Good day, and thank you for standing by. Welcome to the H World Q4 and Full-Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ivy. Please go ahead.

Thank you. Good morning, and good evening, everyone. Thanks for joining us today. Welcome to H World Group 2025 Fourth Quarter and Full-Year Earnings Conference Call. Joining us today is our Founder and Executive Chairman, Mr. Ji Qi; our CEO, Mr. Jin Hui; our CFO, Ms. Chen Hui; and our CSO, Ms. Jihong. Following their 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 provisions 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.hld.com. With that, now I will hand over the call to our CEO, Mr. Jin Hui, to discuss our business performance in the fourth quarter and full year of 2025. Mr. Jin, please.

[Interpreted] Dear investors and analysts, good day. Thank you for joining H1's Fourth Quarter and Full-Year of 2025 Earnings Call. First, I'd like to share some observations on the overall travel market. Demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers. Data from railway, aviation and tourism all indicate a steadily growing travel demand in China. The number of trips as well as consumer spending continues rising as people increasingly pursue a better life. As China's transportation network improves, accommodation needs quickly expanded from major cities to county-level markets, making the lower-tier city a new growth engine for tourism consumption. Strong demand for [ self-pleasure ] and experiential consumption, together with booming tourism events, exhibitions and sports competitions are driving the diversification and quality upgrades of accommodation needs. However, China's hotel industry still faces oversupply of low-quality and homogeneous products, while high-quality value for money supply remains insufficient. Therefore, supply-side reform will remain the main theme of future industry development, and this will undoubtedly bring tremendous growth opportunities for the leading domestic branded hotel groups like H World. While focusing on our core business and driving high-quality growth, we also actively fulfill our social responsibilities to achieve a coordinated development of corporate value and social value. We focus on economy and mid-scale segments, which serve the mass market. We developed good value for money products to provide consumers with safe, cozy and affordable accommodation. Leveraging our brand value and supply chain capability, we revitalized idle assets, enhance urban supporting services and boost asset-operation efficiency. In addition, we keep expanding into the lower-tier cities and rural areas, filling the gap in quality accommodation in those markets. We create stable employment opportunities, drive the development of the surrounding industries and boost local night economy. Looking ahead, we…

Thank you, Jin Hui. We are very happy to report that in 2025, we achieved a successful business turnaround for our Legacy-DH business. We achieved a record level of adjusted EBITDA of around RMB 500 million. This is a significant improvement compared to the loss situation last year. The strong performance confirms the successful execution of our business-transformation plan. Hotel business cannot achieve profitability without revenue enhancement. Our RevPAR continued to grow and achieved 8.2% increase year-on-year in 2025. Despite a challenging market environment, Legacy-DH succeeded in stabilizing like-for-like hotel revenues. We adjusted the revenue management strategy for different categories of our hotel and worked relentlessly on property-level sales performance improvement. Through disciplined efficiency programs, we significantly reduced the DH cost-base and streamlined the operations. Following a successful restructuring of headquarters and reduction of administrative costs at the end of 2024 and early 2025. The management team continued to implement ongoing cost-optimization measures across personnel, external services, and supply chain throughout the organization. At the same time, with numerous restructuring efforts ongoing, we have been able to maintain the organizational and operational stability, ensuring a solid foundation for sustainable future performance. The most important measure we successfully undertook in 2025 was the optimization of our hotel portfolio. We renegotiated lease terms of many hotels, exited several loss-making properties, and transformed a portfolio of leased hotels into asset-light structure. This portfolio restructuring significantly enhanced our profitability and improved resilience of our business. As everybody -- everyone remembers, H World acquired Deutsche Hospitality shortly before COVID breakout. Our business was strong into an unprecedented challenging environment. We did not give up. Instead, we started our transformation journey and brought our expertise globally. This shows the resilience of H World Group. Going forward, in 2026, we will continue to build on the momentum and enhance our performance. Continuous improvement of commercial and operational effectiveness across brands is our first priority. We are undertaking concrete measures to improve our marketing and sales across different target markets and adjust our revenue management strategy for different segments. At the same time, we will further leverage synergies from integration with H World Group. We are working on closer integration from different aspects, such as supply chain, design and construction, technology and loyalty program. In 2026, we're expecting to see more benefit from these synergies on operational level. Another strategic initiative we will continue to undertake in 2026 is to sharpen our brand positioning. For example, we're developing Intercity next generation to make it more guest-friendly and operationally efficient. With the new brand proposition, we expect to roll out our business model to the market and accelerate growth of our network together with our partners across the region in the years to come. With this, I conclude the discussion in Legacy-DH business. I will turn to our CFO, Ms. Chen Hui, for financial performance review.

Thank you, Jihong. Good evening, and good morning, everyone. Let me walk you through our full year 2025 financial overview. In 2025, our group revenue grew 5.9% year-over-year to RMB 25.3 billion, at the high end of our guidance, of which Legacy-Huazhu's revenue rose by 7.9% year-over-year to RMB 20.5 billion. The top-line growth was driven by our high-quality network expansion and stabilized RevPAR performance. Group Adjusted EBITDA increased 24.2% year-over-year to RMB 8.5 billion, with margin improved by 4.9 percentage points year-over-year to 33.5%. The strong profit growth and profit margin expansion were mainly attributable to further enlarged profit contribution from our high-margin asset-light business, as well as the operational improvement and cost savings from Legacy-DH. Adjusted Net income increased by 32.9% year-over-year to RMB 4.9 billion. Looking into our asset-light manachised and franchise business. In 2025, powered by the network expansion of manachised hotels, our manachised and franchise revenue increased by a robust 23.1% year-over-year to RMB 11.7 billion. And manachised franchise gross operating profit rose by 20.8% year-over-year to RMB 7.6 billion. Profit contribution from our manachised and franchise business rose steadily and reached 69% in 2025, representing a 5 percentage point year-over-year increase. In the full year of 2025, we generated RMB 8.4 billion operating cash flow. And at end of 2025, the group had RMB 15.4 billion cash and cash equivalents and RMB 9.6 billion net cash on the balance sheet. With support of our strong cash flow and a healthy balance sheet, we are glad to declare a USD 400 million cash dividend for the second half of 2025. Together with USD 250 million interim dividend and around USD 110 million share repurchases, our total shareholder return amounted to around USD 760 million for the full year of 2025. In 2024, we announced USD…

Thank you, Hui, for the kind introduction. Hello, everyone, and thank you for joining the call today. It is a privilege to step into the role of CFO at such a pivotal moment for H World. I have long admired the company's resilience and its strong market position. As we look ahead, my priorities will be to build a world-class finance function, maintain rigorous control and investment oversight and ensure transparent and consistent communications with the capital markets. I look forward to getting to know many of you individually in the days ahead. And we are now ready to open the floor for questions.

[Operator Instructions] Our first question today is from Dan Chee from Morgan Stanley.

[Interpreted] The first question. I would like to congratulations to Arthur's on the new role, and we have seen the list of credentials of Arthur's expertise. So for starters, can management share very briefly the direction of Arthur's new role? And what kind of changes shall we expect on our financial and growth strategy?

[Interpreted] Thank you, Dan, for your question. Firstly, I want to -- I would like to take this opportunity to thank Ms. Hui for her dedication to the company in the past 20 years. We just had our 20-year anniversary Investor Day last year. We can see that over the 20 years with our founding team, we have built Huazhu into a very successful company. At the conference last year, while we concluded and summarized our achievement that we've made in the past 20 years, we also take the opportunity to look ahead. We had a vision that we want to create Huazhu -- create a H World into a global company, into a world-class company and to work into the world and to become a leading company in China and globally. So with this vision, and as Huazhu is growing really into a hyperscale company, we really need world-class management, professional talent to bring those really diversified and international talent and skills to our management team. So I welcome Arthur to join H World, and we are certain that Mr. Arthur Yu, with his deep financial management expertise and together with the team, we will lead H World to the next stage and to achieve the next success.

We will now take the next question. Next question is from Ronald Leung from Bank of America.

[Interpreted] Let me ask my question in English. So regarding the 2026 revenue guidance, so what is the implied RevPAR expectations? And also, could management comment on the overall demand-supply outlook for 2026? How is the supply-growth trend? And also, how is the overall demand for the business and leisure travel?

[Interpreted] Thank you, Rona. So, in the past 3 months, we have observed that the China's hotel industry trend is actually recovering. On the demand side, we have been observing that actually in the past 1 to 2 years, the leisure travel has been growing really steadily, and also the inbound travel is recovering and coming back. So overall, demand is growing for leisure, especially. And for business travel demand, we have also seen that the business activity and business travel has bottomed and also going on to an upward trend, especially in the Tier 1 and Tier 2 cities. So for 2026, we are cautiously optimistic on the overall RevPAR performance. And for the management and for the company, we do have the target that to deliver a flat to slightly year-over-year increase for the full year 2026 RevPAR.

We will now take the next question. This is from Simon Cheung from Goldman Sachs.

[Interpreted] The question is in relation to the hotel opening, the pace of hotel opening last year. The company has achieved a whole lot in terms of the growth, exceeded 2,400 store opening last year. Wondering whether they would have any change in the pace or expectation for this year. In particular, we noticed that they have some new hotel brand, for example, the Hanting Inn brand. I'm wondering whether they would have any target for this brand as well.

[Interpreted] Thank you, Simon, and I will answer your question on the development. So as you can see, in 2025, we achieved a record high in the hotel gross openings, exceeding 2,400 hotels. Actually, in 2023, we already adjusted our overall growth and development strategies of high-quality sustainable growth. So what we are pursuing is not just the simple quantity, but also high quality standard of the hotel network. So in 2026, while under this high-quality standard, we still expect to expand our hotel network and maintain the overall openings at a high level. And we guided to open 2,200 to 2,300 new hotels in 2026. This actually reflects our strategy of high-quality sustainable growth. And we are still very confident that to achieve our 2,000 hotel target, this strategic goal by 2023 -- 2030. [Interpreted] And on your question on Hanting Inn, I would like to share some thoughts on this Hanting Inn brand, Hanting Inn product. So we always think that the economic sector is the core in China's consumer market, and this is also the core market for H World. What we want to achieve is that we want to achieve full coverage of high market share in this economy sector. [Interpreted] We are seeing more and more high-quality properties that can be built into our HanTing brand. So now you can see that for our HanTing branded hotels, the quality of it is much higher and the standard is also much higher compared to a couple of years ago. So with this, we introduced Hanting Inn, which can help us to cover and serve the overall mass market. We want to stress that Hanting Inn and HanTing, together, they are one brand and HanTing will help us to cover the smart market in China. And HanTing actually takes a very important role in upgrade and replace the older HanTing product and to further purify our HanTing brand.

We will now take the next question. Question is from Xin Chen from UBS.

[Interpreted] Let me translate to English. My question is regarding DH. Could management share further details on the asset-light transformation strategy and road map for DH, as well as the targets for future hotel network expansion and financial performance.

Xin, I will take your questions. Yes, we achieved a turnaround of DH business in 2025. However, our efforts to improve business does not stop here, right? So our reorganization, efficiency improvement, cost control will still remain as part of the ongoing management. And we're also looking into our portfolio restructuring as well. We continue our effort in rental reduction, lease renegotiation, look into possibilities to exit loss-making properties and also possibility to negotiate a much, much better portfolio asset portfolio, right? So now that our business is stabilized, we are also indeed starting to look at development to expand our hotel network. We have much more confidence now in managing international hotels. And we believe into the service and select-service hotels have really a lot of potential in overseas markets. So now that we are developing different business models, so we will have efficient, for example, next-generation Intercity and Zleep for the basis of our growth. Of course, we're also looking into possibilities to expand Steigenberger hotels as well. Europe will remain our core international markets. But at the same time, we'll also explore, for example, Middle East, North Africa, where we already have good basis. So the Legacy-DH business, in a nutshell, is expected to remain profitable in the years to come.

We will now take the next question. This is from Sijie Lin from CICC.

[Interpreted] Our shareholder return in 2025 achieved USD 760 million, exceeding 100% of Adjusted Net Profit and has completed over 75% of USD 2 billion 3-year Shareholder Return Plan. So what's our plan for the shareholder return in the upcoming years?

[Interpreted] This is Hui. I'll answer your question on the shareholder return. So benefiting from our asset-light strategy and our high-quality growth, on H World, we have generated very strong and stable cash flow, as well as we have a high-quality and very healthy balance sheet. So going forward, we will -- we are committed to continue to return to shareholders through either dividend or share repurchase. Thank you.

We'll now take our next question. This is from Lydia Ling from Citi.

[Interpreted] I have questions on the upper-midscale hotel segment and which we saw like the further step of the development in 2025. So what's your plan for this year or the longer term? And do you plan to have more aggressive or accelerate expansion in this segment?

[Interpreted] Thank you, Lydia. I will take your question on the upper-midscale segment. So the upper and upper-midscale sector is one of H World's strategic focus. So we have been focusing on this upper-midscale market in the past 2 years, and we will continue to do so going into the future. So our strategy in the upper-midscale segment is to focus on the Tier 1 and Tier 2 cities, and we were developing this segment using a multi-brand strategy, which I think is different from the other companies. So we have 4 key brands in this segment, which are Grand Ji, Intercity, Crystal and Mercure. As you can see that these 4 brands, they actually -- they all have different target market and they have different specialties, so which covers Grand Ji, which really presents the Oriental aesthetics, and we also have the more Western design like the Intercity and the French-style Mercure. So for the -- using this multi-brand strategy, we really want to chasing ahead into -- in this segment. We will continue to upgrade and enhance our products and services. Our goal and our target is to -- in the upper-midscale sector, we also want to become a leading brand by 2030. So upper-midscale sector will be one of our core strategic focus going into the future. [Interpreted] And also to add on, as you can already see that for the intercity over the past 2 years, it has become a very attractive and compelling brand in the upper-midscale sector, whether it's in terms of its brand value, its product, its service excellence or its RevPAR. And we have also introduced the Grand Ji Hotel, and we really welcome you guys to -- looking to Grand Ji, which is going to have its grand opening in April 1. We -- it has a piloting phase already, but it hasn't really officially launched, and we officially opened the Grand Ji in April 1. We are confident that with our 4 core brands in the upper-midscale sector, which all have its different taste and target market, we can become a leading company in the upper-midscale sector. And we are also confident that each of our 4 key brands, they will become the leader in their own niche market. Thank you.

Thank you. I will now hand the conference back to the speakers for any closing remarks. Thank you.

Thank you, everyone, for taking your time with us today. And this will conclude today's call, and we look forward to seeing you in upcoming quarters. Bye.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]