**Title:** Shift in Hotel Preferences: Local Chains Gain Ground in China
**Meta Description:** As corporate travel budgets tighten, local hotel chains in China are thriving while international brands struggle. Discover the shift in traveler preferences.
**URL Slug:** hotel-preferences-china-local-chains
**Headline:** Local Hotel Chains Thrive as Corporate Travel Budgets Tighten in China
In recent months, a notable shift has occurred in the hotel preferences of business travelers in China. Jason Zhang, a banker based in Shanghai, has found himself opting for a more budget-friendly domestic hotel chain instead of the luxurious Westin in Beijing’s financial district, following his company’s travel budget cuts. Surprisingly, the experience at the domestic chain, Atour, has exceeded his expectations. While the lavish breakfast buffet is no longer available, Zhang enjoys the local cuisine and appreciates the comfort of the hotel’s popular pillows and comforters, which many guests purchase upon checkout. Additionally, the flexible 6 p.m. checkout time eliminates the morning rush, enhancing his overall experience.
Zhang’s experience reflects a broader trend among Chinese banks, which have reduced travel perks since last year due to a slowing economy and tighter corporate budgets. This has led to restrictions on business class flights and high-end hotel bookings. As a result, international luxury hotel brands are facing challenges, while local chains are seizing the opportunity to cater to the evolving needs of business travelers.
Despite a slowdown in work-related travel spending in China in 2024, the total expenditure reached a record $372.5 billion, according to market research. However, much of this growth is being captured by mid-range local hotels rather than luxury establishments. Projections indicate that local brands could increase their market share from 45% in 2023 to as much as 75% by 2028, signaling a significant shift in the hospitality landscape.
Atour Lifestyle Holdings Ltd has reported impressive revenue growth of 55.3%, reaching 7.25 billion yuan ($1 billion), partly due to the popularity of its bedding products. Similarly, H World Group Ltd experienced nearly a 10% year-on-year revenue increase. In contrast, major international brands are struggling in the Greater China region. For instance, InterContinental Hotels Group Plc reported a 5% decline in room revenue for business trips in the region, while Hilton Worldwide Holdings Inc. noted stagnant revenue per room in Asia Pacific, primarily due to challenges in China. Marriott International Inc. also reported a decline in revenue in Greater China, attributing it to weaker domestic demand.
According to Subramania Bhatt, CEO of China Trading Desk, the primary driver of this transformation is corporate cost-cutting measures. Local brands are not only competing on price but are also developing unique advantages that appeal to business travelers.
While tighter travel budgets are a significant factor in the shift towards local hotel chains, it is not the only reason. Local brands, while lacking the prestige of international five-star hotels, are striving to enhance their offerings. For example, Yongbin Xu, a director at a private fund management company in Shanghai, has transitioned from staying at Marriott or Shangri-La hotels to Intercity, an upper mid-scale brand operated by H World Group, seeking a balance of quality and affordability.
As the landscape of business travel in China continues to evolve, local hotel chains are poised to capture a larger share of the market, adapting to the changing preferences of travelers and the economic realities of the region.
**FAQ:**
**Q: Why are business travelers in China switching to local hotel chains?**
A: Business travelers are switching to local hotel chains due to corporate budget cuts, which limit spending on luxury accommodations, while local brands offer competitive pricing and tailored experiences.
