[photopress:hotels_Home_Inns__Changzhou_Inn_mini.jpg,full,alignright]A series of mergers and acquisitions are possible within China’s budget hotel industry. This was started off when Home Inns announced it had acquired the Top Star hotel chain for RMB340 million ($45.3 million).
According to David Sun of Home Inns this will help it work towards its goal of 330 hotels in more than 80 cities, David Sun Sun didn’t say how long it would take to reach the target.
Within the industry the talk is that the acquisition, the first of its kind in China, might indicate the beginning of mergers and acquisitions among domestic budget hotel operators.
Zhang Minghou, an official with the China Hotel Association, which now represents between 8,000 and 9,000 hotels — from deluxe hotels to budget inns — across the country said, ‘The acquisition may reflect a general trend of more frequent mergers and acquisitions in the future. However, it will still take time to see how Home Inns is going to consolidate the two brands and their cultures to make the deal a success.’
He Jianmin, a professor with Shanghai University of Finance & Economics, agrees that more mergers and acquisition deals would likely occur in the budget hotel industry. He said brands with larger operations and sound capital flows will have a competitive edge.
China’s budget inn industry started in its modern form in 1997 when Shanghai-based Jinjiang Inn opened its first inn in the city.
At present, there are already more than 1,000 budget hotels in the country, operating under some 100 brands. Jinjiang Inn, Home Inns, Motel 168 and 7 Days Inn are the major domestic brands competing with overseas rivals such as Super 8.
Major players in the industry are all very keen to expand. Thus we can expect the budget hotel numbers to go up, and the number of brands to go down.