January 10, 2008 -- GreenTree Inn Hotel Management Group plans to build ten new budget hotels in Chongqing this year -- and up to 50 hotels over the next five years.
As part of these plans, the hotel chain signed a lease contract with
Chongqing Municipal Party School last month. The school will provide a 5,174-square-meter building, which GreenTree will use to create a 100-room hotel, the company said. The building is in the Yubei Hi-Tech Development Zone.
It's all part of the chain's plans for southwest China in particular -- and inland China in general.
"GreenTreen Inn Hotel has a long-term marketing strategy in second and third tier cities," Lijun Cheng, GreenTree's regional business development manager for southwest China, told Emerging China. "Take Chongqing municipality for example -- we will develop ten branch hotels this year and we'll build about 50 chain hotels in three or five years here in Chongqing."
For budget hotel chains like GreenTree, location is vitally important, he said.
"It should be near the main transportation hub, with complete surrounding infrastructure, and around major industrial areas and business districts," he said. "It's even better if there are large entertainment complexes nearby."
Second- and third-tier cities are particularly attractive locations, he said, because the operating costs are lower than in the coastal areas. As a result, both domestic and foreign companies have been shifting their attention inland over the past couple of years, he added.
"Another reason for the shift is favorable policies of the central government," he said. "For instance, regulators are now promoting large-scale development of the western region and development of the central region."
The development policies benefit businesses of all kinds -- which helps bring in business travelers, conferences and conventions, and tourists.
"The rapid economic development in these second- and third-tier cities has brought more business opportunities," Cheng said. "We value the Chongqing market the same [way we value] first-tier cities," said Cheng.
Domestic competitors do have an advantage in these regions, due to their established networks, he said. However, foreign brands benefit from their internationally-known brands and years of management experience.
Local officials welcomed GreenTree's entry into the market.
"Currently, Chongqing already possesses many five-star hotels, but not enough budget hotels," Chongqing municipal government spokesman Yi Zhou, told Emerging China. "The development of budget hotel chains here is not very widespread -- there is a great deal of room for progress."
According to Zhou, GreenTree's presence in Chongqing will help the growth of the local economy and the tourism industry.