Blended RevPAR ρecovers to 118% of 1Q19.
SINGAPORE and SHANGHAI – H World Group announced financial results for the first quarter of 2023. In 1Q 2023, H World captured the strong hotel industry recovery and reported hotel turnover of RMB16.2bn, representing 71.3% YoY increase.
In the first quarter, H World’s revenue reached RMB4.5bn, representing a 21% QoQ growth and an increase of 67.1% YoY from RMB2.68bn in the same quarter last year. The reported revenue exceeded company’s previous guidance and surpassed its pre-COVID level. Adjusted EBITDA turned positive to RMB1.7bn, compared to a loss of RMB333mn in 1Q 2022. For the Legacy-Huazhu business, average daily room rate (“ADR”) grew 23.9% YoY to RMB277 from RMB224 in the same period last year, and occupancy rate improved by 16.4ppts YoY to 75.6%.
Jin Hui, CEO of H World commented: “The company’s solid result in the first quarter was largely driven by pend-up demand, a combination of product mix change and continued product upgrades, as well as market penetration and synergy through regional offices.”
RevPAR Recovery Exceeds Expectation
With the gradual recovery of China’s consumption and travelling activates, together with some consumption stimulus measures introduced in various provinces, Legacy-Huazhu’s blended RevPAR grew to RMB210 in 1Q 2023, from only RMB132 in 1Q 2022, and recovered to 118% of 1Q 2019 level. Breaking down into monthly numbers, RevPAR in January, February and March 2023 recovered to 96%, 140% and 120% of the 2019 levels of the corresponding months, respectively.
In the first quarter, Legacy-Huazhu signed up 672 new hotels, up 26% YoY, but closed 209 hotels in the same period. The hotel closure primarily reflects the delayed hotel closure processes in 4Q22 due to COVID impacts, as well as Huazhu’s proactive approach of tightening the new hotel opening requirements and removing interior hotels from the network.
Launches Orange Hotel 3.0, Introducing the “LOHAS” Concept
H World continued implementing its sustainable quality growth strategy. To further improve the quality of the hotel portfolio, H World closed more inferior economy soft brands and HanTing 1.0 version hotels, and achieved further breakthrough in the midscale and upper-midscale segments. In the midscale segment, H World launched Orange Hotel 3.0 version, which embraces the rising demand of “Lifestyles of Health and Sustainability (LOHAS)” concept. In the upper-midscale segment, H World launched DH’s Intercity Hotel brand in China, which offers ultimate business travel experience. H World has successfully opened new Intercity Hotels in Shenzhen, Wuhan, Shanghai and Zhengzhou. The new openings marked an important first step for Intercity brand’s future development in China where the brand is inherited and further evolved.
On the overseas business front, Legacy-DH’s 1Q 2023 RevPAR recovered to 94% of 2019 level.
H World expects revenue to grow 51-55% YoY in the Second Quarter
In the second quarter, H World continues focusing on the sustainable growth strategy, and expects its revenue growth to be in the range of 51%-55% YoY. The full year expectation remains unchanged with expectation of 1,400 gross hotel openings and 42-46% YoY revenue growth.
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