HTHT.US 1179.HK

The latest: Hotel operator H World Group Ltd. (HTHT.US; 1179.HK) reported Tuesday that revenue per available room (Revpar) for its legacy Huazhu business in the second quarter reached 121% of pre-pandemic levels in 2019. Its best performance came in May, when Revpar, a standard hotel industry benchmark, reached 127% of 2019 levels.

Looking up: Thanks to rising confidence level of franchisees, H World’s new hotel signings rebounded further to more than 1,000 in the second quarter, and the company operated 8,750 hotels at the end of June, with a further 2,845 hotels yet to open.

Take Note: The company’s average daily room rate for the second quarter was 305 yuan ($42.6), 28.9% higher than the same period in 2019, but its occupancy rate dropped 5.1 percentage points to 81.8% when compared with the same quarter four years ago.

Digging Deeper: H World, a China-based international hotel group listed in New York and Hong Kong, operated nearly 810,000 rooms at the end of last year through a mix of leased, owned, managed and franchised hotels. Its low-cost Hanting chain is the backbone of its business, and it operates higher-end brands like Mercure, Ibis and Ibis Styles in China through a strategic partnership with France’s Accor (AC.PA). The company has posted net losses for the past three years due to the Covid epidemic, but its operating performance began to improve significantly earlier this year as people’s desire to travel increased.

Market Reaction: H World’s New York-listed shares dropped 0.2% on Tuesday after the announcement. Its Hong Kong-listed shares slipped more on Wednesday to close down 2.9% at HK$33.2 by the midday break. They now trade in the middle of their 52-week range.

Translation by A. Au

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