A total of 188 star-rated hotels in eight regions in China, including Beijing, Jiangxi and Sichuan, have lost their star ratings. The majority of these hotels had their star ratings revoked while a small number of hotels voluntarily relinquished their star ratings.

China’s provincial tourism boards have published the list of hotels of one-star to four-star ranking that have lost their ratings. Five-star hotels are not in the list as the review and evaluation of five-star hotels must be made by the China Tourist Hotel Star-Rating Committee.

Star rating is usually revoked when hotels fail to maintain the standards on facilities, fire safety, service standards, energy-saving controls or fail to participate in the star-rating review held every three years. On the other hand, some hotels voluntarily apply to relinquish their star rankings.

One industry observer said business from government organizations in star-rated hotels has dramatically decreased after the implementation of the State’s “Eight-clause Measure” aimed at stamping out corruption.

Since 2013, spending on conferences and related accommodation and dining at top star-rated hotels has noticeably been decreasing and many top star-rated hotels in China have voluntarily lowered their star rankings in an effort to appeal to mass consumers. Newly opened luxury hotels have also declined star rankings.

Suzhou-based Jiu Zhou Huanyu Commercial Plaza’s deputy general manager Shihong Fang thinks that star ratings are useful for regular consumers to identify a hotel’s service quality when making their choice. However, hotels that are dropping their star rating are doing so mainly because they want to continue to court the business of government officials.

For hotels in the second- and third-tier cities, government business constitutes the bulk of the business and is helps to build the hotel’s brand image while pulling in other clientele. However, as the State anti-corruption drive gains momentum, luxury hotels are no longer qualifying under government procurement guidelines.

Another industry observer said hotels that have lost their star rating will no longer be under the jurisdiction of the China National Tourism Administration (CNTA) and can thus save on manpower and costs for subjecting themselves to inspections and audits. Mr. Fang dismissed the speculation, as such cost is minimal. The more critical reason, he thinks, is that hotels of high star ratings have no real competitive advantage while hotels that are not bound by the star rating system enjoy more flexibility in market positioning and pricing. This has dampened   enthusiasm in the star rating system for a growing number of hotels.(Translation by David)