According to a research report released by GTHT, the hotel sector is currently trading near historical cyclical lows in both valuation and market capitalization, yet leading players still possess substantial room for network expansion. The industry's chain penetration rate is expected to surpass earlier forecasts, with top-tier hotel groups continuing to widen their advantages across product offerings, scale, operational efficiency, and brand equity. The optimization of the online travel agency (OTA) ecosystem, which redistributes benefits toward supply-side players and operators, is poised to favorably shift industry profit allocation in the short to medium term, providing a tailwind for leading chain hotel operators.

Valuations and market expectations have bottomed out, but medium-to-long-term growth prospects remain well-defined. Hotel groups listed on the A-share, Hong Kong, and US markets have seen their valuations retreat to a historical cyclical trough of 10 to 15 times earnings. Guotai Haitong Securities Co., Ltd. notes that while the market capitalizations of major players like Jinjiang and BTG Hotels have fallen back to pre-merger levels, their store counts, earnings quality, and asset-light ratios are markedly superior to those of previous cycles. In terms of expansion, leading operators are maintaining high absolute numbers of new store openings, with properties in the 70-to-149-room segment continuing to open at a steady pace. Looking further out, properties with 30 to 69 rooms account for 28.1% of total rooms, but their chain penetration rate is still under 20%, suggesting that product innovation could unlock significant incremental growth. Four key factors are poised to elevate the ceiling for chain penetration and market concentration: technological enablement, regulatory standardization, improved financial tools, and the development of a unified national market. By 2025, the combined gross merchandise value (GMV) market share of the top four hotel groups is projected to reach 25.1%, with Huazhu and Atour continuing to strengthen their competitive positions. Differentiation among industry leaders is intensifying, with gaps in product strength and operational efficiency widening further, reinforcing a 'strong-get-stronger' dynamic that lays the groundwork for future earnings delivery.

Platform ecosystem optimization is set to benefit hotels through a temporary shift in industry profit distribution. Following the conclusion of the antitrust penalty against Ctrip, old rules such as exclusive partnerships, guaranteed lowest online prices, and AI-driven automatic price adjustments have been abolished. In their place, a five-dimensional operational radar chart has been introduced, making traffic allocation mechanisms fairer. Head hotel groups with superior brand recognition and operational capabilities are likely to see reduced traffic acquisition costs. Additionally, franchisee resources are gravitating further toward top-tier players, and the platform rule changes favor leading chain operators, tilting industry profit distribution toward the hotel side. Hotel groups' monetization rates for franchising businesses are steadily rising, supported by supply chain bulk purchasing and value-added services, with comprehensive service capabilities beyond membership systems emerging as a new growth lever. Given the combination of valuation positioning, growth headroom, and catalysts, the sector's allocation value is becoming increasingly evident, with a focus on leading hotel companies that possess both scale and product advantages.

While cyclical fluctuations are frequent, a trend reversal is anticipated in the first or second quarter of 2027. On the demand side, July 2026 saw a lackluster summer season due to multiple factors including adverse weather, elevated oil prices, and travel diversion. However, August witnessed a recovery in travel demand, with operating metrics showing a clear improvement. Taking base effects into account, under a neutral demand assumption, industry operating data is expected to remain under pressure in the second half of 2026. Business travel and leisure demand should stay broadly stable, with the window for a trend reversal falling in Q1 or Q2 of 2027. On the supply side, growth has been slowing since Q3 2025, with chain hotel room supply expansion decelerating. If demand recovers, the lower supply growth rate could amplify the upside elasticity of RevPAR, making the earnings recovery more sustainable. However, risks remain, including subdued consumer spending, reduced business travel budgets among SMEs, and extreme weather disruptions, any of which could extend the industry's recovery timeline.

Risk warnings: Ongoing volatility in oil prices affecting travel costs, weather conditions impacting tourism demand, the risk of SMEs cutting business travel expenses, and persistently weak consumer spending power.