As the global emphasis on sustainable development has increased, several international green organisations have emerged, such as Green Global and the World Green Design Organisation. Environmental protection has become the focus of many countries' efforts. One of the products of “green” development is the “green hotel”, the benefits of which have been valued and explored by numerous countries, such as Germany and Canada. However, in China, research on green hotels in small and medium-sized cities is limited. This small exploratory study selected Kunming as a case to study the criteria for a green hotel, the benefits of green hotels, and the opportunities and challenges in the development process. This research summarises the requirements for a hotel to become a green hotel and provides some measures for the development of green hotels in small and medium-sized cities in China. This research used a qualitative methodology, taking green hotels in Kunming as an example of the development of green hotels in small and medium-sized cities in China. A total of 48 green hotels in Kunming were selected as the samples to analyse. The data were analysed by content analysis, and the results show that China's green hotels have developed remarkably in recent years. However, compared with developed countries, China's green hotel movement started late and developed slowly. Kunming is a small to medium-sized city in a remote area, and the auditing standards for green hotels in Kunming are based on Chinese standards. As in other developed countries, this standard is mainly employed to guide and evaluate green hotels. Besides being environmentally friendly, green hotels have advantages over traditional hotels, mainly in terms of economic, environmental and social benefits, and the hotels’ reputations. In the process of development, opportunities and challenges coexist, which means that seizing opportunities and solving problems is an essential task for the long-term development of green hotels. The findings of this study provide recommendations for developing strategies for existing green hotels, involving government support, developing technologies, increasing advocacy, and green design. Based on China's national conditions, the results of this study provide examples for other small and medium-sized cities to help their local hotel industry develop in an ecological, environmentally friendly, and sustainable direction.