hotel market

Consumers in China plan to pay up when it comes to hotels, a Morgan Stanley survey found in late January.

The research points to growing demand for high-end and luxury hotels in China now that the country has ended domestic travel restrictions — and a Covid wave has passed.

“Consumers appear more willing to increase spending on hotel accommodation for their trips vs. pre-Covid, with 20% citing it as their top travel expense compared to 17% each in 2017 and 2020,” Morgan Stanley analysts said.

The report released Tuesday cited a proprietary survey from Jan. 29 to 31 of about 2,000 consumers across China’s larger cities in 19 provinces.

The report said that “37% of the consumers prefer higher star-rated hotels, up from 18% in 2020, with higher-income consumers showing even stronger appetites for luxury hotel stays (47% vs. 31% in 2020).”

“Mentions of budget hotels and mid-range hotels fell universally.”

Consumers’ penchant to save soared to record highs during the pandemic. Retail sales lagged overall economic growth in China in the face of uncertainty about future income.

Morgan Stanley said the survey found a similarly muted appetite for shopping, despite it ranking as the top expense for travelers. The shopping budget for travelers was 9,405 yuan ($1,387), slightly higher than in 2020 but still well below the 2017 level of 13,782 yuan, according to surveys over the past few years.

“The majority of the consumers expect to keep their overall spending unchanged in the next six months (70% vs. 73% last month),” the report said.

But 24% of respondents said they planned to spend more to “upgrade their lifestyles” — an attitude that typically results in buying higher quality products. That’s up from 20% a month ago, the report said.

“The increase in the number of