Total Revenue: Increased 9.2% year-over-year to RMB23.9 billion for the full year 2024. Legacy-Huazhu Revenue: Grew 9.1% year-over-year to RMB19 billion for the full year 2024. Legacy-DH Revenue: Increased 9.6% year-over-year to RMB4.9 billion for the full year 2024. Adjusted EBITDA: Grew 8.8% year-over-year to RMB6.8 billion for the full year 2024. Core Adjusted EBITDA: Increased 13.9% year-over-year to RMB7.5 billion for the full year 2024. Adjusted Net Income: Increased 5.8% year-over-year to RMB3.7 billion for the full year 2024. Operational Cash Flow: Generated RMB7.5 billion in 2024. Hotel Openings: Record high of 2,442 new hotels opened in 2024. Hotel Closures: 668 closures in 2024, lower than 2023. RevPAR (Legacy-Huazhu): Decreased 3% to RMB235 in 2024. Occupancy Rate (Legacy-Huazhu): Improved by 0.2 percentage points to 81.2% in 2024. ADR (Legacy-Huazhu): Decreased 3.2% to RMB289 in 2024. RevPAR (Legacy-DH): Increased 5.9% to EUR76 for the full year 2024. Cash and Equivalents: RMB9 billion as of end 2024. Dividend Payout: USD300 million final cash dividend for the second half of 2024. Hotel Pipeline: 2,988 hotels in the pipeline by end of 2024.

Warning! GuruFocus has detected 5 Warning Signs with HTHT.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

H World Group Ltd (NASDAQ:HTHT) achieved a milestone of 10,000 hotels in 1,000 cities and counties in 2024. The company opened a record high of 2,442 new hotels during 2024, with significant contributions from Legacy-Huazhu. The upper-mid segment hotel network grew by 35% year-over-year in 2024, driven by strong development of Intercity and Crystal Orange brands. Asset-light revenue contribution exceeded 50% for the business in 2024, supporting stable and sustainable development. The company's membership base increased to nearly 270 million, with room nights generated through the central reservation system accounting for 66.4% of total bookings.

Negative Points

Legacy-Huazhu's blended RevPAR decreased slightly by 3% to RMB235 in 2024. ADR was down 3.2% to RMB289 due to a high base last year and increased supply. The number of motel closures in 2024 was 668, although lower than in 2023. Legacy-DH operating loss widened due to impairment loss and restructuring costs. The company expects a low single-digit decline in RevPAR for the first quarter of 2025 due to seasonality and weak performance in early March.

Q & A Highlights

Q: What is your outlook for RevPAR growth in Q1 and the full year of 2025? A: Hui Jin, Chief Executive Officer: We expect a low single-digit decline in RevPAR for Q1 2025 due to seasonality and weaker performance in early March. However, for the full year, we anticipate RevPAR to stabilize or slightly increase compared to 2024, driven by strong leisure travel demand and a potential recovery in business travel.

Story Continues

Q: Are there any strategic changes planned for DHL, and how should we view the earnings recovery? A: Jihong He, Chief Strategy Officer: In 2025, our strategy for DHL is to stabilize the business and improve performance through asset-light and organic growth. We expect the restructuring efforts from 2024 to pay off, leading to improved profitability. While we may incur some restructuring costs, they will not be as significant as in 2024.

Q: With a total shareholder return of nearly USD 800 million in 2024, should we expect higher dividend payouts if there are no buyback opportunities? A: Hui Chen, Chief Financial Officer: In 2024, we returned USD 770 million to shareholders, primarily through dividends and share buybacks. Moving forward, we will adhere to our three-year plan to return up to USD 2 billion, mainly through cash dividends, supported by our asset-light model and strong cash flow generation.

Q: How did Legacy-DH perform in 2024, and what are the expectations for 2025? A: Jihong He, Chief Strategy Officer: Legacy-DH's RevPAR improved by 5.9% in 2024, driven by occupancy and ADR increases. We implemented cost-cutting and restructuring, reducing headquarters staff by 30% and exiting 14 leased hotels. In 2025, we aim to enhance hotel operations, reduce overhead, and pursue an asset-light strategy to improve profitability.

Q: Can you elaborate on the asset-light strategy and its impact on financial performance? A: Hui Chen, Chief Financial Officer: Our asset-light strategy led to a 40% revenue contribution from franchised hotels in 2024, up from 35% in 2023. This shift supports margin expansion and strong cash flow generation. We expect this trend to continue, enhancing our resilience and profitability through economic cycles.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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