More economy and mid-range hotel operators in China are leasing office buildings for conversion to guest accommodation, and such flexible, mixed-use approaches are expected to increase amid a continued weakening of the office market.
In some Chinese cities, the practice of multiple hotel brands co-leasing separate floors within a single building has become more prevalent, fuelled by interest from both property owners and hotel operators.
In Hangzhou, the capital of eastern China’s Zhejiang province, a building at West Lake-adjacent Yongjin Plaza now houses some 10 hotels. These include Home Inn and Home Inn Plus – part of the economy chain under Shanghai-headquartered BTG Hotel (Group) – as well as a mix of smaller, lesser-known hotel brands and hostels.
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They lease different floors alongside diverse businesses like restaurants, photography studios and second-hand luxury stores. Three of the hotels share a ground-floor reception area.
“Hotel operators are seeking lower-cost, well-located space, and office landlords are looking to reduce vacancy,” said James Macdonald, head of research for China at Savills, a property consultancy. “This trend is most common in grade B office assets in good locations, especially slightly older buildings where leasing to traditional office tenants has become more challenging.”
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Macdonald said it was natural for building functions to adapt to changing economic structures, working patterns and urban needs, and the trend could even help stimulate the market.
