December 2013 Economic Development Report on Budget Hotel Brands in China

　(1) Brand Index Changes

　　In December, the CityInn brand index was 5.36, an increase of 1.26 from the previous month, representing a growth rate of 30.73%. Detailed data shows that both user influence and media influence rose, especially user influence, which grew significantly by 1.19 compared to the previous month, while industry influence declined slightly.

　　(2) Brand Analysis

　　On December 18, the "World Hotel Brand Research (China) Center and China Boutique Express Chain Hotel Press Conference," supported by the World Hotel Alliance and hosted by CityInn Hotel Group, was grandly held at the Four Seasons Hotel Guangzhou. The event proposed a definition for boutique express hotels, with CityInn being a typical representative of this category.

　　The segmentation of the hotel industry is an important trend now and in the future. In fact, this is inevitable once the industry reaches a certain stage. Because the hotel market naturally forms a pyramid-like hierarchy, with different levels of hotels having distinct customer groups, consumption levels, scales, investment amounts, and management methods. A segmented hotel model can better cater to guests' deeper needs.

　　Boutique express hotels can be described as a modern and standardized economic hotel format with high cost-performance, distinct from standard budget hotels and also part of the non-standard budget hotel category. CityInn identified the boutique express segment as a differentiated market from standard budget hotels and quickly captured this blue ocean market. It is believed that the boutique express market, led by CityInn, will become a new driving force in the chain development of China’s budget hotels.

　　Summary: From the analysis of these two brands, it can be seen that non-standard budget hotels may become a major highlight in the future development of the budget hotel sector. As the market for standard budget hotels becomes increasingly saturated—with declining occupancy rates and room prices—more operators are turning their attention to developing non-standard hotel chains. Examples include the "upward" strategy of boutique express hotels like CityInn, and the "downward" strategy of hundred-yuan hotels like Hi Inn. Some inherent characteristics of non-standard budget hotels also make them more attractive to franchisees, such as flexible options in hardware and style.

　　At the same time, some hotel companies launch non-standard budget hotels as a means to rapidly capture market share. Zhao Huanyan noted that there are tens of thousands of scattered small and medium-sized hotels across the country, all of which are potential projects for consolidation. These projects range widely—from those positioned at three- to four-star levels to those that are merely guesthouses. Major hotel companies are continuously introducing various non-standard new brands to cover all these different levels of non-standard offerings, thereby expanding their market share.

　　As the scale of non-standard budget hotels gradually expands, they will also encounter the same issues as traditional budget hotels—such as the management of franchisees—which is something hotel businesses need to be wary of.