H World Group Ltd Q2 2025 Earnings Call: Asset-Light Business Leads Growth Amid Industry Challenges

H World Group Ltd (HTHT) Q2 2025 earnings call highlights strong growth in asset-light business despite industry challenges. The company's H Rewards membership program saw a 17.5% increase in members, reaching nearly 290 million. Asset-light manachised and franchised business revenue rose 22.8% YoY to RMB2.9 billion. The company launched HanTing 4.0, a revolutionary supply chain reform, and declared a USD250 million interim cash dividend. However, the hotel industry faces challenges due to rapid increases in hotel supply and macroeconomic factors. The leased and owned business declined, with revenue and gross operating profit decreasing by 7.6% and 13.4% YoY, respectively.

H World Group Ltd (HTHT) reported robust second-quarter (Q2) 2025 earnings, showcasing strong growth in its asset-light business model despite industry challenges. The company's Q2 hotel turnover increased by 15.0% year-over-year (YoY) to RMB 26.9 billion [1]. Asset-light manachised and franchised business revenue surged 22.8% YoY to RMB 2.9 billion [2].

Key highlights from the earnings call include:

- H Rewards Program Growth: The company's loyalty program, H Rewards, saw a 17.5% increase in members, reaching nearly 290 million [2].
- Supply Chain Reform: H World Group launched HanTing 4.0, a revolutionary supply chain reform aimed at enhancing operational efficiency [2].
- Dividend Declaration: The company declared a USD250 million interim cash dividend, reflecting its commitment to shareholder returns [1, 2].
- Challenges in Leased and Owned Business: Despite the overall growth, the leased and owned business segment faced challenges, with revenue and gross operating profit declining by 7.6% and 13.4% YoY, respectively [2].

The asset-light strategy, which focuses on franchising and managing hotels without owning the underlying real estate, has proven effective in driving growth. Manachise and franchise hotels now account for 64% of total gross operating profit, up from 57% in the prior year [1]. This shift towards higher-margin segments is evident in the company's financial performance.

H World Group's network expansion continued unabated, with 595 new hotels added in Q2 2025, bringing the total to 12,137 hotels globally [2]. This aggressive expansion is crucial for compensating for any softness in same-store performance and maintaining the company's growth trajectory.

However, the hotel industry faces significant challenges, including rapid increases in hotel supply and macroeconomic factors. Despite these challenges, H World Group's strategic pivot towards an asset-light business model has delivered impressive results, validating its approach.

References:

[1] https://www.stocktitan.net/news/HTHT/h-world-group-reports-robust-q2-results-driven-by-asset-light-4ebitlefaqvt.html
[2] https://www.nasdaq.com/press-release/h-world-group-reports-robust-q2-results-driven-asset-light-strategy-2025-08-20