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.