The development status of China's budget hotel industry in 2020:the growth rate has slowed down, and the chain rate has risen significantly
Budget hotels are also called limited service hotels, and their biggest feature is low prices, and their service model is "b&b" (bed + breakfast).According to the characteristics of economy hotels and the actual situation in China, the definition of economy hotels can be summarized as: "The main service objects are mass travelers and small and medium-sized business people, and guest rooms are the main core products and low prices (generally lower than 300 RMB), standard services, comfortable environment, high-quality facilities, cost-effective and other characteristics of modern hotels."
The characteristics of budget hotels:
1. Limited products
Budget hotels take guest room products as the core and remove other non-essential services to achieve the goal of drastically cutting costs.
2. High-quality products and services
Budget hotels are very concerned about the comfort of guest room facilities and the standardization of services
3. Suitable price
4. The target market of budget hotels:
General business people, working class, individual travelers and students, etc.
1. Limited products
Budget hotels take guest room products as the core and remove other non-essential services to achieve the goal of drastically cutting costs.
2. High-quality products and services
Budget hotels are very concerned about the comfort of guest room facilities and the standardization of services
3. Suitable price
4. The target market of budget hotels:
General business people, working class, individual travelers and students, etc.
According to hotel star ratings, budget hotels are two-star or less than two-star hotels.
Star hotel features
Five-star luxury hotel, extremely modern facilities and equipment, perfect service management level.
Four-star premium hotel, complete facilities and equipment, high-quality service management level.
Three-star midscale hotel,complete facilities and cost-effective hotel products which can meet the accommodation needs of most travelers.
Budget hotels with two stars and lower than two stars, simple facilities and services which can meet the most basic accommodation requirements.
Star hotel features
Five-star luxury hotel, extremely modern facilities and equipment, perfect service management level.
Four-star premium hotel, complete facilities and equipment, high-quality service management level.
Three-star midscale hotel,complete facilities and cost-effective hotel products which can meet the accommodation needs of most travelers.
Budget hotels with two stars and lower than two stars, simple facilities and services which can meet the most basic accommodation requirements.
Budget hotels have always occupied an important position in the Chinese hotel market. The number of hotels and the total number of guest rooms far exceed those of other types of hotels. According to statistics from the China Hotel Association, since 2016, the number of budget hotels in China and the total number of guest rooms have been on a steady rise. As of January 2021, the number of budget hotels in China has reached 230,000, accounting for 82% of the total number of hotels in China; the total number of guest rooms is 9.424 million, accounting for 61% of the total number of hotel guest rooms in China.
From 2016 to 2018, China’s budget hotels entered a rapid growth trend. Since 2019, after budget hotels represented by Home Inns and Hanting Hotels have experienced a rapid expansion stage,due to severe homogeneous competition and oversupply, the growth rate of the budget hotel industry has slowed down, and even started to reverse.Especially under the impact of the 2020 epidemic, the number of budget hotels and the number of guest rooms has fallen sharply, and the transformation and upgrading of budget hotels is imminent.
Data from the "Survey on China's Budget Hotel Industry Market Status and Investment Strategy Consulting Report for 2021-2027" released by Zhiyan Consulting shows: In 2019, the number of China's budget hotels was 287,000, a year-on-year decrease of 3.7%. In 2020, the number of budget hotels in China affected by the epidemic further dropped to 230,000, a year-on-year decrease of 19.9%.
In terms of the number of guest rooms, the growth rate of the number of budget hotel guest rooms in China has gradually decreased in recent years, from 13.5% in 2017 to 2.6% in 2019. In 2020, under the influence of the epidemic, the number of budget hotel guest rooms in China has changed from an increase to a decline, with the number of 9.424 million rooms, which is the first time in the past four years that the number of guest rooms has fallen below 10 million.
Operating income is one of the important indicators that reflect the efficiency of the hotel. Statistics from the Ministry of Culture and Tourism show that in recent years, China's budget hotel revenue has generally shown a downward trend.In 2019, China's budget hotels achieved revenue of RMB 4.658 billion, a decrease of 20.7% from 2018. In 2020, due to the impact of the epidemic, China's budget hotel revenue will only achieve 3.024 billion RMB, a year-on-year decrease of 35.1%.
Among them, room revenue as a percentage of budget hotel operating revenue is on a downward trend. In 2019,guest room revenue accounted for 49% and fell to 43% in 2020.Just the opposite,catering revenue as a percentage of budget hotel revenue is on the rise.In 2019,catering revenue accounted for 33.6% and rose to 37.2% in 2020.
In recent years another characteristic of budget hotels is the significant increase in the chain rate. In 2020, the number of budget hotel chain guest rooms is 2.38 million, which is a decrease of 30,000 compared to the 2.41 million in 2019, but the chain rate has risen significantly. The chain rate of budget hotels in 2020 is 25%, compared with 21% in 2019 , an increase of 4%.
Chain operation is the main trend in the development of the world hotel industry, and it is an inevitable trend to adopt chain operation for budget hotels. At present, the chain operation rate is only 25%, and it needs to be improved. At the same time,in recent years the slowdown in the growth of budget hotels also shows that homogeneous services can no longer meet the needs of guests.Management differentiation and brand building are the main competitive development trends for budget hotels in the future.
As a leading hospitality FF&E vendor in China, Bestar Hospitality provides a complete range of hotel furniture FF&E solution for five-star luxury hotels,high-end hotels,midscale hotels and budget hotels etc, including hotel casegoods, seating and so on.