H World Group Ltd (HTHT) 2023 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to H World First Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，謝謝你的支持。歡迎來到 H World 2023 年第一季度收益電話會議。 （操作員說明）請注意，今天的會議正在錄製中。

I'd now like to hand the conference over to the IR Director, Mr. Jason Chen. Please go ahead, sir.

我現在想將會議交給 IR 總監 Jason Chen 先生。請繼續，先生。

Thank you. Good morning, and good evening, everyone. Thanks for joining us today. Welcome to H World Group 2023 First Quarter Earnings Conference Call.

謝謝。大家早上好，晚上好。感謝您今天加入我們。歡迎來到 H World Group 2023 年第一季度收益電話會議。

Joining us today is our Founder and Chairman, Mr. Qi Ji, our CEO, Mr. Jin Hui; our CFO, Ms. He Jihong; and our President, Mr. Liu Xinxin.

今天加入我們的是我們的創始人兼董事長齊季先生，我們的首席執行官金輝先生；我們的首席財務官何繼紅女士；以及我們的總裁劉欣欣先生。

Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that discussion today will include forward-looking statements made under the safe harbor provision of the United States Private Securities Litigation Reform Act of 1995.

在他們準備好的評論之後，管理層將可以回答您的問題。在我們繼續之前，請注意今天的討論將包括根據 1995 年美國私人證券訴訟改革法案的安全港條款作出的前瞻性陳述。

Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. H World Group does not undertake any obligations to update any forward-looking statements, except as required by applicable laws.

前瞻性陳述涉及固有的風險和不確定性。因此，我們的結果可能與今天表達的觀點存在重大差異。我們向美國證券交易委員會提交的公開文件中概述了一些潛在的風險和不確定性。除適用法律要求外，H World Group 不承擔更新任何前瞻性陳述的任何義務。

On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations of those measures to comparable GAAP information can be found in our earnings release that was distributed yesterday.

在今天的電話會議上，我們還將在討論我們的業績時提到調整後的財務措施。這些措施與可比較的 GAAP 信息的對賬可以在我們昨天發布的收益報告中找到。

As a reminder, this conference call is being recorded. The webcast of this conference call as well as supplementary slide presentation is available at ir.hworld.com.

提醒一下，正在錄製此電話會議。此電話會議的網絡直播以及補充幻燈片演示可在 ir.hworld.com 上獲得。

With that, now I will hand over the call to our CFO, Ms. He Jihong for opening speech. Ms. He, please.

那麼，現在我將把電話轉交給我們的首席財務官何繼紅女士進行開幕致辭。何小姐，請。

Good morning, and good evening, ladies and gentlemen. Thank you for joining our first quarter 2023 earnings call today.

女士們先生們，早上好，晚上好。感謝您今天參加我們的 2023 年第一季度財報電話會議。

With the reopening in China, we have experienced a very positive growth in the first quarter 2023. Our franchisees are rebuilding their confidence and accelerated investment in new hotels.

隨著在中國的重新開業，我們在 2023 年第一季度實現了非常積極的增長。我們的加盟商正在重建信心並加快對新酒店的投資。

After COVID, we observed people in China are willing to spend more experience-related activities like travel, similar to what happened in the Rest of the World. In a nutshell, we had a very good start in this year, and we are very happy to report a strong performance in the first quarter 2023.

在 COVID 之後，我們觀察到中國人願意花費更多與體驗相關的活動，例如旅行，這與世界其他地方發生的情況類似。簡而言之，我們今年的開局非常好，我們很高興地報告 2023 年第一季度的強勁表現。

Mr. Jin Hui, CEO of H World Group will highlight the key achievements in this quarter, followed by elaboration of financial performance. As always, we will have a Q&A session after management's presentation.

H World 集團首席執行官金輝先生將重點介紹本季度的主要成就，然後闡述財務業績。與往常一樣，我們將在管理層介紹後舉行問答環節。

With this, I now hand over to Mr. Jin Hui.

有了這個，我現在交給金輝先生。

[Interpreted] Thank you, Jihong. Let's firstly turn to Page 3 to review our RevPAR recovery in the recent months. Overall, RevPAR has been trending up since the reopening in November last year.

【解讀】謝謝你，吉紅。讓我們首先翻到第 3 頁來回顧我們最近幾個月的 RevPAR 恢復情況。總體而言，自去年 11 月重新開放以來，RevPAR 一直呈上升趨勢。

Our Legacy-Huazhu's blended RevPAR in January, February, March and April recovered to 96%, 140%, 120% and 127% of 2019 levels, respectively. The RevPAR recovery in the first quarter and especially in February was largely driven by the pent-up demand.

我們的 Legacy-華住在 1 月、2 月、3 月和 4 月的混合 RevPAR 分別恢復到 2019 年水平的 96%、140%、120% 和 127%。第一季度，尤其是 2 月份的 RevPAR 復甦主要是由被壓抑的需求推動的。

While we are glad to see the strong rebound in traveling demand leading to a faster RevPAR recovery, we believe it is more important for us to continue enhancing our core competencies in order to achieve sustainable long-term RevPAR growth.

雖然我們很高興看到旅遊需求的強勁反彈導致 RevPAR 的更快恢復，但我們認為更重要的是繼續增強我們的核心競爭力，以實現可持續的長期 RevPAR 增長。

Please turn to Page 4. We believe our sustainable long-term RevPAR growth will be driven by 3 key aspects. Firstly, our organizational restructuring and optimization. The establishment of our original headquarters enables more localized and efficient operations as well as achieving further market penetration and synergies in each region. Secondly, lower-tier cities in China still appear a plenty of growth opportunities, especially considering the local residents, rising spending power supported by high economic resilience.

請翻到第 4 頁。我們相信我們可持續的長期 RevPAR 增長將由 3 個關鍵方面推動。一是組織結構調整優化。我們原總部的設立使運營更加本地化和高效，並在每個區域實現進一步的市場滲透和協同效應。其次，中國的低線城市仍然存在大量增長機會，尤其是考慮到當地居民在高經濟韌性支持下不斷上升的消費能力。

Thirdly, we will continue our efforts on further product and service upgrades and improvements in order to achieve a higher price premium.

第三，我們將繼續努力進一步升級和改進產品和服務，以實現更高的價格溢價。

As we discussed in our last quarter's earnings call, the sustainable quality growth is our core strategic focus in 2023. Under this core strategy, we will focus on 3 key areas. First is on our high-quality hotel network expansion.

正如我們在上一季度的財報電話會議上討論的那樣，可持續的高質量增長是我們 2023 年的核心戰略重點。在這一核心戰略下，我們將重點關注 3 個關鍵領域。首先是我們優質酒店網絡的擴張。

Please turn to Page 5. In the first quarter, excluding the soft economic hotels, we signed up 672 new hotels during the quarter, up 26% year-over-year, which reflects our franchisees' confidence level is gradually improving in the first quarter.

請翻到第5頁。第一季度，剔除軟經濟型酒店，本季度我們新簽約672家酒店，同比增長26%，這反映了我們加盟商的信心水平在第一季度逐漸提高.

During the same period, we opened 262 new hotels, which was slightly down year-over-year mainly due to COVID impact. On the hotel closure front, we closed a total of 209 hotels in the first quarter including 122 inferior economic softer brands and hunting 1.0 version hotels to further improve the quality of our entire hotel portfolios.

同期，我們新開了 262 家酒店，同比略有下降，主要是受 COVID 的影響。在酒店關閉方面，我們在第一季度共關閉了 209 家酒店，其中包括 122 家劣質經濟軟品牌和狩獵 1.0 版酒店，以進一步提高我們整個酒店組合的質量。

In addition, as we mentioned in our -- in the last quarter, some hotel closure processes were uncompleted in the fourth quarter 2022 due to COVID impact and therefore, were delayed to this year.

此外，正如我們在上個季度提到的那樣，由於 COVID 的影響，一些酒店關閉流程在 2022 年第四季度尚未完成，因此被推遲到今年。

Please turn to Page 6. We continued implementing our lower-tier cities' penetration strategy. As of March 2023, we have a total of 8,464 hotels in operation, of which 39% were in the lower-tier cities, up 2 percentage points year-over-year. And we have 2,304 hotels in the pipeline with lower-tier cities contributing around 56%, up 1 percentage point year-over-year.

請翻到第6頁。我們繼續實施低線城市滲透策略。截至2023年3月，我們共有8,464家酒店在營，其中39%位於低線城市，同比增長2個百分點。我們有 2,304 家酒店在建中，其中低線城市貢獻了約 56%，同比增長 1 個百分點。

The number of city coverage for both hotels in operations and in pipeline increased to 1,132 cities compared to 1,089 cities 1 year ago.

運營中和籌備中酒店的城市覆蓋數量從一年前的 1,089 個城市增加到 1,132 個城市。

Our second strategy is to further breakthrough in the mid-scale and upper mid-scale segment. Please turn to Page 7 and Page 8. For our mid-scale segment, we launched Orange Hotel 3.0 version with the Orange color emphasizing the concept of Lojas, meaning lifestyle of health and sustainability. Orange 3.0 version brings together the healthy vitality and environmental sustainability. Every detail in the hotel conveys the idea of an environmental friendly and sustainable lifestyle.

我們的第二個戰略是進一步突破中檔和中檔細分市場。請翻到第7頁和第8頁。對於我們的中端市場，我們推出了Orange Hotel 3.0版本，橙色強調Lojas的概念，意味著健康和可持續的生活方式。 Orange 3.0版本匯集了健康活力與環境可持續性。酒店的每個細節都傳達了環保和可持續生活方式的理念。

For example, every kind of material we used in hotel renovation and the consumable products we provided to our guests in the hotel room are all degradable and renewables.

例如，我們在酒店裝修中使用的每一種材料，以及我們在酒店客房內提供給客人的消耗品，都是可降解可再生的。

In summary, our new Orange Hotels 3.0 version expressed a positive and happy lifestyle and pursue the concept of green and environmental friendly. It provides a more energetic, sunny and fresh accommodation experiences to our customers. We believe our new Orange hotel is well positioned to meet younger customers demand on nice design, experiences and vitality and becomes a good complementary product to our Gee Hotel, and we believe the Orange brand should further enhance H World's competitiveness in the middle-scale hotel segment.

綜上所述，我們全新的Orange Hotels 3.0版本表達了一種積極快樂的生活方式，追求綠色環保的理念。為客戶提供更有活力、陽光、清新的住宿體驗。我們相信我們新的 Orange 酒店能夠很好地滿足年輕客戶對精美設計、體驗和活力的需求，並成為我們 Gee Hotel 的良好補充產品，我們相信 Orange 品牌將進一步提升 H World 在中檔酒店的競爭力部分。

Please turn to Page 9 and 10. For our upper mid-scale segment, we successfully introduced the Intercity brands to China. We recently opened 4 new Intercity hotels in Wuhan, Zhengzhou, Shenzhen and Shanghai. These brand openings are very important steps for Intercity's future scalable development in China. Intercity hotels in Germany, mainly target service business traveler who frequently travel between cities. The hotel development is closely aligned with the railway development process in Europe, covering major transportation hubs in Europe.

請翻到第 9 頁和第 10 頁。對於我們的中高端市場，我們成功地將 Intercity 品牌引入中國。我們最近在武漢、鄭州、深圳和上海新開了 4 家城際酒店。這些品牌開業是Intercity未來在中國規模化發展的非常重要的一步。德國的城際酒店，主要服務於經常往返於城市之間的商旅人士。酒店的開發緊扣歐洲鐵路發展進程，覆蓋歐洲主要交通樞紐。

In depth development in China market is always our key focus and introducing Intercity brands in China market well reflect -- well reflected. As our Chairman, Mr. Qi Ji once said, we are not simply to introduce the German brands to China instead we are interpreting the German brands in China.

在中國市場的深度發展始終是我們的重點，在中國市場引入Intercity品牌很好地體現——很好地體現了。正如我們董事長齊驥先生曾經說過的，我們不是簡單地將德國品牌引入中國，而是在中國詮釋德國品牌。

Therefore, Intercity brands in China not only integrate the European features but also conduct the local brand evolutions and observation on consumer behavior to refine the Intercity brand DNA, which is offering the ultimate business travel experiences from German features of efficiency, quality and effectiveness. In China, Intercity hotels will be mainly located in major commercial centers and transportation hubs.

因此，Intercity品牌在中國不僅融入了歐洲特色，還通過本土化的品牌演進和對消費者行為的觀察，提煉出Intercity品牌DNA，提供德國高效、品質、效果的極致商旅體驗。在中國，城際酒店將主要位於主要的商業中心和交通樞紐。

The theme color of the hotel room is black and white and gray. And the design is very simple but highly functional. With the Intercity brands, we aim to provide Chinese new generation business travelers a better experience with high-quality stay, workspace, service and food.

酒店客房的主題色為黑白灰。設計非常簡單但功能強大。通過城際品牌，我們旨在為中國新一代商旅人士提供更優質的住宿、工作空間、服務和美食體驗。

Our third strategy is to further upgrade and strengthen our organizational and digitalized operational capability.

我們的第三個戰略是進一步提升和加強我們的組織和數字化運營能力。

Please turn to Page 11. We have always put great emphasis on membership program development and direct sales capabilities. We are very pleased to see our H World app and H World mini-program's daily active users in the first quarter of 2023 increased by 2x and 3x compared to the first quarter of 2019, respectively.

請翻到第 11 頁。我們一直非常重視會員計劃的開發和直銷能力。我們很高興看到我們的 H World 應用程序和 H World 小程序在 2023 年第一季度的日活躍用戶分別比 2019 年第一季度增長了 2 倍和 3 倍。

In addition, our direct booking through our CRS system reached a record high of 62%, up 15 percentage points compared to the first quarter of 2019. It is worth noting that our CRS contribution includes booking through our own channels only and executing contribution from OTAs and other third-party distribution platforms.

此外，我們通過 CRS 系統進行的直接預訂達到 62% 的歷史新高，與 2019 年第一季度相比上升了 15 個百分點。值得注意的是，我們的 CRS 貢獻包括僅通過我們自己的渠道預訂和執行來自 OTA 的貢獻和其他第三方分銷平台。

Here concludes our business review and update for the first quarter of 2023. With that, I will now turn the call over to our CFO, Ms. He Jihong, to discuss our financial performance for the quarter.

我們對 2023 年第一季度的業務回顧和更新到此結束。現在，我將把電話轉給我們的首席財務官何繼紅女士，討論我們本季度的財務業績。

Thank you, Jin Hui. I'm now going to elaborate the key financial achievement in this quarter. Please turn to Page 13. Our hotel network continues to expand. In first quarter 2023, the number of rooms achieved 7% growth compared to the same period last year and stands at 820,099.

謝謝你，金輝。我現在要詳細說明本季度的主要財務成就。請翻到第 13 頁。我們的酒店網絡不斷擴大。 2023年第一季度，客房數量同比增長7%，達到820,099間。

Hotel turnover achieved a 71% growth compared to first quarter 2022 and stands at more than CNY 16 billion. Please turn to Page 14. Legacy-Huazhu blended revenue recovered to CNY 210. This is an 18% increase compared to the first quarter 2019 and 58% compared to first quarter 2022.

與 2022 年第一季度相比，酒店營業額增長了 71%，超過 160 億元人民幣。請翻到第 14 頁。Legacy-華住混合收入恢復到 210 元人民幣。這比 2019 年第一季度增長了 18%，比 2022 年第一季度增長了 58%。

The revenue growth, the RevPAR growth is largely driven by ADR increase, which shows a 25% compared to the first quarter 2019 and 24% compared to first quarter 2022. Our average occupancy rate stands at 76% in this quarter.

收入增長、RevPAR 增長主要是由 ADR 增長推動的，與 2019 年第一季度相比增長 25%，與 2022 年第一季度相比增長 24%。本季度我們的平均入住率為 76%。

Please turn to Page 15. The Legacy-DH blended revenue recovered to EUR 55. This is an increase of 66% compared to the first quarter 2022. The recovery is driven by both ADR and occupancy. As first quarter 2022, we still faced a quite heavy COVID impact in many countries where DH operates.

請翻到第 15 頁。Legacy-DH 混合收入恢復到 55 歐元。與 2022 年第一季度相比增長了 66%。復甦是由 ADR 和入住率共同推動的。到 2022 年第一季度，我們在 DH 運營的許多國家/地區仍然面臨相當嚴重的 COVID 影響。

Please turn to Page 16. H World revenue grew to CNY 4.48 billion in first quarter 2023. This is an increase of 67% compared to first quarter 2022, slightly above our guidance.

請翻到第 16 頁。H World 收入在 2023 年第一季度增長至 44.8 億元人民幣。與 2022 年第一季度相比增長 67%，略高於我們的指引。

Legacy-Huazhu revenue grew 58% year-on-year to CNY 3.59 billion, and the Legacy DH revenue grew 18% in the same period, achieving RMB 886 million. This reflects the RevPAR recovery trajectory, thanks to the reopening of China and the Rest of the World. Continued product upgrade as well as market penetration and synergy achieved through regional offices in China.

力獅-華住營收同比增長58%至35.9億元，力獅DH營收同期增長18%，達到8.86億元。這反映了 RevPAR 的恢復軌跡，這要歸功於中國和世界其他地區的重新開放。通過在中國的區域辦事處實現持續的產品升級以及市場滲透和協同效應。

Please turn to Page 17. Our operating income in the first quarter 2023 grew to CNY 664 million, compared to a loss of CNY 708 million in the first quarter 2022. Legacy-Huazhu achieved CNY 822 million, turning into positive territory compared to a loss of CNY 416 million in the first quarter 2022.

請翻到第 17 頁。我們在 2023 年第一季度的營業收入增長到 6.64 億元人民幣，而 2022 年第一季度虧損 7.08 億元人民幣。Legacy-Huazhu 實現 8.22 億元人民幣，與虧損相比轉為正數2022 年第一季度為 4.16 億元人民幣。

Legacy-DH still made a loss in the first quarter 2023, but narrowed its loss by CNY 140 million compared to same period last year. As a group, we maintained total SG&A cost at 13.8% of our total revenue, with China at only about 12% in the first quarter.

2023年一季度Legacy-DH仍處於虧損狀態，但較去年同期縮小虧損1.4億元。作為一個集團，我們將 SG&A 總成本維持在總收入的 13.8%，而第一季度中國僅佔 12% 左右。

We are very disciplined about our SG&A cost as a percentage of our revenue, and it is under our close monitoring constantly. In Germany and European countries, we need to cope with costs in inflationary environment, which has some impact on our profitability.

我們對 SG&A 成本佔收入的百分比非常嚴格，並且一直受到我們的密切監控。在德國和歐洲國家，我們需要應對通脹環境下的成本，這對我們的盈利能力有一定影響。

Please turn to Page 18. In the first quarter 2023, our adjusted EBITDA recovered to CNY 1.65 billion. This is a significant increase from negative CNY 333 in the first quarter 2022. This adjusted EBITDA includes around CNY 500 million gains from sales in Accor’'s shares in the first quarter.

請翻到第 18 頁。2023 年第一季度，我們調整後的 EBITDA 恢復到 16.5 億元人民幣。這比 2022 年第一季度的負值 333 元人民幣有了顯著增長。這一調整後的 EBITDA 包括第一季度雅高股份銷售帶來的約 5 億元人民幣的收益。

Adjusted net income was CNY 1 billion in this quarter compared to negative CNY 662 million in the same period last year. The strong EBITDA and the net income performance are mainly contributed by recovery of the Chinese business.

本季度調整後淨利潤為人民幣 10 億元，而去年同期為負人民幣 6.62 億元。強勁的 EBITDA 和淨收入表現主要得益於中國業務的複蘇。

Operating cash flow stands at CNY 1.84 billion, a strong increase compared to cash outflow in the same period last year.

經營性現金流為人民幣18.4億元，較去年同期現金流出大幅增長。

Please turn to Page 19. Our liquidity position is quite strong. As of 31st March 2023, we have a net cash of CNY 957 million. Our cash balance stands at CNY 10.4 billion, and we have unutilized the bank facility at CNY 2 billion.

請翻到第 19 頁。我們的流動資金狀況相當強勁。截至2023年3月31日，我們擁有淨現金9.57億元人民幣。我們的現金餘額為 104 億元人民幣，我們尚未使用 20 億元人民幣的銀行授信額度。

Please turn to next page. Our revenue guidance for second quarter 2023 is 51% to 55% growth compared to second quarter 2022. Excluding DH, the revenue of Legacy-Huazhu is projected at a growth rate of 64% to 68%. This implies our RevPAR guidance announced early this year remains unchanged. We are confident about the market recovery and the performance for the rest of this year.

請翻到下一頁。我們對 2023 年第二季度的收入預期與 2022 年第二季度相比增長 51% 至 55%。不包括 DH，Legacy-Huazhu 的收入預計增長率為 64% 至 68%。這意味著我們今年早些時候宣布的 RevPAR 指南保持不變。我們對市場復甦和今年剩餘時間的表現充滿信心。

Yes. Thanks, He Jihong. So now we can open for the Q&A session. Operator, please?

是的。謝謝何繼紅。現在我們可以開始問答環節了。接線員，請說？

(Operator Instructions) Our first question comes from the line of Ronald Leung from Bank of America.

（操作員說明）我們的第一個問題來自美國銀行的 Ronald Leung。

(foreign language) Let me ask my questions in English. My first question is what is management's expectation for RevPAR recovery in the second quarter? The second question is about the supply outlook for the hotel industry. The RevPAR recovery has been solid. Some franchisees, hotel owners are tending to reopen their hotels in the upcoming year. So do you expect the increase in the hotel supply will hurt the RevPAR recovery?

（外語）讓我用英語問我的問題。我的第一個問題是管理層對第二季度 RevPAR 恢復的預期是什麼？第二個問題是關於酒店業的供應前景。 RevPAR 恢復穩定。一些特許經營商、酒店業主傾向於在來年重新開放他們的酒店。那麼您認為酒店供應的增加會影響 RevPAR 的恢復嗎？

[Interpreted] Okay. So thank you. So firstly, I will answer the first question. So for the revenue guidance for the second quarter of this year, so it implies the RevPAR -- blended RevPAR recovery compared to the same period of 2019, which is in the range of 110% to 115%, which is in line with our annual guidance in terms of the RevPAR recovery.

[解釋] 好的。所以謝謝。那麼首先，我會回答第一個問題。所以對於今年第二季度的收入指導，這意味著 RevPAR——與 2019 年同期相比的混合 RevPAR 恢復，在 110% 到 115% 的範圍內，這與我們的年度一致在 RevPAR 恢復方面的指導。

And for the second question, yes, for the first quarter, we are observing some of the supply gradually increase, but in a relatively slower paces. But given the recent macro conditions as well as the property market cyclical issues, we are not seeing a large increase in the supply, at least in the short term.

對於第二個問題，是的，對於第一季度，我們觀察到一些供應逐漸增加，但速度相對較慢。但考慮到近期的宏觀環境以及房地產市場的周期性問題，我們認為供應不會大幅增加，至少在短期內不會。

Secondly, even though we are seeing some of the supply is gradually coming back into the market. But the clear trend is the branded hotel penetration or the churn ratio continuously improved and this has actually kept the main pieces of the market unchanged.

其次，儘管我們看到一些供應正逐漸回到市場。但明顯的趨勢是品牌酒店滲透率或流失率不斷提高，這實際上使市場的主要部分保持不變。

And thirdly, in terms of the competition, we think the competition is always there, no matter before or post-COVID. But for us, we will continuously emphasize on building up our core competencies through improved branding products and service as well as our organizational capability to increase our entire competitiveness in the market. Thank you.

第三，就競爭而言，我們認為競爭始終存在，無論是在 COVID 之前還是之後。但對我們來說，我們將繼續強調通過提升品牌產品和服務以及我們的組織能力來建立我們的核心競爭力，以提高我們在市場上的整體競爭力。謝謝。

Our next question comes from the line of Sijie Lin from CICC.

我們的下一個問題來自中金公司的林斯傑。

(foreign language) So I'll translate my questions into English. So my first question is a follow-up question on RevPAR recovery. So do we think the current ADR-driven recovery is healthy and sustainable. And will the gap in OCC recovery, especially for business demand exists for long. And my second question is that what's the pace of hotel new signings and the franchisee sentiment in Q2 after they saw Q1's recovery.

（外語）所以我會把我的問題翻譯成英文。所以我的第一個問題是關於 RevPAR 恢復的後續問題。因此，我們是否認為當前 ADR 驅動的複蘇是健康且可持續的。而OCC復甦的缺口，尤其是對於企業的需求長期存在。我的第二個問題是，在看到第一季度的複甦之後，第二季度酒店新簽約的速度和特許經營商的情緒如何。

[Interpreted] Okay. Now I will answer the first question in terms of the RevPAR. So clearly, RevPAR is a combination of the ADR and OCC. In terms of ADR undeniably in the first quarter, I think the RevPAR recovery was mainly driven by the ADR. And this is actually very much in line with the entire global launching market recovery post the COVID.

[解釋] 好的。現在我將根據 RevPAR 回答第一個問題。很明顯，RevPAR 是 ADR 和 OCC 的組合。就第一季度的 ADR 而言，我認為 RevPAR 的恢復主要是由 ADR 驅動的。這實際上非常符合 COVID 後整個全球發射市場的複蘇。

And this somewhere reflects the higher spending capability as well as the impact of the inflation. But I think -- well, relatively, I think the ADR growth at this moment is still quite healthy. But again, we observed that, especially in the leisure market people are becoming more willing to pay a premium for good quality products and good services and this will support the ADR growth.

這在某處反映了更高的支出能力以及通貨膨脹的影響。但我認為 - 嗯，相對而言，我認為此時的 ADR 增長仍然相當健康。但我們再次觀察到，尤其是在休閒市場，人們越來越願意為優質產品和優質服務支付溢價，這將支持 ADR 增長。

In terms of the business traveling, yes, the demand for the business traveling still have some gap compared to pre-COVID. And according to some of the public study, we are expecting the business recovery -- business traveling will be fully recovered to the pre-COVID level in and around 2024. Therefore, as a group, we will be planning according to this trend.

在商務旅行方面，是的，與 COVID 之前相比，商務旅行的需求仍然存在一些差距。根據一些公開研究，我們預計業務會復蘇——商務旅行將在 2024 年左右完全恢復到 COVID 之前的水平。因此，作為一個團隊，我們將根據這一趨勢進行規劃。

In terms of the franchisees' confidence, so after the 3 years of COVID, we think our existing franchisees are becoming more stable and more mature, and they have better knowledge in terms of the volatility and uncertainties.

在加盟商的信心方面，經過 3 年的 COVID，我們認為我們現有的加盟商變得更加穩定和成熟，並且他們對波動性和不確定性有更好的了解。

So we think they are very stable at this moment and the confidence is gradually improving as well. But we are also very happy to see, especially in the lower-tier cities market we have a lot of new franchisees joining us and those franchises might not be previously in the hotel industry. Some of them are the local property developers or some of them are from some other industries who are willing to join us.

所以我們認為他們現在非常穩定，信心也在逐漸提高。但我們也很高興看到，尤其是在低線城市市場，我們有很多新的加盟商加入我們，這些加盟商以前可能不是酒店行業的。他們有的是本地的房地產開發商，有的是來自其他行業的，願意加入我們。

Our next question comes from the line of Lydia Ling from Citi.

我們的下一個問題來自花旗的Lydia Ling。

(foreign language) I'm Lydia from Citi. So here, I have 2 questions. The first 1 is on your overseas business. So DH business actually is doing loss-making in first quarter. So I wanted to check with management your view on the DH earnings outlook for full year and also how to further narrow the loss and also any update on the integration of DH business?

（外語）我是花旗銀行的莉迪亞。所以在這裡，我有兩個問題。第一個是關於您的海外業務。因此，DH 業務實際上在第一季度處於虧損狀態。因此，我想與管理層核實您對 DH 全年盈利前景的看法，以及如何進一步縮小虧損以及 DH 業務整合的任何更新？

And my second question is on the RevPAR growth. So what's your view on your sustainable long-term RevPAR growth looking forward?

我的第二個問題是關於 RevPAR 的增長。那麼，您對未來可持續的長期 RevPAR 增長有何看法？

Okay. Thank you, This is Jihong. I'm going to answer your question. First about the DH business. First quarter, you see a loss is because of the seasonality we all understand that, especially European countries, the seasonality is quite strong and volatile.

好的。謝謝，我是繼紅。我要回答你的問題。首先是關於 DH 業務。第一季度，你看到虧損是因為我們都知道的季節性，尤其是歐洲國家，季節性很強而且波動很大。

So in the first quarter, the revenue was lower due to the seasonality. And at the same time, the cost because also of the energy cost and an inflationary environment increased our cost. For the whole year, we are very confident that we will continue to increase our performance on the revenue side and continue to control our cost. And we are confident that for the whole year, our EBITDA will come back to the positive territory.

因此在第一季度，由於季節性，收入較低。同時，由於能源成本和通貨膨脹環境，成本增加了我們的成本。對於全年，我們非常有信心在收入方面繼續提高業績並繼續控製成本。我們有信心在全年中，我們的 EBITDA 將恢復正值。

And the second question regarding the RevPAR you can observe from the history of (inaudible), we have been improving RevPAR year by year. This is not only the same store, but also the product upgrade and the product mix as well. And typically, companies RevPAR will grow with the economy -- economic growth as well. So for the past several years, and we are confident that with -- in the future, our RevPAR will continue to grow with the bigger economic environment.

關於 RevPAR 的第二個問題，您可以從（聽不清）的歷史中觀察到，我們一直在逐年提高 RevPAR。這不僅是同店，還有產品升級和產品組合。通常，公司 RevPAR 將隨著經濟增長而增長——經濟增長也是如此。因此，在過去的幾年裡，我們有信心——在未來，我們的 RevPAR 將隨著更大的經濟環境而繼續增長。

Our next question comes from the line of Lina Yan from HSBC.

我們的下一個問題來自匯豐銀行的Lina Yan。

(foreign language) Yes, I will translate my question myself. So first question is on the RevPAR drivers especially on the pricing power for the ADR. So we have seen very strong ADR increase in first quarter driven by inelastic demand. But going forward, we will see the supply-demand gap to narrow. And also the spending power is not as strong as the economy has shown.

（外語）是的，我會自己翻譯我的問題。所以第一個問題是關於 RevPAR 驅動程序，特別是關於 ADR 的定價能力。因此，我們看到在缺乏彈性的需求的推動下，第一季度的 ADR 增長非常強勁。但展望未來，我們將看到供需差距縮小。而且消費能力也沒有經濟表現的那麼強勁。

So also management guided RevPAR in the second quarter will be 110% and 115% of 2019 level. Does that imply management also see like a weakening trend in ADR? Or what kind of change in the mentality of the ADR trend going forward?

因此，管理層指導的第二季度 RevPAR 也將分別為 2019 年水平的 110% 和 115%。這是否意味著管理層也認為 ADR 呈減弱趨勢？或者未來ADR走勢的心態會有什麼樣的變化？

And second question is on the impact of portfolio upgrade on RevPAR. Management mentioned it like a key driver for RevPAR as well. So can you quantify the impact, for example, like the percentage of like hotels upgraded in our portfolio versus 2019. And what is the impact to the RevPAR growth versus 2019?

第二個問題是投資組合升級對 RevPAR 的影響。管理層也將其視為 RevPAR 的關鍵驅動因素。那麼，您能否量化影響，例如，與 2019 年相比，我們的投資組合中類似酒店升級的百分比。與 2019 年相比，對 RevPAR 增長的影響是什麼？

Third question is you commented the business travel hasn't recovered to 2019 level. But can you give us more details on the like a recovery in business travel, like even year-on-year or versus 2019? Yes, that's my question.

第三個問題是您評論說商務旅行還沒有恢復到 2019 年的水平。但是您能否向我們提供更多有關商務旅行複甦的詳細信息，例如同比或與 2019 年相比？是的，這是我的問題。

[Interpreted] Okay. Thanks for your questions. So yes, we understand that quite a lot of you are concerning about the RevPAR and the ADR. So that's why I would like to elaborate a bit more details and express and emphasize on our views again by taking these opportunities.

[解釋] 好的。感謝您的提問。所以是的，我們知道你們中的很多人都在關注 RevPAR 和 ADR。因此，這就是為什麼我想利用這些機會詳細闡述更多細節並再次表達和強調我們的觀點。

So for us, since the year beginning, during our budgeting process and during our first -- during our annual -- last year earnings conference call. So our views keeps with the cautiously optimistic, unchanged. And I hope you can understand this. So our view has been no change since then.

所以對我們來說，從年初開始，在我們的預算編制過程中，以及我們第一次——在我們的年度——去年的收益電話會議上。所以我們的觀點保持謹慎樂觀，不變。我希望你能理解這一點。所以我們的觀點從那時起就沒有改變。

And in terms of the RevPAR and ADR, I think it is a quite complex combination, especially for us. And talking about the China market, we have the lower-tier cities, we have the leisure market. We have the upper scale, we have the upper mid and middle scale. It's a very diversified market.

就 RevPAR 和 ADR 而言，我認為這是一個相當複雜的組合，尤其是對我們而言。談到中國市場，我們有低線城市，我們有休閒市場。我們有上層，我們有中上和中等規模。這是一個非常多元化的市場。

Undeniably talking about the business traveling given the impact of the economic cycle and some of the business traveling demand are not fully coming back yet, but we do see a lot of local demand, especially from the leisure traveling demand side. It's quite strong since the year beginning to now.

不可否認的是，考慮到經濟周期的影響和一些商務旅行需求尚未完全恢復的影響，談論商務旅行，但我們確實看到了很多本地需求，特別是來自休閒旅行需求方面。從年初到現在都挺強的。

And you can also realize that a lot of activities happen in here and there, such as the barbecue events in Zibo city and the (inaudible) which is also supported by the government on the leisure traveling activities.

而且您還可以意識到這里和那裡發生了很多活動，例如淄博市的燒烤活動和（聽不清）政府也支持休閒旅遊活動。

And another front is, if you're looking at until recovery in April, we observed that online business actually is not fully recovered. But if you're looking at the railway I think they very much well recovered or even exceeded the 2019 level, supporting quite strong traveling demand as well.

另一個方面是，如果你一直關注到 4 月份的複蘇，我們觀察到在線業務實際上並沒有完全恢復。但如果你看鐵路，我認為它們恢復得很好，甚至超過了 2019 年的水平，也支持了相當強勁的旅行需求。

And for us, again, in terms of the long-term sustainable RevPAR growth, we are still concentrating on building our core competencies through branding products and services. And we have different product mix, and we also not only the upper mid-scale, but also the lower-tier cities penetration. And it's a very complex combination for us.

對於我們來說，就長期可持續的 RevPAR 增長而言，我們仍然專注於通過品牌產品和服務建立我們的核心競爭力。而且我們有不同的產品組合，我們不僅在中高端，而且在低線城市也有滲透。這對我們來說是一個非常複雜的組合。

So if you remember like maybe 2 years ago, you asked us whether your lower-tier cities penetration will negatively affected our RevPAR growth in the future. So that's why given we are doing a lot of developments in China, not only the lower-tier cities, but also the upper, mid and upscale. So I think that's quite very complicated and it's very difficult to us to predict give a very accurate guidance at this moment.

所以如果你還記得大約 2 年前，你問我們你的低線城市滲透是否會對我們未來的 RevPAR 增長產生負面影響。這就是我們在中國進行大量開發的原因，不僅是低線城市，還有上、中、高檔城市。所以我認為這非常複雜，我們現在很難預測給出非常準確的指導。

Yes. So because China experienced 3 years of COVID, so obviously, at the initial reopening, especially in the first quarter, definitely, there are some -- a lot of pending demand. People are keen to traveling and keen to go outside and the businessmen and the franchisees are keen to resume the business as quick as possible.

是的。因此，由於中國經歷了 3 年的 COVID，所以很明顯，在最初重新開放時，尤其是在第一季度，肯定有一些——很多未決需求。人們熱衷於旅行，熱衷於外出，商人和加盟商熱衷於盡快恢復業務。

So definitely, the confidence and the consumption power at this moment was quite strong. And the recent basically the some of the gap or some of the slight slowdown recently. We think it's quite normal if you compare it to the global market.

可以肯定的是，此刻的信心和消費力是相當強大的。而近期基本上是有些差距或者近期有些小幅放緩。如果你將它與全球市場進行比較，我們認為這是很正常的。

Because we traveled quite a lot to Europe. If you see the Europe recovery currently, it's not as strong as before, and especially considering China experienced the 3 years of COVID, but I think Europe market experienced only 1.5 years. So we think we should give the market a bit patient -- patience in terms of the sustainable recovery going forward.

因為我們經常去歐洲旅行。如果你看到歐洲目前的複蘇，它並不像以前那麼強勁，特別是考慮到中國經歷了 3 年的 COVID，但我認為歐洲市場只經歷了 1.5 年。因此，我們認為我們應該給市場一點耐心——在未來可持續復甦方面保持耐心。

As Jin Hui mentioned before, so we observed actually the airline -- the occupancy rates for the airline is not recovering to the pre-COVID level, but the railway station is performing very -- railway business is recovering very well, and we're still seeing a lot of traveling demand here and there. And we didn't see any statistic on the self-driving traveling activities, but we strongly believe it should be quite strong.

正如金輝之前提到的，所以我們實際上觀察到航空公司——航空公司的客座率沒有恢復到 COVID 之前的水平，但火車站的表現非常——鐵路業務恢復得很好，我們仍然看到到處都有很多旅行需求。我們沒有看到任何關於自駕游活動的統計數據，但我們堅信它應該是相當強勁的。

So therefore, no matter during the COVID or post-COVID, we're still seeing the people are keen to traveling around no matter on the leisure or business side. And in longer term, we think the hotels with relatively lower price will be more resilient no matter during COVID or financial crisis or any other crisis conditions. So basically, talking about the, like, for example, the economic segment will be more resilient compared to the upscale.

因此，無論是在 COVID 期間還是 COVID 之後，我們仍然看到人們熱衷於四處旅行，無論是休閒還是商務。從長遠來看，我們認為無論在 COVID 或金融危機或任何其他危機條件下，價格相對較低的酒店都將更具彈性。所以基本上，談論，例如，與高檔相比，經濟部門將更具彈性。

And the recent consumption trend was very interesting taking the barbecue events in Zibo as an example. We observed that people are generally wants to spend a little bit of money and to buy a big happiness and people who are willing to spend big chunk of money at this condition -- under this condition are not very, very high.

而最近的消費趨勢就很有意思了，以淄博的燒烤活動為例。我們觀察到，人們一般都想花一點錢買一個大幸福，而在這種情況下願意花大筆錢的人——在這種情況下不是非常非常高。

And therefore, we think the upscale segment will be taking even longer time to recover. For us, we are not only caring about ADR, we care more on building up core competencies and the entire ecosystem, and we want to provide the benefit to all our partners, no matter our customers and franchisees in our ecosystem and everyone will be getting benefited.

因此，我們認為高端市場將需要更長的時間才能恢復。對我們來說，我們不僅關心ADR，我們更關心建立核心競爭力和整個生態系統，我們希望將利益提供給我們所有的合作夥伴，無論我們的客戶和加盟商在我們的生態系統中，每個人都會得到受益。

So we think we should be a little bit patient for the long-term growth potential for the entire launching market. And we are not only striving to increased ADR and -- because it is also a very difficult expect ADR or predict the ADR trends in the future because there is a lot of factors kind of affected ADR movements.

所以我們認為我們應該對整個發射市場的長期增長潛力有一點耐心。我們不僅在努力增加 ADR，而且——因為它也很難預測 ADR 或預測未來的 ADR 趨勢，因為有很多因素會影響 ADR 的走勢。

Our next question comes from the line of from Xin Mei Huatai.

我們的下一個問題來自新美華泰的專線。

(foreign language) Can you explain how the organization structure support the development of the new brands such as Orange 3.0, Orange Crystal, Intercity. Are there any problems in the operation of these organizational structure and how can the management fulfill.

（外語）能否解釋一下組織結構如何支持橙子3.0、橙子水晶、Intercity等新品牌的發展。這些組織架構在運行中是否存在問題，管理層如何履行。

[Interpreted] Thanks for your questions. I'm very glad you asked about our organizational restructuring.

[已翻譯] 感謝您的提問。很高興你問及我們的組織重組。

So firstly, I would like to classify -- clarify our -- it is just 1 year since we conducted our organizational restructuring since last year. So I would elaborate more on the purpose of building up the 6 regional headquarters. So as you may know that 1 of our core strategy is to fully penetrating in China market in the limited service segment together with our sustainable quality growth strategy.

因此，首先，我想分類 - 澄清我們的 - 自去年以來我們進行組織重組僅 1 年。所以我會詳細說明建立6個區域總部的目的。因此，您可能知道，我們的核心戰略之一是在有限的服務領域全面滲透中國市場以及我們可持續的質量增長戰略。

So by doing this -- by setting up these 6 regional headquarters, we are very happy to see a very initial good outcomes over the last year. The regional headquarters are more close to our franchisees and customers and achieving a higher operational optimization as well as the synergy.

因此，通過這樣做——通過設立這 6 個地區總部，我們很高興看到去年取得了非常初步的良好成果。區域總部更貼近我們的加盟商和客戶，實現更高的運營優化和協同效應。

And in talking about the upper mid segment, so basically the up mid segment or up mid brand are still using the vertical organizational structure. But the regional headquarters will help or support the upper mid segment in terms of the development but the management will be remained within each of the brands and in the headquarter. If you're talking about some of the challenges or -- and talking about some challenges, currently, we still think -- I think in terms of the talent reserve, it's not still enough, but we think it's going to take some to further building it up.

在談到中上段時，基本上中上段或中上品牌仍在使用垂直組織結構。但區域總部將在發展方面幫助或支持中高端市場，但管理層將留在每個品牌和總部。如果你在談論一些挑戰，或者 - 談論一些挑戰，目前，我們仍然認為 - 我認為就人才儲備而言，這還不夠，但我們認為需要進一步建立它。

Thank you. I'm showing no further questions. I'll now turn the conference back to the management team for closing remarks.

謝謝。我沒有進一步的問題。我現在將會議轉回給管理團隊作閉幕詞。

Thank you, everyone, for taking your time with us today, and we look forward to see you in the upcoming quarter. Thank you. Bye-bye.

感謝大家今天抽出寶貴時間與我們一起，我們期待在下一個季度見到您。謝謝。再見。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此記錄中標記為 [已翻譯] 的部分由現場通話中的口譯員說出。]