Chinese budget hotel chains are expected to see steady development in the next two years, while players in the sector have started to develop mid-tier businesses, industry observers said.

As the Chinese economy is showing signs of stabilization and recovery, budget hotel chains such as Home Inn should see their occupancy rates remain above 85 percent in the next two years, according to a report issued in August by Guotai Junan Securities Co.

Four of the largest five hotel companies in China are budget hotel chains, indicating that the sector has seen strong development and is widely recognized by Chinese customers, a report released by the China Hotel Association showed.