Chinese domestic travel surge bypasses hotel chains as thrifty travellers avoid the beaten path

The world’s second-largest economy saw a surge in tourism during the Labour Day holiday period, but hotel chains across China continued to face economic headwinds as budget-conscious tourists turned towards lesser-known resorts to avoid crowds and escalating competition among hotel operators kept prices from rising.

Domestic travellers spent a total of 166.9 billion yuan (US$23.1 billion) during the first week of May, marking a 12.7 per cent increase from the same period last year, and a 13.5 per cent jump from pre-Covid levels, according to data published on May 6 by the Ministry of Culture and Tourism.

However, hotel chains continued to face downward pressure. Data tallied by Caitong Securities, a brokerage firm, shows that the nationwide revenue per available room (RevPAR) dropped 5.1 per cent on a weekly basis to 129.3 yuan in the last week of April, while the average occupancy rate also declined 4.3 percentage points to 58.8 per cent.

RevPAR measures a hotel’s ability to generate revenue from its complete inventory of rooms.

“Owing to increasing investment, the capacity of the hotel industry has expanded quite a bit, to the point where supply exceeds demand,” said Zhao Huanyan, a senior economist and former consultant at Huamei Consulting Group, a hospitality advisory firm. “Domestic travellers are also becoming more sophisticated. People now prefer to plan their own routes,” rather than following tour groups to popular destinations.

Lily Huo, a Beijing-based advertising industry professional, said that during the May holiday period, she went to see some ancient architecture at a village in North China’s Shanxi province. She stayed in a “bnb-like” hotel.

“I came here because I thought the popular attractions on the internet were not very fun, and they must be really crowded,” she said. The village did not have many hotel chains, and the place she chose was 389 yuan per night.