Home Inn is now the largest domestic economy hotel brand. Starway, as the first and largest mid-range hotel group in China, has opened up another blue ocean by setting its development direction in the currently chaotic mid-range hotel market that lacks strong brands. Although these two hotel brands were both spun off from Ctrip, Home Inn and Starway operate on completely different trajectories.
Home Inn, a Suzhou economy hotel, is now the largest domestic economy hotel brand. Starway, Jinjiang Inn, as the first and largest mid-range hotel group in China, has opened up another blue ocean by setting its development direction in the currently chaotic mid-range hotel market that lacks strong brands.
As of November 2009, Starway had completed its preliminary national layout, with 60 high-quality hotels in 22 cities, including 15 branches in one city and 13 branches in another city. Liu Jiajun, Executive General Manager of Starway Hotel Group, stated that it is expected to have 150 high-quality mid-range hotels by the end of next year.
Compared to economy hotels excessively emphasizing cost compression and simply doing "subtraction," which makes services and hardware appear "rudimentary," Starway does more "addition" in services. It targets business travelers and leisure travelers who pursue a higher quality of life, so it pays great attention to the location of the hotel, room size, facilities, decoration, and even bathing products, all of which are specifically developed and registered as brands, reaching the standards of high-end hotels.
"Starway does 'addition' - we are not an economy hotel," said Liu Jiajun, Executive General Manager of Starway Hotel. For business travelers and leisure travelers who pursue a higher quality of life, economy hotels cannot well meet their needs, hence there is a larger market gap. Liu Jiajun believes that Starway has well filled this gap, thus gaining popularity and recognition from consumers.
As the only national mid-range hotel brand in the current market, Starway's requirements for software and hardware are significantly higher than those of economy hotels. Whether it is the location of the hotel, room size, guestroom facilities, or decoration, they are all much better than those of economy hotels. Bathing products are specifically developed and registered as brands, reaching the standards of high-end hotels.
For example, the actual area of Starway's guestrooms averages about 21 square meters, some even exceeding 30 square meters, which is 17% more than general economy hotels, equivalent to having an extra bathroom space, making living more spacious and comfortable. The configuration of public areas also starts from the customer experience, using high-grade fragrances imported from Europe in the lobby to help relieve stress and uplift mood, something usually found only in top luxury hotels. Another example is that all hotel corridors are carpeted to reduce the noise of dragging luggage, creating a quiet resting environment.
Liu Jiajun indicated that Starway's "addition" often targets the weak points of economy hotels. For instance, bathing products in economy hotels are often relatively simple, with over half of customers choosing to bring their own products, especially female guests, where more than 70% bring their own. Starway has created its own STARESCENTIAL bathing brand, providing customers with safe, high-quality, and comfortable bathing products. During the research and development period, Starway and professional R&D institutions repeatedly tested and selected more than ten factors such as raw materials, ratios, and fragrance types to ensure that the quality comprehensively surpasses household brands.
Liu Jiajun also admitted that Starway's "addition" indeed increases operational costs to a certain extent, but the cost paid significantly enhances customer satisfaction, providing guests with "comfort within a reasonable budget" rather than simple facilities and limited services. Currently, the per-night accommodation fee of Starway is on average about 50 yuan higher than that of economy hotels, which aligns with Starway's market positioning.
Liu Jiajun revealed that after completing the national layout, Starway has locked onto East China, North China, and the Pearl River Delta as the next development priorities, planning to increase investment and distribution in these regions, aiming to add another hundred hotels within a year. It is expected that by the end of next year, Starway plans to have 150 hotels. Liu Jiajun emphasized that mid-range hotels are currently still a "virgin land," with enormous development space for quality hotel brands.
It is understood that there are currently 20-30 major brands in the domestic high-end hotel market, such as InterContinental, Holiday Inn, Shangri-La, with over 500 hotels; at the lower end, there are economy hotels like Home Inn, 7 Days Inn, Jinjiang Inn. Compared to the increasingly clear low-end economy hotel market and the high-end hotel market dominated by foreign capital, the overall domestic mid-range hotel market is still in chaos, predominantly consisting of single hotels without influential or large-scale brands. The rapid development and strong integration of Starway will greatly change the landscape of the mid-range hotel market.
Currently, traditional mid-range hotels—three-star or three-star standard hotels—number approximately 10,000 (in comparison, the number of economy hotels does not exceed 3,000), mostly single hotels. Due to the lack of strong brands and marketing capabilities, these hotels are severely squeezed between high-end hotels and economy hotel groups, leading to a sharp drop in occupancy rates. Most single mid-range hotels survive at the break-even point, or even suffer severe losses.
Experts believe that business travelers actually have a very large demand for mid-range hotels. These guests generally have budgets between 250-400 yuan, which is the market space lacking strong brands but distributed among numerous single three-star hotels. Due to the competitive disadvantage of single hotels lacking strong brands, they cannot compete with chain hotels, causing some consumers to shift towards lower consumption and choose economy hotels. He also pointed out that although economy hotels are popular, their simple services far fail to meet the needs of business people and those pursuing quality leisure travel.
After the emergence of mid-range chain hotel brands like Starway, consumers can now choose high-cost-performance, comfortable mid-range hotels between expensive high-end hotels and rudimentary economy hotels. It is understood that currently, the occupancy rate of Starway hotels generally exceeds 80%, much higher than the around 50% occupancy rate of single mid-range hotels, reversing the predicament of single mid-range hotels under the impact of economy hotels.