Business transformation and product upgrades are key to the survival and future growth of budget hotels that are in decline - and BTG Homeinns Hotels Group, whose Q1 profit surged over 116% YoY to 75.39 million yuan (USD 11.8 million), is a good example, experts said.
Sun Jian, general manager of BTG Homeinns, said the budget hotel operator renovated or refurbished 100 hotels since 2017 with new chairs, lamps, sofas and walls. It also set up areas for tea breaks and buffets, and introduced more fashionable design, to make customers feel at home, the company said. "Budget hotels cannot sell (their products and services) for 10 years without any change," Sun said.
Budget hotels in China saw a rapid growth from 2005 to 2010. By Jan 1, there were 32,444 such hotels operating in China. Back in 2005, there were only 522, according to the China Hospitality Association.
However, such hotels faltered when the emerging middle-income consumer group began to demand tailor-made services and better experiences, a CHA report said.
The rise of rentals, aging of facilities and competition from mid- to high-end hotels and bed-and-breakfast facilities also posed a challenge to budget hotels.
Industry experts said the property management and human resources costs of budget hotels have grown sharply since 2007 with three-star hotels even posting losses. Huazhu Hotels Group (China Lodging Group) said it closed 10 budget hotels in the first quarter of this year and opened 81 new mid-range hotels.
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