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China’s market for cheap hotel rooms in its many smaller cities is huge and quite profitable, but also lacks respect from investors. That reality is evident in the latest valuation for GreenTree Hospitality Group Ltd. (GHG.US), China’s clear leader in the space for cheap rooms that the company charged just 169 yuan ($23) per night for, on average, in this year’s first quarter.
GreenTree’s latest results, released on Tuesday, are obviously more complex than just this ultra-low room rate, which is the result of the company’s focus on China’s smaller cities where many might consider 100 yuan per night as pricey. The company’s first-quarter results also highlighted a number of industry trends, most notably a softening of China’s travel market that seemed inevitable after a nice post-Covid rebound in 2023.