On May 20th, Huazhu Group held a performance conference call for the first quarter of 2024. The company stated that through the expansion of hotels, it is expected that revenue in the second quarter of 2024 will increase by 7% to 10% year-on-year.
Previously, Huazhu Group released its financial report for the first quarter of 2024, achieving a revenue of 5.3 billion yuan during the reporting period, a year-on-year increase of 17.8%, better than the previously announced upper limit. But the net profit was 659 million yuan, a decrease of about 30% compared to the same period last year's 990 million yuan. The company stated that the reduction in net profit is closely related to business recovery and accelerated store expansion.
According to the first quarter financial report released on May 18th, Huazhu Group opened 569 new hotels and 3138 hotels to be opened in China in the first three months of this year. Huazhu previously stated that it expects to open approximately 1800 new hotels throughout 2024, with an average of 450 hotels per quarter. By comparison, Huazhu exceeded its store opening target in the first quarter of this year.
Jin Hui, CEO of Huazhu Group, stated that the total opening volume and hotels to be opened in Huazhu China have reached a historic high in the first quarter of this year.
At present, the expansion of the hotel scale of Huazhu Group mainly relies on the light asset model. Among the 569 newly opened hotels in the first quarter, 567 were managed franchise and franchise hotels, while the remaining 2 were leased and owned hotels. Along with the opening of new hotels, Huazhu China closed 148 hotels this quarter, including 11 leased and self owned hotels.
At the same time as rapidly opening stores, Huazhu Group's hotel operating costs, sales and marketing expenses, general and administrative expenses have all significantly increased compared to the same period last year. In response, Huazhu Group explained in its financial report that the year-on-year increase in hotel operating costs was mainly due to the expansion of Huazhu Group's hotel network and the decrease in rent reductions for leased hotels; The general and administrative expenses increased year-on-year, mainly due to the return of the number of headquarters employees and salary growth from last year's low base to normal levels; The increase in sales and marketing expenses is also due to the continuous growth of the business, which has returned to normal levels from a low base in the same period last year.
It is worth noting that with the explosive release of public demand for travel in 2023, the rational component of travel in 2024 has increased, coupled with the continuous increase in the total supply of hotel rooms in the hotel industry, hotel prices have also returned to rationality. According to the financial report of Huazhu Group, the average rental room revenue of the same store in the first quarter of 2024 was 218 yuan, which is basically the same as the 216 yuan in the first quarter of 2023.
In addition, Huazhu China's net profit in the first quarter of this year was 833 million yuan, while Huazhu International's net loss was 174 million yuan, which still to some extent dragged down Huazhu Group's performance. Jinhui stated that in terms of overseas business, Huazhu will continue to focus on reducing costs and improving efficiency to achieve better profitability. At the same time, overseas business will also transform into a lighter asset model and seek growth opportunities in new regions outside of Europe.
At the first quarter performance conference call, the management of Huazhu Group stated that after experiencing the concentrated release of the leisure tourism market in 2023, this year's May Day and tourism season will face some challenges. However, the company's management still firmly believes in the sustainability of China's tourism and leisure markets. Through hotel expansion, Huazhu Hotels expects to achieve a year-on-year growth of 7% to 10% in revenue for the second quarter of 2024.