Friday, March 21st, 2025
China has emerged as a global leader in the addition of luxury hotel rooms, despite the lack of openings in new hotels overall. This trend is driven primarily by large scale renovations and large upgrades in core cities in the country where existing properties are expanding and modernising to meet the growing demand for premium hospitality experiences. Rather than focusing on building new hotels, China is investing in improving the size and quality of current luxury accommodations, indicating the strategic change in the country’s high-end hospitality landscape.
As the New Year began, China’s mid-scale hotel segment showed significant activities with significant disparities in regional performance and brand development. Two provinces, Guangdong and Jiangsu, appeared as uncontroversial leaders in the addition of the room. Guangzhou led the pack with 4,081 new rooms, followed by Jiangsu of 2,904. Together, these two regions were responsible for 34% of the newly opened hotel rooms in the country. Their commanders clearly reflect the enduring importance of the Greater Bay Area and the Youngz River Delta, both of which continue to serve as epicenters of economic growth, urbanization and tourism. These regions benefit from well-developed infrastructure, strong regional economies, and robust travel demand from both domestic and international markets.
The overall growth of the hotel market remains strong, but far from being evenly distributed across the country. Eastern coastal provinces, including Guangzhou, Jiangsu, Fujian, Shanghai, Zhijiang, Hainan, Beijing and Anhui collectively account for 65% of the additional 100% of all new hotel rooms. This critical development highlights the sustained East-West division in the hospitality sector. The eastern region has accelerated investment and infrastructure development, while central and western states are progressing at a much slower pace due to low levels of economic imbalances and urbanization. This uneven growth pattern has long-term impacts on national tourism strategies and investment plans, urging policymakers and developers to reassess local priorities.
Despite not being economically dominant, Yunnang offered an impressive performance by adding 1,377 new hotel rooms in January alone. This number surpasses Zhijiang’s, with 889 rooms added, bringing us closer to Fujian’s total of 1,387 rooms. The rise of Yunnan is largely attributed to the booming cultural and ecological tourism in the region, as well as government initiatives aimed at strengthening tourism infrastructure. Known for its natural beauty and ethnic diversity, Yunnan is rapidly transforming into a hot spot for both leisure and experiential travel. Its performance suggests that non-traditional markets are becoming increasingly viable for hotel expansion, especially in areas with strong cultural attractions and increased domestic tourism.
One of the most decisive trends observed in January was the rise of Chinese hotel brands. Of the 149 new hotel properties launched that month, 103, or 69.1%, were run by domestic companies. This points to a clear and continuous pivot on local consumption, supported by the maturity of Chinese hotel chains, increased brand awareness and the development of localized supply chains. In contrast, International Brands opened 26 new hotels, located primarily in premium and luxurious segments, maintaining a niche appeal among high-end travelers. Independent, non-brand real estate continued its decline, adding just 20 new standalone hotels, reflecting on continued integration in the hospitality sector and a broader industrial shift to standardization of chains and brand reliability.
The breakdown of hotel additions by Market Tier further shows how consumer demand and investor strategies are refined. Midrange hotels lead in terms of volume, with 72 new properties accounting for 48.3% of all hotel openings. Following the Upper Midscale Hotel there were 45 openings, accounting for 30.2%. Together, these two categories account for almost four-fifths of the market, indicating that investment is increasingly targeting China’s rapidly expanding middle class and value-conscious business travelers. The high-end select service hotel saw 19 new openings, but only 13 new properties have come online in the gorgeous segment. These figures show a shift from a rapid expansion at the top of the market to a thoughtful upgrade of existing properties, focusing on quality improvements over the amount of luxury space.
Interestingly, when measured by number of rooms rather than property numbers, luxury hotels still led the way. They contributed 34.2% of the supply of 6,872 rooms, i.e. all new rooms, thanks to the large development and upgrades of major cities. The high-end select service hotel adds 4,701 rooms, or 23.4%, increasingly aligned with evolving lifestyle preferences in China’s emerging tier 1 cities. The midrange hotel contributes to 5,567 rooms (27.7%) and has entered a small county-level market where the hotel’s infrastructure is still developing. The upper midscale property, with 2,955 rooms (14.7%), is particularly in line with an increase in business trips from small and medium-sized businesses. These patterns reveal subtle markets where developers not only chase growth, but also adjust their strategies to the unique demands of each consumer segment.
Data for January 2025 depicts a picture of China’s mature, segmented hotel market. Growth remains strong, but is now shaped by clear regional preferences, brand dynamics and evolving guest expectations. While major economic hubs continue to control new investments, states like Yunnan show undeveloped potential for tourism-driven growth in non-audiocre regions. The strong performance of local brands and the setbacks of independent hotels reflect an increasing consumer preference for consistency, value and quality assurance. Meanwhile, the rise of mid-scale and mid-scale upper properties highlights a reasonable investment environment where revenues are balanced with operational sustainability.
As China’s domestic travel market continues to evolve and international travel slowly recovers, hospitality industry stakeholders may focus on strengthening their portfolios in major cities, exploring opportunities for cultural and lifestyle destinations. The increased penetration of brand chains, particularly in the non-core market, marks the long-term transition to a more standardized, scalable and professionally managed hotel industry.
China is leading the world in growing luxury hotel rooms due to major upgrades in major cities, despite slowing new hotel openings. This illustrates the shift towards expanding and enhancing existing high-end properties.
