H World Group Limited ((HTHT)) has held its Q3 earnings call. Read on for the main highlights of the call.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
The recent earnings call of H World Group Limited painted a cautiously optimistic picture for the company. While the call highlighted several positive outcomes, such as strong membership growth, revenue and profit increases, and successful expansion in the upper-midscale segment, there were also concerns regarding the sustainability of RevPAR stability and moderate future revenue growth. Overall, the highlights slightly outweighed the lowlights, suggesting a positive yet cautious outlook for the company.
Strong Membership Growth
The company reported a significant increase in its membership base, which exceeded 300 million by the end of the third quarter, marking a 17.3% year-over-year growth. This growth has been a substantial contributor to the company’s performance, with 74% of total room nights sold attributed to members.
Revenue and Profit Growth
H World Group saw an impressive growth in revenue and profit, with group revenue rising by 8.1% year-over-year to RMB 7 billion. Additionally, the group’s adjusted EBITDA increased by 18.9% year-over-year to RMB 2.5 billion, alongside a margin improvement of 3.3 percentage points to 36.1%.
Expansion in Upper-Midscale Segment
The company continued its successful expansion in the upper-midscale segment, with the number of hotels in operation and pipeline exceeding 1,600, reflecting a 25.3% year-over-year increase. This growth was bolstered by the launch of a new brand, Ji Icons.
High-Quality Network Expansion
H World Group achieved a 17.3% year-over-year increase in the number of rooms in operation, contributing to a group hotel GMV growth of 17.5% year-over-year to RMB 30.6 billion, showcasing the company’s robust network expansion.
RevPAR Stability Concerns
Despite the positive growth metrics, there are concerns about the sustainability of RevPAR stability. The RevPAR remained largely stable compared to the same period last year, but macro uncertainties and weak business demand pose potential risks.
Moderate Future Revenue Growth Guidance
Looking ahead, H World Group anticipates a moderate revenue growth of 2% to 6% for the fourth quarter of 2025 compared to the same quarter last year. While this indicates continued growth, it is more modest than previous quarters.
Forward-Looking Guidance
During the earnings call, H World Group provided forward-looking guidance, noting a year-over-year revenue growth of 8.1% to RMB 7 billion, surpassing previous expectations. The company highlighted robust growth in its manachised and franchised business, with revenue increasing by 27.2% year-over-year. Looking forward, the company expects group revenue growth of 2% to 6% for the fourth quarter of 2025, with manachised and franchised revenue projected to grow between 17% and 21%.
In summary, H World Group Limited’s earnings call reflects a cautiously optimistic outlook, with strong membership and revenue growth, as well as successful expansion efforts. However, concerns about RevPAR stability and moderate future revenue growth temper the overall positive sentiment. Investors and stakeholders should keep an eye on these dynamics as the company navigates the challenges and opportunities ahead.