Hotel conversions gain traction in China’s office market amid high vacancies

In China, hotel operators are increasingly converting office buildings into guest accommodations due to high office vacancy rates and a weaker market. This trend involves economy and mid-range hotels leasing space in office buildings, sometimes with multiple hotel brands co-leasing separate floors within the same building. This is particularly common in Grade B office buildings in desirable locations, where attracting traditional office tenants is difficult. The conversions offer hotel operators lower-cost, well-located spaces, while helping landlords reduce vacancies. Property consultants believe this flexible, mixed-use approach, driven by changing economic structures and urban needs, could stimulate the market. The practice is evident in cities like Hangzhou, where multiple hotels share a building with other businesses.

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