Chinese Luxury Hotels Hit Hardest by China’s Frugality Push

on January 13 2014 | in Dining Travel Trends | by | with No Comments

WH Ming Hotel, Shanghai, luxury hotels, five star hotels, China

China’s high-end hotels are seeing considerable drops in their occupancy rates, in the wake of the country’s push for frugality.

The Ministry of Finance has recently enacted a plan to cut down on travel expenses incurred by the country’s civil servants. Now, travelers from state firms and government agencies can no longer stay at hotels with rating of four or more stars. The occupancy rate at high-end Chinese hotels has fallen to 40 percent, a 30 percent drop, according to China Business News.

“My travel expenses for accommodation used to be 800 yuan (US$132) per night, but it has now dropped to 400 yuan (US$66),” a manager at a state-controlled enterprise told WantChina Times. He added that he now has to reconsider his potential travel accommodations.

After the CPC Politburo issued its “eight rules” to fight government extravagance in December of last year, high-end restaurants and hotels have felt a negative impact.

Before the push, government bookings accounted for more than 40 percent of sales for business hotels that are managed as resorts. Now, business has fallen by over 50 percent.

The impact has been less drastic for expensive foreign hotels, which have a steady customer base of international travelers. Even these businesses, however, have seen a 30 percent decline in occupancy rates because of the decrease in government bookings.

High-end restaurants are also feeling the pinch, with some 2,168 restaurants closing in Beijing last year. In the first five months of 2013, sales in the city’s food and beverage industry declined by 36.4 percent, with a 40 percent decrease nationwide during the first half of the year.

These statistics are leading high-end hotels and restaurants to innovate their business models. WH Ming Hotel Shanghai, for instance, is now promoting wedding banquet services; other business have responded with sales promotions for rooms and buffets to draw new customers.

image credit: wh ming hotels

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