Negative Points

• H World Group Ltd ( NASDAQ:HTHT )'s international business (HWI) saw a 3.8% year-over-year decline in RevPAR in Q2 2026, impacted by the Middle East conflict and ramp-up of Southeast Asia expansion.

• The company's international revenue decreased 5.8% year-over-year to RMB1.3 billion, partly due to the closure of leased hotels, which reduced lease revenue.

• H World Group Ltd ( NASDAQ:HTHT ) experienced slower hotel openings in the first half of 2026, with 1,035 hotels opened, 20% below the same period last year, though management attributes this to normal volatility.

• The company noted that severe weather during the summer holiday season negatively affected operational results in some markets, leading to performance below expectations in the first half of summer.

• H World Group Ltd ( NASDAQ:HTHT ) faces challenges in new markets, such as lower-tier cities and inbound travel, where member contribution to bookings is still ramping up, requiring reliance on OTAs.

• The company's upper midscale segment, while growing, is still in the refinement stage, with brands like Grand Ji being developed cautiously, which may limit near-term expansion speed.

• H World Group Ltd ( NASDAQ:HTHT ) acknowledged that total domestic travel spending growth moderated to 2% year-over-year in the first half, reflecting more prudent consumer spending, which could pressure future revenue growth.

• The company's international margins were negatively impacted by the Middle East conflict, though management noted the impact is controllable and maintains a goal of positive profit for HWI.

Q & A Highlights

Q: What is the management's latest expectation for the third quarter and full-year RevPAR trend, given volatile travel demand and extreme weather during the summer peak season? A: CEO Hui Jin stated that China's leisure travel demand is still steadily growing, with consumers treating it as a necessity. While severe weather negatively impacted some regions in the first half of the summer holiday, the overall trend is recovering in August. Despite macro uncertainties, management maintains a cautiously optimistic view and has kept its full-year 2026 RevPAR guidance unchanged.

Q: The company opened 1,035 hotels in the first half, which is 20% below the same period last year. Is there a structural change in the seasonality of hotel openings, and what is the progress on the HanTing 4.0 upgrade? A: CEO Hui Jin clarified that the 498 openings in Q2 were in line with plan, and the pipeline increased both quarter-over-quarter and year-over-year. The company maintains its full-year opening guidance of 2,200 to 2,300 hotels, attributing the first-half variance to normal volatility. Regarding HanTing 4.0, the new version has achieved strong market and franchisee recognition, with operational performance meaningfully better than older versions. The number of HanTing Inn hotels in operation and pipeline has quickly exceeded 200, and the company will continue upgrading its existing portfolio.

Q: What is the company's view on the supply-demand balance in the upper midscale hotel segment, and will it speed up expansion? Can you provide more color on the Grand Ji brand's operating performance and development roadmap? A: CEO Hui Jin stated that the upper midscale segment is a core strategic area with good development opportunities, benefiting from both consumption upgrades and demand shifting from traditional upscale hotels. The company will continue its multi-brand strategy centered on Grand Ji, Crystal, Intercity, and Mercure. While Intercity is growing strongly, Grand Ji is being developed cautiously, with over 20 hotels in the pipeline. Management is focusing on prime locations and refining the business model, expressing high confidence in Grand Ji's future potential as a flagship brand in China's upper midscale segment.

Q: Can management comment on the latest breakdown of customer acquisition channels and the strategy for optimizing the membership system? A: CEO Hui Jin explained that member growth and contribution are in line with expectations, with OTA contribution remaining stable at around 20% to 25%. The strategy focuses on three areas: 1) Emphasizing the best benefits for members, including best price and breakfast, with recent innovations like the family card receiving good feedback; 2) Deepening cross-industry partnerships with airlines and new energy vehicle companies; and 3) Accelerating international member development, including deepening cooperation with Accor to capture inbound travel demand and serve Chinese travelers abroad.

Q: What is the guidance for EBITDA margin trends in the second half and full year, given the margin expansion in China but slippage overseas? A: CFO Arthur Yu stated that the group expects adjusted EBITDA margin to continue expanding in the mid-to-long term, supported by the asset-light strategy and mature cost control systems. However, necessary strategic investments will be made in talent, technology, AI, and brand building. For the international business, the Middle East conflict has had a limited impact on revenue and profit as the 20+ hotels in the region are franchised. The company maintains its full-year goal of achieving positive profit for the HWI business.

Q: What were the key drivers behind the group's strong profit growth in the second quarter? A: CFO Arthur Yu reported that adjusted EBITDA increased 20% year-over-year to RMB2.7 billion, with margins expanding 3 percentage points to 38.3%. This was driven by a growing profit contribution from the asset-light manachised and franchise business, which saw revenue grow 25.2% year-over-year to RMB3.6 billion, coupled with well-controlled G&A expenses that grew slower than revenue.

Q: How is the company's hotel network expansion progressing, particularly in lower-tier cities and core markets? A: CEO Hui Jin highlighted that the company achieved high-quality network expansion with a 7% year-over-year increase in rooms in operation. As of end June, there were 13,417 hotels in operation in China, with a pipeline of 3,054 hotels covering 1,468 cities. The company is progressing toward its goal of 20,000 hotels in 2,000 cities, while also optimizing its footprint in core cities and prime commercial districts.

Q: What is the performance of the international business, particularly in Europe and the Asia Pacific region? A: CEO Hui Jin noted that HWI's blended RevPAR decreased 3.8% year-over-year in Q2, affected by the Middle East conflict and Southeast Asia expansion ramp-up. However, the Europe business delivered solid performance with RevPAR growing 1.1% year-over-year, driven by improvements in both ADR and occupancy. The company will continue optimizing operational efficiency in Europe while pushing forward its strategic layout in the Asia Pacific market.

Q: What is the company's shareholder return plan following the completion of the previous plan? A: CFO Arthur Yu announced that the company completed its 2024 shareholder return plan one year ahead of schedule. The Board has approved a new three-year shareholder return plan with an aggregate amount of USD2.5 billion, effective immediately. As the first distribution under this new plan, the Board approved an ordinary cash dividend of approximately USD275 million.

Q: How is the company addressing social responsibility and sustainability initiatives? A: CEO Hui Jin outlined three key areas: 1) Boosting local employment, with total employees exceeding 20,000 as of end June and refined internal talent development programs; 2) Pursuing energy-saving management solutions for hotels, sharing proven practices with franchisees to reduce costs and improve returns; and 3) Supporting social welfare initiatives through the group's charity foundation, including educational assistance and post-disaster support programs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .