Dongwu Securities: Leading hotel opening and operation industry that matches supply and demand or restarts the upward cycle

The Zhitong Finance App learned that Dongwu Securities released a research report saying that supply growth in the hotel industry is slowing down, demand is stabilizing, the chain chain rate is steadily increasing, and leading companies are leading the industry in opening stores and operating. The valuations of leading companies have reached the bottom of history, and the 15x layout has a high win rate. With the steady improvement of the supply and demand relationship, hotel RevPAR improvements are expected to interpret a new boom cycle. RevPAR improvements will release profit elasticity, and the valuation will rise to 20-25x.

The main views of Dongwu Securities are as follows:

Retroactive the development of the hotel industry: the chain rate and concentration have both increased

The number of rooms in the hotel industry in 2025 was 18.74 million, +6% compared to 2019. The linkage rate increased from 25.7% in 2019 to 41.8% in 2025. Concentration continued to increase, and CR3 reached a new high of 17.0% in '25. The factors of production in the hotel industry include localized land, capital, manpower, and entrepreneurial talent that can be shared across regions, so the hotel industry has a large-scale expansion model of asset-light franchising and entrustment management. Leading companies quickly opened stores through acquisitions and endogenous expansion of their brand matrices during the 16-18 expansion cycle; the bank expects the growth rate of the hotel industry to slow down in the future and return to the trend of increasing linkage rate and concentration. In the past 10 years, the PE-Forward hub has been in the 20-35x range, and the valuation during the expansion boom phase can reach 60x or more.

Reviewing historical stock price performance: growth dominates the long term

The hotel industry is expanding in scale and the volume and price of RevPAR, and leading stock prices have generally risen and outperformed the social services index. Due to its leading growth and brand operation, Huazhu is ahead of Jinjiang and First Travel in stock price performance. Analyzing their main upward momentum, growth is long-term, and profitability and liquidity are phased. Comparing leading companies: The bank focuses on quantitative analysis of the five major hotels Jinjiang, Huazhu, First Travel, Lingnan Holdings, and Yaduo's scale expansion, business model, shareholder background, financial data, valuation, and fluctuations.

Industry monitoring indicators

In the short term, weekly hotel data is used to monitor industry supply and operating volume price data. The supply growth rate is expected to decline month-on-month in '26, and the industry's RevPAR will remain flat and increase slightly year-on-year. In the long run, the cumulative completed area of commercial real estate fell below 3%. The growth rate of hotel supply fell below 3% year on year. The vacancy rate of office buildings was high and rents generally fell, that is, new properties were limited, and some existing properties in other business formats were converted to hotel properties; using civil aviation and railway passenger traffic to track travel demand. After 24 years, the growth rate returned to the middle single digits.

Risk warning: residents' demand for travel is weakening, industry competition intensifies, store growth falls short of expectations, etc.