
| 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | (p.p.) | |||
| Economy hotels | 3,732 | 3,732 | 166 | 167 | 211 | 210 | - | +1.0 | |||
| Leased and owned hotels | 309 | 309 | 192 | 203 | 242 | 245 | +3.9 | ||||
| Manachised and franchised hotels | 3,423 | 3,423 | 162 | 162 | - | 207 | 205 | - | +0.6 | ||
| Midscale, upper-midscale hotels and others | 3,067 | 3,067 | 261 | 264 | 345 | 343 | - | +1.3 | |||
| Leased and owned hotels | 255 | 255 | 322 | 342 | 427 | 428 | +4.6 | ||||
| Manachised and franchised hotels | 2,812 | 2,812 | 253 | 253 | 334 | 331 | - | +0.9 | |||
| Total | 6,799 | 6,799 | 216 | 218 | 280 | 279 | - | +1.1 | |||
Operating Results: Legacy-DH(3)
| Number of hotels | Number of rooms | Unopened hotels in pipeline | |||||||
| Opened in Q1 2024 | Closed in Q1 2024 | Net added in Q1 2024 | As of March 31, 2024 (4) | As of March 31, 2024 | As of March 31, 2024 | ||||
| Leased hotels | 2 | (2 | ) | - | 84 | 16,369 | 19 | ||
| Manachised and franchised hotels | 3 | (1 | ) | 2 | 49 | 10,779 | 15 | ||
| Total | 5 | (3 | ) | 2 | 133 | 27,148 | 34 | ||
| (3) Legacy-DH refers to DH. (4) As of March 31, 2024, a total of 3 hotels were temporarily closed due to repair work. | |||||||||
| For the quarter ended | ||||||||
| March 31, | December 31, | March 31, | yoy | |||||
| 2023 | 2023 | 2024 | change | |||||
| Average daily room rate (in EUR) | ||||||||
| Leased hotels | 108 | 118 | 110 | |||||
| Manachised and franchised hotels | 97 | 111 | 95 | - | ||||
| Blended | 104 | 115 | 104 | |||||
| Occupancy rate (as a percentage) | ||||||||
| Leased hotels | +2.4 p.p. | |||||||
| Manachised and franchised hotels | +2.3 p.p. | |||||||
| Blended | +2.3 p.p. | |||||||
| RevPAR (in EUR) | ||||||||
| Leased hotels | 57 | 76 | 61 | |||||
| Manachised and franchised hotels | 53 | 69 | 54 | |||||
| Blended | 55 | 73 | 58 | |||||
Hotel Portfolio by Brand
| As of March 31, 2024 | |||
| Hotels | Rooms | Unopened hotels | |
| in operation | in pipeline | ||
| Economy hotels | 5,118 | 420,702 | 1,185 |
| HanTing Hotel | 3,744 | 329,477 | 785 |
| Hi Inn | 482 | 25,014 | 198 |
| Ni Hao Hotel | 310 | 23,115 | 177 |
| Elan Hotel | 339 | 18,193 | - |
| Ibis Hotel | 227 | 22,992 | 11 |
| Zleep Hotels | 16 | 1,911 | 14 |
| Midscale hotels | 3,787 | 404,544 | 1,466 |
| Ibis Styles Hotel | 106 | 10,611 | 23 |
| Starway Hotel | 686 | 56,525 | 200 |
| JI Hotel | 2,310 | 264,944 | 926 |
| Orange Hotel | 685 | 72,464 | 317 |
| Upper midscale hotels | 747 | 103,786 | 439 |
| Crystal Orange Hotel | 191 | 24,478 | 137 |
| CitiGO Hotel | 35 | 5,308 | 5 |
| Manxin Hotel | 142 | 12,962 | 82 |
| Madison Hotel | 100 | 12,283 | 71 |
| Mercure Hotel | 175 | 28,032 | 55 |
| Novotel Hotel | 27 | 6,181 | 10 |
| IntercityHotel(5) | 68 | 12,984 | 77 |
| MAXX(6) | 9 | 1,558 | 2 |
| Upscale hotels | 139 | 21,001 | 75 |
| Jaz in the City | 3 | 587 | 1 |
| Joya Hotel | 7 | 1,234 | - |
| Blossom House | 66 | 2,955 | 63 |
| Grand Mercure Hotel | 9 | 1,806 | 1 |
| Steigenberger Hotels & Resorts(7) | 54 | 14,419 | 10 |
| Luxury hotels | 16 | 2,360 | 2 |
| Steigenberger Icon(8) | 9 | 1,847 | 2 |
| Song Hotels | 7 | 513 | - |
| Others | 10 | 3,264 | 5 |
| Other hotels(9) | 10 | 3,264 | 5 |
| Total | 9,817 | 955,657 | 3,172 |
(5) As of March 31, 2024, 12 operational hotels and 69 pipeline hotels of IntercityHotel were in China.
(6) As of March 31, 2024, 4 operational hotels and 1 pipeline hotel of MAXX were in China.
(7) As of March 31, 2024, 11 operational hotels and 3 pipeline hotels of Steigenberger Hotels & Resorts were in China.
(8) As of March 31, 2024, 3 operational hotels and 1 pipeline hotel 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).
Contact Information
Investor Relations
Tel: +86 (21) 6195 9561
Email: ir@hworld.com
https://ir.hworld.com
_______________________
1 Hotel turnover refers to total transaction value of room and non-room revenue from H World hotels (i.e., leased and operated, manachised and franchised hotels).
2 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US
3 The conversion of Renminbi (“RMB”) into United States dollars (“US$”) is based on the exchange rate of US
FAQ
What was H World Group 's revenue for Q1 2024?
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What was the net income for H World Group in Q1 2024?
What was the revenue change in the Legacy-Huazhu segment for Q1 2024?
How did the Legacy-DH segment perform in Q1 2024 in terms of net income?
What was the adjusted EBITDA for H World Group in Q1 2024?
