The Development Strategies Of Budget Hotels In China Marketing Essay

The Development Strategies Of Budget Hotels In chinaw be trade EssayWith rapid economic return in mainland chinawargon, the Chinas tourism labor has entered a capacious stage of growth. Such as mass tourism, single(a) travel, stage teleph genius line concern travel has increased. Related info show that in 2020 at that place exit be the tot of tourists from the world to could reach ccc million people. The grocery store sh be is gamyest. According to the Brobdingnagian selective information, here is a colossal mart require for cypher hotel fabrication. At present Chinas tourism persistence already entered the considerable- de eggshell travel stage. The travellers are resulting to accept ashen, rubbishy, basic- dish hotels. In order to meet Chinas tourism and caper submits, the newborn trend is teaching of the international take involve of reckon hotels. Here are close to natural Chinas cipher hotel stove much(prenominal) as al-Qaeda auberges, Jin Jiang indian lodges, and 7 days guilds. They are part orbit cable shape adapt to the China tourism fabrications motivations, the development will bring new opportunities for the hotel diligence. The advantages of the compute hotel are the mathematical processal fashion prototype is small, the cheap investment required, and easily developing orbit crinkle-make the hotels subscribe a strike off, nodes, eccentric commission instal on broken in-cost investment. But the industry will face challenges by many a(prenominal) topical anesthetic and foreign hotel competitors appear in the industry. And the reckon hotel industry is in the approach stage, the concept of figure hotel is un see, no stock industry rules, carefully dividing a trade, and the merchandising scheme besides need to be development. The cipher hotel industry has to develop food merchandising dodge to seek the road of sustainable development.In this stem, grocery storeing dodge of calculate hotel in China is the object of this study. I will evaluate the up-to-the-minute situation of cypher hotels industry in china, and analyze the problems in the cipher hotel development. I will describe the food commercializeing system of the star sign Inns case study, using their prospering marketing strategy to identify appropriate development strategies for cypher hotels industry in China. I will focus on the marketing strategy opening from my BBA course of instruction to analyze the actual problems and the successful industry cases such as spot Inns that will provide a great guiding to Chinas figure hotel industry shape a new development strategy.OrientationThe overview of China cypher hotel industryIn China the budget hotels is still a new concept. In Europe and the United States, the budget hotels are quite develop industry. It is compared with the full- military value hotels form. But there is no form definition for budget hotel. We brook portio n the characteristics of the budget hotel to define the budget hotels is as follows limited facilities and function aimed at the travelers and rail line travelers market idealized operation the monetary value is low usually below in 300 RMB in China (Table 1) mark network of hotels located on major road networks or in secondary urban locations such as retail parks. They are loosely honorable whole tone, aid measures, the comfortable environment and value for money bedrooms intentional and marketed in such a way as to appeal to the locomotion public and is a cost-effective modern hotel employment (Jones, 2002).Table 1- The published Room hurt of kinfolk Inns Budget HotelsRoom Bed PriceStandard 1F Double 15m2 227Standard King surface 1F King size 15m2 227Standard2F-4F Double 15m2 265Business2F-4F King size15m2 265(Source sign Inn website)According to the Chinese budget hotel industry report 2011-2012, I maxim the Chinas budget hotel industry has a rapid increase in mark et plowshare. In 2011, the Market size grew 45 percent year-on-year to RMB26 billion and the physical body of budget hotels grew by al near 42.85 percent to 7,314. The industry is still in the big but not untouchable stage. For the market share, the total tax income of hotels in China has a concentration ratio just 37 percent in 2011. In future completion progression, the fast market expansion in the main by means of franchise strings, mergers and acquisitions. (China budget hotel industry report, 2011-2012. 2012)Analyzing the sure business portfolio of the China budget hotels whitethorn use the Boston Consulting community Approach (BCG) to assess market share and growth of their business. Here is a high-share business units in low-growth market is called Cash Cow. They need to develop strategies for growth. The hotels need growth if they are to compete much effectively, more(prenominal) than get together their guests, and rive more nonrecreational staffs. The purp ose of strategic syllabusning is to find shipway in which the budget hotel industry fundament go around use its strengths to gestate advantage of irresistible opportunities in the environment of the China budget hotel industry. (Arm buckram Kotler, 2007) prepare outlineA SWOT analysis is a useful legal document to evaluate the businesss overall strengths (S), weaknesses (W), opportunities (O), and threats (T) (Table 2). It analyzes businesss markets and marketing environments and base objective to find castive opportunities and identify environmental threats. The strengths and weaknesses are in the internal environment, and opportunities and threats are in the outer environment. I will use this tool to analyze the reliable situation of the budget hotel industry strengths and weaknesses in the internal environment to come across which opportunities it is scoop up(p). The goal is to match the industrys strengths to decoyive opportunities, overcoming the weakness and mi nimizing the threats (Arm untroubled Kotler, 2007). The SWOT analysis gutter be very good response current situation of the industry.Strengths familiar capabilities that whitethorn friend a company reach its objectivesWeaknessesInternal limitations that may interfere with a companys ability to get to its objectivesOpportunitiesExternal factors that the company may be able to exploit to its advantageThreatsCurrent and emerging external factors that may challenge the companys coiffureanceTable 2-SWOT AnalysisInternalExternalPositive interdictly charged(Source Text book Marketing An insertion, Figure 2.7)The strengths of China budget hotel businessLow cost investment the cost of budget hotel is lower than opposite star hotels, the development is easy.Price advantage the budget hotel can turn out a lower price for good quality, service standards, the comfortable environment, and the bedrooms designed.client advantage the low price of the budget hotels can better attract custo mers improving occupancy rates.Management advantages budget hotel use mountain range business operation, it is easy to set up perplexity model and adapt to market controversy.Information advantages easily set up their let network, customer service systems, and reservation system. Using modern technology can obtain more stable customer source. (Zhao Guo, 2006)The weaknesses of China budget hotel businessHuge rime of budget hotels had flocked together in China.No standard competition model in the industry. leave out of clear market localisationLack of standard humpment system just about budget hotels cheap equipment cannot meet the customers call for.(Meadin, 2010)The opportunities of China budget hotel business in that location is a huge Market invite for growth in China. According the world tourism organization counter the worlds largest tourism country will be China in 2020. without delay, the demand of the budget hotels increases along with the increase number of Chine se tourists and foreign tourists. (Meadin Website, 2010) re romance of spending idea and behavior. With the improvement of the living standard of Chinese people, the consumption idea and behavior began to improve. So there is a huge outer billet for development. (Zhao Guo, 2006)The threats of China budget hotel businessThere is so much competition for the China budget hotel industry. Foreign budget hotel into the Chinese market. And the imperfection of Chinese budget hotel continues to fat. There are a lot of potential competitors and counterchange hotels.Crisis of confidence. Some budget hotel cannot meet the needs of customers such as cheap facilities, low service quality, and bad hotel trading operations. This made a negative tinge for the budget hotel industry.Lack of captain tender resource worry. The rapid growth of budget hotel in China to make the lack of management model and professional staffs. (Zhao Guo, 2006)The features of China budget hotelsThe limitation o f carrefour the event of the budget hotels is modification. They remove some unnecessary service to cut the cost.Quality of go and products the budget hotels emphasize the comfortable of guest room facilities, clean and cheery environment, and service standards.Reasonable price of the budget hotels the main site markets are tourists, students, business man etc. The price is usually below 300 RMB. (Table 1)Chain business operation a lot of budget hotel use set up business model such as JinJiang Inns, kinfolk Inns etc. This way can enhance mark off value, unfold business range. This is beta difference between otherwise star hotels.(Zhang, 2008)The problems of China budget hotel industryLack of service standardsThe biggest problem of the budget hotel is no-standard service, poor facilities of some budget hotels, and voiceless to meet the needs of the customers. Most of the budget hotels management does not reach the position, low service level, and the environment is not enough comfortable. Some budget hotel alike operate old low-star hotel model. They are not professional for the budget hotels core of service. The definition of the budget hotel is impregnable, clean, providing basic support needs. The budget exactly is less investment and less supporting facilities. It is not to lessen the basic management of service quality. Budget hotels investment is less, but similarly need to occupy a standard rules and basic service quality and professional level. (Gao, 2009)Lack of dishonor awarenessIn China budget hotel industry, the brand awareness is not affectionate. Many of the budget hotels are singular operation that not give a scale business and brand effect. The development of individual operation by the price competition is negative for the development of the industry. The customers acknowledge of brand and prime(a) of service brand measuring rod by step growth that has also last a kind of consumption habits. Now the most main competi tion is brand competition, if the hotels have not a brand image they will lose competitiveness power. Actively enforce the brand strategy has become an important issue for the budget hotel management. At present, the most of the Chinas budget hotels did not build a scale business and also not use chain operation, except JinJiang Inns and business firm Inns have brand and collectivization characteristic. There are few budget hotel gain their bear brand awareness. (Gao, 2009)Lack of professional merciful resourceLack of professional talents is a development bottleneck with the company size is continually expanding. The lack of professional talents can easily lead nonstandard service operation skills and severely service quality. The group building and developing force out sources from which to recruit potential employees is so important for the company development. The budget hotels need the employees who can handle a wider variety of responsibilities that training and develop ing managers is so important (Noe, Hollenbeck, Gerhar, Wright, 2009). The professional talent competition is so importance for budget hotel industry. In practice, the budget hotels are faced with the lack of professional talents. The human resources required of the budget hotels are one person who can on more jobs and more abilities manager but there is lack of human resource in the market. Therefore, the Chinas budget hotel industry will face the hale challenge from foreign brand and capital. Attracting talents and creating high quality management team is so important improvement for the China budget hotel industry. There only have the strong human resource development the budget hotel achieve the goals by service standard and operation standardization. (Gao, 2009)Difficult to build scale managementThe budget hotel industry is an emerging industry. Many owners dont have a lot of management experience. At the same time, the budget hotel both in size and in financial resources is li mited. The development of the budget hotel industry is mainly at an individual operation situation, so the weak profits for owners and for customers is fractious to meet their requirements. The budget hotel industry need to change the management model is necessary. (Gao, 2009)No clear market classIn China many budget hotels do not have clear target market and or market segmentation that causes the market overlap or product design is not obvious difference so lack of unalike sub separate market demand for products and go. In China there have been no analyses on budget hotel clear division of products to meet diametrical customers with customer demand for the industry. In foreign the budget hotel can be split into three categories full service hotel, budget hotel, and cheap hotel. The three levels of the price and the facilities is bigger difference. At present the product design of the Chinas budget hotel is single. There is no obvious difference of product and individuality ch aracteristic. The different customers have different demand that reflected in product demand. There has a strong required for product eminence. (Qiang, 2008)Research MethodologyIn this paper, I will use case study method. This project uses the class Inns budget hotel in China. It is successful marketing strategy experience for the budget hotel market. And analyze the issues and current situation of the Chinas budget hotel industry. After analysis, I find some sterling(prenominal) marketing strategy for the industry economic aid other hotels to find their own suitable development road. They have appropriate marketing strategies to compete with other competitors, and establish their own brand image.The main research contentsIntroduction the research background and objectives, the structure of this project, and the significance of the research in this paperAnalysis of the current situation and business environment of the budget hotel industry, take the definition and characteristi c of the budget hotel, and defining the problems of the budget hotel industryAnalysis of the marketing strategy of planetary house Inns, include the introduction of Home Inns and its successful marketing strategies.Reporting the findings, include develop the greatest marketing strategy for the budget hotel industry based on analysis of the Home Inns marketing strategy and the theory of marketing strategy.Data collectionI plan to gather information from the Primary data and secondary data. The secondary data has been collected include magazine, newspaper articles, books and internet articles or journals, and a thesis on a marketing strategy topic. The main data is based on the secondary data source. On the other hand, the primary data also been used include internal report and document from their possess Website of the companies. I also will collect some literature and theory based on my BBA courses include marketing management, strategy management, small business management, huma n resource management, and service operations management what factors help the budget hotel industry find the appropriate road to face the challenges and develop their own marketing strategies.Review of LiteratureIntroduction of Home InnsIn China, Home Inn was founded in 2002 that is the first budget hotel company for the 21st century. The vision of the company is wherever you go, you are always at foot with professional and courteous service, comfortable rooms, convenient locations, and low prices that make attractive for empty travelers and individual business who demand clean, comfortable and convenient environment of the budget hotel. Home Inn continues to rapidly expand its nationwide network of hotels. In November 2011, Home Inn launched a new hotel brand- Yitel for the middle-class and high-class market. They also completed the acquisition of an all ownership interest of Motel 168 hotel chain and have retained the Motel 168 brand in October 2011. In 2012, base of operation s Inns operated across 243 cities in China with a total of 1,682 hotels (Appendix-2). Their goal is to continue expanding to ensure whatever how large grows they will always keep the self-consistent quality and superordinate word service that guide each hotel in the home Inns group (Overview of Home Inn, 2013). Home Inn is a largest budge hotel company in China with a 23.7% market share in 2012. (Appendix-3)The history of the Home Inn is Ji Qi one of Ctrip founders who founded a good business chance. Because Ji Qi noticed a lot of traveler complaints the price is so expensive of the hotels in the Ctrip Website. After some analysis and reaches he found in China the full-service star hotels is not economy and the cheap hotel is poorly quality. This opportunity let Ji Qi readyd a chain brand idea for the hospitality industry in China. So the Home Inns hotel brand is developed. (Ma Chen, 2008)Analysis of marketing strategy in Home InnsThe brand of Home Inn hotel is rapid growth in a short item that has become a first budget hotel chain. Its successful management strategy will be used for other budget hotels in China.To part the market segmentationThe company mustiness to divide the market segmentation to decide its clear market positioning strategy. The company designs the strategy to build the right relationships with the right customers. First the company need to identify a set of possible competitive advantages which to build a position, second step is company chooses the right competitive advantages, and last one step is the company selects an greatest positioning strategy. Then the company must to effectively guide and deliver the chosen position to the market. Market positioning includes deciding how to best serve target customers and setting the competitive advantage for the company. Company positioning should be summarized in positioning statements that state the target segment, positioning concept, and special(prenominal) points of difference. ( Armstrong Kotler, 2007)The segment market will be the direction for Chinas budget hotel business in the future, said Ye Bingxi the senior public relations manager at Home Inns and hotel management Inc. (Wang, 2012)The market position of Home Inns is the middle and high-end business hotel for individual business and leisure travellers who need a comfortable and clean hotel room at right price, Home Inns is a good choice that allows you feel the warmth of your home. The market is more carefully segmented to target customers. The Home Inns provide basic living facilities, clean room, and the equipment is simple and fairish for individual business and leisure travellers will get the comfortable, clean and safe hotel environment at the right price is around 200 RMB. The clear positioning is an important competitive advantage. The marketing positioning of Home Inns to set off their own characteristic, such as the room design is very unique. The most direct impression of the Home Inns is warm, simple, and convenient. They deliver the unique products and service for customers best impression. (Su, Shen Zhong, 2009)To emphasize quality consistencyThe high quality also can mean high levels of quality consistency. Today many companies have move customer-driven quality into a potent strategic power. Customer-centered companies define quality in terms of creating customer value and contentment. They want to create customer satisfaction and value that is necessary of consistently meeting customers needs (Armstrong Kotler, 2007). A good quality control is a system used by a manager to ensure that the finished services meet the needs of customers. telling quality control is needed to set standards for the service quality range, measure actual performance, and compare that performance with naturalised standards (Byrd Megginson, 2009). Attracting talents and building a high quality management team is so important for perform the established standards of the service q uality and ensure the quality consistency. There is only the strong human resource development lead the budget hotel to achieve the goals by maintaining the service standard and operation standardization.For a chain business, the service quality control is so important. If you dont have a good standard of the hotel will not be able to assure the quality of the company brand. The Home Inns practice has great directed function. Standardized service is a huge challenge for budget hotel chains. Only the standardized service can help consistently service quality. The Home Inns have established an effective management system. There are external and internal factor. External factors include industry, product, service and marketing. Inside factor include human resources, management system and core competitiveness. The home inn have wrote standards and procedures have established their own service standards. The different departments and teams within our management work together to maintain strong internal control and strengthen focus on risk management. (Tang, 2007)To build strong brandIn China mostly budget hotels are single business form, no scale formation without the brand. For a budget hotel the brand is powerful assets that must be carefully developed and managed. The strong brand provides a company with many competitive advantages can create big benefits. A powerful brand enjoys a high level of consumer brand awareness and loyalty. The brand exists in the minds of customers. The real value of a strong brand is its power to capture consumer taste and loyalty that expanding the market share. (Armstrong Kotler, 2007)The Home Inns created their own brand that direct represents the characteristic and culture of the business in the market. The well-known brand is based on the quality of the products and services that maximum to meet the needs of the consumers. Home Inns create their own brand mainly following several ways asFist, Home Inns on the brand name is full y considered the characteristic of the budget hotels. On the one hand, home reflects the warmth, comfortable, home feeling meet the customer psychological needs. On the other hand also reflects its convenient and expeditious such as quick reservation system, good traffic conditions customer can easily and quickly find Home Inns.Secondly, through the reasonable and rapid expanding, home Inns hotel chain in order to build the good image.Third, Home Inns more focus on the satisfaction of the brand. The Quality control always is in the expanded scale process. Survey of customer satisfaction is used to well-timed(a) analyze the customers comments and opinions, and then plan the best solution strategy at the first time.Finally, in the information and technology society, Home Inns paid more upkeep to the promotion such as advertising and public relationship. involve print, radio, television, magazines etc. The building advertising is an important part in the Home Inns marketing and is a lso a modern communication to achieved good effect. The Home Inns hotel builds up a good corporate image in the industry. (Su, Shen Zhong, 2009)To perform the chain operation strategyThe budget hotel industry has to use the chain operation value for the biggest value. Because the low price of the budget hotels they should be collectivization and chain operation way for obtain more market share and development space. The chain operation strategy has many advantages over independents.Home Inns is a leading economy hotel chain in Chain. Home Inn Company has clear market position, standardized service processes, daily operations management and supervision system can make a best chain forms. They also provide the strong financial support, and then the nonesuch chain brand is effectively created. Home Inns use regular chain and franchise chain to expand the market size and the numbers of the home inns hotel. There are nine service support for franchise business, such as brand support, gross sales support, engineering and maintenance, and chartered service, maintenance profit, standard manuals, training, hotel management and network technical support content to ensure the standard of service and replication, as well as the brand is effectively expand (Tang, 2007). By the end of 2010, Home Inns Company has a total of 674 hotels binding 121 cities in China. Under Home Inns chain mode, its total room number is 7,8231 (Appendix 4). Its sightly per hotel guest room number is 116. In 2010, annual average every hotel room revenue is RMB 144. Under the back ground of collectivization and standardized chain replication model, Home Inns budget brings a large scale chain like brand effect. (Baidu, 2013)Research FindingHome Inns success experiences maximum meet customers needs and the basic requirement such as convenient, comfortable, clean environment and through the brand strategy and chain strategy to realize the company development. Now here is some the development issu es of the budget hotel industry in China such as no clear market segmentation and poor brand marketing. But with the rapid development of Chinese economy and the tourism industry, the demand of budget hotels become more and more strong in the market. There are some success marketing strategies for the industry from Home Inns. specialism strategyDifferentiation strategy provides the budget hotel products and services that offer benefits different from other competitors. The aim is to achieve competitive advantage by offering better products or services at the same price. The success of a differentiation strategy is likely to be dependent on two key factors identifying and rationality the strategic customer that focuses consideration on who the strategy is targeting and identifying key competitors (Johnson, Scholes Whittington, 2008).In China most budget hotel is not clear on the market segmentation. The target market is single, no clear subdivision. Here the Homs Inns is good ensa mple for the industry they accord different age will be divided into the senior passenger market and youth passenger market segment, and also be divided according the occupation. So the budget hotel industry should accord the gender, income and other factors to design different budget hotel products and service to meet the needs of the consumers for obtaining the customers loyalty. At the same time, the features of the budget hotel are also important for the differentiation strategy. The budget hotels implement specialization strategy the characteristic factors to meet diversification of the consumer demand and required. They need to focus on the maintaining the general service characteristics such as economic, comfortable and convenient and at same time creating the operative personality characteristics such as new concept and new accommodation experience to attract consumers is the service extends to the spiritual aspects. For chain operation, each budget hotel has different reg ional resources and market conditions advantages that through the diversification reengineering will be make the best choice for the budget hotel chain management. (Huang, 2012)Actively countenance Chain operationThe chain operation is the main trend in the budget hotel industry. Home Inn is a biggest chain operation business in China. It is good to ensure the most important customers resources through the chain model. The business travelers will choose familiar brand when they need a hotel service in another urban center. So the key of the chain operation management is to open enough hotel stores in more and more city that keep the travelers can find themselves familiar brand in different cities.Fist, individual economic only have small profits, the budget hotel is difficult to obtain rapid development by single unit profit. The scale economy is consequentially development trend.Second, the hotel is in a specific space environment to the customer provide accommodation facilities and service industry. The hotel hardware facilities is determined in the specific space so the single budget hotel sales has a larger space limitations, will seriously affect to attract customers. Now the consumers activity area presents a wide range feature. single budget hotel only through chain operation to speed expand their business scale and through the scale business reduce motion costs and management cost, and integration of internal resources, expand the brand influence, the market competition advantage can be achieved. The chain operation management is the necessary way for the budget hotel industry development in China. (zhao, 2007) firebrand strategy blade is the in indubitable assets of the budget hotel it can produce huge economic benefits. Brand strategy is very effective marketing strategy. Brand is the culture and the unique advantages of different budget hotels. Brand is like the life of the budget hotel chain operation management, because the brand can let cust omer best understand and feel the different characteristic with other budget hotels that enhance consumers loyalty and identity. The well-know brand also is so important for the chain operation management that is effective competitive advantage. (zhao, 2007)The budget hotels need to manage brands as assets calls for longer-term strategy, maintain and protect their brands image, associations, quality, and to prevent short-term actions. First, the brands positioning must be continuously communicated to consumers that create brand awareness and to build preference and loyalty. The customers loyalty depends on the longer-term brand experience about the budget hotels consistent quality services and products. The budget hotel quality brand mainly through the image features, the price, the accommodation, the service staffs, and the hardware facilities to the customers produce the first impression. So the budget hotel build their brand depend on the long-term quality management and effectiv e marketing strategy. The budget hotel needs to pay more attention to improve their own quality, and to train its staffs for professional manager market that to help employees understand and be enthusiastic about the brand promise. (Armstrong Kotler, 2007)Service strategyService strategy is so important for the service industry-budget hotel industry. The service is to satisfy the needs of their customers through the place, staffs, price, equipment, and communications that they can see. For example, the budget hotel room is tangible services to customers enjoy the intangible service such as clean, warmth, comfortable. The budget hotel need to improve the service quality to meet the customers demand let them really feel the value.Successful budget hotels focus their attention on both their customers and their employees. First they need to ensure the internal