H World Group Limited · HKEX:1179
H World — Q4 2023 Earnings Presentation
31 slides from H World's earnings presentation, Mar 20, 2024
Slide 1: Fourth Quarter and Full Year of 2023 Earnings Call
Fourth Quarter and Full Year of 2023 Earnings Call H World Group Limited (NASDAQ: HTHT and HKEX: 1179) March 21, 2024
Slide 2: Agenda
AGENDA 01 02 03 04 2023 Review and 23Q4 and FY23 Q and A Appendix 2024 Focus Operational and Financial Review
Slide 3: Strong RevPAR Recovery in China
3 Strong RevPAR Recovery in China RevPAR Blended RevPAR in 2023 Compared to 2019 RevPAR Recovery 140% 132% 127% 128% 128% 123% 123% 120% 120% 115% 117% 96% * Numbers in this page refers to Legacy-Huazhu business H W o r ld
Slide 4: Continued Network Expansion in China
4 Continued Network Expansion in China ꂊ䏅緸絞䭯絯䪈䓎 Number of Hotel Opening Number of Hotel Closure Number of Hotel in Pipeline Legacy-Huazhu excl. economy soft brand Total hotel closure (as of Dec 31) Hotel closure excl. low quality economy soft brand and Hanting 1.0 1,641 789 3,061 2,544 1,236 539 273
Slide 5: Economy and Midscale as the Core Products Serving the Mass Market
5 Economy and Midscale as the Core Products Serving the Mass Market 务 Number of Hotels in Operation Number of Hotels in Pipeline Number of Hotel Opening (as of Dec 31) (as of Dec 31) Legacy-Huazhu excl. soft economy hotels Economy Midscale Upper midscale and above Economy Midscale Upper midscale and
Slide 6: Consistent Product Upgrade for Hanting Hotel
6 Consistent Product Upgrade for Hanting Hotel 宪䏭❡ㅷ䭯絯揦倝 Increasing Proportion of Hanting 2.7 and above Hanting 1.0 Hanting 2.7 and above 71.2% 61.3% 50.3% 34.4% 28.5% 15.7% 8.8% 4.4% 2020 2021 2022 2023 • Numbers in this page refers to Legacy-Huazhu business • Proportion of Hanting 1.0 and proportio
Slide 7: Launching JI Hotel 5.0
7 Launching JI Hotel 5.0 5.0 H W o r ld
Slide 8: Orange LOHAS Gaining Popularity
8 Orange LOHAS Gaining Popularity 命㶩⛙崞❡ㅷ䎛「䋑㖞妅鵓 Proportion of Orange LOHAS in Pipeline (as of Dec 31 2023) Orange LOHAS Others 42% 58% * Numbers in this page refers to Legacy-Huazhu business H W o r ld
Slide 9: Further Penetration to Lower Tier Cities in China
9 Further Penetration to Lower Tier Cities in China 鵳♧姿幷鷳⡛絁㙹䋑 Number of Hotels in Operation Number of Hotels in Pipeline City Coverage (as of Dec 31) (as of Dec 31) (hotels in operation and in pipeline) Tier-1 Tier-2 Tier-3, 4 and below Tier-1 Tier-2 Tier-3, 4 and below 9,263 3,061 8,411 2,544 2,000
Slide 10: Regional Headquarters Achieved Promising Results
10 Regional Headquarters Achieved Promising Results 絆絉卹匬靈侮⛓た》䖤ⴲ姿絑蠒䧭佪 Number of New Signings Increased Significantly for Less Penetrated Areas (new signings excl. soft brand) South China West China Central China Compare to 2019 200%+ 130%+ YoY 100%+ Compare to 2019 Compare to 2019 110%+ YoY 80%+ YoY
Slide 11: Further Development of Upper-midscale Segment
11 Further Development of Upper-midscale Segment ♶倗〄㾝⚥넞咓ㅷ晥 Number of Upper-midscale Hotels Number of Upper-midscale Hotels Multi-brand Strategy for in Operation in Pipeline Upper-midscale Segment +23%YoY +34%YoY +7%QoQ +8% QoQ 645 605 386 357 523 287 Q4‘22 Q3’23 Q4’23 Q4‘22 Q3’23 Q4’23 H W o r ld *
Slide 12: InterCity and Crystal Orange Gained Traction Among Franchisees
12 InterCity and Crystal Orange Gained Traction Among Franchisees 㙹꣢ꂊ䏅ㄤ命㶩宐兪「ⵌ⸈湅㉁ꫬ滸 Number of InterCity in the Pipeline 53 41 22 10 Q1‘23 Q2’23 Q3’23 Q4’23 * Numbers in this page refers to Legacy-Huazhu business H W o r ld
Slide 13: InterCity and Crystal Orange Gained Traction Among Franchisees
13 InterCity and Crystal Orange Gained Traction Among Franchisees 㙹꣢ꂊ䏅ㄤ命㶩宐兪「ⵌ⸈湅㉁ꫬ滸 Number of Crystal Orange in the Pipeline 119 108 84 60 Q1‘23 Q2’23 Q3’23 Q4’23 * Numbers in this page refers to Legacy-Huazhu business H W o r ld
Slide 14: Reinforcing Membership Program and Central Reservation System
14 Reinforcing Membership Program and Central Reservation System 䭯絯⸈䔂⠔プ⡤禹ㄤ⚥㣛곫㹁 Number of Members Continue to Increase Direct Booking through H World CRS +9p.p. 228 62.6% 193 199 169 153 53.4% 122 103 79 49 2022 2023 • Includes bookings from H World’s own online channels only, excludes OTAs and other
Slide 15: 'Service Excellence-Centric' Sustainable Quality Growth
15 ‘Service Excellence-Centric’ Sustainable Quality Growth 㔵絗⼾馊剪⸉涸礵渤㟞䧶殜 High Quality Hotel Product Upgrade and Digitalized-based Network Expansion Service Excellence Organizational Capability Enhancement H W o r ld
Slide 16: 2024 Strategic Focus of Legacy-DH
16 2024 Strategic Focus of Legacy-DH 2024 DH Transforming to Continue Focusing on Cost Strengthening Direct Sales Seeking APAC & Middle East Asset-light Model Reduction and Profitability via H Reward Global Loyalty Growth Opportunity Program H W o r ld
Slide 17: Agenda
AGENDA 01 02 03 04 2023 Review and 23Q4 and FY23 Q and A Appendix 2024 Focus Operational and Financial Review
Slide 18: Hotel Network Continues to Expand
18 Hotel Network Continues to Expand ꂊ䏅緸絞䭯絯䪈䓎 Hotel Network Expansion Hotel Turnover (Number of rooms in operation) (in RMB millions) +62% +13% 80,388 Legacy-DH 912,444 7,133 809,478 Legacy-DH 26,814 49,565 Legacy- Legacy- Huazhu Huazhu 885,630 73,256 2022 2023 2022 2023 H W o r ld
Slide 19: Legacy-Huazhu - Blended RevPAR Recovered to 122% of 2019
19 Legacy-Huazhu - Blended RevPAR Recovered to 122% of 2019 -2023 RevPAR 2019 122% ADR (RMB) OCC RevPAR (RMB) Compare to 2019 +27.4% Compare to 2019 -3.3p.p. Compare to 2019 +22.4% Compare to 2022 +26.6% Compare to 2022 +14.4p.p. Compare to 2022 +53.9% 84% 81% 242 299 67% 198 234 236 157 2019 2022 2
Slide 20: Legacy-DH - Blended RevPAR Increased 14.5% YoY
20 Legacy-DH - Blended RevPAR Increased 14.5% YoY DH-2023 RevPAR 14.5% ADR (EUR) OCC RevPAR (EUR) +1.4% +7.2p.p. +14.5% 111 113 63% 71 56% 62 2022 2023 2022 2023 2022 2023 H W o r ld
Slide 21: Revenue: Q4'23 Increased 51%, FY23 Increased 58%
Revenue: Q4’23 Increased 51%，FY23 Increased 58% 21 51% 58% In million RMB 4Q23 4Q22 YoY 3Q23 QoQ 2023 2022 YoY Ӫ 4Q23 and FY23 revenue of Legacy-Huazhu increased significantly YoY, thanks to Revenue from Legacy - Huazhu 4,384 2,757 59.0% 5,113 -14.3% 17,438 10,655 63.7% 1. strong travel demand, - Le
Slide 22: Operating Income Achieved RMB4.7 Billion in 2023
22 Operating Income Achieved RMB4.7 Billion in 2023 2023 47 In million RMB 4Q23 4Q22 YoY 3Q23 QoQ 2023 2022 YoY Ӫ The YoY increase of hotel operating cost in 4Q23 was mainly due to business recovery, while the Hotel operating costs 3,996 3,430 16.5% 3,613 10.6% 14,341 12,260 17.0% QoQ increase was m
Slide 23: Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow
23 Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow EBITDA Ӫ 4Q23 Legacy-Huazhu’s adj. EBITDA and adj. In million RMB 4Q23 4Q22 YoY 3Q23 QoQ 2023 2022 YoY net income improved YoY mainly due to the business recovery but decreased QoQ mainly Adjusted EBITDA 1,270 398 219.1% 2,186 -41.9% 6,
Slide 24: Liquidity Position Update
24 Liquidity Position Update 崨⸓䚍䞔ⲃ刿倝 Cash Balance (incl. Net Cash (incl. Unutilized Time Deposits) Time Deposits) Bank Facilities RMB10.5 bn RMB5.2 bn RMB2.8 bn * As of December 31, 2023 * Cash balance and net cash position includes RMB2.8bn time deposits and financial products H W o r ld
Slide 25: Return to Shareholders in 2023
25 Return to Shareholders in 2023 2023 Cash Dividend Share Repurchase ~USD300 mn USD119 mn * As of December 31, 2023 * Cash dividend was announced in Nov 2023, and was paid out in Jan 2024 H W o r ld
Slide 26: Guidance
26 Guidance ⚌絫䭷䒸 Q1 Full Year 2024 2024 Revenue vs. Q1 2023 Revenue vs. FY 2023 ● Grow 12%-16% ● Grow 8%-12% ● Excluding DH - Grow 11%-15% ● Excluding DH - Grow 8%-12% Gross Opening Target: ~ 1800 hotels Closure of ~ 650 hotels H W o r ld
Slide 27: Agenda
AGENDA 01 02 03 04 2023 Review and 23Q4 and FY23 Q and A Appendix 2024 Focus Operational and Financial Review
Slide 28: Agenda
AGENDA 01 02 03 04 2023 Review and 23Q4 and FY23 Q and A Appendix 2024 Focus Operational and Financial Review
Slide 29: Same-Hotel Operational Data by Segment
29 Same-Hotel Operational Data by Segment ず䏅絑蠒侨䰘 Number of hotels in Same-hotel Same-hotel RevPAR Same-hotel ADR operation Occupancy As of For the quarter ended For the quarter ended For the quarter ended December 31, December 31, December 31, December 31, yoy change yoy change yoy change (p.p.) 202
Slide 30: Same-Hotel Operational Data by Segment
30 Same-Hotel Operational Data by Segment ず䏅絑蠒侨䰘 Number of hotels in Same-hotel Same-hotel RevPAR Same-hotel ADR operation Occupancy As of For the year ended For the year ended For the year ended December 31, December 31, December 31, December 31, yoy change yoy change yoy change (p.p.) 2022 2023 20
Slide 31: Number of Hotels and Rooms
Number of Hotels and Rooms 31 ꂊ䏅侨ꆀㄤ䨻ꢂ侨ꆀ Hotels Rooms Unopened hotels in operation in pipeline Economy hotels 4,984 407,657 1,121 HanTing Hotel 3,598 317,647 731 Hi Inn 471 24,431 180 NiHao Hotel 269 20,009 177 Elan Hotel 404 21,012 1 Ibis Hotel 226 22,659 17 Zleep Hotels 16 1,899 15 Midscale hotels