Sat, July 13

The Current Situation of Rural Homestay Businesses in China in 2023

The closure of 80,000 rural homestay businesses has led to a stark contrast from the days of high demand to now being deserted. Once popular nationwide, why have rural homestays fallen out of favour? A decade ago, rural homestays were well-known for their offerings of rice field fish, free-range chicken, wild boar, and organic vegetables. During weekends and holidays, the entrances of these homestays were always packed with cars, requiring reservations a day in advance and still facing a two to three-hour wait upon arrival. However, today, these homestays are struggling, with some going from hosting hundreds of guests daily to almost no visitors at all. In 2019, there were over 195,000 rural homestay-related businesses in China, but by 2012, this number had dropped by nearly 30%. According to data from Tianyancha, over 81,440 rural homestay-related businesses have been deregistered or revoked in recent years. Many of the remaining homestays are also not doing as well as before. Why were rural homestays once so prosperous, and why are they now closing in large numbers?

The model of rural tourism emerged as early as the 1980s. At that time, some affluent urbanites began to pursue the experience of rural living, choosing to stay in farmhouses, enjoy home-cooked meals, participate in farm activities, and indulge in rural leisure as a trend. This model is very simple, with villagers utilizing local resources to renovate and expand their own homes for guest accommodation, then putting up a sign to open for business. The ingredients are also straightforward, including home-raised chickens, ducks, cows, and sheep, as well as homegrown eggplants, peppers, cabbage, potatoes, etc., supplied according to the season. Customers can taste fresh local produce based on seasonal availability.

Around 2010, with the further development of the urban economy, rural tourism ushered in a boom. A large number of urban white-collar workers, to experience the natural atmosphere of the countryside and taste authentic farm meals, were willing to drive tens or even hundreds of kilometres to remote rural tourism spots for day trips. Fueled by the enthusiasm of people’s extravagant spending, rural tourism reached its peak. Various venues with names like “XXX Farmhouse”, “Farmstead”, “Countryside Restaurant”, or “XXX Family Farmhouse” sprouted up in the suburbs and rural towns like mushrooms after rain.

The threshold for opening a shop is not very high. Firstly, the location is crucial. It is best to choose a place where urban and rural areas meet, at a moderate distance from the city for easy day trips. The scenery should be pleasant with fresh air. Secondly, it is necessary to offer several signature dishes from the countryside, such as free-range chicken, wild boar, organic cabbage, etc., to ensure that customers can enjoy unique delicacies that they cannot find elsewhere. The main selling point of the shop is the combination of delicious food and beautiful scenery, providing customers with a tranquil and cosy experience. City dwellers can relax here, while rural residents can earn extra income. Some well-managed farm stays can even produce millionaires. For example, the first farm stay in China, Xu Family Courtyard, was established in 1986. Initially, it only had 13 bungalows, but after four renovations, it has now developed into a four-story building with over 100 rooms, accommodating more than 300 people. Seeing such a successful case, neighbouring villagers also began to follow suit. The Chengdu Nongke Village in Sichuan Province, where Xu Family Courtyard is located, once had over 200 farm stays at its peak, almost one per person. Later, there was an upgrade, and around 2018, there were over 40 rural hotels, including nine star-rated rural hotels. In 2018, Nongke Village received over 1 million visitors, generating an income of over 120 million yuan. In simple terms, this village has established around forty to fifty hotels, hosting an average of over 3,000 visitors daily, with their daily spending exceeding 300,000 yuan.

With the success of Nongke Village, many places have followed suit and opened their own signature farmhouses for leisure activities. These farmhouses typically have several stoves, and a spacious farmyard, and focus on providing a comprehensive experience. In addition to offering delicious food, they also have play areas, picking areas, and resting areas. Furthermore, the number of dishes and prices at these farmhouses are relatively high. According to regional distribution, Sichuan, Hubei, and Chongqing were the top three regions with the most farmhouses in 2020. This business model seems quite good as urbanites enjoy the fun while villagers make money. The core reason behind this success lies in overcharging customers.

You may still remember the overcharging incident in Xue Xiang in 2017. Xue Xiang is also a type of farmhouse that focuses on learning Northeastern cuisine and providing cosy cabins for accommodation. Due to the popularity of the TV show “Where Are We Going, Dad?” Xue Xiang suddenly became popular overnight, attracting numerous tourists. However, excessive praise is not a good thing. During the peak season in 2017, some tourists booked a three-person heated brick bed for two nights at 552 yuan, but the inn suddenly raised the price and refused to refund, directly increasing the original price of 100 yuan per night to over 1000 yuan. Some tourists also revealed that a box of instant noodles cost 60 yuan, a plate of fried meat cost 288 yuan, and many rooms and food items were not priced, leading to dissatisfaction when customers were charged arbitrary prices after consuming. The aftermath of this incident was that the inn was fined nearly 60,000 yuan, the tourism industry in Xue Xiang was severely affected, going from overcrowded to deserted, and the tour company’s business decreased by two-thirds. Despite local tourism authorities carrying out rectification and supervision, the number of tourists in Xue Xiang has not recovered to its previous levels. Once integrity is lost, it is difficult to regain credibility.

Xue Xiang is not an isolated case, as many farmhouses have failed due to overcharging. Charging 50 yuan for a plate of vegetables, 80 yuan for wild vegetables, and 200 yuan for a chicken, treating customers like fools. The key issue is the mismatch between the quality of ingredients and the prices. Some consumers who used to frequent farmhouses mentioned that in the past, they could see the owners personally picking vegetables in the fields or see the free-range chickens on the farm. However, now many establishments directly purchase ingredients from the market, and some even buy semi-finished products. With the decline in ingredient quality and increasing prices, it is understandable that consumers are reluctant to pay.

The second reason for the decline of rural homestays is the serious homogenization and inconsistent experiences. Many rural homestays are essentially replicas of urban restaurants, simply transplanted to the countryside. They surround themselves with a garden, dig a pond, set up a few stoves, place some tables, add a few chairs, decorate with fruits and vegetables, and display some old rural items, all under the guise of being a rural homestay. The environments are similar, the dishes are more or less the same, but the taste can be vastly different. This is because many rural homestays’ chefs are not professionally trained in the culinary industry, leading to inconsistent quality control, resulting in dishes being too salty or too bland, depending on the chef’s improvisation that day.

Furthermore, rural homestays are typically short-lived businesses, with low repeat customer rates and customer loyalty being hard to maintain. Most customers visit for a fresh experience and are unlikely to return. When there is a trend, it may seem very profitable, leading to a frenzy of new homestays opening up everywhere. However, the weekend spending habits of customers at most rural homestays vary greatly, resulting in unstable revenue. As a result, after 3-5 years of operation, most homestays end up succumbing to the curse of closure.

In recent years, the COVID-19 pandemic has exacerbated the challenges faced by rural homestays. Those that rely on holiday openings have been hit hard, with many unable to survive even half a year and choosing to close voluntarily. Additionally, since the introduction of the “Eight-point Regulation” in 2012, the ban on using public funds for dining has led to a significant drop in business for rural homestays overnight.

The third reason for the decline of rural homestays is related to food safety and hygiene. In March 2021, a consumer exposed a popular dish at a rural homestay in Changchun – stewed goose in an iron pot. According to the exposure, the homestay reheated the leftovers from the previous table and added new ingredients before serving them directly to the next table of customers. The homestay explained that it was an old soup, but in reality, this practice poses a food safety hazard. Even for popular rural homestays with good business, hygiene conditions are often criticized. Last year, the market supervision and management bureau in Deyang conducted a surprise inspection at a local popular rural homestay and found numerous issues. The staff’s health certificates had expired, and various ingredients were haphazardly piled in the warehouse without labels indicating their source, production date, and shelf life. Additionally, the bottoms of washed dishes were burnt yellow, and there were mosquitoes present.

In April 2020, Beijing reported a food poisoning incident at a rural homestay. At that time, over 200 tourists dined at a rural farmhouse restaurant, with 73 of them experiencing symptoms of food poisoning and requiring emergency medical treatment.

In addition to food safety issues, many rural farmhouses also face other safety hazards. For example, in 2013, a farmhouse in Jilin province experienced a carbon monoxide poisoning incident, resulting in 11 people falling ill. After paying some of the medical expenses, the owner directly closed the farmhouse and disappeared from then on. Similarly, in 2020, the roof of a farmhouse in Longchang, Sichuan collapsed, injuring 26 people, with six of them suffering fractures. Faced with such dire situations, many farmhouses have quietly transformed into rural homestays, offering activities such as local tours and camping in an attempt to find new directions for development. The term “rural farmhouse” seems to have become a thing of the past.

In reality, the purpose of rural farmhouses is not just to provide a genuine rural experience, and consumers are not necessarily seeking farmhouses or farm-style cuisine. Instead, they are looking for a healthy, eco-friendly lifestyle and dietary preferences. Only by providing a good experience can businesses retain repeat customers, rather than simply raising prices or offering high-end hotel services. If the focus is solely on deceiving customers, they may only fall for it once. For those farmhouses still in operation, reform is imperative to avoid being phased out.