Business Intelligence on Retailing, Franchising, and Consumerism in China

Budget Hotel Chains Assemble In Chongqing

There are reportedly almost 20 budget hotels that are either newly opened or will be opened soon in Chongqing, with up to 300 outlets already placed throughout the city in China's west.

Local media reports the eruption of a price war, with the cheapest price of one guest room going down as low as RMB77 per night.

Generally, budget hotels in China are those within the price range of RMB80-200 and which could meet the needs of sightseeing tourists or business travelers. In the city, a group of domestic Chinese hotel brands such as 7 Days Inns, Jin Jiang Inns, Home Inns, Top Star Hotel, Motel 168 and some overseas brands like IBIS are competing among local brands like Jindi 126. Among them, 7 Days Inns and Jindi 126 reportedly already own six franchised hotels.

An unnamed vice-president from one budget hotel has told local media that one budget hotel with initial RMB6 million investment and 100 guest rooms should get back its investment within 4 years. Some released reports indicate that budget hotels in Chongqing have 70% average occupancy rate, and up to 90% during weekends or holidays, which means the cost of budget hotel is very low.

Therefore, the local tourism sector is expecting more growth within the budget hotel sector.

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