With the expanding of financial crisis, customers are decreasing and hotel occupancy rate is falling. Economic hotels with domestic target are also starting to feel the coldness. Recently, 7 Days Hotel, Home Inn and Jinjiang Inn, etc. have all put forward various kinds of disguised depreciation promotions. It is said that this has been the biggest discount range in economic hotels.
Xu Zurong, Jinjiang Inn’s President, admitted, “The overall leasing rate fell about 10%.” Zheng Nanyan, 7 Days Hotel CEO, said, “Economic hotels were making easy and quick money two years ago. Accommodation rate used to stay around 95% easily. You can see no differences in management. With the market’s cooling down, life becomes tough, and economic hotels finally return to the normal track of low-cost operation.
However, Dai Bin, Deputy Dean of China Travel Academy, said that economic hotels only accounts for 10% to 20% of the total hotel amounts, far below the average level of European countries (60% to 70%). In the long term, with competitive prices, economic hotels will endure less impact in business from the crisis, or even be faced with a new round of development. They should seek breakthrough in innovational service models and market segmentations.
Xiaoshan from China Market Research Group predicted that the revenues of economic hotels would see 12% to 15% increase.
The competition in 2009 will still be in branding, service, operation and cost-control. Those that stay shall be good ones.