Yet for hospitality investors scrutinising the country’s myriad investment markets, further research may yet be required to ensure that deals turn profitable, according to James Macdonald, head of Savills Research, China.

“While there are signs of a modest improvement in China’s economic outlook, the recovery remains uneven,” Macdonald says. “In terms of real estate repricing, we have seen some adjustments, particularly in cases involving more motivated sellers, but there still remains a divide between seller and buyer expectations.” He adds: “Yields in the hotel sector, in particular, are still not at levels that would broadly attract yield driven institutional capital.”

Hospitality has always been a relatively specialised investment class in China, due to its operational intensity and significant differences across the country’s vast territories. Macdonald notes that periods of oversupply in particular areas in the past have added to its complexity, demanding considerable expertise from market entrants.

“ADRs remain comparatively low by international standards, and occupancy rates in major cities tend to stabilise in the 70–75 percent range,” he adds. “As such, the market has not seen the same level of investor activity as other sectors. Previously a significant portion of hotel deals have been for conversion to offices – some ten years ago – and rental apartments, the latter in the last five years.”

Selective opportunities

That said, he suggests that “there may be selective opportunities for investors with specific expertise in hospitality, particularly in assets catering towards emerging leisure demand”. Macdonald says that market watchers have been observing a shift in travel patterns, “with growing interest in suburban or resort-style properties rather than traditional city-centre hotels”. He adds: “While business travel has resumed gradually, international arrivals have recovered quickly in core cities given relaxed visa restrictions.” China offers several visa-free entry options, including a 240-hour (10-day) transit policy for citizens of 55 countries, which he suggests “may support performance in selected locations such as Beijing, Shanghai, and key tourism hubs”.

Recent investment volumes seem to support this thesis. Data from China’s Report Hall suggests that hotel transactions across the country reached some RMB 8.79 billion (US$2.6 billion) in 2024, with new management signings and development completions aiding investor confidence. In the first five months of 2025, JLL and Zhong Lun report that 283 hospitality transactions have already taken place, while ABN Data records that 313 hotels opened across the country in April alone, a 42 percent rise on the previous month. Most are upscale and luxury properties.

Key destinations for deals include evergreen Shanghai, but rising cities such as Chengdu, Hangzhou and Wuhan also feature on investor hit lists. And although deal volumes for 2025 are not expected to exceed last year, there are further signs of vitality in the market.

Signs of vitality

Global leader Accor revealed in April that it has signed two flagship properties at a UNESCO World Heritage Site in Wuxi, Jiangsu Province. Sofitel Legend Wuxi and Grand Mercure Wuxi will be developed by Accor in partnership with Wuxi Liangxi Culture & Tourism Development Group, with both projects planned to support infrastructure growth in the region.

“We are immensely pleased to create this powerful hotel combination that will create a diverse hospitality experience with prestigious luxury and premium offerings, while further strengthening Accor’s presence in Jiangsu Province and the Yangtze River Delta,” says Gary Rosen, CEO, Accor Greater China.

Sofitel Legend Wuxi will feature 75 guestrooms across six floors and a hidden garden oasis. Next door at 1 Yongfeng Road, the former Nanchang District Government Building will be transformed into Grand Mercure Wuxi, with 200-guestrooms over 13-storeys.

In May, the launch of the Radisson Blu Hotel Shanghai Stadium was the latest ambitious opening for the Chinese-owned chain. In June, Wyndham Hotels & Resorts reached an Asia Pacific milestone with the opening of its hundredth Days Inn hotel in China, namely Days Inn by Wyndham Shantou Jinping.

Hilton, meanwhile, has developed a new prototype specifically for the Chinese market, dubbed the “Hilton Garden Inn · Gen A”. The first iteration of the brand launched in June, “directly responding to the evolving needs of Chinese travellers”, according to Jenny Milos, a Hilton brand management VP for suites & focused service in APAC. Hilton Garden Inn Chongqing Yubei Central Park exemplifies the new concept with its mix of business and lifestyle friendly features, benefitting from what the group calls “4-in-1 multifunctional spaces” as well as featuring calming “nature-inspired designs”. According to Hilton, another 20 Garden Inns have recently been signed to open across the country.

Market growth

CapitaLand Investment's (CLI) wholly owned lodging unit, The Ascott Limited, also has China firmly in its sights as it seeks to grow its asset-light hotel management business. “China continues to be one of Asia’s most dynamic and strategically significant markets,” says Lee Ngor Houai, chief operating officer, EMEA, South Asia and China, Ascott. “Driven by a strong rebound in domestic tourism and the gradual resurgence of outbound travel, we are confident in the long-term growth potential of the market,” he adds.

For Lee, affluent Chinese travellers “are increasingly seeking differentiated, high-quality hospitality experiences”, while Ascott “is poised to lead in capturing the full spectrum of travel demand as China redefines its role in the global hospitality and tourism landscape”.

Ascott flags fly on around 230 properties in over 40 Chinese cities, including current operations and the firm’s pipeline. The brands are diverse, spanning its internationally-known flags such as Citadines, Oakwood and The Crest Collection, as well as two China-specific brands, Adoor Suites and Adoor Apartments. Lee says this mix is intentional: “As Chinese travellers increasingly venture abroad, our strong brand presence in China inspires confidence and encourages them to choose Ascott properties across the globe,” he notes.

In 2024, the business launched nearly 20 projects across 14 cities, including first-time entries into Zhangjiakou, Wenzhou and Jinan, alongside a strategic return to Hong Kong with Ascott North Point Hong Kong.

Ascott’s 2025 pipeline includes more than 20 new properties across China, including the gateway cities of Shanghai, Shenzhen, Wuhan, Wuxi and Haikou. Lee notes that the group’s strategic shift towards an asset-light model in recent years is also fuelling “growth opportunities in franchise management” across China, “to complement our management agreement strategy”. In this field, the group is backing brands like Citadines and Quest to take off.

In October 2024, Ascott formed a 50:50 joint venture with Jin Jiang Hotels to expand Ascott’s Quest brand and Jin Jiang’s Tulip Lodj across China through franchising. Lee suggests that both are ideally placed to respond to the rise in bleisure demand.

By Isobel Lee