Summary of Key Points
This summer, the number of travelers reached a record high (air ticket reservations increased by 7%, and railways transported 1.01 billion passengers), yet many hotels and homestays were left empty: a hotel in Beijing had an occupancy rate of only 26.7%, homestays in Zhejiang received no bookings on weekends, and those in Guangdong were forced to compete with low prices. The reason is not a lack of visitors, but rather a shift in their preferences due to alternatives such as bath centers. The absence of service standards has led to a decline in reputation, an oversupply of accommodations, and a shrinking market for family travelers. The industry is transitioning from a period where profits came easily from location to one where experience and cost-effectiveness are key factors.
Where Have the Visitors Gone?
Young people no longer just want a place to sleep; they look for options that offer value for their money:
- Bath centers have become popular: costing between 200-500 yuan per person, they include all-you-can-eat meals, saunas, esports activities, karaoke, and overnight stays, offering great value for money. Data from Meituan shows that searches for “overnight stays at bath centers” increased by 61% in August last year, with a 127% increase in transactions during the National Day holiday. Young people argue that bath centers are more cost-effective than hotels.
- Other alternatives: Nightly internet cafes with breakfast and showers for over 100 yuan; enjoying a meal at Haidilao after a concert; 24-hour access to KFC or McDonald’s, using airport lounges, or staying in space pods—these options are taking away business from hotels.
Service Issues at Homestays Drive Visitors Away
Both homestay owners and guests complain about the lack of standards:
- Guest complaints: Housekeeping is done only until 9 PM; there are no 24-hour butlers; mineral water isn’t from the well-known brand Bai Shui Shan; fewer sheets are provided for larger groups.
- Owner grievances: How can a small room afford a 24-hour butler? The owner’s own water is criticized as being of unknown quality; a single hair on the floor is enough to claim poor hygiene. Without clear standards, guests become disappointed and may choose chain hotels or bath centers instead.
Surplus Supply and Shrinking Demand
While the number of accommodations is increasing, the core customer base is declining:
- Exponential supply growth: The number of homestays rose from 284,700 in 2023 to 513,700 by June 2026, with an additional 3,500 hotels and 316,000 rooms added in the first half of 2026.
- Shrinking demand: The main summer customers are family groups, but the number of kindergartens has decreased by 41,500 in three years, leading to a 33.1% reduction in the number of children in daycare centers—fewer people with children mean less demand.
- **The “scissors effect”: The combination of increased supply and reduced demand made this summer particularly quiet.
Consumer Segmentation: Either High-End or Low-Cost
Guests are now more selective, leading to a polarization:
- High-end experiences are in demand: Popular vacation destinations with unique brands like Beijing’s Global Resort and Sanya’s Atlantis see parents willing to pay for convenience and their children’s enjoyment.
- Low-cost alternatives are also popular: Reservations for homestays in small cities have increased by nearly 30%, and “premium homestays” (high-quality options) have grown by 31%. Guests seek either distinctive features or good value for money.
- The middle ground is being eliminated: Homestays and hotels that follow generic design trends, use part-time managers, and charge moderate prices cannot compete with high-end experiences or the efficiency of chain hotels and are forced to lower their prices.
The New Industry Cycle: From “Selling Rooms” to “Selling Experiences”
This summer’s trend is not an accident; it marks the end of an old business model:
- Surviving businesses: Those that focus on high-quality experiences (e.g., good locations, unique design, and comprehensive services) or low-cost, low-maintenance operations (where owners manage without debt, treating it as a side business).
- The shift in strategy: From simply providing accommodation to creating memorable experiences—homestays helping guests find local food and avoiding crowded routes, hotels becoming destinations where visitors want to stay longer.
In Summary
The hospitality industry is no longer about romantic ideals; it requires professionalism, creativity, and perseverance. Owners need to ask themselves: Why should customers choose them over others?