Many established high-star hotels have recently begun transforming and refreshing their operations, focusing on the mid-to-high-end market segment. On April 14, the former Wuxi Shanming Shuixiu Hotel officially reopened as an Atour Hotel. According to reports, the Shanming Shuixiu Hotel was a well-known local four-star hotel with accumulated resources in business conferences and market reputation. The new Atour Hotel features personalized accommodation designs based on its version 3.5 model.
Simultaneously, in recent years, due to operational pressures or the need to optimize resource allocation and revitalize assets and cash flow, star-rated hotels in Guangdong, Sichuan, Shanghai, and other regions have successively entered into brand cooperation and upgrade agreements with hotel groups such as Huazhu and Atour. Mid-to-high-end hotels are increasingly becoming a new option for refreshing existing high-end hotel properties. This trend reflects ongoing adjustments in the supply-demand dynamics of the hotel industry and changes in market competition intensity.
However, while major mid-to-high-end hotel groups are consolidating their core mid-to-high-end market positions and integrating older high-star assets, they are also quietly expanding upwards, increasing their focus on the high-end and even luxury hotel segments.
In recent years, one of the most noticeable changes in the high-end hotel sector has been brand transitions and rebranding. Data from the Asia Accommodation Big Data Research Institute shows that in 2025, a total of 1,887 hotels positioned as mid-scale or above underwent brand changes. Most of these brands opted to reduce costs and shorten opening cycles by renovating existing properties. Additionally, according to the same data, 21% of these hotels changed brands within three years, with some properties even rebranding multiple times within a single year.
Beyond the Shanming Shuixiu Hotel, many other high-star hotels have switched segments. In October 2025, the St. Regis Hotel in Huaqiangbei, Futian District, Shenzhen, was renamed an IntercityHotel. It is understood that this 24-year-old five-star business hotel was upgraded through a collaboration between its owner, Centralcon Holdings, and a hotel management group using a light-asset model to reduce operating costs and improve asset efficiency. Additionally, the adjacent St. Regis Century Tower was simultaneously converted into a Ji Hotel, also adopting a light-asset operation model.
Around the same time, the previously closed Shunde New World Hotel announced an upgrade. Following a change in ownership, it signed an agreement with Huazhu Group to initiate the "Qinghui Club" renovation project and introduce the Orange Hotel brand under Huazhu Group. Earlier, after nearly two years of closure, Chengdu's landmark Galaxy Dynasty Hotel rebranded as an Orange Hotel and returned to the market. Similarly, the Tianlin Hotel, one of Shanghai's earliest star-rated hotels catering to foreign guests, was renovated and reopened as an Orange Hotel.
The reasons for these changes extend beyond aging hardware and operational pressures faced by original owners. They are largely driven by shifts in the broader hotel industry environment.
For many years, hotel assets were popular investment categories due to their ability to generate stable cash flow, hedge against inflation, and appreciate in value. However, in recent years, the hotel industry has faced significant challenges, leading to declining asset values. During the real estate boom, developers often built hotels to meet land acquisition requirements, as hotels could also potentially increase the value of surrounding commercial and residential properties. Consequently, numerous high-star hotels were constructed in large numbers.
Currently, with changes in industry policies and the economic environment, many developers are facing liquidity crises and have begun selling off hotel assets to raise cash. For example, in March 2026, incomplete statistics from the Maidian Research Institute indicated that 60 hotels were auctioned during that period. Among them, 12 had auction prices exceeding 100 million yuan, 13 were priced between 50 million and 100 million yuan, and 35 were below 50 million yuan. Only one hotel project was successfully traded during the statistical period.
This phenomenon reflects a slowdown in the growth of mid-to-high-end hotels following adjustments in market supply and demand. Data shows that by the end of 2025, the total number of mid-scale and above hotels in operation in mainland China reached 84,000, with a room supply exceeding 9.07 million. The year-on-year growth rate was approximately 7.7%, significantly lower than the average compound annual growth rate of 12.7% over the past decade, marking the lowest growth rate in ten years. Furthermore, 10,157 new mid-to-high-end hotels opened in 2025, adding 916,000 rooms, a decrease of about 3.8% compared to 2024.
Additionally, data released by the China Tourist Hotels Association indicated that in 2024, the highest closure rate was not among budget hotels but rather mid-scale and high-end hotels. That year, over 1,000 mid-to-high-end hotels ceased operations, involving approximately 100,000 rooms. These figures suggest that as growth in the mid-to-high-end hotel segment slows, investors and operators must pay greater attention to overall operational returns and stability.
At the same time, as hotel brands continue to upgrade and innovate their products, they have improved in service, experience, and design, gradually developing distinct characteristics and quality. In the current environment, with tightened budgets and reduced travel reimbursement allowances for business travelers, many are shifting from high-end hotels to these brands. After all, these hotels offer relatively lower prices while maintaining a certain level of quality and style.
Interestingly, while established high-star hotels are rebranding to target the mid-market, chains like Ji and Atour are exploring the high-end segment. In October 2024, the Atour Group officially launched its high-end lifestyle brand, SAH Hotel. By the end of last year, it opened its first SAH Hotel in Guangzhou's Financial City. Reports indicate that the previously opened SAH Hotel in Shanghai's North Bund performed impressively during its ramp-up phase. In its third month of operation, the average room rate was nearly 1,000 yuan, with an occupancy rate around 90% and a RevPAR (Revenue Per Available Room) of approximately 900 yuan. According to the SAH Hotel franchise manual, the cost per room is about 200,000 yuan, with an estimated payback period of around 4.1 years.
Beyond SAH Hotel, Atour has also introduced Atour S in the high-end segment and A.T.HOUSE in the luxury category. According to financial reports, by the end of last year, Atour operated one A.T.HOUSE, three SAH Hotels, and 89 Atour S properties.
Huazhu Group, the parent company of Ji Hotel, entered the high-end market earlier. Financial reports show that in the high-end segment, Huazhu operates brands such as Blossom Hill, JI Hotel, Grand Mercure, and Steigenberger. In the luxury segment, it has opened Steigenberger and Songpin hotels. At the end of last year, during its 20th-anniversary conference, Huazhu announced the launch of a new brand, "Ji Grand View," an upgraded version of Ji Hotel targeting consumers with higher demands for accommodation experience and cultural ambiance. According to reports, by the end of last year, five Ji Grand View hotels were scheduled to open. Additionally, Huazhu Group operated 166 high-end and 19 luxury hotels, with 121 and 3 hotels pending opening, respectively.
The reasons behind these trends lie in the current supply-demand mismatch in the hotel industry. Traditional four- and five-star hotels have become rigid in service and experience, while the new middle class and younger business travelers are beginning to seek smaller, more refined services with cultural and local characteristics. Simultaneously, as the industry undergoes an accelerated consolidation phase, small and medium-sized independent hotels and older five-star hotels are being phased out, prompting leading chain brands to expand against the trend and capture market share.
This strategy allows them to achieve strategic positioning, elevate their brands, build a full matrix of categories, and enhance pricing power, even as the industry faces price pressures. For example, Atour disclosed in its financial report that as of the third quarter of 2025, the RevPAR for SAH Hotels exceeded 900 yuan.
However, domestic emerging brands are not the only participants in this process. Starting in 2026, major international hotel groups have accelerated their penetration into China's existing market, initiating a new round of refined competition. In the first quarter of this year, several new brands, such as IHG's Vignette Collection, Shilla's Stayfolio, and Corinthia, entered the Chinese market, either opening their first locations or making official announcements. Their expansion strategies have notably shifted, with a move away from heavy-asset new construction towards refreshing existing properties, rebranding, and renovating buildings as key approaches for foreign hotel groups in China.
The continued investment by both domestic and international brands in the mid-to-high-end segment indicates that, despite ongoing pressure on metrics like RevPAR, ADR (Average Daily Rate), and average occupancy rates, the industry still presents structural growth opportunities. Beyond continuing to penetrate lower-tier markets and exploring high-potential areas such as regions along high-speed rail lines and emerging cities, actively competing for the high-end market and challenging international brands for market share has become a crucial strategic direction for local hotel brands.
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