H World Group (HTHT) Q2 2024 earnings summary

Executive summary

• Achieved the milestone of 10,000 hotels in China, operating 10,286 hotels with 1,001,865 rooms as of June 30, 2024, and continued expansion into lower-tier cities with a focus on high-quality, sustainable growth strategies.

• Q2 2024 revenue rose 11.2% year-over-year to RMB 6.1 billion, at the high end of guidance, driven by robust hotel network expansion and strong performance in both China (Legacy-Huazhu) and international (Legacy-DH) segments.

• Operating income reached RMB 1.6 billion, up 14% year-over-year; adjusted EBITDA increased 15% to RMB 2 billion; adjusted net income up 17% to RMB 1.3 billion.

• Strategic emphasis on product upgrades, service excellence, and membership programs to drive RevPAR and maintain industry leadership.

• Announced a three-year shareholder return plan up to US$2 billion, including semi-annual dividends of at least 60% of net income, special dividends, and a five-year US$1 billion share repurchase program.

Financial highlights

• Q2 2024 revenue: RMB 6.1 billion, up 11.2% year-over-year; Legacy-Huazhu up 11.1%, Legacy-DH up 11.6%.

• Adjusted EBITDA: RMB 2 billion, up 15% year-over-year; adjusted net income: RMB 1.25 billion, up 17%.

• Operating income reached RMB 1.6 billion, up 14% year-over-year; operating margin improved to 25.6%.

• Legacy-Huazhu's RevPAR was RMB 244, down 2% year-over-year; ADR RMB 296, down 2.9%; occupancy rate 82.6%, up 0.7 percentage points.

• Legacy-DH RevPAR was EUR 82, up 4.5% year-over-year; ADR EUR 120, up 2.7%; occupancy 68.3%, up 1.2 percentage points.

Outlook and guidance

• Q3 2024 revenue expected to grow 2%-5% year-over-year (1%-4% excluding DH).

• Full-year 2024 hotel opening target revised up to over 2,200 hotels, from previous 1,800.

• RevPAR for Q3 expected to decline mid-single digits year-over-year, but long-term growth confidence remains strong.