H World Group (NASDAQ:HTHT) reported higher first-quarter revenue and profit, citing continued hotel network expansion, improving revenue per available room in China and stronger contributions from its asset-light managed and franchised business.
Chief Executive Officer Jin Hui said China’s domestic travel demand “gained a solid momentum” in 2026, helped by higher railway and aviation cross-region traffic, rising tourism spending and the rollout of spring breaks in several regions around the Qingming Festival and May Day holidays. He also said expanded visa-free policies continued to support inbound tourism, adding another growth driver for China’s hospitality industry.
Revenue and Profit Rise in the Quarter
Chief Financial Officer Arthur Yu said group revenue increased 11.1% year over year to CNY 6.0 billion in the first quarter. H World China, or HWC, revenue rose 12.4% to CNY 5.0 billion, primarily due to steady network expansion and continued RevPAR recovery. H World International, or HWI, revenue increased 5.1%, partially helped by favorable foreign exchange rates.
Group adjusted EBITDA rose 24.2% year over year to CNY 1.9 billion, while the adjusted EBITDA margin expanded 3.3 percentage points to 31.0%. Adjusted net income increased 38.6% to CNY 1.1 billion, with adjusted net income margin rising 3.5 percentage points to 17.9%.
Yu said the profit improvement was mainly driven by a growing contribution from the company’s asset-light business. H World’s managed and franchised business revenue increased 20.3% year over year to CNY 3.0 billion, while gross operating profit for that business rose 20.7% to CNY 1.9 billion, with a gross operating margin of 63.6%.
The company generated CNY 233 million in operating cash flow during the quarter. As of quarter-end, H World held CNY 15.8 billion in cash and cash equivalents and had a net cash position of CNY 9.6 billion, which Yu said provides support for future shareholder return arrangements.
China RevPAR Improves as Network Expands
In China, H World’s blended RevPAR increased 3.0% year over year in the first quarter, representing sequential improvement from the fourth quarter of 2025. Jin said the gain was driven by a 4.5% increase in average daily rate, supported by product upgrades, revenue management improvements and what he described as a more rational competitive environment.
Group hotel gross merchandise value rose 17.4% year over year to RMB 26.4 billion, supported by a 14.1% increase in rooms in operation. Room nights booked by members grew 10.7% year over year to 60 million.
H World China had 13,095 hotels in operation at the end of the first quarter and 2,865 hotels in the pipeline. Its operating and pipeline hotels covered 1,461 cities in China, as the company works toward its goal of 2,000 cities and 20,000 hotels.
Jin said H World continues to focus on the mass market through its economy and midscale brands. He cited ongoing upgrades to HanTing and JI Hotel, as well as the launch of Hi Inn, as efforts to strengthen the company’s position in China’s economy and midscale hotel market.
Upper-Midscale and International Segments Remain Focus Areas
Jin said the upper-midscale segment is an important part of H World’s strategy. At the end of the first quarter, H World China’s upper-midscale hotels in operation and in the pipeline totaled 1,658, up 14.4% year over year. The company is pursuing a multi-brand strategy centered on Intercity, Grand Mercure, Crystal Orange and Mercure.
In response to an analyst question, Jin said first-quarter RevPAR recovery in the upper-midscale segment was “slightly better” than in the economy and midscale segments. He said the company is focusing more on flagship stores in core districts of Tier 1 and Tier 2 cities to build brand influence.
For H World International, first-quarter RevPAR increased 5.0% year over year, driven by a 1.6% rise in ADR and a 2.1 percentage-point improvement in occupancy. Jin said the company has made early progress in Asia-Pacific, using Singapore as an operational hub and expanding into Southeast Asian markets including Vietnam, Laos and Cambodia.
The company has opened six hotels in Southeast Asia across brands including HanTing, JI Hotel, Intercity and MAXX. Jin highlighted the first overseas HanTing, opened in Ho Chi Minh City in late 2025, which recorded nearly RMB 500 RevPAR in the first quarter. He also noted the opening of the first overseas JI 5.0 hotel in Vientiane, Laos.
Management Addresses Demand, Costs and Shareholder Returns
During the question-and-answer session, Jin said leisure travel demand in China has continued to grow after reopening, supported by consumer behavior, government policies and inbound tourism. He said trip volumes are increasing steadily, although overall spending remains affected by fluctuations in consumption power.
Jin said rising energy costs have not had a clear negative impact on domestic travel demand, partly because of the spread of new energy vehicles in China. He said H World maintained its full-year 2026 guidance for a slight increase in RevPAR.
On hotel openings, Jin said H World China gross opened 537 hotels in the first quarter, a level he described as high compared with historical performance. He said net openings were affected by the late timing of the Spring Festival, but both gross and net openings were in line with expectations. The company maintained its full-year opening and closure guidance, though specific figures were not provided on the call.
Yu said H World expects adjusted EBITDA margin for its hotel business to continue improving steadily as it advances its asset-light strategy. He also cited revenue management, cost controls and rent reductions in the leased and owned business. For H World International, particularly Deutsche Hospitality, Yu said the company is continuing cost reduction initiatives and reviewing cost structures to improve efficiency.
Asked about the Middle East conflict, Yu said the impact on H World International was limited in the first quarter. He said HWI has only 10 managed hotels in the Middle East, with relatively small revenue and profit contributions, and that energy cost increases in Europe remain manageable so far.
On shareholder returns, management said H World has a strong balance sheet and stable cash flow, and will maintain its shareholder return plan. The company did not announce new return details on the call.
About H World Group (NASDAQ:HTHT)
H World Group, formerly known as Huazhu Group, is a leading hotel management and franchising company primarily serving the China market. The company operates a broad portfolio of midscale to luxury hotel brands, including Hi Inn, Blossom, Manxin, Madison International, Joya, Grand Mercure, Novotel, Mercure and ibis. Through a network of both directly managed and franchised properties, H World Group caters to business and leisure travelers by offering consistent service standards and loyalty benefits across its brands.
In addition to its core hotel operations, H World Group provides technology-driven hospitality solutions such as centralized reservation systems, revenue management platforms and customer relationship management tools.
