Why China’s homestay business isn't making money?

Update: 2017-07-17

In June this year, Shanghai’s Pudong New Area officially granted licenses for the first time to minsu, or Chinese-style bed-and-breakfasts, a move that legitimized the country’s homestay industry.

At the same time, Chongming Island — the northernmost district of Shanghai, situated at the mouth of the Yangtze — has signaled its intention to become a “world-class ecological island,” something that has given the island’s minsu proprietors cause for optimism.

To a certain extent, minsu represents a backlash against urbanization. However, one of the biggest challenges facing minsu owners everywhere is staying afloat while remaining sustainable.

Minsu generally require a lot of startup capital — around 800,000 yuan at least. At the same time, they cater mostly to suburban travelers visiting on weekends or national holidays, leaving them below capacity on most weekdays. The only way to reach most minsu is by driving, since they are rarely accessible by public transport. For these reasons, minsu accommodation is generally pricier than hotels offering similar amenities, and 80 to 90 percent of minsu aren’t making money.

Minsu may yet serve as the bridge that connects the natural ecology with rural tourism. To become profitable, however, it is clear that they must first diversify their sources of income. As yet, the question of how to do so remains unanswered.

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