5.6 billion tourists cannot satisfy 380,000 homestay businesses

After the Spring Festival holiday, the homestay industry staged a scene of "A Song of Ice and Fire." On one side, domestic tourism is accelerating its recovery, with the number of domestic trips expected to exceed 5.6 billion by 2025, and the homestay market seems to be welcoming a "surge." During the Spring Festival holiday, Tujia's homestay bookings significantly increased from January, with Muniu Homestay orders growing by 26% year-on-year and the average order value rising by 10%, setting a new record for the platform. On the other side, while the festive atmosphere of the Spring Festival has not yet dissipated, posts about homestay closures and transfers are frequently appearing on social media platforms. Since the end of 2025, a number of once-prominent high-end homestays, such as Mogan Mountain Yunxi Valley and Dali Canghai Villa, have quietly exited the market. The seemingly contradictory phenomenon points to the same core issue: the tourism market is warming up, and the demand for 5.6 billion trips is real, but the expansion and internal competition on the supply side of homestays have become even more intense, leading to the predicament of "increasing revenue without increasing profit." In the Year of the Horse, which is imbued with the meaning of "surging and leaping," the homestay industry, once regarded as "poetry and distance," seems to be trapped at the crossroads of scale and profit. 380,000 Businesses Compete in the Homestay Red Sea By 2026, the homestay market has reached an unprecedented scale, but internal competition is also fiercer than ever. This can be directly observed from three sets of data: First, the stock is enormous, and the competition is brutal. According to Qichacha, as of the end of 2025, there are as many as 383,000 existing homestay enterprises nationwide, establishing a red ocean competitive landscape. Source: 2025 National Homestay Industry Development Research Report The "2025 National Homestay Industry Development Research Report" reviews nearly a decade of domestic homestays experiencing two "registration surges": The first was a 147% surge in 2017 under the rural revitalization strategy; The second occurred in 2023, when policies such as the "Guiding Opinions on Promoting the High-Quality Development of Rural Homestays" and the dual stimulus of demand for nearby tourism reignited a new wave of construction and investment. At the same time, capital has also poured in. Source: 2025 National Homestay Industry Development Research Report In 2024, the financing scale of the homestay industry surged to 4.49 billion yuan, setting a new seven-year high. Smart homestays have become highly sought after, with projects like Jinshe Mingyu and Tujia Mingyu securing abundant financing. Capital is eager to promote the slogan of "replicable, manageable, and data-driven," almost wishing to turn homestays into standardized chain hotels. Ctrip acquired 67% of the shares of Dazhe Zhiye, and New Oriental Culture and Tourism invested in Songzan, as leading enterprises frantically layout high-end homestays, witnessing a thriving industry Second, there is a significant reshuffle in the industry. According to data from Qichacha, by the end of 2025, there will be a total of 383,000 existing homestay enterprises nationwide, of which 86,000 are newly registered homestay enterprises in 2025. Although the number of new registrations is considerable, the number of cancellations and revocations has also reached 29,000. This means that while the industry is expanding, it is also undergoing an accelerated reshuffle, and the once blue ocean has turned into a red ocean. The recovery of the tourism market is real, and the demand for homestays is also real, but it cannot withstand the chaotic expansion on the supply side, nor can it withstand everyone rushing in. In the end, when the wind blows away, those who are swimming naked will all be exposed. Starting from the end of 2025, a number of once-prominent high-end homestays have quietly exited the market: Mogan Mountain Yunxi Valley, Dali Cang Hai Gui Villa, Huangshan Huijing Mountain Residence, etc., have successively closed down. Third, while volume increases, prices fall, leading to thin profits. The other side of the homestay market's "rapid progress" is the alarming "increased volume but decreased prices." Source: 2025 National Homestay Industry Development Research Report As of October 2025, the average occupancy rate of homestays nationwide is 36%, the highest since 2021, but the average room price has dropped to 367 yuan, a significant year-on-year decrease of about 30%, the lowest since 2021. This means that even though the rooms are more "full," the money that homestay owners earn is even "thinner." When "high turnover, low profit" becomes the new normal in the industry, this business, which once carried emotions, is becoming incredibly realistic. Three Major Mountains Pressing on Homestays The current state of the homestay industry is not caused by a single reason but is the result of multiple overlapping issues. The "2025 National Homestay Industry Development Research Report" accurately analyzes the structural contradictions behind it: uneven development levels, significant competition impact, low operational levels of enterprises, declining product competitiveness, weak academic research support, and loss of media attention. The first major mountain is insufficient regulation. This is the most talked-about and most unsolvable issue in the homestay industry. The report points out that many homestays have been in a "gray area" since their inception, with public security, fire safety, market regulation, health, and environmental protection departments all able to manage them, yet none of them manage effectively. Recently, the incident in Sanya where a homestay was heavily fined 350,000 yuan and had its business license revoked has been seen by many as a turning point for the homestay industry from barbaric growth to standardized development. The second major mountain is the rampant homogenization, which has lost the "soul" of homestays. What is the core competitiveness of homestays? It has never been about trendy decorations, large bathtubs, or floor-to-ceiling windows, but rather about local culture and the culture of the hosts. Songzan became popular because of its deep experience of Yunnan-Tibet culture, able to take tourists along the most authentic Tibetan routes. Today's homestay market has almost become a "copy-paste competition of internet celebrity styles." Opening a homestay booking platform, one is greeted by a sea of white wall and wood style, infinity pools + afternoon tea standard combinations What's even more fatal is that the "host culture" has disappeared. With a hundred hosts, there are a hundred different homestays. Homestays are not standardized accommodation products on an assembly line; it is the hosts who convey their life attitudes, inherit cultural heritage, spread life aesthetics, and express genuine emotions through their homestays that give them a unique warmth. As the industry scale grows rapidly, many newcomers lack an understanding of the essence of homestays and overlook the importance of emotional connections between hosts and guests. If homogenization is a chronic disease, then the supply-demand imbalance caused by overdevelopment is an acute outbreak, becoming the third major burden on homestays. Beihai Weizhou Island in Guangxi has become a typical example of this problem. This island, with an area of only 24 square kilometers, has seen the number of homestays surge tenfold in just five years under the hype of the "Little Sanya" concept. According to media statistics, there are still over 1,400 homestays operating on the island. This is equivalent to nearly 60 homestays per square kilometer, a density that far exceeds reasonable limits. Image source: Xiaohongshu Moreover, external competition has pushed homestays to a dead end. Currently, homestays are being squeezed from both ends by hotels and camping, making it a lose-lose situation. The "2025 National Homestay Industry Development Research Report" lists "significant impact from competitive formats" as one of the main challenges facing the industry. Hotels, with their standardized services, stable quality, and strong brand reputation, have diverted the core customer base of homestays. Whether business travelers or tourists, they place great importance on hygiene, safety, and supporting facilities; the chain networks and professional services of hotels are simply incomparable to individual homestays. Furthermore, hotels are also moving downmarket, with budget hotels around scenic spots often cheaper than trendy homestays, while still ensuring quality. Tourists naturally vote with their feet and choose hotels. On the other hand, camping poses a challenge from the opposite end, attracting a new generation of consumers who seek novelty, have limited budgets, and love the outdoors, with its extreme cost-effectiveness, high degree of natural integration, and pursuit of freedom and adventurous social experiences. This directly impacts the market segment of homestays that focus on natural charm and affordability. Caught in the middle, homestays find themselves in a difficult position: they cannot compete with hotels on standardization, nor can they match the cost-effectiveness of camping, ultimately leading to internal strife in price wars, resulting in worsening conditions. For homestays to survive, they must return to the people At this point, some may wonder if the homestay industry is failing. The answer is no. The wave of closures, while a ruthless market reshuffle, is also a growing pain as the industry transitions from barbaric growth to meticulous cultivation. So where is the future of the homestay industry? The title of the "2025 National Homestay Industry Development Research Report" is "Return Homestays to the People," which has already provided a clear path for the homestay industry. Of course, the report also offers specific countermeasures and suggestions. First, it is necessary to say goodbye to homogenization and root in local culture to create unique features The core competitiveness of homestays has never been about how trendy the decoration is, but rather how "local" it is. The report suggests that homestays should transform from "homestay +" to "homestay *", deeply integrating local culture, cuisine, and intangible cultural heritage to create highly recognizable characteristics. For example, homestays in Yunnan can integrate Dai culture and Pu'er tea culture, those in Xinjiang can incorporate Uyghur culture and desert culture, and those in Zhejiang can blend Jiangnan water town culture and intangible cultural crafts. Saying goodbye to rootless trendy styles and rooting in local culture to create unique features that cannot be replicated by others is the first step for homestays to survive. Secondly, it is about returning to the culture of the host, giving homestays warmth. The biggest difference between homestays and hotels is "people." Hotels offer standardized services, while homestays provide the warm hospitality of the host, embodying the atmosphere of "a home away from home." The report emphasizes the need to strengthen the "host culture" of homestays, abandoning the operational model of "small hotels" and ensuring effective interaction between operators and guests. The reason why the French-style mountain retreat in Mogan Mountain is unforgettable is that the hosts, the Situ couple, treat the homestay as their own home. They created a rose garden on the mountain simply because the wife liked it, took guests to the wine cellar to choose wine during dinner, and even did not put room numbers on the doors, allowing guests to feel the relaxed pace of life. Finally, it is about digital intelligence + branding, bidding farewell to the "handicraft workshop" model. The digital intelligence in homestay management has become an inevitable trend. For example, the rural homestay cluster in Daocheng Yading, Sichuan, utilizes AI generative technology to customize exclusive rural living experiences for tourists, including AI-generated Tibetan cuisine cooking tutorials, Tibetan cultural design, and rural stargazing guides. At the same time, capital and leading enterprises are promoting branding and specialization. The report shows that companies like Trip.com and New Oriental Culture & Tourism are accelerating their layout through investments, with nearly 70% of homestays being rental properties, and projects operated in company form significantly increasing. Source: 2025 National Homestay Industry Development Research Report This means that the "emotional entrepreneurship" model of going it alone will face greater challenges, while teams or platforms with brand operation, resource integration, and professional management capabilities will have stronger risk resistance. When homestays return to their essence, becoming carriers of local culture and warm living spaces, this wave of closures and reshuffling will inevitably be just a small episode in the industry's development. After all, people's pursuit of a beautiful life and unique experiences will never disappear. And homestays are the perfect carrier for this pursuit