Slide 1: Second Quarter of 2024 Earnings Call
Second Quarter of 2024 Earnings Call H World Group Limited (NASDAQ: HTHT and HKEX: 1179) August 21, 2024
Slide 2: Agenda
AGENDA 01 02 03 04 24Q2 Business 24Q2 Operational Q and A Appendix Update and Financial Review
Slide 3: Legacy-Huazhu Reached 10,000-Hotel Milestone
3 Legacy-Huazhu Reached 10,000-Hotel Milestone 华住中国第一万家酒店开业 H World
Slide 4: Legacy-Huazhu - Blended RevPAR Decreased 2.0% YoY
4 Legacy-Huazhu - Blended RevPAR Decreased 2.0% YoY 华住中国-2024年二季度混合RevPAR同比下降2.0% ADR (RMB) OCC RevPAR (RMB) -2.9% +0.7p.p. -2.0% 305 296 82.6% 250 81.8% 244 Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 5: RevPAR Outperformance and Future Growth Drivers
5 RevPAR Outperformance and Future Growth Drivers 优于行业的RevPAR表现及未来可持续增长 Product Upgrade Service Excellence Membership Program H W or ld
Slide 6: Accelerated Network Expansion in China
6 Accelerated Network Expansion in China 酒店网络加速扩张 Number of Hotel Opening Number of Hotel Closure Number of Hotel in Pipeline Total hotel closure (as of Jun 30) Hotel closure excl. low quality economy soft brand and Hanting 1.0 3,266 567 216 2,808 374 101 86 58 Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 *
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 经济型及中档酒店为核心，服务大众市场 Number of Hotels in Operation Number of Hotels in Pipeline Number of Hotel Opening (as of Jun 30) (as of Jun 30) Economy Midscale Upper midscale and above Economy Midscale Upper midscale and above Economy Midscale
Slide 8: Consistent Product Upgrade - Hanting
8 Consistent Product Upgrade - Hanting 品牌的持续升级 - 汉庭 Proportion of Hanting 3.5 and Above in Operation Hanting 3.5 and above 36.3% 29.8% 19.5% 13.3% 11.8% 2020 2021 2022 2023 Q2'24 * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 9: Consistent Product Upgrade - JI
9 Consistent Product Upgrade - JI 品牌的持续升级 - 全季 Proportion of JI 4.0 and Above in Operation JI 4.0 and above 71.2% 65.7% 56.1% 45.3% 30.0% 2020 2021 2022 2023 Q2'24 * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 10: Consistent Product Upgrade - Orange
10 Consistent Product Upgrade - Orange 品牌的持续升级 - 桔子 Proportion of Orange LOHAS in Pipeline Others LOHAS 315 324 58.4% 90.1% 41.6% 9.9% 2023 Q2'24 H W or ld
Slide 11: Continuous Penetration in Lower Tier Cities in China
11 Continuous Penetration in Lower Tier Cities in China 持续渗透低线城市 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 3,266 10,150 2,808 2,000 8
Slide 12: HI Inn 6.0 Sleep Well & Spend Less
12 HI Inn 6.0 Sleep Well & Spend Less 海友6.0 睡得好 花得少 H W or ld
Slide 13: Further Development of Upper-Midscale Segment
13 Further Development of Upper-Midscale Segment 不断发展中高档品牌 Number of Upper-Midscale Hotels Number of Upper-Midscale Hotels Multi-Brand Strategy for in Operation in Pipeline Upper-Midscale Segment +31%YoY +61%YoY +8%QoQ +18% QoQ 738 509 686 430 562 317 Q2'23 Q1'24 Q2'24 Q2'23 Q1'24 Q2'24 * Numbers in
Slide 14: Strengthening Direct B2B Sales Capability
14 Strengthening Direct B2B Sales Capability 华住商旅的不断加强 Direct Room Nights Number of Active Booked via B2B Corporate Clients 6mn+ 3,600+ +31% YoY +47% YoY +26% QoQ +36% QoQ * Numbers in this page refers to Legacy-Huazhu business H W or ld
Slide 15: Legacy-DH - Blended RevPAR Increased 4.5% YoY
15 Legacy-DH - Blended RevPAR Increased 4.5% YoY DH-2024年二季度混合RevPAR同比增长4.5% ADR (EUR) OCC RevPAR (EUR) +2.7% +1.2p.p. +4.5% 120 82 117 67.1% 68.3% 78 Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 * Numbers in this page refers to Legacy-DH business H W or ld
Slide 16: Legacy-DH - Uncovering Global Opportunities
16 Legacy-DH - Uncovering Global Opportunities DH - 积极推进国际化发展 Hotels in Operation, by region Hotels in Pipeline, by region (as of Jun 30 2024) (as of Jun 30 2024) Germany Europe (excl. Germany) Africa Asia Germany Europe (excl. Germany) Africa Asia 8% 18% 13% 7% 39% 53% 26% 36% * Numbers in this pag
Slide 17: Agenda
AGENDA 01 02 03 04 24Q2 Business 24Q2 Operational Q and A Appendix Update and Financial Review
Slide 18: Hotel Network Continues to Expand
18 Hotel Network Continues to Expand 酒店网络持续扩张 Hotel Network Expansion Hotel Turnover (Number of rooms in operation) (in RMB millions) +19% +15% 1,001,865 23,407 Legacy-DH 844,417 20,274 Legacy-DH 27,552 2,058 Legacy-DH Legacy-DH 26,172 1,908 Legacy-Huazhu Legacy-Huazhu Legacy-Huazhu 974,313 818,245
Slide 19: Revenue: Q2'24 Increased 11%, At the High-End of Guidance
19 Revenue: Q2’24 Increased 11%, At the High-End of Guidance 营收二季度同比增长11%，位于指引上限 In million RMB 2Q24 2Q23 YoY 1Q24 QoQ Revenue from Legacy - Huazhu 4,828 4,347 11.1% 4,245 13.7% Ӫ Legacy-Huazhu revenue increased 11% YoY, at the high-end of our guidance, driven - Leased & Owned Hotels 2,395 2,466 -2.
Slide 20: Increasing Revenue Contribution from Asset-Light Model
20 Increasing Revenue Contribution from Asset-Light Model 轻资产收入占比持续提升 Legacy-Huazhu Revenue Breakdown in Q2’ 23 Legacy-Huazhu Revenue Breakdown in Q2’ 24 Leased and owned hotels Manachised and franchised hotels Others Leased and owned hotels Manachised and franchised hotels Others 1% 3% 42% 49% 57%
Slide 21: Operating Income Achieved RMB1.6 Billion in Q2'24
21 Operating Income Achieved RMB1.6 Billion in Q2’24 二季度经营利润达到人民币16亿元 Ӫ The YoY increase of hotel operating cost was In million RMB 2Q24 2Q23 YoY 1Q24 QoQ mainly due to our hotel network expansion, as Hotel operating costs 3,731 3,482 7.2% 3,565 4.7% well as less rental reduction. - Legacy-Huazhu 2,
Slide 22: Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow
22 Adjusted EBITDA, Adjusted Net Income and Operating Cash Flow 经调整后的EBITDA，净利润以及经营性净现金流情况 Ӫ Legacy-Huazhu’s adj. EBITDA and adj. net In million RMB 2Q24 2Q23 YoY 1Q24 QoQ income improved both YoY and QoQ, thanks to continued business growth and Adjusted EBITDA* 2,040 1,772 15.1% 1,421 43.6% our ass
Slide 23: Liquidity Position Update
23 Liquidity Position Update 流动性情况更新 Cash Balance Net Cash Unutilized (incl. Time Deposits) (incl. Time Deposits) Bank Facilities RMB9.9 bn RMB4.3 bn RMB3.1 bn * As of June 30, 2024 H W or ld * Cash balance and net cash position includes RMB1.7 bn time deposits and financial products
Slide 24: Shareholders Return Plan
24 Shareholders Return Plan 股东回报计划 • Ordinary Dividends § Semi-annually § No less than 60% of the net income each year Up to US$2bn • Special Dividends in the next 3 years • Share Repurchase § Five-year repurchase program § Aggregate amount of up to US$1bn H W or ld
Slide 25: January-July 2024 Shareholder Return
25 January-July 2024 Shareholder Return 2024年1-7月股东回报情况 2024 Interim Share Repurchase Cash Dividend ~USD200 mn ~USD143 mn * Cash dividend was announced in July 2024 H W or ld
Slide 26: Guidance
26 Guidance 业绩指引 Q3 Revenue vs. Q3 2023 • Grow 2%-5% • Excluding DH - Grow 1-4% 2024 Revised up our gross opening target from ~1,800 to 2,200+ for the year H W or ld
Slide 27: Agenda
AGENDA 01 02 03 04 24Q2 Business 24Q2 Operational Q and A Appendix Update and Financial Review
Slide 28: Agenda
AGENDA 01 02 03 04 24Q2 Business 24Q2 Operational Q and A Appendix Update and Financial Review
Slide 29: Same-Hotel Operational Data by Segment
29 Same-Hotel Operational Data by Segment 同店经营数据 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 June 30, June 30, June 30, June 30, yoy change yoy change yoy change (p.p.) 2023 2024 2023 2024
Slide 30: Number of Hotels and Rooms
30 Number of Hotels and Rooms 酒店数量和房间数量 As of June 30, 2024 Total Hotels Rooms Unopened hotels in operation in pipeline Economy hotels 5,288 433,604 1,220 HanTing Hotel 3,883 341,015 816 Hi Inn 512 26,183 234 NiHao Hotel 348 25,935 148 Elan Hotel 299 15,734 - Ibis Hotel 228 22,582 11 Zleep Hotels 18