Assessment of the hotel
rating system in China
In 1990 China began systematically to
rate tourist hotels with a hotel star rat-
ing system. This article examines the
standards and methods of the rating
system to assess its potential as a man-
agement tool to establish national hotel
standards, improve service quality and
strengthen the hotel administration
process, To assess the Chinese system
according to international standards, it
is compared with the widely used Amer-
ican Automobile Association diamond
rating system. This study discusses the
progress in achieving a greater degree
of standardization and professionalism
in the hotel industry. Operational and
procedural limitations of the rating sys-
tem are also pointed out, along with a
number of recommendations to im-
prove scoring and streamline the pro-
cess. This could lead to significant im-
provement in the management, market-
ing and planning of the Chinese hotel
industry.
Juanita C. Liu is Professor of Tourism
Management and Liu Zhan-Qing is a
graduate of the Master of Professional
Studies Program (MPS) at the School of
Travel Industry Management, University of
Hawaii, 2560 Campus Road, Honolulu,
Hawaii 96822.
Acknowledgement
This article is based on research for Liu
Zhan-Qing's MPS monograph. The au-
thors would like to acknowledge the China
National Tourism Administration for the
provision of data with gracious assistance
from Judy Li.
Submitted September 1992; accepted
January 1993
~Jian Zhao, 'Over-provision of Chinese
hotels', Tourism Management, Vol 10, No
1, March 1989; Clem Tisdell and Jie Wen,
'Foreign tourism as an element in People's
Republic of China's economic develop-
ment strategy', Tourism Management, Vol
12, No 1, 1991, p 62.
continued on page 441
440
Liu Zhan-Qing and Juanita C. Liu
In 1990 the China National Tourism Administration (CNTA) estab-
lished a formal hotel star rating system as a management strategy to
establish national hotel standards, improve service quality, and stream-
line the hotel administration process. This study focuses on the effec-
tiveness of the Chinese rating system as an administrative strategy to
improve guest service and build market confidence in China.
While there has been tremendous growth in China's hotel industry in
the past decade, there are a number of acknowledged challenges to
further progress. One obstacle is the lack of coordination in hotel
administration due to the complicated bureaucratic and financial
structure. 1 Another problem is conflicting policies of decentralization
versus maintaining central control. Further, there is wide variation in
the quality of hotel facilities and services owing to the lack of uniform
hotel operation standards prior to the introduction of the rating system.
Service problems are often attributed to an inexperienced work-force
which needs proper motivation, professional training and appreciation
of international standards. 2 Finally, marketing and planning is often
conducted on a trial-and-error basis because of a lack of adequate and
reliable information. Having realized its operational difficulties, CNTA
eventually created its unique hotel rating system with the hope of
providing strong leadership and consistent standards for the entire hotel
industry. Although the intent of the rating system is to improve overall
service quality and to improve market confidence, the ultimate priority
is the consolidation of a hotel administration system which has been
described as 'loosely organized and uncoordinated'. 3 By providing
consumer information and creating marketing opportunities for hotels,
the Chinese rating system also contributes to planning and administra-
tion of the hotel industry. 4
Hence, the purpose of this study is to assess the Chinese hotel rating
system in terms of CNTA expectations to: (1) encourage full-scale
service and quality as an ongoing strategy to improve visitor accom-
modation; (2) establish national hotel operating standards to meet the
needs for international competition; (3) provide updated information on
the quality, availability and distribution pattern of hotels as input for
future hotel marketing, planning and management in China; and (4)
establish C N T A as the central authority to oversee hotel development
in the future.
World-wide hotel rating systems and implications for China
Hotel rating is common practice in the lodging industry world-wide.
International travel organizations have attempted to promote uniform
0261-5177/93/060440-13 © 1993 Butterworth-Heinemann Ltd
 Assessment of the hotel rating system in China

Table 1. Hotel growth in China, 1980-89.

Year Hotels Rooms Beds Rooms/hotel

1980 203 31 788 44 241 157
1981 296 43 251 59 286 146
1982 362 51 625 75 423 143
1983 371 59 588 94 302 161
1984 505 76 994 171 888 153
1985 710 107 389 242 663 151
1986 974 147 497 332 321 151
1987 1 283 184 710 400 727 144
Source: Compiled from The Yearbook of China 1988 1 496 220 165 478 321 147
Tourism Statistics, China National Tourism 1989 1 788 267 505 580 913 150
Administration, 1980-90.

hotel standards. Since 1962 the World Tourism Organization (WTO)

continued from page 440
2Dexter Choy and Chuck Gee, 'Tourism in
the PRC - five years after China opens its
gates', Tourism Management, Vol 4, No 2,
June 1983, p 91; Zhang Guang-Rui, 'Tour-
ism education in China', Tourism Manage-
ment, Vol 8, No 3, 1987.
3China National Tourism Administration,
'Regulation of tourist hotel rating in China',
A Collection of Documents for Hotel Rating
in China, 1990, pp 6-12; China National
Tourism Administration, 'Master plan of
tourism development in China for the
eighth five-year plan', Chapter 4, Tourist
Hotel Development, February 1990, pp
28-30.
40p cit, Ref 3; Er-Fu Liu, 'Hotel rating and
tourism development in China', Tourist
Hotels in China, No 12, May 1990, pp
25-26.
SP.A.L. Vine, 'Hotel classification - art or
science?', Tourism Management, Vol 2,
No 1, March 1981, p 19.
6Horwath & Horwath, 'Hotels of the future
- strategies and action plans', London,
1988, p 18.
7Bob Brook, 'How good are hotel rating
systems?', ASTA Agency Management,
July/August 1989, p 28; World Tourism
Organization, 'Chapter 3: Management in
the accommodation sector', Report on the
Development of the Accommodation Sec-
tor, Madrid, 1985, p 56.
aLawrence Yu, 'Hotel development and
structures in China', International Journal
of Hospitality Management, Vol 11, No 2,
1992, pp 99-110.
9Choy and Gee, op cit, Ref 2; Zhang
Guang-Rui, 'Ten years of Chinese tourism
- profile and assessment', Tourism Man-
agement, Vol 10, No 1, June 1989, p 55;
Tisdell and Wen, op cit, Ref 1 ; Yu, op cit,
Ref 8.
~°Economist Intelligence Unit, China, EIU
International Tourism Report, No 3, 1990,
p 40.
has exerted considerable effort to establish guidelines to work toward a
standard international hotel rating system. 5 The International Hotel
Association (IHA) has made similar attempts to develop a universally
accepted hotel rating guideJ ~However, efforts toward global acceptance
have not been successful; the standards have mostly been used as a
reference for establishing customized national rating systems.
The more than one hundred hotel rating systems used world-wide can
be classified into two categories - official and non-official. 7 An official
rating system is usually established and conducted by a government
agency responsible for tourism or the hotel industry. This system is
usually mandatory with regulatory capacity. Most countries, including
China, use this type of rating system.
By contrast, the non-official rating system is privately administered by
professional associations such as national automobile clubs, hotel
associations or other forms of private trade organizations. It operates on
a voluntary basis and rating service is mainly provided for members of
the organization for purposes of publicity and consumer information. A
typical example is the diamond hotel rating system conducted by the
American Automobile Association ( A A A ) .
The introduction of international hotel management chains, such as
Sheraton, Hilton, Holiday Inn, etc., to China means higher expecta-
tions that accommodations and service quality reflect international
standards. Since 1986 there has been an over-supply of hotel rooms
because of rapidly increasing demand and government incentives, s Thus
upgrading standards through improved coordination and standardiza-
tion is necessary to meet the challenge of the international tourism
market.
The hotel industry in China
During the last decade, the remarkable growth in China's international
tourism and hotels have been well documented. '~ Room shortage in the
early 1980s forced the government to provide economic incentives and
favourable policies for hotel expansion, i~)The hotel business has grown
into a sizeable industry with 1788 properties and 267 505 rooms catering
to international visitors (see Table 1). Continuous capital investment
has greatly improved the quality of accommodations with hundreds of
modern hotels open to international visitors. A closer examination of
the geography, capacity and ownership of the hotel industry in China
shows a high degree of concentration in all these aspects.
Geographic concentration
About 72'/o of hotel capacity is concentrated primarily in the major
tourist cities along the eastern Chinese coast. Distribution of hotels and
rooms, as well as average occupancies, in the top 13 provinces and
municipalities can be seen in Table 2. In 1989 occupancies at these

TOURISM M A N A G E M E N T December 1993 441

A~'.~e.s,snlent o f llu" hole/ ralit [: ,system itt ("himl

Table 2. Accommodation capacity for the top 13 Chinese provinces and municipalities, 1989

Location Hotels Rooms Occupancy ('%)

Guangdon 9 541 65 886 ~J1 7
E}eijing 150 35 023 55.8
Shanghai 72 15 542 539
Liaoning 89 12 034- 56 3
Fujian 72 9 349 652
Shandong 66 9 136 570
Hebei 54 9 052 60.6
Guangxi 44 8 354 40.5
Anhui 63 7 730 597
Zhejiang 36 6 099 61 0
Jiangsu 35 5 903 49.6
Hainan 43 4 712 606
Tianjin 18 3 654 42 1
Total 1 283 192 474
Source: Compiled from The Yearbook of China National total 1 788 267 505
Tourism Statistics, China National Tourism % of national total 72% 72%
Administration, 1990,

locations ranged from 40.5% in Guangxi to 65., Y,, in Fujian. The

overall average occupancy was about 56%, which is indicative of
insufficient demand, or over-supply.

Size distribution and capacity

The size distribution of hotels in China is 45% having fewer than I()0
rooms (small), 44% having 100-299 rooms (medium), and 10% having
300 rooms or more (large) (see Table 3). Hence, small and medium
hotels predominate with 89% of properties, but with only 67% of
rooms. About 50% of all hotels are in the middle class category. Having
mostly been converted from guest houses, they are often under-utilized
and have poor occupancies. About 10% are in the luxury category,
which grew rapidly in the late 1980s. Large hotels, particularly those
with more than 500 rooms, are newly built and often joint ventures with
much superior facilities and services.

Hotel ownership
Decentralization has resulted in a variety of different types of hotel
ownership. II However, state ownership is still the dominant mode,
accounting for 74% of total hotels and 71% of total rooms (see Table 4).
Foreign involvement generally takes the form of either joint venture
(share profit and loss according to rate of equity investment) or
cooperative (share profit and loss according to contract management). L2
Foreign ownership constitutes 17% of hotels and 23% of rooms.
Alternatives to state ownership are encouraged, but remain very
limited.

11Tisdell and Wen, opcit, Ref 1; Yu, opcit,
Ref 8.
12Economist Intelligence Unit, 'Foreign in-
vestment in China's hotel sector', EIU
Travel & Tourism Analyst, No 3, 1989, p
90.
Political environment
Diversification of investment has occurred since the mid-198(ls when
exclusive federal government control was extended to state govern-
ment, local government, departments, collectives and individuals. This
policy was called 'bringing into play the five sectors'. Although this
policy resulted in intended acceleration of hotel development, it fell
short in terms of national hotel planning. Lacking the necessary

Table 3. Distribution of Chinese hotel capacity, 1989.

Capacity (rooms) Hotels % Rooms %

> 500 49 2.7 36 529 13.7
300-499 142 7.9 51 036 19.1
200-299 234 13.1 56 221 21.0
100-199 555 31.0 77 536 28.9
Source: Compiled from The Yearbook of China < 99 808 45.2 46 183 17.3
Tourism Statistics, China National Tourism Total 1 788 100.0 267 505 100.0
Administration, 1990.

442 TOURISM M A N A G E M E N T December 1993

 AlSlg#S',s'me/tl o f the hotel rating s)'.stem in ('hina

Table 4. Chinese hotels by ownership category, 1989.

Type Hotels % Rooms %

State-owned 1 328 74.3 189 206 71.0
State collective 12 0.7 2 124 0.8
Collective 145 8.1 15 063 5.6
Private 3 0.2 61 0.02
Foreign cooperative 161 9.0 29 965 11.2
Joint venture 138 7.7 30 31 t 11.3
Source: Compiled from The Yearbook of China Solely foreign 1 01 775 0.3
Tourism Statistics, China National Tourism Total 1 788 100.0 267 505 100,0
Administration, 1990.

expertise and funds to carry out its responsibility for hotel planning, the
C N T A has been unable to coordinate and implement its policies. Being
an agency overseeing a relatively new and rapidly growing hotel
industry, it also lacks the authority to influence other more established
government branches. Thus hotel rating is an attempt to rectify this
situation by giving greater authority to the C N T A .

Hotel star rating standards and rating method

Currently, the hotel star rating system is applied only to government-
cndorsed hotels that receive international visitors. Ratings of one to five
stars are given according to quality of physical condition and service.
Although the C N T A is the central government agency in charge of hotel
rating, ratings of one- to three-star hotels are done by the local tourism
bureaux. However, C N T A finalizes the ratings of three-star hotels and
rates four- and five-star hotels.
The rating standards are designed to assess the overall hotel quality in
terms of both physical features and services in the following six
categories:
• required facilities and range of services:
• quality of facilities and equipment:
• maintenance;
• cleanliness;
• quality of service;
• guest satisfaction.
The following is a brief description of the scoring procedures for each of
these six areas.

Required facilities and range of services

Standards for physical facilities and range of service are determined by
availability of specified items in the following subcategories: hotel
establishment, lobby area, facilities in public areas, guest rooms,
restaurants, range of services and bars. Items in this section are not
scored by points. Instead, differentiation of hotel stars is made through
the quantity and type of facilities and awdlability of service items.
Within each of the above subcategories, detailed standards are
specified. For example, under 'Facilities in public areas', a two-star
hotel must meet minimum requirements for seven items including
parking, elevator, air-conditioning, public phone, rest room, emergency
lighting and a small convenience shop, A three-star hotel, besides those
items required for a two-star hotel, must also have other facilities such
as a ballroom, massage room, public reading/rest area, book shop,
meeting facility, multiple-function hall and conveniences for the handi-
capped.

Quality of facilities and equipment

After it has been determined that a hotel has the required facilities,

TOURISM M A N A G E M E N T December 1993 443

Assessment of the hotel rating system in ('hina

Table 5. Point allocation for facilities and equipment in the Chinese hotel star rating system.

Major area % Sub-area Points

Exterior 7 Location 8
Surrounding 13
Establishment 6
Facilities 48 Lobby 33
Guest room 103
Bathroom 55
Food and beverages 18 Restaurant 41
Bar 18
Kitchen 13
Public facility 27 Sport 35
Recreation 31
Public area 21
Source: Compiled from A Collection of Docu- Other 23
ments for Hotel Rating in China, China National Total points 100 400
Tourism Administration, 1990.

their quality is rated on the basis of quantity, quality and convenience to

guests. Altogether, a maximum of 400 points are allocated to about 70
items in major function areas (see Table 5). For example, a colour TV
set is required for even a one-star hotel, while the quality of TV is
indicated by points according to the size of TV, eg 4 points for I~", 3
points for 16" and 2 points for 14". In the same manner, a guest room can
obtain 10 points if it is above 20 m 2, while only 1 point is given if it is
below 12 m z. Total points determine the star rating category. For
example, out of the maximum 400 points for facilities, 220 points (55%)
meet requirements for a three-star hotel, while 300 points (75%) are
required for a four-star hotel (see Table 6).

Maintenance and cleanliness

Both maintenance and cleanliness standards are applied to 21 function
areas such as lobby, guest rooms, restaurant, bar, sports and recreation
areas and other public facilities (see Table 7). Within each area, more
detailed items are identified and scored for level of maintenance and
cleanliness. Note that the top items for guest rooms, restaurant and bar,
corridor and elevator and lobby area comprise about half of the total
points, implying that frequent guest-contact areas are given special
attention. For the majority of areas, inspected items include doors,
windows, ceilings, walls, carpets, furniture, lighting, air-conditioning,
decoration and others. Standards for both maintenance and cleanliness
are high since even one-star hotels must achieve minima of 90% (sec
Table 6).

Quality of service
Service quality is evaluated for eight subcategories including uniform
and appearance (9%), front desk services (13%), guest room services
(11%), restaurant/bar services (23%), function areas (35%), hotel
reputation (2%), security (3%), and overall impression of services (4%)
(see Table 8). The quality of service is determined on the basis of
attitude, accuracy, efficiency and guest satisfaction. Like maintenance
and cleanliness, the minimum standard for service quality is 90% (see
Table 6).

Table 6. Minimum points for each hotel star category in the Chinese hotel star rating system.

Star Quality of Guest

group facility Maintenance Cleanliness Services satisfaction
1 80 (20) 1285 (90) 1035 (90) 1215 (90) 14 (70)
Source: Compiled from A Collection of Docu- 2 120 (30) 1285 (90) 1035 (90) 1215 (90) 14 (70)
ments for Hotel Rating in China, China National 3 220 (55) 1314 (92) 1058 (92) 1242 (92) 15 (75)
Tourism Administration, 1990. 4 300 (75) 1357 (95) 1092 (95) 1282 (95) 17 (85)
aNote: Maximum points and percentage for each 5 330 (80) 1357 (95) 1092 (95) 1282 (95) 18 (90)
category. Max a 400 (100) 1428 (100) 1150 (100) 1350 (100) 2 (100)
bFigures in parentheses are percentages.

444 TOURISM MANAGEMENT December 1993

 Assessment of the hotel rating system in China

Table 7. Point allocation for maintenance and cleanliness in the Chinese hotel star rating
system.

Items No. of items Maintenance Cleanliness

inspected inspected points points
Exterior of building 10 31 35
Lobby area 22 90 76
Guest room 28 268 200
Restaurant and bar 16 206 154
Corridor and elevator 4 120 130
Public bathroom 9 36 36
Fitness room 10 16 16
Sauna bath 11 25 25
Massage room 9 12 12
Swimming pool 6 15 26
Tennis court Overall effect 10 10
Shop 8 50 50
Business centre 9 10 18
Barber shop 11 48 34
Kitchen 7 53 51
Meeting room 11 30 25
Multiple-function room 11 28 26
Source: Compiled from A Collection of Docu- Bookstore Overall effect f0 10
ments for Hotel Rating in China, China National Flower shop Overall effect 10 10
Tourism Administration, 1990. Ballroom 11 40 26
~'Other facilities' includes a variety of health, Other facilities a 12 320 180
sports and recreation facilities available in a Total 1428 1150
hotel.

Table 8. Point allocation for quality of service

G u e s t sati,sfaction
in the Chinese hotel star rating system. Guest satisfaction is also an integral part of the rating system. A
Areas/aspects of services Points % 20-question survey obtains guest opinions about their satisfaction with
Uniform and appearance 128 9 the guest rooms, front office, restaurant and other function areas on a
Front desk services 182 13 three-level scale, ic, Good, Satisfactory and Poor. Scores are computed
Guest room services 145 11
Restaurant/bar services 310 23 by the following formula:
Services in function areas 465 35
Reputation 30 2 y = g + s/2
Security 40 3 q
Overall impression of services 50 4
Total points 1350 100
where, Y = satisfaction percentage;
Source: Compiled from A Collection of Docu- g = number of 'good' responses;
ments for Hotel Rating in China, China National s = number of 'satisfactory' responses;
Tourism Administration, 1990.
q = number of questions answered.
Questionnaires are distributed once a week for four consecutive weeks
in all occupied rooms and the collection rate must not be lower than
3(1%. A hotel can be deferred from getting its star rating if the required
satisfaction level is not met.

Criteria f o r star categories

In summary, the physical features of a hotel are determined by the
availability of required facilities and range of service. The other five
categories of quality of facilities and equipment, maintenance, cleanli-
ness, quality of service and guest satisfaction are scored as explained
above for a total of approximately 4348 possible points. Thus, this
comprehensive quality assessment system enables detailed examination.
On the other hand, this process is extremely time-consuming.
For each criterion, a minimum score level must be met in order for
the establishment to be ranked at a certain star category (see Table 6).
To ensure high quality for maintenance, cleanliness and service, 90% is
the minimum level for even one-star hotels. Further, the difference
between categories does not wiry by more than 5%. Sometimes,
minimum scores are even the same for different star categories, as in the
case of one and two stars, or four and five stars. These scoring methods
limit how meaningful differences are among star categories.

TOURISM M A N A G E M E N T December 1993 445

Assessment o f the hole/ralinj¢ svslem in ('hma

Table 9. Comparison of physical and service Comparison of Chinese hotel rating with the AAA diamond
categories of the Chinese hotel star rating rating s y s t e m
system and the diamond rating system of the
American Automobile Association. In order to evaluate the ('hinese rating system according to intcrnan,m-
al standards, it is useful to compare its organization, rating tncthods and
Physical aspects Service aspects
PRC star rating system: standards with the diamond rating system of the American Automobile
Hotel establishment Maintenance Association (AAA). This system is chosen for comparison for the
Lobby area Cleanliness following reasons: (1) AAA's diamond rating is onc of the most
Public area Service quality
Guest rooms Guest satisfaction accepted systems for itlternatiomtl hotel standards; (2) AAA's cmphasis
Restaurants on specifics and overall service quality is useful for comparing ('hina's
Bars
Quality of Facilities method: and (3) although the design of the Chinese rating system is
Range of services based on European and Asian hotel ewtluation systems, Chinese hotel
AAA diamond rating system: operations are heavily influenced by American practices. Hcncc, using
Exterior Housekeeping
Public areas Maintenance an American rating system is useful for practical purposes. A summary
Guest room decor Management of the major differences between the two systems can be sccn in Tables
Guest room equipment Guest services 9 and 10.
Bathrooms

Source: Compiled from A Collection of Docu- Organization and purpose

ments for Hotel Rating in China, China National
Tourism Administration, 1990 and Lodging
Diamond Rating Guidefines, American Auto-
mobile Association, 1989.
Compared with the mandatory Chinese rating system, the A A A rating
is a non-official system conducted by the world's largest motoring and
travel organization. Membership properties, mainly from the USA and
Canada, participate on a w)luntary basis. The purpose of hotel rating is
to provide updated information on accommodations and services, which
are part of member services, to improve travel conditions. In addition, it
provides marketing opportunities for individual properties. For China's
purposes, a mandatory system better serves its primary goal of provid-
ing a central authority with the responsibility for bringing about much
needed standardization and coordination.

13American Automobile Association, Lodg-
ing D i a m o n d Rating Guidefines, AAA, Falls
Church, VA, 1989.
Rating method
The A A A rating classifies properties into nine categories: (1) hotels, (2)
motor inns, (3) motels, (4) country inns, (5) historical, (6) lodges, (7)
cottages, (8) ranches and (9) complexes, according to their architectural
styles and services. 13 Classification enables properties within a particu-
lar service category to improve their ratings without necessarily adding
facilities. Instead of point rankings, qualitative ratings are assigned by
the AAA's Committee on Accommodation, which reviews the inspec-
tion reports along with member comments and past records.
By contrast, the Chinese system does not distinguish between hotel
types for rating purposes. It assumes that hotels in China are more
homogenous since there are few automobiles and because of tile
relatively short history of hotel development, along with predominantly
pleasure travel, which has resulted in hotels that are concentrated in
similar urban settings. The biggest drawback to having one standard for
all properties is that properties cannot significantly improve their ratings
without adding physical facilities. While this may be warranted in some

Table 10. Summary of major differences between the Chinese star rating system and the AAA
diamond rating system.

Items PRC star rating system AAA diamond rating system

Source: Compiled from A Collection of Docu-
ments for Hotel Rating in China, China National
Tourism Administration, 1990 and Lodging
Diamond Rating Guidelines, American Auto-
mobile Association, 1989.
Authority Official, CNTA Government agency Non-official, professional association
Participation Mandatory, all tourist lodgings Voluntary, AAA members
Rating purpose Management, marketing national Consumer information, marketing
standards
Rating method Rating without classification Classifying before rating
Scoring Mostly quantitative point system Qualitative, non-point system
Inspection Large number of inspectors with Small number of full-time hotel
short training sessions professionals with experience
Guest satisfaction One of the decisive elements of rating Informafly considered
Service requirement General, list items, not specific Specific action requirement
actions

446 TOURISM MANAGEMENT December 1993

 A.v~c~'xmenl o] ltw hotel raling .syxlem in ('hina
cases, it may not be desirable in terms of providing a balanced .nix of
hotels for different market segments.

Rating standard,s"
In the A A A diamond rating system, a property is evaluated on the basis
of (1) physical aspects - exterior, public areas, guest room decor, guest
room equipment and bathrooms; and (2) service aspects - housekeep-
ing, maintenance, management and guest services. Corresponding items
in the Chinese rating system can be seen m Table 10. Physical items are
rated 'expected', 'suggested', "acceptable', or 'detracting'. For example,
for 'Lobby furnishings', seating areas are 'suggested' for two-diamond
hotels but 'expected' for three-, four- and five-diamond hotels. On the
other hand, swag lamps are 'acceptable" for two-diamond hotels but are
rated 'detracting' for higher categories. Hence, certain facilities may not
be appropriate for higher level hotels in the A A A system, while under
the Chinese system the higher level hotels must include all the facilities
of lower level hotels and more.
Perhaps the most notable difference is that while the Chinese system
uses both quantitative and qualitative scoring for physical facilities, the
A A A uses only qualitativc assessments. Anothcr difference in the
service aspect is that the A A A rating includes management services,
while the Chinese system tends to be more result-oriented by including
items like cleanliness and guest satisfaction.
Moreover, the A A A system provides detailed guidelines for em-
ployee actions, in addition to requirements for expected levels of
service. For example, under 'Guest reception', duties of the doorman
are listed:
• open driver's door;
• provide direction to front desk;
• learn guests' names;
• explain parking options;
• extend friendly greetings:
• promptly unload luggage.
By contrast, the Chinese system gives only a general description of
tasks. For example, duties under 'Doorman service" are identified as
"guest service, luggage attendance and reception'. Each item is then
judged in terms of accuracy, attitude and promptness. Hence, service
requirements are much more detailed, specific and action-oriented in
the diamond rating system.

Assessment of hotel rating system in China

The Chinese hotel industry has been influenced substantially by the
mandatory rating system for tourist hotels, particularly through its
regulatory capacity. Due to the recent downturn in tourism due to
political unrest, some hoteliers may desire lower ratings to increase
occupancies through lower prices, ttowever, as tourism improves, as is
indicated by a reported increase of 36°/, in the first half of 1992, it is
expected that hoteliers will increasingly regard the rating process more
positively. Ratings will give them the opportunity to increase their
prestige, recognition and competitive advantage. Although the full
impact of the rating system is difficult to assess at this time, preliminary
observation and analyses show that important changes have already
occurred in terms of improvement of facilities and services of hotels,
establishment of national hotel operating standards, provision of a hotel
databank and establishment of CNTA as a central authority for hotel
development.

TOURISM M A N A G E M E N T December 1993 447

Assessment of the hotel rating sys'tem in ('hirer
14CNTA, 'Regulation of tourist hotel rating
in China', op cit, Ref 3, p 138.
l~Xin-Zeng Wang, 'China has 901 star
hotels', The People's Daily (overseas edi-
tion), 16 May 1992.
~SCNTA, 'Master plan of tourism develop-
ment in China for the eighth five-year plan',
op cit, Ref3.
170p cit, Ref 8.
448
Encouragement of lMl-scale service and quality as tm ongoing strategy I~J
improve visitor accommodation
Improvement of facilities and services. Upgrading of facilities and
services results from the new rating system, since most hotels find it
necessary to install new facilities, to renovate or to provide additional
service programmes in order to meet the requirements. Additionally,
the stringent rating requirements have encouraged hotels to pay more
attention to operations. Many hotels have initiated various training
programmes to improve employee skills. Moreover, since each hotcl
determines what level it will apply for, management is forccd to
evaluate its resources, performance and future potential.
Finally, the new system has an economic incentive for improvement,
since state-owned hotels with a rating recognition are entitled to collect
an additional 10% service charge. ~4 Half of the money is contributed to
a general fund for national promotion of hotels, while the other half is to
be used by the hotels for training and employee benefit programmes.
Further limitation of the number of lower quality hotels. Preliminary
results show that the majority of Chinese hotels are at the lower
rankings. Out of the 901 hotels that have obtained their ratings, 63.7%
(or 574 hotels) were in the one-star and two-star categories; 34% (or 306
hotels) were rated with three or four stars; and only 2.3% (or 21 hotels)
received top five-star rankings. ~5 In the current situation of overcapa-
city, it is possible to adjust supply to match demand simply by
reclassifying some of the one-star hotels to accommodate the domeslic
market where there is strong demand.
Accleration of nation-wide hotel renovation. Renovation is expected to
continue to play an important role in improving the Chinese hotel
industry. First, converted guest houses must be refurbished in order to
achieve international standards. Second, newer hotels built in the early
1980s have been in operation for about ten years without adequate
overhaul. It is estimated that, by the mid-1990s, about 30% of Chinese
hotel rooms (80 000 out of the total of 267 505) will need to be
renovated. ~6 The rating programme can accelerate the renovation
process and enable the CNTA to work with local hotels to coordinate
large-scale hotel renovation projects.
Establishment of national hotel operating standards for international
competition
Improvement in standards of hotel operation. Implementation of nation-
al hotel operating standards has signficantly improved the degree of
standardization and professionalism of the hotel industry in China and,
hence, its international competitiveness. Eventually, it is anticipated
that rating outcomes will be even more of a factor in setting hotel prices.
Creation of competitive business environment. China's economic struc-
ture and its open-door policy to introduce features of a limited market
e c o n o m y will be increasingly r e f l e c t e d in hotel m a n a g e m e n t
bureaucracy. 17 The rating of hotels will also contribute to an increasing-
ly competitive business environment through greater accountability of
individual properties. If properly managed, competition can be the
impetus for greater cooperation and coordination, particularly in inter-
national marketing.
Development of training programmes to assist hotel managers. Even with
specific standards and goals for service quality, hotels lacking sufficient
TOURISM MANAGEMENT December 1993

~SCNTA, 'Master plan of tourism develop-
ment in China for the eighth five-year plan',
op cit, Ref 3.
TOURISM M A N A G E M E N T December 1993
Assessment of the hotel ratingsystem in China
management skills may be uncertain as to how to achieve them. Hence,
it would behoove CNTA to develop high-quality national training
programmes for management and employees. This would counteract
the misconception that only line position employees need training, but
not the managers. Further, if CNTA develops qualification guidelines as
a reference for key position managers, it would help with job selection
and motivation. It is also desirable that tourism education departments
allocate more funds to launch new management training programmes to
augment existing programmes.
Development of Chinese hotel chain operations. The Chinese hotel
industry is moving toward gradual networking, which requires con-
tinuous cooperation among individual hotels. The current rating system
enables better consolidation of an emerging industry lacking consistent
product, identity and performance. However, the hotel industry in
China faces the tremendous challenge of a general slow-down of tourist
traffic coupled with an over-provision of hotels. As each hotel is under
severe pressure to compete for visitors, competition through internal
price cuts can only result in loss for the industry as a whole.
The rating system encourages and facilitates cooperation through the
development of Chinese chain operations, which could be further
developed. Consolidated hotel management is a powerful tool to
increase operational efficiency and thus competitiveness. Other benefits
are market positioning through brand recognition and networking. In
the past few years, there have been several attempts to establish hotel
chains in China. Some of them are loosely organized for joint promotion
activities while others are successful management companies with
contracts in several major cities.
Provision of information database J?~rhotel management, marketing and
planning in China
Coordination of hotel marketing activities. Although hotels affiliated
with big international chains are able to provide world-wide booking
service through their reservation systems, the vast majority of hotels in
China are isolated operations unknown to international travellers. Some
hotels mainly rely on year-round room bookings with a few domestic
travel agencies like China International Travel Services (CITS) and
China Travel Services (CTS), whose tour-package components are far
from standardized. Hotel marketing and promotion suffers further from
lack of experience and resources. The Department of International
Marketing of CNTA has controlled less than $2 million worth of annual
marketing budgeting in recent years.
With the ratings system, the marketing endeavour could be greatly
enhanced. CNTA could publish a national hotel directory using the
rating system for travel agencies, tour wholesalers and individual
travellers. To whatever extent possible, C N T A could use fees collected
to increase its national marketing programme. Hotels ranked in the
same star category could also establish referral and reservation net-
works.
Need for feasibility studies for hotel development projects. Since the
rating system provides a complete inventory of available tourist hotels in
China, it can be used to assist nation-wide hotel planning and develop-
ment. Within the next five years, the government plans an addition of
20 000 new hotel rooms in some secondary destination cities. The
annual growth rate is 1.6°/,,, which is substantially less than than the
growth rate in the 198l)s. TM Ratings can help CNTA determine the
449
Assessment o f the hotel raling ,s3's'lem in (hirer
desired number e l hotels at each Sial Icxcl, thus l~iovicling a ,_,tlitic_. i<,~
the construction of new or renovation of existing hotels.

Establishment of a national hotel research system. I..Ising lhe dal'a Ironl

the rating system, the C N T A could establish a national hotel dalabas,,'
and research system which would provide information on availabilii\,
distribution, occupancies, quality and operational ratios to analyse the
structure and performance of hotels. This would facilitate thc inf(~rma-
tion needs for management, marketing, education and research in lhc
hotel industry. It would also provide critical information for long-term
hotel planning for the nation.

Establishment o f C N T A as the central authorio' for hotel develol, m'nt

Under the current system, the rating regulation designates only C N I ' A
and its authorized local branch offices to grant hotel licences. This has
resulted in greater control and coordination within the hotel industry in
China. The rating system enhances C N T A ' s central administrative
authority for policy making. Through its licensing authority. C N T A
must approve all new hotel projects. Combined with other types of
market information, hotel rating could thus provide guidelines for
needed facilities. Having a central authority is seen as the remedy for
the lack of coordination and confusion resulting from a complicated
system of hotel affiliation, ownership and financing, it then becomes
possible to achieve a greater degree of master planning and overall
administration.
While continued central leadership is seen as desirable for consistcn-
cy's sake, clear lines of authority and responsibilities of government
agencies need to be specified. In addition, channels for cooperation and
communication need to be established and managerial and operational
flexibility granted in order to achieve hotel goals.
In summary, China's tourist accommodation is expected to be further
improved as a result of more experience with the rating programme.
With its national standards, the rating system substantially enhances the
potential for the Chinese hotel industry to meet international standards
competitively. As an administration strategy, the rating system plays a
decisive role in helping government oversee national standards, market-
ing, planning and future hotel development. The challenge is to
overcome operational limitations by improving the rating system itself.

Operational limitations and recommendations

There are a number of operational limitations that tend to hinder the
success of the rating system, including requiring a uniform system for all
hotels, inconsistent scoring requirements, unspecified service require-
ments, and a lack of incentives to maintain standards continuously.
The overemphasis on physical standards is due partly to the lack of
classification of hotels for rating purposes. Hence, hotels of different
service categories are evaluated on the same basis, even though they
may be different types of operations. Most problematic is the fact that
higher ratings are usually obtained through added or improved facilities.
As a result, hotels may be motivated to install additional facilities
required for that rating, whether or not they are economically feasible
or appropriate. Finally, many of the conversions are undertaken
without consideration of market demand. What is desirable is a
balanced mix of facilities and establishments.
Furthermore, many hotels respond to hotel rating with an isolated
campaign to meet the government requirement. Before an inspection
they may implement p r o g r a m m e s such as 'five-day quality project' or
'service week' in order to achieve instantaneous results. What is needed

450 TOURISM M A N A G E M E N T December 1993

 A.;,s'es,sment o f / h e tu>tel ratin L, s'ys/em in ('hina

are consistent and continual long-term operational hotel p r o g r a m m e s

with follow-up procedures to motivate employees and improve opera-
tions. With the aforementioned operational limitations in mind, four
recommendations can be made to improve the hotel rating system.

Apply a classification scheme

The Chinese hotel industry is diverse in terms of size, economic type
and client base. Without a classification system, the current rating uses
the same standards to measure vastly different types of establishments.
Furthermore, small limited-service hotels cannot earn a higher rating
even though they serve their particular market segment very well.
Rating without classification encourages hotels to concentrate more on
facilities. Classification based on size, location and client base would
enable each hotel to strive to he the best within its own class.

hnprove the scoring system

For a number of items the minimum score requirement is extremely
high, and the difference between star categories is minimal or zero (see
Table 6). For example, even a one-star hotel needs to score 90% for
maintenance, cleanliness and service quality. It is also questionable
whether small differences of 2'7,, between two- and three-star hotels or
3'Yo between three- and four-star hotels are meaningful. In some cases,
the same cut-off point is used between categories. For example, the
maintenance and cleanliness items require scores of 90% for one- and
two-star hotels and 95'7`, for four- and five-star hotels. Better incentives
for i m p r o v e m e n t would exist with more meaningful differentiation
between scores and more consistent graduated levels. Finally, some
consideration should be given to simplifying the details of the scoring
system so that it is not so cumbersome. The qualitative scoring system of
the A A A could provide some practical guidelines for streamlining the
Chinese system.

Specify quality and service guidelines

While serving as a check-list for hotel inspections, rating guidelines are
also valuable indicators of ways in which hotels can improve. The first
two sections of the rating guidelines (Required facilities/Range of
services, Quality of facilities) provide very detailed and quantitative
standards. However, the rating system does not give meaningful guide-
lines in terms of maintenance, cleanliness and service quality. It simply
lists areas or items to be inspected, but there are no specific standards in
terms of what needs to be done to meet the requirement. The system
needs to incorporate specific guidelines and be action-oriented in order
to clarify expectations.

Maintain standards after rating

Maintaining the expected standards after a hotel has obtained its rating
needs to be stressed. In some cases, hotels can make significant
improvements and manage to meet minimum requirements at the time
of hotel inspection. However, a property may regress shortly after
acquiring the rating without periodic follow-up inspections and other
incentives.
In spite of all difficulties, the rating system has been implemented
successfully and objectives are being achieved progressively. The rating
system, however, must be reviewed and improved on a regular basis so
as to guide the hotel industry properly.

TOURISM M A N A G E M E N T December 1993 451

Assessment of the hotel rating system in ('him~

Conclusion
The hotel star rating system in China, as an administrativc strategy, has
created a stronger and more unified central leadership which is expected
to play a more decisive role in overseeing the planning, deveh~pment
and administration of the hotel industry. Through implementation of
the rating requirements, the Chinese hotel industry has gradually moved
towards a greater degree of standardization and professionalism. The
most notable results are: (1) improvement in service and quality in
visitor accommodation in China, (2) establishment of national hotel
operating standards, (3) a hotel database that has the potential for
better management and development of the hotel industry, and (4)
better central control and coordination of the hotel industry through the
establishment of CNTA as the central hotel authority.
Despite these successes, there are a number of operational difficul-
ties. A comparison with the American Automobile Association di-
amond rating system provides some useful insights. Rating without
classification ignores the diversified nature of Chinese hotels. Inconsis-
tencies in ratings and a complicated scoring system overburden thc
rating process. Overemphasis on physical requirements encourages
heavy capital investment in lieu of improving overall quality and
services. Employees are not provided with sufficient guidance as to how
they might improve their performance, since quality and service re-
quirements are not specified. Finally, there is a lack of incentive for
continuous maintenance of standards.
This study addresses these operational limitations by recommending
the adoption of a classification system, simplifying and restructuring the
scoring system, provision of quality and service requirements, and
continuous monitoring and incentives to maintain standards.
The full potential of hotel rating can be achieved only if it is also
included as a major management tool in the administration process. It is
necessary to develop other supporting programmes to establish a
consistent hotel management system. Steps can be taken to establish
national hotel research and training programmes, to plan hotel renova-
tion and new projects with better market information obtained through
hotel rating and to integrate rating with the development of an
improved marketing system and Chinese hotel chain operations, in
addition, it still takes time for CNTA to delineate responsibility and
coordinate comfortably with other government agencies. With its
regulatory capacity and economic incentives, hotel rating can continue
to be a significant motivating factor for ongoing improvement of
Chinese hotels.

452 TOURISM M A N A G E M E N T December 1993