The third quarter is during the summer vacation, and the domestic tourism and business travel consumption market is booming. Junting Hotel (301073) released a quarterly performance announcement on the evening of October 26, stating that its revenue for the first three quarters of 2023 was approximately 382 million yuan, an increase of 54.14% year-on-year; The net profit attributable to the parent company was approximately 23.97 million yuan, a year-on-year decrease of 7.54%.
Junting Hotel stated in its third quarter report that its revenue increased significantly year-on-year in the first three quarters, partly due to the recovery of the domestic tourism market and an increase in revenue; On the other hand, there has been an increase in the number of self operated hotels.
This summer, consumers have shown a trend of increasing travel radius and increasing travel frequency, and hotels have become one of the hotspots of summer consumption. According to data from the China Tourism Research Institute, the number of domestic tourists this summer reached 1.839 billion, achieving a domestic tourism revenue of 1.21 trillion yuan. The tourism heat during this summer is significantly higher than the same period in 2019.
At the same time, the market recovery has also driven a strong recovery in the business travel market. According to a white paper released by Ctrip Business Travel, the international business travel market has gradually recovered in 2022 with the opening up of different countries, and in 2023, it has initially shown a trend of explosive demand. The global business travel market is further away from a complete recovery. Among them, the growth rate of China's domestic business travel market may usher in a new peak.
Thanks to the growth of summer consumption and travel demand in major business cities, Junting Hotel achieved a revenue of 160 million yuan in the third quarter, a year-on-year increase of 50.23%, and a 61% increase compared to the same period in 2019. All operating indicators showed a growth trend, setting a new historical high.
From specific indicators, in the third quarter, the average rental rate of Junting Hotel's direct operated hotels was 69.79%, an increase of 8.83% compared to the same period last year, exceeding the level of the same period in 2019; The average house price per room is 530 yuan, an increase of 26.43% compared to the same period last year and 24.61% compared to 2019; RevPAR (revenue per available room) was 369.89 yuan per room, a year-on-year increase of 44.75%, an increase of 25.24% compared to 2019. Junting Hotel explained that the RevPAR of the hotel increased significantly in the third quarter, mainly driven by the increase in average room price, demonstrating the good market competitiveness of direct stores.
From January to September 2023, the net cash flow generated by the operating activities of Junting Hotel was 145 million yuan, an increase of 106.96% compared to the same period last year.
Since the beginning of this year, in order to focus more on the main business of the company's hotel operation, Junting Hotel has increased its investment in directly operated hotels and actively reduced other non core businesses such as property transfer leasing, which has also promoted revenue growth.
Junting Hotel is positioned as a mid to high-end hotel, with its stores mainly concentrated in the Yangtze River Delta urban agglomeration. It mainly has three major brands: "Junlan", "Junting", and "Jinglan". Among them, Junlan Hotel accounts for 60.82% of the total number of hotels, accounting for the highest proportion. As of the end of the third quarter, the number of hotels under Junting Hotel reached 388, with a guest room count exceeding 80000.
In the third quarter, Junting Hotel added 15 new contracted hotels and opened 17 new hotels. Among them, 3 Junting brand direct operated stores (Hangzhou Binjiang Pagoda Junting Design Hotel, Hangzhou Zijingang Pagoda Junting Design Hotel, and Shenzhen Luohu Dongmen Junting Shangpin Hotel) opened as scheduled and demonstrated good performance during the climbing period. The Junlan brand has opened 5 new hotels, such as Anji Zhuxianhu Junlan Manor, Qingtian Xina Junlan Hotel, and Yixing Yinlong Valley Junlan Resort, all of which have become benchmark projects in their respective regions. The newly opened Jinglan brand includes five hotels, including Fuzhou Chengtou Guling Jinglan Hotel and Tongxiang F Jinglan Hotel, with nearly 700 new operating rooms and an average single store size further expanding.
In addition, Junting Hotel explained in its third quarter report that the reason for the year-on-year decline in net profit was mainly due to the increase in corresponding costs for exhibition stores, and the early termination of contracts for some properties classified as financing leases. In the first three quarters of 2023, rental expenses incurred during the preparation period due to investment in direct operated hotels were included in management expenses. The cumulative management expenses from the beginning of the year to the end of the third quarter increased by 29.46 million yuan compared to the same period last year, a year-on-year increase of 105.15%.
Junting Hotel will sublet the commercial property of Huihe Junting Hotel (Hangzhou Huihe City Mall and corresponding garage) to the original owner, and the original owner will sign a lease agreement directly with a third party. According to the new leasing standards, this change resulted in a one-time recording of the balance of rent difference of 10.3466 million yuan recognized in accordance with the requirements of the standards over the next 12 years of the lease term.
From an industry perspective, although the summer travel consumption market was hot in the third quarter, the new opening of domestic hotel groups in the third quarter showed a differentiation trend. According to data from Hotel Home, in terms of the number of new stores opened in the five provinces and single brand before the new opening, Huazhu Group (01179) reached a new high, while Jinjiang Hotel (600754) slightly increased, while Shoulv Hotel (600258) showed a slight delay.
It is worth noting that the top five brands of Jinjiang Hotel Group's newly opened stores in the third quarter were all mid to high-end hotels, and Jinjiang Hotel Group's performance in newly opened stores in southwestern provinces was not bad. Among the top five new hotel brands in Huazhu, the proportion of economy or light to mid range hotel brands is still not small. However, Huazhu's market expansion in the central China region has also maintained good performance, almost equal to the number of new stores opened by Jinjiang in Guangdong Province.
Shanghai Securities analyst Zhang Hongle believes that the recovery of consumption requires hotels to take the lead, and the new opening data in the third quarter is particularly important for the industry to judge the real progress of the current market expansion of hotel management companies. Factors such as hotel labor costs, energy consumption, catering costs, travel budgets, international relations, and new supply have all brought new challenges to the hotel industry; In addition, changes in consumer groups, new technological drivers, and regional differences have also injected new opportunities into the hotel industry.