HWORLD-S (01179) Q2 2026 Earnings Call Transcript

Good day and thank you for standing by. Welcome to the H-World Q2 2026 Earnings Conference Corps. 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 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 Law. 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. Jing 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 Security 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. 8-Word 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 gap 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. Jinghui, to discuss our business performance in the second quarter of 2026. Mr. Jing, please. Dear investors and analysts, good day. Thanks for joining us today. Welcome to HL Group Second Quarter 2026 Earnings Conference Call. 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 policies for multiple countries continue 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. 附近旅游人士突破83亿,总花费达7.7万亿元,入境旅游人士达1.9亿,消费总额超1500亿美元。 这份规划当中也提到,后续会调整文旅区域布局,加码高质量文旅产品的供值。 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 R&B $7.7 trillion, and inbound tourist arrivals reaching $190 million with total spending exceeding U.S. dollar $150 billion. The plan also outlined adjustments to the tourism regional layout and the 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. 实现了高质量的网络扩张

载营房量同比增加12.7%的驱动下 集团酒店铁铭铭同比增长13.2%至305亿元 华助会会员体量及会员预定兼业量也均实现稳步增长 更为重要的是集团轻资产的加盟业 无论在规模收入还是利润上均实现了强劲的增长 2026年二季度加盟收入同比提升25.2%至36亿 经营毛利同比增长18.5%至22亿 Facing the current industry opportunities and challenges

IT will remain 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 the 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 R&B $30.5 billion. Room nights booked by members also achieved steady growth. More importantly, the group assets like managed and franchise business deliver robust growth across scale, revenue, and profit. In the second quarter, managed and franchise revenue increased 25.2% yield over year to R&B 3.6 billion, and gross operating profit grew 18.5% yield over year to R&B 2.2 billion. With industry competition rationalizing, H4 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% yield-year increase in live-par in the same period. 我们的酒店品牌和产品持续获得加盟商的青睐和高度认可 公司签约表现稳健 截至6月底 管道内酒店同比环比均有提升 达3054家 我们的载营及管道内酒店已覆盖1468个城镇

继续向千层万店2.0的目标迈进 在布局低线下沉市场的同时 我们持续优化核心城市 优质商圈的门店布局 我们相信依托华注不断精进的 产品实力与品牌势能 我们能够在中国核心存量市场 取得进一步突破 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 age will strengthen product competencies and brand influence, we can achieve further breakthrough in China's core existing market.

We have to sign back Please, Jim. Okay, let's continue.

Okay, so汉廷和全技成为中国酒店品牌 首次拿下hotels榜单的冠亚军. 除此以外,中道主力酒店橘子酒店排名 攀升至全球第26位, 成为集团品牌规模化扩张的 六亿亮眼的里程碑. 但我们认为规模领跑只是阶段性成果 后续集团将继续坚持高质量发展 深增产品打磨 持续迭代升级 以提高产品质量与服务 更好地满足消费者的多元化住宿需求 We focus on the economy and mid-scale segments, deeply cultivating the mass market and continuously strengthening the core competitiveness of our flagship brands.

With the upgrades of Han Ting and Ji, we are pleased to see that the new version of hotels delivered meaningful improvement in Vapar and gained broader recognitions from guests and franchisees. With the rollout of Han Ting Ying, we are further solidifying our leading position in the economy and mid-scale lodging markets. In the recently released Hotels 2025 global rankings for single brand review counts, G Hotel leaped from the number four place globally to the top spot, with Hanqin 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 mid-scale 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, diversify lodging demands. Looking ahead, our limited-service Golden Triangle brands, namely Hantin, G, and Orange, will continue to unleash strong market competitiveness and serve as a key growth engine for the group's 20,000 hotel in 2030 strategy. Besides deepening our core math market brand and network expansion, our upper mid-scale 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, Intercity, Grand G, Crystal, and Mercure. As of N-June, HWO China's upper mid-scale brands and 1,738 hotels in operation and in pipeline, up 13.4% year-over-year. Thank you very much. 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 expands to more cities, each reward's membership base and room night 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 and expanding diversified loyalty points consumption scenarios for our members. At the same time, we are accelerating our H-World international presence, optimizing our H-World 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. 截至6月底 集团再稿员工总数已突破26万人

除此以外 我们也在不断完善内部人才绩养机制 给员工规划清晰的晋升和成长路线 其次 我们坚持推进酒店绿色低碳运营 落地各类节能措施 我们也会把成熟的能耗管理方案给到加盟商 帮助门店省下水电能源开支 进而取得更好的经营回报 最后便是公益回馈方面 依托集团公益基金会 我们落地不少公益项目 通过教育帮扶 灾情资源等来回馈社会 未来我们也将会继续推进各项社会责任工作

兼顾业务成长与社会担当 担负企业向消费者加盟商员工和社会的企业 In addition to focusing on our 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 initiative, balancing business growth with social commitment, and upholding our corporate mission to get franchisees, employees, and the wider community.

Thank you very much. 欧洲板块的经营表现在平均房价入住率双重改善的驱动下,二季住REF同比增长1.1%。 未来我们将持续优化公司在欧洲的运营效率,同时稳步推进在亚太市场的战略股权。 Next, let's go over our operational performance in the international market.

In the second quarter, HWI's blended red power 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 red power decreased 3.8% year-over-year, with ADR up 0.9%, and occupancy rate down 3.5 percentage points. Nevertheless, our Bureau of Business delivered a solid performance. The European segment's red part 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. 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, Jinghui. 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 red-par recovery. Our international business revenue decreasing 5.8% year-over-year to RMB 1.3 billion, which was due to the closure of leased hotel and therefore a decline in leased revenue. We are happy to report that our group recorded another quarter of strong profit growth. Adjusted EBITDA increased 20% year-over-year to RME 2.7 billion, with adjusted EBITDA margin expanding 3% point 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 GNA 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. But 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 three percent points to 24 percent supported by ongoing high quality eyesight light network expansion and improved rev path performance over mnf business revenue grow a solid 24.2 percent year over year to rmb 3.6 billion mnf growth operating profits 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 club. 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 US dollar 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 US dollar 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 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We will take our first question, and the question comes from Lydia Ling from Citi. Please go ahead, your line is open.

RAPA的,那进入三季度以来我们也看到极端的天气带来的出行的一些不确定性也正值暑期的一个旺季,那管理层能否分享一下目前所观察到的暑期的整体的一个 RAPA表现吗? 那么下半年也进入了一个相对高的一个基数,那管理层对于三季度或者是全年的一个 RAPA的最新的预期是怎样的? 那我翻译一下, Thanks management, this is Lydia from City and congratulations on the story results in the second quarter. My question is mainly on the Red Park trend. So into third quarter, we observed volatile travel demand affected by the extreme weather, especially during this peak summer season. So could you share the Red Park performance during the summer holiday and also into second half, base goals are relatively higher. So what's management latest expectation on the third quarter and also full year Red Park trend?

Thank you, questioner. I'm Jinghui. I'll answer this question. 目前应该讲中国的旅游休闲这个需求还是处于持续增长 我们非常坚信的一点就是中国的消费者已经把旅游休闲作为他们的刚需 这个在疫情以后表现得非常的明确 第二方面政府非常鼓励支持文旅出席 今年上半年推出的各地的春假及在八月初推行的公务员休假的这样的一个制度 第三个当然毫无疑问我们在这轮里面看到了大量的新型的休闲旅游的客源和场景 家庭游 银化游 自驾游表现的也非常的强劲 当然,入境油也带来了非常大的增量市场,

尤其对一二线的核心城市。 7月份的确受到了收莲。 I will translate first. So thank you for your question. This is Jinghui. I will answer this question. So currently, China's leisure travel demand is still steadily growing. We firmly believe that in China, consumers have treated 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 governments introducing spring holidays. And in early August, we also saw government encouraging public servants to take holidays. And 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. So, yes, as you mentioned, in July, we do see several regions being negatively affected by those severe weather. it impacted operational results in some of the market for the first half of this summer holiday the performance was below expectation and also on the other hand we 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 rampart unchanged.

OK, xie xie.

Thank you.

We will take our next question. Your next question comes from Dan Chi from Morgan Stanley. Please go ahead.

Your line is open. 各位管理层晚上好,我是大摩的Dan,我有两个问题,第一个是围绕开店,就是华柱中国上半年我们看到毛开店是1035家,刚刚金总也提到了我们会坚定迈进全年2200到2300家的这样的一个目标,这个非常清楚。 啊 我的问题是想从季节性上看啊 去年的上半年的开店有啊 接近一千三百家毛开店啊 占全年比较大的头 那啊在上下半年这种季节性开店啊 最佳时间是不是有一些结构性的变化跟去年啊 我的第二个问题啊 是关于经济型酒店的矩阵啊 就是刚才看到啊 汉庭3.5或以上的版本啊 更新已经达到了55% 那么今年 年前公司推出了新的汉庭快捷 还有全新的汉庭4.0的一些进展 我想问一下这边有没有一些更新的进度 比如说像数量上或者是产品迭代后运营上的一些提升 那我翻译一下 This is Stan from Morgan Stanley I have two questions My first question is on hotel opening We saw growth opening in first half 26 was 1,035 hotels, although on track with Mr. Jing'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 a year seasonality-wise? That was my first question. My second question is about economy segment upgrade. Hunting product, we see that it's now more than 55% are version 3.5 and above. Can the management share some progress made on the latest edition of 4.0 and hunting in, such as quantity or operating improvements? Thank you.

Okay, thank you for your question. I'll go back to the next question. First of all, I will explain about the two weeks of the two weeks of the market. The two weeks of the two weeks of the new market is 498. The market is the number of the number of the market. The two weeks of the agreement is very important. Since the six months of the market, the two weeks of the market will be distributed. In this process, I want to強調一點, I want to強調一點, I want to強調規模量的發展, but I希望實現實質的提升. We have to do the new new contract and new company 提出了更高的要求, and the high-质量發展 strategy we will be堅持在未來幾年 始終如一的貫徹.

Thank you, Dan, for your question. So on the overall new hotel network expansion, in the second quarter, we opened 498 hotels. The number of openings actually in line with our plan and our expectations. And more importantly, if you look at the new signings, we also achieved solid new signings in the second quarter. At the end of June, the number of hotels in our pipeline actually increased, both quarter-over-quarter and year-over-year. And we always emphasize that for HVOD, what we want to achieve is not just very simple quantity growth, but quality improvement. So we do have higher requirements for our new signings and new openings. In the next few years, we will continue our sustainable, high-quality growth strategy unchanged. And 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, but I do think it's a just normal volatility, and there's no change in our overall opening plan.

Thank you. 发展速度好于我们的预期 开业门店的经营表现非常容易 这两点都证明了华柱的能力在经营酒店 推动高质量发展的这样的一个预期 将会得到非常好的支持 后续我们将持续对汉庭的老旧门店版本

进行升级以待 进一步优化梳理汉庭品牌的举证 同时也为下层市场和小型物业的门店翻牌提供足够的产品方案 总之在经济型这个领域 华柱将会充分地发展 充分地实现市场的占领 Our second question, I'm very happy to share with you that our Hanqin 4.0 version have achieved both market and franchisees' recognition. The new version of Hanqin, the rev car performance is meaningfully better than the older version. And after we rolled out Hanqin Ying, the number of hotels of Hanqin Ying in operation and in pipeline actually quickly exceeded 200. The overall development is actually better than our expectation. The operational performance of those Han Qiyin operations is also very strong. I think both the two points that I mentioned above actually shows you that Hua Zhu has very strong capability in high-quality development in the economy hotel segment, and we're very strong in executing. Going forward, we will continue to upgrade our Hanqin's older version of hotel to go through the overall Hanqin hotel's portfolio to improve the overall hotel portfolio quality. Meanwhile, we will also, with the Hanqin product, we also provide the product that's available for those smaller properties for them to open under our Hanqin brand. To conclude, I think under the overall economy segment, each world has a 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 Yuval Liu from Citi CS. CS, please go ahead.

Your line is open. 杭州 广州 武汉其实都是有一些门店落地的 关于这个现在全机大关的经济情况和发展规划 是不是有更多的这个细节可以做一些分享 我翻译一下我的问题 I'm Jiwei from Citix The company now has more than 1700 upper-mid-school hotel properties What's your view on this year's supply demand balance in the upper-mid-school hotel segment? We will speed up expansion Also, G-Grant has opened in Hanzhou, Guangzhou, and Wuhan. Could you give...

Hello, we still have the participant connected. I believe the signal was cut. Yuvalu, are you able to repeat your questions, please?

喂,可以听到我这边的声音吗? 可以. 那我重新问一下我的问题啊. 我的问题主要是关于英文, I'm Jiwei from Citix. The company has more than 1,700 after-mid-skill hotel properties. What's your view on this year's supply-demand balance in the after-mid-skill hotel segment? We will speed up extensions. Also, G-Grant has opened in Hangzhou, Guangzhou, and Wuhan. Could you give more color on its operating performance on the development roadmap?

Okay, I'll be back with you on the question. one side is also building the traditional high-end酒店 and also building the two decades and also building the two decades in the Lone in the Middle East we will continue to maintain the former the U.S. and the U.S. the U.S. and the U.S. to increase the U.S. and increase the U.S. and increase the U.S. 目前成绩发展非常好,我们对成绩非常的有信心,而且无论是经营业绩发展规模都取得了非常好的势能。 同时提到了关于大观品牌,很高兴我们已经在中国陆续签约和开一些门店,连管道的门店已经超过20战。 目前我们依然保持大关在城市的地标,然后打磨大关的商业模式,我们还处于一个谨慎的发展阶段,但是我们非常看好大关已经取得的客户口碑和产品模型, 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 fronts. One is that the upper mid-scale segment actually has opportunities from consumption upgrade. Well, at the same time, it also takes some of the demand from those traditional upscale hotels. And for each vote, we will continue to insist on our multi-brand strategy. We will be building on our grant G, on Crystal, on InterCity, as well as Mercure. We will be using this four core flagship grant to achieve fast development and market share gain in the upper mid-scale segment. currently for the interior city hotel it has been growing very strongly and we are very confident on the future growth for this grant and you mentioned a grantee for the grantee we have been gradually signing and opening some hotels as of now the number of grantee in pipeline have already exceeded 20 hotels and at this moment we'll be really focusing on building grantee at those very prime locations we are still refining the overall business model so we'll be relatively cautious like developing the quantity of it but we are very positive on what grantee has already achieved in terms of the customer reputation the brand reputation and the product model So in the future, we believe GrandGy have very big growth potential, and we are very optimistic on it. We are very confident that GrandGy will become a flagship in China's upper-middle segment, and we're really working hard on that.

Thank you. 好的,谢谢 Thank you We will take our next question Your next question comes from Ronald Lung From Bank of America Please go ahead, your line is open 喂,管理层,晚上好 我是美国银行的Ronald Lung 我有一个问题是关于这个会员系统的 还有这个货客渠道的一些变化 请问管理层可以说一说 或者是这个会员的兼业的证书最近是怎么样

还有就是目前的沃克渠道有什么的变化 还有就是管理层也说这个会员系统 可以不可以再讲多一些具体的有什么优惑 或是调整的策略 好 谢谢 Let me translate my question into English So 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. 目前整个会员增长预定指数我们认为还是较为正常和预期的 当然面对新的休闲市场入境市场下层市场这些新市场 华柱会员的确需要时间沉淀更多的面对这些新市场的客源 对应的我们OTA的占比也比较稳定 目前维持在20%到20%之间 我们认为面对一些新的市场 我们还是需要OTA的支持 尤其在入境和更多的下层市场 对此华注会未来的核心应用策略 我想总结为三个方面 第一个方面是关于华注会员 由以华筑会权益最优的核心为核心的华筑的会员运营策略 我们尤其在价格最优早餐等场景权益的这个治理上 我们接下去会持续的做很多的工作 同时还会做会员的创新 近期我们推出的家庭卡得到了市场的非常好的反馈 Let me answer the question related to our members.

Yes, a member is one of our core strategy for H-Word's operation, and it's 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 expectations. Of course, as we are entering into more markets, for example, leisure market, the inbound market, as well as those lower-tier cities markets, HWO's membership do need some time to grab those traffic from those new markets for us. But meanwhile, the OTA contribution is actually quite stable at around 20% to 25%. We do believe that when we enter those new markets, we do need OTA support, especially for inbound and lower tier cities. And related to the overall strategy and the future strategic operations for each reward members, I will conclude that in three areas. Firstly, for the HRWARD members, we do emphasize the best benefits for our members. This one is one of the key strategies for us. This includes the best price, includes breakfast, and et cetera. And going forward, we are also doing more work on innovation. For example, recently, we actually launched a family card under our HRWARD membership.

And it actually received quite good feedback from the market. 啊 我们在二季度展开和雅高全面的会员合作,来布局入境和海外会员的发展。 一方面承接更多入境需求,也让更多的中国旅客能在海外旅游能住上华住和雅高的酒店。 So, let's conclude the three points. The international community is first to focus on fundraising and the other is in the entire world of climate change and the other is in the entire international community. We are in the entire community.

So, secondly is the cross-industry partnership. You may have already noticed that last year we actually partnered with DB, and this year we're partnering with multiple airline companies as well as new energy vehicle companies to really to work with those multi multiple business sectors this will 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 depend our cooperation with a core on the membership partnership on the one hand it's really to take more to capture more inbound demand and also it's allowed Chinese consumers to be able to Chinese travelers to be able to stay in a course hotel when they go aboard so we're really working on that. So to conclude, on the 3.1 is on the membership operation, secondly it's on the cross-industry partnership, and thirdly it's on the international development for HRWR. Thank you.

Thank you. We will take our next question. Your next question comes from Simon Cheng from Goldman Sachs. Please go ahead. Your line is open.

Thank you. So my questions 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 into the second half and also for the full year. Thank you. I appreciate it.

Simon, thank you for your question. I'm Arthur. I'll answer this question. First, the first thing is our company is a kind of a push-up. So in the middle of the year, we still expect the whole EBITDA rate to continue to increase the rate of the EBITDA rate. This is the first thing.

Thank you, Simon. This is Arthur. I will answer your question. So on the overall margin front, as the group continues to push forward our asset-life strategy, in the mid-to-long term, we do expect companies to adjust the EBITDA margin to continue to expand. On the SG&A front, we have been making really good delivery in the quarter. This is supported by our very mature and developed cost control system. But at the same time, we are also very clear that in order for each world to achieve a long-term sustainable growth, we have to make necessary strategic investments. For example, in the talent development, in technology and AI, in our issue world membership building, in brand building, etc. So in those areas, we'll be making reasonable and long-term and effective investments. So for the outlook of our second half, profitability and cost, we will maintain very stable. 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 monetized and franchised hotels. So they have limited impact, actually, on our HWI's revenue and profit. Despite the impact of Middle East conflict on the traffic and the overall operational cost, For each vote, we are actually doing more cost control for HWI. So by doing that, the overall impact of the Middle East is actually controllable. So for the four-year, we maintain our goal of achieving a positive profit for our HWI business. Thank you.

Thank you. This concludes today's question and answer session. I'll now hand the call back to Ivy Law 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.