In the high-end hotel industry in China, the “conference economy” used to be a core pillar, but it has been steadily declining in recent years, especially suffering a severe blow during the epidemic. As we enter 2025, strict control over corporate travel budgets, the rise of online conferences, and increasing economic pressures have led to deserted conference rooms and sharp revenue declines in high-end hotels.
On August 8, the Beijing Municipal Bureau of Statistics released the main economic indicators of designated accommodation and catering industry corporate entities in the first half of 2025. The data showed that among the 1613 accommodation units, the operating income decreased by 7.3% year-on-year, with a total profit of 59.8 million yuan, a staggering 92.9% decrease.
Xing Haiyang, a senior columnist at “Sanlian Life Weekly,” mentioned that the average profit per enterprise is less than 40,000 yuan, barely covering the expenses a company would pay for one employee in half a year. For a company with dozens or hundreds of employees, hiring even a single additional staff member in the kitchen or lobby could result in losses, illustrating the precarious state of operations.
It’s not just Beijing; hotel businesses in other cities across the country are also experiencing a sudden decline. By 2025, the revenue from conference services in most hotels is far below the levels seen in 2019. Large-scale conferences that were once held at suburban resorts are now history, and even in cities like Wuxi and Changzhou, hotels struggle to recoup the costs of conference room rentals.
Traditionally, high-end hotels rely on three main revenue streams: accommodation, dining, and conferences. With the collapse of the “conference economy,” which follows the trend of five-star hotels offering takeout and setting up stalls, it has become a widespread reality in the high-end hotel industry.
As early as 2007, the Beijing International Hotel’s exhibition department could generate 5 million yuan in revenue just from annual conferences; and in 2012, the domestic conference market was still growing rapidly, with official meetings accounting for 23% of the total.
However, starting from 2013, the conference economy began to decline. From 2019 to 2022, due to the impact of the epidemic and policies, a series of conferences such as annual meetings, distributor meetings, and product launches were canceled, dealing a severe blow to the industry.
The decline in the conference economy is closely related to significant cost reductions in the business sector. Since the second half of 2023, industries such as finance, internet, real estate, and pharmaceuticals have rigorously controlled budgets, making it a common choice to cut down on travel costs.
For example, in 2024, ByteDance issued a violation report on accommodation standards for business trips, exposing the fact that high-spending companies are no longer as prevalent. In 2025, Ant Group initiated the “strictest business travel regulations in history,” prohibiting employees below grade 16 from unnecessary business trips, limiting essential business trips to a maximum of 5 days per month, and placing high-cost employees directly under audit.
The financial sector is no exception, with the business travel budget for Chinese financial enterprises decreasing by over 30% in 2024, with 23 out of 30 securities firms reducing travel expenses. As an example, CICC saw a 40% year-on-year decrease in travel expenses in the first half of the year.
Overall data indicates that in 2024, the average business travel expenses per person for A-share listed companies decreased by 2.9% year-on-year, nearly 15% lower than in 2019. According to the “2024-2025 China Business Travel Management White Paper” by Tongcheng Business Travel, 72.93% of business travels in 2024 were “day trips,” with domestic travel budgets decreasing by 5% to 30%.
The reason companies are strictly controlling business travel is that it accounts for 10% to 40% of operating costs, with hidden costs such as manpower time, approval reimbursements, and ticket verification far exceeding the visible costs such as transportation and accommodation. An investigation revealed that fuel and dining expenses represent 31% of total travel expenses, making it difficult to control effectively.
Internal data from a CFO at an e-commerce platform showed that saving 700 yuan per night could save up to 350 million yuan annually for 500,000 room nights. Currently, over 60% of companies are reducing travel budgets, with domestic air travel accounting for 41%, down from 45%, and train tickets rising to 59%.
Furthermore, the rise of online conferences has intensified the impact on high-end hotel industry. In 2024, the global cloud video conferencing market reached 20.09 billion yuan, expected to exceed 60 billion yuan by 2031, with a compound annual growth rate of 17.3%. Tencent Meetings saved Tencent 570 million yuan annually, with 53% of employees reducing business trips by 1-3 times per month.
With companies tightening their costs and the rise of online conferences, it is without a doubt that the hotel industry is facing the most significant impact. STR data revealed that as of September 2024, mainland China hotels saw an annual decrease of 6% in RevPAR, 4% in ADR, and 2% in OCC. ADR has consecutively dropped for three quarters, and the share of high-end hotel business travelers dropped from over 60% to below 50%.
Various indicators suggest that high-end hotels are facing survival challenges. Data from the “2025 China Hotel Industry Development Report” shows that by the end of 2024, China had a total of 348,700 hotels with a total of 17.64 million rooms, including 21,000 four-star hotels and 5,000 five-star hotels.
However, deserted conference rooms have turned high-standard facilities into burdens. According to a survey by “CEO Vision,” the utilization rates were only 18% for temperature-controlled swimming pools, costing 1.2 million yuan annually in maintenance; 23% for executive lounges, spending 800,000 yuan; and 31% for banquet halls, incurring losses of 1.5 million yuan annually. The executive lounge at a Marriott-affiliated hotel in Hangzhou has been permanently closed.
A Morgan Stanley report indicated that in the first half of 2025, China’s hotel RevPAR decreased by 8%, with the situation expected to worsen in the summer. This trend is attributed to the economic slowdown and oversupply in China, with experts warning that high-end hotels may face the risk of “one-third closure” unless they accelerate the transition towards mid-range offerings.
Deloitte pointed out in the “2025 China Economic and Industry Outlook” that the decline in the conference economy mirrors Japan’s past real estate adjustments, where insufficient domestic demand will persist, requiring the hotel industry to shift towards service consumption, such as weddings and leisure business, to stimulate growth. The report predicts that the travel industry will grow by only 2% to 5% in 2025, significantly lower than the initial forecast of 6% to 9%.
JLL analyzed the hotel investment market in its 2025 report, attributing a decrease of 18% in hotel sales and a 19% drop in average room rates to geopolitical changes and global challenges. However, luxury hotels outperformed economy hotels, indicating that high-end hotels need to focus on high-end international clientele to compensate for the domestic conference gap.
Brand Finance data revealed that the value of Chinese hotel brands in 2025 reached 2.6 billion US dollars, a 19% decrease from the previous year. Authorities unanimously agree that the demise of the “conference economy” signifies a structural change, and the hotel industry must transition from passive waiting to active innovation to avoid greater challenges.