Starred hotels lose shine amid China's austerity drive

The InterContinental Hotel in Zhabei district, Shanghai. The five-star rating, once a halo guaranteeing profits for Chinese luxury hotels, is losing its glamour as the country's ruling party bans consumption in upscale accommodations at public expense. [Provided to China Daily]

HANGZHOU - The five-star rating, once a halo guaranteeing profits for Chinese luxury hotels, is losing its glamour as the country's ruling party bans consumption in upscale accommodations at public expense.

Chairman Chen Miaolin of the New Century Tourism Group based in East China's Zhejiang province said he had instructed his five four-star New Century Hotels to table their plans for an upgrade to five stars under pressure from shrinking turnover.

Chen, who doubles as the vice president of the China Tourism Association, said that a total of 56 five-star hotels sought to downgrade their ratings to four stars in 2013, while many more lower-rated hotels suspended their applications for the top-notch rating.

The Chinese mainland currently has more than 4,000 starred hotels. Of the total, 680 are rated at five stars.

Citing initial estimates by the association, Chen said that the hotel industry reported a decline of 25 percent in its aggregate business turnover in 2013. About 20 or more hotels were closed down each month.

Another report released by the China Tourist Hotel Association shows that in the first half of 2013, the average lodging rate of China's hotels with three-star ratings or higher dwindled by six percentage points to 53 percent from the same period in the previous year.

The average revenue generated by hotel catering businesses dropped by 17.2 percent, while that of meetings and other events dropped by 17.8 percent. Five-star hotels were worst hit as their total revenues declined by 14 percent, more than all other types of hotels, said the report.

Chen attributed the cold front striking China's luxury hotels to the ban imposed by the Communist Party of China (CPC) on official consumption at five-star hotels at public expense.

Since Xi Jinping took the helm of the CPC in November 2012, the Party has made a series of detailed regulations to uproot bureaucratic and extravagant work styles among government workers, such as requiring officials to travel with smaller entourages, simplifying receptions and practising frugality.

The austerity drive hasn't waned over the past year. As the Chinese Lunar New Year on January 31 approaches, the Party released another notice ordering beefed-up supervision and welcoming tip-offs from citizens and media about excessive spending and gifts before and during the week-long holiday.