Why China’s luxury hotels are selling street food to survive
Catering at luxury hotels typically involves high-end banquets and formal entertainment, with exquisite decor and masterfully crafted dishes often seen as worth the high price tag.
But for many consumers in China, that is changing.
In July, the five-star Zhongwu Hotel in Changzhou, Jiangsu province – ranked second among 10 luxury hotels in the city on Trip.com – surprised observers when it launched a street vendor service offering budget meal boxes prepared by its catering team.
“You must first solve the problem of survival. If you can’t even solve your own problems, what else can you talk about?” said Chen Yonghua, Zhongwu Hotel’s manager.
The decision reflects a sluggish business environment for China’s high-end hospitality sector, as cautious consumers tighten their belts amid
concerns about a slowing economy.Priced between 20 yuan and 100 yuan (US$3 and US$14), the boxed meals are a far cry from the several thousand typically charged for a banquet table. Offerings include popular night market favourites like braised dishes, spicy crayfish, a selection of dim sum and other delicacies.
The move is part of the hotel’s efforts to weather mounting challenges facing the industry.
According to Hotel House, a Chinese data provider offering insights on hotels, the average room rate in mainland China was 118 yuan in 2024, a year-on-year decrease of 9.7 per cent. Occupancy fell to 58.8 per cent, a 2.5 per cent decline year-on-year.
Catering services – another pillar of hotel revenue – are also shrinking. Data from the Beijing Hotay Grand Ceremony Hotel showed that in 2024, full-service upscale hotels earned an average of 10.21 million yuan (US$1.4 million) from catering – down from the 12.37 million yuan recorded in 2023 and a 38.3 per cent decline from 2019.
Despite government efforts to spur domestic spending, uncertainty about the future and declining salaries have pushed consumers towards affordable options over luxury.
In megacities like Shanghai and Beijing, the fine dining sector has suffered a severe downturn in the past few years. High-end restaurants have closed one after another as diners tighten their budgets.
Zhongwu Hotel’s street vendor initiative quickly went viral this month. After just seven days, the hotel had set up 20 WeChat groups – each capped at 500 members – to share menus and operating hours. A behind-the-scenes video showed the executive chef, a Black Pearl award winner – China’s equivalent to the Michelin Guide – cooking fried rice later sold for just 28 yuan.
Fans have rushed to pre-order dishes, which typically sell out within five minutes. Each afternoon, the hotel hands out 100 tickets for on-the-spot purchases.
“If you are really keen on it, you should go and queue up before 3pm,” one WeChat group user said. The meal boxes start selling at 4:30pm.
According to a screenshot shared in a WeChat group, 33 hotels in Changzhou have also launched street vendors. That includes established luxury brands like Wenpu Hotel, Hilton and Fudu Qingfeng Hotel, all of which enjoy active social media engagement over the meal boxes.
Still, traditional banquet bookings at Zhongwu Hotel have fallen 65.7 per cent year-on-year, Chen said.
“Meeting normal operating expenses and covering employee compensation is necessary. Without it, businesses face trouble and lay-offs,” he said.
“As responsible businesses, we strive to fulfil our duties and not burden society.”
Dun Zhengnan, director of food and drink at Zhengzhou Tiandilisheng Hotel, said the street stalls are cost-effective and generate buzz.
“The sight of chefs from a five-star hotel cooking meals easily sparks curiosity among passers-by and spreads on social media, which is equivalent to doing ‘down-to-earth’ marketing at a low cost, attracting potential customers,” he said.
But the chill gripping high-end hotels continues to spread. In May, the Communist Party banned officials from excessive wining and dining, part of broader efforts to rein in wasteful government spending.
The policy, which bans alcohol at official work meals, has prompted strict enforcement by local authorities keen to show political loyalty.
A Guangzhou-based political science researcher, who declined to be named due to the sensitivity of the matter, said the ban on alcohol had significantly impacted the industry.
“While ordinary restaurants may benefit, high-end and business entertainment dining will be severely hit,” he said.
On Wednesday, Communist Party mouthpiece the People’s Daily praised the initiative to set up street vendors, calling it a “proactive attempt by businesses to revitalise idle resources”.
“Only by actively seeking change can businesses secure their footing amid fierce competition.”