China's hospitality industry trying new ways to boost spendingーNHK WORLD-JAPAN NEWS

Key Concepts:

• Economic slowdown in China
• Sluggish personal consumption
• Decline in hotel demand
• Struggling hospitality and food & beverage industries
• Innovative strategies to boost consumer spending
• Selling food by weight
• Live social media promotion
• Immersive dining experiences
• Traditional Chinese royal costumes
• Royal banquet experience
• Attracting foreign tourists
• Cultural tourism

Challenges in China's Hospitality and Food & Beverage Industries

Amidst China's economic slowdown and a general sluggishness in personal consumption, the hotel and restaurant sectors are facing significant challenges. In Chongqing, a city in inland China, a noticeable decline in demand has led to the closure of several hotels, with one establishment shutting down around February. This situation is not isolated to Chongqing; the industry across China is experiencing a tough period.

Industry Statistics and Trends:

• Hotel Closures: The number of starred hotels in China saw a substantial drop of 30% in the five years leading up to last year.
• Occupancy Rates: Room occupancy rates have fallen below the 50% mark, indicating a significant underutilization of hotel capacity.

Innovative Strategies for Survival

To combat these declining figures and boost consumer spending, hotels and restaurants are implementing novel approaches.

1. Luxury Hotel's Food-by-Weight Service:

• Concept: One luxury hotel has introduced a unique service to increase sales, particularly targeting non-guests.
• Execution: Daily around 4:00 PM, chefs bring out a selection of over 40 elaborate dishes, including roast goose and stewed pork and beef, to the hotel's parking lot.
• Pricing: The food is sold by weight, with prices reportedly set at approximately half of what is charged in the hotel's Chinese restaurant. This strategy aims to make the hotel's offerings more accessible and affordable.
• Promotion: Sales are actively promoted through live streaming on social media platforms, leveraging digital channels to reach a wider audience.
• Consumer Response: Initial feedback from a customer indicated that while the hotel's offerings are appealing, the usual prices are prohibitive, highlighting the impact of the new pricing strategy.

2. Immersive Dining Experiences:

• Target Audience: The food and beverage industry, also experiencing stagnating sales nationwide according to industry associations, is turning to immersive dining to attract customers.
• Chongqing's Hot Pot Culture: Chengdu, in Sichuan province, renowned for its rich food culture, offers specialty spicy hot pot for as little as $6.5. However, a new trend of immersive dining is gaining traction.
• Royal Banquet Experience: At one restaurant, customers can don traditional Chinese royal costumes and even have their hairstyles done. The primary selling point is the experience of attending a royal banquet.
• Pricing and Value Proposition: While the main dish remains hot pot, the extraordinary setting elevates the price to around $100. This price point is justified by the "luxurious feeling of being a princess."

3. Attracting Foreign Tourists with Cultural Immersion:

• Global Appeal: The immersive service is also being utilized to attract international visitors. Shanghai, in particular, is seeing a recovery in foreign tourism, with numbers expected to exceed 6 million this year, nearing pre-pandemic levels.
• Shanghai Restaurant Case Study: A restaurant in Shanghai offers foreign tourists the opportunity to change into elaborate, traditional Chinese outfits.
  • Tourist Experience: A French tourist described the outfit as "very traditional" and felt "very pretty," acknowledging it was "a bit heavy" and unfamiliar but looked "really nice."
  • Cost: The experience, including the meal, costs approximately $130.
  • Demographics: On a particular day, the restaurant hosted about 100 guests, with at least 10% being overseas tourists.
• Motivation for Foreigners: The restaurant's management believes that foreign customers are keen to learn about Chinese culture and traditions. They aim to "put on a good show" to "liven things up" for these visitors.

Conclusion and Takeaways:

China's hospitality and food & beverage industries are actively responding to economic pressures and declining consumer spending by innovating their service offerings. Strategies such as selling food by weight at reduced prices, leveraging social media for promotion, and creating immersive cultural dining experiences are being employed. These initiatives aim to attract both domestic and international customers, with a particular focus on providing unique cultural experiences for tourists. By serving up these innovative services, the industry hopes to stimulate demand and achieve a rebound in consumption.