H World Group Limited · HKEX:1179
H World — Q2 2023 Earnings Presentation
23 slides from H World's earnings presentation, Aug 25, 2023
Slide 1: Second Quarter of 2023 Earnings Call
Second Quarter of 2023 Earnings Call H World Group Limited (NASDAQ: HTHT and HKEX: 1179) August 25, 2023
Slide 2: Agenda
AGENDA 01 02 03 04 23Q2 Business 23Q2 Operational Q and A Appendix Update and Financial Review
Slide 3: Solid RevPAR Recovery in China Sustained
3 Solid RevPAR Recovery in China Sustained RevPAR Blended RevPAR in 2023 compared to 2019 RevPAR Recovery in 2023 140% 132% 127% 123% 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 Continuous Uncovering Opportunities Higher Market Penetration Upper-midscale Product & Service in Lower Tier Cities and Synergy through Segment Upgrade With High Resilience Regional Headquarters Development H W or ld
Slide 5: Continued Network Expansion in China
5 Continued Network Expansion in China ꂊ䏅緸絞䭯絯䪈䓎 Number of New Signing Number of Hotel Opening Number of Hotel Closure Legacy-Huazhu excl. economy soft brand Legacy-Huazhu excl. economy soft brand Total hotel closure Hotel closure of low quality economy soft brand and Hanting 1.0 374 1,054 216 265 13
Slide 6: Further Enhancement of Our Hotel Quality
6 Further Enhancement of Our Hotel Quality 䭯絯䲿⼮꧋㔙侮⡤ꂊ䏅餘ꆀ Proportion of Low Quality Economy Soft Brand and Hanting 1.0 Continue to Decrease Economy Soft + Hanting 1.0 Hanting 2.7 and above 25.9% 25.9% 23.7% 19.3% 19.8% 14.3% 13.4% 9.7% 2020 2021 2022 2Q23 * Numbers in this page refers to Legacy-Huazhu
Slide 7: Economy and Midscale as the Core Products Serving the Mass Market
7 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 Jun 30) (as of Jun 30) Legacy-Huazhu excl. soft economy hotels Economy Midscale Upper midscale and above Economy Midscale Upper midscale and
Slide 8: Further Penetration to Lower Tier Cities in China
8 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 Jun 30) (as of Jun 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 8,622 2,808 8,051 39% 2,199 2
Slide 9: Further Development of Upper-midscale Segment
9 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 +18% +29% 562 317 478 245 Q2‘22 Q2’23 Q2‘22 Q2’23 * Numbers in this page refers to Legacy-Huazhu business
Slide 10: Revamp of H Rewards
10 Revamp of H Rewards ⼶⡞⠔ㅷ晥ꅾ㝕 From serving mainly business travel to capturing multi-purpose travel l Redesign the homepage of H Rewards App l Introduce Leisure Travel Channel l Launch Content Channel 2.0 H W or ld
Slide 11: Agenda
AGENDA 01 02 03 04 23Q2 Business 23Q2 Operational Q and A Appendix Update and Financial Review
Slide 12: Hotel Network Continues to Expand
12 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) +72% +9% 20,274 Legacy-DH 844,417 1,908 773,898 Legacy-DH Legacy-DH 26,172 24,956 11,785 Legacy-DH 1,474 Legacy-Huazhu Legacy- Legacy-Huazhu Huazhu 748,942 818,245 Le
Slide 13: Legacy-Huazhu - Blended RevPAR Recovered to 121% of Q2'19
13 Legacy-Huazhu - Blended RevPAR Recovered to 121% of Q2‘19 -2023 RevPAR 2019 121% ADR (RMB) OCC RevPAR (RMB) Compare to Q2’19 +28.9% Compare to Q2’19 -5.1p.p. Compare to Q2’19 +21.4% Compare to Q2’22 +39.8% Compare to Q2’22 +17.2p.p. Compare to Q2’22 +77.0% 250 305 87% 82% 206 65% 236 218 141 Q2'1
Slide 14: Legacy-DH - Blended RevPAR Increased 18.5% YoY
14 Legacy-DH - Blended RevPAR Increased 18.5% YoY DH-2023 RevPAR 18.5% ADR (EUR) OCC RevPAR (EUR) +5.6% +7.3p.p. +18.5% 67% 78 117 60% 110 66 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 H W or ld
Slide 15: Revenue in Q2'23 Increased 64%
15 Revenue in Q2’23 Increased 64% 64% In million RMB 2Q23 2Q22 YoY 1Q23 QoQ Revenue from Legacy - Huazhu 4,347 2,461 76.6% 3,594 21.0% Ӫ 2Q23 revenue of Legacy-Huazhu increased - Leased & Owned Hotels 2,466 1,475 67.2% 2,020 22.1% significantly YoY, thanks to 1. strong travel demand; - Manachised &
Slide 16: Operating Income Achieved RMB1.4 Billion in Q2'23
16 Operating Income Achieved RMB1.4 Billion in Q2’23 14 In million RMB 2Q23 2Q22 YoY 1Q23 QoQ Hotel operating costs 3,482 2,972 17.2% 3,250 7.1% - Legacy-Huazhu 2,559 2,168 18.0% 2,383 7.4% Ӫ Hotel operating cost increased YoY in - Legacy-DH 923 804 14.8% 867 6.5% 2Q23 mainly due to business recover
Slide 17: Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow
17 Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow EBITDA In million RMB 2Q23 2Q22 YoY 1Q23 QoQ Ӫ 2Q23 Legacy-Huazhu’s adj. EBITDA and Adjusted EBITDA 1,767 53 3234.0% 1,651 7.0% adj. net income improved significantly YoY. The sequential decrease was due to - Legacy-Huazhu 1,655 23 7095
Slide 18: Liquidity Position Update
18 Liquidity Position Update 崨⸓䚍䞔ⲃ刿倝 Net Cash Cash Balance Unutilized Bank Facilities RMB2.0 bn RMB7.8 bn RMB2.8 bn * As of June 30, 2023 H W or ld
Slide 19: Guidance
19 Guidance ⚌絫䭷䒸 Q3 Full year 2023 2023 Revenue vs. Q3 2022 Revenue vs. full year 2022 ● Grow 43%-47% ● Grow 48%-52% ● Excluding DH - Grow 49%-53% (from previous 42%-46%) ● Excluding DH - Grow 54%-58% (from previous 46%-50%) H W or ld
Slide 20: Agenda
AGENDA 01 02 03 04 23Q2 Business 23Q2 Operational Q and A Appendix Update and Financial Review
Slide 21: Agenda
AGENDA 01 02 03 04 23Q2 Business 23Q2 Operational Q and A Appendix Update and Financial Review
Slide 22: Same-Hotel Operational Data by Segment
22 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 June 30, June 30, June 30, June 30, yoy change yoy change yoy change (p.p.) 2022 2023 2022 2023 2022 202
Slide 23: Number of Hotels and Rooms
23 Number of Hotels and Rooms ꂊ䏅侨ꆀㄤ䨻ꢂ侨ꆀ As of June 30, 2023 Total Hotels Rooms Unopened hotels in operation in pipeline Economy hotels 4,872 392,231 1,092 HanTing Hotel 3,340 297,682 700 Hi Inn 442 23,650 160 NiHao Hotel 213 15,583 188 Elan Hotel 642 31,102 1 Ibis Hotel 219 22,318 30 Zleep Hotels 16