Economy Hotels in China

A Glocalized Innovative Hospitality Sector

Songshan Sam Huang, Xuhua Michael Sun

• Publisher: Taylor & Francis
• Year: 2014
• eBook ISBN: 9781135042325
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Hostelería, viajes y turismo

While economy or budget hotels have been popular in western countries since the end of the Second World War, they have only emerged as a sector in their own right in China since the mid-1990s. Indeed, as a new service industry sector, economy hotels in China demonstrate important characteristics which can be used to illustrate and help explain China's current economic progress more generally.

This book provides a comprehensive overview of the economy hotel sector in China. It covers macro-level social-cultural, economic, environmental, geographic and development issues, alongside micro-level consideration of the budget hotel companies' innovative management and marketing procedures, business expansion strategies, general hotel management and operation issues, as well as an analysis of some leading entrepreneurs in the sector, and in-depth case studies examining the most successful economy hotel companies in China. Huang and Sun argue that the rapid development of budget hotels in China demonstrates how, under the influence of globalisation, Chinese businesses have become more innovative as they apply successful western business models to China. In turn, they show that the China model is fundamentally different in terms of its driving force, which lies purely in its domestic travel market, fuelled by China's continued economic growth. There is therefore much to explore about both China's market situation and business practices in the economy hotel sector and this book makes an important contribution to our understanding of China's new business environment.

Based on extensive fieldwork and investigation, Economy Hotels in China will be welcomed by students and scholars of tourism, hospitality, business studies and Chinese studies, but it will also appeal to practitioners of business management in these sectors who are interested in China's development and business opportunities in China.

1 Economy hotels in China

A historical perspective

Introduction

History has never seen such a fast pace of change as in our modern society and it is commonly accepted that the world is changing at accelerating speed. What we have seen in the past decade could well represent changes over hundreds of years in pre-modern times. These changes prevail in different areas of human life. However, any attempts to understand changes in one area without reference to other related areas may be dangerous, as illustrated in the fable ‘The Blind Men and the Elephant’. Admittedly, we see more radical changes in the economic aspects of our life than in social, cultural, and political areas. However, economic changes should not be interpreted merely from economic laws and rules, that is, within the economic discipline itself, but may be better understood with reference to the social and political transformations taking place alongside.

The fast pace of change in our modern world can best be exemplified by the changes taking place in China, which has recently seen the greatest contrasts of any country. In the past three decades, the changes that Chinese citizens experienced have astounded outside observers. In the early 1980s, what an average household in China desired was no more than the ‘Three Big Pieces’: a watch, a sewing machine, and a bicycle. Girls of marrying age in China’s vast rural territories at that time would use these Three Big Pieces as the standard for choosing their future husbands. Only thirty years later, we see that the Three Big Pieces on Chinese people’s ‘wish list’ are now a ‘car’, a ‘house’ and the ‘next generation’s (the only child’s) education’ (Chinanews, 2004). The modern Three Big Pieces may be more applicable to urban residents but the whole of China has become more urbanised in recent years. That education is listed as one of the main coveted items for Chinese families reflects the transition that has occurred in China’s social arenas. While free education was granted to every Chinese citizen in the 1980s, when China was still following the education system in accordance with its planned economy, after the turn of the century, higher education became fee paying and is treated as a big commodity for Chinese households.

China is known throughout the world for its economic achievements. After China was opened up to the outside world in the early 1980s, foreign businesses and multinational corporations gradually started to enter the country again.¹ China’s attitude to embrace the world and to allow economic globalisation became stronger with its pursuance and eventual success in seeking membership of the World Trade Organisation, and bidding for and hosting the 2008 Summer Olympics. Today, one could say the world needs China and China needs the world. As we consume everyday goods with the label ‘made in China’, we feel the extent of China’s economic power. It is not exaggerating to say China’s economic power has spread to every corner of the world, even to the most remote rural communities in Africa.

In recognition of China’s rising role in the world economy and the introduction of bilateral trade relations with most of the world’s leading economies, studies on China, and its economy and business practices are also flourishing. It is not just a vogue for the world’s leading companies such as IBM and Microsoft to set up their research institutes in China or universities in Western countries to strengthen their research collaborations with universities in China. While issues in relation to its economic and business world are indeed the spotlight of outside research agencies’ interests in studying China, a broader research agenda needs to be framed. China’s economic development and business practices cannot be fully understood without addressing and referring to related issues in its cultural, political, and social arenas. In addition, China may be the only nation in the world that has such a systematic recording of its national history. In studying issues in China, a historical perspective is also recommended.

The current book comes from the first author’s research into China’s tourism and hospitality. For the past three years, he has been working with colleagues to investigate a broad range of issues in China’s economy hotel sector. While economy/budget hotels have been popular in Western countries like the United States, the United Kingdom, and France since the end of the Second World War (Brotherton, 2004; Senior & Morphew, 1990), they were only seen as a hospitality sector in a complete sense after the mid-1990s in China (Huang, Liu, & Hsu, in press). As a new service industry sector, economy hotels in China are demonstrating some characteristics that usefully illustrate and help to explain China’s current economic progress in general. However, we should not separate this new service sector from other related industries/industry sectors in understanding the business practices of economy hotels, even though in reality we have already seen a clear difference between the operations of economy hotels and those of star-rated hotels, the businesses most closely connected to economy hotels; nor should we only develop our understanding of such an emerging industry sector from a business or economic point of view. If one is discerning enough, one should be able to tell that the underlying driving forces for the emergence of the economy hotel sector go beyond economic factors; economy hotels represent a new service sector showcasing China’s recent market economy reform, its social transition in mass market demand, its adaptation to globalisation, its cultural consumption, and its local talent innovation. One or two research papers may not capture all these meanings associated with economy hotel development in China. Therefore, a research book is considered a more appropriate way to communicate what has happened and is now taking place in this sector to a broad base of readers. While the authors of this book are tourism scholars themselves, it is not their intention to create a purely academic book on tourism or hospitality. Hopefully readers will agree that some issues discussed in this book do indeed go beyond mainstream tourism and hospitality research.

It has also been difficult to find a suitable title for this book. Admittedly, economy hotels represent a new service sector in China. Both the reasons for development and the short development path as seen so far for this sector are different from Western experiences (Huang et al., in press). However, defining the nature of this fledgling industry sector precisely is not easy: things would keep changing when they were in an early stage of development. A parent cannot say a two-year-old is a painter when the child is playing with a paint brush. However, to be responsible to our readers, we needed to find a title which is both revealing and able to help them better understand such a new service sector. To fulfil his role in his research project, the first author of this book has been travelling to China and staying in economy hotels affiliated to the top ten brands. One of these trips, in July 2010, lasted 14 days and he stayed in 14 different economy hotel units in Shenzhen, Guangzhou, Wuhan, Zhengzhou, Beijing, and Shanghai, switching hotels every day. This direct field research experience was accompanied by extensive reading of the literature on economy hotels in both English and Chinese to inform the title of this book. While economy hotels appear to have become an important part of China’s hotel industry, this sector is different. One could argue, as suggested in the book’s title, that economy hotels have formed a glocalised innovative hospitality sector in China. Holding this argument, we elaborate on how this sector has emerged in response to both local demands and global trends, and why it is innovative.

This section serves as an introduction to the book. In the next, we provide more historical background information for readers to understand the emergence of economy hotels in China. As the hotel industry is an indispensable part of China’s tourism, the following will briefly review tourism development in China. Later, hotel development in China is discussed before a snapshot of the economy hotel sector itself is provided. Subsequently, the claim that the sector is a glocalised innovative hospitality one is further justified. The chapter ends with an outline of the other chapters in the book.

Tourism development in China

China’s tourism development has taken a different track from that of most Western countries. After the foundation of the People’s Republic of China (PRC), tourism was first regarded as part of foreign affairs and its most salient function was to serve political needs rather than economic purposes (Huang, 2010; Lew, Yu, Ap, & Zhang, 2003; Zhang, Pine, & Lam, 2005; Zhang, Pine, & Zhang, 2000). ‘Political reception’ is the best phrase to label tourism activities in China in its political discourse from 1949 to 1978. During this period, tourism activities centred around accommodating those diplomatic delegations from the communist bloc and receiving overseas Chinese who were friendly towards the young communist Republic. At the same time, domestic tourism in China hardly existed because it was thought to stand against the communism doctrine (Zhang et al., 2000). In 1964, the Communist Party of China (CPC) Central Committee decided to establish the China Travel and Tourism Bureau, in the hope of ‘enhancing the political influence on the outside world’ and ‘receiving free foreign exchange for the country’ (He, 1999, p. 5). This marks the formal beginning of China’s tourism administration system. Generally speaking, tourism in China was still underdeveloped and mainly served as a political means in foreign affairs before 1978. It should be noted that tourism did not even gain the status of an industry in the eyes of policymakers during this period.

1978 witnessed a significant turning point in contemporary China’s history. The Third Plenary Session of the Eleventh CPC Central Committee was convened in this year as an epoch-making event. Following the new national development strategies centring on the reform and opening-up policies initiated by Deng Xiaoping, government officials and policymakers began to consider tourism as an economic activity that could earn foreign exchange, which was desperately needed then for the country’s economic revival (Zhang et al., 2000). Apparently, Deng Xiaoping himself was thought to have played a decisive role in this policy transition by giving a series of directional talks on tourism from October 1978 to July 1979 (Xiao, 2006). Deng’s talks on earning foreign exchanges through tourism and utilising foreign investment in hotel construction had directly influenced China’s tourism development in the 1980s and 1990s.

Based on Deng’s utilitarian viewpoints toward developing tourism, the Chinese government formulated policies repositioning tourism as an economic activity rather than part of foreign relations. In 1979, the State Council approved the building of joint-venture hotels in major cities like Beijing, Shanghai, and Guangzhou. In the tourism working conference held in the same year, the ‘political reception’-oriented tourism development guidelines were replaced by ‘economic operation’-oriented ones. The emphasis on tourism’s function in earning foreign exchange may explain China’s focus on developing inbound tourism in the 1980s. Apart from attracting foreign investment in hotel construction, policy efforts were spent on improving tourism infrastructure. Resources from different sources and levels were directed into tourism infrastructural construction. With state-owned travel agencies and tour guides playing more important roles in inbound tourism, two administrative regulations, one for travel agencies and the other for tour guides, were issued in the mid-1980s.

In the mid-1980s, the status of tourism as an industry was formally established by the Chinese government. In the Seventh Five-year Plan (1986–1990), tourism was for the first time listed as an industry that should be vigorously developed. Owing to the economic growth brought by the reform and opening-up policies, the second half of the 1980s also saw the beginning of China’s domestic tourism. In the 1990s, China’s domestic tourism developed rapidly, further corroborating the role of tourism in the national economy in parallel with inbound tourism’s function to earn foreign exchange. In 1992, the CPC Central Committee and the State Council jointly announced their decision to speed up the development of China’s tertiary industries; tourism was identified as an important part of this tertiary sector. In the first half of the 1990s, in alignment with fast-growing domestic demand, much effort was put into tourism product development and supply. In 1998, the Central Government Economic Conference was held in Beijing in which the touri...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of figures
• List of tables
• Preface
• 1 Economy hotels in China: A historical perspective
• 2 Macro-environmental factors affecting economy hotels in China
• 3 Consumer markets for economy hotels in China
• 4 Economy hotel expansion strategies
• 5 Economy hotel management in China
• 6 Entrepreneurs in economy hotels in China
• 7 Case study I: Home Inn
• 8 Case study II: 7 Days Inn
• 9 Case study III: Jinjiang Inn
• 10 Customer lived experiences in economy hotels in China
• 11 The future of economy hotels in China
• Index