Everbright Securities: Cyclical recovery and structural dividends resonate, leading growth in the hotel industry with outstanding certainty

The Zhitong Finance App learned that Everbright Securities released a research report saying that the recovery trend in the hotel industry is gradually becoming clear, the supply and demand pattern is being optimized, compounded by increased chainization rates, stock renovation, and lodging demand upgrades, and the growth of leading high-quality companies is outstanding. We recommend Huazhu Group-S (01179) and ATAT.US (ATAT.US), which have advantages in scale, a complete brand matrix, an asset-light operating model, and strong digital and member operation capabilities.

The main views of Everbright Securities are as follows:

The recovery trend in the hotel industry is gradually becoming clear, and RevPAR is gradually being repaired

Since September 2025, the hotel industry has gradually entered a recovery period. According to STR data, in September 2025, the overall RevPAR of Chinese hotels changed year on year, and the overall hotel RevPAR increased positively from October to December '25. On the supply side, the pace of expansion has slowed down. In the first nine weeks of 2026, the total number of hotel rooms in China remained low in the 2.1% to 2.3% year-on-year growth rate. On the demand side, business activity picked up. From August to December '25, the share of public and business travelers on domestic routes gradually increased; leisure travel remained very popular. Against the backdrop of slowing supply, remaining resilient demand, and increasing the pricing capacity of leading companies, the recovery trend of China's hotel industry has gradually been established since September 2025.

The chain rate of the industry has a lot of room for improvement, and the trend of quality and high-end upgrading continues

From 2018 to 2024, the overall chain rate of the Chinese hotel industry showed a steady growth trend. The room chain rate increased from 18.56% to 40.09%, but there is still a lot of room for improvement compared to the US and global average. The continuous increase in the chain rate of the hotel industry is expected to help industry leaders enhance their price control capabilities. Judging from the guest room structure, the Chinese hotel industry is showing a trend of structured upgrading where the share of budget hotels continues to decline and the share of middle and high-end hotels is steadily increasing. The core driver comes from demand expansion and supply optimization. On the demand side, customer experience requirements are gradually being upgraded, expanding the target customer base of middle and high-end hotels. On the supply side, compared to luxury hotels, middle and high-end hotels have lower investment thresholds, shorter payback periods, and a higher degree of standardization, making it easier to penetrate the sinking market. Furthermore, as of 2025, nearly 70% of hotels are in urgent need of renovation. The structure of China's hotel industry continues to evolve towards quality and high-end under the resonance of demand upgrading and supply stock optimization.

Huazhu Group has created a leader in the mass market through scale advantages, and the middle and high-end have accelerated expansion

The company has formed a complete economic, mid-range, high-end and luxury brand layout. Hanting's market share is stable at the top of the economy, leading the mid-range circuit throughout the season. Hanting Express was launched in early 2026, and formed a “dual engine” strategy with Hanting 4.0 to strengthen the penetration of the economical hotel market in low-tier cities and consolidate the company's scale advantage in the mass market. High-end brands such as Orange Crystal, Mercure, Intercity, and Manxin have formed an echelon, and high-end and resort brands have continued to improve. The company's brand matrix covers all scenarios of business travel, sinking, transportation hubs, and vacation. It can meet the energy level, consumption level, and return on investment needs of different cities, and is highly attractive to franchisees.

Yaduo is firmly at the top of the middle and high-end hotel circuit, opening a new economic model of scope through retail sales of sleep products

The company has steadily ranked first in the domestic high-end hotel chain market share, and has almost completely switched to the franchise model. The main brands Yaduo, Yaduo X, and Atomino formed a strong synergy, forming significant scale barriers and a first-mover advantage in property resources. The hotel business uses cultural experience+neighborhood service to build barriers of differentiation. The service system surpasses the standardized SOP system to form a strong brand mentality and high user stickiness. The retail business uses “what you see, sell” to transform the accommodation scene into a retail portal, focusing on core sleep categories such as deep sleeping pillows and quilts. SKUs are streamlined, explosive products are prominent, and the online rate is high. The retail business has become the second curve of the company's high gross profit margin and high growth, enhancing the company's growth and ability to withstand cycles to a certain extent.

Risk warning: Industry competition increases risks, demand recovery falls short of expectations, compliance risks and exchange rate risks involved in overseas business, unpredictable risks such as geopolitics and natural disasters, and negative public opinion risks.