[photopress:homeinns_1.jpg,full,alignright]The $33 billion Chinese lodging industry is benefiting from the growth of small and medicum sized businesses and the increase in disposable income. Both of these trends have influenced an increase in business and leisure travelers.
Home Inns was founded in 2001 and opened the first of its economy-class hotels in 2003. Since then, the firm has rapidly expanded its hotel base. Home Inns’ approaching IPO will help the company finance its aggressive expansion plans as it opens new hotels and builds its brand in 100 cities in China.
Home Inns currently has 82 economy-class hotels in 26 cities in China. Of these hotels, 63 are leased and run by its staff. Additionally, Home Inns franchises its brand for 19 hotels in exchange for up-front licensing fees plus 5 to 6 percent of sales made at those locations.
In first-half 2006, revenue more than doubled to $29 million primarily because of its quick expansion to 82 hotels in June, a tripling from 26 at the end of 2004. Revenue per room grew by 7 percent improving the company’s very strong occupancy levels.
Home Inns’ strategy from here is to continue to add hotels at a fast pace while maintaining the quality of its product and the image of its brand.
The company is currently contracted to open 57 more hotels in the next nine months in existing markets and 14 new cities. Longer term, management has targeted 100 cities in China where it hopes to operate. The locations were primarily chosen on the size of the local economies.
Source: MarketWatch
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