High-End Resort Hotels: Standing at a Strategic Crossroads

Every travel off-season, discount pre-sales become a standard tactic in the hotel industry — but in recent years, this strategy has increasingly reached into the realm of luxury resort brands.

During the recent Double 11 sales, high-end properties such as Banyan Tree Jiuzhaigou, Fuchun Resort, and Qiandao Lake Anlan launched “half-price calendar” packages, with some rooms dropping below 700 RMB per night. This sparked a wave of eager voucher hoarding among consumers.

These hotels were once positioned firmly in the premium tier, yet they have now stepped into the promotional arena. Does this imply that luxury resort hotels are under pressure? What is changing in the survival logic of high-end hotels?

The “Ice and Fire” Paradox of Luxury Resort Hotels

The hotel industry is currently facing broad-based growth challenges. With increasingly rational consumer attitudes and shrinking market demand, price competition has spread across budget and mid-scale hotels — and even previously immune luxury brands are now adjusting their strategies to maintain foot traffic.

This year’s Double 11 revealed dramatic markdowns among premium resorts: Banyan Tree Jiuzhaigou offered 3 nights for 1,999 RMB, Fuchun Resort priced a 3-day package at 1,399 RMB, and Qiandao Lake Anlan followed suit with similar packages. On a per-night basis, these rates are far below typical nightly pricing — cheaper even than historical off-season rates — now becoming essential for traffic generation.

The rise of low-price pre-sales aligns with two realities: consumers increasingly seek high value for money, and online platforms reward visibility and engagement. However, luxury hotels typically release only a limited inventory at these prices. Sustained under-pricing would contradict their brand positioning — these promotions are short-term tactical maneuvers, not long-term pricing strategies.

Not all luxury hotels have entered the price war. Industry insiders note that high-end hotels around Shanghai’s Bund continue to thrive. Many visitors come to Shanghai specifically to “check off the skyline and Bund view” — naturally prioritizing hotels with immediate proximity. Young travelers increasingly value both views and convenience, giving hotels in these areas a structural advantage.

Some properties maintain near-constant occupancy due to strong value positioning within prime districts. Others rely on sheer brand equity — with minimal price adjustment required to fill rooms. While certain nearby hotels have trimmed prices, reductions seldom exceed 10%, avoiding outright price wars. Their conclusion is simple: “Location is a non-negotiable advantage — business won’t be bad.”

This market polarization is equally visible in resort hubs like Sanya. Although it remains one of China’s hottest vacation destinations, the market has clearly softened. According to NorthStar Hotel Asset Management, the average room rate for high-star hotels in Sanya in 2024 is 987 RMB — down 16.6% year-on-year — with average revenue per available room down 16% as well.

Yet some top-tier brands remain remarkably resilient. They have even raised rates this year and are unlikely to discount during peak season. While certain premium hotels retain strong demand due to brand and location advantages, it is undeniable that the luxury resort hotel segment is undergoing profound restructuring.

Excess Supply, and the Consumer Takes Control

Consumer demand has become increasingly multidimensional. In major cities, travelers value both location and cost efficiency; in resort destinations, they seek both natural scenery and quality of service. “Wanting it all” has become the new consumer norm — driven by evolving demographic dynamics.

Workers in the 30-to-40 age segment — with rising disposable income but high workplace stress — are becoming the dominant customer base. They expect more than standardized service — they want personalization, emotional resonance, and exclusive experiences.

In response, hotels are expanding activity offerings — yoga, paddleboarding, sound-bowl healing, beach soccer, and more — aiming to stand out through unique programming and thoughtful curation.

At the same time, rational spending patterns and expanded booking channels empower consumers to compare aggressively and negotiate. When multiple hotels cluster around the same destination, customer allocation becomes fragmented — triggering price competition, as seen in Sanya’s declining room rates.

On the supply side, the balance has shifted: luxury hotels now face a structural oversupply.

Tourism data shows domestic travel volumes in 2024 reached 6.016 billion trips — 93% of 2019 levels. But hotel room supply has exceeded pre-pandemic levels, with properties reaching 176,400 units in 2025 — meaning supply has outstripped demand.

The resulting pressure is evident. China’s hotel sentiment index for Q2 2025 remains in negative territory at -24, with high-star hotels averaging just 58.3% occupancy — nearly 15 percentage points below 2019 — while F&B revenues dropped by over 30%.

Distress sentiment has spilled into asset auctions. In early 2025, 259 hotels priced above 10 million RMB entered auction — but only 17 successfully sold. Notably, the top-luxury Banyan Tree Beibei in Chongqing took 10 rounds of listing — falling from 700 million RMB down to a final sale of just 80 million RMB.

Meanwhile, competition from high-end homestays is rapidly intensifying. Market size for boutique homestays has doubled from under 20 billion RMB in 2022 to 42.27 billion in 2024. Properties over 400 RMB per night now account for 30.9% of demand — and those over 600 RMB are nearly 10%.

Despite pricing upward, high-end homestays remain cheaper than luxury hotels, and often offer superior atmosphere, style, and authenticity — especially for couples and families. Hotels still hold the edge in hygiene and service standardization — but homestays are winning in personality and emotional appeal.

When both luxury hotels and luxury homestays “compete upward” in service sophistication, the only room left for differentiation often becomes price.

When Traditional Service Logic Stops Working

As long as travel needs remain steady, luxury hotels retain a foundational market. But the real challenge today is not occupancy recovery — it is consumer persuasion.

Unlike business hotels — which rebound with economic cycles — luxury resorts rely on discretionary spending, especially from middle-class consumers. And this group now prioritizes both quality and value. Even affluent guests no longer pay blindly for branding; they look for return on experience.

Today’s travelers care less about extravagant facilities or mere scenic beauty. They seek distinctive experiences — moments that feel unrepeatable, meaningful, and memory-worthy.

This means even hotels with strong brand presence and prime locations must now respect price-value sensitivity. Industry professionals suggest that hotels offering “reasonable prices near core attractions” — around 500-600 RMB for couples and 1,000 RMB family packages — will perform strongly. Even the definition of “prime location” may evolve, as consumer accommodation choices become more flexible.

Simultaneously, outbound and inbound travel trends offer new opportunities. In 2024, inbound foreign visitation reached 26.94 million, up 95.4% year-on-year; outbound private travel surpassed 140 million trips. Visa-free policies boosted foreign arrivals dramatically. Some hotels report foreign guest ratios climbing to 10%, significantly lifting performance.

A Crossroads Moment for Premium Resort Hotels

With supply exceeding demand and consumers firmly holding purchasing power, luxury resort hotels stand at a decisive turning point. Traditional brand narratives and generic service standards no longer suffice.

To remain competitive, luxury hotels must rethink pricing strategies, clarify brand positioning, and continuously innovate service design. They must deliver tangible, differentiated value — ensuring consumers feel that their experience is worth every cent.

Furthermore, when hosting international travelers, hotels should amplify distinctive cultural storytelling and authentic local experiences — building competitive identity rooted in Chinese heritage, rather than generic global luxury aesthetics.