H World Group’s 2026 RevPAR Guidance and Hotel Expansion Targets Clash in Contradictory Earnings Call Signals

Date of Call: Mar 18, 2026

Financials Results

• Revenue: CNY 25.3 billion, up 5.9% YOY

Guidance:

• Group revenue expected to grow 2%-6% YOY in 2026 (5%-9% growth excluding DH).
• Managed and franchised revenue expected to grow 12%-16% YOY.
• Expect to open 2,200-2,300 hotels and close 600-700 hotels, representing 12% YOY network growth.

Business Commentary:

Revenue Growth and Network Expansion:

• H World Group reported group revenue growth of 5.9% year-over-year to CNY 25.3 billion in 2025.
• The revenue increase was driven by high-quality network expansion and stabilized RevPAR performance, particularly through the growth of its managed and franchised business, which saw a 23.1% increase in revenue.

Managed and Franchised Business Performance:

• The managed and franchised revenue increased by 23.1% year-over-year to RMB 11.7 billion, with gross operating profit rising by 20.8% to RMB 7.6 billion.
• This growth was supported by network expansion and effective revenue management strategies.

Legacy-DH Business Turnaround:

• Legacy-DH achieved a record level of adjusted EBITDA of around CNY 500 million, marking a significant improvement from the previous year.
• This turnaround was due to successful execution of a business transformation plan, including revenue management adjustments, cost reduction initiatives, and portfolio restructuring.

Shareholder Returns and Financial Health:

• H World Group generated RMB 8.4 billion operating cash flow in 2025, with a strong cash position of RMB 15.4 billion in cash and cash equivalents.
• The company declared a $400 million cash dividend for the second half of 2025, contributing to a total shareholder return of around $760 million for the year, reflecting a commitment to returning value to shareholders.

Strategic Focus on Brand Development and Market Penetration:

• The group's hotel GMV grew by 16.4% year-over-year to CNY 108.1 billion, driven by a 16.2% increase in the number of rooms in operation.
• This expansion was supported by a strategic focus on economy and mid-scale segments, as well as deeper penetration into lower-tier cities and rural areas.

Sentiment Analysis:

Overall Tone: Positive

• Management reported solid results, stating 'We are pleased to see' RevPAR growth and 'delivered solid business results.' They are 'cautiously optimistic' for 2026 RevPAR, expect continued growth, and highlighted successful turnaround in Legacy-DH with 'record level of adjusted EBITDA.'

Q&A:

• Question from Dan Chi (Morgan Stanley): Can you share the direction of Arthur Yu's new role and expected changes to financial/growth strategy?
  Response: The appointment aims to bring专业化, young化, and international化 management to help achieve the vision of becoming a world-class hotel group.

• Question from Ronald Leung (Bank of America): What is the implied RevPAR expectation in 2026 guidance, and what is the supply/demand outlook?
  Response: Management is cautiously optimistic and targets a flat to slightly positive YOY RevPAR growth for 2026.

• Question from Simon Cheung (Goldman Sachs): What is the 2026 opening plan, and are there targets for the new HanTing Inn brand?
  Response: Guidance is to open 2,200-2,300 hotels, maintaining high-quality growth. HanTing Inn and HanTing together serve the mass market; the brand is part of a strategy to upgrade and purify the core brand.

• Question from Xin Chen (UBS): What is the further asset-light transformation plan for DH and its future network/financial targets?
  Response: Continuing portfolio restructuring (rental reduction, lease renegotiation, exiting loss-making properties) and exploring development of limited-service hotels internationally, with Europe as a core market.

• Question from Sijie Lin (CICC): What are the plans for shareholder returns following the strong 2025?
  Response: The company remains committed to returning capital via dividends and share repurchases.

• Question from Lydia Ling (Citigroup): What are the plans for the upper mid-scale segment in 2026 and the longer term?
  Response: This segment is a strategic focus; the multi-brand strategy (four core brands) aims to become a leader in the upper mid-scale sector by 2030.

Contradiction Point 1

2026 RevPAR Growth Outlook

Contradiction on providing specific color for 2026 versus only an internal target.

Ronald Leung (Bank of America) - Ronald Leung (Bank of America)

2025Q4: For 2026, the company is cautiously optimistic and has an internal target for RevPAR to achieve a flat to slightly positive year-over-year growth. - [Hui Jin](CEO)

What is the implied rough expectation for 2026 revenue guidance, and could management comment on the overall supply-demand outlook, including supply growth and business/leisure demand? - Dan Chee (Morgan Stanley)

2025Q3: It is too early to provide specific color; the company will share more on Q4 earnings. - [Hui Jin](CEO)

Contradiction Point 2

Hotel Opening Pace for 2026

Contradiction on the strategy for quality vs. scale growth impacting opening numbers.

Simon Cheung (Goldman Sachs) - Simon Cheung (Goldman Sachs)

2025Q4: The guided opening is 2,200–2,300 hotels, maintaining a high level of expansion under the quality-first strategy. - [Hui Jin](CEO)

What is the planned pace of hotel openings for 2026, considering last year’s strong performance, and what are the plans for future store openings of the new HanTing Inn brand? - Simon Cheung (Goldman Sachs Group, Inc., Research Division)

2025Q3: The company may open slightly more than 2,300 hotels for the full year, but the focus remains on quality expansion over pure scale. - [Hui Jin](CEO)

Contradiction Point 3

RevPAR Outlook and Market Recovery Timeline

RevPAR guidance shifts from a slight decline expectation to flat/slightly positive growth.

Ronald Leung (Bank of America) - Ronald Leung (Bank of America)

2025Q4: For 2026, the company is cautiously optimistic and has an internal target for RevPAR to achieve a flat to slightly positive year-over-year growth. - [Hui Jin](CEO)

What is the implied expectation for 2026 revenue guidance, and could management comment on the 2026 supply-demand outlook, including supply growth and business/leisure demand? - Ronald Leung (BofA Securities)

2025Q2: For Q3, RevPAR is expected to have a very slight year-over-year decline due to macro uncertainties and increased supply... - [Hui Jin](CEO)

Contradiction Point 4

Timeline for Resolving Older HanTing Hotel RevPAR Pressure

Specific timeframe for resolving RevPAR issues shifts from a clear 1-2 year estimate to being part of a broader, unspecified strategy.

Lydia Ling (Citigroup) - Lydia Ling (Citigroup)

2025Q4: The plan involves continuous new signings and major substitutions/upgrades of existing hotels. - [Hui Jin](CEO)

What are the plans for the upper mid-scale hotel segment in 2026 and the longer term, including any acceleration in expansion? - K. Y. Cheung (Goldman Sachs)

2025Q2: It will take approximately 1-2 years to resolve RevPAR pressure from older versions (2.0-2.5). The plan involves continuous new signings and major substitutions/upgrades of existing hotels. - [Hui Jin](CEO)

Contradiction Point 5

Deutsche Hospitality (DH) Profitability and Transformation Roadmap

Contradiction on the timeline and drivers for DH's financial improvement.

Xin Chen (UBS) - Xin Chen (UBS)

2025Q4: After a successful turnaround in 2025, DH will continue ongoing efforts... Now that the business is stabilized, the focus shifts to expanding the hotel network... The goal is to remain profitable in the years to come. - [Jihong He](CSO)

Could management share details on DH’s further asset-light transformation strategy, roadmap, and targets for future hotel network expansion and financial performance? - Lydia Ling (Citigroup)

2025Q1: To improve Legacy-DH profitability... EBITDA is expected to improve in Q2 and Q3. - [Jihong He](CSO)