Summary of Hotel Industry Conference Call Industry Overview - The hotel industry, particularly two major groups (Huazhu and Jinjiang), has shown a strong recovery post-National Day, with RevPAR (Revenue Per Available Room) returning to positive year-on-year growth, even exceeding levels from 2024 [1][3][5]. - Business travel demand has significantly rebounded since May, with strong performance noted in July and August, surpassing last year's figures [1][6]. - The implementation of visa-free policies has led to a 120% year-on-year increase in overseas tourists spending in China, exceeding 2019 levels [1][7]. Key Performance Metrics - Huazhu's RevPAR has consistently remained between 95% and 99.6%, while Jinjiang's RevPAR improved to over 100% by the fourth week of October [1][3][4]. - Average Daily Rate (ADR) has remained stable compared to last year, indicating rational market competition among hotel groups [1][8]. - The overall hotel industry is expected to see a RevPAR growth of 3%-5% in 2026, with major hotel groups focusing on maintaining or increasing prices to meet budget targets [1][26]. Business Travel Insights - Business travel, which constitutes about 40%-42% of Huazhu's revenue, saw a decline of 6-10 percentage points in RevPAR during the first half of the year but has since recovered [1][12][6]. - The demand for business travel is anticipated to remain stable or slightly increase in the coming months [9]. Tourism Demand Analysis - The tourism market has shown significant growth, particularly in major cities like Beijing, Shanghai, Guangzhou, and Shenzhen, with a notable increase in foreign tourist numbers [1][7]. - Despite a slight decrease in per capita spending, the overall trend in domestic tourism remains optimistic [7]. Pricing Strategy and Market Dynamics - Hotel groups have refrained from price cuts to attract customers, focusing instead on long-term growth strategies [1][8]. - The expected budget increase for 2026 is around 3%-5%, indicating that prices are unlikely to decrease [26][27]. Competitive Landscape - Huazhu is expanding into lower-tier markets through localized development and strong operational strategies, particularly in Shenzhen and Guangzhou [4][31]. - The performance of small independent hotels is declining, with many facing operational challenges unless they join larger chains [16][19]. Future Outlook - The overall growth rate of the hotel industry is expected to slow down, with a projected growth of around 2% in 2026 [17]. - The focus will shift towards enhancing operational quality and efficiency rather than rapid expansion [19]. - The long-term outlook for the domestic tourism market remains positive, while the business market is influenced by both domestic and international factors [10]. Management Changes - Recent leadership changes in Jinjiang, including the return of a familiar figure to stabilize and refocus the business, are expected to positively impact future operations [34][36]. - Huazhu's management changes are not anticipated to significantly affect the company's strategic direction [33]. Conclusion - The hotel industry is on a recovery path with strong performance metrics, particularly in business and tourism sectors. The focus on maintaining pricing strategies and enhancing operational quality will be crucial for sustained growth in the coming years.

Investment Rating - Maintain Outperform rating with a target price of 18.63 RMB, reflecting a 25x PE valuation for 2025 [4][9]. Core Insights - The company is entering a recovery phase with a narrowing decline in performance metrics, benefiting from accelerated store openings and improving operational efficiency [4][9]. - Q3 2025 revenue was 2.12 billion RMB, a decrease of 1.60%, while net profit was 0.36 billion RMB, down 2.21%. For the first three quarters, revenue totaled 5.78 billion RMB, a year-on-year decline of 1.81%, with net profit increasing by 4.36% to 0.75 billion RMB [4][9]. - Key performance indicators showed RevPAR at -2.8%, occupancy rate (OCC) at -0.8%, and average daily rate (ADR) at -1.7%, indicating a recovery trend compared to previous quarters [4][9]. Financial Summary - Revenue projections for 2025E are 7.63 billion RMB, with a net profit of 0.85 billion RMB, reflecting a growth of 5.7% from the previous year [3][4]. - Gross margin for Q3 2025 was 44.79%, with sales expense ratio at 8.85% and general & administrative expense ratio at 9.92% [4][9]. - The company opened 387 new stores in Q3 2025, accelerating from 364 in Q2 and 300 in Q1, indicating a strong recovery in core brand expansion [4][9].

Summary of Hotel Industry Conference Call Industry Overview - The hotel industry has shown signs of recovery since late August, with September data turning positive and a significant increase in both volume and price during the National Day holiday in October, indicating a rebound from the bottom [1][2] - Major brands like Hanting and Quanjing reported positive performance for the first time in 18 months, suggesting market stabilization [1][4] Key Insights - **Market Performance**: Post-National Day, market performance varied across regions. Cities like Beijing and Shanghai continued to show improvement, while Guangdong faced challenges due to external events [5][6] - **Tourism Trends**: Record high travel numbers and increased disposable income among the middle class have driven hotel performance. The exit of older hotels and the rise of high-quality establishments have also contributed to improved metrics [6][7] - **Investment Opportunities**: The decline in commercial property prices (down approximately 30% from peak) and policies allowing the conversion of office spaces into hotels present new investment opportunities [8] Financial Metrics - **Average Daily Rate (ADR)**: September saw a significant increase in ADR across all stores, with occupancy rates and overnight rates also improving markedly [4] - **Return on Investment**: The payback period for mid-range and upscale hotels has extended to approximately 4.5 years, yet the market still holds substantial growth potential [9][10] Competitive Landscape - **Brand Performance**: Brands like Quanjing, Atour, and Hilton Garden Inn are performing well, with Hanting and Quanjing showing strong recovery [1][10] - **Quality vs. Price**: Despite a trend of consumption downgrade, high-quality mid-range products remain competitive, with brands like Atour and Huazhu achieving occupancy and RevPAR above industry averages [11][12] Supply Chain Advantages - Huazhu's supply chain benefits from standardized, large-scale procurement, which helps control costs and improve investment returns for franchisees [13] - The competitive edge of Huazhu's supply chain is difficult for other hotel groups to replicate due to its established scale and negotiation power [14] Future Directions - The domestic hotel industry is expected to continue evolving towards high-quality, mid-range offerings, driven by increasing demand from the middle class for value and quality [11][12] - The introduction of new brands, such as Atour's Light Stay, reflects a successful strategy to penetrate both high-end and lower-tier markets [15] Impact of New Openings - New hotel openings can impact the performance of existing hotels, but the extent of this impact depends on the local market dynamics [16] Technological Integration - The entry of internet companies into the hotel sector is anticipated to enhance operational efficiency and user experience, with AI technology beginning to play a role in hotel management [16] Conclusion - The hotel industry is on a recovery path, with positive indicators in performance metrics and investment opportunities. The focus on quality and competitive pricing will be crucial for sustaining growth in the evolving market landscape [1][10][11]

Core Insights - The hotel industry is currently experiencing a recovery in demand, a rebalancing of supply and demand, and an accelerated increase in market share for leading companies [1] Demand Side - In September, the industry's RevPAR (Revenue Per Available Room) saw a continued narrowing of the year-on-year decline, with mid-range and high-end hotels performing better than economy hotels, and first-tier and new first-tier cities outperforming lower-tier markets [1] - There is a clear trend of recovery in business demand, with bookings for the Mid-Autumn Festival and National Day holidays showing an increase in both volume and price, alongside a noticeable trend towards quality consumption [1] - The hotel industry's RevPAR is expected to achieve a year-on-year growth in the mid-to-high single digits [1] Supply Side - Supply is maintaining rapid growth, but there is significant structural differentiation, with economy hotels and lower-tier markets being the main growth drivers [1] - Leading companies are experiencing faster growth compared to their peers [1] Investment Recommendations - The company is optimistic about the continued narrowing of the year-on-year gap in RevPAR for leading hotel groups, with the potential to achieve stability or even positive growth next year, highlighting a valuable investment window [1] - Two investment themes are suggested: 1. Short-term positioning in the fourth quarter for companies with clear catalysts (e.g., retail Double Eleven) and high growth certainty in hotel and retail businesses [1] 2. Mid-term positioning in companies that will benefit from the recovery in business demand and the increasing concentration in the industry, while also focusing on organizational evolution and product optimization [1] - The current valuation of the hotel industry is considered reasonable and slightly low, with leading companies possessing strong investment value [1]

Core Insights - The hotel industry is experiencing a strong recovery driven by robust domestic economic growth and favorable policies, with Jin Jiang Hotels emerging as a market leader capitalizing on these opportunities [1][2] - Increased consumer spending power and the implementation of visa-free policies have significantly boosted both domestic and inbound tourism, leading to a surge in hotel accommodation demand [1] - Jin Jiang Hotels has a diverse brand portfolio catering to various customer segments, enhancing its market appeal and occupancy rates [1] Company Overview - Jin Jiang Hotels has signed over 17,000 hotels, establishing a vast presence across major domestic cities and key international locations, which provides a competitive edge in resource integration and operational efficiency [2] - The company's ability to quickly adapt to market demands during peak seasons through internal resource allocation has resulted in higher overall occupancy rates [2] - Utilizing a large membership system and digital marketing strategies, Jin Jiang Hotels effectively attracts consumers with targeted promotions, further boosting occupancy and revenue [2] Future Outlook - Investor sentiment towards the hotel industry remains positive, with Jin Jiang Hotels positioned as a premium investment target due to its strong brand and scale advantages [2] - Continued economic development and tourism market growth in China are expected to provide Jin Jiang Hotels with ongoing opportunities for performance enhancement and market share expansion [2]