Beijing luxury hotels report losses due to crack down on frugality

Last year, sixty five-star hotels reported heavy losses with an average of 40 percent of the rooms vacant, according to Want China Times. Many of the affected hotels have had to shake up their business models, including lowering their star ratings and lowering their prices.

Beijing’s financial bureau does not approve the use of five-star hotels for official meetings, and all five-star hotels are excluded from the department’s list of 318 approved hotels. To counter this, some of the city’s five-star hotels have voluntarily lowered their star ratings. Beijing Jinjiang Fu Yuan Hotel was the first five-star hotel in the city to to do so in 2014. Other Beijing five-star hotels that are not as close to city center have lowered their prices to attract new business.

Wang Qingdao, the vice head of the China Convention Society, said, “Income primarily from official meetings is not consistent with international norms for five-star hotels.” He added, “The ensuing struggle of the hotels suggests that public funds have been controlled and consumer behavior changed.”