ChinaTravelNews, Ritesh Gupta – H World Group Limited has shared that the total number of room nights sold in China increased by 21% or so year-over-year during the second quarter (Q2) this year.
Sharing further details during the company's earnings call, Jin Hui, CEO of H World stated that the team has managed to strengthen its direct B2B sales capability. He said, "...the number of room nights booked directly via our B2B platform exceeded six million, up 31% year-over-year and 26% quarter-over-quarter. The number of active corporate clients exceeded 3,600, up 47% year-over-year and 36% quarter-over-quarter."
Expansion strategy
The company shared that the number of hotels in operation rose from 8,622 at the end of Q2 last year to 10,150 by the end of June this year. The number of hotels in tier-1 cities has gone down from 19% in Q2 of 2023 to 17% in Q2 of this year, whereas hotels in tier-3 and tier 4 has risen from 39% to 41% over the same period. In tier-2 cities, the number of hotels in operation have remained the same at 42%.
H World believes that its continuous penetration in lower tier cities in China has now placed the hotel chain to expand its operations even further.
As of the end of Q2, economy and middle-scale hotels accounted for 92%, 82% and 89% of hotels in operation, hotels in pipeline and hotel openings, respectively.
"After more than four years of hard work, since we proposed the goal of 10,000 hotels in 1,000 cities in the end of 2019, we have finally achieved this milestone," said Hui.
Hui said that with all the expertise that H World has gained over the years and also looking at the growth potential in China, the team has now set a new target.
"...we will continue to focus on our service excellence-centric, sustainable quality growth strategy and move towards the next goal of 20,000 hotels in 2,000 cities," said Hui, stating that H World is now ready to scale new heights.
"While we maintain a high speed of new hotel openings, the number of hotels in the pipeline at the end of second quarter reached a record high of 3,266," said Hui. He added that
The company's Legacy-Huazhu business opened 567 hotels in the April-June period. The number of hotel closures was 101. If excluding low-quality economic soft brand and HanTing 1.0 version, the hotel company closed only 58 hotels, 28 fewer than the same period last year.
Key metrics
Legacy-Huazhu revenue increased 11% year-on-year, driven primarily by higher-than-expected hotel openings. Legacy-DH revenue increased 12% year-on-year, driven by business recovery and hotel network expansion. The company also shared that its operating income improved both year-on-year and quarter-on-quarter, driven primarily by the strong network expansion of its manachised and franchised hotels, as well as further business recovery of DH.
The management shared that its occupancy rate increased by 0.7 percentage points year-over-year in the second quarter.
"This was in line with the occupancy rate improvement targets set by the company at the beginning of the year and it also reflected the stability of the overall travelling demand," said Hui.
The ADR was RMB296 in Q2 of this year, compared with RMB305 in Q2 of 2023.
"In terms of the ADR, the pent-up demand and the temporary supply shortage right after the reopening last year definitely led to a very high base of ADR, especially in the second and third quarter. We believe that both occupancy rate and ADR should gradually return to a relatively healthy and sustainable growth trend this year and onwards," said Hui.
Blended RevPAR was RMB244 in Q2 of 2024, compared with RMB250 in Q2 of 2023 and RMB216 in the previous quarter.
H World focuses on three areas to drive up its RevPAR.
"First, product upgrades, continuously upgrade our main brand with introduction of new versions to meet customers' changing demand, at the same time, upgrading and renovating old hotels and old products to improve hotel quality," shared Hui. Second,the service excellence with the principle of customer-centricity.
"And lastly, our membership program. We continuously focus on improvement of our member stickiness and repurchase through constant updating of our H Rewards App. At the same time, we further strengthened our capabilities on direct B2B booking and corporate client customers to capture more business travelling demand," added Hui.
The team added that despite the relatively weak macro and consumption, the overall travel demand in China remained resilient in the first half of 2024.
"Regarding our business outside China, our Legacy-DH recorded a 4.5% year-over-year blended RevPAR increase in the second quarter of 2024," said Hui.
