Good day, and thank you for standing by. Welcome to the H World Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. 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. 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 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. [Non-English content] Dear investors and analysts, good day. Thanks for joining us today. Welcome to H World Group's second quarter 2026 earnings conference call. [Non-English content] 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 policy for multiple countries continued 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. [Non-English content] Recently, the government issued a plan to build China into a nation strong in tourism during the 15th five-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 $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. [Non-English content] 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 assets light, managed and franchised business delivered robust growth across scale, revenue, and profit. In the second quarter, managed 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. [Non-English content] 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. [Non-English content] 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 maintain 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 matching 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's strengthened product competencies and brand influence, we can achieve further breakthrough in China's core existing markets. [Non-English content] Please continue to stand by. Your conference will resume shortly. Ok. [Non-English content] We have the sound back. Please resume. Ok, let's continue. [Non-English content] We focus on the economy and midscale segments, 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 Inn, we are further solidifying our leading position in the economy and midscale lodging markets. In the recently released HOTELS 2025 global rankings for single-branded room counts, JI Hotel leaps from the number four 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 midscale brand Orange Hotel climbed to 26th 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' diversified 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 strategies. [Non-English content] Besides deepening our core mass market brand and network expansion, our upper midscale 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: IntercityHotel, Grand JI, Crystal Orange Hotel, and Mercure. As of end June, H World China's upper midscale brands had 1,738 hotels in operation and in pipeline, up 13.4% year-over-year. [Non-English content] 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 expand to more cities, H Rewards membership base and the 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 partnership, and expanding diversified loyalty point consumption scenarios for our members. At the same time, we are accelerating our H Rewards international presence, optimizing our H Rewards 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. [Non-English content] In addition to focusing on 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, H World boosts local employment and creates 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, our social welfare initiative. 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, H World 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. [Non-English content] 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. [Non-English content] 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. 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 decreased in 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 percentage points 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 percentage points to 24%. Supported by ongoing high quality asset light network expansion and improved RevPAR performance, our M&F business revenue grew a solid 24.2% 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 one 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 announce that the board has approved another three-year shareholder return plan with an aggregated amount of $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 $275 million. With that, we conclude our financial review for the second quarter of 2026. With that, we are ready to take your questions. Operator, please open the line for Q&A. Thank you. We will now begin the question and answer session. If you wish to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will take our first question, and the question comes from Lydia Ling from Citi. Please go ahead. Your line is open. [Non-English content] Thanks management, this is Lydia from Citi and congratulations on the solid results in the second quarter. My question is mainly on the RevPAR trend. Into the quarter, we observed a volatile travel demand affected by the extreme weather, especially during this peak summer season. Could you share the RevPAR performance during the summer holiday and also into second half base goes are relative higher. What's management latest expectation on the third quarter and also full year RevPAR trend? [Non-English content] [Non-English content] Sorry, I will translate first. Thank you for your question. This is Jin Hui, I will answer this question. Currently China's leisure travel demand is still steadily growing. We firmly believe that in China, consumer have treat 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 tourism travel. In the first half this year, we do see multiple regional government introducing spring holiday. In early August, we also saw government encouraging public servants to take holidays. Certainly, around this round of leisure travel trend, we do see new scenarios and new customers emerging. For example, family trips, travel by silver hairs, travel by self-driving, 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. [Non-English content] Yes, as you mentioned, in July, we do see several regions being negatively affected by those severe weather, and it impacted operational results. In some of the market, for the first half of this summer holiday, the performance was below expectation. Also, on the other hand, 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. [Non-English content] Thank you. We will take our next question. Your next question comes from Dan Chee from Morgan Stanley. Please go ahead. Your line is open. [Non-English content] This is Dan from Morgan Stanley. I have two questions. My first question is on hotel opening. We saw gross opening in first half 2026 was 1,035 hotels. Although on track with Mr. Jin's reassurance on full year target of 2.2 to 2.3 thousand, 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 is 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 Inn, such as quantity or operating improvements? Thank you. [Non-English content] [Non-English content] Thank you, Dan, for your questions. On the overall new hotel network expansion, in the second quarter, we opened 498 hotels. The number of opening is actually in line with our plan and our expectation. More importantly, if you look at the new signings, we also achieved solid new signings in the second quarter. As end of June, the number of hotels in our pipeline actually increased both quarter-over-quarter and year-over-year. We always emphasize that for each quarter, what we want to achieve is not just very simple quantity growth, but quality improvement. 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. 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. I do think it's just normal volatility, and there's no change in our overall opening plan. Thank you. [Non-English content] On your second question, I am very happy to share with you that our HanTing 4.0 version have achieved both market and franchisees recognition. The new version of HanTing, the RevPAR performance is meaningfully better than the older version. After we rolled out Hanting Inn, the number of hotels of Hanting Inn in operation and in pipeline actually quickly exceeded 200. The overall development is actually better than our expectation. The operational performance of those Hanting Inn that's in operation is also very strong. I think both the two points that I mentioned above actually shows you that [Non-English content] has very strong capability in high quality development in the economy hotel segment, and 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, with the Hanting Inn 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 would have very big growth potential to capture the market. Thank you. Thank you. We will take our next question. The next question comes from the line of Liu Jiwei from CITIC. Please go ahead, your line is open. [Non-English content] I'm Liu Jiwei from CITIC. 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, Grand JI has opened in Hangzhou, Guangzhou, and Wuhan. Could you give- Operator? Hello, we still have the participant connected. I believe the signal was cut. Liu Jiwei, are you able to repeat your questions please? [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] 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? Will you speed up expansion? Also, Grand JI has opened in Hangzhou, Guangzhou, and Wuhan. Could you give more color on its operating performance on the development roadmap? [Non-English content] 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 front. One is that the upper mid-scale segment actually has the opportunity from consumption upgrade. While at the same time, it also takes some of the demand from those traditional upscale hotels. For H World, we will continue to insist on our multi-brand strategy. We will be building on our Grand JI, on Crystal Orange Hotel, on IntercityHotel, as well as Mercure. We will be using these four core flagship brands to achieve fast development and market share gain in the upper mid-scale segment. Currently for the IntercityHotel, it has been growing very strongly. We are very confident on the future growth for this brand. 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 developing the quantity of it. 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. [Non-English content] Yeah, we are very confident that Grand JI will become a flagship in China's upper mid-scale segment, and we are really working hard on that. Thank you. [Non-English content] Thank you. We will take our next question. Your next question comes from Ronald Leung from Bank of America. Please go ahead, your line is open. [Non-English content] Let me translate my question into English. Good evening, management. 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? Thank you very much. [Non-English content] Let me answer the question related to our members. Yes, member is one of our core strategy for H World's operation, and it is 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 market, for example leisure market, the inbound market as well as those lower tier cities market, H World's membership do need some time to grab those traffic from those new market for us. But meanwhile, the OTA contribution is actually quite stable at around 20%-25%. We do believe that when we enter those new market, 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 Rewards members, I will conclude it in three areas. Firstly, is for the H Rewards members, we do emphasize on the best benefit for our members. This one is one of the key strategies for us. This includes the best price, includes breakfast and etc. And going forward, we are also doing more work on innovation. For example, recently we actually launched a family card under our H Rewards membership, and it actually received a quite good feedback from the market. [Non-English content] Secondly is on the cross-industry partnership. You may have already noted that last year we actually partnered with DiDi, and this year we are partnering with multiple airline companies, as well as new energy vehicle companies to really work with those multiple business sectors. The cross-industry partnership will also be one of our important strategies. Lastly is our international or overseas member development. In the second quarter, we deepened our cooperation with Accor on the membership partnership. On one hand, it is really to capture more inbound demand, and also it allows Chinese travelers to be able to stay in Accor's hotel when they go abroad. So we are really working on that. To conclude on the three points, one is on the membership operation. Secondly is on the cross-industry partnership. And thirdly is on the international development for H World. Thank you. Thank you. We will take our next question. Your next question comes from Simon Cheung from Goldman Sachs. Please go ahead. Your line is open. [Non-English content] My question is in relation to the EBITDA margin trend. Over the last couple 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 in the second half and also for the full year. Thank you. Appreciate it. [Non-English content] Thank you, Simon. This is Arthur. I will answer your questions. On the overall margin front, as the group continue to push forward our asset light strategy, in the mid to long term, we do expect companies adjust the EBITDA margin to continue to expand. [Non-English content] 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. [Non-English content] 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 investment. For example, in the talent development, in technology and AI, in our H Rewards membership building, in brand building, etc. So in those areas, we will be making reasonable and long-term, and effective investment. [Non-English content] For the outlook of our second half profitability and cost, we will maintain very stable. [Non-English content] 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. [Non-English content] Despite the impact of Middle East conflict on the traffic and on the overall operational cost, for H World, we are actually doing more cost control for HWI. So by doing that, overall impact of the Middle East is actually controllable. [Non-English content] For the full year, we maintain our goal of achieving a positive profit for our HWI business. [Non-English content] Thank you. Thank you. This concludes today's question and answer session. I will now hand the call back to Ivy Luo for closing remarks. 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. This concludes today's conference call. Thank you for participating. You may now disconnect.