Air pollution and President Xi Jinping's campaign to curb official corruption and extravagance took a bite out of the mainland's hospitality industry last year, according to a government think tank report.
The "Green Book of China's Tourism" - issued yesterday by the Chinese Academy of Social Sciences - said revenue at hotels with a three-star rating or above dropped by nearly 12 per cent in the first half of last year, compared with that period in 2012.
Revenue at restaurants with an annual turnover of more than two million yuan (HK$2.5 million) fell by 2 per cent, the first decline in three decades. This was due largely to the anti-graft campaign, the report said.
The central leadership's efforts to curb extravagance has "affected official banquets, high-end tourism, high-end catering and meetings and exhibitions involving industries such as hotels, restaurants and exhibition venues", the report said.
The study did not include statistics for the second half of last year, but figures from the National Tourism Administration showed that hotels with three stars or more saw year-on-year drops in revenue of about 4 per cent in the third quarter.
The tourism report also said the numbers of foreign visitors to the country fell 2 per cent in 2012, dropping to 132 million. That trend was expected to have continued last year.
Foreigners' reluctance to come to China was attributed by researchers to poor travel services and damage to tourist cities' reputations because of air pollution, food safety scandals and traffic congestion.
Watch: A view of Beijing's smog from atop the Forbidden City
"The inbound tourism market became stagnant and later started declining in recent years," the report said.
However, the past year witnessed unprecedented investment in tourism-related projects, said Jin Zhun , a researcher at the academy's tourism research centre who co-authored the new report.
Statistics from the tourism administration indicated that the sector saw record-high direct investment of more that 514 billion yuan on the mainland last year - up 27 per cent on the previous year. Private capital was the driving force behind the increase, accounting for 57 per cent of investment.
"Such active capital flow means people have high expectations for tourism and they want to prepare well before another growth peak comes," Jin said.
Wu Jinmei , another author of the report, said despite the short-term decline in hotel-and-catering industries' revenues, the anti-corruption drive was unlikely to have a long-term impact on the sector.
"We could consider the negative impact on these sectors as removing foam from a hotpot," Wu said.
The World Tourism Organisation said in April that China was the biggest spender on international travel, with Chinese making 83 million trips overseas the previous year. Chinese tourists spent US$102 billion on overseas travel in 2012.