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Sunday, December 7, 2014

Mid-range hotel sector in China is booming

The Chinese market has seen strong demand for affordable mid-range hotels in recent years, with Plateno Hotel Group and Argyle Hotel Group having introduced new brands for the mid-range hotels in the country, the Shanghai-based China Business News reports.

"The mid-range hotel market is seen as the industry's last unexplored market," said Huang Huixing, president of Vienna Hotel Group, who has seen explosive growth in the mid-range hotel market over the past two years. Huang believes 2014 is the beginning of the 10-year golden era for the mid-range hotel market, which wil l create large-scale chain hotel brands.

Although both foreign and domestic capital has flooded into the mid-range hotel market in recent years, experts believe such a development is still in the early layout stage.

On Oct 28, Argyle, which has focused on high-end, luxury hotels since it entered China in 2005, introduced its mid-range hotel brand: Ausotel, which will become the focus of its expansion in China, said Argyle China CEO Zhang Liming.

On Nov 6, Eastern Crown Hotels Group was founded in Guangzhou and swiftly introduced its two mid-range hotel brands: Echarm and eCheng. Eastern Crown CEO Cheng Xinhua expects its total number of hotels to reach 1,000 by 2016 and plans to launch an overseas listing in 2017.

In recent years, both foreign and domestic hotel groups have launched mid-range hotel brands such as Jinjiang's Metropolo, Huazhu's J1 and Xincheng and Plateno's Lavande, James Joyce Coffetel and Coffetel and Zmax.

In terms of business scale and market acceptance, the economy hotel segment is still well ahead of the mid-range hotel sector. However, following the upgrade of consumers, the mid-range hotel sector is now the major trend. Whichever groups can first complete layout in the mid-range hotel segment can take the lead and enjoy the best profit returns, said Huang.

Mainstream prices for mid-range hotels are between 300 yuan and 600 yuan (US$49-$98) a night.

The mid-range hotels are simplified five-star hotels, with their core functions approaching the service levels of five-star hotels while eliminating non-essentials, Huang said.

Vienna Hotel's mid-range hotels have enjoyed profit returns of more than 30%, with investment return cycles of three to five years, while its economy hotels have profit returns of about 10% with investment return cycles of more than five years, Huang said.

Source: Want China Times

from China Travel & Tourism News


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