Robust RevPAR growth in 4Q17 driven by ADR increase

Jinjiang-A reported its Dec-2017 monthly operational data. Domestic hotelsRevPAR growth in 4Q17 continued to be robust. Jinjiang and Plateno series bothenjoyed RevPAR growth of 6-8% yoy in 4Q17. Vienna's blended RevPAR growthseems flattish. In our view, this is mainly due to its fast expansion (c.40% of totalVienna hotels are newly-added, which are still in ramp-up period). To breakdown:

RevPAR of Jinjiang series increased by 4.3%/5.7%/6.1% in Oct/Nov/Dec,mainly driven by ADR growth of 4.3%/2.7%/3.0%.

RevPAR of Plateno series increased by 9.1%/7.9%/6.7% in Oct/Nov/Dec,mainly driven by ADR growth of 14.6%/12.9%/11.9%.

RevPAR of Vienna series increased by -1.1%/2.0%/1.7% in Oct/Nov/Dec,mainly driven by ADR growth of 1.4%/1.2%/2.2%.

Midscale hotels expansion driven by Vienna

Jinjiang added 191 hotels in 4Q17 to reach a total hotel number of 6,694 in 2017-End (vs. 6,503 in 9M17). Jinjiang is upgrading its products aggressively to midto-upscale hotels, mainly through the Vienna brand (99 hotels added in 4Q17),just like China Lodging's strategy for more mid-to-upscale hotels and the Hantingupgrade. Management had guided previously that c.15% of hotels are midscale.In addition, 50-60% of the hotel portfolio pipelines are midscale. The Vienna brandled the midscale hotel market expansion with c.300 hotels added in 2017 to reach754 hotels as of 2017-End (vs. 464 hotels in 2016-End).

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