Core Insights - The hospitality industry, particularly the homestay sector, is experiencing a significant downturn, with many operators reporting disappointing revenues during peak seasons [2][5][11] - The oversupply of homestays has led to increased competition and reduced profitability, with many establishments struggling to cover operational costs [10][18] - Economic conditions and changing consumer preferences are contributing to a decline in travel spending, impacting the overall performance of the homestay market [8][12] Industry Performance - Many homestay owners reported that this summer's performance was worse than last year's, with some locations experiencing a drop in occupancy rates and revenue [2][4] - Specific examples include a homestay in Dali, which saw revenue drop from over 10,000 yuan during peak periods last year to around 6,000-7,000 yuan this year [4][5] - The overall sentiment among homestay operators is pessimistic, with predictions of a further decline in bookings for upcoming holidays like the Mid-Autumn Festival and National Day [6][18] Market Dynamics - The number of homestays in China has surged from approximately 30,000 in 2014 to over 300,000 in 2024, with around 80% of these businesses operating at a loss [10] - The competitive landscape is characterized by a mix of high-end and traditional homestays, with many struggling to differentiate themselves in a crowded market [5][11] - Price competition has intensified, leading some operators to lower rates significantly, which in turn has reduced overall revenue despite higher occupancy [9][16] Consumer Behavior - There is a noticeable shift in consumer perception of homestays, moving away from the unique, personalized experiences they once offered to a more commercialized model [12][14] - The inconsistency in service quality and amenities across different homestays has led to consumer dissatisfaction, making them more inclined to choose standardized hotel options [17] - The high operational costs associated with running a homestay, including rent and maintenance, are becoming unsustainable for many operators [15][18] Future Outlook - The industry is expected to undergo a significant restructuring, with weaker players likely to exit the market, while those that adapt to changing consumer demands may survive [18] - The current economic climate and oversupply issues suggest that the homestay market will continue to face challenges in the near term [8][12]