The supply structure of China’s hotel industry is stabilizing, while the gap between the first-tier and second-tier cities is widening, according to a recent report by Hohi data platform.
In 2023, the supply structure of China’s domestic hotel market further stabilized, and the gap between first-tier and second-tier cities became increasingly pronounced. Shanghai and Beijing, with their large supply scales, stable high-end offerings, and high brand penetration, continued to solidify their lead in the market.
Meanwhile, new first-tier cities like Chengdu and Hangzhou saw rapid growth in high-end supply. Despite some improvements in high-end supply in certain second-tier cities, their overall scale remains less competitive compared to top-tier cities, further clarifying the tiered differentiation in the supply landscape.
Demand fluctuations are evident, and tourism drives performance growth.
Driven by the strong rebound in domestic tourism demand, cities such as Changsha, Chengdu, and Chongqing - known for their rich leisure appeal and tourism resources - have shown outstanding hotel performance. In contrast, demand has been relatively sluggish in cities that are not driven primarily by tourism. Cities like Shenzhen and Fuzhou, which rely heavily on business activities, have seen a decline in market appeal due to the slower-than-expected recovery of business travel.
Additionally, cities like Kunming and Guiyang, which serve as transit hubs, have not fully capitalized on the surge in market traffic, resulting in relatively weaker recovery.
The focus of investment is shifting toward existing assets.
As the domestic hotel market gradually enters a more mature phase, the focus of investment has shifted from new projects to existing assets, a trend particularly evident in first-tier cities such as Shanghai and Guangzhou.
With fewer new projects and a more mature market, investors are turning their attention to renovation and redevelopment of existing assets to enhance asset value and market competitiveness. This shift not only reflects the maturity of the domestic hotel market, but also underscores the growing importance of existing properties as new supply slows, making them a key focus for future investment opportunities.
