On August 17, H World Group released its unaudited results for the second quarter and first half of 2026. Revenue for the quarter reached RMB 7.121 billion, marking a 10.8% year-on-year increase, while net profit attributable to the group stood at approximately RMB 1.6 billion, up 2.1% from the same period last year. For the first half, revenue totaled RMB 13.117 billion, an 11.0% annual rise, with attributable net profit of roughly RMB 2.4 billion, staying nearly flat compared to the prior year.

Growth was primarily fueled by the domestic segment. In the second quarter, H World China (HWC) generated about RMB 5.9 billion in revenue, up 14.9% year over year, while overseas operations under HWI brought in roughly RMB 1.3 billion, a 5.8% decline. Total hotel turnover for the group reached RMB 30.5 billion, up 13.2% annually, with HWC posting a 15.3% gain and HWI dropping 9.4%. Hotel turnover represents the aggregate of room rates and non-room revenue across the group's properties, distinct from group-level revenue recognition.

For HWC in the second quarter, the average daily rate (ADR) rose to RMB 298 from RMB 290 a year earlier, though occupancy slipped from 81.0% to 79.8%. Revenue per available room (RevPAR) edged up 1.1% year on year to RMB 238, compared to RMB 235 in the prior-year period. However, for comparable hotels operating for at least 18 months, RevPAR fell 3.0% year on year to RMB 233, with ADR staying broadly flat and occupancy down 2.4 percentage points. While headline metrics improved, pressure persists on the existing hotel portfolio.

Expansion continues to lean on franchised and manachised models. HWC opened 498 new hotels and closed 176 during the quarter, bringing the group's total operating properties to 13,539 as of June 30, including 13,417 in China. Revenue from manachised and franchised operations reached RMB 3.586 billion in the second quarter, up 25.2% year on year, while directly operated and owned hotels generated RMB 3.233 billion, a 4.9% decline. In the first half, the former's revenue share climbed to 50.3% from 45.4% a year ago.

The shifting business mix also showed up in margin performance. Second-quarter operating profit hit RMB 2.2 billion, surging 24.1% year on year, with the operating margin expanding to 31.1% from 27.8%. Hotel operating costs grew 7.4% annually, trailing revenue growth. Meanwhile, income tax expenses increased to RMB 687 million from RMB 565 million, a factor that tempered the growth rate of attributable net profit relative to operating profit.

Overseas operations faced headwinds in the quarter. On a constant-dollar basis, HWI's ADR inched up to USD 139 from USD 137, but occupancy fell to 70.5% from 74.0%, dragging blended RevPAR down to USD 98 from USD 102. Management attributed the softness to the Middle East conflict and an expansion push into Southeast Asian markets, where room rates are lower and properties are still ramping up. HWI's adjusted EBITDA came in at RMB 131 million, down from RMB 164 million in the same period last year.

Looking ahead, H World Group raised its full-year guidance, now projecting group revenue growth of 4% to 8%, up from a prior range of 2% to 6%. Growth expectations for manachised and franchised revenue were also lifted to 16% to 20%, from 12% to 16%. While domestic store counts continue to climb, same-store performance and overseas occupancy trends will remain key determinants of future growth quality.