As China's economy struggles, consumer spending is tightening, creating significant challenges for the country's hotel industry. Even during peak holiday periods like October's National Day week and November's "Double 11" holiday, hotels have resorted to aggressive price wars to attract budget-conscious travelers. During the National Day holiday, often considered a high-revenue period, room rates dropped drastically. Prices for rooms that once cost 500 yuan ($70) per night fell to just 300 yuan ($42). This has led to a decline in service quality, with many four- and five-star hotels cutting back on amenities to manage costs.

Despite an increase in domestic travel, financial performance remains underwhelming. Data from the Ministry of Culture and Tourism revealed that 765 million domestic trips were made during the National Day holiday, a 10.2% rise compared to 2019. However, spending only grew by 7.9%, highlighting a broader consumption downgrade. While online platforms like Fliggy reported strong sales of discounted hotel packages during the Double 11 promotions, experts warn that such aggressive discounts could damage the industry's long-term competitiveness.

The industry's struggles are further compounded by over-expansion and capital-driven growth. Analysts point to an oversupply of hotels, with rapid nationwide expansion creating an imbalance between supply and demand. Budget accommodations and short-term rentals are becoming increasingly popular among travelers, forcing traditional hotels to compete at unsustainable prices. Many hotel operators have voiced concerns about financial losses, with some reporting deficits even in prime locations after factoring in labor, utilities, and platform commissions.

Adding to the challenges is a sharp decline in foreign tourism. Strained relations between China and Western nations, coupled with the lingering effects of China’s three-year zero-COVID policy, have significantly reduced the number of international visitors. Efforts to attract foreign tourists through visa-free entry policies have had limited success, as negative perceptions of China persist. Some industry insiders predict that many hotels could face bankruptcy in the next three to five years unless significant changes are made.

The Chinese hotel industry now faces a critical juncture. With shifting consumer preferences, geopolitical headwinds, and an oversupplied market, operators must adapt quickly to navigate an increasingly uncertain future. For now, the industry's path to recovery remains fraught with challenges.