Huazhu 1Q26 First Take: Overall revenue held up we

Huazhu 1Q26 First Take: Overall revenue held up well in Q1, and operating metrics kept recovering after turning positive in H2 last year.

That said, with a softer corporate travel rebound, Huazhu stepped up sales spend, which partially weighed on margin release.

1) Revenue growth ticked up QoQ. Total revenue was RMB 6.0bn, up 11% YoY, with a modest sequential acceleration vs. Q4.

Franchise revenue rose 20% YoY to RMB 3.0bn, driven by more rooms and RevPAR back in positive territory, lifting single-hotel GMV.

Self-operated revenue was ~RMB 2.8bn, down 1.4% YoY with a narrower decline QoQ.

Dolphin Research estimates a pickup in Tier-1 city business travel, with premium self-operated brands (e.g., Xiyue, Huajiantang) performing better.

2) RevPAR expanded further YoY. RevPAR rose 2.9% YoY to RMB 214 per night.

ADR increased 4.8% YoY, the key driver, helped by mix upgrade from newer versions such as Hanting 3.5/4.0 and All Seasons 5.0.

OCC was 75.1%, down 110bps YoY, suggesting robust leisure demand but still-weak corporate travel dragging occupancy.

3) Solid openings with higher-quality growth focus. Net adds were 357 hotels in Q1 (537 openings, 180 closures), keeping a fast pace.

Mid-to-upscale brands (Intercity, Orange Crystal, Mercure) remained the core growth engines, while economy brands focused more on refurbishments.

Notably, Huazhu accelerated the cleanup of poorly located, aging, loss-making stores to pursue higher-quality growth.

4) Step-up in sales spend: With a higher franchise mix YoY, GPM expanded 580bps to 39%.

Amid soft corporate travel and intensifying competition, Huazhu appears to have increased placements on Douyin/Xiaohongshu, lifting the S&M ratio by 30bps to 4.8%, while G&A stayed broadly stable.

Adj. EBITDA reached RMB 1.86bn, up 24% YoY. $HWORLD-S(01179.HK)