Visa-free travel, rising foreign visitors boost luxury hotel growth in China

China’s luxury hotel sector has unlocked new avenues for business growth, fuelled by a boom in inbound tourism and a growing number of foreign business travellers and holidaymakers who favour high-end accommodation. International tourists generally spend more than domestic ones, except for wealthy Chinese travellers. Most visa-free visitors to China are from developed countries with much higher living costs. Even spending at their usual levels, they would generate considerable revenue for Chinese businesses, according to Yong Chen, an associate professor at EHL Hospitality Business School in Switzerland. The Hongkong and Shanghai Hotels, owner and operator of The Peninsula Hotels with operations in Beijing and Shanghai, has seen a significant increase in overseas guests supported by China’s visa-free policies. At the Peninsula Shanghai, for example, cancellations by guests from Gulf states due to limited flight capacity had been offset by an increase in luxury travellers from other countries visiting China under the visa-free policies, the group said. “Shanghai has shown significant growth in international visitors, and Beijing is seeing a strong trend in diplomatic, business and returning leisure travellers,” said Benjamin Vuchot, CEO of The Hongkong and Shanghai Hotels. At The Peninsula Beijing, the guest mix is now evenly split between domestic and international travellers. The group said it was seeing a healthy combination of high-level business delegations and returning leisure visitors from the US, the United Kingdom, Australia and Mexico. This trend has been bolstered by China’s continuous optimisation of visa policies. The country has introduced unilateral visa-free access for 50 countries and expanded reciprocal visa-waiver arrangements with 29 nations. China would further refine its cross-border travel and visa-free policies, the Ministry of Foreign Affairs said earlier this month. Last year, 30.1 million foreign nationals entered China under visa-free policies, accounting for 73.1 per cent of all inbound foreign visitors and marking a 49.5 per cent year-on-year growth, according to the National Immigration Administration. “While the hotel industry is certainly the largest beneficiary of China’s relaxed tourism policies, inbound tourists account for a very small fraction of China’s hotel demand and are unlikely to fundamentally reshape the sector,” Chen said. “This is determined by the enormous size of the Chinese market and its economy that is not and will not be dependent on tourism. China’s hotel industry largely relies on domestic demand.” China’s hotel sector’s revenue per available room had ended a two-year decline and returned to growth, with positive momentum expected to continue for the next few quarters, according to a report by Morgan Stanley in February. Inbound and outbound travel are set to become two synchronised engines. The report projected that inbound tourism would contribute 16 per cent of China’s tourism revenue in 2030, up from 12 per cent in 2025. It also forecast that tourism-associated demand, including inbound travel, would account for 6.7 per cent of gross domestic product by 2030, compared with 4.8 per cent in 2024, as it returned to pre-pandemic levels. Megacities including Beijing, Shanghai and Shenzhen are the biggest beneficiaries of the trend, as they are key tourist hubs and gateways to China. As international visitors travelled to smaller cities, demand for midscale, economy hotels and guest houses was also growing, according to Chen. At Amanyangyun, a hotel in Shanghai operated by Singapore-based Aman Resorts, rooms feature traditional Chinese design. The hotel provides cultural activities including calligraphy, tea ceremonies and incense art, which have drawn high-net-worth travellers from South Korea and Europe. Many guests stayed for more than three nights, longer than the average length of stay, according to the hotel.