ChinaTravelNews, Ritesh Gupta – H World Group continues to strengthen its sales conducted through the B2B channel.
Providing details of the same during its third quarter (Q3) earnings call, the hotel company shared that the number of room nights booked directly via H World’s B2B platform crossed the 7.5 million-mark. The team said this figure grew by 41% as compared to the same quarter of 2023. In Q2 of this year, the company sold over six million direct room nights via the same channel.
The home-grown hotel chain also shared that the number of active corporate clients exceeded 4,500 in the third quarter, up 45% year-over-year and a 23% quarter-over-quarter.
Jason Chen, Investor Relations Director, H World explained that China's overall business travel demand has yet to fully recover due to a challenging economic climate. To mitigate the impact of this subdued demand from “from individual business travellers” and maintain stable occupancy rates during off-peak leisure travel season, H World chose to strengthen its direct B2B capabilities. Chen also shared that in Q3, H World proactively adjusted its operational strategies, especially to optimise its sales channels. He highlighted that over the past few years, the team has invested significantly in building its direct B2B sales and corporate customer relationships. The company is confident that strengthening these capabilities will further enhance its membership program and drive sustainable growth.
Sales conducted through direct channels include the H World App, B2B channel and H Rewards Internet booking engine. In 2023, approximately 78% of its room-nights were sold through its own sales channels.
Company-owned sales channels
As a multi-brand hotel group, H World counts on its H Rewards loyalty program as a vital direct sales channel and as an avenue for lower-cost, targeted marketing campaigns.
H Rewards had more than 228 million members at the end of last year.
“We are working on improving the membership's benefits and ensuring the lowest pricing through our direct sales channel and the membership program,” said Chen.
“The membership base of our H Rewards (loyalty program) continues to increase. As of the end of third quarter, H Reward had close to 260 million members. As we rapidly expand our hotel network, enter into new regions and foray into new segments, it will naturally take some time for us to accumulate new members and improve the direct sales contribution for those new hotels.
As a result, in the short term, we do need traffic support from other channels during the ramping up pace of the new hotels. Nevertheless, members and the direct sales remain the most important and the most sustainable sales channel for us,” said Chen.
Elaborating on targeted optimisation of its own sales channels, Chen said the company worked with “hotel managers” to improve “customer acquisition and sales capabilities”. H World asserts that its cloud-based system allows each hotel within its network to manage its room inventory, reservations and pricing on its own on a real-time basis through an Internet browser.
“In the third quarter, our CRS (central reservation system) contribution improved by 2.2 percentage points year-over-year and 4.3 percentage points quarter-over-quarter to 64.2%,” said Chen.
Reach
One of the main objectives that continues to stand out is continuous penetration into lower-tier cities in China.
“At the end of third quarter 2024, around 42% of our hotels (a total of 10,707 in Legacy Huazhu segment) in operations were in tier 3 and below cities, up 2 percentage points year-over-year. In the pipeline, hotels in tier 3 and below cities accounted for 53%, 11 percentage points higher than that in operation,” said Chen. Around 41% of hotels were in operation in tier-2 cities and 17% in tier-1 cities at the end of Q3. Hotels in operations in tier-3 cities have gained one percentage from both tier-2 and tier-1 cities in Q3 of this year over the same period last year.
“At the same time, as the new signings picked up in Southern China, along with our regional strategy and as our upper midscale segment grow, the proportion of pipeline hotels in tier-1 cities increased two percentage points year-over-year. As of the end of third quarter, the number of cities we covered reached 1,324 around 117 more cities than a year ago,” mentioned Chen.
Hotel turnover increased 10.7% year-over-year to RMB26 billion in Q3 of 2024. Revenue increased 2.4% year-over-year to RMB6.4 billion.
For Q4, H World expects its revenue growth to be in the range of 1%-5% compared to the fourth quarter of 2023, and also in the range of 1%-5% excluding Deutsche Hospitality.
