In recent years, China's big cities quietly emerged in a new hotel business: economy hotels. Providing clean and hygienic rooms, tasty and nutritious breakfasts, convenient transportation and busy locations, brand-name chain operations ...... such hotels have become a very popular accommodation facilities in the coastal cities of the streets and lanes flourished. However, government regulatory agencies are unprepared for the development of this emerging industry, and the academic community has just begun to explore the concept of economy hotels.

The lag of research and the lack of industry management have led to some conceptual confusion and operational misunderstandings in the economy hotel industry. This paper combines the development of economic hotels abroad, summarizes the characteristics of economic hotels in China, tries to make a preliminary concept of economic hotels, analyzes the market demand for the development of economic hotels in China, and puts forward the trend of the future development of this industry, hoping to provide a little bit of thinking for the researchers and managers of economic hotels.

The development history of budget hotels

Budget Hotel is a kind of hotel industry that exists in contrast to the traditional Full Service Hotel. The development of budget hotels in the world has gone through four historical phases: germination and early development; booming period; brand adjustment period; redevelopment period.

The late 1930s to the late 1950s is the germination and early development of economy hotels. The main feature of this stage is the emergence and development of motels.In the 1930s, with the rise of mass consumption and the development of highway networks in the United States, motels began to appear to provide inexpensive lodging services for civilian trips. For example, as early as 1939, the United States Florida several motels spontaneously formed a joint industry organization Quality Courts (Quality Courts), and the following year was renamed Quality Courts United Hotel (Quality Courts United), for single motel owners to provide industry services. After World War II, the economic boom in the United States led to the development of mass tourism, triggering a large demand for low to mid-range lodging facilities; the completion of the intercity highway network contributed to the popularity of the motel. 1952 Holiday Inn was established in 1952, absorbing the experience of the past development of the motel based on the improvement of the quality of service, and for the first time to try to adopt a standardized approach to the replication of products and services in just a decade, along the U.S. highway network to rapidly expand in the United States. time it grew rapidly along the U.S. highway network.

From the early '60s to the late '80s, the budget hotel boomed. The number of hotels grew rapidly, and the product form showed a rich hierarchy, began to develop in the direction of diversification. Chain management began to replace the traditional decentralized business model, single hotel to open up the rapid development of the expansion of avenues, some of the development of a more mature economy hotel began to merge and integrate single hotel. At the same time, budget hotels began to internationalize, spreading from the United States to Canada, Central America, South America and Europe. This expansion simultaneously stimulated the rise of local budget hotels, especially in Europe, which began to grow rapidly. By the end of the 1980s budget hotels had become a well-established hotel business in developed countries in Europe and the United States.

From the end of the 80s to the end of the 90s, the budget hotel industry began to carry out brand adjustment. After a long period of rapid development, budget hotels entered the market maturity, high-speed growth and large-scale expansion of the momentum gradually weakened. The diversification strategy and investment policy of large hotel groups prompted hotel groups to be more inclined to purchase and integrate the original brands in the industry through capital operation, rather than creating their own new brands. Market competition eliminated some weak management force, poor capital operation of the brand, some big and strong brand because of capital strength and management strength become more and more powerful. The intensification of competition forces enterprises to turn to service quality management and brand building. Brand building, quality management, market segmentation, product diversification and other internal management of enterprises has been unprecedented attention.

Entering the 21st century, economic hotels have entered a new round of rapid development period. This is mainly manifested in the economic hotel market development in developing countries and the development of local brands. In China, Southeast Asia and other regions, the expansion of budget hotels is very rapid. World-famous budget hotel brands have entered one after another, such as Accor Group's Ibis, Formula 1, Sundart Group's Super 8, Days Inn, and Intercontinental Group's Holiday Inn Express, all aiming at the Asian market. Meanwhile, some local Asian budget hotel brands are also starting to develop, such as China's Jinjiang Star and Ruijia Express.

Two Definition and Characteristics of Economy Hotels

At present, there is no recognized definition of economy hotels in the academic world. The division of economy hotels in foreign countries is mainly based on the price as a criterion, for example, Powers (1995) believes that economy hotels are hotels that do not provide full service and the room rate is maintained below 33 dollars during 1991-1993. According to the characteristics of economy hotels and the actual situation in China, the author believes that the definition of economy hotels can be summarized as follows: "a modern hotel industry with mass travelers and small and medium-sized business people as the main service object, with rooms as the only or core product, low prices (generally below 300 yuan RMB), standard service, comfortable environment, superior hardware and high cost performance. "

Budget hotels, as an emerging industry, is a product of economic development and social life, it is completely different from the face of the upper social class of full-service hotels, is to meet the needs of the general civilian travel accommodation products and facilities. Its basic features are as follows:

First, it is the limited nature of the product. Economy hotels stick to the core value of the hotel - accommodation, with the room product as the soul, in addition to other non-essential services, thus significantly cutting costs. Generally, economy hotels offer only rooms and breakfast (Bed & Breakfast), and some limited-service hotels also offer simple dining, fitness and meeting facilities.

Second, the quality of products and services. Unlike general social hotels, budget hotels place great emphasis on the comfort of room facilities and standardization of services, highlighting cleanliness and hygiene, comfort and convenience.

Again, the price is moderate. Compared with high-end hotels, which often cost thousands of yuan, budget hotels generally cost less than 300 yuan, and some youth hostels and motels even cost only a few dozen to a hundred yuan or so.

Fourth, the target market of budget hotels is general business people, working class, ordinary self-financed travelers and student groups. While upscale hotels tend to target high-end business guests, high-income class, and publicly-funded travelers as their main target market.

Lastly, in terms of external performance, economy hotels generally take the chain operation, through the chain operation to achieve economies of scale and improve brand value. This is also an obvious characteristic of budget hotels that distinguishes them from other star-rated hotels and social inns.

The Development Status of Economy Hotels in China

The initial development of economy hotels in China began in 1996, when Jinjiang Star, a subsidiary of Shanghai Jinjiang Group, was launched as the first economy hotel brand in China. Into the 21st century, a variety of budget brands such as spring break out, showing the following characteristics:

First of all, China's economy hotel industry is growing rapidly, the emergence of a number of widely influential national self-branding. With national influence: Jinjiang Group in 1996, the creation of the Jinjiang Star; Capital Tourism International Hotel Group and Ctrip Travel Service Company and 2002 **** with the investment in the formation of the Ruijia hotel chain. In addition, there are some regional brands of economy hotels, such as Motel 168 and Baolong Home in Shanghai, 7 Days in South China, Xin Yandu in Beijing, and so on. These brands show a booming development trend, and have been rapidly expanded in just a few years, and some regional brands are actively working towards the direction of national brands.

Secondly, China's economy hotel market is in strong demand, with several large cities and several regions becoming hot spots. The demand for budget hotels in large cities such as Beijing, Shanghai, Guangzhou and Chengdu is very prominent and market conditions are relatively mature. The higher overall level of economic development in the three regions of Yangtze River Delta, Pearl River Delta, Beijing and Tianjin also determines the level of demand for budget hotels. So economic hotels in China is a combination of point pattern of rapid development in economically developed areas.

Once again, economic hotels have attracted a large influx of various types of capital. Due to the economic hotel investment is relatively small, and the return on investment is significantly higher than the general hotel; at the same time, China's current investment environment is relatively good, the supply of funds is sufficient, a lot of idle capital has been trying to find suitable investment projects, this combination of property and hotel quality projects exceptionally attractive to the influx of capital; in addition, China's real estate appreciation space has also led to the appreciation of investors on the economic hotel real estate In addition, the appreciation of China's real estate has also led to investors' appreciation of budget hotel real estate, so funds from all sectors of society have been optimistic about this type of project.

Finally, the competition between foreign brands and national brands is increasing. Many mature foreign economic hotel brands are optimistic about China's market potential, high-profile entry. Their mature management experience, strong financial strength and talent reserves, world-renowned brands, well-developed marketing network, strict quality control have unparalleled advantages, the local development, only a few years of experience in China's national brand formed a strong pressure. China's local budget hotels must learn fast and grow fast to gain a certain position and advantage in the market competition.

Four Analysis of Market Demand for Economy Hotels in China

The development of economy hotels is developed under the stimulation of mass consumption. The reason for this is that the market impetus for the development of budget hotels comes from three aspects:

1. The development of mass tourism in China requires inexpensive and quality hotel accommodation facilities

With the development of the economy, China has begun to gradually enter a moderately prosperous society. Since 2000, the gross domestic product (GDP) has been growing at the level of 1 trillion RMB per year; the per capita GDP of some coastal economically developed cities has exceeded 3,000 US dollars; and the total number of domestic tourist trips in China has exceeded 60% of the country's total population, which has basically reached the standard of mass tourism. China's economic development has laid a vast market foundation for domestic tourism, opening the curtain for the arrival of the era of mass tourism.

What accompanies mass tourism is the improvement of corresponding tourism facilities and the restructuring of the tourism industry. At the beginning of the reform, the development of the hotel industry focused on high-star hotels, which was in line with the country's vigorous development of inbound tourism. However, with the strengthening of domestic consumption power, the domestic mass tourism market is growing in spurts, requiring tourism facilities that meet the needs and economic strength of domestic travelers. And there are very few low and mid-range hotels with moderate prices, superior quality, quality service and well-known brands. Therefore, driven by the domestic mass tourism of up to one billion trips or more per year, China's economy hotel market has been able to flourish.

2. China's increasingly prosperous economy has stimulated the development of business tourism, which also generates a huge demand for budget hotels

In recent years, with the development of the world's economy and the acceleration of globalization, business contacts between and within countries are becoming more and more frequent, and business tourism is developing rapidly all over the world. According to statistics, the global business tourism revenue has exceeded 400 billion US dollars in 2000, and the annual growth rate is more than 8%. the number of international, Hong Kong, Macao, Taiwan and domestic business tourists operating in China reached 116 million in 2003. According to the World Tourism Organization's estimates, China's business tourism, which currently spends $10.3 billion annually, is also experiencing rapid growth in the context of China's rapid economic development, and it is estimated that it could grow at a staggering rate of 20% in the next few years.

In the past, high-star hotels were the main choice for business guests, but with the development of the private economy and the restriction of travel expenses by some companies, people are paying more attention to cost-effective choices when conducting business activities. Some of the facilities and equipment, luxury, well-decorated, excellent service, but only to provide rooms and conference facilities, cut other non-essential facilities and thus can significantly reduce the price of the new hotel industry, began to be favored by business travelers.

3. With the development of China's inbound tourism, international tourists' demand for budget hotels is also gradually rising

From the point of view of the demand of international tourists, more and more international travelers are coming to China to travel, and young people aged 15 to 24 and self-help tourists who don't participate in the tours are the main market targets of youth hostels and budget hotels. According to a survey conducted by the National Tourism Administration (NTA), in 2004, more than 1.2 million foreign tourists between the ages of 15 and 24 came to China, and the number of self-guided tourists is growing rapidly. With the entry of famous international brands such as Accor Ibis, Sundart Super 8, Days Inn and other budget hotels into China, as well as the development of local budget hotels in China, there will be an increasing demand for budget hotels from international tourists.

V. Problems of China's economy hotels

1. Incomplete market segmentation, unclear product levels

Economy hotels have just started in China, especially some national brand hotels, there is no clear target market, or the segmentation of the target market is not detailed enough and complete, which results in overlapping markets or too broad, no levels of product design. There is a lack of products and services to meet the needs of different segments of the market. According to foreign development experience, there are three types of economy hotels: Limited Service Hotel, Economy Hotel/Budget Hotel and Super Budget Hotel. Limited service hotels are in the upper class of economy hotels, economy hotels are in the middle class, and budget hotels are in the lowest class. These three levels of hotel prices vary greatly, the gap between its hardware facilities is also very large, limited service hotel room hardware facilities are no less than four or five-star hotel, while some cheap hotels in the cost-cutting ideas under the guidance of as much as possible to simplify the equipment, guest room facilities are relatively simple. But in China, the current market has not yet appeared very clear division of product levels.

2. Lack of management experience and insufficient human resources

In the course of several years of development, domestic budget hotels have accumulated some management experience, but compared with the decades of management experience of some mature foreign brands, the shortcomings are still obvious. In terms of cost control, service quality, training mechanism, logistics and distribution, corporate culture, etc., need to continue to improve. At the same time, China's previous hotel personnel were trained according to the service norms and characteristics of high-star hotels, and could not adapt to the skill requirements of economic hotels of one person with multiple jobs and one job with all-round skills. For senior managers, there are few talents who are proficient in both chain operation and hotel management. Economic hotels at all levels of talent are faced with the problem of inadequate supply of economic hotels at all levels of talent are faced with the problem of inadequate supply of economic hotels.3. Lack of marketing tools, sales and booking network is incomplete

Compared with foreign brands, China's domestic economic hotel brands are obviously lack of marketing awareness and means. Especially some regional brands, awareness is very low, the brand image is not successful enough to build. Particularly important is that, in addition to Jinjiang Star, Ruijia Express, Xinyu Star and a few other hotel chains to build an independent sales booking network and call center, many other hotels rely mainly on professional booking centers and travel agencies to sell rooms. Even for hotels with reservation networks, their reservation technology and efficiency are not very high and not well designed.

4. Obstacles to localization of foreign budget hotels

Many mature foreign brands are attracted by the Chinese market to enter, but their localization and adaptation need some time. China's market and customers are very different from those abroad, and the differences in industry patterns and supporting industry chains are also worth noting. In the process of cooperation with domestic enterprises, some hotel brands have adopted too hasty entry policies, leading to the alienation of the brand in China and the loss of control of quality. For example, Speed 8 has adopted the brand output method of franchising to quickly cut into the Chinese market, and the price difference between the two stores opened in Beijing, Wangfujing and Tuanjiehu, is more than two times, of which the price of the Wangfujing branch has already reached the level of upscale hotels. This large price difference can lead to brand discontinuity, thus destroying the brand's expectations and image in the minds of consumers. In addition, localization barriers are also manifested in management concepts and approaches. Management concepts based on foreign cultural backgrounds are bound to face certain obstacles when they come to China, so improvement is imperative.

5. The influx of irrational capital to the industry to bring the impact

Economic hotels of high return on investment to attract a large amount of capital, but the influx of some irrational capital has led to a lot of problems. Some of the original star hotels have been acquired by the capital after the transformation of the name of economic hotels; some economic hotels management, operation and other aspects of the great problems; some of the capital's real concern is the real estate, just want to use the shell of economic hotels to enter the ...... These phenomena will stir up the order of the industry was not very stable, and lead to the general public's concept of the economy hotel, but also to the economy hotels. Lead to confusion in the general public's understanding of the concept of budget hotels, and for future price competition buried hidden dangers.

Six China's budget wine future development trend prediction

With the rapid development of the domestic economy and tourism industry, the public demand for budget hotels is getting stronger and stronger. Economy hotels that can be accepted by the mass consumption layer have a broad market prospect in China. Economy hotels in China in the future will show the following three major development trends:

1. Chain management will become the main mode of development of economy hotels

Chain management is the world's main trend of hotel development. A British investment agency on the world's hotel industry survey and statistics found that by the end of the 20th century, the world's total number of hotel rooms 1/6 by 34 hotel group chain, and Europe and the United States and other developed countries in the total number of hotels in more than half of the chain is operating.

Budget hotels are a new industry in China, and most investors do not have the corresponding experience, which requires a longer learning and accumulation process. Therefore, the development of budget hotels usually starts with some single hotels, and after accumulating certain management experience and brand equity, they gradually promote chain stores.

Economic hotels to take the form of chain management is the inevitable result of the development of two sets of contradictions: First, the spatial limitations of hotel sales and consumer dispersion; Second, the hotel's pursuit of economies of scale and the contradiction between the weak power of individual hotels.

First, the hotel sales of spatial limitations and the dispersion of consumers between the contradiction leads to the hotel must pursue the spatial maximum dispersion possible.

Hotel operations are strongly spatial, making the attractiveness of individual hotels to the source of visitors is strongly influenced by spatial distance. And the dispersion of tourists is mainly reflected in the area of guest activities within the city presents the characteristics of multi-center and wide range. With the accelerated process of urbanization, the gradual formation of urban industrial structure, the city gathered more and more tourism, business, conference functions, each city has experienced rapid expansion, the traditional small area of the city center is not the only prosperous areas of the city and the core area of guest activities, more and more new districts, development zones, emerging shopping centers, financial centers, attractions and vacation areas such as springing up, each area to gather the corresponding area, the corresponding area to gather the guests in the city and the core area. More and more new districts, development zones, emerging shopping centers, financial centers, attractions and resort areas are springing up, and each area gathers the corresponding crowd of guests, and the exchange of business and transportation between these areas promotes the flow of people and intensifies the dispersion of people's activities in the city. Therefore, the spatial limitation of hotels and the spatial dispersion of guests constitute a great contradiction. Through chain operation it is possible to expand the spatial distribution of the brand's hotels in a given city, thus effectively solving its spatial limitations.

Secondly, the contradiction between hotels' pursuit of economies of scale and the weakness of individual hotels makes it advisable for hotels to expand their scale of operation as much as possible.

The pursuit of profit maximization is the ultimate goal of the enterprise, for this reason, the enterprise will take all kinds of measures to reduce costs and improve efficiency. Expanding the scale of production is an effective way to reduce costs. According to the production cost theory, in a certain period of time, the enterprise marginal production will bring marginal cost reduction, but this effect is limited, more than a certain scale will lead to a decline in corporate efficiency, other long-term cost increases, then the marginal cost will rise with the increase in production. Therefore, the use of expanding the size of the enterprise to improve efficiency, the pursuit of profit maximization is a certain limit. Enterprise scale expansion has a boundary, after reaching the saturation point of enterprise scale can not continue to use this means to reduce enterprise costs. In order to win in the fierce market competition, enterprises must seek other ways to reduce costs and increase profits. Chain can greatly improve the efficiency of each hotel within the chain group, and can enhance the overall image of the whole chain group.

2. Business differentiation and brand building is the survival of the economic hotel competition and development

Currently China's economic hotel market segmentation is still at a relatively early stage, many economic hotel positioning is relatively vague, and some are only generalized to the self-funded travel and small and medium-sized business guests as the target market, and there is rarely any further delineation. However, in the United States, where economy hotels are very developed, the target markets for different economy hotels are very clear and unique. There are motels for self-driving guests, hotels for senior tourists, accommodation facilities for young backpacking travelers, hotels for female travelers, and apartment-style budget hotels for family outings.

Domestic economy hotels after reaching a certain number, the market competition is bound to intensify, generalized market positioning and undifferentiated products can no longer effectively attract customers, especially the homogenization of products will be the fatal flaw of the economy hotels to participate in market competition. Therefore, market segmentation and product differentiation is a problem that hotel operators must face. In addition, in modern society, the brand has become a cultural carrier, the hotel industry as a kind of intangible services and tangible products are closely integrated with the industry, the brand is particularly important to its significance. Each economic hotel brand must be completed in the next few years the positioning of the brand image and the definition of the connotation of the target market segmentation and customer loyalty establishment, product design improvement and service improvement, only in this way to obtain a stable source of customers in the increasingly fierce competition in the market.

To this end, according to the customer group's age, gender, travel purpose, occupation, income and other indicators, can be further subdivided into a number of target markets, such as the elderly tourists market, the youth market, the market for medical practitioners, the student market, the market for business tourists, the white-collar vacation market and so on, according to the consumption characteristics of these refined target markets to design different economic hotel products and services to fill the market. According to the consumption characteristics of these refined target markets, different budget hotel products and services are designed to fill the gap in the market and form stable target consumer groups.

3. Management specialization and technological advances to promote the development of economy hotels

The main feature of economy hotels is "good value for money", which requires operators to seek the best combination of service quality and cost control. Many new technologies, such as electronic reservation systems, financial control systems, and some advanced management systems, such as front desk management, customer management, etc., can effectively improve service efficiency and reduce management costs, budget hotels have a great demand for such technologies and systems. However, at present, these management systems are for high-star hotels, and the management system of economy hotels is still in a groping stage. In the face of the increasing development of economic hotels and the strong demand for management systems, some mature hotel software and management systems will be based on the characteristics of economic hotels and make corresponding improvements and upgrades, which will promote the development and improvement of economic hotel management systems.

Specifically, the improvement of the management system of economic hotels is mainly manifested in several aspects:

First of all, the reservation system. With the intensification of competition, the construction of a very smooth reservation distribution system is a very important initiative. "Home" and "Jinjiang Star" has established an independent reservation system, but many of the economic hotels are just starting out, the scale of the economic hotels in this area is still a blank, there are many hotels sales and booking imitation of general star hotels, through the travel agency, booking centers, tourist booking centers and other organizations to improve the booking system. There are many hotels that mimic the sales and booking of general star hotels, selling rooms through travel agencies, booking centers, and travel booking websites, such as Ctrip and E-Long. These sales channels have seized a considerable part of the profits of economic hotels, which is not conducive to the control of operating costs. Moreover, poor control of sales channels will cause many unstable hidden dangers for future operations. Therefore, the establishment of an independent reservation system can reduce sales costs, but also to stabilize the distribution channel is very necessary.

The second is the personnel management system. Economic hotel management personnel is currently very scarce in this industry, the traditional hotel management organizations to train personnel are adapted to the star-rated hotel operation system, rarely adapt to economic hotels, "one person multi-post", "a multi-tasking" characteristics. Therefore, the shortage of talent is the biggest obstacle to limit the development of economic hotels. Some of the more mature development of economic hotels, such as "Jinjiang Star" has established its own personnel training system, this system will certainly be promoted and improved in other economic hotels, but also these economic hotels to establish an important way to cultivate talent. Therefore, personnel training system is an important aspect of the future economic hotels must pay attention to. In addition, the previous personnel management system is developed for the characteristics of star-rated hotels, in the management framework of economic hotels, how to do a good job of personnel incentives and assessment management is a new problem in front of the operators.

Operating cost control again. Economy hotel low price depends entirely on the operator of the cost control efforts and perspectives. Some economic hotel operators have not completely rid of star-rated hotel business ideas, high costs; and some operators of cost control is too strict, seriously affecting the comfort of the hotel product. Both extremes should be avoided. Therefore, the exploration and improvement of cost control will be the theme of future economic hotel management. The management experience of many well-known foreign budget hotel brands will be drawn upon and promoted in China.