Closing 2,000 hotels a year, private hotel groups are no longer pursuing volume.

Text | Space Secrets, Author | Wang Xiaoxiong

In February, several domestic and international hotel groups released annual or quarterly reports, with “contraction” being a key word. Especially for leading private hotel groups in China, this change is particularly evident by 2025. From the rapid expansion of “county-by-county” hotels to a collective reduction of 2,000 hotels in one year, Chinese private hotel groups are undergoing a profound logical shift, signaling the end of the era of “large-scale construction” in China’s hotel industry.

A Sharp Drop of 2,000 Hotels in One Year: Private Hotel Groups No Longer Pursue “Volume”

During the Spring Festival, the topic of “the world’s first all-season grand view hotel opening” sparked heated discussions across many platforms. Major hotel groups, investors, and consumers quickly focused their attention on this new hotel brand that attracted industry-wide attention.

With minimalist, tranquil luxury, and Zen-inspired designs, consumers describe the design language of this hotel as simple and clean. The sleek staff uniforms and rich yet light cuisine have made Hangzhou Binjiang’s All-Season Grand View stand out in the industry.

The debut of this high-end brand coincided with Huazhu’s 2025 Partner Conference. Previously, Huazhu owned 33 hotel and long-term rental apartment brands, known for steady growth and prudent market strategies in brand establishment, mergers and acquisitions, and opening numbers.

Looking purely at numbers, Huazhu undoubtedly ranks among the top in growth rate and scale. As of December 31, 2025, the number of domestic hotels that can be booked via the Huazhu app was 12,360 (excluding the brands managed by Accor on Huazhu’s platform, such as MGallery, Novotel, and Mercure). This represents a 15.07% increase from 10,741 in 2024, with Hanting, the largest economy brand, totaling 4,353 hotels.

Similarly, Atour maintains strong momentum, with the 2,000th store opening nationwide. The number of hotels available for booking on their app increased by 23.53% year-over-year to 2,000, indicating robust demand in the mid-to-high-end market.

Lijing and eLong also grew steadily last year. Lijing’s operating hotels reached 829, up 34.14%; eLong’s hotels reached 2,340, up 1.34%. These form a solid backbone in the mid-market segment.

However, hotels under GreenTree, Dongcheng, Shangmei, and LvYue experienced collective contraction in 2025 (based on the number of hotels bookable via their apps). For example, LvYue’s hotels decreased by 39.95% to 1,497; GreenTree’s hotels dropped from 4,456 to 2,860, a 35.82% decline, including 1,725 GreenTree Inns; Shangmei’s hotels fell 22.34% to 3,748, with 1,756 Shangkeyou; Dongcheng’s hotels decreased by 18.05% to 2,239.

Overall, the combined number of hotels operated by these eight private hotel groups reached 27,873 in 2025, down 6.45% from 29,794 in 2024.

While leading groups maintain steady growth and mid-tier groups expand strongly, the total number of hotels actually declines—this contradiction reflects accelerated industry reshuffling and intensified competition over existing assets. Behind the numbers, hotel groups must interpret the deep signals conveyed by this structural differentiation and the vast market information hidden beneath the figures.

Private Hotel Groups Face “Double Pressure”

Entering 2026, major hotel groups are adopting a more cautious approach to their expansion in China. According to data from the Asia Hospitality Big Data Research Institute, in January, 258 new hotels opened domestically, and 111 new contracts were signed—both figures declined compared to December 2025, indicating a clear slowdown in market expansion.

While the data shows that the operational hotel counts of the eight major domestic private hotel groups are not entirely pessimistic, the investment climate has been affected. The pace of chain hotel expansion has slowed significantly. In the last quarter of 2025, the net increase in chain hotel stores slowed to 5.2% year-over-year, compared to 18.6% in the same period of 2024, a stark difference.

This slowdown stems from multiple pressures faced by private hotel companies.

• Room revenue shrinking, but rent prices rising

Traditionally, rent is just one part of a hotel’s cost structure. Operators could offset this by increasing occupancy, extending operating cycles, or gradually raising room rates. But reality is challenging this logic.

The experience of Guangzhou Tianhe Huawei Da Hotel is representative. This longstanding four-star hotel owed nearly 3.6 million yuan in rent over five years and was forcibly evicted by the court in January 2026. Similarly, Xi’an Tianli Junting Hotel, which had been struggling with rent arrears since 2020, was forcibly evicted in November 2025 after water and electricity were cut off. These cases are not isolated but indicative of a broader industry trend.

The core contradiction lies in the widening gap between costs and revenues. In many city centers, hotel rents have increased faster than consumer spending power and room prices. More severely, five-star hotels are being forced to sell at economy hotel prices, and new hotels are rushing into OTA price wars. This “internal competition” makes it difficult for hotels—even in stable demand markets—to cover rising fixed costs through price hikes alone.

Rent has become a “first variable” that locks in a hotel’s future at the signing stage. From high-end four-star to regional chains and small independent hotels, high rent has become a shared burden that threatens the industry.

• Intensified head effect and accelerated industry segmentation

While cost pressures are severe, they are not the main reason for the sharp decline in the number of hotels under the eight major private groups. Closer inspection reveals that the scale gap and expansion pace between leading, mid-tier, and trailing private hotel groups are widening rapidly, accelerating industry segmentation.

After multiple market cycles, leading hotel groups are building hard-to-imitate competitive moats. For example, Huazhu’s supply chain advantages and membership system form a dual moat. Cost control measures include leveraging the “Huazhu Easy Purchase” platform for transparent price comparisons and discounts; modular design significantly shortens new hotel opening cycles—some projects are cut by up to 50%; centralized procurement of core materials like bedding and smart room controls reduces costs by 15-28% compared to franchisees.

Scale effects continue to strengthen resource absorption and member acquisition for top groups, while mid-tier groups still building their consumer ecosystems face mounting pressure. This dynamic will likely increase industry variance and highlight the Matthew effect.

• International brands intensify their push into China

Moreover, international hotel brands are accelerating their entry into China, adding new variables to industry competition.

In 2025, Hyatt continued to expand in Asia-Pacific, strengthening its luxury and lifestyle brand portfolio. In October, Hyatt signed a franchise agreement with Home Inn Group to develop Hyatt JiuJiang in China, planning over 50 hotels nationwide in the coming years. Insider sources indicate Hyatt is actively seeking domestic partners and will introduce new brands this year, with plans to open thousands of hotels over the next 30 years.

Meanwhile, the latest annual financial reports show Marriott, Hilton, and InterContinental all set new records for signed contracts in China. Marriott led with a 25% YoY increase; Hilton’s room pipeline surged to 520,000 rooms; InterContinental accelerated scale through 50 years of deep cultivation.

It’s clear that international hotel groups are competing both for land and popularity, exerting dual pressure on mid-tier private hotel groups and complicating the domestic competitive landscape.

• Changing consumer demands

Deep shifts in consumer behavior also challenge private hotel groups’ adaptability. Data shows that during the second half of 2025, travel during long holidays hit new highs, but per capita spending continued to decline. The trend of “high heat, low consumption” became prominent, with accommodation budgets shrinking.

This shift is evident in many examples. Popular travel styles like “one room for four people” or “play in A, stay in B” led to a cooling of the hotel industry in summer 2025. Both destination resorts and city boutique hotels saw declines in occupancy and average revenue per room.

The reduction in hotel numbers under China’s eight major private groups may only be the tip of the iceberg. Overall, in 2025, 10,157 mid-to-upscale hotels opened, adding 916,000 rooms—about 3.8% fewer than in 2024. After two years of rapid expansion, new project launches have slowed, and the industry’s development logic is shifting from scale pursuit to focus on investment returns and long-term stability.

Looking ahead to 2026, amid ongoing cost pressures, international competition, and consumer segmentation, Chinese private hotel groups must find their own breakthroughs to reshape their competitive advantages in the existing asset landscape.

End of “Large-Scale Construction” Era: Hotel Growth Will Slow Further in 2026

Sun Wu, Vice President of Hyatt China, told Space Secrets that the era of “large-scale construction” in China’s hotel industry is over. Reflecting on industry development, the first 20-30 years were driven by supply expansion, while the next decade focused on channels, efficiency, and membership systems. Since 2020, the industry has entered a new era driven by content, with asset renovation and emotional value becoming the main logic for the next ten years.

Stockpile saturation and market maturity are now unavoidable structural factors. In 2025, although supply continued to grow, the Chinese hotel market entered a predominantly stock-driven phase.

According to Houhai Data, by the end of 2025, the total number of mid-to-upscale hotels in mainland China reached 84,000, with over 9.07 million rooms—an approximate 7.7% YoY increase, significantly below the 12.7% ten-year average, marking the lowest growth rate in a decade.

The market logic has shifted, and private hotel companies are actively exploring new strategies—changing their approaches and methods—to find new growth paths amid the competition for existing assets.

• “Optimize quality, reduce inferior”—finding answers within

Leading the way, Huazhu is proactively seeking breakthroughs internally. In 2026, Huazhu will continue its “lean growth” strategy, shifting from pure scale expansion to improving per-store efficiency and quality through operational optimization and product iteration for sustainable growth.

This strategic shift is exemplified by actively closing underperforming hotels and divesting low-efficiency properties. In 2025, Huazhu closed over 300 hotels; Atour also shut more than 200, continuously eliminating locations with poor performance (e.g., RevPAR 20% below regional thresholds).

Building on this, in 2026, Huazhu plans to accelerate the development of a light-asset model, further increasing revenue from management and franchise operations (M&F), reducing reliance on owned assets, and enhancing operational leverage and cyclical resilience.

Mid-tier groups are also adjusting course. Shangmei is shifting from growth to quality, planning to invest in 100 directly operated hotels in 2026, mainly in first-tier cities, to validate financial models and ensure service quality. It also aims to seize property opportunities during the rent decline window. GreenTree will establish stricter quality standards and supervision mechanisms for franchisees, strengthening daily management and training to ensure brand consistency and service quality.

Overall, the domestic private hotel industry in 2026 will enter a comprehensive “improve quality, reduce inferior” phase of dual adjustment.

• Deepening branding and strategic partnerships

As private hotel groups move away from quantity expansion, more are focusing on improving quality through emotional experience and differentiation.

Lijing, which achieved significant growth in 2025, is expanding through strategic partnerships. In January 2026, it partnered with E-Kang Life to develop a deep sleep ecosystem; in February, it signed with Gaochun International Slow City to open pet-themed hotels and four-diamond resorts, promoting integration of tourism and pet economy.

Yayue emphasizes brand culture and user experience. Its Tan Yi brand offers “healing spaces” with features like agate stone therapy and calligraphy rooms, aiming for differentiated competition. It also continues to develop its Huazhu Kids brand, launching personalized family activities to strengthen its position in the family vacation market.

Market data confirms initial success. In January 2026, Huazhu’s All Seasons opened 20 new stores, Hanting 17, both up from the previous month; Atour opened 10 hotels; eLong’s eLong An Yue and eLong Hotels opened 4 and 5 respectively. Although these increases are only single-digit compared to last year, industry sentiment is clearly shifting.

CITIC Securities’ research report further notes that with the slowdown of domestic commercial land rent declines, more cautious franchisee sentiment, and reduced pipeline for the top four hotel groups, supply growth will further slow. With occupancy rates expected to recover in major cities, prices are likely to show some elasticity, with RevPAR growth in top-tier hotels projected to be in the low single digits. This indicates that the growth model relying solely on scale expansion is no longer sustainable; quality improvement and experience innovation will become the core focus of future competition.

Looking back from 2026, the sharp decline in private hotel numbers is not a sign of industry decline but a necessary pain in the path toward maturity. Cost pressures from rigid rents and rising labor costs will continue to squeeze profits; supply chain efficiency and light-asset operations will determine survival; demand-side shifts—such as the paradox of “high heat, low consumption”—require operators to more precisely capture emotional value and explore premium opportunities in a single bed, meal, or deep sleep experience; competition will involve both localization of international brands and internationalization of domestic brands, with differentiation becoming more resilient than scale.

While growth will slow in 2026, this may be the industry’s best era. Moving away from reckless “volume chasing” allows brands to settle and develop resilience. For private hotel groups, more important than closing stores is whether they can find the key to open a new world after closing the door to the old one.