HTHT 2Q26 First Take: Overall, the company delivered a strong print for the quarter, with revenue beating and guidance raised across the board, alongside a new $2.5bn three-year shareholder return plan.

The caveat: same-store RevPAR for mature hotels turned negative for the first time in three quarters, and overseas growth swung to a decline.

1) Revenue beat; guidance raised across the board.

2Q revenue was RMB 7.1bn (+10.8% YoY vs. cons. +5.5%), accelerating QoQ.

Franchise revenue rose 25.2% YoY to RMB 3.6bn, driven by sustained room growth.

It was the fastest pace in four quarters and the key driver of the beat.

Owned-and-operated revenue was ~RMB 3.2bn, down 4.9% YoY.

The decline reflects ongoing closures of older leased hotels and lower overseas leased-hotel revenue.

On 1H results, the company raised its full-year revenue growth guide to 4-8% from 2-6%.

Franchise revenue guidance moved to 16-20% from 12-16%.

2) RevPAR growth cooled, with same-store turning negative.

China RevPAR rose 1.3% YoY to RMB 238 per night.

ADR increased 2.8% YoY to RMB 298, with mix-driven premium remaining the core driver.

OCC was 79.8%, down 120bps YoY.

Notably, same-store RevPAR for mature hotels (≥18 months) fell 3.0% YoY.

Same-store ADR was broadly flat, while OCC dropped 240bps, indicating broad-based occupancy softness at legacy stores.

Dolphin Research estimates this reflects a pre-summer demand cooldown and cannibalization from new openings.

Overseas (HWI) RevPAR declined 3.8% YoY.

We attribute this to Middle East geopolitics and low pricing during early ramp in Southeast Asia.

3) Openings slowed modestly, but the pipeline remains ample.

HTHT added a net 324 hotels in 2Q (501 openings, 177 closures), slightly below 357 in 1Q.

Net adds reached ~681 in 1H.

Against the full-year guide of 2,200-2,300 openings, 2H will need to pick up.

The pipeline stands at 3,089, skewed to mid-to-upscale, and management reaffirmed the full-year opening target.

4) Profit delivery across the board, with asset-light benefits continuing to accrue.

With franchise mix rising further (50.3% in 1H, +490bps YoY), GPM expanded 180bps to 43.4%.

OpEx was broadly stable, lifting OPM by 330bps to 31.1%.

Adj. EBITDA reached RMB 2.73bn, +20% YoY.

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