H World Group Reports Lower-Than-Expected Third-Quarter Results
H World Group Limited (HTHT) shares experienced a decline on Tuesday following the release of the company's third-quarter results, which fell short of analyst expectations.
Adjusted earnings per ADS came in at 61 cents, missing the consensus estimate of 69 cents. Quarterly sales of $918 million also fell below the anticipated $933.86 million.
Despite the lower-than-expected results, H World Group's revenue did experience a 2.4% year-over-year increase, aligning with the previously forecasted guidance of a 2% to 5% increase for the third quarter of 2024.
The company's Legacy-Huazhu segment saw a 1% year-over-year revenue growth, while the Legacy-DH segment experienced an 8.9% increase. As of September 30, 2024, H World Group operated 10,845 hotels with over one million rooms.
Revenue from leased and owned hotels declined by 4.8% year-over-year, while revenue from franchised hotels increased by 14.7%. Hotel turnover also saw a 10.7% year-over-year increase, and adjusted EBITDA reached $300 million in the quarter.
H World Group's cash and cash equivalents stood at $1 billion as of September 30, 2024, with restricted cash of $98 million.
Looking ahead, the company anticipates revenue growth of 1% to 5% for the fourth quarter, excluding the DH segment.
Jin Hui, CEO of H World Group, commented on the results, noting that the Legacy-Huazhu segment's blended RevPAR declined by 8% year-over-year due to a high ADR base and unfavorable weather. However, the occupancy rate remained solid at 85% despite the ongoing rapid hotel network expansion.
Hui also emphasized the company's plans to expand its presence across all regions and penetrate lower-tier cities in China, reaching more of the hotel market with high-quality products and excellent services.
Regarding international operations, Hui highlighted the 3.7% year-over-year blended RevPAR increase in the Legacy-DH business during the third quarter. The company continues to focus on cost reduction in its European business while seeking growth opportunities in the Asia-Pacific and Middle East regions.
Following the release of the results, H World Group shares experienced a 5.89% decline, closing at $33.10 on Tuesday.