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　　At present, there are numerous domestic economy-type chain hotels. When the prices of high-end hotels are constantly rising, economy-type hotels have become the second-to-none choice for many people.

　　According to the "2011 China Economy Hotel Industry Research Report" released by the third-party market research institution Zhongshang Intelligence Network: Since June 2011, after Hanting acquired Motel Hotel, its market share reached 23.12%, ranking first. 7 Days Inn accounts for about 16%, and Home Inn accounts for about 13%. The combined domestic market share of these three economy hotels has exceeded 53%, showing a three-legged situation.

　　The three giants release their second-quarter financial reports

　　Recently, the three major economy hotel groups listed in the US, Home Inn, 7 Days Inn, and Hanting, released their second-quarter financial reports on the same day. Hanting Hotel's net profit exceeded 70 million yuan, an increase of 68.5% year-on-year; 7 Days Inn's net profit was 55.6 million yuan, a decrease of 500,000 yuan year-on-year. Although Home Inn's revenue increased by 60.2%, its net profit decreased by more than 70% year-on-year, reaching 36.4 million yuan.

　　Some industry analysts believe that the problems plaguing the industry, such as rising costs of economy hotels and economic downturn, have not yet been alleviated.

　　Data shows that Home Inn's total revenue in the second quarter was 1.45 billion yuan, a year-on-year increase of 60.2%; Hanting's second-quarter revenue was 798 million yuan, a year-on-year increase of 45.7%; 7 Days Inn's second-quarter net revenue was 633 million yuan, a year-on-year increase of 27.3%.

　　In terms of profit, among the three hotels, only the leader, Home Inn, saw a 70% year-on-year decline in net profit, achieving a net profit of 36.4 million yuan in the second quarter, including a net loss of 19.3 million yuan from its Motel 168 chain; Hanting's second-quarter net profit increased significantly to 75 million yuan, a 68.5% increase year-on-year; 7 Days Inn's net profit attributable to shareholders in the second quarter was 55.57 million yuan, compared with 45.06 million yuan in the same period last year. This is 7 Days Inn's 10th consecutive quarter of profitability.

　　In fact, in the first quarter of this year, these three economic chain hotels all showed signs of declining performance. Many industry insiders believe that the high-growth period of economic chain hotels has passed. Data shows that Home Inn's loss in the first quarter of this year reached 103 million yuan, while it still made a profit of more than 32 million yuan in the same period last year. Hanting and Jinjiang Star, a subsidiary of Jinjiang Group, a listed company on the A-share market, suffered similar losses in the first quarter of this year, with only 7 Days Inn achieving a net profit of 27.8 million yuan.

　　The land grab continues

　　Home Inn, the leader of domestic economy hotels, is now suffering from declining profits and is in a dilemma. Obviously, it is still entangled in last year's acquisition of Motel 168 Hotel. The former owner of Motel 168 Hotel, Morgan Stanley, initially wanted to sell the controlling stake in Motel Hotel for US$1 billion, but had to lower the price due to lack of interest, and finally sold it for US$500 million. Now, the reason why it had to lower the price seems to be clear. Since the fourth quarter of last year, due to the drag of Motel 168, Home Inn has experienced consecutive quarterly losses, and only in the second quarter of this year did it truly achieve an overall turnaround, but Motel 168 is still losing money.

　　Although burdened by the acquisition, land grabbing is still Home Inn's ultimate dream. Recently, Home Inn also acquired Anhui e-Home Inn. In this regard, Home Inn CEO Sun Jian said that Home Inn's industry position has been stable, and it will slow down in the future, but it is slowing down, not hibernating.

　　For 7 Days Inn, CEO Lin Yuezhou frankly stated that it will take a wait-and-see attitude towards acquiring regional small and medium-sized economy hotel brands in the next step. "7 Days Inn's previous acquisition of Huatian Star has many sequelae, and it is not cost-effective overall; we evaluated that the later transformation of Anhui's e-Home Inn is very large, so we also gave up the acquisition." However, the number of 7 Days Inn's single-brand management stores (also known as franchised stores) has ranked first in the industry. 7 Days Inn said that it will focus more on the growth of management-store-based business in the future, reduce management costs, and achieve faster expansion in China's rapidly growing economy hotel industry.

　　As one of the three giants, Hanting is also unwilling to be lonely. The financial report shows that in the second quarter, Hanting completed the acquisition of most of the equity of Hong Kong Starway Hotel, thus adding 110 franchised hotels.

　　Currently, Hanting has two mid-range hotel brands, Starway and Quanji, and two economy hotel brands, Hanting Express and Haiyou Inn. Hanting Hotel Group's Executive Chairman and CEO Ji Qi said that after investing in Starway, Hanting is already the largest mid-range hotel group in terms of scale.

　　Economy hotels become a rigid demand

　　After investing in Starway, Hanting is already the largest mid-range hotel group in terms of scale. But Ji Qi said that economy hotels win by price and have thin profit margins. He is not interested in Home Inn's position as the leader of economy hotels, and high-end hotel groups are Hanting's ultimate goal.

　　Ji Qi previously said: "I can say for sure that I will enter the high-end hotel market, which is roughly the four-star and five-star level. In our second five-year plan, we plan to enter the high-end hotel market."

　　 Zhang Zhijun, executive director of the China Tourism Hotel Industry, said that economy hotels are a rigid demand, while high-end hotels are oversupplied. "In fact, our country really needs economy hotels, but when they develop to a certain extent and need performance, they start to merge others, and then they want to develop high-end hotels. As an insider, this approach is unwise."

　　 To better develop economy hotels, we must constantly leverage our strengths and avoid our weaknesses. Rent, labor costs, and management costs are all factors that economy hotels can no longer ignore.

　　Market competition is a matter of everyone showing their skills. Each company has its own strengths. The key to economy hotels is to increase the comfort of sleeping and bathing environments and increase business functions, so as to reduce costs and ultimately lower prices while ensuring the quality of guest room products.

　　It is worth noting that economy chain hotels are not simply cheap hotels based on price, but simple hotels with modern international reception standards. The price is cheap, but the service quality must not decline. High-quality service is a powerful guarantee for attracting customers, and customer satisfaction must be supported by high-quality service.

——Shenzhen Vinin Hotel Guest Room Control System Expert

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