Huazhu Group Limited

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
☐           REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
☒           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2024
OR
☐           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from            to
OR
☐           SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 001-34656
H World Group Limited
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
CAYMAN ISLANDS
(Jurisdiction of incorporation or organization)
No. 1299 Fenghua Road
Jiading District
Shanghai 201803
People’s Republic of China
+86 (21) 6195-2011
(Address of principal executive offices)
Hui Chen
Chief Financial Officer
H World Group Limited
No. 1299 Fenghua Road
Jiading District
Shanghai 201803
People’s Republic of China
+86 (21) 6195-2011
cj-chenhui@hworld.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
    
Trading Symbol(s)
    
Name of Each Exchange on Which Registered
Ordinary Shares, par value US$0.00001 per share
1179
The Stock Exchange of Hong Kong Limited
American Depositary Shares, each representing
ten ordinary shares
HTHT
NASDAQ Global Select Market
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report: 3,083,916,600 Ordinary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒      No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Yes ☐      No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ☒      No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒      No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒                Accelerated filer ☐                Non-accelerated filer ☐
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of
the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒             U.S. GAAP
☐            International Financial Reporting Standards as issued by the International Accounting Standards Board
☐             Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow.
☐ Item 17                 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐      No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐      No ☐

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i
TABLE OF CONTENTS
    
Page
CERTAIN CONVENTIONS
1
PART I
4
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
4
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
4
ITEM 3. KEY INFORMATION
4
3.A. [Reserved]
11
3.B. Capitalization and Indebtedness
11
3.C. Reason for the Offer and Use of Proceeds
11
3.D. Risk Factors
12
ITEM 4. INFORMATION ON THE COMPANY
54
4.A. History and Development of the Company
54
4.B. Business Overview
55
4.C. Organizational Structure
85
4.D. Property, Plants and Equipment
88
ITEM 4A. UNRESOLVED STAFF COMMENTS
88
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
88
5.A. Operating Results
88
5.B. Liquidity and Capital Resources
104
5.C. Research and Development, Patents and Licenses, etc.
110
5.D. Trend Information
110
5.E. Critical Accounting Estimates
110
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
111
6.A. Directors and Senior Management
111
6.B. Compensation
114
6.C. Board Practices
117
6.D. Employees
119
6.E. Share Ownership
119
6.F. Disclosure of Action to Recover Erroneously Awarded Compensation
120
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
121
7.A. Major Shareholders
121
7.B. Related Party Transactions
121
7.C. Interests of Experts and Counsel
121
ITEM 8. FINANCIAL INFORMATION
122
8.A. Consolidated Statements and Other Financial Information
122
8.B. Significant Changes
123
ITEM 9. THE OFFER AND LISTING
123
9.A. Offering and Listing Details
123
9.B. Plan of Distribution
124
9.C. Markets
124
9.D. Selling Shareholders
124
9.E. Dilution
124
9.F. Expenses of the Issue
124
ITEM 10. ADDITIONAL INFORMATION
124
10.A. Share Capital
124
10.B. Memorandum and Articles of Association
124
10.C. Material Contracts
124
10.D. Exchange Controls
    
124
10.E. Taxation
124
10.F. Dividends and Paying Agents
135
10.G. Statement by Experts
135
10.H. Documents on Display
135
10.I. Subsidiary Information
135

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ii
10.J. Annual Report to Security Holders
135
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
136
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
136
12.A. Debt Securities
136
12.B. Warrants and Rights
136
12.C. Other Securities
137
12.D. American Depositary Shares
137
PART II
141
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
141
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
141
ITEM 15. CONTROLS AND PROCEDURES
141
ITEM 16. [Reserved]
142
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
142
ITEM 16B. CODE OF ETHICS
142
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
143
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
143
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
143
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
144
ITEM 16G. CORPORATE GOVERNANCE
144
ITEM 16H. MINE SAFETY DISCLOSURE
146
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
146
ITEM 16J. INSIDER TRADING POLICIES
146
ITEM 16K. CYBERSECURITY
147
PART III
148
ITEM 17. FINANCIAL STATEMENTS
148
ITEM 18. FINANCIAL STATEMENTS
148
ITEM 19. EXHIBITS
148

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CERTAIN CONVENTIONS
Unless otherwise indicated, all translations from U.S. dollars to RMB in this annual report were made at a rate of US$1.00 to RMB
7.2993, the exchange rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2024. No
representation is made that the RMB amounts referred to herein could have been or could be converted into U.S. dollars at any particular
rate or at all. On April 18, 2025, the exchange rate was US$1.00 to RMB 7.2996. Any discrepancies in any table between totals and sums
of the amounts listed are due to rounding.
Unless otherwise indicated, in this annual report,
●
“ADRs” are to the American depositary receipts that may evidence our ADSs;
●
“ADSs” are to our American depositary shares, each representing ten ordinary shares;
●
“China” or the “PRC” refers to the People’s Republic of China, excluding, for purposes of this annual report, Hong Kong,
Macau and Taiwan;
●
“Consolidated Affiliated Entities” are to Tianjin Jizhu, Shanghai Huanmei and its wholly owned subsidiary Huanmei Travel,
and Ningbo Futing, each of which is a Consolidated Affiliated Entity;
●
“Deutsche Hospitality” or “legacy DH” refers to Steigenberger Hotels GmbH (formerly known as Steigenberger Hotels
Aktiengesellschaft), a subsidiary of our company established under the laws of Germany on September 12, 1985, and its
subsidiaries;
●
“EUR” or “Euro” refers to the legal currency of European Union;
●
“HKD” refers to the legal currency of Hong Kong;
●
“Hong Kong” or “HK” refers to the Hong Kong Special Administrative Region of the PRC;
●
“Hong Kong Listing Rules” are to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited;
●
“Hong Kong Stock Exchange” is to The Stock Exchange of Hong Kong Limited;
●
“Huanmei Travel” is to Huanmei International Travel Agency (Shanghai) Co., Ltd.;
●
“leased hotels” are to leased-and-operated hotels;
●
“legacy Huazhu” refers to our company excluding Deutsche Hospitality;
●
“manachised hotels” are to franchised-and-managed hotels;
●
“Ningbo Futing” is to Ningbo Futing Enterprise Management Co., Ltd.;
●
“occupancy rate” refers to the number of rooms in use divided by the number of available rooms for a given period;
●
“RevPAR” refers to revenue per available room, calculated by room revenue during a period divided by the number of available
rooms of such hotel during the same period;
●
“ordinary shares” or “Shares” are to our ordinary shares, par value US$0.00001 per share;
●
“RMB” or “Renminbi” refers to the legal currency of China;

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2
●
“Shanghai Huanmei” is to Huanmei Information Technology (Shanghai) Co., Ltd.;
●
“Tianjin Jizhu” is to Tianjin Jizhu Information Technology Co., Ltd. (formerly known as Tianjin Mengguang Information
Technology Co., Ltd.);
●
“US$” and “U.S. dollars” are to the legal currency of the United States;
●
“VIEs” are to the Consolidated Affiliated Entities; and
●
“We,” “us,” “our company,” “our” and “Huazhu” are to H World Group Limited (formerly known as Huazhu Group Limited
and China Lodging Group, Limited), a Cayman Islands exempted company with limited liability, its predecessor entities and its
subsidiaries and, in the context of describing our operations and consolidated financial information, the VIEs.
When calculating the number of cities in China with our hotel network coverage in this annual report, we include the number of
municipalities, cities and counties with at least one hotel under our operation or under development.

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3
FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains forward-looking statements that are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this annual report,
including those regarding our future financial position, strategies, plans, objectives, goals and targets, future developments in the markets
where we participate or are seeking to participate and any statements preceded by, followed by or that include the words “aim,”
“anticipate,” “believe,” “could,” “estimate,” “expect,” “going forward,” “intend,” “may,” “ought to,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “will,” “would,” “vision,” “aspire,” “target,” “schedules,” “goal,” “outlook” and the negative of these words
and other similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Such
statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of
which may not materialize or may change. These statements are subject to certain known and unknown risks, uncertainties and
assumptions, including the risk factors as described in this annual report. You are strongly cautioned that reliance on any forward-looking
statements involves known and unknown risks and uncertainties. The risks and uncertainties facing us which could affect the accuracy of
forward-looking statements include, but are not limited to, the following:
●
our anticipated growth strategies, including developing new hotels at desirable locations in a timely and cost-effective manner
and launching a new hotel brand;
●
our future business development, results of operations and financial condition;
●
expected changes in our revenues and certain cost or expense items;
●
our ability to attract customers and leverage our brand;
●
trends and competition in the lodging industry;
●
the status of the relevant regulatory and legislative developments in the countries we operate; and
●
general economic, business and socio-political conditions globally, including recent Israel-Hamas military conflict and Russia-
Ukraine military conflict.
By their nature, certain disclosures relating to these and other risks are only estimates and should one or more of these uncertainties
or risks, among others, materialize, actual results may vary materially from those estimated, anticipated or projected, as well as from
historical results. Specifically but without limitation, sales could decrease, costs could increase, capital costs could increase, capital
investment could be delayed and anticipated improvements in performance might not be fully realized.
We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements
in conjunction with the risk factors disclosed in “Item 3. Key Information—3D. Risk Factors.” Other sections of this annual report
include additional factors that could adversely affect our business and financial performance. Moreover, we operate in an evolving
environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk
factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our
forward-looking statements by these cautionary statements.
You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
H World Group Limited is a holding company incorporated in the Cayman Islands. As a holding company, it has no material
operations of its own and conducts substantially all its operations through its subsidiaries. China is one of our major markets, and we also
have operations in other countries and areas including Europe, the Middle East and the Southeast Asia.
Permits and Permission Required from the PRC Authorities for Our Operations
We conduct our business in China through our subsidiaries, and for some businesses the direct holding of which is restricted by PRC
law, through the Consolidated Affiliated Entities, including the VIEs, which we are required to obtain certain permissions from the PRC
authorities. The PRC government has exercised, and may continue to exercise, substantial influence or control across sectors of the
Chinese economy. Our ability to operate in China may be undermined if our subsidiaries or the VIEs are not able to obtain or maintain
approvals to operate in China. The central or local governments could impose new, stricter regulations or interpretations of existing
regulations that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or
interpretations. As of the date of this annual report, we and the VIEs have received all requisite permits, approvals and certificates from
the PRC government authorities to conduct our business operations in China. However, given the uncertainties of interpretation and
implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot assure you that
relevant policies in this regard will not change in the future, and such change may require us or our subsidiaries or VIEs to obtain
additional licenses, permits, filings or approvals for conducting our business in the PRC. If we or our subsidiaries or VIEs do not receive
or maintain required permissions or approvals, or inadvertently conclude that such permissions or approvals are not required, we may be
subject to governmental investigations or enforcement actions, fines, penalties, suspension of operations, or be prohibited from engaging
in relevant business or conducting securities offering, and these risks could result in a material adverse change in our operations,
significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to
significantly decline in value or become worthless.
As advised by our PRC counsel, JunHe LLP, as of the date of this annual report, none of our PRC subsidiaries or VIEs are required
to obtain any further permission or approval from China Securities Regulatory Commission (the “CSRC”), Cyberspace Administration of
China (the “CAC”), or other PRC regulatory authorities to approve our contractual arrangements with the VIEs and their respective
shareholders other than the permissions related to certain businesses operated by the Consolidated Affiliated Entities, or the renewal of
the permission or approval we have already obtained (if applicable).
JunHe LLP is of the view that:
(a) pursuant to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial
Measures”) and its relevant notes and five supporting guidelines (each, “Supporting Guideline”), which came into effect on March 31,
2023, PRC-based companies that seek to offer and list securities in overseas markets, either through direct or indirect means, are required
to conduct relevant filings with the CSRC.
Furthermore, pursuant to the Circular on the Arrangements for the Filing-based Administration of Overseas Securities Offering and
Listing by Domestic Companies (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.

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5
As our company is considered as a Stock Enterprise, our PRC subsidiaries or the VIEs are not subject to immediate filing
requirements under the Trial Measures. However, in the event of our future re-financing in an overseas market (whether on Nasdaq,
Hong Kong Stock Exchange or in other overseas market), we will be subject to relevant filing requirements of the CSRC; and
(b) with respect to the regulatory requirements for cyber security and data protection, according to the Cybersecurity Review
Measures, which became effective in February 2022, a company is subject to cybersecurity review if it affects or may affect national
security and falls under any of the following circumstances: (i) it is a critical information infrastructure operator (“CIIO”), who purchases
network products and service, or (ii) it is a network platform operator who carries out data processing activities. In addition, any network
platform operator possessing over one million users’ individual information must apply for a cybersecurity review before listing abroad.
Relevant PRC regulatory authorities may also initiate cybersecurity review if they determine that certain network products, services, or
data processing activities affect or may affect national security.
As of the date of this annual report, none of our company, our subsidiaries or the VIEs has received any notice from the CAC or
other PRC regulatory authorities that identifies any of these entities as a CIIO under the Cybersecurity Review Measures or has been
required to go through a cybersecurity review by any PRC authorities. Also, none of our company, our subsidiaries or the VIEs has
received any notice from the CAC or other PRC regulatory authorities that investigate our data processing activities or accuses our data
processing activities affecting national security.
On July 7, 2022, the CAC issued the Measures for the Security Assessment of Data Cross-border Transfer, or the Security
Assessment Measures, which became effective on September 1, 2022. In accordance with the Security Assessment Measures, a data
processor should apply to the CAC for a data export security assessment under certain circumstances, including, among others, (i) where
a data processor provides important data abroad; (ii) where a critical information infrastructure operator or a data processor processing
personal information of over one million people provides personal information abroad; (iii) where a data processor has provided personal
information of 100,000 people or sensitive personal information of 10,000 people in total abroad since January 1 of the previous year;
and (iv) other circumstances prescribed by the CAC. Moreover, the Security Assessment Measures provide that for non-compliant cross-
border data transfers that had been carried out before this regulation came into effect, rectification must be completed within six months
from the effective date of the regulation. The said rectification includes, among others, a self-assessment on the risks of cross-border data
transmission. After the completion of rectification, the data processor should file an application with the CAC by submitting materials
including, (i) a declaration form; (ii) a self-assessment report on the risks of cross-border data transmission; (iii) the legal documents to
be concluded by the data processor and the overseas recipient; and (iv) other materials necessary for data export security assessment.
As of the date of this annual report, we have conducted the self-assessment on the risks of the cross-border data transfers involved in
our business operations pursuant to the regulation and have filed an assessment filing with the CAC within six months from the effective
date of the Security Assessment Measures. We have received the written decision from the CAC approving the cross-border data
transfers required for overseas hotel reservation.
On February 22, 2023, the CAC issued the Measures for the Standard Contract for Outbound Transfer of Personal Information,
which became effective on June 1, 2023. Pursuant to PRC law and such regulation, entering into a CAC-formulated standard contract
with the overseas data recipient is a pre-requisite for a data processor to transfer data abroad, if such data processor meets all the
following conditions: (i) it is not a CIIO; (ii) it processes personal information of fewer than one million individuals; (iii) it has
cumulatively transferred personal information of fewer than 100,000 individuals abroad since January 1 of the previous year; and (iv) it
has cumulatively transferred sensitive personal information of fewer than 10,000 individuals abroad since January 1 of the previous year.
Within ten (10) working days after the standard contract takes effect, the data processor should file the executed standard contract with
the CAC.

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6
On March 22, 2024, the CAC enacted the Provisions on Promoting and Regulating Cross-Border Data Flows (the “Cross-Border
Data Flows Provisions”), which replaced the trigger event of a data processor’s responsibility to apply for the data export security
assessment, submit the standard contract filing, or obtain the compliance certification under the Security Assessment Measures and the
Measures for the Standard Contract for Outbound Transfer of Personal Information, and further regulated that such responsibilities can
be exempted under certain circumstances, including, among others: (i) an individual’s information must be provided abroad for entering
into or performing a contract which the individual is a contracting party, such as for cross-border shopping, cross-border delivery, cross-
border remittance, cross-border payment, cross-border account opening, air ticket and hotel reservation, visa processing and examination
services; (ii) an employee’s information must be provided abroad for human resource management under the labor-relating rules and
regulations and a collective contract signed in accordance with the law; (iii) an individual’s information that must be provided abroad to
protect the safety of his/her life and property under emergency circumstances; and (iv) the cumulative number of the individuals’
information that a data processor (other than CIIO) transferred abroad in a year since January 1 is smaller than 100,000 individuals and
no sensitive personal information is included.
On September 24, 2024, the CAC formally issued the Administrative Regulations on Cyber Data Security (“Cyber Data Security
Regulations”), which became effective on January 1, 2025, stipulating that where network data handlers carry out network data
processing activities that affect or may affect national security, they should undergo a national security review in accordance with
relevant national regulations. The Cyber Data Security Regulations optimize regulations for cross-border data security management,
specifying conditions under which network data processors may provide personal information abroad in accordance with international
treaties or agreements. The regulations clarify that data not identified or publicly disclosed as important data by relevant regions or
departments need not undergo cross-border security assessments for important data. Further, the Cyber Data Security Regulations set
forth network data security protection requirements for network platform service providers, third-party product and service providers,
and other relevant entities.
As of the date of this annual report, we have conducted a personal information protection impact assessment on our cross-border
data transfer scenarios and concluded that the personal information export involved in hotel reservation scenarios can be exempted from
applying for the data export security assessment, submitting standard contract filing, and obtaining the compliance certification. This
exemption is justified as our cross-border data transfers are conducted for hotel reservations pursuant to contracts entered into with our
customers, which is explicitly recognized as an exempted scenario under the Cross-Border Data Flows Provisions.
There remains uncertainty as to how current or future relevant rules published by the CSRC and the CAC will be interpreted or
implemented, and the opinions summarized above are subject to new laws, rules and regulations and/or detailed implementations and
interpretations. In addition, PRC laws and regulations governing the conditions and the requirements of such approval are uncertain, and
the relevant regulatory authorities have broad discretion in interpreting these laws and regulations. Accordingly, the PRC regulatory
authorities may take a different view than what is described above. PRC regulatory authorities that regulate our business and other
participants in our industry may not agree that our corporate structure or any of the above contractual arrangements comply with PRC
licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the
future.
Furthermore, under current PRC laws, regulations and regulatory rules, our PRC subsidiaries or VIEs may be required to obtain
permissions from the CSRC and may be required to go through cybersecurity review by the CAC, in connection with any offering and
listing in an overseas market. If we fail to obtain the relevant approval or complete other review or filing procedures for any future
offshore offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities, which could include fines and
penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or
remittance of dividends by our subsidiaries in China, restrictions on or delays to our financing transactions offshore, or other actions that
could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the
trading price of our ADSs.
For more detailed information, see “—D. Risk Factors—Risks Related to Doing Business in China—Recent regulatory
developments in China may subject us to additional regulatory review and disclosure requirements, expose us to government influence,
or otherwise restrict or completely hinder our ability to offer securities and raise capital outside China, which could adversely affect our
business operations and cause the value of our securities to significantly decline or become worthless.”

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7
Risks and Uncertainties Relating to Doing Business in China
We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934 (the “Exchange Act”), and
as such we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S.
domestic issuers. Moreover, the information we are required to file with or furnish to the Securities and Exchange Commission (the
“SEC”) will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, as
a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate
governance matters that differ significantly from the Nasdaq corporate governance standards. These practices may afford less protection
to shareholders than they would enjoy if we complied fully with the Nasdaq corporate governance standards.
We face various legal and operational risks and uncertainties as China is one of our major markets. We are subject to risks arising
from the uncertainty in the interpretation and the enforcement of the PRC laws and regulations. In addition, rules and regulations in
China can change quickly with little advance notice. In recent years, Chinese regulators have announced regulatory actions targeting
certain sectors of China’s economy, including cracking down on illegal activities in the securities market, enhancing supervision over
China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, adopting new laws and
regulations related to data security, and expanding the efforts in anti-monopoly enforcement. Although the lodging industry does not
appear to be the focus of these regulatory actions, we cannot guarantee that the Chinese regulators will not in the future take regulatory
actions that materially adversely affect the business environment and financial markets in China as they relate to us, our ability to operate
our business, our liquidity and our access to capital. Moreover, recent statements made by the Chinese government have indicated an
intent to increase the government’s oversight and control over offerings of companies with significant operations in the PRC that are to
be conducted in foreign markets, and the PRC regulatory authorities may intervene or influence our operations at any time, which could
result in a material change in our operations or the value of our ADSs. Any actions by the PRC regulatory authorities to exert more
oversight and control over offerings that are conducted overseas could significantly limit or completely hinder our ability to offer or
continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Our Holding Company Structure and Operations in China
Holders of our ADSs do not hold equity interest in our operating subsidiaries or the Consolidated Affiliated Entities, but instead hold
equity interest in H World Group Limited, a Cayman Islands holding company whose consolidated financial results include those of the
Consolidated Affiliated Entities under U.S. GAAP. Our securities that are listed on the NASDAQ Global Select Market and the Hong
Kong Stock Exchange are securities of our Cayman Islands holding company, not of our operating subsidiaries or the VIEs.
H World Group Limited is a Cayman Islands holding company that conducts its business primarily through its subsidiaries, a
majority of which are based in China and Europe, and for some businesses (including internet-based and international travel agency
businesses), the direct holding of which is restricted by PRC law, through the Consolidated Affiliated Entities. Neither H World Group
Limited nor its subsidiaries directly own any equity interest in the Consolidated Affiliated Entities. Instead, H World Group Limited
relies on contractual arrangements among one of its PRC subsidiaries, the Consolidated Affiliated Entities and the Consolidated
Affiliated Entities’ respective nominee shareholders, which allow H World Group Limited, to the extent permitted by PRC law, to:
(i)
direct the activities of the Consolidated Affiliated Entities that most significantly impact the Consolidated Affiliated Entities’
economic performance;
(ii) receive substantially all of the economic benefits of the Consolidated Affiliated Entities; and
(iii) have an exclusive option to purchase all or part of the equity interests in the Consolidated Affiliated Entities.
As a result of these arrangements, we have control over and are the primary beneficiary of the VIEs (composed of the Consolidated
Affiliated Entities) for accounting purposes and, therefore, we 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 subject to conditions for consolidation of, the VIEs under U.S. GAAP.

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The contractual arrangements underlying our VIE model, including our arrangements with the Consolidated Affiliated Entities, have
not been tested in court. However, the Special Administrative Measures for Access of Foreign Investment, or the Negative List (2024
Edition) (as issued by the National Development and Reform Commission, or the NDRC, and the Ministry of Commerce, or MOFCOM,
and amended from time to time), and other applicable PRC laws and regulations (including the Regulations on Travel Agencies (Revised
in 2020)), prohibit direct foreign investment in certain international travel agency businesses and restrict direct foreign investment in
certain internet-based businesses. Due to these regulatory restrictions on direct foreign investment, we conduct relevant operations
through contractual arrangements with the Consolidated Affiliated Entities, which hold the licenses, permits and approvals that are
necessary for operating relevant restricted businesses in the PRC.
The financial impacts of these VIEs were immaterial to our historical consolidated financial statements. The VIEs in aggregate
contributed an insignificant portion (less than 1%) of our total revenues and total net profit (loss) in each of the fiscal years ended
December 31, 2022, 2023 and 2024 and the impact of the VIEs to our consolidated balance sheets as of December 31, 2022, 2023 and
2024 were also immaterial (in aggregate contributing less than 1% of our total assets as of these respective dates). If the PRC regulatory
authorities deem that any of our business operations carried out through the VIEs do not comply with PRC regulatory restrictions,
especially the restrictions on foreign investment in the relevant industries, or if the relevant regulations or their interpretation change in
the future, the PRC regulatory authorities could disallow this structure, which could result in us being subject to penalties or being forced
to relinquish its interests in the affected operations. Additionally, potential future actions by the PRC regulatory authorities could affect
the legality and enforceability of the contractual arrangements underlying the VIE model, which, consequently, would affect our ability
to consolidate the financial results of the VIEs. If any of these happens, there would likely be changes in our operations and/or changes in
the value of the securities of the investors. In the worst circumstances, if the contribution from VIEs becomes significant to our
operations and the VIE model does not comply with PRC laws and regulations, such changes could cause the value of our securities to
significantly decline or become worthless. For more information, see “—D. Risk Factors—Risks Related to Our Corporate Structure”
below in this annual report.
For our corporate structure as of the date of this annual report, including our significant subsidiaries and the VIEs, see “Item 4.
Information on the Company—4.C. Organizational Structure” below in this annual report.
Recent Regulatory Developments
Cyber Security Review and Data Privacy Regulations
The PRC regulatory authorities have promulgated, among others, the Personal Information Protection Law of the PRC, the Data
Security Law of the PRC and the Draft Amendment to Cyber Security Law of the PRC for public comments to ensure cybersecurity, data
and personal information protection. These new laws, as well as other proposed regulations, demonstrate that relevant laws and
regulations governing these areas are developing along with the enforced and constantly tightening of relevant regulatory supervision.
The State Council of the PRC promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure on
July 30, 2021, which took effect on September 1, 2021. This regulation requires, among other things, that certain competent authorities
identify and protect critical information infrastructures. The CAC and a number of other departments under the State Council
promulgated the Cybersecurity Review Measures on December 28, 2021, which became effective on February 15, 2022. According to
this regulation, critical information infrastructure operators purchasing network products and services and network platform operators
carrying out data processing activities, which affect or may affect national security, are required to conduct cybersecurity review. On July
7, 2022, the CAC issued the Security Assessment Measures, which became effective on September 1, 2022 and require a data processor
to apply to the CAC for a data export security assessment under certain circumstances. On February 22, 2023, the CAC issued the
Measures for the Standard Contract for Outbound Transfer of Personal Information, which requires a data processor to enter into
standard contracts under certain circumstances. On March 22, 2024, the CAC issued the Cross-Border Data Flows Provisions, which
further regulates that the responsibility to apply for data export security assessments, submit standard contract, or obtain compliance
certifications can be exempted under certain circumstances. See “—Permits and Permission Required from the PRC Authorities for Our
Operations” above in this annual report for more information.

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On September 1, 2021, the Data Security Law of the PRC became effective, which imposes data security and privacy obligations on
entities and individuals conducting data-related activities, and introduces a data classification and hierarchical protection system. In
addition, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law of the PRC
(the “PIPL”) on August 20, 2021, and this law took effect on November 1, 2021. The PIPL further emphasizes processors’ obligations
and responsibilities for personal information protection and sets out the basic rules for processing personal information and the rules for
cross-border provision of personal information. Furthermore, the Cyberspace Administration of China promulgated the Draft
Amendment to Cyber Security Law (the “CSL”) for public comments on March 28, 2025. The proposed amendments of CSL imposed
more severe and comprehensive fines and other penalties for offences under CSL, among others, the persons directly in charge and other
directly liable persons of a company that is in violation of the CSL and causes particularly serious consequences may be fined up to
RMB 1 million. On September 24, 2024, the CAC formally issued the Cyber Data Security Regulations, which became effective on
January 1, 2025, stipulating that where network data handlers carry out network data processing activities that affect or may affect
national security, they should undergo a national security review in accordance with relevant national regulations. The Cyber Data
Security Regulations optimize regulations for cross-border data security management, specifying conditions under which network data
processors may provide personal information abroad in accordance with international treaties or agreements. The regulations clarify that
data not identified or publicly disclosed as important data by relevant regions or departments need not undergo cross-border security
assessments for important data. Further, the Cyber Data Security Regulations set forth network data security protection requirements for
network platform service providers, third-party product and service providers, and other relevant entities.
There are uncertainties as to the interpretation and application of these cybersecurity and data privacy laws, regulations and
standards, and they may be interpreted and applied in a manner that is inconsistent with our current policies and practices or require
changes to the features of our data systems. If the CAC or other regulatory agencies later deem us to be a CIIO and require that we obtain
their approvals for our future offshore offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such
approvals may be rescinded even if obtained. Any such circumstance could significantly limit or completely hinder our ability to
continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless. In addition,
implementation of industry-wide regulations affecting our business operations could limit our ability to attract new customers and/or
users and cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential
uncertainties from actions taken by the PRC regulatory authorities affecting our business.
Potential CSRC Filings on Overseas Listing
On February 17, 2023, the CSRC promulgated 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.
The Trial Measures does not only govern initial public offerings (the “IPOs”), but also governs spin-off listings, single or multiple
acquisitions of domestic assets, share swaps or transfer of shares, reverse takeovers, SPAC listings, subsequent issuances of securities,
secondary listings or dual listing, etc. In addition to offering and listing of shares, offering and listing of depository receipts, corporate
bonds convertible to shares, and other equity securities by PRC-based companies shall also be subject to the filing requirements under
the Trial Measures.
The Trial Measures and Supporting Guidelines require PRC-based companies that seek overseas offerings and listings to fulfill the
filing procedures with and report relevant information to the CSRC, specifically: (a) for an IPO, the filing with CSRC shall be conducted
within three (3) working days following the submission of the application; (b) for a subsequent issuance of securities, the filing shall be
conducted within three (3) working days following the completion of the offering; (c) for the listings in other stock markets (e.g.
secondary listings or dual listings), the same filing timeline applied to an IPO shall apply; (d) for the listing of assets via multiple
acquisitions, share swaps, transfers of shares (e.g. reverse takeover), the same filing timeline applied to an IPO shall apply; (e) for the
unlisted shares of PRC Companies applying for conversion to listed shares trading on overseas market, the filings shall be conducted
pursuant to the other regulations.

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Furthermore, an overseas offering and listing would be prohibited under the following circumstances: (a) it is explicitly prohibited
under applicable laws and administrative regulations; (b) there exists national security concerns as reviewed and determined by
competent authorities under the State Council; (c) a crime has been committed by the issuer’s PRC-based company, its controlling
shareholder(s) or actual shareholder(s) in the last three (3) years (e.g. corruption, bribery, embezzlement, misappropriation of property or
undermining the market economy orders); (d) the issuer’s PRC-based company is under investigations for criminal acts or major
violations of applicable laws and regulations, and no conclusion of the investigation has yet been made; and (e) there exists material
ownership disputes over equity interests held by controlling shareholders (or by shareholders who are controlled by the controlling
shareholder or actual controllers). If there exists any of the aforementioned circumstances, the overseas offerings and listings shall be
postponed or even terminated.
Specifically, if an issuer adopts a VIE structure for the purpose of overseas offering and listing, it shall disclose relevant contractual
arrangements to the CSRC through fillings. The Supporting Guidance also provides that PRC counsel needs to verify the following
issues, including (i) the participation of foreign investors in the issuer management operation, for example, the appointment of directors;
(ii) whether there exist situations where PRC laws and administrative regulations expressly prohibit the use of contractual arrangements
to retain business licenses and qualifications, etc.; (iii) whether there exist situations where the PRC operating entity of the issuer falls
under the scope of foreign investment security review, or within the restricted or prohibited sectors of foreign investment.
Despite the foregoing, pursuant to the Trial Measures Circular, companies that have already offered shares or been listed overseas
prior to the implementation of the Trial Measures will be considered as “Stock Enterprises”. Stock Enterprises are not required to apply
for filings until a subsequent re-financing event occurs.
As our company is considered as a Stock Enterprise, our PRC subsidiaries and the VIEs are not subject to the immediate filing
requirements under the Trial Measures. However, in the events of any re-financing in the future, such as subsequent share issuance, our
company will be subject to the relevant filing requirements pursuant to the Trial Measures.
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 (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. The Confidentiality and Archives Provisions further
require that (a) a domestic enterprise that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or
provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any
documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent
authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic enterprise that
plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities
including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked,
will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national
regulations.
As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the
CSRC or the CAC. Because these regulatory actions are relatively new, it is uncertain how soon legislative or regulatory bodies will
respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if
any, or the potential impact such modified or new laws and regulations will have on our daily business operation, our ability to accept
foreign investments and listing on a U.S. or other overseas exchanges. PRC laws and their interpretations and enforcement continue to
develop and are subject to change, and the PRC regulators may adopt other rules and restrictions in the future. See “—D. Risk Factors—
Risks Related to Doing Business in China” below for more details.

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The Holding Foreign Companies Accountable Act
Our financial statements contained in this annual report have been audited by Deloitte Touche Tohmatsu Certified Public
Accountants LLP, an independent registered public accounting firm that is headquartered in Shanghai, China with offices in other cities
in China. It is a firm registered with the U.S. Public Company Accounting Oversight Board, or PCAOB, and is required by the laws of
the U.S. to undergo regular inspections by the PCAOB to assess its compliance with the laws of the U.S. and professional standards.
According to Article 177 of the PRC Securities Law, which became effective in March 2020, the securities regulatory authority of the
State Council may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to
implement cross-border supervision and administration, or the Regulatory Cooperation Mechanism; no overseas securities regulator is
allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without a
Regulatory Cooperation Mechanism or the consent of the competent PRC securities regulators and relevant authorities, no organization
or individual may provide the documents and materials relating to securities business activities to overseas parties.
The United States adopted the Holding Foreign Companies Accountable Act on December 18, 2020, and it was amended by the
Consolidated Appropriations Act, 2023 in December 2022 (the amended act hereinafter referred to as the “HFCA Act”). The HFCA Act
states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject
to inspection by the PCAOB for two consecutive years, the SEC shall prohibit such securities from being traded on a national securities
exchange or in the over the counter trading market in the U.S. Pursuant to amendments made to the HFCA Act in 2022, the PCAOB may
determine that it is unable to inspect or investigate completely registered public accounting firms in any foreign jurisdictions because of
positions taken by any foreign authority, rather than an authority in the location in which the firms are headquartered or in which they
have a branch or office, as was the case under the original version of the Act. The SEC has adopted rules to implement the HFCA Act
and, pursuant to the HFCA Act, the PCAOB issued a report notifying the SEC of its determinations on December 16, 2021 that it was
unable to inspect or investigation completely accounting firms headquartered in mainland China or Hong Kong, including our auditor
Deloitte Touche Tohmatsu Certified Public Accountants LLP. We were also conclusively identified as a “Commission-Identified Issuer”
under the HFCA Act on May 26, 2022 in respect of our Annual Report for 2021 on Form 20-F filed on April 27, 2022.
On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking a
first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in Mainland
China and Hong Kong. On December 15, 2022, the PCAOB announced its determination that it has been able to inspect and investigate
audit firms in mainland China and Hong Kong completely for purposes of the HFCA Act, and the PCAOB vacated its December 16,
2021 determinations. As a result of this announcement, we were not for the fiscal year of 2022 or 2023, and do not expect to be for the
fiscal year of 2024 a Commission-Identified Issuer in respect of our annual report on Form 20-F. However, the PCAOB stated that should
PRC authorities obstruct the PCAOB’s ability to inspect or investigate completely in any way and at any point in the future, the PCAOB
Board will act immediately to consider the need to issue new determinations consistent with the HFCA Act. While we currently do not
expect the HFCA Act to prevent us from maintaining the trading of our ADSs in the U.S., uncertainties exist with respect to future
determinations of the PCAOB in this respect and any further legislative or regulatory actions to be taken by the U.S. or Chinese
regulatory authorities that could affect our listing status in the U.S.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
See “—D. Risk Factors—Risks Related to Doing Business in China—If the PCAOB is unable to inspect our auditors as required under
the HFCA Act, the SEC will prohibit the trading of our ADSs, which may materially and adversely affect the value of your investment”
in this annual report for more details.
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable.
3.C. Reason for the Offer and Use of Proceeds
Not applicable.

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3.D. Risk Factors
An investment in our ADSs involves risks. You should carefully consider the risks described below, as well as the other information
included or incorporated by reference in this annual report, before making an investment decision. Our business, financial condition or
results of operations could be materially adversely affected by any of these risks. The market or trading price of our ADSs could decline
due to any of these risks, and you may lose all or part of your investment. In addition, the risks discussed below also include forward-
looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. Please note
that additional risks not presently known to us, that we currently deem immaterial or that we have not anticipated may also impair our
business and operations.
Risk Factor Summary
Risks Related to Our Business
●
Our operating results are subject to conditions affecting the lodging industry in general;
●
Our business is sensitive to Chinese, European, Middle Eastern, Southeast Asian and global economic conditions. A severe or
prolonged downturn in the Chinese, European, Middle Eastern, Southeast Asian or global economy could materially and
adversely affect our revenues and results of operations;
●
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;
●
Seasonality of our business and national or regional special events may cause fluctuations in our revenues, cause our ADS or
ordinary share price to decline, and adversely affect our profitability;
●
We may not be able to manage our planned growth, which could adversely affect our operating results;
●
Failure to comply with data protection laws or maintain the integrity of internal or customer data could result in harm to our
reputation or subject us to costs, liabilities, fines or lawsuits; and
●
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.
Risks Related to Doing Business in China
●
We are subject to many of the economic and political risks associated with emerging markets due to our operations in China;
●
Inflation in China may disrupt our business and have an adverse effect on our financial condition and results of operations;
●
Developments in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to
you and us;
●
Recent regulatory developments in China may subject us to additional regulatory review and disclosure requirements, expose us
to government influence, or otherwise restrict or completely hinder our ability to offer securities and raise capital outside China,
which could adversely affect our business operations and cause the value of our securities to significantly decline or become
worthless; and
●
If the PCAOB is unable to inspect our auditors as required under the HFCA Act, the SEC will prohibit the trading of our ADSs,
which may materially and adversely affect the value of your investment.

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Risks Related to Our Corporate Structure
●
H World Group Limited is a Cayman Islands holding company. As a result, you may experience difficulties in effecting service
of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws;
●
Revenue and assets contributions from the Consolidated Affiliated Entities have not been material. Nonetheless, if the PRC
regulatory authorities deem that the contractual arrangements in relation to the Consolidated Affiliated Entities do not comply
with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of
existing regulations change in the future, our ordinary shares and ADSs may decline in value if we are unable to assert our
contractual control rights over the assets of the Consolidated Affiliated Entities;
●
We rely in part on contractual arrangements with each of the Consolidated Affiliated Entities and their respective nominee
shareholders to operate certain restricted business. These contractual arrangements may not be as effective as direct ownership
in providing operational control and otherwise have a material adverse effect as to our business;
●
If we exercise the option to acquire equity ownership of the Consolidated Affiliated Entities, the ownership transfer may subject
us to certain limitations and substantial costs;
●
The nominee shareholders of the Consolidated Affiliated Entities may have potential conflicts of interest with us, which may
materially and adversely affect our business and financial condition;
●
If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their
responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected;
and
●
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.
Risks Related to Our ADSs, Ordinary Shares and Our Trading Market
●
The market prices for our ADSs and/or ordinary shares have been and may continue to be volatile;
●
An active trading market for our ordinary shares on the Hong Kong Stock Exchange might not be sustained, and trading prices
of our ordinary shares might fluctuate significantly;
●
If securities or industry analysts do not continue to publish research or if they publish inaccurate or unfavorable research about
our business, the market prices and trading volume for our ADSs and/or ordinary shares could decline;
●
Techniques employed by short sellers may drive down the market prices of the ADSs and/or ordinary shares;
●
We may need additional capital, and the sale of additional ADSs, ordinary shares or other equity securities could result in
additional dilution to our shareholders, and the incurrence of additional indebtedness could increase our debt service
obligations;
●
As our founder and co-founders collectively hold a controlling interest in us, they have significant influence over our
management and their interests may not be aligned with our interests or the interests of our other shareholders; and
●
There is uncertainty as to whether Hong Kong stamp duty will apply to the trading or conversion of our ADSs.

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14
Risks Related to Our Business
Our operating results are subject to conditions affecting the lodging industry in general.
Our operating results are subject to conditions typically affecting the lodging industry, which include:
●
changes and volatility in national, regional and local economic conditions in China, Europe, the Middle East, the Southeast
Asia, and other countries and regions where we operate;
●
competition from other hotels, the attractiveness of our hotels to customers, and our ability to maintain and increase sales to
existing customers and attract new customers;
●
adverse weather conditions, natural disasters or travelers’ fears of exposure to contagious diseases and social unrest;
●
changes in travel patterns or in the desirability of particular locations;
●
increases in operating costs and expenses due to inflation and other factors;
●
local market conditions such as an oversupply of, or a reduction in demand for, hotel rooms;
●
the quality and performance of managers and other employees of our hotels;
●
the availability and cost of capital to fund construction and renovation of, and make other investments in, our hotels;
●
seasonality of the lodging business and national or regional special events;
●
the possibility that leased properties may be subject to challenges as to their compliance with the relevant government
regulations; and
●
maintenance and infringement of our intellectual property.
Changes in any of these conditions could adversely affect our occupancy rates, average daily room rates and RevPAR, or otherwise
adversely affect our results of operations and financial condition.
Our business is sensitive to Chinese, European, Middle Eastern, Southeast Asian and global economic conditions. A severe or
prolonged downturn in the Chinese, European, Middle Eastern, Southeast Asian or global economy could materially and adversely
affect our revenues and results of operations.
China is one of our major markets, and we also have operations in other countries and areas including Europe, the Middle East and
the Southeast Asia. We depend on domestic business and leisure travel customers in China for a significant majority of our revenues, and
we also derive a relatively large portion of our revenues from Europe following our acquisition of Deutsche Hospitality in 2020. Our
operations have expanded to the Middle East and the Southeast Asia. Accordingly, our financial results have been, and we expect will
continue to be, affected by developments in the economies and travel industries primarily of China, as well as those of Europe, the
Middle East and the Southeast Asia.
As the travel industry is highly sensitive to business and personal discretionary spending levels, it tends to decline during general
economic downturns. A prolonged slowdown in the Chinese economy could erode consumer confidence which could result in changes to
consumer spending patterns for travel and lodging-related products and services. The European hotel industry is also significantly
affected by European countries’ economic growth. While the European hotel industry demonstrated stable growth from 2015 to 2019, its
growth rate slowed down from 2020 to 2021 due to the impact of COVID-19 and gradually recovered since early 2022.

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The global financial markets experienced significant disruptions from time to time. In addition, conflicts between the United States
and China have extended to multiple areas, which could place further pressure on China’s economic growth. For example, the U.S.
government imposed economic and trade sanctions directly or indirectly affecting China-based technology companies. Such laws and
regulations are likely subject to frequent changes, and their interpretation and enforcement involve substantial uncertainties, which may
be heightened by national security concerns or driven by political and/or other factors that are out of our control. Recently, the United
States has, through several rounds of increases, imposed higher tariffs on a wide range of goods imported from multiple countries. The
tariff increases on goods from China are particularly high, with most goods subject to tariffs of 145% since April 9, 2025. China
responded to the U.S. actions with retaliatory tariffs on most U.S. goods of 125% from April 12, 2025; China also implemented export
restrictions on certain critical minerals and related products. These tariffs and other trade restrictions are expected to reduce trade
volumes, cross-border investment, technological exchange, and other economic activities between major economies, and have a material
adverse effect on global economic conditions and the stability of global financial and stock markets. Moreover, the heightened
geopolitical uncertainty and potential for further escalation may discourage investments in securities issued by China-based issuers
(including us) and affect the global macroeconomic environment. Although cross-border trade is not our principal business, these types
of geopolitical developments could materially and adversely affect our overall financial performance and the market prices of our ADSs
and ordinary shares. For example, some of our franchisees work in industries that are relatively more vulnerable to heightened tariffs,
such as manufacturing, and the escalated trade war might have a material adverse effect on their business and cash flow, thereby
weakening potential franchisees’ willingness to entering into franchise agreements with us or existing franchisees’ ability to invest in the
maintenance and operation of our hotels.
Legislative or administrative actions in respect of Sino-U.S. relations could increase investor caution towards affected issuers,
including us, and the market price of our ordinary shares and ADSs could be adversely affected. For example, the SEC has issued
statements primarily focused on companies with significant China-based operations, such as us. In addition, beginning in December
2020, the United States imposed sanctions on certain Chinese companies that prohibit U.S. persons from buying or selling the publicly
traded securities of these companies as well as securities that are derivatives of or provide investment exposure to these companies. The
implementation of these restrictions forced the delisting of those sanctioned issuers that were then listed on U.S. exchanges. The U.S.
government designated these companies as “China Military-Industrial Complex Companies,” or CMIC Companies, based on their
purported links to the Chinese military or Chinese military infrastructure or capabilities. Furthermore, during a recent television
interview, in response to a journalist’s question on whether the U.S. government could include possible delistings of Chinese companies
from U.S. exchanges as a possible step the U.S. could take in its ongoing trade disputes from China, U.S. Secretary of Treasury, Scott
Bessent, declined to exclude this possibility. If the U.S. government were to issue any order or otherwise require or cause the delisting of
equity securities issued by China-based issuers, it could have a material adverse effect on the price of our ADSs. If our ADSs were to be
delisted from the Nasdaq, we may be unable to readily obtain a listing on another stock exchange, and our shareholders may suffer losses
or be unable to trade our securities as a result. All of these events have introduced uncertainties to the geopolitical situations and the
global economic outlook. Furthermore, rather than just delisting our securities from the Nasdaq, the U.S. government could implement
sanctions, such as those applicable to CMIC Companies, which apply to U.S. persons globally, which could even more significantly
affect our shareholders, in particular U.S. persons, and the market price of our securities, including our Hong Kong Stock Exchange-
listed ordinary shares.
Separately, we may also be subject to review and enforcement under domestic and foreign laws that screen foreign investment and
acquisitions. In both the United States and non-U.S. jurisdictions, these regulatory requirements may treat companies differently based
on the type of company in question and the location and nature of its operations. As a result of these laws and regulations, investments by
particular investors may need to be filed with local regulators, which in turn may impose added costs on our business, impact our
operations, and limit our ability to engage in strategic transactions that might otherwise be beneficial to us and our investors. These laws
are also frequently changed and updated. For example, in October 2024, the U.S. Department of the Treasury issued a final rule (the
“Outbound Investment Rule”), which imposes a new national security regulatory framework to control outbound investment from the
United States in certain sensitive industry sectors in the China, including Hong Kong and Macau. The Outbound Investment Rule took
effect in January 2025, and it restricts U.S. persons’ direct and indirect investment into companies with specified connections to China
that engage in specified “covered activities” within three areas of technology: semiconductors and microelectronics, quantum
information technologies, and artificial intelligence systems. Subsequent to the effectiveness of the Outbound Investment Rule, on
February 20, 2025, President Trump issued the America First Trade Policy Memorandum, which proposes possible expansion of the set
of technologies of concern and a review of exceptions to the Rule, possibly including changes to the existing exception for publicly
trades securities. These rules, including any changes to them that may be adopted, may limit our ability to engage in certain kinds of
business operations; they may also limit our ability to raise capital from U.S. and other sources if we engage in the development of
technologies specified in these rules. Continuing changes in both U.S. and non-U.S. jurisdictions to foreign investment laws and rules
could adversely affect our strategic initiatives, financial performance, and growth prospects.

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There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted
by China. On the other hand, after a sustained period of low interest rates, interest rates have risen significantly in the U.S. and Europe
since 2022. The combination of rising interest rates and inflation has resulted in significant market volatility and economic uncertainty.
There have also been concerns over unrest in the Middle East and Africa, which have resulted in significant market volatility, and
over the possibility of a war involving Iran or North Korea. Furthermore, eruptions of regional tensions, such as the ongoing military
conflicts involving Israel and Palestine, Ukraine and Russia, and the related sanctions against Russia have resulted in major economic
shocks worldwide and substantial volatility across global financial markets. Moreover, there have been concerns about the economic
effect of the earthquake, tsunami and nuclear crisis in Japan and the tensions between Japan and its neighboring countries and about the
uncertainties of growth in economies in the Southeast Asia. Economic conditions in China, Europe and the Middle East and the
Southeast Asia are sensitive to global economic conditions.
It is unclear whether the above challenges will be contained or resolved and what effects they may have. Any prolonged slowdown
in the Chinese, European, Middle Eastern, Southeast Asian or global economy may have a negative impact on our business, results of
operations and financial condition, and continued turbulence in the international markets may adversely affect our ability to access the
capital markets to meet liquidity needs.
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.
The lodging industries in China, Europe, the Middle East, Southeast Asia and other countries and regions where we operate, are
highly fragmented. 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 groups 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
Marriott, Intercontinental, Accor and Hilton. We also face competitions from lodging products offered on platforms such as Airbnb and
service apartments. New and existing competitors may offer more competitive rates, greater convenience, services, or amenities or
superior facilities, which could attract customers away from our hotels and result in a decrease in occupancy rates and average daily
room rates of our hotels. Competitors may also outbid us for new leased hotel conversion sites, negotiate better terms for potential
manachised or franchised hotels, or offer better terms to our existing franchisees in connection with our manachised or franchised hotels,
thereby slowing our anticipated pace of expansion. Furthermore, our typical guests may change their travel, spending and consumption
patterns and choose to stay in other kinds of hotels, especially given the increase in our hotel room rates to keep pace with inflation. Even
if our peers cannot outcompete us, any increasing supply of hospitality assets in the areas we operate could negatively affect our
operational and financial results. Any of these factors may have an adverse effect on our competitive position, results of operations and
financial condition.
Seasonality of our business and national or regional special events may cause fluctuations in our revenues, cause our ADS or
ordinary share price to decline, and adversely affect our profitability.
The lodging industry is subject to fluctuations in revenues due to seasonality and national or regional special events. The seasonality
of our business may cause fluctuations in our quarterly operating results. Generally, the first quarter, in which both the New Year and
Spring Festival holidays fall, accounts for a lower percentage of our annual revenues than other quarters of the year. Our hotels in China
typically have a lower RevPAR in the fourth quarter, as compared to the second and third quarters, due to reduced travel activities in
winter, though some of our European hotels may recognize higher sales in the fourth quarter as a result of more trade fairs and corporate
events. In addition, national or regional special events that attract large numbers of people to travel may also cause fluctuations in our
operating results in particular for the hotel locations where those events are held. Therefore, you should not rely on our operating or
financial results for prior periods as an indication of our results in any future period. As our revenues may vary from quarter to quarter,
our business performance is difficult to predict and our quarterly results could fall below investor expectations, which could cause our
ordinary share and/or ADS prices to decline. Furthermore, the ramp-up process of our new hotels can be delayed during the low season,
which may negatively affect our revenues and profitability.

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Our new leased and owned hotels typically incur significant pre-opening expenses during their development stages and generate
relatively low revenues during their ramp-up stages, which may have a significant negative impact on our financial performance.
The operation of each of our leased and owned hotels goes through three stages: development, ramp-up, and mature operations.
During the development stage, leased and owned hotels do not generate any revenue, and incur pre-opening expenses generally ranging
from approximately RMB1.5 million to RMB20.0 million per hotel. During the ramp-up stage, when the occupancy rate is relatively low,
revenues generated by these hotels may be insufficient to cover their operating costs, which are relatively fixed in nature. As a result,
these newly opened leased and owned hotels may not achieve profitability during the ramp-up stage. Although we have adopted an asset-
light business strategy and gradually and strategically optimized our leased and owned hotel portfolio, we may continue to incur
significant pre-opening expenses during the development stage and relatively low revenues during the ramp-up stage of our newly
opened leased and owned hotels, which may have a negative impact on our financial performance. Moreover, we may plan to develop
more midscale and upscale leased and owned hotels in the future with relatively higher pre-opening expenses, especially rent, which may
lead to a more evident negative impact on our financials. In addition, we must maintain our hotels’ conditions and may upgrade a certain
number of our hotels, which requires renovation and other improvements to our hotels from time to time. Hotels under renovation may
need to be closed partially or entirely or otherwise be seriously disrupted due to the renovations, which could adversely affect the hotels’
revenues.
A significant portion of our costs and expenses may remain at the same level or increase even if our revenues decline, which would
adversely affect our net margins and results of operations.
A significant portion of our operating costs, including rent and depreciation and amortization, is fixed. Accordingly, a decrease in
revenues could result in a disproportionately higher decrease in our earnings because our operating costs and expenses are unlikely to
decrease proportionately. For example, the New Year and Spring Festival holiday periods generally account for a lower portion of our
annual revenues than other periods. However, our expenses do not vary as significantly with changes in occupancy and revenues as we
need to continue to pay rent and salary and to make regular repairs, maintenance and renovations and invest in other capital
improvements throughout the year to maintain the attractiveness of our hotels. Our property development and renovation costs may
increase as a result of increasing costs of materials. However, we may have a limited ability to pass increased costs to customers through
room rate increases. Therefore, our costs and expenses may remain constant or increase even if our revenues decline, which would
adversely affect our net margins and results of operations.
We may not be able to manage our planned growth, which could adversely affect our operating results.
Our hotel group has been growing rapidly since we commenced our business of operating and managing a multi-brand hotel group.
We intend to continue developing and operating additional hotels in different geographic locations in China and overseas. Such
expansions have placed, and will continue placing, substantial demands on our managerial, operational, technological and other
resources. Our planned expansion will also require us to maintain the consistency of our products and the quality of our services to
ensure that our business does not suffer as a result of any deviations, whether actual or perceived, in our quality standards. In order to
manage and support our growth, we must continue improving our existing operational, administrative and technological systems and our
financial and management controls, and recruit, train and retain qualified hotel management personnel as well as other administrative and
sales and marketing personnel, particularly as we expand into new markets. We cannot assure you that we will be able to effectively and
efficiently manage the growth of our operations, recruit and retain qualified personnel, and integrate new hotels into our operations. Our
inability to anticipate the changing demands that expanding operations will impose on our management and information and operational
systems, or our failure to quickly adapt our systems and procedures to the new markets, could result in declines of revenues and increases
in expenses or otherwise harm our results of operations and financial condition.

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In addition, our expansion within existing markets may affect our existing hotels in those markets and, as a result, negatively affect
our overall results of operations. While expansion into new geographic markets, especially overseas, and addition of new hotel products
for which we may have limited operating experience and brand recognition may present operating and marketing challenges that are
different from those we currently encounter in our existing markets. Those new markets may have different regulatory requirements,
competitive conditions, consumer preferences, and discretionary spending patterns as compared to our existing markets. As a result, any
new hotels we open in those markets may be less successful than hotels in our existing markets. Guests and franchisees in any new
market may not be familiar with our brands and we may need more time to build brand awareness in that market through greater
investments in advertising and promotional activities than we anticipated. We may find it more difficult in new markets to hire, motivate
and retain qualified employees who share our vision, passion and culture. Hotels operated in new markets may also have lower average
revenues or higher operating costs than hotels in existing markets. Revenues at hotels operated in new markets may take longer than
expected to ramp up and reach expected revenues and profit levels, and may never do so, thereby affecting our overall profitability.
There can be no assurance that any expansion, new hotel products or brands we introduce will be well received by our customers
and become profitable in a timely fashion, or at all. If a new product or brand is not well received by our customers and our expansion
into new geographic markets is not successful, we may not be able to generate sufficient revenue to offset related costs and expenses, and
our overall financial performance and condition may be adversely affected.
Our multi-brand business strategy exposes us to potential risks and if any of the new hotel brands are not well received by the
market, we may not be able to generate sufficient revenue to offset related costs and expenses, and our overall financial
performance and condition may be adversely affected.
We launched our hotel brand HanTing Hotel in 2005, our economy hotel brand Hi Inn in 2008 and our midscale hotel brand JI Hotel
in 2010. In 2012, we acquired the Starway Hotel brand. In addition, we launched Manxin Hotels & Resorts in October 2013, which was
subsequently rebranded as Manxin Hotel, an upper midscale hotel brand; Joya Hotel, a hotel brand targeting the upscale market, in
December 2013 and Elan Hotel, an economy hotel brand, in September 2014. We acquired Crystal Orange Hotel Holdings Limited, or
Crystal Orange, in May 2017, which holds hotels under the brands of Crystal Orange Hotel and Orange Hotel. In August 2018, we
completed the acquisition of a majority stake in Blossom Hotel Investment Management (Kunshan) Co., Ltd., or Blossom Hotel
Management, which holds hotels under the brand of Blossom Hill Hotels & Resorts (currently Blossom House). We launched the
Madison Hotel brand and Grand Madison Hotel brand in 2019. In 2020, Grand Madison Hotel was merged into Madison Hotel brand. In
January 2020, we completed the acquisition of Deutsche Hospitality, which operates in Europe, the Middle East, Asia and Africa, with
hotels under brands of Steigenberger Hotels & Resorts, MAXX, Jaz in the City, IntercityHotel, and Zleep Hotels. In 2020, we acquired the
Ni Hao Hotel brand, and started to develop and operate hotels under this brand. In May 2021, we completed the acquisition of CitiGO,
which operates hotels under the brand of CitiGO Hotel. We also launched our luxury hotel brands Steigenberger Icons and Song Hotels
in 2021. In addition to the hotel brands owned by us, we entered into strategic alliance transactions with Accor S.A., or Accor. in January
2016, and are developing Accor’s certain number of hotel brands in PRC, Taiwan and Mongolia under our brand franchise agreements.
We cannot guarantee the size and profitability of the various market segments that each new brand is targeting. The business models
of these new brands are not proven, and we cannot guarantee that they can generate return comparable to the established brands. The
process of developing new brands may divert management attention and resources from our established brands. We may not be able to
find competent management staff to lead and manage the execution of the multi-brand business strategy. If we are unable to successfully
execute our multi-brand strategy to target various market segments, we may be unable to generate revenues from these market segments
in the amounts and by the times we anticipate, or at all, and our business, competitive position, financial condition and prospects may be
adversely affected.

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We may not be able to successfully identify, secure and develop in a timely fashion additional hotel properties under the lease and
ownership model or develop hotel properties in a timely or cost-efficient manner, which may adversely affect our growth strategy
and business.
We plan to open more hotels to grow our business. Under our lease and ownership model (other than Deutsche Hospitality) and the
lease model of Deutsche Hospitality, we may not be successful in identifying and leasing or acquiring additional hotel properties at
desirable locations and on commercially reasonable terms or at all. Even if we are able to successfully identify and acquire new hotel
properties, new hotels may not generate the returns we expect. We may also incur costs in connection with evaluating hotel properties
and negotiating with property owners, including properties that we are subsequently unable to lease or own. In addition, we may not be
able to develop additional hotel properties in a timely fashion due to construction or regulatory delays. If we fail to successfully identify,
secure or develop in a timely fashion additional hotel properties, our ability to execute our growth strategy could be impaired and our
business and prospects may be materially and adversely affected.
We develop a substantial majority of our leased and owned hotels directly. Our involvement in the development of properties
presents a number of risks, including construction delays or cost overruns, which may result in increased project costs or lost revenue.
We may be unable to recover development costs we incur for projects that do not reach completion. Properties that we develop could
become less attractive due to market saturation or oversupply, and as a result we may not be able to recover development costs at the
expected rate, or at all. Furthermore, we may not have available cash to complete projects that we have commenced, or we may be
unable to obtain financing for the development of future properties on favorable terms, or at all. If we are unable to successfully manage
our hotel development to minimize these risks, our growth strategies and business prospects may be adversely affected.
Our leases could be terminated early, we may not be able to renew our existing leases on commercially reasonable terms and our
rents could increase substantially in the future, which could materially and adversely affect our operations.
The lease agreements between our lessors and us typically provide, among other things, that the leases could be terminated under
certain legal or factual conditions. If our leases were terminated early, our operation of such properties may be interrupted or
discontinued, and we may incur costs in relocating our operations to other locations. Furthermore, we may have to pay losses and
damages and incur other liabilities to our customers and other vendors due to our default under our contracts. As a result, our business,
results of operations and financial condition could be materially and adversely affected.
We plan to retain the operation of our leased hotels upon lease expiration through (i) renewal of existing leases or (ii) execution of
franchise agreements with the lessors. We cannot assure you, however, that we will be able to retain our hotel operation on satisfactory
terms, or at all. In particular, we may experience an increase in our rent payments and cost of revenues in connection with renegotiating
our leases. If we fail to retain our hotel operation on satisfactory terms upon lease expiration, our costs may increase, and our profit
generated from the hotel operation may decrease in the future. If we are unable to pass the increased costs on to our customers through
room rate increases, our operating margins and earnings could decrease, and our results of operations could be materially and adversely
affected.
We may not be able to successfully compete for franchise agreements and, as a result, we may not be able to achieve our planned
growth.
Our growth strategy includes expanding through manachising and franchising, by entering into franchise agreements with our
franchisees. We believe that our ability to compete for franchise agreements primarily depends on our brand recognition and reputation,
the results of our overall operations in general, and the success of the hotels that we currently manachise and franchise. Other
competitive factors for franchise agreements include marketing support, capacity of the central reservation channel, and the ability to
operate hotels cost-effectively. The terms of any new franchise agreements that we obtain also depend on the terms that our competitors
offer for those agreements. In addition, if the availability of suitable locations for new properties decreases, or regulatory planning or
other local regulations change, the supply of suitable properties for our manachise and franchise models could be diminished. If the
hotels that we manachise or franchise perform less successfully than those of our competitors or if we are unable to offer terms as
favorable as those offered by our competitors, we may not be able to compete effectively for new franchise agreements. As a result, we
may not be able to achieve our planned growth and our business and results of operations may be materially and adversely affected.

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We may have disputes with our franchisees, and they may terminate the franchise agreements with us earlier if the franchised
hotels’ performance is worse than they expected.
We may have disputes with our franchisees with respect to the performance of the franchise agreements. For example, we have in
the past closed certain manachised and franchised hotels as a result of disputes with the franchisees regarding our measures to avoid
competition between the franchisees, including keeping appropriate distances between the manachised and franchised hotels. Some
franchisees were not satisfied with the performance of the hotel managers we appointed for our manachised hotels or generally the
manachised or franchised hotels’ profitability or growth rates. Some franchisees complained that our loyalty program and other
marketing efforts did not bring sufficient customers for their hotels. Our franchisees may also have disputes with us regarding other
matters, such as the amount and settlement of fees payable by them and the adequacy of our operational support to them. In addition, our
franchise agreements with franchisees typically provide that the franchise agreements could be terminated under certain circumstances. If
franchise agreements are terminated early, we lose the franchise fees and related management fees. Furthermore, we may have to pay
losses and damages to our guests, and our brand image may be adversely impacted. As a result, our business and results of operations
and financial conditions may be adversely affected by early termination of our franchise agreements.
We plan to renew our existing franchise agreements upon expiration. However, we may be unable to retain our franchisees on
satisfactory terms, or at all. If a significant number of our existing franchise agreements are terminated early or are not renewed on
satisfactory terms upon expiration, our revenue and profit may decrease in the future. If we cannot secure new franchisees to replace
those expired or terminated franchises and compensate for the loss of business, our results of operations could be materially and
adversely affected.
Acquisitions, financial investments or strategic investments may have an adverse effect on our ability to manage our business and
harm our results of operations and financial condition.
If we are presented with appropriate opportunities, we may acquire or invest in businesses or assets. For example, in the past years,
we invested in AAPC Hotel Management Limited and China Cjia Group Limited. We completed the acquisition of Crystal Orange,
Blossom Hotel Management and Deutsche Hospitality. We also jointly established Yongle Huazhu Hotel & Resort Group with a
subsidiary of Sunac China Holdings Limited and Chengdu Global Times Exhibition and Travel Development Company Limited to
develop and operate hotels.
The existing and future acquisitions or investments may expose us to potential risks, including risks associated with unforeseen or
hidden liabilities, risks that acquired or invested companies will not achieve anticipated performance levels, diversion of management
attention and resources from our existing business, difficulty in integrating the acquired businesses with our existing operational
infrastructure, and inability to generate sufficient revenues to offset the costs and expenses of acquisitions or investments. In addition,
following completion of an acquisition or investment, our management and resources may be diverted from their core business activities
due to the integration process, which diversion may harm the effective management of our business. Furthermore, it may not be possible
to achieve the expected level of benefits after integration and the actual cost of delivering such benefits may exceed the anticipated cost.
Potential risk exposures associated with acquisition or investments, difficulties in business integration, and requirements of cost,
expenses and management attention may be more severe and unpredictable if international acquisitions and investments are involved.
Any difficulties encountered in the acquisition or investment and integration process may have an adverse effect on our ability to manage
our business and harm our results of operations and financial condition. In addition, if we purchase shares from the open market, we may
experience volatility in our investments as the prices of such shares fluctuate frequently. For example, we incurred loss from fair value
changes of equity securities associated with shares we purchased from the open market in the past. If a financial or strategic investment is
unsuccessful, then in addition to the diversion of management attention and resources from our existing business we may lose the value
of our investment, which could have a material adverse effect on our financial condition and results of operations.

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Our legal right to lease certain properties could be challenged or affected adversely by property owners or other third parties or
subject to government regulation.
Part of our business model relies on leases with third parties who either own or lease the properties from the ultimate property
owners. We also grant franchises to hotel operators who may or may not own their hotel properties. The land use rights and other
property rights with respect to properties we currently lease, manachise or franchise for our existing hotels could be challenged. For
example, our lessors have failed to provide the property ownership certificates and/or the land use rights certificates for certain properties
that we lease for our hotel operations. While we have performed due diligence to verify the rights of our lessors to lease such properties,
including inspecting documentation issued by competent regulatory authorities evidencing these lessors’ land use rights and other
property rights with respect to these properties, our rights under those leases could be challenged by other parties including regulatory
authorities. If the properties are deemed to be illegal constructions or the landlords do not have the rights to lease the properties to us for
hotel operations purposes, the landlords (instead of us, as the lessee) may be subject to monetary penalties and the lease agreements may
be invalidated. We may therefore be required to relocate our relevant hotels. We also cannot assure you that we can always keep good
title of the properties we lease currently or will lease in the future, free and clear of all liens, encumbrances and defects. If the ultimate
owner of the property changes after the original owner of such property mortgages such property to any third party, our legal rights under
the lease agreement may be affected adversely and we may not rank senior in the right of continuing occupying the property.
Under PRC laws, lease agreements related to buildings and houses constructed on state-owned land and within urban zoning areas
are required to be registered with the local housing bureau. While the majority of our standard lease agreements require the lessors to
make such registrations, some of our leases have not been registered as required, which may expose both our lessors and us to potential
monetary fines. Some of our rights under the unregistered leases may also be subordinated to the rights of other interested third parties.
In addition, in some instances where our immediate lessors are not the ultimate owners of hotel properties, no consents or permits have
been obtained from the owners, the primary lease holders or competent regulatory authorities, as applicable, for the subleases of the hotel
properties to us, which could potentially impact the enforceability of our leases or lead to the renegotiation of such leases that result in
terms less favorable to us or even relocation of our relevant hotels. In addition, even if such aforementioned consents or permits have
been obtained, we cannot rule out any possible default by our immediate lessors (as sub-lessors) to the primary lease holders, which may
lead to the termination of lease agreements between the sub-lessors and the primary lease holders. As a result, it could render the lease
agreements between us and the sub-lessors unenforceable. Some of the properties we lease from third parties were also subject to
mortgages at the time the leases were signed. Where consent to the lease has not been obtained from the mortgage holder in such
circumstances, the lease may not be binding on the transferee of the property if the mortgage holder forecloses on the mortgage and
transfers the property. Moreover, the property ownership or leasehold in connection with our manachised and franchised hotels could be
subject to similar third-party challenges.
In Germany, our hotels are operated on the legal basis of lease, management or franchise agreements. Some agreements for hotels
located in Germany are concluded subject to conditions precedent or require a consent by a third party, such as authorities in case of local
measurement areas (for example, re-development) or ground owners in case of a hereditary building right. There are no indications that
these requirements have not been fulfilled; however, if not met, failure to meet these requirements could potentially invalidate the
respective agreements or lead to the renegotiation of these agreements which could result in less favorable terms. Furthermore,
provisions or parts of lease, management or franchise agreements may not be effective or may lead to legal disputes. This could lead to
additional cost burdens for our hotel operations. In addition, some of our leases, management or franchise agreements contain break
rights and rescission rights entitling the landlords to terminate the agreements on a certain date or upon the occurrence of certain events.
Previously, German law required lease agreements with a fixed lease period of more than one year to be concluded in written form,
excluding an ordinary termination right prior to the lapse of the lease period. However, as of January 1, 2025, the written-form
requirement for lease agreements with a fixed lease period of more than one year has been replaced by a text-form requirement. This
means that such lease agreements may now be concluded in text form, which encompasses, for instance, emails or other electronic
documents. For lease agreements concluded before January 1, 2025, the statutory written-form requirement remains applicable during a
transition period until December 31, 2025. During this period, a written-form defect may still constitute grounds for termination in
accordance with statutory provisions. However, for agreements concluded after January 1, 2025, this risk no longer applies, as the text
form requirement is now sufficient. Some of our lease agreements concluded before January 1, 2025 may have a written-form defect,
which effectively leads to a statutory termination right with a notice period. For leases concluded before January 1, 2025, such legal
notice—in general—has to be given at the beginning of a calendar quarter with termination being effective at the end of the following
calendar quarter (i.e., the notice period is between six and nine months, depending on the date of the termination notice). Similar issues,
except for the written-form defect, may occur in connection with our managed and franchised hotels.

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Any challenge to our legal rights to the properties used for our hotel operations, if successful, could impair the development or
operations of our hotels in such properties. We are also subject to the risk of potential disputes with property owners or third parties who
otherwise have rights to or interests in our hotel properties. Such disputes, whether resolved in our favor or not, may divert
management’s attention, harm our reputation, or otherwise disrupt our business.
Any failure to comply with land- and property-related PRC laws and regulations may negatively affect our ability to operate our
hotels and we may suffer significant losses as a result.
Our lessors are required to comply with various land- and property-related laws and regulations to enable them to lease effective
titles of their properties for our hotel use. For example, before any properties located on state-owned land in China with allocated or
leased land use rights or on land owned by collective organizations may be leased to third parties, lessors should obtain appropriate
approvals from the competent regulatory authorities. In addition, properties used for hotel operations and the underlying land should be
approved for commercial use purposes by competent regulatory authorities. Some of the lessors of our executed lease agreements have
not obtained the required regulatory approvals, including approvals of the properties for commercial use purposes. Such failure may
subject the lessors to monetary fines or other penalties and may lead to the invalidation or termination of our leases and relocation of our
relevant hotels, and therefore may adversely affect our results of operations. While some lessors have agreed to indemnify us against our
losses resulting from their failure to obtain the required approvals, we cannot assure you that we will be able to successfully enforce such
indemnification obligations against our lessors or that such indemnification can cover losses from all the property defects. As a result, we
may suffer significant losses resulting from our lessors’ failure to obtain required approvals to the extent that we are not fully
indemnified by our lessors.
Our success could be adversely affected by the performance of our manachised and franchised hotels and defaults or wrongdoings
of our franchisees may affect our reputation, which would adversely affect our results of operations.
Our success could be adversely affected by the performance of our manachised and franchised hotels, over which we have less
control compared to our leased and owned hotels. As of December 31, 2024, we manachised and franchised approximately 94.3% of our
hotels, and we plan to further increase the number of manachised and franchised hotels to increase our presence in China and our
overseas markets. Our franchisees for both our manachised and franchised hotels may not be able to develop hotel properties on a timely
basis, which could adversely affect our growth strategy and may impact our ability to collect fees from them on a timely basis.
Furthermore, given that our franchisees are typically responsible for the costs of developing and operating the hotels, including
renovating the hotels to our standards, and all of the operating expenses, the quality of our manachised and franchised hotel operations
may be diminished by factors beyond our control.
Our franchisees may not successfully operate hotels in a manner consistent with our standards and requirements. Our manachised
and franchised hotels are also operated under our brand names. If our brands are misused by any of our franchisees, there may be an
adverse impact on our business reputation and brand image. In addition, like any operators in service-oriented industries, we are subject
to customer complaints, and we may face complaints from unsatisfied customers who are unhappy with the standard of service offered
by our franchisees. Any complaints, regardless of their nature and validity, may affect our reputation, thereby adversely affecting our
results of operations. We may also have to incur additional costs in placating any customers or salvaging our reputation. For example, in
2024, we closed 188 manachised and franchised hotels that did not comply with our brand and operating standards.
If any of our franchisees defaults or commits wrongdoing, there could be situations where the franchisee is not in a position to
sufficiently compensate us for losses which we have suffered as a result of such defaults or wrongdoings. While we ultimately can take
action to terminate our franchise agreements that do not comply with the terms of our franchise agreements or commit wrongdoing, we
may not be able to identify problems and make timely responses and, as a result, our image and reputation may suffer, which may have a
material adverse effect on our results of operations.

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If we are unable to access funds to maintain our hotels’ condition and appearance, or if our franchisees fail to make investments
necessary to maintain or improve their properties, the attractiveness of our hotels and our reputation could suffer, and our hotel
occupancy rates may decline.
In order to maintain our hotels’ condition and appearance, ongoing renovations and other leasehold improvements, including
periodic replacement of furniture, fixtures and equipment, are required. In particular, we manachise and franchise properties leased or
owned by franchisees under the terms of franchise agreements, substantially all of which require our franchisees to comply with
standards that are essential to maintaining the relevant product integrity and our reputation. We depend on our franchisees to comply with
these requirements by maintaining and improving properties through investments, including investments in furniture, fixtures, amenities
and personnel.
Such investments and expenditures require ongoing funding and, to the extent we or our franchisees cannot fund these expenditures
from existing cash or cash flow generated from operations, we or our franchisees must borrow or raise capital through financing. We or
our franchisees may not be able to access capital and our franchisees may be unwilling to spend available capital when necessary, even if
required by the terms of our franchise agreements. If we or our franchisees fail to make investments necessary to maintain or improve the
properties, our hotel’s attractiveness and reputation could suffer, we could lose market share to our competitors and our hotel occupancy
rates and RevPAR may decline.
Interruption or failure of our information systems or our business partners’ systems could impair our ability to effectively provide
our services, which could damage our reputation and subject us to penalties.
Our ability to provide consistent and high-quality services and to monitor our operations on a real-time basis throughout our hotel
group depends on the continued operation of our information technology systems, including our web property management, central
reservation, and customer relationship management systems. Certain damage to or failure of our systems could interrupt our inventory
management, affect the manner of our services in terms of efficiency, consistency and quality, and reduce our customer satisfaction.
Our technology platform plays a central role in our management of inventory, revenues, loyalty program, and franchisees. We also
rely on our call center and mobile application to facilitate customer reservations. Our systems remain vulnerable to damage or
interruption as a result of power loss, telecommunications failures, computer viruses, fires, floods, earthquakes, interruptions in access to
our toll-free numbers, hacking or other attempts to harm our systems, and other similar events. Our servers may also be vulnerable to
break-ins, sabotage and vandalism. Some of our systems are not fully redundant, and our disaster recovery planning does not account for
all possible scenarios.
Furthermore, our systems and technologies, including our website and database, could contain undetected errors or “bugs” that could
adversely affect their performance, or could become outdated, and we may not be able to replace or introduce upgraded systems as
quickly as our competitors or within budgeted costs for such upgrades. If we experience frequent, prolonged or persistent system failures,
our quality of services, customer satisfaction, and operational efficiency could be severely harmed, which could also adversely affect our
reputation. Steps we take to increase the reliability and redundancy of our systems may be costly, which could reduce our operating
margin, and there can be no assurance that any increased reliability may be achievable in practice or would justify the costs incurred.
In addition, we collaborate with various business partners in our day-to-day operations, and our ability to provide satisfactory
services to customers also depends on the maintenance and efficacy of such business partners’ systems, such as the maintenance of
networks with necessary speed, bandwidth, and stability. If any of our business partners’ systems encounter errors, “bugs” or other
problems, our ability to effectively provide our services may be adversely affected, our reputation may be harmed, and we may also face
customer complaints and be subject to fines and other penalties from competent authorities.

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Failure to comply with data protection laws or maintain the integrity of internal or customer data could result in harm to our
reputation or subject us to costs, liabilities, fines or lawsuits.
Our business involves collecting and retaining large volumes of internal and customer data, including personal information as our
various information technology systems enter, process, summarize and report such data. We also maintain information about various
aspects of our operations as well as regarding our employees. The integrity and protection of our customer, employee and company data
is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are
required by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures
to safeguard such information.
The PRC regulatory and enforcement regime regarding privacy and data security is evolving and tightening:
●
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 obtaining such
information through theft or other illegal ways.
●
On November 7, 2016, the Standing Committee of the PRC National People’s Congress, or the NPC Standing Committee,
issued the Cyber Security Law of the PRC, which became effective on June 1, 2017. Pursuant to the Cyber Security Law of the
PRC, network operators must not, without users’ consent, collect their personal information, and may only collect users’
personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their
products and services and shall comply with provisions regarding the protection of personal information as stipulated under the
relevant laws and regulations. In addition, pursuant to the Cyber Security Law of the PRC, personal information and important
data collected and generated by a critical information infrastructure operator in the course of its operations in China must be
stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or may
affect national security, it should be subject to cybersecurity review by the Cyberspace Administration of China, or the CAC.
●
In June 2021, the NPC Standing Committee promulgated the Data Security Law of the PRC, which took effect in September
2021. The Data Security Law of the PRC applies to data handling activities carried out within the territory of the PRC. The
Data Security Law of the PRC further provides that data processing activities carried out outside of China, which harm national
security, public interest or legal interests of Chinese citizens and organizations, should be subject to legal liabilities. Pursuant to
the Data Security Law of the PRC, those conducting data handling activities should, in accordance with laws and regulations,
establish and perfect a data security management system across their entire workflow and adopt the corresponding technical
measures and other necessary measures to ensure data security.
●
The Civil Code of the PRC (effective since January 1, 2021) provides the main legal basis for privacy and personal information
infringement claims under the Chinese civil laws.
●
The Personal Information Protection Law, which took effect on November 1, 2021, outlines the main system framework and
comprehensive requirements for personal information processing.
●
On July 2, 2021, the CAC announced that it had launched a cybersecurity review of DiDi Global, a company with its principal
operations in China that had recently listed on the NASDAQ to prevent the risk of national data security breach and protect
national security and public interest. The CAC then ordered the removal of DiDi’s app from China’s smartphone app stores. On
July 5, 2021, the CAC announced the commencement of cybersecurity review of “Yunmanman,” “Huochebang” and “BOSS
Zhipin” and suspended their registration of new users. Apart from that, on June 23, 2022, the CAC announced the
commencement of cybersecurity review of “CNKI”, a Chinese academic resource database and knowledge service platform.

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●
On July 30, 2021, the State Council promulgated the Regulations on the Security Protection of Critical Information
Infrastructure, which came into effect on September 1, 2021. Under such Regulations, critical information infrastructure refers
to the important network facilities and information systems in crucial industries and fields such as public telecommunications,
information services, energy, transportation, water conservancy, finance, public services, e-government and national defense
science, technology and industry, as well as other important network facilities and information systems which, in case of
destruction, loss of function or leak of data, may result in serious damage to national security, national economy, the people’s
livelihood and public interests. According to such Regulations, a CIIO is required to perform certain obligations to protect the
critical information infrastructure’s security, including but not limited to, conducting network security tests and risk assessments
at least once a year. The security protection departments are responsible for organizing the identification of CIIOs in their
respective industries and areas in accordance with the identification rules and shall inform the identification results to the
operators of network facilities and information systems in a timely manner and in the meanwhile report such results to the
public security department of the State Council. As of the date of this annual report, none of our company, or our operating
subsidiaries has been identified as a CIIO by the CAC or other PRC regulatory authorities. Nevertheless, PRC regulatory
authorities have wide discretion in the interpretation and enforcement of these laws. As a hotel management group operating a
large hotel booking internet, we are still exposed to risks of being deemed to be a CIIO. If we are identified as a CIIO, we
would be required to fulfill various obligations as required under applicable PRC laws for CIIOs, including, among others,
setting up a special security management organization, organizing regular cybersecurity education and training, formulating
emergency plans for cyber security incidents, and conducting regular emergency drills.
●
In December 2021, the CAC and related authorities promulgated the Cybersecurity Review Measures, or the Cybersecurity
Measures, which took effect on February 15, 2022. According to the Cybersecurity Measures, a company is subject to
cybersecurity review if it affects or may affect national security and falls under any of the following circumstances: (i) it is a
critical information infrastructure operator who purchases network products and service, or (ii) it is a network platform operator
who carries out data processing activities. In addition, any network platform operator possessing over one million users’
personal information must apply for a cybersecurity review before listing abroad. Relevant PRC regulatory authorities may also
initiate cybersecurity review if they determine certain network products, services, or data processing activities affect or may
affect national security.
●
On July 7, 2022, the CAC issued the Measures for the Security Assessment of Data Cross-border Transfer, or the Security
Assessment Measures, which became effective on September 1, 2022. In accordance with the Security Assessment Measures, a
data processor should apply to the CAC for a data export security assessment under certain circumstances, including (i) where a
data processor provides important data abroad; (ii) where a critical information infrastructure operator or a data processor
processing personal information of over one million people provides personal information abroad; (iii) where a data processor
has provided personal information of 100,000 people or sensitive personal information of 10,000 people in total abroad since
January 1 of the previous year; and (iv) other circumstances prescribed by the CAC. Moreover, the Security Assessment
Measures provide that for non-compliant cross-border data transfers that had been carried out before this regulation came into
effect, rectification must be completed within six months from the effective date of the regulation.
●
On February 22, 2023, the CAC issued the Measures for the Standard Contract for Outbound Transfer of Personal Information,
which became effective on June 1, 2023. Pursuant to such regulation, entering into a CAC-formulated standard contract with
the overseas data recipient is a pre-requisite for a data processor to transfer data abroad, if such data processor meets all of the
following conditions: (i) it is not a CIIO; (ii) it processes personal information of fewer than one million individuals; (iii) it has
cumulatively transferred personal information of fewer than 100,000 individuals abroad since January 1 of the previous year;
and (iv) it has cumulatively transferred sensitive personal information of fewer than 10,000 individuals abroad since January 1
of the previous year. Within ten (10) working days after the standard contract takes effect, the data processor should file the
executed standard contract with the CAC.
●
On September 28, 2023, the CAC issued the Provisions on Regulating and Promoting Cross - Border Data Flows (Draft for
Comments) for public consultation. On that basis, the CAC has then enacted the official Cross - Border Data Flows Provisions
on March 22, 2024, according to which a company is exempted from applying for the data export security assessment,
submitting the standard contract filing, or obtaining the compliance certification when the cumulative number of the
individuals’ information that a data processor (other than CIIO) transferred abroad in a year since January 1 is smaller than
100,000 individuals and no sensitive personal information is included.

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●
On September 24, 2024, the CAC formally issued the Cyber Data Security Regulations, which became effective on January 1,
2025, stipulating that where network data handlers carry out network data processing activities that affect or may affect national
security, they should undergo a national security review in accordance with relevant national regulations. The Cyber Data
Security Regulations optimize regulations for cross-border data security management, specifying conditions under which
network data processors may provide personal information abroad in accordance with international treaties or agreements. The
regulations clarify that data not identified or publicly disclosed as important data by relevant regions or departments need not
undergo cross-border security assessments for important data. Further, the Cyber Data Security Regulations set forth network
data security protection requirements for network platform service providers, third-party product and service providers, and
other relevant entities.
●
On March 28, 2025, the Cyberspace Administration of China promulgated the Draft Amendment to Cyber Security Law (the
“CSL”) for public comments. The proposed amendments of CSL imposed more severe and comprehensive fines and other
penalties for offences under CSL, among others, the persons directly in charge and other directly liable persons of a company
that is in violation of the CSL and causes particularly serious consequences may be fined up to RMB 1 million.
We have implemented comprehensive cybersecurity and data protection policies, procedures and measures to safeguard personal
information and ensure secured storage and transmission of data and prevent unauthorized access or use of data. As of the date of this
annual report, except for receiving the written decision from the CAC approving the cross-border data transfers required for overseas
hotel reservation, we have not received any notice of and are not currently subject to any proceedings initiated by the CAC or any other
PRC regulatory authority. However, we cannot guarantee that the regulators will recognize our measures as sufficient. As there remains
significant uncertainty in the interpretation and enforcement of China’s laws and regulations in relation to data security and cross-border
transfer of personal information, we cannot assure you that we will be able to comply with such regulations in all respects. Any non-
compliance with these laws and regulations may subject us to fines, orders to rectify or terminate any actions that are deemed illegal by
regulatory authorities, other penalties, including reputational damage, legal proceedings against us, which may affect our business,
financial condition and results of operations.
PRC regulators, including the NPC Standing Committee, the CAC, the Ministry of Industry and Information Technology and the
Ministry of Public Security, have been increasingly focused on the regulation of data security and data protection. The interpretation,
application and enforcement of these laws, rules and regulations evolve from time to time and their scope may change continually
through new legislation, amendments to existing legislation and changes in enforcement. We expect that these areas will receive greater
and continued attention and scrutiny from regulators and the public going forward, which could cause us to incur substantial compliance
costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these
risks, we could become subject to civil litigation brought by relevant individuals, administrative penalties, including fines, suspension of
business, website closure, and revocation of prerequisite licenses, and criminal penalties in severe violation of relevant legal
requirements, and our reputation and results of operations could be materially and adversely affected.
In addition, after our acquisition of Deutsche Hospitality, the European Union has become an important region for our data
protection compliance. European data protection laws, in particular 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 such as the German Federal Data Protection Act), include strict
rules on the processing of personal data, including the transfer of data from the European Union to China or other third countries. Under
the GDPR, any personal data may be used only if there is a legal justification (which could be a consent or an express statutory
justification set out in the GDPR or other applicable EU or national laws), and the principles relating to processing of personal data (see
Art. 5 GDPR) must be fulfilled. Deutsche Hospitality has taken various technical and organizational measures, which are regularly
reviewed and updated, to stay compliant, including appointment of a data protection officer and a special data protection working group,
regulation of data processes, risk management assessment, preparation of relevant documentation and training. We also put high
emphasis on proper dealing with data subject rights requests, i.e., the requests of customers, employees and other natural persons
regarding our use of their data. We, including Deutsche Hospitality, take GDPR requirements and, in particular, data subject rights
requests very seriously. However, we cannot guarantee that we are fully compliant in this complex area where many items are still
unclear. This includes, in particular, international data transfers which are a complex topic in general. Theoretically, fines for a violation
of the GDPR can amount up to 4% of the global turnover of the whole group.

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There is no guarantee that our current security measures and those of our third-party service providers may always be adequate for
the protection of our customer, employee or company data; and like all companies, we have experienced data incidents from time to time.
In addition, given the size of our customer base and the types and volume of personal data on our system, we may be a particularly
attractive target. Unauthorized access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach
of our secure network by an unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach
of the security of the networks of our third-party service providers, or other misconduct. Because the techniques used by computer
programmers who may attempt to penetrate and sabotage our proprietary internal and customer data change frequently and may not be
recognized until launched against a target, we may be unable to anticipate these techniques. Unauthorized access to our proprietary
internal and customer data may also be obtained through inadequate use of security controls. For instance, in August 2018, online reports
alleged that we had become the subject of potential information leak and a proposed class action complaint was filed against us and our
management, which was voluntarily dismissed by the plaintiffs in February 2019. We may face similar litigation in the future. Any of
such proceedings may harm our reputation and adversely affect our business and results of operations. Besides proceedings, we may be
subject to negative publicity about our security and privacy policies, systems, or measurements from time to time.
The laws and regulations applicable to security and privacy are becoming increasingly important globally. Complying with any
additional or new regulatory requirements on a jurisdiction-by-jurisdiction basis would impose significant burdens and costs on our
operations. Any failure to prevent or mitigate security breaches, cyber-attacks or other unauthorized access to our systems or disclosure
of our customers’ data, including their personal information, could result in loss or misuse of such data, interruptions to our service
system, diminished customer experience, loss of customer confidence and trust, impairment of our technology infrastructure, and harm
our reputation and business, resulting in significant legal and financial exposure and potential lawsuits.
If the value of our brand or image diminishes, it could have a material adverse effect on our business and results of operations.
We offer multiple hotel products that are designed to target distinct segments of customers. Our continued success in maintaining
and enhancing our brands and image depends, to a large extent, on our ability to satisfy customer needs by further developing and
maintaining our innovative and distinctive products and maintaining consistent quality of services across our hotel group, as well as our
ability to respond to competitive pressures. If we are unable to do so, our occupancy rates may decline, which could in turn adversely
affect our results of operations. Our business may also be adversely affected if our public image or reputation were to be diminished by
the operations of any of our hotels, whether due to unsatisfactory service, accidents or otherwise. If the value of our products or image is
diminished or if our products do not continue to be attractive to customers, our business and results of operations may be materially and
adversely affected.
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.
The success of our business depends in part upon our continued ability to use our brands, trade names and trademarks to increase
brand awareness and to further develop our products. As of December 31, 2024, we registered 3,205 trademarks within and outside
China. The unauthorized reproduction of our trademarks could diminish the value of our brands and their market acceptance, competitive
advantages or goodwill. In addition, we consider our proprietary information systems and operational system to be key components of
our competitive advantage and our growth strategy.
Monitoring and preventing the unauthorized use of our intellectual property is difficult. The measures we take to protect our brands,
trade names, trademarks, and other intellectual property rights may not be adequate to prevent their unauthorized use by third parties.
Furthermore, the application of laws governing intellectual property rights in China and other jurisdictions is evolving and could involve
substantial risks to us. In particular, the laws and enforcement procedures in the PRC are uncertain and do not protect intellectual
property rights to the same extent as do the laws and enforcement procedures in the United States and other developed countries. If we
are unable to adequately protect our brands, trade names, trademarks and other intellectual property rights, we may lose these rights and
our business may suffer materially.
We may also be subject to claims for infringement, invalidity, or indemnification relating to third parties’ intellectual property rights.
Regardless of their merits, such third-party claims may be time-consuming and costly to defend, divert management attention and
resources, or require us to enter into licensing agreements, which may not be available on commercially reasonable terms, or at all.

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If we are not able to retain, hire and train qualified managerial and other employees, our business may be materially and adversely
affected.
Our managerial and other employees manage our hotels and interact with our customers on a daily basis. They are critical to
maintaining the quality and consistency of our services as well as our established brands and reputation. In general, employee turnover,
especially in lower-level positions, is relatively high in the lodging industry. As a result, it is important for us to retain as well as attract
qualified managerial and other employees who are experienced in lodging or other consumer-service industries. There is a limited supply
of such qualified individuals in cities where we have operations and other cities into which we intend to expand. In addition, we need to
hire qualified managerial and other employees on a timely basis to keep pace with our rapid growth while maintaining consistent quality
of services across our hotels in various geographic locations. We must also provide training to our managerial and other employees so
that they have up-to-date knowledge of various aspects of our hotel operations and can meet our demand for high-quality services. If we
fail to do so, the quality of our services may decrease, which in turn, may have a material adverse effect on our business.
Our current employment practices may be adversely impacted under the applicable labor laws.
The PRC National People’s Congress promulgated the Labor Contract Law of the PRC (the “Labor Contract Law”) in 2007, which
took effect in 2008, and amended it on December 28, 2012. The Labor Contract Law imposes requirements concerning, among others,
the execution of written contracts between employers and employees, the time limits for probationary periods, and the length of fixed-
term employment contracts. Because the PRC regulatory authorities have introduced various new labor-related regulations since the
effectiveness of the labor contract law, and the interpretation and implementation of these regulations are still evolving, our employment
practices could violate the Labor Contract Law and related regulations and could be subject to related penalties, fines or legal fees. If we
are subject to severe penalties or incur significant legal fees in connection with labor law disputes or investigations, our business,
financial condition and results of operations may be adversely affected. In addition, a significant number of our employees are dispatched
from third-party human resources companies, which are responsible for managing, among others, payrolls, social insurance contributions
and local residency permits of these employees. According to a regulation on labor dispatch, which was promulgated in January 2014 to
implement the provisions of the labor contract law, a company is permitted to use dispatched employees for only up to 10% of its labor
force after February 29, 2016. To comply with the labor dispatch regulation, we have reduced the percentage of dispatched employees
since January 2014 by using service outsourcing arrangement. Under the service outsourcing arrangement, we have entered into service
outsourcing agreements with a service outsourcing firm and relevant employees are deemed as employees of this service outsourcing
firm. However, since the current labor dispatch regulation does not clearly define the distinction of labor dispatch and service
outsourcing, our service outsourcing arrangement may be considered as labor dispatch by the relevant PRC regulators.
In addition, according to the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with
our employees in the employment contracts or confidentiality agreements, we have to compensate our employees on a monthly basis
during the term of the restriction period after the termination or ending of the employment contract, which may cause extra expenses to
us.
In Germany, our business is subject to various labor-related statutory regulations. For example, there are restrictions regarding the
assignment and use of temporary agency workers under the German Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz).
The interpretation of the amended regulations is still evolving. It is possible that we may be responsible for non-compliant assignments
of temporary-agency workers, even if the root cause of the non-compliance lies with the temporary-work agency engaged by us. We
could therefore be subject to related fines or temporary-agency workers could be deemed to be our employees by fiction. If we are
subject to severe fines or incur significant legal fees in connection with labor law disputes or investigations, our business, financial
condition and results of operations may be adversely affected.
In addition, our employment practices in other jurisdictions are also subject to changes in applicable labor law. If we are found to
have violated any other applicable labor law requirements, we may be subject to fines or other penalties, which could in turn negatively
affect our reputation and results of operations, and disputes with our employees could interrupt our business operations.

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Failure to retain our management team could harm our business.
We place substantial reliance on the experience and the institutional knowledge of members of our current management team. Mr. Qi
Ji, our founder and chairman of the board, Mr. Hui Jin, our chief executive officer, Ms. Hui Chen, our chief financial officer, and other
members of the management team are particularly important to our future success due to their substantial experiences in lodging and
other consumer-service industries. Finding suitable replacements for Mr. Qi Ji, Mr. Hui Jin, Ms. Hui Chen and other members of our
management team could be difficult, and competition for such personnel of similar experience is intense. The loss of the services of one
or more members of our management team due to their departures or otherwise could hinder our ability to effectively manage our
business and implement our growth strategies.
We are subject to various laws and regulations, including franchise, hotel industry, construction, hygiene, health and safety
environmental, anti-monopoly and advertising laws and regulations that may subject us to liability.
Our business is subject to various compliance and operational requirements under PRC laws. For example, we are required to
complete the filing and submit annual reports with the MOFCOM, to engage in the hotel franchising business. In addition, each of our
hotels in China is required to obtain a special industry license from the local public security authority and complete fire prevention safety
inspection/commitment with the local fire and rescue department, to have hotel operations included in the business scope of its business
license, to obtain hygiene permits, and to comply with license requirements and laws and regulations with respect to construction permit,
zoning, fire prevention, public area hygiene, food safety, public safety, and environmental protection. We are also subject to anti-
monopoly, advertising, and other laws and regulations. See “Item 4. Information on the Company — B. Business Overview —
Regulation — Regulations on Hotel Operation.” If we fail to comply with any applicable franchise, hotel industry, construction, hygiene,
health and safety environmental, anti-monopoly, and advertising laws and regulations related to our business, we may be subject to
potentially significant monetary damages and fines or the suspension of our operations or development activities. Furthermore, new
regulations could also require us to retrofit or modify our hotels or incur other significant expenses.
New zoning plans or regulations applicable to a specific location may cause us to relocate our hotel(s) in that location or require
additional approvals and licenses that may not be granted to us promptly or at all, which may adversely affect our operating results. Any
failure by us to control the use of, or to adequately restrict the discharge of, hazardous substances in our development activities, or to
otherwise operate in compliance with environmental laws could also subject us to potentially significant monetary damages and fines or
the suspension of our hotel development activities or hotel operations, which could materially adversely affect our financial condition
and results of operations. Some of our hotels are not in full compliance with all of the applicable requirements. Such failure to comply
with applicable construction permit, environmental, fire prevention, health and safety laws and regulations related to our business and
hotel operation may subject us to potentially significant monetary damages and fines or the suspension of operations and development
activities of our company or related hotels. We could be subject to any challenges or other actions with respect to such non-compliance.
Our manachised and franchised hotels are subject to these same permit and safety requirements. Although our franchise agreements
require these franchisees to obtain and maintain all required permits or licenses, we have limited control over these franchisees. Any
failure to obtain and maintain the required permits or licenses by any franchisee of a manachised or franchised hotel may require us to
delay opening of the manachised or franchised hotel or to forgo or terminate our franchise agreement, which could harm our brand, result
in lost revenues and subject us to potential indirect liability.

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In particular, the implementation of our strategy of investing in a competing business could be adversely affected by uncertainties in
the implementation and enforcement of the amended PRC Anti-Monopoly Law, which came into effect on August 1, 2022. Under the
Anti-Monopoly Law, any mergers, acquisitions, establishment of joint ventures, or other transactions resulting in change of control may
be deemed as “concentrations of undertakings” in China and the relevant undertaking(s) must notify the State Administration for Market
Regulation, or the SAMR, with the transaction before implementing the transaction if certain turnover thresholds are met. The SAMR
will consider numerous factors in determining “control” based. In practice, any newly established joint venture under the joint control of
at least two undertakings also constitutes a concentration of undertakings. Because of the uncertainties in interpretation, implementation,
and enforcement of the Anti-Monopoly Law, we cannot assure you that the SAMR will not regard our past or future acquisitions or
investments, to have met the filing thresholds, or investigate or demand a filing for merger control review, or otherwise take enforcement
actions. The amended Anti-Monopoly Law has significantly increased the penalties for failing to notify with SAMR. On March 24, 2023,
the SAMR issued four implementing rules of the Anti-Monopoly Law, including the Provisions on the Review of Concentration of
Undertakings, which came into effect on April 15, 2023. The new implementing rules strengthen the enforcement of merger control
reviews but still remain silent on the specific factors to be considered in determination of “control”, which gives the SAMR great
discretion and may result in investigations into our acquisition or investment transactions conducted in the past and make our acquisition
transactions in the future more difficult. Our strategic investments, including our past and future transactions, may be subject to SAMR’s
scrutiny from the anti-monopoly perspective from time to time. There can be no assurance as to whether the SAMR will impose any
administrative penalties or other restrictive measures on us or any relevant parties for our strategic investments. If we are deemed to have
carried out a concentration of undertakings in violation of the Anti-Monopoly Law, in each incident, we could be subject to a fine of up
to RMB5,000,000 where such concentration does not have the effect of excluding or restricting competition, or penalties of being
ordered to cease the concentration and unwind the transaction and being imposed with other restrictive measures to restore the pre-
concentration market status, or be subject to a fine of up to 10% of our sales revenue from the previous year where such concentration
has had or may have the effect of excluding or restricting competition. Our businesses in Europe and other jurisdictions are also subject
to local anti-monopoly requirements and the business activities have to comply with various compliance and operational requirements,
including inter alia, regulations for customer and data protection, as well as regulations with respect to health, safety and fire protection
and hygiene requirements. Compliance with these regulations and adaptions to new regulations could potentially increase the cost of
operating our business and lead to additional expenses.
We could suffer impairment losses for our intangible assets.
We had net intangible assets of RMB5,280 million and RMB4,776 million (US$654 million) as of December 31, 2023 and 2024,
respectively. Our intangible assets consist primarily of brand names, master brand agreements, franchise or manachise agreements, and
our purchased software.
Brand names and master brand agreements are considered to have indefinite lives. We test indefinite life intangible assets at least
annually for impairment, and more frequently if events or changes in circumstances indicate that they might be impaired. Our other
intangible assets are considered to be finite life intangible assets. We evaluate finite life intangibles for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If such an adverse event occurs and has
the effect of changing one of the critical assumptions or estimates related to the fair value of our intangible assets, an impairment charge
could result.
We recorded impairment loss of RMB166 million and RMB391 million (US$54 million) for the years ended December 31,2023 and
2024, respectively. The extent, magnitude and duration of multiple factors, such as market conditions, changes in business factors, and
adjustments to our strategies, may change the assumptions and estimates used in the indefinite life intangible assets valuation, which
could result in future impairment charges. There can be no assurance that future reviews of intangible assets will not result in significant
impairment charges. Although it does not affect cash flow, an impairment charge will have the effect of decreasing our earnings, assets,
and shareholders’ equity.

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We may suffer impairment losses for our goodwill.
We have acquired businesses from time to time, which have resulted in the recognition of goodwill on our financial statements. We
had goodwill of RMB5,318 million and RMB5,221 million and (US$715 million) as of December 31, 2023 and 2024, respectively.
Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.
Factors that could lead to impairment of goodwill include significant adverse changes in the business climate, unanticipated changes in
the competitive environment, adverse legal or regulatory actions or developments, changes in clients’ perception and the reputation of
our brands, changes in interest rates, our strategic realignment, unfavorable changes in our stock price and market capitalization, and
deterioration in our financial condition.
Our financial and operating performance may be adversely affected by epidemics, adverse weather conditions, natural disasters
and other catastrophes.
Our financial and operating performance may be adversely affected by epidemics, adverse weather conditions, natural disasters and
other catastrophes, particularly in locations where we operate a large number of hotels.
Our business could be materially and adversely affected by the outbreak of swine influenza, avian influenza, severe acute respiratory
syndrome, COVID-19, or other epidemics. For example, in recent years, there have been reports on the occurrences of avian influenza in
various parts of China, Europe, and other countries and regions that we operate, including hundreds of confirmed human deaths. In
addition, the COVID-19 pandemic had caused material disruptions to our business operations in China and Europe since early 2020 till
early 2023. Though we have witnessed strong recovery in our operations in both China and Europe since 2023, the ultimate effects of the
COVID-19 due to its unprecedented nature remains uncertain and unpredictable. Even if the pandemic diminishes, its global economic
repercussions, including any resulting recession, could continue to adversely affect our business. Therefore, the impact of the COVID-19
pandemic or any similar health epidemic on our business is uncertain and could be substantial. Losses caused by epidemics, adverse
weather conditions, natural disasters and other catastrophes, including earthquakes or typhoons, are either uninsurable or too expensive
to justify insuring against in China, Europe, and other countries and regions that we operate. In the event an uninsured loss or a loss in
excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future
revenues from the hotel. In that event, we might nevertheless remain obligated for any financial commitments related to the hotel.
Similarly, war (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest and heightened
travel security measures instituted in response, travel-related accidents, as well as geopolitical uncertainty and international conflict, will
affect travel and may in turn have a material adverse effect on our business and results of operations. In addition, we may not be
adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis, and as a result, our
operational continuity may be adversely and materially affected and our reputation may be harmed.
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.
We carry all mandatory and certain optional commercial insurance, including property, business interruption, third-party liability,
public liability and employer’s liability insurance for our leased and owned hotel operations. We also require our lessors, franchisees and
contractors to purchase customary insurance policies. Although we require our franchisees to obtain the requisite insurance coverage
through our franchisees management, we cannot guarantee that our franchisees will adhere to such requirements. In particular, there are
inherent risks of accidents or injuries in hotels. One or more accidents or injuries at any of our hotels could adversely affect our safety
reputation among customers and potential customers, decrease our overall occupancy rates and increase our costs by requiring us to take
additional measures to make our safety precautions even more visible and effective. In the future, we may be unable to renew our
insurance policies or obtain new insurance policies without increases in cost or decreases in coverage levels. We may also encounter
disputes with insurance providers regarding payments of claims that we believe are covered under our policies. Furthermore, if we are
held liable for amounts and claims exceeding the limits of our insurance coverage or outside the scope of our insurance coverage, our
reputation, business, financial condition and results of operations may be materially and adversely affected.

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If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our
financial results or prevent fraud.
We are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, or the SEC, as
required by Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, adopted rules requiring every public company to
include in its annual report a management report on such company’s internal control over financial reporting containing management’s
assessment of the effectiveness of its internal control over financial reporting. In addition, an independent registered public accounting
firm must attest to and report on the effectiveness of such company’s internal control over financial reporting except where the company
is a non-accelerated filer. We currently are a large accelerated filer.
In connection with the preparation of this annual report, we carried out an evaluation of the effectiveness of our internal control over
financial reporting. Based on this assessment and evaluation, our management has concluded that our internal control over financial
reporting was effective as of December 31, 2024. Our independent registered public accounting firm has issued an attestation report as of
December 31, 2024. See “Item 15. Controls and Procedures—Attestation Report of the Registered Public Accounting Firm.” However, if
we fail to maintain effective internal control over financial reporting in the future, our management and our independent registered public
accounting firm may not be able to conclude that we have effective internal control over financial reporting. This could in turn result in
the loss of investor confidence in the reliability of our financial statements and negatively impact the trading prices of our ADSs and/or
ordinary shares. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs, management time and
other resources in an effort to continue to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.
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.
We cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of litigation and other
proceedings filed by or against us, our directors, management or employees, including remedies or damage awards, and adverse results in
such litigation and other proceedings may harm our business or reputation. Such litigation and other proceedings may include, but are not
limited to, actions relating to intellectual property, commercial arrangements, leased properties, share transfer, employment, non-
competition fiduciary duties, personal injury, death, property damage, or other harm resulting from acts or omissions by individuals or
entities outside of our control, including franchisees and third-party property owners. For example, as of December 31, 2024, we had
some pending legal, administrative and arbitration proceedings, including lease contract disputes, franchise agreement disputes and labor
disputes. Moreover, in the case of intellectual property litigation and proceedings, adverse outcomes could include the cancellation,
invalidation or other loss of material intellectual property rights used in our business and injunctions prohibiting our use of business
processes or technology that is subject to third- party patents or other third-party intellectual property rights.
We generally are not liable for the willful actions of our franchisees and property owners; however, there is no assurance that we
would be insulated from liability in all cases.
Risks Related to Doing Business in China
We are subject to many of the economic and political risks associated with emerging markets due to our operations in China.
With global presence, including but not limited to Europe, the Middle East and the Southeast Asia, we conduct a substantial portion
of our business and operations in China. As the lodging industry is highly sensitive to business and personal discretionary spending
levels, it tends to decline during general economic downturns. Accordingly, our results of operations, financial condition and prospects
are subject to a significant degree to economic developments in China. The PRC regulatory authorities have implemented various
measures to encourage economic development and guide the allocation of resources. While some of these measures benefit the overall
PRC economy, they may also have a negative effect on us. For example, our results of operations and financial condition may be
adversely affected by regulatory control over capital investments or changes in environmental, health, labor, or tax regulations that are
applicable to us.

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As the PRC economy is increasingly intricately linked to the global economy, it is affected in various respects by downturns and
recessions of major economies around the world, such as the global financial crisis and sovereign debt crisis in Europe. Stimulus
measures designed to help China weather the global financial crisis may contribute to higher inflation, which could adversely affect our
results of operations and financial condition. For example, certain operating costs and expenses, such as employee compensation and
hotel operating expenses, may increase as a result of higher inflation. Measures to control the pace of economic growth may cause a
decrease in the level of economic activity in China, which in turn could adversely affect our results of operations and financial condition.
In addition, the PRC regulators exercise influence over China’s economic growth through its allocation of resources, control of payment
of foreign currency-denominated obligations, monetary policy, and preferential treatment for particular industries or companies where
the regulators deem appropriate to further regulatory, political and societal goals. Certain measures adopted by the PRC regulatory
authorities, such as changes of the People’s Bank of China’s statutory deposit reserve ratio and lending guideline imposed on commercial
banks, may restrict loans to certain industries. The State Administration of Foreign Exchange, or “SAFE”, and the relevant Chinese
banks where our operating subsidiaries or VIEs in China opened bank accounts may adopt restrictions on the cross-border payment
obligations and dividends repatriation made by these subsidiaries or VIEs by way of “window guidance” measures. These actions, as
well as future actions and policies, could materially affect our liquidity and access to capital and our ability to operate our business.
There have also been concerns about the relationships among China and other Asian countries, the relationship between China and the
United States, as well as the relationship between the United States and certain Asian countries such as North Korea, which may result in
or intensify potential conflicts in relation to territorial, regional security and trade disputes. Specifically, deterioration in political
conditions and abrupt changes in Sino - U.S. relations are difficult to predict and could adversely affect China’s overall economic and
market conditions and consequently our business, operating results and financial condition. Any ongoing controversies between the
United States and China, whether or not related to our business, could cause investors to be unwilling to hold or buy our ADSs and
consequently cause the trading price of our ADSs to decline.
Any adverse changes in economic conditions in China, or in the laws and regulations and the policies in China could have a material
adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results,
leading to reduction in demand for our services and solutions and adversely affect our competitive position. An economic downturn,
whether actual or perceived, a further decrease in economic growth rates or an otherwise uncertain economic outlook in China could
have a material adverse effect on business and consumer spending and, as a result, adversely affect our business, financial condition, and
results of operations.
Inflation in China may disrupt our business and have an adverse effect on our financial condition and results of operations.
The Chinese economy has experienced rapid expansion together with rising rates of inflation and increasing salaries. Salary
increases could potentially increase discretionary spending on travel, but general inflation may also erode disposable incomes and
consumer spending. Furthermore, certain components of our operating costs, including personnel, food, laundry, consumables, property
development and renovation costs, may increase as a result of an increase in the cost of materials and labor resulting from general
inflation. However, we cannot guarantee that we can pass increased costs to customers through room rate increases. This could adversely
impact our business, financial condition and results of operations.
Developments in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you
and us.
China is one of our major markets and most of our operations are conducted in the PRC through our PRC subsidiaries, and are
governed by PRC laws, rules and regulations. The PRC legal system is based on written statutes. It is a system in which prior court
decisions have limited value as precedents. Our PRC subsidiaries and the VIEs are subject to various PRC laws and regulations generally
applicable to companies in China. However, these laws and regulations are relatively new, and the PRC legal system continues to rapidly
evolve.
In particular, PRC laws and regulations concerning the lodging industry are developing and evolving. The PRC governmental
authorities may promulgate new laws and regulations regulating the lodging industries. We cannot assure you that our business
operations would not be deemed to violate any such new PRC laws or regulations. Moreover, developments in the lodging industry may
lead to changes in PRC laws, regulations and policies or in the interpretation and application of existing laws, regulations and policies,
which in turn may limit or restrict us, and could materially and adversely affect our business and operations.
Besides, the PRC is geographically large and divided into various provinces and municipalities and, as such, different laws, rules,
regulations and policies may have different and varying applications and interpretations in different parts of the PRC.

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From time to time, we may have to rely on administrative and court proceedings to enforce our legal rights. However, since the PRC
administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, these types of
uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural
rights, and any failure to respond to changes in the regulatory environment in China, could materially and adversely affect our business
and impede our ability to continue our operations, and may further affect the legal remedies and protections available to investors, which
may, in turn, adversely affect the value of your investment.
Recent regulatory developments in China may subject us to additional regulatory review and disclosure requirements, expose us to
government influence, or otherwise restrict or completely hinder our ability to offer securities and raise capital outside China,
which could adversely affect our business operations and cause the value of our securities to significantly decline or become
worthless.
As our business is primarily conducted in China, we are exposed to legal and other risks associated with our operations in China.
The PRC regulators have authority to exert influence on the ability of a company with operations in China, including us, to conduct its
business, and may exert influence over the manner our operations. Any actions by the PRC regulators to exert more oversight over
offerings that are conducted overseas or foreign investment in companies having operations in China, including us, could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our securities to
significantly decline or become worthless. Recently, the PRC regulators initiated a series of regulatory actions and statements to regulate
business operations in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-
based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, adopting new laws and
regulations related to data security, and expanding the efforts in anti-monopoly enforcement. While we do not believe that these
regulatory changes would have any material impact on us, we cannot guarantee that the authorities will agree with us or will not
promulgate new regulations that restrict our business operations or access to capital.
On August 8, 2006, six PRC regulatory agencies, namely the MOFCOM, the State Assets Supervision and Administration
Commission, the State Administration of Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE,
jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, 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.
On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State
Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities. These opinions emphasized the
need to strengthen the administration over illegal securities activities and the supervision of overseas listings by China-based companies.
These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the
risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. These
opinions and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. There are
still uncertainties regarding the interpretation and implementation of these opinions, and further explanations or detailed rules and
regulations with respect to these opinions may be issued in the future that could impose additional requirements on us. Therefore, we
cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future
implementation rules on a timely basis, or at all.

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On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by
Domestic Companies (which came into effect on March 31, 2023) and its relevant notes and five supporting guidelines. Pursuant to these
regulations, if the offering and listing of securities in an overseas market are made in the name of an offshore entity based on equity,
assets, earnings of PRC companies that operate the offshore entity’s main businesses, such offering or listing of securities is subject to
filing requirements of the CSRC. These regulations apply to various types of overseas equity offerings and listings, including re-
financing, secondary or dual primary listings, listing through special purchase acquisition companies, issuance of equity incentive
awards, issuance of equity securities or securities convertible into or exchangeable for equity securities. Issuers conducting these
transactions will need to make filings with the CSRC. According to the Circular on the Arrangements for the Filing-based
Administration of Overseas Securities Offering and Listing by Domestic Companies, for companies that have already offered shares or
been listed overseas prior to the implementation of such new regulations, these companies qualify as “Stock Enterprises”, and Stock
Enterprises are not required to apply for the filing immediately until a subsequent re-financing event occurs. These new regulations and
their future developments could potentially complicate our future equity offerings and require us to incur significant compliance costs.
In addition, these new rules or regulations impose additional requirements on our future re-financing activities and will subject us to
relevant CSRC filings or other regulatory authorization or requirements. We cannot assure you that we would be able to obtain such
fillings, approval or meet such requirements in a timely manner or at all. Any failure may subject us to fines, penalties or other sanctions
which may have a material adverse effect on our business and financial condition as well as our ability to complete this or other future
offerings.
Rapid urbanization and changes in zoning and urban planning in China may cause our leased and owned hotels to be demolished,
removed or otherwise affected and our franchise agreements to terminate.
China is undergoing a rapid urbanization process, and zoning requirements and other regulatory mandates with respect to urban
planning of a particular area may change from time to time. When there is a change in zoning requirements or other regulatory mandates
with respect to the areas where our hotels are located, the affected hotels may need to be demolished or removed. We have experienced
such demolition and relocation in the past and we may encounter additional demolition and relocation cases in the future. Our franchise
agreements typically provide that if the manachised or franchised hotels are demolished, the franchise agreements will terminate. Any
such demolition and relocation could cause us to lose primary locations for our hotels and we may not be able to achieve comparable
operation results following the relocations. While we may be reimbursed for such demolition and relocation, we cannot assure you that
the reimbursement, as determined by the relevant regulatory authorities, will be sufficient to cover our direct and indirect losses.
Accordingly, our business, results of operations and financial condition could be adversely affected.
Regulatory control of currency conversion may limit our ability to pay dividends in foreign currencies to our shareholders and
therefore adversely affect the value of your investment.
The PRC regulators impose controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of
currency out of China. For example, Our PRC subsidiaries must present certain documents to SAFE, its authorized branch, or the
designated foreign exchange bank, before they can obtain and remit foreign currencies out of the PRC, including evidence that the
relevant PRC taxes have been paid. See “Item 4. Information on the Company — B. Business Overview — Regulation — Regulations
on Foreign Currency Exchange” for discussions of the principal regulations and rules governing foreign currency exchange in China. We
receive a substantial portion of our revenues in RMB. For most capital account items, approval from appropriate regulatory authorities is
required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of
bank loans denominated in foreign currencies. The PRC regulators may also at its discretion restrict access in the future to foreign
currencies for current account transactions. If our PRC subsidiaries, for any reason, fail to satisfy any of the PRC legal requirements for
remitting foreign currency, or if the foreign exchange control system otherwise prevents us from obtaining sufficient foreign currency to
satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our
ADSs and ordinary shares, which would adversely affect the value of your investment.
Fluctuation in the value of the Renminbi may have a material adverse effect on your investment.
The value of the Renminbi against the U.S. dollar, Euro, Hong Kong dollar and other currencies is affected by, among other things,
changes in China’s political and economic conditions and China’s foreign exchange policies.

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A significant portion of our revenues, expenses and financial assets are denominated in the Renminbi. Our reporting currency is
Renminbi. The functional currencies of the entities within Deutsche Hospitality include Euro and other currencies such as Swiss Franc.
We rely substantially on dividends paid to us by our operating subsidiaries in China and Europe. Any significant depreciation of the
Renminbi or Euro against the U.S. dollar may have a material adverse effect on our revenues, and the value of, and any dividends
payable on, our ADSs and ordinary shares, when translated into U.S. dollars. If we decide to convert our Renminbi or Euro into U.S.
dollars for the purpose of making payments for dividends on our ordinary shares or for other business purposes, depreciation of the
Renminbi or Euro against the U.S. dollar or Hong Kong dollar would reduce the U.S. dollar or Hong Kong dollar amount available to us.
On the other hand, to the extent that we need to convert U.S. dollars or Hong Kong dollar into Renminbi or Euro for our operations,
appreciation of the Renminbi or Euro against the U.S. dollar or Hong Kong dollar would have an adverse effect on the Renminbi amount
we receive from the conversion. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk — Foreign Exchange Risk”
for discussions of our exposure to foreign currency risks. In summary, fluctuation in the value of the Renminbi in either direction could
have a material adverse effect on the value of our company and the value of your investment.
In addition, because we also have operations in Europe (namely, Deutsche Hospitality) with the functional currencies of Euro and
other currencies such as Swiss Franc, when the Renminbi appreciates (or depreciates) against these other functional currencies, such as
Euro and Swiss Franc, our revenues from these operations could decrease (or increase) when translated into Renminbi. In general,
fluctuation in the value of the Renminbi in either direction could result in the fluctuation in the value of our Company and the value of
your investment.
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.
On July 4, 2014, 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 replaced the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic
Residents’ Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles issued by SAFE in October 2005,
or Circular 75. Pursuant to Circular 37, any PRC residents, including both PRC institutions and individual residents, are required to
register with the local SAFE branch before making contribution to a company set up or 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 interests, referred to in
this circular as a “special purpose vehicle.” In addition, such PRC residents or entities must update their SAFE registrations when the
offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC
citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers
or spin-offs. In February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign
Exchange Management Policies on Direct Investment, which took effect on June 1, 2015. This notice has amended SAFE Circular 37,
requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing, where banks are required
to review and carry out foreign exchange registration for offshore direct investments, and SAFE and its branches supervise foreign
exchange registration for direct investments indirectly through the banks. See “Item 4. Information on the Company — B. Business
Overview — Regulation — Regulations on Offshore Financing” for discussions of the registration requirements and the relevant
penalties.
We attempt to comply, and attempt to ensure that our shareholders and beneficial owners of our shares who are subject to these rules
comply, with the relevant requirements. We cannot provide any assurance that our shareholders and beneficial owners of our shares who
are PRC residents have complied or will comply with the requirements imposed by Circular 37 or other related rules. Any failure by any
of our shareholders and beneficial owners of our shares who are PRC residents to comply with relevant requirements under this
regulation could subject such shareholders, beneficial owners and us to fines or sanctions imposed by the PRC regulators, including
limitations on our relevant subsidiary’s ability to pay dividends or make distributions to us and our ability to increase our investment in
China, or other penalties that may adversely affect our operations.

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We rely principally on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing
requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material
adverse effect on our ability to conduct our business.
We are a holding company, and we rely principally on dividends from our subsidiaries in China for our cash requirements, including
any debt we may incur. Current PRC laws and regulations permit our subsidiaries to pay dividends to us only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our subsidiaries in China is
required to set aside a certain percentage of its after-tax earnings each year, if any, to fund certain statutory reserves. These reserves are
not distributable as cash dividends. As of December 31, 2024, a total of RMB1,455 million (US$199 million) was not distributable in the
form of dividends to us due to these PRC regulations. In addition, due to restrictions on the distribution of share capital from our PRC
subsidiaries, the PRC subsidiaries’ share capital of RMB2,726 million (US$373 million) as of December 31, 2024 is considered
restricted. Furthermore, if our subsidiaries in China incur debt on their own behalf in the future, the instruments governing the debt may
restrict their ability to pay dividends or make other payments to us. The inability of our subsidiaries to distribute dividends or other
payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our
businesses, pay dividends, or otherwise fund and conduct our business.
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using
the proceeds from offerings of the ADSs, ordinary shares or other securities to make loans or additional capital contributions to
our PRC operating subsidiaries and VIEs.
As an offshore holding company, our ability to make loans or additional capital contributions to our PRC operating subsidiaries and
VIEs is subject to PRC regulatory requirements. These regulatory requirements may delay or prevent us from using the proceeds we
received in the past or will receive in the future from the offerings of ADSs, ordinary shares or other securities to make loans or
additional capital contributions to our PRC operating subsidiaries and VIEs, and impair our ability to fund and expand our business
which may adversely affect our business, financial condition and result of operations. For example, SAFE promulgated the Circular on
Reforming and Regulating the Management Policies on the Settlement of Capital Projects, or Circular 16, on June 9, 2016. Under
Circular 16, registered capital of a foreign-invested company settled in RMB converted from foreign currencies shall be subject to certain
limitations prescribed under Circular 16, which was 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. In addition,
according to Regulation on Foreign Exchange Administration amended on August 5, 2008, foreign-invested companies may not change
how they use such capital without SAFE’s approval.
Furthermore, any offshore funds that we use to finance our PRC entities, including the net proceeds from the offering of the ADSs,
ordinary shares or other securities, are subject to the foreign investment regulations and foreign exchange regulations in the PRC. We
may make loans to our PRC entities, but they are subject to such PRC entities’ sufficient foreign debt quota and foreign exchange loan
registration with SAFE. For example, loans by us to our PRC entities (as foreign-invested enterprises) in China to finance their activities
cannot exceed statutory limits, i.e., the difference between its total amount of investment and its registered capital, or certain amount
calculated based on elements including capital or net assets, the cross-border financing leverage ratio and the macro prudential
coefficient (“Macro-prudential Management Mode”) under relevant PRC laws. Pursuant to the Notice on Expanding the Pilot Program
for High-Level Opening Up of Cross-Border Trade and Investment issued by SAFE on December 4, 2023, enterprises located in
Shanghai, Jiangsu, Guangdong, Beijing, Zhejiang, Hainan, Shenzhen, and Ningbo are permitted to complete registration procedures
directly through designated banks. For loans obtained by entities outside these pilot regions, registration with SAFE remains mandatory
in accordance with applicable foreign exchange regulations. According to the Circular of the People’s Bank of China and the State
Administration of Foreign Exchange on Adjusting the Macro-prudent Adjustment Parameter for Cross-border Financing issued on
January 7, 2021 and the Notice on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing
issued on January 11, 2017 and Notice on Adjusting the Macro-prudential Adjustment Parameter for Cross-border Financing issued by
the People’s Bank of China and SAFE on January 13, 2025, the limit for the total amount of foreign debt under the Macro-prudential
Management Mode is adjusted to 3.5 times of their respective net assets.

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In addition, the application of the proceeds under the ADSs, ordinary shares or other securities is subject to the foreign exchange
regulations in the PRC. We may also decide to finance our entities by means of capital contributions. According to the relevant PRC
regulations on foreign-invested enterprises in China, depending on the total amount of investment, capital contributions to our PRC
operating subsidiaries and VIEs is no longer subject to the approval of the MOFCOM or its local branches. Instead, if we finance our
PRC subsidiaries by means of additional capital contributions, these capital contributions must be filed and registered with relevant
regulatory authorities, including the MOFCOM, or its local counterparts, the State Administration for Market Regulation, or SAMR,
through the Enterprise Registration System and the National Enterprise Credit Information Publicity System, and SAFE. However, we
cannot assure you that the regulations will always remain favorable to us. If the regulations are revised in the future or we fail to
complete such registration or obtain such approvals on time, our ability to use the proceeds of the ADSs, ordinary shares or other
securities and to capitalize our operations in PRC may be negatively affected, which could adversely affect our liquidity and our ability
to fund and expand our business.
We may be subject to fines and legal sanctions imposed by SAFE or other Chinese regulatory authorities and our ability to further
grant shares or share options to, and to adopt additional share incentive plans for, our directors and employees may be restricted if
we or the participants of our share incentive plans fail to comply with PRC regulations relating to employee shares or share options
granted by offshore special purpose companies or offshore listed companies to PRC participants.
In February 2012, the SAFE issued 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, which requires PRC individual participants of
stock incentive plans to register with the SAFE and to comply with a series of other requirements. See “Item 4. Information on the
Company — B. Business Overview — Regulation — Regulations on Foreign Currency Exchange.” We are an offshore listed company
and as a result we and the participants of our share incentive plans who are PRC citizens or non-PRC citizens residing in China
successively for at least one year, or, collectively, the PRC participants, are subject to Circular 7. While we completed the foreign
exchange registration procedures and complied with other requirements according to Circular 7 in June 2012 and September 2023, we
cannot provide any assurance that we or the PRC participants of our share incentive plans will be deemed by regulatory authorities to
have complied with the requirements imposed by Circular 7. If we or the PRC participants of our share incentive plans fail to comply
with Circular 7, we or the PRC participants of our share incentive plans may be subject to fines or other legal sanctions imposed by
SAFE or other PRC regulatory authorities and our ability to further grant shares or share options under our share incentive plans to, and
to adopt additional share incentive plans for, our directors and employees may be restricted. Such events could adversely affect our
business operations.
It is unclear whether we will be considered as a PRC resident enterprise under the Enterprise Income Tax Law of the PRC. 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 a 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.
On March 16, 2007, the PRC National People’s Congress passed the Enterprise Income Tax Law, and the PRC State Council
subsequently issued the Implementation Regulations of the Enterprise Income Tax Law (the “Implementation Regulations”). The
Enterprise Income Tax Law (last amended on December 29, 2018) and its Implementation Regulations (last amended on December 6,
2024), collectively the “EIT Law”, provides that enterprises established outside of China whose “de facto management bodies” are
located in China are considered resident enterprises and are therefore subject to PRC enterprise income tax at a uniform rate of 25% with
respect to their income sourced from both within and outside of China. The Implementation Regulations define the term “de facto
management body” as a management body that exercises substantial and overall control and management over the production and
operations, personnel, accounting and properties of an enterprise.

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On April 22, 2009, the State Taxation Administration, or the “STA” (previously known as State Administration of Taxation, or the
“SAT”) issued the Notice Regarding the Determination of Chinese-Controlled Enterprises Registered Offshore as PRC Tax Resident
Enterprises on the Basis of De Facto Management Bodies, or Circular 82. Circular 82 provides certain specific criteria for determining
whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. In addition, the
STA issued Public Announcement [2011] No. 45 in 2011 and Public Announcement [2014] No. 9 in 2014, providing more guidance on
the implementation of Circular 82 and clarifying matters including resident status determination, post-determination administration and
competent tax authorities. However, the above-mentioned tax circulars apply only to offshore enterprises controlled by PRC enterprises,
not those invested in or controlled by PRC individuals. Currently, there are no further detailed rules or precedents applicable to us
regarding the procedures and specific criteria for determining “de facto management body” for a company invested in or controlled by
PRC individuals. It is still unclear if the PRC tax authorities would determine that we should be classified as a PRC resident enterprise.
Although we have not been notified that we are treated as a PRC resident enterprise, we cannot assure you that we will not be treated
as a resident enterprise under the EIT Law, any aforesaid circulars or any amended regulations in the future. If we are treated as a PRC
resident enterprise for PRC enterprise income tax purposes, among other things, we would be subject to the PRC enterprise income tax at
the rate of 25% on our worldwide taxable income. Furthermore, if we are treated as a PRC resident enterprise, payments of dividend by
us may be regarded as derived from sources within the PRC and therefore we may be obligated to withhold PRC income tax at 10% on
payments of dividend on the ADSs or ordinary shares to non-PRC resident enterprise investors. In the case of non-PRC resident
individual investors, the tax may be withheld at a rate of 20%.
In addition, if we are treated as a PRC resident enterprise, pursuant to the EIT Law and the Individual Income Tax Law of the PRC,
any gain realized on the transfer of the ADSs and/or ordinary shares by non-PRC resident investors may be regarded as derived from
sources within the PRC and accordingly may be subject to a 10% PRC income tax in the case of non-PRC resident enterprises or 20% in
the case of non-PRC resident individuals. The PRC income tax on dividends and/or gains may be reduced or exempted under applicable
tax treaties between the PRC and the ADS holder’s or ordinary share holder’s home country. See “Item 10. Additional Information — E.
Taxation — PRC Taxation.”
If the PCAOB is unable to inspect our auditors as required under the HFCA Act, the SEC will prohibit the trading of our ADSs,
which may materially and adversely affect the value of your investment.
The United States adopted the HFCA Act on December 18, 2020, which was amended by the Consolidated Appropriations Act,
2023 in December 2022. Under the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public
accounting firm that has not been subject to inspection by the PCAOB for two consecutive years (beginning with those we filed in 2022),
the SEC will prohibit our securities, including our ADSs, from being traded on a U.S. national securities exchange, including NASDAQ,
or in the over-the-counter trading market in the U.S. Pursuant to amendments made to the HFCA Act in 2022, the PCAOB may
determine that it is unable to inspect or investigate completely registered public accounting firms in any foreign jurisdictions because of
positions taken by any foreign authority, rather than an authority in the location in which the firms are headquartered or in which they
have a branch or office, as was the case under the original version of the Act. The process for implementing trading prohibitions pursuant
to the HFCA Act will be based on a list of registered public accounting firms that the PCAOB has been unable to inspect and investigate
completely as a result of a position taken by a non-U.S. government. The first such list was announced by the PCAOB on December 16,
2021, and our auditor was included on that list.
The SEC reviews annual reports filed with it to determine if the auditor used for such reports was so identified by the PCAOB, and
such issuers are designated as “Commission-Identified Issuers” on a list to be published by the SEC. If an issuer is a Commission-
Identified Issuer for two consecutive years (which will be determined after the second such consecutive annual report), the SEC will
issue an order that will implement the trading prohibitions described above. We were conclusively identified as a “Commission-
Identified Issuer” under the HFCA Act on May 26, 2022 in respect of our Annual Report for 2021 on Form 20-F filed on April 27, 2022.
If our ADSs are subject to a trading prohibition under the HFCA Act, the price of our ADSs may be adversely affected, and the threat of
such a trading prohibition would also adversely affect their price. If our listing in Hong Kong cannot provide sufficient liquidity or if we
are unable to be listed on another securities exchange that provides sufficient liquidity, such a trading prohibition may substantially
impair your ability to sell or purchase our ADSs when you wish to do so. Furthermore, even if we are able to maintain a listing of our
ordinary shares on the Hong Kong Stock Exchange or another non-U.S. exchange, investors owning our ADSs may have to take
additional steps to engage in transactions on that exchange, including converting ADSs into ordinary shares and establishing non-U.S.
brokerage accounts.

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On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking a
first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in Mainland
China and Hong Kong. On December 15, 2022, the PCAOB announced its determination that it has been able to inspect and investigate
audit firms in mainland China and Hong Kong completely for purposes of the HFCA Act, and the PCAOB vacated its December 16,
2021 determinations. As a result of this announcement, we were not for the fiscal year of 2022 or 2023, and do not expect to be for the
fiscal year of 2024, a Commission-Identified Issuer in respect of our annual report on Form 20-F. However, the PCAOB stated that
should PRC authorities obstruct the PCAOB’s ability to inspect or investigate completely in any way and at any point in the future, the
PCAOB Board will act immediately to consider the need to issue new determinations consistent with the HFCA Act. While we currently
do not expect the HFCA Act to prevent us from maintaining the trading of our ADSs in the U.S., uncertainties exist with respect to future
determinations of the PCAOB in this respect and any further legislative or regulatory actions to be taken by the U.S. or Chinese
regulators that could affect our listing status in the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially
and adversely affect the value of your investment.
Risks Related to Our Corporate Structure
H World Group Limited is a Cayman Islands holding company. As a result, you may experience difficulties in effecting service of
legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws.
H World Group Limited is a holding company with no operations of its own. H World Group Limited conducts its operations
primarily by our subsidiaries, a majority of which are based in China and Europe, and through contractual arrangements with the
Consolidated Affiliated Entities. Investors in our ADSs and ordinary shares do not hold equity interest in our operating entities in China,
but instead are purchasing equity securities of a Cayman Islands holding company. In addition, most of our executive officers reside
within China for a significant portion of the time and most of them are PRC nationals. As a result, it may be difficult for our shareholders
to effect service of process upon us or those persons residing inside China. In addition, China does not have treaties providing for the
reciprocal recognition and enforcement of judgments of courts with the Cayman Islands, United States and many other countries and
regions.
Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any
matter not subject to a binding arbitration provision may be difficult or impossible.
Revenue and assets contributions from the Consolidated Affiliated Entities have not been material. Nonetheless, if the PRC
regulatory authorities deem that the contractual arrangements in relation to the Consolidated Affiliated Entities do not comply with
PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing
regulations change in the future, our ordinary shares and ADSs may decline in value if we are unable to assert our contractual
control rights over the assets of the Consolidated Affiliated Entities.
The current industry entry clearance requirements governing foreign investment activities in the PRC are set out in two categories,
namely the Encouraged Industry Catalogue for Foreign Investment (2022 version), as promulgated by the NDRC and the MOFCOM,
which became effective on January 1, 2023 (the “Encouraged List”), and the Negative List (2024 Edition). Industries listed in the
Encouraged List are generally deemed “encouraged” for foreign investments, and industries not listed in either of these two lists are
generally deemed “permitted” for foreign investments unless specifically prohibited or restricted by other PRC laws. According to the
Negative List (2024 Edition), a foreign stake in a value-added telecommunications service may not exceed 50% (except for e-commerce,
domestic conferencing, store-and-forward, and call center services). Pursuant to the Regulations on Travel Agencies (2020 Revision),
which was promulgated by the State Council and became effective on November 29, 2020, generally, no foreign-invested travel agency
may operate a business providing travel services to Chinese mainland residents’ traveling to other countries or to the Hong Kong or
Macao Special Administrative Region, or Taiwan.
Because H World Group Limited is an exempted company incorporated in the Cayman Islands with limited liability, it is classified
as a foreign enterprise under PRC laws and regulations, and our PRC subsidiaries are foreign-invested enterprises (“FIEs”). PRC laws
and regulations restrict and impose conditions on foreign investment in certain internet-based businesses and international travel agency
businesses. Accordingly, to comply with PRC laws and regulations, we operate these businesses in China through the variable interest
entity model, and rely on contractual arrangements among our PRC subsidiaries, the Consolidated Affiliated Entities and their respective
nominee shareholders to control the business operations of the Consolidated Affiliated Entities and their subsidiary.

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If our corporate structure and contractual arrangements are deemed by the Ministry of Industry and Information Technology or the
MOFCOM or other regulators having competent authority to be illegal, either in whole or in part, we may lose control of the
Consolidated Affiliated Entities and have to modify such structure and contractual arrangements to comply with regulatory requirements.
However, there can be no assurance that we can achieve this without disrupting our business. Further, if our corporate structure and
contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory
authorities would have broad discretion in dealing with such violations, including:
●
revoking our relevant business and operating licenses;
●
levying fines on us;
●
confiscating any of our income that they deem to be obtained through illegal operations;
●
shutting down our relevant services;
●
discontinuing or restricting our operations of such Consolidated Affiliated Entities in China;
●
imposing conditions or requirements with which we may not be able to comply;
●
requiring us to change our corporate structure and contractual arrangements;
●
prohibiting our use of the proceeds from overseas offerings to finance the Consolidated Affiliated Entities’ business and
operations; and
●
taking other regulatory or enforcement actions that could be harmful to our business.
Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to
our corporate structure and contractual arrangements. See “—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” below for more information. Occurrence of any of these events could materially and adversely affect our business, financial
condition and results of operations. If the PRC regulators determine that these contractual arrangements do not comply with PRC
regulations, or if these regulations change or are interpreted differently in the future, our ordinary shares and ADSs may decline in value
if we are unable to assert our contractual control rights over the assets of the Consolidated Affiliated Entities. In addition, H World Group
Limited, which is the company our investors hold securities in, may never have a direct equity ownership interest in the businesses that
are conducted by the Consolidated Affiliated Entities. If the imposition of any of these penalties or requirement to restructure our
corporate structure causes us to lose the rights to direct the activities of the Consolidated Affiliated Entities or our right to receive their
economic benefits, we would no longer be able to consolidate the financial results of such Consolidated Affiliated Entities in our
consolidated financial statements.
We rely in part on contractual arrangements with each of the Consolidated Affiliated Entities and their respective nominee
shareholders to operate certain restricted business. These contractual arrangements may not be as effective as direct ownership in
providing operational control and otherwise have a material adverse effect as to our business.
H World Group Limited is not a Chinese operating company but a Cayman Islands holding company with operations primarily
conducted by our subsidiaries, a majority of which are based in China and Europe, and through contractual arrangements with the
Consolidated Affiliated Entities. The Consolidated Affiliated Entities include (i) Tianjin Jizhu, (ii) Shanghai Huanmei and Huanmei
Travel, and (iii) Ningbo Futing. Mr. Pengfei Jiang, who is the director/supervisor of certain of our subsidiaries, holds 100% of equity
interest in Tianjin Jizhu. Mr. Pengfei Jiang and Mr. Andong Chen, our employee, hold 90% and 10% of equity interest in Shanghai
Huanmei, respectively. Mr. Dongfu Shi is the director of and holds 100% of equity interest in Ningbo Futing.

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We rely in part on contractual arrangements entered into among Huazhu Hotel Management Co., Ltd., a wholly-owned subsidiary of
H World Group Limited (“HZ Hotel Management”), the Consolidated Affiliated Entities and their respective nominee shareholders to
operate certain restricted business. We have control over and are the primary beneficiary of the Consolidated Affiliated Entities for
accounting purposes and, therefore, have consolidated the financial results of the Consolidated Affiliated Entities in our consolidated
financial statements in accordance with U.S. GAAP. Any references to control or benefits that accrue to us because of the Consolidated
Affiliated Entities in this annual report are limited to, and are subject to conditions for consolidation of, the Consolidated Affiliated
Entities under U.S. GAAP. These contractual arrangements may not be as effective as direct ownership in providing us with control over
the Consolidated Affiliated Entities. Investors in our ADSs and ordinary shares are not purchasing equity interest in our operating entities
in China, but instead are purchasing an equity interest in H World Group Limited, a Cayman Islands holding company. The Consolidated
Affiliated Entities do not have a material contribution to our results of operations and the Consolidated Affiliated Entities do not support
material revenues reported within other subsidiaries of our company. The Consolidated Affiliated Entities are consolidated with our
results of operations for accounting purposes. If the Consolidated Affiliated Entities or the respective nominee shareholders of the
Consolidated Affiliated Entities 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 of 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 pursuant to the contractual arrangement or ownership by the record holder
of the equity interest.
All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the
PRC. Accordingly, these contractual arrangements would be interpreted in accordance with PRC laws and any disputes would be
resolved in accordance with PRC legal procedures. However, the legal framework and system in China, in particularly those relating to
arbitration proceedings, are not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties regarding
the enforcement of laws in China could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few
precedents and little formal guidance as to how contractual arrangements in the context of variable interest entities should be interpreted
or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action
become necessary. In addition, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and
if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the
arbitration awards in the PRC courts through arbitration award recognition proceedings, which would require additional expenses and
delay. In the event that we are unable to enforce these contractual arrangements, or if we suffer significant time delays or other obstacles
in the process of enforcing these contractual arrangements, it would be very difficult to exert effective control over the Consolidated
Affiliated Entities, and our ability to conduct our business and our financial condition and results of operations may be materially and
adversely affected. See “ —Risks Related to Doing Business in China—Developments in the interpretation and enforcement of PRC
laws and regulations could limit the legal protections available to you and us” below in this annual report.
If we exercise the option to acquire equity ownership of the Consolidated Affiliated Entities, the ownership transfer may subject us
to certain limitations and substantial costs.
Pursuant to the contractual arrangements, to the extent allowed by PRC laws, rules and regulations, HZ Hotel Management or its
designated person has the exclusive right to purchase all or any part of the equity interests in the Consolidated Affiliated Entities from
their respective nominee shareholders at the higher of (i) the lowest price permitted by applicable PRC laws and (ii) a nominal price of
RMB100. The transfer prices of such equity transfers might be subject to review and tax adjustment with reference to the market value
by the relevant tax authorities, and such authorities may require HZ Hotel Management to pay individual income tax in the PRC on
behalf of the individual shareholders of such Consolidated Affiliated Entities for ownership transfer income with reference to the market
value accordingly, in which case the amount of tax could be substantial.

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The nominee shareholders of the Consolidated Affiliated Entities may have potential conflicts of interest with us, which may
materially and adversely affect our business and financial condition.
We rely on the nominee shareholders of the Consolidated Affiliated Entities to abide by the obligations under such contractual
arrangements. The interests of these shareholders in their capacities as the shareholders of the Consolidated Affiliated Entities may differ
from the interests of our company as a whole, as what is in the best interests of the Consolidated Affiliated Entities, including matters
such as whether to distribute dividends or to make other distributions to fund our offshore requirements, may not be in the best interests
of our company. There can be no assurance that when conflicts of interest arise, any or all of these shareholders will act in the best
interests of our company or that those conflicts of interest will be resolved in our favor. In addition, these shareholders may breach or
cause the Consolidated Affiliated Entities and their subsidiary to breach or refuse to renew the existing contractual arrangements with us.
Control over, and funds due from, the Consolidated Affiliated Entities may be jeopardized if such shareholders breach the terms of the
contractual arrangements or are subject to legal proceedings.
Though it is difficult to address the potential conflicts of interest the nominee shareholders of the Consolidated Affiliated Entities
may encounter, on the one hand, and as a director, supervisor or employee of our group company, on the other hand, we could, however,
at all times, exercise our option under the exclusive option agreements to cause them to transfer all of their equity ownership in the
Consolidated Affiliated Entities to an entity or individual designated by us as permitted by the then applicable PRC laws. In addition, if
such conflicts of interest arise, we could also, in the capacity of attorney-in-fact of the nominee shareholders of the Consolidated
Affiliated Entities as provided under the power of attorney, directly appoint new directors, supervisors or senior management of the
Consolidated Affiliated Entities. We rely on the nominee shareholders of the Consolidated Affiliated Entities to comply with PRC laws
and regulations, which protect contracts and provide that directors and senior management owe a duty of loyalty to the companies they
serve and require them to avoid conflicts of interest and not to take advantage of their positions for personal gains. If we cannot resolve
any conflicts of interest or disputes between us and the individual shareholders of the Consolidated Affiliated Entities, we would have to
rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of
any such legal proceedings.
If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their
responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected.
Under PRC law, legal documents for corporate transactions, including agreements and contracts such as the leases and sales
contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal
representative whose designation is registered and filed with the relevant local branch of the State Administration for Market Regulation.
We generally execute legal documents by affixing chops or seals, rather than having the designated legal representatives sign the
documents. The chops of our subsidiaries and the Consolidated Affiliated Entities are generally held by the relevant entities so that
documents can be executed locally. Although we usually utilize chops to execute contracts, the registered legal representatives of our
subsidiaries and the Consolidated Affiliated Entities have the apparent authority to enter into contracts on behalf of such entities without
chops, unless such contracts set forth otherwise.
In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to the
designated key employees of our legal, human resources or finance departments. Our designated legal representatives generally do not
have access to the chops. Although we have approval procedures in place and monitor our key employees, including the designated legal
representatives of our subsidiaries and the Consolidated Affiliated Entities, the procedures may not be sufficient to prevent all instances
of abuse or negligence. There is a risk that our key employees or designated legal representatives could abuse their authority, for
example, by binding our subsidiaries and the Consolidated Affiliated Entities with contracts against our interests, as we would be
obligated to honor these contracts if the other contracting party acts in good faith in reliance on the apparent authority of our chops or
signatures of our legal representatives. If any designated legal representative obtains control of the chop in an effort to obtain control
over the relevant entity, we would need to have a shareholder or board resolution to designate a new legal representative and to take legal
action to seek the return of the chop, apply for a new chop with the relevant authorities, or otherwise seek legal remedies for the legal
representative’s misconduct. If any of the designated legal representatives obtains and misuses or misappropriates our chops and seals or
other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have
to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our
operations, and our business and operations may be materially and adversely affected.

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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.
The VIE structure through contractual arrangements has been adopted by many PRC-based companies, including us, to obtain
necessary licenses and permits in industries that are currently subject to foreign investment restrictions in China. The MOFCOM
published a discussion draft of the proposed Foreign Investment Law of the PRC in January 2015, or the 2015 Draft FIL, according to
which, variable interest entities that are controlled via contractual arrangements would also be deemed as foreign-invested entities, if
they are ultimately controlled by foreign investors. In March 2019, the PRC National People’s Congress promulgated the Foreign
Investment Law of the PRC, or the FIL, and in December 2019, the State Council promulgated the Implementing Rules of the Foreign
Investment Law of the PRC, or the Implementing Rules, to further clarify and elaborate the relevant provisions of the FIL. The FIL and
the Implementing Rules both became effective from January 1, 2020 and replaced the major previous laws and regulations governing
foreign investments in the PRC. Pursuant to the FIL, “foreign investments” refer to investment activities conducted by foreign investors
(including foreign natural persons, foreign enterprises or other foreign organizations) directly or indirectly in the PRC, which include any
of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other
investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of enterprises
within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (iv) investment in
other methods as specified in laws, administrative regulations, or as stipulated by the State Council. The FIL and the Implementing Rules
do not introduce the concept of “control” in determining whether a company would be considered as a foreign-invested enterprise, nor do
they explicitly provide whether the VIE structure through contractual arrangements would be deemed as a method of foreign investment.
However, the FIL has a catch-all provision that includes in its definition of “foreign investments” made by foreign investors in China in
other methods as specified in laws, administrative regulations, or as stipulated by the State Council. To implement this provision of the
FIL, the relevant regulatory authorities may promulgate more laws, regulations or rules on the interpretation and implementation of the
FIL, and we cannot rule out the possibility that the concept of “control” as stated in the 2015 Draft FIL may be embodied in, or the VIE
structure through contractual arrangements adopted by us may be deemed as a method of foreign investment by, any of such future laws,
regulations and rules. If any of the Consolidated Affiliated Entities were deemed as a foreign-invested enterprise under any of such future
laws, regulations and rules, and any of the businesses operated by such Consolidated Affiliated Entities in any “negative list” for foreign
investment were therefore subject to any foreign investment restrictions or prohibitions, our business, financial condition and results of
operations may be materially and adversely affected. Furthermore, if future laws, administrative regulations or provisions mandate
further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to
whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of
these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, business,
financial condition and results of operations.
Risks Related to Our ADSs, Ordinary Shares and Our Trading Market
The market prices for our ADSs and/or ordinary shares have been and may continue to be volatile.
The market price for our ADSs has been volatile and ranged from a low of US$27.56 to a high of US$42.04 on the NASDAQ
Global Select Market in 2024. Likewise, the high and low prices of our ordinary shares on the Hong Kong Stock Exchange in 2024 were
HK$33.3 and HK$21.0, respectively. In addition, the performance and fluctuation of the market prices of other companies with business
operations located mainly in China that have listed their securities in Hong Kong and/or the United States may affect the volatility in the
prices of and trading volumes for our ADSs and/or ordinary shares. Some of these companies have experienced significant volatility. The
trading performance of these companies’ securities may affect the overall investor sentiment towards other companies with business
operations located mainly in China and listed in Hong Kong and/or the United States and consequently may impact the trading
performance of our ADSs and/or ordinary shares. The market price is subject to wide fluctuations in response to various factors,
including the following:
●
actual or anticipated fluctuations in our quarterly operating results;
●
changes in financial estimates by securities research analysts;
●
conditions in the travel and lodging industries;
●
changes in the economic performance or market valuations of other lodging companies;

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●
announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital
commitments;
●
addition or departure of key personnel;
●
fluctuations of exchange rates between the RMB and U.S. dollar, Hong Kong dollar or other foreign currencies;
●
potential litigation or administrative investigations;
●
release of lock-up or other transfer restrictions on our outstanding ADSs or ordinary shares or sales of additional ADSs or
ordinary shares; and
●
political or market instability or disruptions, pandemics or epidemics and other disruptions to China’s economy or the global
economy, and actual or perceived social unrest in the United States, Hong Kong, Europe, the Middle East and the Southeast
Asia or other countries and regions that we operate.
In addition, the market prices for companies with operations in China in particular have experienced volatility that might have been
unrelated to the operating performance of such companies. The securities of some China-based companies that have listed their securities
in the United States and/or in Hong Kong have experienced significant volatility, including, in some cases, substantial declines in the
market prices of their securities. The performance of the securities of these China-based companies after their offerings may affect the
attitudes of investors toward Chinese companies listed in the United States and/or Hong Kong, which consequently may impact the
performance of our ADSs and ordinary shares, regardless of our actual operating performance. In addition, any negative news or
perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other
China-based companies may also negatively affect the attitudes of investors towards China-based companies in general, including us,
regardless of whether we have engaged in any inappropriate activities.
Inflation has accelerated in many economies, including the United States and Europe, and policy actions to address inflation have
slowed, and could reverse, economic growth in relevant countries. In addition, the continuing Russia-Ukraine war and the related energy
crisis in Europe have weighed on global economic prospects. These types of economic conditions could result in postponed or decreased
spending amid consumer concerns over unemployment, inflation, reduced asset values, increased energy costs, geographical issues, the
availability and cost of credit, and the stability and solvency of financial institutions, financial markets, businesses, local and state
governments, and sovereign nations. The economic recessions in many countries have contributed and may continue to contribute to
extreme volatility in the global stock markets, such as the large declines in share prices in the United States, China, Hong Kong and other
jurisdictions at various times since 2008. These broad market and industry fluctuations may adversely affect the prices of our ADSs
and/or ordinary shares, regardless of our operating performance.
An active trading market for our ordinary shares on the Hong Kong Stock Exchange might not be sustained, and trading prices of
our ordinary shares might fluctuate significantly.
Since our listing in Hong Kong in 2020, our ordinary shares have been traded on the Hong Kong Stock Exchange. However, we
cannot assure you that an active trading market for our ordinary shares on the Hong Kong Stock Exchange will be sustained. The trading
price or liquidity for our ADSs on the NASDAQ Global Select Market and the trading price or liquidity for our ordinary shares on the
Hong Kong Stock Exchange in the past might not be indicative of those of our ordinary shares on the Hong Kong Stock Exchange in the
future. If an active trading market of our ordinary shares on the Hong Kong Stock Exchange is not sustained, the market price and
liquidity of our ordinary shares could be materially and adversely affected.
In 2014, the Hong Kong, Shanghai and Shenzhen Stock Exchanges collaborated to create an inter-exchange trading mechanism
called Stock Connect that allows international and mainland Chinese investors to trade eligible equity securities listed in each other’s
markets through the trading and clearing facilities of their home exchange. Stock Connect allows certain mainland Chinese investors to
trade directly in eligible equity securities listed on the Hong Kong Stock Exchange, known as Southbound Trading. If a company’s
shares are not considered eligible, they cannot be traded through Stock Connect. It is unclear whether and when the ordinary shares of
our company will be eligible to be traded through Stock Connect, if at all. The ineligibility of our ordinary shares for trading through
Stock Connect will affect certain mainland Chinese investors’ ability to trade our ordinary shares.

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If securities or industry analysts do not continue to publish research or if they publish inaccurate or unfavorable research about
our business, the market prices and trading volume for our ADSs and/or ordinary shares could decline.
The trading market for our ADSs and/or ordinary shares relies in part on the research and reports that equity research analysts
publish about us or our business. We do not control these analysts. If research analysts do not maintain adequate research coverage or if
one or more of the analysts who covers us downgrades our ADSs and/or ordinary shares or publishes inaccurate or unfavorable research
about our business, the market price for our ADSs and/or ordinary shares would likely decline. If one or more of these analysts cease
coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the
market price or trading volume for the ADSs and/or ordinary shares to decline significantly.
Techniques employed by short sellers may drive down the market prices of the ADSs and/or ordinary shares.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the
intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the
value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects
to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many
short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business
prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short
attacks have, in the past, led to selling of shares in the market and significant volatility of the prices of ordinary shares and/or ADSs of
the targeted company. We received two short seller reports in September 2020. After receiving those reports, we immediately formed a
special investigation committee, hired attorneys and conducted an internal investigation regarding the allegations in the relevant reports.
Though we concluded that those unfavorable allegations in the short sellers’ reports were untrue and without merit, the short seller
reports, the volatility in the prices of our ADSs and ordinary shares, as well as our responses to regulatory inquiries and relevant
institutions, had diverted and could continue to divert our management’s attention. Furthermore, we have spent and could continue to
spend a significant amount of resources investigating such allegations, responding to relevant regulatory inquiries and defending
ourselves against any potential class action lawsuits. In the event we receive additional short seller reports in the future, our
management’s attention could be diverted, which could adversely affect our business operations and administration. We may need to
spend a significant amount of time and resources responding to the short selling firms and regulatory inquiries and preparing for or
defending against potential class action lawsuits or derivative actions initiated by our investors and shareholders. Additionally, we may
also be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech,
applicable laws of the relevant jurisdictions or issues of commercial confidentiality.
We may need additional capital, and the sale of additional ADSs, ordinary shares or other equity securities could result in
additional dilution to our shareholders, and the incurrence of additional indebtedness could increase our debt service obligations.
We believe that our current cash and cash equivalents, anticipated cash flow from operations, and funds available from borrowings
under our bank facilities (including the undrawn bank facilities currently available to us and bank facilities we plan to obtain in 2025)
will be sufficient to meet our anticipated working capital cash needs for at least the next 12 months. We may, however, require additional
cash resources due to changed business conditions, strategic acquisitions or other future developments, including expansion through
leased and owned hotels and any investments or acquisitions we may decide to pursue. If these resources are insufficient to satisfy our
cash requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional
equity and equity-linked securities could dilute the interests of our shareholders and ADS holders and adversely impact the market prices
of our ADSs and/or ordinary shares. Our incurrence of indebtedness would result in increased debt service obligations and could result in
operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.

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Due to the global outbreak of COVID-19, our business was significantly impacted and we recorded net loss attributable to H World
Group Limited of RMB1,821 million in 2022. We have witnessed recovery since 2023. Our operating income and net income attributable
to H World Group Limited in 2023 totaled RMB4,714 million and RMB4,085 million (US$575 million), respectively. Our operating
income and net income attributable to H World Group Limited in 2024 totaled RMB5,200 million and RMB3,048 million (US$418
million), respectively. As of December 31, 2024, our current liabilities exceeded our current assets by US$15 million. Our ability to
continue to meet our working capital demands depends on our ability to generate cash flows from operations and to arrange adequate
financing arrangements. For more information, please see “Item 5. Operating and financial review and prospects—5.B. Liquidity and
Capital Resources.” If we are unable to continue funding our business operations or achieve or maintain profitability, the market price of
our ADSs may significantly decrease.
Future sales or issuances, or perceived future sales or issuances, of substantial amounts of our ordinary shares or ADSs could
adversely affect the prices of our ADSs and/or ordinary shares.
If our existing shareholders sell, or are perceived as intending to sell, substantial amounts of our ordinary shares or ADSs, including
those issued upon the exercise of our outstanding stock options, the market price of our ADSs and/or ordinary shares could fall. For
example, as of December 31, 2024, we had approximately 127.5 million non-vested restricted stocks and 28.0 million share options
outstanding. Such sales, or perceived potential sales, by our existing shareholders might make it more difficult for us to issue new equity
or equity-related securities in the future at a time and place we deem appropriate. Ordinary shares held by our existing shareholders may
be sold in the public market in the future subject to the restrictions contained in Rule 144 and Rule 701 under the Securities Act and the
applicable lock-up agreements. If any existing shareholder or shareholders sell a substantial amount of ordinary shares after the
expiration of the lock-up period, the prevailing market price for our ADSs and/or ordinary shares could be adversely affected.
In addition, certain of our shareholders or their transferees and assignees will have the right to cause us to register the sale of their
shares under the Securities Act upon the occurrence of certain circumstances. Registration of these shares under the Securities Act would
result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the
registration. Sales of these registered shares in the public market could cause the prices of our ADSs and/or ordinary shares to decline.
Furthermore, we will be required to issue ADSs to holders of our convertible senior notes due 2026, upon their conversion of the
notes. We have not entered into any hedging transactions to reduce the dilution to our existing shareholders upon the holders’ conversion
of our convertible senior notes due 2026. As a result, the prevailing trading prices of our ADSs and/or ordinary shares could be adversely
affected by conversions of these notes.
As our founder and co-founders collectively hold a controlling interest in us, they have significant influence over our management
and their interests may not be aligned with our interests or the interests of our other shareholders.
As of March 31, 2025, our founder, Mr. Qi Ji, who is also our chairman of the board and our co-founders, Ms. Tong Tong Zhao and
Mr. John Jiong Wu, in total beneficially owned approximately 32.2% of our outstanding ordinary shares on an as-converted basis. The
interests of these shareholders may conflict with the interests of our other shareholders. Our founder and co-founders have significant
influence over us, including on matters relating to mergers, consolidations and the sale of all or substantially all of our assets, election of
directors and other significant corporate actions. This concentration of ownership may discourage, delay or prevent a change in control of
us, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company or of
our assets and might reduce the price of our ADSs and/or ordinary shares. These actions may be taken even if they are opposed by our
other shareholders, including holders of our ADSs and/or ordinary shares.

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Holders of our ADSs may not receive dividends or other distributions on our ordinary shares and may not receive any value for
them, if it is illegal or impractical to make them available to these holders.
The depositary of the ADSs has agreed that if it or the custodian receives any cash dividends or other distributions on our ordinary
shares or other deposited securities underlying the ADSs, it will pay them to the holders of ADSs after deducting its fees and expenses
pursuant to the deposit agreement. The holders of ADSs will receive these distributions in proportion to the number of ordinary shares
that their ADSs represent. However, the depositary or the custodian is not responsible if it decides that it is unlawful or impractical to
make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it
consists of securities that require registration under the Securities Act, but that are not properly registered or distributed under an
applicable exemption from registration. The depositary may also determine that it is not practicable to distribute certain property. In these
cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any
ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action
to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that the holders of ADSs may
not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available
to these holders. These restrictions may cause a material decline in the value of the ADSs.
ADS holders may not have the same voting rights as the holders of our ordinary shares and generally have fewer rights than our
ordinary shareholders and must act through the depositary to exercise those rights.
Holders of ADSs do not have the same rights as our ordinary shareholders and may only exercise voting and other shareholder rights
with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Except as described in the
deposit agreement, holders of our ADSs may not be able to exercise voting rights attaching to the shares evidenced by our ADSs on an
individual basis. Holders of our ADSs appoint the depositary or its nominee as their representative to exercise the voting rights attaching
to the shares represented by the ADSs. ADS holders may not receive voting materials in time to instruct the depositary to vote, and it is
possible that they may not have the opportunity to exercise a right to vote and/or may lack recourse if the ADSs are not voted as you
requested.
Except in limited circumstances, the depositary will give us a discretionary proxy to vote our ordinary shares underlying the ADSs
if holders of these ADSs do not give voting instructions to the depositary, which could adversely affect the interests of holders of
ordinary shares and/or the ADSs.
Under the deposit agreement, the depositary will give us a discretionary proxy to vote the ordinary shares underlying the ADSs at
shareholders’ meetings if holders of these ADSs do not give voting instructions to the depositary, unless:
●
we have instructed the depositary that we do not wish a discretionary proxy to be given;
●
we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;
●
a matter to be voted on at the meeting may adversely affect the rights of shareholders; or
●
voting at the meeting is made on a show of hands.
The effect of this discretionary proxy is that, if holders of ADSs fail to give voting instructions to the depositary, they cannot prevent
our ordinary shares underlying their ADSs from being voted, except under the circumstances described above. This may make it more
difficult for shareholders to influence our management. Holders of our ordinary shares are not subject to this discretionary proxy.

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We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock
Exchange.
We completed our public offering and listing in Hong Kong in September 2020 and the trading of our ordinary shares on the Hong
Kong Stock Exchange commenced on September 22, 2020 under the stock code “1179.” As a company listed on the Hong Kong Stock
Exchange pursuant to Chapter 19C of the Hong Kong Listing Rules, we are not subject to certain provisions of the Hong Kong Listing
Rules pursuant to Rule 19C.11, including, among others, rules on notifiable transactions, connected transactions, share option schemes,
content of financial statements as well as certain other continuing obligations. In addition, in connection with the listing of our ordinary
shares on the Hong Kong Stock Exchange, we have been granted a number of waivers and/or exemptions from strict compliance with the
Hong Kong Listing Rules, the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), the Code on Takeovers and Mergers and Share Buy-backs (the “Takeovers Codes”) and the Securities and Futures Ordinance
(Chapter 571 of the Laws of Hong Kong) (the “SFO”). As a result, we will adopt different practices as to those matters, including with
respect to the content and presentation of our annual reports and interim reports, as compared with other companies listed on the Hong
Kong Stock Exchange that do not enjoy those exemptions or waivers. Furthermore, if 55% or more of the total worldwide trading
volume, by dollar value, of our ordinary shares and ADSs over our most recent financial year takes place on the Hong Kong Stock
Exchange’s markets, the Hong Kong Stock Exchange will regard us as having a dual primary listing in Hong Kong and we will no longer
enjoy certain exemptions or waivers from strict compliance with the requirements under the Hong Kong Listing Rules, the Companies
(Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), the Takeovers Codes and the SFO,
which could result in our needing to undertake additional compliance activities, to devote additional resources to comply with new
requirements, and our incurring of incremental compliance costs.
ADS holders may not be able to participate in rights offerings and may experience dilution of his, her or its holdings as a result.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit
agreement for the ADSs, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to
be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act with
respect to all holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or underlying
securities or to endeavor to cause such a registration statement to be declared effective. In addition, we may not be able to take advantage
of any exemptions from registration under the Securities Act. Accordingly, holders of our ADSs may be unable to participate in our
rights offerings and may experience dilution in their holdings as a result.
ADS holders may be subject to limitations on transfer of their ADSs.
Our ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from
time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver,
transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the
depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any
provision of the deposit agreement, or for any other reason.
We may be subject to securities litigation, which is expensive and could divert management attention.
Companies that have experienced volatility in the volume and market prices of their shares have been subject to an increased
incidence of securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us
could result in substantial costs and divert our management’s attention from other business concerns, and, if adversely determined, could
have a material adverse effect on our business, financial condition and results of operations.

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As a foreign private issuer, we are permitted to, and we will, rely on exemptions from certain NASDAQ corporate governance
standards applicable to U.S. issuers, including the requirement regarding the implementation of a nominations committee. This
may afford less protection to holders of our ordinary shares and ADSs.
The NASDAQ Marketplace Rules in general require listed companies to have, among other things, a nominations committee
consisting solely of independent directors. As a foreign private issuer, we are permitted to, and we will, follow home country corporate
governance practices instead of certain requirements of the NASDAQ Marketplace Rules, including, among others, the implementation
of a nominations committee. The corporate governance practice in our home country, the Cayman Islands, does not require the
implementation of a nominations committee. We currently intend to rely upon the relevant home country exemption with respect to the
nominations committee. As a result, the level of independent oversight over management of our company may afford less protection to
holders of our ordinary shares and ADSs.
Our currently effective articles of association contain anti-takeover provisions that could have a material adverse effect on the
rights of holders of our ordinary shares and ADSs.
Our currently effective articles of association contain provisions that have potential to limit the ability of others to acquire control of
our company or cause us to enter into change-of-control transactions. These provisions could have the effect of depriving our
shareholders of opportunities to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to
obtain control of our company in a tender offer or similar transaction.
For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or
more classes or series and to fix their designations, powers, preferences, and relative participating, optional or other rights and the
qualifications, limitations or restrictions, including, without limitation, dividend rights, conversion rights, voting rights, terms of
redemption privileges and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares,
in the form of ADSs or otherwise. In the event these preferred shares have better voting rights than our ordinary shares, in the form of
ADSs or otherwise, they could be issued quickly with terms calculated to delay or prevent a change in control of our company or make
removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may decline and
the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.
The provisions of our currently effective articles of association may encourage potential acquirers to negotiate with us and allow our
board of directors the opportunity to consider alternative proposals in the interest of maximizing shareholder value. However, these
provisions may also discourage acquisition proposals or delay or prevent a change in control that could be beneficial to holders of our
ordinary shares and ADSs.

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You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts or Hong
Kong courts may be limited. The ability of U.S. or Hong Kong authorities to bring actions against us or our management may also
be limited.
We are an exempted company limited by shares incorporated under the laws of the Cayman Islands and conduct a substantial portion
of our business and operations through our subsidiaries in China, the world’s largest emerging market. With the acquisition of Deutsche
Hospitality in January 2020, we also operate part of our business in Germany, among other jurisdictions. Most of our officers reside
outside the United States and Hong Kong and some or all of the assets of those persons are located outside of the United States and Hong
Kong. It may be difficult or impossible for you to bring an action against us or against these individuals in the Cayman Islands, China,
Hong Kong or Germany in the event that you believe that your rights have been infringed under the securities laws or otherwise. Even if
you are successful in bringing an action of this kind outside the Cayman Islands, China, Hong Kong or Germany, the laws of the Cayman
Islands, China, Hong Kong and Germany may render you unable to effect service of process upon, or to enforce a judgment against our
assets or the assets of our directors and officers. There is uncertainty as to whether the courts of the Cayman Islands would (i) recognize
or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions
of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in the Cayman Islands
against us or our directors or officers that are predicated upon the securities laws of the United States or any state in the United States.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United
States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts
of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the foreign courts
against our company under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes
or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-
monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to
such judgment, (b) such courts did not contravene the rules of natural justice of the Cayman Islands, (c) such judgment was not obtained
by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands, (e) no new admissible
evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands, and (f) there is
due compliance with the correct procedures under the laws of the Cayman Islands. A Cayman Islands court may stay enforcement
proceedings if concurrent proceedings are being brought elsewhere.
A judgment of a court of another jurisdiction may be reciprocally recognized or enforced if the jurisdiction has a treaty with China
or if judgments of the PRC courts have been recognized before in that jurisdiction, subject to the satisfaction of other requirements.
However, China does not have treaties providing for the reciprocal enforcement of judgments of courts with Japan, the United Kingdom,
the United States and most other Western countries. There are also uncertainties as to the enforceability in Germany of civil liabilities
based on the U.S. federal and state securities laws or Hong Kong laws, either in an original action or in an action to enforce a judgment
obtained in U.S. courts or Hong Kong courts (as the case may be). Germany currently does not have a treaty with the U.S. or Hong Kong
providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters.
German courts usually deny the recognition and enforcement of punitive damages as incompatible with the fundamental principles of
German law. In addition, due to jurisdictional limitations, matters of comity and various other factors, the SEC, the Department of Justice
and other U.S. authorities may be limited in their ability to take enforcement actions, including in instances of fraud, against us or our
directors and officers in China. In addition, shareholder claims that are common in the United States, including class action securities law
and fraud claims, are generally uncommon in China.
Our corporate affairs are governed by our currently effective memorandum and articles of association and by the Companies Act,
Cap 22 (Act 3 of 1961, as consolidated and revised) (the “Companies Act”) and the common law of the Cayman Islands. The rights of
shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our
directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of
the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English
common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the
fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or
judicial precedents in the United States and Hong Kong. In particular, the Cayman Islands has a less developed body of securities laws as
compared to the United States and Hong Kong, and provides significantly less protection to investors. In addition, Cayman Islands
companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States or the courts of
Hong Kong. Furthermore, our currently effective articles of association are specific to us and include certain provisions that may be
different from common practices in Hong Kong, such as the absence of requirements that the appointment, removal and remuneration of
auditors must be approved by a majority of our shareholders.

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As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against
our management, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United
States or in Hong Kong.
It may be difficult for overseas regulators to conduct investigations or collect evidence within China.
On February 24, 2023, the CSRC released the Confidentiality and Archives Provisions, which came into effect on March 31, 2023.
Pursuant to which, a PRC based company must obtain approvals and make filings with relevant authorities when providing or publicly
disclosing, by itself or through the overseas listing entity, any document or material that involves state secret or work secret of state
agencies. In addition, pursuant to such regulation, any cross-border investigation, collection of evidence or inspection targeting PRC-
based issuers, securities companies and security service institutions proposed by overseas securities regulatory authorities must be carried
out through cross-border regulatory cooperation mechanism and reported to CSRC or relevant competent departments in advance.
As of the date of this annual report, there remains uncertainties as to the interpretation and implementation of such regulation. Also,
shareholder claims or regulatory investigations that are common in the United States generally are difficult to pursue as a matter of law
or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation
mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and
administration, such cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of
mutual and practical cooperation mechanisms. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which
became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection
activities within the territory of the PRC. In addition, the Data Security Law and the Personal Information Protection Law provide that no
entity or individual within the PRC territory can provide any foreign judicial body and law enforcement body with any data or any
personal information stored within the PRC territory without the approval of the competent PRC regulatory authority. While detailed
interpretations of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator
to directly conduct investigation or evidence collection activities within China may increase difficulties you may face in protecting your
interests.
The different characteristics of the capital markets in Hong Kong and the U.S. may negatively affect the trading prices of our
ordinary shares and ADSs.
We are subject to Hong Kong and NASDAQ listing and regulatory requirements concurrently. The Hong Kong Stock Exchange and
the NASDAQ Global Select Market have different trading hours, trading characteristics (including trading volume and liquidity), trading
and listing rules, and investor bases (including different levels of retail and institutional participation). As a result of these differences,
the trading prices of our ordinary shares and/or ADSs may not be the same, even allowing for currency differences and the ADS ratio.
Fluctuations in the price of our ADSs due to circumstances peculiar to the U.S. capital markets could materially and adversely affect the
price of the ordinary shares, or vice versa. Certain events having significant negative impact specifically on the U.S. capital markets may
result in a decline in the trading price of our ordinary shares notwithstanding that such event may not impact the trading prices of
securities listed in Hong Kong generally or to the same extent, or vice versa. Because of the different characteristics of the U.S. and
Hong Kong capital markets, the historical market prices of our ADSs in the NASDAQ Global Select Market may not be indicative of the
trading performance of the ordinary shares in the Hong Kong Stock Exchange, and vice versa.
Exchange between our ordinary shares and our ADSs may adversely affect the liquidity and/or trading price of each other.
Our ADSs are currently traded on the NASDAQ Global Select Market. Subject to compliance with U.S. securities law and the terms
of the deposit agreement, holders of our ordinary shares may deposit ordinary shares with the depositary in exchange for the issuance of
our ADSs. Any holder of ADSs may also withdraw the ordinary shares underlying the ADSs pursuant to the terms of the deposit
agreement for trading on the Hong Kong Stock Exchange. In the event that a substantial number of ordinary shares are deposited with the
depositary in exchange for ADSs, or vice versa, the liquidity and trading prices of our ordinary shares on the Hong Kong Stock
Exchange and our ADSs on the NASDAQ Global Select Market may be adversely affected.

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The time required for the exchange between ordinary shares and ADSs may be longer than expected and investors may not be able
to settle or effect any sale of their securities during this period, and the exchange of ordinary shares into ADSs involves costs.
There is no direct trading or settlement route between the NASDAQ Global Select Market and the Hong Kong Stock Exchange on
which our ADSs and the ordinary shares are respectively traded. In addition, the time differences between Hong Kong and New York and
unforeseen market circumstances or other factors may delay the deposit of ordinary shares in exchange of ADSs or the withdrawal of
ordinary shares underlying the ADSs. Investors will be prevented from settling or effecting the sale of their securities during such periods
of delay. In addition, there is no assurance that any exchange of ordinary shares into ADSs (and vice versa) will be completed in
accordance with the timelines investors may anticipate.
Furthermore, the depositary for the ADSs is entitled to charge holders fees for various services including for the issuance of ADSs
upon deposit of ordinary shares, the release of ordinary shares upon cancelation of ADSs, distributions of cash dividends or other cash
distributions, distributions of ADSs pursuant to share dividends or other free share distributions, distributions of securities other than
ADSs and annual service fees. As a result, shareholders who exchange ordinary shares into ADSs, and vice versa, may not achieve the
level of economic return the shareholders may anticipate.
We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax
consequences for U.S. Holders of our ADSs or ordinary shares.
Based on our financial statements and relevant market and shareholder data, we believe that we should not be treated as a passive
foreign investment company (a “PFIC”) for U.S. federal income tax purposes for 2024. In addition, based on our financial statements and
our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and
shareholder data, we do not anticipate becoming a PFIC in 2025. The application of the PFIC rules is subject to ambiguity in several
respects and, in addition, we must make annual separate determinations each year as to whether we are a PFIC (after the close of each
taxable year). Accordingly, we cannot assure you of our PFIC status for 2025 or for any future taxable year. If we were treated as a PFIC
for any taxable year during which a U.S. Holder (as defined herein) held an ADS or an ordinary share, certain adverse United States
federal income tax consequences could apply to the U.S. Holder. For a more detailed discussion of United States federal income tax
consequences to U.S. Holders, see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Consideration.”
There is uncertainty as to whether Hong Kong stamp duty will apply to the trading or conversion of our ADSs.
In connection with the public offering of our ordinary shares in Hong Kong in September 2020, or the Hong Kong IPO, we
established a branch register of members in Hong Kong, or the Hong Kong share register. Our ordinary shares that are traded on the
Hong Kong Stock Exchange, including those issued in the Hong Kong IPO and those that may be converted from ADSs, are registered
on the Hong Kong share register, and the trading of these ordinary shares on the Hong Kong Stock Exchange are subject to the Hong
Kong stamp duty. To facilitate ADS-ordinary share conversion and trading between the NASDAQ Global Select Market and the Hong
Kong Stock Exchange, we have moved a portion of our issued ordinary shares from our Cayman share register to our Hong Kong share
register.
Under the Hong Kong Stamp Duty Ordinance, any person who effects any sale or purchase of Hong Kong stock, defined as stock
the transfer of which is required to be registered in Hong Kong, is required to pay Hong Kong stamp duty. The stamp duty is currently set
at a total rate of 0.2% of the greater of the consideration for, or the value of, shares transferred, with 0.1% payable by each of the buyer
and the seller.
To the best of our knowledge, Hong Kong stamp duty has not been levied in practice on the trading or conversion of ADSs of
companies that are listed in both the United States and Hong Kong and that have maintained all or a portion of their ordinary shares,
including ordinary shares underlying ADSs, in their Hong Kong share registers. However, it is unclear whether, as a matter of Hong
Kong law, the trading or conversion of ADSs of these dual-listed companies constitutes a sale or purchase of the underlying Hong Kong-
registered ordinary shares that is subject to Hong Kong stamp duty. We advise investors to consult their own tax advisors on this matter.
If Hong Kong stamp duty is determined by the competent authority to apply to the trading or conversion of our ADSs, the trading price
and the value of your investment in our ADSs or ordinary shares may be affected.

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ITEM 4. INFORMATION ON THE COMPANY
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 from C-Travel International Limited.
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.
We fully redeemed our convertible senior notes due 2022 on the maturity date of November 1, 2022.

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55
Year
    
Milestone
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.
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 in China 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 8,543 hotels as of December 31, 2022 to 11,147 hotels as of December 31, 2024,
representing a CAGR of 14.2%. As of December 31, 2024, we had 11,147 hotels in operation, including 633 leased and owned hotels
and 10,514 manachised and franchised hotels, with an aggregate of 1,088,218 hotel rooms. As of the same date, we were developing an
additional 3,013 hotels, including 17 leased and owned hotels and 2,996 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 266 million members as of December 31, 2024. 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 2024, approximately 70% of our room nights under legacy Huazhu were sold
to customers who were individual or corporate H Rewards members. In the same year, approximately 75% 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.
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 2,604 hotels from December 31, 2022 to December 31, 2024, 2,675 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.

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We recorded outstanding financial performance in the past, although our financial performance was adversely affected by COVID-
19 in 2022 and was also affected by exchange loss as a result of the Euro’s depreciation in 2022. We witnessed strong recovery since
2023. Our total revenue was RMB13,862 million, RMB21,882 million and RMB23,891 million (US$3,274 million) in 2022, 2023 and
2024, respectively. We had net loss attributable to H World Group Limited of RMB1,821 million in 2022, and net income attributable to
H World Group Limited of RMB4,085 million and RMB3,048 million in 2023 and 2024, respectively. Our adjusted EBITDA (non-
GAAP) amounted to RMB1,178 million, RMB6,268 million and RMB6,820 million (US$935 million) in 2022, 2023 and 2024,
respectively. Our net cash provided by operating activities amounted to RMB1,564 million, RMB7,674 million and RMB7,518 million
(US$1,030 million) in these 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, 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, 2024, we also operated eleven other hotels, including other partner hotels and other hotel brands in Yongle
Huazhu Hotel & Resort Group (excluding Steigenberger Hotels & Resorts and Blossom House).
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.
Economy Hotel Brands
HanTing Hotel
Launched in 2005, HanTing Hotel is our starting brand and our economy hotel product with a brand mission of being “Accessible to
All, Loved by All” and a vision to become the most beloved hotel brand for the general public nationwide. HanTing Hotels also include
hotels we previously marketed under the name of Hanting Premium Hotels. HanTing Hotel has witnessed the evolution of
accommodation for Chinese people, consistently committed to providing customers with a familiar, reliable and affordable travel
experience. With its provision of efficient self-service and friendly, timely support, HanTing Hotel has enhanced people’s sense of
happiness associated with hotel stay, becoming the “close neighbor” of 1.4 billion Chinese people. As of December 31, 2024, we had
4,139 HanTing Hotels in operation and an additional 711 HanTing Hotels under development.

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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, 2024, we had 415 Ni Hao Hotels in operation and 136 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 high value-for-money budget hotel
product committed to support self-help service. With the tenet of “sleep better, spend less,” Hi Inn offers travelers with international
standard accommodation experience with exceptional value for money through its provision of tidy hotel rooms and convenient and
efficient self-service options. Consistently being customer-oriented and focusing on customers’ core lodging needs—quality sleep and
refreshing showers—Hi Inn provides travelers with carefully-designed, high-quality sleep and bathing products and guest amenities in
the hotel room, as well as convenient self-service facilities in the lobby, including washers and dryers, grab and go breakfast, luggage
storage, power banks, and water dispenser. To enhance operating efficiency and promote green concept of sustainability, Hi Inn has
innovatively established a three-pillar digitalized operating system that integrates self-service, digital front desk and staff mobility. In
addition, Hi Inn pioneers flexible business models such as green stay and timeshare, aiming to establish benchmark for economy hotels.
As of December 31, 2024, we had 546 Hi Inns in operation and an additional 294 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, 2024, we had 162 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, 2024, we had 223 Ibis Hotels in operation and an additional 17 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, 2024, we had four Zleep Hotels in operation and an additional nine 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, 2024, we had 2,867 JI Hotels in
operation and an additional 814 JI Hotels under development.

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Orange Hotel
Orange Hotel, previously marketed under two brand names: Orange Hotel and Orange Select 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, 2024, we had 851 Orange Hotels in operation and an additional 255 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. Starway Hotel is committed to accompanying
travelers along the way, helping them discover unexpected delights, and light up their journeys. As of December 31, 2024, we had 724
Starway Hotels in operation and an additional 127 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, 2024, we had 105 Ibis Styles Hotels in
operation and an additional eight Ibis Styles Hotels under development.
Upper Midscale Hotel Brands
Crystal Orange Hotel
Crystal Orange Hotel is our upper midscale hotel brand featuring boutique design hotels. Crystal Orange Hotel has launched a new
version, targeting the upper midscale segment market and empowering customers with a five-star quality experience at a four-star price.
The “New Crystal” returns to the essence and purity, using walnut, antique copper and glass elements to create a more textured and
premium space atmosphere. As our representative hotel brand with premium services, Crystal Orange Hotel stands as the “pinnacle of
aesthetics.” Its modern urban designs reflect the vibrant essence of contemporary life and offer a sense of sophistication that
contemporary middle-class travelers would enjoy. It has won multiple international design awards from Switzerland, the United States,
Japan, and other countries. As of December 31, 2024, we had 245 Crystal Orange Hotels in operation and an additional 159 Crystal
Orange Hotels under development.
IntercityHotel
IntercityHotel is our upper midscale urban hotel brand targeting business travelers. The hotels boast prime locations and utilize
cutting-edge smart designs featuring high-quality amenities. Whether travel for business or leisure, IntercityHotel is the perfect starting
point for the guests at any city they visit. As of December 31, 2024, we had 99 IntercityHotels in operation and an additional 113
IntercityHotels under development.
Manxin Hotel
Manxin Hotel was launched as an upper midscale brand of resorts in October 2013, and was previously branded as Manxin Hotel &
Resorts. 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, 2024, we had 166 Manxin Hotels in operation and an additional 64 Manxin Hotels under
development.

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Mercure Hotel
Mercure Hotel is an upper midscale hotel brand that focuses on local characteristics and adheres to consistent quality standards and
vibrant hotel management philosophy. Whether located in the center of a city or in the countryside, Mercure Hotel offers authentic travel
experience for business and leisure travelers. Mercure Hotel integrates the powerful international hotel network, professional and
experienced hotel staff and digital technologies in its operations. Mercure Hotel also brings elegant lifestyle that infused with French
romance, creating a diverse and colorful living space for its guests. As of December 31, 2024, we had 199 Mercure Hotels in operation
and an additional 55 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, 2024, we had 149
Madison Hotels in operation, and an additional 105 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, 2024, we had 31 Novotel Hotels in operation and an additional 19 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, 2024, we had 34 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, 2024, we had 12 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, 2024, we had seven Joya Hotels in
operation and one additional Joya Hotels under development.

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Blossom House
Blossom House, launched in Lijiang, China in 2009, previously branded Blossom Hill Hotels & Resorts, is our upscale resort brand
targeting affluent travelers. With the unique brand connotation of Chinese culture and regional culture and creativity, Blossom House
hotels have created two resort types: Blossom House, the full-service resorts, each of which is irreplaceable and one-of-a-kind, and
Blossom Collection, the selective personalized-themed resorts, which provide diverse and vibrant themed resort experience through a
combination of innovative, multidimensional design of hotel products and site-specific attributes, natural scenery, regional culture, and
themed settings of areas where the hotels are located. As of December 31, 2024, we have 75 Blossom House hotels in operation and an
additional 91 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, 2024, we had
55 Steigenberger Hotels & Resorts in operation and an additional 13 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, 2024, we have three Jaz in the City hotels in operation and one Jaz in the City hotel under
development.
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, 2024, we had nine 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,
2024, we had nine Steigenberger Icons Hotels in operation and three 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, 2024, 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.

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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,
2014
2015
2016
2017
2018
2019
2020
2021      2022
2023
2024
Leased and owned hotels
    
 611     
 616     
 624     
 671     
 699     
 688     
 753     
 738
 704     
 691     
 633
Manachised hotels
 
 1,376  
 2,067  
 2,471  
 2,874  
 3,309  
 4,519  
 5,746
 6,824    7,617  
 8,526  
 10,380
Franchised hotels
 
 8  
 80  
 174  
 201  
 222  
 411  
 290
 268  
 222  
 177  
 134
Total
 
 1,995  
 2,763  
 3,269  
 3,746  
 4,230  
 5,618  
 6,789
 7,830    8,543  
 9,394  
 11,147
As of December 31, 2024, our hotel network covered 11,147 hotels spanning 1,115 cities in 31 provinces and municipalities across
the greater China region and 18 other countries, and we also had a pipeline of hotels in these countries and regions. As of December 31,
2024, we had an additional 3,013 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, 2024.
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
225  
 1,958  
 36  
 3  
 341
Others (including Taiwan)(3)
331
 8,399
 73
 2
 2,638
Subtotal
556
 10,357
 109
 5
 2,979
Outside Greater China:
Europe
76
 4
 14
 12
 7
Other countries(4)
 
1  
 19  
 11  
—  
 10
Subtotal
77
 23
 25
 12
 17
Total(5)
 
633  
 10,380  
 134  
 17  
 2,996
Notes:
(1) Include 76 leased hotels operated by Deutsche Hospitality and 557 leased and owned hotels operated by the rest of our Group.
(2) Include 46 manachised and franchised hotels operated by Deutsche Hospitality and 10,468 manachised and franchised hotels
operated by the rest of our Group.
(3) For our hotels in operation, include 1,110 cities across 29 provinces and municipalities; for our hotels under development, include
946 cities across 30 provinces and municipalities (including Taiwan).
(4) For our hotels in operation, include Tunisia, Egypt, the UAE, Oman, Saudi Arabia, Singapore, Qatar, Mongolia, and Cambodia; for
our hotels under development, include Egypt, Oman, the UAE, India, Cambodia, Uzbekistan, Thailand, Korea, 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, 2024.
     Pre-conversion      Conversion     
Period(1)
Period(2)
Total
Leased and owned hotels
 
 16  
 1  
 17
Manachised and franchised hotels
 
 1,773  
 1,223  
 2,996
Total
 
 1,789  
 1,224  
 3,013
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.
(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.

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Among the 17 leased and owned hotels under development as of December 31, 2024, 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 one leased and owned hotels during the conversion period, for which we have completed conversion activities in
February 2025 and have started operations. Total development costs for the leased and owned hotels during the conversion period were
no more than RMB10 million. The average development costs per square meter for completed leased and owned hotels in 2024 were
approximately RMB2,300 (US$315). 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, 2024, we had 625 leased hotels and eight owned hotels, accounting for approximately 5.7% 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 25 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, 2024.
    
Number of
Leases
2025(1)
 
 83
2026
 
 57
2027
 
 53
2028
 
 62
2029
 
 41
2030-2032
 
 124
2033-2035
 
 111
2036 and onward
 
 111
Total
 
 642
Note:
(1) Including leases of 20 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.”

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Manachised and Franchised Hotels
As of December 31, 2024, we had 10,380 manachised hotels and 134 franchised hotels, accounting for approximately 93.1% and
1.2%, 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 (previously known as HUAZHU
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 have historically been required to pay Deutsche Hospitality a
management fee consisting of a base fee of 0.5% to 3.5% 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.

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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 have historically been required to pay Deutsche Hospitality a
franchise fee of approximately 0.5% to 4.0% 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. As is the case with leased and owned hotels, 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.

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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.
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. In addition, we typically seek properties that will
accommodate hotels of 80 to 300 rooms.
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. Our budget and analysis team prepares 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.

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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.
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 Huazhu 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 Huazhu 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.

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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.
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.
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.
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.

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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 Cyber Security 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 2024, approximately 75% of our room nights under legacy Huazhu were sold through our own sales channels and the
remaining 25% 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.

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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,
2024, our H Rewards had more than 266 million members. In 2024, approximately 70% 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,
2024, we registered 1,751 trademarks and logos with the China National Intellectual Property Administration (CNIPA). As of December
31, 2024, we filed 148 trademark applications pending for examination and review by the CNIPA. As of the same date, we also
registered 1,454 trademarks and filed 164 trademark applications outside China. As of December 31, 2024, we received 32 patents;
another 12 patents were applied and under review by relevant PRC authority. We also received copyright registration certificates for 206
software programs developed by us as of December 31, 2024. In addition, we registered 695 national and international top-level domain
names, including www.hworld.com, as of December 31, 2024. 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.”

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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, 2024, 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 RMB29 million (US$8 million).
Corporate Social Responsibility: Environmental Impact
As a global leader and rapidly emerging multi-brand hotel group originated in China, we are deeply aware of our corporate
responsibility and mission. On top of providing customers with comfortable, safe and personalized stay experiences, we are also
committed to exploring green operation methods and reducing environmental footprint, upholding the concept of sustainability
development.
Throughout the design and construction process of hotels, we have kept on promoting the “modular” construction plan. This
approach not only ensures high standards of quality control, but also effectively reduces construction waste. Additionally, we actively
explore opportunities to use renewable energy and improve our energy structure. By the end of 2024, over 3,300 of our hotels had been
equipped with air source heat pumps, and nearly 1,000 hotels had adopted solar water heating systems. Through ongoing efforts and
collaboration with franchisees, we strive to expand usage of such equipment across our hotel network.
H World’s environmental protection initiatives also extend to the field of hotel operations. Increasingly more hotels have been
introduced to “Easy Energy Consumption”, our online energy and water consumption management system. Not only can this system
record energy and water consumption data on a regular basis, it is also capable of providing real-time alerts for abnormal consumption
situations, so that failures of electricity and heating systems and undetected water leaks can be dealt with in a timely manner, avoiding
unnecessary waste of resources. During the reporting period, we further promoted the system by holding training sessions and workshops
for franchisees, teaching them the correct way to use it, while emphasizing the significance of management methods as such. Meanwhile,
we attach great importance to the development of energy and environment management system on property level, with around 90% of
Legacy DH’s leased hotels holding both ISO 50001 Energy Management System Certification and ISO 14001 Environmental
Management System Certification.
In 2024, we newly launched the “ESG Series Course of H World”, an online training program that aims to introduce our employees
to professional knowledge related to the concept of ESG (Environmental, Social, and Governance) and sustainable development. During
the reporting period, we also promoted World Environment Day, Earth Day, World Oceans Day, etc., further enhancing employees’
environmental awareness, while encouraging them to implement environmental protection measures during daily work.
We also share our energy conservation and environmental protection philosophy with our customers. During the reporting period,
our “Green Living, Towel Reuse” initiative expanded to over 9,000 hotels, and had successfully avoided washing of over 7.8 million
towels. In March 2025, “Green Living, Towel Reuse” initiative took one more step forward, launching a collaboration project with
Alipay Ant Forest. Customers who make reservation on H World official APP, pay via Alipay, and choose to forgo towel changes or
bring their own toiletries, will be rewarded extra “green energy points.” After their “green energy points” reach a certain amount, guests
can exchange the points for virtual saplings in the Alipay APP. Ant Forest and its collaboration partners will then plant real vegetation in
desertification areas accordingly.

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H World also extends the green development requirements to its 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 2024, our “Smart Linen Project” continued, with linens in over 500 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. The Project helps digitalize linen handovers, extend the overall lifespan of linens, reduce
comprehensive management costs, and support suppliers to improve water and electricity efficiency. At the same time, we actively
collaborate with suppliers to develop eco-friendly consumables, which include but are not limited to: wheat straw brush, 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 transfer our environmental philosophy into an industry benchmark,
and then promote its adoption across the whole sector.
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 Special Administrative Measures (Negative List) for the Access of Foreign
Investment (Edition 2024) issued on September 6, 2024, which became effective on November 1, 2024, and the Encouraged Industry
Catalogue for Foreign Investment (2022 version) issued on October 26, 2022, which became effective as of January 1, 2023, 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 and amended in October 2012, and various local regulations, hotels
failing to obtain the special industry license may be subject to warnings, orders to suspend or cease continuing business operations,
confiscations of illegal gains or fines. Operators of hotel businesses who have obtained the special industry license but violate applicable
administrative regulations may also be subject to revocation of such licenses in serious circumstances.

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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
National People’s Congress, or the SCNPC enacted the Food Safety Law of the PRC in February 2009, which was most recently
amended in April 2021, according to which any hotel that provides food must obtain a license. 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.
The Fire Prevention Law of the PRC, promulgated in April 1998 and amended in October 2008, April 2019 and April 2021 by the
SCNPC, 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.
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.

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On April 25, 2013, the Standing Committee of the National People’s Congress 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 Special Administrative Region, Macao Special
Administrative Region and Taiwan region.
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 SCNPC, 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 National People’s Congress, 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.
Regulations on Consumer Protection
In October 1993, the SCNPC 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;

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●
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 SCNPC 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.

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According to the Environmental Protection Law of the PRC promulgated by the SCNPC on December 26, 1989 and last amended on
April 24, 2014, the Environmental Impact Assessment Law of the PRC promulgated by the SCNPC 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.

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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 SCNPC 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.

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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.
Recently, 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 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.
On October 23, 2019, the SAFE promulgated the Circular on Further Promoting the Facilitation of Cross-border Trade and
Investment (“Circular 28”). Pursuant to Circular 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 on Further Deepening Reform and Promoting Cross-border Trade and Investment Facilitation 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.
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.

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Regulations on Foreign Investment
The SCNPC 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 SCNPC in December 1993 and was most recently
amended in December 2023) or the Partnership Law of the PRC (promulgated by the SCNPC 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 SCNPC 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 July 2024. 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 Macao regions) 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”).
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.

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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.”
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.

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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.
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.

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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.
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.

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Regulations on Labor Contracts and Social Security
The Labor Law of the PRC, which was promulgated by the SCNPC 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 National People’s
Congress, last amended by the SCNPC 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 SCNPC 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.
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 SCNPC 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.

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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 National People’s Congress. 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 SCNPC 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 January 1, 2021, the Civil Code promulgated in May 2020 by the SCNPC 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.
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.

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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.

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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, 2025.
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.

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The following table sets forth summary information for our significant subsidiaries as of March 31, 2025.
    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
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:

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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.

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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 materially and adversely 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, 2024, we leased 625 out of our 11,147 hotel facilities with an aggregate size of approximately 4.9 million square
meters, including approximately 131,000 square meters subleased to others. As of December 31, 2024, we owned eight out of our 11,147
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.”
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
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 in China 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 8,543 hotels as of December 31, 2022 to 11,147 hotels as of December 31, 2024,
representing a CAGR of 14.2%. As of December 31, 2024, we had 11,147 hotels in operation, including 633 leased and owned hotels
and 10,514 manachised and franchised hotels, with an aggregate of 1,088,218 hotel rooms. As of the same date, we were developing an
additional 3,013 hotels, including 17 leased and owned hotels and 2,996 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 RMB13,862 million, RMB21,882 million and RMB23,891 million (US$3,274 million) in 2022, 2023 and
2024, respectively. We had net loss attributable to H World Group Limited of RMB1,821 million in 2022, and net income attributable to
H World Group Limited of RMB4,085 million and RMB3,048 million (US$418 million) in 2023 and 2024, respectively. Our adjusted
EBITDA (non-GAAP) amounted to RMB1,178 million, RMB6,268 million and RMB6,820 million (US$935 million) in 2022, 2023 and
2024, respectively, and our net cash provided by operating activities amounted to RMB1,564 million, RMB7,674 million and RMB7,518
million (US$1,030 million) in these respective years.

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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, in particular with respect to hotels temporarily closed
during the COVID-19 outbreak, 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.

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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, especially RevPAR achieved by our leased and owned hotels, 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 8,543 as of December 31, 2022 to 11,147 as of
December 31, 2024.
Due to the impact of COVID-19, we had a large number of hotels in China temporarily requisitioned in various locations and during
different periods for the accommodation of medical support workers and for quarantine purposes in relation to COVID-19 in 2022. We
also had a large number of hotels temporarily closed from time to time amid the pandemic. Our legacy Huazhu business witnessed
accelerated recovery since mid-November 2022 after the Chinese authorities modified the COVID policy. As a result, excluding hotels
under temporary requisition (in 2022 only) or temporarily closed, our total number of hotel room nights available for sale increased from
229.5 million as of December 31, 2022 to 351.2 million as of December 31, 2024 for legacy Huazhu.
The hotel operations of Deutsche Hospitality in Europe were also adversely affected due to travel restrictions and lockdowns
imposed by local governments in Europe to contain the spread of COVID-19, and as a result, a number of our Deutsche Hospitality
hotels were temporarily closed in 2020. Thanks to the progress of vaccination campaigns and easing of social restrictions, legacy DH
hotels have experienced RevPAR recovery since March 2022. As of December 31, 2024, the total room nights available for sale was 9.7
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,
2022
2023
2024
Legacy
Legacy
Legacy
 Huazhu
Legacy DH
 Huazhu
Legacy DH
 Huazhu
Legacy DH
Total hotels in operation
    
 8,411     
 132     
 9,263     
 131     
 11,025     
 122
Leased and owned hotels
 
 623  
 81
 607  
 84
 557
 76
Manachised hotels
 
 7,588  
 29
 8,501  
 25
 10,359
 21
Franchised hotels
 
 200  
 22
 155  
 22
 109
 25
Total hotel rooms in operation
 
 783,174  
 26,304
 885,630  
 26,814
 1,062,329
 25,889
Leased and owned hotels
 
 89,638  
 15,328
 86,691  
 16,303
 82,580
 15,490
Manachised hotels
 
 678,245  
 5,711
 786,157  
 5,196
 970,181
 4,647
Franchised hotels
 
 15,291  
 5,265
 12,782  
 5,315
 9,568
 5,752
Total hotel room nights available for sale(1)  
 229,534,995  
 8,851,555
 292,643,397  
 9,405,932
 351,212,097
 9,700,173
Leased and owned hotels
 
 28,046,243  
 5,302,509
 31,592,103  
 5,573,744
 30,529,097
 5,740,957
Manachised hotels
 
 196,734,849  
 1,788,026
 256,346,691  
 1,921,324
 316,743,951
 1,809,668
Franchised hotels
 
 4,753,903  
 1,761,020
 4,704,603  
 1,910,864
 3,939,049
 2,149,548
Note:
(1) Excluding room nights of hotels that were temporarily requisitioned or closed during the outbreak of COVID-19 (for 2022 only) or
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.

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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.
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,
2022
2023
2024
(Excluding hotels under requisition)
RevPAR(1) (in RMB)
    
      
      
  
Leased and owned hotels
 
 174  
 308  
 308
Manachised hotels
 
 156  
 234  
 228
Franchised hotels
 
 130  
 226  
 229
Total hotels in operation
 
 157  
 242  
 235
Average daily room rate (1) (in RMB)
 
 
 
Leased and owned hotels
 
 272  
 372  
 364
Manachised hotels
 
 231  
 289  
 281
Franchised hotels
 
 222  
 309  
 320
Total hotels in operation
 
 236  
 299  
 289
Occupancy rate (as a percentage)
 
 
 
Leased and owned hotels
 
 64  
 83  
 84
Manachised hotels
 
 67  
 81  
 81
Franchised hotels
 
 59  
 73  
 72
Total hotels in operation
 
 67  
 81  
 81
Weight of hotel room nights available for sale contributed by leased and owned hotels
less than 6 months (as a percentage)(2)
 
 2  
 1  
 2
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 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. The RevPAR for all hotels in operation of legacy Huazhu in 2023 was higher than the RevPAR for all of our hotels in
operation of legacy Huazhu (excluding hotels under temporary requisition) in 2022 primarily due to the relief of COVID-19 restriction
measures and recovery from COVID-19.

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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,
    
2022
2023
    
2024
RevPAR(1) (in EUR)
   
  
Leased and owned hotels
 61  
 74
79
Manachised hotels
 61  
 60
61
Franchised hotels
 67  
 75
80
All hotels in operation
 62  
 71
76
Average daily room rate(1) (in EUR)
 
Leased and owned hotels
 110  
 115
117
Manachised hotels
 110  
 99
94
Franchised hotels
 116  
 120
124
All hotels in operation
 111  
 113
114
Occupancy rate (as a percentage)
 
Leased and owned hotels
 56  
65
67
Manachised hotels
 55  
61
64
Franchised hotels
 57  
62
65
All hotels in operation
 56  
63
66
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 2022 to 2024, primarily due to the improving
conditions in the lodging market after Europe lifted COVID-19 related restrictions in mid-February 2022.
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,
    
2023
     2023     
2023
    
2023
    
2024
     2024     
2024
    
2024
RevPAR (in RMB):
  
  
  
  
  
  
  
  
Leased and owned hotels
 257
 321
 356
 298
 280
 321
 333
 296
Manachised hotels
 204
 241
 269
 221
 209
 237
 249
 215
Franchised hotels
 189
 237
 267
 213
 206
 240
 254
 218
Total hotels in operation
 210
 250
 278
 229
 216
 244
 256
 222
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,
2023
    
2023     
2023
    
2023
    
2024
    
2024     
2024
    
2024
RevPAR (in EUR):
   
   
   
   
  
Leased and owned hotels
 57
 83  
 81
 76
 61
88
85
81
Manachised hotels
 46
 61  
 76
 59
 49
60
70
65
Franchised hotels
 60
 82  
 76
 80
 59
82
82
96
Total hotels in operation
 55
 78  
 79
 73
 58
82
82
81

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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,
2023
2023
2023
2023
2024
2024
2024
2024
Number of hotels in operation
for at least 18 months
    
 5,860       6,191     
 6,466     
 6,539     
 6,799       6,920     
 7,035     
 7,163
RevPAR (RMB)
 
 210
 251
 281
 230
 218
 248
 258
 222
Same-hotel RevPAR change
(as a percentage)(1)
 
 51.8
 71.8
 41.1
 40.8
 0.9
 (3.6)
 (10.3)
 (6.7)
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,
2022
2023
2024
(RMB)
%
(RMB)
%
(RMB)
(US$)
%
(In millions, except percentages)
Revenues:
    
      
      
      
      
      
      
  
Leased and owned hotels
 
 9,148  
 66.0  
 13,796  
 63.0  
 13,843
 1,897
 57.9
Manachised and franchised hotels
 
 4,405  
 31.8  
 7,694  
 35.2  
 9,498
 1,301
 39.8
Others
 
 309  
 2.2  
 392  
 1.8  
 550
 76
 2.3
Total revenues
 
 13,862  
 100.0  
 21,882  
 100.0  
 23,891
 3,274
 100.0
●
Leased and Owned Hotels. In 2022, we generated revenues of RMB9,148 million from our leased and owned hotels, which
accounted for 66.0% of our total revenues for the year. 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 (US$1,897 million) from our leased and owned hotels, which accounted for 57.9% of our total revenues for the year. As
of December 31, 2024, we had 17 leased and owned hotels under development.

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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 25 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 2022, we generated revenues of RMB4,405 million from our manachised and franchised
hotels, which accounted for 31.8% of our total revenues for the year. 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 (US$1,301 million) from our manachised and franchised hotels, which accounted for
39.8% 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,
2024, we had 2,996 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.

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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 have historically been required to pay Deutsche
Hospitality a management fee consisting of a base fee of 0.5% to 3.5% 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 have historically been required to pay Deutsche
Hospitality a franchise fee of approximately 0.5% to 4.0% 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 RMB309 million, RMB392 million and RMB550 million (US$76 million) in 2022, 2023
and 2024, respectively, represented revenues generated from services other than the operation of hotel businesses, which mainly
included revenues from the provision of IT products and services and revenues from Huazhu Mall and other revenues from
legacy DH.

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96
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. During the COVID-19 period, we had managed
to adopt measures to improve our cost structure, including negotiating with landlords to reduce or delay rental payments, streamlining
our hotel staff, work shift sharing, temporary furlough of staff, and reducing or eliminating discretionary spending and capital
expenditures. 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,
2022
2023
2024
(RMB)
%
(RMB)
%
(RMB)
(US$)
%
(In millions, except percentages)
Total revenues
    
 13,862     
 100.0     
 21,882     
 100.0     
 23,891     
 3,274     
 100.0
Operating costs and expenses
 
 
 
 
 
 
 
Hotel operating costs:
 
 
 
 
 
 
 
Rents
 
 3,927  
 28.3  
 4,290  
 19.6  
 4,365  
 598  
 18.3
Utilities
 
 603  
 4.3  
 685  
 3.1  
 690  
 94  
 2.9
Personnel costs
 
 3,683  
 26.6  
 4,684  
 21.4  
 5,326  
 730  
 22.3
Depreciation and amortization
 
 1,414  
 10.2  
 1,329  
 6.1  
 1,254  
 172  
 5.2
Consumables, food and beverage
 
 1,026  
 7.4  
 1,327  
 6.1  
 1,293  
 177  
 5.4
Others
 
 1,607  
 11.6  
 2,026  
 9.2  
 2,357  
 323  
 9.9
Total hotel operating costs
 
 12,260  
 88.4  
 14,341  
 65.5  
 15,285  
 2,094  
 64.0
Other operating costs
 
 62  
 0.5  
 34  
 0.2  
 31  
 4  
 0.1
Selling and marketing expenses
 
 613  
 4.4  
 1,072  
 4.9  
 1,176  
 161  
 4.9
General and administrative expenses
 
 1,675  
 12.1  
 2,086  
 9.5  
 2,508  
 344  
 10.5
Pre-opening expenses
 
 95  
 0.7  
 35  
 0.2  
 50  
 7  
 0.2
Total operating costs and expenses
 
 14,705  
 106.1  
 17,568  
 80.3  
 19,050  
 2,610  
 79.7
●
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. 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.

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97
●
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 2022 and 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,
2022
2023
2024
    
(RMB)
    
(RMB)
    
(RMB)
    
(US$)
(In millions)
Net income (loss) attributable to our company
 
 (1,821) 
 4,085
 
 3,048
 
 418
Interest income
 
 (87) 
 (248)  
 (210)  
 (29)
Interest expense
 
 409  
 385
 
 318
 
 44
Income tax expense
 207
 1,204
 1,662
 228
Depreciation and amortization
 1,456
 1,414
 1,332
 183
EBITDA (Non-GAAP)
 164
 6,840
 6,150
 844
Share-based compensation expenses
 87
 143
 322
 44
(Gain) loss from fair value changes of equity securities, net
 359
 (109)
 66
 9
Foreign exchange (gain) loss, net
 641
 (90)
 272
 37
(Gain) loss on disposal of investments
 (73)
 (516)
 10
 1
Adjusted EBITDA (Non-GAAP)
 1,178
 6,268
 6,820
 935

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98
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 Singapore, companies are subject to Singapore
corporate income tax at a rate of 17%. 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%. Companies established in Japan are subject to Japan
corporate income tax at a rate of 23.2% (30%-34% including local taxes). Companies established in Hong Kong are subject to Hong
Kong profit tax at a rate of 16.5%. Companies established in Taiwan are subject to Taiwan corporate income tax at a rate of 20%.
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”) (previously named Mengguang Information and Technology (Shanghai) Co., Ltd) is a recognized software
development entity located in Shanghai of PRC. In November 2018, Jizhu Shanghai was qualified as a high and new tech enterprise,
resulting Jizhu Shanghai being subject to a reduced tax rate of 15% in 2018, 2019 and 2020. In December 2021, Jizhu Shanghai was
qualified as a high and new tech enterprise, resulting Jizhu Shanghai being 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. Huazhu Cloud (Shanghai) Information and Technology Co., Ltd. (“Huazhu Cloud”)
(previously named H-World Information and Technology Co., Ltd.) is qualified as a high and new tech enterprise, resulting Huazhu
Cloud being subject to a reduced tax rate of 15% in 2019, 2020 and 2021. In December 2022, Huazhu Cloud was qualified as a high and
new tech enterprise, resulting Huazhu Cloud being subject to a reduced tax rate of 15% in 2022, 2023 and 2024.

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99
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,
2022
2023
2024
    
(RMB)
    
%  
    
(RMB)
    
%  
    
(RMB)
    
(US$)
    
%  
(In millions, except percentages)
Consolidated Statement of Comprehensive Income
Data:
Revenues:
 
   
   
   
   
   
   
  
Leased and owned hotels
 
 9,148  
 66.0  
 13,796  
 63.0  
 13,843  
 1,897  
 57.9
Manachised and franchised hotels
 
 4,405  
 31.8  
 7,694  
 35.2  
 9,498  
 1,301  
 39.8
Others
 
 309  
 2.2  
 392  
 1.8  
 550  
 76  
 2.3
Total revenues
 
 13,862  
 100.0  
 21,882  
 100.0  
 23,891  
 3,274  
 100.0
Operating costs and expenses(1):
 
   
   
 
 
 
 
Hotel operating costs
 
 12,260  
 88.4  
 14,341  
 65.5  
 15,285  
 2,094  
 64.0
Other operating costs
 
 62  
 0.5  
 34  
 0.2  
 31  
 4  
 0.1
Selling and marketing expenses
 
 613  
 4.4  
 1,072  
 4.9  
 1,176  
 161  
 4.9
General and administrative expenses
 
 1,675  
 12.1  
 2,086  
 9.5  
 2,508  
 344  
 10.5
Pre-opening expenses
 
 95  
 0.7  
 35  
 0.2  
 50  
 7  
 0.2
Total operating costs and expenses
 
 14,705  
 106.1  
 17,568  
 80.3  
 19,050  
 2,610  
 79.7
Goodwill impairment loss
—
—
 4
 0.0
—
—
—
Other operating income, net
 
 549  
 4.0  
 404  
 1.8  
 359  
 49  
 1.5
Income (loss) from operations
 
 (294) 
 (2.1) 
 4,714  
 21.5  
 5,200  
 713  
 21.8
Interest income
 
 87  
 0.6  
 248  
 1.1  
 210  
 29  
 0.9
Interest expense
 
 409  
 3.0  
 385  
 1.7  
 318  
 44  
 1.3
Other income, net
 10  
 0.1  
 573  
 2.6  
 51  
 7  
 0.2
(Loss) gain from fair value changes of equity securities,
net
 
 (359) 
 (2.6) 
 109  
 0.5  
 (66) 
 (9) 
 (0.3)
Foreign exchange (loss) gain, net
 
 (641) 
 (4.6) 
 90  
 0.4  
 (272) 
 (37) 
 (1.1)
Income (loss) before income taxes
 (1,606) 
 (11.6) 
 5,349  
 24.4  
 4,805  
 659  
 20.2
Income tax expense
 
 207  
 1.4  
 1,204  
 5.5  
 1,662  
 228  
 7.0
Loss from equity method investments
 
 (36) 
 (0.3) 
 (14) 
 (0.0) 
 (41) 
 (6) 
(0.2)
Net (loss) income
 
 (1,849) 
 (13.3) 
 4,131  
 18.9  
 3,102  
 425  
 13.0
Less: net (loss) income attributable to noncontrolling
interest
 
 (28) 
 (0.2) 
 46  
 0.2  
 54  
 7  
 0.2
Net (loss) income attributable to H World Group
Limited
 
 (1,821) 
 (13.1) 
 4,085  
 18.7  
 3,048  
 418  
 12.8

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100
Note:
(1) Includes share-based compensation expenses as follows:
    
Year Ended December 31,
2022
2023
2024
    
(RMB)
    
(RMB)
    
(RMB)
    
(US$)
(In millions)
Share-based compensation expenses
 
 87  
 143  
 322  
 44
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. We changed the segment profit measure from EBITDA to adjusted EBITDA
starting from the second quarter of 2023 as we use adjusted EBITDA to evaluate the performance of each segment. Adjusted EBITDA
has also been presented for the disclosure for prior period as the segment profit.
The following table provides a summary of our operating segment results for the years ended December 31, 2022, 2023 and 2024.
    
Years Ended December 31,
2022
2023
2024
     Legacy     Legacy    
    
     Legacy     Legacy    
    
     Legacy     Legacy    
    
Huazhu
DH
Elimination
Total
Huazhu
DH
Elimination
Total
Huazhu
DH
Elimination
Total
Total revenues
 
 10,661  
 3,212  
 (11)   13,862  
 17,444  
 4,465  
 (27)   21,882  
 19,029  
 4,881  
 (19)   23,891
Adjusted EBITDA
 
 1,273  
 (92) 
 (3) 
 1,178  
 6,185  
 84  
 (1) 
 6,268  
 6,974  
 (154) 
 (0) 
 6,820
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 (US$3,274 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 (US$1,897
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 (US$1,301 million) in 2024, primarily due to the increased number of our
manachised hotels.
●
Other Revenues. Other revenues increased by 40.3% from RMB392 million in 2023 to RMB550 million (US$76 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 (US$2,610 million) in 2024.
●
Hotel Operating Costs. Our hotel operating costs increased by 6.6% from RMB14,341 million in 2023 to RMB15,285 million
(US$2,094 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 (US$161 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 (US$344 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.

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101
●
Pre-opening Expenses. Our pre-opening expenses increased by 42.9% from RMB35 million in 2023 to RMB50 million (US$7
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
(US$49 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 (US$713 million) in 2024.
Interest Expense, Net. Our net interest expense was RMB108 million (US$15 million) in 2024. Our interest income was RMB210
million (US$29 million), and our interest expense was RMB318 million (US$44 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 (US$7 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 (US$9 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 (US$37 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 (US$228 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
(US$6 million) in 2024, primarily due to the increase in losses incurred by certain of our investee companies.
Net Income (Loss) 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 (US$7 million) in 2024.Net
income attributable to noncontrolling interest was RMB46 million in 2023.
Net Income (Loss) 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 (US$418 million) in 2024.
Segment Results
Total Revenue. Legacy Huazhu’s total revenues for 2024 were RMB19,029 million (US$2,607 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 (US$669 million), representing a 9.3% increase from RMB4,465million 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 (US$955 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 (US$21 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.

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102
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Total Revenues. Our total revenues increased by 57.9% from RMB13,862 million in 2022 to RMB21,882 million in 2023. This
increase was primarily due to our continuous business recovery from COVID-19 and increased occupancy rate, driven by an increased
demand for leisure travel and the continued recovery for business travel.
●
Leased and Owned Hotels. Total revenues from our leased and owned hotels increased by 50.8% from RMB9,148 million in
2022 to RMB13,796 million in 2023. This increase was primarily due to our continuous business recovery from COVID-19.
●
Manachised and Franchised Hotels. Total revenues from our manachised and franchised hotels increased by 74.7% from
RMB4,405 million in 2022 to RMB7,694 million in 2023 due to our business recovery from COVID-19.
●
Other Revenues. Other revenues increased by 26.9% from RMB309 million in 2022 to RMB392 million in 2023.
Operating Costs and Expenses. Our total operating costs and expenses increased by 19.5% from RMB14,705 million in 2022 to
RMB17,568 million in 2023.
●
Hotel Operating Costs. Our hotel operating costs increased by 17.0% from RMB12,260 million in 2022 to RMB14,341 million
in 2023. This increase was primarily due to an increase in the personnel costs and consumables, food and beverage, which was
in line with the increase in our occupancy rate and revenues. Our hotel operating costs as a percentage of total revenues
decreased from 88.4% in 2022 to 65.5% in 2023.
●
Selling and Marketing Expenses. Our selling and marketing expenses increased by 74.9% from RMB613 million in 2022 to
RMB1,072 million in 2023, mainly due to higher commissions to travel agencies and promotional expenses associated with
business recovery. Our selling and marketing expenses as a percentage of total revenues increased slightly from 4.4% in 2022 to
4.9% in 2023.
●
General and Administrative Expenses. Our general and administrative expenses increased by 24.5% from RMB1,675 million in
2022 to RMB2,086 million in 2023. The increase was mainly attributable to higher personnel costs along with our business
recovery. Our general and administrative expenses as a percentage of total revenues decreased from 12.1% in 2022 to 9.5% in
2023, primarily attributable to our increased revenues and economies of scale.
●
Pre-opening Expenses. Our pre-opening expenses decreased by 63.2% from RMB95 million in 2022 to RMB35 million in 2023
due to more selective openings of leased and owned hotels. Our pre-opening expenses as a percentage of total revenues
decreased from 0.7% in 2022 to 0.2% in 2023. Our pre-opening expenses in 2023 was primarily from legacy Huazhu.
Other Operating Income, Net. Our other operating income decreased by 26.4% from RMB549 million in 2022 to RMB404 million
in 2023, mainly because we received higher COVID-related government subsidies and insurance compensation granted to legacy DH in
2022 compared to 2023.
Income (Loss) from Operations. As a result of the foregoing, we had income from operations of RMB4,714 million in 2023,
compared to loss from operations of RMB294 million in 2022.
Interest Expense, Net. Our net interest expense was RMB137 million in 2023. Our interest income was RMB248 million, and our
interest expense was RMB385 million in 2023. Our net interest expense was RMB322 million in 2022. Our interest income was RMB87
million, and our interest expense was RMB409 million in 2022.
Other Income, Net. We recorded other income, net of RMB573 million in 2023, compared to other income, net of RMB10 million in
2022. The higher other income, net in 2023 was mainly due to gains from sales of Accor’s shares.

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(Loss) Gain from Fair Value Changes of Equity Securities, Net. (Loss) gain from fair value changes of equity securities, net mainly
represents the unrealized (loss) gain from our investment in equity securities with readily determinable fair values. Our gain from fair
value changes of equity securities was RMB109 million in 2023, primarily due to gains from fair value changes of UBOX in 2023 and
we no longer incurred losses from holding Accor shares after we sold those shares in 2023. We had loss from fair value changes of equity
securities of RMB359 million in 2022.
Foreign Exchange (Loss) Gain. Our foreign exchange gain was RMB90 million in 2023, compared to our foreign exchange loss of
RMB641 million in 2022. Our foreign exchange gain in 2023 was primarily attributable to certain internal loan receivables denominated
in Euro as a result of the Euro’s appreciation.
Income Tax Expense. Our income tax expense was RMB1,204 million in 2023, compared to income tax expense of RMB207 million
in 2022. Our effective tax rate in 2023 was 22.5%, compared with negative 12.9% in 2022.
Equity Method Investments. Our loss from equity method investments decreased from RMB36 million in 2022 to RMB14 million in
2023, primarily due to the decrease in losses incurred by certain of our investee companies.
Net (Loss) 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 RMB46 million in 2023, primarily due to
our business recovery. The net loss attributable to noncontrolling interest was RMB28 million in 2022.
Net (Loss) Income Attributable to H World Group Limited. As a result of the foregoing, we recorded net income attributable to H
World Group Limited of RMB4,085 million in 2023, compared to net loss attributable to H World Group Limited of RMB1,821 million
in 2022.
Segment Results
Total Revenue. Legacy Huazhu’s total revenues for 2023 were RMB17,444 million, representing a 63.6% increase from RMB10,661
million in 2022 as a result of our business recovery from COVID-19 in China. Legacy DH’s total revenues from 2023 were RMB4,465
million, representing a 39.0% increase from RMB3,212 million in 2022 due to the continuous business recovery of our European
business.
Adjusted EBITDA. Legacy Huazhu’s adjusted EBITDA from 2023 was RMB6,185 million, representing a significant increase from
RMB1,273 million in 2022 as a result of our business recovery from COVID-19 in China. Legacy DH’s adjusted EBITDA from 2023
was RMB84 million, representing a significant improvement from negative RMB92 million in 2022 due to the continuous business
recovery of our European business.
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, 2023, we reclassified the 2026 Notes
as short-term debt as the holders have a put option which can be exercised within one year. After May 1, 2024, we reclassified the 2026
Notes as long-term debt because the put option was not exercised.

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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. The EUR70 million revolving credit facility is
available for 35 months after the date of the agreement. The interest rate on the loan for each interest period is the aggregate of the
applicable Margin and EURIBOR or one-year benchmark LPR. The margin for each loan depends on the currency of loan, a loan
denominated in EUR means 1.55% per annum and a loan denominated in RMB means -0.15% to -0.2% per annum. There are some
financial covenants including interest cover, leverage and book equity related to this facility. We were fully in compliance with the
amended covenants in 2023 and 2024. As of December 31, 2024, we had drawn down EUR220 million, RMB equivalent of EUR110
million and EUR70 million under the facility agreement and repaid EUR220 million, RMB equivalent of EUR11 million and EUR70
million, respectively.
In March 2024, we entered into a five-year syndicated loan contract with a facility amount of RMB400 million expiring in March
2029. Buildings with a net book value of RMB510 million and land use rights with a net book value of RMB69 million are pledged as
collateral for the loan. 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, and we were in
compliance with the covenants as of December 31, 2024. As of December 31, 2024, we had drawn down RMB340 million under the
facility agreement and repaid RMB15 million. As of December 31, 2024, the outstanding loan amount is RMB325 million.
As of December 31, 2024, we had a total debt balance of RMB5.4 billion (US$0.7 billion), unutilized facilities of approximately
RMB3.3 billion.
We had complied with the covenants under our existing banking facilities as of December 31, 2024.
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, 2024, we
had RMB7,474 million (US$1,024 million) in cash and cash equivalents and RMB50 million (US$7 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, 2024 primarily consisted of Renminbi and
U.S. dollars.
As of December 31, 2024, we had 17 properties for our leased and owned hotels under development. As of December 31, 2024, we
expected to incur approximately RMB638 million (US$87 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 17 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,
2022
2023
2024
    
(RMB)
    
(RMB)
    
(RMB)
    
(US$)
(In millions)
Net cash provided by operating activities
 
 1,564  
 7,674  
 7,518  
 1,030
Net cash used in investing activities
 
 (522) 
 (1,477) 
 (2,239) 
 (307)
Net cash used in financing activities
 
 (1,394) 
 (3,720) 
 (5,504) 
 (754)
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
 
 297  
 164  
 30  
 4
Net (decrease) increase in cash, cash equivalents and restricted cash, including cash
classified within assets held for sale
 
 (55) 
 2,641  
 (195) 
 (27)
Less: net increase (decrease) in cash and cash equivalents classified within assets
held for sale
 —
 17
 (9)
 (1)
Cash, cash equivalents and restricted cash at the beginning of the year
 
 5,141  
 5,086  
 7,710  
 1,057
Cash, cash equivalents and restricted cash at the end of the year
 
 5,086  
 7,710  
 7,524  
 1,031

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105
Operating Activities
In 2022, 2023 and 2024, we financed our operating activities primarily through cash generated from operations.
Net cash provided by operating activities amounted to RMB7,518 million (US$1,030 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.
Net cash provided by operating activities amounted to RMB1,564 million in 2022, primarily attributable to (i) an add-back of
RMB2,257 million in noncash lease expense and (ii) an add-back of RMB1,456 million in depreciation and amortization, partially offset
by (i) our net loss of RMB1,849 million and (ii) a decrease in operating lease liabilities of RMB1,608 million.
Investing Activities
Net cash used in investing activities increased from RMB1,477 million in 2023 to RMB2,239 million (US$307 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.
Our cash used in investing activities in 2022 is primarily related to purchases of property and equipment of RMB1,049 million,
proceeds from maturity/sale of investments of RMB937 million, and purchase of investments of RMB401 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 RMB5,504 million (US$754 million) in 2024, compared with net cash used in
financing activities of RMB3,720 million in 2023. Net cash used in financing activities 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, compared with net cash used in financing activities of
RMB1,394 million in 2022. 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.
We had net cash used in financing activities of RMB1,394 million in 2022, compared with net cash used in financing activities of
RMB1,801 million in 2021. Net cash used in financing activities in 2022 primarily consisted of proceeds from short-term debt of
RMB4,249 million, proceeds from long-term debt of RMB2,797 million and repayment of convertible senior notes of RMB3,406
million, partially offset by (i) repayment of short-term debt of RMB1,935 million and (ii) repayment of long-term debt of RMB2,364
million.

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106
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 RMB1,053 million,
RMB901 million and RMB898 million (US$123 million) in 2022, 2023 and 2024, respectively. Our capital expenditures in 2024
consisted of RMB883 million (US$121 million) in property and equipment and RMB15 million (US$2 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.
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, 2022, 2023 and 2024.
The following table presents the cash flows among the Company, its subsidiaries and the VIEs for the fiscal years ended December
31, 2022, 2023 and 2024.
Cash transfer between our company, subsidiaries and VIEs
    
    
    
    
    
    
(RMB in millions)
Cash flows between subsidiaries and VIEs
 
2022
 
2023
 
2024
Loans from subsidiaries to the VIEs under the contractual arrangement
 
 1  
 —  
 0
Cash receipts by the VIEs from subsidiaries for services
 
 30  
 21  
 12
Loans to subsidiaries by the VIEs
 
 (2) 
 —  
 —
Repayment of loans by subsidiaries
 
 5  
 —  
 —
Cash flows between holding company and subsidiaries(1)
2022
2023
2024
Loans to subsidiaries
 (750)
 (987)
 (0)
Repayment of loans by subsidiaries
 4,165
 2,061
 1,000
Loans from subsidiaries
 
 798
 
 2,574
 
 2,553
Repayment of loans from subsidiaries
 
—
 
 (540)
 
 (457)
Dividend payment from subsidiaries
 
—
 
 —
 
 19
Note:
(1) Includes overseas and PRC subsidiaries.
For the years ended December 31, 2022, 2023 and 2024,
●
our subsidiaries paid service fee totaled approximately RMB30 million, RMB21 million and RMB12 million (US$2 million),
respectively, to the VIEs for telecommunication services and internet-related services provided to hotels;

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107
●
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;
●
the VIEs lent approximately RMB2 million, nil and nil, respectively, to our subsidiaries other than HZ Hotel Management, and
these subsidiaries repaid RMB5 million, nil and nil, respectively, to the VIEs for loans that the VIEs previously provided to
them;
●
cash was transferred from H World Group Limited to our subsidiaries primarily through shareholder loans. In these same
respective periods, our subsidiaries borrowed approximately RMB750 million, RMB987 million and RMB0 million,
respectively, from H World Group Limited, and our subsidiaries repaid a total of approximately RMB4,165 million, RMB2,061
million and RMB1,000 million (US$137 million) loans, respectively, to H World Group Limited;
●
our subsidiaries provided RMB798 million, RMB2,574 million and RMB2,553 million (US$350 million) loans, respectively, to
H World Group Limited, and H World Group Limited repaid approximately nil, RMB540 million and RMB457 million (US$63
million), respectively, to these subsidiaries for such loans; and
●
our subsidiaries paid dividend of nil, nil and RMB19 million (US$3 million), 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, 2022, 2023 and 2024.
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, 2024, approximately RMB4,181 million (US$573 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.

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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 March 3, 2022, our company declared a cash dividend of approximately US$68 million. 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.
H World Group Limited’s source of dividends has come primarily from dividends from our PRC subsidiaries.
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 the Hong Kong Special
Administrative Region 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.

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In 2022, 2023 and 2024, RMB1,310 million, RMB1,454 million and RMB3,787 million were paid as dividends from our PRC
subsidiaries to our Hong Kong and Singapore subsidiaries, respectively. In 2024, RMB208 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 2022, 2023 and 2024.
As of December 31, 2024, we planned to distribute RMB3,135 million from our PRC subsidiaries to our oversea subsidiaries, and
we have accrued for an additional PRC dividend withholding tax of RMB191 million as a result. 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.
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.”

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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”.
5.D. Trend Information
Jizhu Shanghai is a recognized software development entity located in Shanghai of PRC. In November 2018, Jizhu Shanghai was
qualified as high and new tech enterprise, resulting in it being subject to a reduced tax rate of 15% in 2018, 2019 and 2020. 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. Huazhu Cloud is qualified as high and new tech enterprise, resulting
in Huazhu Cloud being subject to a reduced tax rate of 15% in 2019, 2020 and 2021. 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. 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, 2022 to December 31, 2022, for taxable income less than RMB1 million, 87.5% of the
taxable income would be exempted in tax computation, and for taxable income over RMB1 million but less than RMB3 million, the
discount would be 75%. 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 simultaneously meet the following three conditions: annual taxable income does not exceed
RMB3 million, the number of employees does not exceed 300, 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,
2022
2023
2024
    
(RMB)
    
(RMB)
    
(RMB)
(In millions, except per share data)
Aggregate amount
 
 22  
 60  
 47
Per share effect—basic
 
 0.01  
 0.02  
 0.02
Per share effect—diluted
 
 0.01  
 0.02  
 0.02
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.

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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 Names 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.
Determining whether impairment indicators exist and estimating the fair value of our goodwill reporting units and intangible assets
for impairment testing require significant judgment. Brand names are 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, 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, 2024, 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 more than 30%. 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 brand names for legacy DH. As of December 31, 2024, the estimated fair
value of one brand name acquired in DH acquisition was lower than its carrying value, and an impairment of RMB391 million was
recognized in 2024, which reduced the carrying value by 16%. A 5% increase in the discount rate or decrease in royalty saving rate could
result in further impairment charges of approximately RMB129 million and RMB105 million, respectively. In addition, the estimated fair
value of both the other two brand names acquired in DH acquisition exceeded their carrying value by approximately 177% and 112%,
respectively. A 5% increase in the discount rate or decrease in royalty saving rate would not result in impairments.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors and Senior Management
The following table sets forth the name, age and position of each of our directors and executive officers as of the date of this annual
report. The business address of all of our directors and executive officers is No. 1299 Fenghua Road, Jiading District, Shanghai 201803,
People’s Republic of China.
Directors and Executive Officers
    
Age
    
Position/Title
Qi Ji
58
Founder and Executive Chairman of the Board of Directors
John Jiong Wu
57
Co-founder, Independent Director
Tong Tong Zhao
 
58
 
Co-founder, Independent Director
Jie Zheng
 
54
 
Executive Director
Jian Shang
 
57
 
Independent Director
Theng Fong Hee
70
Independent Director
Lei Cao
50
Independent Director
Hui Jin
47
Chief Executive Officer
Hui Chen
 
58
 
Chief Financial Officer

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Qi Ji is our founder, and was appointed as a director in February 2007. Mr. Ji has also served as the executive chairman of our board
since August 2009. Prior to his current role, he also served as our chief executive officer from 2007 to August 2009, from January 2012
to May 2015, and from November 2019 to September 2021. He co-founded Home Inns & Hotels Management Inc. and served as its
chief executive officer from 2002 to January 2005. He also co-founded Trip.com Group Limited (“Trip.com,” a company listed on the
NASDAQ, ticker symbol: TCOM), one of the largest online travel services providers in China, in 1999, acted as its chief executive
officer and president until 2001, and currently serves on Trip.com’s board as an independent director. Mr. Ji received his bachelor’s
degree in engineering mechanics and master degree in mechanical engineering from Shanghai Jiao Tong University in the PRC in 1989
and February 1992, respectively.
John Jiong Wu, a co-founder of our company, has served as our director since January 2007. He is founding partner and chairman of
FengHe Fund Management Pte. Ltd. He served as the venture partner of Northern Light Venture Capital and was an angel investor and
the chief technology officer of Alibaba Group from 2000 to 2007. Mr. Wu was a non-executive director of Viva Biotech Holdings (a
company listed on the Hong Kong Stock Exchange, stock code: 1873) from 2018 to 2020. Mr. Wu received his Bachelor of Science in
Computer Science degree from the University of Michigan in August 1989.
Tong Tong Zhao, a co-founder of our company, has served as our director since February 2007. Ms. Zhao has served in several
companies, including the supervisor of Shanghai Asia-Tang Health Technology Development Co., Ltd., the executive director of
Shanghai Hong Ying Hi-Tech Co., Ltd., and the executive director of Shanghai Xie Cheng Science and Technology Co., Ltd. Ms. Zhao
received her Master of Engineering degree from Shanghai Jiao Tong University in the PRC in March 1992 and her Master of Business
Administration degree from McGill University in Canada in June 2003. She also obtained her bachelor’s degree with a major in
biomedical engineering from Southeast University in the PRC in July 1989.
Jie Zheng has served as our executive director since July 2024. Ms. Zheng has over 20 years of leadership experience across
automotive and hospitality sectors both in China and internationally. Ms. Zheng is currently a venture partner of Peeli Ventures, where
she provides management consulting for portfolio companies in consumer goods and MarTech industries. Ms. Zheng served as our chief
strategist from October 2019 to September 2020, and rejoined us in January 2023 as a senior advisor and has served as a supervisory
board member of Steigenberger Hotels GmbH since November 2023. From October 2010 to April 2019, Ms. Zheng held various
positions within Fiat Chrysler Automobiles Group in China (“FCA China”), including chief executive officer of FCA China (currently
known as Stellantis) and general manager of GAC Fiat Chrysler Automobiles Sales Co., Ltd. Prior to that, Ms. Zheng served as the vice
president of marketing in Chrysler Group China Sales Ltd. from May 2008 to October 2010, the vice president of communications of
Honeywell (China) Co., Ltd. from January 2007 to May 2008, the vice president of global public affairs and communications of OnStar
Corporation (a subsidiary of General Motors) in the U.S. from October 2005 to January 2007, the assistant manager, senior manager and
director, successively, of public affairs and communications of General Motors China Inc. from January 1997 to September 2005, and a
business reporter of China Daily and Shanghai Star from July 1993 to January 1997. Ms. Zheng obtained her bachelor’s degree in
international journalism from Shanghai International Studies University in 1993, master’s degree of business administration from
Rutgers University in 2004, master’s degree in psychology from Arizona State University in 2023, and is currently pursuing her PhD
degree in psychology from California Institute of Integral Studies. Ms. Zheng was awarded the Most Influential Business Women in
China by Fortune in 2011, 2014, 2017 and 2018, respectively, and she has also received Mulan Award for Top Business Women in China
by China Entrepreneur for six consecutive years since 2013.
Jian Shang has served as our independent director since May 2014. Mr. Shang has been the general manager of Hong Shang Asset
Management Co., Ltd. since July 2013. From September 2006 to November 2012, he served as chief executive officer of UBS SDIC
Fund Management Company. Prior to that, he served as chief executive officer of Yin Hua Fund Management Co., Ltd., deputy chief
executive officer of Hua An Fund Management Co., Ltd, and head of strategic planning of Shanghai Stock Exchange respectively from
January 2001 to June 2006. Previously, he was a deputy division director of CSRC. Mr. Shang has been an independent non-executive
director of Shanghai Realway Capital Assets Management Co., Ltd. (a company listed on the Hong Kong Stock Exchange, stock code:
1835) since October 2018. Mr. Shang obtained his PhD in business administration and Master of Arts in economics from University of
Connecticut in the United States in December 1997 and December 1994, respectively, and his bachelor’s degree with a major in
industrial and foreign trade from Shanghai Jiao Tong University in the PRC in July 1989.

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Theng Fong Hee has served as our independent director of the Company since July 2020. Mr. Hee is a senior lawyer in Singapore
with over 40 years of experience. He is now a full - time independent arbitrator and mediator with The Arbitration Chambers. Mr. Hee is
a fellow of Singapore Institute of Arbitrators and Chartered Institute of Arbitrators (UK). He is also on the panel of arbitrators in various
arbitration institutions including Singapore International Arbitration Centre (SIAC), China International Economic and Trade Arbitration
Commission (CIETAC), Beijing Arbitration Commission (BAC), Shanghai International Economic and Trade Arbitration Commission
(SHIAC), Hong Kong International Arbitration Centre (HKIAC), Hainan International Arbitration Court (HIAC), Chongqing Arbitration
Commission (CQAC), Shanghai Arbitration Commission (SHAC), Wuhan Arbitration Commission (WHAC) and Asian International
Arbitration Centre (AIAC). Mr. Hee is also an ambassador of Singapore International Mediation Centre (SIMC) and has been an
accredited mediator of Singapore Mediation Centre (SMC) since March 2017. He serves as an independent director of several listed
companies, including Zheneng Jinjiang Environment Holding Company Limited (a company listed on the Singapore Exchange, stock
code: BWM) from 2016 to 2022, Straco Corporation Limited (a company listed on the Singapore Exchange, stock code: S85) since April
2016, Yanlord Land Group Limited (a company listed on the Singapore Exchange, stock code: Z25) since October 2017, China Aviation
Oil (Singapore) Corporation Ltd (a company listed on the Singapore Exchange, stock code: G92) since April 2019, Haidilao
International Holding Ltd. (a company listed on the Hong Kong Stock Exchange, stock code:6862) since September 2018, Tye Soon
Limited (a company listed on the Singapore Exchange, stock code: BFU) from May 1997 to June 2020, APAC Realty Limited (a
company listed on the Singapore Exchange, stock code: CLN) from September 2017 to June 2020, First Resources Limited (a company
listed on the Singapore Exchange, stock code: EB5) from October 2007 to May 2018, YHI International Limited (a company listed on
the Singapore Exchange, stock code: BPF) from May 2003 to April 2018, and Datapulse Technology Limited (a company listed on the
Singapore Exchange, stock code: BKW) from January 1994 to December 2017. Mr. Hee was also a director of Chinese Development
Assistance Council from June 2012 to June 2018 and Singapore Chinese Cultural Centre from May 2015 to September 2019. He has
been a director of Chua Foundation of Singapore from March 2015 to 2021, F&H Singhome Fund II Ltd. since April 2012, F&H
Singhome Fund III Ltd. since August 2015 and independent non-executive director of Greenland (Singapore) Trust Management Pte.
Ltd. since April 2018. Mr. Hee was awarded the Public Service Medal and Public Service Star awards respectively in 2008 and 2015. He
was also appointed as a Justice of the Peace in April 2018. Mr. Hee obtained his bachelor’s degree in law from National University of
Singapore (formerly known as the University of Singapore) with honors in Singapore in May 1979 and also received a diploma in
Chinese law from Soochow University in the PRC in October 2004. He has been admitted as an advocate and solicitor by the Supreme
Court of Singapore since October 1981.
Lei Cao has served as our independent director since July 2020. She has been the head of tax Greater China in Philips Electronic
Singapore Pte Ltd. since May 2012. Prior to that, Ms. Cao served as a senior tax director from January 2010 to May 2012 and a tax
director from October 2007 to December 2009 in Philips China Investment Co., Ltd. She was also a tax director in Philips Electronics
Singapore Pte Ltd from January 2006 to September 2007 and the senior tax manager in Philips China Investment Co., Ltd. from
November 2003 to December 2005. Her primary role is to manage a team to provide tax solutions for Philips group in the responsible
market, as well as to support and secure Philips group’s interests and operations. Previously, Ms. Cao worked in Deloitte Touche
Tohmatsu Certified Public Accountants LLP from September 1995 to October 2003 under various roles and her last position was a
manager in the tax and business advisory department. Ms. Cao received a bachelor’s degree with a major in international business
management from Shanghai University of Finance and Economics in the PRC in July 1995. Ms. Cao is a PRC Certified Public
Accountant, who has obtained her qualification from Shanghai Institute of Certified Public Accountants in December 2009, and is also a
PRC Certified Tax Agent, who has obtained her qualification from Shanghai Certified Tax Agent Management Center in June 2000.
Hui Jin joined us in 2005 and has served as our chief executive officer since September 2021. He has successively served as the
director of our Development Department, our vice president, executive vice president, and president, respectively. Mr. Jin worked with
Shanghai Home Inns Hotels Management Limited as regional development manager during the period from March 2004 to December
2004. Mr. Jin received his executive master’s degree from China Europe International Business School in the PRC in August 2014, and a
Bachelor of Science degree in Psychology from the East China Normal University in the PRC in July 2000.
Hui Chen has served as our chief financial officer since September 2024. Ms. Chen initially joined us in 2014, and from 2014 to
early 2016, Ms. Chen served as our executive vice president of finance responsible for internal financial management and then chief
financial officer. From March 2018 to February 2020, Ms. Chen served as the chief financial officer of Cjia Group Limited, our affiliate
company which primarily engages in providing apartment services. In February 2020, Ms. Chen rejoined us as the chief compliance
officer. Ms. Chen then served as our chief financial officer from May 2021 to December 2022 and our chief compliance officer since
December 2022. Ms. Chen’s other previous work experiences also include chief financial officer of Home Inns Group and finance
director of Trip.com. Ms. Chen received her master’s degree in management from Shanghai Jiaotong University.

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Employment Agreements
We have entered into an employment agreement with each of our named executive officers. Each of our named executive officers is
employed for a specified time period, which will be automatically extended unless either we or the named executive officer gives prior
notice to terminate such employment. We may terminate the employment for cause, at any time, without notice or compensation, for
certain acts, including but not limited to the conviction of a criminal offence and negligent or dishonest acts to our detriment. A named
executive officer may terminate his or her employment at any time with a one-month prior written notice.
Each named executive officer has agreed to hold, both during and after the termination or expiry of his or her employment
agreement, in strict confidence, and not to use, except as required in the performance of his or her duties in connection with the
employment, any of our confidential information or trade secrets or the confidential or proprietary information of any third party
received by us and for which we have confidential obligations. In addition, each named executive officer has agreed to be bound by non-
competition restrictions. Specifically, each named executive officer has agreed not to, during his or her employment with us and for a
period of two years following his or her termination with our company, be engaged as employee or in another capacity to participant
directly or indirectly in any business that is in competition with ours. Each named executive officer also agrees to comply with all
material applicable laws and regulations related to his or her responsibilities at our company as well as all material written corporate and
business policies and procedures of our company.
6.B. Compensation
For the fiscal year ended December 31, 2024, the aggregate cash compensation and benefits that we paid to our directors and
executive officers were approximately RMB24 million (US$3 million). No pension, retirement or similar benefits have been set aside or
accrued for our executive officers or directors. We have no service contracts with any of our directors providing for benefits upon
termination of employment.
Share Incentive Plans
2009 Share Incentive Plan
In September 2009, our board of directors and our shareholders adopted our 2009 Share Incentive Plan with purposes similar to our
2007 Global Share Plan and 2008 Global Share Plan. Our 2009 Share Incentive Plan was subsequently amended in October 2009,
August 2010, March 2015 and May 2018. 430 million ordinary shares may be issued under our amended 2009 Share Incentive Plan, or
the Amended 2009 Plan.
Plan Administration. The compensation committee administers our Amended 2009 Plan. Our ESOP administration committee,
currently comprised solely of Mr. Qi Ji, has been delegated certain authorities, among others, to grant, in its sole discretion, options,
restricted stocks and restricted stock units to be issued under the respective share incentive plans to any of our employees and consultants
except for our directors and executive officers, and the aggregate number of shares covered by any single grant it makes shall not exceed
5,000,000 ordinary shares.
Types of Awards.
●
Options. The purchase price per share under an option will be determined by a committee appointed by our board and set forth
in the award agreement. The term of an option granted under the Amended 2009 Plan must not exceed ten years from the grant
date, and a shorter term may be required.
●
Restricted Stock and Restricted Stock Units. An award of restricted stock is a grant of our ordinary shares subject to restrictions
the committee appointed by our board may impose. A restricted stock unit is a contractual right that is denominated in our
ordinary shares, each of which represents a right to receive the value of a share or a specified percentage of such value upon the
terms and conditions set forth in the Amended 2009 Plan and the applicable award agreement.

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115
●
Other Stock-based Awards. The committee is authorized to grant other stock-based awards that are denominated or payable in
or otherwise related to our ordinary shares such as stock appreciation rights and rights to dividends and dividend equivalents.
Terms and conditions of such awards will be determined by the committee appointed by our board. Unless the awards are
granted in substitution for outstanding awards previously granted by an entity that we acquired or combined, the value of the
consideration for the ordinary shares to be purchased upon the exercise of such awards shall not be less than the fair market
value of the underlying ordinary shares on the grant date.
Vesting Schedule. As of the date of this annual report, we have entered into option agreements and restricted stock award agreements
respectively under our Amended 2009 Plan. Pursuant to our typical option agreement, 50% of the options granted shall vest on the
second anniversary of the vesting commencement date specified in the corresponding option agreement, and 1/48 of the options shall
vest each month thereafter over the next two years on the first day of each month, subject to the optionee’s continuing to provide services
to us. Pursuant to our typical restricted stock award agreement, 50% of the restricted stock granted shall vest on the second anniversary
of the vesting commencement date specified in the corresponding restricted stock award agreement, and 1/8 of the restricted stock shall
vest each six-month period thereafter over the next two years on the last day of each six-month period, subject to the grantee’s continuing
to provide services to us. For certain grants, we may also apply different vesting schedules set forth in the relevant agreements between
the grantees and us or apply different performance conditions. For example, certain restricted stocks granted shall vest over a period of
ten years in equal yearly installments.
Termination of the Amended 2009 Plan. Our Amended 2009 Plan will terminate in 2029. Our board of directors may amend,
suspend, or terminate our Amended 2009 Plan at any time. No amendment, alteration, suspension, or termination of these plans shall
materially and adversely impair the rights of any participant with respect to an outstanding award, unless mutually agreed otherwise
between the participant and the administrator.
2023 Share Incentive Plan
In June 2023, our board of directors adopted our 2023 Share Incentive Plan with purposes similar to our Amended 2009 Plan. In
June 2024, our shareholders amended and restated the 2023 Share Incentive Plan (the “Amended 2023 Plan”). 300 million ordinary
shares may be issued under our Amended 2023 Plan.
Plan Administration. The compensation committee administers our Amended 2023 Plan. Our ESOP administration committee,
currently comprised solely of Mr. Qi Ji, has been delegated certain authorities, among others, to grant, in its sole discretion, restricted
stock units and options to be issued under the respective share incentive plans to any of our directors, senior management, employees and
consultants, provided that the aggregate number of shares covered by any single grant it makes shall not exceed 5,000,000 ordinary
shares and that any such grant shall be made in compliance with the rules of the Amended 2023 Plan.
Types of Awards.
●
Options. The purchase price per share under an option will be determined by the compensation committee or a committee
otherwise appointed by our board and set forth in the award agreement. The term of an option granted under the Amended 2023
Plan must not exceed ten years from the grant date, and a shorter term may be required.
●
Restricted Stock and Restricted Stock Units. An award of restricted stock is a grant of our ordinary shares subject to restrictions
the compensation committee or the committee otherwise appointed by our board of directors may impose. A restricted stock
unit is a contractual right that is denominated in our ordinary shares, each of which represents a right to receive the value of a
share or a specified percentage of such value upon the terms and conditions set forth in the Amended 2023 Plan and the
applicable award agreement.
●
Other Stock-based Awards. The compensation committee or the committee otherwise appointed by our board of directors is
authorized to grant other stock-based awards that are denominated or payable in or otherwise related to our ordinary shares such
as stock appreciation rights and rights to dividends and dividend equivalents. Terms and conditions of such awards will be
determined by the compensation committee or the committee otherwise appointed by our board of directors. Unless the awards
are granted in substitution for outstanding awards previously granted by an entity that we acquired or combined, the value of
the consideration for the ordinary shares to be purchased upon the exercise of such awards shall not be less than the fair market
value of the underlying ordinary shares on the grant date.

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116
Vesting Schedule. As of the date of this annual report, we have entered into option agreements and restricted stock award agreements
respectively under our Amended 2023 Plan. Pursuant to our typical option agreement, 50% of the options granted shall vest on the
second anniversary of the date of grant specified in the corresponding option agreement, and 1/48 of the options shall vest each month
thereafter over the next two years on the first day of each month, subject to the optionee’s continuing to provide services to us. Pursuant
to our typical restricted stock award agreement, 50% of the restricted stock granted shall vest on the second anniversary of the vesting
commencement date specified in the corresponding restricted stock award agreement, and 1/8 of the restricted stock shall vest each six-
month period over the next two years on the last day of each six-month period, subject to the grantee’s employment or service with us.
Termination of the Amended 2023 Plan. Our Amended 2023 Plan will terminate in 2038. Our board of directors may amend, alter,
suspend, discontinue or terminate our Amended 2023 Plan at any time. No amendment, alteration, suspension, discontinuation or
termination of these plans shall adversely impair the rights of any participant with respect to an outstanding award, unless mutually
agreed otherwise between the participant and the administrator.
The following tables summarize the outstanding options and restricted stocks that we have granted to our directors and executive
officers and to other individuals as a group under our share incentive plans as of December 31, 2024.
     Ordinary Shares      
    
    
Underlying
Outstanding
Options
Exercise Price 
Name
Awarded
(US$/Share)
Date of Grant
Date of Expiration
Qi Ji
8,045,450
2.8
May 31, 2023
May 31, 2033
Hui Jin
 
*
 
2.8
May 31, 2023
May 31, 2033
Hui Chen
*
2.8
May 31, 2023
May 31, 2033
Other individuals as a group(1)
 
11,125,220
 
2.8
May 31, 2023
May 31, 2033
    
Ordinary Shares  
    
Underlying
Outstanding Restricted
Name
Stocks Awarded
Date of Grant
Qi Ji
8,045,450
May 31, 2023
32,181,800
January 17, 2024
Hui Jin
*
March 26, 2015
*
May 9, 2022
*
May 31, 2023
*
January 17, 2024
Hui Chen
*
November 3, 2020
*
May 9, 2022
*
May 31, 2023
*
December 27, 2023
*
January 17, 2024
*
November 27, 2024
Jian Shang
*
June 28, 2024
Lei Cao
*
June 28, 2024
Other individuals as a group(1)
71,050,670
March 17, 2015 – November 27, 2024
*
Upon exercise of all options granted and vesting restricted stock granted, would beneficially own less than 1% of our outstanding
ordinary shares.
(1)
The number may subject to change as certain of the awards granted are subject to performance conditions.

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117
6.C. Board Practices
General
Our board of directors currently consists of seven directors. Under our currently effective memorandum and articles of association,
our board of directors shall consist of no less than two directors. Pursuant to our currently effective articles of association, our directors
may be elected by our shareholders. If our board appoints any person as a director to fill a casual vacancy or as an addition to our
existing board, such director shall be subject to re-election at our first subsequent annual general meeting. There is no shareholding
requirement for qualification to serve as a member of our board of directors.
Our board of directors may exercise all the powers of our company to borrow money, mortgage or charge its undertaking, property
and uncalled capital, and issue debentures, bonds and other securities whenever money is borrowed or as security for any debt, liability
or obligation of our company or of any third party.
We believe that each of Ms. Tong Tong Zhao, Mr. John Jiong Wu, Mr. Jian Shang, Mr. Theng Fong Hee and Ms. Lei Cao is an
“independent director” as that term is used in NASDAQ corporate governance rules.
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and
a duty to act in good faith with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and
such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to
us, our directors must ensure compliance with our memorandum and articles of association.
Terms of Directors and Executive Officers
Each of our directors holds office until a successor has been duly elected and qualified or until his or her office is otherwise vacated
in accordance with our currently effective articles of association. All of our executive officers are appointed by and serve at the discretion
of our board of directors.
Board Committees
We have established two committees under the board of directors — the audit committee and the compensation committee. We have
adopted a charter for each of the board committees. Each committee’s members and functions are described below. We currently do not
plan to establish a nominations committee. As a foreign private issuer, we are permitted to follow home country corporate governance
practices under Rule 5615(a)(3) of the NASDAQ Marketplace Rules. This home country practice of ours differs from Rule 5605(e) of
the NASDAQ Marketplace Rules regarding implementation of a nominations committee, because there are no specific requirements
under Cayman Islands law on the establishment of a nominations committee.
Audit Committee
Our audit committee consists of three directors, namely Mr. Jian Shang, Mr. Theng Fong Hee and Ms. Lei Cao. All directors satisfy
the “independence” requirements of the NASDAQ Global Select Market and the SEC regulations. The chairman of our audit committee
is Mr. Jian Shang, who is qualified as an audit committee financial expert within the meaning of the SEC regulations. The audit
committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit
committee is responsible for, among other things:
●
selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the
independent auditors;
●
setting clear hiring policies for employees or former employees of the independent auditors;
●
reviewing with the independent auditors any audit problems or difficulties and management’s response;

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●
reviewing and approving all proposed related-party transactions;
●
discussing the annual audited financial statements with management and the independent auditors;
●
discussing with management and the independent auditors major issues regarding accounting principles and financial statement
presentations;
●
reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and
judgments;
●
reviewing with management and the independent auditors related-party transactions and off-balance sheet transactions and
structures;
●
reviewing with management and the independent auditors the effect of regulatory and accounting initiatives and actions;
●
reviewing policies with respect to risk assessment and risk management;
●
reviewing our disclosure controls and procedures and internal control over financial reporting;
●
timely reviewing reports from the independent auditors regarding all critical accounting policies and practices to be used by our
company, all alternative treatments of financial information within GAAP that have been discussed with management and all
other material written communications between the independent auditors and management;
●
establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding
accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of
concerns regarding questionable accounting or auditing matters;
●
annually reviewing and reassessing the adequacy of our audit committee charter;
●
such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and
●
meeting separately, periodically, with management, the internal auditors and the independent auditors.
Compensation Committee
Our compensation committee consists of Mr. John Jiong Wu and Mr. Jian Shang. Both directors satisfy the “independence”
requirements of NASDAQ Marketplace Rules and the SEC regulations. Our compensation committee assists the board in reviewing and
approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our
directors and executive officers. The compensation committee is responsible for, among other things:
●
reviewing and approving the compensation for our directors and senior executives;
●
reviewing and evaluating our director and executive compensation and benefits policies generally;
●
reporting to our board of directors periodically;
●
evaluating its own performance and reporting to our board of directors on such evaluation;
●
periodically reviewing and assessing the adequacy of the compensation committee charter and recommending any proposed
changes to our board of directors; and
●
such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.

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6.D. Employees
We had 24,335, 26,985 and 28,502 employees as of December 31, 2022, 2023 and 2024, respectively. We recruit and directly train
and manage all of our employees. We believe that we maintain a good working relationship with our employees and we have not
experienced any significant labor disputes. Some of our employees are represented by Unions and Works Councils, with a variety of
collective bargaining agreements in place. Generally, we consider the relationships between us and Unions and Works Councils that
represent our employees to be respectful.
6.E. Share Ownership
The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the
Exchange Act, of our ordinary shares, as of March 31, 2025 by:
●
each of our directors and executive officers; and
●
each person known to us to own beneficially more than 5% of our ordinary shares.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or
investment power with respect to the ordinary shares. Except as indicated below, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by
them.
    
Ordinary Shares Beneficially Owned(1)
Number
%
Directors and Executive Officers:
  
  
 
Qi Ji
 
 977,841,260 (2)
 31.8 %
John Jiong Wu
 
* (4)
*
Tong Tong Zhao
 
 263,246,520 (3)
 8.6 %
Jie Zheng
 
*  
*
Jian Shang
 
*  
*
Theng Fong Hee
 
—  
—
Lei Cao
 
*  
*
Hui Jin
 
*  
*
Hui Chen
*
*
All Directors and Executive Officers as a Group
 994,052,730 (5)
 32.4 %
Principal Shareholders:
 
 
Winner Crown Holdings Limited
 
 696,880,420 (6)
 22.7 %
East Leader International Limited
 
 262,246,520 (7)
 8.5 %
Invesco Ltd.
 
 349,803,705 (8)
 11.4 %
Trip.com Group Limited
 220,494,460 (9)
 7.2 %
*
Less than 1%.
Notes:
(1) The number of ordinary shares outstanding in calculating the percentages for each listed person or group includes the ordinary
shares underlying options held by such person or group exercisable within 60 days from March 31, 2025. Percentage of beneficial
ownership of each listed person or group is based on (i) 3,069,390,730 ordinary shares outstanding as of March 31, 2025, and (ii) the
ordinary shares underlying share options exercisable by such person within 60 days from March 31, 2025.

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(2) Includes (i) 684,449,150 ordinary shares and 1,243,127 ADSs representing 12,431,270 ordinary shares held by Winner Crown
Holdings Limited, or Winner Crown, a British Virgin Islands company wholly owned by Sherman Holdings Limited, a Bahamas
company. Sherman is owned 100% by vote and value by the Ji Family Trust which is a revocable trust valid under the laws of the
Republic of Singapore. Butterfield Trust (Asia) Limited acts as trustee of the Ji Family Trust, of which Mr. Qi Ji and his family
members are the beneficiaries, (ii) 4,895,370 ordinary shares and 1,100,958 ADSs representing 11,009,580 ordinary shares held by
Mr. Qi Ji, (iii) 262,246,520 ordinary shares held by East Leader International Limited, or East Leader, over which Mr. Ji has voting
power pursuant to a power of attorney dated November 27, 2014. East Leader is wholly owned by Perfect Will Holdings Limited, or
Perfect Will, a British Virgin Islands company, which is in turn wholly owned by Trident Trust Company (Singapore) Pte. Limited,
or Trident Trust. Trident Trust acts as trustee of the Tanya Trust with effect from August 4, 2021, of which Ms. Tong Tong Zhao and
her family members are the beneficiaries, (iv) 804,540 ordinary shares underlying options held by Mr. Qi Ji that are exercisable
within 60 days from March 31, 2025, and (v) 2,004,830 ordinary shares underlying options held by certain participants of our
amended 2023 Plan exercisable within 60 days from March 31, 2025, over which Mr. Qi Ji has voting power pursuant to relevant
award agreements. Consequently, Mr. Qi Ji may be deemed to have beneficial ownership of the 2,004,830 ordinary shares
underlying options that are exercisable within 60 days from March 31, 2025. Mr. Qi Ji disclaims economic interests associated with
the 2,004,830 ordinary shares underlying options that are exercisable within 60 days from March 31, 2025.
(3) Includes (i) 1,000,000 ordinary shares, and (ii) 262,246,520 ordinary shares held by East Leader, a British Virgin Islands company
wholly owned by Perfect Will, a British Virgin Islands company, which is in turn wholly owned by Trident Trust. Trident Trust acts
as trustee of the Tanya Trust with effect from August 4, 2021, of which Ms. Tong Tong Zhao and her family members are the
beneficiaries. Ms. Zhao is the sole director of East Leader.
(4) Includes 9,784,090 ordinary shares held by Mr. John Jiong Wu.
(5) Includes ordinary shares and ordinary shares issuable upon exercise of all of the options that are exercisable within 60 days from
March 31, 2025 held by all of our directors and executive officers as a group.
(6) Winner Crown is a British Virgin Islands company wholly owned by Sherman Holdings Limited, a Bahamas company. Sherman is
owned 100% by vote and value by the Ji Family Trust which is a revocable trust valid under the laws of the Republic of Singapore.
Butterfield Trust (Asia) Limited acts as trustee of the Ji Family Trust, of which Mr. Qi Ji and his family members are the
beneficiaries. Mr. Ji is the sole director of Winner Crown. The address of Winner Crown is Vistra Corporate Service Centre,
Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
(7) East Leader is a British Virgin Islands company wholly owned by Perfect Will Holdings Limited, a British Virgin Islands company,
which is in turn wholly owned by Trident Trust. Trident Trust acts as trustee of the Tanya Trust with effect from August 4, 2021, of
which Ms. Tong Tong Zhao and her family members, are the beneficiaries. Ms. Zhao is the sole director of East Leader. The address
of East Leader is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
(8) Based on Amendment No. 6 to Schedule 13G filed with the SEC on November 17, 2024 by Invesco Ltd, Invesco Ltd. held sole
dispositive power and sole voting power of 349,803,705 and 342,579,665 of ordinary shares in H World, respectively.
(9) Includes (i) 72,024,820 ordinary shares that Trip.com purchased from us, (ii) an aggregate of 116,469,640 of our ordinary shares that
Trip.com purchased from the Chengwei Funds, CDH Courtyard Limited, the IDG Funds, the Northern Light Funds and Pinpoint
Capital 2006 A Limited, and (iii) 3,200,000 ADSs representing 32,000,000 ordinary shares that Trip.com subscribed in our initial
public offering. Trip.com is a Cayman Islands company and its registered address is PO Box 309, Ugland House, Grand Cayman,
KY1-1104, Cayman Islands.
As of March 31, 2025, we had 3,069,390,730 ordinary shares issued and outstanding. To our knowledge, we had two record
shareholders in the United States. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the
number of record holders of our ordinary shares in the United States.
None of our existing shareholders has different voting rights from other shareholders since the closing of our initial public offering.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
6.F. Disclosure of Action to Recover Erroneously Awarded Compensation
We have adopted a policy relating to recovery of erroneously awarded compensation (the “Clawback Policy”), a form of which is
included as Exhibit 97.1 attached herein.

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During or after the fiscal year of 2024, we were not required to prepare an accounting restatement that required recovery of
erroneously awarded compensation pursuant to the Clawback Policy. As of December 31, 2024, there was no outstanding balance of
erroneously awarded compensation to be recovered from the application of the Clawback Policy to a prior restatement.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.”
7.B. Related Party Transactions
Transactions with Trip.com
We conduct transactions in the ordinary course of our business with Trip.com, one of our principal shareholders in which Mr. Qi Ji,
our founder, is a co-founder and independent director. Trip.com rendered reservation services to us to facilitate our customers in making
reservations at our hotels from Trip.com’s hotel booking system. In 2024, the aggregate commission fees of our leased and owned hotels
paid to Trip.com for its reservation services amounted to RMB297 million (US$41 million). In 2024, the lease expenses of our leased
and owned hotel paid to Trip.com amounted to RMB19 million (US$3 million).
In 2024, we provided technical services to Trip.com and recorded service fees amounted to RMB146 million (US$20 million).
Transaction with Cjia Group
China Cjia Group Limited (the “Cjia Group”) is one of our equity investees. We sold goods and provided IT and other services to
Cjia Group amounted to RMB32 million (US$4 million) in 2024.
In 2024, the lease expenses our lease hotels recognized to Cjia Group amounted to RMB36 million (US$5 million). In 2024, we
recognized sublease income from Cjia Group amounted to RMB6 million (US$1 million).
Transaction with Shanghai Lianquan Hotel Management Co., Ltd. (“Lianquan”)
Lianquan is one of our equity investees. In 2024, the sublease income we recognized from Lianquan amounted to RMB11 million
(US$2 million).
Transaction with AZURE Hospitality Fund I Limited Partnership (“Azure”)
Azure is one of our equity investees. We recognized service fees from Azure in the amount of RMB21 million (US$3 million) in
2024.
Employment Agreements
See “Item 6. Directors, Senior Management and Employees — A. Directors and Senior Management — Employment Agreements”
for a description of the employment agreements we have entered into with our senior executive officers.
Share Incentives
See “Item 6. Directors, Senior Management and Employees — B. Compensation of Directors and Executive Officers — Share
Incentive Plans” for a description of share options we have granted to our directors, officers and other individuals as a group.
7.C. Interests of Experts and Counsel
Not applicable.

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ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
8.A.1. See “Item 18. Financial Statements” for our audited consolidated financial statements.
8.A.2. See “Item 18. Financial Statements” for our audited consolidated financial statements, which cover the last three
financial years.
8.A.3. See page F-2 for the report of our independent registered public accounting firm.
8.A.4. Not applicable.
8.A.5. Not applicable.
8.A.6. Not applicable.
8.A.7. See “Item 4. Information on the Company — B. Business Overview — Legal and Administrative Proceedings.”
8.A.8. Dividend Policy
On March 3, 2022, we declared a cash dividend of US$0.021 per ordinary share, or US$0.21 per ADS. Cash dividends are paid in
U.S. dollars, and the total amount of cash distributed for the dividend was approximately US$68 million.
On November 29, 2023, we declared a cash dividend of US$0.093 per ordinary share, or US$0.93 per ADS. The cash dividend was
comprised of two tranches, including (i) an ordinary dividend of US$0.062 per ordinary share, or US$0.62 per ADS and (ii) a special
dividend of US$0.031 per ordinary share, or US$0.31 per ADS. Cash dividends are paid in U.S. dollars, and the total amount of cash
distributed for the dividend was approximately US$300 million.
On July 23, 2024, we declared a cash dividend of US$0.063 per ordinary share, or US$0.63 per ADS. Cash dividends are paid in
U.S. dollars, and the total amount of cash distributed for the dividend was approximately US$200 million.
On March 20, 2025, we declared a cash dividend of US$0.097 per ordinary share, or US$0.97 per ADS. Cash dividends are paid in
U.S. dollars, and the total amount of cash distributed for the dividend was approximately US$300 million.
We are a holding company with no material operations of our own. We conduct our operations primarily through our subsidiaries in
China and Europe. As a result, our ability to pay dividends and to finance any debt we may incur depends upon dividends paid to us by
our subsidiaries. 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.
Our PRC 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.

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For our German subsidiaries, the distributable profit is calculated based on the respective subsidiary’s annual unconsolidated
financial statements prepared in accordance with the German accounting principles, namely, the general accounting principles stated in
the German Commercial Code (Handelsgesetzbuch). Distributions of dividends on shares of stock corporations (Aktiengesellschaften) for
a given financial year are generally determined by a process in which the management board (Vorstand) and supervisory board
(Aufsichtsrat) submit a proposal to the annual general shareholders’ meeting (Hauptversammlung) held in the subsequent financial year
and such annual general shareholders’ meeting (Hauptversammlung) adopts a resolution. German law provides that a resolution
concerning dividends and distribution thereof may be adopted only on the basis of a balance sheet profit (Bilanzgewinn) shown in the
company’s adopted annual single entity financial statements (festgestellter Jahresabschluss). If the management board and supervisory
board adopt the financial statements, they can (but are not obliged to) allocate an amount of up to half of the company’s net income for
the year to other surplus reserves. Additions to the legal reserves and loss carryforwards must be deducted in advance when calculating
the amount of net income for the year to be allocated to other surplus reserves. Dividends on shares resolved by the general shareholders’
meeting (Hauptversammlung) are paid annually, generally three days after the annual shareholders’ meeting (Hauptversammlung). The
German subsidiaries are mainly integrated into Steigenberger Hotels AG through control and profit and loss transfer agreements
(Beherrschungs- und Gewinnabführungsverträge) in such a way that its annual profits or losses are automatically transferred to
Steigenberger Hotels AG and integrated into its financial statements. Steigenberger Hotels AG is prohibited from conducting dividend
distribution during the 60-month term of a credit facility with KFW it obtained in July 2020.
Steigenberger Hotels AG has changed its legal form on 8 November 2022 into a limited liability company (Steigenberger Hotels
GmbH). Consequently, the distribution of profits follows the Law on Limited Liability Companies (Gesetz betreffend die Gesellschaften
mit beschränkter Haftung). The distributable profit is calculated based on the respective subsidiary’s annual unconsolidated single entity
financial statements prepared in accordance with the German accounting principles, namely, the general accounting principles stated in
the German Commercial Code (Handelsgesetzbuch). Distributions of dividends on shares of limited liability companies (GmbH) for a
given financial year are generally determined by a process in which the management board (Geschäftsführung) presents the single entity
financial statements to the supervisory board (Aufsichtsrat) for review. The supervisory board submits a proposal regarding the approval
of the financial statements and another proposal regarding the distribution of a possible profit to the annual general shareholders’ meeting
(Gesellschafterversammlung) held in the subsequent financial year. Such annual general shareholders’ meeting passes a resolution
regarding the confirmation of the single entity financial statements and passes another resolution on the distribution of profits.
For our Singapore subsidiary, pursuant to the Companies Act 1967 of Singapore, dividends are only payable out of profits. Typically,
the directors will recommend a particular rate of dividend and the company in general meeting will declare the dividend subject to the
maximum recommended by the directors.
We may declare and distribute an ordinary dividend semi-annually, the aggregate amount of which for each financial year shall be no
less than 60% of the Company’s net income in such financial year. We may also declare and distribute, from time to time, special
dividends. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the
terms of the deposit agreement, including the fees and expenses payable thereunder. Subject to certain contractual restrictions, our board
of directors has sole discretion in deciding whether to distribute dividends and the dividend amounts within the approved range.
8.B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited
consolidated financial statements included in this annual report.
ITEM 9. THE OFFER AND LISTING
9.A. Offering and Listing Details
Our ADSs have been listed on the NASDAQ Global Select Market under the symbol “HTHT” since March 26, 2010. In 2022, 2023
and 2024, no significant trading suspensions occurred.
Our ordinary shares have been listed on the Hong Kong Stock Exchange since September 22, 2020 under the stock code “1179.”

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9.B. Plan of Distribution
Not applicable.
9.C. Markets
The principal trading market for our shares is the NASDAQ Global Select Market, on which our shares are traded in the form of
ADSs. Our ordinary shares are also traded on the Hong Kong Stock Exchange under the stock code “1179.”
9.D. Selling Shareholders
Not applicable.
9.E. Dilution
Not applicable.
9.F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
Not applicable.
10.B. Memorandum and Articles of Association
We incorporate by reference into this annual report the description of our amended and restated memorandum and articles of
association contained in our registration statement on Form F-1 (File No. 333-165247) originally filed with the Securities and Exchange
Commission on March 5, 2010, as amended. Our shareholders adopted our amended and restated memorandum currently in effect by a
special resolution on June 29, 2021, which was further amended by special resolutions on June 24, 2022. Our shareholders adopted our
second amended and restated articles of associations in effect by a special resolution on June 27, 2023.
10.C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in
Item 4, “Information on the Company” and in Item 7, “Major Shareholders and Related Party Transactions” or elsewhere in this annual
report.
10.D. Exchange Controls
See “Item 4. Information on the Company — B. Business Overview — Regulation — Regulations on Foreign Currency Exchange.”
10.E. Taxation
The following summary of the material Cayman Islands, Hong Kong, People’s Republic of China, Germany and United States
federal income tax consequences of an investment in our ADSs or ordinary shares is based upon laws and relevant interpretations thereof
in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax
consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under state, local and other tax
laws.

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Cayman Islands Taxation
The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and
there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us or holders of our
ADSs or ordinary shares levied by the government of the Cayman Islands except for stamp duties which may be applicable on
instruments executed in, or after execution brought within the jurisdiction of, the Cayman Islands. The Cayman Islands are a party to a
double tax treaty entered into with the United Kingdom in 2010 but otherwise are not a party to any double tax treaties. There are no
exchange control regulations or currency restrictions in the Cayman Islands.
Under existing Cayman Islands laws, payments of dividends and capital in respect of our ADSs and ordinary shares will not be
subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of
our ADSs or ordinary shares, as the case may be, nor will gains derived from the disposal of our ADSs or ordinary shares be subject to
Cayman Islands income or corporation tax.
Hong Kong Taxation
Taxation on us
Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits
arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale of capital assets).
Our Hong Kong subsidiaries are subject to Hong Kong profits tax at a maximum rate of 16.5% of their respective estimated
assessable profits determined under relevant Hong Kong tax regulations. No Hong Kong profits tax has been provided as our Hong Kong
subsidiaries have no estimated assessable profits during the years presented.
Taxation on our shareholders
Gains arising from the sale of ADSs, where the purchases and sales of ADSs are effected outside of Hong Kong, should not be
subject to Hong Kong profits tax.
According to the current tax practice of the Hong Kong Inland Revenue Department, dividends paid by us on ADSs would not be
subject to any Hong Kong tax, even if received by investors in Hong Kong.
To the best of our knowledge, Hong Kong stamp duty has not been levied in practice on the trading or conversion of ADSs of
companies that are listed in both the United States and Hong Kong and that have maintained all or a portion of their shares, including
shares underlying ADSs, in their Hong Kong share registers. However, it is unclear whether, as a matter of Hong Kong law, the trading
or conversion of ADSs of these dual-listed companies constitutes a sale or purchase of the underlying Hong Kong-registered ordinary
shares that is subject to Hong Kong stamp duty.
In connection with the initial public offering of our ordinary shares in Hong Kong, we established a branch register of members in
Hong Kong, or the Hong Kong share register. Dealings in our ordinary shares registered on our Hong Kong share register will be subject
to Hong Kong stamp duty. The stamp duty is charged to each of the seller and purchaser at the ad valorem rate of 0.1% of the
consideration for, or (if greater) the value of, our ordinary shares transferred. In other words, a total of 0.2% is currently payable on a
typical sale and purchase transaction of our ordinary shares. In addition, a fixed duty of HK$5.00 is charged on each instrument of
transfer (if required).
To facilitate ADS-ordinary share conversion and trading between NASDAQ and the Hong Kong Stock Exchange, we also moved a
portion of our issued ordinary shares from our register of members maintained in the Cayman Islands to our Hong Kong share register. It
is unclear whether, as a matter of Hong Kong law, the trading or conversion of ADSs constitutes a sale or purchase of the underlying
Hong Kong-registered ordinary shares that is subject to Hong Kong stamp duty. We advise investors to consult their own tax advisors on
this matter.

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PRC Taxation
PRC taxation on us
●
Enterprise Income Tax
On March 16, 2007, the National People’s Congress, the Chinese legislature, passed the Enterprise Income Tax Law of the PRC,
which was amended in February 2017 and December 2018, and on December 6, 2007, the PRC State Council issued the Implementation
Regulations of the Enterprise Income Tax Law of the PRC, which was amended in April 2019 and December 2024. The Enterprise
Income Tax Law of the PRC and its Implementation Regulations, or the EIT Law, applies a uniform 25% enterprise income tax rate to
PRC resident enterprises, including both foreign-invested enterprises and domestic enterprises. The EIT Law restructures China’s tax
preference policy under the general principle that industries and projects that are encouraged and supported by the State may enjoy tax
preferential treatment. For example, enterprises classified as “high and new technology enterprises strongly supported by the State” are
entitled to a 15% enterprise income tax rate. Enterprises classified as “small and micro businesses” enjoy a preferential enterprise income
tax rate of 20%.
The EIT Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are
considered “resident enterprises.” The “de facto management body” is defined as the organizational body that effectively exercises
overall management of and full and substantial control over production and business operations, personnel, finance and accounting, and
properties of the enterprise. The State Taxation Administration, or the STA (previously known as State Administration of Taxation, or the
SAT), issued on April 22, 2009 the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as
PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, implemented from January 1, 2008.
Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled offshore
incorporated enterprise is located in China, which include: (a) the primary location where senior management members responsible for
an enterprise’s daily production and operations management and the senior management departments discharge their duties; (b) the
location where financial and human resource decisions are made or approved by organizations or persons; (c) the location where the
major assets and corporate documents are kept; and (d) the location where more than half (inclusive) of all directors with voting rights or
senior management have their habitual residence. In addition, the STA issued Public Announcement [2011] No. 45 in 2011 and Public
Announcement [2014] No.9 in 2014, providing more guidance on the implementation of Circular 82 and clarifying matters including
resident status determination, post-determination administration and competent tax authorities. The above-mentioned tax circulars apply
only to offshore enterprises controlled by PRC enterprises or PRC enterprise groups and are not applicable to our case. But the
determining criteria set forth in such tax circulars may reflect the STA’s general position on how the “de facto management body” test
should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC
enterprises or PRC enterprise groups or by PRC or foreign individuals. Currently, there are no further detailed rules or precedents
applicable to us regarding the procedures and specific criteria for determining “de facto management body” for a company invested in or
controlled by PRC individuals. As such, it is still unclear if the PRC tax authorities would determine that, notwithstanding our status as
the Cayman Islands holding company of our operating business in China, we should be classified as a PRC “resident enterprise”.
The EIT Law imposes an enterprise income tax of 10% on dividends distributed by a 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 of business within China or if the received dividends have no actual 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 rate on the dividends received from its PRC subsidiary if the holding company owns
at least 25% equity in the PRC subsidiary and is the beneficial owner of the dividends.

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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 the EIT Law provides that dividend payments between qualified PRC resident enterprises are exempted
from enterprise income tax, it remains unclear as to the detailed qualification requirements for this exemption and whether dividend
payments by our PRC subsidiaries to us would meet such qualification requirements if we were considered a PRC resident enterprise for
this purpose. If we are required under the EIT Law to pay income tax on any dividends we receive from our PRC subsidiaries, our
income tax expenses will increase and the amount of dividends, if any, we may pay to our shareholders and ADS holders may be
materially and adversely affected.
●
Value-added Tax
On March 23, 2016, the Ministry of Finance of China (the “MOF”), and the STA jointly issued the Circular on the Nationwide
Implementation of Pilot Program for the Collection of Value Added-Tax Instead of Business Tax, or Circular 36, which became effective
on May 1, 2016. Pursuant to Circular 36, most of our PRC subsidiaries’ business are subject to value-added tax, or VAT, at a rate of 6%
as general VAT taxpayers, and they would be permitted to offset input VAT by providing valid VAT special invoices received from
vendors against their VAT liability.
On March 20, 2019, the MOF, the STA and the General Administration of Customs of China jointly issued the Public Announcement
on Strengthening the VAT Reform Policies, or Public Announcement [2019] No. 39, pursuant to which, during the period from April 1,
2019 to December 31, 2021, a general VAT taxpayer engaging in the provision of living services, postal services, telecommunications
services or modern services with sales revenue from the provision of such services accounting for more than 50% of its total sales
revenue is allowed to deduct extra 10% of the deductible input VAT for the current period from the VAT payable. Such rate of extra
deduction of input VAT was increased to 15% during the period from October 1, 2019 to December 31, 2021 for general VAT taxpayers
engaging in provision of living services with sales revenue from the provision of living services accounting for more than 50% of its total
sales revenue pursuant to the Public Announcement on Clarifying the VAT Super Deduction Policy for the Living Service Sector, or
Public Announcement [2019] No. 87, jointly issued by the MOF and the STA on September 30, 2019. Our PRC subsidiaries that provide
living services and meet the required criteria stipulated in Public Announcement [2019] No. 39 and Public Announcement [2019] No. 87
would be permitted to enjoy such extra deduction of input VAT at a rate of 10% during period from April 1, 2019 to September 30, 2019,
and at a rate of 15% during period from October 1, 2019 to December 31, 2021, and PRC subsidiaries that do not provide living services
but provide postal services, telecommunications services or modern services and meet the required sales revenue criteria stipulated in
Public Announcement [2019] No. 39 would be permitted to enjoy such extra deduction of input VAT at a rate of 10% during period from
April 1, 2019 to December 31, 2021. The above-mentioned super VAT deduction policy was extended to December 31, 2022 pursuant to
Public Announcement [2022] No. 11 jointly issued by the MOF and the STA on March 3, 2022. On January 9, 2023, the MOF and the
STA jointly issued the Public Announcement on Clarifying the VAT Relief and Other Policies for Small-scale VAT Taxpayers, or Public
Announcement [2023] No. 1, to renew the relevant super VAT deduction policy, pursuant to which, during the period from January 1,
2023 to December 31, 2023, a general VAT taxpayer engaging in the provision of living services, postal services, telecommunications
services or modern services with sales revenue from the provision of such services accounting for more than 50% of its total sales
revenue is allowed to deduct extra 5% of the deductible input VAT for the current period from the VAT payable, and a general VAT
taxpayer engaging in provision of living services with sales revenue from the provision of living services accounting for more than 50%
of its total sales revenue is allowed to deduct extra 10% of the deductible input VAT for the current period from the VAT payable.
The policy notified by the Ministry of Finance and the State Taxation Administration of the Additional Value - Added Tax Credit
Policy for productive services and living services has not yet been updated or extended. We will pay attention to the policy and will
evaluate its influence on us in terms of VAT.
On February 6, 2020, the MOF and the STA jointly issued the Public Announcement on Tax Policies to Support Prevention and
Control of Pneumonia Caused by COVID-19, or Public Announcement [2020] No.8, which retroactively came into force on January 1,
2020, providing that revenue derived by VAT taxpayers from provision of living services shall be temporarily exempted from VAT from
January 1, 2020. Such temporary VAT exemption policy was extended to March 31, 2021 pursuant to Public Announcement [2021] No. 7
jointly issued by the MOF and the STA on March 17, 2021, and was no longer applicable upon expiry. Pursuant to Circular 36, VAT
taxpayers that enjoy such temporary VAT exemption would not be permitted to issue VAT special invoices to customers.

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On December 25, 2024, the SCNPC issued the Value-Added Tax Law of the PRC, or the VAT Law, which shall become effective
from January 1, 2026. According to the VAT Law, any entities and individuals (including individual industrial and commercial
households) that sell goods, services, intangible assets, or immovables, or import goods within the territory of the PRC are taxpayers of
VAT and shall pay the VAT in accordance with the law and regulation. Except for taxpayers’ export of goods, the sale of services or
intangible assets within the scope as prescribed by the State Council by domestic entities and individuals across national borders and
other circumstances specified for by the State Council, the rate of VAT for sale of goods, labor services of processing, repair or
replacement, or tangible movable property leasing services or import of goods is 13% unless otherwise specified, such as the rate of VAT
for sale of agricultural products is 9%, and the rate of VAT for sale of transportation, postal, basic telecommunications, construction, or
immovable leasing services, sale of immovables, or transfer of the rights to use land is 9%. In addition to the above circumstances, the
rate of VAT for sale of services or intangible assets is 6%.
PRC taxation of our overseas shareholders
Under the EIT Law, PRC enterprise income tax at the rate of 10% is applicable to dividends payable to investors that are “non-
resident enterprises”, which do not have an establishment or place of business in the PRC, or which have such establishment or place of
business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends
have their sources within the PRC. Similarly, any gain realized on the transfer of ADSs or ordinary shares by such investors is also
subject to 10% PRC enterprise income tax if such gain is regarded as income derived from sources within the PRC. Therefore, if we are
considered a PRC “resident enterprise”, dividends we pay to non-resident enterprise investors with respect to our ADSs or ordinary
shares and the gains realized from the transfer of our ADSs or ordinary shares may be considered as income derived from sources within
the PRC and be subject to PRC enterprise income tax at a rate of 10% or lower, subject to the provisions of any applicable bilateral tax
treaty. The double taxation treaty between the PRC and the United States, or the Treaty, does not reduce the 10% tax rate.
Moreover, non-resident individual investors are required to pay PRC individual income tax at the rate of 20% instead of 10%
enterprise income tax on dividends payable to the investors or any capital gains realized from the transfer of ADSs or ordinary shares if
such gains are deemed income derived from sources within the PRC, unless there is an applicable tax treaty providing exemption or for a
lower withholding tax rate. Under the PRC Individual Income Tax Law (as amended), or IITL, non-resident individual refers to an
individual who has no domicile in China and does not stay in the territory of China or who has no domicile in China and has stayed in the
territory of China for less than 183 days in aggregate in a calendar year. Pursuant to the IITL and its implementation rules, for purposes
of the PRC individual income tax levied on the income from transfer of property, the taxable income will be the balance of the transfer
price for the transfer of the ADSs or ordinary shares minus the original value and reasonable expenses paid for such transfer. Therefore,
if we are considered a PRC resident enterprise and dividends we pay with respect to our ADSs or ordinary shares and the gains realized
from the transfer of our ADSs or ordinary shares are considered income derived from sources within the PRC by relevant competent
PRC tax authorities, such dividends and gains earned by non-resident individuals may be subject to PRC individual income tax.
United States Federal Income Tax Considerations on Our Shareholders
The following is a description of material U.S. federal income tax consequences to the U.S. Holders (described below) of owning
and disposing of ordinary shares or ADSs, but it does not purport to be a comprehensive description of all tax considerations that may be
relevant to a particular person’s decision to own such ordinary shares or ADSs. This discussion applies only to a U.S. Holder that holds
ordinary shares or ADSs as capital assets within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended
(the “Code”). In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular
circumstances, including alternative minimum tax consequences, the Medicare tax on net investment income, and different tax
consequences that may apply to U.S. Holders subject to special rules, such as:
●
certain financial institutions;
●
dealers or traders in securities who use a mark-to-market method of tax accounting;
●
persons holding ordinary shares or ADSs as part of a straddle, wash sale, conversion transaction or integrated transaction or
persons entering into a constructive sale with respect to the ordinary shares or ADSs;
●
entities or arrangements that are treated as partnerships for U.S. federal income tax purposes (or partners therein);

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●
tax-exempt entities;
●
persons that own or are deemed to own ten percent or more of our ordinary shares (measured by voting power or value); or
●
persons who acquired our ordinary shares or ADSs pursuant to the exercise of an employee stock option or otherwise as
compensation.
This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury
regulations, and the Treaty, all as of the date hereof, and any of which is subject to change, possibly with retroactive effect. It is also
based in part on representations by the depositary and assumes that each obligation under the deposit agreement and any related
agreement will be performed in accordance with its terms.
A “U.S. Holder” is a beneficial owner of ordinary shares or ADSs that is a citizen or resident of the United States or a U.S. domestic
corporation or that otherwise is subject to U.S. federal income taxation on a net income basis in respect of such ordinary shares or ADSs.
In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying ordinary shares represented by those ADSs for
U.S. federal income tax purposes. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated as the
beneficial owner of the underlying ordinary shares represented by the ADSs.
U.S. Holders should consult their tax advisors concerning the U.S. federal, state, local and foreign tax consequences of owning and
disposing of ordinary shares or ADSs in their particular circumstances.
Taxation of Distributions
Subject to the discussion under “—Passive Foreign Investment Company Rules” below, distributions paid on ordinary shares or
ADSs, other than certain pro rata distributions of ordinary shares, will be treated as dividends to the extent paid out of our current or
accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of
our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be treated as dividends
for U.S. federal income tax purposes.
A non-corporate recipient of dividend income from a “qualified foreign corporation” will generally be subject to tax at a reduced
U.S. federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period and
other requirements are met. A non-U.S. corporation will generally be considered to be a qualified foreign corporation (a) if it is eligible
for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is
satisfactory for purposes of this provision and which includes an exchange of information program, or (b) with respect to any dividend it
pays on stock or that are readily tradable on an established securities market in the United States, provided, in both cases, that the
corporation is not a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. Our ADSs are listed on the
NASDAQ Global Select Market and will qualify as readily tradable on an established securities market in the United States so long as
they are so listed. As discussed below in “Passive Foreign Investment Company Rules”, based on our financial statements and relevant
market and shareholder data, we believe that we should not be treated as a PFIC for U.S. federal income tax purposes with respect to our
2024 taxable year. In addition, based on our financial statements and our current expectations regarding the value and nature of our
assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our
2025 taxable year or in the foreseeable future. Since our ordinary shares are not themselves listed on an established securities market in
the United States, dividends that we pay on our ordinary shares that are not backed by ADSs may not be eligible for the reduced tax rate.
If, however, we are deemed to be a resident enterprise under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of
the Treaty (which the U.S. Treasury has determined is satisfactory for this purpose) and in that case we would be treated as a qualified
foreign corporation with respect to dividends paid on our ordinary shares or ADSs. Each non-corporate U.S. Holder is advised to consult
its tax advisors regarding the availability of the reduced tax rate applicable to qualified dividend income for any dividends we pay with
respect to our ADSs or ordinary shares. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders
and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code.

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Dividends we pay may be subject to PRC withholding tax. For U.S. federal income tax purposes, the amount of any dividend will
include amounts withheld in respect of such PRC withholding tax. See “—PRC Taxation” above. Subject to generally applicable
limitations and conditions, PRC dividend withholding tax paid at the appropriate rate applicable to the U.S. Holder may be eligible for a
credit against such U.S. Holder’s federal income tax liability. These generally applicable limitations and conditions include requirements
adopted by the U.S. Internal Revenue Service (“IRS”) in regulations promulgated in December 2021 and any PRC tax will need to
satisfy these requirements in order to be eligible to be a creditable tax for a U.S. Holder. In the case of a U.S. Holder that either (i) is
eligible for, and properly elects, the benefits of the Treaty, or (ii) consistently elects to apply a modified version of these rules under
temporary guidance promulgated in December 2023 and complies with specific requirements set forth in such guidance, the PRC tax on
dividends will be treated as meeting the requirements and therefore as a creditable tax. In the case of all other U.S. Holders, the
application of these requirements to the PRC tax on dividends is uncertain and we have not determined whether these requirements have
been met. If the PRC dividend tax is not a creditable tax for a U.S. Holder or the U.S. Holder does not elect to claim a foreign tax credit
for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may be able to deduct the PRC tax in computing
such U.S. Holder’s taxable income for U.S. federal income tax purposes. Dividend distributions will constitute income from sources
without the United States and, for U.S. Holders that elect to claim foreign tax credits, generally will constitute “passive category income”
for foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. Holder’s particular
circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also
indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary
guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Holders should
consult their own tax advisors regarding the application of these rules to their particular situations.
Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s, or in the case of ADSs, the depositary’s,
actual or constructive receipt of the dividend. The amount of any dividend income paid in RMB will be the U.S. dollar amount calculated
by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars.
If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency
gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss, which would be U.S. source
ordinary gain or loss, if the dividend is converted into U.S. dollars after the date of receipt.
Sales or Other Dispositions of Ordinary Shares or ADSs
For U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of ordinary shares or ADSs will be capital
gain or loss and will be long-term capital gain or loss if the U.S. Holder held the ordinary shares or ADSs for more than one year. The
amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ordinary shares or ADSs disposed of and
the amount realized on the disposition, in each case as determined in U.S. dollars. The deductibility of capital losses is subject to
limitations.
As described in “— PRC Taxation — PRC Taxation on Us,” if we were deemed to be a tax resident enterprise under PRC tax law,
gains from dispositions of our ordinary shares or ADSs may be subject to PRC withholding tax. In that case, a U.S. Holder’s amount
realized would include the gross amount of the proceeds of the sale or disposition before deduction of the PRC tax. Although any such
gain of a U.S. Holder would generally be characterized as U.S.-source income, a U.S. Holder that is eligible for, and properly elects to
claim, the benefits of the Treaty may be entitled to elect to treat the gain as foreign-source income for foreign tax credit purposes. Any
PRC tax imposed on the sale or other disposition of our ordinary shares or ADSs generally will not be treated as a creditable tax for U.S.
foreign tax credit purposes, except in the case of a U.S. Holder that either (i) is eligible for, and properly elects to claim, the benefits of
the Treaty, or (ii) consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted under the temporary
guidance discussed above and complies with the specific requirements set forth in such guidance. If the PRC tax is not a creditable tax or
claimed as a credit by the U.S. Holder pursuant to the Treaty, the tax would reduce the amount realized on the sale or other disposition of
the shares even if the U.S. Holder has elected to claim a foreign tax credit for other taxes in the same year. The temporary guidance
discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations
and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary
guidance. U.S. Holders should consult their own tax advisors regarding the application of the foreign tax credit rules to a sale or other
disposition of the ordinary shares or ADSs and any PRC tax imposed on such sale or disposition.
Deposits and withdrawals of ordinary shares by U.S. Holders in exchange for ADSs will not result in the realization of gain or loss
for U.S. federal income tax purposes.

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Passive Foreign Investment Company Rules
Special U.S. federal income tax rules apply to U.S. persons owning shares of a “passive foreign investment company”, or “PFIC”. If
we were a PFIC for any taxable year during which a U.S. Holder held ordinary shares or ADSs, such U.S. holder may be subject to
adverse tax consequences upon a sale or exchange of our ordinary shares or ADSs (including a sale or exchange that is treated as an
“excess distribution” in respect of the ordinary shares or ADSs). Additionally, a sale or exchange that is treated as a dividend paid by a
PFIC are not qualified dividends eligible to be taxed at preferential rates. Based on our audited consolidated financial statements, we do
not believe we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the 2023 or 2024 taxable
years and do not anticipate becoming a PFIC in 2025 or in the foreseeable future.
Specified Foreign Financial Assets
Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of US$ 50,000 on the last day of
the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their
tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts
held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by
financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals.
Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests
in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be
subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part.
Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in ADSs or
ordinary shares, including the application of the rules to their particular circumstances.
Information Reporting and Backup Withholding
Dividend payments with respect to ADSs or ordinary shares and proceeds from the sale or exchange of ADSs or ordinary shares
may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however,
to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise
exempt from backup withholding. U.S. Holders should consult their tax advisers regarding the application of the U.S. information
reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal
income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the
appropriate claim for refund with the IRS and furnishing any required information.
German Taxation
Income Taxation
German-based corporations (AG and GmbH) are subject to corporate income tax (CIT) and in general also to trade tax, which is a
profit tax levied by the municipalities (TT). CIT is charged at a rate of 15% on the taxable income. A 5.5% solidarity surcharge is
charged on the CIT, resulting in an effective tax rate of 15.825%. Trade tax is also charged on the taxable income by the local
municipalities whereas the tax rates depend on the local multiplier of each municipality. Thus, TT rates vary from town to town.
Typically, TT is levied at an effective rate of 7% – 21%. For Frankfurt, the TT rate amounts to 16.1% and for Munich to 17.15%.
Partnerships themselves (GmbH & Co. KG) that qualify as so-called entrepreneurial partnerships for tax purposes
(Mitunternehmerschaften) are subject to TT but not subject to CIT. For CIT purposes, a partnership is tax transparent; i.e., the taxable
income of a partnership is determined at the level of the partnership itself and then allocated to the partners in proportion to their interest
in the partnership, irrespective of an actual distribution. In case a partner of a partnership is a corporation, the income is subject to CIT at
the level of the partners. If the conditions are fulfilled, expenses of the partner that arise in connection with its partnership participation
are tax deductible from the taxable income of the partnership as so-called special purpose expenses (Sonderbetriebsausgaben), subject to
general rules that may be applicable in relation to deduction of expenses and further provided that the expenses are included in the tax-
filing at the level of the partnership.

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German branches/permanent establishments of foreign corporations are subject to CIT and TT. In case of permanent establishments,
the German double tax treaties generally assign the taxation right to the state in which the permanent establishment is located. The
participation of a foreign corporation (H World Holdings Singapore Pte. Ltd.) in a German partnership (DH Group GmbH & Co. KG) as
limited partner can create a permanent establishment of the foreign corporation in Germany for CIT and TT purposes.
Tax group for CIT and TT purposes
A tax group in Germany allows a set-off of taxable income (positive and negative) for CIT and TT purposes at the level of the entity
heading the tax group (parent company). Such tax group requires in particular the holding of the majority in voting rights (financial
integration) from the beginning of the fiscal year of the parent subsidiary company as well as the implementation and proper execution of
a profit and loss transfer agreement for a fixed minimum period of at least five calendar years. Accordingly, all profits made as well as all
losses suffered at the level of the subsidiary/ies in a tax group as determined pursuant to German accounting rules (HGB) have to be
transferred to or need to be compensated by the head of the tax group. One advantage of the tax group is that the profit transfer is not
subject to dividend taxation (i.e., no CIT/TT on the 5% non-deductible expenses). Only corporations subject to unlimited corporate
income tax with its place of registered office and management in Germany and seat in an EU or EEA country can be subsidiaries in a tax
group.
Participation exemption
Dividends received by a German corporation are generally exempt from CIT if in particular a participation quota of at least 10% at
the beginning of the year the dividend distribution takes place is fulfilled and the distributed dividend has not reduced the taxable income
of the distributing entity; 5% of the dividends are deemed as non-deductible business expenses. Consequently, dividends are effectively
95% tax exempt. The effective CIT including solidarity surcharge on dividends therefore amounts to approximately 0.8% (= 5% taxable
portion x 15.825% tax rate). This participation exemption applies regardless of a minimum holding period or the residence of the
subsidiary (German or foreign). The participation exemption inter alia does not apply if the shares are held as a trading stock of banks
and financial institutions or as an investment of a life or health insurance company.
The 95% exemption applies to TT under additional requirements. For dividends from German corporations the minimum
shareholding at the beginning of the year must be at least 15% instead of 10%; Otherwise, the dividends are fully taxable for TT
purposes. The same holds principally true with regard to the TT-treatment of dividends from foreign corporations.
The 95% participation exemption also applies to capital gains from the disposal of shares in corporations, regardless of the
shareholding percentage. Exceptions only apply in case of certain tax neutral restructurings made in the past and in case of past tax-
effective write-downs. The 95% participation exemption for capital gains applies to both CIT and TT. Again, the participation exemption
for capital gains inter alia does not apply if the shares are held as a trading stock of banks and financial institutions or as an investment of
a life or health insurance company.
Withholding Taxes
Dividends paid by German corporations are subject to withholding tax (Kapitalertragsteuer) at a rate of 25% plus 5.5% solidarity
surcharge thereupon. A German resident shareholder in the form of a corporation or a foreign corporate shareholder that holds its
German participation through a German permanent establishment may offset the paid withholding tax against its tax burden or if higher
than its tax burden get a refund in the course of the tax assessment. For shareholders which are non-resident in Germany, the withholding
tax may generally become a final tax cost unless exemptions apply.
In this regard, for example, a 40% (resp. two fifths) refund on the withholding tax is granted upon application at the Federal Central
Tax Office (Bundeszentralamt für Steuern), if the dividend recipient is domiciled abroad and there is no double taxation treaty with
Germany. Therefore, an effective withholding tax rate of 15.825% on dividends for German non-resident shareholders applies. However,
this refund is subject to enhanced substance requirements.
According to the EU Parent-Subsidiary Directive as implemented into German domestic law, the withholding tax can be reduced to
zero (upon prior application and issuance of a respective tax exemption certificate), if the dividends are paid by a German subsidiary to
its EU shareholder corporation that has held a 10% minimum participation in the German subsidiary for at least 12 months and respective
substance requirements pursuant to German anti-treaty shopping provisions are met.

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Furthermore, based on double tax treaties between Germany and the shareholder’s country of residence, the withholding tax may be
(upon application) reduced to 5% to 15%. Also in these cases, the WHT reduction has to be applied for and substance requirements have
to be met.
By contrast, profit distributions paid by a partnership (for example, GmbH &Co. KG) are not subject to withholding tax because
they are qualified as “withdrawals” rather than dividends from a German income tax perspective.
If a partnership receives dividends from its corporate subsidiaries and if these corporate subsidiaries are to be actually attributable to
the permanent establishment of the German partnership, the dividend withholding tax cannot be reclaimed at the level of a partnership
but only at the level of its partners. This also applies to foreign partners of the German partnership which creates a permanent
establishment due to the participation in a partnership in Germany and are therefore subject to limited CIT and thus, have to file a CIT
return in Germany.
However, reclaiming of the dividend withholding tax in such German CIT return of the foreign partner can only be made in case the
corporate subsidiaries of the partnership are actually attributable to the permanent establishment of the German partnership. As a German
partnership is a semi-transparent entity, the corporate subsidiaries must be in a functional relationship with the partnership in order to be
attributed to the German permanent establishment of the partnership. If the corporate subsidiaries are not attributable to the permanent
establishment of the German partnership, they would be directly attributed to the foreign partner of the partnership. In this case, the
dividends from such corporations would be seen as directly received by the foreign partner and not by the German partnership, leading to
the application of the general refund procedure explained above (including the prove of substance).
Singapore Taxation
Corporate Tax
The prevailing corporate tax rate in Singapore is 17% with effect from Year of Assessment 2011. In addition, with effect from Year
of Assessment 2020, the partial tax exemption scheme applies on the first S$200,000 of a company’s normal chargeable income;
specifically 75% of up to the first S$10,000 of a company’s normal chargeable income, and 50% of up to the next S$190,000 is exempt
from corporate tax. The remaining chargeable income (after the partial tax exemption) will be taxed at 17%.
Singapore has a tax exemption scheme for new start-up companies that was introduced in Year of Assessment 2005 to support
entrepreneurship and help the growth of local enterprises. With effect from Year of Assessment 2020 onwards, there will be a 75%
exemption on the first S$100,000 of normal chargeable income, and a further 50% exemption on the next S$100,000 of normal
chargeable income.
Our subsidiaries in Singapore are subject to Singapore corporate income tax at a rate of 17%.
Goods and Services Tax
Goods and services tax (“GST”) in Singapore is a consumption tax that is levied on the import of goods and services into Singapore,
as well as nearly all supplies of goods and services in Singapore at a prevailing rate of 7%.With effect from January 1, 2023, GST rate
had increased to 8%, which further increased to 9% with effect from January 1, 2024.
Dividend Distributions
Singapore adopts a one-tier corporate tax system under which the tax collected from corporate profits is a final tax and the after-tax
profits of a company resident in Singapore can be distributed to its shareholders as tax-exempt dividends. Such dividends are tax-exempt
in the hands of the shareholders, irrespective of whether the shareholder is a company or an individual and whether or not the shareholder
is a Singapore tax resident. Singapore does not currently impose withholding tax on dividends paid to resident or non-resident
shareholders.

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Capital Gains upon Disposition of Shares
Any gains considered to be in the nature of capital made from the sale of our shares will not be taxable in Singapore to the extent
that they do not fall within the ambit of the new Section 10L of the Income Tax Act 1947 (“ITA”), which came into effect on January 1,
2024. Any gains of an income nature would be subject to tax at the prevailing corporate income tax rate of 17.0%. There are no specific
laws or regulations which deal with the characterization of whether a gain is income or capital in nature. Gains arising from the disposal
of our shares may be construed to be of an income nature and subject to Singapore income tax, if they arise from activities which the
Inland Revenue Authority of Singapore (“IRAS”) regards as the carrying on of a trade or business in Singapore. Such gains, even if they
do not arise from an activity in the ordinary course of trade or business or from an ordinary incident of some other business activity, may
also be considered gains or profits of an income nature if the investor had the intention or purpose of making a profit at the time of
acquisition of our shares. However, under Singapore tax laws, subject to section 10L of the ITA, there is a temporary safe harbor rule
where any gains derived by a divesting company from its disposal of ordinary shares in an investee company between June 1, 2012 and
December 31, 2027 are generally exempt from tax if immediately prior to the date of the relevant disposal, the divesting company has
held at least 20% of the ordinary shares in the investee company for a continuous period of at least 24 months. Subject to certain
prescribed exemptions and section 10L of the ITA, the safe harbor rule is only applicable if the divesting company, at the time of
lodgment of its income tax return in Singapore relating to the period in which the disposal of ordinary shares occurred, provides such
information and documentation as may be specified by the IRAS.
Under Section 10L of the Income Tax Act 1947, gains received in Singapore by an entity of a relevant group from the sale or
disposal of any movable or immovable property outside Singapore will be treated as income chargeable to tax under Section 10(1)(g) of
the ITA under certain circumstances. Any registered shares, equity securities or securities will be deemed to be located outside Singapore
if the register or principal register (if there is more than one register) is located outside Singapore regardless of where the company is
incorporated. If our shares are deemed to be foreign assets, gains from their disposal will be subject to tax if an entity of a relevant group
(other than an excluded entity) disposed of our shares on or after 1 January 2024. An entity is a member of a group of entities if its assets,
liabilities, income, expenses and cash flows are (a) included in the consolidated financial statements of the parent entity of the group, or
(b) excluded from the consolidated financial statements of the parent entity of the group solely on size or materiality grounds or on the
grounds that the entity is held for sale. A group is a relevant group if (a) the entities of the group are not all incorporated, registered or
established in Singapore; or (b) any entity of the group has a place of business outside Singapore. An excluded entity is defined in
Section 10L of the ITA to include (a) a pure equity-holding company satisfying the conditions in Section 10L(16) or (b) any other entity
with adequate economic substance in Singapore, taking into account factors enumerated in Section 10L, whose operations are managed
and performed in Singapore.
Investors are advised to consult their own tax advisors on the applicable tax treatment if they received gains in Singapore from the
disposal of our shares.
Global Anti-Base Erosion Model Rules (Pillar Two)
The Global Anti-Base Erosion Model Rules (Pillar Two) (“BEPS Pillar 2”) rules are implemented in Singapore via the Multinational
Enterprise (Minimum Tax) Act 2024 (“MMTA”). It introduces (i) the multinational enterprise top-up tax (“MTT”), and (ii) the domestic
top-up tax (“DTT”).
The MMTA applies to a multinational enterprise (“MNE”) group for a financial year beginning on or after January 1, 2025 if its
annual consolidated group revenue (determined by reference to the consolidated financial statements of its ultimate parent entity) for at
least two financial years out of the four financial years immediately before that financial year is equal to or exceeds EUR750 million.
MTT applies to a Singapore parent entity’s ownership interest in its relevant entities outside Singapore and its stateless entities but
does not apply to its ownership interest in its domestic entities. The minimum rate for MTT is 15% and the top-up amount is computed
using the effective tax rate (“ETR”) that is calculated on a jurisdictional basis for an MNE group. The charging provision for MTT is
found in section 12 of the MMTA, which imposes MTT on an entity if (i) the entity is a responsible member of an MNE group at any
time in the financial year, (ii) the MNE group is an in-scope MNE group for the financial year, (iii) the entity holds an ownership interest
in another constituent entity (“CE”) of the MNE group at any time in the financial year, (iv) that other CE is located in a jurisdiction
outside Singapore or is a stateless entity, and has a top up amount for the financial year, and (v) the entity is located in Singapore.

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The DTT imposes a top-up tax on certain CEs located in Singapore to raise their ETR to at least 15%. The charging provision for the
DTT is section 28 of the MMTA, which imposes DTT equivalent to the on an MNE group for a financial year if (i) the MNE group is an
in-scope MNE group, (ii) at least one of its CEs is located in Singapore or is: (a) a flow through entity established, formed, incorporated
or registered under the laws of Singapore, (b) not a responsible member, and (c) a reverse hybrid entity with respect to any of its income,
expenditure, profit or loss, and (3) the MNE group has a top up amount for that financial year.
Do note that in-scope MNE groups are subject to various administrative requirements. This includes registering under the MMTA,
designating a Singapore CE to be a Designated Local DTT Filing Entity (“DFE”) / Designated Local GIR Filing Entity (“GFE”),
submitting MTT and DTT returns, and making a GloBE information return (“GIR”) filing.
However, excluded entities are excluded from the MTT and DTT. While their revenue is still taken into account to determine if the
MNE group is in-scope, their attributes such as their profits, losses, taxes accrued, tangible assets, and payroll expenses are excluded
from the various computations under MTT and DTT including the de minimis exclusion. Further, such entities are not subject to any
administrative obligations under MTT and DTT, such as the filing of a GloBE Information Return. Excluded entities include a
governmental entity, an international organisation and a non-profit organisation.
Further, the MTT and DTT regimes also provide for safe harbours that help reduce the MNE groups’ compliance burden. Where a
safe harbour is elected by an MNE group for a jurisdiction, the top-up amounts for qualifying entities of the MNE group in the
jurisdiction are treated as nil. Singapore currently has three safe harbours: (1) transitional CbCR Safe Harbour, (2) simplified
Calculations Safe Harbour, and (3) QDMTT Safe Harbour.
Penalties may be imposed under the MMT Act where an in-scope MNE group fails to meet its obligations for MTT and DTT. As
MTT and DTT rules are new, MNEs will require time to familiarise themselves with the rules. In view that some MNEs have given
feedback that such rules are complex, IRAS will adopt a light touch approach for the first 3 FYs from FY 2025, if an MNE group can
demonstrate that it has taken reasonable measures to ensure the correct application of the rules.
10.F. Dividends and Paying Agents
Not applicable.
10.G. Statement by Experts
Not applicable.
10.H. Documents on Display
We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are
required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than
four months after the close of each fiscal year, which is December 31. Copies of reports and other information, when so filed, may be
inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the Securities and
Exchange Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the
Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov
that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the
SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the
reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
10.I. Subsidiary Information
Not applicable.
10.J. Annual Report to Security Holders
Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our exposure to interest rate risk primarily relates to the interest rates for our outstanding debt and the interest income generated by
excess cash invested in liquid investments. We do not rely on derivative financial instruments to manage our interest risk exposure.
Interest-earning instruments carry a degree of interest rate risk.
We have not been exposed to material risks due to changes in interest rates. However, our future interest income and interest expense
may be different from expected due to changes in market interest rates.
Foreign Exchange Risk
A significant portion of our revenues, expenses and financial assets are denominated in the Renminbi. Our reporting currency is
Renminbi. The functional currencies of entities within Deutsche Hospitality include Euro and other currencies such as Swiss Franc. We
rely substantially on dividends paid to us by our operating subsidiaries in China and Europe. Any significant depreciation of the
Renminbi or Euro against the U.S. dollar may have a material adverse effect on our revenues and the value of, and any dividends payable
on, our ADSs and ordinary shares, when translated into U.S. dollars. In general, our exposure to foreign exchange risks should be
limited, the value of your investment in our ADSs will be affected by the foreign exchange rate between U.S. dollars and RMB and
between U.S. dollars and Euro because the value of our business is effectively denominated in RMB and Euro, while the ADSs will be
traded in U.S. dollars.
The value of the RMB against the U.S. dollar, the Hong Kong dollar and other currencies may fluctuate and is affected by, among
other things, changes in China’s political and economic conditions. The conversion of RMB into other currencies, including U.S. dollars
and Hong Kong dollar, has been based on rates set by the People’s Bank of China. On July 21, 2005, the PRC regulatory authorities
changed its decade-old policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to
fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy caused the Renminbi to
appreciate by more than 20% against the U.S. dollar between July 2005 and July 2008. Between July 2008 and June 2010, this
appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010,
the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or the
PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. To the extent we hold
assets denominated in U.S. dollars, any appreciation of the RMB against the U.S. dollar could result in a change to our statement of
operations and a reduction in the value of our U.S. dollar denominated assets. On the other hand, a decline in the value of the RMB
against the U.S. dollar and the Hong Kong dollar could reduce the U.S. dollar equivalent amounts of our financial results, the value of
your investment in our company and the dividends we may pay in the future, if any, all of which may have a material adverse effect on
the prices of ADSs and ordinary shares. To the extent that we need to convert U.S. dollars or Hong Kong dollars into Renminbi or Euro
for our operations, appreciation of the Renminbi or Euro against the U.S. dollar or Hong Kong dollar would have an adverse effect on the
Renminbi or Euro amount we receive from the conversion.
By way of example, assuming we had converted a U.S. dollar denominated cash balance of US$1 million as of December 31, 2024
into Renminbi at the exchange rate of US$1.00 for RMB7.2993, such cash balance would have been approximately RMB7.3 million
(US$1 million). Assuming a 1.0% depreciation of the RMB against the U.S. dollar, such cash balance would have increased to
RMB7.4million (US$1 million) as of December 31, 2024.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Not applicable.

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12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Fees and Expenses
ADS holders will be required to pay the following fees under the terms of the deposit agreement:
Service
    
Fees
 
Issuance of ADSs
Up to US$0.05 per ADS issued
Cancelation of ADSs
Up to US$0.05 per ADS canceled
Distribution of cash dividends or other cash distributions (e.g., sale
of rights and other entitlements)
Up to US$0.05 per ADS held
Distribution of ADSs pursuant to stock dividends, other free stock
distributions or exercise of rights to purchase additional ADSs
Up to US$0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase
additional ADSs
Up to US$0.05 per ADS held
Depositary services
Up to US$0.05 per ADS held on the applicable record date(s)
established by the depositary
As an ADS holder, you will also be responsible to pay certain charges such as:
●
fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the
Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares);
●
expenses incurred for converting foreign currency into U.S. dollars;
●
expenses for cable, telex and fax transmissions and for delivery of securities;
●
taxes (including applicable interest and penalties) and other governmental charges;
●
fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other
applicable regulatory requirements; and
●
fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit.
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of
their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to
the depositary for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with
distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of
ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions
other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date holders concurrent with the
distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the
depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via
The Depository Trust Company (“DTC”)), the depositary generally collects its fees through the systems provided by DTC (whose
nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The
brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to
the depositary.

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In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested
service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You
will receive prior notice of such changes.
Fees and Other Payments Made by the Depositary to Us
The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program established pursuant to the
deposit agreement, by making available a portion of the depositary fees charged in respect of the ADR program or otherwise, upon such
terms and conditions as we and the depositary may agree from time to time. For the year ended December 31, 2024, we have received a
total of RMB49 million (US$7 million) from the depositary as reimbursement for our expenses incurred in connection with investor
relationship programs related to the ADS program.
Dealings and Settlement of Ordinary Shares in Hong Kong
Our ordinary shares trade on the Hong Kong Stock Exchange in board lots of 100 shares. Dealings in our ordinary shares on the
Hong Kong Stock Exchange are conducted in Hong Kong dollars.
The transaction costs of dealings in our ordinary shares on the Hong Kong Stock Exchange include:
●
Hong Kong Stock Exchange trading fee of 0.00565% of the consideration of the transaction, charged to each of the buyer and
seller;
●
the Securities and Futures Commission of Hong Kong, or the SFC, transaction levy of 0.0027% of the consideration of the
transaction, charged to each of the buyer and seller;
●
Accounting and Financial Reporting Council of Hong Kong, or the AFRC, transaction levy of 0.00015% of the consideration of
the transaction, charged to each of the buyer and seller;
●
transfer deed stamp duty of HK$5.00 per transfer deed (if applicable), payable by the seller;
●
ad valorem stamp duty at a total rate of 0.2% of the value of the transaction, with 0.1% payable by each of the buyer and the
seller;
●
stock settlement fee, which is currently 0.002% of the gross transaction value, subject to a minimum fee of HK$2.00 and a
maximum fee of HK$100.00 per side per trade;
●
brokerage commission, which is freely negotiable with the broker (other than brokerage commissions for certain public offering
transactions, which are currently set at 1% of the subscription or purchase price and will be payable by the person subscribing
for or purchasing the securities); and
●
the Hong Kong share registrar will charge between HK$2.50 to HK$20.00, depending on the speed of service (or such higher
fee as may from time to time be permitted under the Hong Kong Listing Rules), for each transfer of ordinary shares from one
registered owner to another, each share certificate canceled or issued by it and any applicable fee as stated in the share transfer
forms used in Hong Kong.
Investors must settle their trades executed on the Hong Kong Stock Exchange through their brokers directly or through custodians.
For an investor who has deposited his or her ordinary shares in his or her stock account or in his or her designated Central Clearing and
Settlement System, or CCASS, participant’s stock account maintained with CCASS, settlement will be effected in CCASS in accordance
with the General Rules of HKSCC and HKSCC Operational Procedures in effect from time to time. For an investor who holds the
physical certificates, settlement certificates and the duly executed transfer forms must be delivered to his or her broker or custodian
before the settlement date.

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Conversion between Ordinary Shares Trading in Hong Kong and ADSs
In connection with the initial public offering of our shares in Hong Kong, we established a branch register of members in Hong
Kong, or the Hong Kong share register, which is maintained by our Hong Kong share registrar, Computershare Hong Kong Investor
Services Limited. Our principal register of members, or the Cayman share register, will continue to be maintained by our principal share
registrar, Conyers Trust Company (Cayman) Limited.
As described in further detail below, holders of ordinary shares registered on the Hong Kong share register will be able to convert
these ordinary shares into ADSs, and vice versa.
Converting Ordinary Shares Trading in Hong Kong into ADSs
An investor who holds ordinary shares registered in Hong Kong and who intends to convert them to ADSs to trade on NASDAQ
must deposit or have his or her broker deposit the ordinary shares with the depositary’s Hong Kong custodian, Citibank, N.A., Hong
Kong, or the custodian, in exchange for ADSs.
A deposit of ordinary shares trading in Hong Kong in exchange for ADSs involves the following procedures:
●
If ordinary shares have been deposited with CCASS, the investor must transfer ordinary shares to the depositary’s account with
the custodian within CCASS by following the CCASS procedures for transfer and submit and deliver a duly completed and
signed conversion form to the depositary via his or her broker.
●
If ordinary shares are held outside CCASS, the investor must arrange to deposit, his or her shares into CCASS for delivery to
the depositary’s account with the custodian within CCASS, submit and deliver a request for conversion form to the custodian
and after duly completing and signing such conversion form, deliver such conversion form to the custodian.
●
Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, if
applicable, the depositary will issue the corresponding number of ADSs in the name(s) requested by an investor and will deliver
the ADSs to the designated DTC account of the person(s) designated.
For ordinary shares deposited in CCASS, under normal circumstances, the above steps generally require two business days. For
ordinary shares held outside CCASS in physical form, the above steps may take 14 business days, or more, to complete. Temporary
delays may arise. For example, the transfer books of the depositary may from time to time be closed to ADS issuances. The investor will
be unable to trade the ADSs until the procedures are completed.
Converting ADSs to Ordinary Shares Trading in Hong Kong
An investor who holds ADSs and who intends to convert his/her ADSs into ordinary shares to trade on the Hong Kong Stock
Exchange must cancel the ADSs the investor holds and withdraw ordinary shares from our ADS program and cause his or her broker or
other financial institution to trade such ordinary shares on the Hong Kong Stock Exchange.
An investor that holds ADSs indirectly through a broker should follow the broker’s procedure and instruct the broker to arrange for
cancelation of the ADSs, and transfer of the underlying ordinary shares from the depositary’s account with the custodian within the
CCASS system to the investor’s Hong Kong stock account.
For investors holding ADSs directly, the following steps must be taken:
●
To withdraw ordinary shares from our ADS program, an investor who holds ADSs may turn in such ADSs at the office of the
depositary (and the applicable ADR(s) if the ADSs are held in certificated form), and send an instruction to cancel such ADSs
to the depositary.
●
Upon payment or net of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, if
applicable, the depositary will cancel the ADSs and instruct the custodian to deliver ordinary shares underlying the canceled
ADSs to the CCASS account designated by an investor.

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●
If an investor prefers to receive ordinary shares outside CCASS, he or she must receive ordinary shares in CCASS first and then
arrange for withdrawal from CCASS. Investors can then obtain a transfer form signed by HKSCC Nominees Limited (as the
transferor) and register ordinary shares in their own names with the Hong Kong share registrar.
For ordinary shares to be received in CCASS, under normal circumstances, the above steps generally require two business days. For
ordinary shares to be received outside CCASS in physical form, the above steps may take 14 business days, or more, to complete. The
investor will be unable to trade the ordinary shares on the Hong Kong Stock Exchange until the procedures are completed.
Temporary delays may arise. For example, the transfer books of the depositary may from time to time be closed to ADS
cancellations. In addition, completion of the above steps and procedures is subject to there being a sufficient number of ordinary shares
on the Hong Kong share register to facilitate a withdrawal from the ADS program directly into the CCASS system. We are not under any
obligation to maintain or increase the number of ordinary shares on the Hong Kong share register to facilitate such withdrawals.
Depositary Requirements
Before the depositary issues ADSs or permits withdrawal of ordinary shares, the depositary may require:
●
production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
●
compliance with procedures it may establish, from time to time, consistent with the deposit agreement, including but not limited
to presentation of transfer documents.
The depositary may refuse to deliver, transfer or register issuances, transfers and cancelations of ADSs generally when the transfer
books of the depositary or our Hong Kong share registrar are closed or at any time if the depositary or we determine it advisable to do so.
All costs attributable to the transfer of ordinary shares to effect a withdrawal from or deposit of ordinary shares into our ADS
program will be borne by the investor requesting the transfer. In particular, holders of ordinary shares and ADSs should note that the
Hong Kong share registrar will charge between HK$2.50 to HK$20, depending on the speed of service (or such higher fee as may from
time to time be permitted under the Hong Kong Listing Rules), for each transfer of ordinary shares from one registered owner to another,
each share certificate canceled or issued by it and any applicable fee as stated in the share transfer forms used in Hong Kong. In addition,
holders of ordinary shares and ADSs must pay up to US$5.00 per 100 ADSs for each issuance of ADSs and each cancelation of ADSs,
as the case may be, in connection with the deposit of ordinary shares into, or withdrawal of ordinary shares from, our ADS program.

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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None of these events occurred in any of the years ended December 31, 2022, 2023 and 2024.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
In June 2021, we effected a share subdivision to sub-divide each ordinary share with a par value of US$0.0001 each into ten
ordinary shares with a par value of US$0.00001 each. Concurrent with the share subdivision, the ratio of ADS to ordinary share was
adjusted from one (1) ADS representing one (1) ordinary share to one (1) ADS representing ten (10) ordinary shares after share
subdivision.
The following “Use of Proceeds” information relates to the registration statement on Form F-3ASR (File No. 333-269169), together
with the prospectus supplement dated January 10, 2023 in relation to our follow-on offering of 7,118,500 ADSs (including the exercise in
full of the underwriters’ option to purchase additional ADSs), representing an aggregate of 71,185,000 ordinary shares. The net proceeds
raised from the follow-on public offering were approximately US$291.6 million (including the exercise in full of the underwriters’
option to purchase additional ADSs), after deducting underwriting discounts and commissions and the offering expenses. Goldman Sachs
(Asia) L.L.C. and UBS Securities LLC are the representatives of the underwriters for our follow-on offering.
The total expenses incurred for our company’s account in connection with the follow-on offering was approximately US$7.4 million,
which included approximately US$6.0 million in underwriting discounts and commissions and approximately US$1.4 million of other
costs and expenses. None of the transaction expenses included payments to directors or officers of our company or their associates,
persons owning more than 10% or more of our equity securities or our affiliates.
For the period from January 10, 2023 to March 31, 2024, we had used all of our net proceeds from our follow-on offering to fund
our growth strategies amid post-COVID reopening and for working capital and general corporate purposes and invest in initiatives that
support our long term success, including our technology infrastructure, supply chain ecosystem, distribution system that connects both
individual guests and corporate clients, and ESG efforts. There is no material change in the use of proceeds as described in our
prospectus supplement dated January 10, 2023.
None of the net proceeds we received from this follow-on offering were paid, directly or indirectly, to any of our directors or officers
or their associates, persons owning 10% or more of our equity securities or our affiliates.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the
effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of
the end of the period covered by this annual report. Based on such evaluation, our management has concluded that, as of the end of the
period covered by this annual report, our disclosure controls and procedures were effective.

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Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for our company. Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in
accordance with generally accepted accounting principles and includes those policies and procedures that (a) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (b) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance
with generally accepted accounting principles and that a company’s receipts and expenditures are being made only in accordance with
authorizations of a company’s management and directors and (c) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the consolidated financial
statements.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with
respect to consolidated financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies and procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act and related rules as promulgated by the SEC, our management assessed the
effectiveness of the internal control over financial reporting as of December 31, 2024 using criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Deloitte Touche
Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm. The attestation report issued by Deloitte
Touche Tohmatsu Certified Public Accountants LLP can be found on page F-4 of this annual report on Form 20-F.
Changes in Internal Control over Financial Reporting
There were no significant changes that have materially affected or are reasonably likely to materially affect our internal control over
financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Jian Shang is an audit committee financial expert, as that term is defined in
Item 16A(b) of Form 20-F, and is independent for the purposes of Rule 5605(a)(2) of the NASDAQ Marketplace Rules, or the NASDAQ
Rules, and Rule 10A-3 under the Exchange Act.
ITEM 16B. CODE OF ETHICS
Our board of directors adopted a code of business conduct and ethics on January 27, 2010 that applies to our directors, officers,
employees and agents, including certain provisions that specifically apply to our executive officers and any other persons who perform
similar functions for us. We have filed our code of business conduct and ethics as an exhibit to our registration statement on Form F-1
(File No. 333-165247) originally filed with the Securities and Exchange Commission on March 5, 2010, as amended. Our code of
business conduct and ethics is publicly available on our website at https://ir.hworld.com/.

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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Deloitte Touche Tohmatsu Certified Public Accountants LLP, or Deloitte, serves as our independent registered public accounting
firm.
Our audit committee is responsible for the oversight of Deloitte’s work. The policy of our audit committee is to pre-approve all audit
and non-audit services provided by Deloitte, including audit services, audit-related services, tax services and other services, other than
those for de minimis services which are approved by the audit committee prior to the completion of the audit.
We paid the following fees for professional services to Deloitte for the years ended December 31, 2023 and 2024.
    
Year Ended December 31,
2023
2024
US$
US$
(In millions)
Audit Fees(1)
 
 3.5
 
 3.0
Audit-related Fees(2)
 0.6
 0.1
Tax Fees(3)
 
 0.3
 
 0.0
Other Service Fees(4)
—
 0.2
Total
 
 4.4
 
 3.3
Notes:
(1) Audit Fees. This category includes the aggregate fees billed for the professional services rendered by our principal auditors for the
interim review of quarterly financial statements and the audit of our annual financial statements.
(2) Audit - related Fees. This category includes the aggregated fees billed for the professional services rendered by our principal
auditors for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated
financial statements that are not reported under “Audit Fees.” Audit - related Fees in 2023 was incurred to support our follow - on
offering.
(3) Tax Fees. This category includes the aggregate fees billed for the professional services rendered by our principal auditors for tax
compliance and tax advice.
(4) Other Service Fees. This category includes the aggregate fees billed for the professional services rendered by our principal auditors
for business consulting.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We announced a share repurchase program approved by our board of directors on August 21, 2019. Under the terms of the approved
program, we may repurchase up to US$750 million worth of our issued and outstanding ADSs in open market at prevailing market prices
or privately negotiated transaction, depending on market conditions and other factors, as well as in accordance with restrictions relating
to volume, price and timing. This share repurchase plan will be effective for five years. Our board of directors review the share
repurchase program periodically, and may authorize adjustment of its terms and size accordingly. The share repurchase program may be
suspended or discontinued at any time. We repurchased 1,779,470, 3,458,597 and 6,876,340 ADSs in 2022, 2023 and 2024 under this
program, respectively.

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144
We announced a share repurchase program approved by our board of directors on July 23, 2024, which replaced the previous share
repurchase program approved and adopted on August 21, 2019 with an aggregate amount of up to US$750 million. Under the terms of
the approved program, effective from August 21, 2024, we may repurchase up to US$1,000 million worth of our issued and outstanding
ADSs through open market transactions at prevailing market prices or in privately negotiated transactions from time to time as market
conditions warrant and in compliance with applicable requirements of Rule 10b5-1 and Rule 10b-18 under the U.S. Securities Exchange
Act of 1934, as amended, at times and in such amounts as our company deems appropriate. This share repurchase plan will be effective
for five years. Our board of directors review the share repurchase program periodically, and may authorize adjustment of its terms and
size or suspend or discontinue the program. We repurchased 1,503,206 ADSs in 2024 under this program.
The following table sets forth information about our purchases of outstanding ADSs in 2024.
    
    
     (c) Total Number     
(d) Approximate
of ADSs
Dollar Value of ADSs that May
Purchased as Part
Yet be Purchased
(a) Total Number
(b) Average Price
of Publicly
Under the Plans
of ADSs
Paid per ADSs 
Announced Plans
or Programs (in
Period
Purchased
(US$)
or Programs
US$million)
January 2024
 2,403,439
 31.88
 2,403,439
 501
February 2024
 
—  
—  
—  
 501
March 2024
 
—  
—  
—  
 501
April 2024
 
—  
—  
—  
 501
May 2024
 
—  
—  
—  
 501
June 2024
 
 544,292  
 33.92  
 544,292  
 483
July 2024
 
 1,267,152  
 31.73  
 1,267,152  
 443
August 2024
 
 3,615,185  
 31.35  
 3,615,185  
 972
September 2024
 
 549,478  
 29.86  
 549,478  
 956
October 2024
 
—  
—  
—  
 956
November 2024
 
—  
—  
—  
 956
December 2024
 
—  
—  
—  
 956
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
We are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act), and our ADSs are listed on the
NASDAQ Global Select Market. The NASDAQ rules provide that foreign private issuers may follow home country practice in lieu of
the corporate governance requirements of the NASDAQ Stock Market LLC, subject to certain exceptions and requirements and except to
the extent that such exemptions would be contrary to U.S. federal securities laws and regulations. The significant differences between our
corporate governance practices and those followed by domestic companies under the NASDAQ rules are summarized as follows:
●
We follow home country practice that permits our board of directors not to have a majority of independent directors in lieu of
complying with Rule 5605(b)(1) of the NASDAQ.
●
We follow home country practice that permits our independent directors not to hold regularly scheduled meetings at which only
independent directors are present in lieu of complying with Rule 5605(b)(2) of the NASDAQ.
●
We follow home country practice that permits our board of directors not to implement a nominations committee, in lieu of
complying with Rule 5605(e) of the NASDAQ Rules that requires the implementation of a nominations committee.
●
We followed home country practice that permits us not to disclose in our annual report or website the material terms of all
agreements or arrangements between any director, nominee for director and any person or entity other than our company
relating to compensation or other payment in connection with that person’s candidacy or services as a director of our company,
in lieu of complying with Rule 5250(b)(3) of the NASDAQ.

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145
Other than the above, we have followed and intend to continue to follow the applicable corporate governance standards under the
NASDAQ rules.
In accordance with Rule 5250(d)(1) of the NASDAQ, we will post this annual report on Form 20-F on our company website at
https://ir.hworld.com.
Under Rule 19C.11 of the Hong Kong Listing Rules, we are exempt from certain corporate governance requirements of the Hong
Kong Stock Exchange, including Appendix C1 of the Hong Kong Listing Rules (Corporate Governance Code) and Appendix D2 of the
Hong Kong Listing Rules (Disclosure of Financial Information).
In connection with our listing on the Hong Kong Stock Exchange, the Hong Kong Stock Exchange and the SFC granted certain
waivers and exemptions from strict compliance with the relevant provisions of the Hong Kong Listing Rules and the SFO, respectively,
and the SFC also granted a ruling under the Takeovers Codes.
Not a Public Company in Hong Kong
Section 4.1 of the Introduction to the Takeovers Codes provides that the Takeovers Codes applies to takeovers, mergers and share
buy-backs affecting public companies in Hong Kong and companies with a primary listing in Hong Kong. According to the Note to
Section 4.2 of the Introduction to the Takeovers Codes, a Grandfathered Greater China Issuer within the meaning of Rule 19C.01 of the
Hong Kong Listing Rules with a secondary listing on the Hong Kong Stock Exchange will not normally be regarded as a public company
in Hong Kong under Section 4.2 of the Introduction to the Takeovers Codes.
The SFC granted a ruling that we are not a “public company in Hong Kong” for the purposes of Section 4.2. Therefore, the
Takeovers Codes do not apply to us. In the event that the bulk of trading in the Shares migrates to Hong Kong such that our Company
would be treated as having a dual-primary listing pursuant to Rule 19C.13 of the Hong Kong Listing Rules, the Takeovers Codes will
apply to our Company.
Disclosure of Interests under Part XV of SFO
Part XV of the SFO imposes duties of disclosure of interests in ordinary shares. Under the U.S. Exchange Act, which we are subject
to, any person (including directors and officers of the company concerned) who acquires beneficial ownership, as determined in
accordance with the rules and regulations of the SEC and which includes the power to direct the voting or the disposition of the
securities, of more than 5% of a class of equity securities registered under Section 12 of the U.S. Exchange Act must file beneficial
owner reports with the SEC, and such person must promptly report any material change in the information provided (including any
acquisition or disposition of 1% or more of the class of equity securities concerned), unless exceptions apply. Therefore, compliance with
Part XV of the SFO would subject our corporate insiders to a second level of reporting, which would be unduly burdensome to them,
would result in additional costs and would not be meaningful, since the statutory disclosure of interest obligations under the U.S.
Exchange Act that apply to us and our corporate insiders would provide our investors with sufficient information relating to the
shareholding interests of our significant shareholders.
The SFC granted a partial exemption under section 309(2) of the SFO from the provisions of Part XV of the SFO (other than
Divisions 5, 11 and 12 of Part XV of the SFO), on the conditions that (i) the bulk of trading in the ordinary shares is not considered to
have migrated to Hong Kong on a permanent basis in accordance with Rule 19C.13 of the Hong Kong Listing Rules; (ii) all disclosures
of interest filed in the SEC are also filed with the Hong Kong Stock Exchange as soon as practicable, which will then publish such
disclosure in the same manner as disclosures made under Part XV of the SFO; and (iii) we will advise the SFC if there is any material
change to any of the information which has been provided to the SFC, including any significant changes to the disclosure requirements in
the U.S. and any significant changes in the volume of our worldwide share turnover that takes place on the Hong Kong Stock Exchange.
This exemption may be reconsidered by the SFC in the event there is a material change in information provided to the SFC.
The U.S. Exchange Act and the rules and regulations promulgated thereunder require disclosure of interests by shareholders that are
broadly equivalent to Part XV of the SFO. For relevant disclosure in respect of the substantial shareholder’s interests, see “Item 7. Major
Shareholders and Related Party Transactions — A. Major Shareholders.”

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146
We undertook to file with the Hong Kong Stock Exchange, as soon as practicable, any declaration of shareholding and securities
transactions filed with the SEC. We further undertook to disclose in present and future listing documents any shareholding interests as
disclosed in an SEC filing and the relationship between our directors, officers, members of committees and their relationship to any
controlling shareholder.
Corporate Communication
Rule 2.07A of the Hong Kong Listing Rules, as amended with effect from December 31, 2023, provides that a listed issuer may (i)
send or otherwise make available to the relevant holders of its securities any corporate communication by electronic means or (ii) make
the corporate communication available on its website and the website of the Hong Kong Stock Exchange, and must set out on its website
the manner in which (i) and/or (ii) above is adopted for the dissemination of its corporate communications.
The Hong Kong Stock Exchange granted us a waiver from strict compliance with the requirements under Rule 2.07A of the Hong
Kong Listing Rules, which remains effective.
Since our listing on the Hong Kong Stock Exchange, we made the following arrangements:
●
We issue all corporate communications as required by the Hong Kong Listing Rules on our own website in English and
Chinese, and on the Hong Kong Stock Exchange’s website in English and Chinese.
●
We continue to make arrangements to provide printed copies of proxy materials and notices to our shareholders at no costs upon
request.
●
We have added to the “Investor Relations” page of our website which directs investors to all of our filings with the Hong Kong
Stock Exchange.
In light of the amendments to Rule 2.07A of the Hong Kong Listing Rules, we have also set out in the relevant sections of our
website the manner of our corporation communication dissemination.
Rule 13.25B of the Hong Kong Listing Rules requires a listed issuer to publish a monthly return in relation to movements in its
equity securities (including treasury shares), debt securities and any other securitized instruments, as applicable, during the period to
which the monthly return relates. Pursuant to the Joint Policy Statement Regarding the Listing of Overseas Companies, or Joint Policy
Statement, we sought a waiver from Rule 13.25B subject to satisfying the waiver condition that the SFC has granted a partial exemption
from strict compliance with Part XV of the SFO (other than Divisions 5, 11 and 12 of Part XV of the SFO) in respect of disclosure of
shareholders’ interests. As we have obtained a partial exemption from the SFC, the Hong Kong Stock Exchange granted a waiver from
strict compliance with Rule 13.25B of the Hong Kong Listing Rules. We disclose information about share repurchases, if any, in our
quarterly earnings releases and annual reports on Form 20-F which are furnished or filed with the SEC in accordance with applicable
U.S. rules and regulations.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have adopted an insider trading policy (the “Insider Trading Policy”), which governs the purchase, sale and other dispositions of
our securities by our directors, executive officers, and employees. Our Insider Trading Policy aims to promote compliance with
applicable insider trading laws, rules and regulations, and the Nasdaq listing standards. A copy of our Insider Trading Policy is filed as
Exhibit 11.2 to this Annual Report.

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147
ITEM 16K. CYBERSECURITY
Risk Management and Strategy
We have implemented procedures for assessing, identifying, and managing material risks from cybersecurity threats and for
prevention, detection, mitigation and remediation of material cybersecurity incidents. We have also integrated cybersecurity risk
management into our overall enterprise risk management system.
The framework of our cybersecurity risk management process mainly includes four steps: (i) identifying cybersecurity threats,
assessing the severity, identifying the source and whether the threat is associated with a third-party service provider; (ii) reporting
material cybersecurity incidents to management and our board of directors; (iii) implementing safeguards, countermeasures and
mitigation strategies; and (iv) remediation and restoration of the affected systems. We have established processes to oversee and identify
risks from cybersecurity threats associated with our use of third-party services providers.
We have also developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This
system encompasses various levels, including network, host and application security, and incorporates systematic security capabilities for
threat defense, monitoring, analysis, response, deception, and countermeasures. We strive to manage cybersecurity risks and protect
sensitive information through various methods, including technical safeguards, procedural requirements, an intensive monitoring
program on our corporate network, continuous testing of our security posture both internally and with outside vendors, a robust incident
response program, a review of the effectiveness of our security system with reference to applicable security standards by qualified third
parties and regular cybersecurity awareness training for employees. Our Operation and Maintenance Security Department continuously
monitor the performance of our platforms and infrastructure to enable us to respond quickly to potential problems, including potential
cybersecurity threats.
In addition, we regularly engage third-party assessors, consultants and auditors in connection with our cybersecurity risk
management processes, and the audit committee of our Board of Directors has the necessary resources and authority to select, retain,
terminate and approve the fees and other retention terms for such assessors, consultants, auditors or other third parties, as it deems
necessary or appropriate. As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified
any material cybersecurity threats that have affected or are reasonably likely to materially affect us, including our business strategy,
results of operations, or financial condition.
Governance
We place a strong emphasis on data security. We have established an information security committee and an information security and
privacy protection working group consisting of heads of various departments. To further ensure data security, we have also set up a
special data security committee to ensure the security of customer data and prevent data leakage by setting data security guidelines and
coordinating data security planning. We also have a dedicated information security center equipped with personnel specialized in data
security, compliance, and risk management. This center is involved in key aspects of our business operations and provides other
departments with professional data security and risk management services.
Our information security committee is responsible for the oversight of risks from cybersecurity threats, including full authority in
monitoring, resolving, disclosing, and otherwise handling matters related to or arising out any cybersecurity incidents. Members of our
information security committee are responsible for monitoring the prevention, detection, mitigation and remediation of cybersecurity
incidents and shall report risks from cybersecurity threats on a regular basis and promptly reporting any material cybersecurity incidents
to the management of the information security committee.
Mr. Hui Jin, our chief executive officer, serves as the chairman of our information security committee. Mr. Jin is authorized to make
decisions with regard to the cybersecurity matters of our company.

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148
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
Our consolidated financial statements are included at the end of this annual report.
ITEM 19. EXHIBITS
Exhibit
Number
    
Description of Document
1.1
The Amended and Restated Memorandum and Second Amended and Restated Articles of Association of the Registrant
currently in effect, adopted by way of a special resolution passed on June 27, 2023. (Incorporated by reference to Exhibit
3.1 from our report on Form 6-K filed with the Securities and Exchange Commission on June 27, 2023.)
2.1
Registrant’s Specimen American Depositary Receipt. (Incorporated by reference to Form 424b3 (file no. 333-225171) filed
with the Securities and Exchange Commission on July 11, 2022.)
2.2
Registrant’s Specimen Certificate for Ordinary Shares. (Incorporated by reference to Exhibit 4.1 from our Form F-3 (file
no. 333- 269169) filed with the Securities and Exchange Commission on January 10, 2023.)
2.3
Form of Deposit Agreement Among the Registrant, the Depositary and All Holders and Beneficial Owners of the
American Depositary Shares. (Incorporated by reference to Exhibits 4.3 from the Amendment No. 1 to our Registration
Statement on Form F-1 (file no. 333-165247) filed with the Securities and Exchange Commission on March 12, 2010.)
2.4
Form of Amendment No. 1 to Deposit Agreement among the Registrant, the Depositary and all Holders and Beneficial
Owners of the American Depositary Shares issued thereunder. (Incorporated by reference to Exhibits (a)(i) from the post-
effective amendment No. 1 to Form F-6 (file no. 333-225171) filed with the Securities and Exchange Commission on
May 7, 2021.)
2.5*
Description of Securities
4.1
Amended and Restated 2009 Share Incentive Plan, amended and restated as of October 1, 2009. (Incorporated by reference
to Exhibit 10.3 from our Registration Statement on Form F-1 (file no. 333-165247) filed with the Securities and Exchange
Commission on March 5, 2010.)
4.2
Amendment to the Amended and Restated 2009 Share Incentive Plan, amended as of August 26, 2010. (Incorporated by
reference to Exhibit 99.2 from our report on Form 6-K (file no. 333-34656) filed with the Securities and Exchange
Commission on July 15, 2010.)
4.3
Amendment to the Amended and Restated 2009 Share Incentive Plan, amended as of March 26, 2015. (Incorporated by
reference to Exhibit 99.2 from our report on Form 6-K filed with the Securities and Exchange Commission on March 27,
2015.)
4.4
Form of Indemnification Agreement with the Registrant’s Directors. (Incorporated by reference to Exhibit 10.4 from our
Registration Statement on Form F-1 (file no. 333-165247) filed with the Securities and Exchange Commission on March 5,
2010.)
4.5
English translation of the Form of Employment Agreement between the Registrant and Executive Officers of the
Registrant. (Incorporated by reference to Exhibit 4.6 from our annual report on Form 20-F (File No. 001-34656) filed with
the Securities and Exchange Commission on April 12, 2012.)
4.6
Investor and Registration Rights Agreement between the Registrant and Ctrip.com International, Ltd., dated March 12,
2010. (Incorporated by reference to Exhibit 10.10 from the Amendment No. 1 to our Registration Statement on Form F-1
(file no. 333-165247) filed with the Securities and Exchange Commission on March 12, 2010.)

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149
4.7
Supplemental Registration Rights Agreement between the registrant and Trip.com dated August 3, 2020. (Incorporated by
reference to Exhibit 4.7 from our annual report on Form 20-F filed with the Securities and Exchange Commission on April
23, 2021.)
4.8
Indenture between the Registrant and Wilmington Trust, National Association dated May 12, 2020. (Incorporated by
reference to Exhibit 4.17 from our annual report on Form 20-F filed with the Securities and Exchange Commission on
April 23, 2021.)
4.9
Amended and Restated 2023 Share Incentive Plan, adopted on June 27, 2024. (Incorporated by reference to Exhibit 99.2
from our report on Form 6-K filed with the Securities and Exchange Commission on June 27, 2024.)
8.1*
Subsidiaries of the Registrant
11.1
Code of Business Conduct and Ethics of the Registrant. (Incorporated by reference to Exhibit 99.1 from our Registration
Statement on Form F-1 (file no. 333-165247) filed with the Securities and Exchange Commission on March 5, 2010.)
11.2*
Insider Trading Policy of the Registrant
12.1*
Certification of Hui Jin, Chief Executive Officer of the Registrant, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
12.2*
Certification of Hui Chen, Chief Financial Officer of the Registrant, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
13.1**
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1*
Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP, Independent Registered Public Accounting Firm.
15.2*
Consent of JunHe LLP
97.1
Policy Relating to Recovery of Erroneously Awarded Compensation of the Registrant (Incorporated by reference to Exhibit
97.1 from our annual report on Form 20-F filed with the Securities and Exchange Commission on April 23, 2024.)
101.INS*
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its
XBRLtags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.*
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Filed with this Annual Report on Form 20-F.
**
Furnished with this Annual Report on Form 20-F.

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150
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
H WORLD GROUP LIMITED
By: /s/ Hui Jin
Name:Hui Jin
Title: Chief Executive Officer
Date: April 25, 2025

Table of Contents
F-1
H WORLD GROUP LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2022, 2023 AND 2024
Reports of Independent Registered Public Accounting Firm (PCAOB 1113)
    
F-2
Consolidated Balance Sheets as of December 31, 2023 and 2024
F-5
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2023 and 2024
F-6
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2023 and 2024
F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2023 and 2024
F-8
Notes to Consolidated Financial Statements
F-10
Financial Statements Schedule I — Financial Information for Parent Company
F-38
Financial Statements Schedule II — Valuation and Qualifying Accounts
F-42

Table of Contents
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF H WORLD GROUP LIMITED
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of H World Group Limited and its subsidiaries (the “Company”) as of
December 31, 2024 and 2023, the related consolidated statements of comprehensive income, changes in equity, and cash flows, for each
of the three years in the period ended December 31, 2024, and the related notes and the financial statements schedules (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of its operations and cash flows for each of the three years in
the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
April 25, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Convenience Translation
Our audits also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such
translation has been made in conformity with the basis stated in Note 2. Such United States dollar amounts are presented solely for the
convenience of readers outside the People’s Republic of China.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to
the financial statements and (2)  involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.

Table of Contents
F-3
Impairment Assessment of Goodwill and Brand Names related to DH acquisition - Refer to Notes 2, 5 and 7 to the financial
statements
Critical Audit Matter Description
As more fully described in Notes 2, 5 and 7 to the consolidated financial statements, the Company recognized goodwill and brand names
related to its acquisition of Steigenberger Hotels Aktiengesellschaft Germany (“DH”). The Company concluded through its impairment
analyses, no impairment on goodwill and RMB391 million of impairment loss on brand names should be recognized for the year ended
December 31, 2024.
We identified impairment assessments of goodwill and brand names with indefinite lives assigned to the legacy DH reporting unit as a
critical audit matter because of the significant judgments made by management relating the determination of the estimated fair value of
the legacy DH reporting unit as part of the impairment assessments. The Company determined the estimated fair value of the legacy DH
reporting unit and each brand name assigned to the legacy DH reporting unit using the discounted cash flow methodology under income
approach, which requires management to make significant estimates and assumptions related to projected hotels’ revenues, growth rates,
projected operating cost, royalty saving rates and discount rates (collectively referred to as “significant assumptions”). These significant
assumptions are inherently uncertain in that the estimates change from year to year based on forecasted operating results and are
sensitive to change in market conditions and consumer demands. It required a high degree of auditor judgment and an increased extent of
effort when performing audit procedures to evaluate the reasonableness of management’s significant assumptions.
How the Critical Audit Matter was addressed in the Audit
●
We tested the effectiveness of internal controls related to management’s determination of significant assumptions used in the
discounted cash flow model.
●
We evaluated the reasonableness of significant assumptions used by management in the cash flow projections for the
determination of fair value of legacy DH reporting unit and brand names with infinite lives. We also evaluated the ranges and
probabilities of reasonably possible outcomes, and whether management set its point estimates within the ranges.
●
We evaluated management’s ability to accurately forecast future revenues and operating margins by comparing actual results to
management’s historical forecasts.
●
With the assistance of internal fair value specialists, we evaluated the reasonableness of the discount rates by developing a
range of independent estimates and comparing those to the related rates selected by management.
●
We tested the accuracy and completeness of the key data used in developing estimates.
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP
Shanghai, China
April 25, 2025
We have served as the Company’s auditor since 2009.

Table of Contents
F-4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF H WORLD GROUP LIMITED
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of H World Group Limited (previously known as Huazhu Group Limited)
and its subsidiaries (the “Company”) as of December 31, 2024 based on criteria established in Internal Control — Integrated Framework
(2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the
COSO criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the
“PCAOB”), the financial statements as of and for the year ended December 31, 2024 of the Company and our report dated April 25,
2025 expressed an unqualified opinion on those financial statements and included explanatory paragraphs regarding the convenience
translation of Renminbi amounts into United States dollar amounts.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1)  pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP
Shanghai, China
April 25, 2025

Table of Contents
F-5
H WORLD GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
(Renminbi in millions, except share and per share data, unless otherwise stated)
As of December 31, 
    
2023
    
2024
    
2024
US$’ in millions
 
(Note 2)
ASSETS
  
  
  
Current assets:
 
   
   
  
Cash and cash equivalents
 
6,946  
7,474  
1,024
Restricted cash
 
764  
50  
7
Short-term investments, including marketable securities measured at fair value of RMB231 and RMB81 as of December 31, 2023 and 2024, respectively
 
2,189  
3,603  
494
Accounts receivable, net
 
755  
817  
112
Loan receivables - current, net
 
184  
114  
16
Amounts due from related parties, net
 
210  
297  
41
Inventories
 
59  
60  
8
Other current assets, net
 
949  
800  
108
Total current assets
 
12,056  
13,215  
1,810
Property and equipment, net
 
6,097  
5,682  
778
Intangible assets, net
 
5,280  
4,776  
654
Operating lease right-of-use assets
25,658
24,992
3,424
Finance lease right-of-use assets
 
2,171  
2,272  
311
Land use rights, net
 
181  
174  
24
Long-term investments, including available-for-sale debt securities measured at fair value of RMB281 and RMB230 as of December 31, 2023 and 2024,
respectively
 
2,564  
2,316  
317
Goodwill
 
5,318  
5,221  
715
Amounts due from related parties
25
51
7
Loan receivables, net
 
163  
190  
26
Other assets, net
 
663  
668  
94
Deferred income tax assets
 
1,043  
1,054  
144
Assets held for sale
2,313
1,941
266
Total assets
 
63,532  
62,552  
8,570
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Short-term debt and current portion of long-term debt
 
4,049  
880  
120
Accounts payable
 
1,019  
983  
135
Amounts due to related parties
 
77  
74  
10
Salary and welfare payables
 
1,067  
1,201  
165
Deferred revenue
 
1,637  
1,822  
250
Operating lease liabilities, current
 
3,609  
3,492  
478
Finance lease liabilities, current
45
50
7
Accrued expenses and other current liabilities
 
3,261  
4,006  
549
Dividends payable
 
2,085  
0  
0
Income tax payable
 
562  
813  
111
Total current liabilities
 
17,411  
13,321  
1,825
Long-term debt
 
1,265  
4,546  
623
Operating lease liabilities, non-current
 
24,215  
23,634  
3,238
Finance lease liabilities, non-current
2,697
2,843
390
Deferred revenue
 
1,072  
1,351  
185
Other long-term liabilities
 
1,118  
1,472  
201
Retirement benefit obligations
124
111
15
Deferred income tax liabilities
 
845  
919  
126
Liabilities held for sale
2,536
2,084
286
Total liabilities
 
51,283  
50,281  
6,889
Commitments and contingencies (Note 21)
 
 
 
Equity:
 
 
 
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized; 3,210,392,530 and 3,105,094,690 shares issued as of December 31,
2023 and 2024, and 3,159,046,350 and 3,083,916,600 shares outstanding as of December 31, 2023 and 2024, respectively)
 
0  
0  
0
Treasury shares (51,346,180 and 21,178,090 shares as of December 31, 2023 and 2024, respectively)
 
(906) 
(274)
(38)
Additional paid-in capital
 
11,861  
9,620  
1,318
Retained earnings
 
794  
2,449  
336
Accumulated other comprehensive income
 
386  
382  
52
Total H World Group Limited shareholders’ equity
 
12,135  
12,177  
1,668
Noncontrolling interest
 
114  
94  
13
Total equity
 
12,249  
12,271  
1,681
Total liabilities and equity
 
63,532  
62,552  
8,570
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-6
H WORLD GROUP LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Renminbi in millions, except share and per share data, unless otherwise stated)
Years Ended December 31, 
    
2022
    
2023
    
2024
    
2024
US$’ in millions
 
(Note 2)
Revenues:
  
  
  
  
Leased and owned hotels
 
9,148  
13,796  
13,843  
1,897
Manachised and franchised hotels
 
4,405  
7,694  
9,498  
1,301
Others
 
309  
392  
550  
76
Total revenues
 
13,862  
21,882  
23,891  
3,274
Operating costs and expenses:
 
 
 
 
Hotel operating costs
 
12,260  
14,341  
15,285  
2,094
Other operating costs
 
62  
34  
31  
4
Selling and marketing expenses
 
613  
1,072  
1,176  
161
General and administrative expenses
 
1,675  
2,086  
2,508  
344
Pre-opening expenses
 
95  
35  
50  
7
Total operating costs and expenses
 
14,705  
17,568  
19,050  
2,610
Goodwill impairment loss
—
4
—
—
Other operating income, net
 
549  
404  
359  
49
(Loss) income from operations
 
(294) 
4,714  
5,200  
713
Interest income
 
87  
248  
210  
29
Interest expense
 
409  
385  
318  
44
Other income, net
 
10  
573  
51  
7
(Loss) gain from fair value changes of equity securities, net
 
(359) 
109  
(66) 
(9)
Foreign exchange (loss) gain, net
 
(641) 
90  
(272) 
(37)
(Loss) income before income taxes
 
(1,606) 
5,349  
4,805  
659
Income tax expense
 
207  
1,204  
1,662  
228
Loss from equity method investments
 
(36) 
(14) 
(41) 
(6)
Net (loss) income
 
(1,849) 
4,131  
3,102  
425
Less: net (loss) income attributable to noncontrolling interest
 
(28) 
46  
54  
7
Net (loss) income attributable to H World Group Limited
 
(1,821) 
4,085  
3,048  
418
Other comprehensive income (loss)
 
 
 
 
Gain (loss) arising from defined benefit plan, net of tax of RMB10, RMB(3) and RMB0 for the
year ended 2022, 2023 and 2024, respectively
 
22  
(9) 
6
1
Gain (loss) from fair value changes of debt securities, net of tax of RMB19, RMB(3) and
RMB(13) for 2022,2023 and 2024, respectively
 
57  
(12) 
(38) 
(5)
Foreign currency translation adjustments, net of tax of nil for the years ended 2022, 2023 and
2024, respectively
 
112  
175  
28
4
Comprehensive (loss) income
 
(1,658) 
4,285  
3,098  
425
Less: comprehensive (loss) income attributable to the noncontrolling interest
 
(28) 
46  
54  
7
Comprehensive (loss) income attributable to H World Group Limited
 
(1,630) 
4,239  
3,044  
418
(Losses) earnings per share:
 
Basic
 
(0.59) 
1.28  
0.98  
0.13
Diluted
 
(0.59) 
1.25  
0.96  
0.13
Weighted average number of shares used in computation:
 
 
 
 
Basic
 
3,111,196,757  
3,183,163,131  
3,115,130,107  
3,115,130,107
Diluted
 
3,111,196,757  
3,351,421,211  
3,278,308,290  
3,278,308,290
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-7
H WORLD GROUP LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Renminbi in millions, except share data, unless otherwise stated)
Accumulated
Ordinary Shares
Treasury Shares
Additional
Other
Outstanding
Paid-in
Retained
Comprehensive
Noncontrolling
    
shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Earnings      (Loss) Income     
Interest
     Total Equity
Balance at January 1, 2022
     3,120,746,090     
0     
30,974,040     
(107)    
9,964     
1,037     
41     
109     
11,044
Issuance of ordinary shares upon exercise of options and vesting of
restricted stocks
 
9,462,340  
0  
—  
—  
(0) 
—  
—  
—  
—
Return of loaned ADS in connection with issuance of Convertible
Senior Notes due 2022
 
—  
—  
104,251,120  
—  
—  
—  
—  
—  
—
Share-based compensation
—  
—  
—  
—  
87  
—  
—  
—  
87
Net loss
 
—  
—  
—  
—  
—  
(1,821) 
—  
(28) 
(1,849)
Dividends to noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
(6) 
(6)
Capital contribution from noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
0  
0
Acquisition of noncontrolling interest
 
—  
—  
—  
—  
1  
—  
—  
(2) 
(1)
Gain from fair value changes of debt securities, net of tax of RMB19
 
—  
—  
—  
—  
—  
—  
57  
—  
57
Foreign currency translation adjustments, net of tax of nil
 
—  
—  
—  
—  
—  
—  
112  
—  
112
Repurchase of ordinary shares
 
(17,794,700) 
—  
17,794,700  
(334) 
—  
—  
—  
—  
(334)
Cash dividends declared
 
—  
—  
—  
—  
—  
(416) 
—  
—  
(416)
Noncontrolling interest recognized in connection with acquisitions
 
—  
—  
—  
—  
—  
—  
—  
1  
1
Termination of Capped Call
 
—  
—  
—  
—  
86  
—  
—  
—  
86
Income arising from defined benefit plan, net of tax of RMB10
 
—  
—  
—  
—  
—  
—  
22  
—  
22
Balance at December 31, 2022
 
3,112,413,730  
0  
153,019,860  
(441) 
10,138  
(1,200) 
232  
74  
8,803
Issuance of ordinary shares upon exercise of options and vesting of
restricted stocks
 
6,793,560  
0  
—  
—  
(0) 
—  
—  
—  
—
Vesting of restricted stock in Treasury Shares
 
3,239,790  
—  
(3,239,790) 
11  
(11) 
—  
—  
—  
—
Conversion of Convertible Senior Notes due 2022
 
240  
0  
—  
—  
0  
—  
—  
—  
0
Share-based compensation
 
—  
—  
—  
—  
143  
—  
—  
—  
143
Net income
 
—  
—  
—  
—  
—  
4,085  
—  
46  
4,131
Dividends to noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
(2) 
(2)
Issuance of ordinary shares
 
71,185,000  
0  
—  
—  
1,963  
—  
—  
—  
1,963
Capital contribution from noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
0  
0
Acquisition of noncontrolling interest
 
—  
—  
—  
—  
(0) 
—  
—  
(4) 
(4)
Loss from fair value changes of debt securities, net of tax benefit of
RMB3
 
—  
—  
—  
—  
—  
—  
(12) 
—  
(12)
Foreign currency translation adjustments, net of tax of nil
 
—  
—  
—  
—  
—  
—  
175  
—  
175
Repurchase of ordinary shares
 
(34,585,970) 
—  
34,585,970  
(848) 
—  
—  
—  
—  
(848)
Cash dividends declared
 
—  
—  
—  
—  
—  
(2,091) 
—  
—  
(2,091)
Cancellation of ordinary shares
 
—  
0  
(133,019,860) 
372  
(372) 
—  
—  
—  
0
Loss arising from defined benefit plan, net of tax benefit of RMB3
 
—  
—  
—  
—  
—  
—  
(9) 
—  
(9)
Balance at December 31, 2023
3,159,046,350
0
51,346,180
(906)
11,861
794
386
114
12,249
Issuance of ordinary shares upon exercise of options and vesting of
restricted stocks
 
1,497,730  
0  
—  
—  
(0) 
—  
—  
—  
—
Vesting of restricted stock in Treasury Shares
7,167,980
—
(7,167,980)
25
(25)
—
—
—
—
Share-based compensation
 
—  
—  
—  
—  
322  
—  
—  
—  
322
Net income
 
—  
—  
—  
—  
—  
3,048  
—  
54  
3,102
Dividends to noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
(4) 
(4)
Capital contribution from noncontrolling interest holders
 
—  
—  
—  
—  
—  
—  
—  
0  
0
Acquisition of noncontrolling interest
—
—
—
—
(49)
—
—
(70)
(119)
Loss from fair value changes of debt securities, net of tax benefit of
RMB13
 
—  
—  
—  
—  
—  
—  
(38) 
—  
(38)
Foreign currency translation adjustments, net of tax of nil
 
—  
—  
—  
—  
—  
—  
28  
—  
28
Repurchase of ordinary shares
(52,761,410)
—
52,761,410
(1,172)
—
—
—
—
(1,172)
Purchase of prepaid put option
—
—
—
—
(710)
—
—
—
(710)
Repurchase of ordinary shares upon exercise of prepaid put option
 
(31,034,050) 
—  
31,034,050  
(710) 
710  
—  
—  
—  
—
Cash dividends declared
—
—
—
—
—
(1,393)
—
—
(1,393)
Cancellation of ordinary shares
—
0
(106,795,570)
2,489
(2,489)
—
—
—
—
Gain arising from defined benefit plan, net of tax of RMB0
—
—
—
—
—
—
6
—
6
Balance at December 31, 2024
 
3,083,916,600
0
21,178,090
(274)
9,620
2,449
382
94
12,271
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-8
H WORLD GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Renminbi in millions, unless otherwise stated)
Years Ended December 31, 
    
2022
    
2023
    
2024
    
2024
US$ in millions
 
(Note 2)
Operating activities:
 
   
   
   
  
Net (loss) income
 
(1,849) 
4,131  
3,102  
425
Adjustments to reconcile net (loss) income to net cash provided by operating activities: 
 
 
 
Share-based compensation
 
87  
143  
322  
44
Depreciation and amortization
 
1,456  
1,414  
1,332  
183
Amortization of issuance cost of convertible senior notes and upfront fee on bank
borrowings
 
57  
34  
5  
0
Deferred income taxes
 
(268) 
29  
113  
15
Credit loss
 
82  
89  
3  
0
Impairment loss
 
491  
516  
537  
74
Loss from equity method investments, net of dividends
 
85  
72  
97  
13
Foreign currency exchange loss (gain)
 
341  
(119) 
263  
36
Investment loss (income)
 
321  
(806) 
(13) 
(2)
Noncash lease expense
 
2,257  
2,163  
2,300  
315
Others
(54)
48
23
4
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
Accounts receivable
 
(621) 
296  
(95) 
(13)
Other assets
 
149  
6  
13  
2
Salary and welfare payables
 
63  
402  
121  
17
Deferred revenue
 
(19) 
576  
467  
64
Accrued expenses and other current liabilities
 
507  
1,133  
752  
103
Operating lease liabilities
 
(1,608) 
(2,548) 
(2,453) 
(336)
Income tax payable
 
82  
62  
251  
34
Other long-term liabilities
 
20  
84  
382  
53
Others, net
(15)
(51)
(4)
(1)
Net cash provided by operating activities
 
1,564  
7,674  
7,518  
1,030
Investing activities:
 
 
 
 
Purchases of property and equipment
 
(1,049) 
(894) 
(883) 
(121)
Purchases of intangible asset
 
(4) 
(7) 
(15) 
(2)
Acquisitions, net of cash received
 
(57) 
0  
—  
—
Purchases of investments
 
(401) 
(3,509) 
(4,017) 
(550)
Proceeds from maturity/sale and return of investments
 
937  
2,972  
2,563  
351
Origination of loan receivables
 
(175) 
(226) 
(178) 
(24)
Collection of loan receivables
 
212  
137  
217  
29
Other investing activities
15
50
74
10
Net cash used in investing activities
 
(522) 
(1,477) 
(2,239) 
(307)

Table of Contents
F-9
Financing activities:
 
   
   
 
Proceeds from issuance of ordinary shares
 
—  
1,973  
—  
—
Proceeds from Termination of Capped Call
 
86  
—  
—  
—
Payment of repurchases of ordinary shares
(334)
(848)
(1,172)
(161)
Proceeds from short-term debt
 
4,249  
745  
77  
11
Repayment of short-term debt
 
(1,935) 
(3,436) 
(367) 
(50)
Proceeds from long-term debt
 
2,797  
350  
490  
67
Repayment of long-term debt
 
(2,364) 
(2,336) 
(140) 
(19)
Proceeds from long-term finance liabilities
55
74
72
10
Repayment of long-term finance liabilities
(49)
(66)
(73)
(10)
Dividends paid
 
(416) 
—  
(3,480) 
(477)
Repayment of convertible senior notes
(3,406)
(0)
—
—
Principal payments of finance lease
(40)
(82)
(65)
(9)
Purchase of prepaid put option
—
—
(710)
(97)
Other financing activities
(37)
(94)
(136)
(19)
Net cash used in financing activities
 
(1,394) 
(3,720) 
(5,504) 
(754)
Effect of exchange rate changes on cash and cash equivalents, and restricted cash
297
164
30
4
Net (decrease) increase in cash, cash equivalents and restricted cash, including cash and
cash equivalents classified within assets held for sale
 
(55) 
2,641  
(195) 
(27)
Less: net increase (decrease) in cash and cash equivalents classified within assets held
for sale
—
17
(9)
(1)
Cash, cash equivalents and restricted cash at the beginning of the year
 
5,141  
5,086  
7,710  
1,057
Cash, cash equivalents and restricted cash at the end of the year
 
5,086  
7,710  
7,524  
1,031
 
 
 
 
Cash and cash equivalents
3,583
6,946
7,474
1,024
Restricted cash
1,503
764
50
7
Total cash, cash equivalents and restricted cash shown in the statements of cash flows
5,086
7,710
7,524
1,031
Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized
 
256  
263  
166  
23
Income taxes paid
 
385  
1,127  
1,310  
179
Supplemental schedule of non-cash investing and financing activities:
 
 
 
 
Purchases of property and equipment included in payables
 
652  
477  
437  
60
The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents
F-10
H WORLD GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 and 2024
(Renminbi in millions, except share and per share data, unless otherwise stated)
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
H World Group Limited (the “Company”) was incorporated in the Cayman Islands under the laws of the Cayman Islands on
January 4, 2007. The principal business activities of the Company and its subsidiaries and consolidated variable interest entities (the
“Group”) are to develop leased and owned, manachised and franchised hotels mainly in the People’s Republic of China (“PRC”) and
Europe.
On January 2, 2020, the Group completed the acquisition of 100% equity interest of Steigenberger Hotels Aktiengesellschaft
(“Deutsche Hospitality” or “DH”) which was renamed as Steigenberger Hotels GmbH. Deutsche Hospitality was engaged in the business
of leasing, franchising, operating and managing hotels in the midscale and upscale market in Europe, the Middle East and Africa. After
the acquisition, “legacy DH” refers to Deutsche Hospitality and its subsidiaries and “legacy Huazhu” refers to the Group excluding
Deutsche Hospitality.
Leased and owned hotels
The Group leases hotel properties from property owners or purchases properties directly and is responsible for all aspects of hotel
operations and management, including hiring, training and supervising the managers and employees required to operate the hotels. In
addition, the Group is responsible for hotel development and customization to conform to the standards of the Group brands at the
beginning of the lease or the construction, as well as repairs and maintenance, operating expenses and management of properties over the
term of the lease or the land and building certificate.
As of December 31, 2023 and 2024, the Group had 691 and 633 leased and owned hotels in operation, respectively.
Manachised and franchised hotels
The Group enters into franchise and management arrangements with franchisees for which the Group is responsible for providing
branding, quality assurance, training, reservation, hiring and appointing of the hotel general manager and various other support services
relating to hotel renovation and operations. Those hotels are classified as manachised hotels. Under the typical franchise and
management agreements, the franchisee is required to pay an initial franchise fee and ongoing franchise and management service fees,
which typically equal to a certain  percentage of the revenues of the hotel. The franchisee is responsible for the costs of hotel
development, renovation and the costs of its operations. The franchise and management agreements typically range from eight to
ten years under legacy Huazhu, and 15 to 20 years for manachised hotels and 10 to 15 years for franchised hotels under legacy DH.
These agreements are renewable upon mutual agreement between the Group and the franchisee. There are also some franchised hotels for
which the Group does not provide a hotel general manager. As of December 31, 2023 and 2024, the Group had 8,526 and 10,380
manachised hotels in operation and 177 and 134 franchised hotels in operation, respectively.
2.
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally
accepted in the United States of America (“U.S. GAAP”).
Basis of consolidation
The consolidated financial statements include the financial statements of the Company, its majority-owned subsidiaries and
consolidated variable interest entities (the “VIEs”). All intercompany transactions and balances are eliminated on consolidation.

Table of Contents
F-11
Variable Interest Entities
The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support.
As of December 31, 2023 and 2024, the impact of the consolidated VIEs are immaterial to the Group’s consolidated financial
statements.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Significant accounting estimates reflected in the Group’s consolidated financial statements include
the useful lives and impairment of property and equipment, right-of-use assets and intangible assets with definite lives, valuation
allowance of deferred tax assets, purchase price allocation, impairment of investment, goodwill and intangible assets without definite
lives and incremental borrowing rate used to measure lease liabilities.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which
have original maturities of three months or less when purchased.
Restricted cash
Restricted cash mainly represents deposits used as security against borrowings, deposits restricted due to contract disputes or lawsuit
and cash restricted for special purposes.
Investments
The Group uses the equity method of accounting to account for equity investment with significant influence, no control over the
investee. Equity-method investment is reviewed for impairment by assessing whether there is an indication that a loss in value has
occurred and whether a decline is deemed to be other-than-temporary. In making this determination, factors are evaluated in determining
whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and
the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment.
Held to maturity investments are stated at amortized cost.
Investments in equity securities that have readily determinable fair values (except those accounted for under the equity method of
accounting or those that result in consolidation of the investee) are measured at fair value, with gains and losses from fair value changes
recognized in net income in the consolidated statements of comprehensive income.
Equity investments without readily determinable fair values are measured at cost, less impairment, plus or minus observable price
changes.
The Group classifies debt securities for which it does not have an intent to hold till maturity or may sell the security in response to
the changes in economic conditions are classified as available-for-sale debt securities. These securities are carried at estimated fair value
with unrealized holding gains and losses, net of tax impact, if any, reported as a net amount in a separate component of shareholders’
equity, accumulated other comprehensive income, until realized. In determining the allowance for credit losses, the Group evaluates
available-for-sale debt securities at the individual security level and considers the Group’s investment strategy, current market conditions,
financial strength of the underlying investments, term to maturity, and the Group’s intent and ability to sell the securities.

Table of Contents
F-12
Allowances for Losses on Certain Financial Assets
The Group establishes allowances for credit losses on accounts receivable, loans receivables and certain other similar financial
assets. For accounts receivables and other financial assets, the adequacy of these allowances is assessed regularly for pools of assets with
similar risk characteristics by evaluating of factors such as historical levels of credit losses, current economic condition that may affect a
customer’s ability to pay, customer credit ratings, and age of the receivable. When specific customers are identified as no longer sharing
the same risk profile as their current pool, they are removed from the pool and evaluated separately.
For loan receivables, the Group estimate current expected credit losses based on the expectation of future economic conditions,
historical collection experience and a loss-rate approach whereby the allowance is calculated using the probability of default and
recovery rates and multiplying it by the asset’s amortized cost at the balance sheet date.
Property and equipment, net
Property and equipment, net are stated at cost less accumulated depreciation, and impairment, if any. The renovations, betterments
and interest cost incurred during construction are capitalized. Depreciation of property and equipment is provided using the straight line
method over their expected useful lives. The expected useful lives are as follows:
Leasehold improvements
    Shorter of the lease term or their estimated useful lives
Buildings
20-40 years
Furniture, fixtures and equipment
1-20 years
Motor vehicles
5 years
Construction in progress represents leasehold improvements and property under construction or being installed and is stated at cost.
Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is
transferred to the cost of property and equipment, and depreciation commences when the asset is ready for its intended use.
Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is
recognized in the consolidated statements of comprehensive income as the difference between the net sales proceeds and the carrying
amount of the underlying asset.
Intangible assets, net
Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives over
which the assets are expected to contribute directly or indirectly to the future cash flows of the Group. These estimated useful lives are
generally as follows:
Franchise or manachise agreements
    Remaining contract terms from 10 to 20 years
Purchased software
3 - 10 years based on the estimated usage period
Other intangible assets including trademark, licenses and other
rights
2 - 15 years based on the contractual term, the length of license
agreements and the effective terms of other legal rights
Almost all the brand names and master brand agreement acquired by the Group are considered to have indefinite useful lives since
there are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these brands and these
brands can be renewed at nominal cost. The Group evaluates the brand name and master brand agreement each reporting period to
determine whether events and circumstances continue to support an indefinite useful life.
Land use rights, net
The land use rights represent the operating lease prepayments for the rights to use the land in the PRC under ASC 842, Leases,
which are amortized on a straight-line basis over the remaining term of the land certificates, between 30 to 50 years.

Table of Contents
F-13
Impairment of long-lived assets
The Group evaluates its long-lived assets including property and equipment, net, right-of-use assets and finite lived intangibles for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When
these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows
expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less
than the carrying amount of the assets, the Group recognizes an impairment loss equal to the difference between the carrying amount and
fair value of these assets.
The Group performed a recoverability test of its long-lived assets associated with certain hotels due to the continued
underperformance relative to the projected operating results, of which the carrying amount of the long-lived assets exceeded the future
undiscounted net cash flows, and recognized an impairment loss of RMB297, RMB286 and RMB89 during the years ended December
31, 2022, 2023 and 2024, respectively.
Fair value of the long-lived assets was determined by the Group based on the income approach using the discounted cash flow
associated with the underlying assets, which incorporated certain assumptions including projected hotels’ revenue, growth rates and
projected operating costs based on current economic condition, expectation of management and projected trends of current operating
results.
Goodwill
Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be
impaired. The Group performs a one-step impairment test in which it compares the fair value of a reporting unit with its carrying amount
and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The
goodwill impairment testing was performed at each reporting unit level. If the carrying amount of a reporting unit exceeds its fair value,
an impairment amounts to that excess should be recognized in the consolidated statements of comprehensive income.
Revenue recognition
Revenue are primarily derived from products and services in leased and owned hotels, contracts of manachised and franchised hotels
with third-party franchisees as well as activities other than the operation of hotel businesses.
Leased and owned hotel revenues
Leased and owned hotel revenues are primarily derived from the rental of rooms, sales of food, beverage and other ancillary goods
and services, including but not limited to souvenir, laundry, parking and conference reservation. Each of these products and services
represents an individual performance obligation and, in exchange for these services, the Group receives fixed amounts based on
published rates or negotiated contracts. Payment is due in full at the time when the services are rendered or the goods are provided.
Room rental revenue is recognized on a daily basis when rooms are occupied. Food and beverage revenue and other goods and services
revenue are recognized when they have been delivered or rendered to the guests as the respective performance obligations are satisfied.
Manachised and franchised hotel revenues
Manachised and franchised hotel revenues are derived from franchise or manachise agreements where the franchisees are required to
pay (i) an initial one-time franchise fee, and (ii) continuing franchise fees, which mainly consist of (a) primarily on-going management
and franchise service fees, (b) central reservation system usage fees, system maintenance and support fees and (c) reimbursements for
hotel manager fees.
Initial one-time license/franchise fee: For the manachised and franchised hotel, the Group is entitled to an initial one-time franchise
fee, which is typically fixed and collected upfront. Initial franchise fee is recognized as revenue on a straight-line basis over the term of
the franchise agreements.

Table of Contents
F-14
On-going management and franchise service/royalty fees: On-going management and franchise service/royalty fees for our
manachised and franchised hotels are variable and generally calculated as a percentage of the room revenues of the hotels as defined by
each contract. Generally, on-going management and franchise service/royalty fees are recognized on a monthly basis over the term of the
agreements as these amounts became payable. For the manachised hotel under Deutsche Hospitality, the franchisees are generally
required to pay the Group an on-going management fees consisting of a base fee as a percentage of the hotel’s gross revenues and an
incentive fee as a percentage of the hotel’s gross adjusted profit. Based fee is recognized on a monthly basis over the term of the
agreement when the amounts become payable. Incentive fee are recognized on a monthly basis over the term of the agreement based on
each hotel’s financial results, as long as the Group does not expect a significant reversal of the hotel’s gross adjusted profit.
Central reservation system usage fees, other system maintenance and support fees: The group also charges a monthly system
maintenance and support fees as part of the contracts. These fees are recognized on a monthly basis over the term of the agreements as
these amount become payable.
Reimbursements for hotel manager fees: Under the management and franchise agreements, the Group is entitled to be reimbursed for
payroll related for the appointed hotel general managers and other out-of-pocket expenses the Group incurs on behalf of the manachised
hotels. The Group is entitled to reimbursement in the period the Group incurs the related reimbursable costs, which are recognized within
manachised and franchised hotels revenue.
Other revenues
Other revenues mainly include revenues from the provision of IT products and services and commissions from suppliers for goods
sold through Huazhu Mall. Revenue from commissions charged to suppliers for goods through Huazhu Mall is recognized upon delivery
of goods to end customers when the suppliers’ obligations are fulfilled. Revenues from IT products are recognized when goods are
delivered and revenues from IT services are recognized when services are rendered.
Loyalty Program
H Rewards loyalty program members earn loyalty points based on nights and other consumptions that they spent at the Group’s
hotels and Huazhu Mall. These loyalty points can be redeemed for future products and services. Points earned by loyalty program
members represent a material right to free or discounted goods or services in the future. The loyalty program has one performance
obligation that consists of marketing and managing the program and arranging for award redemptions by members. The Group is
responsible for arranging for the redemption of points, but the Group does not directly fulfill the redemption obligation except at leased
and owned hotels. Therefore, the Group is the agent with respect to this performance obligation for manachised and franchised hotels,
and is the principal with respect to leased and owned hotels.
For leased and owned hotels, a portion of the leased and owned revenues is deferred until a member redeems points. The amount of
revenue the Group recognizes upon point redemption is impacted by the estimate of the “breakage” for points that members will never
redeem in the Group’s owned and leased hotels.
For manachised and franchised hotels, the Group receives monthly cash contributions from manachised and franchised hotels
determined based on the value of qualified spend when the points are earned. The Group recognizes these contributions into revenue as
the Group provides the related service. The amount of revenue recognized is based on a blend of historical funding rates and is impacted
by the Group’s estimate of the “breakage” for points that members will never redeem.
Membership fees from the Group’s customer loyalty program are earned and recognized on a straight-line basis over the expected
membership duration of the different membership levels. The membership duration is estimated to be two to five years which reflects the
expected membership retention. Revenues recognized from membership fees were RMB267, RMB288 and RMB338 for the years ended
December 31, 2022, 2023 and 2024, respectively, which amount were included in revenues from leased and owned hotel or revenues
from manachised and franchised hotels depending on the type of hotels the membership was sold at.
Advertising and promotional expenses
Advertising related expenses, including promotion expenses and production costs of marketing materials, are charged to the
consolidated statements of comprehensive income as incurred, and amounted to RMB128, RMB255 and RMB256 for the years ended
December 31, 2022, 2023 and 2024, respectively.

Table of Contents
F-15
Leases
The Group determines if an arrangement is a lease or contains a lease at the inception of the contract. A lease arrangement is
evaluated for classification as operating or financing upon lease commencement. Lease liabilities, which represent the Group’s obligation
to make lease payments arising from the lease, and corresponding right of-use assets, which represent the Group’s right to use an
underlying asset for the lease term, are recognized at the commencement date of the lease based on the present value of fixed future
payments and variable lease payments that depend on an index or a rate (initially measured using the index or rate as at the
commencement date) over the lease term, calculated using the discount rate implicit in the lease, if available, or the Group’s incremental
borrowing rate. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term
and lease expense relating to variable payments is expensed as incurred. For finance leases, the amortization of the asset is recognized
over the shorter of the lease term or useful life of the underlying asset.
Most leases have initial terms ranging from 10 to 20 years for legacy Huazhu, and from 20 to 25 years for legacy DH. The lease
term includes lessee’s options to extend or to early terminate the lease, and lease extension options are included in operating lease ROU
assets and lease liabilities only to the extent that it is reasonably certain that the Group will exercise such extension options and will not
exercise early termination options, respectively. The Group’s lease agreements may include nonlease components, mainly common area
maintenance, which are combined with the lease components as the Group elects to account for these components as a single lease
component, as permitted. The Group elected the practical expedient of not to separate land components outside PRC from leases of
specified property and equipment at the ASC842 transition date. Besides, the Group’s lease payments are generally fixed and certain
agreements contain variable lease payments based on the operating performance of the leased property and the changes in the index of
consumer pricing index (“CPI”). Almost all the lease agreements with variable lease payments based on the changes in CPI are held by
legacy DH.
For operating leases, the Group recognizes lease expense on a straight-line basis over the lease term and variable lease payments that
depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments
are recognized in the period in which the obligation for those payments is incurred. The operating lease expense is recognized as hotel
operating costs, general and administrative expenses and pre-opening expenses in the consolidated statements of comprehensive income.
For finance leases, lease expense is front-loaded, because ROU asset is depreciated on a straight-line basis over the shorter of the lease
term or useful life of the underlying asset, and the lease liability is measured at amortized cost using the effective interest method, and
the interest expense declines as the balance of lease liability declines; the depreciation of ROU assets and interest expenses on lease
liabilities are respectively classified as hotel operating costs and interest expense in the consolidated statements of comprehensive
income. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease
payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, and are not included in lease
liabilities. The Group’s lease agreements do not contain any significant residual value guarantees or restricted covenants.
The Group reassesses of a contract is or contains a leasing arrangement and re-measures ROU assets and liabilities upon
modification of the contract. The Group will derecognize ROU assets and liabilities, with difference recognized in the consolidated
statements of comprehensive income on the contract termination.
Income taxes
Current income taxes are provided for in accordance with the relevant statutory tax laws and regulations.
Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements. Net operating losses are carried forward and credited by applying enacted statutory tax rates
applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Group, it is more-likely-
than-not that some portion or all of the deferred tax assets will not be realized. For a particular tax-paying component of an entity and
within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related valuation allowance, shall be offset and
presented as a single noncurrent amount. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax-
paying components of the entity or to different tax jurisdictions.

Table of Contents
F-16
Foreign currency translation
The reporting currency of the Group is the Renminbi (“RMB”). The functional currency of the Company is the United States dollar
(“US$”). Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured in functional
currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during
the  year are converted into the functional currency at the applicable rates of exchange prevailing on the day transactions occurred.
Transaction gains and losses are recognized in the statements of comprehensive income.
Assets and liabilities are translated into RMB at the exchange rates at the balance sheet date, equity accounts are translated at
historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the  year. Translation
adjustments are reported as cumulative translation adjustments and are shown as a separate component of comprehensive income.
The financial records of the Group’s subsidiaries are maintained in local currencies, which are the functional currencies.
Fair value
The established fair value hierarchy by U.S. GAAP has three levels based on the reliability of the inputs used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or
liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which
significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities.
The financial instruments of the Group not measured at fair value include cash and cash equivalent, restricted cash, loan receivables,
receivables, held to maturity investments in short-term investments and long-term investments, payables, short-term debts, and long-term
debts. The carrying amounts of the short-term financial instruments approximates their fair value due to their short-term nature. The
long-term debts, long-term loan receivables and held to maturity investments in long-term investments approximate their fair values,
because the bearing interest rates approximate market interest rate, and market interest rates have not fluctuated significantly since the
commencement of loan contracts signed. Convertible senior notes are measured at amortized costs of RMB3,463, RMB3,537 and
RMB3,594 and the corresponding fair value estimated based on quoted market price were RMB4,283, RMB3,768 and RMB3,815 as of
December 31, 2022, 2023 and 2024, respectively.
The following table presents our assets that are measured at fair value on a recurring basis and are categorized using the fair value
hierarchy.
As of December 31, 2023
Fair Value Measurements at Reporting Date Using
Quoted Prices in Active
Significant Other
Significant
Markets for Identical
Observable Inputs
Unobservable
Description
    
Assets (Level 1)
    
(Level 2)
    
Inputs (Level 3)
Short term investments
Equity securities with readily determinable fair values
231
—
—
Long term investments
Available-for-sale debt securities
 
—  
—  
281
Employee benefit plan assets
17
—
—

Table of Contents
F-17
As of December 31, 2024
Fair Value Measurements at Reporting Date Using
Quoted Prices in Active
Significant Other
Significant
Markets for Identical
Observable Inputs
Unobservable
Description
 
Assets (Level 1)
 
(Level 2)
 
Inputs (Level 3)
Short term investments
Equity securities with readily determinable fair values
    
81     
—     
—
Long term investments
Available-for-sale debt securities
 
—  
—  
230
Employee benefit plan assets
 
5  
—  
—
Equity securities with readily determinable fair value and employee benefit plan assets are valued using a market approach based on
the quoted market prices or broker/dealer quotes of identical or comparable instruments.
Level 3 fair value of available-for-sale debt securities is determined based on income approach using various unobservable inputs.
The determination of the fair value required significant judgement by management with respect to the assumptions and estimates for the
revenue growth rate, weighted average cost of capital, lack of marketability discounts, expected volatility and probability in equity
allocation.
Certain assets are measured at a non-recurring basis. The following table presents the asset classification, the fair value and losses
recognized for the years ended December 31, 2023 and 2024 due to impairment of the related assets.
As of December 31, 2023
Fair Value Measurements at Reporting Date Using
Significant Unobservable
Total Loss for
Description
    
Fair Value
    
Inputs (Level 3)
    
the Year
Property and equipment
 
70  
70  
52
Operating lease right-of-use assets
309
309
228
Intangible assets
236
236
166
Long-term investment
113
113
66
Goodwill
—
—
4
As of December 31, 2024
Fair Value Measurements at Reporting Date Using
Significant Unobservable 
Total Loss for
Description
Fair Value
Inputs (Level 3)
 the Year
Property and equipment
 
23  
23  
56
Operating lease right-of-use assets
    
21     
21     
33
Intangible assets
 
2,102  
2,102  
391
Long-term investment
 
11  
11  
30
Assets held for sale
1,795
1,795
27
Property and equipment, operating lease right-of-use assets, intangible assets and assets held for sale were primarily valued using the
income approach based on discounted cash flows associated with the underlying assets, which incorporate certain assumptions including
projected hotels’ revenue, growth rates and projected operating costs based on current economic condition, expectation of future trends.
The revenue growth rate, royalty saving rate and the discount rate were the significant unobservable input used in the fair value
measurement, which are ranged between 1% to 5%, 1.5% to 3%, and 8.64% to 15% respectively, for the years ended December 31, 2022,
2023 and 2024.
Assets and liabilities held for sale
The Group recognizes the assets and liabilities of a disposal group as held for sale in the period (i) it has approved and committed to
a plan to sell the disposal group, (ii) the disposal group is available for immediate sale in its present condition, (iii) an active program to
locate a buyer and other actions to sell the disposal group have been initiated, (iv) it is unlikely that significant changes to the plan will
be made or that the plan will be withdrawn. The Group measures a disposal group that is classified as held for sale at the lower of its
carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held
for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until closing. Long-lived assets are not
depreciated or amortized while they are classified as held for sale.

Table of Contents
F-18
Share-based compensation
The Group recognizes share-based compensation in the consolidated statements of comprehensive income based on the fair value of
equity awards on the date of the grant, with compensation expenses recognized over the period in which the grantee is required to
provide service to the Group in exchange for the equity award. Vesting of certain equity awards are based on the performance conditions
for a period of time following the grant date. Share-based compensation expense is recognized according to the Group’s judgement of
likely future performance and will be adjusted in future periods based on the actual performance.
Treasury shares
Treasury shares represent ordinary shares repurchased by the Company that are no longer outstanding and are held by the Company.
The repurchase of ordinary shares is accounted for under the cost method whereby the total acquisition cost is recorded as treasury
shares.
Earnings (losses) per share
Basic earnings (losses) per share is computed by dividing income attributable to holders of ordinary shares by the weighted average
number of ordinary shares outstanding during the year. Diluted earnings (losses) per share reflects the potential dilution that could occur
if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary
shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and ordinary shares issuable upon the
exercise of stock options and vesting of nonvested restricted stocks (using the treasury stock method).
Recently Issued Accounting Pronouncements
Adopted Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, under which all public entities that are required to report segment
information in accordance with Topic 280 are required to disclose significant segment expenses by reportable segment if they are
regularly provided to the CODM and included in each reported measure of segment profit or loss. In addition, the amendments enhance
interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss,
provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.
The purpose of the amendments is to enable “investors to better understand an entity’s overall performance” and assess “potential future
cash flows.” The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023 and
interim periods within fiscal years beginning after December 15, 2024. The Group adopted this ASU, with additional disclosures
provided in the notes to the consolidated financial statements.
Accounting Standards Not Yet Adopted
On December 14, 2023, the FASB issued ASU 2023-09, which establishes new income tax disclosure requirements in addition to
modifying and eliminating certain existing requirements. The ASU amends ASC 740-10-50-12 to require a public business entity to
disclose a reconciliation between the amount of reported income tax expense (or benefit) from continuing operations and the amount
computed by multiplying the income (or loss) from continuing operations before income taxes by the applicable statutory federal
(national) income tax rate of the jurisdiction (country) of domicile. If the public business entities is not domiciled in the United States,
the federal (national) income tax rate in such entity’s jurisdiction (country) of domicile shall normally be used in the rate reconciliation.
The amendments prohibit the use of different income tax rates for subsidiaries or segments. Further, public business entities that use an
income tax rate in the rate reconciliation that is other than the U.S. income tax rate must disclose the rate used and the basis for using it.
The ASU also adds ASC 740-10-50-12A, which requires entities to annually disaggregate the income tax rate reconciliation between the
following eight categories by both percentages and reporting currency amounts: 1. State and local income tax, net of federal (national)
income tax effect, 2. Foreign tax effects, 3. Effect of changes in tax laws or rates enacted in the current period, 4. Effect of cross-border
tax laws, 5. Tax credits, 6. Changes in valuation allowances, 7. Nontaxable or nondeductible items, 8. Changes in unrecognized tax
benefits. Public business entities must apply the ASU’s guidance to annual periods beginning after December 15, 2024. Early adoption is
permitted. Entities may apply the amendments prospectively or may elect retrospective application. The Group does not expect the
adoption of this ASU will have a significant impact on the consolidated financial statements.

Table of Contents
F-19
In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Income Statement - Reporting Comprehensive Income -
Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, among other
things, the following for public business entities: (i) tabular disclosure of amounts for the following categories that are included in each
expense caption within continuing operations on the statement of operations, with each expense caption that includes one of these
expense categories deemed a relevant expense caption: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d)
intangible asset amortization and (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities; (ii)
disclosure of certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other
disaggregation requirements; (iii) qualitative description of the amount remaining in relevant expense captions that are not separately
disaggregated quantitatively; and (iv) disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s
definition of selling expenses. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. ASU
2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods
beginning after December 15, 2027. Early adoption is permitted. The Group does not expect the adoption of this ASU will have a
significant impact on the consolidated financial statements.
Translation into United States Dollars
The financial statements of the Group are stated in RMB. Translations of amounts from RMB into United States dollars are solely
for the convenience of the reader and were calculated at the rate of US$1 = RMB7.2993, on December 31, 2024, as set forth in H.10
statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could
be, converted, realized or settled into United States dollars at that rate on December 31, 2024, or at any other rate.
3.
REVENUE
Disaggregated Revenues
The following tables present the Group’s revenues disaggregated by the nature of the product or service:
Years Ended December 31, 
    
2022
    
2023
    
2024
Room revenues
7,571
11,789
11,806
Food and beverage revenues
 
1,049  
1,333  
1,342
Others
 
528  
674  
695
Leased and owned hotel revenues
 
9,148  
13,796  
13,843
Initial one-time license/franchise fee
 
106  
114  
137
On-going management and service/royalty fees
 
1,375  
2,785  
3,306
Central reservation system usage fees, other system maintenance and support fees
 
1,262  
2,628  
3,318
Reimbursements for hotel manager fees
 
1,103  
1,400  
1,752
Other fees
 
559  
767  
985
Manachised and franchised hotel revenues
 
4,405  
7,694  
9,498
Other revenues
 
309  
392  
550
Total revenues
 
13,862  
21,882  
23,891
Contract Balances
The Group’s contract assets are insignificant at December 31, 2023 and 2024.
As of December 31, 
    
2023
    
2024
Current contract liabilities
1,637
1,822
Long-term contract liabilities
 
1,072  
1,351
Total contract liabilities
 
2,709  
3,173
The contract liabilities balances above are classified as deferred revenue on the consolidated balance sheets, as of December 31,
2023 and 2024.

Table of Contents
F-20
The Group recognized revenues that were previously deferred as contract liabilities of RMB686 and RMB800 during the  years
ended December 31, 2023 and 2024, respectively.
4.
PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following:
As of December 31, 
    
2023
    
2024
Cost:
  
  
Buildings
 
791  
791
Leasehold improvements
 
11,053  
11,187
Furniture, fixtures and equipment
 
2,448  
2,363
Motor vehicles
 
2  
2
 
14,294  
14,343
Less: Accumulated depreciation
 
8,456  
8,769
 
5,838  
5,574
Construction in progress
 
259  
108
Property and equipment, net
 
6,097  
5,682
Depreciation expense was RMB1,312, RMB1,276 and RMB1,195 for the  years ended December 31, 2022, 2023 and 2024,
respectively.
5.
INTANGIBLE ASSETS, NET
Intangible assets, net consist of the following:
As of December 31, 
    
2023
    
2024
Intangible assets with indefinite lives:
  
  
Brand names
 
5,327  
5,235
Master brand agreement
 
192  
192
Intangible assets with finite lives:
 
 
Franchise or manachise agreements
 
281  
248
Purchased software
 
135  
149
Other intangible assets
 
75  
74
Total
 
6,010  
5,898
Less: Accumulated amortization
 
204  
228
Less: Accumulated impairment loss(Note2)
526
894
Total
 
5,280  
4,776
Amortization expense of intangible assets for the years ended December 31, 2022, 2023 and 2024 amounted to RMB45, RMB45,
and RMB39, respectively.
There were 3 brand names with indefinite lives acquired in DH acquisition. Impairment recognized relating to these brand names
were RMB167, RMB160 and RMB391, respectively for the years ended December 31, 2022, 2023 and 2024.

Table of Contents
F-21
The annual estimated amortization expense for the above intangible assets excluding brand names and master brand agreement for
the following years is as follows:
Amortization for
    
Intangible Assets
2025
 
30
2026
 
27
2027
 
25
2028
 
21
2029
 
19
Thereafter
 
108
Total
 
230
6.
INVESTMENTS
The investments as of December 31, 2023 and 2024 were as follows:
As of December 31, 
    
2023
    
2024
Short-term investments
Equity securities with readily determinable fair values:
  
  
Marketable securities
 
231  
81
Held to maturity investments
Bank time deposits and financial products
1,958
3,522
Total
2,189
3,603
Long-term investments
Equity securities without readily determinable fair values:
 
 
Cjia Group-preferred shares
 
99  
66
Oravel Stays Private limited (“OYO”)
 
54  
—
Other equity securities without readily determinable fair values
 
29  
20
Subtotal
182
86
Equity-method investments:
 
 
AAPC LUB
 
490  
495
Hotel related funds
 
479  
404
Other investments
 
320  
214
Subtotal
1,289
1,113
Available-for-sale debt securities:
 
 
Cjia Group-convertible notes
 
281  
230
Held to maturity investments
Bank time deposits
812
887
Total
 
2,564  
2,316

Table of Contents
F-22
7.
GOODWILL
The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2024 were as follows:
     Legacy Huazhu    
Legacy DH
    
Total
Balance at January 1, 2023
 
 
 
Goodwill
3,036
2,570
5,606
Accumulated impairment loss
 
(4) 
(407) 
(411)
3,032
2,163
5,195
Impairment loss recognized during the year
—
(4)
(4)
Net foreign exchange-goodwill
—
151
151
Net foreign exchange-impairment loss
—
(24)
(24)
Balance at December 31, 2023
Goodwill
3,036
2,721
5,757
Accumulated impairment loss
(4)
(435)
(439)
3,032
2,286
5,318
Net foreign exchange-goodwill
—
(115)
(115)
Net foreign exchange-impairment loss
—
18
18
Balance at December 31, 2024
Goodwill
3,036
2,606
5,642
Accumulated impairment loss
(4)
(417)
(421)
3,032
2,189
5,221
As of December 31, 2023 and 2024, the estimated fair value of legacy Huazhu exceeded over 100% of its carrying value. As of
December 31, 2023 and 2024, the estimated fair value of legacy DH exceeded its carrying value by approximately RMB490 and
RMB794, which accounted for 17% and 36%of its carrying value, respectively. A 5% decline in the underlying projected cash flows or
increase in the discount rate could not result in an impairment loss in 2023 and 2024.
8. ASSETS AND LIABILITIES HELD FOR SALE
In the fourth quarter of 2023, the Group committed to a plan to sell certain lease-and-owned hotels (the “disposal group”) included
in legacy DH. In February 2024, the Group entered into a Share and Asset Purchase and Transfer Agreement with an unaffiliated third
party, and the transaction is expected to be closed in mid-2024, subject to certain customary closing conditions. As of December 31,
2023, the related assets and liabilities were classified as held for sale on the Group’s consolidated balance sheet. As the estimated fair
value of the disposal group exceeded its carrying value, no impairment loss was recognized for the year ended December 31, 2023. As of
December 31, 2024, the Company remained actively pursuing the sale of the business, with the transaction expected to be completed in
phases throughout 2025. According with the amendment signed in early 2025, the first tranche was closed during February 2025, and the
residual tranche is expected to be closed in 2025. For the year ended December 31, 2024, an impairment loss of RMB27 was recorded as
the fair value of certain assets fell below their carrying value.

Table of Contents
F-23
The total assets and liabilities of the disposal group that were classified as held for sale on the Group’s consolidated balance sheet as
of December 31, 2023 and 2024, were as follows:
As of December 31,
    
2023
    
2024
Assets held for sale:
 
  
Cash and cash equivalents and restricted cash
 
17
8
Property and equipment, net
 
102
82
Operating lease right-of-use assets
 
1,834
1,732
Finance lease right-of-use assets
 
295
67
Other assets
 
65
52
Total
 
2,313
1,941
Liabilities held for sale:
 
  
Accrued expenses and other current liabilities
 
102
62
Operating lease liabilities, current
76
69
Operating lease liabilities, non-current
 
1,936
1,785
Finance lease liabilities
 
324
71
Other liabilities
 
98
97
Total
 
2,536
2,084
9.
DEBT
The short-term and long-term debt as of December 31, 2023 and 2024 were as follows:
As of December 31, 
    
2023
    
2024
Short-term debt:
 
   
  
Long-term bank borrowings, current portion
 
125
 
791
Short-term bank borrowings
 
329
 
38
Convertible senior notes, current portion
 
3,537
 
—
FF&E liability, current portion
58
51
Total
 
4,049
 
880
Long-term debt:
 
 
Long-term bank borrowings, non-current portion
 
1,050
 
730
Convertible senior notes, non-current portion
 
—
 
3,594
FF&E liability, non-current portion
199
209
Others
16
13
Total
 
1,265
 
4,546
Bank borrowings
In August 2022, the Group 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. The EUR70 million revolving credit facility is
available for 35 months after the date of the agreement. The interest rate on the loan for each interest period is the aggregate of the
applicable Margin and EURIBOR or one-year benchmark LPR. The margin for each loan depends on the currency of loan, a loan
denominated in EUR means 1.55% per annum and a loan denominated in RMB means -0.15% to -0.2% per annum. There are some
financial covenants including interest cover, leverage and book equity related to this facility. The Group was fully in compliance with the
amended covenants for the years ended December 31, 2023 and 2024. In 2022, the Group had drawn down EUR220 million, RMB
equivalent of EUR110 million and EUR70 million under the facility agreement, among which, the Group repaid EUR220 million, RMB
equivalent of EUR6 million and EUR70 million for the year ended December 31, 2023 and repaid RMB equivalent of EUR5 million for
the year ended December 31, 2024. As of December 31, 2023 and 2024, the interest rate of borrowings drawn under this agreement was
3.35% and 3.15%, respectively.

Table of Contents
F-24
In March 2024, the Group entered into a five-year syndicated loan contract with facility amount of RMB400 expiring in March
2029. As of December 31, 2024, buildings with a net book value of RMB510 and land use rights with a net book value of RMB69 were
pledged as collateral for the loan. The loan is 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. The Group was fully in compliance
with the covenants for the year ended December 31, 2024. In 2024, the Group had drawn down RMB340 under the facility agreement
and repaid RMB15. As of December 31, 2024, the outstanding loan amount was RMB325. As of December 31, 2024, the interest rate of
borrowings drawn under this agreement was 2.90%.
Convertible Senior Notes due 2026
On May 12, 2020, the Company issued US$450 million Convertible Senior Notes (the “2026 Notes”). On May 26, 2020, the
Company issued an additional US$50 million in aggregate principal amount of the 2026 Notes pursuant to the exercise in full by the
initial purchasers of an option to purchase additional 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. In 2020,
proceeds to the Company were RMB3,499 (equivalently US$493 million), net of issuance costs of RMB49 (equivalently US$7 million).
Holders of the 2026 Notes have the option to convert their Notes at any time prior to the close of business on the second business
day immediately preceding the maturity date. The 2026 Notes can be converted into the Company’s ADSs at an initial conversion rate of
23.971 of the Company’s ADSs per US$1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of US$41.72
per ADS). The conversion rate is subject to adjustment in some events but is not adjusted for any accrued and unpaid interest. In
addition, following a make-whole fundamental change (as defined in the Indenture) that occur prior to the maturity date or following the
Company’s delivery of a notice of a tax redemption, the Company will increase the conversion rate for a holder who elects to convert its
notes in connection with such a corporate event or such tax redemption.
The holders may require the 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.
The Company accounted for the 2026 Notes as a single instrument. Issuance costs related to the 2026 Notes  is recorded in
consolidated balance sheet as a direct deduction from the principal amount of the 2026 Notes, and is amortized over the period from
May 12, 2020, the date of issuance, to May 1, 2024, the first put date of the 2026 Notes, using the effective interest method.
During the year ended December 31, 2023, RMB0.01 of the 2026 Notes had been converted into 24 ADSs upon the holders’ request.
As of December 31, 2023, the Group reclassified the 2026 Notes as short - term debt as the 2026 Notes holders have a put option which
can be exercised within one year. After May 1, 2024, the Group reclassified the 2026 Notes as long-term debt as the put option was not
exercised.
Debt Maturities
The contractual maturities of the Group’s debt as of December 31, 2024 were as follows:
Year Ending December 31,
    
Principal Amounts
2025
 
880
2026
 
4,057
2027
 
222
2028
 
153
2029
37
Thereafter
77
Total
 
5,426

Table of Contents
F-25
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As of December 31, 
    
2023
    
2024
Payables to franchisees
 
1,150  
1,606
Other payables
 
1,146  
1,426
Accrued utilities and other accrued expenses
 
283  
275
Liabilities related to customer loyalty program
 
264  
332
Value-added tax, other tax and surcharge payables
 
337  
301
Advance from noncontrolling interest holders
 
81  
66
Total
 
3,261  
4,006
11. HOTEL OPERATING COSTS
Hotel operating costs include all direct costs incurred in the operation of the leased and owned hotels, manachised and franchised
hotels and consist of the following:
Years Ended December 31, 
    
2022
    
2023
    
2024
Rents
 
3,927  
4,290  
4,365
Utilities
 
603  
685  
690
Personnel costs
 
3,683  
4,684  
5,326
Depreciation and amortization
 
1,414  
1,329  
1,254
Consumable, food and beverage
 
1,026  
1,327  
1,293
Others
 
1,607  
2,026  
2,357
Total
 
12,260  
14,341  
15,285
12. SHARE-BASED COMPENSATION
In September  2009, the Group adopted the 2009 Share Incentive Plan which allows the Group to offer incentive awards to
employees, officers, directors and consultants or advisors (the “Participants”). In March 2015, the Group increased the maximum number
of incentive awards available under the 2009 Share Incentive Plan to 430,000,000. In June 2023, the Group adopted the 2023 Share
Incentive Plan (collectively with 2009 Share Incentive Plan, the “Incentive Award Plans”), which allows the Group to offer incentive
awards up to 20,000,000 ordinary shares to Participants. In June 2024, the Group increased the maximum number of incentive awards
available under the 2023 Share Incentive Plan to 300,000,000. The Group either uses treasury shares or issues shares upon the exercise of
share options and the vesting of nonvested restricted stocks. The incentive awards granted under the Incentive Award Plans typically
have a maximum life of ten years and vest in typical ways as listed below:
a.) Vest 50% on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the
following two years;
b.) Vest over a period of ten years in equal yearly installments;
As of December 31, 2024, the Group had granted a total of 273,796,350 options and 350,934,830 nonvested restricted stocks in
total, which were subject to adjustment on performance condition.

Table of Contents
F-26
Share options
In 2023, the Group granted 28,625,350 share options to senior officers, which was in five tranches with performance conditions, and
the vesting of each of the five tranches commences respectively at the first, second, third, fourth, and fifth anniversary of grant date. Each
tranche is accounted for as a separate award with the same grant date, the same service inception date and its own requisite service
period. The actual number of share options that could be exercised is contingent on certain financial performance of the year when
vesting of share option commences. The Group reassesses the performance condition at each reporting period for true up. For each
tranche, 50% vests on the second anniversary of the stated vesting commencement date with the remaining 50% vesting ratably over the
following two years and will become exercisable if certain performance conditions are met during the five - year period ending
December 31, 2027.
The weighted - average grant date fair value for options granted during the year ended December 31, 2023 was US$2.22 per share,
computed using the binomial option pricing model. The binomial option pricing model required the input of subjective assumptions
including the expected stock price volatility and the expected price multiple at which employees were likely to exercise stock options.
The Group used historical data to estimate forfeiture rate. Expected volatilities were based on the average historical equity volatility of
the Group. The risk - free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at
the time of grant.
The fair value of stock options was estimated using the following significant assumptions:
    
2023
 
Suboptimal exercise factor
 
2.80
Risk-free interest rate
 
3.61 %
Volatility
 
49.31 %
Dividend yield
 
0.80 %
Life of option
 
10 years
The following table summarized the Group’s share option activity under the option plans:
    
    
    
Weighted
    
Weighted
Average
Aggregate
Number of
Average
Remaining
Intrinsic
Options
Exercise Price
Contractual Life
Value
 
US$
 
Years
  US$’million
Share options outstanding at January 1, 2024
 
28,519,100  
2.80  
 
Adjusted for performance conditions
(499,440)
2.80
Share options outstanding at December 31, 2024
 
28,019,660  
2.80  
8.41  
14
Share options vested or expected to vest at December 31, 2024
 
25,868,440  
2.80  
8.41  
13
Share options exercisable at December 31, 2024
 
—  
—  
—  
—
Given the actual number of share options that could be exercised is contingent on certain financial performance of the year when
vesting commences, the share - based compensation expenses related to these options would be recognized when the financial
performance is expected to be met. The Group didn’t record any compensation expenses relating to options awarded indexed to financial
performance beyond the year ended December 31, 2024. The total share based compensation expenses relating to these options was
RMB257.
As of December 31, 2024, there was RMB98 in total unrecognized compensation expense related to the option arrangements, which
is expected to be recognized over a weighted - average period of 2.92 years.
Nonvested restricted stocks
The fair value of nonvested restricted stock with service conditions or performance conditions is based on the fair market value of
the underlying ordinary shares on the date of grant.

Table of Contents
F-27
In 2022, the Group granted 31,683,100 nonvested restricted stocks, respectively to senior officers and managers, each was in ten
tranches with performance conditions. Each tranche is accounted for as a separate award with the same grant date, its own service
inception date and requisite service period. The share-based compensation cost is recognized for each vesting tranche during the
respective service period based on the estimated performance conditions at the service inception date. The Group reassesses the
performance condition at each reporting period for true up. For each tranche, 50% vests on the second anniversary of the vesting
commencement date with the remaining 50% vesting ratably over the following two years.
In 2023, the Group granted 28,625,350 nonvested restricted stocks to senior officers, with the same terms of the options granted in
2023. The share-based compensation expenses related to these nonvested restricted stocks would be recognized when the financial
performance is expected to be met. The Group didn’t record any compensation expenses relating to incentive shares which are indexed to
financial performance beyond the year ended December 31, 2024. The total share based compensation expenses relating to these
nonvested restricted stocks was RMB417.
The following table summarized the Group’s nonvested restricted stock activities in 2024.
Weighted Average
Number of
Grant Date
    
Restricted Stocks
    
Fair Value
  
US$
Nonvested restricted stocks outstanding at January 1, 2024
 
95,061,300  
2.54
Granted
43,408,450
3.05
Forfeited
(1,646,500)
2.84
Vested
(8,665,710)
1.44
Adjusted for performance conditions
(620,530)
3.15
Nonvested restricted stocks outstanding at December 31, 2024
127,537,010
2.78
As of December 31, 2024, there was RMB1,640 in unrecognized compensation costs, net of estimated forfeitures, related to
unvested restricted stocks, which is expected to be recognized over a weighted-average period of 6.26 years.
The total fair value of nonvested restricted stocks vested in 2022, 2023 and 2024 was RMB234, RMB286 and RMB224,
respectively.
For the years ended December 31, 2022, 2023 and 2024, the Group recognized share-based compensation expenses of RMB87,
RMB143 and RMB322, respectively, which were classified as follows:
Years Ended December 31, 
    
2022
    
2023
    
2024
Hotel operating costs
33
31
31
Selling and marketing expenses
 
4  
6  
6
General and administrative expenses
 
50  
106  
285
Total
 
87  
143  
322

Table of Contents
F-28
13. EARNINGS (LOSSES) PER SHARE
The following table sets forth the computation of basic and diluted earnings (losses) per share for the years indicated:
Years Ended December 31, 
    
2022
    
2023
    
2024
Net (loss) income attributable to ordinary shareholders — basic
 
(1,821) 
4,085  
3,048
Net (loss) income attributable to ordinary shareholders — diluted
 
(1,821) 
4,205  
3,160
Weighted average ordinary shares outstanding — basic
 
3,111,196,757  
3,183,163,131  
3,115,130,107
Incremental weighted-average ordinary shares from assumed exercise of share
options and nonvested restricted stocks using the treasury stock method
 
—  
44,331,080  
36,507,943
Dilutive effect of convertible senior notes
 
—  
123,927,000  
126,670,240
Weighted average ordinary shares outstanding — diluted
 
3,111,196,757  
3,351,421,211  
3,278,308,290
Basic (losses) earnings per share
 
(0.59) 
1.28  
0.98
Diluted (losses) earnings per share
 
(0.59) 
1.25  
0.96
For the years ended December 31, 2022, 2023 and 2024, the Group had securities which could potentially dilute basic earnings per
share in the future, but which were excluded from the computation of diluted earnings per share as their effects would have been anti-
dilutive. Such outstanding securities consist of the following at non-weighted basis:
As of December 31, 
   
2022
    
2023
    
2024
Outstanding employee options and nonvested restricted stocks
76,939,150
53,132,230
45,194,870
Shares of convertible senior notes
120,601,000
—
—
Total
 
197,540,150  
53,132,230  
45,194,870
In accordance with ASC Topic 470-20, although legally issued, the loaned ADSs in connection with the “2022 Notes” are not
considered outstanding, and then excluded from basic and diluted earnings per share unless default of the ADS lending arrangement
occurs, at which time the Loaned ADSs would be included in the basic and diluted earnings per share calculation.
All these Loaned ADSs had been returned to the Company with the maturity of 2022 Notes on November 1, 2022 and was
accounted for as an increase to the treasury shares.
14. SEGMENT
The Group’s chief operating decision maker (“CODM”) has been identified as the chief executive officer. The Group has two
operating segments which are legacy Huazhu and legacy DH according to the way management intends to evaluate results and allocate
resources within the Group. In identifying its reportable segments, the Group assesses the nature of operating segments and evaluates the
operating results of each reporting segment. Both operating segments meet the quantitative thresholds and should be considered as two
reportable segments. The CODM uses revenue and Adjusted EBITDA to evaluate the trends of the segments over time and monitor
budget-to-actual variances to assess the performance and determine how to allocate capital resources. To better reflect the profitability of
core business, the Group has redefined Adjusted EBITDA starting in 2024, with comparative figures for 2022 and 2023 restated
accordingly. Adjusted EBITDA is defined as net (loss) income attributable to H World Group Limited excluding income tax expense
(benefit), interest expense, interest income, depreciation and amortization, share-based compensation expenses, gain(loss) from fair value
changes of equity securities, foreign exchange gain(loss) and gain(loss) on disposal of investments. Significant segment expenses include
adjusted hotel operating costs, adjusted selling and marketing expenses, adjusted general and administrative expenses, all of which
exclude depreciation and amortization and share-based compensation expenses. The CODM does not use assets by operating segment
when assessing performance or making operating segment resource allocations.

Table of Contents
F-29
The following table provides a summary of the Group’s operating segment results and reconciliation of Adjusted EBITDA to net
(loss) income attributable to H World Group Limited for the years ended December 31, 2022, 2023 and 2024.
Years Ended December 31,
2022
2023
2024
Legacy
Legacy
Legacy
Legacy
Legacy
Legacy
     Huazhu     
DH
    Elimination    
Total
     Huazhu     
DH
    Elimination    
Total
     Huazhu     
DH
    Elimination    
Total
Leased and owned hotels
6,062
3,086
—
9,148
9,522
4,286
(12)
13,796
9,146
4,697
—
13,843
Manachised and franchised hotels
4,324
86
(5)
4,405
7,596
107
(9)
7,694
9,385
126
(13)
9,498
Others
275
40
(6)
309
326
72
(6)
392
498
58
(6)
550
Total revenues
 
10,661  
3,212    
(11)
13,862  
17,444  
4,465  
(27)
21,882  
19,029  
4,881  
(19)
23,891
Adjusted hotel operating costs
 
(7,958) 
(2,857)
—
—  
(9,419) 
(3,569) 
—
—  
(9,888) 
(4,125) 
—
—
Adjusted selling and marketing expenses
 
(331) 
(277)
—
—  
(641) 
(429) 
—
—  
(723) 
(451) 
—
—
Adjusted general and administrative expenses
(1,184)
(401)
—
—
(1,405)
(505)
—
—
(1,573)
(575)
—
—
Other segment items (primarily include other
operating income, net)
85
231
—
—
206
122
—
—
129
116
—
—
Adjusted EBITDA
1,273
(92)
(3)
1,178
6,185
84
(1)
6,268
6,974
(154)
(0)
6,820
Interest income
 
—  
—
—
87  
—  
—  
—
248  
—  
—
—
210
Interest expense
 
—  
—
—
(409) 
—  
—  
—
(385) 
—  
—
—
(318)
Income tax expense
 
—  
—
—
(207) 
—  
—  
—
(1,204) 
—  
—
—
(1,662)
Depreciation and amortization
 
—
 
—
—
(1,456) 
—  
—  
—
(1,414) 
—  
—
—
(1,332)
Share-based compensation
 
—
—
 
—
(87) 
—  
—
—
(143) 
—  
—
—
(322)
(Loss) gain from fair value changes of equity
securities
—
—
—
(359)
—
—
—
109
—
—
—
(66)
Foreign exchange gain (loss), net
—
—
—
(641)
—
—
—
90
—
—
—
(272)
Gain (loss) on disposal of investments
—
—
—
73
—
—
—
516
—
—
—
(10)
Net (loss) income attributable to H World
Group Limited
 
—
—
—
(1,821)
—
—
—
4,085
—
—
—
3,048
The following tables represent revenues and property and equipment, net, intangible assets, net, right-of-use assets, land use rights,
net and goodwill by geographical region.
Revenues:
Years Ended December 31,
    
2022
    
2023
    
2024
China
 
10,637
17,393  
18,984
Germany
 
2,458
3,324  
3,544
All others
 
767
1,165  
1,363
Total
 
13,862
21,882  
23,891
Property and equipment, net, intangible assets, net, right - of - use assets, land use rights, net and goodwill:
As of December 31,
    
2023
    
2024
China
 
28,762  
27,461
Germany
 
12,504  
11,940
All others
 
3,439  
3,716
Total
 
44,705  
43,117
Other than China and Germany, there were no countries that individually represented more than 10% of the total revenue for the
years ended December 31, 2022, 2023 and 2024.
15. CASH DIVIDEND
On March 3, 2022, the Group approved and declared a cash dividend of US$0.021 per ordinary share on its outstanding shares as of
the close of trading on March 24, 2022. Such dividend of RMB416 was fully paid in April 2022.
On November 29, 2023, the Group approved and declared a cash dividend of US$0.093 per ordinary share or US$0.93 per ADS, on
its outstanding shares as of the close of trading on January 10, 2024. Such dividend of RMB2,091 was fully paid in the first quarter of
2024.

Table of Contents
F-30
On July 23, 2024, the Group approved and declared a cash dividend of US$0.063 per ordinary share, or US$0.63 per ADS, on its
outstanding shares as of the close of trading on August 14, 2024. Such dividend of RMB1,389 was mostly paid in 2024.
On March 20, 2025, the Group approved and declared a cash dividend of US$0.097 per ordinary share, or US$0.97 per ADS, on its
outstanding shares as of the close of trading on April 9, 2025. Such dividend of approximately US$300 is expected to be paid in the
second quarter of 2025.
16. LEASES
The Group’s leases mainly related to buildings and the rights to use the land. The total expense related to short-term leases was
insignificant for the years ended December 31, 2022, 2023 and 2024, and sublease income of the Group which was recognized in
revenues in the consolidated statements of comprehensive income was RMB119, RMB143 and RMB163 for the years ended December
31, 2022, 2023 and 2024, respectively. The Group recognized a negative lease expense of RMB281, RMB98 for the years ended
December 31, 2022 and 2023 under the relief of lease concession from COVID-19 as the Group elects using the variable lease expense
approach. For the year ended December 31, 2024, the impact under the relief of lease concession from COVID-19 was immaterial.
A summary of supplemental information related to operating leases in 2023 and 2024 is as follows:
    
Years Ended December 31, 
 
2023
    
2024
Lease cost:
 
  
Operating fixed lease cost
 
4,217
4,166
Finance lease cost
— Amortization of ROU assets
87
91
— Interest on lease liabilities
114
129
Operating variable lease cost
 
110
290
Total lease cost
 
4,528
4,676
Other information:
 
Weighted average remaining lease term
 
Operating leases
13 years
14 years
Finance leases
27 years
27 years
Weighted average discount rate
Operating leases
6.27 %
5.97 %
Finance leases
 
4.29 %
4.30 %
As of December 31, 2024, the maturities of lease liabilities, excluding lease liabilities classified in liabilities held for sale (Note 8),
in accordance with ASC 842 in each of the next five years and thereafter are as follows:
Total Operating
Total Finance
Year Ending December 31, 
    
Leases
    
Leases
2025
 
4,028  
171
2026
 
3,845
174
2027
 
3,746
177
2028
 
3,565
180
2029
 
3,358
181
Thereafter
 
21,480
4,086
Total minimum lease payments
 
40,022
4,969
Less: amount representing interest
 
12,896
2,076
Present value of minimum lease payments
 
27,126
2,893

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F-31
As of December 31, 2024, the Group has entered 16 lease contracts that the Group expects to account for as operating or finance
leases, the future undiscounted lease payments for these non-cancellable lease contracts are RMB4,051, which is not reflected in the
consolidated balance sheets.
As of December 31, 2023, the maturities of lease liabilities, excluding lease liabilities classified in liabilities held for sale (Note 8),
in accordance with ASC 842 in each of the next five years and thereafter were as follows:
    
Total Operating
Total Finance
Year Ending December 31, 
    
Leases
    
Leases
2024
 
4,073
155
2025
 
3,981
159
2026
 
3,788
161
2027
 
3,615
165
2028
 
3,384
168
Thereafter
 
22,282
4,056
Total minimum lease payments
41,123
4,864
Less: amount representing interest
13,299
2,122
Present value of minimum lease payments
 
27,824
2,742
Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2024 are as follows:
    
Years Ended December, 31
2023
    
2024
Cash paid for amounts included in the measurement of operating lease liabilities
4,440
4,212
Cash paid for amounts included in the measurement of finance lease liabilities
68
109
Non-cash right-of-use assets obtained in exchange for operating lease liabilities
 
343  
2,076
Non-cash right-of-use assets obtained in exchange for finance lease liabilities, net of reassessment of
finance lease payments
 
361  
78
17. INCOME TAXES
The Group is subject to different income tax rates in various countries and jurisdictions under laws and relevant interpretations
depending on the place of formation.

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F-32
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”), which once called Mengguang Information and Technology (Shanghai) Co., Ltd, is a recognized software
development entity located in Shanghai of PRC. In November 2018, Jizhu Shanghai was qualified as high and new tech enterprise,
resulting Jizhu Shanghai subject to a reduced tax rate of 15% in 2018, 2019 and 2020. 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 qualified as high and new tech enterprise, resulting Jizhu Shanghai subject to a reduced tax rate of 15% in
2024, 2025 and 2026. Huazhu Cloud (Shanghai) Information and Technology Co., Ltd. (“Huazhu Cloud”) (previously named H-World
Information and Technology Co., Ltd.) was qualified as high and new tech enterprise, resulting Huazhu Cloud subject to a reduced tax
rate of 15% in 2019, 2020 and 2021. 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. 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, 2022 to
December 31, 2022, for taxable income less than RMB1, 87.5% of the taxable income would be exempted in tax computation, and for
taxable income over RMB1 but less than RMB3, the discount would be 75%. From January 1, 2023 to December 31, 2027, for taxable
income less than RMB3, 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 simultaneously meet the following three
conditions: annual taxable income does not exceed RMB3, the number of employees does not exceed 300, and the total assets does not
exceed RMB50.
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%. The income tax rates in other countries and jurisdictions are of little effect on the
financial statements. In other major jurisdictions, including Austria, Netherlands and Belgium, the Group is subject to a range from 9%
to 25% of the statutory income tax rate, respectively.
(Loss) income before income taxes consists of:
Years Ended December 31, 
    
2022
    
2023
    
2024
PRC including Hong Kong and Taiwan
(483)
5,833
5,414
Germany
 
(410) 
(463) 
(857)
Other
 
(713) 
(21) 
248
Total
 
(1,606) 
5,349  
4,805
Income tax expense (benefit) is comprised of the following:
Years Ended December 31, 
    
2022
    
2023
    
2024
Current Tax
 
475  
1,175  
1,549
Deferred Tax
 
(268) 
29  
113
Total
 
207  
1,204  
1,662
A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows:
Years Ended December 31, 
    
2022
    
2023
    
2024
PRC statutory tax rate
 
25 %  
25 %  
25 %
Tax effect of non-deductible expenses and non-taxable income in determining taxable
profit
 
(8)%  
2 %  
4 %
Effect of different tax rate of group entities operating in other jurisdictions
 
(10)%  
(4)%  
(2)%
Effect of change in valuation allowance
 
(15)%  
(0)%  
1 %
Effect of tax holiday
 
1 %  
(1)%  
(1)%
Effect of cash dividends
 
(6)%  
1 %  
8 %
Effective tax rate
 
(13)%  
23 %  
35 %

Table of Contents
F-33
The aggregate amount and per share effect of the tax holidays are as follows:
Years Ended December 31, 
    
2022
    
2023
    
2024
Aggregate amount
 
22  
60  
47
Per share effect—basic
 
0.01  
0.02  
0.02
Per share effect—diluted
 
0.01  
0.02  
0.02
The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2023 and 2024 are as follows:
As of December 31, 
    
2023
    
2024
Deferred tax assets:
 
   
  
Net loss carryforward
 
1,289  
1,091
Deferred revenue
 
454  
562
Long-term assets
 
399  
485
Bad debt provision
 
80  
80
Accrued payroll
 
(10) 
110
Other accrued expenses
 
74  
(12)
Others
 
231  
133
Valuation allowance
 
(675) 
(718)
Total deferred tax assets, net of valuation allowance
 
1,842  
1,731
Deferred tax liabilities:
 
 
Fair value adjustment for building, land use rights and identified intangible assets due to acquisition
 
1,593  
1,400
Others
 
51  
5
Withholding tax
—
191
Total deferred tax liabilities
1,644  
1,596
Net deferred tax assets
198
135
Analysis as:
Deferred tax assets
1,043
1,054
Deferred tax liabilities
845
919
Net deferred tax assets
 
198
135
Deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to do so, and intends to settle on a
net basis.
The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more
likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts
of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax
planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The
Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carryforward periods
provided for in the tax law. Movement of the valuation allowance is as follows:
Years Ended December 31, 
    
2022
    
2023
    
2024
Balance at the beginning of the year
(466)
(731)
(675)
Provided
 
(338) 
(145) 
(271)
Reversed
 
41  
165  
177
Written off
 
32  
36  
51
Balance at the end of the year
 
(731) 
(675) 
(718)
As of December 31, 2024, the Group’s PRC subsidiaries had tax loss carryforwards of RMB1,762, which will expire between 2025
and 2029 if not used. Companies under Legacy DH had tax loss carry forwards of RMB2,351, which can be offset in the future without
anytime restriction.

Table of Contents
F-34
The Group determines whether or not a tax position is “more-likely-than-not” of being sustained upon audit based solely on the
technical merits of the position. At December 31, 2023 and 2024, the Group had recorded liabilities for uncertain tax benefit of
approximately RMB67 and RMB85 mainly associated with the interests on intercompany loans and other permanent differences related
to Corporate Income and Trade Taxes, respectively. No interest or penalty expense was recorded for the years ended December 31, 2022,
2023 and 2024. In 2024, the Group will decrease its income tax liability by RMB0.3 for unrecognized tax benefits previously recorded in
2015 as the statute of limitations for the tax liabilities of certain tax positions will expire under the PRC Tax Administration and
Collection Law.
Years Ended December 31, 
    
2022
    
2023
    
2024
Balance at the beginning of the year
 
60  
65  
67
Addition for tax positions
 
5  
2  
18
Balance at the end of the year
 
65  
67  
85
In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1,
2008, are subject to a 10% withholding income tax. If there is a favorable tax treaty between mainland China and the jurisdiction of the
foreign holding company, the income tax rate may be reduced. For example, holding companies in Hong Kong that are also tax residents
in Hong Kong are eligible for a 5% withholding tax on dividends under the Tax Memorandum between China and the Hong Kong
Special Administrative Region if the holding company is the beneficial owner of the dividends and holds more than 25% of the PRC
company. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences
attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. In March 2022, the Group announced that its
board of directors declared a cash dividend of approximately US$68 million. To facilitate this dividend distribution and meet the oversea
treasury demand, certain amount of dividends from the Group’s PRC subsidiaries to its oversea subsidiaries was planned. PRC dividend
withholding tax of RMB100 was accrued as of December 31, 2022. In 2023, the Group revised its dividend policy that it may make a
dividend distribution every year up to 45% of its current year net income starting from 2023. PRC dividend withholding tax of RMB75
was accrued as of December 31, 2023. In 2024, the Group announced an amended three - year dividend policy that, the board of directors
has the sole discretion to declare and distribute ordinary dividends semi - annually, the aggregate amount of which for each financial year
shall be no less than 60% of the Group’s net income in such financial year.
In 2024, the Group distributed dividends totaling RMB3,787 from the Group’s PRC subsidiaries to its oversea subsidiaries, with
RMB208 of PRC withholding tax incurred. As of December 31, 2024, the Group plans to distribute RMB3,135 from PRC subsidiaries to
its oversea subsidiaries, and has accrued for an additional PRC dividend withholding tax of RMB191. Other than these planned dividends
distributions, the Group intends to indefinitely reinvest the remaining undistributed earnings of PRC subsidiaries, of which, no provision
for PRC dividend withholding tax was accrued.
According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income
taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five  years under special
circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB0.1 is specifically listed as a
special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of
limitations in the case of tax evasion. The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from
inception to 2024.
According to the German General Fiscal Code, the statute of limitations for the assessment and collection of taxes is four years. The
four-year period usually starts at the end of the year in which the tax return is filed. If no tax return is filed, the statute of limitations starts
with the end of the third year following the year in which the tax arose. Extended limitations of 5 and 10 years will apply in the event of
tax evasion or tax fraud. The statute of limitations may be suspended for a variety of reasons, for example, appeal of assessment by
taxpayers, announcement or start of a tax audit, obvious mistake in tax assessment, etc.
The Organisation for Economic Co-operation and Development (OECD) developed a Global Anti-Base Erosion Rules (Pillar Two)
to ensure a 15% global minimum tax paid by large multinational enterprises with consolidated revenue over EUR 750 million. In
December 2022, the EU Minimum Tax Directive entered into force and leaded to member states to enact legislation to implement Pillar
Two rules effective for fiscal years starting on or after December 31,2023.

Table of Contents
F-35
On 1 January 2025, Singapore’s Multinational Enterprise Top - up Tax Act came into effect. Hong Kong, China, gazetted the Inland
Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024 on 27 December 2024, which will come into
operation for financial years commencing on or after 1 January 2025.
Some other major jurisdictions have either enacted certain parts of the Pillar Two rules or begun the process of enacting such rules,
with varying effective dates.
Based on current enacted legislation effective in 2025, group’s structure and assessment, the Group does not expect Pillar Two to
have a material impact on the effective tax rate, consolidation results of operation, financial position, and cash flows in near term. The
Group will continue to closely monitor Pillar Two global implementation process and executive the assessment.
18. EMPLOYEE BENEFIT PLANS
a.    Defined Benefit Plans
The Group maintains a German pension plan after the completion of the acquisition of DH.
As of December 31, 2023 and 2024, accumulated benefit obligation net of plan assets recognized in the consolidated balance sheets
consist of the following:
    
As of December 31, 
2023
    
2024
Salary and welfare payables
 
12
9
Retirement benefit obligation
 
124
111
Liability in the balance sheet
 
136
120
b.    Defined Contribution Plans
Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which
certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to
employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees’ salaries.
The total contribution for such employee benefits were RMB645, RMB699 and RMB835 for the years ended December 31, 2022, 2023
and 2024, respectively. The Group has no ongoing obligation to its employees subsequent to its contribution to the PRC plan.
Furthermore, the Group pays contribution to governmental and private pension insurance organizations based on legal regulations in
some countries out of China. The contributions are recognized as expense and amount RMB74, RMB90 and RMB108 for the years
ended December 31, 2022, 2023 and 2024.
19. RESTRICTED NET ASSETS
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, amounted to RMB904, RMB1,029
and RMB1,455 as of December 31, 2022, 2023 and 2024, respectively. In addition, due to restrictions on the distribution of share capital
from the Group’s PRC subsidiaries, the PRC subsidiaries share capital of RMB2,726 at December 31, 2024 is considered restricted. As a
result of these PRC laws and regulations, as of December 31, 2024, approximately RMB4,181 is not available for distribution to the
Group by its PRC subsidiaries in the form of dividends, loans or advances.
20. RELATED PARTY TRANSACTIONS AND BALANCES
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to
common control or common significant influence. Related parties may be individuals or corporate entities.

Table of Contents
F-36
The following entities are considered to be related parties to the Group. The related parties mainly act as service providers or service
recipients to the Group. The Group is not obligated to provide any type of financial support to these related parties.
Related Party
    
Nature of the Party
    
Relationship with the Group
Trip.com Group Limited (“Trip.com”)
 
Online travel services provider  
Mr. Qi Ji is a director; Shareholder of the Group
Sheen Star Group Limited (“Sheen Star”)
 
Investment holding company
 
Equity method investee of the Group, controlled
by Mr. Qi Ji
China Cjia Group Limited (“Cjia Group”)
 
Apartment Management Group 
Equity method investee of the Group
Shanghai Zhuchuang Enterprise Management
Co., Ltd. (“Zhuchuang”)
 
Staged office space company
 
Equity method investee of the Group
Shanghai Lianquan Hotel Management Co., Ltd.
(“Lianquan”)
 
Hotel management company
 
Equity method investee of the Group
Huamai (Guangzhou) Hotel Management Co.,
Ltd. (“Huamai”)
Hotel management company
Equity method investee of the Group
Azure Hospitality Fund I Limited Partnership
(LLP) (“Azure”)
Fund
Equity method investee of the Group
(a) Related party balances
Amounts due from related parties consist of the following:
As of December 31, 
    
2023
    
2024
Trip.com
 
174  
284
Lianquan
 
45  
49
Huamai
22
26
Cjia Group
 
9  
15
Zhuchuang
 
14  
14
Others
 
34  
24
Allowance for expected credit losses
(63)
(64)
Total
 
235  
348
Amounts due to related parties consist of the following:
As of December 31, 
    
2023
    
2024
Trip.com
48
41
Cjia Group
16
14
Others
13
19
Total
77
74

Table of Contents
F-37
(b) Related party transactions
During the years ended December 31, 2022, 2023 and 2024, significant related party transactions were as follows:
Years Ended December 31, 
    
2022
    
2023
    
2024
Commission expenses to Trip.com
55  
260  
297
Lease expenses to Trip.com
19  
19  
19
Lease expenses to Cjia Group
31
37
36
Goods sold and service provided to Cjia Group
4
17  
32
Service fee from Trip.com
93
112
146
Service fee from Sheen Star
4
5
—
Service fee from Azure
5
17
21
Sublease income from Lianquan
12
10
11
Sublease income from Cjia Group
5
5
6
Interest income from Sheen Star
—
10
—
21. COMMITMENTS AND CONTINGENCIES
(a) Commitments
As of December 31, 2024, the Group’s commitments related to leasehold improvements and installation of equipment for hotel
operations was RMB105, which is expected to be incurred within one to two year.
(b) Contingencies
The Group is subject to periodic legal or administrative proceedings in the ordinary course of the Group’s business, including lease
contract terminations and disputes, management agreement disputes and other disputes. The Group does not believe that any currently
pending legal or administrative proceeding to which the Group is a party will have a material adverse effect on the financial statements.
As of December 31, 2024, the accrued contingent liability was RMB29.

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F-38
ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I
H WORLD GROUP LIMITED
FINANCIAL INFORMATION FOR PARENT COMPANY
CONDENSED BALANCE SHEETS
(Renminbi in millions, except share and per share data, unless otherwise stated)
As of December 31, 
    
2023
    
2024
    
2024
US$’ in millions
(Note 2)
Assets
Current assets:
Cash and cash equivalents
 
4,382  
1,869  
256
Short-term investments
 
576
 
863
 
118
Other current assets
 
24
 
2
 
0
Total current assets
 
4,982
 
2,734
 
374
Investment in and amount due from subsidiaries
 
15,760
 
18,103
 
2,480
Total assets
 
20,742
 
20,837
 
2,854
Liabilities and equity
Current liabilities:
Short-term debt
 
3,537
 
—
 
—
Dividends payable
 
2,085
 
0
 
0
Amount due to subsidiaries
 
2,897
 
4,990
 
684
Accrued expenses and other current liabilities
 
88
 
76
 
10
Total current liabilities
 
8,607
 
5,066
 
694
Long-term debt
 
—
 
3,594
 
492
Total liabilities
 
8,607
 
8,660
 
1,186
Equity:
Ordinary shares (US$0.00001 par value per share; 80,000,000,000 shares authorized;
3,210,392,530 and 3,105,094,690 shares issued as of December 31, 2023 and 2024,
and 3,159,046,350 and 3,083,916,600 shares outstanding as of December 31, 2023
and 2024, respectively)
 
0
 
0
 
0
Treasury shares (51,346,180 and 21,178,090 shares as of December 31, 2023 and 2024,
respectively)
 
(906)  
(274)  
(38)
Additional paid-in capital
 
11,861
 
9,620
 
1,318
Retained earnings
 
794
 
2,449
 
336
Accumulated other comprehensive income
 
386
 
382
 
52
Total equity
 
12,135
 
12,177
 
1,668
Total liabilities and equity
 
20,742
 
20,837
 
2,854

Table of Contents
F-39
ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I
H WORLD GROUP LIMITED
FINANCIAL INFORMATION FOR PARENT COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Renminbi in millions, unless otherwise stated)
Years Ended December 31, 
    
2022
    
2023
    
2024
    
2024
US$’ in millions
(Note 2)
Operating costs and expenses:
General and administrative expenses
 
93  
154  
340  
47
Total operating costs and expenses
 
93  
154  
340  
47
Loss from operations
 
(93) 
(154) 
(340) 
(47)
Interest income
 
15  
69  
64  
9
Interest expense
 
130  
122  
112  
15
Foreign exchange loss
 
(223) 
(108) 
(23) 
(3)
Other income, net
 
6  
61  
93  
13
(Loss) gain from fair value changes of equity securities, net
 
(1) 
(15) 
4  
0
(Loss) income in investment in subsidiaries
 
(1,395) 
4,354  
3,362  
461
Net (loss) income attributable to H World Group Limited
 
(1,821) 
4,085  
3,048  
418
Other comprehensive (loss) income, net of tax
 
191  
154  
(4) 
(0)
Comprehensive (loss) income
 
(1,630) 
4,239  
3,044  
418

Table of Contents
F-40
ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I
H WORLD GROUP LIMITED
FINANCIAL INFORMATION FOR PARENT COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Renminbi in millions, unless otherwise stated)
Years Ended December 31, 
    
2022
    
2023
    
2024
    
2024
 
US$’ in millions
(Note 2)
Net cash provided by (used in) operating activities
 
(136) 
(133) 
17  
3
Investing activities:
Loans to subsidiaries
 
(750) 
(987) 
(0) 
(0)
Repayment of loans by subsidiaries
 
4,165  
2,061  
1,000  
137
Purchase of investments
 
—  
(803) 
(1,188) 
(163)
Proceeds from maturity/sale of investments
 
—  
301  
917  
126
Dividends received
—
—
19
3
Net cash (used in) provided by investing activities
 
3,415  
572  
748  
103
Financing activities:
Proceeds from issuance of ordinary shares in Hong Kong public offering
—
1,973
—
—
Proceeds from termination of Capped Call
86
—
—
—
Payment of ordinary share issuance costs
(0)
(9)
—
—
Payment of repurchases of ordinary shares
(334)
(848)
(1,172)
(161)
Loans from subsidiaries
798
2,574
2,553
350
Repayment of loans from subsidiaries
—
(540)
(457)
(63)
Proceeds from short-term bank borrowings
 
453  
—  
—  
—
Repayment of short-term bank borrowings
 
—
(439)
—
—
Repayment of convertible senior notes
(3,406)
(0)
—
—
Dividends paid
 
(416) 
—  
(3,480) 
(477)
Purchase of prepaid put option
—
—
(710)
(97)
Net cash provided by (used in) financing activities
 
(2,819) 
2,711  
(3,266) 
(448)
Effect of exchange rate changes on cash and cash equivalents
 
163  
28  
(12) 
(2)
Net (decrease) increase in cash and cash equivalents
 
623  
3,178  
(2,513) 
(344)
Cash, cash equivalents at the beginning of the year
 
581  
1,204  
4,382  
600
Cash, cash equivalents at the end of the year
 
1,204  
4,382  
1,869  
256
The accompanying notes are an integral part of these consolidated financial statements

Table of Contents
F-41
ADDITIONAL FINANCIAL INFORMATION — FINANCIAL STATEMENTS SCHEDULE I
H WORLD GROUP LIMITED
FINANCIAL INFORMATION FOR PARENT COMPANY
Note to Schedule I
Schedule I has been provided pursuant to the requirements of Rule  12-04(a)  and 5-04-(c)  of Regulation S-X, which require
condensed financial information as to the financial position, change in financial position and results of operations of a parent company as
of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted
net assets of consolidated subsidiaries exceed 25  percent of consolidated net assets as of the end of the most recently completed
fiscal year.
The condensed financial information has been prepared using the same accounting policies as set out in the accompanying
consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. Such
investments in subsidiaries are presented on the balance sheets as investment in subsidiaries and the profit of the subsidiaries is presented
as income in investment in subsidiaries.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosures contain
supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the
notes to the accompanying consolidated financial statements.
As of December 31, 2024, there are no material contingencies, mandatory dividend, and significant provision of long-term
obligation or guarantee of the Company, except for those which have separately disclosed in the consolidated financial statements.

Table of Contents
F-42
ADDITION INFORMATION — FINANCIAL STATEMENTS SCHEDULE II
H WORLD GROUP LIMITED
This financial information has been prepared in conformity with accounting principles generally accepted in the United States.
VALUATION AND QUALIFYING ACCOUNTS
     Balance at      Charge to     
    
Beginning of
Costs and
Balance at
Year
Expenses
Write off
End of Year
（Renminbi in millions）
Allowance for accounts receivable, loan receivables, assets held for sale, and other
financial assets:
2022
 
128  
82  
(7) 
203
2023
 
203
89
(5)
287
2024
287
3
(17)
273
******

Exhibit 2.5
Description of Rights of Each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934
American Depositary Shares (“ADSs”), each representing ten ordinary shares of H World Group Limited (our company) are listed on the
Nasdaq Global Select Market and the shares are registered under Section 12(b) of the Exchange Act. Shares underlying the ADSs are
held by Citibank, N.A., as depositary, and holders of ADSs will not be treated as holders of the ordinary shares. Ordinary shares of our
company are listed on the Hong Kong Stock Exchange. This exhibit contains a description of the rights of (i) the holders of ordinary
shares and (ii) ADS holders.
Description of Ordinary Shares (Items 9.A.3, 9.A.5, 9.A.6, 10.B.3, 10.B.4, 10.B.6, 10.B.7, 10.B.8, 10.B.9 and 10.B.10 of Form 20-F)
General
All of our issued and outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares
are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares. Each
of our ordinary shares has a par value US$0.00001.
Preemptive Rights
The shareholders of us do not have preemptive rights.
Transfer of Shares
Subject to any applicable restrictions set forth in our amended and restated articles of association, including, for example, the
board of directors’ discretion to refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not
approve, or any share issued under the share incentive plans for employees upon which a restriction on transfer imposed thereby still
subsists, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or
in a form prescribed by the NASDAQ Global Select Market or the Hong Kong Stock Exchange or in another form that our directors may
approve.
·
Our directors may decline to register any transfer of any share which is not paid up or on which we have a lien. Our directors
may also decline to register any transfer of any share unless:
·
the instrument of transfer is lodged with us accompanied by the certificate for the shares to which it relates and such other
evidence as our directors may reasonably require to show the right of the transferor to make the transfer;
·
the instrument of transfer is in respect of only one class of share;
·
the instrument of transfer is properly stamped (in circumstances where stamping is required);
·
in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four;
and
·
fee of such maximum sum as the NASDAQ Global Select Market or the Hong Kong Stock Exchange may determine to be
payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.
If our directors refuse to register a transfer, they shall, within two months after the date on which the

instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, on notice being given by advertisement in such one or more newspapers or by any other
means in accordance with the requirements of the NASDAQ Global Select Market or the Hong Kong Stock Exchange, be suspended and
the register closed at such times and for such periods as our directors may from time to time determine; provided, however, that the
registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our directors may determine.
Limitations or Qualifications
The rights of our shareholders are not materially limited or qualified.
Dividends
Subject to the Companies Act, our company in general meeting or our directors may declare dividends in any currency to be
paid to our shareholders. Dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside
from profits which our directors determine is no longer needed. Our board of directors may also declare and pay dividends out of the
share premium account or any other fund or account that can be authorized for this purpose in accordance with the Companies Act.
Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides (i) all dividends shall be
declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a
share in advance of calls shall be treated for this purpose as paid up on that share and (ii) all dividends shall be apportioned and paid pro
rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.
Our directors may deduct from any dividend or bonus payable to any shareholder all sums of money (if any) presently payable
by such shareholder to us on account of calls or otherwise.
No dividend or other money payable by us on or in respect of any share shall bear interest against us.
In respect of any dividend proposed to be paid or declared on our share capital, our directors may resolve and direct that (i) such
dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that our shareholders
entitled thereto will be entitled to elect to receive such dividend (or part thereof if our directors so determine) in cash in lieu of such
allotment or (ii) the shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid
up in lieu of the whole or such part of the dividend as our directors may think fit. On the recommendation of our directors, we may also
by ordinary resolution resolve in respect of any particular dividend that, notwithstanding the foregoing, a dividend may be satisfied
wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such
dividend in cash in lieu of such allotment.
Any dividend interest or other sum payable in cash to the holder of shares may be paid by check or warrant sent by mail
addressed to the holder at his registered address, or addressed to such person and at such addresses as the holder may in writing direct.
Every check or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case
of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or
their risk and payment of the check or warrant by the bank on which it is drawn shall constitute a good discharge to us.
All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by our board of
directors for the benefit of our company until claimed. Any dividend unclaimed after a period of six years from the date of declaration of
such dividend shall be forfeited and reverted to us.
Whenever our directors or our company in general meeting have resolved that a dividend be paid or declared, our directors may
further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid
up shares, debentures or warrants to subscribe for our securities

or securities of any other company. Where any difficulty arises with regard to such distribution, our directors may settle it as they think
expedient. In particular, our directors may issue fractional certificates, ignore fractions altogether or round the same up or down, fix the
value for distribution purposes of any such specific assets, determine that cash payments shall be made to any of our shareholders upon
the footing of the value so fixed in order to adjust the rights of the parties, vest any such specific assets in trustees as may seem expedient
to our directors, and appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons
entitled to the dividend, which appointment shall be effective and binding on our shareholders.
Voting Rights
Subject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting every
shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized
representative) shall have one vote on a show of hands, and on a poll every shareholder present in person or by proxy (or, in the case of a
shareholder being a corporation, by its duly appointed representative) shall have one vote for each fully paid share of which such
shareholder is the holder.
No shareholder shall be entitled to attend and vote or be reckoned in a quorum at any general meeting unless such shareholder is
duly registered as our shareholder at the applicable record date for that meeting and all calls or other sums due by such shareholder to us
have been paid.
If a clearing house (or its nominee(s)), being a corporation, is our shareholder, it may authorize such person or persons as it
thinks fit to act as its representative(s) at any meeting or at any meeting of any class of shareholders provided that the authorization shall
specify the number and class of shares in respect of which each such person is so authorized. A person authorized pursuant to this
provision is entitled to exercise the same powers on behalf of the recognized clearing house (or its nominee(s)) as if such person was the
registered holder of our shares held by that clearing house (or its nominee(s)) including the right to vote individually on a show of hands.
While there is nothing under the laws of the Cayman Islands which specifically prohibits or restricts the creation of cumulative
voting rights for the election of our directors, it is not a concept that is accepted as a common practice in the Cayman Islands, and our
company has made no provisions in its amended and restated articles of association to allow cumulative voting for such elections.
Liquidation
Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time
being attached to any class or classes of shares: (i) if we are wound up and the assets available for distribution among our shareholders
are more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed
pari passu among those shareholders in proportion to the amount paid up on the shares held by them, respectively and (ii) if we are
wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the paid-up
capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the
capital paid up at the commencement of the winding up on the shares held by them, respectively.
If we are wound up, the liquidator may with the sanction of our special resolution and any other sanction required by the
Companies Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether or not they shall consist of
property of the same kind) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and
may determine how such division shall be carried out as between the shareholders or different classes of shareholders. The liquidator
may also vest the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall
think fit, but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.
Share Repurchase
We are empowered by the Companies Act and our amended and restated articles of association to purchase our own shares,
subject to certain restrictions. Our directors may only exercise this power on behalf of us, subject to

the Companies Act, our amended and restated memorandum and articles of association and to any applicable requirements imposed from
time to time by the NASDAQ Global Select Market, the SEC, or by any other recognized stock exchange on which our securities are
listed.
Sinking Fund Provision
There are no sinking fund provisions applicable to our ordinary shares.
Calls on Shares and Forfeiture of Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice
served to such shareholders at least 14 clear days prior to the specified time of payment. Shares that have been called upon and remain
unpaid on the specified time are subject to forfeiture.
Modification of Rights of Shares
Except with respect to share capital and the location of the registered office, alterations to our amended and restated
memorandum and articles of association may only be made by special resolution, meaning a majority of not less than two-thirds of votes
cast at a shareholders meeting.
Subject to the Companies Act, all or any of the special rights attached to shares of any class (unless otherwise provided for by
the terms of issue of the shares of that class) may be varied, modified or abrogated, with the sanction of a special resolution, passed at a
separate general meeting of the holders of the shares of that class. The provisions of our amended and restated articles of association
relating to general meetings shall apply similarly to every such separate general meeting, but so that the quorum for the purposes of any
such separate general meeting or at its adjourned meeting shall be a person or persons together holding (or represented by proxy) on the
date of the relevant meeting not less than one-third in nominal value of the issued shares of that class, that every holder of shares of the
class shall be entitled on a poll to one vote for every such share held by such holder and that any holder of shares of that class present in
person or by proxy may demand a poll.
The special rights conferred upon the holders of any class of shares shall not, unless otherwise expressly provided in the rights
attaching to or the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu
therewith.
Anti-takeover Provisions in the Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles of association contain provisions which may have the effect of limiting the
ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have
the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging
third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors has the
authority, without further action by our shareholders, to issue preferred shares in one or more classes or series and to fix their
designations, powers, preferences, and relative participating, optional or other rights and the qualifications, limitations or restrictions,
including, without limitation, dividend rights, conversion rights, voting rights, terms of redemption privileges and liquidation
preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADSs or otherwise. In
the event these preferred shares have better voting rights than our ordinary shares, in the form of ADSs or otherwise, they could be issued
quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult.
Disclosure of Shareholder Ownership
There are no provisions under Cayman Islands law applicable to our company, or in our amended and restated memorandum
and articles of association that require our company to disclose the ownership threshold above which shareholder ownership must be
disclosed.

General Meetings of Shareholders
Shareholders’ meetings may be convened by our board of directors. Advance notice of at least 14 clear days is required for the
convening of our annual general shareholders’ meeting and any other general meeting of our shareholders, subject to exceptions in
certain circumstances as set out in our amended and restated memorandum and articles of association. A quorum for a meeting of
shareholders consists of members holding not less than one-third in nominal value of the total issued voting shares in our company
present in person or by proxy.
Registered Office and Objects
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, or at such other location within the Cayman Islands as our directors may from time to time
determine. The objects for which we are established are unrestricted and we have full power and authority to carry out any object not
prohibited by the Companies Act or any other law of the Cayman Islands.
Differences in Corporate Law
The Companies Act is modeled after similar laws in the United Kingdom but does not follow recent changes in United
Kingdom laws. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set
forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws
applicable to companies incorporated in the United States.
Mergers and Similar Arrangements. Under the laws of the Cayman Islands, two or more companies may merge or consolidate
in accordance with Section 233 of the Companies Act. A merger means the merging of two or more constituent companies and the
vesting of their undertaking, property and liabilities in one of such constituent companies as the surviving company. A consolidation
means the combination of two or more constituent companies into a new consolidated company and the vesting of the undertaking,
property and liabilities of such constituent companies in the new consolidated company. In order to merge or consolidate, the directors of
each constituent company must approve a written plan of merger or consolidation which must be authorized by each constituent
company by a special resolution of the shareholders and such other authorization as may be specified in such company’s articles of
association. The consent of each holder of a fixed or floating security interest of a constituent company in a proposed merger or
consolidation must also be obtained.
For a director who has a financial interest in the plan of merger or consolidation, he should declare the nature of his interest at
the board meeting where the plan was considered. Following such declaration, subject to any separate requirement for Audit Committee
approval under the applicable law or any applicable requirements imposed from time to time by the NASDAQ Global Select Market, the
SEC, or by any other recognized stock exchange on which the securities are listed, and unless disqualified by the chairman of the
relevant board meeting, he may vote on the plan of merger or consolidation.
A shareholder resolution is not required if a Cayman Islands incorporated parent company is seeking to merge with one or more
of its Cayman Islands incorporated subsidiary companies (i.e., companies where at least ninety per cent (90%) of the issued shares of
which (of one or more classes) that are entitled to vote are owned by the parent company). In any event, all shareholders must be given a
copy of the plan of merger or consolidation irrespective of whether they are entitled to vote at the meeting or consent to the written
resolution to approve the plan of merger or consolidation.
The shareholders of the constituent companies are not required to receive shares of the surviving or consolidated company but
may receive debt obligations or other securities of the surviving or consolidated company, or money and other assets or a combination
thereof. Further, some or all of the shares of a class or series may be converted into a kind of asset while the other shares of the same
class or series may receive a different kind of asset. As such, not all the shares of a class or series must receive the same kind of
consideration.

After the plan of merger or consolidation has been approved by the directors, authorized by a resolution of the shareholders and
the holders of fixed or floating security interest have given their consent, the plan of merger or consolidation is executed by each
company and filed, together with certain ancillary documents, with the Registrar of Companies in the Cayman Islands.
A shareholder may dissent from a merger or consolidation. A shareholder properly exercising his dissent rights is entitled to
payment in cash of the fair value of his shares. Such dissent rights are unavailable in respect of shares subject to a plan of merger or
consolidation for which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the expiry
date of the period allowed for written notice of an election to dissent subject to the provisions of the Companies Act.
A shareholder dissenting from a merger or consolidation must object in writing to the merger or consolidation before the vote by
the shareholders on the merger or consolidation. If the merger or consolidation is approved by the shareholders, the company must within
20 days give notice of this fact to each shareholder who gave written objection. Such shareholders then have 20 days to give to the
company their written election in the form specified by the Companies Act to dissent from the merger or consolidation.
Upon giving notice of his election to dissent, a shareholder ceases to have any rights of a shareholder except the right to be paid
the fair value of his shares. As such, the merger or consolidation may proceed in the ordinary course notwithstanding the dissent.
Within seven days of the later of the delivery of the notice of election to dissent and the effective date of the merger or
consolidation, the company must make a written offer to each dissenting shareholder to purchase his shares at a specified price that the
company determines to be their fair value. The company and the shareholder then have 30 days to agree upon the price. If the company
and a shareholder fail to agree on the price within the 30 days, then within 20 days thereafter, the company shall or any dissenting
shareholder may file a petition with the Grand Court for a determination of the fair value of the shares of all dissenting shareholders. At
the petition hearing, the Grand Court shall determine the fair value of the shares of such dissenting shareholders as it finds are involved,
together with a fair rate of interest, if any, to be paid by our company upon the amount determined to be the fair value.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff and a derivative action may not be brought by a
minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman
Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle
and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative
actions in the name of the company to challenge actions where:
·
a company is acting or proposing to act illegally or beyond the scope of its authority;
·
the act complained of, although not beyond the scope of its authority, could only be effected duly if authorized by more than a
simple majority vote which has not been obtained; or
·
those who control the company are perpetrating a “fraud on the minority.”
Corporate Governance. Cayman Islands laws do not restrict transactions with directors, requiring only that directors exercise a
duty of care and owe a fiduciary duty to the companies for which they serve. Under our amended and restated memorandum and articles
of association, subject to any separate requirement for audit committee approval under the applicable rules of the NASDAQ Global
Select Market or unless disqualified by the chairman of the relevant board meeting, so long as a director discloses the nature of his
interest in any contract or arrangement which he is interested in, such a director may vote in respect of any contract or proposed contract
or arrangement in which such director is interested and may be counted in the quorum at such a meeting.

Restructuring. A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a
restructuring officer on the grounds that the company:
(a) is or is likely to become unable to pay its debts; and
(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the
law of a foreign country or by way of a consensual restructuring.
The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with
such powers and to carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment
of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the
appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than
criminal proceedings) may be proceeded with or commenced against the company, no resolution to wind up the company may be passed,
and no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding the
presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has
security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without
reference to the restructuring officer appointed.
Description of Debt Securities, Warrants and Rights and Other Securities (Items 9.A.7, 12.A, 12.B and 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
Citibank, N.A. acts as the depositary for the American Depositary Shares. Citibank’s depositary offices are located at 388
Greenwich Street, New York, New York 10013. American Depositary Shares are frequently referred to as “ADSs” and represent
ownership interests in securities that are on deposit with the depositary. ADSs may be represented by certificates that are commonly
known as “American Depositary Receipts” or “ADRs.” The depositary typically appoints a custodian to safe-keep the securities on
deposit. In this case, the custodian is Citibank, N.A.-Hong Kong, located at 9/F, Citi Tower, One Bay East, 83 Hoi Bun Road, Kwun
Tong, Kowloon, Hong Kong.
We have appointed Citibank as depositary pursuant to a deposit agreement. A copy of the deposit agreement is on file with the
SEC, under cover of a Registration Statement on Form F-6 (Registration No. 333-225171). You may obtain a copy of the deposit
agreement from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and from the SEC’s website
(www.sec.gov).
We are providing you with a summary description of the material terms of the ADSs and of your material rights as an owner of
ADSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights and
obligations of an owner of ADSs will be determined by reference to the terms of the deposit agreement and not by this summary. For the
complete information, you should read the entire deposit agreement and the form of American Depositary Receipt. The portions of this
summary description that are italicized describe matters that may be relevant to the ownership of ADSs but that may not be contained in
the deposit agreement.
Each ADS represents the right to receive, and to exercise the beneficial ownership interests in, ten (10) ordinary shares on
deposit with the depositary and/or the custodian. An ADS also represents the right to receive, and to exercise the beneficial interests in,
any other property received by the depositary or the custodian on behalf of the owner of the ADS but that has not been distributed to the
owners of ADSs because of legal restrictions or practical considerations. We and the depositary may agree to change the ADS- to-
ordinary shares ratio by amending the deposit agreement. This amendment may give rise to, or change, the depositary fees payable by
ADS owners. The custodian, the depositary and their respective nominees will hold all deposited property for the benefit of the holders
and beneficial owners of ADSs. The deposited property does not constitute the proprietary assets of the depositary, the custodian or their
nominees. Beneficial ownership in the deposited property will under the terms of the deposit

agreement be vested in the beneficial owners of the ADSs. The depositary, the custodian and their respective nominees will be the record
holders of the deposited property represented by the ADSs for the benefit of the holders and beneficial owners of the corresponding
ADSs. A beneficial owner of ADSs may or may not be the holder of ADSs. Beneficial owners of ADSs will be able to receive, and to
exercise beneficial ownership interests in, the deposited property only through the registered holders of our ADSs, the registered holders
of our ADSs (on behalf of the applicable ADS owners) only through the depositary, and the depositary (on behalf of the owners of the
corresponding ADSs) directly, or indirectly, through the custodian or their respective nominees, in each case upon the terms of the
deposit agreement.
If you become an owner of ADSs, you will become a party to the deposit agreement and therefore will be bound to its terms and
to the terms of any ADR that represents your ADSs. The deposit agreement and the ADR specify our rights and obligations as well as
your rights and obligations as an owner of ADSs and those of the depositary. As an ADS holder, you appoint the depositary to act on
your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations to
the holders of ordinary shares will continue to be governed by the laws of the Cayman Islands, which may be different from the laws in
the United States.
In addition, applicable laws and regulations may require you to satisfy reporting requirements and obtain regulatory approvals in
certain circumstances. You are solely responsible for complying with such reporting requirements and obtaining such approvals. Neither
the depositary, the custodian, our company or any of their or our respective agents or affiliates shall be required to take any actions
whatsoever on your behalf to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and
regulations.
We will not treat you, being an owner of ADSs, as one of our shareholders and you will not have direct shareholder rights. The
depositary will hold on your behalf the shareholder rights attached to the ordinary shares underlying your ADSs. As an owner of ADSs
you will be able to exercise the shareholders rights for the ordinary shares represented by your ADSs through the depositary only to the
extent contemplated in the deposit agreement. To exercise any shareholder rights not contemplated in the deposit agreement you will, as
an ADS owner, need to arrange for the cancellation of your ADSs and become a direct shareholder.
The manner in which you own the ADSs (e.g., in a brokerage account vs. as registered holder, or as holder of certificated vs.
uncertificated ADSs) may affect your rights and obligations, and the manner in which, and extent to which, the depositary’s services are
made available to you. As an owner of ADSs, you may hold your ADSs either by means of an ADR registered in your name, through a
brokerage or safekeeping account, or through an account established by the depositary in your name reflecting the registration of
uncertificated ADSs directly on the books of the depositary (commonly referred to as the “direct registration system” or “DRS”). The
direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the depositary. Under the direct
registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary to the holders of our ADSs. The
direct registration system includes automated transfers between the depositary and The Depository Trust Company (“DTC”), the central
book-entry clearing and settlement system for equity securities in the United States. If you decide to hold your ADSs through your
brokerage or safekeeping account, you must rely on the procedures of your broker or bank to assert your rights as ADS owner. Banks and
brokers typically hold securities such as the ADSs through clearing and settlement systems such as DTC. The procedures of such
clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult with your broker or
bank if you have any questions concerning these limitations and procedures. All ADSs held through DTC will be registered in the name
of a nominee of DTC. This summary description assumes you have opted to own the ADSs directly by means of an ADS registered in
your name and, as such, we will refer to you as the “holder.” When we refer to “you,” we assume the reader owns ADSs and will own
ADSs at the relevant time.
The registration of the ordinary shares in the name of the depositary or the custodian shall, to the maximum extent permitted by
applicable law, vest in the depositary or the custodian the record ownership in the applicable ordinary shares with the beneficial
ownership rights and interests in such ordinary shares being at all times vested with the beneficial owners of the ADSs representing the
ordinary shares. The depositary or the custodian shall at all times be entitled to exercise the beneficial ownership rights in all deposited
property, in each case only on behalf of the holders and beneficial owners of the ADSs representing the deposited property.

Dividends and Distributions
As a holder of ADSs, you generally have the right to receive the distributions we make on the securities deposited with the
custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders of ADSs
will receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of a specified
record date, after deduction of the applicable fees, taxes and expenses.
Distributions of Cash
Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the
custodian. Upon receipt of confirmation of the deposit of the requisite funds, the depositary will arrange for the funds received in a
currency other than U.S. dollars to be converted into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to the
applicable laws and regulations.
The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the United States.
The amounts distributed to holders will be net of the fees, expenses, withheld taxes and governmental charges payable by holders under
the terms of the deposit agreement. The depositary will apply the same method for distributing the proceeds of the sale of any property
(such as undistributed rights) held by the custodian in respect of securities on deposit.
Distributions of Ordinary Shares
Whenever we make a free distribution of ordinary shares for the securities on deposit with the custodian, we will deposit the
applicable number of ordinary shares with the custodian. Upon receipt of confirmation of such deposit, the depositary will either
distribute to holders new ADSs representing the ordinary shares deposited or modify the ADS-to-ordinary shares ratio, in which case
each ADS you hold will represent rights and interests in the additional ordinary shares so deposited. Only whole new ADSs will be
distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.
The distribution of new ADSs or the modification of the ADS-to-ordinary shares ratio upon a distribution of ordinary shares
will be made net of the fees, expenses, withheld taxes and governmental charges payable by holders under the terms of the deposit
agreement. In order to pay such taxes or governmental charges, the depositary may sell all or a portion of the new ordinary shares so
distributed.
No such distribution of new ADSs will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not
operationally practicable. If the depositary does not distribute new ADSs as described above, it may sell the ordinary shares received
upon the terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.
Distributions of Rights
Whenever we intend to distribute rights to subscribe for additional ordinary shares, we will give prior notice to the depositary
and we will assist the depositary in determining whether it is lawful and reasonably practicable to distribute rights to subscribe for
additional ADSs to holders.
The depositary will establish procedures to distribute rights to purchase additional ADSs to holders and to enable such holders
to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provide all of
the documentation contemplated in the deposit agreement (such as opinions to address the lawfulness of the transaction). You may have
to pay fees, expenses, taxes and other governmental charges to purchase the new ADSs upon the exercise of your rights. The depositary
is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new ordinary shares
other than in the form of ADSs.

The depositary will not distribute the rights to you if:
·
we do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or
·
we fail to deliver satisfactory documents to the depositary; or
·
it is not reasonably practicable to distribute the rights.
The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The
proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will
allow the rights to lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we
will give prior notice thereof to the depositary and will indicate whether we wish the elective distribution to be made available to you. In
such case, we will assist the depositary in determining whether such distribution is lawful and reasonably practicable.
The depositary will make the election available to you only if we timely request it to do so, if it is reasonably practicable and if
we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary will establish procedures
to enable you to elect to receive either cash or additional ADSs in each case as described in the deposit agreement. The depositary is not
obligated to establish procedures to facilitate the distribution and exercise by holders of elective distributions to purchase new ordinary
shares other than in the form of ADSs.
If the election is not made available to you, you will receive either cash or additional ADSs, depending on what a shareholder
would receive upon failing to make an election, as more fully described in the deposit agreement.
Other Distributions
Whenever we intend to distribute property other than cash, ordinary shares or rights to purchase additional ordinary shares, we
will notify the depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the
depositary in determining whether such distribution to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute such property to you, if we timely request the depositary to do so and if we provide to
the depositary all of the documentation contemplated in the deposit agreement, the depositary will distribute the property to the holders
in a manner it deems practicable.
The distribution will be made net of fees, expenses, withheld taxes and governmental charges payable by holders under the
terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary may sell all or a portion of the
property received.
The depositary will not distribute the property to you and will sell the property if:
·
we do not request that the property be distributed to you or if we ask that the property not be distributed to you; or
·
we do not deliver satisfactory documents to the depositary; or
·
the depositary determines that all or a portion of the distribution to you is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.

Redemption
Whenever we decide to redeem any of the securities on deposit with the custodian, we will timely notify the depositary. If it is
reasonably practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary will provide
notice of the redemption to the holders.
The custodian will be instructed to surrender the shares being redeemed against payment of the applicable redemption price.
The depositary will convert the redemption funds received in a currency other than U.S. dollars into U.S. dollars upon the terms of the
deposit agreement and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of
their ADSs to the depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your
ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the depositary
may determine.
Changes Affecting Ordinary Shares
The ordinary shares held on deposit for your ADSs may change from time to time. For example, there may be a change in
nominal or par value, a split-up, cancellation, consolidation or reclassification of such ordinary shares or a recapitalization,
reorganization, merger, consolidation or sale of assets.
If any such change were to occur, your ADSs would, to the extent permitted by law and the deposit agreement, represent the
right to receive the property received or exchanged in respect of the ordinary shares held on deposit. The depositary may in such
circumstances deliver new ADSs to you, amend the deposit agreement, the ADRs and the applicable Registration Statement(s) on Form
F-6, call for the exchange of your existing ADSs for new ADSs and take any other actions that are appropriate to reflect as to the ADSs
the change affecting the ordinary shares. If the depositary may not lawfully distribute such property to you, the depositary may sell such
property and distribute the net proceeds to you as in the case of a cash distribution.
Issuance of ADSs upon Deposit of Ordinary Shares
The depositary may create ADSs on your behalf if you or your broker deposit ordinary shares with the custodian. The
depositary will deliver these ADSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes
payable for the transfer of the ordinary shares to the custodian. Your ability to deposit ordinary shares and receive ADSs may be limited
by legal considerations applicable at the time of deposit.
The issuance of ADSs may be delayed until the depositary or the custodian receives confirmation that all required approvals
have been given and that the ordinary shares have been duly transferred to the custodian. The depositary will only issue ADSs in whole
numbers.
When you make a deposit of ordinary shares, you will be responsible for transferring good and valid title to the depositary. As
such, you will be deemed to represent and warrant that:
·
The ordinary shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained.
·
All preemptive (and similar) rights, if any, with respect to such ordinary shares have been validly waived or exercised.
·
You are duly authorized to deposit the ordinary shares.
·
The ordinary shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or
adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted securities” (as defined in the deposit
agreement).
·
The ordinary shares presented for deposit have not been stripped of any rights or entitlements.
If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take
any and all actions necessary to correct the consequences of the misrepresentations.

Transfer, Combination and Split Up of ADRs
As an ADR holder, you will be entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby. For
transfers of ADRs, you will have to surrender the ADRs to be transferred to the depositary and also must:
·
ensure that the surrendered ADR certificate is properly endorsed or otherwise in proper form for transfer;
·
provide such proof of identity and genuineness of signatures as the depositary deems appropriate;
·
provide any transfer stamps required by the State of New York or the United States; and
·
pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to the terms of
the deposit agreement, upon the transfer of ADRs.
To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary with your request to
have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR holders, pursuant to the
terms of the deposit agreement, upon a combination or split up of ADRs.
Withdrawal of Ordinary Shares Upon Cancellation of ADSs
As a holder, you will be entitled to present your ADSs to the depositary for cancellation and then receive the corresponding
number of underlying ordinary shares at the custodian’s offices. Your ability to withdraw the ordinary shares held in respect of the ADSs
may be limited by U.S. and Cayman Islands legal considerations applicable at the time of withdrawal. In order to withdraw the ordinary
shares represented by your ADSs, you will be required to pay to the depositary the fees for cancellation of ADSs and any charges and
taxes payable upon the transfer of the ordinary shares being withdrawn. You assume the risk for delivery of all funds and securities upon
withdrawal. Once canceled, the ADSs will not have any rights under the deposit agreement.
If you hold ADSs registered in your name, the depositary may ask you to provide proof of identity and genuineness of any
signature and such other documents as the depositary may deem appropriate before it will cancel your ADSs. The withdrawal of the
ordinary shares represented by your ADSs may be delayed until the depositary receives satisfactory evidence of compliance with all
applicable laws and regulations. Please keep in mind that the depositary will only accept ADSs for cancellation that represent a whole
number of securities on deposit.
You will have the right to withdraw the securities represented by your ADSs at any time except for:
·
temporary delays that may arise because (i) the transfer books for the ordinary shares or ADSs are closed, or (ii) ordinary shares
are immobilized on account of a shareholders’ meeting or a payment of dividends;
·
obligations to pay fees, taxes and similar charges; and
·
restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on deposit.
The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADSs except to
comply with mandatory provisions of law.
Voting Rights
As a holder, you generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for
the ordinary shares represented by your ADSs. The voting rights of holders of ordinary shares are described in “Description of Ordinary
Shares —Voting Rights” above.
At our request, the depositary will distribute to you any notice of shareholders’ meeting received from us

together with information explaining how to instruct the depositary to exercise the voting rights of the securities represented by ADSs. In
lieu of distributing such materials, the depositary may distribute to holders of ADSs instructions on how to retrieve such materials upon
request.
If the depositary timely receives voting instructions from a holder of ADSs, it will endeavor to vote the securities represented by
the holder’s ADSs. In the event voting takes place at a shareholders’ meeting by show of hands, the depositary will instruct the custodian
to vote in accordance with the voting instructions received from a majority of holders of ADSs who provided voting instructions. In the
event voting takes place at a shareholders’ meeting by poll, the depositary will instruct the custodian to vote in accordance with the
voting instructions received from the holders of ADSs.
In the event of voting by poll, holders of ADSs in respect of which no timely voting instructions have been received shall be
deemed to have instructed the depositary to give a discretionary proxy to a person designated by us to vote the ordinary shares
represented by such holders’ ADSs; provided, that no such instructions shall be deemed given and no such discretionary proxy shall be
given with respect to any matter as to which we inform the depositary that (i) we do not wish such proxy to be given, (ii) substantial
opposition exists or (iii) the rights of our shareholders may be adversely affected. No discretionary proxy shall be given with respect to
any vote by show of hands.
Please note that the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and
the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting
instructions to the depositary in a timely manner.
The depositary will not join in demanding a vote by poll. A holder of ADSs will not be able to exercise any rights that may
attach to the ordinary shares represented by such ADSs to requisition a shareholder meeting or propose resolutions for a shareholder
vote. At our request, the depositary will represent deposited ordinary shares for the purpose of establishing a quorum regardless of
whether voting instructions have been provided with respect thereto.
Fees and Expenses
ADS holders will be required to pay the following fees under the terms of the deposit agreement:
Service
    
Fees
Issuance of ADSs
Up to US$0.05 per ADS issued
Cancelation of ADSs
Up to US$0.05 per ADS canceled
Distribution of cash dividends or other cash distributions (e.g., sale
of rights and other entitlements)
Up to US$0.05 per ADS held
Distribution of ADSs pursuant to stock dividends, other free stock
distributions or exercise of rights to purchase additional ADSs
Up to US$0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase
additional ADSs
Up to US$0.05 per ADS held
Depositary services
Up to US$0.05 per ADS held on the applicable record
date(s)established by the depositary
As an ADS holder, you will also be responsible to pay certain charges such as:

·
fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the
Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares);
·
expenses incurred for converting foreign currency into U.S. dollars;
·
expenses for cable, telex and fax transmissions and for delivery of securities;
·
taxes (including applicable interest and penalties) and other governmental charges;
·
fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other
applicable regulatory requirements; and
·
fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit.
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on
behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the
ADSs to the depositary for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with
distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of
ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of
distributions other than cash (i.e., stock dividend, rights), the depositary charge the applicable fee to the ADS record date holders
concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in
direct registration), the depositary send invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and
custodian accounts (via DTC), the depositary generally collects its fees through the systems provided by DTC (whose nominee is the
registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and
custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the
depositary.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the
requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS
holder.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary.
You will receive prior notice of such changes.
The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program established pursuant to the
deposit agreement, by making available a portion of the depositary fees charged in respect of the ADR program or otherwise, upon such
terms and conditions as we and the depositary may agree from time to time.
Amendments and Termination
We may agree with the depositary to modify the deposit agreement at any time without your consent. We undertake to give
holders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit
agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are
reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case
without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior
notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.
You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to
the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the ordinary shares
represented by your ADSs (except as permitted by law).

We have the right to direct the depositary to terminate the deposit agreement. Similarly, the depositary may in certain
circumstances on its own initiative terminate the deposit agreement. In either case, the depositary must give notice to the holders at least
30 days before termination. Until termination, your rights under the deposit agreement will be unaffected.
After termination, the depositary will continue to collect distributions received (but will not distribute any such property until
you request the cancellation of your ADSs) and may sell the securities held on deposit. After the sale, the depositary will hold the
proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the
depositary will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still
outstanding (after deduction of applicable fees, taxes and expenses) or as may be required by law.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office at all
reasonable times but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs
and the deposit agreement.
The depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and
transfer of ADSs. These facilities may be closed from time to time, to the extent not prohibited by law.
The depositary may close the transfer books at any time and from time to time, when deemed necessary or at the reasonable
written request of us, to the extent not prohibited by law.
Limitations on Obligations and Liabilities
The deposit agreement limits our obligations and the depositary’s obligations to you. Please note the following:
·
We and the depositary are obligated only to take the actions specifically stated in the deposit agreement without negligence or
bad faith. Without limiting the foregoing, neither we nor the depositary is obligated to participate in any action, suit or other
proceeding relating to deposited property or the ADSs without satisfactory indemnity. The depositary disclaims any liability for
any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts
in good faith and in accordance with the terms of the deposit agreement.
·
The depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of
any document forwarded to you on behalf of us or for the accuracy of any translation of such a document, for the investment
risks associated with investing in ordinary shares, for the validity or worth of the ordinary shares, for any tax consequences that
result from the ownership of ADSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms
of the deposit agreement, for the timeliness of any of our notices or for our failure to give notice.
·
We and the depositary will not be obligated to perform any act that is inconsistent with the terms of the deposit agreement.
·
We and the depositary disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation,
any provision of our amended and restated Memorandum and Articles of Association, any provision of any securities on deposit
or by reason of any act of God or war or other circumstances beyond our control.
·
We and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any

discretion provided for the deposit agreement or in our amended and restated Memorandum and Articles of Association or in
any provisions of securities on deposit.
·
We and the depositary further disclaim any liability for any action or inaction in reliance on the advice or information received
from legal counsel, accountants, any person presenting ordinary shares for deposit, any holder of ADSs or authorized
representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or
information.
·
We and the depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other
benefit which is made available to holders of ordinary shares but is not, under the terms of the deposit agreement, made
available to you.
·
We and the depositary may rely without any liability upon any written notice, request or other document believed to be genuine
and to have been signed or presented by the proper parties.
·
We and the depositary also disclaim liability for any consequential or punitive damages for any breach of the terms of the
deposit agreement.
·
No disclaimer of any Securities Act liability is intended by any provision of the deposit agreement.
·
Nothing in the deposit agreement gives rise to a partnership or joint venture, or establishes a fiduciary relationship, among us,
the depositary and you as an ADS holder.
·
Nothing in the deposit agreement precludes Citibank (or its affiliates) from engaging in transactions in which parties adverse to
us or the ADS owners have interests, and nothing in the deposit agreement obligates Citibank to disclose those transactions, or
any information obtained in the course of those transactions, to us or to the ADS owners, or to account for any payment
received as part of those transactions.
Taxes
You will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the
ADSs. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders
and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any
deficiency if the sale proceeds do not cover the taxes that are due.
The depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until
all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to
obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the
depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian
may require to fulfill legal obligations. You are required to indemnify us, the depositary and the custodian for any claims with respect to
taxes based on any tax benefit obtained for you.
Foreign Currency Conversion
The depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practical,
and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may have to pay fees and expenses
incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other
governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a
reasonable cost or within a reasonable period, the depositary may take the following actions in its discretion:

·
Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the
conversion and distribution is lawful and practical.
·
Distribute the foreign currency to holders for whom the distribution is lawful and practical.
·
Hold the foreign currency (without liability for interest) for the applicable holders.
Governing Law
The deposit agreement, the ADRs and the ADSs will be interpreted in accordance with the laws of the State of New York. The
rights of holders of ordinary shares (including ordinary shares represented by ADSs) are governed by the laws of the Cayman Islands.
We and the depositary have agreed that the federal or state courts in the City of New York shall have jurisdiction to hear and determine
any suit, action or proceeding and to settle any dispute between us that may arise out of or in connection with the Deposit Agreement. We
also submitted to the jurisdiction of these courts, and we have appointed an agent for service of process in the City of New York.
Conversion Between Ordinary Shares Trading in Hong Kong and ADSs (Items 12.D.1 and 12.D.4 of Form 20-F)
In connection with the initial public offering of our shares in Hong Kong, we established a branch register of members in Hong
Kong, or the Hong Kong share register, which is maintained by our Hong Kong share registrar, Computershare Hong Kong Investor
Services Limited. Our principal register of members, or the Cayman share register, will continue to be maintained by our principal share
registrar, Conyers Trust Company (Cayman) Limited.
As described in further detail below, holders of ordinary shares registered on the Hong Kong share register will be able to
convert these ordinary shares into ADSs, and vice versa.
Our ADSs
Our ADSs are traded on NASDAQ. Dealings in our ADSs on NASDAQ are conducted in U.S. dollars.
ADSs may be held either:
·
by having a certificated ADS, or an ADR, registered in the holder’s name, or by holding in the direct registration system,
pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by
periodic statements issued by the depositary to the ADS holders entitled thereto; or
·
indirectly, through the holder’s broker or other financial institution.
The depositary for our ADSs is Citibank, N.A., whose office is located at 388 Greenwich Street, New York, New York 10013,
United States.
Converting Ordinary Shares Trading in Hong Kong into ADSs
An investor who holds ordinary shares registered in Hong Kong and who intends to convert them to ADSs to trade on
NASDAQ must deposit or have his or her broker deposit the ordinary shares with the depositary’s Hong Kong custodian, Citibank, N.A.,
Hong Kong, or the custodian, in exchange for ADSs.
A deposit of ordinary shares trading in Hong Kong in exchange for ADSs involves the following procedures:
·
If ordinary shares have been deposited with CCASS, the investor must transfer ordinary shares to the depositary’s account with
the custodian within CCASS by following the CCASS procedures for transfer and submit and deliver a duly completed and
signed conversion form to the depositary via his or her broker.

·
If ordinary shares are held outside CCASS, the investor must arrange to deposit, his or her shares into CCASS for delivery to
the depositary’s account with the custodian within CCASS, submit and deliver a request for conversion form to the custodian
and after duly completing and signing such conversion form, deliver such conversion form to the custodian.
·
Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, if
applicable, the depositary will issue the corresponding number of ADSs in the name(s) requested by an investor and will deliver
the ADSs to the designated DTC account of the person(s) designated.
For ordinary shares deposited in CCASS, under normal circumstances, the above steps generally require two business days. For
ordinary shares held outside CCASS in physical form, the above steps may take 14 business days, or more, to complete. Temporary
delays may arise. For example, the transfer books of the depositary may from time to time be closed to ADS issuances. The investor will
be unable to trade the ADSs until the procedures are completed.
Converting ADSs to Ordinary Shares Trading in Hong Kong
An investor who holds ADSs and who intends to convert his/her ADSs into ordinary shares to trade on the Hong Kong Stock
Exchange must cancel the ADSs the investor holds and withdraw ordinary shares from our ADS program and cause his or her broker or
other financial institution to trade such ordinary shares on the Hong Kong Stock Exchange.
An investor that holds ADSs indirectly through a broker should follow the broker’s procedure and instruct the broker to arrange
for cancelation of the ADSs, and transfer of the underlying ordinary shares from the depositary’s account with the custodian within the
CCASS system to the investor’s Hong Kong stock account.
For investors holding ADSs directly, the following steps must be taken:
·
To withdraw ordinary shares from our ADS program, an investor who holds ADSs may turn in such ADSs at the office of the
depositary (and the applicable ADR(s) if the ADSs are held in certificated form), and send an instruction to cancel such ADSs
to the depositary.
·
Upon payment or net of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, if
applicable, the depositary will cancel the ADSs and instruct the custodian to deliver ordinary shares underlying the canceled
ADSs to the CCASS account designated by an investor.
·
If an investor prefers to receive ordinary shares outside CCASS, he or she must receive ordinary shares in CCASS first and then
arrange for withdrawal from CCASS. Investors can then obtain a transfer form signed by HKSCC Nominees Limited (as the
transferor) and register ordinary shares in their own names with the Hong Kong share registrar.
For ordinary shares to be received in CCASS, under normal circumstances, the above steps generally require two business days.
For ordinary shares to be received outside CCASS in physical form, the above steps may take 14 business days, or more, to complete.
The investor will be unable to trade the ordinary shares on the Hong Kong Stock Exchange until the procedures are completed.
Temporary delays may arise. For example, the transfer books of the depositary may from time to time be closed to ADS
cancelations. In addition, completion of the above steps and procedures is subject to there being a sufficient number of ordinary shares on
the Hong Kong share register to facilitate a withdrawal from the ADS program directly into the CCASS system.
We are not under any obligation to maintain or increase the number of ordinary shares on the Hong Kong share register to
facilitate such withdrawals.

Depositary Requirements
Before the depositary issues ADSs or permits withdrawal of ordinary shares, the depositary may require:
·
production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
·
compliance with procedures it may establish, from time to time, consistent with the deposit agreement, including but not limited
to presentation of transfer documents.
The depositary may refuse to deliver, transfer or register issuances, transfers and cancelations of ADSs generally when the
transfer books of the depositary or our Hong Kong share registrar are closed or at any time if the depositary or we determine it advisable
to do so.
All costs attributable to the transfer of ordinary shares to effect a withdrawal from or deposit of ordinary shares into our ADS
program will be borne by the investor requesting the transfer. In particular, holders of ordinary shares and ADSs should note that the
Hong Kong share registrar will charge between HK$2.50 to HK$20, depending on the speed of service (or such higher fee as may from
time to time be permitted under the Hong Kong Listing Rules), for each transfer of ordinary shares from one registered owner to another,
each share certificate canceled or issued by it and any applicable fee as stated in the share transfer forms used in Hong Kong.
In addition, holders of ordinary shares and ADSs must pay up to US$5.00 per 100 ADSs for each issuance of ADSs and each
cancelation of ADSs, as the case may be, in connection with the deposit of ordinary shares into, or withdrawal of ordinary shares from,
our ADS program.

Exhibit 8.1
List of subsidiaries of H World Group Limited
List of Subsidiaries
 
I.
Directly-Owned Subsidiaries:
 
China Lodging Investment Limited (Cayman Islands)
H World Holdings (HK) Limited (Hong Kong)
H World Holdings Singapore Pte. Ltd. (Singapore)
City Home Group Limited (Cayman Islands)
HanTing (Tianjin) Investment Consulting Co., Ltd. (PRC)
II. Indirectly-Owned Subsidiaries:
1.
100% Owned Subsidiaries
1.001 Starway Hotels (Hong Kong) Limited (Hong Kong)
1.002 Crystal Orange Hotel Holdings Limited (BVI)
1.003 Orange Hotel Hong Kong Limited (Hong Kong)
1.004 ACL Greater China Limited (Hong Kong)
1.005 H World (HK) Investment Limited
1.006 TAHM Investment Limited (Hong Kong)
1.007 Huazhu Investment I Limited (Hong Kong)
1.008 Huazhu Investment II Limited (Hong Kong)
1.009 Starway Hotel Holdings Limited (BVI)
1.010 Hi Inn Hotel Holdings Limited (BVI)
1.011 Hi Inn Hotel (Hong Kong) Limited (Hong Kong)
1.012 Starway Lodging (Hong Kong) Limited (Hong Kong)
1.013 City Home Investment Limited (Hong Kong)
1.014 Huazhu K.K. (Japan)
1.015 Huazhu Investment GmbH (Germany)
1.016 DH Group GmbH & Co. KG (Germany)
1.017 Huazhu Hospitality Inc (BVI)
1.018 Huazhu Hospitality (Hong Kong) Limited (Hong Kong)
1.019 Steigenberger Hotels GmbH (Germany)
1.020 IntercityHotel GmbH (Germany)
1.021 Deutsche Hospitality Hotels Czech Republic s.r.o.(Czech Republic)
1.022 Sourcify GmbH (Germany)
1.023 Steigenberger Consulting GmbH (Germany)
1.024 Deutsche Hospitality Asset GmbH (Germany)
1.025 Hotel Columbia 2 GmbH(Germany)
1.026 Steigenberger Spa GmbH (Germany)
1.027 Hotel Columbia 4 GmbH(Germany)
1.028 STAG Hotelverwaltungs-Gesellschaft mbH (Austria)
1.029 Steigenberger Hotels AG (Switzerland)
1.030 STAG Hotels Netherlands B.V. (Netherlands)
1.031 Scheveningen Hotel Holding B.V. (Netherlands)
1.032 STAG Belgium N.V. (Belgium)
1.033 Steigenberger Italia S.r.l. (Italy)
1.034 Steigenberger DMCC (UAE)
1.035 Tunisian Hospitality Group SARL (Tunisia)
1.036 STAG Hotels Hungary Szállodaipari Kft. (Hungary)
1.037 Deutsche Hospitality Hotels Spain S.L. (Spain)
1.038 Steigenberger Akademie GmbH (Germany)
1.039 STEIGENBERGER HOTELFACHSCHULE GmbH (Germany)
1.040 Steigenberger Berufsfachschule für Assistenten im Hotel- und Tourismusmanagement gGmbH (Germany)
1.041 STEIGENBERGER HOTELBERUFSFACHSCHULE GmbH (Germany)
1.042 Yagao Meihua Hotel Management Co., Ltd.
1.043 Tianjin Yagao Hotel Management Co., Ltd.

1.044 Starway Hotel Management (Shanghai) Co., Ltd.
1.045 Orange Hotel Management (China) Co., Ltd.
1.046 Beijing Crystal Orange Hotel Management Consulting Co., Ltd.
1.047 Beijing Orange Times Softwares Technology Co., Ltd.
1.048 Yiju (Shanghai) Hotel Management Co., Ltd.
1.049 Shanghai HanTing Hotel Management Group, Ltd.
1.050 HanTing Xingkong (Shanghai) Hotel Management Co., Ltd.
1.051 Hanting (Shanghai) Enterprise Management Co., Ltd.
1.052 Huazhu (Hainan) Hotel Management Co., Ltd
1.053 Shanghai Huaxiang Catering Management Co., Ltd.
1.054 Hai Haiyou Hotel Management (Ningbo) Co., Ltd.
1.055 Xingji Hotel Management (Ningbo) Co., Ltd.
1.056 Suzhou Siting Hotel Limited
1.057 Nanjing Yiya Hotel Management Co., Limited
1.058 Tianjin Huazhu Hotel Limited
1.059 Chengdu Kehua Hotel Limited
1.060 Chengdu Siting Hotel Limited
1.061 Ya’an Yiya Hotel Limited
1.062 Huasu (Hainan) Enterprise Management Co., Ltd.
1.063 Jizhu Information Technology (Shanghai) Co., Ltd.
1.064 Huazhu Hotel Management (Ningbo) Co., Ltd.
1.065 Huazhu Xingshun (Suzhou) Tourism Investment Co., Ltd.
1.066 Shanghai Chengge Hotel Management Co., Ltd.
1.067 Huazhu Hotel Management (Shenzhen) Co., Ltd.
1.068 Shanghai Shuohong Hotel Management Co., Ltd.
1.069 Shanghai Ibis Hotel Management Co., Limited
1.070 Nanjing Meiyue Hotel Management Co., Ltd.
1.071 Xi’an Anruosi Hotel Management Co., Ltd.
1.072 Xi’an Yusi Hotel Management Co., Ltd.
1.073 Ibis Xiamen Hotel Limited
1.074 Beijing Yaoting Hotel Management Co., Ltd.
1.075 Beijing Xiting Hotel Management Co., Ltd.
1.076 Beijing Huazhu Ruijing Hotel Management Co., Ltd.
1.077 Shanghai Yiju Hotel Management Co., Ltd. （上海逸居酒店管理有限公司）
1.078 Wuxi Yiju Hotel Management Co., Ltd.
1.079 Shanghai Yate Hotel Management Co., Ltd.
1.080 Shanghai Songting Hotel Management Co., Ltd.
1.081 Shanghai Qinting Hotel Management Co., Ltd. （上海沁庭酒店管理有限公司）
1.082 Shanghai Xinting Hotel Management Co., Ltd.（上海新庭酒店管理有限公司）
1.083 Shanghai Pengting Hotel Management Co., Ltd.
1.084 Shanghai Luting Hotel Management Co., Ltd.
1.085 Shanghai Haoting Hotel Management Co., Ltd. （上海灏庭酒店管理有限公司）
1.086 Shanghai Changting Hotel Management Co., Ltd.（上海长庭酒店管理有限公司）
1.087 Shanghai Jiating Hotel Management Co., Ltd.
1.088 Shanghai Xiting Hotel Management Co., Ltd.  (上海熙庭酒店管理有限公司)
1.089 Shanghai Yaogu Shangwu Hotel Management Co., Ltd.
1.090 Shanghai Aiting Hotel Management Co., Ltd.
1.091 Shanghai Yiju Hotel Management Co., Ltd. （上海宜居酒店管理有限公司）
1.092 Shanghai Qinting Hotel Management Co., Ltd. （上海钦庭酒店管理有限公司）
1.093 Shanghai Changting Hotel Management Co., Ltd.（上海畅庭酒店管理有限公司）
1.094 Shanghai Huawei Education Technology Co., Ltd.
1.095 Hangzhou Qiuting Hotel Management Co., Ltd.

1.096 Hangzhou Yishitan Investment and Management Co., Ltd.
1.097 Hangzhou Senting Hotel Management Co., Ltd.
1.098 Beijing Zhongting Hotel Management Co., Ltd.
1.099 Beijing HanTing Jiamei Hotel Management Co., Ltd.
1.100 Beijing HanTing Ruijing Hotel Management Co., Ltd.
1.101 Beijing Jiating Hotel Management Co., Ltd.
1.102 Beijing Anting Hotel Management Co., Ltd.
1.103 Tianjin Yiting Hotel Management Co., Ltd.
1.104 Tianjin HanTing Xingkong Hotel Management Co., Ltd.
1.105 Xi’an HanTing Fukai Hotel Management Co., Ltd.
1.106 Xi’an Fengting Hotel Management Co., Ltd.
1.107 Jinan Hanting Hotel Management Co., Ltd.
1.108 Zibo HanTing Hotel Management Co., Ltd.
1.109 Xiamen Wuting Hotel Co., Ltd.
1.110 Xiamen Tingju Hotel Co., Ltd.
1.111 Xiamen Xiating Hotel Co., Ltd.
1.112 Guangzhou Chengting Hotel Management Co., Ltd.
1.113 Guangzhou Shangbin Hotel Co., Ltd.
1.114 Guangzhou Mengting Hotel Management Co., Ltd.
1.115 Guangzhou Huiting Hotel Management Co., Ltd.
1.116 Guangzhou Meiting Hotel Management Co., Ltd.
1.117 Shenzhen Shenting Hotel Management Co., Ltd.
1.118 Shenzhen HanTing Hotel Management Co., Ltd.
1.119 Taiyuan Hanting Jiangnan Hotel Management Co., Ltd.
1.120 Wuhan Changting Hotel Management Co., Ltd.
1.121 Shenyang Maruika Hotel Management Co., Ltd.
1.122 Kunming Xiting Hotel Management Co., Ltd.
1.123 Baotoushi Anting Hotel Management Co., Ltd.
1.124 Huazhu Hotel Management Co., Ltd.
1.125 Hanting Technology (Suzhou) Co., Ltd.
1.126 Tianjin Huasu Enterprise Management Co., Ltd.
1.127 Shanghai Keting E-Commerce Co., Ltd.
1.128 Shanghai Huazhu Commercial Factoring Co., Ltd.
1.129 Shanghai Zhiyu Information Consulting Co., Ltd.
1.130 Chengdu Zongju Hotel Management Co., Ltd.
1.131 Tianjin Huarui Hotel Management Co., Ltd.
1.132 Banma Yigou E-Commerce Co., Ltd.
1.133 Shanghai Huiting Hotel Management Co., Ltd. （上海荟庭酒店管理有限公司）
1.134 Shanghai Huiyue Hotel Management Co., Ltd.
1.135 Shanghai Fanting Hotel Management Co., Ltd.
1.136 Shanghai Yinting Hotel Management Co., Ltd.
1.137 Shanghai Guangting Hotel Management Co., Ltd.
1.138 Shanghai Lanting Hotel Management Co., Ltd.
1.139 Shanghai Baiting Hotel Management Co., Ltd.
1.140 Shanghai Chengji Hotel Management Co., Ltd.
1.141 Shanghai Xingting Hotel Management Co., Ltd.
1.142 Shanghai Baoting Hotel Management Co., Ltd.
1.143 Shanghai Fangpu Hotel Management Co., Ltd.
1.144 Shanghai Manao Hotel Management Co., Ltd.
1.145 Hangzhou Pingting Hotel Management Co., Ltd.
1.146 Hangzhou Wenxuan Hotel Management Co., Ltd.
1.147 Hangzhou Miaoting Hotel Management Co., Ltd.
1.148 Jinan Luoting Hotel Management Co., Ltd.
1.149 Xi’an Yahua Hotel Management Co., Ltd.
1.150 Xi’an Quanji Maoting Hotel Management Co., Ltd.
1.151 Kunshan Bizhu Enterprise Management Co., Ltd.
1.152 Hangzhou Yilai Hotel Chain Co., Ltd.
1.153 Huazhu Enterprise Management Co., Ltd.
1.154 Shanghai Aiqu Enterprise Management Co., Ltd.

1.155 Shanghai Wuqin Equity Fund Co., Ltd.
1.156 Huazhu Investment (Shanghai) Co., Ltd.
1.157 Shanghai Jijing Catering Co., Ltd.
1.158 Shanghai Yiju Hotel Management Co., Ltd. （上海宜桔酒店管理有限公司）
1.159 Shanghai Shangting Hotel Management Co., Ltd.
1.160 Shanghai Hongting Hotel Management Co., Ltd.
1.161 Shanghai Duting Hotel Management Co., Ltd.
1.162 Shanghai Hongxi Hotel Management Co., Ltd.
1.163 Shanghai Haoting Hotel Management Co., Ltd. （上海郝庭酒店管理有限公司）
1.164 Shanghai Tongji Hotel Management Co., Ltd.
1.165 Shanghai Chunting Hotel Management Co., Ltd.
1.166 Shanghai Moting Hotel Management Co., Ltd.
1.167 Hangzhou Ansheng Hotel Management Co., Ltd.
1.168 Suzhou Lishan Yatai Hotel Management Co., Ltd.
1.169 Suzhou Yongchangjiahe Hotel Management Co., Ltd.
1.170 Wantong Yiguan (Beijing) Hotel Management Co., Ltd.
1.171 Beijing Dongnian Hotel Co., Ltd.
1.172 Zhuhai Manneijiali Investment Development Company Limited
1.173 Guangzhou Zhongting Quanji Hotel Management Co., Ltd.
1.174 Guangzhou Didu Hotel Management Co., Ltd.
1.175 Guangzhou Bihua Hotel Management Co., Ltd.
1.176 Shanghai Hua Yu Zhou enterprise Management Co., Ltd.
1.177 Shenzhen Chengxuan Hotel Management Co., Ltd.
1.178 Shenzhen Qiquan Hotel Management Co., Ltd.
1.179 Shanghai Jizhu Investment Management Co., Ltd.
1.180 Kunshan Hanka Catering Management Co., Ltd.
1.181 Ningbo Huating Investment Consulting Co., Ltd.
1.182 Ningbo Huating Galaxy Investment Management Co., Ltd.
1.183 Shanghai Huazhu Chengxing Management Consulting Co., Ltd.
1.184 Huazhu Enterprise Management (Zhuhai Hengqin) Co., Ltd.
1.185 Hangzhou Yueli Yilai Hotel Co., Ltd.
1.186 Hangzhou Maolu Yilai Hotel Co., Ltd.
1.187 Hangzhou Qiandaohu Yilai Resort Co., Ltd.
1.188 Beijing Qitian Holiday Hotel Co., Ltd.
1.189 Beijing Crystal Orange Hotel Management Co., Ltd.
1.190 Beijing Orange Times Hotel Management Co., Ltd.
1.191 Shanghai Juchao Department Management Co., Ltd.
1.192 Guiyang Yangguang Hotel Management Co., Ltd.
1.193 Beijing Yuecheng Hotel Management Co., Ltd.
1.194 Hangzhou Zhongcheng Hotel Management Co., Ltd.
1.195 He Garden Hotel (Beijing) Co., Ltd.
1.196 Xi 'an Chengjia Fukai Hotel Management Co., Ltd.
1.197 Shanghai Shiju Catering Service Co., Ltd.
1.198 Tianjin Jizhu Information Technology Co., Ltd.
1.199 Ningbo Futing Enterprise Management Co., Ltd.
1.200 Huanmei Information Technology (Shanghai) Co., Ltd.
1.201 Huanmei International Travel Service (Shanghai) Co., Ltd.
1.202 Hanting Hesheng (Suzhou) Hotel Management Co., Ltd.
1.203 Beijing Hanting Hotel Management Co., Ltd.
1.204 Shanghai HanTing Guancheng Hotel Management Co., Ltd.
1.205 Tianjin Huazhu Finance Leasing Co., Ltd.
1.206 Jiangsu Keting Commercial and Trade Co., Ltd
1.207 Ningbo Jishi Investment Management LLP
1.208 Ningbo Jisu Investment Management LLP
1.209 Ningbo Qiji Galaxy Investment Management Center LLP
1.210 Blossom Hotel Investment Management (Kunshan) Co., Ltd.
1.211 Huazhu (Shanghai) Hotel Management Co., Ltd.
1.212 Shanghai Blossom House Investment Management Co., Ltd.
1.213 Shanghai Blossom Hotel Management Co., Ltd.

1.214 Shanghai Changguan Investment Management Co., Ltd.
1.215 Chengdu Jishun Hotel Management Co., Ltd.
1.216 Wuxi Blossom House Culture Tourism Investment Co., Ltd.
1.217 Suzhou Blossom Hotel Investment Management Co., Ltd.
1.218 Huzhou Blossom House Hotel Investment Management Co., Ltd.
1.219 Ningbo Blossom House Hotel Management Co., Ltd.
1.220 Lijiang Blossom House Hotel Management Co., Ltd.
1.221 Diqingzhou Blossom House Hotel Management Co., Ltd.
1.222 Guangzhou Huange Hotel Management Co., Ltd.
1.223 H World Technologies Pte. Ltd.
1.224 H Rewards Pte. Ltd.
1.225 Jisu Enterprise Management Co., Ltd.
1.226 Changsha Changting Hotel Management Co., Ltd.
1.227 Shanghai Huaxiang Six Catering Management Co., Ltd.
1.228 Nanjing Hongying Hotel Management Co., Ltd.
1.229 Wuxi Hanting Hotel Management Co., Ltd.
1.230 H World Hotel Management Pte. Ltd.
1.231 Shanghai Huaxiang Four Catering Management Co., Ltd.
1.232 Huazhu Cloud (Shanghai) Information Technology Co., Ltd.
1.233 Jinan Hanjia Hotel Management Co., Ltd.
1.234 Shanghai Yaoting Enterprise Management Co., Ltd.
1.235 Shanghai Xingqing Hotel Management Co., Ltd.
1.236 Elan Hotel Holdings Limited (BVI)
1.237 Elan Hotel (Hong Kong) Limited (Hong Kong)
1.238 Jihao Hotel Management (Shanghai) Co., Ltd.
1.239 Shanghai Huaye Xingkong Enterprise Management Co., Ltd.
1.240 Shanghai Juzhou Hotel Management Co., Ltd.
1.241 Yangzhou Jiting Hotel Management Co., Ltd.
1.242 Huazhu Gou (Shanghai) Trading Co., Ltd.
1.243 Ningbo Hongting Investment Management Center LLP
1.244 Shanghai Qiting Hotel Management Co., Ltd.
1.245 Qingdao Xiangye Hotel Management Co., Ltd.
1.246 Shanghai Yide Hotel Management Co., Ltd.
2.
Majority-Owned Subsidiaries
    
    
    
2.01
Shanghai Leshu Hotel Management Co., Ltd.
100%
equity interests
owned by
Shanghai Ruiji Hotel Management Co., Ltd.
2.02
Shanghai Mingxin Hotel Management Co., Ltd.
100%
equity interests
owned by
Shanghai Ruiji Hotel Management Co., Ltd.
2.03
Shanghai Mingjing Hotel Investment Management Co., Ltd.
100%
equity interests
owned by
Shanghai Ruiji Hotel Management Co., Ltd.
2.04
Xiamen Leshu Hotel Management Co., Ltd.
100%
equity interests
owned by
Shanghai Ruiji Hotel Management Co., Ltd.
2.05
Fuzhou Leshu Hotel Management Co., Ltd.
100%
equity interests
owned by
Shanghai Ruiji Hotel Management Co., Ltd.
2.06
Changxing Longguan Culture Development Co., Ltd.
100%
equity interests
owned by
Shanghai Longhua Investment Management Co. Ltd.
2.07
Suzhou Zhongzhou Express Hotel Co. Ltd.
100%
equity interests
owned by
Henan Zhongzhou Express Hotel Investment Co., Ltd.
2.08
Jiaozuo Zhongzhou Express Hotel Co. Ltd.
100%
equity interests
owned by
Henan Zhongzhou Express Hotel Investment Co., Ltd.
2.09
Hangzhou Yuexi Hotel Management Co., Ltd.
91.83%
equity interests
owned by
Blossom Hotel Investment Management (Kunshan)
Co., Ltd.
2.10
Suzhou Blossom House Hotel Management Co., Ltd.
60%
equity interests
owned by
Blossom Hotel Investment Management (Kunshan)
Co., Ltd.
2.11
Kunshan Zhouzhuang Blossom House Hotel Investment
Management Co., Ltd.
60%
equity interests
owned by
Blossom Hotel Investment Management (Kunshan)
Co., Ltd.
2.12
Sichuan Blossom House Hotel Investment Management Co., Ltd.
51%
equity interests
owned by
Blossom Hotel Investment Management (Kunshan)
Co., Ltd.
2.13
Shanghai Longhua Investment Management Co., Ltd.
51%
equity interests
owned by
Shanghai Changguan Investment Management Co., Ltd.
2.14
Guangzhou Yahua Puxin Hotel Co., Ltd.
90%
equity interests
owned by
Jisu Enterprise Management Co., Ltd.
2.15
Shanghai Meixie Hotel Management Co., Ltd.
60%
equity interests
owned by
Yagao Meihua Hotel Management Co., Ltd.
2.16
Shanghai Suting Hotel Management Co., Ltd.
99%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.17
Beijing Hanting Oriental Hotel Management Co., Ltd.
99%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.

2.18 Urumqi Luting Hotel Management Co., Ltd.
    
99%
    equity interests
owned by
    Shanghai HanTing Hotel Management Group, Ltd.
2.19 Urumqi Qiting Hotel Management Co., Ltd.
99%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.20 Chongqi Yiting Hotel Management Co., Ltd.
99%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.21 Xi’an Bangting Hotel Management Co., Ltd.
99%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.22 Shanghai Liansheng Hotel Co., Ltd.
90%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.23 Chengdu Changting Hotel Management Co., Ltd.
80%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.24 Nanjing Leting Hotel Management Co., Ltd.
80%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.25 Chengdu Yuting Hotel Management Co., Ltd.
60%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.26 Shanghai Huiting Hotel Management Co., Ltd. （上海辉庭
酒店管理有限公司）
55%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.27 Chengdu HanTing Yangchen Hotel Management Co., Ltd.
51%
equity interests
owned by
Shanghai HanTing Hotel Management Group, Ltd.
2.28 Shanghai Dingting Hotel Management Co., Ltd.
55%
equity interests
owned by
HanTing Xingkong (Shanghai) Hotel Management
Co., Ltd.
2.29 Nanjing Zhuting Hotel Management Co., Ltd.
51%
equity interests
owned by
HanTing Xingkong (Shanghai) Hotel Management
Co., Ltd.
2.30 Hangzhou Chenji Hotel Management Co., Ltd.
51%
equity interests
owned by
HanTing Xingkong (Shanghai) Hotel Management
Co., Ltd.
2.31 Xi’an Jvting Hotel Management Co., Ltd.
90%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.32 Shenzhen Nanshen Hotel Management Co., Ltd.
88%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.33 Henan Zhongzhou Express Hotel Investment Co., Ltd.
85%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.34 Suzhou Zhujiangnan Hotel Management Co., Ltd.
66%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.35 Shanghai Junrui Hotel Co., Ltd.
60%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.36 Wenzhou Yaozhu Hotel Management Co., Ltd.
60%
equity interests
owned by
Huazhu Hotel Management Co., Ltd.
2.37 Yongle Huazhu Hotel & Resort Group
50%
equity interests
owned by
Huazhu Hospitality (Hong Kong) Limited
2.38 Beijing Shenzhou Business Travel Hotel Investment
Management Co., Ltd.
85%
equity interests
owned by
Hanting (Shanghai) Enterprise Management Co., Ltd.
2.39 Shenzhen Shijie Chengjia Hotel Management Co., Ltd.
51%
equity interests
owned by
Shanghai Chengge Hotel Management Co., Ltd.
2.40 Shanghai Ruicheng Hotel Management Co., Ltd.
50%
equity interests
owned by
Shanghai Chengge Hotel Management Co., Ltd.
2.41 Shanghai Shenzhou Business Travel Hotel Co., Ltd.
100%
equity interests
owned by
Beijing Shenzhou Business Travel Hotel Investment
Management Co., Ltd.
2.42 Shanghai Ruiji Hotel Management Co., Ltd.
50%
equity interests
owned by
Huazhu Investment (Shanghai) Co., Ltd.
2.43 Beijing Hualige Hotel Management Co., Ltd.
40%
equity interests
owned by
Starway Hotel Management (Shanghai) Co., Ltd.
2.44 Hefei Jucheng Hotel Management Consulting Co., Ltd.
70%
equity interests
owned by
Beijing Crystal Orange Hotel Management Consulting
Co., Ltd.
2.45 Nanjing Jinlv Huazhu Mingri City Hotel Co., Ltd.
100%
equity interests
owned by
Jiangsu Jinlv Huazhu Hotel Management Co., Ltd.
2.46 Shanghai Twelve Shichen Supply Chain Technology Co.,
Ltd.
90%
equity interests
owned by
Jisu Enterprise Management Co., Ltd.
2.47 Zhengzhou Tiancheng Express Hotel Co. Ltd.
65% equity interests owned by Henan Zhongzhou Express Hotel Investment Co., Ltd.,
and 35% equity interests owned by Huazhu Hotel Management Co., Ltd.
2.48 Jiangsu Jinlv Huazhu Hotel Management Co., Ltd.
39% equity interests owned by Huazhu Hotel Management Co., Ltd., and 15% equity
interests owned by Ningbo Futing Enterprise Management Co., Ltd.

1
Exhibit 11.2
H WORLD GROUP LIMITED
AMENDED AND RESTATED STATEMENT OF POLICIES
GOVERNING MATERIAL, NON-PUBLIC INFORMATION
AND THE PREVENTION OF INSIDER TRADING
(Adopted by the Board of Directors of H World Group Limited on December 12, 
2024, effective immediately)
This Amended and Restated Statement of Policies Governing Material, Non-Public Information and the Prevention of Insider
Trading (this “Statement”) applies to all directors, officers, employees and certain consultants and contractors of H World Group Limited
and its subsidiaries and affiliated entities (collectively, the “Company”) or any other person or entity (a) over which an individual
mentioned above exercises influence or control of its investment decisions, or (b) which effects a transaction in the Company’s securities,
which securities are in fact beneficially owned by any of the individuals mentioned above (“Insider(s)”).
Every Insider must review this Statement, and execute and return the Certificate of Compliance attached hereto to the Head of
Legal Department (the “General Counsel”) within seven (7) days after you receive this Policy. Questions regarding the Statement should
be directed to the Head of Legal Department.
This Statement consists of three sections: Section I provides an overview; Section II sets forth the Company’s policies
prohibiting insider trading; and Section III explains insider trading.
I. SUMMARY
Preventing insider trading is necessary to comply with United States securities law and to preserve the reputation and integrity
of the Company as well as that of all persons affiliated with it. “Insider trading” occurs when any person purchases or sells securities
while in possession of inside information relating to such securities. As explained in Section III below, “inside information” is
information which is considered to be both “material” and “non-public.”
The Company considers strict compliance with the policies (the “Policy”) set forth in this Statement to be a matter of utmost
importance. Violation of this Policy could cause extreme reputational damage and possible legal liability to you and the Company.
Knowing or willful violations of this Statement or spirit of this Policy will be grounds for immediate dismissal from the Company.
Violation of the Policy might expose the violator to severe criminal penalties as well as civil liability to any person injured by the
violation. The monetary damages flowing from a violation could be three times the profit realized by the violator, as well as the
attorney’s fees of the persons injured.

2
II. POLICIES PROHIBITING INSIDER TRADING
For purposes of this Statement, while the terms “purchase” and “sell” of securities exclude the acceptance of share incentive
awards granted by the Company thereof and the exercise of share incentive awards that does not involve the sale of securities, the
cashless exercise of options does involve the sale of securities and therefore is subject to the policies set forth below.
A.
No Trading - No Insider shall purchase or sell any securities of the Company or enter into a binding security
trading plan in compliance with Rule 10b5-1 under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act,”
and such a plan, a “Rule 10b5-1 plan”) while in possession of material, non-public information relating to the Company, its ADSs
or other securities (the “Material Information”) or during certain periods. See Section III-F for additional procedures and
guidelines regarding Rule 10b5-1 plans.
In the event that the Material Information possessed by you relates to the ADSs or other securities of the Company, the
above policy will require waiting for at least forty-eight (48) hours after public disclosure of the Material Information by the Company,
which forty-eight (48) hours shall include in all events at least one full Trading Day on Nasdaq following such public disclosure. The
term “Trading Day” is defined as a day on which Nasdaq is open for trading. Except for public holidays in the United States, Nasdaq’s
regular trading hours are from 9:30 a.m. to 4:00 p.m., New York City time, Monday through Friday.
In addition, no Insider shall purchase or sell any securities of the Company or enter into a Rule 10b5-1 Plan, regardless
of whether such Insider possesses any Material Information, (1) during any period commencing at the close of the Trading Window and
ending at the close of trading on the second Trading Day following the date upon which the Company’s earnings statement for that fiscal
quarter is released to the public; or (2) without the prior clearance by the General Counsel during any period designated as a “limited
trading period.” The General Counsel may declare limited trading periods at the times that he deems appropriate, and need not provide
any reason for making a declaration.
Furthermore, any director and Section 16 officer1 of the Company must notify the General Counsel of all his/her
transactions in the Company’s securities (including without limitation, acquisitions and dispositions of the ADSs, the sale of ordinary
shares issued upon exercise of share incentive awards and the execution or termination of a Rule 10b5-1 plan or any other non-Rule
10b5-1 plan, but excluding the
1 An officer who is deemed to be an “officer” in accordance with Rule 16a-1(f) of the Exchange Act. Under Section 16, officers include
the company’s president, principal financial officer, principal accounting officer (or, if there is no principal accounting officer, the
controller), and any vice president in charge of a principal business unit, division or function (such as sales, administrative or finance). In
addition, any other officer who performs a policy-making function or any other person who performs similar policy-making functions for
the company is considered an “officer” under Rule 16a-1(f). For the Company, it refers to the executive officers disclosed in the
Company’s annual report on Form 20-F.

3
acceptance of share incentive awards granted by the Company and the exercise of share incentive awards that does not involve the sale of
securities) before executing such transactions.
Please see Section III below for an explanation of the Material Information.
B.
Trading Window for Insiders - Assuming none of the “no trading” restrictions set forth in Section II-A above
applies, Insiders may only purchase or sell any securities of the Company or enter into a Rule 10b5-1 plan or any non-Rule 10b5-
1 plan during the “Trading Window.” Generally, there will be four Trading Windows per year, each commencing with the close of
trading on the second Trading Day following the date upon which the Company’s financial results for the prior fiscal quarter is released
to the public and continuing until the close of trading on the last Trading Day of the last month of each fiscal quarter.
If the Company’s public disclosure of its financial results for the prior period occurs on a Trading Day more than four
hours before Nasdaq closes, then such date of disclosure shall be considered the first Trading Day following such public disclosure.
Please note that trading in Company securities during the Trading Window is not a “safe harbor,” and all
Insiders should strictly comply with all other policies set forth in this Statement.
When in doubt, do not trade! Check with the General Counsel first.
C.
No Tipping - No Insider shall directly or indirectly disclose any Material Information to anyone who trades in
securities (so-called “tipping”) while in possession of such Material Information.
D.
Confidentiality - No Insider shall communicate any Material Information to anyone outside the Company under any
circumstances unless approved by the General Counsel in advance, or to anyone within the Company other than on a need-to-know basis.
E.
No Comment - No Insider shall discuss any internal matters or developments of the Company with anyone outside of
the Company, except as required in the performance of regular corporate duties. Unless you are expressly authorized to the contrary, if
you receive any inquiries about the Company or its securities by the financial press, investment analysts or others, or any requests for
comments or interviews, you should decline to comment and direct the inquiry or request to the General Counsel.
F.
Corrective Action - If any potentially Material Information is inadvertently disclosed, any Insider should notify the
General Counsel immediately so that the Company can determine whether or not corrective action, such as general disclosure to the
public, is warranted.
G.
Additional Prohibited Transactions
(a)
Short-Term Trading - Short-term trading of the Company’s securities

4
may be distracting and may unduly focus the investor on the Company’s short-term stock market performance instead of the Company’s
long-term business objectives. For these reasons, Insiders who purchase Company securities in the open market may not sell any
Company securities of the same class during the six months following the purchase.
(b)
Short Sales - Short sales of the Company’s securities evidence an expectation on the part of the seller that the
securities will decline in value, and therefore signal to the market that the seller has no confidence in the Company or its short-term
prospects. In addition, short sales may reduce the seller’s incentive to improve the Company’s performance. For these reasons, Insiders
are prohibited from engaging in short sales of the Company’s securities.
(b)
Publicly-Traded Options - A transaction in options is, in effect, a bet on the short-term movement of the
Company’s stock and therefore creates the appearance that the Insider is trading based on inside information. Transactions in options also
may focus the investor’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly,
transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are strongly discouraged. Any
Insider wishing to enter into such an arrangement must first pre-clear the proposed transaction with the Board of Directors of the
Company. Any request for pre-clearance of a publicly-traded options transaction must be submitted to the Chairman of the Board at least
two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the
proposed transaction.

5
III. EXPLANATION OF INSIDER TRADING
As noted above, “insider trading” refers to the purchase or sale of securities while in possession of “material” and “non-public”
information relating to such securities. “Securities” include not only stocks, bonds, notes and debentures, but also options, warrants and
similar instruments. “Purchase” and “sale” are defined broadly under the federal securities law. “Purchase” includes not only the actual
purchase of securities, but any contract to purchase or otherwise acquire securities. “Sale” includes not only the actual sale of securities,
but any contract to sell or otherwise dispose of securities. These definitions extend to a broad range of transactions including
conventional cash-for-stock transactions, the grant and exercise of stock options and acquisitions and exercises of warrants or puts, calls
or other options related to the securities. It is generally understood that insider trading includes the following:
·
trading by Insiders while in possession of material, non-public information;
·
trading by persons other than Insiders while in possession of material, non- public information where the information
either was given in breach of an Insider’s fiduciary duty to keep it confidential or was misappropriated; or
·
communicating or tipping material, non-public information to others, including recommending the purchase or sale of
the securities while in possession of such information.
As noted above, for purposes of this Statement, the terms “purchase” and “sell” of securities exclude the acceptance of
share incentive awards granted by the issuer thereof and the exercise of share incentive awards that does not involve the sale of
securities. Among other things, the cashless exercise of options does involve the sale of securities and therefore is subject to the policies
set forth in this Statement.
A.
What Facts are Material?
The materiality of a fact depends upon the circumstances. A fact is considered “material” if it could reasonably be
expected to affect the decision of a reasonable investor to buy, sell or hold the Company’s securities or where the fact is likely to have a
significant effect on the market price of the Company’s securities. Material Information can be positive or negative and can relate to
virtually any aspect of a company’s business or to any type of securities, debt or equity.
Examples of Material Information include (but are not limited to) information concerning:
·
dividends;
·
corporate earnings or earnings forecasts;
·
significant changes in financial condition or asset value;

6
·
negotiations for the mergers or acquisitions or dispositions of significant subsidiaries or assets;
·
negotiations for material business alliance and collaboration arrangements;
·
significant new contracts or the loss of a significant contract;
·
significant new products or services;
·
significant marketing plans or changes in such plans;
·
significant capital investment plans or changes in such plans;
·
material litigation, administrative action or governmental investigations or inquiries about the Company or any of its
affiliated companies, officers or directors;
·
significant borrowings or financings;
·
defaults on significant borrowings;
·
significant equity or debt offerings;
·
significant personnel changes;
·
material changes in accounting methods and write-offs; and
·
any substantial change in industry circumstances or competitive conditions which could significantly affect the
Company’s earnings or prospects for expansion.
A good general rule of thumb: when in doubt, do not trade. One convenient rule of thumb in making this
determination is to ask yourself, “Would the person on the other side of this transaction still want to complete the trade at this price if he
or she knew what I know about the Company?” If the answer is “no,” chances are you possess material, non- public information.
B.
What is Non-public?
Information is “non-public” if it has not been disclosed in a manner that allows it to be widely disseminated. In order
for information to be considered public, it must be widely disseminated in a manner making it generally available to investors such as in
a press release or in the Company’s filing with the United States Security and Exchange Commission (the “SEC”), or through such media
as Dow Jones, Reuters Economic Services, The Wall Street Journal, Bloomberg, Associated Press, PR Newswire or United Press
International. The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination.
In addition, even after a public announcement, a reasonable period of time

7
must lapse in order for the market to react to the information. Generally, one should allow approximately forty-eight (48) hours following
publication as a reasonable waiting period before such information is deemed to be public.
C.
Who is an Insider?
Insiders include all directors, officers, employees and certain consultants and contractors of the Company or any other
person or entity (a) over which an individual mentioned above exercises influence or control of its investment decisions, or (b) which
effects a transaction in the Company’s securities, which securities are in fact beneficially owned by any of the individuals mentioned
above. Insiders have independent fiduciary duties to their company and its stockholders not to trade on material non-public information
relating to the company’s securities. In addition, family members and friends of Insiders as well as professional advisors of the Company
(e.g. accountants, attorneys, investment bankers and consultants) who receive material, non-public information about the Company may
also fall under the definition of Insiders of the Company.
It should be noted that trading by members of an Insider’s family members can be the responsibility of such Insider
under certain circumstances and could give rise to legal and Company-imposed sanctions.
D.
Trading by Persons Other than Insiders
Insiders are also prohibited from disclosing material non-public information, or making a recommendation or
expressing an opinion regarding the Company’s securities based on such information, to others who might use the information to trade in
the Company’s securities. Both the Insider who communicated the material non-public information and the person who receives and uses
such information (the “Tippee”) may be liable under United States securities laws.
Persons other than Insiders also can be liable for insider trading, including Tippees who trade on material, non-public
information tipped to them or individuals who trade on material, non-public information which has been misappropriated. Tippees inherit
an Insider’s duties and are liable for trading on material, non-public information illegally tipped to them by an Insider. Similarly, just as
Insiders are liable for the insider trading of their Tippees, so are Tippees who pass the information along to others who trade. In other
words, a Tippee’s liability for insider trading is no different from that of an Insider. Tippees can obtain material, non-public information
by receiving overt tips from others or through, among other things, conversations at social, business, or other gatherings.
E.
Penalties for Engaging in Insider Trading
Penalties for trading on or tipping material, non-public information can extend significantly beyond any profits made
or losses avoided, both for individuals engaging in such unlawful conduct and their employers. The SEC and the United States
Department of Justice have made the civil and criminal prosecution of insider trading violations a top priority. Enforcement remedies
available to the government or private plaintiffs under the federal securities laws include:

8
·
SEC administrative sanctions;
·
securities industry self-regulatory organization sanctions;
·
civil injunctions;
·
damage awards to private plaintiffs;
·
disgorgement of all profits;
·
civil fines for the violator of up to three times the amount of profit gained or loss avoided;
·
civil fines for the employer or other controlling person of a violator (i.e., where the violator is an employee or other
controlled person) of up to the greater of US$1,000,000 or three times the amount of profit gained or loss avoided by
the violator;
·
criminal fines for individual violators of up to US$5,000,000 (US$25,000,000 for an entity); and
·
jail sentences of up to 20 years.
In addition, insider trading could result in serious sanctions by the Company, including immediate dismissal. Insider
trading violations are not limited to violations of the federal securities laws: other federal and state civil or criminal laws, such as the
laws prohibiting mail and wire fraud and the United States Racketeer Influenced and Corrupt Organizations Act (RICO), may also be
violated upon the occurrence of insider trading.
F.
Transactions under Rule 10b5-1 plans
Implementation of a trading plan under Rule 10b5-1 under the Exchange Act, allows a person to place a standing order
with a broker to purchase or sell Company securities, so long as the plan specifies the dates, prices and amounts of the planned trades or
establishes a formula for those purposes. Trades executed pursuant to a Rule 10b5-1 plan that meets the requirements listed below may
generally be executed even though the person who established the plan may be in possession of material non-public information at the
time of the trade. Any other trading plans that are not implemented under Rule 10b5-1, that do not have the protections of Rule 10b5-1,
are referred to as non-Rule 10b5-1 plans.
A Rule 10b5-1 plan may only be established when a person is not in possession of material non-public information and
when a blackout period is not in effect. Anyone subject to this Policy who wishes to enter into a Rule 10b5-1 plan must submit the Rule
10b5-1 plan to the General Counsel for prior, written approval. Subsequent termination or modifications to any Rule 10b5-1 plans must
also be pre-approved by the General Counsel.
Whether or not pre-approval will be granted will depend on all the facts and circumstances at the time, but the
following guidelines should be kept in mind:
·
The Rule 10b5-1 plan must be in writing and entered into only when a blackout period under this policy (for example,
outside of trading window or

9
in possession of material non-public information) is not in effect and when the individual is not in possession of
material non-public information;
·
The Rule 10b5-1 plan must be adopted in good faith and not as part of a plan or scheme to evade the anti-fraud rules
under the federal securities laws, and the individual must at all times act in good faith with respect to the Rule 10b5-1
plan;
·
Any person adopting the Rule 10b5-1 plan who serves as a director or Section 16 officer of the Company must certify
in writing, in the terms of the Rule 10b5-1 plan agreement, that, at the time of the adoption of a Rule 10b5-1 plan
(whether a new plan or due to a Termination Modification, as defined below): (1) they are not aware of material
nonpublic information about the Company or the Company’s securities; and (2) they are adopting the plan in good faith
and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5;
·
Any modification to the amount, price or timing of the purchase or sale of securities under the Rule 10b5-1 plan, as
well as any change to an algorithm or computer program affecting such factors shall be deemed to be a termination of
the current Rule 10b5-1 plan and the adoption of a new Rule 10b5-1 plan for purposes of restarting the Cooling-Off
Period (as defined below) (any such modification, a “Termination Modification”);
·
The first trade made following adoption or Termination Modification of a Rule 10b5-1 Plan of a Section 16 officer or
director of the Company may take place no sooner than 90 calendar days after the adoption or modification (the
“Officer Cooling-Off Period”). For individual other than Section 16 officers and directors of the Company, the
Cooling-Off Period is 30 days following the Rule 10b5-1 plan’s adoption or any Termination Modification of such
Rule 10b5-1 plan (the “non-Officer Cooling-Off Period”; together with Officer Cooling-Off Period, the “Cooling-Off
Period”);
·
Except as permitted by the General Counsel and subject to the limitations under Rule 10b5-1, any directors, officers,
employees and consultants of the Company may not have more than one Rule 10b5-1 plan in effect at any given time,
and no transactions to purchase or sell securities may be effected outside the Rule 10b5-1 plan;
·
In any 12-month period,, any directors, officers, employees and consultants of the Company is limited to have only one
single-trade plan (10b5-1 or otherwise), one designed to effect the open market purchase or sale of the total amount of
the securities subject to the plan as a single transaction;
·
The Rule 10b5-1 plans must permit its termination by the Company at any time when the Company believes that
trading pursuant to its terms may not lawfully occur;
·
The Rule 10b5-1 plan should, in the absence of special circumstances, be for a period of not less than one year;

10
·
The Rule 10b5-1 plan should provide for relatively simple pricing parameters (e.g., limit orders), rather than complex
formulae for determining when trading under the Rule 10b5-1 plan may occur and at what price;
·
There may generally not be a termination or Termination Modification of a Rule 10b5-1 plan once it is executed to
avoid calling into question the original “bona fides” of the Rule 10b5-1 plan; any Termination Modification must be
made only during a non-blackout period when the person is not in possession of material non-public information and
transactions under the amended Rule 10b5-1 plan may not commence until the Cooling-Off Period, beginning at the
execution of the Termination Modification, has elapsed; and
·
Rule 10b5-1 plans do not obviate the need to file Form 144 and the fact that a reported transaction was made or is to be
made pursuant to a Rule 10b5-1 should be noted on the form.
Information regarding adoption, modification, termination and material terms of any trading plan (including any
modification or change to the plan), including both Rule 10b5-1 plans and non-Rule 10b5-1 plans, may be required to be disclosed in the
Company’s annual report on Form 20-F.
A copy of the executed version of any pre-cleared trading plan by the General Counsel, both Rule 10b5-1 plans and
non-Rule 10b5-1 plans, or any pre-cleared amendment to or modification or termination of a trading plan by the General Counsel must
be provided to the General Counsel for retention in accordance with the Company’s record retention policy.

11
CERTIFICATION OF COMPLIANCE
TO:
     Head of Legal Department
FROM:
RE:
H WORLD GROUP LIMITED AMENDED AND RESTATED STATEMENT OF POLICIES OF GOVERNING
MATERIAL, NON-PUBLIC INFORMATION AND THE PREVENTION OF INSIDER TRADING
I have received, reviewed, and understand the policies set forth in the referenced Statement of Policies (such policies,
as from time to time amended, the “Policy”) and hereby undertake, as a condition to my present and continued employment at or
association with H World Group Limited, to comply fully with the Policy.
I hereby certify that I have adhered to the Policy during the time period that I have been employed by or associated
with H World Group Limited or any of its subsidiaries or affiliated entities.
I agree to adhere to the Policy in the future.
Name:
Title:
Date

Exhibit 12.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
I, Hui Jin, certify that:
1.
I have reviewed this annual report on Form 20-F of H World Group Limited;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in
this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the
period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal
control over financial reporting;
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing
the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial
information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
company’s internal control over financial reporting.
Date:April 25, 2025
By: /s/ Hui Jin
Name: Hui Jin
Title:
Chief Executive Officer

Exhibit 12.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
I, Hui Chen, certify that:
1.
I have reviewed this annual report on Form 20-F of H World Group Limited;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in
this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rule 13a-15(f) and 15d-15(f)) for the company and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the
period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal
control over financial reporting;
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing
the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial
information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
company’s internal control over financial reporting.
Date: April 25, 2025
By:
/s/ Hui Chen
Name: Hui Chen
Title:
Chief Financial Officer

Exhibit 13.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The certification set forth below is being submitted to the Securities and Exchange Commission in connection with the Annual
Report on Form 20-F for the year ended December 31, 2024 (the “Report”) of H World Group Limited (the “Company”) for the purpose
of complying with Rule 13a-14(b) or Rule 15d14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of
Chapter 63 of Title 18 of the United States Code.
Hui Jin, the Chief Executive Officer of the Company, and Hui Chen, the Chief Financial Officer of the Company, each certifies
that, to the best of his or her knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: April 25, 2025
By:
/s/ Hui Jin
Name: Hui Jin
Title: Chief Executive Officer
By:
/s/ Hui Chen
Name: Hui Chen
Title: Chief Financial Officer

Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-269169 and 333-280844 on Form F-3 and Registration
Statement Nos. 333-166179, 333-192295, 333-203460 and 333-281654 on Form S-8 of our reports dated April 25, 2025, relating to the
financial statements of H World Group Limited and the effectiveness of H World Group Limited’s internal control over financial
reporting appearing in this Annual Report on Form 20-F for the year ended December 31, 2024.
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP
Shanghai, China
April 25, 2025

Exhibit 15.2
April 25, 2025
H World Group Limited
No. 1299 Fenghua Road
Jiading District
Shanghai 201803
People’s Republic of China
Dear Sir/Madam:
We hereby consent to the references to our firm’s name under the headings “Item 3. Key Information” in H World Group Limited’s
annual report on Form 20-F for the fiscal year of 2024 (the “Annual Report”), which will be filed with the Securities and Exchange
Commission (the “SEC”) on the date hereof. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual
Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated
thereunder.
Very truly yours,
/s/ JunHe LLP
JunHe LLP