UBS China Hotel Sector: Expert Call Takeaways—Franchisee Cautiously Optimistic for 2026
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UBS hosted an expert call with a hotel franchisee operating roughly 85 properties across Guangdong, Fujian, and Zhejiang, featuring brands such as Atour, H World Group, and Jin Jiang alongside independent hotels. The expert projects company revenue to decline 7% year-over-year in 2025 before stabilizing flat in 2026, citing shrinking banquet demand, soft tourism in certain regions, and peak-season government price caps (e.g., Haikou).
Industry chain penetration is expected to keep rising, intensifying competition. Meanwhile, early consumption recovery signals are emerging, particularly from mid-to-large corporate conferences. The expert anticipates industry RevPAR may stabilize as franchisees realize price wars are ineffective, helped by optimized room counts, unified pricing controls, and optimistic tourism outlooks. New room supply growth should decelerate once favorable property conversion policies expire by the end of 2025.
Brand recovery remains highly differentiated. Atour leads the recovery, bolstered by its Light brand upgrade requiring manageable capital expenditure per room. H World Group ranks second, while Jin Jiang has seen notable share declines. The expert is bearish on BTG. Payback periods average around 5 to 5.5 years for core brands.
Following the Trip.com antitrust investigation, franchisees expect to list simultaneously on multiple online travel agency platforms to expand traffic. However, Trip.com's user stickiness remains formidable, and independent hotels highly dependent on its traffic may face near-term operational challenges.