[photopress:Hotels_Home_Inn.jpg,full,alignright]David Sun is chief executive officer of Home Inns & Hotels Management. (HMIN) With a string of 200 budget hotels across China, his company caters for frugal travelers.
It’s a big market. The demand for hotel beds is booming, with growing domestic tourism and business travel. Industry observers think the young firm — which had just 10 hotels in 2003 — can make good on its plans for 1,000 locations across the country within four years.
David Sun said, ‘The demand for economy hotels in China is large and growing, and China’s large market is still highly fragmented.
Home Inns added 26 hotels in the second quarter. All are in smaller second-tier markets, where land rents are cheaper and competition is sparser. It has dozens more in the pipeline. Last month it opened its 200th, in the northwestern city of Urumqi.
David Sun said, ‘We think the second-tier cities represent more attractive opportunities and higher returns at this time.’
The Shanghai-based company was formed in 2002. The Beijing Tourism Group, a government-owned entity, is still a minority shareholder.
The prices are right. For about $25 a night, Chinese visitors get a modest but clean room, with a comfortable mattress and free Web access. The properties also have amenities not found in some other Chinese budget accommodations — like 24-hour hot-and-cold running water.
The company filled 95% of its beds in the second quarter, down slightly from 98% in the same period in 2006. In any other country those percentage figures are something hotel owners only dream about.