In the first quarter of 2025, H World Group Limited, a prominent player in the global hotel industry, reported its financial results reflecting a complex mix of growth and challenges. The company showcased an extensive network comprising 11,685 hotels globally with over 1.1 million rooms. Notably, Legacy-Huazhu contributed significantly to this network with 11,564 operational hotels while Legacy-DH added another 121. Despite robust expansion efforts, particularly within China where 694 new hotels were opened, there was a cautious approach due to macroeconomic uncertainties. Revenue for the quarter amounted to RMB5.4 billion (US$744 million), marking a modest year-over-year increase but a notable quarter-over-quarter decline.

H World Group's operations during the first quarter of 2025 highlighted both achievements and hurdles. The company successfully expanded its hotel network by opening 694 new establishments in China alone, contributing significantly to its target of approximately 2,300 gross hotel openings for the entire year. This growth was primarily driven by the Legacy-Huazhu segment, which operates under various models including leased and owned, manachised, and franchised hotels. By March 31, 2025, Legacy-Huazhu managed 11,564 hotels globally, featuring 552 leased and owned properties alongside 11,012 manachised and franchised ones.

Despite these advancements, financial performance revealed mixed outcomes. Total revenue reached RMB5.4 billion (US$744 million), representing a slight year-over-year increase but a more pronounced drop compared to the previous quarter. A key factor influencing this trend was the strategic shift towards lighter asset ownership, evident in the reduction of leased and owned hotel revenues by 10%. Meanwhile, income from manachised and franchised hotels surged by 21.1%, underscoring the effectiveness of this business model. Operating costs increased marginally by 1.1% year-over-year, attributed mainly to Legacy-Huazhu’s expansion activities.

Legacy-DH, focusing on international markets outside China, also demonstrated progress albeit with differing dynamics. For the same period, it operated 121 hotels with 25,758 rooms, showing improvements in RevPAR, ADR, and occupancy rates. Specifically, RevPAR saw a year-over-year increase of 12.7%, driven by enhanced ADR and higher occupancy levels. These positive trends were supported by cost optimization measures and restructuring efforts that led to reduced SG&A expenses by 11.1%.

The overall profitability improved as net income attributable to H World Group rose by 35.7% year-over-year to RMB894 million (US$123 million). Adjusted EBITDA stood at RMB1.5 billion (US$206 million), reflecting steady operational efficiency despite challenging external conditions. Cash flow management remained strong, with operating cash inflow totaling RMB580 million (US$80 million) and investing cash inflow reaching RMB757 million (US$103 million).

Looking ahead, H World anticipates moderate revenue growth between 1% to 5% for the second quarter compared to the same period last year. Management remains optimistic about sustaining momentum through continued emphasis on high-quality network expansion, brand positioning enhancements, and service excellence initiatives centered around its loyalty program, H Rewards.

As the hospitality sector navigates ongoing uncertainties, H World's commitment to innovative strategies and disciplined execution positions it favorably for future success. The balance between aggressive market penetration and prudent fiscal management underscores the company's resilience and adaptability in an ever-evolving industry landscape.