Core Viewpoint - The five-star hotel industry in China is experiencing a significant decline, with many hotels facing closure or being sold at discounted prices due to various factors including changing consumer preferences and economic pressures [4][10][20]. Industry Overview - The rise of five-star hotels in China began in 1978 with the reform and opening-up policy, leading to a rapid increase in the number of hotels, particularly after the introduction of star rating standards in 1988 [6][9]. - The peak of five-star hotel numbers was reached in 2019, but the industry has since faced challenges, including the impact of the COVID-19 pandemic [9][10]. Market Dynamics - The introduction of new regulations in 2013 limited the use of five-star hotels for government meetings, leading to a decline in their prestige and a slowdown in new hotel openings [9]. - The number of five-star hotels has decreased significantly, with 171 hotels losing their five-star status between 2019 and 2024, particularly during the years 2021 to 2023 [10][12]. Financial Performance - The average revenue for five-star hotels in 2023 was 87.99 million yuan, a significant drop from over 100 million yuan in 2018, indicating a continued struggle for profitability [20]. - Some listed hotel companies reported declines in revenue and net profit compared to 2019, highlighting the financial difficulties faced by the industry [19][20]. Consumer Behavior - There is a noticeable shift in consumer preferences, with travelers increasingly opting for mid-range hotels that offer better value for money, leading to a decline in the proportion of consumers choosing five-star hotels [30][35]. - The average price of five-star hotels has decreased, with some brands experiencing significant drops in average daily rates compared to 2018 [18][20]. Competitive Landscape - New hotel brands and chains are gaining popularity, offering competitive pricing and modern amenities, which further challenges the traditional five-star hotel model [35]. - The rise of alternative accommodations and budget-friendly options has led to a decrease in the perceived value of five-star hotels among consumers [30][35].