H World Group Stock

H World Group Limited, together with its subsidiaries, develops leased and owned, manachised, and franchised hotels primarily in the People’s Republic of China (PRC) and Europe.

The company’s hotels are operated under three different models: leased and owned, franchised, and franchised hotels that it operates under management contracts, which it refers to as manachised.

The company has developed a vast base of loyal and engaged customers under its H Rewards loyalty program. H Rewards covers all of its brands and had more than 199 million members as of December 31, 2022. The company engages with program members through multiple online and offline touch points to personalize their lodging experiences and foster strong and long-lasting relationships that inspire loyalty to its brands. In 2022, approximately 76% of the company’s room-nights were sold to customers who were individual or corporate H Rewards members in legacy Huazhu.

The company has developed industry-leading, proprietary technology infrastructure that enhances customer experience, increases its operational efficiency, and supports its fast growth. The core of this infrastructure is a comprehensive suite of modularized applications, including a cloud-based property management system and centralized reservation, procurement and revenue management systems. Leveraging the company’s operational experience and technological capabilities, it has built a centralized shared service center and realized the economies of scale made possible through its sizable hotel operations. The company has also undertaken a series of industry-first digitalization initiatives to optimize its hotels’ operational efficiency and cost structure and operate smart hotels.

Leveraging the company’s strong brand recognition, massive member traffic, and robust technology infrastructure, it has pioneered a business operating system designed to enhance hotel operations across all fronts. The company’s business operating system is the result of its years of industry know-how, and it includes innovative ideas that are first tested and refined by its leased and owned business.

Brands and Products

As of December 31, 2022, the company had hotels in operation or under development under the following brands, which are designed to target distinct segments of customers:

Economy hotel brands: HanTing Hotel, Ni Hao Hotel, Hi Inn, Elan Hotel, Zleep Hotels and Ibis Hotel;

Midscale hotel brands: JI Hotel, Orange Hotel, Starway Hotel and Ibis Styles Hotel;

Upper midscale hotel brands: Crystal Orange Hotel, IntercityHotel, Manxin Hotel, Mercure Hotel, Madison Hotel, Novotel Hotel, CitiGO Hotel and MAXX by Steigenberger;

Upscale hotel brands: Joya Hotel, Blossom House, Steigenberger Hotels & Resorts, Jaz in the City, and Grand Mercure; and

Luxury hotel brand: Steigenberger Icon and Song Hotels.

The company has entered into brand franchise agreements with Accor Hotels (Accor) and enjoy exclusive franchise rights in respect of Mercure Hotel, Ibis Hotel and Ibis Styles Hotel in the PRC, Taiwan and Mongolia and non-exclusive franchise rights in respect of Grand Mercure and Novotel Hotel in the PRC, Taiwan and Mongolia. Through its acquisition of Deutsche Hospitality, the company has obtained exclusive rights to construct, operate, manage, franchise and license hotels under the Jaz in the City brand in China, South East Asia, Japan, South Korea and Europe subject to certain exceptions, and non-exclusive rights to operate, manage, franchise and license certain number of hotels under the Jaz in the City brand in certain other countries and regions, such as Tunisia, Cape Verde, the UAE and Egypt.

The company also hotels, including partner hotels under Deutsche Hospitality and other hotels under other hotel brands in Yongle Huazhu Hotel & Resort Group.

Economy Hotel Brands

HanTing Hotel

HanTing Hotel is the company’s starting brand and its economy hotel product with the value proposition of Quality, Convenience and Value. HanTing Hotels also include hotels the company previously marketed under the name of Hanting Premium Hotels.

Ni Hao Hotel

Ni Hao Hotel is the company’s economy hotel product targeting young customers. By digitalizing and standardizing independent hotels, it helps improve their operational efficiency while maintaining their individual features. Ni Hao Hotels provide clean and comfortable lodging experiences to the guests at affordable prices. Ni Hao Hotel is committed to creating a happy planet for young travelers.

Hi Inn

Launched in late 2008 and originally marketed under the name of HanTing Hi Inn, Hi Inn is the company’s economy hotel product committed to support self-help service. With the tenet of freedom of lodging for all, Hi Inn has carefully selected the streets and alleys of cities, reasonably planned every inch of space, and met the needs of practical people on leisure vacations and business trips with self-help services, devoting itself to making every traveler feel free, wise, practical and green lodging experience.

Elan Hotel

Elan Hotel is the company’s economy hotel product committed to improving the operating efficiency of individual micro, small- and medium-sized economy hotels. With the continuing upgrade of accommodations and services, these hotels provide a high quality experience for young customers.

Ibis Hotel

Ibis Hotel is an economy hotel brand that is recognized across the world for its quality, reliability and commitment to the environment. It has created complex public spaces, specialty cocktails, Ibis Croissant and other specialty dining, and is known worldwide for its comfortable, stylish and energetic brand tonality.

Zleep Hotels

Zleep Hotels, the company’s economy hotel brand, is a well-known and successful hotel brand in Scandinavia offering service and design at a great rate.

Midscale Hotel Brands

JI Hotel

JI Hotel creates a quality experience through friendly services to make more people feel the natural decency of the Orient and enhance the quality of life on the journey for customers. Its brand purpose is to make customers feel the natural decency of the Orient, and its brand philosophy focuses on Orient, Moderation and Culture.

Orange Hotel

Orange Hotel, previously marketed under two brand names: Orange Hotel and Orange Select Hotel, is the company’s midscale hotel brand. With healthy lifestyle and attitude, energetic and bright hotel products and services, Orange Hotel meets the lifestyle and consumption needs of the contemporary middle class. In terms of space design, Orange Hotel adopts the theme of California sunshine, emphasizes on returning to the essence of Orange, hoping that everyone who enters the hotel can enjoy life with a healthy and energetic attitude.

Starway Hotel

Starway Hotel is the company’s select local specialty hotel brand. Comfortable sleeping system, preferred special breakfast, convenient intelligent services and laundry and other supporting facilities are available to meet personalized travel needs.

Ibis Styles Hotel

Ibis Styles Hotel is a midscale brand that offers comfortable and designer hotels. Ibis Styles Hotel advocates one-hotel-one-design, with each hotel choosing a different story theme to create creative spaces through a fun and premium design approach that is eye-catching. The different style collections of Ibis Styles Hotel can cater to the accommodation needs of different people, covering not only business and vacation, but also attracting the innovative Z-Generations. As of December 31, 2022, the company had 85 Ibis Styles Hotels in operation and an additional 25 Ibis Styles Hotels under development.

Upper Midscale Hotel Brands

Crystal Orange Hotel

Crystal Orange Hotel is the company’s upper midscale hotel brand featuring boutique design hotels. Crystal Orange Hotel has launched a new version, targeting the upper midscale segment market and empowering customers with a five-star quality experience at a four-star price. The New Crystal returns to the essence and purity, using walnut, antique copper and glass elements to create a more textured and premium space atmosphere.

IntercityHotel

IntercityHotel is the company’s upper midscale urban hotel brand targeting business travelers. The hotels of IntercityHotel are usually located within walking distance of train stations or airports. In the future, IntercityHotel will once again break through the city edge and become not only a local city landmark, but also a perfect starting point for customers to do business and explore the city.

Manxin Hotel

Manxin Hotel was launched as an upper midscale brand of resorts in 2013. Nowadays Manxin Hotel has become a brand with city hotels and resorts. Manxin Hotel is aimed at bringing the guests a distinct experience by presenting amazing space design and offering attractive activities. Manxin Hotel incorporates localized features into the design and experience, and is a must-stay upper midscale hotel for urban exploration, with both business and travel features.

Mercure Hotel

Mercure Hotel is an upper midscale hotel brand that combines the French romantic and elegant lifestyle with a strong quality commitment with the warm experiences of hotels that are rooted in their local community.

Madison Hotel

The company launched its new upper midscale hotel brands Madison Hotel and Grand Madison Hotel in 2019, which are committed to offering guests a classic lodging experience. In 2020, the company merged the Grand Madison Hotel brand into the Madison Hotel brand. These hotels target business and leisure guests with high lodging standards and desire to understand more of the cities they are traveling in, and offer comfortable accommodations, functional furnishings and facilities, and high-quality services.

Novotel Hotel

Novotel is an upper midscale brand that provides a multi-service offering for both business and leisure guests, with spacious, modular rooms, 24/7 catering offers with balanced meals, meeting rooms, attentive and proactive staff, kid areas, multi-purpose lobbies and fitness centers. These hotels are typically located in the heart of major international cities, business districts and tourist destinations.

CitiGO Hotel

CitiGO Hotel is a lifestyle brand that mainly targets young people. Crafted by internationally prestigious designers, CitiGO blends travel, sports and urban culture together to provide guests with unique lodging experience. With the concept of entry lux, fashion, social life and fun, CitiGO offers trendy hospitality with affordable price.

MAXX by Steigenberger

MAXX by Steigenberger, the company’s upper midscale hotel brand, is a new, charismatic concept and focuses on creating a warm, feel-good atmosphere in all destinations. MAXX by Steigenberger inherits the European model and integrates insights into the local market, focusing on the core needs of sleep, bathroom and breakfast, with quality facilities, subtle style, superb hospitality and social circle as the emphasis, providing customers with a new, luxurious accommodation experience.

Upscale Hotel Brands

Joya Hotel

In December 2013, the company launched its upscale brand Joya Hotel. These hotels are typically located in areas close to major business and commercial districts in first- and second-tier cities. With the new Chinese-style design and diversified service features, Joya Hotel creates a hotel space more in line with the Chinese culture and lifestyle.

Blossom House

Blossom House, previously branded Blossom Hill Hotels & Resorts, is the company’s upscale lifestyle and resort brand targeting affluent travelers. With the unique brand connotation of Chinese culture and regional culture and creativity, Blossom House hotels have created three resort types: urban resort lifestyle hotel, themed country club and mega-resort.

Steigenberger Hotels & Resorts

Steigenberger Hotels & Resorts is the company’s upscale brand originated in Germany. With high-quality facilities and services and unique entertainment resources, Steigenberger Hotels & Resorts provides guests with a super high-end experience of high-quality conference services, high-quality leisure and quality meals to meet the diverse needs of guests’ various activities.

Jaz in the City

Jaz in the City is the company’s upscale lifestyle brand. Jaz in the City branded hotels reflect metropolitan lifestyle and draw upon the local music and cultural scene.

Grand Mercure

Grand Mercure offers guests an imaginative, discovery-filled hotel experience, a fresh and engaging stay that attracts visitors from around the world. Deeply rooted in its destinations, Grand Mercure offers an elegant and immersive cultural experience through warm, attentive staff who tell vivid stories and take guests on a journey through the traditions of fine dining and high-end hospitality.

Luxury Hotel Brand

Steigenberger Icon

Steigenberger Icon is the company’s first brand under luxury level, a prestigious level it granted only to its most legendary Steigenberger hotels. For its signature premium service and spiritual and cultural appeals, Steigenberger Icon has become the top choice for royalty, celebrities, dignitaries, talents and superstars to stay.

Song Hotels

Song Hotels is the company’s luxury hotel brand designed for high-end vacation experience. The development of this brand is inspired by culture and the delicate aesthetics from Song dynasty. Song hotels convey a leisure and elegant lifestyle to its guests through the use of the exquisite decoration and meticulous service.

Hotel Network

The company operates hotels under lease and ownership, manachise and franchise models. Under the lease and ownership model, the company directly operates hotels located primarily on leased properties, as well as on owned properties. Under the manachise model, the company manages manachised hotels through the on-site hotel managers the company appoints and collects fees from franchisees. Under the franchise model, the company collects fees from franchisees but do not appoint on-site hotel managers. The company’s hotel network has grown rapidly.

Leased and Owned Hotels

The company manages and operates aspect of hotels and bear all of the accompanying expenses. The company is responsible for recruiting, training and supervising the hotel managers and employees, paying for leases and costs associated with construction and renovation of these hotels, and purchasing all supplies and other required equipment. The company’s leased hotels are located on leased properties. The company leases usually allow extensions by mutual agreement.

Manachised and Franchised Hotels

The company’s franchisees lease or own their hotel properties and are responsible for the costs of developing and operating the manachised or franchised hotels, including constructing and renovating the hotels according to its standards, and all of the hotel operating expenses. The company imposes the same standards on all of its manachised and franchised hotels to ensure product quality and consistency across its hotel network.

Manachised Hotels

The company manages its manachised hotels and impose the same standards on all manachised hotels as its other hotels to ensure product quality and consistency across its hotel network.

The company authorizes a manachised hotel to use its relevant brand name, logo and relevant trademarks. The franchisee is responsible for the hotel’s construction, renovation and maintenance. The company provides guidance to the franchisee on the construction or renovation of the hotel and require the hotel to meet its standards before approving it to commence operations. The company appoints and trains hotel managers who are responsible for hiring hotel staff and managing daily operations of its manachised hotels. The company also provides its franchisees with services, such as central reservation, sales and marketing support, technology support, quality assurance inspections and other operational support and information.

The company generally charges its franchisees an upfront franchise fee typically ranging between RMB80,000 and RMB1,000,000 per hotel, as well as a monthly franchise fee of approximately 3% to 6.5% of the gross revenues generated by each manachised hotel. In addition, the company collects from franchisees a reservation fee for using its central reservation system and a membership registration fee for customers who join its H Rewards loyalty program at the manachised hotels. The company also charges system maintenance and support fees and other IT service fees from its franchisees for sharing its technology infrastructure with its manachised hotels. Furthermore, the company employs and appoints hotel managers for the manachised hotels and charge franchisees for a manager fee on a monthly basis.

The company’s franchise and management agreements for its manachised hotels typically run for an initial term of eight to ten years, and may be extended upon mutual agreement between it and the franchisee three months prior to the expiration of the franchise and management agreements.

The company typically has the right to early terminate the franchise and management agreements immediately, if the franchisee commences operations without its approval, goes bankrupt, suspends operation for a specified period, interferes in its appointed manager’s management of the hotel, or violates applicable laws and regulations that result in harm to its brand, among others.

Franchised Hotels

The company applies the same standards to its franchised hotels as its other hotels. For its franchised hotels under legacy Huazhu, the terms of the franchise agreements are subject to negotiation with individual hotel owners. The services that the company provides to franchised hotels are similar to those it provides to manachised hotels.

The company charges its franchised hotels fees on generally the same terms as its manachised hotels. The company’s franchise agreements for its franchised hotels typically run for an initial term of eight to ten years, and may be extended upon mutual agreement between it and the franchisee three months prior to the expiration of the franchise agreements.

The company’s rights to terminate the franchise agreements for its franchised hotels are similar to those for its manachised hotels.

For its franchised hotels under Deutsche Hospitality, the franchisees have historically been required to pay Deutsche Hospitality a franchise fee of approximately 0.5% to 4.0% of the hotel’s gross room revenue or turnover. The company is gradually adapting the terms of Deutsche Hospitality’s franchise agreements to be similar to those of its other franchised hotels.

Hotel Development

The company mainly uses the manachise and franchise models to expand its network in a less capital-intensive manner. The company also leases the properties of the hotels it operates. The company has adopted a systematic process with respect to the planning and execution of new development projects.

Manachised and Franchised Hotels

The company opens manachised and franchised hotels to expand its geographical coverage or to further penetrate in its existing markets. Manachised and franchised hotels provide the company valuable operating information in assessing the attractiveness of new markets, and supplement its coverage in areas where the potential franchisees can have access to attractive locations by leveraging their own assets and local network. As is the case with leased and owned hotels, the company generally look to establish manachised and franchised hotels near popular commercial and office districts that tend to generate stronger demand for hotel accommodations. Manachised and franchised hotels must also meet specified criteria in connection with the infrastructure of the building, such as adequate water, electricity and sewage systems.

The company typically sources potential franchisees through word-of-mouth referrals, applications submitted via its website and industry conferences. Some of the company’s franchisees operate several of its manachised and franchised hotels. In general, the company seeks franchisees who share its values and management philosophies.

The company typically supervises the franchisees in designing and renovating their properties pursuant to the same standards required for its leased and owned hotels, and provide assistance as required. The company also provides technical expertise and recommend pre-selected qualified suppliers to its franchisees. In addition, the company appoints or trains hotel managers and help train other hotel staff for its manachised hotels to ensure that high quality and consistent services are provided throughout all its hotels.

Intellectual Property

The trademarks and logos used in the company’s hotels are under protection of the registered trademarks and logos. As of December 31, 2022, the company registered 1,382 trademarks and logos with the China Trademark Office. As of December 31, 2022, the company filed 272 trademark applications pending for examination and review by the PRC trademark office. As of December 31, 2022, the company also registered 1,210 trademarks and filed 220 trademark applications outside China. As of December 31, 2022, the company received 28 patents; another 5 patents were applied and under review by relevant PRC authority. The company also received copyright registration certificates for 153 software programs developed by it as of December 31, 2022. In addition, the company registered 622 national and international top-level domain names, including www.hworld.com, as of December 31, 2022.

Competition

The company primarily competes with other hotel chains as well as various independent hotels in each of the markets in which it operates, including Chinese hotel groups, such as BTG Homeinns and Jinjiang, as well as international hotel groups, such as Marriot, Intercontinental, Accor and Hilton. The company also faces competition from Airbnb and service apartments.

History

The company was founded in 2005. It was incorporated in the Cayman Islands under the laws of the Cayman Islands in 2007. The company was formerly known as China Lodging Group, Limited and changed its name to Huazhu Group Limited in 2018. Further, the company changed its name to H World Group Limited in 2022.