The Chinese lodging industry: problems and solutions

Based on the operation results of Chinese hotels from 1991‐2000, this paper analyzes problems facing the Chinese lodging industry and proposes solutions. Chinese hotels’ performance, in terms of both revenue and profit, has been deteriorating since the early 1990s. While overcapacity has undoubtedly contributed to the poor performance, declining operation scale and low efficiency on the part of domestically‐owned hotels have aggravated the situation. To improve its operation results, the Chinese lodging industry should grow prudently, tap into the domestic tourist market, close the efficiency gap between domestic‐ownership and foreign‐ownership hotels and pursue economies of scale.