by HOU Ruining

China's hotel investment market is gaining momentum and a total of 283 hotel investment deals were recorded nationwide in the first five months of 2025. Tier-one cities made up 37 per cent of the total, highlighting their dominance in the market. East China led with a 55 per cent share, followed by the north and southwest. Cities such as Xi'an, Chengdu and Chongqing also saw rising investment, driven by booming cultural and tourism sectors.

The findings were published in a white paper jointly released by real estate consultancy JLL and law firm Zhong Lun.

China's hotel sector has entered a more active phase, fueled by several factors. Financially pressured property owners are offloading hotel assets at discounted prices, creating opportunities for long-term investors to buy at more attractive valuations.

The market is also shifting toward asset revitalisation. As China's real estate sector pivots from expansion to stock optimisation, more deals involve existing hotels changing hands or undergoing upgrades. This "stock era" is opening the door to repositioning strategies and value-added investment.

At the same time, recovering domestic and inbound travel is lifting expectations for hotel occupancy and returns, further boosting investor interest.

According to market analysis provider chinabgao.com, hotel transactions across mainland China reached 18.79 billion yuan (US$2.6 billion) in 2024, with nearly 70 per cent of deals concentrated in tier-one cities and a dozen major rising urban centers such as Chengdu, Hangzhou and Wuhan. This year's volume is expected to remain steady at around 18 billion yuan.

Longer-term trends also point to growing concentration. Between 2015 and 2024, total hotel transactions hit 168.5 billion yuan, with over 60 per cent occurring in tier-one cities. Shanghai led all markets, accounting for a third of national deals in 2023 and 2024 alone.

From 2020 to 2024, these fast-growing cities—often referred to as "new tier-one cities" increased their share of investment deals by six percentage points compared with 2015–2019.

Signs of renewed confidence are also emerging on the development side. According to ABN Data, a lodging industry analytics firm, 313 new hotels opened in April—a 41.6 per cent rise from the previous month—with mid-to-high-end hotels comprising the majority.

April also saw 128 hotel signings, including major luxury projects. Accor's top-tier Sofitel Legend and its premium Grand Mercure brand made their debut in Wuxi through a new hotel cluster agreement. In Fujian's Pingtan district, a seafront Crowne Plaza was signed with a planned investment of 600 million yuan.