We estimate 1H17comparable RevPAR yoy growth to be 5-6%Jinjiang-A has reported its June-17hotel operational data by brand. We estimatethat the company enjoys solid operational results with blended RevPAR growthof 2-3% yoy. However, if we factor in the reform of business tax (5%) to VAT andproducts mix change, the comparable blended RevPAR growth is 5-6% (2.5-3%yoy increase of occupancy rate and 2-3% yoy growth of ADR). For mid-scalehotels, we estimate a RevPAR growth 10% yoy mainly driven by ADR growth of6-7%. Breakdown by brand:    Jinjiang brand - 1H17RevPAR was estimated to be RMB139with 76%occupancy rate. For like-for-like basis (VAT reform effect started in May2016), 1H17RevPAR growth of 6% was driven by 1) 1.6% yoy increase ofoccupancy rate and 2) 3.5% yoy growth of ADR.    Plateno brand - 1H17RevPAR was estimated to be RMB123with 79%occupancy rate. Since Plateno was consolidated in 2Q16. 2Q17RevPARgrowth of 8% was driven by 1) 4.5% yoy increase of occupancy rate and2) 2.2% yoy growth of ADR.    Louvre brand - 1H17RevPAR was estimated to be EUR36with 61%occupancy rate. 1H17RevPAR growth of 3% was driven by 1) 2% yoyincrease of occupancy rate and 2) 1% yoy growth of ADR.    Vienna brand - Vienna was consolidated in 2H16. As mid-scale hotels,Vienna was estimated to generate 1H17RevPAR of RMB209withoccupancy rate of 87% (vs. 1H17occupancy rate of 86% for ChinaLodging mid-scale hotels). By end of 1H17, there were 581hotels inoperation (vs. 464hotels by 2016end). Management guided previouslythat there will be c.700of Vienna hotels in operation by 2017end.    DB’s view - 1H17results support our view that demand is improving    Just like China Lodging's strategy on more mid-to-upscale hotels and Hantingupgrade, Jinjiang is also upgrading its product aggressively to mid-to-upscalehotel mainly through the brand of Vienna. Management guided previously thatmore than 1,000hotels are mid-scale among total 6,297hotels in operation by1H17end. We believe the major hotel groups are in the process of upgrading theirproduct to meet the higher demand from Chinese customer's trade-up, especiallyin tier 1-2cities. The hotel sector's recovery is mainly due to the robust domestictravel growth. In addition, mid-high-scale economy hotels' growth is driven bythe rise in demand by domestic travelers and business travelers, and consumertrade-up.

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