In the first half of this year, China's domestic hotel market experienced a period of volatility and adjustment, with "calibration" becoming the industry's key theme. Under such circumstances, market valuations for leading companies have generally turned conservative. Consequently, the recently released first-half 2025 financial reports from Jin Jiang Hotels, H World Group, BTG Hotels, and Atour Lifestyle Holdings Limited have attracted significant attention. While the performance of these four domestic hotel groups varied—H World Group and Atour Lifestyle Holdings Limited achieved growth in both revenue and net profit, while Jin Jiang Hotels and BTG Hotels saw year-over-year revenue declines—industry observers generally believe these hotel groups delivered a "steady progress" performance amid weak market expectations.
**Operating Pressures High, Yet Profits Rise**
In the first half of this year, Jin Jiang Hotels' net profit attributable to shareholders was halved, drawing industry attention. However, industry observers quickly noted that the group's adjusted net profit attributable to shareholders increased 5.17% year-over-year. What accounts for this discrepancy?
Financial reports reveal that during the same period last year, Jin Jiang Hotels sold 100% equity in Fashion Trip Hotel Management Co., Ltd. and exited several properties, resulting in non-recurring gains and losses of 459 million yuan in the first half of 2024. This year's first half saw non-recurring losses of only 38 million yuan. Excluding these transaction impacts, Jin Jiang Hotels achieved adjusted net profit attributable to shareholders of 409 million yuan in the first half, representing the best interim profit performance since its listing. "Analyzing Jin Jiang Hotels' current operating situation solely from revenue and net profit perspectives could mislead investors into thinking its profitability has deteriorated," industry observers cautioned.
Current market challenges are widely acknowledged across the industry. Data from hotel information statistics firm STR shows that industry-wide Revenue per Available Room (RevPAR) declined 5% year-over-year in the first half, with both occupancy rates and average daily rates falling. As participants in this market, all four domestic hotel groups experienced slight declines in these three core operating metrics during the reporting period.
In the first half, H World Group's domestic same-store RevPAR declined 7.9% year-over-year, yet surprisingly to many industry observers, its operating profit margin rose to 24.3% from 22.5% in the same period last year. How was this achieved?
H World Group CEO Jin Hui explained that driven by hotel network expansion, H World Group's operating profit grew. The company opened 1,289 new hotels in the first half, completing 56% of its full-year opening target.
The asset-light operating model proved crucial to this success. In the first half, H World Group operated 92% of its hotel rooms under management franchise and licensing models, a 2% year-over-year increase. While RevPAR performance declined for both management franchise/licensing hotels and leased/owned hotels, the former's decline was 2.4 percentage points smaller than the latter. H World Group management stated that the relatively stable profit-generating franchise business has become the company's core development focus. Additionally, as scale expanded, H World Group continued to reduce per-hotel operating costs, with average per-hotel costs declining 14.56% year-over-year in the first half.
Similar patterns emerged in other groups' financial reports. For instance, from a revenue structure perspective, management franchise hotels have become one of Atour Lifestyle Holdings Limited's primary growth drivers. Its management franchise hotel revenue grew 26.5% year-over-year, accounting for approximately 52.6% of total revenue. In contrast, self-operated hotel business continued shrinking, with revenue declining 17% year-over-year. Industry observers believe this asset-light model reduces hotel groups' capital expenditure pressure while accelerating market expansion.
Years of mid-to-high-end market positioning have also generated higher profits for these hotel groups. In the first half, BTG Hotels' new mid-to-high-end hotel openings increased 11.8% year-over-year. Despite overall revenue decline, this segment's revenue grew 1.06% year-over-year.
While declining core operating metrics haven't significantly impacted these hotel groups' earnings, group leaders have acknowledged the pressure. Atour Lifestyle Holdings Limited CEO Wang Haijun stated during earnings calls that despite maintaining revenue growth through retail business innovation amid market pressure, RevPAR decline reflects dual challenges of intensified market competition and increasingly rational consumer demand.
"This is our adjustment period and a threshold we must cross," Jin Hui said.
**Effective Adjustment Strategies**
Analyzing the four domestic hotel groups' financial reports reveals both operating pressures and clear turnaround signals. For instance, Jin Jiang Hotels achieved adjusted net profit attributable to shareholders of 382 million yuan in Q2, up 17.1% year-over-year. H World Group's Q2 revenue reached approximately 6.4 billion yuan, growing 4.5% year-over-year, with both revenue amount and growth rate exceeding Q1. BTG Hotels similarly achieved higher Q2 revenue and net profit compared to Q1, with year-over-year growth. This demonstrates steadily improving market sentiment, though it's also related to strategic adjustments by these groups.
For an extended period, expansion speed was a key metric for hotel group scale. Now, these groups are working to escape the "scale equals growth" logic.
"12+3+1" represents Jin Jiang Hotels' brand strategy for the first half: focusing on developing 12 thousand-store flagship brands, 3 core mid-to-high-end brands, and exploring 1 resort segment. Essentially, this means concentrating on quality stores and markets with consumption potential. Under this strategy, flagship brand new openings accounted for 86% of total openings in the first half, up approximately 3% year-over-year.
"Previously, many hotel groups achieved rapid development through large-scale store construction and investment. However, this development model can no longer adapt to current market conditions. As consumer demands continuously evolve, the hotel industry must focus more on quality and content enhancement," said BTG Hotels Group General Manager Sun Jian.
Jin Hui expressed similar views in media interviews—value-for-money will become the industry keyword for the foreseeable future. "How to quickly identify positioning and develop products and services that keep pace with the times is an important challenge facing all industry participants," Jin Hui said. H World Group focuses not only on market share but also market share quality, continuing to upgrade existing stores while comprehensively controlling new store locations and property quality.
In market competition, true winners are often long-distance runners who can focus on long-term positioning. The four domestic hotel groups are continuously optimizing product lines based on market conditions. All launched upgraded versions of core brands in the first half, opening multiple hotels with positive market feedback. For example, Atour Lifestyle Holdings Limited's 4.0 version emphasizing spatial aesthetics and artistic culture achieved first-store monthly RevPAR exceeding 710 yuan.
In addressing market challenges, several hotel groups have experimented with stabilizing store operations, including helping franchisees and partners with operations by reducing their investment costs.
In March, Atour Lifestyle Holdings Limited launched a partner profit-sharing plan, reducing prices by 10% on high-frequency guest supplies including adult slippers, key card holders, and bath amenities. In July, Atour Lifestyle Holdings Limited continued reducing prices on some hotels' high-frequency operational and engineering supplies while upgrading some guest amenities. "These adjustments effectively reduce franchisees' daily expenses while maintaining service quality, representing a way to enhance store operational effectiveness," industry observers analyzed.
In the first half, H World Group's per-hotel operating costs reached 607,900 yuan, down 14.19% year-over-year. Jin Hui introduced that H World Group has achieved 10% to 20% cost reductions in furniture, soft furnishings, and operational supplies procurement. Regarding operational cycles, Hanting 4.0's modular production can shorten construction periods by 30 days, reducing franchisee investment pressure. Industry observers believe this represents an attempt to return hotel operators to service fundamentals rather than engaging in price wars.
**Market Breakthrough Focus Areas**
Regarding Q3 performance, leaders of the four domestic hotel groups maintain cautiously optimistic attitudes. "Summer tourism market prosperity exists, but affected by extreme weather and other factors, H World Group's Q3 RevPAR is expected to continue declining year-over-year, though the decline will narrow compared to Q2," Jin Hui analyzed. Atour Lifestyle Holdings Limited management expressed similar views during earnings calls, noting that despite entering summer vacation with rotating market hotspots, overall demand hasn't reached last year's levels. However, Q3 RevPAR pressure is expected to ease compared to Q2.
"China's hotel industry has seen rapid homogenized supply increases over the past two years, creating operational challenges," Jin Hui identified an industry-wide issue. Most industry observers view this as one reason for sufficient customer "depth" but weakened hotel pricing elasticity. Where lies the breakthrough? Hotel groups need comprehensive strategic approaches.
First, drive product evolution from pure accommodation toward "accommodation + tourism experience" models.
Currently, hotel-tourism integration is viewed as hotels' primary differentiation strategy. Jin Jiang Hotels has launched multiple themed itineraries and vacation packages. H World Group has also developed richer product lines, advancing "hotel+X" projects including surrounding experiences and suburban tours. Atour Lifestyle Holdings Limited's "healing hotel" themed rooms incorporating meditation courses achieve 15% higher occupancy than standard rooms with 20% premium pricing.
"Experiential consumption becoming a trend" represents industry consensus. Jin Hui believes hotels must now integrate better experiences into guests' journeys.
Second, continue upgrading existing stores and renovating existing properties.
"As a high-investment, asset-heavy industry, how to refresh product capabilities, operational capabilities, and technological development capabilities requires attention from every operator," Sun Jian believes. Some aging hotels can enhance competitiveness through renovation and upgrades, introducing new design concepts and technologies. BTG Hotels is optimizing operational models to improve existing asset utilization efficiency and maximize asset value.
Third, accelerate digital transformation with AI applications becoming new competitive tracks.
Following rapid expansion in recent years, several hotel groups face challenges in improving operational management levels. H World Group leverages digital tools to ensure brand and service consistency during rapid expansion; Jin Jiang Hotels has established global hotel internet platforms and global shared service platforms; BTG Hotels' self-developed AI digital store managers can daily review store operational metrics and optimize revenue management decisions. This track focuses on who can more effectively and rapidly develop AI's multifaceted auxiliary functions to enhance hotel operational management.
Fourth, seek capital market "remedies" for breakthrough challenges.
Jin Jiang Hotels is pursuing Hong Kong IPO. If successful, it would become China's first hotel group listed on both A+H dual platforms. Raised funds would primarily support overseas hotel capital expenditures, advance digital transformation upgrades, repay some high-interest bank loans, and supplement working capital. Market sources suggest Atour Lifestyle Holdings Limited, listed in the US, is also considering Hong Kong secondary listing, though transaction scale and timeline details remain undetermined. Industry observers reveal Atour Lifestyle Holdings Limited's concerns about market risks and consideration of related actions.
Last year, the National Development and Reform Commission issued guidelines promoting normalized REIT issuance, including hotel assets in underlying asset categories for the first time. On August 15, BTG Hotels announced approval for issuing ultra-short-term financing bonds, short-term financing bonds, and medium-term notes totaling no more than 4 billion yuan. Industry observers predict BTG Hotels will allocate portions of these funds toward existing asset renovations.
Industry analysts suggest that hotels seeking sustainable lean development must approach product, strategy, technology, and capital operations comprehensively to form integrated pathways. Absent external shocks in the second half, hotel markets will likely continue "profit through structure" trends, with the effectiveness of these four domestic hotel groups' experimental directions reflected in upcoming financial reports.