Amidst China’s weak and slowing economy, consumer downgrading, and the harsh winter facing the catering and hotel industry in China, news has emerged recently about the closure of the Shanghai Dynasty Grand Hotel in China. Following last year’s record high of nearly three million catering establishments shutting down on the mainland, industry professionals have expressed that this year is the “most brutal year of elimination for the hotel industry”.
According to reports from mainland media such as Shangguan News, the Dynasty Grand Hotel on Zhaobang Road in Xuhui District, Shanghai, has long been deserted. A notice posted at the entrance states that due to the expiration of the contract between Xuhui Dynasty Grand Hotel and Qiwen (Qijia Garden Grand Hotel), all relevant personnel from Qijia Garden Grand Hotel are not allowed to enter the hotel without the chairman’s consent of Dynasty Grand Hotel.
The Dynasty Grand Hotel was once a famous hotel in Shanghai and a landmark in the city, where many Shanghainese held their hundred-day banquets, birthday parties, and weddings. There used to be an elongated Lincoln parked at the hotel’s entrance, which was quite luxurious, but now only a truck remains parked outside for clearing.
The news of the Dynasty Hotel’s closure has sparked discussions among the people in Shanghai. Some netizens from Shanghai expressed that they had dreamt of scheduling blind dates on Saturdays, then getting married at the Dynasty Grand Hotel since childhood. Some mentioned that as kids watching TV shows, the mentions of Jin Money Leopard and Dynasty Grand Hotel made them aspire to visit these places when they grew up, but now that luxury has vanished as they reached adulthood.
Data from the Loveqicha App shows that the Dynasty Grand Hotel in Xuhui District, Shanghai was established in June 2001 as a sole proprietorship, operated by Dong Rongting, registered at 288 Zhaobang Road. Its current operating status is listed as still in business, offering services including large-scale hotels (including cooked food delicacies, raw seafood); alcoholic beverages (excluding bulk wines); and retail of rolled tobacco, cigars, clothing, daily necessities at the operating location.
In recent years, with the dual pressures of slowing economic growth and weak consumption in China, the catering industry has been plunged into a harsh winter. According to data from the catering industry media Red Diner Network, nearly three million catering outlets in China closed last year, setting a historic record. This year’s first half has witnessed an even more intense wave of closures within the industry.
A blogger with 132,000 followers, “Little People of China,” featured citizens from various cities in the country in a video on July 17th, discussing the mass closures of dining and hotel establishments.
A hotel operator with 11 years of experience expressed that this year is indeed the cruelest year of elimination for the hotel industry. As it’s already July, the peak season for the hotel industry, many hotels are unexpectedly facing closures. He has never seen so many hotels being eliminated during his 11-year tenure. The hardest hit are the old hotels with over seven to eight years of renovation, lacking funds for refurbishment, relying on lowering food prices to survive, leading to increasing losses in sales. The most unfortunate are those who took over at high prices, burdened with high transfer fees and rent, plunging into the hotel industry, only to await being wiped out.
A resident of Shanghai shared how his mother was suddenly informed at the end of last month that she wouldn’t be needed after two more days. She worked in a bakery in a factory canteen for a foreign enterprise, earning less than 4000 yuan a month. She worked from 6:30 am to 4:30 pm, five days a week, with two days off. The reason for the layoffs was the declining revenue of the entire restaurant.
A hotel owner in Wuhan, Hubei Province, described the current situation as unbearable. He predicted that starting from October this year, there would be a collective drop in hotel transfer prices. He questioned, “Are there still hotels with occupancy rates exceeding 50% now?” He commented, “If your hotel is losing money, it’s better to close early for relief.”
Last year, the closed restaurants across China covered various types including formal dining, tea houses, cafes, bakeries, hot pot, desserts, buffets, and barbecue, with some prominent brands. Opera BOMBANA, an Italian restaurant in Beijing was once a dining destination for celebrities but closed after 11 years of operation last April. L’Atelier 18, a Michelin three-star chef restaurant in Shanghai, closed only six months after opening. SteakHouse, a high-end steakhouse in Shenzhen, also couldn’t escape closure, with some customers reporting delays in refunds of their stored value amounts.
Based on analysis by mainland media, from a demand perspective, increased uncertainty in the external environment, shrinking assets of the middle class, and the majority of consumers moving towards rational and practical spending are leading to the preference for high-value, essential dining. With a noticeable decline in foot traffic and enduring high operating costs, internet-famous dining establishments, upscale restaurants, and non-essential dining are gradually losing competitiveness, falling into crises.
Recently, the Chinese authorities introduced a new “prohibition on alcohol” policy, escalating crackdowns on banquets across regions, which not only sparked backlash and complaints from officials but also dealt a severe blow to the catering industry.
A restaurant owner and blogger known as “Old Bald” mentioned how his restaurant only sells half as usual on Fridays, illustrating the hardships of the dining industry, which he attributed to the official prohibition on alcohol.
He expressed his depression due to the alcohol ban, indicating that closure might be imminent. Various establishments, including Party and government organs, state-owned enterprises, and central enterprises, have restricted the serving of alcohol. Companies like Moutai, if they hold shareholder meetings, can only offer buffets without alcoholic beverages. Many in the insurance sector belong to state-owned enterprises as well. Moreover, the public security, procuratorates, courts, and troops, along with public entities like hospitals, schools, and banks, and even community workers are subject to limitations. With customer numbers halved, many establishments are closing down. It seems that restaurants have to remove all alcoholic drinks and beverages from their shelves – customers can only have tea or plain water with meals to keep afloat.
Another dining blogger, “Guiyang Huanhuan,” voiced concerns about the impending crisis in the dining industry. All institutions refrain from serving white wine, red wine, and beer, thus affecting not only the dining industry but also the entertainment sector, including KTV and bars. Currently, the income from these establishments is the most stable. The main force of this consumer market has vanished.
Some restaurant owners describe the impact of the new “prohibition on alcohol” policy as “harsher than the pandemic”.