China’s biggest food delivery platform is seeing a trend: more spending on experiences. “More and more consumers are willing to allocate a larger portion of their budget to travel,” Wang Xing, CEO of Hong Kong-listed Meituan , said Thursday during a first-quarter earnings call, according to a FactSet transcript. “Their demand is not only growing, also probably more diverse, which brings substantial opportunity for us,” he said. Meituan operates a hotel bookings and travel-related business, albeit far smaller than its food delivery operation. HSBC analysts on Friday raised their price target on the stock by 5 Hong Kong dollars (64 cents) to 170 Hong Kong dollars after an improved earnings outlook across all of Meituan’s segments. Mimicking U.S. The tourism industry’s growth, despite a more sluggish macro backdrop in China, is similar to what happened in the U.S. after the pandemic. American consumers have kept spending on experiences, including concerts and cruises . In a report last week about China’s consumer market potential, Bank of America Securities analysts chose hotel operator H World as one of its top picks. “We believe H World is best positioned to capture long-term growth in the China hotel industry given best-in-class execution,” the analysts said. “While RevPAR (revenue per available room) growth could remain under pressure near-term due to slower business travel recovery and high base of leisure travel, we believe its long-term unit growth story remains intact.” BofA rates H World a buy, and expects its U.S.-listed shares can reach $47. That’s 30% above where H World shares closed Thursday. The company’s brands include hotels with sleek, modern styles at a relatively affordable price. In China, H World also owns master franchisee rights for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel. Goldman Sachs’ latest Asia Pacific conviction list, published last week, lists H World as its only travel stock pick with an even higher price target of $52 a share. The analysts rate the stock a buy and expect it to benefit from “value-focused consumption trends” and industry consolidation. Inbound visits Travelers are also coming to mainland China from Hong Kong, Macau, Taiwan and the rest of the world. Morgan Stanley expects that inbound tourism revenue has “meaningful upside potential” and can grow by around 11% a year through 2033, according to a mid-year outlook
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