This phone conference announced H World's financial report for the second quarter of 2025, discussed the company's performance and included forward-looking statements, reminding investors to pay attention to potential risks. The conference also provided adjusted financial indicators and showed a comparison with GAAP data. A Q&A session will be opened after the meeting, allowing participants to ask relevant questions.

In the face of increased hotel supply and the impact of macroeconomic factors, the industry continues to optimize its layout, focusing on high-quality growth. In the second quarter, significant growth in room numbers and membership base was achieved through expanding into new cities and deepening penetration in lower-tier markets. Meanwhile, MNF business grew strongly, driving overall profit growth for the group.

In the face of macroeconomic uncertainty and weak consumption, the hotel group is focusing on the economy and mid-market segments, consolidating core competitiveness and customer loyalty through brand upgrades, product optimization, and service enhancement. Brands under the group such as Hanting, Orange, and Quanji show strong growth in their respective segmented markets. Supply chain reforms have significantly reduced costs and improved efficiency, while also strengthening member systems and direct sales capabilities, laying the foundation for long-term sustainable development.

The report mentioned that the group's second-quarter revenue increased year-on-year, with adjusted EBITDA and net profit also showing growth. Through the implementation of the SSI strategy and cost optimization, management and franchise operations performed strongly, leading to an increase in total gross operating profit. Cash flow remains stable, and a mid-term cash dividend plan is announced. Revenue and franchise business growth expectations for the third quarter are optimistic.

Discussed the slight decrease in RevPAR in the third quarter and full-year expectations, as well as the reasons why full-year performance may be slightly below previous guidance, including macroeconomic uncertainties and challenges brought about by increased supply. At the same time, analyzed the potential impact of new hotel openings on existing hotels, and proposed strategies to address this short-term challenge through product upgrades and proper positioning.

The conversation revolves around the company's latest financial data disclosure regarding its owned leasing and franchise operations, discussing the rapid growth of franchise operations and the gradually decreasing trend of owned leasing operations. The company emphasizes maintaining a healthy profit level in owned leasing operations through measures such as rent reduction and cost optimization, and expresses its intention to continue optimizing its business structure in the future, focusing on the development of franchise and management operations.

The conversation discussed the hotel group's plans and standards for opening new stores in the current market conditions, emphasizing the importance of a high-quality sustainable growth strategy. At the same time, the group achieved year-on-year growth in adjusted EBITDA in the second quarter through measures such as asset transformation, cost optimization, and supply chain capacity enhancement, despite a decline in RevPAR. It is expected that stable profit growth will be achieved in the future through continuous investment and optimization.

The dialogue mainly revolves around the declining performance of the hotel brand Hanting's Revpar, pointing out that the strategy of renovating old stores and signing new store contracts will gradually solve this challenge. At the same time, the growth potential of mid-to-high-end market brands such as Orange and Intercity was discussed, emphasizing the use of product upgrades and market opportunities to improve brand competitiveness in the short term and become leaders in the niche market in the long term.

Discussed how to specifically enhance supply chain capabilities, as well as the potential contribution of this measure to reducing future operating costs.

The conversation revolves around the upgrading of supply chain capabilities, emphasizing its importance as a core competitive advantage for achieving high quality, long-term sustainable growth. Starting from 2024, measures such as introducing top suppliers, strengthening collaborations, advancing modular applications, optimizing product design, and improving quality standards will significantly enhance supply chain efficiency, reduce costs, shorten construction periods, thereby supporting the continued development and consolidation of the company's leadership position.

Discussed the legal requirements regarding the difficulty in terminating rental agreements in Europe, especially in Germany, as well as the ongoing evaluation of the profitability of leasing hotels. Mentioned negotiations with landlords to adjust lease terms, while carefully evaluating long-term commitments and returns to advance towards an asset-light model. Will be more cautious in signing lease agreements in the future to ensure long-term benefits.

The host of the meeting expressed gratitude to all participants, emphasized expectations for future collaboration in the coming quarters, and formally announced the end of the meeting for the day. Thank you all for your participation, and the meeting has now successfully concluded.