中国旅游与酒店业：连锁反应给了酒店领导者成长的空间.docxVIP

China Tourism and Hotels Initiate coverage: Chain reaction gives hotel leaders room to grow The move to mid-market hotels is set to drive industry growth This should help China’s leading hotel chains rapidly increase their market share Initiate coverage on Jinjiang Hotels (Buy), BTG Hotels (Hold) and China CYTS Tours (Hold) Disclosures Disclaimer: This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Why read this report? We analyse the major shift to mid-market hotels… …which leaves China’s major hotel chains very well positioned We initiate coverage on two major hotel groups and a leading tourism company Moving up to the mid-market For the hotel industry, the key to growth is limited service hotels The words “China” and “tourism” usually conjure up familiar images of the dominant force in the global travel industry. But there is another side to that story – the country’s huge domestic tourism industry. This report initiates coverage on two major hotel groups and a leading tourism company and assesses the state of these industries as they emerge from lockdown following the coronavirus outbreak. For hotels, we think the key to growth is limited service hotels (LSH), an established part of the hospitality industry in Europe and the US, but a relatively new phenomenon in China. These hotels strip the amenities offered down to the basics, usually little more than a bed and a bathroom, with limited catering options. The business model is attractive as it lowers both the investment outlay and operational costs. Hotel guests are happy, too, as they get a comfortable room at a reasonable price. Within the LSH segment, the mid-market hotels are growing their market share much faster than economy hotels, which is good for margins and profits. This hotel category is increasingly dominated by China’s large hotel chains. We think this shift to the mid-market is the main driver