Losing five-star rating to win more business

Fast increase in the number of five-star hotels in China in the past few years, to some extent, is a result of the Chinese government’s luxurious receptions. It is natural that some five-star hotels will now insist on giving up their five-star rating and stay low to survive the winter of anti-graft campaign launched by the Chinese government, says an article in the Beijing News. Excerpts:

Number of five-star hotels in China has dropped to 804 from 814 just in the past nine months. All of the 10 hotels in the gap chose to give up their five-star rating voluntarily. Five of them are government reception hotels earmarked by local authorities.

The immediate cause behind the downgrading is a new rule passed by the central government last month that said that government reception, activity and conference can only be held in four-star hotels and below, to save money.

The number of five-star hotel had risen rapidly in recent years. Some local governments of less-developed regions regard five-star hotel a symbol of local prosperity. Some five-star hotels have local governments as their stakeholders. Were it not for the governments’ expensive expenditures on various kinds of receptions, meetings and activities, some five-star hotels cannot make ends meet at all, especially in the poorer regions.

But voluntary downgrading by hotels is not to help the government to be frugal, but a new way to win businesses from the governments.

The central authority must strictly rule the upper limits of expenditures of governments, carry out effective supervision and auditing, and require the authorities to timely disclose their spending to the public. Or, a four-star hotel today may not be cheaper than a former five-star hotel.