2,000 Closures in One Year: Private Hotel Groups No Longer Chasing Scale

A retreat from scale

China’s private hotel chains are scaling back. After years of “county‑by‑county” expansion, eight major domestic private groups saw their combined in‑operation hotel count fall from 29,794 in 2024 to about 28,500 in 2025 — a drop of roughly 4.3%, with an estimated 2,000 fewer hotels bookable on operator apps. Has the era of big‑build “supply‑push” finally ended? Industry insiders say yes: expansion is giving way to inventory management, margin protection and a focus on long‑term returns.

Winners and losers

The shift is uneven. Huazhu (华住) remained the clear leader, with bookable domestic hotels rising to 12,360 (up 15% year‑on‑year), while Atour (亚朵) crossed the 2,000‑hotel mark and eLong (艺龙) and Licheng (丽呈) recorded healthy gains. But a cluster of formerly fast‑growing players — GreenTree (格林/格林豪泰), Dongcheng (东呈), Shangmei (尚美) and Lvyue (旅悦) — contracted sharply: GreenTree’s count reportedly fell from 4,456 to 2,860 (-35.8%), Lvyue down nearly 40%, and others down by double digits. The net result: head brands consolidate advantages through supply chains, membership platforms and centralized procurement, while mid‑tier groups face accelerating pressure.

Costs, evictions and changing demand

Why the pullback? Rising fixed costs, notably rent, are squeezing margins and eroding the old “raise occupancy to cover rent” logic. It has been reported that several hotels were forcibly evicted after years of unpaid rent — cases in Guangzhou and Xi’an have been cited widely — underscoring that high lease burdens are now a structural threat rather than a short‑term headache. At the same time, consumer behaviour is shifting: travel volumes remain high but per‑capita spend is falling, and heightened OTA price competition has driven a “race to the bottom” in some segments.

International push and a new playbook

Compounding pressure on local chains is an aggressive push by international groups. Hyatt (凯悦) has reportedly deepened China ambitions via strategic franchising deals, while Marriott (万豪), Hilton (希尔顿) and IHG (洲际) posted record signings in China last year. That international appetite — occurring amid broader geopolitical scrutiny of foreign investment but sustained consumer demand for global brands — squeezes mid‑tier domestic players from both directions. The result: a market moving from rapid capacity expansion to stock‑management, renovation and differentiation. For many private groups, the immediate task is clear: find a defensible niche in a maturing market or be subsumed by the math of scale.