Last year when China's local governments began prohibiting government officials from spending money at five-star hotels, the nation's hotels took the only logical step they could think of to preserve government business: dropping at least one star.
"As the Communist Party led by President Xi Jinping continues a campaign against corruption and government extravagance, some top-of-the-line hotels are feeling the pain," reports Bloomberg Businessweek. Hangzhou-based New Century, an operator of 64 hotels around China, including 40 with five-star ratings, reported a decline in revenue of 18 percent last year.
"Chairman Chen Miaolin of the New Century Tourism Group based in east China's Zhejiang Province said he had instructed his five four-star New Century Hotels to table their plans for an upgrade to five stars under pressure from shrinking turnover," reports Peoples Daily Online.
"New Century's guests have traditionally included a long list of top Chinese officials, from governors to generals to President Xi himself," Bloomberg continues.
Star reduction attempts have been reported by 56 hotels in China. It has not been confirmed whether or not rates are changing. So far the ban is only aimed at hotel ratings.
Since Xi Jinping came to office in November 2012, the party has enforced regulations to dismantle extravagant work styles among government workers. The Party has released another notice ordering an increased supervision and encouraging tip-offs from citizens and media about excessive spending and gifts during the upcoming Lunar New Year.
New Century Tourism Group had agreed to provide management services for 75 new hotels, but now 12 of them have seen their construction suspended.