H World Group Limited's Q3 2024 Financial Results: Strong Growth Driven by Expansion and Brand Strategy

H World Group Limited's Third Quarter 2024 Financial Results

H World Group Limited, trading on NASDAQ as HTHT and on HKEX as 1179.HK, recently released its unaudited financial results for the third quarter of 2024 (Q3 2024). The results indicate noteworthy growth both in revenue and hotel turnover, emphasizing the Group's strong market presence and strategic initiatives in a competitive landscape.

Financial Highlights

During Q3 2024, H World's revenue saw an increase of 2.4% year-over-year, amounting to RMB 6.4 billion. This growth was largely attributed to the performance of the Legacy-Huazhu segment, which reported a 1.0% increase in revenue compared to the previous year, while the Legacy-DH segment experienced more robust growth at 8.9% year-over-year. Additionally, the Group's hotel turnover rose by 10.7% year-over-year, reaching RMB 26.0 billion.

This performance is particularly impressive given the overall downturn observed in the industry, marking H World's resilience and competitive advantage in the market. The Group's net income for this quarter reached RMB 1.3 billion, significantly outpacing industry averages and reflecting H World's effectiveness in navigating the economic challenges.

Expansion and Operational Efficiency

A key aspect of H World's operation is its expansive reach, with a total of 10,845 hotels across 18 countries and an additional 2,925 hotels in the pipeline. CEO Jin Hui highlighted that the Group opened 774 new hotels in China during Q3 2024. The Group has implemented growth strategies that focus on maintaining high occupancy rates despite rapid expansion, with an occupancy rate of 85% reported in the third quarter. This balance of growth and quality is central to H World's strategic objectives going forward.

H World's commitment to high-quality growth is evident from its strategic focus on lower-tier cities, where the hotel supply has traditionally lacked quality offerings. As of the end of Q3 2024, hotels located in third-tier and lower-tier cities comprised 42% of Legacy-Huazhu's portfolio, indicating ongoing penetration into these emerging markets.

Diverse Brand Portfolio

H World boasts a portfolio of over 30 distinct brands, catering to various market segments from economy to luxury hotels. The success of proprietary brands like HanTing Hotel and JI Hotel is instrumental in securing a leading position within their price segments. The Group also continues to expand its brand matrix through acquisitions and partnerships, enhancing its competitiveness and ability to satisfy diverse consumer needs.

The mid-to-high-end segment has particularly benefited from changing consumer preferences, with a reported 33% year-over-year increase in mid-to-high-end hotel operations under Legacy-Huazhu, bringing the total to 803 hotels. This accommodation aligns with the rising demand for quality services amid an economic rebound, particularly among business travelers.

Moving Forward

In response to evolving market demands, H World has made significant adjustments, such as the recent enhancements to the Crystal Orange Hotel brand, focusing on business travelers and their need for quality sleep. With expectations of continued growth in global business travel spending—projected at $1.5 trillion for 2024—H World is poised to capitalize on this upward trend.

The Group is also expanding its presence internationally, particularly in the Asia-Pacific and Middle East regions, after acquiring Deutsche Hospitality as a stepping stone for further growth opportunities. By the close of Q3 2024, Legacy-DH had 138 operational hotels with more in the pipeline.

H World's strategic dedication to 'rooted in China, reaching the world' strengthens its position as a significant player in the global hotel market. With robust financial results, an expanding footprint, and strategic focus on brand quality and operational efficiency, H World Group Limited stands in a promising position for sustained success through future quarters and beyond.

In conclusion, H World Group Limited's Q3 2024 results are a testament to its successful balancing act between rapid expansion and quality service delivery. This approach not only fortifies its existing market position but also sets the foundation for future growth within the international hotel arena.