In the past two years, China's hotel industry has experienced a digestion period following rapid supply expansion.
The number of stores continues to grow, with low-priced properties being acquired in a &#34;land grab&#34; manner, intensifying price competition, leading to pressure on both occupancy rates and room prices, causing the industry to fall into an inefficient cycle of &#34;exchanging price for volume.&#34;
Even in the context of overall supply remaining high, some brands have already begun to move out of low-price competition, achieving RevPAR (Revenue per Available Room) recovery and profit rebound through product upgrades, chain replacements, and operational structure optimization.
The latest financial report shows that Huazhu's revenue in the fourth quarter of 2025 reached 6.53 billion yuan, a year-on-year increase of 8.3%, with the adjusted net profit for the year soaring to 4.9 billion yuan at a growth rate of 32.9%.
In the fourth quarter, Atour Group recorded revenue of 2.79 billion yuan, a year-on-year increase of 33.8%, with adjusted EBITDA surging 61% year-on-year, setting a new record for the period.
However, in the context of still high total supply, the recovery path of leading chains may just be the beginning of structural differentiation in the industry.
<h2>Structural Rebound</h2>
Currently, the domestic hotel industry is still in a phase where supply pressure has not been fully digested.
By the end of 2024, the total number of hotels in China has exceeded 370,000, with a room capacity of over 18.5 million, and the overall supply level is higher than the previous industry peak.
During the expansion cycle of the past few years, a large number of single hotels entered the market, and the industry once showed a clear &#34;land grab&#34; characteristic. In the context of slowing demand growth, exchanging price for volume became a common phenomenon, with RevPAR and ADR (Average Daily Rate) under long-term pressure.
However, entering 2025, the operational data of leading chains began to show significant differentiation.
In the third quarter of 2025, Huazhu's RevPAR began to improve, and in the fourth quarter, it officially turned positive, with a year-on-year increase of 1.8%. Among them, ADR increased by 4% year-on-year, becoming the core driving force.
Atour also welcomed a key turning point in the fourth quarter of 2025. ADR ended two consecutive years of negative growth, increasing by 1.5% year-on-year, and RevPAR recovery improved seasonally.
The rebound in ADR is driven by both industry-level changes and structural factors.
Wang Xuewei, a partner at Siyuan Hengyue, told Xinfeng: &#34;Starting from the second half of 2025, major groups have noticeably slowed down their pace of store expansion, and a tacit pricing consensus is gradually forming at the regional level, with proactive price wars decreasing, and industry competition shifting from low prices to quality and brand.&#34;
At the same time, competition on the supply side is shifting from price to quality upgrades, which also supports room prices.
Both Huazhu and Atour are promoting upgrades to mid-to-high-end and upward replacements.
Atour's non-standard, high-emotional value product line, SAVHE, has seen its RevPAR exceed 950 yuan in the fourth quarter, indicating that there is still significant space for mid-to-high-end demand.
Huazhu is advancing its mid-range layout through a multi-brand strategy, including brands like Intercity, All Seasons, Orange Crystal, and Mercure, with new openings growing significantly faster than the group average.
By the end of 2025, the number of Huazhu's mid-to-high-end hotels (including those in operation and preparation) exceeded 1,639, a year-on-year increase of 17.6%, with the core brand Intercity surpassing 100 opened stores
As the growth rate of demand slows down, standalone hotels lacking membership systems and management capabilities are gradually losing their advantages in the stock competition. More and more existing properties are choosing to join chain systems to obtain more stable returns.
In 2025, H World is expected to open more than 2,400 new hotels, setting a historical record.
Atour added 67 new stores in the fourth quarter, bringing the total number of stores to over 2,000, with new stores primarily focusing on Atour 4.0 (Aito) and Light Stay.
There has also been marginal improvement on the demand side.
H World CEO Jin Hui stated that the trend in China's hotel industry has been recovering over the past three months, with stable growth in leisure travel, gradual recovery in inbound tourism, and a rebound in business activities and travel demand, especially noticeable in first- and second-tier cities. The company expects RevPAR to remain flat or grow slightly year-on-year in 2026.
Meanwhile, the leverage effect of the management franchise model continues to be released.
In 2025, H World's revenue from management franchises and franchising business grew by 23.1% year-on-year, accounting for 69% of Legacy-Huazhu's total profit, an increase of 5 percentage points from the previous year.
Atour's revenue from management franchise hotels grew by 28% year-on-year, becoming an important source of profit growth.
<h2>Capabilities of the Leaders</h2>
The upgrade to mid-to-high-end has become a relatively certain trend in the industry.
Against the backdrop of still abundant supply, mid-to-high-end hotels are forming differentiated competition through higher room prices and stronger brand recognition, as well as spatial design, dining support, and service experience.
This not only diverts some customer segments from luxury hotels but also continues to squeeze the market space for budget hotels.
According to Wang Xuewei, mid-to-high-end hotels will not quickly become overly competitive in the short term; the current logic remains strong, mainly because the market is not yet fully saturated. It is expected to maintain mid-to-high single-digit growth this year. &#34;Demand in this price segment does not completely pursue cost-effectiveness; quality can still drive considerable consumption.&#34;
Recently, H World launched upgraded product lines such as All Seasons Grand View, while Atour has separated Atour 4.0 into the &#34;Atour Aito&#34; brand and signaled continued expansion in 2026, further advancing competition in the mid-to-high-end segment.
Whether for business travel, cultural tourism consumption, or quality accommodation demand, the requirements for transportation convenience, surrounding facilities, and living comfort are basically consistent.
Attracted by the dividends of the mid-to-high-end segment, various enterprises often concentrate their layouts in core cities and mature business districts, with overlapping site selections being quite common.
Wang Xuewei pointed out: &#34;Companies with obvious cost control capabilities and advantages in the industrial chain can provide more complete services at the same quality level. However, not all groups possess this capability; some traditional groups face significant financial pressure, making it difficult to compete at the same quality level for the same price.&#34;
Despite benefiting from the same round of industry recovery, H World and Atour have different positions and core sources of growth in the current cycle.
H World's expansion is more driven by chain replacement.
According to information disclosed during the conference call, over 50% of the pipeline of upcoming hotels (i.e., hotel projects in planning, construction, and preparation) are located in third-tier cities and below, indicating that the company is significantly sinking mid-to-high-end and upgraded economy hotels into county markets to capture the chain dividends through brand and supply chain advantages
In 2026, the company expects overall revenue growth of 2%–6%, with franchise business growth of 12%–16%. Although there is a phased slowdown compared to 2025, the annual store opening guidance still reaches 2,200–2,300 stores, maintaining a relatively high level of expansion in the industry.
From the perspective of store opening structure, H World is further promoting mature brands such as All Seasons and Hanting into lower-tier cities, achieving stock replacement through scale advantages rather than solely relying on new demand.
Overseas business is an important variable in this cycle for H World.
In 2025, Deutsche Hospitality achieved a turnaround to profitability, with adjusted EBITDA turning positive. Management expects that international business will continue to be profitable in the coming years, significantly improving market expectations for H World’s overall profitability.
In contrast, Atour is still in the growth stage.
The revenue growth guidance provided by the company for 2026 is 20%–24%, significantly higher than the industry average, with growth driven more by brand upgrades and new business expansions.
The most important variable comes from the retail business.
In 2019, Atour's retail revenue was less than 100 million yuan, which grew to 3.67 billion yuan by 2025, accounting for about 41% of total revenue.
In the fourth quarter of 2025, Atour's hotel business grew by 23% year-on-year, while the retail business grew by over 50% year-on-year, becoming the main driver of overall growth.
The significance of the retail business lies not only in revenue scale but also in breaking the boundaries of accommodation scenarios.
Through Atour Planet and online channels, the company can reach a large number of non-staying users, extending the value of a single room to a longer consumption cycle, thereby forming a profit model distinct from traditional hotel groups.
The early performance recovery of H World and Atour demonstrates the unique resilience of leading chains in a high-supply environment.
However, from the market's perspective, the different paths currently chosen by these two companies—H World relying on chain replacement for steady profits, and Atour accelerating growth through mid-to-high-end upgrades and retail extensions—seem more like a reflection of capability differences.
In the context of ongoing uncertainty in the overall market, the positive performance of the leaders may only be an indication of individual frontrunners' unique paths

HTHT

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BEDZ

- Over the past two years, China's hotel industry has seen rapid expansion followed by a period of adjustment, resulting in increased competition and pressure on occupancy rates and room prices.  
- Despite ongoing high supply levels, leading brands like Huazhu and Atour are emerging from low-price competition by enhancing product offerings and optimizing operations, with Huazhu's 2025 Q4 revenue reaching 6.53 billion yuan, a year-on-year increase of 8.3%.  
- The landscape is evolving, with a clear shift from price-based competition to quality and brand recognition, although challenges remain for individual hotels lacking the necessary management capabilities.

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