H World Group Limited · HKEX:1179
H World — Q3 2023 Earnings Presentation
24 slides from H World's earnings presentation, Nov 27, 2023
Slide 1: Third Quarter of 2023 Earnings Call
Third Quarter of 2023 Earnings Call H World Group Limited (NASDAQ: HTHT and HKEX: 1179) November 27, 2023
Slide 2: Agenda
AGENDA 01 02 03 04 23Q3 Business 23Q3 Operational Q and A Appendix Update and Financial Review
Slide 3: Strong RevPAR Recovery in China
3 Strong RevPAR Recovery in China 务 RevPAR Blended RevPAR in 2023 compared to 2019 RevPAR Recovery in 2023 140% 132% 127% 128% 128% 123% 120% 120% 115% 96% * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 4: Sustainable RevPAR Recovery Driven by…
4 Sustainable RevPAR Recovery Driven by… RevPAR Uncovering Opportunities Higher Market Penetration Continuous Upper-midscale in Lower Tier Cities and Synergy through Product & Service Segment With High Resilience Regional Headquarters Upgrade Development H W or ld
Slide 5: Further Penetration to Lower Tier Cities in China
5 Further Penetration to Lower Tier Cities in China Number of Hotels in Operation Number of Hotels in Pipeline City Coverage (as of Sep 30) (as of Sep 30) (hotels in operation and in pipeline) Tier-1 Tier-2 Tier-3, 4 and below Tier-1 Tier-2 Tier-3, 4 and below 8,276 9,028 2,935 40% 2,274 2,000 41% 5
Slide 6: Continued Network Expansion in China
6 Continued Network Expansion in China 的 Number of Hotel Opening Number of Hotel Closure Legacy-Huazhu excl. economy soft brand Total hotel closure Hotel closure of low quality economy soft brand and Hanting 1.0 545 204 427 139 128 94 Q3‘22 Q3’23 Q3‘22 Q3’23 * Numbers in this page refers to Legacy-H
Slide 7: Further Enhancement of Our Hotel Quality
7 Further Enhancement of Our Hotel Quality Proportion of Low Quality Economy Soft Brand and Hanting 1.0 Continues to Decrease Economy Soft + Hanting 1.0 Hanting 2.7 and above 26.8% 25.9% 23.7% 19.3% 19.8% 14.3% 13.4% 8.2% 2020 2021 2022 3Q23 * Numbers in this page refers to Legacy-Huazhu business H
Slide 8: Economy and Midscale as the Core Products Serving the Mass Market
8 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 Sep 30) (as of Sep 30) Legacy-Huazhu excl. soft economy hotels Economy Midscale Upper midscale and above Economy Midscale Upper midscale and
Slide 9: Further Development of Upper-midscale Segment
9 Further Development of Upper-midscale Segment 务 Number of Upper-midscale Hotels Number of Upper-midscale Hotels Multi-brand Strategy for in Operation in Pipeline Upper-midscale Segment +19%YoY +35%YoY +8%QoQ +13% QoQ 605 357 562 317 510 264 Q3‘22 Q2’23 Q3’23 Q3‘22 Q2’23 Q3’23 H W or ld * Numbers i
Slide 10: InterCity and Crystal Orange Gained Traction Among Franchisees
10 InterCity and Crystal Orange Gained Traction Among Franchisees Number of InterCity in the Pipeline Number of Crystal Orange in the Pipeline 41 108 84 22 60 10 Q1‘23 Q2’23 Q3’23 Q1‘23 Q2’23 Q3’23 * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 11: DH Continues to Drive Operating Efficiency & Strategic Growth
11 DH Continues to Drive Operating Efficiency & Strategic Growth DH ● Despite Germany’s slow economic recovery post Covid, DH’s portfolio continues to outperform the overall market ● 3Q23 YoY cost growth in line with revenue growth despite inflationary pressure in Europe after excluding one-off adju
Slide 12: Agenda
AGENDA 01 02 03 04 23Q3 Business 23Q3 Operational Q and A Appendix Update and Financial Review
Slide 13: Hotel Network Continues to Expand
13 Hotel Network Continues to Expand 的 Hotel Network Expansion Hotel Turnover (Number of rooms in operation) (in RMB millions) +55% +11% 23,498 885,756 Legacy-DH 797,489 Legacy-DH 1,935 26,472 15,154 Legacy- Legacy- Huazhu Huazhu 859,284 21,564 Q3‘22 Q3’23 Q3‘22 Q3’23 H W or ld
Slide 14: Legacy-Huazhu - Blended RevPAR Recovered to 129% of Q3'19
14 Legacy-Huazhu - Blended RevPAR Recovered to 129% of Q3‘19 务 -2023 RevPAR 2019 129% ADR (RMB) OCC RevPAR (RMB) Compare to Q3’19 +32.1% Compare to Q3’19 -1.8p.p. Compare to Q3’19 +29.4% Compare to Q3’22 +27.7% Compare to Q3’22 +9.8p.p. Compare to Q3’22 +44.3% 324 278 88% 86% 76% 254 215 245 193 Q3'
Slide 15: Legacy-DH - Blended RevPAR Increased 4.5% YoY
15 Legacy-DH - Blended RevPAR Increased 4.5% YoY DH-2023 RevPAR 4.5% ADR (EUR) OCC RevPAR (EUR) +0.1% +2.9p.p. +4.5% 69% 79 114 114 66% 75 Q3'22 Q3'23 Q3'22 Q3'23 Q3'22 Q3'23 H W or ld
Slide 16: Revenue in Q3'23 Increased 54% YoY
16 Revenue in Q3’23 Increased 54% YoY 54% In million RMB 3Q23 3Q22 YoY 2Q23 QoQ Revenue from Legacy - Huazhu 5,113 3,161 61.8% 4,347 17.6% 3Q23 revenue of Legacy-Huazhu increased significantly YoY, thanks to - Leased & Owned Hotels 2,748 1,793 53.3% 2,466 11.4% 1. strong travel demand, especially du
Slide 17: Operating Income Achieved RMB1.9 Billion in Q3'23
17 Operating Income Achieved RMB1.9 Billion in Q3’23 19 In million RMB 3Q23 3Q22 YoY 2Q23 QoQ Hotel operating cost increased YoY in 3Q23 mainly due to continuous business Hotel operating costs 3,613 3,045 18.7% 3,482 3.8% recovery. - Legacy-Huazhu 2,660 2,301 15.6% 2,559 3.9% - Legacy-DH 953 744 28.
Slide 18: Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow
18 Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow EBITDA 3Q23 Legacy-Huazhu’s adj. EBITDA and In million RMB 3Q23 3Q22 YoY 2Q23 QoQ adj. net income continued to improve both 2,186 491 345.2% 1,767 23.7% YoY and QoQ. Adjusted EBITDA - Legacy-Huazhu 2,131 397 436.8% 1,655 28.8% 3Q23 Lega
Slide 19: Liquidity Position Update
19 Liquidity Position Update Cash Balance Net Cash (incl. Unutilized Time Deposits) Bank Facilities RMB6.3 bn RMB3.9 bn RMB2.7 bn * As of September 30, 2023 * Net cash position includes RMB2.8bn time deposits and financial products H W or ld
Slide 20: Guidance
20 Guidance Q4 Revenue vs. Q4 2022 ● Grow 41%-45% Excluding DH - Grow 48%-52% 2023 ● H W or ld
Slide 21: Agenda
AGENDA 01 02 03 04 23Q3 Business 23Q3 Operational Q and A Appendix Update and Financial Review
Slide 22: Agenda
AGENDA 01 02 03 04 23Q3 Business 23Q3 Operational Q and A Appendix Update and Financial Review
Slide 23: Same-Hotel Operational Data by Segment
Same-Hotel Operational Data by Segment 23 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 Septmeber 30, Septmeber 30, Septmeber 30, Septmeber 30, yoy change yoy change yoy change (p.p.) 2022 2023 2022
Slide 24: Number of Hotels and Rooms
Number of Hotels and Rooms 24 Hotels Rooms Unopened hotels in operation in pipeline Economy hotels 5,007 405,226 1,097 HanTing Hotel 3,500 311,067 700 Hi Inn 461 24,272 180 NiHao Hotel 247 18,369 181 Elan Hotel 561 27,244 1 Ibis Hotel 223 22,541 22 Zleep Hotels 15 1,733 13 Midscale hotels 3,329 359,