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China Economy Hotel Chains

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Counting the economy hotels in China: 

Jinjiang Inn: 139 hotels in 44 cities (including under development) as of June 2006, owned by Jinjiang Group (HK Stock Exchange, 2006.HK), started in 1996 (Shanghai).

Home Inns (Nasdaq, HMIN): 134 (94 leased, 40 franchised, 39 cities) as of Dec 31 2006, founded by Ctrip founders Ji Qi, Neil Shen and James Liang, started in 2002 (Beijing)

Motel168 (Morgan Stanley invested $20 m for 20% stake): as the name suggested, the room started from CNY 168, they also offer CNY 268 rooms; started in 2002 (Shanghai).

Super 8 (US Chain): all franchised

7Days Inn (Warburg Pincus invested $10 m for 20% stake): founded by Ctrip South China manager Zheng Nanyan (do we see pattern here?), started in Guangzhou.

Another useful source: hostelCN  

3 replies on “China Economy Hotel Chains”

Did you find any profit margin and market share info for these players? Can you share? I think in one of your posts, you might have talked about growth rates…not sure though.
Is that positively correlated with the growth rate of automobiles in China…how strong is the correlation do you know?
Is there a Chinese equivalency of AAA? Getting absent-minded now.

Profit margin is about 10%. You can read more details here:

http://english.homeinns.com/phoenix.zhtml?c=203641&p=irol-investorkit

According to HMIN’s Prospectus, Jinjiang Inn, Home Inns and Motel168
have market shares of 20%, 18% and 10%, respectively. However, the whole pie is getting bigger (how big can that be???).

The growth driver, (again) according to prospectus:
1) Fast growing SME (small middle size enterprises)
2) Growth of domestic tourism
3) Expansion of urban business center
4) Fragmentation of hotel industry: they are getting market share from 3-star hotels and Zhao Dai Shuo…

There may be some contribution from the increase use of cars. But not
a big factor. China does not have AAA, but has many for-profit car clubs.

[…] You may ask why they have bugs in the bathroom? Can’t they find some better places? Well, the problem is the properties (real estate) prices in Shanghai and Beijing have sky rocketed in recent years, i.e., HMIN is paying more for the lease of its hotels. You may ask why those old buildings suddenly become hot? Well, in recent two years a lot money has been poured into budget hotels, because they are (potentially) very lucrative investments. So, budget hotel developers are bidding up those otherwise-no-good buildings, as long as the locations are good (a.k.a, near a business hub, near a metro station, etc.). […]

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