H World Group (HTHT) Q2 2024 earnings summary

Executive summary

• Achieved milestone of over 10,000 hotels in China, with 10,286 hotels and 1,001,865 rooms as of June 30, 2024, driven by robust network expansion and focus on lower-tier cities.

• Q2 2024 revenue grew 11.2% year-over-year to RMB6.1 billion, at the high end of guidance, with strong performance in both China (Legacy-Huazhu) and international (Legacy-DH) segments.

• Adjusted EBITDA increased 15.1% year-over-year to RMB2.04 billion; adjusted net income up 16.9% to RMB1.25 billion; net income attributable to H World was RMB1.1 billion.

• Continued shift toward asset-light model, with manachised and franchised hotels contributing a growing share of revenue.

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

Financial highlights

• Q2 2024 revenue: RMB6.1 billion (+11.2% YoY), with Legacy-Huazhu up 11.1% and Legacy-DH up 11.6%.

• Adjusted EBITDA: RMB2.04 billion, up 15.1% year-over-year; adjusted net income: RMB1.25 billion, up 16.9%.

• Operating income reached RMB1.6 billion, up 14% year-over-year.

• Operating cash inflow: RMB2.2 billion, stable year-over-year.

• Cash and time deposits: RMB9.9 billion; net cash: RMB4.3 billion as of June 30, 2024.

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 1,800.

• RevPAR for Q3 expected to decline mid-single digits year-over-year due to high base and macro softness, but long-term growth confidence remains.