Even large players do not have an easy time. Homestay platform Tujia started to receive cancellations of orders at the beginning of January. The majority of the cancellations took place from Jan 20-27 and peaked on Jan 23 when Wuhan was locked down.

The company's business in Hubei province, the epicenter of the epidemic, has been affected most seriously. There have also been large numbers of cancellations in popular tourist cities across the nation including Beijing, Chonqqing, Hangzhou in Zhejiang province and Sanya in Hainan province. Even its business in overseas markets such as Osaka, Singapore, Nagoya and Kyoto has been affected.

Unlike lodging service providers in cities, who are anxiously finding their way out, homestay providers in the countryside are telling a somewhat different story.

Lodging service brand Lost Villa started operations in Zhejiang's Mogan Mountain in 2013. Over the past seven years, it has opened 11 chain stores in Zhejiang and Jiangsu provinces and the Ningxia Hui autonomous region.

Spring Festival is usually the best business season for Lost Villa, with even more tourists than during the National Day holiday. But now they have been closed down due to safety concerns, which will result in about 5 million yuan in losses, said founder Ji Xiaoxiang.

But Ji looks on the bright side. The company has taken the time to revise its services and internal management. An online meeting is held every three days among the management team to analyze specific cases in the past. It has also rolled out online training courses for its employees.

"We have been so busy building up our brand and businesses in the past that we did not have the time to look back. The unexpected sudden pause caused by the epidemic has provided us with the opportunity. I am also able to know my employees much better via the online meetings and training.

"The epidemic has somehow helped the industry to look in retrospect at its original objective－catering to city-dwellers' craving for a simple and more idyllic life. In this sense, only lodging services in the countryside can satisfy such demand," Ji said.

"People are saying that the industry is reshuffling at present. But the fact is, reshuffling is happening all the time even without the epidemic. The important thing is to stick to industry logic and address true market demand," he said.

Tujia's chief branding officer Li Zhenni explained that the lodging service industry will enter a new phase given the fact that China's economic growth is more consumption-driven, and more innovative technologies are being applied in lodging services with more related regulations to be introduced.

"The industry is undergoing a process during which only the fittest will survive. The threshold will be increasingly higher and service quality will be improved accordingly. The epidemic has only accelerated this process. It is a challenge for the entire industry, but it will certainly usher in a new era when the epidemic ends," Li said.