Skip to content

Hotel Industry Faces Tough Challenges

The China Tourist Hotel Association published a consolidated report with information from over 2,000 hotels having the level of three stars and above. It included the financial results for the first half of 2013. The consolidated results showed that the average occupancy rate was 53 percent, which was below the breakeven rate of 60 percent. This was down six percent from the same period in 2012. The average hotel revenue was down 8.5 percent; food and beverage revenue was down 17.2 percent; meeting and conference revenue was down 17.8 percent, which was the greatest amount from all areas. The total revenue was down 11.8 percent. The results also suggested that 31.1 percent of the hotels are not optimistic about their business opportunities in the future.

The report stated that China’s hotel and restaurant industry had experienced double digit growth over the past thirty years. The growth rate even exceeded 22 percent over a period of twenty of those years.

The drop in hotel revenue resulted from the following four circumstances. Government entities decreased their spending due to the tightened meals and entertainment policy. Foreign tourism was down five percent due to the world’s economy. The downturn in the stock market had an impact. The government’s misjudgment of the market resulted in an excess supply. This last circumstance was cited as the major reason for the lowered occupancy rates.

Source: People’s Daily, August 18, 2013