Budget Hotels in China Booming
OCTOBER 19, 2006. The recipe of 'two-star lobbies, three-star rooms and four-star beds' is increasingly popular with tourists and occupancy rates are going through the roof. According to the municipal tourism bureau during the week-long National holiday, occupancy rates at about 3,000 budget hotels in Beijing reached 90 percent. Major tourist destinations such as Shanghai, Qingdao, Hangzhou and Ningbo reported similar rates.
Jinjiang Inn, China's largest budget hotelier, had opened 139 hotels with 19,812 rooms by June this year and has almost doubled capacity each year for the last three years. Other domestic operators like Home Inn and Motel 168 are expanding through franchising and certified operations, which are key expansion models for budget hotels in China.
Wei Xiao'an, a researcher with the Tourism Research Center of China's Academy of Social Sciences, said, 'The budget hotel boom shows that recreation tourism is gaining popularity among ordinary Chinese people.'
Wei Xiao'an said budget hotels are a relatively new concept in China and do not yet have an official definition, but industry insiders say budget hotels have 'a two-star lobby, three-star rooms and four-star beds.' A neat phrase if not a precise definition.
The lack of a precise definition means that the total number of budget hotels is unknown. According to the National Tourism Administration, 60,000 of the nation's 260,000 hotels, with a combined 3 million rooms, are budget hotels.
Wei Xiao'an said, 'Generally, budget hotels only provide bed and breakfast. They are as good as three-star hotels, but have no resplendent lobby, no conference rooms or entertainment centers. Some don't even have dining halls. Unlike hostels and boarding houses, budget hotels have to be part of a chain that offers standard facilities and services.'
He Hongzhang, CEO of Top Star, a domestic budget hotel chain that hopes to open 1,000 outlets by 2015, budget hotels are generally cheaper than three-star hotels in similar locations. Rates range from RMB100 to 200($12.5 to $25), 15 to 30 percent down on three-star hotel rates. He said budget hotels usually target people aged 25 to 35 with a monthly income of RMB3,000 to 5,000 RMB ($375 to $625).
China's domestic hotel market is expected to boom in the lead-up to the 2008 Olympic Games and the 2010 World Expo.
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