H World Group Ltd (HTHT) 2025 Q2 法說會逐字稿

Good day and thank you for standing by. Welcome to the H World Q2 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

您好，感謝您的支持。歡迎參加 H World 2025 年第二季財報電話會議。（操作員指示）請注意，今天的會議正在錄音。

I would now like to hand the conference over to your speaker today, Jason Chen. Please go ahead.

現在我想將會議交給今天的演講者 Jason Chen。請繼續。

Thank you, Heidi. Good morning, and good evening, everyone. Thanks for joining us today. Welcome to H World Group 2025 second-quarter earnings conference call. Joining us today is our Founder and Chairman, Mr. Qi Ji; our CEO, Mr. Jin Hui; our CFO, Ms. Chen Hui; and our CSO, Ms. He Jihong. Following their prepared remarks, management will be available to answer your questions.

謝謝你，海蒂。大家早安，晚上好。感謝您今天加入我們。歡迎參加H World Group 2025年第二季財報電話會議。今天與我們一起出席的有我們的創始人兼董事長齊冀先生、我們的首席執行官金輝先生、我們的首席財務官陳暉女士以及我們的首席戰略官何繼紅女士。在發表準備好的發言後，管理階層將回答您的問題。

Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor Provision of the United States Private Securities Litigation Reform Act of 1995. 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 and applicable laws.

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做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，我們的結果可能與今天表達的觀點有重大不同。我們向美國證券交易委員會提交的公開文件中概述了許多潛在的風險和不確定性。除法律要求和適用外，H World Group 不承擔更新任何前瞻性聲明的義務。

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 earlier today. 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.

在今天的電話會議上，我們還將在討論績效時提及調整後的財務指標。在我們今天早些時候發布的收益報告中找到這些指標與可比較 GAAP 資訊的對帳表。提醒一下，本次電話會議正在錄音。本次電話會議的網路直播以及補充投影片簡報可在 ir.hworld.com 上找到。

With that, now I will hand over the call to our CEO, Mr. Jin Hui to discuss our business performance in the second quarter of 2025. Mr. Jin, please?

現在，我將把電話交給我們的執行長金輝先生，討論我們 2025 年第二季的業務表現。請問金先生？

(interpreted) Dear investors and analyst, good day. Thank you for joining our second quarter 2025 earnings conference call. First, I'd like to share some observations on the overall market. On the demand side, domestic number of travelers continues to grow steadily according to the data released from railways, airlines, and the tourism statistics. However, due to the rapid increase in hotel supply over the past two years, coped with the negative impacts of various macro factors on business traveling and consumer spending willingness, the hotel industry is still facing some challenges.

（翻譯）尊敬的投資人和分析師，大家好。感謝您參加我們的 2025 年第二季財報電話會議。首先，我想分享一些對整體市場的觀察。需求方面，鐵路、航空、旅遊統計顯示，國內出境旅遊人數持續穩定成長。但由於近兩年飯店供給量快速成長，加上各種宏觀因素對商務旅遊和消費者消費意願的負面影響，飯店業仍面臨一些挑戰。

Despite the current challenging market conditions, we remain committed to focus on the long-term business development, emphasizing on high-quality growth, securing prime locations in the major cities. Further deepening our presence in the lower-tier cities and optimizing the location and quality of our existing hotels. In the second quarter, by breaking through into more new cities and regions, and further penetrating into the lower-tier cities, we achieved another quarter of high-quality network expansion, driven by an 18.3% year-over-year increase in the number of rooms in operation, our hotel -- our group hotel GMV grew by 15% year over year to RMB26.9 billion.

儘管當前市場環境充滿挑戰，我們仍致力於長期業務發展，強調高品質成長，確保在主要城市的黃金地段。進一步深化我們在低線城市的業務，並優化現有酒店的位置和品質。第二季度，透過突破更多新城市和地區，進一步滲透到低線城市，我們實現了又一個季度的高品質網路擴張，在營運客房數量同比增長18.3%的推動下，我們集團酒店GMV同比增長15%至人民幣269億元。

Meanwhile, along with our hotel network expansion and continuous enhancement of our H Rewards membership program. Our member base also grew by 17.5% year over year to nearly 290 million in the second quarter, while the number of room nights booked by members exceeded 60 million nights representing a 28.8% year-over-year growth.

同時，隨著我們酒店網絡的擴大和H Rewards會員計劃的不斷加強。我們的會員數量在第二季也較去年同期成長了17.5%，達到近2.9億，而會員預訂的間夜數超過6,000萬晚，較去年同期成長28.8%。

More importantly, our asset-light manachised and franchised business delivered robust growth in hotel network, revenue and profit. M&F revenue rose 22.8% year over year to RMB2.9 billion in the second quarter. While its gross operating profit increased by 23.2% year over year to RMB1.9 billion, contributing nearly two-thirds of the group's total gross operating profit.

更重要的是，我們的輕資產管理和特許經營業務在酒店網路、收入和利潤方面實現了強勁增長。第二季度，M&F 營收年增 22.8% 至 29 億元。而其毛營業利潤則較去年同期成長23.2%至人民幣19億元，貢獻了集團總毛營業利潤的近三分之二。

Macro uncertainties and weakened consumer spending willingness should have more pronounced impact on the high-end consumption. H World remains steadfast in our strategic focus on economy and middle-scale segment to serve the mass market. Against the backdrop of consumers favoring value for money products and services, H World is well positioned to demonstrate even stronger competitive advantages. By enhancing our brands, optimizing and upgrading our products and improving our services we will further solidify our core competitiveness and long-term customers' loyalty and achieve resilience while navigating through cycles.

宏觀經濟不確定性、居民消費意願減弱對高端消費的影響應該會更加明顯。H World 始終堅持以經濟型和中型酒店為策略重點，服務大眾市場。在消費者青睞物有所值的產品和服務的背景下，H World 更有能力展現更強的競爭優勢。透過提升品牌、優化升級產品、改善服務，我們將進一步鞏固核心競爭力和長期客戶忠誠度，並在週期中保持韌性。

We are delighted that after 20 years of development, our HanTing brand ranked at number one on the latest hotels magazines, World's Top 50 hotel brands list, becoming the world's largest hotel brand by room count. However, we believe this is just the beginning, and we continue to refine and upgrade our product to improve product quality and to better meet customers' demand. Recently, we officially launched HanTing 4.0 version. This is not just a simple product upgrade, but a revolutionary supply chain reform.

我們欣喜的是，經過20年的發展，漢庭品牌在最新酒店雜誌「全球50大酒店品牌」榜單中位列第一，成為全球客房數量最多的酒店品牌。然而，我們相信這只是一個開始，我們將繼續改進和升級我們的產品，以提高產品質量，並更好地滿足客戶的需求。近日，我們正式推出漢庭4.0版本。這不僅是一次簡單的產品升級，而是一場革命性的供應鏈改革。

Through systematic optimization across CapEx, construction, maintenance, and operations, we have successfully developed a benchmark products with lower cost, higher quality and greater efficiency. HanTing will serve as a key driver for our further penetration into the lower-tier cities.

透過對資本支出、建造、維護和營運的系統優化，我們成功開發出成本更低、品質更高、效率更高的標竿產品。漢庭將成為我們進一步滲透到低線城市的關鍵驅動力。

HanTing Hotel has undoubtedly become the leading hotel brands in the economy segment while JI Hotel has been leading the middle-scale segment. Nevertheless, we are more excited to see our Orange Hotel recently surpassing the 1,000 hotels milestone. With its industry-leading products, cost competitiveness and operational capabilities, Orange Hotel is well positioned to become our second growth engine in the middle scale segment.

漢庭酒店已無可爭議地成為經濟型酒店領域的領導品牌，全季酒店則一直領銜中檔酒店市場。儘管如此，我們更高興地看到我們的橙色酒店最近突破了 1,000 家酒店的里程碑。憑藉著業界領先的產品、成本競爭力和營運能力，桔子酒店有望成為我們中檔酒店領域的第二大成長引擎。

Together, HanTing, JI, and Orange formed the Golden Triangle brands of our limited service segment demonstrate formidable competitiveness and serve as the core driver to reach our 20,000 hotels in 2000 cities strategic target in midterm.

漢庭、全季、Orange三大品牌共同構成了我們有限服務板塊的金三角，展現出強大的競爭力，成為我們實現中期2000個城市20000家酒店戰略目標的核心驅動力。

At the same time, H World has made rapid breakthroughs in the upper-midscale segment. As of the second quarter, the number of upper-midscale hotels in operation and in pipeline exceeded 1,500, up 23.3% year over year. In particular, our Intercity Hotel has been rapidly gaining traction among both franchisees and consumers and achieving remarkable roses in the recent quarters. Thanks to its clear brand positioning, exceptional product quality, and a strong operational performance. In the second quarter, Intercity achieved a positive year-over-year growth in its same hotel RevPAR.

同時，H World在中高端市場也取得了快速突破。截至第二季度，已開業和籌備中的中高檔酒店數量超過1,500家，年增23.3%。特別是我們的城際酒店在特許經營商和消費者中迅速獲得關注，並在最近幾季取得了顯著的成長。得益於其清晰的品牌定位、卓越的產品品質以及強大的營運績效。第二季度，城際酒店集團旗下同一家酒店的RevPAR實現了同比增長。

Whether it's the limited service or the upper midscale segment, continuously product optimization and upgrades relies on strong supply chain capabilities. We firmly believe that supply chain strength is a critical pillar of high-quality development. Therefore, we continue to innovate and optimize our supply chain through enlarging our supplier pool, strengthening module applications and optimizing product design to achieve higher product quality, lower OpEx and CapEx and a shorter construction period, which is, in turn, further strengthening our core competitiveness.

無論是服務有限的酒店還是中高端酒店，持續的產品優化和升級都依賴強大的供應鏈能力。我們堅信，供應鏈實力是高品質發展的重要支柱。因此，我們透過擴大供應商庫、加強模組應用和優化產品設計來不斷創新和優化我們的供應鏈，以實現更高的產品品質、更低的營運成本和資本支出以及更短的建設週期，從而進一步增強我們的核心競爭力。

Lastly, we remain focusing on our direct sales capability through H Rewards membership program. Our membership and direct sales are vital to our sustainable long-term business growth. As we expand our hotel network and enter more new cities, our membership base continuously to grow. By the end of the second quarter, H Rewards membership reached nearly 290 million members, with direct bookings through CRS rose 5.2 percentage points year over year to 65.1%.

最後，我們將繼續透過 H Rewards 會員計畫專注於我們的直銷能力。我們的會員資格和直銷對於我們可持續的長期業務成長至關重要。隨著我們擴大酒店網絡並進入更多新城市，我們的會員基礎也在不斷增長。截至第二季末，H Rewards會員數已接近2.9億，透過CRS直接預訂的比例年增5.2個百分點，達到65.1%。

Recently, we introduced the price guarantee features in our H Rewards app, ensuring our members got the best room rate. Going forward, we will further enhance membership benefits, expand loyalty point usage scenarios and exploring cross-industry partnership to improve member engagement and stickiness and further boost our direct sales capability.

最近，我們在 H Rewards 應用程式中推出了價格保證功能，確保我們的會員獲得最優惠的房價。未來，我們將進一步提升會員權益，拓展積分使用場景，探索跨界合作，提高會員參與度和黏性，進一步提升直銷能力。

This concludes the business update for H World Second Quarter 2025. Now I will hand over the call to our CFO, Ms. Chen Hui, to present the group's financial performance for the quarter.

這就是 H World 2025 年第二季的業務更新內容。現在我將電話交給我們的財務長陳暉女士，她將向大家介紹集團本季的財務表現。

Thank you, Jin Hui. Good evening, and good morning, everyone. Let me walk you through our second quarter financial overview.

謝謝你，金輝。大家晚上好，早安。讓我向您介紹一下我們第二季的財務概況。

During the quarter, our group revenue grew 4.5% year over year to RMB6.4 billion, near the high end of our previous guidance, of which Legacy-Huazhu's revenue increased 5.7% year over year. We are glad to report that as we continue carrying out asset-light strategy and the cost optimization efforts, we saw year-over-year margin improvements from both Legacy-Huazhu and Legacy-DH. As a result, our group adjusted EBITDA rose by 11.3% year over year to RMB2.3 billion. Adjusted net income increased 7.6% year over year to RMB1.3 billion.

本季度，我們集團營收年增4.5%至人民幣64億元，接近我們先前預期的高位，其中Legacy-Huazhu的營收年增5.7%。我們很高興地報告，隨著我們繼續實施輕資產策略和成本優化工作，我們看到Legacy-華住和Legacy-DH的利潤率同比都有所提高。因此，我們集團調整後EBITDA年增11.3%至人民幣23億元。調整後淨收入較去年同期成長7.6%至人民幣13億元。

More importantly, as we may notice that we started providing revenue and gross operating profit breakdown for our manachised and franchised and leased and owned business in our presentation. We believe it could be better demonstrate our future business development strategy especially on the profit growth driver during our asset-light transformation period.

更重要的是，我們可能注意到，我們在演示中開始提供我們的經營、特許經營、租賃和自有業務的收入和總營業利潤明細。我們相信這可以更好地展現我們未來的業務發展策略，特別是在輕資產轉型期間的利潤成長動力。

Looking into the numbers. In the second quarter, our manachised and franchised business revenue recorded a robust 22.8% year-over-year growth to RMB2.9 billion, and gross operating profit, both by 23.2% year over year to RMB1.9 billion in the second quarter, respectively. The robust growth in both revenue and profit was mainly driven by hotel network expansion. More importantly, given the nature of asset-light business model, manachised and franchised margin profile is relatively stable and is less impacted by RevPAR moment compared to leased and owned.

查看數字。第二季度，我們的經銷及加盟業務收入年增 22.8% 至 29 億元，毛營業利潤年增 23.2% 至 19 億元。營收和利潤的強勁成長主要得益於飯店網路的擴張。更重要的是，鑑於輕資產業務模式的性質，與租賃和自有相比，管理和特許經營的利潤率相對穩定，受 RevPAR 時刻的影響較小。

On leased and owned business front, we continued reducing the exposure. In the second quarter, our leased and owned revenue -- and leased and owned gross operating profit decreased 7.6% year over year and 13.4% year over year, respectively. Our asset-light transformation resulted in further enlarged profit contribution from manachised and franchised business. In the second quarter, our manachised and franchised business contributed to 64% of our total gross operating profit, up 7.5 percentage points year over year.

在租賃和自有業務方面，我們持續減少風險敞口。第二季度，我們的租賃和自有收入以及租賃和自有毛營業利潤分別年減 7.6% 和 13.4%。輕資產轉型推動特許經營業務利潤貢獻進一步擴大。第二季度，我們的經銷及特許經營業務貢獻了我們總營業毛利的64%，年增7.5個百分點。

Moving to the cash flow and the liquidity position. In the second quarter, we generated RMB2.7 billion operating cash flow. And at quarter end, the group had RMB13.7 billion cash and cash equivalents and RMB6.2 billion net cash on the balance sheet. We are committed to pay out dividend consistently and stick to our shareholder return plan. For the first half of 2025, we are glad to declare USD250 million interim cash dividend, which represents 74% of our first half net profit and together with roughly USD62 million share buyback.

轉向現金流和流動性狀況。第二季度，我們實現營運現金流27億元。截至本季末，該集團資產負債表上的現金及現金等價物為137億元人民幣，淨現金為62億元。我們致力於持續派發股息並堅持我們的股東回報計劃。對於 2025 年上半年，我們很高興宣布派發 2.5 億美元的中期現金股息，占我們上半年淨利潤的 74%，並回購約 6,200 萬美元的股票。

Lastly, on our guidance for the third quarter of 2025. We expect our group revenue to grow 2% to 6% compared to the same quarter last year and 4% to 8% excluding DH. The manachised and franchised revenue in the third quarter of 2025 is expected to grow in a range of 20% to 24% compared to the third quarter last year. With that, we are ready to take your questions. Operator, please open the line for Q&A.

最後，我們對 2025 年第三季的預測。我們預計，與去年同期相比，我們集團的營收將成長 2% 至 6%，不包括 DH，則將成長 4% 至 8%。預計2025年第三季的管理和特許經營收入將與去年第三季相比成長20%至24%。現在，我們已準備好回答您的問題。接線員，請開通問答專線。

(Operator Instructions) Ronald Leung, Bank of America.

（操作員指示）美國銀行 Ronald Leung。

(interpreted) I have two questions. My first question is about RevPAR. So what is your expectation for the RevPAR in 3Q and also 2025? And is there any change to the full year revenue guidance? This is my first question.

（翻譯）我有兩個問題。我的第一個問題是關於 RevPAR 的。那麼，您對第三季以及 2025 年的 RevPAR 有何預期？全年收入預期有變化嗎？這是我的第一個問題。

My second question is about any potential impact on RevPAR from new hotel openings. So do you see any potential cannibalization when new hotels open and ramp up and that could affect all hotels. If yes, are there any initiatives that management can take to address this contract?

我的第二個問題是新酒店開幕對 RevPAR 的潛在影響。那麼，當新酒店開業並擴展時，您是否認為存在任何潛在的蠶食現象，這可能會影響所有酒店？如果是，管理階層可以採取什麼措施來處理該合約？

Okay. Let me translate. So I understand you guys are still very much looking at the RevPAR movements for so far. We hope you can focus more on a long-term, H World's performance in terms of the market share gaining our improvements in terms of the products and the brands as well as a lot of improvements from different fronts, to create our core competency.

好的。讓我翻譯一下。所以我知道你們目前仍然非常關注 RevPAR 的動向。我們希望您能更加關注H World的長期表現，包括市場份額、產品和品牌方面的改進以及來自不同方面的大量改進，以打造我們的核心競爭力。

In terms of the RevPAR guidance for the third quarter and the full year, for the third quarter, especially during the summer holiday, we observed that a lot of local governments are promoting the tourism industry, for example, by providing deep discounts in terms of the ticket, even free tickets giving, just trying to boost the demand for the leisure traveling. However, in some regions and areas was affected by some extreme weather conditions plus some of the macro uncertainties, some of the weakened consumer spending willingness.

關於第三季度和全年的RevPAR指引，在第三季度，特別是在暑假期間，我們觀察到許多地方政府正在推動旅遊業，例如透過提供門票方面的大幅折扣，甚至免費贈送門票，只是想刺激休閒旅遊的需求。但部分地區和領域受到一些極端氣候條件和一些宏觀不確定因素的影響，居民消費意願已減弱。

The overall performance till now for the summer holiday are slightly below our previous expectation. Therefore, we're seeing the third quarter's RevPAR will still have a very slight year-over-year decline. However, it's going to be quite significantly narrowed on a sequential basis.

到目前為止，暑假的整體表現略低於我們先前的預期。因此，我們預計第三季的 RevPAR 仍將出現年比輕微下降。然而，從連續性來看，這一差距將會顯著縮小。

In terms of the full year RevPAR, again, because of some of the macro uncertainties, especially, as I mentioned previously, there was quite a lot of supply increased over the last two years, is still creating some of the challenges currently combining the performance for the first half as well as the current summer holiday performance.

就全年 RevPAR 而言，同樣，由於一些宏觀不確定性，特別是如我之前提到的，過去兩年供應量增加了相當多，目前結合上半年的表現以及當前暑假的表現，仍然帶來了一些挑戰。

We are currently expecting the RevPAR for the full year performance will be slightly below our previous guidance. But however, as I mentioned, we have been putting a lot of efforts in terms of to improve our products, our sales capability, our supply chain capability just to make sure that we can be much resilient even under this kind of challenging market conditions. Therefore, in terms of the revenue, we will strive to achieve our previous guidance.

我們目前預計全年 RevPAR 業績將略低於我們先前的預期。但是，正如我所提到的，我們一直在努力改進我們的產品、銷售能力和供應鏈能力，以確保即使在這種充滿挑戰的市場條件下，我們也能具有很強的韌性。因此，在收入方面，我們將努力實現先前的預期。

In terms of the impact from the new hotels to the old hotels, we have to admit over the past 20 years of development, especially in those Tier 1 to Tier 2, where we have higher market share, we have a much higher basis. There are a lot of old version of the products, which has been running for many, many years. Of course, in the current environment, this kind of product competitiveness is quite low.

至於新酒店對舊酒店的影響，我們必須承認，在過去20年的發展中，特別是在一線到二線市場，我們的市場份額更高，基礎也更高。有很多舊版的產品，已經運作了很多年了。當然，在目前的環境下，這種產品的競爭力是相當低的。

So as you may notice that we have been constantly introducing new products. For example, we upgraded JI Hotels from previous 3.5 -- 3.0 to currency 5.0. The Orange from 1.0 to the current 3.0 and HanTing from previous maybe 2.0 to the latest 4.0. All the products itself, the quality has been improved massively, of course, that we are adding some of the pressures to the older products.

您可能注意到我們一直在不斷推出新產品。例如，我們將全季飯店從先前的3.5-3.0版本升級到了5.0版本。橘子酒店從1.0版本升級到了現在的3.0版本，漢庭酒店從之前可能是2.0版本升級到了最新的4.0版本。所有產品本身的品質都得到了大幅提升，當然，我們也為老產品增加了一些壓力。

And also, in addition to this, in the Tier 1, Tier 2 cities, because of the real estate market weakness there's a lot of high-quality properties are coming out to the market which we can have much better property to open new hotels with much higher quality products. And that's why -- I mean, we have to admit that in creating some of the negative impacts to the existing old hotels. But we do believe it is a short-term pain, and we have to go through this because our target is not only gaining market share, but we want to gaining market share with high-quality products. That partly has never been changed.

此外，由於一線、二線城市房地產市場疲軟，大量優質房產湧入市場，我們可以擁有更好的房產來開設提供更高品質產品的新酒店。這就是為什麼——我的意思是，我們必須承認這會對現有的舊酒店產生一些負面影響。但我們確實認為這只是短期的痛苦，我們必須經歷這個痛苦，因為我們的目標不僅是獲得市場份額，而且我們希望透過高品質的產品獲得市場份額。這部分從未改變過。

But of course, we are looking for some of the solutions to solve this kind of problem. Firstly, we are actively looking for upgrades for the existing hotels. And secondly, we will be more rationally in terms of positioning for the new hotel openings.

但當然，我們正在尋找一些解決方案來解決這類問題。首先，我們正在積極尋求現有酒店的升級。其次，我們對新開飯店的定位會更合理。

Dan Chee, Morgan Stanley.

摩根士丹利的 Dan Chee。

(interpreted) Thank you management for this opportunity. We saw the company breaks down the gross operating profit between the asset-heavy leased and owned and asset-light franchised and managed (sic – manachised) business segments. What's the key message behind the new disclosure in terms of strategic focus between these two business segments, is there any change we should expect in the future?

（翻譯）感謝管理層給予這次機會。我們看到該公司將總營業利潤分為資產密集型租賃和自有業務部門以及資產輕型特許經營和管理（原文如此 - 管理）業務部門。就這兩個業務部門之間的策略重點而言，新揭露背後的關鍵訊息是什麼？未來我們應該期待什麼改變？

Another follow-up question on this topic is asset-light franchise and manachised segment is now 64% of total GOP with this segment revenue growing 23% this quarter. The GOP margin increased slightly but the GOP for asset-heavy leased and owned declined by 13% Legacy China Huazhu business leased and owned GOP down by 20%. GOP margin also declined. So going forward, what's the outlook for the margin of this segment? And is there any operational adjustment we can expect to support the margin of this leased and owned business?

關於該主題的另一個後續問題是輕資產特許經營和管理部門目前佔總 GOP 的 64%，該部門收入本季增長了 23%。毛利率略有上升，但重資產租賃及自有業務的毛利率下降了 13%，原中國華住業務的租賃及自有業務的毛利率下降了 20%。共和黨的利潤率也下降了。那麼展望未來，該細分市場的利潤前景如何？我們是否可以預期進行任何營運調整來支持這項租賃和自有業務的利潤率？

(interpreted) Thanks, Dan. For the processes, as you may notice that over the past several years, we have been quite actively doing the asset-light transformation for the group over the last few quarters, our e manachised and franchised business has been growing quite rapidly, driven by the high-quality network expansion and also to drive the revenue growth as well.

（翻譯）謝謝，丹。從流程上看，大家可能注意到，過去幾年，我們一直在積極地為集團進行輕資產轉型，在過去的幾個季度裡，我們的電子管理和特許經營業務增長相當迅速，這得益於高質量的網絡擴張，同時也帶動了收入的增長。

In terms of the leased and owned business, you have been seeing that the exposure for the leased and owned business has been gradually reducing. Of course, the stable -- the M&F, the asset-light business has a much stable gross margin and also it shows a real business development and strategy for the group going forward. So that's why since starting from this quarter, we started to giving a breakdown between our asset-light business and asset-heavy business.

就租賃和自有業務而言，您已經看到租賃和自有業務的風險敞口正在逐漸減少。當然，穩定的－M&F，輕資產業務具有更穩定的毛利率，也顯示了集團未來真正的業務發展和策略。因此，從本季開始，我們開始對輕資產業務和重資產業務進行細分。

So for the margin performance for our leased and owned business, as you said, the margin has declined on a year-over-year business. This was mainly because that we are gradually exceeding the exposure -- or reducing the exposure for the leased and owned. Therefore, no matter from the volume or no matter from the margin or from the absolute dollar amount in terms of the profit, it's in a decline trend. But however, in order to maintain a relatively healthier and stable margin performance for the leased and owned business, we are doing several key measures.

因此，對於我們的租賃和自有業務的利潤率表現，正如您所說，利潤率同比有所下降。這主要是因為我們正在逐漸超過風險敞口——或者減少租賃和自有的風險敞口。因此，無論從交易量或從利潤率，或是從利潤的絕對金額來看，都處於下降趨勢。但是，為了保持租賃和自有業務相對健康和穩定的利潤率表現，我們正在採取幾項關鍵措施。

One is, we are actively seeking for the rental reduction with the landlord. For example, in the first half of this year, we actually signed up around RMB390 million in total for the contract value for the rental reduction. And secondly, in terms of the revenue management as well as sales and marketing and cost optimization, we are doing a lot of work for our leased and owned business as well. Well, even though that we are gradually reducing the exposure for our leased and owned business, but we are still putting a lot of efforts for the existing properties, trying to improve their performance. Not only the top line but also the bottom line as well.

一是積極與房東協商減租。例如今年上半年我們實際簽訂的減租合約總額大概是3.9億元。其次，在收入管理以及銷售、行銷和成本優化方面，我們也為租賃和自有業務做了大量工作。嗯，儘管我們正在逐漸減少租賃和自有業務的曝光度，但我們仍在為現有物業付出很多努力，試圖提高它們的表現。不僅要考慮頂線，還要考慮底線。

Lydia Ling, Citi.

花旗銀行的 Lydia Ling。

(interpreted) I have two questions. And the first one is on the store expansion. And so we saw some deceleration in the second quarter. So given current macro background, so how about our franchise sentiment over the openings? And any adjustment in your planning for the new openings for this year? And if possible, could you share with us some color on the new signing momentum?

（翻譯）我有兩個問題。第一個是關於門市擴張。因此我們看到第二季度出現了一些減速。那麼，考慮到當前的宏觀背景，我們對開業特許經營的看法如何？今年新店開幕計畫有什麼調整嗎？如果可能的話，您能否與我們分享一些有關新簽約勢頭的詳細資訊？

And then my second question is on the margin side. And so at group level and -- do you have any further optimization in terms of the cost? And so could you actually give some items on the full year margin trend?

我的第二個問題是關於利潤方面。那麼在集團層面—您在成本方面還有什麼進一步的優化嗎？那麼您能否給出一些有關全年利潤趨勢的項目？

(interpreted) Okay. So as you may notice that over the past several years, we have been implementing high-quality, sustainable growth strategy. We are not only looking for a scale growth, I mean, the quality is much important than the scale itself. So we're going to continuously doing this -- implementing this strategy.

（翻譯）好的。所以您可能注意到，過去幾年我們一直在實施高品質、可持續的成長策略。我們追求的不僅是規模的成長，品質比規模本身更重要。因此，我們將繼續這樣做——實施這項策略。

So going forward, we will be even more strict on new signings in terms of the property in terms of the location, as well as you know, we have to make sure that our franchisees can make profit and the hotel product itself has a high quality. So under this kind of standard, we think we still can maintain a relatively healthier pace of the new openings in the near future.

因此，展望未來，我們將對新簽約的酒店在物業和位置方面更加嚴格，而且，我們必須確保我們的加盟商能夠盈利，並且酒店產品本身俱有高品質。所以在這樣的標準下，我們認為近期我們仍然可以維持一個比較健康的開店節奏。

(interpreted) So in terms of the margin performance, so in the second quarter, benefiting from our asset-light transformation, and we have more revenue and profit contributing from the asset-light business as well as our cost optimization, leveraging our supply chain capability as well as our CRS contribution increase and also a little bit part from the rental reduction. So putting them together help us to achieve 11.3% adjusted EBITDA growth for the group despite the RevPAR decline.

(解釋) 就利潤率表現而言，在第二季度，受益於我們的輕資產轉型，我們有更多的收入和利潤貢獻來自輕資產業務以及我們的成本優化，利用我們的供應鏈能力以及我們的 CRS 貢獻增加，還有一小部分來自租金降低。因此，儘管 RevPAR 有所下降，但綜合起來，我們仍能實現集團 11.3% 的調整後 EBITDA 成長。

In terms of the SG&A, if you're excluding the SBC, actually, the SG&A declined by roughly 1%. For the second half, of course, we could make some of the investment, but definitely, we're going to consider a rationale ROI when we do some of the investment. But in a longer-term perspective, we believe along with more asset-light contribution, we could achieve a stable or gradual margin improvements in the future.

就銷售、一般及行政費用 (SG&A) 而言，如果排除 SBC，SG&A 實際上下降了約 1%。當然，對於下半年，我們可以進行一些投資，但是，我們在進行一些投資時肯定會考慮合理的投資報酬率。但從長遠來看，我們相信隨著輕資產貢獻的增加，未來我們可以實現穩定或逐步的利潤率提高。

Simon Cheung, Goldman Sachs.

高盛的 Simon Cheung。

(interpreted) Let me translate that into English. So I have two questions. The first question is in relation to the RevPAR -- same-store RevPAR performance of the company that has been somewhat affected by some of the old store on the -- under the HanTing brand that management mentioned about. Wondering how long would it take them to kind of resolve the issue in such a way that we were starting to see stabilization on the same-store RevPAR.

（翻譯）讓我將其翻譯成英文。我有兩個問題。第一個問題與 RevPAR 有關——公司的同店 RevPAR 表現在一定程度上受到了管理層提到的漢庭品牌下一些老店的影響。想知道他們需要多長時間才能解決這個問題，以便我們開始看到同店 RevPAR 趨於穩定。

And then secondly, just on the upscale segments, particularly the upscale segments for the Crystal Orange as well as the Intercity brand has done very well in the last, I think, a couple of quarters. Just wondering how management think about the long-term growth potential as well as the market share expectation?

其次，僅在高端市場，特別是 Crystal Orange 和 Intercity 品牌的高端市場，我認為在過去幾季中表現非常良好。只是想知道管理階層如何看待長期成長潛力以及市佔率預期？

(interpreted) So in terms of your question regarding to the HanTing brand. So currently -- as we discussed previously, currently, we launched HanTing 4.0 version. And over the last several years, we have been consistently upgrading HanTing brand, and we believe the 4.0 should be relatively a matured product, the product itself, not only probably -- not only in China but also globally. And in terms of its design, hotel quality should be at the leading position. It's definitely leveraging on our strong capability from the supply chain because it's creating a much lower CapEx, lower OpEx and a shorter construction and also a better performance.

（翻譯）關於您關於漢庭品牌的問題。因此目前——正如我們之前討論過的，目前，我們推出了漢庭 4.0 版本。在過去的幾年裡，我們一直在不斷升級漢庭品牌，我們相信4.0應該是相對成熟的產品，產品本身可能不僅在中國，而且在全球範圍內。並且從設計上來說，酒店品質應該處於領先地位。它確實充分利用了我們強大的供應鏈能力，因為它創造了更低的資本支出、更低的營運支出、更短的建造時間以及更好的效能。

In regarding to the pressures from the new hotels to the older hotels, as I said previously, we noticed that and especially our observation internally that those HanTing 2.0 -- 2.5 version and below are facing the biggest pressure in terms of the RevPAR performance. And it's probably going to take one or two years to solve this problem because it's -- because of the large basis over the past 20 years. But however, we are very glad to see the new signings for the HanTing brand actually in this year has been very, very strong.

關於新酒店對舊酒店的壓力，我之前也說過，我們注意到了，特別是我們內部觀察發現，漢庭2.0-2.5版本及以下的酒店在RevPAR的表現上面臨的壓力最大。解決這個問題可能需要一兩年的時間，因為過去 20 年的基礎非常龐大。但是，我們很高興看到漢庭品牌今年的新簽約實際上非常非常強勁。

So there's two major things that we are going to do is, one, is we keep signing new contracts and opening new hotels in different areas, but also we have to do some of the major substitutions by using the new products to replace all the products or continuously upgrading the existing hotels to improve the competitiveness.

因此，我們要做兩件大事：一是不斷簽署新合約並在不同地區開設新酒店，二是我們必須進行一些重大替代，使用新產品替換所有產品或不斷升級現有酒店以提高競爭力。

In terms of our Orange brand and Intercity brands, I'm very happy to share something with you. In terms of the Orange brand, after launching the 3.0 version, we have been gaining a lot of traction from the franchise customers. And we want -- the Orange brand becomes a back-to-back brand for JI Hotel. And we just achieved a thousand milestone for the Orange brand recently.

關於我們的Orange品牌和Intercity品牌，我很高興與大家分享一些事情。就Orange品牌而言，在推出3.0版本後，我們獲得了大量特許經營客戶的青睞。我們希望 Orange 品牌成為全季酒店的背靠背品牌。最近，我們剛剛為 Orange 品牌實現了千個里程碑。

And in terms of the JI Hotel, currently, the hotel in operation and in pipeline, putting them together has been already exceeded around 4,000 hotels. So we definitely hope the Orange Hotel could be the second growth driver in our middle scale segment. And together with Ji Hotel to become number one and number two hotel brands in the middle-scale segment for the overall market.

而就全季酒店而言，目前，全季酒店營運和籌備中的酒店總數已經超過4000家。因此，我們非常希望橘子飯店能夠成為我們中檔飯店領域的第二個成長動力。並與全季酒店一起成為整體市場中檔酒店細分市場第一和第二大的酒店品牌。

And in terms of the Intercity hotel, because of the high quality and very accurate brand and product positioning, we have been achieving a quite rapid development of this Intercity Hotel over the past several quarters. More importantly, Intercity achieved positive growth in terms of the like-for-like same-hotel RevPAR in the second quarter, which is probably quite less other brands can achieve the positive RevPAR growth. Therefore, in the next, probably three to five years, we definitely want our Intercity brand to become a leading brand in the upper midscale segment.

就城際酒店而言，由於高品質和非常準確的品牌和產品定位，我們在過去幾季中實現了相當快速的發展。更重要的是，城際酒店集團第二季度的同店可售房收入（RevPAR）實現了正增長，這可能是其他品牌很少能實現的正向RevPAR增長。因此，在未來大概三到五年內，我們肯定希望我們的城際品牌能成為中高端市場的領導品牌。

And because of -- we are also taking the benefits from the weakness of the real estate market because we do see a lot of A-grade office building has been out in the market, especially in the Tier 1, Tier 2 cities in some of the prime locations that definitely creating or give us a lot of opportunity to build a very nice and high-quality hotel products. And it's going to be a new standard or a new generation -- Intercity going to be a new standard and a new generation or new definition of the upcoming -- up mid-segment hotel in the near future.

而且由於——我們也從房地產市場的疲軟中獲益，因為我們確實看到許多甲級辦公大樓已經出現在市場上，特別是在一線、二線城市的一些黃金地段，這無疑為我們創造或提供了許多機會來打造非常漂亮和高品質的飯店產品。在不久的將來，它將成為一種新標準或新一代——城際酒店將成為即將到來的中端酒店的新標準和新一代或新定義。

Si Lin, CICC.

司林，中金公司。

(interpreted) I have two questions. So first is on the supply chain. So how do we strengthen our supply chain capability in detail? Could you explain more about this? And to what extent will this contribute to future decrease of operating costs?

（翻譯）我有兩個問題。首先是供應鏈。那麼具體來說，我們該如何加強我們的供應鏈能力呢？能進一步解釋一下嗎？這在多大程度上有助於未來營運成本的下降？

And my second question is about DH. So what will be the pace of the future shift towards asset-light model for DH?

我的第二個問題是關於 DH 的。那麼未來DH轉向輕資產模式的步伐將會是怎麼樣的呢？

(interpreted) Okay. In terms of our supply chain capability, obviously, as we always said, the supply chain capability becomes a very core competency for us. to maintain or to achieve high-quality, long-term sustainable growth. Since 2024, we have been comprehensively upgrading our supply chain capability, mainly through enlarging and attracting a lot of top-tier suppliers and cooperations with them closely as well as increasing more modularization, application and optimizing some of the product design and increase the quality standard and the reviewing system as well, in order to achieve higher quality products and a lower CapEx and OpEx as well as shorter construction period. I can share with you some of the data.

（翻譯）好的。就我們的供應鏈能力而言，顯然，正如我們一直所說，供應鏈能力已成為我們維持或實現高品質、長期可持續成長的核心競爭力。自2024年起，我們全面升級供應鏈能力，主要透過擴大和吸引大量頂級供應商並與他們緊密合作，同時增加模組化、應用化，優化部分產品設計，提高品質標準和審核系統，以實現更高品質的產品和更低的資本支出和營運支出以及更短的建設週期。我可以和你們分享一些數據。

As of now, in terms of, for example, furnitures and furnishing, the consumables, some basic material, we have achieved around 10% to 20% cost decline on a year-over-year basis. And also in terms of the construction period, taking HanTing 4.0 as an example, because we are applying more modularization that actually helped the construction period for HanTing 4.0 products by 30 days. Therefore, the strong and strengthening the supply chain capability could definitely help our -- help us to grow in the longer term with definitely across the leadership and as well as the high efficiency. Thank you.

截至目前，就家具和陳設、消耗品以及一些基本材料而言，我們的成本比去年同期下降了約 10% 至 20%。在建設週期方面，以漢庭4.0為例，由於我們應用了更多的模組化，這實際上幫助漢庭4.0產品的建設週期縮短了30天。因此，強大且不斷加強的供應鏈能力肯定能夠幫助我們——幫助我們在長期內實現成長，並且肯定會提高領導力和效率。謝謝。

This is Jihong. I can address the DH asset-light business model and the development. In Europe, especially in Germany or Central Europe, the legal requirement is not as easy to dissolve any lease contract. So we are working hard on discussing and negotiating with the landlord. Not everything would turn out exactly as we expected. So we continue to try this out.

我是吉紅。我可以講一下DH輕資產商業模式和發展。在歐洲，尤其是德國或中歐，法律要求解除任何租賃合約並不那麼容易。所以我們正在努力和房東進行討論和協商。並非所有事情都會如我們預期的那樣發展。所以我們繼續嘗試。

We are continuously screening the profitability of our leased hotels, especially for low performing or nonperforming hotels, we are constantly engaged in a discussion. And we cannot disclose anything yet, but we -- some of the leased negotiation and some of the change of the lease are in the works. We will report as soon as we have any information about that.

我們正在不斷審查我們租賃酒店的盈利能力，特別是對於業績不佳或沒有業績的酒店，我們一直在進行討論。目前我們還不能透露任何消息，但是一些租賃談判和租賃變更正在進行中。一旦我們獲得任何相關信息，我們將立即報告。

And in the future, we are also trying very hard to go on asset-light model. And we are very, very careful in signing any potential leased contracts. We really need to look at the commitment and also the return in the longer term as well.

而未來我們也在努力走輕資產模式。我們在簽署任何潛在的租賃合約時都非常非常謹慎。我們確實需要考慮承諾以及長期回報。

Thank you. This concludes today's question-and-answer session. I will now hand back to Jason Chen for closing remarks.

謝謝。今天的問答環節到此結束。現在我將發言交還給 Jason Chen 作結束語。

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

感謝大家今天抽出時間與我們在一起，我們期待在下一季與您見面。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。您現在可以斷開連線。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。