By Xinhua writers Cheng Lu and Cheng Yunjie
HANGZHOU, Jan. 21 (Xinhua) -- The five-star rating, once a halo
guaranteeing profits for Chinese luxury hotels, is losing its
glamour as the country's ruling party bans consumption in upscale
accommodations at public expense.
Chairman Chen Miaolin of the New Century Tourism Group based in
east China's Zhejiang Province said he had instructed his five
four-star New Century Hotels to table their plans for an upgrade to
five stars under pressure from shrinking turnover.
Chen, who doubles as the vice president of the China Tourism
Association, said that a total of 56 five-star hotels sought to
downgrade their ratings to four stars in 2013, while many more
lower-rated hotels suspended their applications for the top-notch
The Chinese mainland currently has more than 4,000 starred
hotels. Of the total, 680 are rated at five stars.
Citing initial estimates by the association, Chen said that the
hotel industry reported a decline of 25 percent in its aggregate
business turnover in 2013. About 20 or more hotels were closed down
Another report released by the China Tourist Hotel Association
shows that in the first half of 2013, the average lodging rate of
China's hotels with three-star ratings or higher dwindled by six
percentage points to 53 percent from the same period in the
The average revenue generated by hotel catering businesses
dropped by 17.2 percent, while that of meetings and other events
dropped by 17.8 percent. Five-star hotels were worst hit as their
total revenues declined by 14 percent, more than all other types of
hotels, said the report.
Chen attributed the cold front striking China's luxury hotels to
the ban imposed by the Communist Party of China (CPC) on official
consumption at five-star hotels at public expense.
Since Xi Jinping took the helm of the CPC in November 2012, the
Party has made a series of detailed regulations to uproot
bureaucratic and extravagant work styles among government workers,
such as requiring officials to travel with smaller entourages,
simplifying receptions and practising frugality.
The austerity drive hasn't waned over the past year. As the
Chinese Lunar New Year on Jan. 31 approaches, the Party released
another notice ordering beefed-up supervision and welcoming
tip-offs from citizens and media about excessive spending and gifts
before and during the week-long holiday.
Chen didn't expect the drive to deal such a heavy blow to the
He said the New Century Tourism Group, parent group to 64
hotels, including more than 40 with starred ratings, had agreed to
provide management services for 75 new hotels once they were put to
Now, a dozen of them have seen their construction suspended. For
the others, construction has seriously fallen behind their original
schedules, Chen said.
To remedy the situation, Chen said one of his four-star hotels
in Tianjin had been shut down and would seek to reopen as a nursing
home after the Spring Festival.
Chen was not the only hotel manager in China seeking to
reposition his business while the hotel industry struggles.
Yang Xiaowei, a sales manager at Lijingwan International Hotel
in Beijing, said that many government organizations had canceled
their traditional year-end banquets under the pressure of
"High-end restaurants and hotels are really suffering, as nearly
60 percent of our turnover used to come from governmental
departments and state-owned enterprises," said Yang.
Last year, the hotel posted less than four million yuan (655,738
U.S. dollars) in business generated at public expense, compared to
over six million yuan in 2012.
But Yang does not see voluntary downgrading as a sustainable
solution for luxury hotels to survive.
"We put our bet on private consumption. We have offered more
discounts to the public and strived to increase our visibility on
the Internet," she said.
Zhang Yan, a sociology researcher with the Shaanxi Provincial
Academy of Social Sciences, also agreed that it is time for the
Chinese hotel industry to reduce its dependence on public
"I think the Party's crackdown on corruption and extravagance
will advance in the Year of Horse. Luxury hotels and restaurants
will have to face the lingering cold air," Zhang said.
"They have to innovate their operations and marketing activities
to become more appealing to individual consumers. Meanwhile, as too
many hotels exist in the market, mergers and acquisitions are
indispensable this year," she said. Enditem (Xinhua correspondents
Wei Hui and Wei Donghua from Zhejiang contributed to the story)