1. Liu Bin, who ran guesthouses in Dali for over a decade, saw a sharp downturn during the 2025 National Day holiday: rooms were not full and he could not raise prices, unlike in past years. [para. 1][para. 2] After recovering pandemic losses during the 2023–2024 tourism rebound, he decided to exit the business, keeping one property for long-term rentals, where monthly rent per room fell from 2,000 yuan ($300) to 1,200 yuan; only six of nine rooms are occupied. [para. 3][para. 4]
2. Liu's retreat reflects a broader squeeze on China's minsu sector: a post-pandemic investment rush intensified competition just as travelers became more price-conscious. Bookings are rising on major platforms, but falling rates lengthen the time needed to recoup investments and are prompting some operators to quit. The pressures are uneven—established destinations face crowded markets while smaller cities still attract investment, and properties offering distinctive experiences remain viable. [para. 5][para. 6]
3. Minsu are small accommodations using local homes or idle resources, with owners helping guests experience local nature, culture and daily life. In Dali, outside investors have leased and renovated properties to capture demand for its slower-paced lifestyle, especially after the 2023 television drama "Meet Yourself," focused on guesthouse operators, boosted the destination's popularity. [para. 8][para. 9]
4. Dali prefecture, home to 3.32 million residents, recorded 121 million tourist visits in 2025, with operating guesthouses reaching 7,007 by end-July 2025, up from 6,067 a year earlier. [para. 10] But visitor growth slowed sharply, from 67.4% in 2023 and 15.5% in 2024 to 10.4% in 2025, while tourist spending fell to 139.4 billion yuan from 171.7 billion yuan in 2024. [para. 11] Nationwide, new minsu registrations totaled 191,000 in 2023–2024, exceeding the 162,000 registered businesses at end-2022; the total reached 375,000 by end-2025. [para. 13]
5. Expansion continues in newer destinations. A villa owner near Yaohu Town in Yixing invested nearly 1.5 million yuan to convert her three-story villa into a guesthouse, then cut rates and sought income beyond room rentals, calling the investment somewhat impulsive. Housing market pressures are adding supply, as owners of underused apartments and seaside homes turn to vacation rentals, sometimes hoping to offset losses on property investments. [para. 14][para. 15][para. 16]
6. Occupancy data show the squeeze: in 2025, guesthouse occupancy hit a six-year high of 34.8%, but the average daily room rate fell nearly 3.5% to 484.65 yuan, a six-year low. [para. 20] Younger, price-sensitive customers dominate the market: on Muniao, 78% of users are under 35 and 86% of bookings cost less than 400 yuan per night; Tujia's figures show over four-fifths of bookings below that threshold. [para. 19]
7. Pressure reaches even upscale destinations like Moganshan. Wang Ruiwen, owner of Lingdi Art Guesthouse, lowered room rates and saw corporate events decline from three or four per quarter to one, and is considering closing when his lease expires. [para. 21][para. 22] Budget hotel chains are encroaching—H World's Hi Inn can offer rooms for 80–90 yuan per night with predictability in cleanliness, safety and service. [para. 23][para. 24] Guesthouses retain advantages for families and groups seeking multiple bedrooms, kitchens and private space, but urban apartment-style rentals are especially vulnerable. [para. 25]
8. Exiting is difficult. Liu said many Dali operators would willingly hand over their businesses at the right price, but few find takers. At one property, nightly rates fell from 500 yuan to 200 yuan, and the lease-transfer price was cut from 170,000 yuan to 110,000 yuan, yet it remained on the market for months. "Investors tend to chase a rising market rather than buy into a downturn," Liu said. [para. 26][para. 27]
9. Photogenic design alone offers limited protection, since competitors can quickly copy popular styles. A Fliggy representative said properties sustaining higher rates and stable occupancy typically offer scarce locations, distinctive themes, locally rooted activities or consistently strong service. [para. 29][para. 30] During the 2026 National Day holiday, Meituan listings carrying distinctive-feature labels commanded average nightly rates about 20% above the platform average, and in Jingdezhen, special-experience properties achieved three times the occupancy of ordinary guesthouses. [para. 31]
10. The industry is shifting from expansion toward consolidation and quality, according to Mu Xiaoxue of the China Tourism Association: "Some people are leaving, but genuinely good products are still expanding." She cautioned that running a guesthouse is not a high-profit business—prospective operators must calculate returns, identify their customers and establish what distinctive experience they can offer. [para. 32][para. 33]
AI generated, for reference only
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