Lecture #3Tourism Management: Hotels Lecture Objectives • Understand hotel development in China • Review world hotel development and its influence on China’s hotel business • Case analysis of economy hotel development in China • Discuss tourism’s influence on China’s modernization • Discuss to what extent tourism will make an authentic modern China (Discussion of authenticity #2) Useful References Yu, L. (2003). Critical issues in China’s hotel industry. In Yu, L., Ap, J. & Zhang, G. (Eds.), Tourism in China, pp. 129-142. New York: The Haworth Hospitality Press
Development of tourism infrastructures in ChinaYour independent reading of the textbook chapters, giving critical thoughts to: Achievements and future issues* • Hotels • Service improvement, management consolidation, and brand development • Strategies of global hotel companies to enter China • Financial performance of hotels *To have the information updates, please visit: http://www.cnta.com
Review world hotel development &its influence on China’s hotel business • Western hotel chains and their hotel brands • The global hotel industry is dominated by hotel chains. • A third (over 5 million) of world hotel rooms were controlled by the top 300 hotel chains • 2.7 million hotel rooms were controlled by the top ten hotel chains
Geographic Location of World Top 100 Hotel Companies, 2007 Source: Compiled based on data from Hotels Magazine, “Hotels’ 325”
Hotel Company in Most Countries Source: Hotels Magazine, “Hotels’ 325”
Three hotel industry business formats • Management contracting; • Franchising; • Consortia
Case analysis of economy hotel development in China • Economy hotel, also known as limited service hotel • Low price RMB180-220 • Operation model – b&b • First came up in US in 1950s • Global ratio to star hotel is: 7 : 3 • In China such hotels only take up less than 10% of the market share • 3 well known brand economy hotels in China enjoy an annual growth of 90% in the past 3 years: • Jinjiang Inn （锦江之星） • Home Inn （如家快捷） • Motel 168 / 268
EH in Hangzhou • First built in 2003 (Home Inn Tiyuchang Road) • By 2008, 8 economy hotel chains had opened business in the city • Home Inn has 16 in HZ at present • Occupancy rate stands at a regular rate of 95% and frequently reaches 100% • Problems caused by overexpansion of economy hotels in Hangzhou
Major problems • Overheated investment pushes up construction cost – multiplied cost such as • Building renting • Management • Labor • etc. => profitability • Competition with 2-3 star hotels in • Service • Price
Inadequate management capabilities • Weak in marketing, mainly depending on “C-trip” • Lack of established quality standards and quality guarantee system • Human resource problems • 11% untrained urban reemployment people • 19% untrained rural migrant workers • Attractiveness to professionally trained hotel management graduates • Indistinctive product design • Homogenization => attractiveness to tourists • Insufficient government supporting policies Economy hotel should not mean “cheap hotel” only!
Tourism as a driving force of China’s modernization campaign: the false modern China =拆啦！ Is there an authentic modern China in the making?
Key questions associated with China’s outbound travel: • Direct result of the false modern? • Strong and rapid economic growth => • China becomes one of the world major outbound market => • Chinese tourists’ behaviour – individual manifestation of a false modern society? • Potential transformation towards an authentic modern with the help of tourism to increasingly open China? • Right and opportunity to travel: individuality and freedom => • Exposure to different values, cultures, and ideas => • Travel as a learning experience，could tourism development be the soil for an authentic modern China to grow?