H World Group Q1 2026 Earnings Call - Margin Expansion Driven by Asset-Light Shift and Overseas Pullback

Operator: Day. Thank you for standing by. Welcome to H World First Quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I’ll hand the conference over to your first speaker today, Miss Ivy Luo, Head of Investor Relations. Please go ahead.

Jin Hui, Chief Executive Officer (CEO), H World Group: 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, Ms. 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 first quarter of 2026 earnings call. In 2026, China’s domestic travel demand gained a 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 enabled Chinese consumers to enjoy 5 to 8 days of vacation, which effectively help balancing out passenger flows in between peak and off-peak periods. Meanwhile, a further step up in the implementation of visa-free policy has fueled the continuous growth of inbound tourism, which serve as an additional growth engine of China’s hospitality industry. We think structurally there is still a mismatch between the hotel supply and the consumer demand in China. Therefore, pushing forward supply-side reform and hotel network optimization will remain a key strategic 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 of redo China’s hotel industry.

Jin Hui, Chief Executive Officer (CEO), H World Group: 华住会员预订间夜量持续增长，一季度会员预订间夜同比增长10.7%。集团的轻资产加盟业务实现了规模、收入及利润的同步稳健增长。2026年一季度加盟收入同比提升20.3%至30亿元，经营毛利同比增长20.7%至19亿元。

Jin Hui, Chief Executive Officer (CEO), H World Group: As we enter 2026, H World remain committed to brand net high quality development, we achieve 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 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 managed and franchised 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.

Group M&F gross operating profit increased by 20.7% year-over-year to RMB 1.9 billion.

Jin Hui, Chief Executive Officer (CEO), H World Group: 在市场竞争更加趋于理性的背景下，华住中国依托产品及服务质量的不断升级，精细化的收益管理及营销能力提升，4.5%的ADR同比提升。ADR的扩张带动了RevPAR同比3%的增长，RevPAR表现环比持续改善。

Jin Hui, Chief Executive Officer (CEO), H World Group: As market competition became more rational and healthier, H World China achieved 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 2025.

Jin Hui, Chief Executive Officer (CEO), H World Group: 在品牌档次的布局上，我们坚持以国民经济型和中档酒店为市场，持续夯实核心品牌的竞争力。汉庭、全季品牌的不断升级和汉庭快捷的推出，助力华住进一步夯实在经济型和中档市场的绝对领导力。在此基础上，我们稳步推进高质量的网络扩张，持续完善城市布局。截至一季度末，华住中国在营酒店达13,095家，管道内酒店2,865家。在营及管道内酒店已覆盖1,461个城镇，持续向千城万店2.0的目标迈进。在下沉低线城市的同时，我们也在同步梳理和完善华住在二线城市的酒店布局，尤其加大在核心城市核心商圈的高质量布局。我们相信华住产品力的提升和品牌力的增强，将支持华住在中国一二线存量市场取得进一步的突破。

Jin Hui, Chief Executive Officer (CEO), H World Group: 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 upgrades of HanTing and JI Hotel, together with the launch of Hi Inn, have further strengthened our competitiveness in economy and mid-scale hotel markets, reinforcing H World’s absolute leadership in China’s mass market hospitality segment. We are steadily expand hotel network and enhancing geographic coverage. By the end of 1st quarter, HWC Hotel 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, 20,000 hotels.

While expanding into lower-tier cities, we are also optimizing and refining our hotel portfolio in the tier 1 and 2 cities, especially in those core business districts in the top-tier cities. We believe our premium product quality and a strong brand power will enable us to recapture opportunities in the mature tier 1 and 2 cities markets.

Jin Hui, Chief Executive Officer (CEO), H World Group: 除了核心大众品牌的深耕和网络布局的完善，华住中国中高端板块也在逐步发力。我们坚持多品牌策略，通过清晰的品牌定位与价值主张，稳步推进以城际、大观、水晶及美居四大品牌为核心的发展战略。截至一季度末，华住中国中高端品牌在营及管道酒店已达1,658家，同比增长14.4%。

Jin Hui, Chief Executive Officer (CEO), H World Group: 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’re 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, JI, Crystal and Mercure. At the end of first quarter, the number of our upper mid scale hotels in operation and in pipeline reached 1,658, up 14.4% year-over-year.

Jin Hui, Chief Executive Officer (CEO), H World Group: 在营销方面，我们始终坚持以华住会为核心。我们坚信会员体系及直销能力是支撑公司业务长期可持续能力。随着我们酒店网络覆盖更多的城市，华住会的会员体量及会员经验都实现了稳步增长。未来我们将进一步加强品牌建设，拓宽获客场景，同时不断优化会员权益，来提升会员转换，增强会员粘性。

Jin Hui, Chief Executive Officer (CEO), H World Group: We always insist on strengthening our direct sales capabilities through H Rewards 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 night booked by members also achieve robust growth. Going forward, we’ll further strengthen brand building, diversify customer acquisition scenarios, and enhance member benefit and member stickiness.

Jin Hui, Chief Executive Officer (CEO), H World Group: 为清晰展现未来发展布局，从本季度起，我们正式启用华住中国、华住国际两大业务板块的披露框架与统计口径。华住中国特指集团中国境内业务，华住国际则囊括集团所有海外酒店，包括Legacy DH及亚太的运营业务。

Jin Hui, Chief Executive Officer (CEO), H World Group: 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.

Jin Hui, Chief Executive Officer (CEO), H World Group: 接下来我们就回顾一下华住国际业务表现。2026年一季度，华住国际RevPAR同比提升5%，其中ADR同比上涨1.6%，入住率同比提升2.1个百分点。

Jin Hui, Chief Executive Officer (CEO), H World Group: Let’s go over the operational performance of our HWI business. In the first quarter 2026, HWI achieved a 5.0% year-over-year increase in RevPAR, driven by a 1.6% increase in ADR and a 2.1 percentage improvement in occupancy rate.

Jin Hui, Chief Executive Officer (CEO), H World Group: 大家可能已经留意到，除了DH业务，华住国际在亚太市场也有了初步的布局和突破。依托共建一带一路区域合作发展机遇，华住国际持续加码亚太区域战略布局。目前我们以新加坡为运营枢纽，向老挝、越南、柬埔寨等东南亚重点市场延伸。目前集团在东南亚已落地运营六家酒店，依托汉庭、全季、城际、美仑美奂等品牌，逐步构建涵盖经济型、中档及中高端多元化住宿产品矩阵，满足不同客户的消费与出行需求。

Jin Hui, Chief Executive Officer (CEO), H World Group: As you may have noticed, 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 6 hotels across Southeast Asia. By rolling out brands ranging from HanTing, JI Hotel to Intercity, and MAXX, we have built a covering economy, mid-scale, and upper mid-scale segments, catering to diverse guest travel needs.

Jin Hui, Chief Executive Officer (CEO), H World Group: 2025年末，我们首家海外汉庭正式落地开业，该项目采用汉庭4.0的产品体系，坐落于越南胡志明市第一郡核心商圈，区位优势突出。在2026年一季度取得了亮眼的经营表现，一季度RevPAR达到近500元人民币。另外值得一提的是，该汉庭是由国内优质头部加盟商出海投资筹建，充分体现了加盟商对华住品牌力和运营能力的充分信赖和高度认可。今年年初，全季5.0首家海外门店也正式落地老挝首都万象。该全季坐落于万象核心地段，延续全季东方人文的空间设计，让我们具备了东方文化品牌输出的能力。

Jin Hui, Chief Executive Officer (CEO), H World Group: We opened our 1st overseas HanTing Hotel in late 2025, featuring our latest HanTing 4.0 version, the hotel sits in the very prime center business district of Ho Chi Minh City, Vietnam. The hotel posted strong operational results with a nearly RMB 500 RevPAR in the 1st quarter. It’s also worth mentioning that this property was invested by one of our large domestic franchisees, which shows our franchisee acknowledgement and confidence in our brand power and operational capabilities. This quarter, our 1st 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 cultural brands.

Jin Hui, Chief Executive Officer (CEO), H World Group: 我们相信华住的标准化品牌体系，数字化运营能力与供应链优势可以很好地赋能海外门店。我们目标打造华住在亚太市场的品牌势能，同时积累对东南亚市场本地化运营的能力。

Jin Hui, Chief Executive Officer (CEO), H World Group: 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 Asia Pacific region while accumulating local operational expertise in the Southeast Asian market.

Jin Hui, Chief Executive Officer (CEO), H World Group: 以上就是华住2026年一季度的业务情况更新。下面有请华住集团CFO Arthur余为大家分享集团一季度的财务情况。有请。

Jin Hui, Chief Executive Officer (CEO), H World Group: This concludes the business update for the first quarter of 2026. I will now hand over the call to our CFO, Mr. Arthur Yu, financial performance for the quarter.

Arthur Yu, Chief Financial Officer (CFO), H World Group: 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 segments. 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 CNY 6.0 billion. Within this, HWC revenue increased 12.4% year-over-year to CNY 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 CNY 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 CNY 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. Increase 20.7% year-over-year to CNY 1.9 billion, with a gross operating margin of 63.6% for the quarter. Let’s now turn to our cash flow and liquidity position. We generated CNY 233 million in operating cash flow during quarter 1. As of quarter end, the group hold CNY 15.8 billion in cash and cash equivalents, with a net cash position of CNY 9.6 billion on our balance sheet. Our healthy operating cash flow and strong balance sheet provides solid support for future shareholder return arrangements. This concludes our financial review for the first quarter of 2026.

Jin Hui, Chief Executive Officer (CEO), H World Group: We are ready to take your questions. Operator, please open the line for Q&A.

Operator: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. 1 moment for our first question. We will now take our first question from the line of Dan Qi of Morgan Stanley. Please ask your question. Dan, your line is open.

Dan Qi (徐显达), Analyst, Morgan Stanley: 各位管理层，大家晚上好。我是大摩的分析师Dan，徐显达。很高兴又看到一个季度利润的优异增长，这个公司。我的问题是关于最近这个RevPAR还有需求的趋势，就一季度我们看到需求是环比得到提升的，就3%的一个RevPAR的增长。然后刚刚金总也提到了二季度以来的春假和节假日的这些错峰的旅游。那么想问一问，能不能向我们分享多一点最近的这个情况，特别是商旅的一些趋势，就是除了休闲之外，还有就是能源上涨之后呢，有没有看到有一些影响或者是情况怎么样？最后一点，我想问管理层就是，入住率这一边呢，看是不是能给我们多一点点分享，是不是可以稳定一点？谢谢。那我翻译一下。Thank you management, 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, and Mr. Jin mentioned about the demand balance during the Qingming and also May Spring holiday. Several holidays in Q2. Can management share more colors, especially on business demand, and any impact from energy cost increase? Lastly, any comments on the occupancy stabilization? Thank you. [Foreign language]

Jin Hui, Chief Executive Officer (CEO), H World Group: 好，各位，我是金辉，我来回答这个问题。在疫情以后，中国市场的旅游休闲市场一直保持一个非常好的增长。我想这个一方面和消费者的日益这样的把旅游作为刚需的这样的一个消费，成为一种出行的习惯非常有关。同时呢，政府侧也做了大量的推进文旅、推进消费的这样的一个工作，包括我前面提到的春假的等等试点。同时我们也很高兴持续看到入境市场的快速增长。所以总体来讲，在中国旅游市场人次这方面持续展现了稳步的增长的趋势。当然由于消费力的这样的一个问题，中国经济还处于一个波动的状态，所以我们看到的是人次增长，消费力显得不是太强劲的这样的现状。所以整体来讲，我先回答一下消费力，消费市场还是稳步增长的一个趋势，尤其在休闲市场。

Dan Qi (徐显达), Analyst, Morgan Stanley: After reopening, we actually see that for the leisure travel demand, it still has been growing steadily. Couple reasons behind. I think one is that after reopening, the leisure travel and experiential experience behavior is becoming a necessity to Chinese consumers. Secondly, we are also seeing government pushing out supportive policies, such as the one that I mentioned during my prepared remarks, the spring breaks, that would roll out in multiple regions and cities this year. Thirdly, we’re also seeing a rising demand or an increase in overall inbound tourism, which was an additional growth driver to the overall leisure travel market. Overall, we are seeing that in terms of the number of trips, it is growing steadily after reopening. Probably because of the consumption power, we still see some fluctuations in the overall spending.

To conclude, we do believe that overall leisure travel is still growing steadily.

Jin Hui, Chief Executive Officer (CEO), H World Group: 能源上涨目前没有对国内的出行造成非常明显的影响，我想这和中国新能源汽车的快速普及也有很大的关系，这个非常明确。刚才Dan问到了能源的问题，我们没有看到对出行市场明显的负面，所以我们保持了对26年全年华住RevPAR微增的目标。

Dan Qi (徐显达), Analyst, Morgan Stanley: The rising energy cost, for now, we haven’t been observing any impact on the overall travel demand because of the rising energy cost. We think partially this is also because the popular new energy vehicle in China. That is also why for the full year 2026, we still maintain our full year RevPAR guidance of a slight increase.

Jin Hui, Chief Executive Officer (CEO), H World Group: 我们在过去和未来，华住将持续聚焦在自身以品牌、运营管理、会员等营销核心能力的投入。随着市场供应的趋缓，我们对未来整体的出租率还是表示谨慎的乐观态度。

Dan Qi (徐显达), Analyst, Morgan Stanley: For each role, we will continue to focus on building our own core competencies, including our hotel brands, including our operational management capability, as well as membership. Given that the overall industry supply increase has been slowing down and the rationalizing, we maintain cautiously optimistic on overall occupancy rate outlook.

Jin Hui, Chief Executive Officer (CEO), H World Group: 谢谢。

Dan Qi (徐显达), Analyst, Morgan Stanley: Thank you.

Operator: Thank you. We will now take our next question from the line of Ronald Leung of Bank of America. Please ask your question, Ronald, your line is open.

Ronald Leung, Analyst, Bank of America Securities: 各位管理层晚上好，我是美银证券的Ronald。我的问题是关于开店关店的。我们看到一季度的开店都是还有不错的节奏，可以请问一下今年的最新的开关店的预期的整个计划是怎么样？还有就是关于开关店的城市覆盖的规划也是怎么样的。谢谢管理层。Let me translate my question into English.

So

My question is about the opening and closures outlook for the full year. What is the latest outlook for the full year opening and closures? Could management also comment about the city coverage in terms of the overall openings? Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: 关于开店和布局的问题，我分两部分来回答，先回答开业部分。一季度华住毛开业的门店是537家，维持在历史的一个高位的水平。当然一季度净开业还受到了中国春节比较晚的一些因素，但整体开业数量是符合集团的这个预期。

Jin Hui, Chief Executive Officer (CEO), H World Group: I will answer the opening and the city coverage question separately. On the HWC, we grossly opened 537 hotels, which is at a relatively high level compared to historical performance. Of course, in the first quarter, our net opening is highly impacted by the late Spring Festival holiday this year. Overall, the number of gross openings and net openings this quarter was in line with our overall expectation.

Jin Hui, Chief Executive Officer (CEO), H World Group: 在开店的战略上，我想再次重申华住的规划的想法是围绕着高质量的发展。自从两年前华住从单纯追求规模的增长转型成以高质量品牌引领的这样一个发展策略，我们坚持，持续地提升我们签约和开业的门店的质量要求。在这个大背景下，很高兴地和大家报告，我们的签约依然保持一个非常良好的节奏。

Jin Hui, Chief Executive Officer (CEO), H World Group: Our hotel opening strategies, we insist on the high quality development of our hotel network. Since 2 years ago, we already shifted from purely focusing on quantity to focusing a high quality growth of the hotel network. Under our brand network high quality growth strategy, we have high standards and high requirement on the new signings and new openings. With that strategy, I’m happy to report that in the first quarter of overall new signings is still at a healthy and high level.

Jin Hui, Chief Executive Officer (CEO), H World Group: 在保持良好的签约的节奏下，华住维持2026年的全年的开关店指标指引不变。

Jin Hui, Chief Executive Officer (CEO), H World Group: With our healthy signing pace, we maintain our opening guidance for the full year of 2026 unchanged.

Jin Hui, Chief Executive Officer (CEO), H World Group: 关于开业城市布局的规划上，华住目前采取的是两手抓、两条腿走路的方式。一方面我们继续保持对下沉市场的渗透，同时我们基于目前房地产供应周期的因素的影响，我们正在重返二线，去重新布局我们的高品质、高质量的新品的主力品牌，去重返一二线，抢夺核心城市核心商圈。

Jin Hui, Chief Executive Officer (CEO), H World Group: On the city coverage strategy, we have 2 lines of strategy which we are implementing at the same time. Firstly is still the penetration into lower tier cities. Secondly, given the current real estate market, the current supply cycle of the real estate market, we are also returning to the Tier 1 and Tier 2 cities. We are grabbing those emerging opportunities of those high quality properties in those core and premium district and premium locations. We will be developing our premium hotel products in those Tier 1 and Tier 2 cities.

Jin Hui, Chief Executive Officer (CEO), H World Group: 华住有非常充足的信心，同时在下沉市场和核心城市保持一个非常高质量的增长。

Jin Hui, Chief Executive Officer (CEO), H World Group: We are fully confident that each role will be delivering high quality growth in both the lower tier cities as well as the Tier 1 and 2 cities.

Jin Hui, Chief Executive Officer (CEO), H World Group: 谢谢。

Jin Hui, Chief Executive Officer (CEO), H World Group: Thank you.

Operator: Thank you. We will now take our next question from the line of Sijie Lin of CICC. Please ask your question Sijie Lin.

Sijie Lin (林思杰), Analyst, CICC (China International Capital Corporation): 好，谢谢管理层，我是中金公司林思杰。我的问题是关于这个中高端业务的一个发展。就是我们看到过去一段时间中高端，尤其是城际的这个开店和签约是很不错的，包括这个城际大观首店也开始运营了，然后有了这个十二家签约。所以，我想问问，就是，我们这个中高端的一个RevPAR的一个表现，相对于这个经济型中档大概会怎么样？以及呢，就是可否分享一下未来一段时间这个中高端的拳头产品吧，包括城际和城际大观，以及整个板块的这个拓展的目标和经营的一个重心。我来翻译成英文。 So thank you management.

My question is about the upper mid scale business development for the last several quarters, upper mid scale, especially InterCity, achieved quite impressive expansion speed. We see that JI Hotel opened first hotel and has 12 new signings. I want to know how the 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 segments, especially the InterCity and JI Hotel, in the coming period. Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: 好的，谢谢。我来回答这个问题。中高端是华住未来战略布局当中非常重要的组成部分，也是华住的战略重心。我很高兴地，表现其实略好于我们中档和国民市场，展现了华住在中高端市场品牌和运营能力的逐步形成。

Jin Hui, Chief Executive Officer (CEO), H World Group: The upper mid-scale segment is a core strategic part of our overall H World strategy. We are actually very happy to see that in the first quarter, the overall rapid recovery in the upper mid-scale segment is actually slightly better than our economy and mid-scale. This showcases our growing brand power and product quality in the upper mid-scale segment.

Jin Hui, Chief Executive Officer (CEO), H World Group: 由于华住采取的是多品牌中高端的发展策略，我们四个品牌分别是全季、大观、水晶橙和美居。就规模来讲，整体规模增长不错，但是单一品牌的品牌势能还不足，所以我们今年调整了开发策略，更聚焦在一二线核心城市核心商圈，去进一步树立我们这些品牌的旗舰店，进而来尽快提升四个品牌在中国消费者市场的品牌影响力。

Jin Hui, Chief Executive Officer (CEO), H World Group: We adopt a multi-brand strategy in the upper mid scale segment. Namely is the Intercity, Grand Mercure, and Crystal Orange Hotel. Overall, the total network growth in the upper mid scale is quite solid. When we’re breaking down into single brand, we do see that some of the brand still need further improvement in its overall brand power. We are returning to and refocusing back to the Tier 1 and Tier 2 cities to opening flagship stores in those core districts.

Jin Hui, Chief Executive Officer (CEO), H World Group: 我们的确花了很多时间在早期打磨四大品牌的不同产品、不同定位。我们希望形成四个品牌非常鲜明的市场定位和差异化。四个品牌在起动的阶段，对于华住来讲也是巨大挑战，但我坚信从长远来看，华住会依托这四个品牌实现在中高端市场的领导者的这样的市场地位。我们表示非常有信心。

Jin Hui, Chief Executive Officer (CEO), H World Group: At the initial stage of development, each one has been spending a lot of time, setting the overall brand strategy as well as the design. We have very clear value proposition for each of our upper mid-scale product. Of course, at the initial stage is we, you are always going to face off the challenges. We are very confident that in the longer term, our H World upper mid-scale brands will be leading in the upper mid-scale segment.

Jin Hui, Chief Executive Officer (CEO), H World Group: 谢谢。

Jin Hui, Chief Executive Officer (CEO), H World Group: Thank you.

Operator: Thank you. We will now take our next question from Liu Jiwei of CITICS. Please ask your question Jiwei, your line is open.

Liu Jiwei (刘继伟), Analyst, CITICS Securities: 管理层好，我是中信证券的刘继伟。我这边请教一个关于会员的问题，就是我们一方面其实现在去看这个商旅跟休闲的这种客源的需求还是比较波动的。另一方面，其实最近这个OTA行业本身也在被监管，所以在这种大的背景下，目前我们的这种获客的整个的客源的渠道占比现在是怎么样的？包括从整个长期展望，估计这个渠道的结构的比例会不会有什么样的变化，以及的话呢，也想请教一下公司在整个的这个会员的营销方面有什么样的一些策略跟想法。Uh, I’ll translate my question to English.

Hi management, I’m Liu Jiwei from CITICS. Against the backdrop of fluctuating business and the narrow gas mix and increasing regulation across OTA 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? Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: 好，我来回答这个问题。华住整体来讲，CRS的比例，尤其我们一些关键指标保持还是相对稳定的。在开业五百多家店，包括去年保持一个高增长的同时，我们混客比例还是保持一个相对稳定的状态，我们觉得整体还是表现不错的。

Jin Hui, Chief Executive Officer (CEO), H World Group: Overall, our CRS as well as some of the other key metrics, of our memberships have been performing quite stable. Even under the case that we’ve been expanding our overall network rapidly last year and opened over 500 new hotels this year. The overall CRS contribution, to, and the membership booking has been quite stable.

Jin Hui, Chief Executive Officer (CEO), H World Group: 但的确我们看到一些新的变化，由于中国市场休闲旅游、入境等一些新型的客户越来越多，对于华住而言，去建立新的能力，实现这些会员的连接和转换，的确是华住会下一个阶段非常核心的关键任务。

Jin Hui, Chief Executive Officer (CEO), H World Group: At the same time, we are also observing some emerging trend, including the leisure travel as well as the overall increase in the inbound tourism. How to capture those emerging traffic and the new type of consumers is one of the very important topic for H World and for our H World membership.

Jin Hui, Chief Executive Officer (CEO), H World Group: 我想大家也关注到了，华住在持续引入一些新的核心团队，包括我们和行业领先的AI企业展开个性化和新型会员的转换。这些动作都表明了华住在华住会这个营销上面的坚定的投入。

Jin Hui, Chief Executive Officer (CEO), H World Group: You may have noticed that H World we have been bringing in some new talents into the company, and we are also working with some leading AI companies to develop new selling marketing strategies as well as to solve the new strategy and initiatives in member conversion.

Jin Hui, Chief Executive Officer (CEO), H World Group: 同时，华住会还在企业级的预定方面也在持续发力，我们通过华住会的能力持续去服务好中国头部企业的商旅客人，我想这也是华住会非常重要的一个能力的提升，也是新的客源的转换。

Jin Hui, Chief Executive Officer (CEO), H World Group: Improving our capability in the corporate B2B channel. We are using our membership to leading corporate business travelers. We do believe that this is also showcases the improving membership on capability of H World.

Jin Hui, Chief Executive Officer (CEO), H World Group: 谢谢。

Jin Hui, Chief Executive Officer (CEO), H World Group: Thank you.

Operator: Thank you. We will now take our next question from the line of Leah Pan of Goldman Sachs. Please ask your question, Leah, your line is open.

Leah Pan (佳浓), Analyst, Goldman Sachs: 感谢管理层给我提问的机会，我是高盛香港的分析师Leah Pan佳浓。我有一个关于公司海外扩张战略的问题。管理层刚刚提到近期在东南亚地区布局持续推进，包括签约马来西亚的酒店，以及进入柬埔寨市场。能否请管理层再具体分享一下我们目前在这些区域有什么扩张的进一步进展，以及未来几年在东南亚市场以及其他全球市场的增长目标。另外想请问一下管理层如何看待中东的问题对于公司目前国际业务和未来海外拓展的影响。Thanks for taking my question, this is Leah from Goldman Sachs. I have a question on the company’s international strategy.

I think you mentioned on the business stepping up in the Southeast Asia market, including the signing of Zleep Hotels in Malaysia and the entry into Cambodia with the brands Zleep Hotels and the Steigenberger. Could you please share with us more potentially in your in the Southeast Asia market and the growing targets over the next few years? Also, given company’s business exposure in the Middle East market, how do you see the impact from the ongoing Middle East crisis to your current business and as well as the global expansion strategy? Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: 好，我是金辉，我先回答第一个问题，关于东南亚的战略和布局。的确，第一阶段我们在越南和老挝，包括柬埔寨成功的开店，给了我莫大的证明，证明了中国的品牌、中国的供应链、中国的会员优势都能很好地赋能我们在东南亚的开店。因而基于这样的一个能力的基础，我们认为华住会持续加大在整个东南亚布局的规模和速度，所以对此我们表示非常的，对长期来讲是非常乐观的一个新的市场，对华住来讲也是一个非常充满机会的市场。

Jin Hui, Chief Executive Officer (CEO), H World Group: You do see that as a first step, we successfully opened hotels in Vietnam, in Laos and in Cambodia. This gives us a very strong confidence that H World’s products, management, supply chain as well as members can actually empower the hotel operation in the overseas market. Going forward, we are gonna step up in the overall investment in the Southeast Asia market in terms of the network expansion, the size as well as the pace of expansion. We do think that overall the Southeast Asia is a brand new market that provides new opportunities to H World.

Arthur Yu, Chief Financial Officer (CFO), H World Group: 你好，我是Arthur余君瑞，我来回答第二个关于中东战争对我们华住国际的影响。首先从整体一季度的结果来看，我们的影响是比较有限的。一方面，华住国际在中东我们仅有十家这样的一个加盟店，那对华住国际的收入和利润的占比还是比较小的。另外一方面，对于欧洲能源成本的上升的影响，我们通过自己内部在管理上面的努力，去降低这个影响。现在看这个影响还是相对比较可控的。但整体中东的局势仍然存在不确定性，所以我们会密切关注事态的进一步进展，跟市场进行沟通。 所以这是关于中东冲突的第二个问题。根据我们第一季度的业绩，我们看到中东冲突对我们的H World International的影响非常有限。在中东地区，我们的HWI只有十家管理型酒店，这些酒店的收入和利润都比较小，可以忽略不计。至于能源成本的总体增加，我们正在努力控制和管理能源的总体增加。到目前为止，我们认为中东冲突对HWI的影响仍然可以控制。但当然，中东局势将如何演变仍有不确定性，所以我们会密切关注整体发展。谢谢。

Operator: 谢谢。我们现在转到 Citi 的 Lydia Lin 的提问。请提问，Lydia，你的麦克风已经打开。

Lydia Lin, Analyst, Citi: 管毅腾好，我是Citi的Lydia，感谢给我提问的机会。那我的问题呢，是关于那个利润率方面的。那我们看到一季度呢，公司的利润率还是有持续的提升，那费用率也是继续的优化。那怎么看全年的这个利润率的一个趋势？如果分地区来看的话，那中国现在也是比较高的一个水平，那随着这个轻资产的这个战略进一步推进，那还有多少的提升空间？那么DH那边可以看到一季，或者整个就是华住国际那边一季度的，是有在减亏，那怎么看全年的这个利润的一个情况。Hi management, Lydia from Citi, and thanks for taking my questions. So my question will be on the profitability. So in first quarter, we continue to see the margin improvement and a further optimization in the cost ratios. So what would be your outlook for the full year margin trend?

If by region in China as asset light strategy continues to push forward, what will be the upside from current high level? We see the international part, the loss actually narrowed on year basis in first quarter. What would be your target for the overseas profitability on full year basis? Thank you.

Arthur Yu, Chief Financial Officer (CFO), H World Group: 谢谢 Lydia，我是 Arthur 余君瑞，我来回答这个问题。首先我们看到我们第一季度的 EBITDA 的表现还是很好的，那主要是有三个方面，我们做出了一个动作的影响。第一呢是随着集团的轻资产的战略的推进，我们还是有信心华住的酒店业务的 EBITDA 率将在同比是持续的、稳定的这样的一个提升，主要是由轻资产的战略所带来的。第二一点呢，是我们自己的直营业务，那我们通过收益管理以及成本管控，特别是在减租方面做出一些卓有成效的工作，是比较好的，完成了这样的我们的一个成本控制的这样的一个目标，取得了比较好的结果。On first quarter EBITDA, there are several things that we are doing to improve the overall EBITDA performance.

Firstly is our asset light strategy. As we continue pushing forward asset light strategy, we are confident that for our H World hotel business, the adjusted EBITDA margin will continue to improve steadily. Secondly, also on the overall lease and own business, we are also improving the performance of this segment by revenue management as well as cost control, including the negotiation of rental reduction.

Operator: 嗯。

Arthur Yu, Chief Financial Officer (CFO), H World Group: 然后刚才你提到的关于海外的业务，那我们在华住国际，特别是DH的业务方面，我们在持续地推进成本降低的这样的一个项目。那在这个项目的基础之上，我们会深挖我们自己的每一项成本的结构，然后对我们自己的成本做出精细化的管理，以提升我们自己的运营效率。那这方面我们已经在第一季度取得了初步的这样的一个效果，后边我们还会继续去持续推进。On overseas business HWI, especially for DH.

We continue to push forward the cost reduction initiatives. We are actually looking into each item in the overall cost structure to improve the overall efficiency.

In the first quarter this year, and we will continue to pushing forward the cost reduction initiatives in DH. 最后一点，我也想补充一句的是，我们除了做好多成本降低方面的努力，我们其实还在加大一些重点项目上面的投资，例如说像我们的数字化和AI的建设、华住会会员体系的升级以及品牌的推广和宣传。例如我们Q1做了汉庭快捷的发布。在这些事情上面呢，我们是保持一个长期可持续发展的这样的一个想法，那华住需要对我们自己的品牌和会员体系和技术体系做必要的投入。但是从全年的这样的一个成本来讲，我们会在我们自己内部的预算的基础之上，做出一个这样的一个保持稳定的一个投入，让我们在投入和产出方面有一个比较好的回报。谢谢。

Jin Hui, Chief Executive Officer (CEO), H World Group: I would like to add that aside from the cost control and cost reduction, H World is also making some investment in key areas such as digitalization, technology and AI development, as well as our overall H World membership building, the promotion and marketing of our core brand. For example, in the first quarter, we launched our Hanting Inn product. Based on the overall budget and overall planning, we do need to make necessary investment. Of course, we will be looking at the overall ROI of those investment. On the full year basis, we will have control on the cost, we also make necessary investment for our long-term sustainable growth.

Operator: Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: We’ll take the last question.

Operator: Certainly. Our last question today comes from the line of Xin Chen of UBS. Please ask your question. Xing, your line is open.

Dan Qi (徐显达), Analyst, Morgan Stanley0: Xing. Let me translate to English. This is Xing from UBS. My question is on dividends. Could the management please share the 2026 shareholder return plan with us? Thank you.

Arthur Yu, Chief Financial Officer (CFO), H World Group: Xin Chen. Thank you.

Jin Hui, Chief Executive Officer (CEO), H World Group: Thank you, Xin. As you can see from our presentations, H World have very strong and solid balance sheet as well as stable cash flow. Going forward, as we continue pushing forward the SNI strategy, and those cost reduction initiatives, we will maintain our shareholder return plan in place. Going forward, if there’s anything new, we will update with the market in time. Overall, for the overall direction, is that we will be using our own cash flow to return to the shareholders. Thank you.

Operator: Thank you. 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.

Jin Hui, Chief Executive Officer (CEO), H World Group: 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.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect your line.