Huazhu's Franchise Push Fuels 32.9% Profit Growth
Huazhu Group (H World) demonstrated robust financial health in 2025, with total revenue rising 5.9% to 25.3 billion yuan and adjusted net profit surging 32.9% to 4.9 billion yuan. The performance was anchored by the company's asset-light strategy, which emphasizes management and franchise (M&F) contracts over direct ownership. Revenue from its M&F business grew 23.1% to 11.7 billion yuan, accounting for an increasing share of total profit. A significant milestone was the turnaround of its international division, Deutsche Hospitality (Legacy-DH), which posted an adjusted EBITDA of 499 million yuan for 2025, reversing a 154 million yuan loss from 2024.
The company's growth strategy centers on aggressive network expansion and penetrating underserved markets. Huazhu opened over 2,400 hotels in 2025, with more than 50% of its development pipeline now located in third-tier cities and below. This push allows Huazhu to capitalize on the consolidation of independent hotels into branded chains. Looking ahead, the company projects its high-margin M&F revenue will grow another 12% to 16% in 2026, signaling continued confidence in its scale-driven model.
Atour's Retail Arm Powers 33.8% Q4 Revenue Spike
While Huazhu expands through scale, Atour is charting a different path centered on brand premiumization and retail innovation. The company reported a 33.8% year-over-year increase in fourth-quarter revenue to 2.79 billion yuan, while its adjusted EBITDA soared 61%. This growth was accompanied by a crucial turnaround in pricing power, as its average daily rate (ADR) rose 1.5% in Q4, ending two consecutive years of negative growth.
Atour's key differentiator is its burgeoning retail business. What began as an in-hotel offering has evolved into a major revenue stream, generating 3.67 billion yuan in 2025 and accounting for approximately 41% of the company's total income. This unique model extends the customer relationship and revenue potential far beyond the physical hotel stay, creating a distinct and high-growth profit center. The success of its premium brands, such as SAVHE, which commands a RevPAR of over 950 yuan, further underscores its focus on the high-value segment of the market.
Top Chains Escape Price Wars as RevPAR Recovers
After a prolonged period of intense price competition driven by market oversupply, China's leading hotel chains began to show signs of a structural recovery in late 2025. In the fourth quarter, Huazhu's core China business (Legacy-Huazhu) saw its revenue per available room (RevPAR) increase 2.0% year-over-year, while Atour's ADR also turned positive. This indicates a strategic shift among market leaders away from discounting and toward competing on brand, quality, and service, which is starting to restore pricing discipline.
However, the success of Huazhu and Atour highlights a growing divergence within the industry. While these giants leverage sophisticated strategies—Huazhu with its franchise-led scale and Atour with its retail ecosystem—many smaller, independent hotels continue to struggle with high vacancy and low rates. This split suggests that the recovery is not uniform. For investors, the performance of these leading operators provides a clear signal that the future of China's hospitality market belongs to well-capitalized, strategically focused companies capable of differentiating themselves from the competition.
Edgen Stock·Mar 21 2026, 07:38
