Monday, January 21, 2008
China's Budget Hotel Boom
Millions of travellers, both Chinese and foreign, are taking advantage of a boom in China's budget hotel industry, where room rates are generally less than a quarter of the rates in five-star hotels.
Budget hotel rooms have mushroomed in the past right years from practically zero to more than 100,000, with more than 100 brands competing for a bite of China's rapidly expanding tourism market.
China has a population four times that of the US, and the potential to be the world's biggest budget hotel market.
China's tourism market is rapidly growing (especially due to the upcoming Beijing Olympics in August), and there is a high demand for hotels. From what we have learnt in econs, due to ever present scarcity, it is necessary for us to make the most of what we have.
So instead of building a few posh and grand who-knows-how-many-stars hotel, the choice being made here is therefore to build more simple lost-cost budget hotels. As a result, resources can be fully utilised to accommodate the huge number of travellers in the vast land of China.
Now from a consumer's POV, an opportunity cost is also incurred to stay in a budget hotel. To pay 3/4 less than what you usually do, a beautiful done-up room with 24 hours room service and other facilities in the hotel have to therefore be forgone :(
i hope this made some sense.
love, Elaine.
11:29 PM
