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DATE
Monday, Aug. 17, 2026 at 7:00 a.m. ET
CALL PARTICIPANTS
- Founder and Executive Chairman – Ji Qi
- Chief Executive Officer – Jin Hui
- Chief Financial Officer – Arthur Yu
- Investor Relations – Ivy Luo
TAKEAWAYS
- Revenue — RMB 7.1 billion, representing a 10.8% increase driven by China business expansion and RevPAR recovery.
- HWC Revenue — RMB 5.9 billion, a 14.9% increase reflecting steady network expansion and improved RevPAR performance.
- M&F Revenue — RMB 3.6 billion, a 25.2% increase supported by high-quality asset-light network growth.
- Adjusted EBITDA — RMB 2.7 billion, a 20% increase due to an improved profit contribution from the asset-light business and G&A cost controls.
- Adjusted EBITDA Margin — 38.3%, an expansion of 3 percentage points resulting from a growing asset-light business mix.
- HWC RevPAR — RMB 238, a 1.1% increase year over year fueled by continuous product upgrades and revenue management optimization.
- HWC ADR — RMB 298, a 2.6% increase year over year marking the fourth consecutive quarter of positive growth.
- HWC Occupancy Rate — 79.8%, a 1.2 percentage point decrease compared to 81.0% in the prior year period.
- HWI RevPAR — US$98, a 3.8% decrease reflecting the negative impact of the Middle East conflict and expansion in Southeast Asia.
- Net Income — RMB 1.6 billion, a 2.1% increase supported by HWC performance and international segment efficiency improvements.
- Hotel Turnover — RMB 30.5 billion, a 13.2% increase driven by a 12.7% increase in the number of hotel rooms in operation.
- Gross Operating Profit (M&F) — RMB 2.2 billion, an 18.5% increase resulting from higher business scale, revenue, and profit.
- Hotel Operating Costs — RMB 4.0 billion, a 7.4% increase that was slower than total revenue growth as the company became more asset-light.
- Cash and Cash Equivalents — RMB 14.2 billion, as of June 30, 2026, providing liquidity for a new three-year shareholder return plan.
- Total Debt — RMB 4.2 billion, as of the end of the second quarter.
- Full Year 2026 Revenue Guidance — 4% to 8% growth, raised from the previous range of 2% to 6% based on current performance visibility.
- M&F Revenue Guidance — 16% to 20% growth, increased from the previous 12% to 16% range for the full year.
- Hotels in Pipeline — 3,089 properties, including 3,054 hotels in China and 35 international locations.
- HWC New Openings — 498 hotels in the second quarter, consisting of one leased property and 497 manachised or franchised hotels.
- HWC Closed Hotels — 176 properties, reflecting the company’s strategy of exiting leased and owned properties and optimizing the network.
- Total Employees — Exceeding 260,000, representing growth supported by ongoing hotel network expansion and recruitment.
- Upper Mid-scale Segment Scale — 1,738 hotels in operation and in pipeline, a 13.4% increase supported by multibrand development.
- SG&A Expenses — RMB 1.0 billion, a 6.1% increase year over year reflecting internal cost management capabilities.
- Ordinary Cash Dividend — Approximately US$275 million, representing US$0.087 per ordinary share or US$0.87 per ADS.
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RISKS
- Jin stated, “In the second quarter of 2026, our HWI segment’s operational performance was negatively impacted by the Middle East conflict as well as our expansion into the developing South Eastern Asia countries which have lower ADRs and are still in the ramp-up period,” noting regional tensions persist.
- Jin noted that July performance in some markets was below expectation due to several regions being negatively affected by severe weather during the peak summer holiday period.
SUMMARY
Management of H World Group Limited (HTHT +11.29%) reported a strategy centered on high-quality hotel network expansion through regional breakthroughs and penetration into lower-tier cities. The company stated that the manachised and franchised business model remains the primary growth engine, representing 93% of total hotel rooms in operation as of June 30, 2026. Management reported the implementation of a new three-year shareholder return plan totaling $2.5 billion, supported by cash flow and balance sheet strength. The company indicated that internal operations now focus on the mass market lodging segment while transitioning further toward an asset-light structure.
- CEO Jin stated that the “limited service Golden Triangle brands,” comprising Hanting, JI, and Orange, serve as the core engine for the strategy to reach 20,000 hotels in 2,000 cities.
- Management reported that the H Rewards membership program and direct sales capabilities are “core competitive advantages underpinning the group’s long-term sustainable growth.”
- CEO Jin noted that Hanting 4.0 has achieved broader recognition from guests, stating the version’s “RevPAR performance is meaningfully better than the older version.”
- CFO Yu reported that the adjusted EBITDA margin expanded to 38.3%, attributing the improvement to a “growing profit contribution from our asset-light business, coupled with well-controlled G&A expenses.”
- The company stated it has completed its 2024 shareholder return plan one year ahead of schedule and initiated a new ordinary cash dividend of approximately $275 million.
- Management reported that upper mid-scale brands, including Intercity, Grand JI, Crystal, and Mercure, reached 1,738 hotels in operation and in pipeline, a 13.4% increase.
- CEO Jin noted that inbound tourism is providing new growth opportunities in Tier 1 and Tier 2 cities following the implementation of visa-free policies for multiple countries.
INDUSTRY GLOSSARY
- ADS: American Depositary Share, a U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange.
- ADR: Average Daily Rate, representing the average rental income per paid occupied room per day.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, used to assess operating performance.
- GMV: Gross Merchandise Volume, also referred to as hotel turnover, representing the total transaction value of room and non-room revenue.
- HWC: H World China, the operating segment for all hotels located within mainland China.
- HWI: H World International, the operating segment for all hotels located outside mainland China.
- Manachised: A management-franchised hotel model where the company appoints on-site hotel managers and provides training and support while the franchisee owns the property.
- RevPAR: Revenue Per Available Room, calculated by multiplying a hotel’s average daily room rate by its occupancy rate.
Full Conference Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the H World Q2 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Ivy Luo. Please go ahead.
Ivy Luo: Thank you, operator. Good evening, and good morning, everyone. Thanks for joining us today. Welcome to H World Group 2026 Second Quarter and First Half Earnings Conference Call. Joining us today is our Founder and Executive Chairman, Mr. Ji Qi; our CEO, Mr. Jin Hui; our CFO, Mr. Arthur Yu. Following our prepared remarks, management will be available to answer your questions. 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 obligation to update any forward-looking statements, except as required under applicable laws. On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation 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. 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 2026. Mr. Jin, please.
Hui Jin: [Interpreted] Dear investors and analysts, good day. Thanks for joining us today. Welcome to H World Group’s Second Quarter 2026 Earnings Conference Call. During the first half of 2026, domestic culture and tourism travel in China maintained steady growth. According to the Ministry of Culture and Tourism, domestic resident trips reached 3.5 billion in the first half, representing a 5.4% year-over-year increase. As visa-free policies for multiple countries continue to take effect, inbound tourism gained strong momentum, bringing new growth opportunities to China’s lodging industry. On the consumption structural front, the growth of total domestic travel spending moderated, up 2% year-over-year to RMB 3.2 trillion in the first half.
This reflects new consumption characteristics among travelers, which are more frequent trips with more prudent spending decisions. Recently, the government issued a plan to build China into a nation’s strong in tourism during the 15th 5-year plan period, which laid out 2030 targets, including annual domestic resident trips exceeding 8.3 billion with total consumption reaching RMB 7.7 trillion, and inbound tourist arrivals reaching 190 million with total spending exceeding USD 150 billion. The plan also outlined adjustments to the tourism regional layout and a greater supply of high-quality culture and tourism-related products. We believe the travel-related industry supply chain has great long-term growth potential.
Moving forward, H World Group will keep leveraging our multi-brand portfolio, hotel operation expertise and digital capabilities to steadily expand our brand network and capture accommodation demand brought by travelers. Facing the current industry opportunities and challenges, H World remains committed to do the right thing for the long term. We focus on the mass market lodging segment and emphasize high-quality development. On hotel network, we continue expanding into lower-tier cities, while at the same time, securing those prime locations in the core cities, continuously optimizing our existing hotel footprint. In the second quarter, we achieved high-quality network expansion through regional breakthroughs and lower-tier city penetration.
Backed by a 12.7% year-over-year increase in the number of rooms in operation, the group’s hotel GMV grew 13.2% year-over-year to RMB 30.5 billion. Room nights booked by members also achieved steady growth. More importantly, the group asset-light manachise and franchise business delivered robust growth across scale, revenue and profit. In the second quarter, manachise and franchise revenue increased 25.2% year-over-year to RMB 3.6 billion, and gross operating profit grew 18.5% year-over-year to RMB 2.2 billion. With industry competition rationalizing, H World China achieved a 2.6% year-over-year increase in ADR in the second quarter, which was backed by our continuous product and service upgrades, revenue management and integrated marketing capabilities. This marked our fourth consecutive quarters of positive ADR growth.
The ADR improvement fueled a 1.1% year-over-year increase in RevPAR in the same period. We continue to steadily expand our high-quality hotel network and enhance our nationwide network presence. As of end June, we had 13,417 hotels in operation in China. Our hotel brands and products continue to gain strong favor and recognition from franchisees, and we maintained a solid signing momentum. As of end June, hotels in pipeline increased both year-over-year and quarter-over-quarter, reached 3,054. Our hotels in operation and in pipeline cover 1,468 cities in China, and we are marching towards our goal of 20,000 hotels in 2,000 cities. While expanding the lower-tier market, we also continue optimizing hotel footprint in core cities and prime commercial districts.
We believe that with H World strength and product competencies and brand influence, we can achieve further breakthrough in China’s core existing markets. [Technical Difficulty]
Operator: We have signed back. Please resume.
Hui Jin: [Interpreted] We focus on the economy and mid-scale segment, deeply cultivating the mass market and continuously strengthening the core competitiveness of our flagship brands. With the upgrades of Hanting and JI, we are pleased to see that the new version hotels delivered meaningful improvement in RevPAR and gained broader recognition from guests and franchisees. With the rollout of Hanting, JI we are further solidifying our leading position in the economy and mid-scale lodging markets. In the recently released Hotel 2025 global rankings for single branded and room counts, JI Hotel leap from the #4 place globally to the top spot with Hanting closely following in the second place.
This marks the first time Chinese hotel brands have claimed the top two positions on this list and underscores the effectiveness of our brand strategy. In addition, our core mid-scale brand, Orange Hotel, climbed to 26 place globally, representing another notable milestone in our brand-led expansion. We view this scale leadership as a milestone to date, and we will continue to adhere to high-quality development, focusing on product refinement and continuous iteration to improve product quality and services to better serve guests diversify lodging demands.
Looking ahead, our limited service Golden Triangle brands, namely Hanting, JI, and Orange will continue to unleash strong market competitiveness and serve as a key growth engine for the group’s 20,000 hotel in 2,000 cities strategy. Besides deepening our core mass market brand and network expansion, our upper mid-scale segment has also been making steady progress. We stick to our multi-brand strategy with distinct brand positioning and value propositions and push ahead with our development strategy centered on four flagship brands Intercity, Grand JI, Crystal, and Mercure. As of end June, H World China’s upper mid-scale brands and 1,738 hotels in operation and in pipeline, up 13.4% year-over-year.
On the marketing front, we have always centered our strategy on our H Rewards membership program. We firmly believe that our membership program and the direct sales capability are the core competitive advantages underpinning the group’s long-term sustainable growth. As our hotel network expanded to more cities, H Rewards membership base and room nights booked by members have both achieved steady growth. In addition, to upgrade membership benefit and enhance our guest experiences, we are refining our membership-centric operation, deepening cross-industry partnerships and expanding diversified loyalty point consumption scenarios for our members. At the same time, we are accelerating our H Reward international presences, optimizing our H Reward app to capture more inbound travel demand and empower global membership services.
Going forward, we will further strengthen brand building, broaden customer acquisition channels and continuously optimizing membership benefits to enhance member conversion and strengthen member loyalty. In addition to focusing on our internal operational management and driving steady business expansion across the group, we are also committed to proactively fulfilling our social responsibilities. I would like to share three key areas. Firstly, it will boost local employment and create job opportunities. The continuous expansion of our hotel network enables us to recruit more employees on an ongoing basis. As of end June, the total number of employees of the group exceeded 260,000. In addition, we continue to refine our internal talent development program, providing employees with clear career paths.
Secondly, we pursue energy saving management of our hotels and have rolled out multiple initiatives. We share proven energy saving management solutions with our franchisees to help them cut water and electricity costs and secure better operating returns. Thirdly, on social welfare initiatives, supported by the group’s charity foundation, we have launched a wide range of public welfare programs to give back to the society through educational assistance, post-disaster support and other initiatives. Going forward, H1 will continue to push forward the social responsibility initiatives, balancing business growth with social commitment and upholding our corporate mission to guests, franchisees, employees and the wider community. Next, let’s go over our operational performance in the international market.
In the second quarter, HWI’s blended RevPAR was affected by the Middle East conflict as well as our Southeastern Asia expansion, which were still in the ramp-up period. In the second quarter, HWI’s RevPAR decreased 3.8% year-over-year with ADR up 0.9% and occupancy rate down 3.5 percentage points. Nevertheless, our Europe business delivered a solid performance. The European segment’s RevPAR grew 1.1% year-over-year in the second quarter, driven by improvements in both ADR and occupancy. Going forward, we will continue to optimize HWI’s operational efficiency in Europe and push forward our strategic layout in the Asia Pacific market. This concludes the business update for the second quarter of 2026. I will now hand over the call to our CFO, Mr.
Arthur Yu, for financial performance for the quarter.
Arthur Yu: Thank you, Jin Hui. Good evening, and good morning to everyone. Now let’s walk through our Q2 financial highlights. In the second quarter, our group revenue grew 10.8% year-over-year to RMB 7.1 billion. This was primarily driven by our China business. In the quarter, our China revenue increased 14.9% year-over-year to RMB 5.9 billion, supported by a steady and high-quality network expansion as well as continued RevPAR recovery. Our international business revenue decreasing 5.8% year-over-year to RMB 1.3 billion, which was due to the closure of leased hotel and therefore, a decline in lease revenue. We are happy to report that our group recorded another quarter of strong profit growth.
Adjusted EBITDA increased 20% year-over-year to RMB 2.7 billion, with adjusted EBITDA margin expanding 3 percent point year-over-year to 38.3%. The margin improvement was attributable to a growing profit contribution from our asset-light business, coupled with well-controlled G&A expenses. In the second quarter, hotel operating costs increased 7.4% year-over-year, slower than our revenue growth as we became more asset-light. SG&A expenses in the quarter rose 6.1% year-over-year, which was also slower than our revenue growth, reflecting our cost management capabilities. Adjusted net income grew 26.9% year-over-year to RMB 1.7 billion, with the adjusted net income margin improved 3 percent points to 24%.
Supported by ongoing high-quality asset-light network expansion and improved RevPAR performance, our M&F business revenue grew a solid 25.2% year-over-year to RMB 3.6 billion. M&F gross operating profit increased 18.5% year-over-year to RMB 2.2 billion. Lastly, on shareholder returns, we are very pleased to announce that we completed our 2024 shareholder return 1 year ahead of our plan. We are committed to returning to our shareholders, which will continue to be supported by our healthy operating cash flow and strong balance sheet. We, therefore, announced that the Board has approved another 3-year shareholder return plan with an aggregated amount of USD 2.5 billion effective from today.
As the first distribution under this new shareholder return plan, the Board has also approved an ordinary cash dividend of approximately USD 275 million. With that, we conclude our financial review for the second quarter of 2026.
Ivy Luo: With that, we are ready to take your questions. Operator, please open the line for Q&A.
Operator: [Operator Instructions] We will take our first question, and the question comes from Lydia Ling from Citi.
Lydia Ling: [Interpreted] This is Lydia from Citi. And congratulations on the solid results in the second quarter. My question is mainly on the RevPAR trend. So into third quarter, we observed a volatile travel demand affected by the extreme weather, especially during this peak summer season. So could you share the RevPAR performance during the summer holiday and also into second half, base goes relative higher. So what’s management latest expectation on the third quarter and also full year RevPAR trend.
Hui Jin: [Interpreted] I will translate first. So thank you for your question. This is Jin Hui. I will answer this question. So currently, China’s leisure travel demand is still a steadily growing. We firmly believe that in China, consumer have treated leisure travel as one of the necessities. This has been very clear after the COVID reopening. Secondly, the government is very supportive of the culture and the tourism travel. In the first half this year, we do see multiple regional governments introducing spring holiday. And in early August, we also saw government encouraging public servant to take holidays. And thirdly, around this round of leisure travel trend, we do see new scenarios and new customers emerging.
For example, a family trips, travel by silver hairs, travel by self-driving, that has also — those both have been performing very strong. Of course, inbound travel has also brought us increasing demand, especially in those core cities in the Tier 1 and Tier 2 cities. So yes, as you mentioned, I mean — July, we do see several regions being negatively affected by the severe weather and it impacted operational results. In some of the markets for the first half of the summer holiday, the performance was below expectation. Also, on the other hand, we — I do think that this is also partially affected by the spring holiday.
In August, so far, we do see the overall trend recovering. Considering all the uncertainties in the macro environment, we maintain a cautiously optimistic view for the overall demand. For the full year of 2026, we maintain our view for the overall RevPAR unchanged.
Operator: Your next question comes from Dan Chee from Morgan Stanley.
Dan Chee: [Interpreted] This is Dan from Morgan Stanley. I have two questions. My first question is on hotel opening. We saw gross opening in first half ’26 was 1,035 hotels, although on track with Mr. Jin’s reassurance on full year target of 2,200 to 2,300, it is 20% below first half last year. Is there any structural change in the contribution of the two halves in the year seasonality-wise? That was my first question. My second question is about economy segment upgrade. Hanting product, we see that it’s now more than 55% are version 3.5 and above. Can the management share some progress made on the latest addition of 4.0 and Hanting in such as quantity or operating improvements?
Hui Jin: [Interpreted] Thank you Dan, for your questions. So on the overall new hotel network expansion, in the second quarter, we opened 498 hotels. The number of openings is actually in line with our plan and our expectation. And more importantly, if you look at the new signings, we also achieved solid new signings in the second quarter. At end of June, the number of hotels in our pipeline actually increased both quarter-over-quarter and year-over-year. And we always emphasize that for H World, what we want to achieve is not just a very simple quantity growth, but quality improvement. So we do have higher requirement for our new signings and the new openings.
In the next few years, we will continue our sustainable high-quality growth strategy unchanged. And for the full year of 2026, we maintain our full year opening guidance. Yes, in the first half, the opening number was impacted by the base as well as by the supply chain. But I do think it’s just normal volatility, and there’s no change in our overall opening plan. On your second question, I’m very happy to share with you that our Hanting 4.0 version have recognized — have achieved both market and franchisees recognition. The new version of Hanting, the RevPAR performance is meaningfully better than the older version.
And after we rolled out Hanting, Ji the number of hotels of Hanting, JI in operation and in pipeline actually quickly exceeded 200. The overall development is actually better than our expectation. The operational performance of Hanting, JI that in operation is also very strong. I think both the two points that I mentioned above actually shows you that Huazhu has very strong capability in high-quality development in the economy hotel segment, and we have — we are very strong in executing. Going forward, we will continue to upgrade our Hanting’s older version of hotel to go through the overall Hanting hotels portfolio to improve the overall hotel portfolio quality.
Meanwhile, we will also to — with the Hanting product, we also provide the product that’s available for those smaller properties for them to open under our Hanting brand. To conclude, I think under the overall economy segment, it will have very big growth potential to capture the market.
Operator: The next question comes from the line of Jiwei Liu from Citic.
Jiwei Liu: [Interpreted] The company now has more than 1,700 upper mid-scale hotel properties. What’s your view on this year’s supply-demand balance in the upper mid-scale hotel segment? Will you speed up expansion? Also, JI Grand has opened in Hangzhou, Guangzhou and Wuhan. [Technical Difficulty]
Operator: We still have the participant connected. I believe the signal was cut… Are you able to repeat your questions, please?
Jiwei Liu: I’m Jiwei from Citic. The company has more than 1,700 upper mid-scale hotel properties. What’s your view on this year’s supply-demand balance in the upper mid-scale hotel segment? We will speed up expansion. Also, JI Grand has opened in Hangzhou, Guangzhou and Wuhan. Could you give more color on its operating performance on the development road map?
Hui Jin: [Interpreted] Let me answer your questions related to the upper mid-scale segment. Yes, upper mid-scale segment is one of H World’s core strategic area, and we continue to put effort into the brand building as well as the overall development in this segment. For the upper mid-scale market in China, we do see good development opportunities. We actually see opportunities from two fronts. One is that the upper mid-scale segment actually has opportunities from consumption upgrade. While at the same time, it’s also taken some of the demand from those traditional upscale hotels. And for H World, we will continue to insist on our multi-brand strategy.
We will be building on our Grand JI, on Crystal, on Intercity as well as Mercure. We will be using this four core flagship brand to achieve fast development and market share gain in the upper mid-scale segment. Currently, for the intercity hotel, it has been growing very strongly, and we are very confident on the future growth for this brand. And you mentioned Grand JI. For the Grand JI, we have been gradually signing and opening some hotels. As of now, the number of Grand JI in pipeline have already exceeded 20 hotels. At this moment, we’ll be really focusing on building Grand JI at those very prime locations. We are still refining the overall business model.
So we’ll be relatively cautious on like developing the quantity of it. But we are very positive on what Grand JI has already achieved in terms of the customer reputation, the brand reputation and the product model. In the future, we believe Grand JI has very big growth potential, and we are very optimistic on it. Yes. We are very confident that Grand JI will become a flagship in China’s upper mid-scale segment, and we’re really working hard on that. Thank you.
Operator: Your next question comes from Ronald Leung from Bank of America.
Ronald Leung: [Interpreted] Let me translate my question in English. My question is related to the membership system. Could management comment on the latest breakdown in terms of the customer acquisition channel? Also, could management comment on the strategy in terms of optimizing the membership system?
Hui Jin: [Interpreted] Let me answer the question related to our members. Yes, member is one of our core strategy for H World operation, and it’s also one of our core competitive advantages. Right now, the overall member — the increase of the members as well as the member contribution in the booking is in line with our expectation. Of course, as we are entering into more markets, for example, leisure market, the inbound market as well as those lower-tier cities market, H World membership do need to — need some time to grab those traffic from those new markets for us. But meanwhile, the OTA contribution is actually quite stable at around 20% to 25%.
We do believe that when we enter those new markets, we do need OTA support, especially for inbound and lower-tier cities. And related to the overall strategy and the future strategic operations for H Reward members, I will conclude it in three areas. Firstly is for the H Reward members, we do emphasize on the best benefit for our members. This one is one of the key strategy for us. This includes the best price, includes breakfast and et cetera. And going forward, we are also doing more work on innovation. For example, recently, we actually launched the family card under our H Reward membership. And it actually received quite good feedback from the market.
So secondly is on the cross-industry partnership. You may have already noticed that last year, we actually partnered with DB. And this year, we’re partnering with multiple airline companies as well as new energy vehicle companies to really to work with those multiple business sectors. This will — the cross-industry partnership will also be one of our important strategy. Lastly is our international or overseas member development. In the second quarter, we deepened our cooperation with Accor on the membership partnership. On the one hand is really to take more — to capture more inbound demand.
And also it allows Chinese consumers to be able to — or Chinese travelers to be able to stay in our Accor’s hotel when they go aboard. So we’re really working on that. So to conclude on the three points. One is on the membership operation. Secondly, it’s on the cross-industry partnership. And thirdly, it’s on the international development for H Reward.
Operator: Your next question comes from Simon Cheung from Goldman Sachs.
Simon Cheung: [Interpreted] so my questions in relation to the EBITDA margin trend. Over the last couple of quarters, they have seen a nice 3%, 4% margin expansion in China, but yet in overseas markets, the margins, they see some sluggish or slippage. Wondering whether management do have any guidance going into the second half and also for the full year.
Arthur Yu: [Interpreted] Thank you, Simon. This is Arthur. I will answer your questions. So on the overall margin front, and as the group continue to push forward our asset-light strategy, in the mid- to long term, we do expect company’s adjusted EBITDA margin to continue to expand. On the SG&A front, we have been making really good delivery in the quarter. This is supported by our very mature and development cost control system. But at the same time, we are also very clear that in order for H World to achieve a long-term sustainable growth, we have to make necessary strategic investments.
For example, in the talent development, in technology and AI in our H Reward membership building, in brand building, et cetera. So in those kind of — those areas, we’ll be making reasonable and long-term and effective investments. So for the outlook of our second half profitability and cost, we will maintain very stable. On our international business, yes, our international business was in some way impacted by the Middle East conflict. For our HWI in the Middle East and in Egypt, we have more than 20 hotels, but they are all managed and franchised hotels. So they have limited impact actually on our HWI’s revenue and profit.
Despite the impact of Middle East conflict on the traffic and the overall operational cost, for a H World, we are actually doing more cost control for HWI. So by doing that, the overall impact of the Middle East is actually controllable. So for the full year, we maintain our goal of achieving a positive profit for our HWI business.
Operator: This concludes today’s question-and-answer session. I’ll now hand the call back to Ivy Luo for closing remarks.
Ivy Luo: Thank you, everyone, for taking your time with us today. This will conclude today’s call, and we look forward to seeing you in the upcoming quarter. Goodbye.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
