**According to the “2025/2026 China Hotel Operator Confidence Index Survey” released by JLL, China’s hotel industry is shifting from “recovery driven by foot traffic” to “quality-driven growth,” with market confidence gradually stabilizing and the industry showing a trend of structural optimization.** Here’s a detailed analysis:

### **I. Market Confidence: Prudent Optimism with Clear Divergence**

1. **Overall Expectations Are Cautious but Stabilizing**

- From 2025 to 2026, while Chinese hotel industry respondents remained relatively cautious in their expectations for total annual revenue, their confidence had rebounded compared to 2025. Although 45% of respondents still anticipated that gross operating profit (GOP) would remain under pressure in 2026, this proportion had narrowed significantly from 59% in 2025, reflecting a gradual stabilization in market sentiment.

2. **Conflicting Confidence in Hotels with Different Positioning**

- **Luxury Hotels**: Half of the respondents hold positive expectations for revenue, demonstrating strong resilience.

- Lifestyle Hotels: Revenue and GOP are expected to outperform traditional brands, benefiting from growing demand for differentiated experiences.

- **Resort Hotels**: Enjoy higher confidence than city hotels, benefiting from the upgrading of cultural and tourism consumption as well as inbound tourism driven by visa‑free policies.

### **II. Core Challenges: Intensified Competition and Cost Pressures**

1. **New Supply Shocks the Market**

- The influx of a large number of new hotels into the market has intensified industry competition, particularly in the mid‑range and luxury segments, putting downward pressure on occupancy rates and room rates.

2. **Macroeconomic Conditions and the Contraction of Corporate Travel**

- Persistent macroeconomic uncertainty, coupled with constrained business travel frequency and shrinking budgets, has failed to effectively ease demand for business hotels.

3. **Operating Costs Continue to Rise**

- Rising labor costs, volatile energy prices, and increasing supply chain expenses are further squeezing profit margins. Surveys indicate that labor and energy consumption-related expenditures have become the primary focus of operational cost management.

### **III. Pathways to Quality Growth: Diversification and Refined Operations**

1. **Business Diversification**

- **Expanding the Target Audience**: Shift from traditional business and leisure travelers to tap into emerging markets such as local consumers, niche communities (e.g., pet-friendly venues, anime-themed spaces), MICE (meetings, exhibitions, events), and long-stay travelers.

- **Culinary Innovation**: While 46% of respondents expect restaurant performance in 2026 to fall short of 2025 levels, the “Catering+” model—such as integrating live performances, IP collaborations, and themed exhibitions—is reshaping the industry landscape, driving restaurants to shift from single‑function establishments to multifaceted experiential spaces.

2. **Refined Operations**

- **Dynamic Pricing and Revenue Management**: Leverage data-driven insights and enhanced market sensitivity to respond flexibly to fluctuations in demand.

- **Cost Control and Efficiency Enhancement**: We control expenses across multiple dimensions, from workforce scheduling and energy management to supply chain integration and digital efficiency improvements. For example, the application of AI technology can optimize workforce efficiency and reduce annualized per capita costs.

- **Sustainable Development Investments**: Although currently only 8% of Chinese hotels have obtained external sustainability certifications—lower than the Asia-Pacific region’s average of 30%—measures such as energy conservation, waste reduction, and resource optimization have become core drivers for lowering operating costs and improving cash flow.

3. **Capital Expenditures Focused on Core Areas**

- Key capital expenditure priorities for 2026 include upgrading operational systems, strengthening brand standards, and renovating mechanical and electrical engineering projects, thereby enhancing efficiency through cost control and promoting asset preservation.

### **IV. Future Outlook: Structural Opportunities and Long‑Term Resilience**

1. Release of policy and market dividends

- The domestic visa‑free policy and tourism promotion efforts are expected to attract more domestic and international tourists, boosting hotel occupancy rates.

The “culture, tourism + commerce” model is rapidly developing, and differentiated products such as health-and-wellness travel residences and intangible cultural heritage experiences are poised to seize growth opportunities.

2. **Leading Enterprises Drive Industry Upgrades**

- The concentration in the chain hotel market is increasing, and leading companies—such as Jinjiang International, Huazhu, and Home Inn—have become the cornerstone of industry growth by leveraging branding, digitalization, and a strategy of expanding into lower-tier markets to precisely meet evolving consumer demands.

3. **Technology‑Driven Long‑Term Transformation**

- Technological innovations such as large AI models and digital operations are profoundly transforming the hotel industry chain, driving the sector toward intelligent, efficient, and sustainable development.