--- title: "HTHT (Trans): Mid-to-upscale brands show stronger overall RevPAR recovery" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40841105.md" description: "Below are Dolphin Research's notes from H World's FY26 Q1 earnings call.For our full take on the results, please see 'H World: Shedding Burdens, Going Lean—Still a Top Student in Hotels!'" datetime: "2026-05-15T16:28:09.000Z" locales: - [en](https://longbridge.com/en/topics/40841105.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40841105.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40841105.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # HTHT (Trans): Mid-to-upscale brands show stronger overall RevPAR recovery **Below is Dolphin Research's transcript of Huazhu Group's FY26 Q1 earnings call. For our earnings take, please see '**[**Huazhu: Shedding burdens, back to basics — still a top-of-class hotel operator**](https://longbridge.cn/zh-CN/topics/40840164?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=0bdf67bf-58d7-477f-9397-9a02bc1d2713)**'.** **I. Key takeaways** 1\. **Shareholder returns**: With a solid balance sheet (net cash of RMB 9.6bn), the company will continue to return cash to shareholders through internal FCF, keeping its shareholder return plan unchanged. Any updates will be disclosed in a timely manner. $HWORLD-S(01179.HK) $H World(HTHT.US) 2\. **Outlook**: Guidance for a mild RevPAR increase in 2026 is unchanged, as is the full-year opening plan. 3. **Group revenue and profit**: Q1 revenue was RMB 6.0bn (+11.1% YoY). **Adj. EBITDA reached RMB 1.9bn (+24.2% YoY; margin 31.0%, +330bps YoY), and adj. net profit was RMB 1.1bn (+38.6% YoY; margin 17.9%, +350bps YoY).** 4\. **Asset-light biz.**: Management & Franchise (M&F) revenue rose 20.3% YoY, with an operating margin of 63.6%. 5. **Cash flow & liquidity**: Q1 operating cash flow was RMB 233mn. Cash and equivalents at quarter-end were RMB 15.8bn, with a net cash position of RMB 9.6bn. **II. Earnings call details** **2.1 Management remarks** 1\. **Industry backdrop & strategy** a. Since 2026, domestic travel demand has steadily increased, with intercity rail and air passenger volumes and travel spending continuing to rise. b. **Many regions introduced a spring break, creating 5–8 day holiday blocks around Qingming and May Day, smoothing peak and off-peak flows.** c. Visa-free policies are further boosting inbound travel, adding an extra growth engine for hotels. d. There remains a structural mismatch between hotel supply and demand, so supply-side reform and network optimization remain core strategic priorities. 2\. **Huazhu China (HWC)** a. **Driven by a 14.1% YoY increase in rooms in operation, group hotel GMV grew 17.4% YoY to RMB 26.4bn.** b. Huazhu Club members rose 10.7% YoY to 260mn. c. HWC ADR increased 4.5% YoY (benefiting from product upgrades and revenue management), driving blended RevPAR up 3% YoY, improving vs. Q4 2025 QoQ. d. Ongoing upgrades to Hanting and Ji Hotel continued, with the launch of Hanting Ying, reinforcing absolute leadership in economy and midscale segments. e. By end-Q1, HWC had 13,095 hotels in operation and 2,865 in the pipeline, covering 1,461 cities, advancing toward the '2,000 cities, 20,000 hotels' goal. f. **While penetrating lower-tier cities, HWC is also optimizing and curating sites in Tier-1/2 core districts, leveraging product quality and brand strength to recapture mature market opportunities.** 3\. **Upper-midscale strategy** a. Sticking to a multi-brand play with clear positioning and value propositions, HWC is steadily scaling InterCity, Grandji, Crystal, and Mercure in the upper-midscale segment. b. By end-Q1, upper-midscale operating and pipeline hotels reached 1,658, up 14.4% YoY. c. Grandji opened its first hotel and signed 12 new projects. 4\. **Huazhu Intl (HWI)** a. Q1 HWI RevPAR grew 5.0% YoY (ADR +1.6%, occupancy +210bps). b. **With Singapore as the operating HQ, HWI is accelerating Southeast Asia expansion (Vietnam, Laos, Cambodia), with six hotels opened across Hanting, Ji, InterCity, and Mercure, spanning economy to upper-midscale.** c. The first overseas Hanting 4.0 opened in Ho Chi Minh City's core district, with Q1 RevPAR near RMB 500, invested by a major domestic franchisee, underscoring franchisee confidence. d. The first overseas Ji Hotel 5.0 opened in Vientiane, Laos, continuing its oriental design language. e. HWI believes standardized brands, digitalized operations, and supply chain capabilities can empower overseas hotels, aiming to build brand influence across APAC. 5\. **Segment reporting** a. From this quarter, operating segments are renamed HWC (Huazhu China) and HWI (Huazhu Intl), replacing Legacy HUAZHU and Legacy DH. b. **HWI now covers all overseas hotel businesses, including DH (Deutsche Hospitality) and APAC, with prior-period figures restated.** **2.2 Q&A** **Q: What drove Q1 RevPAR improvement QoQ? How have higher energy costs affected travel demand, and what is the occupancy outlook?** A: Leisure demand has continued to grow steadily post-reopening for several reasons. First, leisure and experiential consumption have become a necessity for Chinese consumers. Second, government support measures, such as newly introduced spring breaks in multiple regions this year, have helped. Third, inbound demand is rising, providing additional momentum for the leisure market. Overall, trip frequency has been on a steady uptrend post-reopening, though spending per trip still fluctuates due to purchasing power. That said, leisure travel is steadily improving. Regarding higher energy costs, we have not seen a material negative impact on domestic travel, largely thanks to the rapid adoption of NEVs in China. Therefore, we maintain our 2026 guidance for a mild RevPAR increase. Huazhu will continue to focus on its core strengths, including brands, operating capability, and the membership ecosystem. With supply growth slowing and competition becoming more rational, we remain cautiously optimistic on occupancy. **Q: What is the 2026 outlook for openings/closures and city coverage?** A: On HWC, gross openings were 537 in Q1, a historically high level. Net openings in Q1 were affected by a late Chinese New Year, but both gross and net openings tracked expectations. On development, two years ago we shifted from pure scale to brand-led, high-quality growth. With this approach, we set high standards for new signings and openings. New signings in Q1 remained robust, so we keep our 2026 opening guidance unchanged. We pursue a dual-track city strategy: continued penetration into lower-tier cities, and a return to Tier-1/2 cities to capture quality sites amid the current real-estate supply cycle. We aim to develop upper-midscale products in core business districts, and are confident in achieving high-quality growth across both lower-tier and Tier-1/2 cities. **Q: How are RevPAR and expansion targets for upper-midscale brands, especially InterCity and Grandji?** A: Upper-midscale is a core pillar of Huazhu's strategy. We are pleased that Q1 RevPAR recovery for upper-midscale slightly outpaced economy and midscale, reflecting stronger brand equity and product quality in that segment. We follow a multi-brand approach in upper-midscale, centered on InterCity, Grandji, Crystal, and Mercure. Overall network growth is solid, though some brands still need to build stronger brand equity. Our strategy prioritizes Tier-1/2 cities and opening flagships in core districts. In the early stage, we spent significant time on brand architecture and design, establishing clear value propositions for each brand. There will be challenges at the start, but we are confident Huazhu's upper-midscale portfolio will take a leading position over the long term. **Q: What is the mix of direct vs. OTA channels today? How will channel mix evolve, and what are the member marketing initiatives?** A: Our CRS and other customer KPIs remain stable. Even with rapid network expansion last year and 500+ new hotels opened in Q1, CRS contribution and member booking share held steady. We are also tracking new trends, including growing leisure demand and inbound travel. Capturing these new traffic sources and customer cohorts is a key agenda for Huazhu and Huazhu Club. You may have noticed we brought in new talent and are partnering with leading AI firms to develop new marketing strategies and member conversion initiatives. Meanwhile, Huazhu Club continues to build enterprise booking capabilities, serving leading corporate travel clients in China. This is a key direction to enhance Huazhu Club's capabilities and acquire new customers. In B2B, we leverage the membership system to serve top corporate clients, showcasing Huazhu Club's ongoing improvements. **Q: What is Huazhu's vision and medium-term growth goals in SE Asia? Has the Middle East situation affected business or the international strategy?** A: In the first phase of our SE Asia expansion, we successfully opened in Vietnam and Cambodia, which boosted our confidence. We believe Chinese brands, supply chains, and customer advantages can help us grow in SE Asia, and we plan to scale and speed up our buildout there. As a first step, we opened hotels in Vietnam, Laos, and Cambodia, reinforcing our confidence that our products, management, supply chain, and membership ecosystem can empower overseas operations. We will increase investment in SE Asia, including network size and pace, as we see it as a new market with new opportunities. Regarding the Middle East conflict, Q1 results show a very limited impact on HWI. We only have 10 managed hotels in the region, with manageable and immaterial contributions to revenue and profit. On energy costs, we are actively managing the overall increase and view the impact on HWI as controllable, while monitoring uncertainties ahead. **Q: Margin improved again in Q1. What is the full-year margin outlook? How much upside remains for the China asset-light margin, and what is the overseas profitability target?** A: For EBITDA improvement, we are doing a few things. First, the asset-light strategy: as we push this forward, we are confident Huazhu's adj. EBITDA margin will keep improving steadily. Second, **for leased and self-owned hotels, we are lifting performance through revenue management and cost controls, including rent renegotiations.** For overseas, especially DH, we continue to drive cost optimization, reviewing the cost structure line by line to improve efficiency. Beyond cost actions, HWI is making necessary investments in digital, tech, and AI, and building HWI membership, while promoting and marketing core brands. For example, the Hanting Ying product was launched in Q1. Given budgets and plans, these investments are necessary. We will evaluate ROI over the full year, balancing cost control with the investments needed for sustainable long-term growth. **Q: What is the 2026 shareholder return plan?** A: Huazhu has a very solid balance sheet and stable cash flows. With continued progress on asset-light and efficiency initiatives, we will keep the shareholder return plan unchanged, and disclose any updates in due course. The overarching direction is to return cash to shareholders from internal cash generation. **Risk disclosure and disclaimer:**[**Dolphin Research Disclaimer & General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [01179.HK](https://longbridge.com/en/quote/01179.HK.md) - [DH.US](https://longbridge.com/en/quote/DH.US.md) - [HWC.US](https://longbridge.com/en/quote/HWC.US.md) - [HTHT.US](https://longbridge.com/en/quote/HTHT.US.md)