Bank of America Merrill Lynch said that maintaining that the Grand Hotel (00045.HK) outperformed the market rating, the target price was 14%, down from 10.2 yuan to 8.8 yuan. The bank said it will lower the EBITDA forecasts for major hotels this year and next two years by 13% and 15% respectively.

According to the bank, in the first half of this year, the EBITDA of major hotels plummeted 18% year-on-year to 525 million yuan, falling short of the bank's expectations. The decline was mainly due to the partial closure of the Beijing and Chicago Peninsula Hotels for renovation projects. Furthermore, revenue fell 3% and employee expenses rose 3%, causing gross profit to fall to 20.1%. Excluding the impact of these two hotels, EBITDA is still down 4% year over year.

On the Hong Kong side, average rentable room revenue fell 5%. The bank also indicated that the group had increased sales to companies and groups to offset the impact of falling leisure demand.