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Hotels

Growth shifts to mid-range
as category rationalizes
 
The three hotel brands that rank in the BrandZÔ Top 100 Most Valuable Chinese Brands – Home Inn, Hanting, and JinJiang Inn – grew 8 percent overall in value, down from an 11 percent increase a year ago, as the hotel category experienced a period of rationalization. Hanting increased 25 percent growth, in part because of strong performance in top tier cities.
 
The greatest opportunity – the mid-priced segment of the market – resulted from less high-end demand, in part because of the government discouragement of extravagance, and heated competition among budget brands.
 
Domestic tourism, a government strategy for driving consumption, remained strong. Budget airlines flying to more domestic destinations, and the growing network of high speed rail, facilitated more affordable travel.
 
In addition, local governments invested in historical restoration projects to attract tourists, and more theme parks, such as Disney World Shanghai, appeared. Inbound tourism rose 3.8 percent during the first half of 2016, according to the China National Tourism Administration.
 
Hotel category rationalization included the Homeinns Hotel Group merger into BTG Hotels Group, a State Owned Enterprise (SOE). Homeinns operates around 3,000 hotels in China, including the budget Home Inn brand and the more upscale Yitel brand. Similarly, state-owned JinJiang International acquired a budget and midrange hotel group called Plateno.
 
Hanting increased the number of the more profitable mid-level hotels in its mix. It also launched a campaign focused on cleanliness to differentiate from other economy hotel brands. In addition, Hanting continued to expand and upgrade its properties, opening around 772 new locations and closing 205. And the brand also took steps to strengthen loyalty and direct sales.