Published on
October 23, 2025
In the fourth quarter of 2025, the hotel market sentiment in China’s first-tier cities showed significant divergence. As the summer tailwinds began to fade, there was a noticeable shift in hotel performance across the country. While Sanya experienced a strong upturn in demand, cities like Beijing, Shanghai, and Guangzhou struggled with continued pressure. Similarly, Shenzhen displayed resilience, benefiting from demand on the consumer side, but the overall hotel market outlook remained cautious.
According to recent industry reports, the hotel market in China saw declining occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR) when compared to the third quarter of 2025. These declines are attributed to a combination of reduced business travel demand, off-season effects, and rising operational challenges. A lack of short-term catalysts further dampened the market’s near-term outlook, leading many in the industry to adopt a more cautious stance heading into the final months of the year.
First-Tier Cities: Diverging Sentiment
In Sanya, the hotel market showed strength, with confidence continuing to rise despite broader challenges in other parts of China. This tropical island destination has long been a popular retreat for domestic tourists, and its popularity remained high in Q4, which was further bolstered by local demand and tourism promotions. As a result, hotels in Sanya benefitted from improved occupancy rates and steady performance throughout the quarter.
Shenzhen also demonstrated resilience on the demand side. As a major economic hub, Shenzhen continued to benefit from consumer demand, particularly in its leisure and hospitality sectors. The city’s strong recovery in tourism, particularly driven by domestic visitors, provided a much-needed boost to the hotel market. However, despite this positive sentiment, the market outlook remained under pressure due to uncertainties surrounding corporate travel and rising operational costs.
On the other hand, Beijing, Shanghai, and Guangzhou continued to face challenges in the fourth quarter. With tourism demand slowing down post-summer and continued caution from business travelers, these cities’ hotel markets faced downward trends in occupancy and rates. The MICE (Meetings, Incentives, Conferences, and Exhibitions) segment, which traditionally drives a significant portion of demand, remained weak. This indicates that businesses were still cautious about corporate spending, limiting growth potential for these cities’ hotel markets.
Second-Tier Cities: Cautious Sentiment Amidst Weak Business Demand
Second-tier cities in China also struggled with weak demand, particularly from business and MICE travelers. These cities, which had been on a growth trajectory in recent years, faced the dual challenge of increasing competition from new hotel developments and subdued business travel. While some cities managed to find pockets of opportunity, particularly by catering to domestic tourists and leisure travelers, the overall sentiment remained cautious.
Cities outside the first-tier region have seen an uptick in competition due to new supply entering the market. This has led to an intensification of price competition and a narrowing of profit margins for hoteliers. The slower recovery in corporate travel continues to impact overall hotel demand in these regions, making it more challenging for properties to maintain high occupancy rates and ADR levels.
The Corporate Travel Segment Faces Continued Challenges
One of the key contributing factors to the weakened hotel market outlook in Q4 2025 is the continued softness in corporate travel demand. While some businesses have resumed in-person events and meetings, many companies remain cautious due to uncertain economic conditions and continued pressure on corporate budgets. According to industry data, the meeting demand index for the quarter remained deeply negative, signaling a lack of confidence in the return of large-scale business events.
Corporate travel demand in both the domestic and international sectors remains subdued. With tightened budgets, companies are opting for more cost-effective travel solutions, further impacting hotel performance, particularly in major business-centric cities like Beijing and Shanghai.
Forecast for Q4 2025 and Beyond
Looking ahead, most industry experts expect the downward trend to continue into the final quarter of 2025. While some regions like Sanya and Shenzhen may benefit from strong domestic demand, major cities like Beijing and Shanghai are likely to experience continued pressures in occupancy and ADR.
Industry forecasts predict that national hotel occupancy is set to decline by approximately 11% quarter-on-quarter, with ADR falling by 2.8% and median RevPAR dipping by around 13.5%. The expectation of further operational stress is compounded by the absence of short-term demand drivers and global uncertainties that continue to influence travel trends.
Conclusion: A Cautious Outlook for the Hotel Market in China
The forecast for China’s hotel market for Q4 2025 remains mixed. Some cities, such as Sanya and Shenzhen, continue to show signs of demand growth. Other first-tier cities, such as Beijing, Shanghai, and Guangzhou, remain under strain. The overarching mood remains pessimistic, with concerns regarding subdued business travel, the MICE sector’s sluggish recovery, and rising competition from second-tier cities’ new hotel construction. The performance of the hotel sector continues to illustrate the global uncertainty, with many operators focused on cost minimization and redefined demand responsiveness.
The remainder of the year will certainly indicate how much diversification and leisure tourism as well as bespoke corporate packages the outlined strategies will usher for demand in 2026. While the recovery for the industry remains elusive, supply deficiency and enhancing guest experience offer promising resolutions to the unyielding turbulence.
