China hotel third-quarter earnings preview: room revenue stabilizes and openings accelerate, with Atour’s retail business and H World’s margins in focus
Original source：Citi ResearchFirst published on Unhidea：Original source date：
Key takeaway
Citi is positive on the resilience of China’s hotel room revenue and the faster pace of openings in the third quarter, but slowing retail growth and margin pressure at Atour, as well as a higher year-earlier comparison base in the fourth quarter, remain important constraints when assessing performance.
How has hotel revenue recovered after summer weather disruptions?
STR data show that the year-over-year change in revenue per available room (RevPAR) for China’s hotel industry improved from a decline of 2.8% in July 2026 to growth of 0.2% in August and 1.5% in September. The measure reflects both room rates and occupancy.
Citi expects Atour’s blended RevPAR in China to rise slightly year over year in the third quarter despite the impact of extreme summer weather, while H World’s will be roughly flat. Both companies also opened hotels faster in the third quarter than in the first half.
The year-earlier comparison base is higher in the fourth quarter, and RevPAR could still fluctuate. Citi believes initiatives related to students’ autumn break in November could increase off-season leisure travel demand, so performance may be more resilient than the market fears.
Why is Atour’s retail growth driving upward revisions to forecasts?
Citi expects Atour to report third-quarter net revenue of 3.28 billion yuan, up 25% year over year, and non-GAAP net income of 590 million yuan, up 21%. The bank expects new hotel openings to accelerate in the third quarter compared with the first and second quarters, closures to remain roughly flat sequentially, and new openings in the fourth quarter to exceed the third-quarter number.
Retail remains a growth engine: Citi expects third-quarter retail revenue to rise approximately 50% year over year, below the approximately 60% recorded in the first half. Pillows and duvets remain the main categories, while newer categories such as sleepwear are gaining volume.
Based on retail momentum, Citi raised its forecast for Atour’s 2026 retail revenue growth from 40% to 48% and its full-year total revenue growth forecast from 30% to 33%. However, the bank expects the third-quarter net margin to decline slightly year over year due to the business mix and a higher tax rate.
Where is H World’s profit growth coming from?
Citi expects H World to report third-quarter revenue of 7.35 billion yuan, up 5.6% year over year, and adjusted net income of 1.7 billion yuan, up 11.9%. The bank expects openings to accelerate compared with the first and second quarters and believes the company is on track to meet its full-year opening target.
Citi believes asset-light initiatives will help improve margins. It expects third-quarter adjusted earnings before interest, taxes, depreciation and amortization of 2.72 billion yuan, with a margin of 37%, above 36.1% a year earlier.
What conditions underpin Citi’s full-year assessment?
Citi’s base case assumes that in 2026, Atour’s China hotel RevPAR will rise 0.4% year over year and its net hotel openings will total 408; the corresponding figures for H World are growth of 0.5% and 1510 net openings. RevPAR, expansion rates and margins at either company coming in above or below expectations would change the bank’s scenario assessment.
Citi maintained buy ratings on both companies, with a target price of 49 US dollars for Atour and target prices of 59 US dollars and 47 Hong Kong dollars for H World’s US- and Hong Kong-listed shares, respectively.
