China hotel industry RevPAR inflection may be near, with leaders likely to benefit first

Overview

This report reviews China’s hotel industry operating and financial performance in Q4 2025 and looks ahead to RevPAR trends in Q1 2026 and full-year 2026. UBS believes that operating data at leading hotel groups continued to improve in Q4 2025, with H World and Atour maintaining strong revenue and net profit growth, Jinjiang reversing last year’s loss, and BTG still declining year over year. Looking ahead to 2026, outbound travel is likely to be disrupted by flight schedules, geopolitical tensions, and other factors, while domestic travel may accelerate due to substitution effects; combined with slower supply growth, this could bring the industry RevPAR inflection point closer.

Core views

The core view is that the recovery in China’s hotel industry is moving from sequential improvement toward a potential year-over-year turn to positive. 1) RevPAR at major hotel groups improved versus previous quarters in Q4 2025; 2) Supported by the Spring Festival holiday and resilient leisure travel demand, industry RevPAR was strong in January-February of Q1 2026, and although March weakened, subsequent weekly data improved; 3) Supply growth in 2026 is expected to slow to 5-7%, helping rebalance supply and demand; 4) Leading hotel groups, especially H World and Atour, may outperform the sector thanks to stronger franchisee recognition and portfolio upgrades.

Analysis framework

The report combines industry operating data, company disclosures, STR industry data, and channel checks, with a focus on RevPAR, revenue, net profit, new openings, and management guidance. In the company valuation section, the report states that the target prices for Atour, H World, Jinjiang Hotels, and BTG Hotels are all based on the DCF method.

Methodology notes

• Operating metricRevPAR

  Revenue per available room

  The report uses year-over-year changes in RevPAR as the core measure of hotel operating conditions and compares trends for the industry as a whole and leading hotel groups in Q4 2025, Q1 2026, and 2026E.

• Valuation methodDCF

  Discounted cash flow

  The report states that the target prices for Atour, H World, Jinjiang Hotels, and BTG Hotels are all based on the DCF method, but the excerpt does not provide specific target prices or key assumptions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• H World (HTHT.O)

  A leading hotel operator that the report is bullish on

  Strengths

  Q4 2025 RevPAR was up 2% YoY, and Q1 2026 RevPAR was up 5% YoY in January-February; revenue and net profit continued to grow strongly; franchisee recognition and hotel mix upgrades may support outperformance versus the industry.

  Weaknesses

  March RevPAR was down 3% YoY, still affected by macro and travel-demand volatility.

  Comparison

  Compared with the industry overall, H World performed stronger in Q4 2025 and in the first two months of Q1 2026, and is viewed as potentially beating prior guidance.

  Risks

  A persistently weak economy, a sharp year-over-year decline in RevPAR, rapid increases in labor and rental costs, new openings slower than expected, and force majeure events such as epidemics or natural disasters.

• Atour (ATAT.O)

  A leading hotel operator that the report is bullish on

  Strengths

  The report expects Q1 2026 RevPAR growth to turn positive, and believes hotel mix upgrades and franchisee recognition support outperformance versus the industry.

  Weaknesses

  Q4 2025 RevPAR was down 0.4% YoY, making performance relatively weaker, mainly because of its higher exposure to mid-to-upscale hotels.

  Comparison

  Compared with H World, Atour’s short-term RevPAR is more affected by product mix, but the report still expects it to turn positive in Q1 2026.

  Risks

  Weak macroeconomic conditions, slower-than-expected new hotel openings, rising labor and rental costs, major epidemics or natural disasters, and other force majeure events.

• Jinjiang Hotels

  A major hotel operator in China

  Strengths

  Q4 2025 RevPAR was up 0.1% YoY, reversing the loss from the same period last year; Q1 2026 RevPAR was up 7% YoY in January-February.

  Weaknesses

  March RevPAR was down 2% YoY, and the transformation of its food-and-beverage business may still progress slowly.

  Comparison

  Its January-February RevPAR performance was stronger than H World’s, but the report does not explicitly identify it as the preferred name.

  Risks

  A persistently weak economy, a significant decline in RevPAR, rapid increases in labor and rental costs, new openings slower than expected, slower-than-expected improvement in the food-and-beverage business, and epidemics or natural disasters.

• BTG Hotels

  A major hotel operator in China

  Strengths

  Q4 2025 RevPAR was flat, and the company still has recovery potential against the backdrop of industry improvement.

  Weaknesses

  Revenue and profitability continued to decline year over year, and operating performance was weaker than H World and Atour.

  Comparison

  Among the four major operators, BTG has the weakest profitability trend.

  Risks

  A prolonged economic downturn, an escalation in China-US trade frictions, weakening domestic business travel demand, faster-than-expected increases in labor and rental costs, a slower-than-expected increase in the share of mid-to-upscale hotels, and natural disasters or major epidemics.

Key data

• Q4 2025 RevPARH World +2%; Atour -0.4%; Jinjiang +0.1%; BTG flatAll four major operators improved sequentially versus the prior quarter.
• Industry RevPAR2026 January -1.5%; February +15%; March about -1.3%Based on STR data, performance was strong in January-February and softened slightly in March.
• Q1 2026 RevPAR at leading hotel groupsH World +5% in January-February, -3% in March; Jinjiang +7% in January-February, -2% in March; Atour posted positive growth in January-FebruaryBased on UBS channel checks, the report expects Atour’s Q1 2026 RevPAR growth to turn positive.
• 2026 supply growthExpected to rise by +5% to +7% year over yearSlower supply growth off a high base should help improve industry supply-demand balance.
• Limited-service hotel RevPAR2025 -6%; 2026E -3%UBS expects the decline in this segment to narrow.

Impact & implications

If UBS’s view proves correct, China’s hotel industry may enter a phase of year-over-year RevPAR recovery, with improved earnings leverage and valuation expectations for leading companies. H World and Atour are seen as the more levered beneficiaries, mainly because of stronger franchisee recognition, product-mix upgrades, and operating trends that may be better than prior guidance. At the industry level, domestic travel substituting for outbound travel, the extension of the Spring Festival holiday, and slower supply growth are the key positive factors.

Risks

• A persistently weak macroeconomy could leave business and leisure travel demand below expectations.
• Slower-than-expected growth in visitor traffic during peak seasons could weigh on RevPAR recovery.
• Severe weather, earthquakes, aviation accidents, epidemics, or other disasters could disrupt travel.
• Rising labor and rental costs could compress hotel operators’ margins.
• New hotel openings or franchise expansion could be slower than expected.
• If outbound travel recovers faster than expected, the domestic-travel substitution effect could weaken.

What to watch

• Whether the year-over-year RevPAR trend in Q2 2026 and the summer season can remain positive.
• Whether actual RevPAR at H World and Atour exceeds prior management guidance.
• Whether domestic travel demand continues to be supported by substitution away from outbound travel.
• Whether industry supply growth slows to 5-7% as expected.
• The impact of labor, rent, and other cost pressures on margins.
• The pace of earnings recovery and business transformation at Jinjiang and BTG.