Huazhu Group's Q4 RevPAR recovers, institutions raise target price

Why are institutions optimistic about Huazhu’s performance outlook?

21st Century Business Herald Reporter Zhang Sainan

With the opening of 2,444 new hotels in a year, Huazhu Group is set to achieve a historic high in performance in 2025.

Huazhu Group (NASDAQ: HTHT; 01179.HK) disclosed its financial performance for the fourth quarter and full year of 2025, showing that in the fourth quarter of last year, it achieved revenue of approximately 6.5 billion yuan (RMB, the same below), an increase of 8.3% year-on-year; net profit attributable to the parent company was approximately 1.173 billion yuan, up 2,293.9% year-on-year; adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was approximately 2.194 billion yuan, an increase of 76.1% year-on-year.

For the whole year, Huazhu Group’s revenue was approximately 25.31 billion yuan, a year-on-year increase of 5.93%; net profit attributable to the parent company was approximately 5.08 billion yuan, a year-on-year increase of 66.67%; adjusted EBITDA was approximately 8.473 billion yuan, compared to approximately 6.82 billion yuan in the same period last year.

As of the end of the reporting period, Huazhu Group had 12,858 hotels in operation, with 1,264,419 rooms; 2,906 hotels were yet to open. Among them, Huazhu China had 12,740 hotels, with 2,887 hotels pending opening.

Huazhu Group CEO Jin Hui stated, “2025 marks our 20th anniversary. I am pleased to see that we opened a total of 2,444 new hotels throughout the year, marking another year of rapid network expansion. More importantly, driven by continuous product upgrades and a series of revenue management optimization measures, our average revenue per available room has shown improvement since the third quarter and returned to positive growth in the fourth quarter.”

Reporters from the 21st Century Business Herald noticed that institutions generally responded positively to Huazhu’s 2025 financial report, with several international investment banks raising their target prices for Huazhu Group.

The financial report indicates that in 2025, Huazhu Group’s total revenue reached 108.1 billion yuan, a year-on-year increase of 16.4%; revenue realized was 25.3 billion yuan, a year-on-year increase of 5.9%; adjusted net profit was 4.9 billion yuan, a significant year-on-year increase of 32.9%, with all core financial indicators showing a positive trend.

In terms of revenue composition, for the whole year of 2025, Huazhu Group’s revenue from the Huazhu China division was approximately 20.535 billion yuan, up 7.9% year-on-year; revenue from the Huazhu International (formerly: Deutsche Hospitality) division was approximately 4.794 billion yuan, down 1.8% year-on-year.

In the fourth quarter of 2025, Huazhu Group’s hotel revenue was approximately 28.1 billion yuan, a year-on-year increase of 18.4%. Excluding the Huazhu International division, Huazhu China’s fourth-quarter revenue grew approximately 18.9% year-on-year. For the entire year of 2025, Huazhu Group’s hotel revenue increased by 16.4% year-on-year; excluding the Huazhu International division, Huazhu China’s annual revenue grew approximately 17.2% year-on-year.

In terms of accommodation industry metrics, Huazhu Group disclosed that in 2025, the comprehensive ADR (average daily rate) of hotels under Huazhu China was 290 yuan, a year-on-year increase of 0.2%; the occupancy rate was 80%, a decrease of 1.2 percentage points year-on-year; RevPAR (revenue per available room) was 232 yuan, a year-on-year decrease of 1.3%.

Although the annual RevPAR showed a slight year-on-year decline, the fourth quarter has already recovered to positive year-on-year growth.

In the fourth quarter of 2025, the comprehensive ADR of hotels under Huazhu China was 288 yuan, a year-on-year increase of 4.1%; the occupancy rate reached 78.4%, a year-on-year decrease of 1.6 percentage points; RevPAR was 226 yuan, a year-on-year increase of 2%.

For Huazhu International, in the fourth quarter of 2025, hotels under Huazhu International had an ADR of 120 euros, a year-on-year increase of 3.9%; the occupancy rate was 72.6%, a year-on-year increase of 2.1 percentage points; RevPAR was 87 euros, a year-on-year increase of 7%. For the whole year of 2025, hotels under Huazhu International had an ADR of 116 euros, a year-on-year increase of 1.4%; the occupancy rate was 70.5%, a year-on-year increase of 4.4 percentage points; RevPAR was 82 euros, a year-on-year increase of 8.2%.

In the announcement, Huazhu provided guidance for its performance in 2026, expecting revenue growth of 2%-6% compared to the full year of 2025, and anticipating that its management franchise and licensing income will grow by 12%-16% compared to the full year of 2025. For the full year of 2026, Huazhu expects to open 2,200-2,300 hotels and close 600 to 700 hotels.

The RevPAR, a key metric in the accommodation industry, has garnered considerable market attention. The hotel market in 2024 experienced an increase in volume but a decrease in price, leading to fluctuations in Huazhu Group’s RevPAR, while the recovery in the fourth quarter of 2025 has raised market expectations for Huazhu’s performance in 2026.

The reporter noted that following the release of Huazhu’s financial data, several investment banks have raised the company’s target price.

Macquarie’s research report noted that Huazhu Group’s revenue and adjusted EBITDA for the fourth quarter of 2025 grew by 8.3% and 83% year-on-year, respectively, both exceeding the bank’s and market expectations. Revenue per available room has returned to a recovery trajectory. During the period, overseas revenue per available room increased by 7.4% year-on-year, and the light-asset strategy continues to drive margin expansion. Management expects about 1,600 new hotels to open in 2026, with revenue growth of 2% to 6% year-on-year.

The bank has raised its net profit forecasts for 2026 and 2027 by 2.3% and 1.5%, respectively, to reflect better-than-expected fourth-quarter performance, as well as ongoing cost reductions driven by the light-asset transformation strategy. Additionally, the bank raised Huazhu Group’s target price for Hong Kong stocks from 46 HKD to 48 HKD, and for U.S. stocks from 59 USD to 62 USD, maintaining an “Outperform” rating.

However, some institutions believe that Huazhu faces pressure to sustain continuous growth in performance.

Daiwa published a research report indicating that Huazhu Group’s fourth-quarter revenue exceeded expectations by 2.5%, and EBITDA exceeded expectations by over 10%. However, the bank believes that the EBITDA exceeding expectations is mainly due to a one-time adjustment in its bonus plan. Although management is confident about RevPAR turning positive in 2026, it appears that guidance for flat or slight growth is somewhat below market expectations. The company expects revenue to grow by 2% to 6% year-on-year in 2026, which is lower than both the bank’s and market expectations. The bank believes that the more cautious outlook mainly reflects DH’s accelerated sale of its leased hotels, which will put pressure on revenue growth.

Nonetheless, Daiwa still raised the company’s target price, increasing Huazhu’s EBITDA forecasts for 2026 to 2027 by 5%, raising the target price from 36.5 HKD to 43.7 HKD, maintaining an “Outperform” rating.

Citi released a research report stating that after considering Huazhu’s overseas business performance exceeding expectations, it raised adjusted EBITDA forecasts for the next two years by 6% to 7%. Assuming revenue growth reaches the upper limit of 6%, with a net addition of 1,600 hotels and a 1.9% increase in revenue per available room, the estimated return for 2026 will be closer to 12.6% in 2024, rather than 12.9% in 2025.

The report pointed out that Huazhu’s management provided a revenue growth guidance of 2% to 6% for 2026. Assuming revenue growth reaches the upper limit of 6%, with a net addition of 1,600 hotels and a 1.9% increase in revenue per available room, the estimated return for 2026 will be closer to 12.6% in 2024, rather than 12.9% in 2025. To exceed this expectation, higher growth in revenue per available room or a higher booking rate from the central reservation system will be needed.

As of March 20, at the time of the reporter’s publication, Huazhu Group’s Hong Kong stock was reported at 40.76 HKD, and the U.S. stock was reported at 50.53 USD.