Prices have plunged from 3,200 to 800. Summer tourism is booming, yet the homestay owners who rely on internet celebrity filters have suffered staggering losses?
The tourism market is booming, and logically, homestay operators should be reaping huge profits. But the reality is that homestays across the country are collectively experiencing a downturn. With tourism so popular, why are homestay owners losing money? Ba Mei spoke with several homestay operators and independent travelers to hear what they have to say.
This summer vacation, the tourism market is extremely hot.
Data from Fliggy shows that the popularity of summer travel has increased by over 40% year-on-year, bookings from family traveler groups have risen by 31% year-on-year, and bookings from college students traveling have surged by 58% year-on-year.
Data from Ctrip shows that the number of family tourist reservations nationwide has increased by 13.6% year-on-year.
Data from Tongcheng shows that booking popularity for summer family travel products has risen by 45% year-on-year. According to estimates from China State Railway Group Co., Ltd., the national railway system is expected to handle 1.01 billion passenger trips throughout the summer vacation.
Against the backdrop of a thriving tourism market, logically, homestay operators should be making substantial profits. However, the reality is that homestays nationwide are going through a collective slump. The average occupancy rate of homestays across the country is only 36%, with the average room price dropping to 367 yuan. 64.55% of homestays have an annual occupancy rate below 40%.
With tourism so prosperous, why are homestay owners losing money? Ba Mei chatted with several homestay operators and independent travelers to find out their perspectives.
1. Two homestay owners share their stories: All the money earned in peak season goes to covering losses in the off-season
Ba Mei first found Lao Zhang in Mogan Mountain.
Lao Zhang's homestay is halfway up Mogan Mountain, with 8 rooms, a swimming pool, and a viewing terrace. It opened in 2019 with an investment of over 4 million yuan. In the first three years, business was incredibly good: room prices on summer weekends stayed stable between 2,800 and 3,200 yuan, and you couldn't book a room without reserving at least half a month in advance. Lao Zhang said: "Back then, guests would take photos as soon as they arrived and post them on WeChat Moments, and when they left, they would tell me 'I'll come back again'."
Lao Zhang entered the industry during the homestay investment boom around 2015. In those years, renovating an old house in Mogan Mountain would easily cost 5 to 6 million yuan. Boutique design homestays with infinity pools and mountain-view floor-to-ceiling windows had weekend nightly rates firmly set at 2,800 to 3,200 yuan. Many white-collar workers from Shanghai, Hangzhou, and Suzhou would rather cut back on dining and entertainment expenses to spend a large sum staying in the mountains, just to take a set of idyllic mountain photos for their WeChat Moments.
"Back then, we weren't selling accommodation — we were selling 'poetry and distance'," Lao Zhang said.
The turning point came in the second half of 2024: the idea of spending three or four thousand yuan to go to the mountains and relax on weekends suddenly became "out of step with the times".
In July, he opened his management backend and saw that the occupancy rate for the next seven days was less than 40%. He cut the room price from 2,800 yuan to 800 yuan, a drop of over 60%.
Some travelers shared comparison order screenshots: last summer, a mountain-top king room that cost 3,200 yuan was priced at just over 800 yuan for the same period this year, with a free afternoon tea for two included.
"If I don't cut prices, even fewer people will come," Lao Zhang said.
"Calculated over the whole year, the occupancy rate is just over 30%. We can be fully booked in the peak season months, but in the off-season, there are often no guests at all. Rent is 300,000 yuan a year, labor and utilities cost 200,000 yuan, and OTA platforms take a 15% commission. Fixed monthly expenses are 50,000 to 60,000 yuan. All the money we earn in peak season goes to filling the gaps from the off-season."
"Last year, I spent nearly a million yuan on renovations," he said with a bitter smile. "Back then, I thought the pandemic was over, so I poured all my savings into redecorating, figuring the market would bounce back. But now, I haven't even recouped the renovation costs, and room prices have dropped by two-thirds first."
Later, Lao Zhang said helplessly:
"If you don't cut prices, you wait for death; if you cut prices, you rush toward death. When you lower your prices, the place next door cuts even more. When you offer free afternoon tea, others throw in free dinner and shuttle service. I asked around in our industry group, and the more I heard, the colder I felt."
"Have you thought about transferring the homestay away?" Lao Zhang gave a wry smile: "I've listed it for three months. Seven or eight people came to see it, but none of the deals went through. In the past, a homestay with these conditions would start at 3 million yuan in transfer fees and sell within a week. Now, no one wants it even if you offer to pay them." Multiple homestays in Mogan Mountain have already put up "0-yuan transfer fee" signs.
Finally, Lao Zhang said a poignant line:
"There's no fewer travelers, but they just don't stay in homestays anymore."
After saying goodbye to Lao Zhang, Ba Mei got in touch with Ruo Ruo in Dali.
Ruo Ruo has been running homestays in Dali for three years and manages 15 properties. In previous summer vacations, travelers would start making reservations one after another as early as June, and many homestays would already be fully booked by early July. This year, the summer vacation has already started, but the peak season that was supposed to bring full bookings has been slow to arrive.
"The booked occupancy rate for mid-to-late July is only 10%," Ruo Ruo's voice sounded a bit hoarse.
There are over a hundred homestays in her residential compound. She's not the only one feeling anxious — the neighboring operators are all panicking. Ruo Ruo said the owner next door used to run a homestay in Xishuangbanna and only moved to Dali this year. After July began, he barely received any orders at all, completely confused about what was going on.
Ruo Ruo recalled that when she first arrived in Dali in 2023, there weren't that many homestays in the compound. In her first year, she earned a decent profit, so in the second year, she took over more than 30 properties. Ruo Ruo said, "In the second half of 2024, more and more new homestays opened, and pricing kept getting compressed lower and lower."
Ruo Ruo's homestays follow a mid-tier pricing strategy: around 200+ yuan on weekdays, rising to 500+ yuan in summer vacation, but actual selling prices have kept dropping over the past two years. This year, travelers have become far more price-sensitive. "There are quite a lot of people inquiring on social media every day — a hundred people asking about prices in a single day — but in the end, only one or two transactions usually close."
This year, she even encountered a customer who directly snapped at her pricing, saying, "Are you crazy about money?"
"I've struggled with whether to cut prices or not. Then I realized — cutting prices won't help, the whole street is slashing rates. Instead of engaging in a price war, I might as well think of other ways out."
"Aren't the platform commissions getting more and more aggressive? In the past, commissions were 7% to 8%, now they start at 12% to 13%. To get a better ranking, you have to buy extra traffic, which costs hundreds of yuan each time, with no guarantee of a transaction. Out of the room fee guests pay, the platform takes a big chunk, leaving very little for us."
"How many homestay owners are in the same situation as her?" Ruo Ruo said over 80% of homestays in Dali are currently losing money. A peer who runs a homestay in Shuanglang invested several million yuan just in renovations, but doesn't even dare to price rooms at 500 to 600 yuan in peak summer, only charging 400 yuan. "If you don't charge that price, you won't get any guests at all."
Complaints about Dali homestays are becoming increasingly common on social platforms. "Photos don't match the actual property" and "The owner doesn't care at all" have become common phrases. One traveler posted: "A homestay costing over 1,000 yuan a night had a stench coming from the bathroom drain. When I mentioned it to the owner, he said 'It's the mountains, that's normal'. The pictures showed an infinity pool facing Cangshan Mountain and Erhai Lake, but when I got there, I found a new building had been built right in front of the pool, blocking all the views." There were more than 700 comments under that post: half said "I've had the same experience", and the other half said "That's why I never stay in homestays anymore".
2. Two travelers admit: Internet-famous homestays offer poor value for money, and no one wants to keep up the facade anymore
Ba Mei found Xiao Wang, a 28-year-old designer working in Shanghai, traveling with his girlfriend. In previous years, every summer they would stay two nights in Mogan Mountain, filling their WeChat Moments with photos of mountain-view floor-to-ceiling windows. This year, they didn't go.
Xiao Wang said: "Back then, I thought spending 3,000 yuan for one night, taking a few photos to post on WeChat Moments, made me feel like I was living a refined life. Now looking back, I was just paying for a piece of proof that 'I'm doing well'."
"The place I stayed last year had a beautiful swimming pool, but the water was freezing — I only swam a couple of strokes before getting out. If I wanted to go out for dinner at night, it took 20 minutes to drive down the mountain. When I opened the window in the morning, there was indeed a mountain view, but I could also hear every word the people in the next room were saying."
This summer vacation, he took his girlfriend to a county town near Zhejiang, staying at a farmhouse that cost over 200 yuan. The owner was a local. In the evening, he set up a table in the yard, cooked four dishes, and invited them to eat together.
Xiao Wang said: "That meal was the most comfortable one I've had all year. The owner told me his family had lived in the mountains for generations. They used to grow tea, but later all the young people went to work in cities, so no one took care of the tea plantations and they turned it into a farmhouse. He said 'You city folks love coming to the mountains, and us mountain folks want to go see the cities — neither side has it easy'."
"Will you go back to Mogan Mountain next time?" Xiao Wang thought for a moment:
"If I just want to spend a weekend and get some fresh air, a farmhouse is more than enough. If I want to post on WeChat Moments to prove I'm living a good life, then I'd probably still go to Mogan Mountain. But I don't need that kind of proof anymore."
The other traveler is Sister Li, a mom from Shanghai, with a third-grade elementary school son. Last summer vacation, she took her child to Dali and stayed there for a few days. This year, she chose a theme park near Shanghai, with accommodation, dining, and entertainment all in one place, spending less than 2,000 yuan for a two-day, one-night trip.
"Staying in those Dali homestays with a kid is pure misery. Kids can't stay still in the room, and there's nothing fun to do outside. Spending over 1,000 yuan for one night just to look at a mountain view? Not worth it."
"Last year, when my kid got to the Dali homestay, he started throwing a tantrum saying the room was boring and he wanted to go home. We did go to the swimming pool, but the water was cold — he only stayed in 10 minutes before coming out. The next day, I said I'd take him hiking, but he only walked 100 meters before refusing to go on, saying he wanted to go back to the hotel and watch cartoons."
"Over 1,000 yuan was exchanged for three sentences — 'It's not fun', 'I want to go home', 'Watch cartoons'."
"Back when I went to Dali, all I could think about was: where to take the kid hiking, where to take photos, what captions to write for WeChat Moments. This time at the theme park, I didn't think about any of that. The kid queued up and played by himself, while my husband and I sat on a bench scrolling through our phones, each doing our own thing, no one bothering the other."
"I told my husband this is what a real vacation feels like. The previous trips weren't vacations, they were just giving ourselves extra work to do."
"This summer vacation, several of my mom friends simply didn't travel at all. Some took their kids to visit all the museums, libraries, and science and technology museums in the city. The kids still got to broaden their horizons, and it barely cost any money. In the past, everyone would compete over whose kid had traveled to farther places and stayed in more expensive hotels, posting on WeChat Moments to see who got the most likes. Now no one's keeping up that facade anymore," Sister Li said.
3. Summer tourism is booming, but homestays are losing money — what's the reason?
The overall tourism market is still the same size, and there are no fewer travelers. But homestay owners' wallets are getting emptier.
There are essentially two reasons behind this.
First, severe oversupply.
There are over 2,000 registered homestays in Mogan Mountain, with the number of beds doubling in five years.
In Dali Prefecture, there are 7,007 homestays, with 68,300 rooms and 103,200 beds. The average occupancy rate of over 7,000 homestays across the prefecture is only 40%-50%, far lower than the 80% level in previous years.
In the old town of Dali, king rooms without air conditioning are even selling for as low as 50 yuan a night.
Currently, the total number of homestay-related enterprises nationwide has exceeded 403,000, over 20 times the figure five years ago.
Lao Zhang said a very straightforward line to Ba Mei: "In the past, 10 guests fought over one room. Now, 100 rooms are fighting for one guest."
The price cuts in Mogan Mountain aren't being done by one or two operators — it's the entire industry squeezing out bubbles. You sell for 1,200, I cut to 1,000, others go even lower to 800, and the premium margin has been completely wiped out.
Second, consumers have changed.
It's not that people aren't traveling anymore — it's that the way they travel has changed.
What Xiao Wang said about "not needing that kind of proof anymore" and Sister Li's point that "what kids want isn't seeing new things, it's having fun" actually mean the same thing — travelers' spending logic has shifted. In the past, people paid for "things I can show to others", but now they pay for "things that actually make me feel good".
Data from Tongcheng Travel shows that search popularity for summer study tours in 2026 has risen by 143%, and booking popularity for "Travel along with Textbooks" has increased by over 60% year-on-year. Travelers are no longer satisfied with "staying one night at an internet-famous homestay to take a photo". They take their kids to see the places written about in their textbooks with their own eyes, make a craft by hand in intangible cultural heritage workshops, find a place to stay and experience the local life slowly — staying for a whole week or even half a month.
Money is still being spent, but the way it's spent has completely changed. Travelers are no longer paying for "internet-famous filters":
The era when you could sell homestays just with WeChat Moments photos is over