CICC 2025 Tourism Hotel and Catering Outlook: Focus on Industry "Infrastructure" Expectation of Recovery in Quantity and Price

CICC released a research report stating that in 2024, the hotel and tourism industry overall faced "stable volume and price decrease" in the high base year of the previous year, while catering, duty-free, and personnel services continued to face volume and price pressures since 2023. Valuations are expected to slightly rebound from the bottom under policy expectations, but valuations of top companies remain low. Looking ahead to 2025, the expansion of policies in the catering and cultural tourism industry is expected to bring about demand recovery and a turning point in volume and price. It is recommended to focus on the industry's "infrastructure". CICC's main viewpoints are as follows: Consumer rationality/quality-price ratio and emotional value/heart-price ratio coexist, and the industry's "infrastructure" continues to increase market share and cross the cycle. 1) Consumers are becoming more rational, but that does not mean compromising on quality. Meanwhile, consumer demand is still diverse, and consumers increasingly value the emotional value provided by consumer goods. Companies that can maximize cost efficiency to provide quality-price ratio products, or provide heart-price ratio products and services by catering to experiential and spiritual pursuits have the opportunity to stand out. The trend of "quality-price ratio" and "experiential value" has also been observed in Japan since the 1990s. 2) In the domestic social services industry, there is still room for significant improvement in chainization and concentration. Against the backdrop of increasing differentiation between enterprises and the exacerbation of the suction effect, coffee, affordable tea drinks, Western fast food, hot pot, chain hotels, and other "infrastructure" industries are expected to continue to increase market share through high-quality expansion and stable single-store models in 2025, achieving growth across the cycle. This is mainly because they have scale and brand advantages, good business models (such as easy replication and expansion/high barriers to entry/consumer preference migration is slow, etc.), and strong adjustment and iterative capabilities. The expansion of policies in the catering and cultural tourism industry is expected to bring about demand recovery and a turning point in volume and price. Some sub-industries (such as catering) have partially shown a slowdown in low-price promotions and stabilization in the landscape. If more and more substantial policies are implemented (such as consumer vouchers, livelihood promotion, ice and snow economy, job creation, etc., directly and indirectly boosting social service consumption), the industry is expected to experience demand recovery and a turning point in volume and price. The stabilization of the catering landscape is partly evident (some brands have narrowed the decline in average price per customer); the hotel industry is focusing on the improvement of supply and demand relationships (expecting a decrease in supply growth rate); the personnel service industry is paying attention to the potential elasticity of the pro-cyclical industry and the improvement process of enterprise recruitment confidence under policy stimulation; the tourism industry is optimistic about the resilience of leisure demand and ice and snow tourism hotspots, emphasizing catalytic factors such as improved transportation, new product launches, mergers and acquisitions, etc.; duty-free shopping and other high-end consumption categories are also expected to achieve a certain pro-cyclical rebound, but factors such as competition in the taxed channel need to be observed simultaneously. Risk factors: Policies and effects weaker than expected; intensified competition; companies unable to improve management capabilities to respond to changes, etc.