On the back of positive predictions about the continued growth
of the Chinese tourist market, the country has become increasingly
interesting to budget hotel brands from home and abroad who’ve
accelerated their plans for expansion in the country in recent
years.
On August 22, Shanghai-based Jinjiang Inn, one of main domestic
budget hotel players, disclosed that its first overseas hotel would
probably be in St. Petersburg, Russia with progress on the deal
expected next year. If their plans go ahead as scheduled, it’ll be
the first for a Chinese budget hotel group to venture into overseas
markets.
In recent years many domestic budget hotel brands like Jinjiang
Inn, Home Inn and Motel168 have expanded rapidly. The competition
between the two big players Jinjiang and Home is regarded as being
fierce. ?
Jinjiang Inn is a subsidiary of local hotel giant, the Jinjiang
Group. It now has 139 outlets, according to information released by
them on August 26. Their rapid expansion is much quicker than their
strategy announcement two years ago. Then they discussed plans to
open 200 hotels in 3 to 5 years.
Another domestic budget brand, Home Inn, disclosed this month
that it has 150-plus hotels in total with a presence in over 40
Chinese cities. Founded in June 2002, Home Inn owns the largest
number of hotels among domestic budget hotel brands.?
Home Inn is being jointly developed by Ctrip.com and the Capital
Tourism Group. Ctrip.com is China's biggest online travel agency.
Home Inn says it plans to have a total of 180 hotels by the end of
this year.
The two brands are both said to have plans to take the IPO route
to access funding for their expansion plans, an industry insider
observed. Home Inn is seeking to go public through NASDAQ while
Jinjiang Inn is expected to take the Hong Kong route.
Motel 168 has also expanded its network and now has?39
hotels. But domestic brands are not the only players in the field
keen to grow. The Chinese market is also attracting the attention
of foreign hotel groups.
On August 29, the Super 8 franchise, the budget brand of the
US-based Cendant Hotel Group, arrived in Xiamen, a coastal city in
south China’s Fujian Province. Their Xiamen hotel is their
42nd in China. At present they’ve established a network of hotels
in 24 Chinese cities.
Another international hotel giant, Accor, currently operates
four Ibis budget hotels in China. They plan to increase their
network to 50 by the end of 2008 with an investment of US$250
million, said Brian Deeson, Accor's CEO (Greater China) in
June.
But as more budget hotels expand, risks are also emerging. At
the Fuzimiao (Confucius Temple) , a wonderfully scenic area in east
China’s Nanjing City, 50 budget hotels have gone into operation
from last year alone. ?
Competition between these hotels also exists in some secondary
cities. In Zhenzhou, capital of central China’s Henan Province, two dozen budget hotels have
opened in the last 15 months. Some hotel operators have complained
that income can’t offset the increased running expenses after
becoming part of a hotel chain brand.?
(China.org.cn by Wang Zhiyong, August 10, 2006)