英国留学生硕士dissertation定制：Analysis on China Economy

Leisure and Tourism Management
Master Thesis
Analysis on China Economy Hotel and its Development Strategy
Ning Chen
Relation number: 122076
Abstract
Since the first opened in 1997, economy hotels in mainland China (mainland) have spread far andwide, filling a need for millions of business and leisure patrons seeking a convenient, economical,and increasingly comfortable place to rest. Economy hotels with offering cleaning room, deliciousbreakfast, good location, hotel-chain operation, already takes advantage compare other types ofhotel. However, people still unacknowledged about this new hospitality industry-economy hotel,also academic literature analysis about this new concept is root period.Demand for economy hotels are increasing along with china has become an import tourismdestination in Asia and the fifth-largest tourism country in the world (measured in number ofinternational tourist arrivals). Currently incomplete cases study and lack of 英国留学生硕士dissertation定制management, leadseconomy hotel development and research have disorder situation.The objective of this research demonstrates that China economical hotel market situation in thecurrent and future China hotel business. This research investigates the treads of economy hoteldevelopment in China (mainland), and analysis the requirements for market demands. The studyshows to what extent and to what goals of economy hotels in future management and how thatperceived as the first choice by customer. Suggestions on how the economy hotel could bedeveloped improved are also provided. However, future industry structure and market competitionwill be determined by a company’s capability to perform including structure and performance,strategy for future and product offerings.
Keywords:
Economy hotels, super budget hotel, market analysis, trends and development , Home inns hotel, China budget hotel.
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Acknowledgement
Many people have made valuable contributions to this research. They have been important sourcesof knowledge and inspiration throughout the whole process of the research. I would like to take this
opportunity to grate fully acknowledge those whose contributions are significant to the successfulcompletion of this thesis.
First of all I would like to thank you thesis supervisor Sjoerd Gehrels for useful ideas, support andconstructive criticism. Also I would like to acknowledge Alex Yang, Constable Reuben, Tracy Law,and Martin Ng for introducing me to the research area and providing me with information aboutthe Home inns hotel. With their knowledge and straightforward way they have inspired me to do
the best. Special thanks are also directed to Daniel Cheung for his never-ending enthusiasm.Secondly I also appreciated greatly the help of Mr. Yang who is the manager of marketingdepartment of Homes inns hotel (Shenzhen), whose unreserved support for my survey in the hotel.
And Mr. Yang provided me the opportunity for practice in Home inns hotel and be his personalassistance for compose the Home inns hotel annual report 2009, that is high level contact with#p#分页标题#e#
management team of hotel and huge contribution for my future hospitality career.Finally, I would like to thank my parents for their support whatever in life or financial. Withouttheir patience and companionship during my working days, the research would have been much too
pure to bear.
Ning Chen
(Sabrina) 122076
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Conten-
1.1 STUDY BACKGROUND AND MOTIVATI ON ...................................................................................... - 6 -
1.2 THE AIM OF THESI S ...................................................................................................................... - 8 -
1.3 STUDY RANGE ............................................................................................................................. - 9 -
1.4 LIMITATI ON S AND PERSPECTI VE OF TH E STUDY......................................................................... - 10 -
1.5 STUDY STEPS AND PROCEDURES ................................................................................................- 10 -
1.6 OUTLINE OF TH E THESI S ............................................................................................................ - 11 -
CHAPTER
II
CONCEPTUAL
FRAMWORK12
-
2.1 ECONOM Y HOTEL ......................................................................................................................- 12 -
2.2 STUDY CONCLUSI ON OF FOR EI GN ECONOMY HOTEL ................................................................. - 15 -
2.2.1 Development state of foreign economy hotel..................................................................... - 15 -
2.2.2 Relative literature discussion of economy hotel................................................................ - 20 -
CHAPTER
III
RESEARCH
METHODOL-
3.1 STUDY DESI GN ...........................................................................................................................- 27 -
3.1.1 Basic data for assessment members of hotel experts.........................................................- 27 -
3.1.2 Professional assessment for the value curve at the supply end......................................... - 28 -
3.2 STUDY DESI GN AND SAMPLING..................................................................................................- 29 -
3.2.1Content and design of questionnaire.................................................................................. - 29 -
3.2.2 Data collection...................................................................................................................- 30 -
3.2.3 Preliminary examination of questionnaire.........................................................................- 31 -
3.2.4 Sampling design.................................................................................................................- 31 -
3.3 DATA ANALYSI S..........................................................................................................................- 33 -#p#分页标题#e#
CHAPTER
IV
PROFILES
OF
ANALYSIS
ON
CHINA
ECONOMY
HOTEL
AND
DEVELOPMENT
STRATEGIES
-
4.1 ANALYSI S ON CUSTOMER ’S BA SI C BACKGROUND......................................................................- 34 -
4.1.1 Analysis on customer’s basic background..........................................................................- 34 -
4.1.2 Lodging purpose................................................................................................................ - 36 -
4.1.3 Lodging approaches...........................................................................................................- 37 -
4.1.4 Lodging transportation choice...........................................................................................- 37 -
4.1.5 Pricing chosen - 38 -
4.1.6 from which province or region - 38 -
4.2 ANALYSI S ON CUSTOMER ’S DEMAND - 40 -
4.3 ANALYSI S OF HOTEL STUDY (HOM E INNS HOTEL ) - 44 -
4.3.1 Hotel management - 45 -
4.3.2 Hotel Development - 47 -
4.3.3 Home inns Hotel Chain - 48 -
4.3.4 Hotel organizational Structure - 53 -
4.3.5 Performance Indicator - 53 -
CHAPTER
V
CONCLUSION
AND
SUGGESTION
5.1 RESEARCH CONCLUSI ON ............................................................................................................- 56 -
5.1.1 Overall China economical hotel industry.......................................................................... - 56 -
5.1.2 Research Conclusion......................................................................................................... - 57 -
5.2 SUGGESTI ON TO FOLLOW-UP STUDY..........................................................................................- 58 -
5.2.1 Suggestion to follow-up study............................................................................................- 59 -
5.2.2 Suggestion to industry practice..........................................................................................- 59 -
5.2.3 Investment suggestion on dealers of economy hotel.......................................................... - 60 -
5.3 DEVELOPMENT TEN DENCY OF ECONOMY HOTEL IN TH E FUTURE..............................................- 63 -
5.3.1. Development tendency of multiple brands........................................................................- 63 -
5.3.2. Depart monomer operation and change to the tendency of scale chain...........................- 63 -
5.3.3. Tendency of low, medium and high price levels................................................................- 64 -
BIBLIOGRAPHY............................................................................................................................... - 65 -
APPENDIX I..................................................................................................................................- 68 -#p#分页标题#e#
APPENDIX II................................................................................................................................ - 69 -
APPENDIX III ............................................................................................................................... - 70 -
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Chapter
I
:
The
Research
Subject
Emerges
……as Chinese have become more wealthy they have started to enjoy more leisure
time, with the Central Government legislating an increased number of holidays as a
way to stimulate internal consumption.”
(Richard Hu, 2009 in specia l report, p.3)
1.1
Study
background
and
motivation
The fast and stable growth of China’s economy has brought huge business opportunities, with thefast development of market economy and increasing fluid of commercial activities, China’s
economical hotel market has becoming a booming market. The lease rate of China economicalhotels is generally above 90% and the return is to 20% even higher(Hongying Huang , 2008). With
domestic travel of China develops rapidly recently, under the condition that the industries of Chinarestaurant are in high competitions, China economy hotels will further face the opportunities and
challenge from domestic hotels and foreign hotels. Under this situation, it gives a wider operationroom to economy hotels; on the other hand, it will make the state of the domestic hotelsinternational which has been appeared and the international competition domestic severe; and thisis a rapid method for China economy hotels connecting with international conventions. After HomeInn lists on the stock market of NASDAQ, which not only means more fund investment and muchhigher quality requirement to the hotel but also means the change of industry pattern of economyhotels(Li Chao, 2009). Thus, economy hotels must obey to the change of international conventionsto improve their core competitiveness; the economy hotels can survive and continuously develop
only using this method.Firstly, this study must have some knowledge about the operation principle, business model andconditions of industry competition of China economy hotels; then the curve model of the value forChina economy hotels can be developed further aiming at factors such as internal conditions andexternal environment of economy hotels. The urgent affairs to do now is to Change competitionidea in time, build the correct competition ideas of economy hotels, continuously innovate, expandthe competition room and cultivate and improve the core competitiveness of the enterprise(wangS.Y, 2004). Now homogenization competitions of economy hotels are very serious; the industryof economy hotels can develop quickly and healthily only when customers' need are concerned andinnovations of product and service are continuously proposed (China Hotel Association 2007).Severe competitions and rapid changes of the market make many economy hotels make greatefforts to look for rapid methods which can operate quickly and benefit rapidly. The implement ofvalue innovation is the desirability for economy hotels to actively adapt to the new environment andsituations both at home and abroad, and the implement of value innovation is enterprises’repositions to themselves. The enterprise can get benefit with the innovation of industry value(Yip#p#分页标题#e#
Jacky, 1997); So, economy hotels should determine product value characteristics and product priceled by core requirement of the mass market to innovate new need markets and customers’ valueaccording to curve model of the value.
However, the service project provided by economy hotels and cost evaluations invested byeconomy hotels or the key factors on how to make customers feel improved quality of the service
http://www.ukthesis.org/dissertation_writing/Tourism/has been always the problems puzzling the theory researchers and practice developers(Lili Zhang &Han, 2008). It is hoped that this study can break the logical thinking of traditional competition and
this study puts forward evaluation methodology of value curve starting from the business model ofexisting hotels. The key factors on how to make the customers feel the quality improvement can be
discovered from the value curve, the valuation methodology of value curve can be further used asthe reference for the investment result optimization of the economy hotels’ dealers1.
Based on the statistics of China Hotel Association, economy hotels’ earned profit can reach asmuch as 30%-50% of that of the operation profit (China Hotel Association, 2007). The main reason
for which is that most three-star hotels generally exists the problem of high investment, low outputand high vacancy rate of guest room. And with the rapid development of domestic and foreign
1 Hotel dealer: any person who carries on business in purchasing, selling, supplying or distributing goods and also includesworks contractor, co-operative society, and here special means these people whose business is independent from government.- 8 -travel, economy hotels develop quickly because the innovative, low price and concise servicesought by economy hotels just meets the demands of customers(Zheng G, 2006). China economyhotels must look for fresh way to get rid of the existing competition facing the market competitionand continuous development of economy hotels in the coming ten years; China economy hotelsdevelop value curve model of economy hotels should be developed by deleting, reducing,increasing and creating new elements to traditional star hotels; China economy hotels shoulddistinguish itself from other classification hotels and social taverns. Opening new field for Chinaeconomy hotels.
1.2
Theaimofthesis
Based on the study background and motivation stated in the preceding section, the study goal of thisstudy is as follows:
The overall aim of the thesis is know the basic background and property state of the economyhotels’ customers and then discuss the constituents of the economy hotel’s value factors and thenoffer better service project and lodging experience to the customers. Through the interview studyand the study of the specific organization, and in combination with the conceptual framework, to
complete value thinking direction and decision suggestion should be given to the dealers of theeconomy hotels when they make investment on service and innovate service to know the#p#分页标题#e#
customers’ need direction and choice standard to the economy hotels. Reduce the investment wasteand improve the economy benefit of the investment to reach good value required by the customers.
Along with compared the dealers ’ change state of the investment in the service project of the value
curve of one-star hotel, three-star hotel, and five-star hotel with economy hotel. And the analysis of
which elements should reduce and eliminate for the customers’ need and dealers investment level
when value constituents of the economy hotels are discussed, and Which elements should improve
and created. Thus, the optima operation model of the economy hotels can be developed.
1.3
Study
range
This study selects four economy hotels as the study objects and these four economy hotels ’ market
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share of the economy hotel rank higher for the recent years to work out the industry level of the
economy hotels; domestic economy hotels include Home Inn and Motel 168 Chain Hotel; foreign
economy hotels include Super 8 Hotel and Green Tree Inn. One of other economy hotels will be
chosen to be operated as a hotel from their original chain state-coffee; now there are twelve
business hotels that have been used as the study object. This study range is related with Home Inns,
Motel 168 Chain Hotel, Super 8 Hotel and Green Tree Inn and business hotels.
Figure1.1: Motel 168 Hotel Figure1.2: Home Inn
http://www.super8.com/Super8/control/home http://www.homeinns.com/index/index.aspx
Figure1.3: Green Tree Inn Figure1.4: Super 8 Hotel
http://www.998.com/ http://www.motel168.com/
1.4
Limitations
and
perspective
of
the
study
The study range of this thesis is limited only research within Guangdong province of China. So, the
result of this study probably hardly represents all operation models and customers’ impressions of
China economy hotels.
However, the research object of this study is one of four hotels whose market share of the economy
hotel rank higher announced by the website of China economy hotels. And this study won’t be
related with hotels or other departments and organizations; it isn’t involved by any scholars; the
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opinions got from the research are mainly based on the opinion of the trade union; it is easy to be
biased. Although the experts’ choices concerns representativeness of many aspects, the choice still
belongs to subjective judgment and interviewees’ will.
In addition, this study only discusses the factor of value element of the mutually competitive
economy hotel’s value curve; this study doesn’t deeply discuss the differences for the content of
value element in different regions. So it only discusses the score of every element due to the
operators’ difference; and then the dynamic curve model of every element in the industry#p#分页标题#e#
competition of the economy can be drawn.
1.5
Study
steps
and
procedures
This study will be done based on the following procedures to fully complete the analysis and
discussion of this study.
--Determine the study topic and range.
--Collect relative theories and literatures discussing China economy hotels both at
China or abroad, to arrange and analyze them.
--Build the study framework, study methods and designs of this thesis.
--Classify relative data and draw up the first draft of customer questionnaire and
expert questionnaire.
--Testing for the first draft of customer questionnaire and the result should be analyzed to check the
reliability of this questionnaire; the content of the first draft should be analyzed and corrected based
on the reliability.
--Data process and statistics analysis should be done via descriptive statistics, frequency distribution
and statistics of percent after the collection of the customer questionnaire.
--Data process and statistics analysis should be done via descriptive statistics, frequency distribution
and statistics of percent after the collection of the dealers ’ questionnaire; and then this data should
be transferred into curve table.
--Based on the statistics analysis, the study result should be summarized and the study report should
be composed.
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1.6
Outline
of
the
thesis
In order to enhance our knowledge in the field of economy hotel in hospitality, an extensive
literature study of the area been conducted to increase the understanding of the chosen subject. This
resulted in a literature review in order to identify a problem and determine courses of action. This
type of pre-study of literature can be classified as an exploratory study of secondary data in the field
data that has already been published and produced for other purposes than those of this specific
research (K & Taylor, 1996). Secondary data is suitable to use to get wide range information on a
subject before proceeding to use primary data collected by the researcher for the specific study at
hand. The aim of the literature review was to examine the scope of literature in the field of economy
hotel in China.
Chapter three describes and explains the motives behind the methodology of the interview study.
The content explains how the survey has been constructed, made reliable and accurate. The
questions used for interview study and explain the motivation the use of them.
In chapter four the profile of China economy hotel and development situations has been present, by
analysis on customer’s background, demand, etc. Through use those resources to give an overview
of China economy hotels. And an analysis a specific economical hotel in different perspectives is
given.
Finally a deeper analysis and discussion regarding development of China economy hotel in current#p#分页标题#e#
in presented in chapter five. Meanwhile the writer concludes some suggestion of academic and
industry for future study.
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Chapter II Conceptual Framwork
“…..over the past five years in China the economy/budget hotel chains have grown at
an annual rate of about 100% to 2,805 hotels and 312,930 hotel rooms as of 2008,....”
(Hongying, Huang 2008)
2.1
Economy
Hotel
There is no accepted notion for economy hotel both in China and abroad. Based on Smith Travel
Research Definition, economy hotel refers to the hotel that always keeps low price and aims at the
customer who is sensitive to price; these sensitive customers occupy 20% of the low-income market
(Zhongwei Fan, 2008). The definition of economy hotel in <WTO Modern Hotel and Encyclopedia
of Restaurant Management> is economy hotel refers to the budget hotel and economy hotel
generally only operates guest room; economy hotel has no equipment of restaurant management
and the price of economy hotel is low. Generally speaking, economy hotel makes service to mass
customers and the price of economy hotel is moderate; economy hotel regards guest room as its
absolute key point; the infrastructure of economy hotel is very complete and economy hotel is clean,
convenient and comfortable and the guest room conditions of economy hotel can be equal as that
of the three-star hotel; Meanwhile, some large facilities of combinations such as the investment of
grand halls, banquet halls, fitness center and sauna bath centers greatly reduce the project cost
which make the room price reduce to a economic and reasonable level(Hongying Huang , 2008).
Organization of economy hotel emphasizes people first management, highly effective organization,
few staffing and a person with multiple positions. In addition, economy hotel is located at busy area
and communications center of large and medium city; economy hotel offers convenience to
customers relying on rich recreation facilities, the city’s infrastructure construction and traffic
convenience of mature streets. But some budget hotels are frequently sited in older renovated
buildings, thereby avoiding land acquisition and the provision of amenities is limited, and
procurement and staff costs are carefully budgeted.
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Now there are two misunderstandings in China as for the definition of economy hotel. One is that it
tries to classified from the “star classification system” in China and the hotels below three-star
(including three-star hotel) are called economy hotel; the other one is that the range of economy
hotel is defined from a more microscopic level and it is thought that economy hotel should also
include accommodation of many rest houses and hotels(Zhao Wei, 2008). All these two definitions
are uncertainty; the mistaking of the first definition is that the hotel originally governed by#p#分页标题#e#
commercial management department hasn’t been listed into economy hotel. It seems that the
second definition only stays at the level of perceptual judgment. The star-hotels with low price can
be ranked to economy hotel only when the star-hotel effectively cut down its price. Many rest
houses with low price and hotels can’t reach the standard of international economy hotel and that
can only be listed into economy hotel after realizing the professional management, quality stability
and operation of the enterprise. Many rest houses with low price and hotels are the development
power of economy hotel at most. And some hotel doesn’t lack restaurants with economic price but
lack restaurant with economic standard.
To establishing definition shouldn’t be formed only for economy hotel, the definition of economy
hotel is a specific, dynamic and balanced relative concepts; and that should be promoted to a kind of
investment philosophy and operation mentality and a dynamic concept of resources allocation
should be formed; the scale operation should be realized using flexible and multiple cooperation
approaches; the quality and quantity of economy hotel should be improved by the guidance of
market, brand operation, product operation and capital operation. Economy hotel is a
comprehensive operation type for China hotel industries. If it is mastered from the definition,
economy hotel should be firstly the definition of enterprise and the so-called hotels without
enterprise nature can’t be listed into economy hotel; and secondly, the definition of economy hotel
should be a dynamic definition defined from many dimensionalities such as service, facility, price,
market positioning and degree of satisfaction(Lili, Zhang & Jingjing, Han, 2008). In conclude,
economy hotel refers to a kind of hotel industry type whose limited in investment, scale isn’t large,
simply function and rent fee is moderate while economy hotel is an operation model with certain
service quality standard. The core of economy hotel lies in its limited service, simple facility and
low-price; the market positioning of economy hotel is social mass, common business person, small
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and medium-sized enterprise owners and common travelers at their own expense. Such dynamic
definition can throw off the unclear positioning of economy hotel between budget hotel and low
star-hotel. Economy hotel can absorb reasonable constituents required by the market from the
budget hotel and low price hotel; economy hotel can strengthen its own characteristics and
connotation at the same time which is anther thought and improvement of hotel investment model
and management model(Alessandro, F 2005).
Economic hotel in China are mainly concentrated on east coast, which is a hub for business and
visitor arrivals. Among the provinces, Guangdong, Zhenjiang and Guangxi have the largest number#p#分页标题#e#
of hotels while the Shanghai and Beijing, Tianjin metropolitan areas also rank highly(Kou
zhengling, 2003). Economics hotel supply generally declines when moving to the inner regions of
China, as do visitor arrivals. The only exception is Sichuan, which has rich tourism assets and is
emerging as a business hub in the west of China.
Economy hotel chains generally have a higher market share by number of hotels on the eastern
coast, particularly in Shanghai (55%), Tianjin (36%) and Beijing (29%)( Don, Q. & Dou J, 2001).
However, this segment is still in a nascent stage. For example, Hainan, the major tourism
destination in the south, only has three economy hotels out of a total of 269. Yunnan, famous for its
scenic Shangri-la Country, has just 24 hotels, equivalent to only 2.7% of the total number of hotels
in the province. Meanwhile, international hotel operators tend to be concentrated in the coastal
cities; 40% of the portfolios of the top three brands are located in Beijing, Shanghai, Tianjin and
Guangdong province.
China economy hotel should have the following characteristics:
-- Market characteristic
The positioning of economy hotel is ordinary customer mass who is sensitive in price, particularly
for national consumption mass market; the price of economy hotel is moderate and the market scale
of economy hotel is large and the demand of economy hotel is stable.
--Service characteristic
Compared with full service of high and middle-class hotels, what economy hotel offers is limited
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service which is mainly shown at giving priority to providing accommodation; meanwhile,
economy hotel has standard and professional hotel service such as standard service system and
service procedure which is the an essential distinction from existing social hotels 1.
--Organization characteristics
Staffing allocation is very simple and generally one person has multiple positions in economy hotel.
--Operation characteristic
The investment amount of economy hotel isn’t very high and its normal investment is about
10,000,000-20,000,000 RMB(Zheng G, 2006); economy hotel pays attention to the briefness and
http://www.ukthesis.org/dissertation_writing/Tourism/practice of the equipment and the operation activity of economy hotel is done under low cost;
economy hotel highlights the core business and the non-core business for outsourcing company.
2.2
Study
conclusion
of
foreign
economy
hotel
2.2.1
Development
state
of
foreign
economy
hotel
Seen from the world, the foreign hotel groups developed at first was as well as star-hotel; however,
the managers sensitive ly discover new market requirement when they foresee the coming saturation
of the starred hotels market; and then these managers develop new hotel product- “economy hotel”#p#分页标题#e#
and they make great success. The large scale development of foreign economy hotel started from
the formation of mass travel after the World War II. Growth of international economy after the
World War II and tourism made the travel development continue the domestic travel-development
model of departure and entry travel(Yip Jacky, 1997). One result of this model is that travel
industry can accumulate experience and strength while travel industry gives service to domestic
tourists; then with the development of outbound travel, domestic travel develops toward foreign
naturally and domestic travel continuously offers service to Chinese tourists who are at abroad; So
the domestic travel can run its operation in a much larger scale. Such operation model offers a
necessary premise and guarantee to the development of economy hotel. Meanwhile, a key
breakthrough of science and technology, particularly the coming of car replaces the traditional tour
method and brings the revolutionary breakthrough of economy hotel. In generally, foreign economy
1 Social hotel means the type of hotel is operation without classification.
- 16 -
hotels experience three stages, namely initial state, maturity stage of development and slide stage
(Li & Qin, 2003).
-- Initial stage of economy hotel
Youth Hostel and Motor Court is the prototype of economy hotel. Generation of Youth Hostel: The
first Youth Hostel in the world was born in a discarded German old castle in 1912 which laid the
foundation for the basic structure of Youth Hostel; the basic structure of Youth Hostel was safe,
economic, sanitary and private and the facility in the room of Youth Hostel was very simple, had
elevated beds, hard bed, quilt, personal cabinet with locks, small tables and chairs, public bath room
and toilet; some Youth Hostels had cafeteria and common room. So Youth Hostel is a
accommodation place that gave sanitation, safety and economy to theses travel group, most of them
are students (Wang, S.Y. 2004). Now Youth Hostels have covered more than 70 countries in the
world. The generation of Motor Court is based on these characteristics after the World War II that
the continuous growth of the rapid development of American private cars and family travel,
Kemmons Wilson (1997) founded the first modern Motor Court that had 120 rooms in Menphis in
1952 and this Motor Court standardized the industry of Motor Court. Motor Court offered
accommodation and simple diet to tourist with vehicle. The greatest development period for
American Motor Court was between 1948 and 1955 and at that time, per capital income was 1500-
1900 US dollars; the development of economy facilitated the appearance of domestic travel while
travels with driving private car was the main transportation of travel in developed country.
Approximately 60%-80% tourists drive cars to make travels among counties(Yip Jacky, 1997).#p#分页标题#e#
Western people got used to travel with cars; thus, the Motor Court appeared. Typical Motor Court
locates at downtown but or at in-line of highway or suburb. The secret for the development of
Motor Court is as its convenience, sanitation, economy and fitting travel family. Anther reason for
rapid development of Motor Court is low construction cost, only requiring little investment,
flexible operation, simpler service and few labors. There were 60,000 Motor Courts in America in
1960 and Motor Courts covered every American state; at the same time, Motor Courts developed
extensively in Europe, Australia and North America(Alessandro, F 2005). With the development
for ten years, Motor Courts have quickly become the biggest hotel system in the world. Motor
Courts can be generally divided into four parts, i.e. passerby Motor Court, terminal Motor Court,
holiday village Motor Court and campground Motor Court. The development of Youth Hostel and
- 17 -
Motor Court lay the foundation for the development of economy hotel, and these are also main
forms of economy hotel at the initial stage of economy hotel(Lili, Zhang & Jingjing, Han 2008).
-- Maturity stage for the rapid development of economy
America founded the first brand of economy in 1963, namely Motor Court. And next America
initiated the greatest development of market of European. The connotation of economy hotel was
gradually enriched and the forms of economy hotel were gradually increased. Now many large
hotels in the world have entered into such segment market and they purchase many economy hotels
together. Many hotel groups started from economy hotels are continuously strengthening, e.g.
Choice Hotels International starts from Quality Inn. The first hotel of Marriott which is famous for
elegance is Tw in Bridge Motor Hotel. The development of Holiday Inn is from the Motor Hotel
with 120 rooms in Summer Avenue of Memphis, Tennessee until it covers 52 countries. Nowadays,
nearly every famous international hotel groups at least have one chain of economy hotel or more.
The markets in French and America are places where the economy hotel develops maturely;
particularly economy hotel in America has entered into mature operation model from new operation
type; the development in America is more rapidly: the number of economy hotel was 420,000 while
it was 720,000 in 1998(Zheng G, 2004). The growth of economy has risen 73.8% while that of
luxury hotel was only 26.4%( Chon K, 2002). Economy hotel is the market segment that grows
fastest in the industry of hotels. Operation revenue of economy hotel occupies 64% of the income
of hotels industry in America and the operation revenue of economy hotel ranks the third place in
American retail business; the create profit of economy hotel is accounted by 100,000,000,000 US
dollars(Zhang, H., Li, X. & Qin, Y 2003). The number and income of American economy hotel#p#分页标题#e#
and mid-ranged hotel respectively occupied 57% and 47% of all hotel capacities in 2000. From
1998 to 2001, the total business income of economy hotel rose 21% and the supply and demand of
rooms respectively rose 11.1% and 11%; they were basically at an equal level (Zhongwei, Fan,
2008).
Many big hotel groups regard economy hotel as entry point in order to enter certain region to have
development. E.g. MOTEL 6 is a system of economy purchased by Accor to expand its American
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market; and such behavior makes economy hotel be the core of Accor. When French Accor
established economy hotel, Accor had an idea that if they wanted to build a real hotel colony, they
should let every customer choose hotel based on their own purchasing power. Now many brands in
Accor are economy hotels such as Ibis, Etap, Formulel, Red Roor and Motel 6; all of these economy
hotels are favorable by common business guest and tourists (Zhang, H., Li, X. & Qin, Y. 2003).
Take Formule as an example, that is an economy hotel put forward by Accor in the middle of 80s,.
At that moment, there were two main rivals in French budget hotels: the first kind was one-star
hotel and hotels without star and the customer started from low price (60-90 franc per night), but the
customers should suffer from bad bed and noise; the other one was two-star hotel (200 franc per
night) which absorbed customers by providing a better lodging environment than the previous one
(Zheng, G 2006). Accor hotel wants to break the convention to make the customers have a good
sleep in the night by using low price and reducing or canceling the equipment and service that
customers think it is unnecessary. For example, Accor concealed restaurant with high consumption
and resting room; they used automatic answering machine to replace labor reception in the main
foyer; they lessened the room area, provided simpler furniture and weaken non-main function;
meanwhile, Accor hotel improved or newly increased the equipment and service that customers
evaluated highly such as improving the comfort level of the bed, quiet-degree in the room and
sanitation, from which new value curve could be built. Such doing brings a great cost advantage to
Accor hotel and the cost for that to build a room has been reduced to 50%; human resource cost of
hotel is reduced to 20-30% from 25-35% of the sale income(Lili, Zhang & Jingjing, Han 2008);
and improve the services that customers think well such as bed quality, sanitation and quiet
environment exceed common two-star hotel in French; However, its price is bit higher than that of
one-star hotel, thus, it can attract lots of customers. Such a decision of Accor hotel makes its market
share is larger than that of other five hotel markets that rank after Accor. Until April 2003, there
were more than 3,800 hotels, 415,000 guest rooms and 1,278 economy hotels governed by Accor in#p#分页标题#e#
90 countries(Lili, Zhang & Jingjing, Han 2008); in particular, idea of Ibis put forward in 1974
which was famous for the combination of excellent service, quality and price; and up to now, it is
still one of the biggest network of economy hotels in Europe, and Ibis hotel has 643 hotels and
669,938 guest rooms.
- 19 -
From the above examples that many excellent economy hotels in America belong to internationally
famous hotel groups. Just because the development of whole economy hotels is too fast, which
leads to the competition in this market segment is extraordinarily fierce. The main reason for this
phenomenon is that the management of hotel management is relative ly simple and hipping and the
operation of economy hotel mainly relies on operation of its owned hotel and the transference of
franchise rights to reduce the output management; particularly, the transference of franchise rights
is the main business and income resource of the low grade hotels(Zhao Wei, 2008). But there are
many chain stores and brands of economy hotels which cause the business competition of output
franchise rights of economy hotels is very fierce and the rent rate for the guest room of economy
hotel is decreasing.
--Sliding stage of economy hotel
The development of economy hotel in America began to slide since 2001 and the rent rate of the
guest room was lower than that of whole hotel industry in America and this was also the result that
in the past fives the net increase of economy hotels in America was 22,000. Compared with 2002,
the increase rate in America for the demand of lower-price hotel in 2003 was -0.7% and that of
economy hotel was only 0.5%; in 2003 and rent rate of these two kinds of hotels were respectively
56.1% and 54.3% which were lower than that all other kinds of hotels(Richard Hu, 2009). So from
this that the low barrier of the economy hotel industry causes the increasing competition among
industries; follow-up operation of the economy hotel who enters blindly must face adverse
conditions if there is no advantages such as rallying point of the brand and sustaining power of the
management.
Seen from the development of economy hotel in foreign counties, economy hotel had large occupy
of market demand at the beginning; it not only occupied number advantage in the international
hotel groups but also its maturity of brand and influence was as equal as high class hotels(Zhongwei,
Fan 2008). However, due to the serious competition, the economy hotel will necessarily slide when
it develops to a certain stage. If the economy hotel wants to further expand and develop, what it
needed more is economies of scales building powerful brand, integrating resources and
management skill, keeping the relation between technology and management, coordinating relation
- 20 -
with the transferee, then that can be succeed in serious competition.#p#分页标题#e#
2.2.2
Relative
literature
discussion
of
economy
hotel
The relative literature from the retrieval of all kinds of materials that most foreign scholars and
academic make research to economy hotel from the following aspects:
--Researches on characteristics and scale of economy hotels
Some foreign scholars start from the characteristics of function and service of economy hotels;
these scholars put forward that economy hotel is a core business product that provides limited
service and pays attention to the service of guest room while all non-core businesses adopt
recruiting such as laundry service, cleaning service and maintenance of large-scale equipment(Li
Chao, 2009). For example, Alessandro analyzes the definition of product characteristics and service
object of budget hotels; Alessandro thinks that budget hotels are new product conceptions in the
development of modern hotel industry and budget hotels are necessary products to meet guests’
personal requirement. Lanier discusses the scale condition, distribution characteristics, function
settings and development tendency of three kinds of American hotels, i.e. Bed & Breakfasts,
Country Inns and Small Hotels. Lanier also points out that these three kinds of hotels with small
scale will be the main force for the development of American hotel industry.
--Study on history review, current situation and future prospect of international hotels
JanA.Derros, DavidM.Stipark, RandellA.Smith and Jeong-Gil Choi make studies on the
development of American hotel industry. Based on census data of American hotel industry in STR,
RandeUA., Smith analyzes the increase of scale, constitute proportion and benefit change of the
hotel industry for the past ten years from 1990 to 1998 and he warns investors in hotel industry,
particularly the investors of city hotel, should make cautions consideration when they invest in
hotel industry(Zhongwei, Fan 2008). JanA. Deroos uses NOR index to measure the supply and
demand of macro markets in American hotel industry and JanA. Deroos forecasts the demand of
hotel market, the price of hotel room and requirement of hotel long-term customer sources by using
NOR index. Jeong-Gil Choi foresees the development cycle and turning point of American hotel
- 21 -
industry in the future based on the fact that cycle of American hotel industry is 1-2 years earlier than
that of American business cycle. Brotherton.Bob analyzes the successful factors for the
development of English hotel industry. Ramiguez makes analysis on decisive factors for Spain
hotel turning to the world. Cizsmaar.Sanja(2000) , Ahmed.ZafarU(1999) , Dowling.R.K(1999),
Johnson(1997) and Marvel.W.M(1997) respectively discusses the development current situation,
problems and development prospect of hotel industry in Croatia, South Africa, Southeast Asia,#p#分页标题#e#
Hungary and Switzerland. Anna Mttila, Ray Pine and Dowling.R.K investigate the development
situation of hotel industry in Asia and Southeast area(Zhao Wei 2008). From aspects such as
hotel ownership, hotel economic benefit, hotel group, hotel managers, hotel politics and business
environment, Ray Pine analyzes the development of China hotel after entering mass travel period
and Ray Pine also explains using articles the opportunities and challenge of franchise method in
China(Pine, Q 2002). Anna study the investment situation of Asia hotels and says there are
three kinds of shareholders of Asia hotel industry, i.e. loan institution, rights, interests investors and
management corporation of hotel; Anna points out that return rate of hotel in Asia in quiet low, but
with the boom for domestic countries in Asia, medium rand hotel and economy hotel will be the
investment hotspot in a short time. Lomano think the operation performance of American economy
hotel and also systematically analyzes the reason for the slide of economy hotel since 2001.
Lomano said that the development of economy hotel in the future is optimistic. Also Shane Harris
looks into the distance to the Europe economy hotel from brand perspective.
--Study on site selection of every kind of hotel
Barun Kumar Chakravarty(1984) considers the accessibility of hotel as the main index of hotel site
selection; the measurement basis of accessibility is the distance between hotel and traffic pitch
point and neighboring residential area and the convenient location can improve the operation
benefit of the hotel(Lili, Zhang & Jingjing, Han 2008). Gerald W Lanin（1985）thinks that the site
selection of hotel should consider the factors such as the entrance of selection area, market entrance,
neighboring traffic facilities, public facilities and model of traffic flow. Another profess Douglas
Foster (1985) believe that the location of target market and tourists’ motivation decides the site
selection of hotel and different sites should be selected to distribute the hotel aiming at different
guests. Sung-soo Pyo in the book of <Hotel revolution for 21st >illustrate that utilizing location
- 22 -
characteristics to guarantee good customers’ satisfaction degree and good corporate imagine is the
target which must be set by the hotel managers when they select the hotel location(Zhao Wei
2008). Some scholars analyze the factors of historical development influencing the hotel
distribution.
--Study on pricing and marketing of economy hotel
Schmidgall (1995) wrote the comment about price that is the hotel pricing should also consider the
factors such as industry competition, profession intuition of managers and customers’ psychology
besides the cost(Li Chao 2009). Zhen-Gu made the optimization model of hotel pricing and such a
model can work out the optimal price of hotel guest room and mechanism of which is that variable#p#分页标题#e#
costs of hotel and characteristics of demand is the pricing basis(Li Chao 2009). SpLadany and other
people make investigation on price formulation under special market. He uses nonlinear model to
analyze how to realize the optimal market share of hotel guest room(Hongying, Huang 2008).
TomBanun conclude how the hotel determines its price in the market that supply exceeds demand.
The study on hotel marketing methods and sale channels are shown by the division of hotel
customer sources market and macro management for the development of hotel industry. Scholars
investigate new marketing methods and sales channels by the development of burgeoning
customers’ market. For example, Howard proposes that the hotel industry should pay close
attention to SMERF (social, military, education, religious and fraternal groups)( Zhongwei, Fan
2008). Howard thinks that there is great development potential of such a market in American hotel
market and it can also expand new sales methods and channels of hotel industry. Some scholars
begin to study the influence of traditional sales channel-agent on hotel. They think that it is not
enough for previous scholars to study the influences of agent on hotel just from the ethics and
method prospects, and the previous scholars should make studies on the information mastered by
two parties; also the agent can’t take all the responsibilities for the influence on the hotel caused by
information asymmetry(Zhao Wei 2008). Some scholars illustrate the influence of new technology
on hotel development and management from the prospect that the challenge of new technology to
traditional sales of the hotel.
- 23 -
--Study on chain operation of economy hotel
Some scholars mainly comment that the chain operation of economy hotel should adopt three main
models, namely franchise represented by American Cendant, merger and acquisition of French
Accor and brand extensions network of Holiday Inn. DiPan Patel discusses the competition relation
and pricing principle of franchisor and franchisee in the same market and DiPan Patel also points
out the effective control of franchisor to the service quality of franchisee.
--Study on hotel investment
Porta, an American market scholar, distinguished that the competition of any industry comes from
fives powers, namely, barriers to entry, exit barriers, existed enterprise, the customers’ abilities to
bargain and whether having substitute products. To evaluate the performance of hotel and to study
of hotel products are same as the evaluation for the competition degree of current hotel market,
while the study on hotel investment becomes the evaluation for the future market development of
the hotel industry.
At the same time, many Chinese scholars have made relatives researches.
Yudong, Han (2010) makes study on the rapid extension of economy hotel industry and his study#p#分页标题#e#
point out that the rapid extension of economy hotel causes the destructive competition in the market
while due to the slide and the rise of land value cause the unoptimistic performance of the economy
hotel. However, this study also indicates that the current investment market of economy hotel is
still periodically while the prerequisite of which is not to invest blindly, or the resources waste will
be caused. And the value curve studied by this study can solve this problem.
Li Na (2009) thinks that now China economy hotel has developed to a perfection, so the hotel
industry begin to look for different development area and market, such situation is also reflected on
the housing price of the economy hotel and polarization of price has appeared. Some housing price
is lower than 100 RMB while other housing price is higher than 400, which makes the original
housing price of China economy hotel centralizing 200 RMB have a great distance(Lili, Zhang &
Jingjing, Han 2009). And this shows that the market of China economy hotel has a competition
situation with multiple points. Pinchao, Li also shows that there are three kinds or levels of the
- 24 -
foreign economy hotels that develop maturely and these three kinds of economy hotels are
respectively Limited Service Hotel, Economy Hotel /Budget Hotel and Super Budget Hotel; and
these three kinds of hotel are respectively the high, medium and low ranged level of economy
hotels and, as well price of these three kinds of hotel is great different and the hardware facilities
and service also have a great difference(Pine, Q 2002).
Yuhong, Sun (2009) believe that with the rapid development of China economy and the rising of
mass travel, economy hotel is liked by business gusts and mass tourist due to the low price, standard
service, comfortable environment and cost performance. The great market potential of economy
hotel not only makes the development of domestic brand but also attracts the entry of many foreign
economy hotels. This study also points out that the basic strategy for the development of China
domestic economy hotel is cost leadership strategy, centralization strategy, differentiation strategy
and international strategy.
Li Fei & Junwu, Huang (2009) indicates that with the rapid development of starred hotels China
economy hotel exists un-continuation of the supply at the same time; now there are problems such
as confusion of price competition, singleness of management mode and lacking big famous chain
group of economy hotel.
Aiming at the analysis the importance of basic characteristics of economy hotel, Li Fei & He
Jianmin (2009) made customer research about 13 product elements, namely price, traffic
convenience, quiet degree of the room, chain brand, cleanness and sanitation, service level,
construction aesthetics, decoration of main foyer, coffee house, recreation facilities, baby monitor,#p#分页标题#e#
managed service of pets and room service. They study the elements of 13 products in the analysis
on the importance for the service facilities of guest room including bed, beddings, cabinet, writing
desk, telephone, carpet, broadband service, number of television channels, independent washing
room, shower, bathtub, decoration in the room and estaminet. This study discovers that the
customers pay attention to the guest room facilities and basic service project and emphasizes the
utility and efficiency. However, the dealers ’ impact on economy hotel hasn’t been fully shown.
- 25 -
Based on survey published in 2007 by the Commerce Reform and Development Division of
Commerce Department and China Restaurant Association (2007), this survey present that there is a
great promotion and emphasis for customers’ safety and comfort as for the hotel infrastructure and
supporting service; there is a further function demand for the business mating including business
center, goods department, meeting center, self-help laundry service and automatic sale equipment
while the demand for non-core body-building, recreation facilities and bar is weak. The element
order for the core competitiveness of the hotel, most of enterprise concerns most is the products and
service quality, but under the pressure of competitive market and benefit, the attention to
reservation system, marketing system, product with cost performance and the control of low cost is
promoted. From the review for the product elements of comprehensive economy hotel, easily to
discover that with the diversification tendency of customer’s demand and dealer’s supply and based
on 10 factors of service project discussed by Drucker’s value curve of economy hotel (see formula
1), this study points that the service of the economy hotel is restricted by appraisal index and five
product elements, namely safety, business center, goods department, brand and reservation system
should be increased. There are total fifteen value elements are used to discuss and analyze the value
curve of economy hotel to further develop optimal investment and operation model.
- 26 -
Chapter
III
Research
M
et
hodology
The structure of this thesis study is shown by the following figure:
Research motivation
and background
Literature review and discussion
Research method and
creating survey
questionnaire
Data collection and
Material analysis
Discussion of
demonstration result
Conclusion and suggestion
Result Report
- 27 -
3.1
Study
design
This section aims at three parts, i.e. operation definition, measurement method and questionnaire
design, of variables used for statistics and verification in the study. However, the value curve of
economy hotel studied by this thesis should be drawn based on customer and expert’s service#p#分页标题#e#
feeling to economy hotel. So this study design will respectively measure at hotel’s customers and
expert by questionnaire survey.
3.1.1
Basic
data
for
assessment
members
of
hotel
experts
In order to know investment amount for the service project of value factors offered by the hotel and
give a probable score to investment amount to the service project offered by the visited hotel dealers,
this study organizes assessment mission of experts. Professional background of the hotel
assessment mission of experts includes sales of hotel equipment, construction of hotel operation
system, and control of hotel finance cost, hotel operation and marketing, hotel investment plan and
hotel decoration design; this assessment mission of experts is made up of six professional
employees and see Table 3-1 for their basic information. This study adopts the method of secretly
visiting guests in order to truly reflect the service project level provided by the dealers and avoid
evaluation standard being influenced by pressure of human feeling.
3.1.2
Professional
assessment
for
the
value
curve
at
the
supply
end
The professional assessment for the value curve at the supply end in this study aims at making
assessments to fifteen value elements of the service project provided by the dealers of economy
hotel such as price, quiet degree of rooms, cleanness and sanitation, quality of the bed, room
facilities, quality of staff service, room size, decoration of hall, building aesthetics, diet facilities,
Gender Age(years) Experience
A Male 47 sales of hotel equipment is 9 years
B Male 54 construction of hotel operation is 10 years
C Male 37 for cost control of hotel finance is 6 years
D Male 39 for hotel operation and marketing and finance control is 7 years
E Male 52
for hotel operation and marketing and investment plan is more
than ten years
F Male 36 for hotel investment plan and decoration design is 5 years
- 28 -
safety, reservation system, brand, business center and goods department. The design of research
questions adopt positively presentation and scoring with forward direction.
After the experts’ scoring, the visited group will use the total of ever service project to divide
averages got by the experts, and the number got is the score of service project of this hotel. Use
averages to divide 7, and then multiply 100%, and the percentage got is the percentage for the
dealer’s investment degree of this value element.
Suppose:
--The name code of the visited hotel is S1
--The visited group’s averages to the service project (room facilities) provided by S1 is: δ
--S1 the percentage for hotel dealer’s investment degree to service project (room facilities ) is: α %#p#分页标题#e#
--Expert A’ s average to the service project (room facilities) provided by S1 is AS1
Expert B’ s average to the service project (room facilities) provided by S1 is BS1
Expert C’ s average to the service project (room facilities) provided by S1 is CS1
Expert N’ s average to the service project (room facilities) provided by S1 is NS1
--7 represents the highest score for single total points of investment service project (room facilities)
is 7.
Calculation Formula 1: δ= (AS1 + BS1 + CS1 + ………… + NS1 ) / N (the number of experts)
Calculation Formula 2: α % = δ/7 × 100%
It represents that it is equal to the investment amount of five star hotels when α % reaches 100%.
Operation definition in the objective measure table (price) references average price of lodging years
of hotels in 2006 China Hotel Business Statistics as its level basis. The hotel whose price is higher
than 300 will be further divided, namely, every 50 RMB is a class interval(Zheng, G 2009).
According to average price of China economy hotel gathered in April 2010 from the networks of
China economy hotel, the brand price of every economy hotel is very small. The score is directly
calculated by average room price, for example, taking average room price 197 RMB of Home Inn
as an example and the coordination score of the transition is 1.97. The average room price of Green
Haotai Hotel is 206 RMB while its coordination score of the transition is 2.04. The grade can be got
in the same manner. Adopting measure method of scoring positively and based on the condition
partition fitted by service project-subentry standard, the probable score will be respectively given
- 29 -
and the highest total score of the single item is 7 which are equal to the standard of five–stars hotel.
3.2
Study
design
and
sampling
3.2.1Content
and
design
of
questionnaire
Questionnaire objects of this study can be divided into two types: the first type is the customer of
economy hotel and the other type the expert of economy hotel. The following will explain them
respectively:
The first type: the customer of economy hotel
This stage is the questionnaire using customer of economy hotel as its study object and this stage
composes three parts: the first part is the measurement of customers’ most concerned project of
economy hotel including lodging consideration factors, the most important service project and
deleting or adding service project; the second part is the measurement for the importance degree of
the service project provided by economy hotel including the scoring of projects such as price,
quietness, sanitation, bed quality, room facilities, service level, room size, hall, building aesthetics,
diet facilities, safety, business center, reservation system, goods department and brand. The third#p#分页标题#e#
part is the basic data of subject including gender, age, profession, goal of this accommodation,
method of this accommodation, room price chosen most and apartment.
The second type: the expert of economy hotel
The study at this stage adopts the questionnaire of expert evaluation team; in other words,
professionals with professional standards aiming at the five economy hotels discussed in this study
at hotel investment are invited. And all these personal include specialists at aspects such as hotel
decoration and design, investment plan of hotel, cost control of hotel finance, hotel operation and
marketing, sales of hotel equipment and hotel operation system.
The study direction at this stage is the investment direction of economy hotel, so the design of this
questionnaire aims at the dealers’ investment. This stage is made up of two parts: the first part is the
basic data of experts including gender, age, professional background and whether they having
- 30 -
relative years employed in investing economy hotel; the second part is the measurement for the
probable score for the investment amount and level of service quality provided by visited economy
hotel including the scoring of projects such as price, quietness, sanitation, bed quality, room
facilities, service level, room size, hall, building aesthetics, diet facilities, safety, business center,
reservation system, goods department and brand.
3.2.2
Data
collection
According to Cooper and Schindler with the method of the interrogation/communication study, “the
researcher questions the subjects and collects their responses by personal or impersonal means”.
This method allows feedback, so a multi-way communication. In this case, the
interrogation/communication study is used to get the result of increasing the knowledge and
awareness of China economical hotel services surveys.
Questionnaire is designed according to the following principles to make sure the valuable
information can not only be collected in the correct w ay, but also be analyzed structurally to show
the results.
Since the respondent might have some fear of identification, the questionnaire is filled in
anonymously that could encourage interviewees to express opinions freely. The purpose of the
research will be explained first to have better quality of data from interviewees who understand the
aim of the research. In preparing a questionnaire, structured questionnaire are formed to analyze
data and for providing statistical information more easily. When analyzing and presenting data
every single item of questionnaire is focused on rather than aggregate score.
3.2.
3
Preliminary
examination
of
questionnaire
The first draft of the customer demand questionnaire of economy hotel (the first type) in this study
has 15 questions. The first draft of questionnaire (the second type) provided to personals of#p#分页标题#e#
economy hotel has 30 questions. Both these two questionnaires have been done the preliminary
examinations and the modification of the questionnaires will be done based on the result of
- 31 -
preliminary examinations. 30 questionnaires for the preliminary examinations of this questionnaire
was given out in the middle of July, 2010; then reliability analysis was done about the gathered data
and the reliability of Cronbach’ s α is 0.8. Based on the result of the preliminary examinations and
the subject’s suggestion, the unclear questions are made probably modification and formal
questionnaire of this study was completed in August 2010.
3.2.
4
Sampling
design
From the discussion of this study we can know that value curve of economy hotel is controlled by
customer demand and dealer supply of economy hotel. Thus, this study chooses four economy
hotels whose market share is in top ten of economy chain hotels in January 2010 (website of China
economy hotel, 2010) and one of other type economy chain hotel to make study. This study totally
chooses five chain hotels, i.e. Home Inn, Motel Chain Hotel, Green Tree Inn Hotel, Super 8 Hotel
and Mingdian Business Hotel. This study makes respective questionnaire to the above economy
hotels and the subjects can be divided into two types: the first type is the demand investigation of
the above five hotel’s customers in Guangdon province, China and the second type is the inves tment
investigation of the above five hotel’s dealers in Guangdong province, China; and value curve study
on China economy hotel will be done based on these two questionnaire.
In order to make the investigation of this study representative, the subjects who accept the customer
questionnaire of economy hotel must have the following prerequisites: firstly, they should be
lodging customer of economy hotel; secondly, they should be at the age of 20 or older and have the
abilities of autonomy consumption. Because different guest rooms and occupancy of every
economy hotel, this study gets the effective sampling. Thus, this study uses the scale and occupancy
in Guangdong province, China as the study target according to Ruiping,Chen (2006)’s number that
rooms of Guangdong economy hotels are about 100 while the occupancy is about 40%. Under the
consideration that the objectiveness of sampling and limited time, it is expected to get 90 effective
samplings in two weeks using convenient sampling methods of Home Inn, Motel Chain Hotel,
Green Tree Inn Hotel, Super 8 Hotel and Mingdian 1 Business Hotel and it is preliminarily got 450
1 http://www.mt-inn.com/flash/default.htm
- 32 -
effective questionnaires. This study reference the recovery rate for the valid samplings of the past
study questionnaires; the total questionnaires of every economy hotel is 160 and the number of all#p#分页标题#e#
questionnaire is 800. A good connection should be made with the hotel principles to make sure the
recovery rate of this questionnaire. In order to improve the subjects’ willing to fill in this
questionnaire, good gifts should be given to the subjects to improve the effective numbers for the
questionnaire of this study.
The sampling design of this study aiming at dealer’s investment level of economy hotel has invited
professionals who are experts at the investment of economy hotel including 6 professionals of sales
of hotel equipment, construction of hotel operation system, and control of hotel finance cost, hotel
operation and marketing, hotel investment plan and hotel decoration design; these five
professionals uses their own professions to make studies on the questionnaires of the five economy
hotels discussed in this study. Because this study doubts that the dealers are not honest to their
investment, the assessment and questionnaire of the expert is adopted in order avoid such
phenomenon. People who know better about the investment of economy hotel make study from the
most profession way on this stage. Thus, the total number of questionnaire spread at this stage is 30.
3.
3
Data
analysis
This study aims at five Guangdon economy hotels to make investigation. This study makes
exploration towards different opinions of customer and dealer in this study and different demands
and supplies of customer and dealer. All effective questionnaires after the questionnaire collection
will be coded and then input into the computer to build files and SPSS (Statistical Product and
Service Solutions)1 will be used as the tool of statistics and analysis. Based on the requirement of
this study and analysis goal and adopting descriptive statistics to get data. Material analysis mainly
uses frequency distribution and percentage, and then the data will be changed to curve graph and the
relative change for the high-low and strong-weak ups and downs of the value element of economy
hotel will be explored.
1 http://www.spss.com/
- 33 -
Next the four economy hotels whose market share is in top ten in January 2010, and then the
samplings got from these four economy hotels will be further meant to draw the value curve for the
supply end of economy hotel. And the curve of industry supply end will be compared with other
types hotels-Mingdian Business hotel to explore the relative change of high-low and strong-weak
ups and downs of the value element. At last, value curve model of Guangdong economy hotel will
be drawn based on the study result combining with the value curve of dealer’s supply end to
complete the data process of this study and statistic analysis.
- 34 -
Chapter
IV
Profiles
of
Analysis
on
China
Economy
Hotel#p#分页标题#e#
and
Development
Strate
gies
The research analyzes and studies the value curve at customer’s demand end of Guangdong
economy hotels and the questionnaires sent aiming at customers is 800; recovery of questionnaire is
559 and the effective questionnaires are 528 while ineffective questionnaires are 31. Cronbach’s α
is 0.870 and Cronbach’s α for all questions in the questionnaire is bigger than 0.850.
4.1
Analysis
on
customer
’
s
basic
background
4.1.1
Analysis
on
customer
’
s
basic
background
There are some questions for customer’s basic background based on the measurement framework
drafted in accordance with operation definition, namely, gender, age, profession, lodging goal,
lodging method, lodging vehicle, which hotel chosen most and being from which province or
region.
--Gender
Among 528 effective samplings, there are 283 males and percentage of males is 51.4%; there are
245 females among 528 effective samplings and percentage of females is 48.6. The male sampling
is more than that of the females; from which we can know that more males live in the economy
hotels and the reason for which is probably that the opportunities for males to have business is more
than that of the females. Or probably males guest think that service matters provided by hotel have
direction relation with them, so they show great consideration. See the show of the figure 1
distribution times for the statistics of customer gender.
- 35 -
F ig u r e 1 : G e n d e r
3 0 3
2 2 5
0 4 0 8 0 1 2 0 1 6 0 2 0 0 2 4 0 2 8 0 3 2 0
1
F e m a le
M a le
--Age
There are 209 people whose ages are among 21-29 and occupy most numbers of samplings and the
percentage of these people is 39.5%. And the sequences of other people are 185 people aged 31-40
and the percentage is 35.1; 90 people aged 41-50 and the percentage is 15.3%; 15 people aged 51-
60 and the percentage is 4.6%; 19 people aged below twenty years old and the percentage is 3.6%.
From the samplings that ration of the youth and prime (from 21 to 40) is high and the total
percentage of these two is 74.6%; from this figure that main consumption level of economy hotel
centralizes between the youth and prime (from 21 to 40). And people who are at this age level have
great power to push the development of economy hotels. See the show of 4-2 distribution times for
the statistics of customer age.
Figure 2: A ge
39.50%
35.10%
15.30%
4.60% 3.60%
21-29
31-40
41-50
51-60
<20
--Profession
As for the profession, there are 92 middle management of the company who occupy most of the
samplings and the percentage of them is 17.4%. And sequences of other people are: 88 individual#p#分页标题#e#
households and their percentage is 16.7%; 60 liberal professions and their percentage is 11.4 %; 40
common office staffs of company and their percentage is 7.6 %; 34 officers of party policy and
- 36 -
official business organization and their percentage is 6.4 %; 32 other people and their percentage is
6.1 %; 31 enterprise bosses and their percentage is 5.9 %; 29 other people and their percentage is
6.1 %; 29 workers, sales and service staffs and common servants and their percentage is 5.5 %; 38
senior management of enterprise and their percentage is 6.3 %; 26 specialists of educational
organization and their percentage is 2.6 %; 29 students and their percentage is 5.6%; 6 laid-off and
job waiting people and their percentage is 1.0%;14 retire men and their percentage is 2.7%; 9
military position and their percentage is 1.7%. This shown samplings are mainly composed by
middle management, private business, liberal professions and common office staffs of company,
and their percent is bigger than 1/2. Among them, middle management of the company occupy most;
this may because the middle management of the company have more opportunities to be on
business, so they have high probability to lodge in hotel and accept the research and visit.
4.1.2
Lodging
purpose
As for the lodging purpose, there are 179 people being on business who occupy most of samplings
and their percentage is 33.9%. And sequences of other people are: 168 people for recreation travel
and holiday and their percentage is 31.8%.85 people for visiting relatives and friends and their
percentage is 16.1%. 37 people for group tour and their percentage is 7.0%. 36 people for other
purpose and it percentage is 6.8%.23 people for exhibition and their percentage is 4.4%. The
samplings are mainly composed by business customer whose percentage is 33.9%; from which can
be known that the main consumption levels of economy hotel are mainly business guests.
Figure 3: Lodging Purpose
33.90%
16.10%
7.00%
6.80% 4.40%
Business
Visiting(relatives,friend)
Group tour
Others
exhibition
- 37 -
4.1.3
Lodging
approaches
As for the lodging approaches, there are 163 individual travelers who occupy most of samplings
and their percentage is 30.9%. And sequences of other people are: 99 people whose rooms are
booked by their companies and their percentage is 18.8%. 93 people their rooms are recommended
by relatives and friends and the percentage is 17.6%. 71 people whose rooms are booked by
reservation line of the hotel call and their percentage is 13.4%. 43 people whose rooms are booked
by the travel services and their percentage is 8.1%. 24 people whose rooms are booked via the
special reservation network of the hotel and their percentage is 4.5%. 21 people whose rooms are
booked via other ways and their percentage is 4.0%.14 people their rooms are booked via the#p#分页标题#e#
booking center of the hotel and their percentage is 2.7%. From the shown samplings see that the
customer’s main lodging approach is automatic lodging of individual travelers; from which can
acknowledge that the main consumer group of economy hotel are individual travelers and it has a
highly self-choice.
4.1.4
Lodging
transportation
choice
As for the vehicle, there are 187 people voluntary driving to economy hotel who occupy most of
samplings and their percentage is 35.4%. And sequences of other people are: 115 people who come
to economy hotel by train and their percentage is 21.8%; 104 people who come to economy hotel by
bus and the percentage is 19.7%. 75 people who come to economy hotel by plane and its percentage
is 14.2%. 43 people who come to economy hotel by other vehicles and their percentage is 8.1%.
4 people who come to economy hotel by steamer and their percentage is 0.8%. The main lodging
vehicle shown by the samplings is the voluntary drivin g. But if the total of the people who come to
economy hotel via public transport traffic including train, public bus and airplane is 294 and their
percentage is 55.7%; from which conclude that the customer groups of the economy hotel use the
mass transport traffic tools as main vehicles to lodge in economy hotels.
- 38 -
4.1.5
Pricing
chosen
Which kind of hotel chosen best, taking an individual as an example, there are 129 people who
choose the hotel with the price of 100-139 RMB and all these occupy most of samplings and their
percentage is 24.4%. And sequences of other people are: 101 people who choose the hotel with the
price of 180-210 RMB and its percentage is 19.1%. 95 people who choose the hotel with the price
of 220-259 RMB and their percentage is 18.0%. 43 people who choose the hotel with the price of
260-299 RMB and its percentage is 8.1%. 99 people who choose the hotel with the price below 99
RMB and its percentage is 2.3%. 11 people choose the hotel with the price of 330-339 RMB and
their percentage is 2.1%. 8 people choose the hotel with the price above 340 RMB and their
percentage is 1.5%. From all these figures shown that the customer’s choice of economy hotels can
be divided into three types: the first type is low price and average price is among 100-139; the
second type is the middle price and average price is among 140-179 which is main consumption
price and its percentage is 48.8%; the third type is high price and average price is among 180-259
and its percentage is 37.1%.
4.1.6
from
which
province
or
region
Being from which province or region, there are 129 people (single choice) coming from
Guangdong who occupies most of the samplings and its percentage is 24.4%. The sequences of
other people are: 129 people coming from Guangxi and its percentage is 15.2%; 47 people coming#p#分页标题#e#
from Zhejiang and its percentage is 8.9%; 42 people coming from Jiangxi and its percentage is
8.0%; 26 people coming from Fujian and its percentage is 4.9%. 24 people coming from Hunan and
its percentage is 4.5%; 24 people coming from Anhui and its percentage is 4.5%; 12 people coming
from Taiwan and its percentage is 3.2%; 16 people coming from other places and its percentage is
3.0 %; 9 people coming from Henan and its percentage is 1.7%; 19 people coming from Guangxi
and its percentage is 2.7%; 6 people coming from Shangxi and its percentage is 1.1%; 4 people
coming from Beijing and their percentage is 0.8%; and all of these figures show that the customer
of economy hotel mainly come from Guangdong.
The samplings of this research all adopt convenient method among the customers of Guangdong
- 39 -
economy hotels, so the constituents and characteristics of the interviewees represent the situation
for the consumption group of Guangdong economy hotels. With the rapid development of China
urbanization and centralization of the educated people to central cities, the middle class of the
enterprise raises quail. During this process, the main contents of the middle class’s life are
composed by frequent business and economy activities. It is shown from the statistics of this
research that core consumption groups of current economy hotel have the following seven
structural characteristics:
--Male tourists are more than female tourists.
--The youths and primes from 21 years old to 40 years old are main customer groups.
--As for the profession, the middle management of the enterprise is the main objects of lodging.
--The main goal for people to lodge in economy hotel is business evection which recreation travel
ranks the second.
--The main lodging guests of economy hotel are individual travelers and it has a high automatic
choice.
--Main traffic tool for lodging is public transport tool.
-- The most price been chosen is price among RMB100-179.
In conlcusion, it is shown from the research data that the customer groups of economy hotel begin
to create a new consumption with high quality. In fact, China economy hotel has been on its way to
overturning the tradition and leading the coming trend of the hotel. And requirements of economy
and material and business caused by customer groups of the economy hotel will greatly change the
operation patterns of China hotel industry. The dealers of hotel industry will pay close attention to
serving those requirements of the main customer group, which is very possible to create a fully new
market, crate a new operation type and change the situation that the current competition of hotel
homogenization. What is more, economy hotel gets the loyal support from the main customers
which are equal to mastering the large market demand of the hotel industry in the future.#p#分页标题#e#
4.2
Analysis
on
customer
’
s
demand
This section mainly analyzes the customer’s relative points on service comments, including:
- 40 -
(1) Which is the first comment that attracts you to think about living in the hotel?
As for the first comment that attracts the customer to think about living in the hotel, there are 128
people (single choice) who choose cleanness and its percentage is 24.2%; the sequences of other
people are: 96 people who choose safety and its percentage is 18.2%; 85 people who choose service
level and its percentage is 54.7%; 70 people who choose price and its percentage is 13.3 %; 60
people who choose brand and its percentage is 11.4%; 55 people who choose location and its
percentage is 10.4%; 26 people who choose room facilities and its percentage is 4.9 %; 3 people
who choose other things and its percentage is 0.6%.
From the above figures that customers consider cleanness, safety and service most when consider
living in hotel. The total percentage of these three items is 58.5%. From the above analysis, we can
know that more than half customers’ willing to choosing which hotel is decided by the cleanness,
quietness, safety and service level of the hotel.
(2)Which comment you don’t consider at all when you live in hotel?
As for the project not considered by the customer at all, there are 141 (single choice) people who
don’t consider brand at all and its percentage is 26.7%; the sequences of other people are: 132
people who don’t consider reservation system at all and its percentage is 25.0 %; 79 people who
don’t care location at all and its percentage is 15.0%; 60 people who are not interesting in price at
all and its percentage is 11.4 %; 38 people who don’t consider safety at all and its percentage is
7.2%; 27 people who don’t consider cleanness at all and its percentage is 5.1%; 21 people who
don’t consider service level at all and its percentage is 4.0%; 16 people who don’t consider room
facilities at all and its percentage is 3.0%; 14 people who don’t consider other factors at all and its
percentage is 2.7%.
There are some comments of customers don’t consider most is brand, reservation and location. The
reason for which is probably that now there are many economy hotels and every economy hotel has
special reservation system or with the spread for the room reservation of special networks such as
- 41 -
ctrip.com and ELONG1. Convenience of life function in the site selection of economy hotel is
require highly; the brand, reservation system and location of economy hotels have high
performance which is the necessary conditions for the differential among economy hotels, other
classification hotels and social hotels. The customer’s choice for living in the hotel is more multiple.#p#分页标题#e#
Thus, the customers don’t consider these three service comments when they choose the hotel to stay.
(3)Which service do you think are most important?
As for the service project considered most important by the customers, there are 469 people (double
choices) who choose sanitation and its percentage is 88.8%; and the sequences of other people are:
409 people who choose safety and its percentage is 77.5%; 357 people who choose quietness and its
percentage is 67.6%; 330 people choose service level and its percentage is 62.5%; 320 people who
choose prices and its percentage is 60.6%; 235 people who choose room facilities and its percentage
is 44.5%; 187 people who choose bed quality and its percentage is 35.4%; 94 people who choose
diet facilities and its percentage is 17.8 %; 91 people who choose brand and its percentage is 17.2%;
54 people who choose room size and its percentage is 10.2 %; 32 people who choose reservation
system and its percentage is 6.1%; 28 people who choose building aesthetics and its percentage is
5.3%; 17 people who choose business center and its percentage is 3.2%; 7 people who choose the
hall and its percentage is 1.3%; 5 people who choose goods department and its percentage is 0.9 %;
in the 15 value elements provided by the hotels, besides the sanitation and quietness in the choices,
that equally important to the customers is their safety. From the figures, that the five items are
thought important by the customers to live in hotel, i.e. sanitation, safety, quietness, service level
and price; the dealers of the economy can consider that the service value of economy hotel should
be promoted while the economy hotel provides service. The amount for the important service
factors thought by the customer should be added, and service quality of the above service elements
should be improved and the customers’ identity to the service provided by the economy hotel need
be strengthened.
In addition, the top four unimportant service projects thought by the customers of the 15 value
1 www.ctrip.com / www.elong.com
- 42 -
elements provided by the economy hotel are: building aesthetics, business center, hall and
department of life goods. The dealers of economy hotel can consider that the service value of these
four service should be reduced while provides service; the amount for the unimportant service
factors thought by the customer should be reduced; or use substitute and outsourcing operation to
reduce the operation cost, unnecessary resource waste and the excessive investment of service
project.
(4) Which service do you think should be added in the hotel?
As for the added projects thought by the customers: there are 92 people (single choice) who choose
monitoring system of public security and its percentage is 17.4%; and the sequences of other people
are: 85 people who choose books and newspapers and its percentage is 16.1%; 81 people who#p#分页标题#e#
choose the purchasing of local specialty and its percentage is 15.3%; 73 people who choose selfhelp
laundry service and its percentage is 13.8%; 58 people who choose the explanation of outside
environment and its percentage is 11.1%; 39 people who choose desserts and drinks and its
percentage is 7.4%; 34 people who choose automatic sales service and its percentage is 6.4%; 34
people who choose other things and its percentage is 6.4%; 32 people who choose sales promotion
and its percentage is 6.1%.
From the show of research statistics, the top three added service projects thought by customer are
monitoring system of public security, books and newspapers and the purchasing of local specialty;
and the economy hotel can adjust the provided services item to increase the effective demand
requirements thought by the customers based on the environment and region of the economy hotel.
The increase of monitoring system of public security meets the female customers’ safety
requirement and increases their lodging will. The increase of books and newspapers meets the
business person requirement to master real-time news and the business person can combine their
leisure culture with their busy business life. To increase of local purchasing specialty is the optimal
gift for the customers’ evection and travel; increase self-help laundry service and provide free
laundry service or self-help laundry service to the medium and long-term lodging customers; the
service items of the industry which are beneficial to themselves should be added combining with
the hotel locations.
- 43 -
It is shown from customer’s relative view that the service projects concerned by the customers are
mainly sanitation, safety, quietness, room facilities and price; in other words, the practicability of
the lodging should be emphasized on a reasonable price and the customers doesn’t pay attention to
the luxury service project. In addition, the customers’ attention to the brand, location and
reservation system provided by the dealers is low; the reason for which is probably that the
influence of the dealer’s brand advertisement hasn’t been shown or because the brands of economy
hotel is too many for the customer can’t directly choose or judge the advantage and disadvantage of
the brands, locations and reservation systems. Another reason is that now famous economy hotel
has its own special reservation system, probably because the spread for the room reservation of
special networks such as ctrip.com and ELONG. The dealers should strengthen the industry scale
and brand benefit to create the popularity of chain brands and extend larger cover of investment
network and maintain the convenience for the pipelines of room reservation. Thus, the brand,
reservation system and location of the hotel have high performance in the economy hotel which is#p#分页标题#e#
the necessary conditions for the differential among economy hotels, and others hotels due to the
customer’s choice for living in the hotel is more multiple. The economy hotels create elements
which are beneficial to it and then enter into the further service project with barriers.
4.3
Analysis
of
hotel
study
(Home
inns
hotel)
Since Home inns found operations in 2002, is has been know one of the best-know economy hotel
brands in China. Home Inn as a leading economy hotel chain in China based on the number of hotels
and hotel rooms, as well as the geographic coverage of the hotel chain. The hotel offers a consistent
product and high-quality services to primarily serve the fast growing population of value-conscious
individual business and leisure travelers who demand clean, comfortable and convenient lodging.
As of December 31. 2009, Home inns consisted of 616 hotels in operation and an additional 69
hotels under development, covering 132 cities in China.
Home inns hotel chain covers most major metropolitan areas in China, further penetrate the existing
cities and metropolitan area where its presence and also expand into additional cities in China with
- 44 -
population generally have the potential for sustainable economic growth and increasing demand for
hotel accommodation services.
Exhibit 4.1: Home inns hotels in China
Home inns Hotel (如家酒店)
“Stay like at Home”
- 45 -
4.3.1
Hotel
management
Home inns ’s operators believe that skilled management is a critical element is maximizing revenues
and profitability of our hotel operations. As majority of its senior hotel management team has
extensive experience in the hospitality and other consumer-services industries. Each departments
including hotel operations, sales and marketing, human resources, training, and accounting and
finance, is staffed by an experienced team with significant expert in their respective area(Zhongwei
Fan, 2008). These departments support each hotel and its management in day-to-day activities by
providing operating statistics, accounting and budgeting services, sales and revenue management
marketing and promotion support, cost controls, property management tools and other resources
that hotel develop, maintain and deliver efficiently and effectively using the centralized corporate
office resources. The key elements of Home inns centralized hotel management programs been
analysis that including the following:
--Budgeting and Monitoring
The general manager of each hotel has work with the corporate office personnel to set a detailed
annual budget for revenues and cost categories of the hotel. Through the use of the online property
management and management reporting systems, the operators are able to track each hotel’s daily#p#分页标题#e#
occupancy, average daily rates, RevPAR and other operating data.
--Quality Assurance and Training
Home inns management team have established quality standards for all aspects of hotel operations
that cover, among other areas, housekeeping, hotel maintenance and renovation, and service
offering. Also sets of procedural manuals been developed that relating all aspects of hotel
operations to ensure that our employees follow the same standards(Zhongwei, Fan 2008). The
compliance of Home inns with quality standards is monitored through both scheduled and
unannounced visits and reviews conducted periodically at each hotel. Each employee been required
takes periodic tests in order to monitor compliance with hotel quality standards. In addition, the
practice of tracking customer comments through guest comment cards, and the direct solicitation of
guest opinion regarding specific items, allows everyone to improve service and amenities at each
hotel across the hotel chain.
- 46 -
--Target Sales
Home inns hotel use a property management system to manage each property’s use of the various
distribution channels in the lodging industry. These channels include our central reservation system
and toll-free numbers, third-party travel agents and other travel intermediaries, corporate travel
office and office managers. Based on market conditions, the mangers adjust the number of room
allocated to each of hotel sales channels on a daily basis in order to optimize hotel profitability.
Exhibit 4.2: Home inns percentage of room nights stayed in 2009 by customer channel
Source: CBRE research, Asia
4.3.2
Hotel
Development
Home inns hotel follow a structured and systematic development and construction process with
respect with respect to hotel development of new hotel properties. As a leading branded economy
hotel chain in China, operators are generally able to establish credibility with property owners and
secure desirable properties on reasonable terms(Hongyin Huang, 2008). Home inns hotel
commence constructing a standardized after definitive agreements with the owner have been
executed. A majority of the construction materials and supplies for the new hotel are purchased
through our centralized procurement system. Home inns hotel chain management team assist
special for franchised-and-managed hotels franchisees in refurbishing renovating or constructing
their properties after they join Home inns braded hotel chain, and in meeting the brand
Customer Channel
Approximate Percentage of Total
Room Nights Stayed in 2009
Central reservation system bookings by members of our Home Inns
membership network 9.5
Reservations not booked through our central reservation system by
members of our Home 1.5
Reservations not booked through our central reservation system by#p#分页标题#e#
members of our Home Inns membership network 40.9
Walk-ins 12.2
Corporate account 13.7
Travel agencies and consolidators 6.9
others 15.3
Total 100
- 47 -
specifications by providing technical expertise and coast-saving suggestions(Richa rd Hu, 2009).
There are a series of pre-opening activities, such as indentifying and appointing the general
manager and other members of the hotel management team, and hiring and training hotel staff in
anticipation of the hotel opening.
Home inns hotel expenditures capital totaled RMB 581.6 million, RMB 996.40 million and RMB
250.4 in 2007, 2008 and 2009 respectively (Lili, Zhang & Jingjing, Han, 2009) There are
incurred capital expenditures primarily in connection with leasehold improvements and investments
in furniture, fixtures and equipment, technology and information and operational systems. As
leading of China economical hotel, they expect to meet more capital expenditure needs in the
foreseeable future with cash generated from our operating activities and financing activities.
There are some criteria of to lease or franchise properties that meet the following market-and hotelspecific;
firstly general market criteria that including economic growth, future hotel development
focus on cities and metropolitan areas that are generally show growth in certain business activities
as measured by employment opportunities, population growth rates, tourism and convention
activities, air traffic volume, local commercial real estate occupancy, and retail sales volume. Home
Inns plans to invest RMB 130 million to open 15 hotels in Yunnan. Kunming, the capital of Yunnan
province, is becoming a destination for tourism and business(Lili, Zhang & Jingjing, Han,
2009). The investment per hotel, as well as franchise fee arrangements in this region, is consistent
with Home Inns’s exiting practices; Secondly, Home inns seek to invest in hotels situated near both
business and leisure centers that tends to generate a broad base of demand for hotel
accommodations and facilities. These demand drivers include transportation hubs, convention
centers, business parks, shopping centers and other retail area, all of there belong to location and
market appeal criteria. Other specific hotel criteria including size and facilities, financial return
requirements, the development team, marketing team and city general managers to assess the
potential financial return of every proposed new hotel.
- 48 -
4.3.3
Home
inns
Hotel
Chain
Home Inns hotel chain currently covers most major metropolitan areas in China. For future they
intend to penetrate the existing cities and metropolitan areas where they presence and also expand
into additional cities in China with a population of over two million, annual GDP of over RMB 35
billion, or both(Lili, Zhang & Jingjing, Han, 2009). For Home inns hotel each one has a#p#分页标题#e#
standardized design, appearance, décor, color scheme, lighting scheme and set of guest amenities.
Also the hotels are strategically located to provide our guests with convenient access to major
business districts, ground transportation hubs, major highways, shopping centers, industrial
development zones, colleges and universities, and large residential neighborhoods.
Exhibit 4.3: a complete listing of all of Home inns hotels in December 31, 2009
- 49 -
- 50 -
- 51 -
Source: CBRE research, Asia
Leased-and-operated Hotels
For leased-and-operated hotels, Home inns hotel lease properties from real estate owners or lessors,
and are responsible for hotel development and customization to conform to the standards of Home
Inns, as well as repair and maintenance and operating expenses of properties over the term of the
lease. The annual rent for each of our leased-and-operated hotels ranges from RMB 0.35 million to
RMB 15.7 million, depending on the location, size and condition of each hotel property. The terms
of hotels leases range from 6 to 21 years, most of which are 15 years. In general, upon expiration of
these leases, Home inns hotel dispose of the removable facilities, equipment and appliances
installed by us while leasehold improvements and fixtures may be kept by the lessor on the premises.
Franchised-and-managed Hotels
This kind of hotel been branded with “Home Inn” to franchisees who are property owners, lessors
or existing hotel operators, and hotels are generally responsible for managing these hotels, typically
including the hiring and appointing of the general managers of these hotels, typically including the
hiring and appointing of the general managers of these hotels, Under a typical franchise agreement
- 52 -
between us and a franchisee, the franchisee is generally required to pay us an initial franchise fee of
RMB 0.2 million to RMB 0.3 million. Beside this, a brand royalty fee of 3% of the revenues of the
hotel, an annual management fee of 1.5% of the revenues of the hotel and an annual franchise fee
1.5% of the revenues of the hotel(Lili, Zhang & Jingjing, Han, 2009). The franchisee is
responsible for the costs of hotel development and customization to conform to the standards of
Home inns, as well as for repairs and maintenance and operating expenses of the hotel.
Exhibit 4.4: the number of Home inns hotel in operation in December 31, 2009
Source: CBRE research, Asia
The room rate been set based on local market conditions with reference to room rates set by Home
inns’s competitors. As mentioned before hotel primarily target individual business and leisure
traveler, the month that includes Chinese New Year (which can fall in late January or early February)
generally accounts for a lower portion of the annual revenues that other months. The following#p#分页标题#e#
table presents certain selected operating date as of and for the dates and periods indicated. The
results of operations have been and will continue to be significantly affected by changes in these
operating measures which are widely used in the hospitality industry.
Exhibit 4.5
Source: CBRE research, Asia
- 53 -
4.3.4
Hotel
organizationa l
Structure
The diagram illustrates Home inns hotel organization structure and the place of formation,
ownership interest and affiliation of each of its subsidiaries.
Source: special hotel report management (Richard Hu 2009)
4.3.5
Performance
Indicator
The increase in the number of hotels in the hotel chain is largely affected by the demand for Home
inns hotels in various cities and ability to successfully identify and secure new properties and
develop new hotels at desirable locations. The non-financial key performance indicators consist of
the increase in the total number of hotels and hotel rooms in Home Inns hotel chain as well as the
- 54 -
RevPAR achieved by the hotels. RevPAR is a commonly used operating measure in the hospitality
industry and is defined as the product of average occupancy rates and average daily rates achieved.
Occupancy rates of hotels mainly depend on the locations of hotels, the effectiveness of sales and
brand promotion efforts, ability to maintain the consistency and quality of hotel facilities and
service, the performance of managerial and other employees of hotels, as well as ability to respond
to competitive pressure(Zheng G, 2006) .
Another performance indicator is consist of our revenue and cost structure, which are discussed in
greater details in the following paragraphs. In addition, the hotel use EBITDA, a non-GAAP
financial measure, as a key financial performance indicator to assess the operating results before the
impact of interest, income taxes, depreciation and amortization.
Revenue.
In 2009, Home inns generated total revenues of RMB 2.60 billion (US$381.0 million). The
revenues are significantly affected by the following operating measures, which are widely used in
the hospitality industry and appear throughout this annual report including the total number of
hotels in Home inns hotel chain; the total number of hotel room in the chain; occupancy rates
achieved, average daily rates achieved, the RevPAR achieved by the hotels;
Exhibit 4.6
Source: CBRE research, Asia
In 2009, generated revenues of RMB 2.45 billion from leased-and operated hotels that accounted
for 94.3% of the hotels total revenues for the year. For franchised-and-managed hotels, total
- 55 -
revenue of RMB 147.5 million, this accounted for 5.7% of Homes inns hotel total revenues in
2009(Richard Hu, 2009).
Revenues from the leased-and-operated hotels primarily consist of revenues from sales of room#p#分页标题#e#
stays and, to a much lesser extent, revenues from sales of food and beverage at the hotels and other
services(Alessandro F, 2005). It is easy to recognize revenues from sales of roomstays, food and
beverage when services are rendered. The initial franchise fee as revenue when the franchised-andmanaged
hotel opens for business, the fee becomes non-refundable, and the hotel have fulfilled all
of commitments and obligations. The fees received from franchisees for system usage, maintenance
and support as revenues when hotel services are rendered.
- 56 -
Chapter
V
Conclusion
and
suggestion
This chapter is divided into two parts. Firstly, this chapter concludes the customer’s low-high
demand to the value elements of the hotel combining with the result of demonstration analysis for
individual case of economy hotel to explain the importance of the conclusion of this research.
Secondly, based on this research conclusion to explain the suggestion of this research on the
practice; at last, this chapter puts forward the suggestion to follow-up study and illustrate the limits
and insufficiency of this research. It is hoped that the follow-up researchers can increase it to be the
reference for the study on the coming development direction of the economy hotel.
5.
1
Research
conclusion
5.1.1
Overall
China
economical
hotel
industry
Through analysis the economical hotels situation, China’s economical hotel market has becoming a
booming market, and tourism industry has already become the new point of economic growth,
which offered various opportunities to the development of hotel industry, and the boom of tourism
industry has shown the huge market potential.
In current situation that the market of high star hotel has been mature, and china development with
reforming economic and political system, there are more governments’ hotel will enter the hotel
market; and with maturity of customer’s market and the improvement of people ’s cultural life and
living standard, so economical hotel market are very appropriate market for future hotel industry.
After the economic hotel industry entering the mature stage, the customers’ consumption
experience is more abundant because they can get more information about industry such as
performance, cost. So the customers will require higher service quality that is main points for
developing economical hotel in future. In other perspective of hotel has knowledge-intensive and
labor-intensive characteristics, which means it has higher require for hotel employees, especially
the hotel administrative staffs. The hotel industry has great industrial correlativeness with other
- 57 -
industries. So it is difficult to form the supplier’s bargaining power when industry has not formed#p#分页标题#e#
scale economies effect (Zhongwei, Fan 2008). The current competitions among economical hotel in
China are mainly the price competition and this is the main reason why the whole operating of the
industry is unsatisfactorily. In this moment, China economical industry still lack of profession
knowledge in profession level, service quality of them will affect the hotel business performance
directly. The development bottleneck of economical hotels in China is the scarcity of specialized
employees comparing to foreign competitors. So it is important to training effective managers of
economical hotels. For company have already entered into economical hotels market and with
pioneering advantage, should use collectivization strategy, chain strategy and brand strategy, and
combine others to exert backwardness advantage.
5.1.2
Research
Conclusion
The aim of this research is to explore whether different economy hotels have different value curve;
according to the customer’s demand and dealer ’s supply, this research draws up the value curve for
China representative economy hotels and explores seeking the optimal value curve of economy
hotel in all kinds of economy hotels. The goal for which is to check whether the value curve of the
dealer’s supply end is equal to that of the demand; now the research conclusion is concluded as
follows:
Hereby, discovering from this research on the exploration of the customers of economy hotel that
those who usually consume in economy hotel are individual male youths and primes on business
evection; thus, when the dealers look for the targeted customer group of the economy hotel, they
must pay attention to the characteristics of such customers. The dealers should make marketing
strategies aiming at the customer’s characteristics, for example, whether such customers have
difference with other customers group on eating or whether such customers have difference with
other customers group on work and rest. If they can firstly catch such customers’ demands, they
will at least catch more than 70% main customers of the targeted customers of the economy hotel.
Secondly, it is observed that there are fewer females who live in the economy hotels; the reason for
which is probable that the males have more opportunities for business evection, but it is also
- 58 -
probably that the females have doubt about lodging safety of the economy hotel. Starting from the
first concerned element of the females to the economy hotel, the proportion for choosing the safety
factor of economy is higher than that of the males; it is easy to discover that females pay more
attention to the safety when they live in economy hotel. Thus, if you want to catch the consumption
group of the females, you should start from the lodging safety of the economy hotel.
The economy hotel discovers when it observes customer’s demand since it attracts customers to live#p#分页标题#e#
in that the sanitation, safety and service level are top three service projects considered by the
customers; from this fact we can know that the customers don’t only consider low price or brand
when lodge in the economy hotel but further ask for the sanitation, safety and service level of
economy hotel. So, the service quality of cleanness and sanitation should be improved under the
condition that too much investment doesn’t need increasing; besides the cleanness of the external
environment and neighboring environment, they should pay more attention to the cleanness of guest
room and the cleanness and degassing of the bathroom.
In addition, nowadays giving more attention to energy conservation and emission reduction, the
standard sanitation system of the hotel should be established to complete recover of environmental
protection and rubbish classification. The coming hotels can definitely not neglect the sanitation of
the guest room and the lodging customers’ safety when the operation strategies are made; at last, the
service level of the hotel and the service staffs should be improved.
5.2
Suggestion
to
follow-up
study
Due to the limit of the time and region of this thesis, it can only chooses the hotels that this study
thinks these hotels are representative; this thesis isn’t involved other types of the economy hotels
and it is hoped that the follow-up investigators can continuously develop and expand it. The
following points have been found during the investigation process to be offered to dealers and other
investigators to have a reference.
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5.2.1
Suggestion
to
follow-up
study
--Suggestion of Academic Study
This study is based on Guangdong economy hotel and follow-up investigators can explore the
importance degree for the value element of economy hotel and make comparison among relative ly
differential study.
--Suggestion to industry study
Due to the immaturity of relative study to the value curve of economy hotel; the follow-up
investigators are suggested that they develop study discussion of profitable model of economy
hotel based investment of value elements.
5.2.2
Suggestion
to
industry
practice
--Appraisal system of economy hotel needs establishing
This thesis discovers that economy hotel still lessens relative ly industry standard and norm; the
hardware of guest room should at least reach three-star hotel and there is no hardware or supporting
facilities in the dinning hall; meanwhile, economy hotel is short of professional baggage man and
room service. Economy hotel regards the lodging and sleep as its standard; under the condition of
cleanness, comfort and safety, the quality of value element offered by hotel is appraised to establish
industry standard and norm of economy hotel which is good to attract the tourists’ approval and#p#分页标题#e#
increase the tourists’ trust.
For those hotel that been reconstructed, so that is “ole hotel, newly open”. It should be appearing
brand-new. As establishing the improvement of management strategy, the operator should take the
cultivation of being together spirit into consideration and regard it as an important content. With an
active attitude toward reform, people might build and understand the being together spirit. The
group hotel manager must impose this deep understanding of the importance of the concept on the
whole personnel.
- 60 -
5.2.3
Investment
suggestion
on
dealers
of
economy
hotel
--Do some things while leave something undone –make your choice of strong basis, keep
improving
Under the premise of seeking low cost, the hardware investment of the economy hotel is limited, so
the economy hotel should develop towards software with high service quality; economy hotel
doesn’t reach every aspect of a matter but make efforts to keep improving on core service project of
the economy hotel. Now economy has reached certain levels on bed quality, sanitation and
quietness of room. But there is a universal problem that the service level is insufficient and safety
problem isn’t in place. Thus, as for the allocation of the investment cost, the dealers should firstly
choose the important value elements thought by the customers, for example, the customers have
high requirement to safety, so the investment amount of the investment should be increased. It is
suggested that the building use fireproofing building materials and bathroom strengthen the
equipment of safety and anti-skidding besides basic survival equipment. Apart from this, because
reception cabinet in the hall always have goods left by the customers and coming and going tourists
are very complex, it is suggested 24-hour monitoring system be used and existing safety facilities be
positively strengthened to guarantee the rights and interests of customers and hotel dealers.
-- I think therefore I am- customers highest, talents first
The service objective of economy hotel is customer. The dealer’s investment should try to exceed
the customer’s demand and foresee the future and make investment firstly; what is more, they
should try their best to change the customers’ values, life style and create industry value; don’t the
brand and reservation system emphasized by the dealer change the customer’s value; Now the
added value of economy hotel hasn’t been created, for example, the business tourists need gifts for
family when they return home after the evection, mini magazine provided by the service that
outside the hotel, the abnormal combination of recreation and travel, health attendance in the
business life, Workstation idea in action office and the rent of vehicles; all of these examples#p#分页标题#e#
provide the life style of customers’ value innovation to the hotel.
The supplier for the service provided by the economy hotel is dealer. Now China economy hotel has
a rapid development while most service staffs have no experience. Strengthening the training of
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service procedure and intensifying the education about staff’s low self-esteem are the factors that
should be concerned by the dealer(Li & Qin 2003). In addition, the flattering management
model of economy hotel is different from the operating talented person of traditional starred hotel,
i.e. every hotel try his or her best to recruit managers. How to train staffs, improve management
abilities, keep the talented person and reduce the staff turnover, from which the marketing value of
the enterprise can be accumulated. So having stable and qualified talented person is the key element
which should be concerned by the dealers when they enter into the investment of economy hotel.
-- Mirroring the management- starting from the heart and returning to the essence
Human beings face mirror every day and know which part need arranging when see selves in the
mirror. What the dealer should consider besides cost is the thought of the customer’s heart when the
dealer invests any value element; the dealer should think how the staffs carry it out after the dealer
knows the customer’s demand. Facing his or her industry, the dealers generally only have the right
to positively look forward and they can’t have any pessimistic thought facing staffs and customers.
So the dealers of the economy hotel should return to the essence of the economy and pay attention
to the practical applicability of the hotel and put high cost performance into practice but not blindly
only choose to reduce price.
-- Gene reformation of value elements DNA
When bring the cases of other hotels as investment references when consider to invest and operate
hotel; most of time have more blind imitation but lack of originality. Facing such severe problems,
the essence of economy hotel can be strengthened starting from the reformation of gene composed
by value elements. For example, the supply of breakfast doesn’t need to follow the traditional diet
method, namely, going to the dinning hall to have breakfast. It is probably for the hotel to prepare
special bags for breakfast and ask the dietitian to blend balanced and nutrient breakfast; such
behavior is very convenient for the busy business tourist to carry the breakfast out; what is more, it
can save investment equipment of the dinning hall for the dealers and the cost of relative service
staffs.
--Operation methods cooperating with the rivals
The greatest advantage of the economy hotel is that it can be integrated via network, free room
reservation and management system of store matters to realize real-time reservation, the reservation#p#分页标题#e#
system of confirmation and payment and provide convenient and fast service to the customers; in
- 62 -
other words, it is so-called mouse & cement operation method. Facing the international
development the progress of the network information and technology and severer competition of
the market, if the dealers of modern hotels can cooperate with their rival, they can mutually learn
the advantages and effectively reduce the risks at development fees of technology and market
investment. E.g. the hotel dealers of China and Taiwan have their own advantages at operation
strategies. Dealers of Taiwan hotel has accumulated experience for many years on organizing
service climate and the management and integration for the service quality of recreation; while
China dealers have many hotel sites and customer market; these two competitive dealers should
make efforts to cooperate together to develop economy hotels which is more suitable for every
nation’s culture in the world and the consumption habit of every nation in the world.
--Establishment of management system and responsibility mechanism
Establishing the management system and improve business strategy, is order to achieve the initial
success in psychological construction. The method management by layer what has clear allocation
of responsibility should be applied in the whole business activities. Each unit has its own jobs and
responsibilities. That will form a favorable circle.
--Modification of management rules and reduction of personnel
Modify management rules and to execute the new policy fitting for the management system, must
follow the ideas “sharp difference between rewards and punishments”, “fair and reasonable”, “strict
but not severe”. “getting rid of selfishness”, all of this for achieve the goal of perfect service,
英国dissertation网increaser benefits ”, the management rules can be constructed seriously, completely, reasonably. The
modified management rules can effectively restrain the personnel expanding and the organization
ill-management. At the same time, the modification of management rules should take consideration
of laws which show the rationality of the leader mechanism.
--suggestion market positioning and Entrance Strategies
China economical hoteliers should learn hot to set differential service strategy and offers the service
according to the customers’ different demand, depending on own brand and team advantages.
Through the research, the core competence is the combination of a group of technologies, but not an
individual technology. In China, every hotel operators have to know high-quality service and
unique marketing culture of the group are the main factors of forming its core competence. With
this to attract customer, the corporate of culture, team spirit plays important role in suiting the#p#分页标题#e#
- 63 -
development economical hotels.
Also chain operating is the developing trend of economical hotel industry. The chain operating can
be realized by it can merge and acquire other hotels to expand the scale; also can develop the scale
through the trust management and brand export. In China, according to the current situations, using
merger and acquisition to realize the chain operation depending on the systematic hotel
management experience and its customer cluster of the group. Thus it will help the hotel to realize
the collectivization strategy in the future.
5.3
Development
tendency
of
economy
hotel
in
the
future
5.3.1.
Development
tendency
of
multiple
brands
In China hotel industry, what lessens isn’t product type of economy hotel but brand of mass
economy hotel. As for economy hotel, brand is higher than tangible assets. The foreign brand such
as Super 8 Hotel and Green Tree Inn Hotel regard serving business guest as their development
direction; domestic economy hotels such as Home Inn and Motel 168 occupy market via function
and multi channels and they expand quickly by using low cost to face the competition of
international brand. Under the condition of Libreville economy, it is impossible to have no rivals if
it is profitable. So, China economy hotel has been developed to a relative ly mature production
type when with the development of several famous chains brands and gathers enterprise colonies
with certain scales.
5.3.2.
Depart
monome r
operation
and
change
to
the
tendency
of
scale
chain
The competition of economy hotel is severer and severer and industry scale is the basis of chain
management; chain stores must be achieved if you want to realize the group operation. Economy
hotel should have the consciousness of breaking the regional limits and distributing all over the
nation and form the national websites and the hotel management should be E-commenced. In the
chain tendency of customer sources system, the central reservation system of economy hotel is the
key for the stability of the customer source. What is most for the chain enterprises is that the same
hardware and software, the same service and the same product of every chain store. All in all, scale
- 64 -
chain operation is a channel for reducing operation cost and effectively makes a profit.
5.3.3.
Tendency
of
low,
medium
and
high
price
levels
Facing the customers’ choice tendency to the price of economy hotel, China economy hotel has
gradually walked towards personality and differentiation and the phenomenon that thousands of
stores have the same appearance doesn’t exist any more. Under the same hotel system, low, medium#p#分页标题#e#
and high levels can be divided based on the development characteristics of personal hotel to provide
service. Exclusively special service should be given aiming at different target markets to highlight
the characteristics of a certain hotel. Seen from the developing economy hotel, although there is no
doubt about excessive investment, it is possible for economy hotel to develop towards high range
business hotel, boutique hotel with high price and topic economy hotel.
- 65 -
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- 67 -
Personal
interviews
Alex Yang 12-July-2010
Tracy Law 27-June-2010
Martin Ng 10-Aug-2010
- 68 -
APPENDIX
I
- 69 -
APPENDIX
II
- 70 -
APPENDIX
III
Result
of
the
research
study
Pricing Chosen
24.40%
19.10% 18.00%
8.10%
0 2.10% 1.50% 2.30%
0.05
0.1
0.15
0.2
0.25
0.3
100-139 180-210 220-259 260-299 330-339 340> 99<
Customer Region
1.70%2.70%3.00%3.20%4.50%4.50%4.90%
8.00%8.90%
15.20%
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Henan
Guangxi
others
Taiwan
Hunana
Anhui
FuJian
Jiangxi
ZheJiang
Guangdong
Customer Region
Percentage
Customer Region nr
- 71 -
W hich is the first comment that attracts you to think about living in the hotel?
24.20%
18.20%
54.70%
13.30% 11.40% 10.40%
4.90% 0.00% 1.90%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Cleaness Safety Service Price Brand Location Facilities Others
http://www.ukthesis.org/dissertation_writing/Tourism/Which comment you don’t consider at all when you live in hotel?
26.70% 25%
15% 11.40% 7.20% 5.10% 4.00% 3.00% 2.70% 0.00%#p#分页标题#e#
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
None
Revervation
System
Location
Price
Safety
Cleanness
Service
Facility
Others
- 72 -
Which service do you think are most important?
88.80% 77.50% 67.60% 62.50% 60.60%
17.80% 0.00% 17.20% 5.30% 3.20%
20.00%
40.00%
60.00%
80.00%
100.00%
Sanitation
Safte
Quietness
Service
Price
Room facilities
Brand
Building Aesthetics
Business Center
W hich service do you think should be added in the
hotel?
17.40% 16.10%
7.40% 6.40% 6.10% 6.40%
0.00%
5.00%
10.00%
15.00%
20.00%
Monitoring
System
Books &
Newspaper
Purchasing
http://www.ukthesis.org/dissertation_writing/Tourism/Automatic
Sale
Sale
Promotion
Others