Coffee-by-day and bar-by-night: Why are lifestyle hotels not performing well in China?

This article is from the WeChat Official Account "Space Insight", written by Wang Xiaoxiong, published with authorization from 36Kr.

Constant passenger flow from morning to night and a bustling, crowded lobby may be the shared vision of countless brand operators and property owners. Nowadays, a growing number of hotel brands are trying to integrate various business formats into their hotel lobbies to turn this "dream" into reality, and the most popular format of all is the "daytime coffee + nighttime bar" model.

However, is this format truly suitable for the Chinese market? Can it bring tangible benefits to property owners in the pan mid-range hotel market? And why are more and more such "daytime coffee + nighttime bar" setups turning into useless decorations in hotel lobbies?

01

Has the "daytime coffee + nighttime bar" setup in hotels almost become a useless decoration?

"A friend of mine runs a store with the daytime coffee + nighttime bar model. Its business looks decent, but there is barely any profit." When talking about the current operation status of commercial spaces with industry peers recently, she could not help but sigh at this format that has boomed in the past two years.

Digging deeper into the operation details of the store, she said that except for coffee and alcohol which are made on-site, all other snacks such as pizza, grilled wings, and marinated delicacies are ordered and delivered from nearby partner stores, with a small amount of rebates settled monthly. But a customer may sit for the whole afternoon after ordering one cup of coffee, or chat for hours after ordering one glass of alcohol, while the store only has a limited number of seats.

The store is not completely deserted, but this statement fully reflects the status quo of some daytime coffee + nighttime bar outlets: in the early stage, group-buying coupons support the passenger flow but bring meager revenue, while in the later stage, the low passenger flow cannot sustain the revenue at all. With no proper marketing strategies and no chain brand endorsement, the business just lingers on tepidly in this vicious cycle.

As hotel industry practitioners, however, we must observe that this trend of "folded space" is spreading across the whole industry. In the past two years, hotels, as one of the important commercial spaces, have been embedded with various business formats to realize monetization.

How far has the evolution of modern hotel lobbies gone?

They need to have Instagram-style check-in points for KOLs to take photos; they need to have dessert corners for children who love sweets; they need to have milk tea shops for commercial co-branding; they must have coffee shops to boost floor efficiency and gross profit margin; plus bookstores, flower shops, light food stores... Almost every "store" represents a certain "lifestyle" advocated by the corresponding brand.

Among all these formats, the most common one is "daytime coffee + nighttime bar", which is referred to by young people as "C (coffee) in the morning and A (alcohol) at night".

The vision of brands and property owners is as follows: in the morning, guests walk downstairs in hotel slippers, order a cup of freshly made iced Americano or steaming hot latte, sit in the lounge area of the lobby to read newspapers, work, or pair the drink with a breakfast set; at night, jazz music plays in the lobby, guests who have been busy outside for the whole day come back to the hotel lobby, shake a cup of freshly made cocktail in their hands, and chat and toast with each other.

Brand operators also hold this expectation: they can earn more revenue, maintain a good passenger flow, and achieve the high floor efficiency as promoted.

At first glance, a small number of hotels have indeed achieved this goal.

But the general reality is far more harsh. An industry insider told Space Insight that in the past two years, many lifestyle hotels launched by leading hotel groups that take "daytime coffee + nighttime bar" as their selling point have all turned this functional setup into a decoration, almost without exception.

This statement may sound arbitrary, but we must face this fact. On one hand, this track is growing rapidly. Data from Meituan shows that the annual growth rate of the entire daytime coffee + nighttime bar industry exceeded 40% in 2025, and the market size is expected to exceed 200 billion yuan by 2027. The explosive growth has led to severe overcrowding in this track.

On the other hand, there is a non-negligible store closure rate, as well as tough problems about whether the core consumer groups in the city, the location, and the corresponding lifestyle can support the daytime coffee + nighttime bar format. Blind layout will only lead to store closure.

This also applies to the hotel industry. Nowadays, when the concept of "lifestyle" is highly recognized by the industry, there are indeed some brands that have successfully practiced the daytime coffee + nighttime bar model in the market, but the real successful cases are extremely rare.

So why is this lifestyle not accepted by most markets and hotel consumer groups? Why can't the vision of some brands to arrange the daytime coffee + nighttime bar setup in the lobby be realized? What kind of hotels are suitable for this format after all? Apart from the daytime coffee + nighttime bar model, what kind of integrated formats should hotels really try?

This series of questions is worth alerting and discussing for all hotel practitioners today.

02

Executive lounges are downgraded, in-room coffee is moved out, but the corresponding customer groups are hard to find

To talk about "nighttime bar", we must first clarify the close relationship between alcohol and hotels; and when it comes to alcohol in hotels, we need to sort out the development of executive lounges.

The concept of executive lounge first originated in high-end business hotels in Europe and America. In 1954, to enhance brand image and competitiveness, Hilton Hotel Group renovated the 19th floor of the Chicago Hilton Hotel (formerly known as the Hilton Chicago Hotel) to create the world's first "Executive Floor" and its supporting executive lounge.

The original intention at that time was to provide a relatively private and quiet space for high-end business guests and administrative staff, integrating office, rest and light catering services, so as to isolate them from the noise of the lobby and meet guests' demands for efficiency and privacy.

In the 1980s, major international hotel groups followed suit and improved the executive floor and lounge model. For example, Hyatt Hotels developed it into the "Concierge Floor", adding all-day catering, meeting rooms and other supporting facilities, further establishing the business model of "space isolation + bundled services".

During this period, the executive lounge became a symbol for high-end hotels to demonstrate their brand strength, and the happy hour and exclusive services in the lounge became the standard configuration of high-end hotels.

At the end of the 1980s, as international hotel groups entered China, the concept of executive floor and lounge was introduced to the Chinese market. In the early stage, the functions were relatively single, mainly meeting the office and light meal demands of foreign business guests.

In the later stage, many hotel groups began to adopt localized naming methods, such as Shangri-La's "Horizon Club" and The Langham's "Langham Club" to highlight the sense of exclusivity, and the executive lounge gradually evolved into a comprehensive area integrating office and catering.

However, in recent years, affected by multiple factors such as rising hotel operation costs and sharp decline in business guest sources, some mid-to-high-end hotels have begun to reduce or cancel executive lounges, regarding them as "cost black holes".

After gradually losing their original carriers, the presence of "alcohol" in the hotel industry is now facing a value restructuring.

Therefore, from the perspective of the current market environment, the "nighttime bar" setup is more like a "downgrade" of the consumption and access rights of executive lounges — it is not only "downgraded" from the exclusive space inside the hotel floor to the open hotel lobby, but also the exclusive right of hotel guests is "downgraded" to every passer-by.

When it comes to "daytime coffee", the development path is slightly different.

The history of in-room coffee in hotels is an epitome of the continuous integration of the hotel industry and coffee culture, evolving from "basic supporting facility" to "experience economy".

This process began in the 1950s, when German hotels first launched the minibar service. Later, high-end hotels in Europe, America and Hong Kong followed suit, and instant coffee or capsule coffee began to be provided in guest rooms. In the following decades, coffee was only an accessory of the minibar, with no prominent commercial value.

The real change took place in the 1990s. As commercial coffee brands such as Starbucks and COSTA swept across the world, hotels realized that coffee is not just a drink, but also a social carrier. So they extended coffee services from guest rooms to lobbies, creating coffee shops combined with afternoon tea and breakfast services.

In the 2010s, coffee began to deeply integrate into the brand genes of domestic chain hotels. Represented by James Joyce Coffetel, the "cafe + hotel" format combined coffee, book bar and rest area into an experience space. Groups such as Huazhu and BTG Homeinns successively launched their self-operated coffee brands niiice café and "Home Coffee", upgrading coffee from a supporting facility to an independent profit point.

Entering the 2020s, in-room coffee has even begun to evolve towards high-quality premium products. Some high-end hotels have introduced pour-over coffee, drip bags and professional equipment, matching the standards of boutique cafes, to support the premium of guest rooms with high-quality experience.

So when we trace back to the origin, we can find that the daytime coffee + nighttime bar format has shown its embryonic form in the domestic hotel industry for more than 40 years, but it has never been fully integrated and developed on a large scale.

Nowadays, this lifestyle has been written into the brand manuals of major hotel groups and has become one of the selling points of many lifestyle brands, which seems quite natural.

However, looking at the whole market, individual stores that have truly achieved profit from the daytime coffee + nighttime bar model are extremely rare. A consumer's words may reveal part of the reason: "When I want to visit a bar, I have a list of top 50 bars to choose from, and takeaway coffee can be delivered to my door at only 15.9 yuan. Why should I buy coffee or alcohol in a hotel?"

Combined with the market situation, there may be more reasons.

The first is the mismatch of lifestyles. The happy hour lifestyle that originated in Europe and the United States will easily suffer from acclimatization in the domestic market if it is transplanted rigidly.

Especially in some mid-to-high-end and mid-range hotels, the operators assume that business travelers who are exhausted after a busy day outside only want a comfortable hot bath and a good night's sleep when they return to the hotel. These additional revenue projects originally envisioned by the pan mid-range market will easily become useless decorations.

The second is the cost problem. The cost of recruiting and training baristas is relatively manageable, but industry data shows that the salary ceiling of skilled bartenders in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen is quite high, generally ranging from 15,000 yuan to 25,000 yuan per month.

In this case, hotels have to bear a large additional expense in the lobby, and it remains to be seen whether this expense can bring corresponding revenue.

The third is the overcrowding of the track and the scarcity of suitable cities. This point is easier to understand: in the core business districts of first-tier and second-tier cities, lifestyle hotels that focus on the daytime coffee + nighttime bar model are easily overlapped with other similar formats, falling into the quagmire of homogeneous competition, and it is difficult for them to resist the impact of professional external stores.

The accumulated customer groups, reputation and product quality of professional cafes and bars over many years cannot be offset by hotels simply setting up a bar counter.

Therefore, this additional revenue dream written in hotel brand manuals actually faces multiple thresholds.

03

Surge in revenue but negative profit, the old model "comes to an end"

But there are still successful cases in the market.

Some hotels have found ways to cut costs

NOA Hotel combines boutique coffee and craft beer to create a composite social space. It provides boutique coffee in the daytime and craft beer at night, and has become a local destination with its industrial-style design. The craft beer served at night is easy to preserve, and hotels only need to purchase finished products without additional mixing, earning profits from the price difference.

When checking in at Hilton Shanghai Zhangjiang Science City Hotel, the reporter from Space Insight also noticed that most of the alcoholic drinks provided by Moonsong in the hotel lobby come from local breweries and suppliers in Shanghai. Other service personnel are only responsible for making simple non-alcoholic drinks. The cost of purchasing finished products replaces the cost of hiring professional bartenders, which is also a way to stabilize revenue while maintaining brand quality.

Some hotels have found ways to increase revenue

For example, UrCove skillfully combines offline activities with the daytime coffee + nighttime bar lifestyle. Data best illustrates the effectiveness: UrCove Guangzhou Pazhou Exhibition Center Hotel held its first UrCove Garden Beer Festival during the Canton Fair, and the revenue of its creative space reached 17,500 yuan on the opening day.

Although it remains to be tested by time whether this model can be replicated, it has at least become proof of successful revenue generation for UrCove's property owners. When the format itself lacks the ability to generate profits, using activities to attract traffic to the space may be the key to activating the idle space.

Some hotels have chosen the right destination market

As a successful model of independent hotels that implement the daytime coffee + nighttime bar model, Xiamen Lujing Minjia has created the "Minjia · Daytime Coffee + Nighttime Bar" setup in a single-family villa No.13 in its park. It operates as a quiet garden cafe in the daytime, suitable for working and staying alone, and transforms into a whisky garden bar at night, providing unlimited craft beer and light social scenes to realize all-round experience.

Lushan Changli Qinlu Yunqi Hotel creates the "daytime coffee + nighttime bar + live performance" model combined with mountain residence experience. It provides boutique coffee and light western food in the daytime, and operates as a lounge bar with live singing performances at night, realizing a dynamic and balanced residence experience.

These independent hotels are located in tourist destinations, or the hotels themselves are tourist destinations. This advantage allows these hotels to appropriately relax the consideration of costs, hire professional teams to amplify their own advantages, and even incubate new IPs independent of the hotel.

It can be seen that the daytime coffee + nighttime bar model is never a universal key. It is just a seed that can only take root in the right soil.

However, the above cases also confirm that the success of the daytime coffee + nighttime bar model in China is extremely difficult to replicate. But the market never lacks new challengers.

On September 17, Shangmei Digital Intelligence and Accor announced the introduction of two new brands. Surprisingly, Accor's JO&JOE is a mid-range lifestyle hotel, which is mainly deployed in the core business districts of first-tier and second-tier cities.

What exactly is its lifestyle? Gary Zhu, CEO of Accor Greater China, told Space Insight that JO&JOE, introduced from France, represents the local free social atmosphere, with themes of color, music and unconstrained creativity. But this model cannot be completely copied to the Greater China region because the customer groups are different.

"Now young people love HEYTEA, and maybe one day we will sell HEYTEA in our lobbies." Gary Zhu said that the daytime coffee + nighttime bar setup attached to JO&JOE will not be rigidly transplanted into the domestic market by Shangmei. If some young people are not used to the beer we provide, we can provide coffee, tea and milk tea instead, which is "the same concept, different service forms".

One industry insider's statement left a deep impression on Space Insight: customers' perception of a brand is based on the consistency of quality. When this factor becomes unpredictable, why not build your own store to truly satisfy customers?

This statement may reveal the delicate disguise of some lifestyle hotels. What the pan mid-range hotel market needs is never a brand that constantly superimposes usage scenarios in the lobby, but a pioneer that dares to carry out localized experiments in the lobby, truly considers the revenue of property owners, and improves the living experience of guests at the same time.

The competition in hotel lobbies has never been about competing for who can bring in more guests and more business formats, but about finding the setup that is truly suitable for the local market, suitable for the customer groups targeted by the hotel's positioning, and can bring tangible benefits to the property owners.

The tide of the daytime coffee + nighttime bar model is still surging. In the next cycle, the ones that survive may not be the ones with the most complex formats, but the ones that think clearly before taking action.