Core Viewpoint - The article discusses the challenges faced by the homestay industry in Dali, Yunnan, highlighting the oversaturation of the market and the financial struggles of many entrepreneurs who entered the market during a tourism boom, only to find themselves unable to recover their investments [1][9][24]. Market Overview - In 2023, Dali's tourism market saw a significant recovery, with a nearly doubled number of visitors compared to 2019, leading to a surge in homestay prices [9]. - By the end of 2023, Dali had 8,952 hotels and homestays, with a total of 118,500 rooms and 182,100 beds [9][10]. - Despite the influx of tourists, the average occupancy rate during peak times was only about 10 guests per room, indicating a severe oversupply [10]. Entrepreneurial Challenges - Many new entrants to the homestay market underestimated the competition and the operational challenges, leading to a wave of business closures and transfers [8][16]. - For instance, a new entrepreneur, referred to as "October," faced overwhelming operational demands and realized that even during peak seasons, profitability was elusive [5][6]. - Another entrepreneur, "Little Rain," invested over 1 million yuan but struggled to break even, highlighting the financial risks involved [19][21]. Market Dynamics - The article notes a trend of low-price transfers as many owners seek to exit the market, with some selling at significant losses [7][8]. - The influx of new homestays led to a price war, further squeezing margins and making it difficult for many to sustain their businesses [10][12]. Regulatory Environment - The Dali government plans to implement stricter regulations for homestays in 2024, requiring special industry licenses and higher standards for hygiene and safety, which may further challenge small operators [12][13]. Success Factors - Successful operators are adapting by focusing on long-term rentals and diversifying their offerings, such as integrating wellness services into their homestays [23]. - Understanding customer preferences is crucial, with data indicating that family travel is a significant driver of demand in Dali [22]. Conclusion - The Dali homestay market is undergoing a significant transformation, with many entrepreneurs exiting while others adapt to survive. The future success of homestays will depend on their ability to differentiate themselves and meet evolving customer needs [24].