Shares of H World Group Limited (NASDAQ:HTHT) fell over 2% in premarket trading Tuesday after the hospitality giant reported first-quarter 2025 results that came in below Wall Street expectations.
The company, which operates a broad hotel network across China and internationally, posted adjusted earnings per share of RMB2.48 ($0.34), missing analyst estimates of RMB2.60. Revenue for the quarter was RMB5.4 billion ($744 million), just under the RMB5.41 billion projected by analysts.
Despite the earnings miss, H World saw a 2.2% year-over-year increase in revenue, bolstered by the opening of 694 new hotels in China during the quarter. The aggressive pace of expansion keeps the company on track to meet its full-year goal of around 2,300 gross hotel openings.
“We continued our rapid network expansion with 694 new hotel openings in China and remain on track to achieve our full-year target,” said CEO Jin Hui. “However, we maintain an overall cautious stance amid ongoing tariff and macroeconomic uncertainties.”
Revenue from the Legacy-Huazhu segment, which excludes Steigenberger-branded hotels, rose 5.5% year-over-year to RMB4.5 billion. However, RevPAR (revenue per available room) for the group dropped 3.9% YoY to RMB208, signaling lingering challenges in demand and pricing power.
Looking ahead, H World expects second-quarter revenue to rise by 1% to 5% year-over-year, or 3% to 7% when excluding the Deutsche Hospitality (DH) segment. Manachised and franchised revenue is projected to climb 18% to 22% in Q2, as the company leans further into its asset-light expansion model.