This paper describes the structure and challenges facing the domestic Chinese hotel industry at the start of the second decade of the twenty-first century. It notes the progress that has been made and the increasing internationalization of the industry and Chinese chains as they commence to raise capital overseas and begin a period of mergers and acquisitions of foreign based chains. An analysis of the balance between demand and supply is provided for different cities throughout China. The challenges facing the Chinese domestic industry and for foreign chains operating in China are classified and a commentary is provided for each of these categorisations.