Budget hotel chains continue to expand

Budget hotel chains like Home Inns & Hotels Management Inc and China Lodging Group Ltd continue to expand, and reversed their losses in the second quarter, the Daily Economic News reported on Sept 11.

China Lodging owned 863 hotels by June 30. The company plans to open 260 to 270 new hotels by the end of the year.

Home Inns opened 59 new hotels in the first quarter, up 84.4 percent year-on-year, and 103 hotels in the second quarter, up 17 percent year-on-year.

7 Days Group Holding Ltd changed its target for new openings to 320 from 240 this year.

The booming tourism business provides a good environment for the expansion of the companies. And in order to grab market share, budget hotels are rushing to increase their locations, experts said.

A multi-brand strategy - a successful strategy for international leading hotel groups - is also being used by Chinese hotel chains.

Home Inns posted net profit of 36.4 million yuan ($5.74 million) in the second quarter, while China Lodging posted a profit of 75 million yuan, up 68.5 percent year-on-year.

The three budget hotel chains saw profit declines in the first quarter, with Home Inns registering losses of 103 million yuan.