4.A. History and Development of the Company The following table illustrates the key milestones of our history and business development: ​ Year ​ ​ ​ Milestone 2005 ​ We launched the first HanTing Hotel in Kunshan, Suzhou. ​ ​ ​ 2008 ​ We launched our budget hotel product, HanTing Hi Inn, which was subsequently rebranded as Hi Inn. ​ ​ ​ 2010 ​ Our ADSs were listed on the NASDAQ Global Selected Market.We launched the first JI Hotel in Shanghai. ​ ​ ​ 2012 ​ We acquired a 51% equity interest in Starway HK, a midscale hotel chain, and expanded our offering to four hotel brands. ​ ​ We changed our Chinese trade name from “HanTing Hotel Group” to “HuaZhu Hotel Group”. ​ ​ ​ 2013 ​ We acquired the remaining 49% equity interest in Starway HK. ​ ​ We adopted the first proprietary cloud-based property management system in China. ​ ​ ​ 2014 ​ We entered into agreements with Accor, to join forces in the Pan-China region to develop Accor brand hotels and to form an extensive and long-term alliance with Accor. ​ ​ We offered the first automated self-check-in or check-out kiosks in China, featuring advanced technologies such as facial recognition. ​ ​ ​ 2016 ​ We completed our transaction with Accor. ​ ​ We adopted a centralized procurement system, leveraging our Internet of Things technology, which allows all hotels across the network to make bulk purchases of hotel supplies. ​ ​ ​ 2017 ​ We completed the acquisition of all of the equity interests in Crystal Orange, which operated hotels under the brands Crystal Orange Hotel and Orange Hotel. ​ ​ We issued US$475 million of 0.375% convertible senior notes due 2022. ​ ​ ​ 2018 ​ We changed our name to Huazhu Group Limited, or Huazhu. ​ ​ We completed the acquisition in steps of a majority stake in Blossom Hotel Management, which was engaged in the business of operating and managing hotels under Blossom Hill Hotels & Resorts (currently Blossom House) brand in the upscale market in the PRC. ​ ​ ​ 2019 ​ We were a winner of the “2019 CIO 100 Award”, which recognized us as one of the 100 most innovative organizations worldwide that use information technology in innovative ways to deliver business value. ​ ​ Our H Rewards loyalty program surpassed 150 million members. ​ ​ We opened our first overseas hotel in Singapore under JI Hotel brand, which we directly operate. ​ ​ ​ 2020 ​ We completed the acquisition of all equity interest in Steigenberger Hotels AG, which was engaged in the business of operating and managing hotels under five brands, namely Steigenberger Hotels & Resorts, MAXX, Jaz in the City, IntercityHotel and Zleep Hotels, primarily in Europe. ​ ​ We issued US$500 million of 3% convertible senior notes due 2026. ​ ​ We completed our global offering and listing on the Hong Kong Stock Exchange. Our ordinary shares started to be traded on the Hong Kong Stock Exchange on September 22, 2020. ​ ​ We completed the put right offer relating to the 2022 Notes. ​ ​ ​ 2021 ​ We completed the acquisition of CitiGO in May 2021, which operates hotels under the brand of CitiGO Hotel. ​ ​ ​ 2022 ​ We changed our name to H World Group Limited, or H World. 56 Table of Contents Year ​ ​ ​ Milestone ​ ​ We fully redeemed our convertible senior notes due 2022 on the maturity date of November 1, 2022. ​ ​ ​ 2023 ​ We issued a total of 7,118,500 ADSs (including 928,500 additional ADSs pursuant to the exercise of a 30-day option), each representing ten ordinary shares of H World Group Limited, at a price of US$42.0 per ADS, in January 2023. ​ ​ ​ 2024 ​ We achieved the milestone of opening 10,000 hotels. ​ ​ ​ 2025 ​ We launched our upper midscale hotel brand, Grand JI Hotel.Our H Rewards loyalty program surpassed 300 million members. ​ Our principal executive offices are located at No. 1299 Fenghua Road, Jiading District, Shanghai 201803, People’s Republic of China. Our telephone number at this address is +86 (21) 6195-2011. Our registered office in the Cayman Islands is located at the offices of Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is http://www.hworld.com. The information contained on our website is not a part of this annual report. The SEC maintains an internet site (http://www.sec.gov), which contains reports, proxy and information statements, and other information regarding us that file electronically with the SEC. 4.B. Business Overview We are a leading, fast-growing multi-brand hotel group with international operations. Our hotels are operated under three different models: leased and owned, franchised, and franchised hotels that we operate under management contracts, which we refer to as “manachised.” We expanded our hotel network from 9,394 hotels as of December 31, 2023 to 12,858 hotels as of December 31, 2025, representing a CAGR of 17.0%. As of December 31, 2025, we had 12,858 hotels in operation, including 573 leased and owned hotels and 12,285 manachised and franchised hotels, with an aggregate of 1,264,419 hotel rooms. As of the same date, we were developing an additional 2,906 hotels, including 19 leased and owned hotels and 2,887 manachised and franchised hotels. Brands are the bedrock of our success. Over a decade, we grew from an economy hotel chain to a multi-brand hotel group covering the full spectrum of market segments. Leveraging our consumer insights and our capability to deliver innovative and trend-setting products, we now operate a portfolio of over 20 distinct hotel brands. We have developed a vast base of loyal and engaged customers under our H Rewards loyalty program. H Rewards covers all of our brands and had more than 311 million members as of December 31, 2025. We engage with program members through multiple online and offline touch points to personalize their lodging experiences and foster strong and long-lasting relationships that inspire loyalty to our brands. H Rewards is a powerful distribution platform, enabling us to conduct lower-cost, targeted marketing campaigns and maintain a high percentage of direct sales to customers. In 2025, approximately 73% of our room nights under legacy Huazhu were sold to customers who were individual or corporate H Rewards members. In the same year, approximately 77% of our room nights under legacy Huazhu were sold through our own sales channels. We have developed industry-leading, proprietary technology infrastructure that enhances customer experience, increases our operational efficiency, and supports our fast growth. The core of this infrastructure is a comprehensive suite of modularized applications, including a cloud-based property management system and centralized reservation, procurement and revenue management systems. Leveraging our operational experience and technological capabilities, we have built a centralized shared service center and realized the economies of scale made possible through our sizable hotel operations. We have also undertaken a series of industry-first digitalization initiatives to optimize our hotels’ operational efficiency and cost structure and operate “smart” hotels. Our digital transformation initiative, the “Easy” series, has increased the speed and efficiency of our hotels’ entire business processes, from the moment a reservation is made until a guest checks out. 57 Table of Contents Leveraging our strong brand recognition, massive member traffic, and robust technology infrastructure, we have pioneered a business operating system designed to enhance hotel operations across all fronts. Our business operating system is the result of our years of industry know-how, and it includes innovative ideas that are first tested and refined by our leased and owned business. Subsequently, these ideas can be “plugged-and-played” by our franchisees with confidence, thus allowing us to effectively expand our hotel network in an asset-light manner. We added a net 3,464 hotels from December 31, 2023 to December 31, 2025, 3,582 of which were manachised and franchised hotels. Apart from receiving franchise fees for these hotels, we also share our technology infrastructure and our vast customers base with our franchisees. We believe that our distinct approach to hospitality has helped us establish a highly differentiated business model that balances scale, quality and returns. We recorded outstanding financial performance in the past and has recorded strong post COVID-19 recovery since 2023. Our total revenue was RMB21,882 million, RMB23,891 million and RMB25,307 million (US$3,618 million) in 2023, 2024 and 2025, respectively. We had net income attributable to H World Group Limited of RMB4,085 million, RMB3,048 million and RMB5,080 million (US$726 million) in 2023, 2024 and 2025, respectively. Our adjusted EBITDA (non-GAAP) amounted to RMB6,268 million, RMB6,820 million and RMB8,473 million (US$1,211 million) in 2023, 2024 and 2025, respectively. Our net cash provided by operating activities amounted to RMB7,674 million, RMB7,518 million and RMB8,379 million (US$1,198 million) in the respective periods. We believe that our core competencies and proven business model well-position us to increase our share in the expanding global lodging industry and continue to deliver encouraging financial performance. Our Brands and Products As of the date of this annual report, we have hotels in operation or under development under the following brands, which are designed to target distinct segments of customers: ● Economy hotel brands: HanTing Hotel, Ni Hao Hotel, Hi Inn, Elan Hotel, Zleep Hotels, and Ibis Hotel; ● Midscale hotel brands: JI Hotel, Orange Hotel, Starway Hotel, and Ibis Styles Hotel; ● Upper midscale hotel brands: Crystal Orange Hotel, IntercityHotel, Grand JI Hotel, Manxin Hotel, Mercure Hotel, Madison Hotel, Novotel Hotel, CitiGO Hotel, and MAXX; ● Upscale hotel brands: Joya Hotel, Blossom House, Steigenberger Hotels & Resorts, Jaz in the City, and Grand Mercure Hotel; and ● Luxury hotel brand: Steigenberger Icons and Song Hotels. We have entered into brand franchise agreements with Accor and enjoy exclusive franchise rights in respect of Mercure Hotel, Ibis Hotel, and Ibis Styles Hotel in the PRC, Taiwan, and Mongolia and non-exclusive franchise rights in respect of Grand Mercure Hotel and Novotel Hotel in the PRC, Taiwan, and Mongolia. Through our acquisition of Deutsche Hospitality, we have obtained exclusive rights to construct, operate, manage, franchise, and license hotels under the Jaz in the City brand in China, Southeast Asia, Japan, South Korea, and Europe subject to certain exceptions, and non-exclusive rights to operate, manage, franchise, and license certain number of hotels under the Jaz in the City brand in certain other countries and regions, such as Tunisia, Cape Verde, the United Arab Emirates (the “UAE”), and Egypt. As of December 31, 2025, we also operated five other hotels, including other partner hotels and other hotel brands in Yongle Huazhu Hotel & Resort Group. We believe that our multi-brand strategy provides us with a competitive advantage to open more hotels in attractive markets, capture a wider range of customers with evolving lodging preferences and needs thereby achieving greater economies of scale through shared platforms. 58 Table of Contents Economy Hotel Brands HanTing Hotel Launched in 2005, HanTing Hotel is dedicated to becoming a beloved national hotel for all. From the reassurance of a restful night’s sleep and a warm, hearty breakfast, to the ease of self check-in and the thoughtfulness of robot-assisted delivery, HanTing Hotel has consistently delivered on its commitment to fulfilling the core lodging needs of its guests—quality sleep, refreshing showers, and satisfying breakfast—complemented by a convenient, warm, and 24-hour open lobby. With a travel experience defined by the promise of “good quality at an affordable price” and a continuous enhancement of the sense of security and happiness of Chinese travelers on the go, HanTing Hotel has become the “distant relative and close neighbor” of 1.4 billion Chinese people. As of December 31, 2025, we had 4,556 HanTing Hotels in operation and an additional 774 HanTing Hotels under development. Ni Hao Hotel Ni Hao Hotel is our economy hotel product targeting young customers. The brand new Ni Hao Hotel 2.0 integrates contemporary aesthetics with traditional Chinese colors and symbols, creating a joyful and prosper atmosphere and offering traveler with various aesthetic choices. As of December 31, 2025, we had 513 Ni Hao Hotels in operation and 86 Ni Hao Hotels under development. Hi Inn Launched in late 2008 and originally marketed under the name of HanTing Hi Inn, Hi Inn is our fully self-service economy hotel brand. With the tenet of “sleep better, spend less,” Hi Inn focuses on customers’ core lodging needs—quality sleep and refreshing showers—and offers travelers with international standard accommodation experience at exceptional value for money. Hi Inn is distributed across major first- and second-tier cities as well as rapidly growing third- and fourth-tier cities in China. As of December 31, 2025, we had 696 Hi Inns in operation and an additional 287 Hi Inns under development. Elan Hotel In September 2014, we launched Elan Hotel. Elan Hotel is our economy hotel product committed to improving the operating efficiency of individual micro, small- and medium-sized economy hotels. As of December 31, 2025, we had 45 Elan Hotels in operation. Ibis Hotel Ibis Hotel is the world’s leading economy hotel brand originated from France. Ibis Hotel breaks through the conventional monotonous atmosphere of economy hotels and creates a space without boundaries. Featuring it with front desk that also serves as bar, restaurant that turns into livehouse at night, and vibrant music setting the ambiance at any time, we intend to transform economy hotel into a lively environment open for everyone. As of December 31, 2025, we had 214 Ibis Hotels in operation and an additional six Ibis Hotels under development. Zleep Hotels Zleep Hotels, our economy hotel brand, is a well-known and successful hotel brand in Scandinavia and other parts of Europe offering service and design at a great rate. As of December 31, 2025, we had six Zleep Hotels in operation and an additional seven Zleep Hotels under development. Midscale Hotel Brands JI Hotel JI Hotel is a midscale brand that we launched in 2010. Over the past 15 years, JI Hotel adheres to its original aspiration to “design for Chinese, offer experience to all.” Drawing from oriental wisdom, humanity and culture, it offers quality lodging experience with friendly services, dedicating to providing travelers with accommodations that resonate with the aesthetics and lifestyle of Chinese people and sharing the unique Chinese lodging culture with guests from all over the world. As of December 31, 2025, we had 3,565 JI Hotels in operation and an additional 752 JI Hotels under development. 59 Table of Contents Orange Hotel Orange Hotel is our midscale hotel brand. Drawing inspiration from Orange County in California and having “bright sunny days” as its brand concept, Orange Hotel creates a bright and memorable journey for travelers by creating sunny living spaces, offering vibrant and efficient services, and promoting a healthy lifestyle. As of December 31, 2025, we had 1,055 Orange Hotels in operation and an additional 250 Orange Hotels under development. Starway Hotel Starway Hotel is our select midscale hotel brand. It offers a diverse range of products and quality lodging experiences, meanwhile merging the local characters and creates unique memories for the travelers. Through its thoughtful sleeping system, distinctive breakfast represented by Starway Hotel’s signature noodle, convenient smart facilities, laundry services and other ancillary services, Starway Hotel caters to customers’ diverse travel needs and conveys the unique charm of each city. In every city, with a warm bowl of its signature noodle, Starway Hotel is committed to warmly accompanying travelers on each and every journey. As of December 31, 2025, we had 712 Starway Hotels in operation and an additional 118 Starway Hotels under development. Ibis Styles Hotel Ibis Styles Hotel is a midscale brand that offers comfortable and designer hotels. Ibis Styles Hotel advocates one-hotel-one-design, with each hotel choosing a different story theme to create creative spaces through a fun and premium design approach that is eye-catching. The different style collections of Ibis Styles Hotel can cater to the accommodation needs of different people, covering not only business and vacation, but also attracting the innovative Z-Generations. As of December 31, 2025, we had 99 Ibis Styles Hotels in operation and an additional four Ibis Styles Hotels under development. Upper Midscale Hotel Brands Crystal Orange Hotel Crystal Orange Hotel is our upper midscale hotel brand targeting the upper midscale business travel and quality travel market. Crystal Orange Hotel has launched a new version 2.5, empowering customers with a five-star quality experience at a four-star price. Crystal Orange Hotel returns to the essence and purity, using walnut, antique copper and glass elements to create a more textured and premium space atmosphere, earning its reputation as the “pinnacle of aesthetics” in its segment and winning multiple international design awards. Beyond design, Crystal Orange Hotel is underpinned by a “Purify, Recharge, Awaken” six-sense energy recovery system, dedicated to creating an energy-restoring journey for urban travelers navigating the fast-paced modern world—a stay that goes beyond rest, empowering guests to rediscover their vitality and become their best selves. As of December 31, 2025, we had 322 Crystal Orange Hotels in operation and an additional 100 Crystal Orange Hotels under development. IntercityHotel IntercityHotel, originating from Germany in 1987, entered the Chinese market following our acquisition of Deutsche Hospitality in 2020. Inheriting the Bauhaus tradition of modern design, IntercityHotel places functionalism at its core, delivering a “Precise, Seamless, and Efficient” stay experience tailored to the needs of business travelers. Today, as one of the most sought-after brands in the upper midscale segment, IntercityHotel has achieved comprehensive coverage across core first- and second-tier cities in China, offering the discerning business traveler an ideal journey defined by “Work Efficiently, Live Effortlessly.” As of December 31, 2025, we had 159 IntercityHotels in operation and an additional 111 IntercityHotels under development. Grand JI Hotel Grand JI Hotel is our oriental hotel brand. Drawing on the artistic spirit and etiquette of the contemporary East, it conveys a rich cultural essence that embraces all things, allowing the world to experience the elegance and refinement of the East. As of December 31, 2025, we had five Grand JI Hotels under development. 60 Table of Contents Manxin Hotel Manxin Hotel incorporates localized features into the design and experience, and is a must-stay lifestyle hotel for urban exploration, with both business and travel features. Currently there are two product lines under Manxin Hotel, namely Manxin Hotel and Manxin Mansion. As of December 31, 2025, we had 192 Manxin Hotels in operation and an additional 47 Manxin Hotels under development. Mercure Hotel Mercure Hotel is an upper midscale hotel brand originating from France, drawing its inspiration from Mercury, the Roman deity of travel and fortune, and is positioned as a French-lifestyle upper midscale hotel for business travelers. Since its founding in 1973, Mercure Hotel has consistently placed the French art de vivre at its core, crafting spaces around the world that offer travelers an experience defined by elegance, ease, and the poetry of everyday life. As of December 31, 2025, we had 226 Mercure Hotels in operation and an additional 88 Mercure Hotels under development. Madison Hotel We launched our new upper midscale hotel brands Madison Hotel and Grand Madison Hotel in 2019, which are committed to offering guests a classic lodging experience. In 2020, we merged the Grand Madison Hotel brand into the Madison Hotel brand. Madison Hotel integrates local characteristics to create a warm and vibrant travel experience for the guests. As of December 31, 2025, we had 218 Madison Hotels in operation, and an additional 113 Madison Hotels under development. Novotel Hotel Novotel is an upper midscale brand that provides a multi-service offering for both business and leisure guests, with spacious, modular rooms, 24/7 catering offers with balanced meals, meeting rooms, attentive and proactive staff, kid areas, multi-purpose lobbies and fitness centers. As of December 31, 2025, we had 46 Novotel Hotels in operation and an additional 18 Novotel Hotels under development. CitiGO Hotel CitiGO Hotel is a lifestyle brand that mainly targets young people. Crafted by internationally prestigious designers, CitiGO blends travel, sports and urban culture together to provide guests with unique lodging experience. CitiGO introduces a new concept space that combines elements of hotel, apartment and community, aiming to provide travelers with distinctive travel experience. With a focus on engaging different demographics, CitiGO emphasizes stylish and trendy designs along with rich and vibrant communal entertainment areas, breaking traditional perceptions of hotels. The hotel restaurant provides extra-long breakfast from 7:00 am to 12:00 pm, fresh coffee, craft beer and free late-night snack. CitiGO is passionate about cross-industry collaborations, embedding a youthful and playful attitude into its brand DNA, leading new travel trends for urban youth seeking quality life. As of December 31, 2025, we had 33 CitiGO Hotels in operation, and an additional four CitiGO Hotels under development. MAXX MAXX is our upper midscale hotel brand originated from Germany. MAXX inherits European elegance and style, redefining new luxury lifestyle through an international perspective and insights into the local market, serving as an urban oasis that captures every extraordinary moment, and integrates insights into the local market. As of December 31, 2025, we had 11 MAXX hotels in operation and seven MAXX hotels under development. Upscale Hotel Brands Joya Hotel In December 2013, we launched our upscale brand Joya Hotel. These hotels are typically located in areas close to major business and commercial districts in first- and second-tier cities. With the new Chinese-style design and diversified service features, Joya Hotel creates a hotel space more in line with the Chinese culture and lifestyle. As of December 31, 2025, we had seven Joya Hotels in operation. 61 Table of Contents Blossom House Blossom House, founded in Lijiang, China in 2009, is our upscale cultural tourism and resort hotel brand. With “Relax, Connect, and Happiness” at its core, Blossom House has successfully integrated local history, culture, and heritage with an upscale service philosophy, pioneering the development of upscale cultural tourism and resort hospitality in China and earning its place as our most happiness-inspiring upscale resort hotel. Guided by its distinctive Blossom aesthetics, the brand leads product innovation and has established three product lines: Blossom House Secret Retreat, full-service resorts, and selective-service resorts. Today, Blossom House has achieved coverage across China’s major premier tourist destinations and key scenic areas, and will continue to lead all travelers toward new horizons, ushering in an entirely new era of upscale cultural and humanistic resort experiences. As of December 31, 2025, we have 90 Blossom House hotels in operation and an additional 107 Blossom House hotels under development. Steigenberger Hotels & Resorts Steigenberger Hotels & Resorts is our upscale brand originated in Germany. With high-quality facilities and services and unique entertainment resources, Steigenberger Hotels & Resorts provides guests with a super high-end experience of high-quality conference services, high-quality leisure and quality meals to meet the diverse needs of guests’ various activities. As of December 31, 2025, we had 56 Steigenberger Hotels & Resorts in operation and an additional 14 Steigenberger Hotels & Resorts under development. Jaz in the City Jaz in the City is our upscale lifestyle brand. Jaz in the City branded hotels reflect metropolitan lifestyle and draw upon the local music and cultural scene. As of December 31, 2025, we have three Jaz in the City hotels in operation. Grand Mercure Hotel Grand Mercure Hotel offers guests an imaginative, discovery-filled hotel experience, a fresh and engaging stay that attracts visitors from around the world. Deeply rooted in its destinations, Grand Mercure Hotel offers an elegant and immersive cultural experience through warm, attentive staff who tell vivid stories and take guests on a journey through the traditions of fine dining and high-end hospitality. As of December 31, 2025, we had ten Grand Mercure Hotels in operation. Luxury Hotel Brand Steigenberger Icons Steigenberger Icons is our first brand under luxury level, a prestigious level we granted only to our most legendary Steigenberger hotels. It offers customers with legendary living experience through its provision of German-style butler services. As of December 31, 2025, we had 12 Steigenberger Icons Hotels in operation and one Steigenberger Icons Hotel under development. Song Hotels Song Hotels is our luxury hotel brand designed for high-end vacation experience. It creates luxurious and leisure stay experience for the guests through its portrait of contemporary Chinese lifestyle of pursuing perfection and its innovation of delicate aesthetics rooted in Song dynasty. As of December 31, 2025, we had seven Song Hotels in operation and an additional two Song Hotels under development. Our Hotel Network We operate hotels under lease and ownership, manachise and franchise models. Under the lease and ownership model, we directly operate hotels located primarily on leased properties, as well as on owned properties. Under the manachise model, we manage manachised hotels through the on-site hotel managers we appoint and collect fees from franchisees. Under the franchise model, we collect fees from franchisees but do not appoint on-site hotel managers. We have adopted a disciplined return-driven development model aimed at achieving high growth and profitability and applied consistent operational and quality standards across all of our hotels. 62 Table of Contents Our hotel network has grown rapidly. The following table sets forth the number of hotels we operated as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2015 ​ 2016 ​ 2017 ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ 2025 Leased and owned hotels ​ ​ ​ 616 ​ ​ ​ 624 ​ ​ ​ 671 ​ ​ ​ 699 ​ ​ ​ 688 ​ ​ ​ 753 ​ ​ ​ 738 ​ ​ ​ 704 ​ 691 ​ ​ ​ 633 ​ ​ ​ 573 Manachised hotels 2,067 2,471 2,874 3,309 4,519 5,746 6,824 ​ 7,617 8,526 10,380 12,170 Franchised hotels 80 174 201 222 411 290 268 ​ 222 177 134 115 Total 2,763 3,269 3,746 4,230 5,618 6,789 7,830 ​ 8,543 9,394 11,147 12,858 ​ As of December 31, 2025, our hotel network covered 12,858 hotels spanning 1,222 cities in 31 provinces and municipalities across the greater China region and 20 other countries, and we also had a pipeline of hotels in these countries and regions. As of December 31, 2025, we had an additional 2,906 leased and owned as well as manachised and franchised hotels under development. The following table sets forth a summary of all of our hotels by geographic region as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased and ​ Manachised ​ ​ Leased and ​ ​ ​ ​ ​ Owned Hotels ​ and Franchised ​ ​ Owned ​ Manachised ​ Franchised ​ Under ​ Hotels Under ​ ​ ​ ​ Hotels(1) ​ ​ ​ Hotels(2) ​ ​ ​ Hotels(2) ​ ​ ​ Development(5) ​ ​ ​ Development(5) Greater China: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shanghai, Beijing, Guangzhou, Shenzhen and Hangzhou ​ 206 2,164 30 8 362 Others (3) ​ 304 ​ 9,981 ​ 51 ​ 3 ​ 2,503 Subtotal ​ 510 ​ 12,145 ​ 81 ​ 11 ​ 2,865 Outside Greater China: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Europe ​ 62 ​ 6 ​ 23 ​ 8 ​ 6 Other countries(4) 1 19 11 — 16 Subtotal ​ 63 ​ 25 ​ 34 ​ 8 ​ 22 Total(5) 573 12,170 115 19 2,887 Notes: (1) Include 62 leased hotels operated by Deutsche Hospitality and 511 leased and owned hotels operated by the rest of our Group. (2) Include 56 manachised and franchised hotels operated by Deutsche Hospitality and 12,229 manachised and franchised hotels operated by the rest of our Group. (3) For our hotels in operation, include 1,217 cities across 29 provinces and municipalities; for our hotels under development, include 936 cities across 30 provinces and municipalities. (4) For our hotels in operation, include Tunisia, Egypt, the UAE, Oman, Saudi Arabia, Singapore, Qatar, Mongolia, Korea, Vietnam and Cambodia; for our hotels under development, include Egypt, Oman, Saudi Arabia, the UAE, India, Cambodia, Uzbekistan, Thailand, Malaysia and Laos. (5) Include hotels for which we have entered into binding leases, purchase agreements of land use right or property, or franchise agreements but that have not yet commenced operations. The inactive projects are excluded from this list according to management judgment. ​ The following table sets forth the status of our hotels under development as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-conversion ​ ​ ​ Conversion ​ ​ ​ ​ ​ ​ Period(1) ​ Period(2) ​ Total Leased and owned hotels 16 3 19 Manachised and franchised hotels 1,638 1,249 2,887 Total 1,654 1,252 2,906 Notes: (1) Includes hotels for which we have entered into binding leases or franchise agreements but of which the property has not been delivered by the respective lessors or property owners, as the case may be. The inactive projects are excluded from this list according to management judgment. 63 Table of Contents (2) Includes hotels for which we have commenced conversion activities but that have not yet commenced operations. The inactive projects are excluded from this list according to management judgment. Among the 19 leased and owned hotels under development as of December 31, 2025, we had 16 leased and owned hotels during pre-conversion period, for which we have entered into binding leases but of which the property has not been delivered by the respective lessors, and had 3 leased and owned hotels during the conversion period, for which we have completed conversion activities and have started operations in January and February 2026. Total development costs for the leased and owned hotels during the conversion period were approximately RMB121 million. The average development costs per square meter for completed leased and owned hotels in 2025 were approximately RMB2,100 (US$300). The franchisees are responsible for development costs for our manachised hotels and franchised hotels. The reasons for hotel closures typically include property-related matters (such as rezoning and expiry of leases), hotel operation quality or results not meeting our requirements, and other commercial reasons. Leased and owned hotels As of December 31, 2025, we had 565 leased hotels and eight owned hotels, accounting for approximately 4.5% of our hotels in operation. We manage and operate each aspect of these hotels and bear all of the accompanying expenses. We are responsible for recruiting, training, and supervising the hotel managers and employees, paying for leases and costs associated with construction and renovation of these hotels, and purchasing all supplies and other required equipment. Our leased hotels are located on leased properties. The terms of our leases typically range from ten to 30 years. We generally enjoy an initial two- to eight-month rent-free period. For certain of our hotels (under Deutsche Hospitality), the landlords are responsible for renovating the hotels (other than soft furnishing) and we are not required to pay rent until this renovation is completed. We generally pay fixed rent on a monthly, quarterly or biannual basis for the first three to five years of the lease term, after which we are generally subject to a 2% to 6% increase on rent every three to five years or, for Deutsche Hospitality’s hotels, generally annual adjustments based on consumer price index levels. Our leases usually allow extensions by mutual agreement. In addition, for our leased hotels located in China, our lessors are typically required to notify us in advance if they intend to sell or dispose of their properties, in which case we have a right of first refusal to purchase the properties on equivalent terms and conditions. The following table sets forth the number of our leases for hotels in operation and under development that were expected to expire in the periods indicated as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Leases 2026(1) 68 2027 53 2028 61 2029 41 2030 37 2031-2033 120 2034-2036 85 2037 and onward 119 Total 584 Note: (1) Including leases of four legacy DH hotels we plan to dispose of. For more information, see “Notes to Consolidated Financial Statements — Note 8. Assets and liabilities held for sale.” 64 Table of Contents Manachised and Franchised Hotels As of December 31, 2025, we had 12,170 manachised hotels and 115 franchised hotels, accounting for approximately 94.6% and 0.9%, respectively, of our hotels in operation. Our franchisees lease or own their hotel properties and are responsible for the costs of developing and operating the manachised or franchised hotels, including constructing and renovating the hotels according to our standards, and all of the hotel operating expenses. We impose the same standards on all of our manachised and franchised hotels to ensure product quality and consistency across our hotel network. Our franchisees are not allowed to sub-franchise hotels under our brands to any third party. We collect fees from the franchisees of our manachised and franchised hotels and do not bear loss incurred by our franchisees. We believe that the manachise and franchise models have enabled us to quickly and effectively expand our geographical coverage and market share in a less capital-intensive manner through leveraging the local knowledge and relationships of our franchisees. Manachised hotels We manage our manachised hotels and impose the same standards on all manachised hotels as our other hotels to ensure product quality and consistency across our hotel network. For our manachised hotels under legacy Huazhu, our manachise agreements typically have the following terms: Scope of service: We authorize a manachised hotel to use our relevant brand name, logo and relevant trademarks. The franchisee is responsible for the hotel’s construction, renovation and maintenance. We provide guidance to the franchisee on the construction or renovation of the hotel and require the hotel to meet our standards before approving it to commence operations. We are engaged in the appointment and training of hotel managers who are responsible for hiring hotel staff and managing daily operations of our manachised hotels. We also provide our franchisees with services such as central reservation, sales and marketing support, technology support, quality assurance inspections, and other operational support and information. Fees charged to franchisees: we generally charge our franchisees an upfront franchise fee typically ranging between RMB80,000 and RMB1,000,000 per hotel, as well as a monthly franchise fee of approximately 3% to 6.5% of the gross revenues generated by each manachised hotel. In addition, we collect from franchisees a reservation fee for using our central reservation system and a membership registration fee for customers who join our H Rewards loyalty program at the manachised hotels. We also charge system maintenance and support fees and other IT service fees from our franchisees for sharing our technology infrastructure with our manachised hotels. Furthermore, we employ and appoint hotel managers for the manachised hotels and charge franchisees for a manager fee on a monthly basis. Term of service: our franchise and management agreements for our manachised hotels typically run for an initial term of eight to ten years and may be extended upon mutual agreement between us and the franchisee three months prior to the expiration of the franchise and management agreements. Termination: we typically have the right to early terminate the franchise and management agreements immediately, if the franchisee commences operations without our approval, goes bankrupt, suspends operation for a specified period, interferes in our appointed manager’s management of the hotel, or violates applicable laws and regulations that result in harm to our brand, among others. We are also entitled to terminate these agreements in case of material breaches of the agreements by the franchisee, if the franchisee fails to rectify within a grace period. For our manachised hotels under Deutsche Hospitality, the franchisees are required to pay Deutsche Hospitality a management fee consisting of a base fee of 0.3% to 3.0% of the hotel’s turnover and an incentive fee of 6% to 10% of the hotel’s adjusted gross operating profit. Deutsche Hospitality participates in the distribution of the manachised hotel’s profit, and charges a marketing fee for a few manachised hotels. General manager compensation of a manachised hotel, including salaries, social security contribution, and various benefits and bonuses, is borne by the manachised hotel. For some manachised hotels outside Germany, Deutsche Hospitality further charges a license fee of approximately 0.5% to 1% of the hotel’s turnover. The term of service for our manachised hotels under Deutsche Hospitality is typically 15 to 20 years. 65 Table of Contents Franchised hotels We do not appoint hotel managers for our franchised hotels and do not manage their daily operations. We apply the same standards to our franchised hotels as our other hotels. For our franchised hotels under legacy Huazhu, the terms of the franchise agreements are subject to negotiation with individual hotel owners, while they generally have the following terms: Scope of service: the services that we provide to franchised hotels are similar to those we provide to manachised hotels, except that we do not appoint managers and do not provide management services to the franchised hotels. Franchise fee: we charge our franchised hotels fees on generally the same terms as our manachised hotels, except that we do not appoint hotel managers to our franchised hotels and thus do not charge these hotels hotel manager fee on a monthly basis. Term of service: our franchise agreements for our franchised hotels typically run for an initial term of eight to ten years and may be extended upon mutual agreement between us and the franchisee three months prior to the expiration of the franchise agreements. Termination: our rights to terminate the franchise agreements for our franchised hotels are similar to those for our manachised hotels. For our franchised hotels under Deutsche Hospitality, the franchisees are required to pay Deutsche Hospitality a franchise fee of approximately 0.5% to 3.8% of the hotel’s gross room revenue or turnover. Some hotels outside Germany are charged a fixed franchise fee ranging from EUR40,000 to EUR200,000 per year. Most franchised hotels are also charged a central service fee (or marketing fee) and a license fee. The term of service for our franchised hotels under Deutsche Hospitality is typically ten to 15 years. Hotel Development We mainly use the manachise and franchise models to expand our network in a less capital-intensive manner. We also lease the properties of the hotels we operate. Other than the properties we acquired as part of our strategic alliance with Accor in 2016, and from our acquisition of Blossom Hotel Management, we typically do not acquire properties ourselves, as owning properties is generally much more capital intensive. We have adopted a systematic process with respect to the planning and execution of new development projects. Our development department analyzes economic data by city, field visit reports and market intelligence information to identify target locations in each city and form a three-year development plan for new hotels on a regular basis. The plan is subsequently reviewed and approved by our investment committee. Once a property is identified in the targeted location, staff in our development department analyzes the business terms and formulates a proposal for the project. In the case of a lease opportunity, the investment committee evaluates each proposed project based on several factors, including the length of the investment payback period, the rate of return on the investment, the amount of net cash flow projected during the operating period and the impact on our existing hotels in the vicinity. When evaluating potential manachising and franchising opportunities, the investment committee considers the attractiveness of the location as well as additional factors such as quality of the prospective franchisee and product consistency with our standards. Our investment committee weighs each investment proposal carefully to ensure that we can effectively expand our coverage while concurrently improving our profitability. The following is a description of our hotel development process. Manachised and franchised hotels We open manachised and franchised hotels to expand our geographical coverage or to further penetrate in our existing markets. Manachised and franchised hotels provide us valuable operating information in assessing the attractiveness of new markets, and supplement our coverage in areas where the potential franchisees can have access to attractive locations by leveraging their own assets and local network. We generally look to establish manachised and franchised hotels near popular commercial and office districts that tend to generate stronger demand for hotel accommodations. Manachised and franchised hotels must also meet specified criteria in connection with the infrastructure of the building, such as adequate water, electricity and sewage systems. We typically source potential franchisees through word-of-mouth referrals, applications submitted via our website, our WeChat service platform and industry conferences. Some of our franchisees operate several of our manachised and franchised hotels. In general, we seek franchisees who share our values and management philosophies. 66 Table of Contents We typically supervise the franchisees in designing and renovating their properties pursuant to the same standards required for our leased and owned hotels and provide assistance as required. We also provide technical expertise and recommend pre-selected qualified suppliers to our franchisees. In addition, we appoint or train hotel managers and help train other hotel staff for our manachised hotels to ensure that high quality and consistent services are provided throughout all our hotels. Leased and owned hotels We seek properties that are in central or highly accessible locations in economically more developed cities in order to showcase our hotel operation expertise and ability to achieve desirable investment returns. After identifying a proposed site, we conduct thorough due diligence and typically negotiate leases concurrently with the lessors. All leases and development plans are subject to the final approval of our investment committee. Once a lease agreement has been executed, we then engage independent design firms and construction companies to begin work on leasehold improvement. Our construction management team works closely with these firms on planning and architectural design. Our contracts with construction companies typically contain warranties for quality and requirements for timely completion of construction. Contractors or suppliers are typically required to compensate us in the event of delays or poor work quality. A majority of the construction materials and supplies used in the construction of our new hotels are purchased by us through a centralized procurement system. Hotel Management Our management team has accumulated significant experience with respect to the operation of hotels. Building on this experience, our management team has developed a robust operational platform for our years of operations, implemented a rigorous budgeting process, and utilized our real-time information systems to monitor our hotel performance. We believe these systems are critical in maximizing our revenues and profitability. The following are some of the key components of our hotel management infrastructure: Budgeting. We prepare a detailed annual cost and revenue budget for each of our leased and owned hotels, and an annual revenue budget for each of our manachised and franchised hotels. The hotel budget is prepared based on, among other things, the historical operating performance of each hotel, the performance of comparable hotels and local market conditions. We may adjust the budget upon the occurrence of unexpected events that significantly affect a specific hotel’s operating performance. In addition, our compensation scheme for managers in each hotel is directly linked to its performance against the annual budget. Pricing. The room rates of our leased and owned hotels as well as manachised hotels are determined using a centralized RMS. We adjust room rates regularly based on seasonality and market demand. We also adjust room rates for certain events, such as the China Import and Export Fair held twice a year in Guangzhou and public health events such as COVID-19. Room rates for our franchised hotels are determined by the franchisees based on local market conditions. Monitoring. Through our cloud-based property management system, we are able to monitor each hotel’s occupancy status, average daily room rates, RevPAR, and other operating data on a real-time basis. Real-time hotel operating information allows us to adjust our sales efforts and other resources to rapidly capitalize on changes in the market and to maximize operating efficiency. Centralized cash management. Our leased and owned hotels deposit cash into our central account several times a week. We also generally centralize all payments for expenditures. Our manachised and franchised hotels manage their cash separately. Centralized procurement. We have implemented a centralized procurement system to cope with our large procurement requirements. Given the scale of our hotel network and our centralized procurement system, we have the purchasing power to secure favorable terms from suppliers for all of our hotels. Quality assurance. We have formed detailed brand standards on hotel facilities and interior decoration for us and our franchisees to follow. We have also developed an operating manual to which our staff closely adhere to ensure the consistency and quality of our customer experience. We conduct periodic internal quality checks of our hotels to ensure that our operating policies and procedures are followed. We also engage “mystery guests” from time to time to ensure that we are providing consistent quality services. Furthermore, we actively solicit customer feedback by conducting outbound e-mail surveys and monitor comments posted on our website and third-party websites. 67 Table of Contents Training. We view the quality and skill sets of our employees as essential to our business and thus have made employee training one of our top priorities. Our H World Academy, previously known as Research and Study Center of H World Group, together with our regional management teams, offers structured training programs for our hotel managers, other hotel-based staff and corporate staff. Our hotel managers are required to attend a series of learning programs, covering topics such as our corporate culture, team management, sales and marketing, customer service, hotel operation standards, and financial and human resource management. A substantial number of our hotel managers have received training completion certificates. Our H World Academy has prepared a new-hire training package to standardize the training for hotel-based staff across our hotel group. In addition, we provide our corporate staff with various training programs, such as managerial skills, leadership development, corporate culture and best practice sharing. Technology Infrastructure and Digitalization We have successfully developed and fully implemented an advanced, scalable technology infrastructure platform at the group level, along with a comprehensive suite of digital transformation initiatives at the hotel level. These initiatives encompass our hotel operations, utilizing cutting-edge technologies like algorithms, big data analytics, data mining, AI, machine learning, and Internet of Things (“IoT”). These technologies have enabled us to enhance operational efficiency, make informed decisions promptly, and increase our profitability. In a global context, based on data centers in Shanghai, Singapore, and Frankfurt, we have successfully built a globally unified digital core platform with proprietary intellectual property rights. This platform meets the regulatory requirements for data compliance around the globe in a better way. The platform consists of the following three main components: Global Unified Distribution Platform (H-HUB). This platform achieves 100% direct connectivity to all countries, all brands, and all hotels. Sales are conducted through direct channels such as the H World App, B2B Enterprise Channel and overseas H Rewards Internet Booking Engine (IBE). Simultaneously, it integrates with over 20 global distribution platforms, including major online travel agencies, global distribution system, and travel management companies, enabling unified management, pricing, and distribution of global hotel inventory. Hotel Operating System Platform (H-HOS). Starting from room property management system (PMS), this platform has extended to integrate food and beverage POS (Point of Sale System) and banquet EMS (Event Management System) systems. It not only covers all of our brands in the PRC, but has also extended to overseas markets. Global Unified Collaboration Platform (H-TONE). H-TONE is an integrated collaboration platform that includes instant messaging, email, video conferencing, online documents, calendars, and application workspaces. It has already been deployed in multiple countries across Asia-Pacific and Europe. With real-time intelligent voice translation, it effectively addresses language barriers, allowing seamless communication between overseas employees and employees in China. The following discusses certain other key elements of our technology infrastructure as well as our digitalization initiatives: Central Cloud Services Customer relationship management (CRM) system. Our integrated CRM system maintains information of our H Rewards members, including their reservation and consumption history and pattern, points accumulated and redeemed, and prepayment and balance. This allows us to better serve the members of our loyalty program and offer targeted promotions to enhance customer loyalty. The CRM system also allows us to monitor the performance of our corporate client sales representatives. An integrated CRM system effectively supports the promotion of H Rewards membership benefits worldwide and provides members with more precise and competitive services and promotional activities, constantly enhancing the consumption experience of our H Rewards members. At the same time, based on member reviews and feedback, it can more effectively and comprehensively track the service quality of every hotel, promoting closed-loop comprehensive quality management driven by customers. Centralized revenue management system (RMS). Our RMS is the first in-house developed, large scale, fully automated RMS in China’s hotel industry. Powered by in-house developed algorithms and AI, our RMS automatically adjusts room rates of hotels within our hotel network in a centralized manner at the group level or the business unit level, based on the current business status and real-time demand forecasts for the local markets within minutes, effectively increasing hotel occupancy through price and promotional tools. We believe our centralized revenue managing system enhances our ability to adjust room rates in a timely fashion, maximizing the revenue per room for hotels within our network. 68 Table of Contents Centralized procurement system (CPS). Leveraging IoT technology, our CPS is the most representative top collection platform. Our CPS has enabled us to efficiently manage our operating costs, especially with respect to supplies used in large quantities, and allows all hotels across our network to make bulk purchases of hotel supplies at the same time. Digital Hotel Solutions Cloud-based property management system (Cloud-PMS). A property management system is a hotel management software suite that hotel managers and front desk staff use to manage every hotel’s daily business operations. It is the core component of our H - HOS. Our Cloud-PMS is a cloud-based, hotel-level application that is empowered by, and seamlessly integrated with, our centralized technology infrastructure (which is comprised of our RMS and other group-level modules). Unlike onsite-PMSs which require significant upfront hardware investment and are costly and time-consuming to upgrade, our cloud-based PMS is highly scalable and enables the simultaneous launch of new services across all of our hotels. This system enables each hotel within our network to efficiently and cost-effectively manage its room inventory, reservations and pricing on its own on a real-time basis through an Internet browser, which in turn optimizes each hotel’s occupancy rate, average daily room rates, and revenues generated per available room, or RevPAR. The system is designed to enable us to enhance our profitability and compete more effectively by integrating with our central reservation system (CRS) and CRM. We believe our Cloud-PMS has enabled our management to more effectively assess the performance of our hotels on a timely basis and to efficiently allocate resources and effectively identify specific market and sales targets. “Easy” series. We have implemented an “Easy” series digital system to improve our hotel’s operating efficiency. For example, our “Easy House Keeping” digital system, which is the first of its kind in the industry, streamlines and digitizes various hotel housekeeping processes, including room cleaning, room status update and maintenance, which in turn reduces the time between check-out and check-in of a hotel room, increasing hotel room turnover efficiency. This system features an in-house developed, designated mobile application which automatically assigns cleaning or maintenance staff to a room that requires cleaning or repairs. In addition, our “Easy Invoicing” digital system greatly simplifies the check-out process for business travelers. Self-check-in/out guest terminals. Our user-friendly, patented self-check-in/out guest terminals, featuring a variety of advanced automated technologies to replace traditional manual check-in and check-out services. Digital payment initiatives. We currently offer a variety of convenient digital payment options for our hotel guests, including online credit card payment, Alipay, WeChat Pay, and Apple Pay. Complimentary Wi-Fi. We were one of the first in China to offer complimentary Wi-Fi to all hotel guests in 2013. This initiative has greatly contributed to the growth of our customer base and has become mainstream in the industry. Artificial Intelligence Smart robots. We are one of the first hotel groups in China that have achieved large-scale deployment of smart robots. These smart robots powered by big data and algorithms, which we co-developed with our partner, can travel the entire hotel to make deliveries of snacks, toiletries and other hotel amenities, greet guests and lead them to their rooms, improving both the hotel’s operating efficiency and guest experience. AI assistant. Our intelligent AI assistant, which we co-launched with our partner, is a pioneer in China’s hotel industry based on intelligent voice recognition technology. Embedded in our mobile apps, our intelligent AI assistant can engage in conversation with hotel guests and answer their queries, thereby enhancing guest experience. Smart rooms. A number of other smart features of our hotel rooms also help enhance the quality of guests’ stay. For example, one of our AI initiatives, “Hello Huazhu,” also enables voice control of room facilities such as lights, TV, air-conditioning, and window shades. 69 Table of Contents Privacy and Data Security We place a strong emphasis on data security. We have established dedicated committees for the oversight and management of data security, such as our information security committee, information security and privacy protection working group, and special data security committee. We also have a dedicated information security center that provides other departments with professional data security and risk management services. For more details on our governance with respect to privacy and data security, see “Item 16K. Cybersecurity — Governance.” We strictly comply with privacy and data security laws of the jurisdictions where we operate, including Cybersecurity Law of the People’s Republic of China, the Data Security Law of the People’s Republic of China, the Personal Information Protection Law of the People’s Republic of China, and the General Data Protection Regulation (“GDPR”) of the European Union. We have in place extensive policies, processes, network architecture, and software to protect customer data. Our major systems, including those regarding property management, customer relationship management, as well as our website and mobile apps, have passed the Level III information security protection assessment conducted by the China National Accreditation Service for Conformity Assessment. We have also obtained the ISO27001 information security management certification and the ISO27701 privacy information management certification. Our payment system has passed the payment card industry (“PCI”) data security standard (“DSS”) requirements and security assessment procedures assessment. In addition, we collaborate with renowned consulting companies to strengthen the infrastructure of our information technologies and systems and to ensure compliance with all applicable laws and regulations. We attach great importance to customer privacy and security, adhere to the requirements of data security, and have implemented relevant protection measures in all aspects throughout the data life cycle. We strictly comply with relevant laws and regulations, carry out compliance analyses on our internal App to ensure that the collection, use and processing of personal information are legal and compliant, and adopt the principle of minimum necessity to only collect customer information with the authorization and consent of customers. All personal information of guests is classified as the upmost confidential data in our data security system. We have real-time controls over networks and network services to ensure that users can only access authorized networks and network services. Employee can only access authorized internal resources and, by default, enjoys only minimal authorities. We conduct at least one vulnerability scan per year covering all production devices. The information security team implements a 24/7 emergency response strategy, performs annual data security compliance assessments, and conducts occasional security-related audits to ensure continuous data security compliance. We have set up the H World Security Response Center, inviting external security experts to submit online reports outlining security vulnerabilities in our products and business to help us discover and resolve security issues in a timely manner. We are committed to safeguarding the security of hundreds of millions of our members and Internet users. In addition, we are committed to building the information security ecology across the hotel industry. For example, to build an inclusive and win-win ecosystem, we actively hold information security events, establish information security industry alliances and jointly publish industry white papers. Sales and Marketing Our marketing strategy is designed to enhance our brand recognition and customer loyalty. Building and differentiating the brand image of each of our hotel products is critical to increasing our brand recognition. We focus on targeting the distinct guest segments that each of our hotel products serves and adopting effective marketing measures based on thorough analysis and application of data and analytics. In 2025, approximately 77% of our room nights under legacy Huazhu were sold through our own sales channels and the remaining 23% of our room nights were sold through intermediaries. We use our RMS and Cloud-PMS systems to conduct pricing management for all of our hotels except for our franchised hotels. We review our hotel pricing regularly and adjust room rates as needed based on local market conditions and the specific location of each hotel, focusing mainly on three factors: (i) optimum occupancy rate of the hotel and our other hotels nearby, (ii) seasonal demand for the hotel, and (iii) event-driven demand for the hotel. 70 Table of Contents A key component of our marketing efforts is the H Rewards, our loyalty program, which covers all of our brands. We believe the H Rewards loyalty program allows us to build customer loyalty and conduct lower-cost, targeted marketing campaigns. As of December 31, 2025, our H Rewards had more than 311 million members. In 2025, approximately 73% of our room nights under legacy Huazhu were sold to our H Rewards members. Members of the H Rewards are provided with discounts on room rates, free breakfasts (for gold and platinum members), more convenient check-out procedures, and other benefits. H Rewards members can also accumulate points through stays in our hotels or by purchasing products and services provided at our hotels and from Huazhu Mall. These points can be used to offset the room charges in our hotels, buy products in Huazhu Mall or be redeemed for various coupons. The H Rewards includes five levels of membership: star, silver, rose gold, gold, and platinum. Rose gold membership is only available for corporate members of the H Rewards. H Rewards was previously known as HanTing Club and HuaZhu Club. Competition The hotel industry is highly fragmented. A significant majority of the room supply has come from independent hotels, guest houses and other lodging facilities. In recent years, hotel groups emerged and began to consolidate the market by converting independent hotels into hotel chains. As a multi-brand hotel group, we believe that we compete primarily based on location, room rates, brand recognition, quality of accommodations, geographic coverage, service quality, range of services, guest amenities, and convenience of the central reservation system. We primarily compete with other hotel chains as well as various independent hotels in each of the markets in which we operate, including Chinese hotel groups such as BTG Hotels, Jinjiang, and Atour, as well as international hotel groups such as Marriot, Intercontinental, Accor, and Hilton. We also face competition from Airbnb and service apartments. Intellectual Property We regard our trademarks, copyrights, domain names, trade secrets and other intellectual property rights as critical to our business. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with our employees, business partners and others, to protect our intellectual property rights. The trademarks and logos used in our current hotels are under protection of the registered trademarks and logos. As of December 31, 2025, we registered 1,991 trademarks and logos with the China National Intellectual Property Administration (CNIPA). As of December 31, 2025, we filed 297 trademark applications pending for examination and review by the CNIPA. As of the same date, we also registered 1,907 trademarks and filed 229 trademark applications outside China. As of December 31, 2025, we received 41 patents; another 11 patents were applied and under review by relevant PRC authority. We also received copyright registration certificates for 243 software programs developed by us as of December 31, 2025. In addition, we registered 710 national and international top-level domain names, including www.hworld.com, as of December 31, 2025. Our intellectual property is subject to risks of theft and other unauthorized use, and our ability to protect our intellectual property from unauthorized use is limited. In addition, we may be subject to claims that we have infringed the intellectual property rights of others. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — Failure to protect our tradenames and trademarks as well as other intellectual property rights could have a negative impact on our brands and adversely affect our business.” Insurance We believe that our hotels are covered by adequate property and liability insurance policies with coverage features and insured limits that we believe are customary for similar companies in China and overseas. We also require our franchisees to carry adequate property and liability insurance policies. We carry property insurance that covers the assets that we own at our hotels. Although we require our franchisees to purchase customary insurance policies, we cannot guarantee that they will adhere to such requirements. If we were held liable for amounts and claims exceeding the limits of our insurance coverage or outside the scope of our insurance coverage, our business, results of operations, and financial condition may be materially and adversely affected. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — Our limited insurance coverage may expose us to losses, which may have a material adverse effect on our reputation, business, financial condition, and results of operations.” 71 Table of Contents Legal and Administrative Proceedings In the ordinary course of our business, we, our directors, management and employees are subject to legal or administrative proceedings. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, our directors, management and employees, we do not believe that any currently pending legal or administrative proceeding to which we, our directors, management and employees are a party will have a material adverse effect on our business or reputation. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We, our directors, management and employees may be subject to certain risks related to legal proceedings filed by or against us, and adverse results may harm our business.” As of December 31, 2025, we had several pending legal and administrative proceedings, including lease contract disputes, franchise agreement disputes and labor disputes. As of the same date, our accrued contingent liability was RMB16 million (US$2 million). Sustainable Hospitality As a global multi-brand hotel group, we remain committed to integrating sustainability into our long-term development. In 2025, we further embedded ESG principles into our strategy and operations, advancing responsible growth while enhancing long-term value creation for stakeholders. Environmental Stewardship We always adhere to the concept of green development and fulfil our responsibility for environmental protection. While delivering high-quality hotel services to guests, we strive to minimize the environmental impact of our operations. We are committed to achieving carbon neutrality by 2050, based on total Scope 1 and Scope 2 greenhouse gas emissions in 2023. We continued to advance green building, green operations, and green services across the full life cycle of hotel development and management. We promoted modular construction to improve resource efficiency and reduce waste, while accelerating the deployment of renewable energy solutions such as air-source heat pumps and solar systems. By the end of 2025, over 4,800 of our hotels had been equipped with air-source heat pumps, and over 1,100 hotels had adopted solar water heating systems. 64 hotels had obtained Global Sustainable Tourism Council (GSTC) certification, and 160 hotels were certified as “China Green Hotels”. As of the same date, around 98% of Legacy DH’s leased hotels held both ISO 50001 Energy Management System Certification and ISO 14001 Environmental Management System Certification. At the operational level, we strengthened digital energy and water management through the smart platform “Easy Energy Consumption”, improving resource efficiency and enabling real-time monitoring. In parallel, we actively expanded green certifications and enhanced environmental management systems at the property level. By the end of 2025, 11,250 of our hotels were equipped with “Easy Energy Consumption”. We also strengthened water stewardship. The Chief Executive Officer is responsible for overseeing water resource management strategy and performance. Key measures include the installation of water-efficient fixtures, optimization of irrigation systems, systematic leakage detection and repair, and water recycling. We closely monitor water conditions in the regions where we operate and leverage international water risk assessment tools to identify potential risks. For example, Legacy DH has implemented enhanced measures, including installing low-flow fixtures, optimizing operational processes, strengthening employee water-saving training, and continuously monitoring water consumption per occupied room. Additionally, the Madison Hotel in Xiamen Software Park implemented a condensate water recovery project in 2025, collecting air conditioning condensate for reuse in cooling towers and establishing a closed-loop “collect-treat-reuse-monitor” system integrated into hotel operations. ​ 72 Table of Contents We also extend the green development requirements to our suppliers. Taking laundry suppliers as an example, we have incorporated environmental criteria into our supplier selection process, specifying requirements for equipment’s water and energy-saving capabilities, laundry chemical types and the inspection procedures. We actively encourage them to utilize tunnel washers that use water recycling and filtration technology. In 2025, our “Smart Linen Project” continued, with linens in over 2,300 our hotels already installed with chips. These chips can accurately identify the linens’ affiliated hotels, while tracking washing conditions such as water temperature, washing duration, and number of washes. At the same time, we actively collaborate with suppliers to develop eco-friendly consumables, which include wheat straw brushes, corn starch shower caps, natural bamboo paper, and RPET (Recycled Polyethylene Terephthalate)-bottled body care products. Through iterative improvements and continuous cooperation with suppliers, we aim to transform our environmental philosophy into an industry benchmark, and then promote its adoption across the whole sector. At the customer level, we actively engage guests in our environmental initiative of “Green Living, Towel Reuse” (“Green Living”) by encouraging practices such as reusing towels, bringing personal toiletries, and opting out of daily cleaning services during extended stays, alongside promoting green travel programs. Meanwhile, we extended sustainability requirements into our supply chain by promoting environmentally responsible sourcing practices, such as plant-based products and cage-free egg procurement, contributing to climate action and biodiversity protection. At the employee level, we introduced a dedicated ESG and Sustainable Development module on our company-wide Excellence Forum, serving as an online learning platform for our employees. This program is designed to provide foundational knowledge on ESG principles and sustainable development practices. During the reporting period, we carried out structured monthly ESG awareness campaigns, highlighting key environmental observances such as World Environment Day, Earth Day, World Oceans Day, International Migratory Bird Day, International Polar Bear Day, and World Water Day. These initiatives strengthened employees’ environmental consciousness, encouraged the adoption of eco-friendly practices in daily operations, and promoted participation in our “Green Living” service program. Social Responsibility We remained focused on delivering safe, reliable, and high-quality hospitality experiences. We continuously strengthened guest safety management, service quality, and data privacy protection, ensuring a trusted and secure environment. We have established a “three-tier safety operation system” comprising expert safety inspections, random checks by Safety Ambassadors, and routine self-assessments by hotel managers, enhancing the safety management standards across all properties. In 2025, professional safety audits covered over 50% of the hotels, while dedicated inspections by Safety Ambassadors covered more than 95% of the properties. We have also obtained the ISO27001 information security management certification. We continued to advance inclusive hospitality by promoting the All-Age Friendly Barrier-Free Program, creating more accessible and comfortable spaces for diverse customer groups. Meanwhile, we strengthened responsible procurement practices to enhance supply chain resilience and sustainability. We also placed strong emphasis on employee development and wellbeing through systematic training and capability-building programs. In 2025, the All-Age Friendly Barrier-Free Program was awarded the Gold Prize in the China Hotel Industry ESG Innovation Competition. In addition, we actively fulfilled our social responsibilities through long-term public welfare initiatives, including education support and rural revitalization programs. By the end of 2025, a total of 13,473 students had benefited from the Scholarly HanTing online teaching public welfare project. We also partnered with over 130 universities across China to promote industry-academy integration and build a talent pipeline for long-term development. Effective Governance We continued to strengthen our ESG governance framework. We established a Sustainability Committee under the Board of Directors, a Sustainability Management Committee, and specialized Sustainability Working Groups, thereby enhancing high-level oversight and strategic coordination of ESG matters. The Sustainability Committee is responsible for overseeing and addressing key ESG priorities, including water stress, carbon emissions, privacy and data security, and other related sustainability matters. To ensure accountability, we have linked sustainability performance to the performance evaluations of brand CEOs, ensuring that ESG objectives are effectively embedded into business decision-making and execution. 73 Table of Contents At the same time, we upgraded the sustainability strategy and reinforced risk management, internal control, and compliance systems, ensuring effective governance across all business segments and regions. We also continuously improved our business ethics framework and stakeholder communication mechanisms, fostering a culture of integrity, transparency, and accountability. In 2025, we conducted two business ethics training sessions, achieving 100% employee coverage. In addition, all of Legacy Huazhu’s core suppliers have signed the Sunshine Agreement, and Legacy DH has signed the Supplier and Business Partner Code of Conduct with all of its suppliers. Through these continued efforts, our ESG performance received broad recognition. In 2025, our MSCI ESG rating was upgraded to A, along with more than ten sustainability awards, demonstrating our solid progress toward becoming a more sustainable and responsible global hospitality leader. Regulation The hotel industry in the countries and regions where we operate business, including China, is subject to a number of laws and regulations, including laws and regulations relating specifically to hotel operation, management and commercial franchising, and travel agency business, as well as those relating to environmental and consumer protection. The principal regulations governing foreign ownership of hotel businesses in the PRC currently are the Negative List issued on September 6, 2024, which became effective on November 1, 2024, and the Encouraged Catalogue issued on December 15, 2025, which became effective on February 1, 2026, both of which were promulgated by the MOFCOM, or the MOC, and the NDRC as well as other negative lists (generally with fewer limitations) applicable to the free trade zones. Pursuant to these regulations, there are no restrictions on foreign investment in hotel businesses in China aside from business licenses and other permits that every hotel must obtain. Similar with other industries in China, regulations governing the hotel industry in China are still developing and evolving. As a result, most legislative actions consist of general measures such as industry standards, rules or circulars issued by different ministries rather than detailed legislations. This section summarizes the principal regulations in the countries and regions we operate that are currently relevant to our business and operations. Regulations on Hotel Operation The Ministry of Public Security issued the Measures for the Control of Security in the Hotel Industry in November 1987 and amended it in 2011, 2020 and 2022, respectively, and the State Council promulgated the Decision of the State Council on Establishing Administrative License for Necessarily Retained Items Requiring Administrative Examination and Approval in June 2004 and amended it in January 2009 and August 2016, respectively. Under these two regulations, anyone who applies to operate a hotel is subject to examination and approval by the local public security authority and must obtain a special industry license. The Measures for the Control of Security in the Hotel Industry impose certain security control obligations on the operators. For example, the hotel must examine the identification card of any guest to whom accommodation is provided and make an accurate registration. The hotel must also report to the local public security authority if it discovers anyone violating the law or behaving suspiciously or an offender wanted by the public security authority. Pursuant to the Measures for the Control of Security in the Hotel Industry, hotels failing to obtain the special industry license may be subject to warnings or fines of up to RMB200. In addition, pursuant to the Law of the PRC on Penalties for the Violation of Public Security Administration promulgated in August 2005, amended in October 2012 and June 2025, and effective January 1, 2026, hotels operating without the special industry license may result in detention up to 15 days, fines up to RMB 5,000, and confiscation of illegal gains. Operators of hotel businesses who have obtained a special industry license but violate applicable administrative regulations may also be subject to revocation of such licenses in serious circumstances. Besides, non-compliance with guest registration rules may result in fines and directly responsible personnel may face detention for intentional safety violations. 74 Table of Contents The State Council promulgated the Administrative Regulations on Sanitation of Public Places in April 1987 and most recently amended it in December 2024, according to which, a hotel must obtain a public area hygiene license before opening for business. Pursuant to this regulation, hotels failing to obtain a public area hygiene license may be subject to the following administrative penalties depending on the seriousness of their respective activities: (i) warnings; (ii) fines; or (iii) orders to suspend or cease continuing business operations. In March 2011, the Ministry of Health promulgated the Implementation Rules of the Administrative Regulations on Sanitation of Public Places, which was amended in January 2016 and December 2017, according to which, starting from May 1, 2011, hotel operators shall establish sanitation management system and keep records of sanitation management. The Standing Committee of the NPC enacted the Food Safety Law of the PRC in February 2009, which was most recently amended in December, 2025. The State Administration for Market Regulation, or the SAMR (previously known as “China Food and Drug Administration”), enacted the Measures for the Administration of Food Trade Licensing and Recordation on June 15, 2023, which became effective on December 1, 2023, according to which any entity involving sales of food or food services must obtain a food business license, unless it sells (i) edible agricultural products, (ii) prepackaged food only, (iii) specific full-nutritional formula food in formula food for special medical purposes by a medical institution or drug retailer, or (iv) food produced by a permitted food producer at its production and processing place or through the Internet only. Pursuant to the Food Safety Law of the PRC, hotels failing to obtain the food business license (or formerly the food service license) may be subject to: (i) confiscation of illegal gains, food illegally produced for sale, and tools, facilities and raw materials used for illegal production; or (ii) fines between RMB50,000 and RMB100,000 if the value of food illegally produced is less than RMB10,000, or fines equal to 10 to 20 times of the value of food if such value is equal to or more than RMB10,000. Moreover, The Law of the PRC on Public Health Emergency Response, passed on September 12, 2025 and effective on November 1, 2025, establishes a comprehensive legal framework for emergency response. It mandates that entities, including hotels, assess risks, should formulate emergency plans, and conduct drills. The law specifies legal liability for non-compliance. The Fire Prevention Law of the PRC, promulgated in April 1998 and amended in October 2008, April 2019 and April 2021 by the Standing Committee of the NPC, and the Provisions on Supervision and Inspection on Fire Prevention and Control, promulgated on June 9, 2004 and most recently amended on July 17, 2012 by the Ministry of Public Security, together with the Interim Provisions on the Administration of Fire Protection Design Review and Final Inspection of Construction Projects, promulgated by the Ministry of Housing and Urban-Rural Development on April 1, 2020 and most recently amended on August 21, 2023, require that (i) the fire prevention design documents of special construction projects, such as hotels with overall floor area of more than 10,000 square meters, shall be reviewed and inspected by local housing and urban-rural construction authorities before construction; (ii) the construction of specific construction projects, such as hotels with overall floor area of more than 10,000 square meters be inspected and accepted by local housing and urban-rural construction authorities from a fire prevention perspective before completion; and (iii) the public gathering places, such as hotels, shall complete fire prevention safety inspection with the local fire and rescue department, which is a prerequisite for business opening. Pursuant to these regulations, related hotels failing to obtain approval of fire prevention inspection and acceptance or failing fire prevention safety inspections (including acceptance check and safety check on fire prevention) may be subject to: (i) orders to suspend the construction of projects, use or operation of business; and (ii) fines between RMB30,000 and RMB300,000. In January 2006, the State Council promulgated the Regulations for Administration of Entertainment Places, which was amended in February 2016 and November 2020. The Ministry of Culture issued the Administrative Measures for Entertainment Places in February 2013 and amended it in December 2017 and May 2022. Under these regulations, hotels that provide entertainment facilities, such as discos, karaoke venues or ballrooms, are required to obtain a license for entertainment business operations. On October 18, 2010, the General Administration of Quality Supervision, Inspection and Quarantine and Standardization Administration approved and issued Classification and Accreditation for Star-rated Tourist Hotels (GB/T14308-2010), which became effective on January 1, 2011. On November 27, 2023, the Ministry of Culture and Tourism issued the latest version of Classification and Accreditation for Star-rated Tourist Hotels (GB/T14308-2023), which took effect on March 1, 2024. On November 19, 2010, the National Tourist Administration promulgated the Implementation Measures of Classification and Accreditation for Star-rated Tourist Hotels, which became effective on January 1, 2011. Under these regulations, all hotels with operations of over one year are eligible to apply for a star rating assessment. There are five ratings from one star to five stars for tourist hotels, assessed based on the level of facilities, management standards and quality of service. A star rating, once granted, is valid for three years. ​ 75 Table of Contents On September 21, 2012, the MOFCOM promulgated the Provisional Administrative Measures for Single-purpose Commercial Prepaid Cards, which was amended on August 18, 2016. Pursuant to this regulation, if an enterprise engaged in retail, accommodation and catering, or residential services issues any single-purpose commercial prepaid card to its customers, it should undergo a record-filing procedure. For a hotel primarily engaged in the business of accommodation, the aggregate balance of the advance payment under the single-purpose commercial prepaid cards it issued shall not exceed 40% of its income from its primary business in the previous financial year. On April 25, 2013, the Standing Committee of the NPC issued the Tourism Law of the PRC, which became effective on October 1, 2013 and was most recently amended on October 26, 2018. According to this law, the accommodation operators shall fulfill their obligations under the agreements with customers. If the accommodation operators subcontract part of their services to any third party or involve any third party to provide services to customers, the accommodation operators shall assume the joint and several liabilities with the third parties for any damage caused to the customers. Regulations on Travel Agency Business Generally, the travel agency business is subject to the Regulations on Travel Agencies promulgated by the State Council on February 20, 2009 and last amended on November 29, 2020, which prohibits foreign-invested travel agencies from providing travel services to Chinese mainland residents for their travels to foreign countries, and to Hong Kong, Macau and Taiwan. On August 20, 2020, the Ministry of Culture and Tourism promulgated a Tentative Administrative Measure on Online Travel Operation, which was intended to standardize the online travel operation business. The online travel operation services mean the provision of travel services to the travelers via information network such as Internet, and such services include package tour, transportation, accommodation, dining, sightseeing, entertainment and so on. The operator of online travel business shall provide real and accurate travel services information without false promotion and advertisement. The operator of online travel platform shall verify the identification, license, quality standard and credit rating of all travel business operators registered on the platform. The online travel business operator shall protect the personal data privacy of travelers and shall not set unfair trading conditions based on consumption record and preference by abusing data analyzing technology. The platform operator shall examine the license and qualification of travel business operators inside the platform and alert the travelers for safety warning, and shall take the liability if it fails to perform relevant obligations requested by such administrative measures. Regulations on Leasing Under the Law of the PRC on Administration of Urban Real Estate promulgated by the Standing Committee of the NPC, which took effect as of January 1995 and was amended in August 2007, August 2009 and August 2019, respectively, and the Administrative Measures on Leasing of Commodity House promulgated by the Ministry of Housing and Urban-rural Construction, which took effect as of February 1, 2011, when leasing premises, the lessor and lessee are required to enter into a written lease contract, prescribing such provisions as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. Both lessor and lessee are also required to go through registration procedures to record the lease with the real estate administration department. Pursuant to these laws and regulations and various local regulations, if the lessor and lessee fail to go through the registration procedures, both lessor and lessee may be subject to fines, and the leasing interest will be subordinated to an interested third party acting in good faith. In May 2020, the NPC, the China legislature, passed the Civil Code of the PRC, or the Civil Code, which took effect on January 1, 2021. According to Chapter 14, Book 3 of the Civil Code, which governs lease agreements, subject to consent of the lessor, the lessee may sublease the leased item to a third party. Where the lessee subleases the lease item, the leasing contract between the lessee and the lessor remains valid. The lessor is entitled to terminate the contract if the lessee subleases the lease item without the consent of the lessor. Pursuant to Chapter 17, Book 2 of the Civil Code, which where a mortgagor leases the mortgaged property and the possession thereof has been transferred before the creation of mortgage interest, the previously established leasing relation shall not be affected; and where a mortgagor leases the mortgaged property after the creation of the mortgage interest, the leasing interest will be subordinated to the registered mortgage interest. 76 Table of Contents Regulations on Consumer Protection In October 1993, the Standing Committee of the NPC promulgated the Law of the PRC on the Protection of the Rights and Interests of Consumers, or the Consumer Protection Law, which became effective on January 1, 1994 and was lately amended in October 2013. Under the Consumer Protection Law, a business operator providing a commodity or service to a consumer is subject to a number of requirements, including the following: ● to ensure that commodities and services meet with certain safety requirements; ● to protect the safety of consumers; ● to disclose serious defects of a commodity or a service and to adopt preventive measures against damage occurrence; ● to provide consumers with accurate information and to refrain from conducting false advertising; ● to obtain consents of consumers and to disclose the rules for the collection and/or use of information when collecting data or information from consumers; to take technical measures and other necessary measures to protect the personal information collected from consumers; not to divulge, sell, or illegally provide consumers’ information to others; not to send commercial information to consumers without the consent or request of consumers or with a clear refusal from consumers; ● not to set unreasonable or unfair terms for consumers or alleviate or release itself from civil liability for harming the legal rights and interests of consumers by means of standard contracts, circulars, announcements, shop notices or other means; ● to remind consumers in a conspicuous manner to pay attention to the quality, quantity and prices or fees of commodities or services, duration and manner of performance, safety precautions and risk warnings, after-sales service, civil liability and other terms and conditions vital to the interests of consumers under a standard form of agreement prepared by the business operators, and to provide explanations as required by consumers; and ● not to insult or slander consumers or to search the person of, or articles carried by, a consumer or to infringe upon the personal freedom of a consumer. Business operators may be subject to civil liabilities for failing to fulfill the obligations listed above. These liabilities include restoring the consumer’s reputation, eliminating the adverse effects suffered by the consumer, and offering an apology and compensation for any losses incurred. The following penalties may also be imposed upon business operators for the infraction of these obligations: issuance of a warning, confiscation of any illegal income, imposition of a fine, an order to cease business operation, revocation of its business license or imposition of criminal liabilities under circumstances that are specified in laws and statutory regulations. Art. 1198 of the Civil Code further increases the liabilities of business operators engaged in the operation of hotels, restaurants, or entertainment facilities and subjects such operators to tort liabilities for failing to guarantee the personal safety of others. Regulations on Environmental Protection In February 2012, the Standing Committee of the NPC issued the newly amended Law of the PRC on Promoting Clean Production, which regulates service enterprises such as restaurants, entertainment establishments and hotels and requires them to use technologies and equipment that conserve energy and water, serve other environmental protection purposes, and reduce or stop the use of consumer goods that waste resources or pollute the environment. 77 Table of Contents According to the Environmental Protection Law of the PRC promulgated by the Standing Committee of the NPC on December 26, 1989 and last amended on April 24, 2014, the Environmental Impact Assessment Law of the PRC promulgated by the Standing Committee of the NPC on October 28, 2002 and last amended on December 29, 2018, the Administrative Regulations on Environmental Protection for Construction Projects promulgated by the State Council on November 29, 1998 and amended on July 16, 2017, the Interim Measures on Acceptance of Environmental Protection for Completion of Construction Projects promulgated by the Ministry of Environmental Protection (renamed as the Ministry of Ecology and Environment) on November 20, 2017 and effective as of the same date and the Category-Based Management Directory on the Environmental Impact Assessment for Construction Projects (Edition 2021) issued by the Ministry of Ecology and Environment, hotels which involve Environment Sensitive Areas should submit a Form on Environmental Impact Assessment to competent environmental protection authorities for approvals, and shall prepare and make public an Acceptance Inspection Report of the Environmental Protection Facilities before commencing the operation. Such Environment Sensitive Areas are defined by the Category-Based Management Directory on the Environmental Impact Assessment for Construction Projects (Edition 2021), which was issued by the Ministry of Ecology and Environment. Pursuant to the Environmental Impact Assessment Law, any hotel failing to obtain the approval of the Form of Environmental Impact Assessment may be ordered to cease construction and restore the property to its original state, and according to the violation activities committed and the harmful consequences thereof, be subject to fines of no less than 1% but no more than 5% of the total investment amount for the construction project of such hotel. The person directly responsible for the project may be subject to certain administrative penalties. Pursuant to the Administrative Regulations on Environmental Protection for Construction Projects, where the construction project is put into production or use when the environmental protection facilities have not undergone acceptance inspection or do not pass acceptance inspection, the responsible hotels may be ordered to make correction within a stipulated period and subject to a fine ranging from RMB200,000 to RMB1 million; where correction is not made within the stipulated period, a fine ranging from RMB1 million to RMB2 million will be imposed. The directly responsible person may be subject to a fine ranging from RMB50,000 to RMB200,000. If the construction project causes any significant environmental pollution or ecological damage, the production or use should be suspended, or the project should be closed down upon approval by the relevant local regulators. Furthermore, any hotel failing to public the Acceptance Inspection Report may be ordered to publicize the Report, and may be subject to a fine ranging from RMB50,000 to RMB200,000. The relevant breach may also be announced by local environmental protection authorities. Regulations on Commercial Franchising Franchise operations are subject to the supervision and administration of the MOFCOM, and its regional counterparts. Such activities are currently regulated by the Administrative Regulations on Commercial Franchising, which was promulgated by the State Council on February 6, 2007 and became effective on May 1, 2007. The Administrative Regulations on Commercial Franchising were subsequently supplemented by the Administrative Measures on Filing of Commercial Franchises, which was most recently amended by the MOFCOM on December 29, 2023 and became effective on the same date, and the newly amended Administrative Measures on Information Disclosure of Commercial Franchises, which was most recently amended by the MOFCOM on February 23, 2012 and became effective on April 1, 2012. Under the above applicable regulations, a franchisor must have certain prerequisites including a mature business model, the capability to provide long-term business guidance and training services to franchisees and ownership of at least two self-operated storefronts that have been in operation for at least one year. Franchisors engaged in franchising activities without satisfying the above requirements may be subject to penalties such as forfeit of illegal income and imposition of fines between RMB100,000 and RMB500,000 and may be bulletined by the MOFCOM or its local counterparts. Franchise contracts shall include certain required provisions, such as terms, termination rights and payments. Franchisors are generally required to file franchise contracts with the MOFCOM or its local counterparts. Failure to report franchising activities may result in penalties such as fines up to RMB100,000. Such noncompliance may also be bulletined. In the first quarter of every year, franchisors are required to report to the MOFCOM or its local counterparts any franchise contracts they executed, canceled, renewed or amended in the previous year. The term of a franchise contract shall be no less than three years unless otherwise agreed by franchisees. The franchisee is entitled to terminate the franchise contract in his sole discretion within a set period of time upon signing of the franchise contract. 78 Table of Contents Pursuant to the Administrative Measures on Information Disclosure of Commercial Franchises, 30 days prior to the execution of franchise contracts, franchisors are required to provide franchisees with copies of the franchise contracts, as well as written true and accurate basic information on matters including: ● the name, domiciles, legal representative, registered capital, scope of business and basic information relating to its commercial franchising; ● basic information relating to the registered trademark, logo, patent, know-how and business model; ● the type, amount and method of payment of franchise fees (including payment of deposit and the conditions and method of refund of deposit); ● the price and conditions for the franchisor to provide goods, service and equipment to the franchisee; ● the detailed plan, provision and implementation plan of consistent services including operational guidance, technical support and business training provided to the franchisee; ● detailed measures for guiding and supervising the operation of the franchisor; ● investment budget for all franchised hotels of the franchisee; ● the current numbers, territory and operation evaluation of the franchisees within China; ● a summary of accounting statements audited by an accounting firm and a summary of audit reports for the previous two years; ● information on any lawsuit in which the franchisor has been involved in the previous five years; ● basic information regarding whether the franchisor and its legal representative have any record of material violation; and ● other information required to be disclosed by the MOFCOM. In the event of failure to disclose or misrepresentation, the franchisee may terminate the franchise contract and the franchisor may be fined up to RMB100,000. In addition, such noncompliance may be bulletined. Regulations on Trademarks Both the Trademark Law of the PRC adopted by the Standing Committee of the NPC on August 23, 1982 and subsequently revised in 1993, 2001, 2013 and 2019, and the Implementation Regulation of the Trademark Law of the PRC adopted by the State Council on August 3, 2002 and revised on April 29, 2014 give protection to the holders of registered trademarks. The CNIPA handles trademark registrations. Trademarks can be registered for a term of ten years and can be extended for another ten years if requested upon expiration of any ten-year term. Trademark licensing agreements should be submitted to the CNIPA for record. Without the filing, the trademark licensing should not be used against a bona fide third party. Regulations on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Control Regulations of the PRC promulgated by the State Council, as amended on August 5, 2008, or the Foreign Exchange Regulations. Under the Foreign Exchange Regulations, the RMB is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange, or the SAFE, is obtained and prior registration with the SAFE is made. 79 Table of Contents The Circular on Reforming the Management Method regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (“Circular 19”), promulgated by the SAFE on March 30, 2015 and last amended on March 23, 2023, allows foreign-invested enterprises to make equity investments by using RMB funds converted from foreign exchange capital. Under Circular 19, the foreign exchange capital in the capital account of foreign-invested enterprises upon the confirmation of rights and interests of monetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operation needs of the enterprises. The proportion of willingness-based foreign exchange settlement of capital for foreign-invested enterprises is temporarily set at 100%. The SAFE can adjust such proportion in due time based on the circumstances of the international balance of payments. However, Circular 19 and the Circular on Reforming and Regulating the Management Policies on the Settlement of Capital Projects (“Circular 16”), promulgated by the SAFE on and effective as of June 9, 2016, continues to prohibit foreign-invested enterprises from, among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope, investment and financing in securities and other investments except for bank’s principal-secured products, providing loans to non-affiliated enterprises or constructing or purchasing real estate not for self-use. Circular 16 has further been amended by Circular of the State Administration of Foreign Exchange on Further Deepening Reform and Promoting Cross-border Trade and Investment Facilitation issued by SAFE on December 4, 2023 (“Circular 28”) to further explicit restrictions on the use of domestic institutions’ income from foreign exchange receipts under capital account and the RMB funds obtained from the settlement. While recently, the Circular on Matters Related to Deepening the Reform of Foreign Exchange Administration for Cross-border Investment and Financing (Circular 43), promulgated and effective as of September 12, 2025, partially relaxed the restriction under Circular 28 that “capital account foreign exchange receipts shall not be used for the purchase of residential real estate for non-self-use purposes”. The use of foreign exchange receipts under capital contributions and external debts of non-financial enterprises, as well as the RMB funds converted therefrom, may be used for real estate investment, provided that they comply with other existing regulatory requirements. On October 23, 2019, the SAFE promulgated the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment (“Circular [2019] 28”). Pursuant to Circular [2019] 28, on the basis of allowing investment-oriented foreign-invested enterprise (including foreign-invested investment companies, foreign-invested venture capital enterprises and foreign-invested equity investment enterprises) to use capital funds for domestic equity investment in accordance with laws and regulations, non-investment foreign-invested enterprises shall be allowed to use capital funds for domestic equity investment in accordance with the laws under the premise of not violating the Negative List and the authenticity and compliance of their domestic invested projects. Such provisions have recently been replaced by Circular 28 that when non-investing foreign-funded enterprise makes domestic equity investment with capital funds in the domestic currency, the investee shall handle the registration for the acceptance of domestic reinvestment and open a capital account to receive funds, and no entry registration of cash contribution is further required. The domestic institution that transfers the equity shall, in accordance with the relevant provisions, register the receipt of domestic reinvestment and open a settlement account under the capital account to receive the consideration for equity transfer. According to the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing, with no need to provide the evidentiary materials concerning authenticity of such capital for banks in advance, provided that their capital use shall be authentic and in line with provisions, and conform to the prevailing administrative regulations on the use of income under capital accounts. The concerned bank shall conduct spot checking in accordance with the relevant requirements. 80 Table of Contents On December 25, 2006, the People’s Bank of China issued the Administration Measures on Individual Foreign Exchange Control and its Implementation Rules were issued by the SAFE on January 5, 2007, both of which became effective on February 1, 2007. The Implementation Rules was later partly amended on May 29, 2016 and March 23, 2023. Under these regulations, all foreign exchange matters involved in the employee stock ownership plan, stock option plan and other similar plans, participated by onshore individuals shall be transacted upon approval from the SAFE or its authorized branch. On February 15, 2012, the SAFE promulgated the Notice on Relevant Issues Concerning Foreign Exchange Control on Domestic Individuals Participating in the Stock Incentive Plan of An Overseas Listed Company, or Circular 7, to replace the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Option Plan or Stock Option Plan of An Overseas Listed Company. Under Circular 7, the board members, supervisors, officers or other employees, including PRC citizens and foreigners having lived within the territory of the PRC successively for at least one year of a PRC entity, who participate in stock incentive plans or equity compensation plans by an overseas publicly listed company, or the PRC participants, are required, through a PRC agent or PRC subsidiaries of such overseas publicly-listed company, to complete certain foreign exchange registration procedures with respect to the plans upon the examination by, and approval of, the SAFE. We and our PRC participants who have been granted stock options are subject to Circular 7. If our PRC participants who hold such options or our PRC subsidiary fail to comply with these regulations, such participants and their PRC employer may be subject to fines and legal sanctions. Regulations on Foreign Investment The Standing Committee of the NPC enacted the Foreign Investment Law of the PRC on March 15, 2019, and the State Council promulgated the Implementation Regulations of Foreign Investment Law of the PRC on December 26, 2019, both of which came into force on January 1, 2020. On December 30, 2019, the MOFCOM and the SAMR jointly promulgated the Measures on Reporting of Foreign Investment Information, which also became effective on January 1, 2020. Under these laws and regulations, foreign investors or foreign-invested enterprises shall report and update investment information to the competent authorities for commerce through the Enterprise Registration System and the Enterprise Credit Information Publicity System. Any foreign investor or foreign-invested company found to be non-compliant with these reporting obligations may potentially be subject to fines and legal sanctions. The Foreign Investment Law of the PRC, together with its Implementation Regulations replaced, in their entirety, the trio of previous laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. Generally speaking, the Company Law of the PRC (promulgated by the Standing Committee of the NPC in December 1993 and was most recently amended in December 2023) or the Partnership Law of the PRC (promulgated by the Standing Committee of the NPC in February 1997 and amended in August 2006) shall apply with respect to the organization of foreign-invested enterprises. Regulations on Share Capital In October 2005, the Standing Committee of the NPC issued the amended Company Law of the PRC, which became effective on January 1, 2006 and was then amended in March 2014, October 2018 and December 2023. On June 17, 2014, the MOFCOM issued the Notice of the Ministry of Commerce on Improving the Administration of Foreign Investment Review. Pursuant to the above regulations, shareholders of a foreign-invested company are obligated to make full and timely contribution to the registered capital of the foreign-invested company in accordance with the Company Law of the PRC and the company’s articles of association pursuant to which the restrictions or requirements on the percentage of initial capital contribution, the percentage of cash contribution and the period of contribution imposed on foreign-invested companies (including companies invested by investors from Taiwan, Hong Kong and Macau) are abolished. A company which proposes to reduce its registered capital shall prepare a balance sheet and a list of assets. The company shall notify its creditors within ten days from the date of resolution on reduction of registered capital and publish an announcement in the newspapers within 30 days. The creditors may, within 30 days from receipt of the notice or within 45 days from the announcement date, require the company to settle the debts or provide a corresponding guarantee. Shareholders of certain of our PRC subsidiaries have mandatory preemptive rights. Regulations on Dividend Distribution The principal regulations governing distribution of dividends of foreign-invested enterprises include the Company Law of the PRC (the “Company Law”). 81 Table of Contents Under the Company Law, companies shall contribute 10% of the profits into their statutory surplus reserve upon distribution of their post-tax profits of the current year. A company may discontinue the contribution when the aggregate sum of the statutory surplus reserve is more than 50% of its registered capital. Regulations on Offshore Financing On October 21, 2005, the SAFE issued Notice on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or Circular 75, which became effective as of November 1, 2005. Under Circular 75, if PRC residents use assets or equity interests in their PRC entities as capital contributions to establish offshore companies or inject assets or equity interests of their PRC entities into offshore companies to raise capital overseas, they are required to register with local SAFE branches with respect to their overseas investments in offshore companies. PRC residents are also required to file amendments to their registrations if their offshore companies experience material events involving capital variation, such as changes in share capital, share transfers, mergers and acquisitions, spin-off transactions, long-term equity or debt investments or uses of assets in China to guarantee offshore obligations. Moreover, Circular 75 applies retroactively. As a result, PRC residents who have established or acquired control of offshore companies that have made onshore investments in the PRC in the past were required to complete the relevant registration procedures with the local SAFE branch by March 31, 2006. Under the relevant rules, failure to comply with the registration procedures set forth in Circular 75 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the increase of its registered capital, the payment of dividends and other distributions to its offshore parent or affiliate and the capital inflow from the offshore entity, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations. PRC residents who control our company are required to register periodically with the SAFE in connection with their investments in us. The SAFE issued a series of guidelines to its local branches with respect to the operational process for SAFE registration, including the Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, or Circular 59, which came into effect as of December 17, 2012. The guidelines standardized more specific and stringent supervision on the registration required by Circular 75. For example, the guidelines impose obligations on onshore subsidiaries of an offshore entity to make true and accurate statements to the local SAFE authorities in case any shareholder or beneficial owner of the offshore entity is a PRC citizen or resident. Untrue statements by the onshore subsidiaries will lead to potential liability for the subsidiaries, and in some instances, for their legal representatives and other individuals. On July 4, 2014, the SAFE issued the Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange Administration of the Overseas Investment and Financing and Round-trip Investments by Domestic Residents through Special Purpose Vehicles, or Circular 37, which became effective and suspended Circular 75 on the same date, and Circular 37 shall prevail over any other inconsistency between itself and relevant regulations promulgated previously. Pursuant to Circular 37, any PRC residents, including both PRC institutions and individual residents, are required to register with the local branch of the SAFE before making a contribution to an enterprise directly established or indirectly controlled by the PRC residents outside of the PRC for the purpose of overseas investment or financing with their legally owned domestic or offshore assets or equity interests, referred to in this circular as a “special purpose vehicle”. Under Circular 37, the term “PRC institutions” refers to entities with legal person status or other economic organizations established within the territory of the PRC. The term “PRC individual residents” includes all PRC citizens (also including PRC citizens abroad) and foreigners who habitually reside in the PRC for economic benefit. A registered special purpose vehicle is required to amend its SAFE registration or file with respect to such vehicle in connection with any change of basic information including PRC individual resident shareholder, name, term of operation, or PRC individual resident’s increase or decrease of capital, transfer or exchange of shares, merger, division or other material changes. In addition, if a non-listed special purpose vehicle grants any equity incentives to directors, supervisors or employees of domestic companies under its direct or indirect control, the relevant PRC individual residents could register with the local branch of the SAFE before exercising such options. The SAFE simultaneously issued guidance to its local branches with respect to the implementation of Circular 37. Under Circular 37, failure to comply with the foreign exchange registration procedures may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including restrictions on the payment of dividends and other distributions to its offshore parent company and the capital inflow from the offshore entity, and may also subject the relevant PRC residents and onshore company to penalties under the PRC foreign exchange administration regulations. See “Risk Factors—Risks Related to Doing Business in China—PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us, or otherwise adversely affect us.” 82 Table of Contents On September 14, 2015, the NDRC issued the Circular of the National Development and Reform Commission on Promoting the Administrative Reform of the Record-filing and Registration System for the Issuance of Foreign Debts by Enterprises to remove the quota review and approval system for the issuance of foreign debts (including bonds and loans for more than 1 year) by enterprises, reform and innovate the ways that foreign debts are managed, and implement the administration of record-filing and the registration system. On January 5, 2023, the NDRC issued the Administrative Measures for Examination and Registration of Medium- and Long-term Foreign Debts of Enterprises, which took effect on February 10, 2023, replacing the above Circular of the National Development and Reform Commission on Promoting the Administrative Reform of the Record-filing and Registration System for the Issuance of Foreign Debts by Enterprises. The new Administrative Measures provide more clarity on the procedures and requirements of the registration and reporting of medium- and long-term foreign debts. Regulations on Merger and Acquisition and Overseas Listing On August 8, 2006, six PRC regulatory agencies, namely the MOFCOM, the State Assets Supervision and Administration Commission, the State Administration of Taxation, the SAIC, the China Securities Regulatory Commission, or the CSRC, and the SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, also known as Circular 10, which became effective on September 8, 2006. The M&A Rule, as amended on June 22, 2009, purports, among other things, to require offshore special purpose vehicles, or SPVs, formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. On September 21, 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by SPVs seeking the CSRC approval of their overseas listings. We believe, based on the advice of our PRC counsel, that the CSRC approval is not required in the context of our existing listing on the NASDAQ and the Hong Kong Stock Exchange because we established our PRC subsidiaries by means of direct investment other than by merger or acquisition of domestic companies, and we started to operate our business in the PRC through foreign invested enterprises before September 8, 2006, the effective date of the M&A Rule. However, we cannot assure you that the relevant PRC regulators, including the CSRC, would reach the same conclusion as our PRC counsel. If the CSRC or other PRC regulatory body subsequently determines that CSRC’s approval was required for our existing listing on the NASDAQ and the Hong Kong Stock Exchange, we may face sanctions by the CSRC or other PRC regulatory agencies, which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading prices of our ADSs and/or ordinary shares. The M&A Rule also established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change of control transaction in which a foreign investor takes control of a PRC domestic enterprise. On July 30, 2017, for the purpose of promoting the reform of the foreign investment administrative system and simplifying the administrative procedures, the MOFCOM amended the Interim Measures for the Record-filing Administration of the Incorporation and Change of Foreign-invested Enterprises which was promulgated in October 2016 and further amended in June 2018. According to the amended interim measures, a record-filing administration system shall apply to foreign investors’ mergers and acquisitions of domestic non-foreign-invested enterprises and strategic investments in listed companies, provided that they do not involve the implementation of special access administrative measures prescribed by the PRC regulators or involve the mergers and acquisitions of affiliates. 83 Table of Contents On December 30, 2019, for the purpose of further promoting the foreign investment administration and simplifying the administrative procedures, the MOFCOM and the SAMR promulgated the Measures on Reporting of Foreign Investment Information, which became effective on January 1, 2020 and suspended the Interim Measures for the Record-filing Administration of the Incorporation and Change of Foreign-invested Enterprises on the same date. Under this regulation, an information reporting system shall apply to foreign investors’ mergers and acquisitions of domestic non-foreign-invested enterprises and strategic investments in listed companies, provided that they comply with the implementation of special access administrative measures prescribed by the PRC regulators and do not involve the mergers and acquisitions of affiliates. Specifically, under the information reporting system, where a new foreign-invested enterprise is incorporated or a non-foreign invested enterprise changes to a foreign-invested enterprise through acquisition, merger or other means, such incorporation or change no longer requires approval or record-filing of MOFCOM, but shall be reported online to the commerce administrative authorities through the Enterprise Registration System and the National Enterprise Credit Information Publicity System, together with the registration with the relevant department of the SAMR through the same systems. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and relevant notes and Supporting Guidelines, which came into effect on March 31, 2023. The Trial Measures seek to regulate all types of overseas offerings and listings by PRC based companies, including: (a) direct overseas listings, i.e. overseas listings by joint-stock companies which are established in PRC (such as H shares, N shares, GDRs); and (b) indirect overseas listings, i.e. overseas listings by PRC based companies in the names of an overseas entity (such as red-chip listings), if such issuers meets both of the following conditions: (i) more than 50% of its audited financial indicators (either operating revenue, profits, total assets or net assets) for the most recent accounting year is accounted for by its PRC-based companies, and (ii) major business activities or operations are conducted within the territory of PRC; main places of business are located within the territory of the PRC; or the majority of senior management staff domicile in the PRC or are Chinese citizens. Furthermore, pursuant to the Circular on the Arrangements for the Filing-based Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures Circular, companies that have already offered or listed securities overseas prior to the implementation of the Trial Measures are considered as “Stock Enterprises”, and these Stock Enterprises are not required to apply for filings immediately with CSRC until a re-financing event takes place and then a filing for such re-financing is required. On February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Provisions, which became effective from March 31,2023. The Confidentiality and Archives Provisions specify that during the overseas issuance of securities and listing activities of domestic enterprises, domestic enterprises and securities companies and securities service institutions that provide relevant securities services shall, by strictly abiding by the relevant laws and regulations of the PRC and the requirements therein, establish sound confidentiality and archives management systems, take necessary measures to implement confidentiality and archives management responsibilities, and shall not leak national secrets, work secrets of governmental agencies and undermine national and public interests. Work manuscripts generated in the PRC by securities companies and securities service institutions that provide relevant securities services for overseas issuance and listing of securities by domestic enterprises shall be kept in the PRC. Without the approval of relevant competent authorities, it shall not be transferred overseas. Where archives or copies need to be transferred outside of the PRC, it shall be subject to the approval procedures in accordance with relevant PRC regulations. 84 Table of Contents Regulation on Security Review In August 2011, the MOFCOM promulgated the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Rule, which came into effect on September 1, 2011, to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011. Under these regulations, a security review is required for foreign investors’ mergers and acquisitions having “national defense and security” implications and mergers and acquisitions by which foreign investors may acquire “de facto control” of domestic enterprises having “national security” implications. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to a security review, the MOFCOM will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rule further prohibits foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. Based on the above regulations, on December 19, 2020, the NDRC and MOFCOM jointly issued the Measures for the Security Review of Foreign Investments, which became effective as of January 18, 2021. The Measures for the Security Review of Foreign Investments establishes a comprehensive security review system of foreign investments, which, among others, expands the review subjects to various types of foreign investments that affect or may affect national security, including greenfield investments and investments in other forms. Similar to the previous regulations, the foreign investments subject to security review include investments having “national defense security” implications and investments by which foreign investors may acquire “de facto control” of invested enterprises having “national security” implications. Regulations on Labor Contracts and Social Security The Labor Law of the PRC, which was promulgated by the Standing Committee of the NPC on July 5, 1994, came into effect on January 1, 1995, and was amended on August 27, 2009 and December 29, 2018, the Labor Contract Law of the PRC that became effective on January 1, 2008, as amended on December 28, 2012, and the Implementation Regulations on Labor Contract Law of the PRC which was promulgated and came into effect on September 18, 2008 by the State Council seek to clarify the responsibilities of both employers and employees and codifies certain basic rights and protections of employees. Among others, the Labor Contract Law of the PRC provides that after completing two fixed-term employment contracts, an employee that desires to continue working for an employer is entitled to require a non-fixed-term employment contract. In addition, employees who have been employed for more than ten years by the same employer are entitled to require a non-fixed-term contract. The Labor Contract Law of the PRC also requires that the employees dispatched from human resources outsourcing firms or labor agencies be limited to temporary, auxiliary or substitute positions. Furthermore, where an employer causes any damage to the dispatched employee, the labor dispatch entity and the employer shall assume joint and several liabilities. According to the Interim Provisions on Labor Dispatch, which was promulgated in January 2014 and took effect in March 2014, to implement the provisions of the Labor Contract Law of the PRC regarding labor dispatch, a company is permitted to use dispatched employees for up to 10% of its labor force and the companies currently using dispatched employees are given a two-year grace period after March 1, 2014 to comply with this limit. According to the Individual Income Tax Law of the PRC, which was promulgated on September 10, 1980 by the NPC, last amended by the Standing Committee of the NPC on August 31, 2018 and came into effect on January 1, 2019, companies operating in China are required to withhold individual income tax on employees’ salaries based on the actual salary of each employee upon payment. According to the Law on Social Insurance of the PRC, which was promulgated by the Standing Committee of the NPC on October 28, 2010, came into effect on July 1, 2011, and was amended on December 29, 2018, the Provisional Regulations on the Collection and Payment of Social Insurance Premium, which was promulgated by the State Council on January 22, 1999 and amended on March 24, 2019, and the Regulations on the Administration of Housing Provident Fund, which was promulgated by the State Council on April 3, 1999 and came into effect on the same date, and was amended on March 24, 2002 and March 24, 2019, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity insurance and housing provident funds. Employers who fail to contribute may be fined and ordered to make good the deficit within a stipulated time limit. 85 Table of Contents Considering the PRC regulatory authorities have continued to introduce various new labor-related regulations since the effectiveness of the labor contract law, and the interpretation and implementation of these regulations are still evolving, we cannot assure you that our employment practice will at all times be deemed in compliance with the new regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes or investigations, our business and results of operations may be adversely affected. See “Risk Factors—Risks Related to Our Business—Our current employment practices may be adversely impacted under the applicable labor laws.” Regulation on Information Protection on Networks On December 28, 2012, the Standing Committee of the NPC issued Decision of the Standing Committee of the National People’s Congress on Strengthening Information Protection on Networks, pursuant to which network service providers and other enterprises and institutions shall, when gathering and using electronic personal information of citizens in business activities, publish their collection and usage rules and adhere to the principles of legality, rationality and necessarily, explicitly state the purposes, manners and scopes of collecting and using information, and obtain the consent of those from whom information is collected, and shall not collect and use information in violation of laws and regulations and the agreement between both sides; and the network service providers and other enterprises and institutions and their personnel must strictly keep such information confidential and may not divulge, alter, damage, sell, or illegally provide others with such information. On July 16, 2013, the Ministry of Industry and Information Technology, or the MIIT, issued the Provisions on the Protection of Personal Information of Telecommunication and Internet User. The requirements under this order are stricter and specific compared to the above decision issued by the NPC. According to the provisions, if a network service provider wishes to collect or use personal information, it may do so only if such collection is necessary for the services it provides. Furthermore, it must disclose to its users the purpose, method and scope of any such collection or usage, and must obtain consent from the users whose information is being collected or used. Network service providers are also required to establish and publish their protocols relating to personal information collection or usage, keep any collected information strictly confidential and take technological and other measures to maintain the security of such information. Network service providers are required to cease any collection or usage of the relevant personal information and provide services for the users to de-register the relevant user account, when a user stops using the relevant Internet service. Network service providers are further prohibited from divulging, distorting or destroying any such personal information, or selling or providing such personal information unlawfully to other parties. In addition, if a network service provider appoints an agent to undertake any marketing or technical services that involve the collection or usage of personal information, the network service provider is required to supervise and manage the protection of the information. The provisions state, in broad terms, that violators may face warnings, fines, public exposure and, criminal liability whereas the case constitutes a crime. On June 1, 2017, the Cybersecurity Law of the PRC promulgated in November, 2016 by the Standing Committee of the NPC became effective. This law also absorbed and restated the principles and requirements mentioned in the aforesaid decision and order, and further provides that, where an individual finds any network operator collects or uses his or her personal information in violation of the provisions of any law, regulation or the agreement of both parties, the individual shall be entitled to request the network operator to delete his or her personal information; if the individual finds that his or her personal information collected or stored by the network operator has any error, he or she shall be entitled to request the network operator to make corrections, and the network operator shall take measures accordingly. Pursuant to this law, the violators may be subject to: (i) warning; (ii) confiscation of illegal gains and fines equal to one to ten times of the illegal gains; or if without illegal gains, fines up to RMB1,000,000; or (iii) an order to shut down the website, suspend the business operation for rectification, or revoke business license. Besides, responsible persons may be subject to fines between RMB10,000 and RMB100,000. On October 28, 2025, the Standing Committee of the NPC adopted amendments to the Cybersecurity Law, which took effect on January 1, 2026. The amendments substantially increase penalties for non-compliance with relevant regulations, with maximum fines of up to RMB10 million for companies and RMB1 million for responsible individuals in cases involving exceptionally serious consequences. On January 1, 2021, the Civil Code promulgated in May 2020 by the Standing Committee of the NPC became effective. The Civil Code protects individuals’ right to personal information and provides for similar requirements for personal information protection as the Cybersecurity Law. Individuals may bring up civil litigations based on the Civil Code if their right to personal information is infringed upon. 86 Table of Contents From criminal law perspective, the PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained during the course of performing duties or providing services or obtained through theft or other illegal ways. Data Protection Law in Europe The Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (GDPR), complemented by EU Member States law on data protection (e.g. in Germany the German Federal Data Protection Act), imposes certain requirements and restrictions on the processing of personal data relating to natural persons. GDPR requirements will apply both to companies established in the EU and to companies, such as us, that are not established in the EU but process personal data of individuals who are in the EU (and in the EEA subject to the enactment of implementation procedures), where the processing activities relate to: (a) the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the EU; or (b) the monitoring of their behavior as far as their behavior takes place within the EU. Therefore, the GDPR applies to our EU entities as well as the offering of services by our non-EU entities to EU guests. The GDPR imposes on subject companies a large number of obligations, which relate for example, but are not limited, to (i) the principles applying to the processing of personal data, for example, lawfulness, fairness, transparency, purpose limitation, data minimization and “privacy by design”, accuracy, storage limitations to process and store personal data only as long as necessary, access restrictions on a “need to know basis”, and ensuring security and confidentiality of personal data by technical and organizational measures; (ii) the ability of the controller to demonstrate compliance with such principles (accountability); (iii) a there must be a legal basis for the data processing (special requirements apply to certain specific categories of data such as health related data and other special categories of personal data); and (iv) data subjects rights (for example, transparency, right of information about personal data processed, right of access/receive copies, right to rectification, right to erasure, right to restrict processing, right to data portability, and right to object to a processing under certain circumstances). This leads to companies being under the obligation to implement a number of formal processes and policies regarding the implementation of the GDPR requirements, such as ensuring the rights of the data subjects, handling of data breaches, documentation of the processing activities, processes for regularly testing, assessing and evaluating the effectiveness of technical and organizational measures for ensuring the security of the processing, processes for the selection and auditing of processors. The GDPR provides for substantial fines for breaches of data protection requirements, which, depending on the infringed provisions of the GDPR, can go up to either (thresholds depending on the obligations which have been breached): (i) 2% of the group’s annual worldwide turnover of the preceding financial year or EUR10 million, whichever is greater, or (ii) 4% of the group’s annual worldwide turnover of the preceding financial year or EUR20 million, whichever is greater. The fine may be imposed instead of, or in addition to, measures that may be ordered by supervisory authorities (for example, request to cease the processing). The GDPR and EU Member States law also provide for private enforcement mechanisms and, in the most severe cases, criminal liability. The Directive (EC) 2002/58 of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector imposes restrictions on the use of cookies and similar means as well as on website tracking, including the requirement to obtain informed and prior consent for storage or access to information stored on a user’s terminal equipment in the EU in certain cases (in particular for cookies which track for marketing purposes). The Directive (EC) 2002/58 is transposed into German law as the Telecommunications Digital Services Data Protection Act. ​ ​ 87 Table of Contents 4.C. Organizational Structure The following diagram illustrates our corporate and ownership structure, the place of formation and the ownership interests of our subsidiaries as of March 31, 2026. Notes: (1) We have four affiliated entities consolidated through contractual arrangements: Tianjin Jizhu, Shanghai Huanmei and its wholly-owned subsidiary Huanmei Travel, and Ningbo Futing. The registered shareholders of these Consolidated Affiliated Entities are (i) Mr. Pengfei Jiang, who is the director/supervisor of certain of our subsidiaries, holding 100% of equity interest in Tianjin Jizhu, (ii) Mr. Pengfei Jiang and Mr. Andong Chen, our employee, holding 90% and 10% of equity interest in Shanghai Huanmei, respectively, and (iii) Mr. Dongfu Shi, who is the director of Ningbo Futing, holding 100% of equity interest in Ningbo Futing. ​ ​ 88 Table of Contents The following table sets forth summary information for our significant subsidiaries as of March 31, 2026. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ ​ Date of ​ ​ ​ ​ Major Subsidiaries ​ Ownership ​ Incorporation/Acquisition ​ Place of Incorporation H World Holdings (HK) Limited 100% ​ October 22, 2008 Hong Kong H World Holdings Singapore Pte. Ltd. 100% ​ April 14, 2010 Singapore HanTing Xingkong (Shanghai) Hotel Management Co., Ltd. 100% ​ March 3, 2006 PRC HanTing (Tianjin) Investment Consulting Co., Ltd 100% ​ January 16, 2008 PRC HanTing Technology (Suzhou) Co., Ltd. 100% ​ December 3, 2008 PRC HanTing (Shanghai) Enterprise Management Co., Ltd. 100% ​ December 14, 2010 PRC HuaZhu Hotel Management Co., Ltd. 100% ​ August 16, 2012 PRC Jizhu Information Technology (Shanghai) Co., Ltd. 100% ​ February 26, 2014 PRC Huazhu Enterprise Management Co., Ltd. ​ 100% ​ June 6, 2014 ​ PRC ACL Greater China Limited 100% ​ January 25, 2016 Hong Kong Yagao Meihua Hotel Management Co., Ltd. 100% ​ January 25, 2016 PRC Orange Hotel Management (China) Co., Ltd. 100% ​ May 25, 2017 PRC Beijing Crystal Orange Hotel Management Consulting Co., Ltd. 100% ​ May 25, 2017 PRC Huazhu Hotel Management (Ningbo) Co., Ltd. 100% ​ July 20, 2018 PRC Huazhu Cloud (Shanghai) Information Technology Co., Ltd. ​ 100% ​ November 7, 2013 ​ PRC Steigenberger Hotels GmbH ​ 100% ​ January 2, 2020 Germany Intercity Hotel GmbH 100% ​ January 2, 2020 ​ Germany Jisu Enterprise Management Co., Ltd. ​ 100% ​ July 27, 2022 ​ PRC Shanghai Huaye Xingkong Enterprise Management Co., Ltd. ​ 100% ​ December 27, 2024 ​ PRC ​ H World Group Limited is not a Chinese operating company but a holding company incorporated in the Cayman Islands. As a holding company with no material operations of its own, H World Group Limited conducts substantially all of its business through its subsidiaries, and for some businesses the direct holding of which is restricted by PRC law, through the Consolidated Affiliated Entities. While we do not have any equity ownership of the Consolidated Affiliated Entities, the contractual arrangements we have with the Consolidated Affiliated Entities enables us to direct the activities that most significantly affect the economic performance of the Consolidated Affiliated Entities, as well as receive the economic benefits from the Consolidated Affiliated Entities. Because of these arrangements, we have control over and are the primary beneficiary of the VIEs for accounting purposes and, therefore, have consolidated the financial results of the VIEs in our consolidated financial statements in accordance with U.S. GAAP. Any references to control or benefits that accrue to us because of the VIEs in this annual report are limited to, and are subject to conditions for consolidation of, the VIEs under U.S. GAAP. Investors in our securities do not own equity interest in our operating entities, including our subsidiaries and the Consolidated Affiliated Entities in China, but instead own equity interest in the Cayman Islands holding company. Our securities that are listed on the stock exchanges are securities of our Cayman Islands holding company, not of our operating subsidiaries or the VIEs. Contractual Arrangements with the Consolidated Affiliated Entities We have entered into a series of contractual arrangements with each of Tianjin Jizhu, Shanghai Huanmei and Ningbo Futing and the respective nominee shareholder(s) of the Consolidated Affiliated Entities (the “Affiliated Entity Shareholders”), as described in more detail below, including (i) the power of attorney, the share pledge agreement and the loan agreement, which provide us with effective control over and ability to receive significant economic benefits from the Consolidated Affiliated Entities to the extent permitted by PRC law; and (ii) exclusive option agreements, which provide us with exclusive options to purchase all or part of the equity interests in the Consolidated Affiliated Entities to the extent permitted by PRC law. The contractual arrangements with each of Tianjin Jizhu, Shanghai Huanmei and Ningbo Futing were entered into by and among HZ Hotel Management, the Consolidated Affiliated Entities and each of their respective nominee shareholder(s). The contractual arrangements between each Consolidated Affiliated Entity on the one hand, and HZ Hotel Management and the respective Affiliated Entity Shareholders on the other hand, are all on substantially the same terms, which are summarized below: 89 Table of Contents Share Pledge Agreement Pursuant to the Share Pledge Agreement among HZ Hotel Management, the Consolidated Affiliated Entity and the Affiliated Entity Shareholders, the Affiliated Entity Shareholders have pledged 100% equity interest in the Consolidated Affiliated Entity to HZ Hotel Management to guarantee the performance by the Consolidated Affiliated Entity and its shareholder(s) of their obligations under the contractual arrangements. Pursuant to this agreement, HZ Hotel Management has right to claim dividends or distributive profits with regard to the pledged shares from the Consolidated Affiliated Entity. The Consolidated Affiliated Entity Shareholders also agreed, without HZ Hotel Management’s prior written consent, not to transfer the pledged shares, or establish or permit the existence of any security interest or other encumbrance on the pledged shares, except by the performance of the Exclusive Option Agreement. The Share Pledge Agreement will remain effective until the Consolidated Affiliated Entity and the Affiliated Entity Shareholders have discharged all their obligations and fully paid all the amounts payable under the contractual arrangements. Loan Agreement Pursuant to the Loan Agreement among HZ Hotel Management and the respective Affiliated Entity Shareholders, HZ Hotel Management agrees to provide the shareholders of the Consolidated Affiliated Entity with a loan to fund the Consolidated Affiliated Entity. This loan will be repaid only by transfer of Affiliated Entity Shareholders’ equity interest in the Consolidated Affiliated Entity to HZ Hotel Management or any person designated by HZ Hotel Management pursuant to the Exclusive Option Agreement. Without the prior written consent of HZ Hotel Management, Affiliated Entity Shareholders may not, in any manner, among other things, supplement or amend the articles of associations of the Consolidated Affiliated Entity; increase or reduce its registered capital or change the structure of its registered capital in other manners; sell, transfer, pledge or dispose of its assets, legal or beneficial interests in business or revenue or allow any encumbrance on such assets, business or revenue; assume, inherit, guarantee any debt, or allow the existence of any debt, except for debts incurred in the ordinary course of business and debts known and agreed in writing by HZ Hotel Management; cause the Consolidated Affiliated Entity to enter into any material contract with value above RMB100,000 outside the ordinary course of business; provide loans or credits in any form to any other persons; cause or permit to merge, consolidate with, acquire or invest in any other persons; or distribute dividends to its shareholders. The loan agreement will remain effective until ten years after the date of the Loan Agreement and the loan under this agreement should be fully repaid before or upon the termination of the Loan Agreement. Exclusive Option Agreement Pursuant to the Exclusive Option Agreement among HZ Hotel Management, the Consolidated Affiliated Entity and the Affiliated Entity Shareholders, the Affiliated Entity Shareholders irrevocably grant HZ Hotel Management or any third party designated by HZ Hotel Management an exclusive option to purchase all or part of their equity interests in the Consolidated Affiliated Entity at the higher of (i) the lowest price permitted by applicable PRC laws and (ii) a nominal price of RMB100. This agreement will remain effective until 20 years after the date of the agreement and will be automatically renewed at the discretion of HZ Hotel Management. Power of Attorney Pursuant to the Power of Attorney given by the Affiliated Entity Shareholders, the Affiliated Entity Shareholders irrevocably authorize HZ Hotel Management or any person(s) designated by HZ Hotel Management to act as his or her attorney-in-fact to exercise all of his or her rights as a shareholder of the Consolidated Affiliated Entity, including, but not limited to, the right to call and attend shareholders’ meetings, vote, sell, transfer, pledge or dispose of any or all of the shares, nominate, appoint or remove the directors, supervisors and senior management, and other shareholders rights conferred by the articles of association of the Consolidated Affiliated Entity and the relevant laws and regulations. This power of attorney will remain in force as long as the shareholder remains a shareholder of the respective Consolidated Affiliated Entity unless otherwise instructed by us. The Affiliated Entity Shareholders shall not have the right to terminate this power of attorney or revoke the appointment of the attorney-in-fact. 90 Table of Contents These contractual arrangements may not be as effective as direct ownership in providing us with control over the Consolidated Affiliated Entities. If the Consolidated Affiliated Entities or their shareholders fail to perform their respective obligations under these contractual arrangements, our recourse to the assets held by the Consolidated Affiliated Entities is indirect and we may have to incur substantial costs and expend significant resources to enforce such arrangements in reliance on legal remedies under PRC law. These remedies may not always be effective. Furthermore, in connection with litigation, arbitration or other judicial or dispute resolution proceedings, assets under the name of any record holder of equity interest in the Consolidated Affiliated Entities, including such equity interest, may be put under court custody. As a consequence, we cannot be certain that the equity interest will be disposed of pursuant to the contractual arrangement or ownership by the record holder of the equity interest. There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules, and regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the Consolidated Affiliated Entities, and their shareholders. See “Risk Factors—Risks Related to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations” and “—The nominee shareholders of the Consolidated Affiliated Entities may have potential conflicts of interest with us, which may affect our business and financial condition” below in this annual report for more details regarding these uncertainties. 4.D. Property, Plants and Equipment Our headquarters are located in Shanghai, China and occupy nearly 41,000 square meters of office space, which is owned by us. As of December 31, 2025, we leased 565 out of our 12,858 hotel facilities with an aggregate size of approximately 4.5 million square meters, including approximately 113,000 square meters subleased to others. As of December 31, 2025, we owned eight out of our 12,858 hotel facilities with an aggregate size of approximately 85,000 square meters. For detailed information about the locations of our hotels, see “Item 4. Information on the Company — B. Business Overview — Our Hotel Network.” ​