Consider The Development Strategy Of Economy Hotel

Economy Hotels was introduced into China in1990s. It has became a symbol In1996that Jinjiang group established the first Economy Hotel Jinjiang Inns. In21Century, all kinds of Economy Hotels brands such as Jinjiang Inns, Home Inn, Hanting Express began to spring up. Some of them like7days Inn have made great achievement in domestic service network.The competition era of Economy Hotels in China has already come.While domestic brands were making a rapid growth, the foreign brands poured into the budget hotel area at the same time. Ibis, Super8Hotel group have made huge investment in China. Some foreign brand even made expansion at a rate of200%-300%per year. The competition has become increasingly white-hot.Because Industry and academia are still in an exploratory stage to acknowledge the economy hotels sector, it causes some confusion and misunderstanding of the operation. A lot of investors themselves couldn’t tell the difference between the middle and low-end product, leisure or business hotel, let alone the consumers. Despite the rapid growth, economic hotel sector is facing a lot of challenges such as lack of experience, inappropriate management, short of staff, and weak marketing concept. Due to the blind investment and inefficient management, some small companies are facing the operational and survival dilemma.Local companies have lost the competition in High Star Tourism Hotels market in the past, and today they are facing the invasion of foreign investors. Keeping local advantage and making improvement are the keywords.This article analyzes several aspects of competition situations such as environment, service, price, marketing and brand name for economy hotels sector especially emphasizing on environment and brand name, which shows the necessity to have a model of chain operation and to develop in scale and intensification. The four biggest economy hotel groups in China are Home Inn,7Days Inn, Jinjiang Inn and Hanting Inn. In the first quarter of2011, each of them shared a marking quota of16.58%,10.53%,9.93%and9.23%, which was in total46.27%. It was a low percentage in market share obviously.There were more than300brands and5000+hotels joined the completion. According to the experience of developed countries, a mature market can only accommodate3to5brands, and the profit reduces greatly after3rd. Domestic market is now stepping into a period of adjustment and market concentration will be improved through mergers and acquisitions.A large-scale economy hotels can take full advantage of online reservation, complementary with SMS and telephone reservation, and plus a perfect CRM system. CRM is a protracted war, which combines with the marketing and brand management strategy, and requests a large amount of manpower, material resources and financial resources, yet the result of CRM cannot shows in a short term. CRM strategy needs multiple departments to coordinate."Chain" and "brand name" are the key words of success in economy hotels sector. The first word could enlarge the size of a hotel enterprise, reduce costs through centralized purchase, centralize order and lower vacancy rates; the2nd word can increase hotel’s popularity, extend source of tourists and expand the competitiveness. It’s hard to become a popular hotel without brand name if it only has the scale of chain operation. It’s better to have less than3products under a brand name hotel in order to avoid the confusion. Moreover, most of the economy hotels market is still weak in China. It’s unnecessary and unable to produce more brands. Single brand name’s devolvement and more brand names’ differentiation will make economy hotels market mature.