5.A. Operating Results You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information – D. Risk Factors” or in other parts of this annual report on Form 20-F. 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. On January 2, 2020, we completed the acquisition of Deutsche Hospitality and have consolidated its financial information since then. 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, and our net cash provided by operating activities amounted to RMB7,674 million, RMB7,518 million and RMB8,379 million (US$1,198 million) in these respective years. 91 Table of Contents Specific factors affecting our results of operations While our business is affected by factors relating to general economic conditions and the lodging industry in China and other jurisdictions in which we operate, including business and leisure travel of the customers and market competition (see “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — Our operating results are subject to conditions affecting the lodging industry in general” and “—The lodging industries in China, Europe, the Middle East, the Southeast Asia, and other countries and regions where we operate are competitive, and if we are unable to compete successfully, our financial condition and results of operations may be harmed”), we believe that our results of operations are also affected by company-specific factors, including, among others: ● The total number of hotels and hotel rooms in our hotel network. Our revenues largely depend on the size of our hotel network. Furthermore, we believe that the expanded geographic coverage of our hotel network will enhance our brand recognition. Whether we can successfully increase the number of hotels and hotel rooms in our hotel group is largely affected by our ability to effectively identify and lease, own, manachise or franchise additional hotel properties at desirable locations on commercially favorable terms and the availability of funding to make necessary capital investments to open these new hotels. ● Nature of the cost of our business. A significant portion of our operating costs and expenses, including rent and depreciation and amortization, is relatively fixed. As a result, an increase in our revenues achieved through higher RevPAR generally will result in higher profitability. Vice versa, a decrease in our revenues could result in a disproportionately larger decrease in our earnings because our operating costs and expenses are unlikely to decrease proportionately. ● The number of new leased and owned hotels under development. Generally, the operation of each leased and owned hotel goes through three stages: development, ramp-up, and mature operations. During the development stage, our leased and owned hotels generate no revenue. In addition, we bear the pre-opening expenses for a substantial majority of our leased and owned hotels, which generally range from approximately RMB1.5 million to RMB20.0 million per hotel. 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. During periods when a large number of new leased and owned hotels are under development, the pre-opening expenses incurred may have a significant negative impact on our financial performance. ● The mix of mature and new leased and owned hotels, manachised hotels and franchised hotels. When a new hotel starts operation and goes through the ramp-up stage, the occupancy rate is relatively low, and the room rate may be subject to discount. Revenues generated by these hotels are lower than those generated by mature hotels and may be insufficient to cover their operating costs, which are relatively fixed in nature and are similar to those of mature hotels. The lower profitability during the ramp-up stage for leased and owned hotels may have a significant negative impact on our financial performance. The length of the ramp-up stage may be affected by factors such as hotel size, seasonality, and location. New hotels opened in lower-tier cities generally have longer ramp-up period. On average, it takes our hotels approximately six months to ramp up. We define mature leased and owned hotels as those that have been in operation for more than six months. Under the manachise and franchise models, we generate revenues from franchise and service fees we charge to each manachised and franchised hotel while the franchisee bears substantially all the capital expenditures and pre-opening and operational expenses. The hotel operating costs relating to manachised hotels are mainly costs for hotel managers as we hire and send them to manachised hotels. An increasing proportion of manachised and franchised hotels in our hotel mix will allow us to benefit from the recurring cash inflows from franchise and service fees with minimal upfront costs and capital expenditures. Our manachised and franchised hotels have been and will continue to be significant contributor to our revenues in the foreseeable future. 92 Table of Contents Key Performance Indicators We utilize a set of non-financial and financial key performance indicators which our senior management reviews frequently. The review of these indicators facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to react promptly to changing customer demands and market conditions. After our acquisition of Deutsche Hospitality hotels in January 2020, we modified our operating segment structure into two operating segments⸺legacy Huazhu and legacy DH. Our analysis below sets forth information of both operating segments. Non-financial Key Performance Indicators Our non-financial key performance indicators consist of (i) change in the total number of hotels and hotel rooms in our hotel group, (ii) RevPAR, and (iii) same-hotel RevPAR change. Change in the total number of hotels and hotel rooms. We track the change in the total number of hotels and hotel rooms in operation to monitor our business expansion. Our total hotels in operation increased from 9,394 as of December 31, 2023 to 12,858 as of December 31, 2025. Our total number of hotel room nights available for sale increased from 292.6 million as of December 31, 2023 to 416.8 million as of December 31, 2025 for legacy Huazhu. As of December 31, 2025, the total room nights available for sale was 9.3 million for legacy DH. The following table sets forth various measures of changes in the total number of hotels and hotel rooms as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ Legacy ​ ​ ​ Legacy ​ ​ ​ Legacy ​ ​ ​ ​ Huazhu ​ Legacy DH ​ Huazhu ​ Legacy DH ​ Huazhu ​ Legacy DH Total hotels in operation ​ ​ ​ 9,263 ​ ​ ​ 131 ​ ​ ​ 11,025 ​ ​ ​ 122 ​ ​ ​ 12,740 ​ ​ ​ 118 Leased and owned hotels 607 84 ​ 557 76 ​ 511 ​ 62 Manachised hotels 8,501 25 ​ 10,359 21 ​ 12,148 ​ 22 Franchised hotels 155 22 ​ 109 25 ​ 81 ​ 34 Total hotel rooms in operation 885,630 26,814 ​ 1,062,329 25,889 ​ 1,239,397 ​ 25,022 Leased and owned hotels 86,691 16,303 ​ 82,580 15,490 ​ 76,694 ​ 13,363 Manachised hotels 786,157 5,196 ​ 970,181 4,647 ​ 1,154,806 ​ 4,437 Franchised hotels 12,782 5,315 ​ 9,568 5,752 ​ 7,897 ​ 7,222 Total hotel room nights available for sale(1) 292,643,397 9,405,932 ​ 351,212,097 9,700,173 ​ 416,805,923 ​ 9,273,146 Leased and owned hotels 31,592,103 5,573,744 ​ 30,529,097 5,740,957 ​ 28,582,340 ​ 5,030,213 Manachised hotels 256,346,691 1,921,324 ​ 316,743,951 1,809,668 ​ 385,118,056 ​ 1,715,860 Franchised hotels 4,704,603 1,910,864 ​ 3,939,049 2,149,548 ​ 3,105,527 ​ 2,527,073 Note: (1) Excluding room nights of hotels that were temporarily closed. Legacy Huazhu’s hotels may be temporarily closed due to decoration, brand upgrade, or business model change purposes. Legacy DH’s hotels may be temporarily closed due to repair work or renovation. RevPAR. RevPAR is a commonly used operating measure in the lodging industry and is defined as the product of average occupancy rates and average daily room rates achieved. Occupancy rates of our hotels mainly depend on the locations of our hotels, product and service offering, the effectiveness of our sales and brand promotion efforts, our ability to effectively manage hotel reservations, the performance of managerial and other employees of our hotels, as well as our ability to respond to competitive pressure. From year to year, occupancy of our portfolio may fluctuate as a result of changes in the mix of our mature and ramp-up hotels, as well as special events and public health events. 93 Table of Contents We set the room rates of our hotels primarily based on the location of a hotel, room rates charged by our competitors within the same locality, and our relative brand and product strength in the city or city cluster. From year to year, average daily room rates of our portfolio may change due to our yield management practice, city mix change and special events. The following table sets forth our RevPAR, average daily room rate and occupancy rate for legacy Huazhu’s leased and owned hotels as well as manachised and franchised hotels for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ ​ ​ ​ RevPAR(1) (in RMB) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased and owned hotels 308 308 299 Manachised hotels 234 228 227 Franchised hotels 226 229 230 Total hotels in operation 242 235 232 Average daily room rate (1) (in RMB) ​ ​ ​ Leased and owned hotels 372 364 361 Manachised hotels 289 281 284 Franchised hotels 309 320 335 Total hotels in operation 299 289 290 Occupancy rate (as a percentage) ​ ​ ​ Leased and owned hotels 83 84 83 Manachised hotels 81 81 80 Franchised hotels 73 72 69 Total hotels in operation 81 81 80 Weight of hotel room nights available for sale contributed by leased and owned hotels less than 6 months (as a percentage)(2) 1 2 1 Notes: (1) The RevPAR and average daily room rates disclosed in this annual report for legacy Huazhu are based on the tax-inclusive room rates. (2) Represents (i) the aggregate of monthly hotel room nights available for sale in a given period of leased and owned hotels, which had been in operation for less than six months, divided by (ii) the aggregate of monthly total hotel room nights available for sale in that same period. RevPAR may change from period to period due to (i) the change in the mix of our leased and owned hotels in the ramp-up and mature phases, (ii) the change in the mix of our hotels in different cities and locations, (iii) the change in the mix of our hotels of different brands, and (iv) the change in same-hotel RevPAR. The RevPAR for all hotels in operation of legacy Huazhu in 2025 was lower than the RevPAR for all of our hotels in operation of legacy Huazhu in 2024, primarily due to an increase in supply in 2025. The RevPAR for all hotels in operation of legacy Huazhu in 2024 was lower than the RevPAR for all of our hotels in operation of legacy Huazhu in 2023 primarily due to a high base in 2023 as well as an increase in supply in 2024. 94 Table of Contents The following table sets forth our RevPAR, average daily room rate and occupancy rate for the leased hotels as well as manachised and franchised hotels of legacy DH for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2023 ​ 2024 ​ ​ ​ 2025 RevPAR(1) (in EUR) ​ ​ ​ ​ ​ Leased and owned hotels ​ 74 79 ​ 81 Manachised hotels ​ 60 61 ​ 71 Franchised hotels ​ 75 80 ​ 91 All hotels in operation ​ 71 76 ​ 82 Average daily room rate(1) (in EUR) ​ ​ ​ ​ ​ Leased and owned hotels ​ 115 117 ​ 112 Manachised hotels ​ 99 94 ​ 102 Franchised hotels ​ 120 124 ​ 134 All hotels in operation ​ 113 114 ​ 116 Occupancy rate (as a percentage) ​ ​ ​ ​ ​ Leased and owned hotels ​ 65 67 ​ 72 Manachised hotels ​ 61 64 ​ 70 Franchised hotels ​ 62 65 ​ 68 All hotels in operation ​ 63 66 ​ 71 Note: (1) The RevPAR and average daily room rates for legacy DH are based on the tax-exclusive room rates. The RevPAR for all legacy DH hotels in operation continually increased from 2023 to 2025, primarily due to increased occupancy and average daily room rate of manachised and franchised hotels. The seasonality of our business may cause fluctuations in our quarterly RevPAR. We typically have the lowest RevPAR in the first quarter due to reduced travel activities in winter and during the Spring Festival holidays, and the highest RevPAR in the third quarter due to increased travel during summer. National and regional special events that attract large numbers of people to travel may also cause fluctuations in our RevPAR. The following table sets forth quarterly RevPAR of legacy Huazhu’s hotels for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RevPAR (in RMB): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased and owned hotels ​ 280 ​ 321 ​ 333 ​ 296 ​ 269 ​ 304 ​ 327 ​ 297 Manachised hotels ​ 209 ​ 237 ​ 249 ​ 215 ​ 203 ​ 230 ​ 250 ​ 221 Franchised hotels ​ 206 ​ 240 ​ 254 ​ 218 ​ 207 ​ 237 ​ 255 ​ 221 Total hotels in operation ​ 216 ​ 244 ​ 256 ​ 222 ​ 208 ​ 235 ​ 256 ​ 226 ​ The following table sets forth the quarterly RevPAR of the hotels operated by legacy DH for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ June 30, ​ September 30, ​ December 31, ​ ​ ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 RevPAR (in EUR): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased and owned hotels ​ 61 ​ 88 85 ​ 81 ​ 64 ​ 90 ​ 85 ​ 86 Manachised hotels ​ 49 ​ 60 70 ​ 65 ​ 53 ​ 70 ​ 80 ​ 79 Franchised hotels ​ 59 ​ 82 82 ​ 96 ​ 76 ​ 97 ​ 95 ​ 94 Total hotels in operation ​ 58 ​ 82 82 ​ 81 ​ 65 ​ 88 ​ 87 ​ 87 ​ 95 Table of Contents Same-hotel RevPAR change. Our overall RevPAR trend does not reflect the trend of a stable and mature portfolio, because it may fluctuate when city mix and mix of mature and ramp-up hotels change. We track same-hotel year-over-year RevPAR change for legacy Huazhu’s hotels in operation for at least 18 months to monitor the RevPAR trend for our mature hotels on a comparable basis. The following table sets forth our same-hotel RevPAR for hotels in operation under legacy Huazhu for at least 18 months for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ March 31, ​ June 30, ​ September 30, ​ December 31, ​ ​ 2024 ​ 2024 ​ 2024 ​ 2024 ​ 2025 ​ 2025 ​ 2025 ​ 2025 Number of hotels in operation for at least 18 months ​ ​ ​ 6,799 ​ ​ ​ 6,920 ​ ​ ​ 7,035 ​ ​ ​ 7,163 ​ ​ ​ 7,450 ​ ​ ​ 7,790 ​ ​ ​ 8,282 ​ ​ ​ 8,557 RevPAR (RMB) 218 ​ 248 ​ 258 ​ 222 ​ 205 ​ 233 ​ 250 ​ 222 Same-hotel RevPAR change (as a percentage)(1) 0.9 ​ (3.6) ​ (10.3) ​ (6.7) ​ (8.3) ​ (7.9) ​ (4.7) ​ (2.5) Note: (1) In calculating the same-hotel RevPAR change (as a percentage) of our hotels which have been in operation for at least 18 months as of the beginning of any month within a certain period, the average RevPAR of these hotels within this period is compared with the average RevPAR of these same hotels in the corresponding period of the prior year. Financial Key Performance Indicators Our financial key performance indicators consist of (i) revenues, (ii) operating costs and expenses, and (iii) EBITDA (Non-GAAP) and Adjusted EBITDA (Non-GAAP). Revenues. We primarily derive our revenues from operations of our leased and owned hotels and franchise and service fees from our manachised and franchised hotels. The following table sets forth the revenues generated by our leased and owned as well as manachised and franchised hotels and other revenues, each in absolute amount and as a percentage of total revenues for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ (RMB) ​ % ​ (RMB) ​ % ​ (RMB) ​ (US$) ​ % ​ ​ (In millions, except percentages) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased and owned hotels 13,796 63.0 13,843 57.9 12,943 ​ 1,851 ​ 51.1 Manachised and franchised hotels 7,694 35.2 9,498 39.8 11,696 ​ 1,672 ​ 46.2 Others 392 1.8 550 2.3 668 ​ 95 ​ 2.7 Total revenues 21,882 100.0 23,891 100.0 25,307 ​ 3,618 ​ 100.0 ​ ● Leased and Owned Hotels. In 2023, we generated revenue of RMB13,796 million from our leased and owned hotels, which accounted for 63.0% of our total revenues for the year. In 2024, we generated revenues of RMB13,843 million from our leased and owned hotels, which accounted for 57.9% of our total revenues for the year. In 2025, we generated revenues of RMB12,943 million (US$1,851 million) from our leased and owned hotels, which accounted for 51.1% of our total revenues for the year. As of December 31, 2025, we had 19 leased and owned hotels under development. 96 Table of Contents For our leased hotels, we lease properties from real estate owners or lessors and we are responsible for hotel development and customization to conform to our standards, as well as for repairs and maintenance and operating costs and expenses of properties over the term of the lease. We are also responsible for substantially all aspects of hotel operations and management, including hiring, training, and supervising the hotel managers and employees required to operate our hotels and purchasing supplies. Our typical lease term ranges from ten to 30 years. For a substantial majority of our hotels, we typically 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 every three to five years or, for Deutsche Hospitality’s hotels, generally annual adjustments based on consumer price index levels. Our owned hotels include the hotels we acquired as part of our strategic alliance with Accor in 2016 and the ones we acquired through acquisition of Blossom Hotel Management in 2018. Our revenues generated from leased and owned hotels are significantly affected by the following two operating measures: ● The total number of room nights available from the leased and owned hotels in our hotel group. The future growth of revenues generated from our leased and owned hotels will depend significantly upon our ability to expand our hotel group into new locations and maintain and further increase our RevPAR at existing hotels. ● RevPAR achieved by our leased and owned hotels, which represents the product of average daily room rates and occupancy rates. To understand factors impacting our RevPAR, please see “– Non-financial Key Performance Indicators – RevPAR.” ● Manachised and Franchised Hotels. In 2023, we generated revenues of RMB7,694 million from our manachised and franchised hotels, which accounted for 35.2% of our total revenues for the year. In 2024, we generated revenues of RMB9,498 million from our manachised and franchised hotels, which accounted for 39.8% of our total revenues for the year. In 2025, we generated revenues of RMB11,696 million (US$1,672 million) from our manachised and franchised hotels, which accounted for 46.2% of our total revenues for the year. We expect that revenues from our manachised and franchised hotels will increase in the foreseeable future as we add more manachised and franchised hotels in our hotel group. We also expect the number of our manachised and franchised hotels as a percentage of the total number of hotels in our network to increase. As of December 31, 2025, we had 2,887 manachised and franchised hotels under development. ● Manachised Hotels. Our franchisees either lease or own their hotel properties and also invest in the renovation of their properties according to our product standards. Our franchisees are typically responsible for the costs of developing and operating the hotels, including renovating the hotels according to our standards, and all of the operating expenses. We manage our manachised hotels and impose the same standards for all manachised hotels to ensure product quality and consistency across our hotel network. Management services we provide to our franchisees for our manachised hotels generally include hiring, appointing, and training hotel managers, managing reservations, providing sales and marketing support, conducting quality inspections and providing other operational support and information. We believe that our manachise model has 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. We collect fees from our franchisees. Our franchisees are responsible for all costs and expenses related to hotel construction and refurbishing. Our franchise and management agreements for manachised hotels typically run for an initial term of eight to ten years under legacy Huazhu, and for our hotels under Deutsche Hospitality, 15 to 20 years. 97 Table of Contents For our manachised hotels under legacy Huazhu, our franchisees are generally required to pay us an upfront franchise fee typically ranging between RMB80,000 and RMB1,000,000 per hotel. In general, we charge a monthly franchise fee of approximately 3% to 6.5% of the gross revenues generated by each manachised hotel. We also 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. In addition, we 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 manager fee on a monthly basis. 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 the 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. ● Franchised Hotels. Under our typical franchise agreements, we provide our franchisees with training, central reservation, sales and marketing support, technology support, quality assurance inspections and other operational support and information. We do not appoint hotel managers for our franchised hotels. We collect fees from the franchisees of our franchised hotels and do not bear any loss incurred or otherwise, share any profit realized by our franchisees. Our franchise agreements for our franchised hotels typically run for an initial term of eight to ten years under legacy Huazhu, and for our hotels under Deutsche Hospitality, 10 to 15 years. For our franchised hotels under legacy Huazhu, 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 a monthly management service fee. 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 turnover and gross operating revenue. 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. ● Other Revenues. Other revenues of RMB392 million, RMB550 million and RMB668 million (US$95 million) in 2023, 2024 and 2025, respectively, represented revenues generated from services other than the operation of hotel businesses, which mainly included revenues from the provision of technical services, procurement platform and Huazhu Mall, and other revenues from legacy DH. 98 Table of Contents Operating Costs and Expenses. Our operating costs and expenses consist of costs for hotel operation, other operating cost, selling and marketing expenses, general and administrative expenses, and pre-opening expenses. The following table sets forth the components of our operating costs and expenses, both in absolute amount and as a percentage of total revenues for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ (RMB) ​ % ​ (RMB) ​ % ​ (RMB) ​ (US$) ​ % ​ ​ (In millions, except percentages) Total revenues ​ ​ ​ 21,882 ​ ​ ​ 100.0 ​ ​ ​ 23,891 ​ ​ ​ 100.0 ​ ​ ​ 25,307 ​ ​ ​ 3,618 ​ ​ ​ 100.0 Operating costs and expenses ​ ​ ​ ​ ​ ​ ​ Hotel operating costs: ​ ​ ​ ​ ​ ​ ​ Rents 4,290 19.6 4,365 18.3 4,179 597 16.5 Utilities 685 3.1 690 2.9 656 94 2.6 Personnel costs 4,684 21.4 5,326 22.3 5,761 824 22.8 Depreciation and amortization 1,329 6.1 1,254 5.2 1,190 170 4.7 Consumables, food and beverage 1,327 6.1 1,293 5.4 1,221 175 4.8 Others 2,026 9.2 2,357 9.9 2,332 334 9.2 Total hotel operating costs 14,341 65.5 15,285 64.0 15,339 2,194 60.6 Other operating costs 34 0.2 31 0.1 61 9 0.2 Selling and marketing expenses 1,072 4.9 1,176 4.9 1,270 182 5.0 General and administrative expenses 2,086 9.5 2,508 10.5 2,262 321 8.9 Pre-opening expenses 35 0.2 50 0.2 41 6 0.2 Total operating costs and expenses 17,568 80.3 19,050 79.7 18,973 2,712 74.9 ​ ● Hotel Operating Costs. Our hotel operating costs consist primarily of costs and expenses directly attributable to the operation of our leased and owned as well as manachised hotels. Leased and owned hotel operating costs primarily include rental payments and utility costs for hotel properties, compensation and benefits for our hotel-based employees, costs of hotel room consumable products and depreciation and amortization of leasehold improvements, intangible assets and land use rights. Manachised hotel operating costs primarily include compensation and benefits for manachised hotel managers and other limited number of employees directly hired by us, which are recouped by us in the form of monthly service fees and commissions to the agents. We anticipate that our hotel operating costs in absolute amount will increase as we continue to open new hotels. Our hotel operating costs as a percentage of our total revenue may change from period to period mainly driven by three factors: (i) the hotel operating costs as a percentage of revenues from our leased and owned hotels, (ii) the operating costs, mainly personnel costs, as a percentage of revenues from the manachised and franchised business, and (iii) the weight of manachised and franchised hotels in our revenue mix. ● Selling and Marketing Expenses. Our selling and marketing expenses consist primarily of commissions to travel intermediaries, expenses for marketing programs and materials, bank fees for processing bank card payments, and compensation and benefits for our sales and marketing personnel, including personnel at our centralized reservation center. We expect that our selling and marketing expenses will increase as our sales increase and as we further expand into new geographic locations and promote our brands. ● General and Administrative Expenses. Our general and administrative expenses consist primarily of compensation and benefits for our corporate and regional office employees and other employees who are not sales and marketing or hotel-based employees, travel and communication expenses of our general and administrative staff, costs of third-party professional services, and office expenses for corporate and regional offices. We expect that our general and administrative expenses will increase as we hire additional personnel and incur additional costs in connection with the expansion of our business. 99 Table of Contents ● Pre-opening Expenses. Our pre-opening expenses consist primarily of rents, personnel cost, and other miscellaneous expenses incurred prior to the opening of a new leased or owned hotel. Our pre-opening expenses are largely determined by the number of pre-opening hotels in the pipeline and the rental fees incurred during the development stage. Landlords typically offer a two- to eight-month rent-free period at the beginning of the lease. Nevertheless, rental is booked during this period on a straight-line basis. Therefore, a portion of pre-opening expenses is non-cash rental expenses. 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. EBITDA (Non-GAAP) and Adjusted EBITDA (Non-GAAP). We use earnings before interest income, interest expense, income tax expense (benefit), and depreciation and amortization, or EBITDA, a non-GAAP financial measure, to assess our results of operations before the impact of investing and financing transactions and income taxes. Given the significant investments that we have made in leasehold improvements, depreciation and amortization expense comprises a significant portion of our cost structure. In addition, we believe that EBITDA is widely used by other companies in the lodging industry and may be used by investors as a measure of our financial performance. We believe that EBITDA is a useful financial metric to assess our results of operations before the impact of investing and financing transactions and income taxes and will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. We also use Adjusted EBITDA, another non-GAAP measure. In 2024, to better reflect the profitability of our core business, we redefined Adjusted EBITDA as EBITDA excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net, and gain (loss) on disposal of investments, and as a result, our Adjusted EBITDA in 2023 were adjusted to conform to the 2024 presentation. We present Adjusted EBITDA because it is used by our management to evaluate our operating performance. We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance by excluding share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net, and gain (loss) on disposal of investments that may not be indicative of our operating performance. We also believe that: (i) both our management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods; (ii) these non-GAAP financial measures facilitate our management’s internal comparisons to our historical performance; and (iii) these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used regularly by our management in financial and operational decision-making. The presentation of EBITDA and Adjusted EBITDA should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business. A reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most directly comparable U.S. GAAP measure, is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (US$) ​ ​ (In millions) Net income attributable to our company 4,085 3,048 5,080 726 Interest income (248) (210) (223) (32) Interest expense 385 318 337 48 Income tax expense ​ 1,204 ​ 1,662 ​ 2,161 ​ 309 Depreciation and amortization ​ 1,414 ​ 1,332 ​ 1,257 ​ 180 EBITDA (Non-GAAP) ​ 6,840 ​ 6,150 ​ 8,612 ​ 1,231 Share-based compensation expenses ​ 143 ​ 322 ​ 420 ​ 60 (Gain) loss from fair value changes of equity securities, net ​ (109) ​ 66 ​ 10 ​ 1 Foreign exchange (gain) loss, net ​ (90) ​ 272 ​ (569) ​ (81) (Gain) loss on disposal of investments ​ (516) ​ 10 ​ — ​ — Adjusted EBITDA (Non-GAAP) ​ 6,268 ​ 6,820 ​ 8,473 ​ 1,211 ​ 100 Table of Contents The use of EBITDA and Adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, income tax, interest income and interest expense have been and will be incurred and are not reflected in the presentation of EBITDA. Share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net, and gain (loss) on disposal of investments have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA or Adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest income, interest expense, income tax expense, share-based compensation expenses, gain (loss) from fair value changes of equity securities, foreign exchange gain (loss), net, gain (loss) on disposal of investments, capital expenditures and other relevant items both in our reconciliations to the U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The terms EBITDA and Adjusted EBITDA are not defined under U.S. GAAP, and neither EBITDA nor Adjusted EBITDA is a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA or Adjusted EBITDA may not be comparable to EBITDA or Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or Adjusted EBITDA in the same manner as we do. Taxation We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the British Virgin Islands and Seychelles, our subsidiaries are not subject to tax on income or capital gain. Under the current laws of Germany, companies are subject to income tax at a standard rate of 15% (15.825% including solidarity surcharge), plus municipal trade tax of 7%-21%. In other major jurisdictions, including Austria, Netherlands and Belgium, we are subject to a range from 9% to 25% of the statutory income tax rate, respectively. Our principal operations and geographic markets are in the PRC. Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), which was effective from January 1, 2008, domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25%, and the industries and projects that are encouraged and supported by the State may enjoy tax preferential treatment. Jizhu Information and Technology (Shanghai) Co., Ltd. (“Jizhu Shanghai”), formerly known as Mengguang Information and Technology (Shanghai) Co., Ltd, is a recognized software development entity located in Shanghai of PRC. Jizhu Shanghai was qualified as high and new tech enterprise in December 2021 and December 2024, and accordingly is entitled to a reduced tax rate of 15% from 2021 to 2026. Huazhu Cloud (Shanghai) Information and Technology Co., Ltd. (“Huazhu Cloud”) (formerly known as H-World Information and Technology Co., Ltd.) was qualified as high and new tech enterprise in December 2022 and December 2025, and accordingly is entitled to a reduced tax rate of 15% from 2022 to 2027. 101 Table of Contents The EIT Law imposes a withholding tax of 10% on dividends distributed by a PRC foreign-invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered a “non-resident enterprise” without any establishment or place within China or if the dividends received have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding tax rate. A holding company which is a tax resident in Hong Kong, for example, would be subject to a 5% withholding tax rate on the dividends received from its PRC subsidiary if it owns at least 25% equity in the PRC subsidiary and is the beneficial owner of the dividends. See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in China — It is unclear whether we will be considered as a PRC resident enterprise under the Enterprise Income Tax Law of the PRC, and depending on the determination of our PRC resident enterprise status, if we are not treated as a PRC resident enterprise, dividends paid to us by our PRC subsidiaries will be subject to PRC withholding tax; if we are treated as a PRC resident enterprise, we may be subject to 25% PRC income tax on our worldwide income, and holders of our ADSs or ordinary shares that are non-PRC resident investors may be subject to PRC withholding tax on dividends on and gains realized on their transfer of our ADSs or ordinary shares.” Results of Operations We have grown rapidly since we began our current business of operating and managing a multi-brand hotel portfolio in 2007. We believe that the period-to-period comparison of operating results should not be relied upon as being indicative of future performance. The following table sets forth a summary of our consolidated results of operations, both in absolute amount and as a percentage of total revenues for the periods indicated. This information should be read together with our consolidated financial statements and related notes for the relevant periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ (RMB) ​ ​ ​ % ​ ​ ​ (RMB) ​ ​ ​ % ​ ​ ​ (RMB) ​ ​ ​ (US$) ​ ​ ​ % ​ ​ (In millions, except percentages) Consolidated Statement of Comprehensive Income Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues: ​ ​ ​ ​ ​ ​ ​ Leased and owned hotels 13,796 63.0 13,843 57.9 12,943 1,851 51.1 Manachised and franchised hotels 7,694 35.2 9,498 39.8 11,696 1,672 46.2 Others 392 1.8 550 2.3 668 95 2.7 Total revenues 21,882 100.0 23,891 100.0 25,307 3,618 100.0 Operating costs and expenses(1): ​ ​ ​ ​ ​ ​ ​ Hotel operating costs 14,341 65.5 15,285 64.0 15,339 2,194 60.6 Other operating costs 34 0.2 31 0.1 61 9 0.2 Selling and marketing expenses 1,072 4.9 1,176 4.9 1,270 182 5.0 General and administrative expenses 2,086 9.5 2,508 10.5 2,262 321 8.9 Pre-opening expenses 35 0.2 50 0.2 41 6 0.2 Total operating costs and expenses 17,568 80.3 19,050 79.7 18,973 2,712 74.9 Goodwill impairment loss ​ 4 ​ 0.0 ​ — ​ — ​ — ​ — ​ — Other operating income, net 404 1.8 359 1.5 485 69 1.9 Income from operations 4,714 21.5 5,200 21.8 6,819 975 27.0 Interest income 248 1.1 210 0.9 223 32 0.9 Interest expense 385 1.7 318 1.3 337 48 1.3 Other income, net ​ 573 2.6 51 0.2 38 5 0.1 Gain (loss) from fair value changes of equity securities, net 109 0.5 (66) (0.3) (10) (1) (0.0) Foreign exchange gain (loss), net 90 0.4 (272) (1.1) 569 81 2.2 Income before income taxes ​ 5,349 24.4 4,805 20.2 7,302 1,044 28.9 Income tax expense 1,204 5.5 1,662 7.0 2,161 309 8.6 Loss from equity method investments (14) (0.0) (41) (0.2) (26) (4) (0.1) Net income 4,131 18.9 3,102 13.0 5,115 731 20.2 Less: net income attributable to noncontrolling interest 46 0.2 54 0.2 35 5 0.1 Net income attributable to H World Group Limited 4,085 18.7 3,048 12.8 5,080 726 20.1 Note: (1) Includes share-based compensation expenses as follows: 102 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (US$) ​ ​ (In millions) Share-based compensation expenses 143 322 420 60 ​ We have two operating segments⸺legacy Huazhu and legacy DH. We use adjusted EBITDA as the segment profit measure to evaluate the performance of each segment. The following table provides a summary of our operating segment results for the years ended December 31, 2023, 2024 and 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ Legacy ​ ​ ​ Legacy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Legacy ​ ​ ​ Legacy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Legacy ​ ​ ​ Legacy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Huazhu ​ DH ​ Elimination ​ Total ​ Huazhu ​ DH ​ Elimination ​ Total ​ Huazhu ​ DH ​ Elimination ​ Total Total revenues 17,444 4,465 (27) 21,882 19,029 4,881 (19) 23,891 20,535 4,794 (22) 25,307 Adjusted EBITDA 6,185 84 (1) 6,268 6,974 (154) (0) 6,820 7,974 499 0 8,473 ​ Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Total Revenues. Our total revenues increased by 5.9% from RMB23,891 million in 2024 to RMB25,307 million (US$3,618 million) in 2025. This increase was primarily due to the expansion of our hotel network. ● Leased and Owned Hotels. Total revenues from our leased and owned hotels /decreased by 6.5% to RMB12,943 million (US$1,851 million) in 2025 from RMB13,843 million in 2024. ● Manachised and Franchised Hotels. Total revenues from our manachised and franchised hotels increased by 23.1% from RMB9,498 million in 2024 to RMB11,696 million (US$1,672 million) in 2025, primarily due to the increased number of our manachised hotels. ● Other Revenues. Other revenues increased by 21.5% from RMB550 million in 2024 to RMB668million (US$95 million) in 2025. Operating Costs and Expenses. Our total operating costs and expenses decreased by 0.4% from RMB19,050 million in 2024 to RMB18,973 million (US$2,712 million) in 2025. ● Hotel Operating Costs. Our hotel operating costs remained relatively flat at RMB15,285 million in 2024 and RMB15,339 million (US$2,194 million) in 2025. Our hotel operating costs as a percentage of total revenues decreased from 64.0% in 2024 to 60.6% in 2025. ● Selling and Marketing Expenses. Our selling and marketing expenses increased by 8.0% from RMB1,176 million in 2024 to RMB1,270 million (US$182 million) in 2025. Our selling and marketing expenses as a percentage of total revenues remained relatively flat at 4.9% in 2024 and 5.0% in 2025. ● General and Administrative Expenses. Our general and administrative expenses decreased by 9.8% from RMB2,508 million in 2024 to RMB2,262 million (US$321 million) in 2025. The decrease was mainly due to lower restructuring costs incurred and decreased headcount in Legacy DH as compared with 2024. ● Pre-opening Expenses. Our pre-opening expenses decreased by 18.0% from RMB50 million in 2024 to RMB41 million (US$6 million) in 2025. Our pre-opening expenses as a percentage of total revenues remained flat at 0.2% in both 2024 and 2025. Our pre-opening expenses in 2025 were primarily from legacy Huazhu. Other Operating Income, Net. Our other operating income increased by 35.1% from RMB359 million in 2024 to RMB485 million (US$69 million) in 2025. 103 Table of Contents Income from Operations. As a result of the foregoing, our income from operations increased by 31.1% from RMB5,200 million in 2024 to RMB6,819 million (US$975 million) in 2025. Interest Income/Expense, Net. Our net interest expense was RMB114 million (US$16 million) in 2025. Our interest income was RMB223 million (US$32 million), and our interest expense was RMB337 million (US$48 million) in 2025. Our net interest expense was RMB108 million in 2024. Our interest income was RMB210 million, and our interest expense was RMB318 million in 2024. Other Income, Net. We recorded other income, net of RMB38 million (US$5 million) in 2025, compared to other income, net of RMB51 million in 2024. Gain (Loss) from Fair Value Changes of Equity Securities, Net. Gain (loss) from fair value changes of equity securities, net mainly represents the gain (loss) from our investment in equity securities with readily determinable fair values. Our loss from fair value changes of equity securities was RMB10 million (US$1 million) in 2025, primarily due to the decrease in the fair value of the market securities that we held. Foreign Exchange Gain (Loss). Our foreign exchange gain was RMB569 million (US$81 million) in 2025, compared to our foreign exchange loss of RMB272 million in 2024. Our foreign exchange gain in 2025 was primarily attributable to certain internal loan receivables denominated in Euro as a result of Euro’s appreciation. Income Tax Expense. Our income tax expense was RMB2,161 million (US$309 million) in 2025, increased from income tax expense of RMB1,662 million in 2024, primarily due to the increase in our income before income taxes. Equity Method Investments. Our loss from equity method investments decreased from RMB41 million in 2024 to RMB26 million (US$4 million) in 2025, primarily due to decrease in losses incurred by certain of our investee companies. Net Income Attributable to Noncontrolling Interest. Net income attributable to noncontrolling interest represents joint venture partners’ share of our net income or loss based on their equity interest in the leased and owned hotels owned by the joint ventures which are controlled and consolidated by us. Net income attributable to noncontrolling interest was RMB35 million (US$5 million) in 2025. Net income attributable to noncontrolling interest was RMB54 million in 2024. Net Income Attributable to H World Group Limited. As a result of the foregoing, net income attributable to H World Group Limited increased from RMB3,048 million in 2024 to RMB5,080 million (US$726 million) in 2025. Segment Results Total Revenue. Legacy Huazhu’s total revenues for 2025 were RMB20,535 million (US$2,936 million), representing a 7.9% increase from RMB19,029 million in 2024 as a result of our hotel network expansion. Legacy DH’s total revenues remained relatively flat at RMB4,881 million in 2024 and RMB4,794 million (US$686 million) in 2025. Adjusted EBITDA. Legacy Huazhu’s adjusted EBITDA from 2025 was RMB7,974 million (US$1,140 million), representing an increase from RMB6,974 million in 2024 as a result of our increased revenue due to hotel network expansion. Legacy DH’s adjusted EBITDA from 2025 was RMB499 million (US$71 million), compared to its negative adjusted EBITDA of RMB154 million in 2024, primarily due to lower restructuring costs incurred and decreased headcount, as well as decreased impairment loss from intangible assets. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Total Revenues. Our total revenues increased by 9.2% from RMB21,882 million in 2023 to RMB23,891 million in 2024. This increase was primarily due to expansion of our hotel network. ● Leased and Owned Hotels. Total revenues from our leased and owned hotels increased to RMB13,843 million in 2024 from RMB13,796 million in 2023. ● Manachised and Franchised Hotels. Total revenues from our manachised and franchised hotels increased by 23.4% from RMB7,694 million in 2023 to RMB9,498 million in 2024, primarily due to the increased number of our manachised hotels. 104 Table of Contents ● Other Revenues. Other revenues increased by 40.3% from RMB392 million in 2023 to RMB550 million in 2024. Operating Costs and Expenses. Our total operating costs and expenses increased by 8.4% from RMB17,568 million in 2023 to RMB19,050 million in 2024. ● Hotel Operating Costs. Our hotel operating costs increased by 6.6% from RMB14,341 million in 2023 to RMB15,285 million in 2024, primarily due to the rising personnel costs as our hotel network continued to expand. Our hotel operating costs as a percentage of total revenues decreased from 65.5% in 2023 to 64.0% in 2024. ● Selling and Marketing Expenses. Our selling and marketing expenses increased by 9.7% from RMB1,072 million in 2023 to RMB1,176 million in 2024. Our selling and marketing expenses as a percentage of total revenues remained flat at 4.9% in 2023 and 2024. ● General and Administrative Expenses. Our general and administrative expenses increased by 20.2% from RMB2,086 million in 2023 to RMB2,508 million in 2024. The increase was mainly due to increased headcount as well as an increase in share-based compensation to attract and retain core employees who are key to our sustainable long-term business growth. ● Pre-opening Expenses. Our pre-opening expenses increased by 42.9% from RMB35 million in 2023 to RMB50 million in 2024. Our pre-opening expenses as a percentage of total revenues remained flat at 0.2% in 2023 and 2024. Our pre-opening expenses in 2024 was primarily from legacy Huazhu. Other Operating Income, Net. Our other operating income decreased by 11.1% from RMB404 million in 2023 to RMB359 million in 2024. Income (Loss) from Operations. As a result of the foregoing, our income from operations increased by 10.3% from RMB4,714 million in 2023 to RMB5,200 million in 2024. Interest Expense, Net. Our net interest expense was RMB108 million in 2024. Our interest income was RMB210 million, and our interest expense was RMB318 million in 2024. Our net interest expense was RMB137 million in 2023. Our interest income was RMB248 million, and our interest expense was RMB385 million in 2023. Other Income, Net. We recorded other income, net of RMB51 million in 2024, compared to other income, net of RMB573 million in 2023. The higher other income, net in 2023 was mainly due to gains from sales of Accor’s shares. (Loss) Gain from Fair Value Changes of Equity Securities, Net. (Loss) gain from fair value changes of equity securities, net mainly represents the (loss) gain from our investment in equity securities with readily determinable fair values. Our loss from fair value changes of equity securities was RMB66 million in 2024, primarily due to loss from fair value changes of UBOX shares. Foreign Exchange (Loss) Gain. Our foreign exchange loss was RMB272 million in 2024, compared to our foreign exchange gain of RMB90 million in 2023. Our foreign exchange loss in 2024 was primarily attributable to certain internal loan receivables denominated in Euro as a result of the Euro’s depreciation. Income Tax Expense. Our income tax expense was RMB1,662 million in 2024, compared to income tax expense of RMB1,204 million in 2023. Our effective tax rate in 2024 was 34.6%, compared with 22.5% in 2023. The higher effective tax rate in 2024 was mainly attributable to increased withholding tax related to dividend distribution. Equity Method Investments. Our loss from equity method investments increased from RMB14 million in 2023 to RMB41 million in 2024, primarily due to the increase in losses incurred by certain of our investee companies. Net Income Attributable to Noncontrolling Interest. Net income attributable to noncontrolling interest represents joint venture partners’ share of our net income or loss based on their equity interest in the leased and owned hotels owned by the joint ventures which are controlled and consolidated by us. Net income attributable to noncontrolling interest was RMB54 million in 2024.Net income attributable to noncontrolling interest was RMB46 million in 2023. 105 Table of Contents Net Income Attributable to H World Group Limited. As a result of the foregoing, net income attributable to H World Group Limited decreased from RMB4,085 million in 2023 to RMB3,048 million in 2024. Segment Results Total Revenue. Legacy Huazhu’s total revenues for 2024 were RMB19,029 million, representing a 9.1% increase from RMB17,444 million in 2023 as a result of our hotel network expansion. Legacy DH’s total revenues from 2024 were RMB4,881 million, representing a 9.3% increase from RMB4,465 million in 2023 primarily due to optimized hotel operations and improved hotel performance. Adjusted EBITDA. Legacy Huazhu’s adjusted EBITDA from 2024 was RMB6,974 million, representing an increase from RMB6,185 million in 2023 as a result of our hotel network expansion. Legacy DH’s negative adjusted EBITDA from 2024 was RMB154 million, representing a decrease from its adjusted EBITDA of RMB84 million in 2023, primarily due to increased impairment loss from intangible assets and restructuring costs incurred in 2024. Outstanding Indebtedness In May 2020, we issued US$500 million Convertible Senior Notes (the “2026 Notes”). The 2026 Notes will mature on May 1, 2026 and bear interest at a rate of 3.00% per annum, payable in arrears semi-annually on May 1 and November 1 of each year, beginning on November 1, 2020. The 2026 Notes can be converted into our ADSs at an initial conversion rate of 23.971, subject to adjustment in some events, of our ADSs per US$1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of US$41.72 per ADS). The holders may require our Company to repurchase all or portion of the 2026 Notes for cash on May 1, 2024, or in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. In 2023, RMB0.01 million of the 2026 Notes was converted into 24 ADSs upon holders’ requests. As of December 31, 2024, we classified the 2026 Notes as long-term debt as the put option had expired. As of December 31, 2025, we reclassified the 2026 Notes as short-term debt as the 2026 Notes mature on May 1, 2026. In August 2022, we entered into a 3-year long-term facility of EUR220 million and RMB-equivalent of EUR110 million term facility, and EUR70 million revolving credit facility agreement with several banks. As of December 31, 2024, the outstanding loan amount was RMB equivalent of EUR99 million in long-term bank borrowings, current portion. This amount had been fully repaid by December 31, 2025. In March 2024, we entered into a five-year syndicated loan contract with a facility amount of RMB400 million expiring in March 2029. As of December 31, 2024 and December 31, 2025, buildings with a net book value of RMB510 million and RMB478 million, respectively, and land use rights with a net book value of RMB69 million and RMB67 million, respectively, were pledged as collateral for the loan. The loan was intended for the operation of headquarters buildings and refinancing existing obligations. The interest rate resets every year, and is based on the People’s Bank of China one-year benchmark LPR minus 55 basis points on the pricing date. There are some financial covenants including revenue and profit related to this facility. We were fully in compliance with the covenants for the year ended December 31, 2024 and 2025. In 2024, we had drawn down RMB340 million under the facility agreement and repaid RMB15 million. In 2025, we repaid RMB40 million. As of December 31, 2024 and 2025, the outstanding loan amount was RMB325 million and RMB285 million, respectively. In July 2025, we entered into a one-year loan facility of up to RMB2,000 million or its equivalent in other currencies. We had drawn down RMB1,400 million under this agreement and the interest rate was fixed at 1.8% per annum. As of December 31, 2025, the outstanding loan amount was RMB1,400 million and total bank deposits of RMB1,406 million in short-term investments were pledged as collateral. As of December 31, 2025, we had a total debt balance of RMB5.8 billion (US$0.8 billion) and unutilized facilities of approximately RMB6.3 billion. We had complied with the covenants under our existing banking facilities as of December 31, 2025. ​ 106 Table of Contents 5.B. Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities, proceeds from our follow-on offering of ADSs in January 2023, borrowings from commercial banks, and issuance of convertible senior notes due 2026. As of December 31, 2025, we had RMB10,386 million (US$1,485 million) in cash and cash equivalents and RMB146 million (US$21 million) in restricted cash. Our cash and cash equivalents and restricted cash consist of cash on hand, liquid investments which have maturities of three months or less when acquired and are unrestricted as to withdrawal or use, deposits used as security against borrowings, and deposits restricted due to contract disputes or lawsuits or special purpose. Our cash and cash equivalents as of December 31, 2025 primarily consisted of Renminbi and U.S. dollars. As of December 31, 2025, we had 19 properties for our leased and owned hotels under development. As of December 31, 2025, we expected to incur approximately RMB693 million (US$99 million) of capital expenditures in connection with (i) certain recently completed leasehold improvements and installation of equipment and (ii) the funding of the leasehold improvements and installation of equipment of these 19 leased and owned hotels, which is expected to be incurred within one to two years. We intend to fund this planned expansion with our operating cash flow, our cash balance and our credit facilities. The following table sets forth a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (US$) ​ ​ (In millions) Net cash provided by operating activities 7,674 7,518 8,379 1,198 Net cash used in investing activities (1,477) (2,239) (1,042) (149) Net cash used in financing activities (3,720) (5,504) (4,306) (616) Effect of exchange rate changes on cash and cash equivalents, and restricted cash 164 30 (30) (4) Net (decrease) increase in cash, cash equivalents and restricted cash, including cash classified within assets held for sale 2,641 (195) 3,001 429 Less: net increase (decrease) in cash and cash equivalents classified within assets held for sale ​ 17 ​ (9) ​ (7) ​ (1) Cash, cash equivalents and restricted cash at the beginning of the year 5,086 7,710 7,524 1,076 Cash, cash equivalents and restricted cash at the end of the year 7,710 7,524 10,532 1,506 ​ Operating Activities In 2023, 2024 and 2025, we financed our operating activities primarily through cash generated from operations. Net cash provided by operating activities amounted to RMB8,379 million (US$1,198 million) in 2025, primarily attributable to (i) our net income of RMB5,115 million, (ii) an added-back of RMB2,233 million in noncash lease expense, (iii) an added-back of RMB1,257 million in noncash depreciation and amortization, and (iv) an increase in accrued expenses and other current liabilities of RMB936 million, partially offset by a decrease in operating lease liabilities of RMB2,383 million. Net cash provided by operating activities amounted to RMB7,518 million in 2024, primarily attributable to (i) our net income of RMB3,102 million, (ii) an added-back of RMB2,300 million in noncash lease expense, and (iii) an added-back of RMB1,332 million in noncash depreciation and amortization, partially offset by a decrease in operating lease liabilities of RMB2,453 million. Net cash provided by operating activities amounted to RMB7,674 million in 2023, primarily attributable to (i) our net income of RMB4,131 million, (ii) an added-back of RMB2,163 million in noncash lease expense, (iii) an added-back of RMB1,414 million in noncash depreciation and amortization, and (iv) an increase in accrued expenses and other current liabilities of RMB1,133 million, partially offset by a decrease in operating lease liabilities of RMB2,548 million. ​ 107 Table of Contents Investing Activities Net cash used in investing activities decreased from RMB2,239 million in 2024 to RMB1,042 million (US$149 million) in 2025, primarily due to (i) purchases of investments of RMB8,134 million mainly related to our purchase of time deposits and financial products, and (ii) purchase of property and equipment of RMB828 million, partially offset by proceeds from maturity/sale and return of investments of RMB7,777 million. Net cash used in investing activities increased from RMB1,477 million in 2023 to RMB2,239 million in 2024, primarily due to (i) purchases of investments of RMB4,017 million mainly related to our purchase of time deposits and financial products and (ii) purchase of property and equipment of RMB883 million, partially offset by proceeds from maturity/sale and return of investments of RMB2,563 million. Net cash used in investing activities increased from RMB522 million in 2022 to RMB1,477 million in 2023, primarily due to (i) purchases of investments of RMB3,509 million mainly related to our purchase of time deposits and financial products and (ii) purchase of property and equipment of RMB894 million, partially offset by proceeds from maturity/sale and return of investments of RMB2,972 million. Financing Activities Our major financing activities since 2021 consist of loans with commercial banks, proceeds from our follow-on offering of ADSs in January 2023, payment of dividends, and share repurchases. We had net cash used in financing activities of RMB4,306 million (US$616 million) in 2025, primarily consisted of (i) dividends paid of RMB3,907 million, (ii) repayment of short-term debt of RMB2,272 million, (iii) repayment of long-term debt of RMB850 million, and (iv) payment of repurchases of ordinary shares of RMB783 million, partially offset by proceeds from short-term debt of RMB3,595 million. We had net cash used in financing activities of RMB5,504 million in 2024, primarily consisted of (i) dividends paid of RMB3,480 million, (ii) payment of repurchases of ordinary shares of RMB1,172 million and (iii) purchase of prepaid put option of RMB710 million. We had net cash used in financing activities of RMB3,720 million in 2023. Net cash used in financing activities in 2023 primarily consisted of repayment of short-term debt of RMB3,436 million and repayment of long-term debt of RMB2,336 million, partially offset by (i) net proceeds from issuance of ordinary shares of RMB1,973 million and (ii) proceeds from debt of RMB1,169 million. Capital Expenditure Our capital expenditures were incurred primarily in connection with leasehold improvements, investments in furniture, fixtures and equipment and technology, information and operational software. Our cash paid on capital expenditures totaled RMB901 million, RMB898 million and RMB838 million (US$120 million) in 2023, 2024 and 2025, respectively. Our capital expenditures in 2025 consisted of RMB828 million (US$119 million) in property and equipment and RMB10 million (US$1 million) in software and license. We will continue to make capital expenditures to meet the expected growth of our operations and expect our cash balance, cash generated from our operating activities and credit facilities will meet our capital expenditure needs in the foreseeable future. Transfer of Cash within Our Organization H World Group Limited is a holding company with no material operations of its own. H World Group Limited conducts its operations primarily through its subsidiaries in China and Europe. Under legacy Huazhu, H World Group Limited generally transfers cash to its Hong Kong or Singapore subsidiaries, by way of loans and capital contributions, and these Hong Kong or Singapore subsidiaries generally transfer cash to its PRC subsidiaries by making capital contributions or providing loans to them. H World Group Limited may also directly transfer cash to its PRC subsidiaries by making capital contributions or providing loans to them. These PRC subsidiaries generally transfer cash to the VIEs by loans or by making payment to the VIEs for inter-group transactions. These PRC subsidiaries generally transfer cash to these Hong Kong or Singapore subsidiaries by way of repayment of loans and dividends, and these PRC, Hong Kong or Singapore subsidiaries generally transfer cash to H World Group Limited through loans or repayment of loans. 108 Table of Contents To a lesser extent, H World Group Limited and its subsidiaries may transfer cash to entities of Deutsche Hospitality by way of loans, if needed. Except as disclosed in the table and discussion below, the VIEs have not distributed and do not currently have any plans to distribute any earnings or settle any amounts owed under the contractual agreements to our subsidiaries. The VIEs in aggregate contributed an insignificant portion (less than 1%) of our total retained earnings as of December 31, 2024 and 2025. The following table presents the cash flows among the Company, its subsidiaries and the VIEs for the fiscal years ended December 31, 2023, 2024 and 2025. ​ ​ ​ ​ ​ ​ ​ Cash transfer between our company, subsidiaries and VIEs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (RMB in millions) ​ ​ ​ ​ ​ ​ Cash flows between subsidiaries and VIEs 2023 2024 2025 Loans from subsidiaries to the VIEs under the contractual arrangement — 0 1 Cash receipts by the VIEs from subsidiaries for services 21 12 6 ​ ​ ​ ​ ​ ​ ​ ​ Cash flows between holding company and subsidiaries(1) ​ 2023 ​ 2024 ​ 2025 Loans to subsidiaries ​ (987) ​ (0) ​ (1,465) Repayment of loans by subsidiaries ​ 2,061 ​ 1,000 ​ 3,678 Loans from subsidiaries 2,574 2,553 2,608 Repayment of loans from subsidiaries (540) (457) (347) Dividend payment from subsidiaries — 19 — Note: (1) Includes overseas and PRC subsidiaries. For the years ended December 31, 2023, 2024 and 2025, ● our subsidiaries paid service fee totaled approximately RMB21 million, RMB12 million and RMB6 million (US$1 million), respectively, to the VIEs for telecommunication services and internet-related services provided to hotels; ● cash inflows of the VIEs were primarily provided via loan arrangements with our subsidiaries, our payment to the VIEs for inter-group transactions, and capital contributions of the nominee shareholders; ● cash was transferred from H World Group Limited to our subsidiaries primarily through shareholder loans. In these same respective periods, our subsidiaries borrowed approximately RMB987 million, nil and RMB1,465 million (US$209 million), respectively, from H World Group Limited, and our subsidiaries repaid a total of approximately RMB2,061 million, RMB1,000 million and RMB3,678 million (US$526 million) loans, respectively, to H World Group Limited; ● our subsidiaries provided RMB2,574 million, RMB2,553 million and RMB2,608 million (US$374 million) loans, respectively, to H World Group Limited, and H World Group Limited repaid approximately RMB540 million, RMB457 million and RMB347 million (US$50 million), respectively, to these subsidiaries for such loans; and ● our subsidiaries paid dividend of nil, RMB19 million and nil, respectively, to H World Group Limited. Other than the transfers described above, no assets were transferred among H World Group Limited, our subsidiaries, and the VIEs for the years ended December 31, 2023, 2024 and 2025. 109 Table of Contents Restrictions on Cash Transfers to Us H World Group Limited is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries in China and Europe. We face various restrictions and limitations on foreign exchange, our ability to transfer cash between entities, across borders and to U.S. investors, and our ability to distribute earnings from our subsidiaries and/or the VIEs, to us and holders of the ADSs as well as the ability to settle amounts owed under the contractual arrangements with the VIEs. If our subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Pursuant to laws applicable to entities incorporated in the PRC, our subsidiaries in the PRC must make appropriations from after-tax profit to non-distributable reserve funds. In particular, subject to certain cumulative limits, the statutory reserve fund requires an annual appropriation of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserve fund reaches 50% of a PRC subsidiary’s registered capital. These reserve funds can only be used for such specific purposes as provided in PRC laws and are not distributable as cash dividends. In addition, due to restrictions on the distribution of share capital from our PRC subsidiaries, the share capital of our PRC subsidiaries is considered restricted. As a result of these requirements under PRC laws and regulations, as of December 31, 2025, approximately RMB4,269 million (US$610 million) was not available for distribution to us by our PRC subsidiaries in the form of dividends, loans, or advances. Due to various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we and the VIEs may not be able to obtain the necessary regulatory approvals or complete the necessary regulatory registrations or other procedures on a timely basis, or at all, with respect to future loans by us to our PRC subsidiaries or the VIEs or with respect to future capital contributions by us to our PRC subsidiaries. These requirements may delay or prevent us from using our offshore funds to make loans or capital contribution to our PRC subsidiaries and the VIEs, and thus may restrict our ability to execute our business strategy, and materially and adversely affect our liquidity and our ability to fund and expand our business. In addition, uncertainties regarding the interpretation and implementation of the contractual arrangements with the VIEs could limit our ability to enforce such agreements. If the PRC authorities determine that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if current regulations change or are interpreted differently in the future, our ability to settle amounts owed by the VIEs under the VIE agreements may be seriously hindered. Furthermore, due to restrictions on foreign exchange placed on our PRC subsidiaries and the VIEs by the PRC regulators under PRC laws and regulations, to the extent cash is located in the PRC or within a PRC-domiciled entity and may need to be used to fund our operations outside of the PRC, the funds may not be available due to such limitations unless and until related approvals and registrations are obtained. Under regulations of the SAFE, the Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approvals and registrations of the SAFE and other competent PRC authorities are obtained. Dividends or Distributions to US Investors We consider making an ordinary dividend distribution semi-annually, the aggregate amount of which for each financial year shall be no less than 60% of our net income in such financial year. On November 29, 2023, our company declared a cash dividend of approximately US$300 million, including an ordinary dividend in the amount of approximately US$200 million and a special dividend in the amount of approximately US$100 million. On July 23, 2024, our company declared a cash dividend of approximately US$200 million. On March 20, 2025, our company declared a cash dividend of approximately US$300 million. On August 20, 2025, our company declared a cash dividend of approximately US$250 million. On March 18, 2026, our company declared a cash dividend of approximately US$400 million. H World Group Limited’s source of dividends has come primarily from dividends from our PRC subsidiaries. 110 Table of Contents Taxation on Dividends or Distributions The PRC Enterprise Income Tax Law and its implementing regulations (collectively “EIT Law”) provide that enterprises established outside of China whose “de facto management bodies” are located in China are considered resident enterprises. Currently, it is still unclear whether the PRC tax authorities would determine that we should be classified as a PRC resident enterprise. See “Item 10. Additional Information — E. Taxation — PRC Taxation.” The EIT Law imposes a withholding tax of 10% on dividends distributed by a PRC subsidiary to its immediate holding company outside of China, if such immediate holding company is considered a non-resident enterprise without any establishment or place of business within China or if the dividends received have no connection with the establishment or place of business of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential withholding tax rate. A holding company which is a tax resident in Hong Kong, for example, would be subject to a 5% withholding tax on dividends under the Tax Arrangement between the PRC central government and Hong Kong if the holding company is the beneficial owner of the dividends and holds more than 25% of the share capital of the PRC company. The EIT Law provides that PRC resident enterprises are generally subject to a uniform 25% enterprise income tax rate on their worldwide income. Therefore, if we are treated as a PRC resident enterprise, we will be subject to PRC income tax on our worldwide income at the 25% uniform tax rate, which could have an impact on our effective tax rate and an adverse effect on our net income and results of operations, although we may be exempted from enterprise income tax on dividends distributed from our directly or indirectly controlled non-PRC subsidiaries sourced from outside China, since such income received by PRC resident enterprise may be tax exempted subject to certain requirements and limitations under the EIT Law. Our German subsidiaries are permitted to pay dividends from their distributable profit as long as there are no agreements, such as debt covenants, that restrict such payments, in which regulations applying to limited liability companies (Gesellschaft mit beschränkter Haftung) have to be taken into account. Pursuant to the Law on Limited Liability Companies of Germany (Gesetz betreffend die Gesellschaften mit beschränkter Haftung), dividends are only payable out of profits. Typically, the directors of the relevant companies will recommend a particular rate of dividend and these subsidiaries will, in general meetings, declare the dividend subject to the maximum recommended by the directors. However, the general meetings are not bound by the directors’ recommendation. They may also declare a dividend exceeding the amount of the recommendation up to the amount of the total distributable profit of the company. In 2023, 2024 and 2025, RMB1,454 million, RMB3,787 million and RMB2,668 million were paid as dividends from our PRC subsidiaries to our Hong Kong and Singapore subsidiaries, respectively. In 2025, RMB182 million of PRC withholding tax was incurred as a result of our distribution of dividends. Except as disclosed under “—Transfer of Cash within Our Organization,” no other dividend or distribution was made by our offshore subsidiaries to our company in 2023, 2024 and 2025. As of December 31, 2025, we have accrued a PRC dividend withholding tax of RMB322 million on undistributed earnings, which we planned to distribute from our PRC subsidiaries to overseas subsidiaries. Other than these planned dividends distributions, we intend to indefinitely reinvest the remaining undistributed earnings of PRC subsidiaries, of which, no provision for PRC dividend withholding tax has been accrued. ​ 111 Table of Contents For purposes of illustration only, the following discussion reflects the hypothetical taxes that might be required to be paid in Mainland China, Hong Kong and Singapore, assuming that: (i) we have taxable earnings in the PRC subsidiaries/VIEs, and (ii) we determine to pay dividends with funds derived from our earnings in the PRC subsidiaries/VIEs in the future. The illustration below, presented by percentages, starts with pre-tax earnings of our PRC subsidiaries and VIEs and concludes with the percentage of that amount payable to our company as dividends. ​ ​ ​ ​ ​ ​ ​ ​ Taxation Scenario(1) ​ ​ Statutory Tax and ​ ​ ​ Standard Rates ​ Hypothetical pre-tax earnings in the PRC subsidiaries/VIEs ​ 100 % Tax on earnings at statutory rate of 25% at WFOE(2) level (25) % Amount to be distributed as dividend from WFOE(2) to Hong Kong or Singapore entities 75 % Withholding tax at standard rate of 10%(3) ​ (7.5) % Amount to be distributed as dividend at Hong Kong entities level/Singapore entities level and net distribution to H World Group Limited(4) 67.5 % Notes: (1) For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount is assumed to equal Chinese taxable income. (2) We use the term “WFOE” to refer to our wholly-owned subsidiary in the PRC that is the counterparty to the VIEs in our contractual arrangements with them. (3) The EIT Law imposes a withholding income tax of 10% on dividends distributed by a PRC subsidiary to its immediate holding company outside of Mainland China. A lower withholding income tax rate of 5% is applied if the immediate holding company is a Hong Kong or Singapore entity which is the beneficial owner of the dividends and holds more than 25% of the share capital of the PRC subsidiary. There is no incremental tax at Hong Kong or Singapore entities level for any dividend distribution to H World Group Limited. (4) If the treaty benefit is available and a 5% withholding income tax rate is imposed, the withholding tax would be 3.75% of the hypothetical book pre-tax earnings amount and the amount to be distributed as dividend at Hong Kong or Singapore entities level and net distribution to H World Group Limited would be 71.25%. Currently, it is still unclear whether the PRC tax authorities will determine that we should be classified as a PRC resident enterprise. If we are deemed to be a PRC resident enterprise by the PRC tax authorities, dividends paid to our non-PRC individual shareholders, including our ADS holders, and any gain realized on the transfer of ADSs or ordinary shares by such holders may be subject to PRC individual income tax at a rate of 20%, which in the case of dividends may be withheld at source. Any such tax may reduce the returns on your investment in the ADSs or ordinary shares. See “Item 3. Key Information—3D. Risk Factors—Risks Related to Doing Business in China—It is unclear whether we will be considered as a PRC resident enterprise under the Enterprise Income Tax Law of the PRC, and depending on the determination of our PRC resident enterprise status, if we are not treated as a PRC resident enterprise, dividends paid to us by our PRC subsidiaries will be subject to PRC withholding tax; if we are treated as a PRC resident enterprise, we may be subject to 25% PRC income tax on our worldwide income, and holders of our ADSs or ordinary shares that are non-PRC resident investors may be subject to PRC withholding tax on dividends on and gains realized on their transfer of our ADSs or ordinary shares.” 5.C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company — B. Business Overview — Technology Infrastructure and Digitalization” and “— Intellectual Property”. 112 Table of Contents 5.D. Trend Information Jizhu Shanghai is a recognized software development entity located in Shanghai of PRC. In December 2021, Jizhu Shanghai was qualified as high and new tech enterprise, resulting Jizhu Shanghai subject to a reduced tax rate of 15% in 2021, 2022 and 2023. In December 2024, Jizhu Shanghai was again qualified as a high and new tech enterprise, resulting Jizhu Shanghai being subject to a reduced tax rate of 15% in 2024, 2025 and 2026. In December 2022, Huazhu Cloud was qualified as high and new tech enterprise, resulting Huazhu Cloud subject to a reduced tax rate of 15% in 2022, 2023 and 2024. In December 2025, Huazhu Cloud was qualified as high and new tech enterprise, resulting Huazhu Cloud subject to a reduced tax rate of 15% in 2025, 2026 and 2027. Pursuant to the relevant regulations applicable to small and micro businesses, several PRC subsidiaries enjoy a preferential tax rate of 20% with a discount to taxable income. From January 1, 2023 to December 31, 2027, for taxable income less than RMB3 million, 75% of the taxable income would be exempted in tax computation. Entities qualified as small and micro businesses shall be engaged in industries not restricted or prohibited by the state, which also meet the following three conditions: annual taxable income does not exceed RMB3 million, no more than 300 employees, and the total assets does not exceed RMB50 million. The aggregate amount and per share effect of tax holidays were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ ​ (RMB) ​ ​ (In millions, except per share data) Aggregate amount 60 47 98 Per share effect—basic 0.02 0.02 0.03 Per share effect—diluted 0.02 0.02 0.03 ​ Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the current fiscal year that are reasonably likely to have a material adverse effect on our total revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 5.E. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. Our expectations regarding the future are based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Summary of Principal Accounting Policies.” Impairment of Goodwill and Brand Name Arising from the Acquisition of Deutsche Hospitality Brand names are generally considered to have indefinite useful lives which are obtained through business acquisitions and originally recorded at their estimated fair values at the date of acquisition. 113 Table of Contents Estimating the fair value of our goodwill reporting units and brand name for impairment testing require significant judgment. Brand name is evaluated for impairment using an income approach utilizing the relief from royalty method. The determination of the fair value using the discounted cash flow model requires our management to make significant estimates and assumptions related to projected hotels’ revenues and growth rates, projected operating cost, royalty saving rates and discount rates. The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections are consistent with our operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. For the year ended December 31, 2025, we performed a quantitative assessment of goodwill for legacy DH. No goodwill impairment charges were recorded as a result of the testing. The estimated fair value of goodwill for legacy DH exceeded the calculated carrying value by 70%. A 5% decline in projected cash flows or increase in the discount rate would not result in an impairment. We also performed quantitative impairment testing for a brand name for legacy DH. As of December 31, 2025, the estimated fair value of this brand name acquired in the DH acquisition was higher than its respective carrying value. Following an impairment of RMB391 million recognized in 2024, which reduced the carrying value by 16%, no impairment was recognized in 2025. The estimated fair value of this brand name acquired in the DH acquisition exceeded their carrying value by approximately 9%. A 5% increase in the discount rate or decrease in royalty saving rate would not result in impairments. ​