In 2025, as China's hotel industry undergoes structural adjustments, the value of a financial report lies not only in documenting the past but also in validating a business model's resilience and strategic foresight. On November 17, H World Group (01179, HTHT.US) released its Q3 2025 results. Despite industry-wide pressures, the company delivered impressive performance: revenue reached RMB 7 billion, up 8.1% YoY, surpassing the upper limit of its previous guidance; adjusted net profit rose 10.8% YoY to RMB 1.52 billion; and adjusted EBITDA increased 18.9% YoY to RMB 2.5 billion.

Marking its 20th anniversary this year, H World operates in a fiercely competitive "red ocean" of opportunities and challenges. This "dual excellence in scale and quality" report not only highlights the company's operational resilience but also underscores its core strategy of "high-quality supply" to navigate cycles, reinforcing market expectations of its "certainty premium."

**Resilient Growth in Q3: Franchise Model as the Core Engine** Amid a slowing industry recovery, H World achieved robust growth across key metrics. Hotel turnover climbed 17.5% YoY to RMB 30.6 billion, with revenue, adjusted EBITDA, and adjusted net profit all showing significant gains. This defies the industry trend of profit pressures during adjustments, validating H World’s cycle-proof business model.

The growth was driven by a combination of "brand empowerment + diversified layout," with franchise and licensing revenue surging 27.2% YoY to RMB 3.3 billion. This reflects strong resonance between H World’s product matrix and franchise partnerships, as well as franchisees’ trust in its brand value and management model.

**Lean Expansion with Operational Efficiency** H World’s Q3 expansion showcased "lean growth": the number of operating hotels and rooms both grew 17.1% and 17.3% YoY, while 749 new domestic hotels opened—a quarterly record—with 2,727 in the pipeline. Crucially, operational efficiency remained high: ADR stabilized and rebounded, OCC held at 84.1% (far above peers), and RevPAR was flat YoY. These metrics demonstrate the synergy of H World’s brand appeal, member traffic, and operational support, ensuring profitability even amid supply growth.

Morgan Stanley raised H World’s target price to $47, citing positive RevPAR trends and operational leverage, while CICC maintained an "Outperform" rating and $48 target, expecting sustained profit growth from RevPAR improvements.

**"High-Quality Supply System" as a Competitive Moat** The franchise boom reflects H World’s "high-quality supply system," powered by its "brand + membership + operations" trifecta. This integrated approach has transformed H World from a traditional operator into an ecosystem platform with unrivaled barriers.

Its brand matrix spans budget to upscale segments: HanTing, Ji Hotel, and Orange anchor the economy-midscale market, while HaiYou redefines "light investment, high turnover" with fully digital operations. In upscale, H World broke new ground, ranking first in 2024 mid-to-high-end signings. By Q3, its upscale pipeline exceeded 1,600 properties (+25.3% YoY), with the newly launched "Ji Grand" brand targeting global premium markets with an Eastern aesthetic.

**Membership and Ecosystem Strength** H World’s loyalty program, "H Rewards," hit 300 million members (+17.3% YoY), contributing 74% of room nights (66 million, +19.7% YoY). Recognized by Skift as the world’s largest hotel loyalty program, it further expanded partnerships (e.g., Bank of China, UnionPay) to build a "finance + stay + lifestyle" ecosystem, reducing OTA reliance.

**Operational Support for Franchisees** Beyond branding, H World offers end-to-end solutions—site selection, design, digital tools—to enhance efficiency and returns. Its "grow the pie together" philosophy ensures franchisees benefit from brand溢价, stable occupancy, and cost controls.

**Supply-Side Reforms as a Long-Term Catalyst** At its recent partner summit, founder Ji Qi identified "supply-side reform" as China’s hotel industry’s biggest opportunity, emphasizing chain expansion, branding, and ROI focus. CEO Jin Hui echoed this, stating H World will "redefine" the sector by upgrading quality and efficiency.

With 20 years of积淀, H World’s systemic capabilities—scalable membership, diversified brands, and operational excellence—position it to lead industry consolidation. As supply-side reforms unfold, H World is poised for "lean growth," creating value for stakeholders in the decades ahead.