H World Group Q4 2025 Earnings Call - Asset-light franchise growth and DH turnaround lift margins

Operator: Good day, and thank you for standing by. Welcome to the H World Q4 and full year 2025 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 and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised today’s conference is being recorded. We’d now like to hand the conference over to your first speaker today, Ivy. Please go ahead.

Dan Chi, Analyst, Morgan Stanley2: Thank you. Good morning and good evening, everyone. Thanks for joining us today. Welcome to H World Group 2025 fourth quarter and full year earnings conference call. Joining us today is our founder and Executive Chairman, Mr. Qi Ji, our CEO, Mr. Hui Jin, our CFO, Ms. Hui Chen, and our CSO, Ms. Jihong He. Following their 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 Provisions 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 SEC.

H World Group does not take, 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. Hui Jin, to discuss our business performance in the fourth quarter and full year of 2025. Mr. Hui Jin, please. Dear investors and analysts, good day. Thank you for joining H World fourth quarter and full year of 2025 earnings call. First, I’d like to share some observations on the overall travel market.

Demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers. Data from railway, aviation, and tourism all indicate a steadily growing travel demand in China. The number of trips, as well as consumer spending, continues rising as people increasingly pursue a better life. As China’s transportation network improves, accommodation needs quickly expanded from major cities to county-level markets, making the lower-tier city a new growth engine for tourism consumption. Strong demand for leisure and experiential consumption, together with booming tourism events, exhibitions, and sports competitions, are driving the diversification and quality upgrades of accommodation needs. However, China’s hotel industry still faces oversupply of low-quality and homogeneous products, while high-quality, value-for-money supply remains insufficient.

Therefore, supply-side reform will remain the main theme of future industry development, and this will undoubtedly bring tremendous growth opportunities for the leading domestic branded hotel groups like H World. While focusing our core business and driving high-quality growth, we also actively fulfill our social responsibilities to achieve a coordinated development of corporate value and social value. We focus on economy and mid-scale segments, which serve the mass market. We develop good value for money products to provide consumers with safe, cozy, and affordable accommodation. Leveraging our brand value and the supply chain capability, we revitalize idle assets, enhance urban supporting services, and boost asset operation efficiency. In addition, we keep expanding into the lower-tier cities and rural areas, filling the gap in quality accommodation in those markets. We create stable employment opportunities, drive the development of the surrounding industries, and boost local night economy.

Looking ahead, we will continue deepening our roots in the China market, pursuing high quality growth and delivering service excellence with a brand-led approach to redo China’s hotel industry.

Hui Jin, Chief Executive Officer, H World Group Limited: 2025年，华住继续推进以品牌引领下的高端发展。在规模布局、盈利表现、品牌建设及会员生态搭建等方面均收获了稳健的经营成果。我们欣喜地看到，依托精益化收益管理、综合影响能力提升以及产品及服务质量的不断升级，我们在维持OCC相对稳定的基础上，推动ADR逐季修复。四季度RevPAR实现了自2024年二季度以来的首次同比正增长。2025年全年ADR也保持同比基本持平的良好态势。

Dan Chi, Analyst, Morgan Stanley2: In 2025, H World remained committed to brand-led, high quality development, and we delivered solid business results across network expansion, profitability, brand building, and membership ecosystem development. We are pleased to see that supported by refined revenue management, enhanced sales, marketing capabilities, and ongoing upgrades of our product and services, we kept occupancy rates stable while driving ADR recovery quarter by quarter. For the fourth quarter, we achieved positive year-over-year RevPAR growth for the first time since the second quarter 2024. Our full year, 2025 ADR remains largely flat year over year.

Hui Jin, Chief Executive Officer, H World Group Limited: 与此同时，华住凭借更区域市场的持续突破，低线城市的深度渗透，实现了全年高质量网络的扩张。在营房量同比增加16.2%的驱动下，集团酒店GMV同比增长16.4%，至RMB 1,080亿元。伴随全国网络布局持续完善，华住会运营能力不断升级，华住会员预订间夜持续增长，2025年会员预订间夜突破2.45亿间，同比增长21.5%。

Dan Chi, Analyst, Morgan Stanley2: By breaking through in new cities and regions and further penetrating in the lower tier cities, we achieved another year of high quality network expansion. Driven by a 16.2% year-over-year increase in the number of rooms in operation, our group hotel GMV grew 16.4% year-over-year to CNY 108.1 billion. Meanwhile, along with our network expansion and continuous enhancement of H Rewards membership program, room nights sold to members rose 21.5% year-over-year, exceeding 245 million in 2025.

Hui Jin, Chief Executive Officer, H World Group Limited: 更为重要的是，集团轻资产的加盟业务，无论在规模、收入还是利润上均实现稳健增长。2025年，加盟收入同比提升23.1%，至117亿元，经营毛利同比增长20.8%，至76亿元。

Dan Chi, Analyst, Morgan Stanley2: More importantly, our asset-light monetized and franchised business delivered solid growth in its hotel network, revenue, as well as profit. Our full year 2025 group M&F revenue rose 23.1% year-over-year to RMB 11.7 billion. The group M&F gross operating profit increased by 20.8% year-over-year to RMB 7.6 billion.

Hui Jin, Chief Executive Officer, H World Group Limited: 在酒店网络布局上，华住坚持以经济型国民中档酒店为核心，深耕大众市场，持续夯实核心品牌竞争力。我们通过升级核心品牌，优化以客户为中心的服务体系，持续提升酒店网络运营质量与品牌影响力，助力集团实现长期稳健的可持续发展。截止2025年末，汉庭、全季、橘子三大核心有限服务品牌的新版本门店占比得到进一步提升。

Dan Chi, Analyst, Morgan Stanley2: In terms of hotel network expansion, we remain steadfast in focusing on economy and mid-scale hotel segments to serve the mass market and strengthening our core brand competitiveness. By continuously upgrading our core products and enhancing our service excellence with a customer-centric principle, we improved the operational quality of our hotel portfolio and strengthened our brand value, which helped the group to achieve long-term sustainable growth. By the end of 2025, the proportion of new versions of the three core limited service brands, namely Hanting, JI, and Orange, had raised further.

Hui Jin, Chief Executive Officer, H World Group Limited: 为进一步完善下沉市场布局，存化原有汉庭酒店品牌，贴合大众出行刚需，我们推出汉庭快捷品牌。汉庭快捷主打高性价比与品质平衡。我们创新推出多人间、家庭房等产品，覆盖家庭出行、团队出行等细分场景，填补经济型酒店市场空白。同时搭配划转会自助入住、自助洗衣等智能服务，兼顾住客体验与运营效率。汉庭快捷承担汉庭品牌存化的重要使命，进一步加速品牌与产品迭代升级，为消费者提供更优质的住宿体验。依托轻、快、省、赢的改造模式，为老版本汉庭的加盟商提供轻改造、快施工、成本低、盈利稳的优异重要选择。

Dan Chi, Analyst, Morgan Stanley2: To further expand our footprint in the lower tier markets, advance Hanting brand purification, and meet the diversified travel needs of consumers, we have launched the Hanting Inn brand. Hanting Inn strikes a perfect balance between cost effectiveness and quality. We have rolled out innovative room types such as multi bedrooms and family rooms, catering to the growing scenarios such as family trips and group travel, and filling in the missing piece in the economy hotel market. In addition, we have integrated smart services such as self check-in and self-service laundry facility, balancing guest experience and operational efficiency. Also, Hanting Inn plays a vital role in Hanting brand purification, helping accelerate brand and product upgrades to deliver better lodging experience for our guests.

Supported by our light, fast, economical, profitable renovation model, Hanting Inn offers franchisees who operate older Hanting hotels another great option, which has light refurbishment, quick construction, low cost and certain profitability.

Hui Jin, Chief Executive Officer, H World Group Limited: 与此同时，华住中高端板块坚持多品牌发展战略，通过清晰的品牌定位与价值主张，稳步推进橙记、全季、大观、水晶及美居四大核心品牌的发展。截至2025年末，集团中高端品牌在营及管道内店突破1,639家，同比增长17.6%。其中核心品牌橙记在营门店突破一百家。凭借清晰定位、优质产品与良好经营表现，已成为华住在中高端赛道的核心增长动力之一。

Dan Chi, Analyst, Morgan Stanley2: Meanwhile, for our upper mid-scale segment, we stick to our multi-brand approach, backed by clear brand positioning and value propositions, we are steadily pushing forward the development of four key brands in this segment, which are IntercityHotel, JI, Crystal and Mercure. As of end 2025, the number of our upper mid-scale hotels in operation and in pipeline exceeded 1,639, up 17.6% year-over-year. Among them, our core brand, IntercityHotel, hit a milestone of over 100 operating hotels. With its clear brand positioning, exceptional product quality and strong operational performance, IntercityHotel has become one of the core growth drivers for our upper mid-scale segment.

Hui Jin, Chief Executive Officer, H World Group Limited: 在营销方面，我们始终坚持以华住会为核心，会员体系及直销能力是支撑公司业务长期可持续发展的重要核心竞争力。随着华住酒店网络覆盖更多的城市，我们的会员体量及会员贡献的经营量都实现稳步增长。同时，公司积极布局自媒体等新兴社交渠道，强化入境市场，进一步拓宽获客场景，提升会员转换效率。

Dan Chi, Analyst, Morgan Stanley2: We always focus on strengthening our direct sales capabilities through each rewards membership program, which are vital to our sustainable long term business growth. As we expand our hotel network to cover more cities, our membership base and the room night booked by members both achieved robust growth. Meanwhile, we are also proactively exploring cooperation with new sales and marketing channels such as self media, to boost our presence in the inbound travel market, to further broaden customer acquisition scenarios and to enhance membership conversion efficiency.

Hui Jin, Chief Executive Officer, H World Group Limited: 最后，展望二零二六年，华住将继续坚持以品牌为引领的经营增长，持续夯实营销能力，以及更加积极开放的姿态，拥抱科技创新，用科技赋能酒店实体运营，同时全力提升客户体验、加盟商投资回报与经营效益，推动集团稳步向千城万店二点零的战略目标前进。

Dan Chi, Analyst, Morgan Stanley2: Lastly, looking ahead into 2026, H World will continue to pursue brand-led, high-quality growth, keep strengthening our sales and marketing capabilities, and embrace tech innovation with a more open and proactive mindset to leverage technology to power our ongoing hotel operations. At the same time, we will continue to enhance customer experience and to improve operational efficiency and investment returns for franchisees. Steadily working our way to our strategic goal of 2,000 cities, 20,000 hotels.

Hui Jin, Chief Executive Officer, H World Group Limited: 以上就是华住中国二零二五年四季度及全年的业务情况分析

Hui Chen, Chief Financial Officer, H World Group Limited: 下面有请CSO何继红为大家介绍DH二零二五年四季度及全年的业务情况。有请继红。

Dan Chi, Analyst, Morgan Stanley2: All above concludes the 2025 operational update for Legacy-Huazhu. Now I will hand over the call to our CSO, Ms. Jihong He, to give an update on Legacy-DH.

Jihong He, Chief Strategy Officer, H World Group Limited: Thank you, Hui Jin. We are very happy to report that in 2025 we made a successful business turnaround for our Legacy-DH business. We achieved a record level of adjusted EBITDA of around CNY 500 million. This is a significant improvement compared to the last situation last year. The strong performance confirms the successful execution of the business transformation plan. Hotel business cannot achieve profitability without revenue enhancement. Our RevPAR continues to grow and achieved 8.2% increase year-on-year in 2025. Despite a challenging market environment, Legacy-DH succeeded in stabilizing like-for-like hotel revenues. We adjusted the revenue management strategy for different categories of a hotel and worked relentlessly on property level sales performance improvement. Through disciplined efficiency programs, we significantly reduced the DH cost base and streamlined the operations.

Following a successful restructuring of headquarters and reduction of administrative costs at the end of 2024 and early 2025, the management team continued to implement ongoing cost optimization measures across personnel, external services and supply chain throughout the organization. At the same time, with numerous restructuring efforts ongoing, we have been able to maintain the organizational and operational stability, ensuring a solid foundation for sustainable future performance. Another important measure we successfully undertook in 2025 was the optimization of our hotel portfolio. We renegotiated the lease terms of many hotels, exited several loss-making properties, and it transformed a portfolio of leased hotels into asset light structure. This portfolio restructuring significantly enhanced our profitability and improved resilience of our business. As everyone remembers, H World acquired Deutsche Hospitality shortly before COVID outbreak. Our business was thrown into an unprecedented challenging environment.

We did not give up. Instead, we started our transformation journey and brought our expertise globally. This shows the resilience of H World Group. Going forward in 2026, we will continue to build on the momentum and enhance our performance. Continuous improvement of commercial and operational effectiveness across brands is our first priority. We are undertaking concrete measures to improve our marketing and sales across different target markets and adjust our revenue management strategy for different segments. At the same time, we will further leverage synergies from integration with H World Group. We are working on closer integration from different aspects such as supply chain, design and construction, technology, and the loyalty program. In 2026, we’re expected to see more benefit from these synergies on operational level. Another strategic initiative we’ll continue to undertake in 2026 is to sharpen our brand positioning.

For example, we’re developing Intercity next generation to make it more guest friendly and operational efficient. With the new brand proposition, we expect to roll out a business model to the market and accelerate growth of a network together with our partners across the region in the years to come. With this, I conclude the discussion in Legacy-DH business. I will turn to our CFO, Ms. Hui Chen, for financial performance review.

Hui Chen, Chief Financial Officer, H World Group Limited: Thank you, Jihong He. Good evening and good morning, everyone. Let me walk you through our full year 2025 financial overview. In 2025, our group revenue grew 5.9% year-over-year to CNY 25.3 billion. At the high end of our guidance, of which Legacy-Huazhu’s revenue rose by 7.9% year-over-year to CNY 20.5 billion. The top-line growth was driven by our high quality network expansion and stabilized RevPAR performance. Group adjusted EBITDA increased 24.2% year-over-year to CNY 8.5 billion, with margin improved by 4.9 percentage points year-over-year to 33.5%.

The strong profit growth and profit margin expansion were mainly attributable to further enlarged profit contribution from our high-margin asset-light business, as well as the operational improvement and the cost savings from Legacy-DH. Adjusted net income increased by 32.9% year-over-year to RMB 4.9 billion. Looking into our asset-light managed and franchised business, in 2025, powered by the network expansion of managed hotels, our managed and franchised revenue increased by a robust 23.1% year-over-year to RMB 11.7 billion. The managed and franchised gross operating profit rose by 20.8% year-over-year to RMB 7.6 billion. Profit contribution from our managed and franchised business rose steadily and reached 69% in 2025, representing a five percentage point year-over-year increase.

In the full year of 2025, we generated RMB 8.4 billion operating cash flow. At end of 2025, the group had RMB 15.4 billion cash and cash equivalent and RMB 9.6 billion net cash on the balance sheet. With support of our strong cash flow and a healthy balance sheet, we are glad to declare a $400 million cash dividend for the second half of 2025. Together with $250 million interim dividend and around $110 million share repurchases, our total shareholder return amounted to around $760 million for the full year of 2025. In 2024, we announced a $2 billion, three-year total shareholder return plan.

We have now completed over 75% of this three-year plan, and we are committed to continuously returning to our shareholders. Lastly, our guidance for the full year of 2026. We expect our group revenue to grow 2%-6% year-over-year, and 5%-9% if excluding DH. We expect our managed and franchised revenue to grow 12%-16% year-over-year. In terms of unit growth, we are expecting to open 2,200-2,300 hotels in 2026, and to close 600-700 hotels for the same year. This represents a 12% year-over-year hotel network growth. With that, we conclude our financial review for the full year of 2025. Today, I will step down as CFO and Mr. Arthur Yu will take the CFO role of Huazhu.

I would like to take this opportunity to thank all the investors and the analysts for your continuous support for H World Group. I will still be serving as the Chief Financial Officer of the company. Together with our team, we will ensure stable financial management and a smooth transition. We are certain that Arthur, with his expertise and vision, will help drive our financial strategy and support our growth trajectory. Together, the team will lead H World Group to its next success. I will now turn the call to Mr. Arthur Yu. Arthur, please.

Arthur Yu, Chief Financial Officer, H World Group Limited: Okay. Thank you, Hui, for the kind introduction. Hello, everyone, and thank you for joining the call today. It is a privilege to step into the role of CFO at such a pivotal moment for H World Group. I have long admired the company’s resilience and its strong market position. As we look ahead, my priorities will be to build a world-class finance function, maintain rigorous control and investment oversight, and ensure transparent and consistent communications with the capital markets. I look forward to getting to know many of you individually in the days ahead. We are now ready to open the floor for questions.

Operator: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Thank you. Our first question today is from Dan Chi from Morgan Stanley. Please go ahead.

Dan Chi, Analyst, Morgan Stanley: 各位管理层大家晚上好，感谢管理层给我第一个问问题的机会。我首先想祝贺Arthur Yu于总加入公司，然后刚刚也听到，Arthur还有也在announcement上面看到Arthur的一些资深的履历。我想请问一下管理层可不可以初步向我们分享一下，那么Arthur还有这一次的新的任命，会有哪一些策略方向，还有希望带来一些什么样比较向好的改变？我翻译一下。Thank you management for the opportunity to ask the first question.

I would like to congratulate Arthur on the new role. We have seen the list of credentials of Arthur’s expertise. For starters, can management share very briefly the direction of Arthur’s new role? What kind of changes shall we expect on our financial and growth strategy? Thank you.

Hui Jin, Chief Executive Officer, H World Group Limited: 谢谢，我是金辉。我来回答这个问题。首先借这个机会再次感谢陈辉总陪伴我们创业团队在过去二十年取得的成绩。大家可以看到华住在中国市场过去二十年取得的这样的成绩，源于我们陈辉总这一批我们创业团队的孜孜以恒的努力。在刚刚结束的华住二十年的大会，其实华住一方面总结了过去二十年的成绩，同时也展望了未来新的愿景。我们希望能成为一家真正世界级的酒店集团，让中国酒店业，让中国服务走向世界，成为华住此刻的目标。所以面向未来，一方面我们面对世界级这样一个理想，另外一方面也希望面对华住超大规模的管理，希望带来更专业化的管理跃升。我觉得在不同阶段，我们更希望引入更多元化、国际化、专业化的人才来帮助我们实现新的一场新征程。所以在这个时间节点，我们很高兴看到Arthur加入到华住，来带来这样的一个专业化、年轻化、国际化的转型。我们期待Arthur在岗位上能帮助华住实现新的管理跃升。

Dan Chi, Analyst, Morgan Stanley2: Thank you, Dan, for your question. Firstly, I would like to take this opportunity to thank Ms. Hui Chen for her dedication to the company in the past 20 years.

We just had our 20-year anniversary on Investor Day last year. We can see that over the 20 years with our founding team, we have built Huazhu into a very successful company. At the conference last year, while we concluded and summarized our achievement that we’ve made in the past 20 years, we also take the opportunity to look ahead. We had a vision that we want to create Huazhu, create H World into a global company, into a world-class company, and to work into the world and to become a leading company in China and in globally. With this vision, and as far as with growing really into a hyper scale company, we really need world-class management professional talent to bring those really diversified and international talent and skills to our management team. I welcome Arthur to joining H World, and we are certain that Mr.

Arthur Yu with his deep financial management expertise and together with the team, we will lead H World to the next stage and to achieve the next success.

Hui Jin, Chief Executive Officer, H World Group Limited: 谢谢 Dan。

Dan Chi, Analyst, Morgan Stanley2: Thank you, Dan.

Dan Chi, Analyst, Morgan Stanley: 谢谢。

Conference Moderator, Moderator: Thank you. We will now take the next question. Next question is from Ronald Leung from Bank of America. Please go ahead.

Ronald Leung, Analyst, Bank of America: 各位管理层，晚上好。首先我想谢谢陈辉总，多年来对这个分析师们的支持，现在也趁这个机会，恭喜Arthur这次这个任命。我的问题呢，就是想请教一下这个2026年的这个预期。首先2026年这个收入指引呢，里面隐含的rough的预期是什么？还有管理层可不可以讲一讲，就是2026年的总体的供需关系，比如这个供应的增长大概会是怎么样，还有就是需求方面，包括商务，还有休闲的需求，在2026年的看法也是怎么样？Let me ask my question in English. Regarding the 2026 revenue guidance, what is the implied rough expectations?

Could management comment on the overall demand supply outlook for 2026? How is the supply growth trend, and also how is the overall demand for the business and leisure travel? Thank you very much.

Hui Jin, Chief Executive Officer, H World Group Limited: 好的，是金辉，我来回答这个问题。在过去的三个月不到时间，我们感受到中国整个酒店行业的这个趋势是逐步向好。在需求方面，应该讲在过去几年，以文旅、休闲这样的一个需求一直在稳步的增长，大家也关注到入境市场的增长也在快速提升。应该讲整个需求还是处于一个稳步提升的状态。商务市场呢，我们也感受到触底的迹象，尤其在中国的一二线核心城市，我们感受到的趋势的明朗和向好。所以总体来讲，华住对2026年的整体RevPAR是持有谨慎乐观的态度。我们期待华住隐含的2026年的同比RevPAR是实现微小的正增长。这个目标我们是成为集团的管理和目标。

Dan Chi, Analyst, Morgan Stanley2: Thank you, Ronald. In the past 3 months, we have observed that the China hotel industry trend is actually recovering. On the demand side, we have been observing that actually in the past 1-2 years, the leisure travel has been growing really steadily and also the inbound travel is recovering and coming back. Overall demand is growing, for leisure especially. For business travel demand, we have also seen that business activity and business travel has bottomed and also going on to an upward trend, especially in the Tier 1 and Tier 2 cities. For 2026, we are cautiously optimistic on the overall RevPAR performance.

For the management and for the company, we do have the target that to deliver a flat to slightly year-over-year increase for the full year 2026 RevPAR. Thank you.

Conference Moderator, Moderator: Thank you. We will now take the next question. This is from Simon Cheung from Goldman Sachs. Please go ahead.

Dan Chi, Analyst, Morgan Stanley0: 谢谢金总、何总跟陈总刚才的分享，也恭喜阿宝。我有一个小小的问题想追问，是那个开店的节奏的问题吧。上一年你开店挺猛的，两千四百多个店，那今年有什么规划，以及因为你最近也有新推出一些新的品牌吧，比如说那个汉庭快捷的品牌，那有没有说什么计划，这个品牌今年以及未来几年大概那个店数会开到多少个店呢？就这个问题吧。那我用英语再翻译一下吧。The question is in relation to the hotel opening.

The pace of hotel opening last year, the company has achieved a whole lot in terms of the growth, exceeded 2,400 store opening last year. Wondering whether they would have any change in their pace or expectation for this year. In particular, we noticed that they have some new hotel brands. For example, the HanTing Inn brand, and wondering whether they would have any target for this brand as well. Thank you.

Hui Jin, Chief Executive Officer, H World Group Limited: 好，我来回答一下这个关于发展的问题。我们在2025年录得了应该是华住历史上开业最多的一年，我们整个开业门店超过两千四百家。其实在2023年开始，华住就调整了我们发展的策略，我们希望华住的发展是以质量优先于规模的精益发展战略。所以过去两年，华住始终坚持高质量的发展路径。我们预期在精益增长的战略指导下，华住的总体新增门店、开业门店依然会保持一个高位区间。我们披露了大概在两千两百家至两千三百家的预测开业数量，是符合现在市场和华住以精益发展战略为战略的这样一个合理开店区间。所以进而在这个精益增长的大战略里面，我们非常有信心，在2030年依然保持我们高质量的开出两万家好店的总体目标，依然不变。

Dan Chi, Analyst, Morgan Stanley2: Thank you, Simon. I will answer your question on the development. As you can see, in 2025, we achieved a record high in the hotel growth openings exceeding 2,400 hotels. Actually in 2023, we already adjusted our overall growth and development strategies of high quality, sustainable growth. What we are pursuing is not just the simple quantity, but also high quality of standard of the hotel network. In 2026, while under this high quality standard, we still expect to expand our hotel network and maintain the overall openings at a high level. We guided to open 2,200-2,300 new hotels in 2026. This actually reflects our strategy of high quality, sustainable growth. We are still very confident that to achieve our 2,000 hotel target, this strategic goal by 2023, 2030.

Hui Jin, Chief Executive Officer, H World Group Limited: 对，同时我想对大家比较关心的我们新发布的汉庭快捷也做一个统一的分享。在中国的经济型国民市场，始终是中国人口结构下最主要也是最坚实的市场，同时也是华住这个整个业务当中最根基的市场。我们始终希望在国民市场能实现充分的、完整的这样的一个市场占有和高质量的发展。

Dan Chi, Analyst, Morgan Stanley2: On your question on HanTing Inn, I would like to share some thoughts on this HanTing Inn brand HanTing Inn product. We always think that the economy sector is the core in China’s consumer market, and this is also the core market for H World. What we want to achieve is full coverage of high market share in this economy sector.

Hui Jin, Chief Executive Officer, H World Group Limited: 一方面我们看到有更多高质量的物业供给转化成汉庭酒店的这样机会越来越多，也就是汉庭酒店的品质明显比我们十年、二十年前质量更高，品质更好。同时我们也看到中国更多数的国民对性价比的需求。我们近来推出的汉庭快捷是汉庭酒店品牌升级和纯化重要的战略之一。所以我们最后希望汉庭酒店和汉庭快捷依然是国民市场的一个品牌，去服务更广更多数的中国国民对性价比的这样的一个产品需求和出行的服务体验。

Dan Chi, Analyst, Morgan Stanley2: We are seeing more and more high quality properties that can be built into our HanTing brand. Now you can see that for our HanTing branded hotels, the quality of it is much higher and the standard is also much higher compared to a couple of years ago. With this, we’ve introduced HanTing Inn, which can help us to cover and serve the overall mass market. We want to stress that HanTing Inn and HanTing they together are one brand, and the HanTing will help us to cover the mass market in China. The HanTing actually takes a very important role in upgrade and replace the older HanTing product and to further purify our HanTing brand.

Hui Jin, Chief Executive Officer, H World Group Limited: 谢谢。

Dan Chi, Analyst, Morgan Stanley2: Thank you.

Conference Moderator, Moderator: Thank you. We will now take the next question. Question is from Xin Chen from UBS. Please go ahead.

Dan Chi, Analyst, Morgan Stanley1: 各位管理层好，感谢给我这次提问机会，我是UBS的陈新。我的问题是关于DH的，刚才管理层在介绍的时候，其实slides上也有，也提到了DH的下一步的继续的轻资产化。那想请管理层给我们可否分享一下DH的进一步轻资产转型的规划以及节奏，以及DH未来的酒店网络发展和财务表现的目标。My question is regarding DH. Could management share further details on the asset lighter transformation strategy and roadmap approach, as well as the targets for future hotel network expansion and financial performance?

Thanks. 谢 谢.

Jihong He, Chief Strategy Officer, H World Group Limited: Xin Chen, I will take your questions. Yes, you know we achieve a turnaround of DH business in 2025. However, our efforts to improve business does not stop here, right? Our reorganization, efficiency improvement, cost control will still remain as part of the ongoing management. We are also looking to our portfolio restructuring as well. We continue our effort in rental reduction, lease re-negotiation, look into possibilities to exit loss-making properties, and also possibility to negotiate much better portfolio, asset portfolio, right?

Now that our business is stabilized, we are also indeed starting to look at development to expand our hotel network. We have much more confidence now in managing international hotels, and we believe limited service and selected service hotels have really a lot of potential in overseas markets. Now that we are developing different business models, so we will have efficient, you know, for example, next generation IntercityHotel and Zleep for the basis of our growth. Of course, we also look into possibilities to expand, Steigenberger hotels as well. Europe will remain our core international markets, but at the same time, we’ll also explore, for example, Middle East, North Africa, where we already have good basis. The Legacy-DH business, or in a nutshell, is expected to remain profitable in the years to come.

Conference Moderator, Moderator: Thank you. We will now take the next question. This is from Sijie Lin from CICC. Please go ahead.

Hui Jin, Chief Executive Officer, H World Group Limited: 谢谢管理层，也祝贺于总。我想问一个关于股东回报的问题，就是我们25年的这个股东回报很丰厚，达到了这个USD 7.6亿，这个是超过了经调整净利润的100%，然后我们也已经完成了这个三年USD 20亿计划的超过十四分之三。所以想问一下股东回报的一个后续的安排和规划。

Dan Chi, Analyst, Morgan Stanley2: Thank you management. Our shareholder return in 2025 achieved $760 million, exceeding 100% of adjusted net profit and has completed over 75% of $2 billion three-year shareholder return plan. What’s our plan for the shareholder return in the upcoming years? Thank you.

Sijie Lin, Analyst, CICC: Uh,

Hui Chen, Chief Financial Officer, H World Group Limited: Thank you, Sijie. This is Hui Chen. I’ll answer your question on the shareholder return. Benefiting from our asset light strategy and our high quality growth, H World, we have generated very strong and stable cash flow. As well as we have a high quality and very healthy balance sheet. Going forward, we’re committed to continue to return to shareholders through either dividends or share repurchase. Thank you.

Operator: Thank you. We’ll now take our next question. This is from Lydia Ling from Citi. Please go ahead.

Lydia Ling, Analyst, Citigroup: Hey,

Dan Chi, Analyst, Morgan Stanley2: Thanks, management. Thanks for taking my questions. I have questions on the upper mid-scale hotel segment and which we saw, like, the further step of the development in 2025. What’s your plan for this year or the longer term? Do you plan to have more aggressive or accelerated expansion in this segment? Thank you. Thank you, Lydia. I will take your question on the upper mid-scale segment. The upper mid-scale segment is one of H World’s strategic focuses. We have been focusing on this upper mid-scale market in the past two years, and we will continue to do so going into the future. Our strategy in the upper mid-scale segment is to focus on the tier one and tier two cities.

We will develop this segment using a multi-brand strategy, which I think is different from the other companies. We have four key brands in this segment, which are JI Hotel, IntercityHotel, Crystal Orange Hotel, and Mercure. As you can see that these four brands actually all have different target market and they have different specialties. Which covers the JI Hotel, which really presents the oriental aesthetics. We also have the more Western design, like the IntercityHotel and the French style Mercure. Using this multi-brand strategy, we really want to charge ahead in this segment. We will continue to upgrade and enhance our product and the services.

Our goal and our target is to, in the upper mid-scale sector, we also want to become a leading brand by 2030. Upper mid-scale sector will be one of our core strategic focus going into the future. Thank you. Also to add on, as you can already see that for the IntercityHotel, over the past 2 years, it’s been becoming a very attractive and compelling brand in the upper mid-scale sector. Whether it’s in terms of its brand value, its product, its service excellence or its rapport. We have also introduced the Grand Joya Hotel, and we really welcome you guys to look into Grand Joya, which is gonna have its grand opening in April first.

It has a piloting phase already, but it hasn’t really officially launched, and we officially opened the Grand Ji in April first. We are confident that with our four core brand in the upper mid-scale sector, which all have its different take and target market, we can become a leading company in the upper mid-scale sector. We are also confident that each of our four key brands, they will become the leader in their own niche market. Thank you.

Operator: Thank you. I will now hand the conference back to the speakers for any closing remarks. Thank you.

Dan Chi, Analyst, Morgan Stanley2: 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.

Operator: Thank you. This concludes today’s conference call. Thank you for participating, and you may now disconnect.