China's H World Is Already Bigger Than Wyndham. Now it Aims to Double

H World Group has built an empire that's larger than all major Western hotel companies in hotel count and loyalty membership, and it's still growing fast.

"We grew from nothing to over a million rooms in the 20 years since our founding," said Jihong He, chief strategy officer of H World Group and executive chair of H World International, in an exclusive interview. "That shows we're doing something right. ... We aim to reach 20,000 hotels within five years."

The Shanghai-based company, which ran 11,147 hotels as of late last year, will mainly open budget and limited-service properties in China's underserved smaller cities. It also aims to grow abroad with upscale international brands like Steigenberger, Intercity, and Zleep.

H World had 1.08 million rooms as of December and last year generated $3.3 billion in revenue. That was more than Wyndham's 893,000 rooms and $1.4 billion in revenue. (Marriott and Hilton surpassed H World in room count and revenue.)

As of March, H World expected revenue from its Chinese hotels to grow 5% to 9% this year, before President Trump announced high tariffs on the country.

Loyalty Program and Pre-Paid Cards

H World's loyalty program has 267 million members — surpassing Marriott Bonvoy's 228 million as well as Chinese rivals Jin Jiang and BTG Homeinns.

A key driver of sign-ups within China is stored value cards that give access to discounts.

"It's a little bit like Costco," He said. "Guests can use the pre-paid cards to book future stays at discounted rates by being members of the loyalty program."

"We incentivize our general managers to meet KPIs [targets] for how many pre-paid cards they can sell," He said. "Sometimes they're so successful, being paid on commission, that selling the pre-paid cards exceeds their typical starting salaries."

Outside of China, H World uses a points-based rewards program like its Western counterparts without pre-paid cards. The company wants to unify the programs and has begun by unifying databases, with its Singapore hotels already merged.

Tech Advantages

H World generates roughly three out of four bookings directly, avoiding online travel agency commissions.

Unlike Western hotel groups, which often operate on fragmented tech systems acquired through decades of mergers, H World built all of its operational software as a unified system

"From day one, our founder, Mr. Qi Ji, had a vision of creating our own tech stack," explained He. "This integration allows the company to recognize members instantly across properties and offer personalized services."

The company has optimized its digital presence across China's distinctive digital ecosystem, focusing on WeChat mini programs and platforms like Douyin (TikTok).

Lower-Cost Development

H World has innovated in hotel development in China by adopting pre-fabricated, or modular, construction methods that significantly reduce costs.

"Even light fixtures are integrated as part of the modular systems. The pre-made modules come directly from the factory to the site, enormously shortening construction time and avoiding mistakes," said He.

This approach has made it more cost-effective to build and renovate hotels, which has attracted small investors and family businesses.

Shift to Asset-Light

Like most Western hotel groups, H World has been moving to an asset-light business model. It used to own or lease most of its properties. As of December, it owned or leased only 663 hotels out of 11,147 worldwide.

"We introduced the 'manchising' business model, which is a combination of management contract plus franchise," said He.

"Our biggest franchisee owns probably 20 to 30 hotels," He noted. "She became relatively rich... and wants to spread the word."

Underpenetrated Markets

Despite its rapid expansion, H World still sees enormous potential in the Chinese market, where hotel penetration by all branded hotel groups stands at only about 30%, compared to roughly 70% of U.S. hotels being affliated with hotel groups.

"We have about 2,000 cities on our map that we would like to conquer," He said, with significant opportunities in central, southern, and western China.

International Ambitions

In February 2020, the company began expanding outside of China by closing its acquisition of Deutsche Hospitality, a collection of brands like Steigenberger, in Europe, for about 440 million euros.

"It was really bad timing," He said. The pandemic hurt demand and strained finances.

"But we're quite confident that we're stabilizing the business and will grow the business as well," she said.

H World has opened Steigenberger, InterCity, Montien, and other international brands in Singapore, Cambodia, and China, with plans to grow them, especially in Southeast Asia but also in Europe and the Middle East.

The Oyo Rivalry

Before the pandemic, India-based hotel startup Oyo attempted to break into the Chinese market. Oyo had a scaling model where it required little of owners to put up Oyo signs on their inns and start using their booking software to become members of its network.

In 2017, H World (then known as Huazhu) invested $10 million in Oyo. But it also began competing with Oyo with a similar soft-branded conversion brand, H Hotel (which has since merged into its Elan brand).

"We found that [H Hotel] was not working out," she said. "The quality was often bad, damaging our reputation."

The pandemic and bruising competition caused Oyo to pull out of China, despite having claimed to be operating 450,000 rooms in the country with 12,000 employees.

H World abandoned that style of soft-branded growth, and it sold part of its stake in Oyo at a handsome profit.

Accor Partnership

Accor has a joint venture with H World. The company is Accor's franchisee for its ibis, ibis Styles, and Mercure brands and is a co-developer of its Grand Mercure and Novotel brands.

He, who sits on the board of the Accor joint venture, said it was mutually beneficial and that both sides had helped each other. (Accor has a similar deal with Jin Jiang, which owns a nearly 10% stake in the Paris-based hotel giant.)

"It wouldn't have been possible for them to have so many Mercure in China without us," she said. "We've learned a lot from them, and we cherish this kind of relationship."

Focus on Quality Control

Making money in hotels in China is more difficult than in the U.S. because it's easier to create hotels thanks to fewer regulations and cheaper construction costs. So excess supply creates a downward pressure on prices, He said.

However, H World charges a relative premium in exchange for a consistent quality of experience with a consistent set of amenities.

So while this year, H World expects to open 2,300 hotels, it also expects to close at least 600. Properties that don't meet standards or renovate get kicked out.

Unlike at Western hotel groups, H World requires franchisees to use general managers (GMs) who it selects. It trains nearly 1,000 GMs a year at regional flagship properties and academies in 8-day in-person and month-long online courses.

H World was first among its Chinese rivals to apply a similar career advancement process to hotel housekeepers. The goal has been to boost cleanliness by retaining talent through a mix of rewards, recognition, and promotion.

"We're obsessed with maintaining quality at scale," He said. "It's a differentiator in the market."

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