Jinjiang Hotels rushes to Hong Kong Stock IPO: Three-year net profit down 22.6%, overseas business losses widen by 63.7%

Global Layout of a Hotel Giant

Jinjiang Hotels is a hotel group with a business presence worldwide. As of December 31, 2025, it has opened 14,132 hotels with 1,368,057 rooms, covering 339 cities in 31 provinces, municipalities, and autonomous regions in China, as well as 57 countries or regions abroad. The company operates under two business models: ownership and leasing model, and franchising and management model.

Under the ownership and leasing model, the company owns or leases hotel properties and operates them directly, with revenue mainly coming from room accommodation and food and beverage sales. Under the franchising and management model, hotel owners are authorized to use the company’s brand and systems, with revenue coming from franchise fees or management fees. By the end of 2025, the proportion of rooms in franchised and managed hotels reached 94.9%, with relevant revenue proportions for 2023, 2024, and 2025 being 42.4%, 44.0%, and 49.7%, respectively, indicating the company’s significant success in transitioning to a light asset model.

Revenue Declined for Three Consecutive Years by 5.7%

The company’s revenue decreased from RMB 14.649 billion in 2023 to RMB 14.063 billion in 2024, and further dropped to RMB 13.811 billion in 2025, resulting in a three-year compound annual growth rate of -3.0%.

For the year ended December 31

The decline in revenue is mainly due to the company’s strategic closure of certain owned and leased hotels to align with its light asset model strategy, as well as a challenging overseas market environment leading to revenue declines.

Net Profit Cumulative Decline of 22.6% Over Three Years

The company’s net profit decreased from RMB 1.277 billion in 2023 to RMB 989 million in 2025, with a cumulative decline of 22.6% over three years.

For the year ended December 31

The decline in net profit is mainly attributed to a decrease in non-recurring income and revenue declines due to market conditions.

Gross Margin Declined by 3.4 Percentage Points for Three Consecutive Years

The company’s gross margin fell from 40.8% in 2023 to 37.4% in 2025, a cumulative decline of 3.4 percentage points.

For the year ended December 31

The decline in gross margin is mainly due to reduced revenue from owned and leased hotels, as well as declines in RevPAR for both owned and leased hotels and franchised and managed hotels due to the overseas market environment, while costs remained relatively stable.

Net Margin Continues to Face Pressure, Declining by 1.5 Percentage Points

Net margin decreased from 8.7% in 2023 to 7.2% in 2025, a cumulative decline of 1.5 percentage points.

For the year ended December 31

Light Asset Model Revenue Share Increased by 7.3 Percentage Points

In the company’s revenue composition, the share of franchising and management revenue increased from 42.4% in 2023 to 49.7% in 2025, while the share of owned and leased revenue decreased from 49.2% to 42.0%, indicating the effectiveness of the light asset transformation strategy.

Revenue Composition for the Year Ended December 31

Related Party Transactions Account for 6.6% of Procurement, Attracting Attention

The company has multiple ongoing related party transactions with its controlling shareholder, Jinjiang International Group, including trademark licensing, comprehensive commodity procurement and supply, property leasing, and financial services. From 2023 to 2025, sales to Jinjiang International Group accounted for 0.4%, 0.8%, and 1.0% of total revenue, while procurement from it accounted for 6.9%, 8.0%, and 6.6% of total procurement.

Overseas Business Losses Expanded by 63.7% Over Three Years

The company’s overseas business recorded net losses during the performance period, with net losses of RMB 405 million, RMB 434 million, and RMB 663 million from 2023 to 2025, expanding the total loss by 63.7%.

Overseas Business Losses for the Year Ended December 31

This is mainly due to:

1. Rising operating costs, especially labor and energy costs;
2. Increased borrowing costs due to rising interest rates;
3. Intensifying market competition.

Additionally, the company recorded net current liabilities of RMB 1.526 billion and RMB 26 million on December 31, 2024, and 2025, respectively, indicating certain liquidity pressures.

Leading in Scale but Lagging in Profitability Compared to Peers

As of 2024, based on the number of hotels, Jinjiang Hotels is the largest hotel chain group in the world, with approximately 13,400 hotels. In the Chinese market, based on the number of rooms, the company has a market share of 13.0%, ranking first among Chinese hotel chain groups for nine consecutive years. However, the company’s gross margin and net margin levels still lag behind those of internationally leading hotel groups.

Comparison of Profitability Among Major Hotel Groups in 2025

Low Customer Concentration Reduces Risk

During the performance period, income from the top five customers accounted for 0.8%, 1.3%, and 1.4%, respectively, indicating low customer concentration and no significant dependency risks.

For the year ended December 31

Moderate Supplier Concentration Level Maintained

The proportion of procurement from the top five suppliers to total procurement was 16.2%, 16.2%, and 14.8%, respectively, indicating a moderate level of supplier concentration.

For the year ended December 31

State-Owned Holding Structure is Concentrated

As of the last practicable date, Jinjiang International, through Jinjiang Capital and Jinjiang International Hong Kong Investment Management, holds approximately 47.26% of the company’s shares, making it the controlling shareholder. Jinjiang International is ultimately owned 90.00% by the Shanghai State-Owned Assets Supervision and Administration Commission and 10.00% by the Shanghai Financial Bureau, with the actual controller being the Shanghai State-Owned Assets Supervision and Administration Commission. The equity structure is highly concentrated, with the top three shareholders holding 67.0% of the shares, and the public shareholding ratio being relatively low.

Core Management Team is Experienced but Compensation Needs Improvement

The company’s core management team includes Chairman Mr. Zhang Xiaoqiang, CEO Mr. Mao Xiao, and others, all of whom have extensive experience in the hotel industry, with an average industry experience of over 15 years. Chairman Mr. Zhang Xiaoqiang is 57 years old and has been with Jinjiang Group since 1989, boasting 34 years of industry experience, while also serving as President of Jinjiang International; CEO Mr. Mao Xiao, 50 years old, is a certified public accountant with rich financial and hotel management experience. The compensation level of the management team is generally consistent with the industry average, with the total compensation for directors in 2025 being RMB 2.4 million and the total compensation for the five highest-paid individuals being RMB 35.2 million. The team exhibits strong stability, but the compensation level is below the industry average. The company has implemented a restricted stock incentive plan to attract and retain talent.

Multiple Risk Factors Require Close Attention

Risk of Intensifying Industry Competition

The hotel industry is highly competitive, and failure to compete effectively may adversely affect revenue, profits, or market share. In 2025, the RevPAR of the Chinese hotel market decreased by 3.2% year-on-year, putting overall growth pressure on the industry.

Risk of Economic Environment Fluctuations

The business is sensitive to global economic conditions, especially in the Chinese and European markets. Economic downturns may significantly impact performance. The company’s overseas revenue accounts for 27.9%, which is greatly affected by geopolitical and exchange rate fluctuations.

Risk of Brand Reputation Management

Damage to brand image or reputation may adversely affect business and operational performance. With the rapid expansion of hotel numbers, controlling service quality has become a challenge.

Risk of Continuous Losses in Overseas Business

The overseas business has been continuously losing money, with losses reaching RMB 663 million in 2025. Geopolitical, legal, and regulatory risks may affect the development of international business. Overseas revenue of RMB 3.851 billion decreased by 9.5% year-on-year, and the gross margin fell from 41.9% to 35.9%.

Risk of Liquidity Pressure

There are net current liabilities in both 2024 and 2025, amounting to RMB 1.526 billion and RMB 26 million, respectively. In 2025, the current ratio is 0.99, which may limit business development capabilities.

Risk of Goodwill Impairment

As of the end of 2025, the goodwill balance was RMB 11.644 billion, accounting for 25.8% of total assets. If the performance of subsidiaries does not meet expectations, there will be a risk of impairment.

Risk of Rising Human Resource Costs

Labor shortages and rising labor costs may lead to slowed growth and affect business and operational performance. In particular, in overseas markets, rising labor costs are a significant factor contributing to the expansion of losses.

Conclusion

As a leading global hotel group in scale, Jinjiang Hotels has achieved significant results in its transition to a light asset model, with the proportion of franchising and management business continuously increasing. However, the company faces multiple challenges, including continuous revenue decline, simultaneous decreases in gross margin and net margin, and ongoing losses in overseas business. Investors should pay attention to its ability to improve overseas business, control costs, and ensure profitability stability under the light asset model. Despite its significant scale advantages, future growth still faces considerable pressure amid intensified industry competition and macroeconomic uncertainties. Investors are advised to invest cautiously after thoroughly assessing the risks.

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Editor: Xiao Lang Quick Report