Guosen: The overall operation of outbound chain is flat, embracing high-quality leading companies with outstanding member traffic.

Guosen released a research report stating that the overall performance of travel chain companies in the first half of 2024 was relatively flat, but leading operators with online platform traffic advantages still significantly outperformed the industry index. Meanwhile, chain expansion (mainly franchise expansion) and efficient operations of high-quality leading companies with brand and member traffic advantages still achieved good alpha growth. Currently, in the economic environment and market style, it is recommended to allocate TRIP.COM-S (09961), MEITUAN-W (03690), TONGCHENGTRAVEL (00780), HWORLD-S (01179), YUM CHINA (09987), HAIDILAO (06862), Anhui Jiuhuashan Tourism Development (603199.SH), Emei Shan Tourism (000888.SZ), Changbai Mountain Tourism (603099.SH), Shanghai Jin Jiang International Hotels, among others. Industry: Domestic tourism in the first half of the year saw stable growth, with strong recovery in inbound and outbound passenger flows. In the first half of the year, the number of domestic tourists increased by 14%, revenue increased by 19%, showing stable growth. The number of inbound and outbound travelers increased by 71% in the first half of the year, recovering to 83% of the 2019 level; the scale of international flight passenger flow in the first half of the year recovered to 80% of the 2019 level, with a year-on-year increase of 254%; inbound and outbound passenger flows saw strong recovery. Sector: The overall operations of A-share travel chain companies in the first half of the year were flat, with some overseas-listed leading companies in the travel chain sector showing relatively outstanding performance based on traffic (membership) advantages. In the first half of the year, A-share travel chain companies saw a year-on-year decrease in revenue, net profit, and non-GAAP performance of 2%, 7%, and 11% respectively, with a decline of 6%, 18%, and 29% in the second quarter, indicating an overall flat performance. After a comprehensive review of the operations of A-share and overseas-listed leading travel chains, the performance of sub-sectors in the first half of this year is as follows: online travel or local service platform leaders relying on online traffic advantages and operational efficiency performed well; some scenic area leaders showed relative resilience in terms of passenger flow and revenue; outbound travel and performing arts saw recovery growth; hotel leaders remained stable or achieved steady growth; tax-free, catering, and other sectors were mostly under pressure, with only some strong branded catering leaders showing good performance. From January to August, the social service sector as a whole underperformed the market, with only scenic areas and some OTA leaders outperforming in a structural bull market. Online traffic advantage leaders: Online traffic accelerated penetration and increased bargaining power, helping leading companies achieve alpha growth with improved operating efficiency. Despite facing pressure from high base numbers, especially in the second quarter, leading online travel (OTA) and local life service leaders still performed well: online acceleration drove better booking volume than the market average, and under the easing competition and increased bargaining power, the realization rate (commission rate) is expected to rebound year-on-year, with Meituan, Ctrip, Tongcheng's revenue in the second quarter of 2024 increasing by 21%, 14%, and 48% respectively (OTA business +23%), with good revenue growth. Cost control efficiency, accelerated operational efficiency, and profit growth, with adjusted performance in the second quarter of 2024 increasing by 78%, 45%, and 11% for Meituan, Ctrip, and Tongcheng respectively, showing strong overall performance. Hotels: The industry's RevPAR was under pressure in the second quarter, but leading companies still saw stable growth in adjusted performance, supported by scale expansion and operational efficiency. In the second quarter of 2024, the industry's RevPAR dropped by about 10%, but leading RevPAR still outperformed the industry; and with franchise expansion and operational efficiency, hotel leaders saw a year-on-year increase of 15-32% in adjusted performance in the second quarter of 2024, showing overall good performance. Brands like Huazhu and Yaado, along with traffic-dominant leaders, have improved annual store opening guidance, confirming alpha. In addition, the hotel leaders, dominated by franchise growth, have good cash flow, with expectations for long-term capital returns. Outbound travel saw recovery growth, some natural scenic areas showed good defensive qualities, and there was significant differentiation in the catering sector. Most outbound travel leaders saw recovery growth from a low base; Scenic areas: popular tourist destinations still showed resilience in terms of passenger flow and revenue, with performance varying, with Changbai Mountain Tourism, Anhui Jiuhuashan Tourism Development performing relatively well, and Emei Shan Tourism remaining stable overall. The catering sector as a whole was under pressure, with only YUM CHINA and HAIDILAO showing relative strength. Risk Warning: Systemic risks such as macroeconomic and political factors, intensified industry competition, policy risks, underperformance of heavy asset new projects, among other risks.