HTHT: Leaner and unburdened, still a top performer in hotels!
Before the US open on May 15, 2026 Beijing time, Huazhu (1179.HK/HTHT.O) reported Q1 2026 results. Overall, revenue was solid, and operating metrics kept improving after turning positive in H2 last year, but higher sales spend amid a soft corporate travel recovery partially diluted margin release.$HWORLD-S(01179.HK) $H World(HTHT.US)
1) RevPAR expanded YoY. On the core metric RevPAR, Q1 came in at RMB 214 per night, up 2.9% YoY, extending the recovery that turned positive in H2 last year.ADR rose 4.8% to RMB 285 per night as the main driver, with structural premium still unlocking from newer versions such as Hanting 3.5/4.0 and Ji All Seasons 5.0. OCC was 75.1%, down 110bps YoY, suggesting leisure travel stayed firm while corporate demand remained tepid, weighing on occupancy.
In Europe, more EU corporate meetings and the rebound of inbound tourism lifted RevPAR by 5.3% to EUR 80 per night. Volume and price contributed roughly evenly, outperforming China.
2) Store openings stayed brisk. Net adds were 357 hotels in Q1, with 537 openings, keeping a high pace.Mid-to-upscale brands (Ji All Seasons, Orange Crystal, Mercure) remained the primary growth engine, while the economy tier focused more on renovations. Notably, Huazhu closed 180 hotels in Q1, accelerating the exit of poorly located, aged, and loss-making properties to pursue higher-quality growth.
3) Revenue growth ticked up QoQ. Total revenue was RMB 6.0bn, up 11% YoY, with a slight acceleration vs. Q4.Franchise revenue rose 20% to RMB 3.0bn on more rooms and positive RevPAR lifting per-hotel sales, with mix up 370bps to 50%. Leased-and-owned revenue was ~RMB 2.8bn, down 1.4% YoY with a narrower decline QoQ, which Dolphin Research estimates was helped by a rebound in Tier-1 business travel and steady contributions from higher-end self-operated brands such as Joya and Blossom House.
4) Sales spend rose temporarily. With the continued shift to an asset-light model, a higher franchise mix lifted GPM by 580bps to 39% (franchise saves on rent and labor, driving higher margins).On opex, Dolphin Research estimates Huazhu increased exposure for mid-to-upscale brands on social media and short-video channels amid weak corporate recovery and intensified competition, nudging the sales ratio up 30bps to 4.8%, while G&A was broadly stable. Adj. EBITDA reached RMB 1.86bn, up 24% YoY, modestly beating consensus (RMB 1.77bn).
5) Key financial snapshots
Dolphin Research view:
Aside from a temporary uptick in sales spend, Q1 growth quality remained solid. Three consecutive quarters of positive RevPAR (an early turn vs. peers), a record-high franchise mix, and DH turning profitable after breaking even all suggest Huazhu is shifting from cyclical recovery to structural growth.
We also see marginal shifts across the hotel industry through this print:
On supply, the biggest issue over the past two years was not weak demand but an overly fast supply release that disrupted pricing, especially in mid-to-upscale. Projects clustered, conversions were fast, and franchisees’ expectations were high, leading to a wave of new capacity before demand fully caught up and prices cracked first.
As franchisees’ ROI cycles extend, nationwide room-count growth has slowed from 9% YoY in Nov 2025 to ~6.5% now. While still above the normal 3%-5%, the trend clearly points to structural cooling on the supply side.
On the demand side, Ministry of Culture & Tourism data show Q1 trips per capita reached 3.2, up 41% YoY. Among discretionary categories in Jan–Apr, travel recovered the fastest to 128% of 2019 levels (vs. dining at 115% and retail at 108%).
Breaking it down, the key incremental driver is weekend short-haul, up 7–8ppt to 78%. Combined with a drop in ticket spending share (from 42% in 2019 to 28%) and higher shares for lodging, experiences, and F&B, demand is shifting from holiday spikes to higher-frequency, normalized, experience-led travel.
For hotel operators, lower volatility in occupancy means less need for aggressive discounting to fill low-season rooms. The focus can shift from price wars to product upgrades, with leaders like Huazhu, which has a higher mid-to-upscale mix, stronger membership, and more mature RM systems, positioned to benefit first in our view.
Looking into 2026, execution priorities remain clear: brand premiumization and lower-tier expansion are the two core growth pillars. In Tier-1/2 cities, Huazhu will prioritize Ji All Seasons Grand (premium business), Intercity (select-city), Crystal (affordable luxury), and Mercure (intl midscale) to raise mid-to-upscale mix; in lower tiers, lighter formats such as 'Hanting Express' lower the franchise threshold and accelerate penetration.The value of these upgrades is not just better looks, but the ability to support a higher ADR, shorter build cycles, and stronger disruption in lower-tier markets.
On valuation, using the upper end of guidance at 2%–6% growth reflects continued recovery in leisure penetration and Huazhu’s upbeat trends in franchise growth and positive RevPAR. We also nudge up sales spend assumptions on intensified mid-to-upscale competition.Based on 2026E net profit of RMB 5.36bn and 18x, shares are not cheap, but if peak-season RevPAR accelerates through Q2–Q3, multiples could re-rate to 20–22x, implying 10%–20% upside. Investors can calibrate to their risk appetite.
Details follow:
I. RevPAR expanded YoY
Before diving into the P&L, we start with the operating foundation:
1.1 ADR recovery accelerated, with structural premium still unlocking
On the core metric, Huazhu China Q1 RevPAR was RMB 214 per night, up ~2.8% YoY, marking a third straight quarter of positive growth since Q3 2025 and a faster pace vs. Q4 (+1.8%). By volume/price:
ADR: RMB 285 per night, up ~4.8% YoY and accelerating vs. Q4 (+4.0%). Beyond a better industry supply-demand balance, Dolphin Research believes Huazhu’s earlier ADR recovery vs. peers stems from leading product upgrades.Hanting 3.5, Ji All Seasons 4.0, and Orange 2.0 are not merely prettier renovations; they improve design, space efficiency, build cycle, customer profiling, and member conversion.
OCC: 75.1%, down ~110bps YoY. Leisure was strong, but corporate demand, while recovering, has yet to see a strong rebound and is more a stabilization.Notably, OCC declines were smaller for mature hotels (operating >18 months), suggesting ramp-up pressure from new openings.
1.2 Europe: steady recovery, DH now self-funding
Legacy-DH RevPAR was ~EUR 80 per night in Q1 2026, up ~5% YoY. By components:
OCC: 63.3%, up ~210bps YoY, supported by spring corporate activity and continued inbound growth.
ADR: ~EUR 127 per night, up ~1.6% YoY, steady.
More importantly, profitability turned: the market used to tag DH as asset-heavy and low-efficiency, but Q1 adj. EBITDA reached ~$60mn, extending the Q4 2025 turnaround. This indicates restructuring (sale-leasebacks, franchise conversions, cost optimizations) is delivering, turning DH from a 'legacy drag' into a 'growth option'.
Looking ahead, Europe’s recovery continues, especially Germany, DH’s core market, where trade fairs and business travel are reviving and the Intercity brand is performing well.
1.3 Openings remain high, structure keeps improving
Huazhu added 357 net hotels in Q1 with 537 openings, keeping a robust cadence. Mid-to-upscale brands (Ji All Seasons, Orange Crystal, Mercure) were the clear growth engine, while the economy tier focused on upgrades.Huazhu also closed 180 hotels, stepping up the clean-up of poorly located, aged, and loss-making properties to drive quality growth.
Future expansion is clear on two lanes: brand-up and penetration-down. Mid-to-upscale brands such as Ji All Seasons, Orange, Intercity, Orange Crystal, Manxin, and Mercure will keep driving mix upgrades.For lower tiers, upgraded Hanting and Ji All Seasons will pressure independents by leveraging brand and efficiency advantages.
II. Franchise revenue surges, asset-light flywheel accelerates
2.1 Topline beat
Total revenue was RMB 6.0bn in Q1, up 11% YoY, with a QoQ pickup from Q4. Franchise revenue rose 20% to RMB 3.0bn on higher room inventory and positive RevPAR lifting per-hotel sales, with mix up 370bps to 50%.Leased-and-owned revenue was ~RMB 2.8bn, down 1.4% YoY with a narrower decline QoQ, aided, in Dolphin Research’s view, by Tier-1 business activity and steady contributions from Joya and Blossom House.
2.2 Asset-light shift expands margins
With a higher franchise mix (saving on rent and labor vs. leased-and-owned), GPM expanded 580bps to 39%.
Specifically, as Huazhu continues to reduce asset-heavy exposure and raise franchise mix, rent/lease share fell 200bps to 35%. With stronger centralized procurement and digital consumption control, D&A and materials also edged down ~100bps, while labor rose ~100bps to 6% on network expansion and wage increases.
2.3 Sales ratio up temporarily
On opex, Dolphin Research estimates Huazhu raised brand exposure for mid-to-upscale on social and short-video channels given weak corporate recovery and fiercer competition, pushing the sales ratio up 30bps to 4.8%. G&A stayed stable.Adj. EBITDA was RMB 1.86bn, up 24% YoY, modestly above the street’s RMB 1.77bn.
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Dolphin Research on 'Huazhu' – past coverage:
Earnings reviews
Mar 18, 2026: Huazhu: After the deep squat, how long can the 'honor roll' last?
Aug 21, 2025: Huazhu: Building the core, ready for a deep-squat rebound?
Aug 21, 2024: Domestic travel cooling, why is Huazhu accelerating openings?
May 20, 2024: A bustling holiday, a quiet Huazhu
Mar 20, 2024: Huazhu: Volatile profits, too weather-dependent?
Deep dives
Dec 23, 2022: At $43, can Huazhu sprint to a new peak?
Dec 14, 2022: Up 75%, how was Huazhu’s faith forged? (Part I)
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