Top Biz News

Budget hotels eye expansion

By Ding Qingfen (China Daily)
Updated: 2007-05-04 09:06

China's budget hotel operators are racing to expand in a bid to secure their share of the growing travel market.

As personal incomes have risen over recent years, so too has people's desire to travel. In response, hotel owners have been keen to open more units and spruce up their image.

Leading the way on expansion is Jinjiang Inn, a subsidiary of theShanghai-based Jin Jiang Travel. Already the country's largest hotel group by number, it plans to increase its total units from 118 at the end of last year to 180 by the end of this.

Home Inn, which is currently the nation's second largest group, also has ambitious plans. It says it wants to grow its number of outlets to 200 by the end of the year, which would give it the top spot.

Although China's first budget hotels, Jinjiang Inns, opened their doors in 1997, the market did not really take off until 2004 with the arrival of a slew of new brands, including Hotel Home, Seven Days Inn, City Inn and Joy Inn.

According to the recently released 2006 China Budget Hotel Report by the China Hotel Association (CHA), at the end of last year, there were close to 100 budget brands in the country and more than 1,000 hotels. Both figures were up 100 percent on 2005.

Despite the high growth, the report suggests that the budget hotel sector is still far from its saturation point, as it accounts for just 30 percent of the total hospitality market, which is dominated by international brands.

Dai Bin, director of the academic research office atBeijingInternational Studies University, said: "The growth momentum will continue for at least three years."

Of the country's current 1,000 hotels, some 40 percent of them are in East China, with North China accounting for 19 percent.

Zhang Minghou, assistant to the chairperson of the CHA, said: "Regions like North China, Central China and South China are expected to be the hot destinations of the future."

Zhang said that budget hotels also offer good returns on investment, as they are relatively cheap to set up and the payback period is much shorter than for larger operations.

"The average budget hotel costs about 7.3 million yuan to set up and generally becomes profitable within three to five years.

(China Daily 05/04/2007 page3)