Q3 2025 H World Group Ltd Earnings Call

November 17, 2025

Operator: Good day, and thank you for standing by. Welcome to H World Q3 2025 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Jason Chen. Thank you. Please go ahead.

Good day, and thank you for standing by. Welcome to H World Q3 2025 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Jason Chen. Thank you. Please go ahead.

Speaker #1: Standing by. Welcome to H World Group's Q3 2025 earnings conference call. Good day, and thank you for joining us. At this time, all participants are in a listen-only mode.

Speaker #1: After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you need to press *11 on your telephone; you'll then hear an automated message advising your hand is raised.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Jason Chen.

Speaker #1: Thank you. Please go ahead.

Jason Chen: Thank you. Good morning and good evening, everyone. Thanks for joining us today. Welcome to H World Group Q2, Q4 earnings conference call. Joining us today is our Founder and Chairman, Mr. Ji Qi, our CEO, Mr. Jinhui, our CFO, Ms. Chen Hui, and our CSO, Ms. He Jihong. 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 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 obligations to update any forward-looking statements except as required and applicable laws.

Speaker #2: Good morning and good evening, everyone. Thanks for joining us today. Welcome to H World Group's Q3 2025 earnings conference call. Joining us today is our founder and chairman, Mr. Jihong He.

Speaker #2: Jin Hui, our CFO, Ms. Chen Hui, and our CSO, Ms. He Jihong. Following their prepared remarks, our CEO, Mr. [name missing], and management will be available to answer your questions.

Speaker #2: Before we begin today's discussion, please note that the Safe Harbor Provision of the United States Private Securities Litigation Reform Act of 1995 applies to forward-looking statements made during this call.

Speaker #2: Forward-looking statements involve inherent risks and uncertainties, and 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.

Speaker #2: does not undertake any obligations to update any forward-looking H World Group statements, except as required by applicable laws. On a call today, we will also mention adjusted financial measures during the discussion of our performance.

Jason Chen: On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations 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 slides presentation, is available at ir.hworld.com. With that, now I will hand over the call to our CEO, Mr. Jinhui, to discuss our business performance in Q3 2025. Mr. Jinhui, please.

On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations 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 slides presentation, is available at ir.hworld.com. With that, now I will hand over the call to our CEO, Mr. Jinhui, to discuss our business performance in Q3 2025. Mr. Jinhui, please.

Speaker #2: Reconciliations of those measures to comparable GAAP information can be found in our earnings release that was distributed earlier. Reminder, this conference call is being held today.

Speaker #2: Recorded. The webcast of this conference call, as well as a supplementary slides presentation, is available at ir.hworld.com. With that, I will now hand the call over to our CEO, Mr. Hui Jin, to discuss our business performance in the third quarter of 2025.

Speaker #2: Mr. Jin, please.

Hui Jin: ?????????????????????????2025??????????????????????????????20????????????????"??20????"????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? I believe many of you have noticed that two weeks ago, on the occasion of H World's 20th anniversary, we successfully held a partner conference themed 20 Years Young: Forging Ahead. Therefore, before diving into our Q3 performance review, I'd like to take a few minutes to once again share some of our thoughts on the long-term outlook of China's hotel industry and us. In summary, we believe H World has great long-term growth potentials by deeply rooted in China market. Currently, we can observe that while the industry supply is relatively ample, high-quality supply is in noticeable shortage. Compared to the matured US market, China still has low hotel chain penetration, and the industry remains fragmented.

Jin Hui: [Foreign Language]

Speaker #3: 谢谢。因为投资人分析师大家好，感谢大家参加华瑞集团2025年第三季度业绩电话会。相信大家都关注到两周前在华瑞集团成立20周年之际，我们成功地举办了主题为"华瑞20年再出发"的伙伴大会。因此在回顾三季度业绩之前，我想用几分钟时间和大家再次分享一下我们对中国酒店行业以及华瑞未来长期发展的一些展望。如果用一句话来总结，我们认为华瑞深耕中国，大有可为。目前我们看到中国酒店市场的供给是相对充分的，但是高质量的供给是明显缺乏的。相较非常成熟的美国市场，中国酒店行业连锁化率集中度都处于较低的水平。中国作为一个跟美国一样的统一大市场，并且拥有更大的人口基数，未来连锁率的提升、低质量供给的出清，将会必然成为一个长期的趋势。

Jason Chen: I believe many of you have noticed that two weeks ago, on the occasion of H World's 20th anniversary, we successfully held a partner conference themed 20 Years Young: Forging Ahead. Therefore, before diving into our Q3 performance review, I'd like to take a few minutes to once again share some of our thoughts on the long-term outlook of China's hotel industry and us. In summary, we believe H World has great long-term growth potentials by deeply rooted in China market. Currently, we can observe that while the industry supply is relatively ample, high-quality supply is in noticeable shortage. Compared to the matured US market, China still has low hotel chain penetration, and the industry remains fragmented.

Speaker #2: of H World's 20th anniversary, we successfully held that two weeks ago, on the occasion a partner conference themed I believe many of you have noticed "20 years young, forging diving into our third quarter performance review, I'd like to take a few minutes to once again share some of our thoughts on the long-term outlook of China's hotel industry and us.

Speaker #2: In summary, we believe H World has great long-term growth potential, being deeply rooted in the China market. Currently, we can observe that while the industry supply is relatively ample, high-quality supply is in noticeable shortage.

Speaker #2: The Chinese market still has low hotel chain penetration, and compared to the matured U.S. industry, it remains fragmented. As a unified, large, singular market, similar to the U.S. but with an even larger population base, the increase in churn ratio and the phase-out of low-quality supply will inevitably become a long-term trend.

Hui Jin: As a unified large singular market, similar to the US, but with an even larger population base, the increase in churn ratio and the phase-out of low-quality supply will inevitably become a long-term trend. ???????????????????????????"??"???"??"???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? More importantly, the demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers nowadays. China has the best infrastructure worldwide, with extensive high-speed rail and highway networks coverage. This has made traveling much easier and more convenient, facilitating the penetration of accommodation needs from major cities to county-level markets. Additionally, Chinese consumers are beginning to redefine consumption concepts and oriental aesthetics. We can see a substantial increase in consumer design in seeking self-pleasure, which further drives the growth of experiential consumption such as tourism, exhibitions, concerts, and sports events. ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Apparently, the current supply quality in China's hotel industry is unable to fully meet consumers' increasingly upgraded and diversified demands.

As a unified large singular market, similar to the US, but with an even larger population base, the increase in churn ratio and the phase-out of low-quality supply will inevitably become a long-term trend.

Jin Hui: [Foreign Language]

More importantly, the demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers nowadays. China has the best infrastructure worldwide, with extensive high-speed rail and highway networks coverage. This has made traveling much easier and more convenient, facilitating the penetration of accommodation needs from major cities to county-level markets. Additionally, Chinese consumers are beginning to redefine consumption concepts and oriental aesthetics. We can see a substantial increase in consumer design in seeking self-pleasure, which further drives the growth of experiential consumption such as tourism, exhibitions, concerts, and sports events.

Speaker #3: 认为重要的是，中国消费者对于出行、旅行的需求开始逐步从货需转变为刚需。我们看到中国拥有全世界最强大的基础建设，发达的高铁和高速公路网络大大提高了人们出行的便利性，也帮助住宿需求从城市走向县域市场。除此以外，中国消费者也逐步开始重新定义新的消费理念和东方审美。我们可以看到消费者对越级需求的大幅提升，这也进一步推动了旅游、展演、体育赛事等一系列体验类消费的增长。

Speaker #2: More

Speaker #2: Importantly, the demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers nowadays. China has the best infrastructure worldwide, with extensive high-speed rail and highway network coverage.

Speaker #2: traveling much easier and more This has made the penetration of accommodation convenient. Facilitating needs from major cities to country-level markets. Additionally, Chinese consumers are beginning to redefine consumption concepts and oriental aesthetics.

Speaker #2: We can see a substantial increase in consumer demand for self-pleasure, which further drives the growth of experiential consumption such as tourism, exhibitions, concerts, and sports events.

Jin Hui: [Foreign Language]

Speaker #3: 显而易见，中国酒店行业目前的供给质量无法充分满足消费者日益升级和多元化的需求。因此，供给者改革将会是中国酒店行业未来发展的主旋律，而这必将给本土的品牌、连锁酒店带来巨大的成长机遇和空间。作为中国酒店行业的头部企业，华瑞将深耕中国市场，坚持高质量发展，以品牌为引领，打造卓越服务，围绕品质与效率，把中国酒店业重新做一遍。我们对中国酒店行业的发展充满信心。

Jason Chen: Apparently, the current supply quality in China's hotel industry is unable to fully meet consumers' increasingly upgraded and diversified demands.

Speaker #2: Apparently, the current supply quality in China's hotel industry is unable to fully meet consumers' increasingly upgraded and diversified demands. Therefore, supply-side reform will be the main theme of the future industry development.

Hui Jin: Therefore, supply-side reform will be the main theme of the future industry development, and this will undoubtedly bring tremendous growth opportunities for domestic-branded hotels like us. As the leading players in China's hotel industry, we will continue deepening our roots in the China market, pursuing high-quality growth, and delivering service excellence with a brand-led approach to reduce industry, centering on high quality and efficiency. We are full of confidence in the future development of China's hotel industry. After sharing our perspectives on the long-term outlook, now let's turn to our Q3 performance. We are pleased to see early signs of improvements in the overall market condition. On the demand side, data from railway, aviation, and the number of tourists indicate that the domestic travel demand continues to grow steadily, with the increasing demand for travel being particularly evident during the National Day and Mid-Autumn Festivals holiday period. In terms of supply, third-party data shows that the month-over-month growth rate of market supply has stabilized, while the year-over-year increase has slowed. However, whether this trend can continue still needs to be observed for some time.

Therefore, supply-side reform will be the main theme of the future industry development, and this will undoubtedly bring tremendous growth opportunities for domestic-branded hotels like us. As the leading players in China's hotel industry, we will continue deepening our roots in the China market, pursuing high-quality growth, and delivering service excellence with a brand-led approach to reduce industry, centering on high quality and efficiency. We are full of confidence in the future development of China's hotel industry. After sharing our perspectives on the long-term outlook, now let's turn to our Q3 performance. We are pleased to see early signs of improvements in the overall market condition. On the demand side, data from railway, aviation, and the number of tourists indicate that the domestic travel demand continues to grow steadily, with the increasing demand for travel being particularly evident during the National Day and Mid-Autumn Festivals holiday period. In terms of supply, third-party data shows that the month-over-month growth rate of market supply has stabilized, while the year-over-year increase has slowed. However, whether this trend can continue still needs to be observed for some time.

Speaker #2: And this will undoubtedly bring tremendous growth opportunities for domestic branded hotels like us. As a leading player in China's hotel industry, we will continue deepening our roots in the China market, pursuing high-quality growth, and delivering service excellence with a brand-led approach to reduce the industry's focus on high-quality and efficiency.

Speaker #2: We are full of confidence in the future development of China's hotel industry.

Speaker #2: We are full of confidence in the future development of China's hotel industry. So I'm.

Speaker #2: After hearing our 对未来长期发展的展望回到三季度的业绩表现。我们很高兴地看到市场整体趋势逐渐向好。在需求方面，铁路、航空和旅游人次等数据表明国内的出行需求仍保持稳健增长。消费者日益增长的出行需求在国庆、中秋假期表现得尤为突出。在供给方面，第三方数据显示市场供给的环比增速已趋于稳定。同比增幅有所减缓，但这一趋势是否可以持续，我们仍将去观察一段时间。 perspectives on the long-term outlook, now let's turn to our third quarter performance. We are pleased to see early signs of improvements in the overall market condition.

Speaker #2: On the demand side, data from railway and aviation, as well as the number of tourists, indicate that domestic travel demand continues to grow steadily. The increasing demand for travel is particularly evident during the National Day and Mid-Autumn Festival holiday periods. On the supply side, third-party data shows that sequential supply growth has stabilized and the year-over-year growth rate has moderated.

Hui Jin: On the supply side, Q3 data shows that the sequential supply growth has stabilized, and the year-over-year growth rate has moderated. However, we still need more time to see if this trend is sustainable. ???????????????????????????????????????????????????????????????????????????????????OCC????????????ADR?????????????????RERPA? We are glad to report that H World delivered good results across several key metrics in Q3. In Q3, we achieved a year-over-year increase in ADR while maintaining a relatively stable occupancy rate, driven by refined revenue management initiatives, including optimizing pricing strategies across flagship hotel, newly opened hotel, and the matured hotel, as well as refining promotional strategies and enhancing incentive programs. As a result, our RERPA stayed largely stable compared to the same period last year. ???????????????????????????????????????????????????????17.3%?????????GMV????17.5%?RMB 30.6 billion???????????????????????????????????????????????????????????????????300 million?????17.3%???????????????????19.7%???66 million?????74%??????????? Through breaking through in new cities and the regions, and further penetrating in the lower-tier cities, we achieved another quarter of high-quality network expansion.

On the supply side, Q3 data shows that the sequential supply growth has stabilized, and the year-over-year growth rate has moderated. However, we still need more time to see if this trend is sustainable.

Speaker #2: However, we still need more time to see if this trend is sustainable. We are

Jin Hui: [Foreign Language]

Jason Chen: We are glad to report that H World delivered good results across several key metrics in Q3. In Q3, we achieved a year-over-year increase in ADR while maintaining a relatively stable occupancy rate, driven by refined revenue management initiatives, including optimizing pricing strategies across flagship hotel, newly opened hotel, and the matured hotel, as well as refining promotional strategies and enhancing incentive programs. As a result, our RERPA stayed largely stable compared to the same period last year.

Speaker #3: 从三季度集团经营变现来看，华瑞在多项核心指标上取得了不错的表现。我们通过精细化的收益管理，包括旗舰店、新店与老店的协同定价、促销管控以及激励机制优化等多项举措，在维持OCC相对稳定的情况下，推动了ADR的同比正增长。实现了同比基本持平的REPA。

Speaker #2: Glad to report that actual delivered a good result across several key metrics in the quarter. In the third quarter, we achieved a year-over-year increase in ADR while maintaining a relatively stable occupancy rate.

Speaker #2: Driven by refined revenue management initiatives, including optimizing pricing strategies across our flagship newly opened hotel and the matured hotel, as well as refining promotional strategies and enhancing incentive programs.

Speaker #2: As a result, our REPA stayed largely stable compared to the same period last year.

Jin Hui: [Foreign Language]

Jason Chen: Through breaking through in new cities and the regions, and further penetrating in the lower-tier cities, we achieved another quarter of high-quality network expansion.

Speaker #2: Through breaking through in 同时，通过在各区域市场的突破与对低线城市的持续有效渗透，华瑞实现了又一季度的高质量规模扩张。在在营房量同比增加17.3%的驱动下，集团酒店GMV同比增长17.5%至306亿元。随着我们网络布局的持续优化以及华瑞会能力的进一步升级，华瑞的会员规模及会员预订经营业量也在持续增长，截至三季度末，华瑞会会员数量突破了3亿。同比增加17.3%，全球第一。同时，会员预订经营业同比上涨19.7%，超过6,600万经营业。占比74%，也实现了全球的领先。 new cities and the regions and further penetrating in the lower tier cities, we achieved a third quarter of high-quality network expansion.

Hui Jin: Driven by a 17.3% year-over-year increase in the number of rooms in operation, our group hotel GMV grew by 17.5% year-over-year to RMB 30.6 billion. Meanwhile, along with our network expansion and the continuous enhancement of H World's membership program, our membership base exceeded 300 million by the end of Q3, up 17.3% year-over-year, and ranking No. 1 globally. In addition, room nights sold to the members rose 19.7% compared to the same period of last year, exceeding 66 million and accounting for 74% of the total room nights sold, which is also a leading position worldwide. ??????????????????????????????????????????????????????????????27.2%?33????????????28.6%?22???????????????????? More importantly, our monetized and franchised business delivered strong growth in its hotel network revenue as well as profit.

Driven by a 17.3% year-over-year increase in the number of rooms in operation, our group hotel GMV grew by 17.5% year-over-year to RMB 30.6 billion. Meanwhile, along with our network expansion and the continuous enhancement of H World's membership program, our membership base exceeded 300 million by the end of Q3, up 17.3% year-over-year, and ranking No. 1 globally. In addition, room nights sold to the members rose 19.7% compared to the same period of last year, exceeding 66 million and accounting for 74% of the total room nights sold, which is also a leading position worldwide.

Speaker #2: Driven by a 17.3% year-over-year increase in the number of rooms in operation, our group hotel GMV grew by 17.5% year-over-year to RMB 30.6 billion.

Speaker #2: With our network expansion and the continuous enhancement of the Edge Rewards membership program, our membership base exceeded 300 million by the end of the third quarter.

Speaker #2: Up 17.3% year-over-year, and the ranking number one globally. In addition, room nights sold to the members rose 19.7% compared to the same period of last year, exceeding 66 million and accounting for 74% of the total room nights sold, which is also a leading position worldwide.

Jin Hui: [Foreign Language]

Jason Chen: More importantly, our monetized and franchised business delivered strong growth in its hotel network revenue as well as profit.

Speaker #1: Are you? Molly. More importantly, our franchised business monetized and delivered strong growth in its hotel revenue as well as profit network.

Speaker #1: Our third quarter growth of MAFFE revenue rose 27.2% year over year to RMB 3.3 billion, and gross operating profit increased by 28.6% year over year to RMB 2.2 billion, contributing over 70% of the total group's operating gross profit.

Hui Jin: Our Q3 group M&F revenue rose 27.2% year-over-year to RMB 3.3 billion, and the group M&F gross operating profits increased by 28.6% year-over-year to RMB 2.2 billion, contributing over 70% of the group's total gross operating profit. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????2.0???????????? In terms of hotel network expansion, we remain steadfast in executing our strategic focus on the economy and the middle-tier segments to serve the mass market. This strategic positioning aligns precisely with the current consumer behavior of seeking value for money products and services, and can further demonstrate our competitive advantages. By continuously upgrading our core products and enhancing our excellent service with a customer-centric principle, we are enhancing the quality of our hotel portfolio and strengthening our brand positioning to achieve long-term sustainable growth.

Our Q3 group M&F revenue rose 27.2% year-over-year to RMB 3.3 billion, and the group M&F gross operating profits increased by 28.6% year-over-year to RMB 2.2 billion, contributing over 70% of the group's total gross operating profit.

Speaker #1: Hui Jin full . 20 . The full I 20 . 20 . 20 . One . In terms of hotel network expansion , remained we steadfast in executing our strategic focus on and middle scale segments economy to serve the market mass .

Jin Hui: [Foreign Language]

Jason Chen: In terms of hotel network expansion, we remain steadfast in executing our strategic focus on the economy and the middle-tier segments to serve the mass market. This strategic positioning aligns precisely with the current consumer behavior of seeking value for money products and services, and can further demonstrate our competitive advantages. By continuously upgrading our core products and enhancing our excellent service with a customer-centric principle, we are enhancing the quality of our hotel portfolio and strengthening our brand positioning to achieve long-term sustainable growth.

Speaker #1: This strategic positioning aligns precisely with the current consumer behavior of seeking value for money, products and services, and can further demonstrate our competitive advantages by continuously upgrading our core products and enhancing our excellent service with a customer-centric principle.

Speaker #1: We enhancing the quality are of our hotel portfolio and strengthening our brand to positioning long term sustainable The new growth . version of quarantine , middle our school along with Hotel and G brand will Hotel , serve key engines as the for our in the lower tier cities expansion strong and foundation for achieving our goal provide of 20,000 hotels in 20 cities .

Hui Jin: The new version of HanTing, along with our middle-tier brands G Hotel and Orange Hotel, will serve as the key growth engines for our expansion in the lower-tier cities and provide a strong foundation for achieving our strategic goal of 20,000 hotels in 2,000 cities. ????????????????????????????????????????????????1,600??????25.3%???????????????????????????????????????20?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? At the same time, H World has also made rapid breakthrough in the upper-mid-scale segments. At the end of Q3, our number of upper-mid-scale hotels in operation and in pipeline exceeded 1,600, up 25.3% year-over-year. More importantly, to meet the growing consumer demand for quality living, oriental aesthetics, and unique experiences, we recently launched a brand new upper-mid-scale brand, G Icons, during our 20th anniversary. The introduction of G Icons further enriched our upper-mid-scale brand portfolio, and helped us to achieve comprehensive coverage from oriental to Western brands, and from selected service to lifestyle hotel offerings.

The new version of HanTing, along with our middle-tier brands G Hotel and Orange Hotel, will serve as the key growth engines for our expansion in the lower-tier cities and provide a strong foundation for achieving our strategic goal of 20,000 hotels in 2,000 cities.

Speaker #2: On August 20, 2021, H World Group reported a revenue of $2.2 billion.

Jin Hui: [Foreign Language]

Jason Chen: At the same time, H World has also made rapid breakthrough in the upper-mid-scale segments. At the end of Q3, our number of upper-mid-scale hotels in operation and in pipeline exceeded 1,600, up 25.3% year-over-year. More importantly, to meet the growing consumer demand for quality living, oriental aesthetics, and unique experiences, we recently launched a brand new upper-mid-scale brand, G Icons, during our 20th anniversary. The introduction of G Icons further enriched our upper-mid-scale brand portfolio, and helped us to achieve comprehensive coverage from oriental to Western brands, and from selected service to lifestyle hotel offerings.

Speaker #1: At the same time . Each word has also made rapid breakthrough in the upper upper mid scale segment . At the end of third quarter , our number of upper hotel in operation and in pipeline exceeded 1600 , up 25.3% year over year .

Speaker #1: More importantly , to meet the growth consumer growing demand for quality living or aesthetics and unique experiences , we recently launched a brand new upper Midscale brand , GI cons .

Speaker #1: During our 20th anniversary, the introduction of GI further enriches our upper mid-scale brand portfolio and helps us achieve comprehensive coverage from our rental to Western brands and from selected service to lifestyle hotel offerings.

Speaker #1: GI Brands embodies a combination of subtle, understated, and elegant Oriental aesthetic, enabling a value leap from accommodation functionality to a holistic lifestyle.

Hui Jin: G Icons brand embodies a combination of subtle, understated, and elegant oriental aesthetic, enabling a value leap from accommodation functionality to holistic lifestyle experiences. ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? The success of G Hotels has demonstrated Chinese consumers' affinity for oriental aesthetics and culture. We are confident that building upon G Hotels' foundation, G Icons will further deepen the expression of oriental aesthetics and the culture element. Moreover, our group's strong supply chain and modular construction capability, as well as our global leading membership and direct sales capability, will effectively support our G Icons to reach low construction cost, high operational efficiency, and high product quality. We believe G Icons will become one of the big driving forces to support our penetration in the upper-mid-scale segment, and has the potential to become another world-class brand after HanTing, G Hotel, and Orange brands.

G Icons brand embodies a combination of subtle, understated, and elegant oriental aesthetic, enabling a value leap from accommodation functionality to holistic lifestyle experiences.

Speaker #1: Experiences .

Jin Hui: [Foreign Language]

Jason Chen: The success of G Hotels has demonstrated Chinese consumers' affinity for oriental aesthetics and culture. We are confident that building upon G Hotels' foundation, G Icons will further deepen the expression of oriental aesthetics and the culture element. Moreover, our group's strong supply chain and modular construction capability, as well as our global leading membership and direct sales capability, will effectively support our G Icons to reach low construction cost, high operational efficiency, and high product quality. We believe G Icons will become one of the big driving forces to support our penetration in the upper-mid-scale segment, and has the potential to become another world-class brand after HanTing, G Hotel, and Orange brands.

Speaker #2: Hui Jin. Belgian. Wang G, 2022. Zero.

Speaker #1: The success of GI hotels has demonstrated consumers' Chinese affinity for Oriental aesthetics. We are confident that building upon the hotel's GI foundation, the GI icon will further deepen the expression of Oriental aesthetics and the cultural element.

Speaker #1: Moreover , our group's strong supply chain and modular construction capability , as well as our global leading and membership direct sales capability will effectively support our GI icons to reach low construction costs , high operational efficiency and high product quality .

Speaker #1: We believe GI icons will become one of the big driving forces to support our penetration in the upper mid segment and have the potential to become another world-class brand after Hunting G Hotel and Orange Brands.

Speaker #2: In . Hong . When . Hui Chen two point Hui Chen 25 G . 2020 G in Shanghai is . Only .

Hui Jin: ?????????????????????????????????????????????????????????????????????????????????????????????????3?????????????????19.7%???????????????????????????????????????????????????????????? We remain focusing on strengthening our direct sales capabilities through H World's membership program. Our membership program and direct sales capability are vital to our sustainable long-term business growth. Our membership base has been growing as we expand our hotel network and entering into more cities. By the end of Q3, H World's membership exceeded 300 million, and room nights sold to the members grew 19.7% year-over-year, with an enlarging portion of contribution to the total room nights sold. Going forward, we will further enhance our membership benefits, expand loyalty points usage scenarios, and explore cross-industry partnerships to strengthen member engagement and enhance direct sales capability. ??????2025????????????????CFO??????????????????????? This concludes the business updates for H World's Q3 2025. Now, I will hand over the floor to our CFO, Ms. Chen Hui, to present the group's financial performance for the quarter. Thank you, Jinhui. Good evening and good morning, everyone.

Jin Hui: [Foreign Language]

Speaker #1: We remain focused on directly strengthening our sales capability through our actual membership program. Our membership program and direct sales capability are vital to our sustainable, long-term business growth.

Jason Chen: We remain focusing on strengthening our direct sales capabilities through H World's membership program. Our membership program and direct sales capability are vital to our sustainable long-term business growth. Our membership base has been growing as we expand our hotel network and entering into more cities. By the end of Q3, H World's membership exceeded 300 million, and room nights sold to the members grew 19.7% year-over-year, with an enlarging portion of contribution to the total room nights sold. Going forward, we will further enhance our membership benefits, expand loyalty points usage scenarios, and explore cross-industry partnerships to strengthen member engagement and enhance direct sales capability.

Speaker #1: Our membership base has been growing as we expand our hotel network and enter more cities. By the end of the third quarter, extroverts membership exceeded 300 million, and the room nights sold to the members grew 19.7% year over year, with an enlarged portion of contribution to the total room nights sold.

Speaker #1: Going forward , we will further enhance our membership benefits , expand loyalty points , usage scenarios and explore cross partnerships to strengthen member enhance direct sales engagement and capability .

Speaker #1: This concludes the update for the third quarter 2025. Now, I hand over the call to Mr. Jason Chen, the CFO, to present the group's financial performance for the quarter.

Jin Hui: [Foreign Language]

Jason Chen: This concludes the business updates for H World's Q3 2025. Now, I will hand over the floor to our CFO, Ms. Chen Hui, to present the group's financial performance for the quarter.

Speaker #3: Thank you . Jinghui . Good evening and good morning , everyone . Let me walk you through our third quarter financial overview . During the quarter , our group revenue grew year to 8.1% year over RMB 7 billion .

Chen Hui: Thank you, Jinhui. Good evening and good morning, everyone.

Speaker #3: And Lexi revenue grew 10.8% year over year to RMB Both 5.7 billion . surpassed the high end of our previous guidance . It was driven mainly by better than expected river Park performance as , as well hotel network expansion group adjusted EBITDA rose by 18.9% year over year to RMB 2.5 billion , with margin improved by 3.3 percentage year over points year to 36.1% .

Hui Jin: Let me walk you through our Q3 financial overview. During the quarter, our group revenue grew 8.1% year-over-year to RMB 7 billion, and next quarter revenue grew 10.8% year-over-year to RMB 5.7 billion. Both surpassed the high end of our previous guidance. It was mainly driven by better-than-expected revenue performance, as well as hotel network expansion. Group adjusted EBITDA rose by 18.9% year-over-year to RMB 2.5 billion, with margin improved by 3.3 percentage points year-over-year to 36.1%. The faster adjusted EBITDA growth and margin expansion were mainly contributed to further enlarged profit contribution from our asset-light business. Cost saving from next Deutsche Hospitality, partially on the absence of RMB 81 million restructuring cost incurred in Q3 last year, as well as cost optimization efforts from next H World Group.

Let me walk you through our Q3 financial overview. During the quarter, our group revenue grew 8.1% year-over-year to RMB 7 billion, and next quarter revenue grew 10.8% year-over-year to RMB 5.7 billion. Both surpassed the high end of our previous guidance. It was mainly driven by better-than-expected revenue performance, as well as hotel network expansion. Group adjusted EBITDA rose by 18.9% year-over-year to RMB 2.5 billion, with margin improved by 3.3 percentage points year-over-year to 36.1%. The faster Adjusted EBITDA growth and margin expansion were mainly contributed to further enlarged profit contribution from our asset-light business. Cost saving from next Deutsche Hospitality, partially on the absence of RMB 81 million restructuring cost incurred in Q3 last year, as well as cost optimization efforts from next H World Group.

Speaker #3: The faster adjusted EBITDA growth margin and expansion were mainly contributed to by further enlarged profit contributions from our asset-light business, cost savings from legacy partially, and the absence of RMB 81 million in restructuring costs incurred in the third quarter last year, as well as cost optimization efforts from legacy Huazhu.

Speaker #3: Looking into our asset light franchise monetize and in the business third quarter , powered by our high quality SLA network expansion and better than expected driver performance .

Hui Jin: Looking into our asset-light monetized and franchised business in Q3, powered by our high-quality asset-light network expansion and better-than-expected revenue performance, our monetized and franchised business revenue recorded a robust 27.2% year-over-year growth to RMB 3.3 billion. More importantly, monetized and franchised business gross operating profit rose by 28.6% year-over-year to RMB 2.2 billion, with a margin of 68% in Q3. As a result, gross operating profit contribution from our monetized and franchised business further enlarged to 70% in Q3, up 11.1 percentage points year-over-year. Moving to our cash flow and liquidity position, in Q3, we generated RMB 1.7 billion operating cash flow. At the quarter end, the group had RMB 13.3 billion cash and cash equivalent, and RMB 6.6 billion net cash on the balance sheet.

Looking into our asset-light monetized and franchised business in Q3, powered by our high-quality asset-light network expansion and better-than-expected revenue performance, our monetized and franchised business revenue recorded a robust 27.2% year-over-year growth to RMB 3.3 billion. More importantly, monetized and franchised business gross operating profit rose by 28.6% year-over-year to RMB 2.2 billion, with a margin of 68% in Q3. As a result, gross operating profit contribution from our monetized and franchised business further enlarged to 70% in Q3, up 11.1 percentage points year-over-year. Moving to our cash flow and liquidity position, in Q3, we generated RMB 1.7 billion operating cash flow. At the quarter end, the group had RMB 13.3 billion cash and cash equivalent, and RMB 6.6 billion net cash on the balance sheet.

Speaker #3: magnetized business and franchised revenue recorded a robust 27.2% year over year growth to RMB 3.3 billion , more importantly , magnetized and franchise business gross operating profit by 28.6% year over year to RMB with a margin 2.2 billion , of 68% in the third quarter .

Speaker #3: As a result, gross operating profit contribution from our magnetized and franchise business further enlarged to 70% in the third quarter, up 11.1 percentage points year over year.

Speaker #3: To assess our cash flow and liquidity position in the third quarter, we generated RMB 1.7 billion in operating cash flow. The group had RMB 13.3 billion in cash and cash equivalents, and RMB 6.6 billion in net cash on the balance sheet.

Speaker #3: Lastly, in our guidance for the fourth quarter of 2025, we expect our group revenue to grow 2% to 6% compared to the same quarter last year, and 3% to 7% if excluding DHL.

Hui Jin: Lastly, on our guidance for Q4 of 2025, we expect our group revenue to grow 2% to 6% compared to the same quarter last year, and 3% to 7% if excluding DH. The monetized and franchised revenue in Q4 of 2025 is expected to grow in the range of 17% to 21% compared to Q4 last year. With that, we are ready to take your questions. Operator, please open the line for Q&A. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. One moment for the first question. The first question comes from the line of Dan Qi of Morgan Stanley. Please go ahead. ????????????????????????????? Dan???????????????? RevPAR ??????????????????? deliver ????????????? RevPAR???????????????????????????????????? 3% ? 7% ?????????????? RevPAR ??????????????????? RevPAR ???????????????????????????????????????????????????????????????????????????????????????? RevPAR ????????????????????????????????????????? Good evening.

Lastly, on our guidance for Q4 of 2025, we expect our group revenue to grow 2% to 6% compared to the same quarter last year, and 3% to 7% if excluding DH. The monetized and franchised revenue in Q4 of 2025 is expected to grow in the range of 17% to 21% compared to Q4 last year. With that, we are ready to take your questions. Operator, please open the line for Q&A.

Speaker #3: The revenue franchised in the fourth quarter of 2025 is expected to grow in the range of 17% to 21%, compared to the fourth quarter of last year.

Speaker #3: With that, we are ready to take your questions. Operator, please open the line for Q&A.

Speaker #4: Thank

Speaker #4: We you . will now open question begin the and answer session . If you would like to ask a question , please press star one .

Speaker #4: One on the telephone and wait for our name to be announced. One moment for the first question. The first question comes from the line of Dan Chi of Morgan Stanley.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one one on your telephone and wait for your name to be announced. One moment for the first question. The first question comes from the line of Dan Qi of Morgan Stanley. Please go ahead.

Speaker #4: Please go ahead .

Speaker #5: Dan . Red . What kind of delivery to . You doing so ? I on the . Shanghai . Shanghai San . Are evening .

Dan Chee: [Foreign Language]

Speaker #5: Good. My question is about RevPAR and demand. Firstly, on the trend of the company's China revenue guidance of growth of 3 to 4% year on year, what's the implied assumption?

Speaker #5: Can you share the 2026 outlook for us, especially seeing the third quarter after revenue decline turned almost flat, particularly on the experiential new demand?

Good evening.

Hui Jin: My question is about RevPAR and demand trend. Firstly, on the company's Q4 China revenue guidance of 3% to 4% year-on-year growth, what's the implied RevPAR assumption? Can the management share any 2026 outlook for us, especially after seeing Q3 RevPAR decline turns almost flat, especially on the new experiential demand Mr. Jinhui mentioned versus the original business demand weakness? Which one is driving the RevPAR stabilization? Thank you. ???????????????????????? RevPAR ?????????????????????????????????????????????????????????10???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? RevPAR ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????. As many of you may notice, in Q3, our RevPAR is a bit stabilized. On year-over-year basis, it's kind of flat. It's not further declining compared to last two quarters. Of course, we observe several trends during the quarter.

My question is about RevPAR and demand trend. Firstly, on the company's Q4 China revenue guidance of 3% to 4% year-on-year growth, what's the implied RevPAR assumption? Can the management share any 2026 outlook for us, especially after seeing Q3 RevPAR decline turns almost flat, especially on the new experiential demand Mr. Jinhui mentioned versus the original business demand weakness? Which one is driving the RevPAR stabilization? Thank you.

Speaker #5: Mr. Jing versus the mentioned , original business weakness . So one is which rest driving the demand ? Stabilization . Thank you .

Speaker #2: the To . For me , if I may . T . On . . Yes . One thing . You . Also saw in the .

Jin Hui: [Foreign Language]

Speaker #2: Q1 on is . The . The . The . Spring within the 20 . 20 . Summer has . The . The . Indoor .

Speaker #2: The . The . Shanghai . The .

Speaker #1: So . As . many of As you may notice that in the third quarter . You know our rough part is a bit year over year stabilized basis .

Speaker #1: flat . not It's further declining compared to last two quarters . And of course , observe the we several the in terms of quarter demand the .

Jason Chen: As many of you may notice, in Q3, our RevPAR is a bit stabilized. On year-over-year basis, it's kind of flat. It's not further declining compared to last two quarters. Of course, we observe several trends during the quarter.

Speaker #1: the demand Obviously , was mainly driven by the leisure travel demand , from the tourism especially activities starting from , you summer know , holiday to September .

Speaker #1: And of course , the beginning of the October National Day . And Mid-Autumn Festival , well . as But side , as I supply mentioned before .

Hui Jin: In terms of the demand, obviously, the demand was mainly driven by the leisure traveler demand, especially from the tourism activities, starting from, you know, summer holiday till September, and of course the beginning of the October National Day and the Mid-Autumn Festival as well. On the supply side, as I mentioned before, on a year-over-year basis, from the third-party data, we saw the supply growth actually moderated. It was not growing as fast as before. It's becoming, you know, a bit moderated, which brings some of the, you know, benefits to the RevPAR stabilization.

In terms of the demand, obviously, the demand was mainly driven by the leisure traveler demand, especially from the tourism activities, starting from, you know, summer holiday till September, and of course the beginning of the October National Day and the Mid-Autumn Festival as well. On the supply side, as I mentioned before, on a year-over-year basis, from the third-party data, we saw the supply growth actually moderated. It was not growing as fast as before. It's becoming, you know, a bit moderated, which brings some of the, you know, benefits to the RevPAR stabilization.

Speaker #1: On the year over year basis , third party data , we from the saw supply growth actually moderated . So it was not growing as as before .

Speaker #1: So it's becoming fast , you know , a bit moderated . So which brings some of the benefits to the Rafah stabilization . But more importantly , you know , us for what has been putting a lot of efforts over the last six months in terms to further enhance our , for revenue management , as I mentioned in my prepared remarks , in terms of , you know , setting a new pricing strategy among different tiers of , you know , hotels flagship , like new hotels and matured hotels and therefore , I think but but looking to because we are to the entering season of the , there's still uncertainties .

Hui Jin: More importantly, you know, for us, H World has been putting a lot of effort over the last six months to further enhance our, for example, revenue management, as I mentioned in my prepared remarks, in terms of, you know, setting a new pricing strategy among different tiers of, you know, hotels like flagship new hotels and mature hotels. Therefore, I think, but looking to the fourth quarter, because we are entering into the low season, there are still some uncertainties. As of now, you know, based on our revenue guidance, it implies our fourth quarter RevPAR, which is somewhere around flattish to slightly positive for the fourth quarter. In terms of business demand and leisure demand, of course, you know, there are still some macro uncertainties.

More importantly, you know, for us, H World has been putting a lot of effort over the last six months to further enhance our, for example, revenue management, as I mentioned in my prepared remarks, in terms of, you know, setting a new pricing strategy among different tiers of, you know, hotels like flagship new hotels and mature hotels. Therefore, I think, but looking to the fourth quarter, because we are entering into the low season, there are still some uncertainties. As of now, you know, based on our revenue guidance, it implies our fourth quarter RevPAR, which is somewhere around flattish to slightly positive for the fourth quarter. In terms of business demand and leisure demand, of course, you know, there are still some macro uncertainties.

Speaker #1: Now, you mentioned fourth quarter guidance, which implies our first quarter report. Revenue is expected to be somewhere around flattish to slightly positive for the fourth quarter in terms of business demand and leisure demand.

Speaker #1: course , you know , there are still Of some of the macro and uncertainties . So to be very frank , the business demand is not that strong yet .

Speaker #1: But on the other hand , for the leisure demand , it was continuously growing . As I mentioned previously . You know , for the Chinese consumers nowadays , the leisure travel demand has become gradually becoming a necessity instead of discretional demand .

Hui Jin: To be very frank, the business demand is not that strong yet. On the other hand, for the leisure demand, it was continuously growing. As I mentioned previously, you know, for the Chinese consumers nowadays, the leisure traveling demand has become, has gradually becoming a necessity instead of discretional demand, and especially for some emerging new demand such as concerts, marathons, sports events, and inbound traveler as well. The leisure demand is very strong. In terms of the outlook for next year, we think it's a bit too early. It still takes time to see whether, you know, the stabilization in terms of the RevPAR and the supply-demand equivalent is sustainable. We will give more colors for our fourth quarter earnings. Thank you. ??, thank you. Thank you for the questions. One moment for the next question.

To be very frank, the business demand is not that strong yet. On the other hand, for the leisure demand, it was continuously growing. As I mentioned previously, you know, for the Chinese consumers nowadays, the leisure traveling demand has become, has gradually becoming a necessity instead of discretional demand, and especially for some emerging new demand such as concerts, marathons, sports events, and inbound traveler as well. The leisure demand is very strong. In terms of the outlook for next year, we think it's a bit too early. It still takes time to see whether, you know, the stabilization in terms of the RevPAR and the supply-demand equivalent is sustainable. We will give more colors for our fourth quarter earnings. Thank you.

Speaker #1: And for some especially emerging new demand , such as concerts , marathons , sports events and inbound traveler as well . So , so the leisure remain very strong in terms of the outlook for the next year .

Speaker #1: We think it's a bit too early . It's still time to take see whether the stabilization , in terms of the report supply demand and the equivalent is sustainable .

Speaker #1: We will give so more colors for our fourth quarter earnings. Thank you.

Speaker #5: Thank you

Speaker #5: .

Speaker #4: questions . Thank you One moment for the for the next question . Our next question comes from the of CJ Lin line SIC .

Speaker #4: Please go ahead .

Dan Chee: ??, thank you.

Operator: Thank you for the questions. One moment for the next question.

Speaker #6: Ho ADR. ADR, how? Rough patches and the gap has shot now. Management. The question is about wrap. If we break down.

Hui Jin: Our next question comes from the line of Su Jielin of CICC. Please go ahead. ????????????????????? RevPAR ?????????????? ADR ? OCC ?????????????? ADR ??????????????????????????????????????????????????? RevPAR ??? RevPAR ??? gap??????????????????????????? gap ?????????????????????????? Thank you, management. My question is about RevPAR breakdown. If we look at ADR and OCC, we see that ADR performs better recently. Trying to understand the reason behind this and the sustainability. Also, if we look at the gap between blended RevPAR and same hotel RevPAR, the gap remained at similar level with last few quarters. Is there any chance that the gap narrows in the future and what measures need to be taken? Thank you.

Our next question comes from the line of Su Jielin of CICC. Please go ahead.

Sijie Lin: [Foreign Language]

Thank you, management. My question is about RevPAR breakdown. If we look at ADR and OCC, we see that ADR performs better recently. Trying to understand the reason behind this and the sustainability. Also, if we look at the gap between blended RevPAR and same hotel RevPAR, the gap remained at similar level with last few quarters. Is there any chance that the gap narrows in the future and what measures need to be taken? Thank you.

Speaker #6: look at ADR and we see performs better ADR So recently . reason this understand the and the sustainability . Also if we look gap behind blended recipe and same recipe , the gap hotel remained that level with quarters .

Speaker #6: So is there any that the narrows gap future ? And what be Thank taken ? in the chance measures need to .

Speaker #2: Chen . , the Treating the . So I . The in our . In the in the . What are the addition of the .

Hui Jin: ?????????????????????? 2025 ??RevPAR ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ADR ????????????? ADR ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Okay, so in terms of the ADR, of course for 2025, the improvements of RevPAR has been a very key task for our top management team, and of course they have been putting a lot of efforts on that. In terms of ADR, as I mentioned earlier, we have to do a lot of, you know, works on further enhancing our revenue management capability, especially on the pricing, you know, pricing for different layers of the hotel and different products. Of course on the front line, we give a lot of, you know, various incentives to our salespeople to further motivate them to do a lot of, you know, sales activities.

Jin Hui: [Foreign Language]

Speaker #2: The full . Food . To . The . In the . ADR . ADR . 2022 . You . Champion . The . The year .

Speaker #2: The the . Due to the danger . To the . To the . To the trading and the champion . To the . Okay .

Speaker #1: So, in terms of the ADR, of course, for 2025, the improvements of rough pies being a very key task for our top team management.

Jason Chen: Okay, so in terms of the ADR, of course for 2025, the improvements of RevPAR has been a very key task for our top management team, and of course they have been putting a lot of efforts on that. In terms of ADR, as I mentioned earlier, we have to do a lot of, you know, works on further enhancing our revenue management capability, especially on the pricing, you know, pricing for different layers of the hotel and different products. Of course on the front line, we give a lot of, you know, various incentives to our salespeople to further motivate them to do a lot of, you know, sales activities.

Speaker #1: of course , they And if , have been putting a lot of efforts on that . So in terms of ADR , as I mentioned earlier .

Speaker #1: So we have doing a lot of works on , you know , further enhancing our revenue management capability , especially the on You know pricing .

Speaker #1: , pricing for different layer of the hotel and different products . And on the of course , frontline , we give a lot of , you know , various incentives to our salespeople , to motivate them to further of sales activities .

Speaker #1: However , apart from this , things , we have been doing six months , over over the last the six Months.is actually , you know , the ADR increase in the third quarter is result from know our , you , you know , continuous efforts on , you , the product upgrades , the quality improvements , as well as our service excellence , because we doing have been this , this things for many , years .

Hui Jin: However, apart from these things we have been doing over the last six months, actually, you know, the ADR increasing in the third quarter is a result from our, you know, continuous efforts on, you know, the product upgrades, the quality improvements, as well as our service excellence. Because we have been doing this since for many, many years and continuously doing so, we have more and more recommendations from our customers. That's why in certain areas or in certain regions, our products and the service are definitely in a leading position, which gives us some of the pricing power, which led us to achieve a better ADR for the third quarter. In terms of the, you know, like-for-like hotel or mature hotels, the gap, we are glad to see the year-over-year decline was narrowed significantly in the third quarter.

However, apart from these things we have been doing over the last six months, actually, you know, the ADR increasing in the third quarter is a result from our, you know, continuous efforts on, you know, the product upgrades, the quality improvements, as well as our service excellence. Because we have been doing this since for many, many years and continuously doing so, we have more and more recommendations from our customers. That's why in certain areas or in certain regions, our products and the service are definitely in a leading position, which gives us some of the pricing power, which led us to achieve a better ADR for the third quarter. In terms of the, you know, like-for-like hotel or mature hotels, the gap, we are glad to see the year-over-year decline was narrowed significantly in the third quarter.

Speaker #1: many And the continuously so and we doing have more and more recommendations from our customers . So that's why in in certain area or in certain regions , our products and service is definitely in a leading position , which give us some of the pricing power which us to achieve a better ADR for the third quarter .

Speaker #1: And the , know , like for you like quarter or in terms matured for gap the , we glad see over year decline are narrowed of the significantly in third quarter .

Speaker #1: On one hand , you know , we we in terms to the pricing , we use a lot of , you know , different layer for pricing .

Speaker #1: The different products . You know , over the last one and a half years , we opened you know , high a lot of , quality hotels , new in hotels some of tier one , tier two cities , which creating some of the cannibalization to the existing hotels .

Hui Jin: On one hand, you know, we, in terms of the pricing, we use a lot of, you know, different layers for pricing the different products. You know, over the last one and a half years, we opened a lot of, you know, high-quality hotels, new hotels in some of tier one, tier two cities, which created some of the cannibalizations to the existing hotels. Through different pricing, different pricing strategy for different products, I think we are seeing some of the improvements for our mature hotels. The fourth, and more importantly, we keep doing a lot of, you know, existing hotels upgrades to further improve the hotel quality itself in order to, you know, rise the, improve the RevPAR as a whole. Thank you. Thank you, Jingzong. Thank you for the questions. One moment for the next question.

On one hand, you know, we, in terms of the pricing, we use a lot of, you know, different layers for pricing the different products. You know, over the last one and a half years, we opened a lot of, you know, high-quality hotels, new hotels in some of tier one, tier two cities, which created some of the cannibalizations to the existing hotels. Through different pricing, different pricing strategy for different products, I think we are seeing some of the improvements for our mature hotels. The fourth, and more importantly, we keep doing a lot of, you know, existing hotels upgrades to further improve the hotel quality itself in order to, you know, rise the, improve the RevPAR as a whole. Thank you.

Speaker #1: But through different pricing in different , different pricing strategy for different products . I think we are seeing some of the improvements for our matured hotels and for and more importantly , we keep doing a lot of , existing hotels upgrades to further improve the hotel quality itself in order to rise the improve the recipe as a whole .

Speaker #1: Thank you .

Speaker #6: you . Jingdong Thank .

Speaker #4: Thank you for the questions. One moment for the next question. The next question will come from the line of Lydia Link of Citi.

Speaker #4: Please go ahead .

Sijie Lin: Thank you, Jingzong.

Speaker #7: How is Lydia? The Chen G.I. Six management team, led by Lydia from the city, has been focusing on the brand strategy, especially for the newly upscale brand launched in G.I. Town.

Operator: Thank you for the questions. One moment for the next question.

Hui Jin: The next questions will come from the line of Lydia Ling of Citi. Please go ahead. ?????????? Lydia???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thanks, management, Lydia from Citi. I have a question regarding the brand, especially for the newly launched upper mid-scale brand, G Icons. Could you actually share some of your plans for this brand, such as your store opening plan and also the store economics like the capex and the payback period? How actually is your advantage versus the current other leading upper mid-scale brand in the market, and how is the feedback from the franchisee so far? Thank you. ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Okay, in terms of the G Icons brand, obviously the launch of G Icons brand has shown a very strong determination for H World Group to further break through and develop in the upper mid-scale segment with multi-brand strategy. This trend is very clear.

The next questions will come from the line of Lydia Ling of Citi. Please go ahead.

Lydia Ling: [Foreign Language]

Speaker #7: So could you actually share some of your plans for this brand and such as your store opening plan and also the store economics , like the CapEx and the payback period , and how actually your advantage versus like current the other leading upper brand in the market , and how is the feedback from the franchisee so far ?

Thanks, management, Lydia from Citi. I have a question regarding the brand, especially for the newly launched upper mid-scale brand, G Icons. Could you actually share some of your plans for this brand, such as your store opening plan and also the store economics like the capex and the payback period? How actually is your advantage versus the current other leading upper mid-scale brand in the market, and how is the feedback from the franchisee so far? Thank you.

Speaker #7: Thank you .

Speaker #2: Yes . In the . In the . In the . In the . I . Dongfang . The . For the . One to .

Jin Hui: [Foreign Language]

Speaker #2: The Dongfang . To . And the the . Shanghai .

Speaker #1: Okay . So terms of in the G brand . So obviously , you know , the launch of the icons brand have a very shown strong determination for H World Group further break through development in the upper and mid segment with multi-brand strategy .

Okay, in terms of the G Icons brand, obviously the launch of G Icons brand has shown a very strong determination for H World Group to further break through and develop in the upper mid-scale segment with multi-brand strategy. This trend is very clear.

Speaker #1: This trend is very clear . And secondly , based on the current , you know , culture , confidence or Chinese cultural confidence and also the preference from the Chinese government , the Chinese consumers on Oriental culture , Oriental service , as well as Oriental lifestyle that also , you know , basically support the launch of the GI brand .

Hui Jin: Secondly, based on the current, you know, cultural confidence or Chinese cultural confidence and also the preference from the Chinese consumers on oriental culture, oriental service, as well as, you know, oriental lifestyle, that also, you know, basically supports the launch of the G Icons brand. As I said before, G Icons is going to definitely become one of the core brands in our upper mid-scale segment. We hope this brand can be, you know, the best brand or the best hotel that Chinese customers will like the most. In terms of the, you know, the UE, in terms of the CapEx you asked, we hope we can share more information after the first hotels opened. Thank you. Thank you for the questions. Our next question comes from Simon Cheng of Goldman Sachs. Please go ahead.

Secondly, based on the current, you know, cultural confidence or Chinese cultural confidence and also the preference from the Chinese consumers on oriental culture, oriental service, as well as, you know, oriental lifestyle, that also, you know, basically supports the launch of the G Icons brand. As I said before, G Icons is going to definitely become one of the core brands in our upper mid-scale segment. We hope this brand can be, you know, the best brand or the best hotel that Chinese customers will like the most. In terms of the, you know, the UE, in terms of the CapEx you asked, we hope we can share more information after the first hotels opened. Thank you.

Speaker #1: And as I said before , GI icon is going to definitely become one of the core brands in our upper mid segment . And we hope brand can be , you know , the best brand or the best hotel that Chinese customers will like .

Speaker #1: The most . So in terms of the , you know , the the UAE , in terms of the CapEx , you ask me , we hope we can share more information after the first hotels opened .

Speaker #1: Thank you .

Speaker #4: Thank you for the questions. Our next question comes from Simon Cheng of Goldman Sachs. Please go ahead.

Operator: Thank you for the questions. Our next question comes from Simon Cheng of Goldman Sachs. Please go ahead.

Speaker #8: We are eager . Yeah . Can . So Hong Kong . Sorry . And then the . Upper . You . Singida . The the .

Hui Jin: The question is relating to the hotel opening. In the third quarter, they done very well in terms of hotel opening, over 700, and I think in the first nine months, they opened more than 2,000 hotels. That's on track or even exceeded the 2,300 hotels that they have targeted for the full year. Wondering whether there's any update for that, in particular also on the new signing as well. On the related questions, given the focus and the strong momentum that they have seen in the upscale segments, upper mid-scale segments where they achieved 1,600 hotel secure, and we have seen, you know, similarly HanTing, they done like 5,000, and that's, you know, a G Hotel done 4,000. Wondering whether they have any targets for the upper mid-scale in the long run. Thank you.

Speaker #8: The the neo . How you can not . Are you going ? When someone want to be . Can . The question is relating related to the hotel opening in the third quarter .

Speaker #8: They've done very well in terms of hotel opening . Over 700 . And I the think in first nine months they opened more than 2000 hotels .

Speaker #8: That's on track or even exceeded the 2,300 hotels that they have targeted for the full year. I’m wondering whether there's any update on that.

Simon Cheung: [Foreign Language]

The question is relating to the hotel opening. In the third quarter, they done very well in terms of hotel opening, over 700, and I think in the first nine months, they opened more than 2,000 hotels. That's on track or even exceeded the 2,300 hotels that they have targeted for the full year. Wondering whether there's any update for that, in particular also on the new signing as well. On the related questions, given the focus and the strong momentum that they have seen in the upscale segments, upper mid-scale segments where they achieved 1,600 hotel secure, and we have seen, you know, similarly HanTing, they done like 5,000, and that's, you know, a G Hotel done 4,000. Wondering whether they have any targets for the upper mid-scale in the long run. Thank you.

Speaker #8: And and in particular , also on the new signing as well . And then on the related questions , given the focus and the strong momentum that they have seen in the upscale segments upper , Midscale segments where they achieved 1600 hotel secure , and we have seen , you know , similarly , hunting , they've done like 5000 and that's , you know , Jihong He done 4000 .

Speaker #8: Wondering whether they have targets for the upper midscale in the longer run. Thank you.

Speaker #2: That was I yeah . So yeah , you you are . The you . You you . If . Are the . You .

Hui Jin: Okay, so benefiting from, you know, fast new signings in 2023 and 2024 post COVID, as well as, you know, further improvements in terms of our supply chain capability, which resulted in performance in conversion ratio from the pipeline to new openings. We achieve a quite good new openings for the first nine months, which is slightly more than 2,000. Therefore, for the full year, we could possibly, you know, open a bit more than 2,300 hotels as what we guided previously. Again, we emphasized several times over the last several quarters earnings call in terms of the new signings and openings will focus more on quality expansion instead of only looking for a scale. That theme never changed. We're going to continuously implementing this strategy for high-quality, sustainable growth.

Speaker #2: Are the . Are Chen new to to figure out . They . Are . In . That . Out . And I with .

Speaker #2: I mean, for with the, the you.

Speaker #1: Okay . So benefiting from you know , faster new signings in 2023 and 2024 post the Covid , as well as further improvements in terms of our supply chain capability , which resulted in improvements in conversion ratio from the pipeline to new openings .

Jin Hui: [Foreign Language]

Jason Chen: Okay, so benefiting from, you know, fast new signings in 2023 and 2024 post COVID, as well as, you know, further improvements in terms of our supply chain capability, which resulted in performance in conversion ratio from the pipeline to new openings. We achieve a quite good new openings for the first nine months, which is slightly more than 2,000. Therefore, for the full year, we could possibly, you know, open a bit more than 2,300 hotels as what we guided previously. Again, we emphasized several times over the last several quarters earnings call in terms of the new signings and openings will focus more on quality expansion instead of only looking for a scale. That theme never changed. We're going to continuously implementing this strategy for high-quality, sustainable growth.

Speaker #1: So we achieved quite good new openings for the first nine months , which is slightly more than 2000 . So therefore therefore , for the full year , we could possibly , you know , open a bit more than 22,300 hotel as what we guided previously .

Speaker #1: But again, as we emphasized during the federal times over the last several quarters of the earnings call, in terms of the new signings and openings, we will focus more on quality expansion instead of solely looking for scale.

Speaker #1: So that steam never changed . So we can continuously implementing this strategy for high quality , growth sustainable . In terms of the upper mid segment , as I said , you know , we have reached 1600 in both pipeline and the which also achieved pretty the rapid growth .

Speaker #1: But you however , if look into a longer term , for example , 2030 , we're gonna still , you know , focus on the mass market with the economy and the middle school .

Hui Jin: In terms of the upper mid-segment, as I said, you know we have reached 1,600 in both pipeline and in operations, which also achieved pretty rapid growth. However, if you look into a longer term, for example 2030, we are going to still, you know, focus on the mass market with the economy and the middle scale. In terms of the proportion, you know, economy and the middle scale are going to still contribute to the majority. In terms of the growth rate, we hope our upper mid-segments could grow the fastest in the industry and become the leading players in the China market by 2030. Thank you. ?????Jason????? Thank you for the questions. Our next questions come from Ronald Leung of Bank of America. Please go ahead. ??????????????? Ronald Leung????????????????????? margins ???????????????????? margins ???????????????????????????????? margins ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Let me translate my questions in English.

In terms of the upper mid-segment, as I said, you know we have reached 1,600 in both pipeline and in operations, which also achieved pretty rapid growth. However, if you look into a longer term, for example 2030, we are going to still, you know, focus on the mass market with the economy and the middle scale. In terms of the proportion, you know, economy and the middle scale are going to still contribute to the majority. In terms of the growth rate, we hope our upper mid-segments could grow the fastest in the industry and become the leading players in the China market by 2030. Thank you.

Speaker #1: So in terms of the proportion , you know , economy and the middle school are still contributes the majority . But in terms of the growth rate , we hope our upper segment could grow the fastest in the industry .

Speaker #1: And become the leading players in the China market by 2030.

Speaker #8: Thank you .

Speaker #4: Thank you for the questions. Next, our question comes from Ronald Leung of Bank of America. Please go ahead.

Speaker #2: Hey, was one of.

Simon Cheung: ?????Jason?????

Operator: Thank you for the questions. Our next questions come from Ronald Leung of Bank of America. Please go ahead.

Speaker #5: The .

Speaker #2: 1P01P .

Speaker #5: Margins are higher .

Ronald Leung: [Foreign Language] Let me translate my questions in English.

Speaker #2: Margin . Is .

Speaker #5: The .

Speaker #2: Higher margins . You the other one is a Hui Chen . The other the . So we are your Hui Jin . I .

Speaker #2: Mean , how ? Are much . How ? Let me translate the questions my into in English . So questions . My I have two first question is about and cost margins .

Speaker #2: Outlook: The company has achieved very decent results.

Speaker #5: Margins expansion in .

Speaker #2: The past .

Speaker #5: Two quarters .

Speaker #2: Good management. Share with us the latest outlook on cost control and also margins.

Hui Jin: I have two questions. My first question is about cost and margins outlook. The company has achieved very decent margins expansion in the past two quarters. Could management share with us the latest outlook on cost control and also margins? My second question is about the memberships program. The overall memberships has grown decently to over 300 million by the end of Q3 2025. Could management share an update on the strategy on how to further enhance memberships loyalty and also marketing strategies to improve the conversion rates? Thank you very much. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Okay, in terms of our members, definitely direct sales and the membership is one of our core strategies. We are glad to see in terms of the member base as well as the room night sold to members continuously to grow.

I have two questions. My first question is about cost and margins outlook. The company has achieved very decent margins expansion in the past two quarters. Could management share with us the latest outlook on cost control and also margins? My second question is about the memberships program. The overall memberships has grown decently to over 300 million by the end of Q3 2025. Could management share an update on the strategy on how to further enhance memberships loyalty and also marketing strategies to improve the conversion rates? Thank you very much.

Speaker #5: My

Speaker #5: second .

Speaker #2: Question is about the membership program . So the overall membership has grown decently to over 300 million by the end of 3 to 5 .

Speaker #2: Could management share an update on the strategy on how to further enhance membership loyalty, and also marketing strategies to improve the conversion rates?

Speaker #2: Thank you very much. With that, I will turn it over to Jinhua Hui Chen. Are you there? You're on. So, I mean, Hui Jin Chen.

Jin Hui: [Foreign Language]

Speaker #2: Yuan has mentioned the views , the need to to . To . To women who . To . To . How ? To .

Speaker #2: the . For the current . Women . To . To . To . To . To . To . Hui Jin . The change to the Jason Chen .

Speaker #2: Hui Jin: To the ...

Speaker #1: Okay . So in terms of our members . So definitely , you know , direct sales and membership is one of our core strategy .

Speaker #1: We are glad to see, in terms of the member base as well as the room night social members, continuously growing. But we think that's still not enough.

Jason Chen: Okay, in terms of our members, definitely direct sales and the membership is one of our core strategies. We are glad to see in terms of the member base as well as the room night sold to members continuously to grow.

Speaker #1: So that's why we have been doing quite a lot of jobs over the past several months . First of all , we introduced a price guarantee program , which can ensure our members to get the best price service as and also the unique experiences at the hotel .

Hui Jin: We think that's still not enough, which is why we have been doing quite a lot of jobs over the past several months. First of all, we introduced a price guarantee program, which is going to ensure our members get the best price, the services, and also the unique experiences at the hotel. Secondly, we are also trying to fulfill more diversified demand from leisure travelers and some of the emergent demands, for example, as I mentioned earlier, like sports events, like inbound travelers. Basically, the X Rewards membership program is gradually shifting from only business travelers to fulfill more diversified demands. Thirdly, we are also enhancing our capability to receive more business clients and corporate clients to further enhance our exposures.

We think that's still not enough, which is why we have been doing quite a lot of jobs over the past several months. First of all, we introduced a price guarantee program, which is going to ensure our members get the best price, the services, and also the unique experiences at the hotel. Secondly, we are also trying to fulfill more diversified demand from leisure travelers and some of the emergent demands, for example, as I mentioned earlier, like sports events, like inbound travelers. Basically, the X Rewards membership program is gradually shifting from only business travelers to fulfill more diversified demands. Thirdly, we are also enhancing our capability to receive more business clients and corporate clients to further enhance our exposures.

Speaker #1: And secondly, we are also trying to fulfill more diversified demand from leisure travelers and some of the emerging, you know, demands.

Speaker #1: For example, as I mentioned earlier, events like sports are attracting travelers. Basically, the rewards membership program is gradually shifting from catering solely to business travelers to fulfilling a more diversified demand.

Speaker #1: And thirdly , we are also enhancing our capability to , you know , more business receive clients and corporate clients to further enhance our exposures .

Speaker #1: lastly , And we have been experimenting a cross , you know , cooperation with a lot of , you know , top tier , you know , vertical players trying to enhance , you know , members experiences and improve their engagement .

Hui Jin: Lastly, we have been experimenting with a lot of cross-industry cooperation with a lot of top-tier vertical players, trying to enhance members' experiences and improve their engagement. Thank you. Thank you for the questions. Our last questions come from Jiwei Liu from 3PX. Sorry, please continue. ???? Ronald ???????????????? EBITDA ? margin????? EBITDA ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ROI ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? EBITDA ? margin ??????????? Okay, let me do the translation. Overall, the addressed EBITDA margin improvement was mainly because of our SLI strategy. Obviously, the M&F has higher margin compared to this and on. In terms of the cost control, in terms of the hotel operating cost, by leveraging our strong supply chain capability, we continuously reduce the cost per room night sold. For our lease-and-own hotels, we are continuously seeking for more rental reduction, just trying to improve the profitability level of our lease-and-own hotels.

Lastly, we have been experimenting with a lot of cross-industry cooperation with a lot of top-tier vertical players, trying to enhance members' experiences and improve their engagement. Thank you.

Speaker #1: Thank you .

Speaker #4: Thank you for the questions . Our last question , our last question comes from Zhiwei Liu from CDH . Sorry . Please continue .

Operator: Thank you for the questions. Our last questions come from Jiwei Liu from 3PX. Sorry, please continue.

Speaker #3: I . The EBITDA , the margin . The you are . In jumping Zhang Xiao Hua . How ? Can . The 20 member .

Chen Hui: [Foreign Language]

Jason Chen: Okay, let me do the translation. Overall, the addressed EBITDA margin improvement was mainly because of our SLI strategy. Obviously, the M&F has higher margin compared to this and on. In terms of the cost control, in terms of the hotel operating cost, by leveraging our strong supply chain capability, we continuously reduce the cost per room night sold. For our lease-and-own hotels, we are continuously seeking for more rental reduction, just trying to improve the profitability level of our lease-and-own hotels.

Speaker #3: ROI . In Xiao Hui yuan . Be . The strong . To the 21 . The margin that the .

Speaker #1: Okay , let me do the translation . So overall , the adjusted EBITDA margin improvement was mainly because of our excellent strategy . So obviously the MAF has higher margin compared to lease and own .

Speaker #1: in But of the cost in control , terms of the hotel operating costs , by leveraging our strong supply chain capability , we to continuously reduce the cost per room night sold .

Speaker #1: And for our leased and owned hotels, we are continuously seeking more rental reductions. We are just trying to improve the profitability level of our list.

Speaker #1: And own hotels . And on . A perspectives we continuously optimizing our , you know and back office and headquarter to trying to control the cost in terms of the sales and marketing .

Hui Jin: On the SG&A perspectives, we continuously optimizing our mid and back office and headquarter, just trying to control the cost. In terms of the sales and marketing, we will, based on our eye, do some necessary investments on, for example, the hotel brand membership, as well as the new user acquisition. As mentioned by Jinhui, we have been systematically improving our capability to improve our revenue management, as in the cost control side. We are also doing a systematic capability improvement. Thank you. Thank you. We have come to the end of the question and answer session. That concludes the conference call for today. Thank you for your participation. You may now disconnect your lines.

On the SG&A perspectives, we continuously optimizing our mid and back office and headquarter, just trying to control the cost. In terms of the sales and marketing, we will, based on our eye, do some necessary investments on, for example, the hotel brand membership, as well as the new user acquisition. As mentioned by Jinhui, we have been systematically improving our capability to improve our revenue management, as in the cost control side. We are also doing a systematic capability improvement. Thank you.

Speaker #1: will We based on our I and to do some of necessary investments on , for example , the hotel brand , you know , membership as well as the user new new user acquisition .

Speaker #1: as So mentioned by by Jinhua , so we have been systematically improve our capability to improve our revenue management . So as in the cost control side .

Speaker #1: So, we are also doing a systematic capability improvement. Thank you.

Speaker #4: We have come to the end. Thank you for your participation in the question and answer session. That concludes the conference call for today. Thank you.

Operator: Thank you. We have come to the end of the question and answer session. That concludes the conference call for today. Thank you for your participation. You may now disconnect your lines.

Q3 2025 H World Group Ltd Earnings Call

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