Huazhu (01179, HTHT.US) brand potential accelerates to realize deterministic growth, and the upward guidance releases value signals

On August 17, Huazhu Group (01179, HTHT.US) announced the second quarter and interim results of 2026. According to the data, in the second quarter, Huazhu's turnover increased 13.2% year on year to 30.5 billion yuan, and revenue increased 10.8% year on year to 7.1 billion yuan. Driven by the mission of “achieving a beautiful journey”, Huazhu continued to advance the “lean growth” strategy in depth in the second quarter. During this period, it not only achieved steady growth in financial data, but also handed over outstanding report cards in various dimensions such as product upgrades, scale development, membership system, and scientific and technological innovation. Based on the outstanding performance in the second quarter, Huazhu Group also raised its 2026 full-year guidance: annual revenue is expected to increase by 4% to 8% year on year; of these, Huazhu China's revenue will increase 7% to 11%, all up from previous guidance.

For investors, the significance of Huazhu's report card is not only about digital growth, but also because it validates a key judgment: large scale can also be strong. Huazhu has not only achieved scale leadership, but also used its system capabilities to make scale a sustainable competitive advantage. Behind this is the collaborative support of brand power, product power, and operational efficiency. It is this systematic combination of capabilities that forms a real barrier to living in China in the eyes of investors.

Develop in an orderly manner on a large scale to give back to a wider range of consumers with abundant supply

In the second quarter, Huazhu Group's hotel network covered more cities and served more consumers. As of June 30, 2026, Huazhu had 13,539 hotels in operation worldwide, covering 21 countries, with a total number of guest rooms exceeding 1.33 million. There were 498 newly opened hotels in China during the period, a net increase of 322; hotels in operation and awaiting opening have covered 1,468 towns, adding 52 empty markets over the previous year.

It is worth mentioning that in the process of the orderly development of the Huazhu China Hotel Network, the industry environment is not unsurprising. In the first half of 2026, the Chinese hotel industry continued the operating characteristics of “alternating peaks and valleys”, and rational consumption and quality upgrading coexisted as the core main line of the industry. The industry is moving from an era of extensive scale expansion to a new cycle of refined operation centered on value reshaping. The overall pattern of “head is scarce, central congestion, and tail pressure” is presented. Brand building has been upgraded from a scale competition to a comprehensive competition of service quality, innovation ability, and operational efficiency. When incremental competition shifts to a stock game, what really opens the gap is the comprehensive competitiveness of brand potential, product strength, and system efficiency.

In this industry environment, Huazhu's store expansion in China has maintained an orderly pace. Budget and mid-range hotels are still the main new players, and the natural extension of the brand's potential to sink into the market is clear, reflecting that Huazhu does not simply pursue the number of stores opened, but is committed to improving the supply network with suitable brands in regions with accommodation needs and commercial potential. At the same time, in the process of promoting the penetration of low-tier cities, Huazhu simultaneously optimizes the quality of existing stores in core cities and high-quality business districts, and enhances the synergy effect and operational resilience of the overall network. At this pace, Huazhu China's strategy of opening 2,200 to 2,300 new stores throughout the year progressed in an orderly manner.

The simultaneous improvement of performance indicators provides strong evidence for the orderly development of Huazhu Group. In the second quarter, Huazhu China's RevPAR (average rentable room revenue) reached 238 yuan, up 1.1% year on year; ADR (average daily housing price) was 298 yuan, up 2.6% year on year; OCC (occupancy rate) remained high at 79.8%, higher than the industry average. Continued improvement in ADR is the main driving force for RevPAR's growth, indicating that the pricing capabilities of Huazhu's brands continue to increase. In a performance conference call, Huazhu CEO Jin Hui attributed this positive change to iterative product service upgrades, refined revenue management, and continuous improvement in comprehensive marketing capabilities.

The continued deepening of the membership ecosystem is another supporting force that cannot be ignored behind the orderly development of the Huazhu store network. As Jin Hui said, “The membership system and direct sales capabilities are important core competencies that support the long-term sustainable development of the company's business.” By upgrading member benefits and user experience, Huazhu continues to refine the refined member operation system, deepen cross-border linkage between multiple business formats, and expand multiple consumption scenarios for membership points. As far as phased results are concerned, Huazhuhui's huge private traffic pool has not only contributed to a stable customer base for franchise stores. And this is a microscopic expression of the positive flywheel that “the brand brings stable customer flow, and the passenger flow is transformed into franchisee investment confidence.”

The centralized release of brand power is the most intuitive footnote to large-scale orderly development. In the “Global Top 50 Hotel Brands” list recently published by the authoritative international hotel magazine “HOTELS”, the all-season hotel topped the global single brand list with 404,600 guest rooms, Hanting Hotel ranked second with 393,800 guest rooms, and Orange Hotel's ranking climbed to 26th place in the world. This is the first time that a Chinese hotel brand has taken the first place in the global single brand list. The whole season jumped from fourth to number one in the world the previous year, followed by Hanting, and the youngest orange in the “Golden Triangle” also ranked in the top 30 in the world. According to Zhitong Finance, the significance of Huazhu Group's achievement of this milestone is that it has verified a simple business logic in the most direct way: when hundreds of millions of consumers use real stay choices to push the full season, Hanting, and Orange to the top of the world, brand power is no longer an abstract concept, but a natural result — consumers recognize the brand, and the brand brings traffic to the franchisee's investment confidence, and provides richer stores to serve a wider range of consumers.

Realization of brand value, from “consumer recognition” to “ecological symbiosis”

The centralized implementation of Huazhu's brand value is the result of consumers voting with their feet. However, the true value of brand power lies not only in ranking on the list, but also in whether it can be transformed into a safe experience for guests and profit guarantee for franchisees. In this sense, brand power is the deepest value bond connecting guests and franchisees.

For guests, Huazhu responds to increasingly diverse accommodation needs through continuous product iteration. By the end of the reporting period, the proportion of stores 4.0 and above in the whole quarter had risen to 85%, Hanting 3.5 and above reached 55%, and Orange 2.0 and above reached 80%. New versions of the full season 5.0 “Xiaoshanqing”, Hanting 4.0, and Orange 3.0 have been launched one after another, driving the “good but not expensive” lodging experience to continue improving. While stabilizing the basic market of the mass market, Huazhu's high-end brands have also ushered in accelerated growth. With the four major brands Intercity, All Seasons, Crystal, and Mercure as the core, the Group has built a clear matrix of mid-range and high-end brands. By the end of the second quarter, the number of hotels in operation and awaiting opening by Huazhu China's middle and high-end brands increased 13.4% year over year. Among them, Intercity Hotel has jumped to 139 stores, relying on the “German ingenuity, efficient business” differentiated positioning and accurate card position business travel circuit; the newly unveiled All-Season Grand View has entered the high-end business market with Oriental elegance. It has already broken through 20 in a few months, showing strong development potential.

Picture: All Season Grand View Room

Figure: Intercity public areas

Also, recently, Huazhu announced a comprehensive upgrade of the “Safety 360” system, focusing on the four dimensions of cleaning, privacy, products, and service, from adding linen to anti-pinhole detectors, turning the “invisible standard” into peace of mind that guests can perceive.

For franchisees, Huazhu transforms brand potential into real cost reduction and efficiency through systematic platform capabilities. Upgrading the hotel cost digital management system GOP2.0 and superimposing the SaaS financial system is not only possible

Store business conditions can be checked at any time. Through abnormal warning and root cause analysis, it provides a more reliable basis for management decisions, so that franchisees can keep track of the flow of every penny.

At the level of the membership system, the stable private customer flow provided by Huazhu Club already forms the most direct customer source guarantee for franchisees — relying on a huge membership base and a high proportion of reservations through its own channels, a new store has a definite initial customer flow once it opens, greatly reducing customer dependence on OTA channels. Huazhu's ability to transform brand potential into actual customer traffic is the most perceptible certainty for franchisees when choosing Huazhu. This is not cold data; it is actually a customer source guarantee that “makes franchisees feel more at ease”.

In terms of service efficiency, Huazhu's AI in-residence service has covered 13,000 hotels, covering 10 high-frequency scenarios such as delivery, renewal, billing, and facility inquiries, and more than 180 service sub-scenarios, forming a complete closed loop of intelligent services from demand identification to task execution. From self-service check-in to in-home services, from store operations to franchisee management, digital tools are delivering standardized service capabilities to every store.

Conclusions

The value of Huazhu Group's report card is more than just the numbers themselves. From brand rise to product iteration, from member ecology to technological empowerment, Huazhu's business performance in the second quarter verified a key judgment: growth is no longer a single-point breakthrough, but a continuous release of system capabilities. When the full season and Hanting won the global championship and runner-up, when the store network developed in an orderly manner, and when the GOP management system built a foundation for franchisees to reduce costs and increase efficiency, Huazhu is responding to the market with facts: in addition to leading in scale, it has also achieved systematic leadership in operational efficiency and brand value.

This is where the certainty of “size+brand” two-wheel drive lies. For investors, this certainty does not come from exceeding expectations of a certain performance, but rather from a conclusion that has been verified over and over again: Huazhu not only has a broad moat of scale, but is also supported by collaborative brand power, product strength, and operational efficiency, making scale a sustainable competitive advantage. When the industry moves from incremental competition to a stock game, only enterprises that can manage scale and efficiency at the same time can continue to deliver value in the midst of cyclical fluctuations. Huazhu is becoming the answer.