As China’s economy continues to flounder and Chinese consumers pinch pennies, the Chinese hotel industry is struggling, even during the normally busy holiday season that includes October’s National Day week and November’s “Double 11” holiday—Nov. 11, also known as Singles Day.

Hotels in China began an aggressive price war in preparation for the Nov. 11 holiday after the week-long National Day holiday from Oct. 1 to Oct. 7, which some industry professionals deemed “the worst golden week.”

On Oct. 15, Chinese travel website Ctrip launched a “stock up now, pay later” promotion in advance of the Double 11 holiday. Ctrip offered a “Zero Yuan Order,” allowing customers to stock up on coupons and pay when they check into the hotel. The website also offers major discounts and discounted hotel packages.

Fliggy, another Chinese online travel agency, sold 100,000 3-night hotel packages within 10 minutes of launching its “Double 11 sale” on Oct. 21. The packages went for 999 yuan ($140).

As the industry gears up for the upcoming holiday, the heated price war is causing concerns. According to media reports, Ji Qi, founder of hotel giant H World Group, which operates 10,000 hotels globally, warned recently that excessive discounts could weaken hotels’ competitiveness.

Tian Jing, a Shanghai resident who used a pseudonym for safety reasons, works in the hotel industry. Tian told The Epoch Times on Nov. 1—citing an analysis from Hotel Tech Report, a third-party website—that the overall market this year is not as good as it was last year, due to the economic situation.

Tian said that hotels are currently less expensive. Rooms that were originally 500 yuan ($70) a night now cost 300 yuan ($42) a night, he said. However, he said that “the quality has also declined,” with four-star and five-star hotels cutting corners on amenities.

Cheap Travel Amid Consumption Downgrade

Data shows that during the National Day holiday week, although the number of tourists increased, financial performance was poor, due to the widespread consumption downgrade in China. Some tourism industry professionals said that it was the “worst National Golden Week” in history, according to a report from Chinese language newspaper World Journal.

According to official data released by China’s Ministry of Culture and Tourism, during the National Day holiday, 765 million people traveled domestically in China, an increase of 10.2 percent over the same period in 2019, shortly before the COVID-19 pandemic. However, spending only increased by 7.9 percent.

According to statistics from the Fliggy platform, the number of bookings for upscale hotels in China during this year’s National Day holiday increased by nearly 40 percent from the same period last year, but the average hotel booking price fell by about 6 percent year over year.

At the end of September, a hotel owner in Changsha posted a video on social media complaining that business this year is miserable.

“Selling at this price in such a central location can’t even cover the basic rent. If you add in the labor, water, electricity, and property platform commissions, I’m having a big deficit. I don’t know how to survive,” the business owner said.

Hotel Industry Continues to Build

Even as Chinese hotels engage in a fierce price war, the industry is expanding rapidly across the country.

Sohu Travel reported that as of March 31, Huazhu China, a subsidiary of China’s H Group, had 9,684 hotels in operation, covering 1,290 cities across the country. That number marks an increase of 158 cities from the same period last year.

Wang He, a U.S.-based China affairs observer, told The Epoch Times: “Hotels rely on tourism, but everyone travels on a budget and tries not to spend money. So prices are definitely not going to go up. Under this circumstance, it is ridiculous to conduct large-scale hotel construction and expansion.”

Davy J. Wong, a Chinese American economist, told The Epoch Times that due to over-expansion and capital-driven growth, hotel constructions are too concentrated in certain areas to compete with each other.

Wong said that besides the imbalance between supply and demand, the Chinese hotel industry is facing serious problems.

“On the other hand, consumption has been seriously downgraded, with more and more short-term rentals, homestays, and even lower-end accommodations. This change has made it impossible for hotels that rely on capital investment to be compatible with the lower end, leading to more fierce competition in the industry,” he said.

Wong predicted that the hotel industry is bound to undergo a major reshuffle and predicted that most hotels in China will go bankrupt within three to five years.

Tian told The Epoch Times that domestic hotels are laying off employees in a bid to stay afloat.

“There are no government or corporate conferences, [so] the related liaison and sales departments in hotels will be disbanded, catering will be outsourced, and hotels are only [providing] guest rooms,” he said.

Visa Exemption Fails to Attract Foreign Visitors

The drop in foreign tourists has been a challenge to China’s hotel industry since the China–U.S. trade war in 2018.

“The tensions between China and the United States, between China and Europe, and the Chinese communist regime’s support for Russia in the Russian–Ukrainian war, all have led to negative views of China from the Western world,” Tian said.

“The regime’s draconian 3-year zero-COVID [policy] has led to a sharp decline in the number of foreign tourists, visitors, students, and foreign investment.”

“It’s ineffective,” Wong said. “In addition, the Chinese regime’s anti-Japanese and anti-American propaganda and education, murders targeting foreigners, etc., also have negative effects.”

Wang said that foreigners are not coming to China anymore.

“It’s not about visas. The three-year COVID-19 lockdown by the [Chinese Communist Party] has scared off Westerners. They’ve completely distanced themselves psychologically from the regime. Many of the Westerners in China feel that they need to withdraw from the country. It has also led to a sharp drop in the number of Westerners traveling to China. It has not recovered at all,” he said.

Ning Haizhong and Luo Ya contributed to this report.