2026Q1-MSl·Hotel Market Sentiment Report

Recovery Trend Continues, Sentiment Index Reaches Highest Level In Six Quarters

In the first quarter of 2026, the national Hotel Market Sentiment Index was -21, representing a quarter-on-quarter rebound of 10 points and reaching the highest level in the past six quarters. This improvement signals that respondents hold a less pessimistic view of the short-term operating environment compared to the previous quarter. However, the index remains in negative territory, indicating that the sector continues to operate under pressure.

Regionally, most regions nationwide recorded a QoQ rebound. South China (-15) and East China (-17) outperformed the national average, continuing their relatively stable market performance. North China (-24) and Northeast China (-28) also recorded significant improvements. In contrast, the Northwest declined slightly by 2 points to -30. As Q1 represents the traditional tourism off-season for this region, seasonality weighed on practitioners’ market assessment.

Tier-1 Market Sentiment Rebounds Significantly, Sanya and Shenzhen Lead the Sentiment Recovery

In Q1 2026, sentiment indices across Tier-1 cities posted a distinct rebound. Sanya continued to lead the market, with particularly strong performance in ADR and F&B indices; approximately 70% of practitioners expect year-on-year growth for both indices. Key drivers include the launch of island-wide customs closure operations under the Hainan Free Trade Port, which has stimulated duty-free consumption and spilled over into hotel and F&B demand. Additionally, growth in inbound tourism coupled with peak-season dynamics solidified the demand base. According to the Demand Dashboard on the HOHI Data Platform, international and regional inbound flight volume at Sanya Phoenix International Airport grew by approximately 12% month-on-month in December.

Occupancy sentiment for Shenzhen and Shanghai returned to neutral or positive territory.Shenzhen’s comprehensive index rebounded to 0, primarily driven by the normalization of “northbound travel by Hong Kong residents” and incremental volume from expanded inbound tourism. Shanghai saw a marked improvement in its visitor volume outlook, supported by visa-free policies and a gradual stabilization in corporate demand.

In contrast, Guangzhou demonstrated recovery resilience, with its sentiment index jumping 17 points QoQ. However, practitioners remain cautious regarding growth expectations for ADR and F&B Revenue. On one hand, while the share of inbound tourism has increased, the shift in source market composition has offered limited support for pricing, as newer demand segments tend to have weaker spending power. On the other hand, intense competition in the local dining sector, compounded by a high comparative base, leaves F&B Revenue more sensitive to demand fluctuations.

Beijing saw its comprehensive sentiment index recover to -25, yet it remains below the China average due to the relatively slow recovery of corporate and MICE demand. This indicates that practitioners maintain a cautious outlook on the short-term operating environment.

Tier-2 City Sentiment Rebounds, with Chongqing Leading, Boosted by Leisure Demand and Inbound Travel

This quarter, market confidence in key Tier-2 cities experienced a significant recovery. Chongqing, Hangzhou, and Xiamen outperformed the national average. Notably, Xiamen and Nanjing posted notable quarter-on-quarter increases of 39 and 38 points, respectively. However, it must be noted that the comprehensive indices for these key Tier-2 cities remain in negative territory. This quarter’s performance primarily reflects a rebound from a low base, and overall sentiments remain cautious.

Chongqing’s comprehensive sentiment index recovered to -10, ranking first among key Tier-2 cities. The revival in confidence was primarily driven by the combined impact of the city’s distinctive “8D” appeal and the surge in inbound tourism. Data indicates that, fueled by the dividends of visa-free policies and international cultural and sports events, inbound visitor volume surged by 170% year-on-year. This momentum propelled Chongqing’s hotel booking volume into the national top 10, significantly boosting market outlook.

Nanjing saw a remarkable recovery, with its sentiment index jumping 38 points QoQ. Since 2025, Nanjing has continuously enriched consumption scenarios through diverse events such as the Jiangsu Super League and music festivals, effectively tapping into demand for experience-driven consumption. Relevant data indicates that for the 2026 New Year period, the city organized multiple countdown events; consequently, transaction volume in the accommodation sector on New Year’s Day soared by 121.9% YoY. The cumulative effect of sustained events and festive momentum provided solid support for operational sentiments this quarter.

FIT Demand Shows Relative Stability, Leisure Group and MICE Remain at Low Levels

Results indicate that sentiment indices across all demand segments remain in negative territory, suggesting that the foundation for demand recovery is not yet solid. However, there is a clear divergence in performance across segments. Domestic Leisure FIT recorded the highest index among segments at -4. Meanwhile, although Foreign Leisure FIT remained negative at -15, market confidence has improved, supported by the expansion of visa-free policies and the ongoing recovery of international air routes. According to the 2025 China Inbound Tourism Annual Report released by Ctrip, inbound bookings in the first three quarters of 2025 doubled year-on-year, with visa-free travelers accounting for 72.2%. This reflects how policy facilitation is steadily strengthening the demand base for inbound tourism. As a result, accommodation demand from inbound visitors has been notably strong in cities such as Sanya, Shanghai, and Chongqing.

In contrast, sentiment indices for Leisure Group and MICE demand remain relatively low. Survey response distribution shows a high proportion of “Worse” and “Same” ratings, indicating that these segments currently contribute little to the broader market recovery.

Policy Support Continues, Dilution Effect from New Supply Remains Unabated

This quarter, practitioners continue to view policy factors as a key support for industry operations. The sentiment index for Central Government Policy stood at +5, a distinct rebound from the previous quarter, indicating that the policy environment is bolstering industry sentiments. The government has sustained initiatives to stimulate tourism consumption, such as the introduction of autumn breaks for students in several regions during Q4 2025. These measures drove travel among families with school-aged children during non-traditional peak periods, partially optimizing the off-season demand structure. The index for Local Tourism Development Trends reached +11, suggesting that practitioners maintain a relatively stable sentiment on the overall trend of cultural and tourism demand.

However, the operating environment remains constrained by pressures on both the supply and demand sides. The index for New Competitive Supply Additions was recorded at -58, reflecting the persistent dilution impact from new supply on the existing market. According to the HOHI Data Platform, approximately 10,100 new hotels in the midscale segment and above opened nationwide in 2025, adding roughly 916,000 rooms. While the second half of the year saw a slowdown, with about 445,000 new rooms added—down from the first half—the absolute scale of hotel inventory remains high, and the competitive landscape has not significantly improved. Meanwhile, the index for Consumers’ Willingness to Spend was -38, reflecting a cautious recovery in demand. As a result, the industry remains in an adjustment phase, characterized by elevated supply and a moderate demand recovery.

Industry Maintains Cautious Q1 Outlook Amid Corporate Off-Season

In this survey, the initial questions focused on year-over-year performance forecasts to reduce the influence of seasonal factors on sentiment analysis. To better capture practitioners’ assessment of short-term market fluctuations, we invited participants to predict potential performance levels for the first quarter.

Actual data reveals a gradual month-on-month weakening throughout Q4. As the holiday effect faded, market demand declined. Both Occupancy and RevPAR have trended downward since October, placing the industry under significant pressure toward the end of Q4. (For detailed performance trends of national and key cities, please refer to the HOHI Data Platform WeChat Mini Program.)

In this context, practitioners generally expect this pressure to persist into the first quarter. Given that Q1 is typically the off-season for Corporate and MICE demand, overall demand volume is expected to weaken, potentially intensifying operational pressure. Results indicate that the median national Occupancy for Q1 is projected to decline by 11.8% compared to Q4, while median RevPAR is expected to drop by 9.7% QoQ. Notably, however, the median forecast for ADR shows a slight increase of 2.3% compared to Q4. This is primarily attributed to leisure demand driven by the Spring Festival and winter vacation, which provides pricing support. Consequently, certain vacation destinations and urban leisure hotels retain pricing power and premium potential during Q1, thereby supporting the overall ADR.