The founder and partner of IDGVC, Xiong Xiaoge, once said to the CEO of Hanshin Hotel, Ji Qi, at the Entrepreneurs Annual Conference held last month: "If you can take the Hanshin Hotel public, and turn it into a company worth over 1 billion US dollars, then you will have created a record of being able to run three listed companies consecutively around the world, each with a market value of over 1 billion US dollars." Of the three companies referred to by Xiong Xiaoge, two belong to the economy hotel sector. And this form was an unfamiliar term to Chinese people more than ten years ago.
Economy hotels eliminate facilities that are rarely used but have high costs, such as luxury hotel pools and high-end restaurants. They only provide clean and tidy guest rooms, and achieve scale operation through a standardized chain model. The core lies in high cost performance, rather than the literal meaning of "cheap".
The implantation of this concept into the minds of Chinese people is not accidental. With the opening and continuous growth of domestic and international tourism markets as well as business travel, economy hotels have found their survival space between star-rated hotels and traditional guesthouses, and have walked out a third way in hotel management. This foreign product borrowed from foreign motels has been improved on Chinese soil, and with innovations in product design, management model, and capital operations, it has become a representative product of China's new service economy while sharing the wallets of business people and leisure tourists.
Currently, the trend of differentiated competition among economy hotels has already begun to show signs. For example, Home Inn goes "up" with its "Hei Yi", attempting to enter the mid-to-high end market, while Hanshin's "Hai You Hostel" and Jinjiang's "Bestime Express" go "down", aiming to develop blue oceans.
No matter how the situation develops, products, services, and brands have always been the three shields erected before the enterprise defense line, becoming effective "defensive equipment" for head-to-head battles.
Data shows that by the end of 2008, there were 2805 economy hotels in China, while in 2007, the number of economy hotels in the United States had already reached 60,000, indicating that there is still huge development space for economy hotels in China. More competitors have entered the field, and the key lies in not being blindly aggressive and finding one's own "track".
Commentary:
President of a certain economy hotel
The lower down the pyramid, the denser the population group covered. The positioning of economy hotels captures the lower-end consumption, meeting the actual needs of large groups in the consumer market. However, currently the costs of property, manpower, etc., for economy hotels have been raised to quite a high level, compressing their profit margin very low. The key to winning in the competition lies in scale and differentiation.
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