Summary of Key Points from the Conference Call Industry Overview - **Industry**: Travel and Leisure, specifically focusing on the hotel sector in China - **Key Trends**: Healthy travel demand, especially in lower-tier cities and popular outbound destinations like Europe, Australia, and Korea, compensating for a significant shortfall in travel to Japan due to political tensions [1][7] Core Insights 1. **Travel Demand**: Overall travel demand remains robust, particularly in lower-tier cities and for long-haul outbound travel, with a noted ~50% year-over-year shortfall in travel to Japan [1][7] 2. **Hotel RevPar Outlook**: The expert anticipates a modest increase in hotel industry RevPar, contingent on the extent of supply slowdown and stagnant business travel demand over the past 1-2 years [1][7] 3. **Impact of Anti-Trust Investigation**: The ongoing anti-trust investigation is expected to have a limited impact on TCOM's operations, as other OTAs employ similar pricing structures. TCOM's competitive advantages include a well-established global supply chain and reliable service fulfillment [1][6] 4. **AI Development**: While AI could pose a long-term threat to OTAs, significant changes in user behavior towards AI tools for travel booking are expected to take time. The expert notes that previous attempts to shift user habits, such as through short-form videos, have not succeeded [1][7] 5. **Future Competitors**: New entrants like Fliggy and Douyin are viewed as potential strong competitors in the long run due to their unique market positioning and user engagement strategies [1][6] Financial Projections - **Hotel Operators**: H World and Atour are identified as well-positioned to benefit from potential RevPar growth driven by business travel recovery and industry consolidation [2] - **Valuation of TCOM**: Despite the anti-trust investigation, TCOM is considered undervalued at a trading multiple of 12x FY26E P/E, even with expectations of a ~20% decline in hotel GMV over the next two years and a -1 point year-over-year EBIT margin decline domestically [2] Additional Insights - **Supply Growth**: The growth rate of midscale or above hotels in China is projected to slow, with an estimated increase of +7.7% by the end of 2025. This slowdown is expected to support RevPar growth in 2026 [7] - **CNY Holiday Performance**: During the recent CNY holidays, hotel RevPar increased by mid-teens percentage year-over-year, with H World reporting a 16% increase in hotel room nights [7] - **Travel Preferences**: Popular overseas travel destinations included Australia, New Zealand, Spain, Turkey, and South Korea, with Thailand and Malaysia also seeing increased interest [7] Conclusion The travel and leisure industry, particularly the hotel sector in China, is experiencing a recovery phase with healthy demand and potential for RevPar growth. However, challenges such as the anti-trust investigation and changing consumer behaviors due to AI developments remain critical factors to monitor.