Having been rejected from multiple hotels in the past 10 days (I've been traveling with a friend around NW China on vacation), it seems to me that receptionists and hoteliers have been pretty embarrassed/surprised by their government's discriminatory policy toward foreigners.
This is also an observation about Chinese regulatory overreach, how dumb policies enacted at the top can make people at the bottom, through no fault of their own, also look dumb.

For instance, the receptionist at the first hotel we tried tonight called the local police bureau...
to inquire about us using a passport to get a room.

"Can't do it," she told us. "You need a shenfenzheng" — IDs issued to Chinese citizens.

"So, basically no foreigners can stay here," I said.

She seemed truly surprised: she didn't know foreigners don't carry shenfenzheng.
At the second hotel we were rejected from, the receptionist, a young lady, initially agreed to give us a room before realizing we didn't have Chinese ID, which means she had to call her manager.

After putting down the phone, she declared with a brave nod, "We have no rooms."
I looked at my friend and burst out laughing. We laughed for longer than the situation probably called for. Eventually she got the joke, too — her manager had fed her a line, which she delivered with such earnestness that it was comically absurd.
"It's because of the epidemic," she added.

"You can't use this reason for all of your problems," my friend said. "It's because we're foreigners that you had a room and now suddenly don't."

She looked embarrassed. She didn't deserve to be given a hard time by two weary travelers
But I really wanted to tell her something on a person-to-person level. "We're not angry," I said, "but just between you and me, it's been a month, maybe two since China closed its borders to all foreigners. The only people who have been allowed in are Chinese nationals...
"The threat isn't coming from people like us who've been in the country all this time.”

“I don’t know anything about that,” she said.

I shrugged. "Now you do."

As we turned to leave, she practically called out, “I’m really sorry you can’t stay here. Take some of this candy!”
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