Summary of Conference Call Notes Industry Overview - The lodging industry in China is experiencing a shift towards quality growth, with consumers prioritizing "value-for-quality" as spending power has not fully recovered [3][11] - Domestic travel showed resilience in 2025, with a 18% year-over-year (YoY) growth in domestic travel, although per capita spending decreased by 6% YoY [3][18] - The lodging industry is still under pressure, with overall RevPAR (Revenue per Available Room) remaining sluggish due to oversupply and slow business travel recovery [3][29] Company-Specific Insights H World (HTHT US / 1179 HK) - **Recommendation**: Outperform with a target price of USD 59 / HKD 46, benefiting from an asset-light business transformation aimed at expanding margins [3][11][60] - **Financial Performance**: - Expected RevPAR growth of 4% YoY in 2026, with EBITDA margins projected to increase from 29% in 2024 to 35% in 2026 [4][11] - Net income forecasted to rise from RMB 3,048 million in 2024 to RMB 5,433 million in 2026 [4] - **Market Position**: H World is focusing on midscale and upper midscale segments, with 53% of its portfolio in these categories as of Q3 2025 [34] - **Direct Booking Strategy**: Direct bookings have reached 80%, reducing reliance on online travel agencies (OTAs) [3][37] Atour (ATAT US) - **Recommendation**: Outperform with a target price of USD 48 [3][11][60] - **Financial Performance**: - Expected RevPAR growth of 3% YoY in 2026, with EBITDA margins projected to stabilize around 24% [4] - Revenue growth forecasted to increase from RMB 9,783.9 million in 2025 to RMB 14,107.7 million in 2027 [9] - **Market Position**: Atour is well-positioned in the midscale segment, with a focus on quality hotels and a strategic goal of operating 2,000 quality hotels [34] Jinjiang (600754 CH) - **Recommendation**: Underperform with a target price of RMB 20 [3][11][60] - **Financial Performance**: - Expected RevPAR growth of 3% YoY in 2026, but lower operating efficiency compared to peers [4][11] - Revenue forecasted to increase from RMB 13,464.9 million in 2025 to RMB 15,039.7 million in 2027 [10] - **Market Position**: Jinjiang is focusing on the midscale segment, which accounts for 62% of its total network, but faces challenges with older properties needing renovation [34] Key Trends and Insights - **Consumer Behavior**: There is a notable shift towards quality accommodations at reasonable prices, with consumers prioritizing value over luxury [34] - **Direct Booking Growth**: Major hotel groups are enhancing their membership systems and direct booking channels, leading to improved customer loyalty [3][37] - **Market Dynamics**: The hotel industry is experiencing a consolidation phase, with leading brands gaining market share despite overall sluggish RevPAR recovery [3][29] Risks and Challenges - Potential risks include slower-than-expected RevPAR growth, prolonged recovery in business travel, and market competition leading to potential market-share loss [13][47] - Jinjiang faces specific challenges related to its operating efficiency and the need for a turnaround in its overseas business [11][13] Conclusion The lodging industry in China is navigating a complex landscape characterized by a focus on quality growth and changing consumer preferences. Leading companies like H World and Atour are well-positioned to capitalize on these trends, while Jinjiang faces challenges that may hinder its performance relative to peers.