China Tourism Equities: A more cautious growth outlook for 2H26

We adopt a more cautious view of RevPAR trends across our covered hotels in 2H26, reflecting weaker consumer demand. Leading hotel chains are proactively navigating near-term headwinds through key strategic initiatives. Maintain Buy on Jinjiang Hotels and BTG Hotels; cut TPs due to valuation methodology changes and lower earnings forecasts. In our last note, we underestimated the combined impact of this summer's adverse weather and elevated fuel costs on hotel demand. Industry RevPAR growth moderated to a low-single-digit decline in 2Q26, down from mid-single-digit growth in 1Q26, and weak momentum continues into July-August. Leading hotel chains are navigating headwinds through (1) a continued shift to asset-light models; (2) enhanced supply chain efficiency; (3) rising CRS penetration driven by AI tools, precise membership management and disciplined franchisee oversight;