H World Group Limited (HTHT)
Fair ValueFundamental
71
Price
$33.70
Market Cap
$103.71B
Part 1 · What the company is worth
Overview
H World operates and franchises hotels under brands spanning budget to upscale, mostly in China (HanTing, Ibis, Orange, Joya) and, since acquiring Deutsche Hospitality, in Europe under Steigenberger and related names. Rather than owning most of its properties, the company signs manachise and franchise agreements: hotel owners fund the building, and H World supplies the brand, reservation system, training and standards in exchange for fees. It runs one of China's largest hotel networks by room count.
How it makes money
Most rooms — 93% as of early 2026 — operate under the manachised and franchised model, where H World earns a fee based on a percentage of the franchisee's hotel revenue plus system and reservation charges, rather than paying for the building or the staff. That asset-light structure means franchise fee income grew faster than the company's overall revenue and now supplies most of its gross operating profit. A small remaining share of hotels is leased and directly operated, carrying real estate costs the franchised hotels do not.
Revenue by segment
The original China hotel business — HanTing, Ibis, Orange and other brands — operated mostly through manachise and franchise agreements.
Deutsche Hospitality's European hotels under Steigenberger and related brands, acquired to extend the group beyond China.
Competitive moat
Brand · NarrowA large membership loyalty program and a portfolio of recognized brands make H World hotels a default choice for repeat domestic travelers, and its scale gives it purchasing and system advantages a small independent hotel cannot match. Chinese hotel groups like Jinjiang and BTG offer similar loyalty programs and comparable scale, so the advantage is real but not unique.
What drives demand
CyclicalHotel demand tracks business and leisure travel, both of which contract sharply when the economy weakens or when travel restrictions return, as seen during the pandemic. The manachise model shifts some of that risk onto hotel owners rather than H World directly, but franchise fee income still falls when the hotels themselves see fewer bookings.
Key risks
- VIE structure and Chinese regulatory risk — H World's structure relies on contractual arrangements rather than direct ownership of some China operations; a change in how Chinese authorities treat this structure could affect its validity or the company's control.
- Cross-border data regulation — Hotel reservations involve cross-border data transfers subject to Chinese cybersecurity and data security approval requirements that could tighten or change with little notice.
- US listing and audit access risk — Tensions over US regulators' access to audit work on China-based companies, and broader US-China friction, could affect the company's ability to remain listed on a US exchange.
- Reliance on franchisees to protect the brand — With 93% of rooms now manachised or franchised, service quality and brand standards depend on independent hotel owners H World does not directly control.
The case for
Buyers argue that the asset-light manachise model lets H World grow its hotel network and franchise fee income without funding real estate itself, and that a leading loyalty program and multi-brand portfolio in China's large domestic travel market support pricing power over time.
The case against
Sellers fear that regulatory shifts around the VIE structure, cross-border data rules or US listing access could disrupt the business with little warning, and that ceding day-to-day control to thousands of franchisees makes consistent brand quality harder to guarantee as the network grows.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users
The largest upper-midscale chain in China, it competes directly with H World's Crystal Orange, Manxin and Orange brands for business travellers in tier-one and tier-two cities.
The biggest international operator in China, it competes with H World's upscale brands for the same corporate accounts and hotel developers, and its loyalty programme pulls at the same repeat travellers.
China's largest hotel group by room count, competing with H World for the same domestic travellers and the same franchisee owners across the economy and midscale brands, and also in Europe through its Louvre Hotels arm.
Owner of the Home Inns and Jianguo brands, it is the other large domestic chain disputing the same budget and midscale segment in the same Chinese cities where H World runs HanTing and JI Hotel.
A franchise-driven Chinese chain concentrated in lower-tier cities, it courts the same price-sensitive guests and the same small hotel owners that H World signs up for HanTing and Ni Hao.
Accor competes with H World on two fronts: in Europe its Novotel and Mercure hotels face H World's Steigenberger and IntercityHotel properties, and in China its midscale brands target the same guests.
Balance Sheet & Liquidity
Revenue
$26.60B
Trailing 12 months (through 6/30/2026)
Net Income
$5.04B
Trailing 12 months (through 6/30/2026)
Free Cash Flow
$7.37B
Total Equity
$16.90B
Total Liabilities
$34.23B
Current Ratio
1.21
Interest Coverage
-
Debt/EBITDA
3.85
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$34.67
Current Price
$33.70
Margin of Safety
+2.8%
Fair Value Range
$22.54 - $46.81
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
29.89
ROE
38.1%
P/B Ratio
6.14
P/FCF
14.07
Gross Margin
41.1%
ROIC
12.8%
Profitability Radar
Value Creation (Economic Moat)
ROIC
12.8%
WACC
7.1%
ROIC − WACC
+5.7 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (13)
- ROIC 12.8%
- Gross Margin 41.1%
- P/FCF 14.07
- Debt/Equity ratio
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Debt/EBITDA
- ROE 40.5%
- Revenue Growth 5Y 19.9%
- Analyst Consensus 96% Buy
- Earnings Quality (OCF/NI) 1.73
- Net Margin Trend 20.1% vs 12.8%
Failed (5)
- Price CAGR -1.00%
- P/B Ratio 6.14
- DCF valuation (Fairly valued)
- Earnings Surprise avg -3.7%
- Piotroski F-Score 2/9
Unavailable (9)
- EPS data insufficient
- Dividend Payout NaN%
- Operating Margin NaN%
- Interest Coverage
- Return on Tangible Assets
- Low reliance on intangibles
- Price below Graham Number
- PEG Ratio (need PE > 0 and growth > 0)
- Share Dilution (missing shares data)
Piotroski F-Score
Serious financial concerns
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Qi Ji | Founder & Executive Chairman | 58 |
| Mr. Hui Jin | Chief Executive Officer | 47 |
| Ms. Xinxin Liu | President | 46 |
| Mr. Junrui Yu | Chief Financial Officer | 44 |
| Mr. Dong Li | Chief Accounting Officer & Deputy CFO | - |
| Ms. Ivy Luo | Head of Investor Relations | - |
| Mr. Yao Chen | Company Secretary & Director of Legal Affairs | - |
| Ms. Fei Ye | Deputy CFO & VP of Strategic Investment and Capital Market | - |
| Ms. Jihong He | Chief Strategy Officer | 53 |
| Yu Ida | Senior Manager of Investor Relations | - |
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Latest News
Recent headlines for HTHT, sourced from Markets Gazette.
- 5/15/2026NEUTRALH World Group Reports Q1 2026 Results: Full Earnings Call Transcript
H World Group Limited has released its Q1 2026 earnings call transcript. While the transcript provides detailed insights into the company's performance, strategic initiatives, and future outlook, it does not contain specific financial figures or forward-looking statements that would indicate a significant immediate impact on the stock price. Investors should review the transcript for qualitative information regarding operational efficiency, market positioning, and management's commentary on industry trends.
via Markets Gazette