China’s hotel market sentiment weakened further in the fourth quarter of 2026, with growing pressure on revenue expectations and regional differences in recovery, according to the latest China Hotel Market Sentiment Survey by Horwath HTL.
The 46th edition of the survey examines hoteliers’ expectations for occupancy, average daily rate (ADR) and total revenue. It also compares the latest findings with historical sentiment indices to assess differences in market expectations across China.
The Hotel Market Sentiment Index measures respondents’ overall expectations for hotel performance. It ranges from -150 to +150, with -150 representing extreme pessimism, 0 indicating neutrality and +150 reflecting extreme optimism.
China’s Hotel Market Sentiment Declines as Revenue Pressure Grows
The national Hotel Market Sentiment Index fell five points to -22 in Q4 2026, marking its second consecutive quarterly decline.
Occupancy and ADR sentiment remained relatively stable at -12 and -24, respectively. However, the Total Revenue index dropped to -30, while F&B Revenue fell to -37, indicating greater pressure on hotels’ overall revenue expectations.
Regionally, South China remained the only area with a positive index, at 4. By contrast, Southwest and Northeast China recorded the weakest readings, at -40 and -38, respectively, reflecting continued pressure on pricing and revenue recovery.
Guangzhou Shows Improvement as Sanya and Shenzhen Remain Positive
Sanya continued to lead China’s Tier-1 markets, recording a sentiment index of 46. Strong expectations for ADR and revenue supported its position.
Shenzhen also remained in positive territory, with an index of 4. The upcoming APEC summit is expected to support business travel and MICE demand.
Meanwhile, Guangzhou recorded the largest improvement among the markets covered, gaining 16 points to reach -1. Expectations for occupancy and pricing improved ahead of the 140th Canton Fair.
Shanghai and Beijing remained more cautious, with indices of -13 and -23, respectively. Revenue recovery in both cities continued to lag.
Concerts Support Tier-2 Markets, but ADR Pressure Persists
Tianjin led the Tier-2 markets with an index of -3, improving 20 points from Q3. The city’s strong summer performance contributed to the improvement.
Nanjing ranked second at -19. In addition, concerts and the so-called “ticket-stub economy” provided additional demand in Nanjing and Qingdao.
However, several other cities continued to face pricing challenges. Xi’an, Chengdu and Kunming recorded sentiment indices of -40, -36 and -38, respectively.
Their ADR indices all fell below -40, reflecting continued rate pressure as additional hotel supply intensified competition.
Inbound Leisure Demand Holds Up Better Than Domestic Travel
Inbound leisure demand remained relatively resilient in Q4 2026. The Foreign Leisure FIT index held steady at -9, while Foreign Leisure Group improved to -18.
Continued measures to facilitate inbound travel supported these expectations.
Domestic leisure sentiment, however, weakened. The FIT and Group indices fell to -25 and -36, respectively, as travellers became more price-conscious.
Business travel and MICE demand also remained subdued. Although the MICE index improved slightly quarter-on-quarter, it stood at -37.
Tourism Policies Remain Supportive as Hotel Supply Expands
Central Government Policy and Local Tourism Development Trends both recorded positive sentiment indices of 6.
Continued tourism support measures and newly introduced autumn school breaks may also encourage additional family travel.
Nevertheless, consumer spending sentiment remained weak. Consumers’ Willingness to Spend recorded an index of -42, while New Competitive Supply Additions registered the lowest reading at -62.
According to the HOHI Data Platform, 767 midscale and above hotels opened across China in September. The additional properties have intensified competition in an already challenging operating environment.
Hotel Occupancy Forecast to Fall 6.1% in Q4
Following the summer peak in August, China’s hotel performance softened in September as travel demand returned to more normal seasonal levels.
For Q4 2026, the survey forecasts a 6.1% quarter-on-quarter decline in occupancy. ADR, meanwhile, is expected to edge up by 0.6%.
As a result, RevPAR is forecast to fall by 5.5%.
The projections suggest that weaker seasonal demand, rather than falling room rates, will be the main factor behind the expected decline.
Hotels are increasingly prioritising rate integrity over aggressive discounting during the traditional low season.
2027 Hotel Outlook Remains Cautious as Budgeting Takes Priority
The latest survey also introduced full-year 2027 hotel performance expectations. The findings indicate continued caution, although pessimism has moderated.
The Occupancy sentiment index stood at -3. ADR recorded -13, while Total Revenue and F&B Revenue registered -11 and -14, respectively.
Approximately 46% of respondents expected ADR to decline in 2027. Most anticipated a decrease of no more than 5%.
Against this backdrop, hotels will need to adopt evidence-based budgeting strategies. Key considerations include local demand patterns, competitive supply, guest and distribution channel mix, and operational efficiency.
Despite the uneven recovery, inbound tourism, MICE activity and entertainment-related travel may offer selective opportunities for growth.
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