管理層發言
Good day, and thank you for standing by. Welcome to H World First Quarter 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. I'll now hand the conference over to your first speaker today, Ms. Ivy Luo, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning and good evening, everyone. Thanks for joining us today. Welcome to H World's First Quarter 2026 Earnings Conference Call. Joining us today is our Founder and Executive Chairman, Mr. Ji Qi; our CEO, Mr. Jin Hui; our CFO, Mr. Arthur Yu; our COO, Mr. Chen Hui; and our CSO, Ms. Jihong He. Following our prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under the safe harbor provision of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. H World Group does not undertake any obligation to update any forward-looking statements, except as required under applicable laws.
On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation of those measures to comparable GAAP information can be found in our earnings release that was distributed early today. As a reminder, this conference call is being recorded. The webcast of this conference call as well as supplementary slide presentation is available at ir.hworld.com. With that, now I will hand over the call to our CEO, Mr. Jin Hui to discuss our business performance in the first quarter of 2026. Mr. Jin, please.
Dear investors and analysts, good day. Thank you for joining H World's First Quarter 2026 Earnings Call. In 2026, China's domestic travel demand gained solid momentum. The overall railway and aviation cross-region traffic, number of trips as well as tourism spending rose steadily. We also saw several regions rolling out spring breaks this year. Those spring breaks right before or after Qingming Festival and May Day holidays enable Chinese consumers to enjoy 5 to 8 days of vacation, which effectively help balance our passenger flows between peak and off-peak periods. Meanwhile, a further step-up in the implementation of visa-free policy has fueled the continued growth of inbound tourism, which serves as an additional growth engine of China's hospitality industry. We think structurally, there is still a mismatch between the hotel supply and consumer demand in China. Therefore, pushing forward supply-side reform and hotel network optimization will remain a key strategic priority for H World.
This closely aligns with the 15th Five-Year Plan guideline on deepening supply-side structural reform and revitalizing existing resources. Meanwhile, backed by our strong brand reputation, proven operational expertise and digitalization advantages, we aim to further expand our market share, deliver sustainable high-quality growth and fulfill our mission to redefine China's hotel industry. As we enter 2026, H World remains committed to brand-led high-quality development, and we achieved solid business results across network expansion, brand building, membership ecosystem development and profitability. By breaking through into new cities and regions and deepening penetration in the lower-tier cities, we delivered another quarter of strong network expansion, driven by a 14.1% year-over-year increase in the number of rooms in operation. Our group hotel GMV grew 17.4% year-over-year to RMB 26.4 billion.
Nights booked by members increased 10.7% year-over-year to 60 million. Our asset-light manachised and franchise business registered another quarter of solid growth in its hotel network, revenue as well as profit. Our first quarter 2026 group M&F revenue rose 20.3% year-over-year to RMB 3.0 billion, and group M&F gross operating profit increased 20.7% year-over-year to RMB 1.9 billion. As market competition became more rational and healthier, H World China achieved a 4.5% year-over-year increase in ADR, which was also supported by our continuous product upgrades and revenue management optimization. The ADR expansion drove a 3.0% year-over-year growth in the blended RevPAR, which represents a sequential improvement from the fourth quarter of 2025. We remain focused on serving the mass market using our economy and mid-scale hotels and solidifying the competencies of our core brands. The continuous upgrade of HanTing and JI Hotel, together with the launch of Hi Inn, have further strengthened our competitiveness in the economy and mid-scale hotel market, reinforcing H World's absolute leadership in China's mass market hospitality segment.
We steadily expand our hotel network and enhance geographic coverage. By the end of the first quarter, HWC hotels in operation totaled 13,095 and we have another 2,865 hotels in the pipeline. Our city coverage increased to 1,461 cities across China. We are moving steadily towards our strategic goal of 2,000 cities and 20,000 hotels. While expanding into lower-tier cities, we are also optimizing and refining our hotel portfolio in Tier 1 and Tier 2 cities, especially in those core business districts in the top-tier cities. We believe our premium product quality and the strong brand power will enable us to recapture opportunities in the mature Tier 1 and Tier 2 cities market. Aside from strengthening our core mass market brands and optimizing hotel coverage, we are also making steady headway in the upper mid-scale segment. We are adopting a multi-brand strategy with clear brand positioning and value propositions.
We are steadily pushing forward the development of our four key upper mid-scale brands, namely Intercity, Grand Ji, Crystal and Mercure. At the end of the first quarter, the number of our upper mid-scale hotels in operation and in pipeline reached 1,658, up 14.4% year-over-year. We always insist on strengthening our direct sales capability through the H-Reward membership program, which we believe is vital to our sustainable long-term development. As our hotel network covers more cities, our membership base and room nights booked by members also achieved robust growth. Going forward, we will further strengthen brand building, diversify customer acquisition scenarios and enhance member benefits and member stickiness. To better and more accurately reflect our future development prospects, we have adopted the new HWC and HWI disclosure framework and terminology beginning this quarter, where the acronym HWC refers to our operations inside China and HWI includes all overseas hotel business covering Legacy-DH as well as our APAC business.
Now let's go over the operational performance of our HWI business. In the first quarter of 2026, HWI achieved a 5.0% year-over-year increase in RevPAR driven by a 1.6% increase in ADR and a 2.1% improvement in occupancy rate. Aside from our DH business, H World International has also made initial progress and breakthroughs in the Asia Pacific market. Leveraging the development opportunities under the Belt and Road initiatives, we are accelerating our strategic layout across APAC. With Singapore as its operational hub, HWI is expanding its footprint into key Southeast Asian markets, including Vietnam, Laos and Cambodia. To date, we have opened six hotels across Southeast Asia. By rolling out brands ranging from HanTing and JI Hotel to Intercity and MAXX, we have built coverage across the economy, mid-scale and upper mid-scale segments, catering to diverse guest travel needs. We opened our first overseas HanTing Hotel in late 2025, featuring our latest HanTing 4.0 version; the hotel sits in a very prime central business district of Ho Chi Minh City, Vietnam.
The hotel posted strong operational results with nearly RMB 500 RevPAR in the first quarter. It's also worth mentioning that this property was invested by one of our large domestic franchisees, which shows our franchisee acknowledgment and confidence in our brand power and operational capabilities. This quarter, our first overseas JI 5.0 officially opened in Vientiane, the capital of Laos, located in a prime area of the city. The hotel continues JI's signature design language rooted in Eastern culture, representing the overseas expansion of one of H World's Eastern-culture brands. We believe our standardized branded hotel products, systematic and digitalized operation capabilities and supply chain advantages will enable us to empower our overseas hotels. Moving forward, we aim to build solid brand influence in the Asia Pacific region, while accumulating local operational expertise in the Southeast Asian market. This concludes the business update for the first quarter of 2026. I will now hand over the call to our CFO, Mr. Arthur Yu, for the financial performance for the quarter.
Thank you, Jin Hui. Good evening and good morning to everyone. Before we get into the details of our quarterly financial performance, I'd like to quickly highlight one accounting update first. Starting this quarter, we have renamed our operating segments to HWC and HWI, replacing the previous Legacy-Huazhu and Legacy-DH segment. Additionally, we made a minor business realignment between HWC and HWI effective 2026. For consistency and comparability, we have restated prior period figures to align with our current segment presentation. Now let's walk through our quarter 1 financial highlights. Group revenue grew 11.1% year-over-year to RMB 6.0 billion. Within this, HWC revenue increased 12.4% year-over-year to RMB 5.0 billion, primarily driven by steady hotel network expansion and continued RevPAR recovery. HWI revenue rose 5.1% year-over-year in quarter 1 2026, partially benefited by favorable foreign exchange rates.
On profitability, group adjusted EBITDA was up 24.2% year-over-year to RMB 1.9 billion, with the margin expanding 3.3 percentage points year-over-year to 31.0%. The strong EBITDA growth and margin improvement were mainly attributable to a growing profit contribution from our asset-light business. Adjusted net income grew 38.6% year-over-year to RMB 1.1 billion with the adjusted net income margin improving 3.5 percentage points to 17.9%. Next, on our asset-light M&F business, supported by ongoing high-quality asset-light network expansion and improved RevPAR performance, our M&F business revenue grew a solid 20.3% year-over-year, and M&F gross operating profit increased 20.7% year-over-year to RMB 1.9 billion with a gross operating margin of 63.3% for the quarter. Let's now turn to our cash flow and liquidity position. We generated RMB 233 million in operating cash flow during quarter 1. As of quarter end, the group holds RMB 15.8 billion in cash and cash equivalents, with a net cash position of RMB 9.6 billion on our balance sheet. Our healthy operating cash flow and strong balance sheet provide solid support for future shareholder return arrangements. This concludes our financial review for the first quarter of 2026.
We are ready to take your questions. Operator, please open the line for Q&A.
分析師問答
We will now take our first question from the line of Dan Chee of Morgan Stanley.
This is Dan from Morgan Stanley. Congratulations on another quarter of strong profit growth. My question is around recent demand and RevPAR trend. First quarter RevPAR saw sequential improvement. Mr. Jin mentioned the demand balance during Qingming and also the May spring holiday, and several holidays in Q2. Can management share more color, especially on business demand and any impact from energy cost increase? Lastly, any comments on the occupancy stabilization?
After reopening, we actually see that leisure travel demand has been growing steadily. A couple of reasons behind this: one is that after reopening, leisure travel and experiential behavior have become a necessity to Chinese consumers. Secondly, we are seeing government supportive policies such as the spring breaks that were rolled out in multiple regions and cities this year. Thirdly, we're also seeing a rising demand in inbound tourism, which is an additional growth driver to the overall leisure travel market. Overall, the number of trips is growing steadily after reopening. However, because of consumption power, we still see some fluctuations in overall spending. But to conclude, we believe that overall leisure travel is still growing steadily. Regarding rising energy costs, for now we haven't observed any impact on overall travel demand due to rising energy costs. We think partially this is because of the popularity of new energy vehicles in China. That is why for the full year 2026, we still maintain our full-year RevPAR guidance of a slight increase. For H1, we will continue to focus on building our core competencies, including our hotel brands, operational management capability as well as membership. Given that overall industry supply increase has been slowing down and rationalizing, we remain cautiously optimistic on our occupancy rate outlook.
We will now take our next question from the line of Ronald Leung of Bank of America.
Let me translate my question into English. My question is about the openings and closures outlook for the full year. What is the latest outlook for full-year openings and closures? Could management also comment about the city coverage in terms of the overall openings?
I will answer the opening and the city coverage question separately. On HWC, we grossly opened 537 hotels, which is at a relatively high level compared to historical performance. In the first quarter, our net opening was impacted by the late spring festival holiday this year. Overall, the number of gross openings and net openings in the quarter was in line with our expectation. Our hotel opening strategy insists on high-quality development of our hotel network. Since two years ago, we shifted from purely focusing on quantity to focusing on high-quality growth of the hotel network. Under our brand-led high-quality growth strategy, we have high standards and high requirements on new signings and new openings. I'm happy to report that in the first quarter, overall new signings remained at a healthy and high level. With our healthy signing pace, we maintain our opening guidance for the full year of 2026 unchanged.
On city coverage strategy, we are implementing two lines of strategy simultaneously: firstly, penetration into lower-tier cities; and secondly, returning to Tier 1 and Tier 2 cities to capture opportunities for high-quality properties in core and premium districts and locations. We will be developing our premium hotel product in those Tier 1 and Tier 2 cities. We are fully confident that H World will deliver high-quality growth in both lower-tier cities as well as Tier 1 and Tier 2 cities.
We will now take our next question from the line of Sijie Lin of CICC.
My question is about the upper mid-scale business development. Over the last several quarters, upper mid-scale, especially Intercity, achieved quite impressive expansion speed, and we see that Grand Ji opened its first hotel and has 12 new signings. How did RevPAR performance of upper mid-scale compare with economy and mid-scale? Additionally, could you please share the expansion targets and operational focus of the upper mid-scale segment, especially Intercity and Grand Ji in the coming period?
The upper mid-scale segment is a core strategic part of our overall H World strategy. We are very pleased to see that in the first quarter, overall RevPAR recovery in the upper mid-scale segment was slightly better than our economy and mid-scale segments. This showcases our growing brand power and product quality in the upper mid-scale segment. We adopt a multi-brand strategy in the upper mid-scale segment—namely Intercity, Grand Ji, Mercure and Crystal. Overall, network growth in the upper mid-scale is quite solid. When breaking down by single brand, we do see that some brands still need further improvement in overall brand power. Regarding our upper mid-scale strategy, we are refocusing on Tier 1 and Tier 2 cities to open flagship properties in core districts. In the initial stage of development, H World has spent a lot of time setting the overall brand strategy and design, so we have a very clear value proposition for each upper mid-scale product. Of course, at the initial phase, there are challenges, but we are confident that in the longer term our upper mid-scale brands will be leaders in the segment.
We will now take our next question from the line of Jiwei Liu of Citic.
I'll translate my question into English. I'm Jiwei from Citic. Against the backdrop of fluctuating business travel mix and increasing regulation across the hotel industry, can you share the current breakdown of our customer source channels and your outlook going forward, as well as the company's plans and strategies for membership marketing?
Overall, our CRS as well as some of the other key metrics of our memberships have been performing quite stably, even as we've been rapidly expanding our network and opened over 500 new hotels last year. The overall CRS contribution and membership booking has been stable. At the same time, we are observing emerging trends, including stronger leisure travel and increasing inbound tourism. Capturing these emerging traffic sources and new types of consumers is a very important topic for H-Reward and our membership initiatives. You may have noticed that at H World, we have been bringing in new talent and we are working with leading AI companies to develop new sales and marketing strategies as well as new initiatives to improve member conversion. In terms of improving our capabilities in the corporate B2B channel, we are using our membership to attract corporate business travelers. We believe this showcases the improving membership capabilities of H World.
We will now take our next question from the line of Leah Pan of Goldman Sachs.
This is Leah from Goldman Sachs. I have a question on the company's international strategy. You mentioned stepping up in the Southeast Asia market, including signing JI Hotels in Malaysia and entry into Cambodia with the brands of JI Hotel and Steigenberger. Could you please share potential scale and targets in Southeast Asia over the next few years? Also, given the company's business exposure in the Middle East market, how do you see the impact from the ongoing Middle East crisis on your current business and global expansion strategy?
As a first step, we successfully opened hotels in Vietnam, Laos and Cambodia. This gives us strong confidence that H World's product management, supply chain and membership can actually empower hotel operations in overseas markets. Going forward, we will step up our investment in the Southeast Asia market in terms of network expansion, size and pace. We think Southeast Asia is a new market that provides new opportunities to H World.
I'll answer the second question related to the Middle East conflict. Based on our first quarter results, we see very limited impact from the Middle East conflict on H World International. In the Middle East, HWI only has 10 manachised and franchise hotels, and it has a manageable and non-material contribution to revenue as well as profit. Regarding the overall increase in energy costs, we are taking efforts to control and manage the increase in overall energy expenses. So far, we think the impact of rising energy costs on HWI is still manageable. However, there are uncertainties in how the situation in the Middle East will evolve, and we will keep a close eye on developments there.
We will now take our next question from the line of Lydia Ling of Citi.
Lydia from Citi. My question is on profitability. In the first quarter, we continued to see margin improvement and further optimization in cost ratios. What is your outlook for full-year margin trend by region? In China, as the asset-light strategy continues to push forward, what is the upside from the current high level? We also see the international part's loss narrowed year-over-year in the first quarter. What would be your target for overseas profitability on a full-year basis?
In the first quarter, there are several initiatives improving EBITDA performance. First, our asset-light strategy: as we continue to push forward asset-light, we are confident that adjusted EBITDA margin will continue to improve steadily. Second, on the lease and owned business, we are improving performance through revenue management and cost control, including negotiation of rental reductions. On the overseas business, especially DH, we continue to push cost reduction initiatives. We are looking into each item in the cost structure to improve overall efficiency; we started this in the first quarter and will continue to advance these initiatives in DH. I would add that aside from cost control and reduction, H World is also making investments in key areas such as digitalization, technology and AI development, as well as H-Reward membership, promotion and marketing of our core brands. For example, in the first quarter, we launched our HanTing product. Based on our budget and planning, we will make necessary investments while looking at the ROI of those investments. On a full-year basis, we will control costs but also make necessary investments for long-term sustainable growth.
We'll take the last question.
Certainly. Our last question today comes from the line of Xin Chen of UBS.
This is Xin Chen from UBS. My question is on dividends. Could management please share the 2026 shareholder return plan with us?
Thank you, Xin Chen. As you can see from our presentation, H World has a very strong balance sheet as well as stable cash flow. Going forward, as we continue pushing the asset-light strategy and cost reduction initiatives, we will maintain our shareholder return plan. If there are any updates, we will inform the market in a timely manner. Overall direction is that we will use our cash flow to return to shareholders.
That's the end of the question-and-answer session. I'd now like to turn the conference back to Ms. Ivy Luo for closing comments.
Thank you, everyone, for taking your time with us today. This will conclude today's call, and we look forward to seeing you in the upcoming quarters. Bye-bye.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.