China’s economy is slowing.

Even its high-end hospitality sector is feeling the pinch, with luxury hotels resorting to innovative measures to stay afloat.

In Changzhou, Jiangsu province, the five-star Zhongwu Hotel—ranked second among the city’s top 10 luxury hotels on Trip.com—has drawn local media attention by launching a ‘street vendor service’, offering budget meal boxes prepared by its acclaimed catering team.

Broader economic challenges are forcing businesses to adapt to ‘cautious consumer spending’ and declining demand for luxury services.

This is interesting for China-watchers in India. All is not well in the land of the Golden Dragon.

From Banquets to Budget Meals

Traditionally, luxury hotels in China have thrived on opulent banquets and formal entertainment, with lavish decor and meticulously crafted dishes commanding premium prices.

No longer. With economic uncertainty looming, consumer priorities are shifting.

Zhongwu Hotel’s ‘street vendor initiative’, launched in July 2025, offers meal boxes priced between 165 and 825 Indian rupees (20 to 100 yuan), a stark contrast to the thousands of yuan typically charged for a banquet table.

The offerings include popular night market staples such as braised dishes, spicy crayfish, and dim sum, prepared by the hotel’s executive chef, a Black Pearl award winner—China’s equivalent of the Michelin Guide.

The initiative has struck a chord with consumers. Within seven days, Zhongwu Hotel established 20 WeChat groups, each with 500 members, to share menus and operating hours. A behind-the-scenes video showcasing the chef cooking fried rice, sold for just 231 Indian rupees (28 yuan), went viral.

Meal boxes sell out within five minutes, with the hotel distributing 100 tickets daily for on-the-spot purchases starting at 4:30pm.

One WeChat user advised, “If you are really keen on it, you should go and queue up before 3pm.”

A Struggling Hospitality Sector

The pivot to street vending points to the mounting challenges facing China’s high-end hospitality industry.

According to Hotel House, a Chinese data provider, the average room rate in mainland China dropped to 974 Indian rupees (118 yuan) in 2024, a 9.7% year-on-year decline. Occupancy rates also fell to 58.8%, down 2.5% from the previous year.

Catering services, a key revenue stream for hotels, are similarly under pressure. Data from the Beijing Hotay Grand Ceremony Hotel reveals that full-service upscale hotels earned an average of 84.2 million Indian rupees (10.21 million yuan, US$1.4 million) from catering in 2024, down from 102 million Indian rupees (12.37 million yuan) in 2023 and a staggering 38.3% drop from 2019.

Zhongwu Hotel’s manager, Chen Yonghua, highlighted the severity of the downturn, noting a 65.7% year-on-year decline in traditional banquet bookings. “You must first solve the problem of survival,” Chen said. “If you can’t even solve your own problems, what else can you talk about?”

The hotel’s street vendor service is an attempt to ensure operational expenses and employee salaries are met, avoiding layoffs and financial distress.

Wider Economic Pressures

The slowdown extends beyond Changzhou.

In megacities like Shanghai and Beijing, the fine dining sector has been hit hard, with high-end restaurants closing as diners opt for more affordable options.

Declining salaries and uncertainty about the future have prompted consumers to tighten their budgets, reducing demand for luxury experiences. Despite government efforts to stimulate domestic spending, these measures have yet to reverse the trend.

The hospitality sector’s woes are compounded by policy changes.

In May 2025, the Communist Party banned officials from excessive wining and dining, including wines and alcohol at official work meals, to curb ‘wasteful government spending’.

A Guangzhou-based political science researcher, speaking anonymously due to the sensitivity of the issue, noted that this ban has significantly impacted high-end and business entertainment dining. “While ordinary restaurants may benefit, high-end dining will be severely hit,” he said.

An Indian Perspective

In India, where economic rivalry with China is a recurring theme, China’s economic slowdown has being noticed.

While the Indian government narrative attempts to position India as a global economic powerhouse, claiming growth in sectors like technology and manufacturing, China’s struggles have been ignored by the mainstream media.

China’s shift towards budget offerings, exemplified by luxury hotels like Zhongwu resorting to street vending, indicates the depth of its economic challenges.

This development is perhaps an opportunity for India to strengthen its economic narrative, particularly as it attracts global investment seeking alternatives to China’s slowing market.

However, Indian businesses are also cautious, recognising that a weakened Chinese economy could impact global trade dynamics, including India’s export markets.

A Creative Response to Crisis

Zhongwu Hotel’s street vendor model is not an isolated case.

In Changzhou alone, 33 hotels, including luxury brands like Wenpu Hotel, Hilton, and Fudu Qingfeng Hotel, have launched similar initiatives. These ventures are cost-effective and generate significant social media buzz.

Dun Zhengnan, director of food and drink at Zhengzhou Tiandilisheng Hotel, explained, “The sight of chefs from a five-star hotel cooking meals easily sparks curiosity among passers-by and spreads on social media, which is equivalent to doing ‘down-to-earth’ marketing at a low cost, attracting potential customers.”

The Communist Party’s mouthpiece, the People’s Daily, praised the initiative on 9 July 2025, calling it a “proactive attempt by businesses to revitalise idle resources.” The publication emphasised that “only by actively seeking change can businesses secure their footing amid fierce competition.”

Looking Ahead

China’s luxury hospitality sector is navigating uncharted waters as the economic slowdown reshapes consumer behaviour.

While innovative strategies like street vending offer a lifeline, they also tell us of the challenges facing the industry.

For hotels like Zhongwu, adapting to a more frugal market is not just a matter of survival but a rallying effort in the face of economic adversity.

Meanwhile, in India, the narrative of China’s economic struggles reinforces the competitive dynamics between the two nations, with implications for global economic trends.

  China slowdown, Indo-China, naked truth, People’s Republic of China, street food