China’s hotel industry continued to recover in 2025, but performance varied significantly by location, star rating and room rate segment, according to the 2026 China Hotel Industry Study published by the China Tourist Hotel Association (CTHA) and Horwath HTL.
The 2026 study collected data from 1,321 hotels, covering nearly 357,573 guestrooms and more than 437,310 food and beverage seats. First published in 2003, the annual publication has now appeared for 24 consecutive years.
The study examines hotel operating and financial performance across star ratings, management models, room rate segments and city tiers. It provides hotel operators with benchmarks for evaluating performance, identifying areas for improvement, budgeting and operational planning. Hotel owners, investors and other industry professionals can also use its findings to inform investment and asset management decisions.
Based on the internationally recognised Uniform System of Accounts for the Lodging Industry (USALI), the study aligns its reporting with international hotel accounting standards to support consistent benchmarking across China’s hotel industry.
China Hotel Industry Recovery Remains Uneven in 2025
After two years of volatility and adjustment, China’s hotel industry entered a period of modest recovery in 2025. However, improvements in revenue and profitability varied across markets and hotel categories.
Rooms revenue once again led the recovery. Some segments, including five-star and four-star hotels, recorded improvements in both occupancy and room rates. Nevertheless, gains in overall revenue and profit remained uneven.
Meanwhile, food and beverage (F&B), meetings and other non-room revenue streams continued to face pressure. Labour productivity and distribution channel costs also weighed on profit margins.
As a result, the industry is moving beyond a straightforward demand-led rebound. Performance increasingly depends on the quality of demand, distribution strategies, non-room revenue generation and organisational effectiveness.
Although the rooms department generally improved, results differed considerably by location, star rating, market positioning and room rate band. These differences shaped hotels’ revenue, profitability and rooms yield throughout 2025.
Destination Resorts Lead Hotel Performance by Location
In 2025, city tier alone no longer explained differences in hotel performance. Destination resorts regained momentum following a period of correction, returning to the top in both total revenue and operating profit. The study attributed this performance to strong spending on higher-quality leisure stays.
Among first-tier cities, results were more mixed. Shanghai and Shenzhen performed relatively well, supported by core business demand and individual travellers with higher spending power.
By contrast, Beijing and Guangzhou faced greater pressure from a slower business recovery, weaker demand for high-value leisure travel and more intense rate competition.
Second-tier and third-tier cities also recorded pockets of strength, particularly where active tourism demand coincided with a stable business base.
These patterns suggest that a market’s ability to attract higher-value demand is becoming a more important factor in performance differences than its city-tier classification alone.
Five-Star Hotels Show Stronger Recovery Capacity
Higher-star hotels generally demonstrated greater resilience in 2025, although their performance depended on more than rooms revenue alone.
Five-star hotels showed the strongest recovery, with clear improvements in the rooms department and some gains in profitability. However, total revenue per available room increased less than revenue per available room (RevPAR), suggesting that non-room revenue had not fully recovered.
Four-star hotels continued to face constraints related to product depth, pricing power and cost structures. While they recorded a moderate recovery, total revenue increased only slightly.
Meanwhile, three-star and limited-service hotels relied on lower room rates to support occupancy. Despite this approach, both total revenue and profit fell sharply.
The differences across these categories reflect the combined effects of pricing power, non-room revenue performance and operating costs. Star rating alone, therefore, does not determine a hotel’s ability to recover.
China’s Hotel Market Shows a K-Shaped Demand Pattern
Room rate positioning also revealed a more pronounced K-shaped consumption trend in 2025, with performance diverging between higher-priced properties, lower-priced hotels and the middle market.
Hotels with an average daily rate (ADR) above RMB1,000 performed strongly, supported by differentiated guest experiences and an established base of high-net-worth customers. Key performance indicators continued to improve in this segment.
At the other end of the market, hotels priced below RMB700 benefited from resilient demand for essential accommodation as travellers faced tighter budgets. Selected revenue and profit indicators recovered as a result.
However, hotels in the RMB701–1,000 range encountered pressure from both directions. Higher-end properties competed for guests through stronger product differentiation, while lower-priced alternatives attracted more price-sensitive travellers. This combination weighed further on the middle segment’s performance.
The findings point to a shift in competitive priorities, from simply rebuilding guest volumes to generating higher-quality revenue. Attracting higher-value guests, strengthening perceived product value and improving revenue mix are becoming increasingly important to hotel resilience across market cycles.
Editorial disclosure: This article is an independently written editorial analysis based on industry reoprting from HNR Hotel News. The content has been rewritten and contextualised for editorial clarity and relevance.
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