---
title: "Large hotels are not selling well, is \"small and beautiful\" not enough to sell? Analyzing the \"explosive sales\" secrets of hotel assets under 300 million yuan"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/281455400.md"
description: "In the first quarter of 2026, the Chinese hotel auction market showed differentiation, with the auction failure rate for hotels priced over 300 million yuan exceeding 90%, while smaller hotels priced below 300 million yuan became favored, becoming high-frequency transaction targets. Investment logic has shifted from scale to efficiency, and market reconstruction has begun. A report by Jones Lang LaSalle (JLL) indicates that the global hotel investment market will welcome structural opportunities in 2026, with hotel investment transaction volumes in the Asia-Pacific region expected to rebound, particularly small projects in non-first-tier cities attracting attention due to lower investment thresholds and controllable risks"
datetime: "2026-04-02T02:36:16.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/281455400.md)
  - [en](https://longbridge.com/en/news/281455400.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/281455400.md)
---

# Large hotels are not selling well, is "small and beautiful" not enough to sell? Analyzing the "explosive sales" secrets of hotel assets under 300 million yuan

In the first quarter of 2026, the domestic hotel auction market showed a clear differentiation. The auction failure rate for properties valued at over 100 million yuan exceeded 90%. High-quality assets like the Ritz-Carlton Chengdu and the Bank of China Hotel in Hohhot, valued at over 300 million yuan, either had to be discounted or went unsold, reflecting a strong wait-and-see sentiment among investors.

On the other hand, properties priced below 300 million yuan in non-first-tier cities unexpectedly became popular, emerging as high-frequency targets in completed hotel transactions. As large-scale assets repeatedly cooled on the auction table, investment logic quietly shifted from "scale worship" to "efficiency first," marking the beginning of a value reconstruction in the existing hotel market.

## **90% Failure Rate, Hotels Over 300 Million Yuan Hard to Take Over**

As the first quarter of 2026 just concluded, the trading market for existing hotels in China did not experience the anticipated heat.

Recently, Jones Lang LaSalle (JLL), a professional real estate services and investment management company, pointed out in a report on new opportunities in the global and Chinese hotel investment markets that 2025 set the tone for recovery and adjustment in the global hotel industry, while 2026 will usher in more structural opportunities.

JLL believes that in 2026, the global hotel investment market is expected to achieve further growth driven by multiple factors, including a strong debt market, record levels of capital waiting to be invested, and investors' urgent demand for stable returns. The demand for travel and hotels in the Asia-Pacific region is expected to remain resilient, with hotel investment transaction volumes likely to rebound to 2024 levels.

Against this backdrop, JLL specifically highlighted a significant structural characteristic of current hotel transactions in China—small projects are highly favored. Projects priced below 300 million yuan are becoming the market's preferred choice due to their low investment thresholds, controllable risks, and short return cycles, aligning with the current cautious investment environment; moreover, the focus of investment is accelerating towards non-first-tier cities.

Space Secret Probe observed that since the beginning of the year, "high-line low-price" hotels have indeed frequently appeared on the auction table, but the auction situation for hotels priced above 300 million yuan is not ideal, with "discounts" and "unsold" being the keywords. On April 7, the Chengdu R&F Ritz-Carlton Hotel will be publicly auctioned on the JD Judicial Auction platform, with a starting price of 860 million yuan, about 90% of the appraised value, dubbed "the cheapest Ritz-Carlton in history."

On March 31, the Bank of China Hotel in Hohhot will be auctioned, with a market appraisal value of approximately 454 million yuan, but the starting price is set at only 120 million yuan, humorously referred to in the industry as "picking up a five-star hotel at 20% off."

In February, the Zhongzhou Huayue Hotel in Zhengzhou, Henan Province, failed to sell at a starting price of 327 million yuan, reflecting the lack of confidence in the valuation of hotel properties in provincial capital cities by capital and the hotel market, and confirming investors' wait-and-see attitude towards more core and lower-priced properties.

This situation is not absolute; there are occasional reports of "high-line low-price" properties being sold, but the transaction prices mostly approach the 300 million yuan mark. On March 8, one of Shanghai's landmark old hotels, the Donghai Hotel, was sold. According to market information, the listing price for the Donghai Hotel was approximately 390 million yuan, and although the final transaction price has not been officially disclosed, industry estimates suggest it was around 350 million yuan, with the buyer being private capital from Henan In January, the Hefei Baohe R&F Westin was sold at a price of 303 million yuan in a second auction. The hotel was previously listed for judicial auction on JD.com at 379 million yuan, and Weili Investment Group ultimately won the property at a 20% discount.

From a broader perspective, data from the Asia Hospitality Big Data Research Institute shows that in January 2026, a total of 77 hotels were listed for auction in the country, with a total starting price of 10.9 billion yuan. Among them, 28 hotels had starting prices of over 100 million yuan, but only 8 were successfully sold, resulting in an overall transaction rate of less than 10%. In February, 73 hotels were auctioned with a total starting price of approximately 5.5 billion yuan, of which 18 had starting prices over 100 million yuan, and 5 were sold, leading to an overall transaction rate of less than 7%. As of mid-March, there were still over 20 key properties listed on the market, but only 2 were sold.

Among the hotels auctioned in January, there were 70 hotels with prices below 300 million yuan, and all 8 sold hotels had auction prices below 100 million yuan, with only one being a hotel in a high-tier or provincial capital city; in February, there were 68 hotels auctioned below 300 million yuan, and among the 5 sold hotels, only one was located in a provincial capital city (Wuhan, Hubei).

According to statistics from the Asia Hospitality Big Data Research Institute, there are currently over 150 hotels concentrated on auction platforms nationwide, but the unsold rate for properties over 100 million yuan exceeds 90%, with a transaction rate of less than 10%. Hotels in non-core areas are almost ignored, and the current state of asset auctions is becoming increasingly harsh.

It is evident that the market for existing hotel transactions is clearly polarized: on one side, developers are under heavy debt pressure and urgently need to liquidate; on the other side, buyers are cautiously observing and only picking up hard currency, leading the overall market into a period of deep observation.

## **Why Large Hotels in High-Tier Cities Are Difficult to Sell**

Observing the hotels that are still pending auction and have repeatedly failed to sell, their commonality is obvious. These hotels are mostly landmark hotels, real estate hotels, and other properties strongly associated with real estate and administrative guidance, many of which were once high-star hotels.

-   **In the "Great Clearance" era, quality existing assets are nearing saturation**

Looking back in history, high-star hotels were once tools for real estate companies to acquire land and enhance residential prices in the area. According to CRIC data, by the end of 2021, only 15 of the top 100 real estate companies in the country had not engaged in hotel business; real estate companies have become one of the "main forces" in the current intensive sale of high-star hotels. JLL data shows that by 2025, about 24% of hotel asset sellers in the country will be real estate developers, second only to state-owned enterprises.

In contrast to previous trends, the "big share" of hotel asset clearance in 2025 has fallen to state-owned enterprises. In 2010, the State-owned Assets Supervision and Administration Commission issued the first round of "retirement orders," requiring non-core state-owned enterprises to fully divest from hotel businesses. By the end of 2025, more than 2,100 hotels had been divested, completing 90% of the clearance task The 2026 Two Sessions proposed the goal of "ultimate clearance," which means that, except for a few specialized places related to national defense and foreign affairs reception, all non-core hotels, guesthouses, and market-oriented reception venues of state-owned enterprises will be completely withdrawn and transferred, bidding farewell to this fully market-oriented industry.

In addition, after 2000, with the development of the domestic economy and the improvement of the level of opening up, internationally renowned hotel brands such as Hyatt, Marriott, Shangri-La, and Hilton have flooded into the Chinese market, quickly occupying a place in the high-end hotel market in China with advanced management experience and mature brand operations; now, these international brand hotels have also entered a renewal cycle.

Sun Jian, Chief Development Officer of InterContinental Hotels Group Greater China, once stated that in the 40 years of development of the hotel industry in China, the first 20 years were government-driven, the second 20 years were real estate-driven, and now it must shift to investment-driven.

According to the "White Paper on the Renovation of Existing Hotel Assets in China" released by JLL, as the supply of new hotels slows down, the Chinese hotel industry, which has developed rapidly for over 40 years, is gradually entering the era of existing stock. In 2017, China's high-end hotels reached a peak, with the number of five-star hotels reaching 846; however, by the first quarter of 2025, this number had shrunk to 736.

These real estate hotels, hotels under state-owned enterprises, and the first batch of international brand hotels that entered the domestic market have sold off properties that were previously core assets with good locations, high star ratings, large volumes, and good quality during the "major clearance" period of the investment-driven transition in the hotel industry, which will inevitably lead to saturation of high-quality, high-priced hotels in the existing market.

-   **It's not that they won't buy, but they are returning to rationality**

This saturation has further fostered a wait-and-see attitude among buyers, with funds becoming cautious, and good properties facing the dilemma of "not being able to sell even at a discount."

Industry insiders told Space Secret that apart from the high financial threshold and cautious investment sentiment of buyers, the main reasons why large-scale, high-priced existing hotels cannot be auctioned off are as follows:

First is the operating costs and profit pressure. Large-scale hotels have high operating costs, including personnel salaries, equipment maintenance, and energy consumption. If the hotel's own profitability is weak or in a loss state, buyers will worry about needing to continuously invest a large amount of funds to maintain operations after taking over, and it will be difficult to achieve profitability in the short term, thus reducing their willingness to purchase.

Second is the imbalance between supply and demand in the market. During the past real estate boom, a large number of high-star hotels were built, leading to an oversupply in the market. Now, consumer demand is shifting towards cost-effectiveness and personalized experiences, reducing the attractiveness of traditional high-star hotels. Buyers are cautious about investing in new high-star hotels and are more inclined to choose assets with strong brands or significant renovation potential.

Third is the condition of the assets and potential risks. Some existing hotels have issues such as aging facilities, outdated decorations, property disputes, and debt problems. Buyers need to invest additional funds for renovations or to resolve legal issues, increasing transaction risks and costs, which deters buyers Finally, there is a lag in market expectations and price adjustments. Sellers often set the starting price based on historical costs or past valuations, without fully considering the actual market demand and the current value of the assets. Even with multiple price reductions, if the price remains above the psychological expectations of buyers or fails to reflect the true value of the assets, it is difficult to attract buyers.

In summary, the difficulty in auctioning large-volume, high-priced existing hotels is the result of a combination of factors such as capital, operations, market conditions, and asset status, reflecting the current shift in the hotel market from scale expansion to quality improvement and differentiated competition.

However, the changes brought about by this adjustment are structural rather than recessionary. On one hand, opportunities for large transactions and high-profile assets are decreasing; on the other hand, cash flow pressures are prompting some owners to release assets at more reasonable prices, creating a rare "buyer's window."

Under the combined influence of these factors, in 2025, the Chinese hotel investment market is showing a clear characteristic of rational price return. As of November, the transaction volume of hotels in mainland China is approximately 11.065 billion yuan, a decrease of 27.1% compared to the same period in 2024, behind which is a profound shift in investment logic.

## **"Small and Beautiful" is Becoming a New Consensus in Hotel Investment in the Era of Existing Stock**

Looking back at the hotel auction transaction cases since 2026, properties priced at 300 million yuan or even below, located in non-first-tier cities, are becoming the focus of transactions. Behind this shift is a deep adjustment in investment logic and risk preferences.

-   **High Investment Value of "Small and Beautiful" Properties**

As an indispensable "backbone" of existing hotel assets, single or chain hotel properties located in non-first-tier cities possess significant investment value.

First, there is substantial room for value enhancement of existing assets. Non-first-tier cities have a large number of old or poorly managed hotel assets, which can significantly improve operational efficiency and profitability through renovation, brand upgrades, and innovation in business formats. Capital can achieve value reconstruction and obtain high returns by acquiring and renovating these undervalued assets.

Second, there is regional economic growth and the rise of cultural tourism demand. In recent years, the economic vitality of non-first-tier cities has increased, and the cultural tourism industry has developed rapidly, with a significant rise in the number of tourists and frequency of consumption. Many county towns and emerging cities have become tourism hotspots, driving up hotel demand and providing a stable customer base for hotel operations, enhancing the cash flow stability of the assets.

Finally, there is policy support and infrastructure improvement. The government promotes coordinated regional development and increases investment in infrastructure construction in non-first-tier cities, such as improving transportation networks and supporting cultural tourism projects, which enhances the attractiveness and accessibility of non-first-tier cities, creating favorable conditions for the development of the hotel industry and attracting capital attention.

Currently, the hotel market in first-tier cities is nearing saturation and is highly competitive, while the hotel market in non-first-tier cities has not been fully developed, with relatively relaxed competition. Research indicates that capital can further meet local consumption upgrade demands by precisely targeting niche markets, such as mid-to-high-end boutique hotels and themed hotels, avoiding homogenized competition with first-tier cities.

-   **Transformation of Hotel Group Existing Assets** When capital maintains a wait-and-see attitude towards the continuously declining prices of core hotel assets in first-tier cities, the investment in "small and beautiful" hotels has become a consensus among investors. In response to this trend, major hotel groups are launching targeted brands and strategies.

Huazhu Group's Hanting Express focuses on the renovation of existing economy hotels, adopting a strategy of "light, fast, economical, and profitable" to reduce renovation costs through modular renovations and rapid construction. Xingcheng Hotels positions itself as a mid-range renovation brand, employing a strategy of "light renovation, high efficiency, and localization," retaining the original structure of the property while integrating local cultural elements through soft decoration upgrades and partial renovations. These models are suitable for the demand of small-scale properties in non-first-tier cities and can quickly enhance property competitiveness.

Jinjiang Hotels (China) is also advancing on two fronts. Yujinxiang Hotels targets the mid-to-high-end existing market, focusing on the quality and experience of property renovations, suitable for properties with certain history or characteristics in non-first-tier cities, enhancing property value through renovations to attract mid-to-high-end clientele. IU Hotels is positioned for economy-level renovations, characterized by low-cost and rapid renovations, suitable for small-scale economy hotels in non-first-tier cities, enhancing operational efficiency through standardized renovations.

ShouLvyu Jia launched Wanxin Zhige, focusing on mid-to-high-end selected service renovations, providing one-stop renovation solutions, emphasizing the functionality and comfort of properties to adapt to small-scale mid-to-high-end properties, enhancing operational capabilities and market competitiveness through renovations.

Including but not limited to the aforementioned hotel brands, various renovation strategies and positioning are being employed to target the market for small-scale property renovations in non-first-tier cities, providing diversified solutions, and attempting to help owners enhance property value and market competitiveness in this increasingly focused market for small-scale existing hotels in non-first-tier cities.

As large-scale high-priced assets repeatedly fail to sell at auction, "small and beautiful" is becoming a new consensus in hotel investment during the era of existing assets, and behind this consensus is a rational return of the industry from scale worship to efficiency priority.

However, this shift is not the end but the prologue to the reconstruction of existing value. With the continuous improvement of infrastructure in non-first-tier cities, further penetration of cultural and tourism consumption, and the standardized output of renovation capabilities by hotel groups, "small and beautiful" properties may evolve from the current "safe choice" to a "value lowland."

In the future, the ability to establish a scaled operational network in a dispersed market and to transform single-point renovation experiences into replicable asset appreciation models will determine the positioning of players in the new cycle. As capital and brands jointly bet on "small and beautiful," the existing game of China's hotel industry may be opening up new imaginative spaces

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