China’s Hotel Industry Crashes This Summer: Prices Plunge And Occupancy Drops—what You Need To Know

Tuesday, July 22, 2025

It is 1 of nan worst summers successful representation for China’s edifice industry. Hotel Revenue per Available Room (RevPAR) dropped 8% y/y successful nan 1st week of nan summertime vacation (June 29 – July 5, 2025 – 7 days), according to Morgan Stanley. Following a dip successful occupancy rates, that had already taken its toll connected nan ailing hospitality sector, nan alteration is predominantly because of debased demand, they said. Analysts judge portion of nan logic nan world’s largest edifice companies person started disconnected nan twelvemonth truthful anemic is because excessively galore hotels over-estimated what nan marketplace request would beryllium agelong earlier they reached nan last 4th and decided what to complaint for them.

The challenges, however, are not exclusive to nan summertime months. Throughout 2025, China’s edifice manufacture has been facing important struggles. In nan first 4th of nan year, nationwide edifice RevPAR dropped by 5% year-on-year, signaling persistent weakness crossed nan sector. Despite a little betterment during nan May Day holiday, nan optimism was short-lived. By nan extremity of May, a caller information of intoxicant bans introduced stricter restrictions that person impacted nan country’s edifice and nutrient & beverage sectors, starring to further gross losses for galore hotels.

Alcohol Bans and Business Travel Challenges

The intoxicant bans, which primitively applied to authorities functions, person now been extended and are straight affecting some organization eating and firm events. These caller restrictions person had a peculiarly damaging effect connected high-end hotels, which person agelong relied connected business recreation and meetings for a important information of their revenue. As a result, galore luxury hotels are struggling to pull firm clients and guests, pinch nan firm argumentation of “travel only if perfectly necessary” pushing business travelers toward virtual meetings alternatively than in-person gatherings.

Moreover, nan wide diminution successful business travel, coupled pinch shrinking authorities receptions, has further exacerbated nan financial strain connected galore hotels. With authorities functions reduced and businesses tightening their budgets, high-end hotels successful China look an progressively bleak future.

This downturn successful business recreation has contributed to nan broader challenges successful nan edifice sector, which are amplified by a quickly shifting scenery of user behavior. More and much consumers are opting to trim backmost connected discretionary spending, further contributing to anemic request successful nan hospitality industry.

The Surge successful Hotel and Homestay Supply

In summation to anemic request and stricter firm budgets, nan different important situation for China’s edifice assemblage is nan tremendous surge successful supply. The number of hotels crossed nan state has surged successful caller years, adding to pressures that we whitethorn moreover spot exacerbated arsenic hotels compete for visitors. As of 2023, location were 323,000 hotels successful full connected nan mainland, nan number rising to 348,700 by 2024 and exceeding nan erstwhile precocious successful 2018. This speedy maturation has caused markets to go oversaturated, meaning that hotels are progressively vying for customers who are spending less days there.

In summation to nan emergence successful accepted hotels, nan number of homestay businesses has besides surged. As of March 2025, China had complete 331,000 registered homestay-related businesses, pinch much than 60% of these businesses being established successful nan past 3 years. This accelerated maturation successful some hotels and homestays has resulted successful a acold much competitory marketplace for accommodation. Industry insiders statement that while traveler numbers this summertime haven’t importantly declined, they person been dispersed bladed crossed a overmuch larger proviso base.

The accelerated summation successful some edifice and homestay proviso is causing galore hotels to look fierce competition, peculiarly from much affordable aliases unsocial homestay options. These changes successful nan accommodation assemblage person forced accepted hotels to reevaluate their business models and pricing strategies successful bid to stay competitory successful a crowded marketplace.

Sluggish Luxury Hotel Market

Luxury hotels person been among nan hardest deed by these marketplace changes. Once thriving connected nan business and authorities sector, galore of China’s high-end hotels are now uncovering it difficult to pull their accustomed clientele. With less firm events and world business travelers visiting nan country, luxury hotels are struggling to capable rooms and support their precocious standards of service.

Moreover, nan tightening of authorities receptions and nan diminution successful discretionary spending by consumers intends that moreover premium services, specified arsenic good eating and luxury accommodations, are little successful demand. This displacement is not conscionable a impermanent downturn but a longer-term inclination that is apt to person lasting effects connected China’s high-end hospitality market.

As these hotels struggle to adjust, galore are focusing connected enhancing their offerings and diversifying their services. However, nan accelerated emergence successful nan number of some edifice rooms and homestays intends that moreover these changes whitethorn not beryllium capable to reconstruct nan profitability galore luxury hotels erstwhile enjoyed.

Looking Ahead: Will China’s Hotel Industry Recover?

Despite these ongoing challenges, location are immoderate signs that China’s edifice manufacture whitethorn retrieve successful nan agelong term. While nan manufacture faces aggravated title and rising supply, nan sheer size of China’s home tourism marketplace offers immoderate dream for recovery. As much Chinese travelers opt for home vacations owed to ongoing world recreation uncertainties, nan request for accommodation whitethorn displacement toward section destinations. However, for this betterment to beryllium sustainable, hotels must set their pricing and offerings to meet nan expectations of today’s travelers.

Hotels successful China whitethorn request to go much adaptable successful bid to cater to evolving user preferences, including offering much personalized services, innovative packages, and experiences tailored to different marketplace segments. The luxury segment, successful particular, will person to find ways to set to nan changing scenery of business and leisure travel, while besides embracing caller technologies and business models.

Conclusion: The Road Ahead for China’s Hotel Industry

In short, China is experiencing a fantastically difficult summertime successful its edifice business, wherever prices and occupancy are down and nan title is aggravated from an oversupply of rooms. Although location are indications that nan assemblage will yet get backmost up, nan way toward betterment is paved pinch nan sizeable forces of alteration that will effect really hotels operate, compete and bring group in. For now, however, galore Chinese hotels are battening down their hatches amid changing marketplace dynamics, a slowing system and accrued competition. Whether nan manufacture rebounds will travel down to move changes and invention successful a transforming environment.