www.HtmBam.blogfa.com International Journal of Hospitality Management 30 (2011) 222–232
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International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhosman
Interpreting the mind of multinational hotel investors: Future trends and implications in China Basak Denizci Guillet ∗ , Hanqin Qiu Zhang 1 , Bo Wendy Gao 2 School of Hotel and Tourism Management, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
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a b s t r a c t
Keywords: China Expansion Multinational hotels Future trends
This study provides an updated outlook on the future of the investments proposed by multinational hotel corporations in China. Data were collected from secondary sources using keyword research to identify proposed new hotel developments and future trends in China. A grounded theory approach was used to analyze the data. Findings revealed that the decisions of multinational hotel groups with respect to business formats, the direction trends of investments, and the attractiveness of Chinese market are affected by the happening of mega-events, Chinese government policies, the presence of local entrepreneurs, and market potential. © 2010 Elsevier Ltd. All rights reserved.
1. Introduction
urbanization, and infrastructure development has cultivated more investment opportunities for hotel companies. Given the steady and strong growth in demand in business and leisure travel, China has become an investment heaven for multinational hotel management groups. Although hotel investments in China have been affected by the worldwide financial crisis and visa restrictions prior to the Olympic Games, China has been and will continue to be one of the most promising countries for investments and growth for multinational hotel companies. Given the importance of China’s role in the development of international tourism and its related sectors and the fast-growing interest in China, the purpose of this study is threefold:
It has been more than 30 years since the Chinese government announced the open door policy in 1978. This policy has led to the diversification and decentralization of hotel investments in Mainland China (hereafter known as China). The Beijing Jianguo Hotel, built by the Hong Kong Peninsula Hotel Group and opened in 1982, is considered to be the first multinational hotel chain in China (Heung et al., 2008). Many multinational hotel companies, including but not limited to the Accor Hotel Group, Intercontinental Hotel Group, Marriott Hotel Group, and Shangri-la Hotel Group, followed in the steps of the Hong Kong Peninsula Hotel Group, which helped the rapid development of China’s hotel and tourism industry. According to the 2009 Asia Hotel Forum report (Wu, 2009), by the end of 2000 there were over 150 hotel management companies in China, 41 of which were authorized by the China National Tourism Administration (CNTA), while over 60 were authorized by regional business administrations and more than 50 were multinational hotel groups (MHGs). In 2003 China became an investment platform for the top 10 MHGs. In a more recent press release, the World Tourism Organization (WTO) ranked China fourth in arrivals and fifth in terms of receipts in the world (WTO, 2009). The Beijing Olympics held in 2008, along with the World Expo held in Shanghai in 2010, are being widely seen as an unprecedented opportunity for China’s tourism industry. The increase in disposable income,
∗ Corresponding author. Tel.: +852 2766 6340; fax: +852 2362 9362. E-mail addresses:
[email protected] (B.D. Guillet),
[email protected] (H.Q. Zhang),
[email protected] (B.W. Gao). 1 Tel.: +852 2766 6368; fax: +852 2362 9362. 2 Tel.: +852 3400 3846; fax: +852 2362 9362. 0278-4319/$ – see front matter © 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhm.2010.10.005
(1) to provide an overall outlook for the hotel industry as it relates to investments proposed by multinational hotel corporations in China in the near future, (2) to analyze trends in new hotel developments planned by these multinational corporations in China, and (3) to develop a theoretical framework of future development trends in China from the conceptualization of the secondary information using grounded theory approach. Given the complexity of international expansion decisions, this study intends to fill an important gap in the literature on post-entry decisions and strategies. Studies that focused on firms’ strategies when they enter and operate in international market used multidimensional approaches and theories to explain firms’ behavior which is an indication that the theories developed are not satisfactory to explain firms’ actions. This issue is further discussed in the literature review. In addition, Canabal and White (2008) reviewed 128 articles related to international entry modes for the period of 1988–2006 and suggested that the new research in this area
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should be focused on post-entry decisions and strategies. According to Canabal and White (2008, p. 277), “strategic decisions made by firms following entry mode choice are crucial in determining whether or not they will be successful in the market entered”. In the same study, Canabal and White (2008) also found that there were only 6 studies related to hotels although there were about 50 studies in manufacturing sector. 2. Literature review of the development of multinational hotel groups in China China’s hotel industry has experienced phenomenal growth in the past 30 years. In addition to macro-environmental reasons, this has also been the result of MHGs’ experience with strategic expansion plans and high standard management skills. Existing studies on MHGs have focused mainly on barriers faced in China (Kivela and Leung, 2005; Pine and Qi, 2004), factors influencing business formats (Altinay, 2007; Heung et al., 2008), and location strategies (Johnson and Vanetti, 2005; Li and Park, 2006). In addition, Pine et al. conducted in-depth interviews with hotel management companies and independent hotels in the gateway cities of Beijing, Shanghai, and Guangzhou and identified four main categories of barriers to hotel chain development in China, namely, economic and political systems, hotel ownership, hotel management capability and resources, and competition between local and foreign firms. Pine stated that foreign hotel companies already enjoy the advantages of economies of scale, global recognition and networking, and well-established managerial and technological expertise. They also have the advantage of being able to bypass local protectionist policies. To prosper, however, multinational firms will have to appreciate China’s political, social, and cultural frameworks, in particular the need to work with local partners who are part of the guanxi network. I have found that even foreign companies with a history of working in China still encounter frustrations in their efforts to do business there. The entry modes of multinational hotel groups have been classified into foreign direct investment (FDI) forms and non-equity forms. FDI refers to equity investments ensuring some management control and a joint venture; non-equity forms include leasing agreements, management contracts, franchise agreements, and marketing agreements (Endo, 2006). FDI is the most commonly used form in developed countries and management contracts are most commonly used in developing countries, but FDIs in developing countries appear to be emerging (Endo, 2006). Altinay (2005) studied factors influencing the entry mode choice of a particular multinational hotel organization. He argued that large multinational hotel chains appear to use non-equity modal forms such as franchising and management contracts rather than control-oriented equity forms. He also found that capital markets, host-country hotel markets, customers, and organization-specific characteristics play a determinant role in expansion plans. But his study was also based on the situation in the hotel’s European, Middle Eastern, and African divisions. It is not clear whether the findings of Altinay’s study would apply to the hotel industry as a whole, since multinational expansion entails environmental diversity, complexity, and uncertainty in host-country hotel markets. Management contracts and franchising are the major business formats in China, while joint ventures are becoming increasingly popular. Although the financial performance of the joint ventures has not appeared favorable in the short run, these investments are perceived as ventures towards long-term goals (Li et al., 2006). The key factors in finding the right partners have been identified as strategy and marketing planning, willingness to engage in information exchange with the local partner, a strong financial background,
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and good experience in market research activities (Li et al., 2006). The location strategies of multinational hotel chains have also been studied and identified as being the size and nature of the city in which the hotel is located, the infrastructure within the region, and the perception of the region as an attractive business destination (Johnson and Vanetti, 2005). Although Johnson and Vanetti’s (2005) study was conducted in five developing countries in Eastern Central Europe, it provides some valuable information on these hotel groups’ location strategies in China. The results of this study have been proved by Li and Park’s (2006) later study on the locations of FDIs in China, which focused on FDIs as they apply to all industries. They identified agglomeration economies, infrastructure, and institutional changes as positively affecting location choice by foreign firms. Heung et al. (2008) examined the hotel industry in China from the perspective of both MHGs and state-owned hotels and identified franchising as a win–win situation for the latter. Furthermore, franchising is an opportunity not only for China’s state-owned hotels but also for MHGs to continue their expansion. A literature review of the international entry mode studies in the mainstream management journals revealed 12 different approaches: control, cultural distance, institutional theory, internationalization, knowledge-based view, market imperfections, organizational capabilities, the eclectic paradigm, transaction cost theory, resource-based view, risk, uncertainty. The focus of control approach is to explain the entry mode decisions by the extent to which the firm can influence systems and decisions (Erramilli, 1996; Herrman and Datta, 2006). Cultural distance approach is related to the distance between a firm’s home and host country (Agarwal, 1994; Makino and Neupert, 2000). The studies conducted using this approach studied how cultural distance influences entry choice. Institutional theory focuses on how firms operate in an institutional context. Institutional context refers to rules, norms and values the firms mimic from local host country firms or their competitors in the local market (Davis et al., 2000; Yiu and Makino, 2002). Internationalization theory introduces four stages to explain international development of firms: (1) firms do not have regular exports, (2) firms export through agents, (3) firms sell through subsidiaries, and (4) firms begin overseas production (Canabal and White, 2008, p. 271). Internationalization theory was used in studies related to distribution in international business units and host market characteristics (Anand and Delios, 1997; Nitsch et al., 1996). Knowledge-based view considers firms’ capabilities to share and transfer knowledge that can potentially generate competitive advantages when firm enter the foreign market (Kogut and Zander, 1993; Pak, 2002). For instance, Pak (2002) argued that learning capabilities of the firm influenced international franchisers’ entry mode decisions. Market imperfections approach was introduced by Hymer (1976) where he argued that the market imperfections in the form of good market, factors market, and competition due to economies of scale and government intervention lead to foreign direct investment in international markets. Organizational capabilities refer to “what broad-based, heterogeneous factors are critical to business success” (Roth and Jackson, 1995, p. 1721). The studies conducted using this approach include Erramilli et al. (2002) and Chen and Hennart (2002). The eclectic paradigm perspective considers three factors, namely ownership, location and internationalization advantages, when it comes to entry mode choice of firms. These advantages are costs and benefits of inter-firm relationships, resource commitment and availability, reduction of transaction and coordination costs (Brouthers et al., 1996; Padmanabhan and Cho, 1999). Transaction cost theory is referred as the most frequently used model to explain entry mode (Canabal and White, 2008). It focuses on firms’ efforts to minimize transaction costs and inefficiencies by creating governance structures when they operate in a foreign market (Brouthers et al., 2003; Hennart, 1991; Meyer, 2001). Resource-based view is
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related to firms’ competitive advantages being valuable and rare in order to be sustainable (Barney, 1991; Chen and Chen, 2003). Risk perspective examines how different risk levels affect firms’ investment strategies when they enter and operate in foreign markets (Brouthers, 1995; Delios and Henisz, 2000). Uncertainity centered studies examined environmental uncertainty’s influence as perceived by the firm on its performance (Erramilli and D’Souza, 1993; Brouthers et al., 2003). It is clear that there are many approaches to explain the firms’ international expansion plans. An interesting observation is that the studies addressed in the literature review used multiple theories and approaches to explain firms’ behaviors when they enter and operate in foreign markets. This is another indication of how complex theoretical understanding of firms’ international plans are. Majority of the mainstream research in this area focused on multiple manufacturing and service sectors. Our intent is to provide insight into a specific industry. Given the trend in the studies related to international expansion plans incorporate theories from different disciplines such as anthropology, economics, management and sociology, this study takes the grounded theory approach which involves inductive analytic procedures that clarify the process by which individuals interpret reality, with the ultimate goal of developing a theoretical framework to guide future studies and hence, does not focus on any particular theory to explain MHGs’ expansion strategies. Most of the studies discussed in the hospitality and tourism literature are related to factors affecting the development of MHGs in China. But few studies have examined the future expansion strategies of these groups within China. Wang (2006) summarized the development strategies of MHGs in China and examined the distribution patterns of 10 hotel groups before 2006. He then analyzed these 10 hotel groups’ development strategies for the period 1981–2006. In addition, he pointed out the relationship between the development strategy of these groups and the regional economies, regional attributes, and environmental resources. Although Wang’s study provides important and relevant information for industry executives and contributes to the hospitality literature, the time period of the analysis and the data used might be outdated in view of the ever-changing Chinese economic environment and world economy. Furthermore, there is lack of research that takes a systematic approach into examining MGHs’ expansion strategies in China. The contribution of the present study is in its updated outlook on the future of the investments proposed by multinational hotel corporations in China. In this respect, a richer understanding of the MHGs’ expansion plans in China is a timely topic given the importance of China in the tourism arena. The study contributes to the existing literature in at least three ways. First, our study attempts to fill a gap in the literature by delving into a specific industry’s expansion strategies and highlights the key issues for MHGs when they enter into specific emerging market and operate in this environment. Second, this study provides an outlook to the future in comparison to the past studies where the focus was past and present decisions. Third, this study provides a theoretical framework of future development trends in China, based on a grounded theory approach. We believe the findings of this study and understanding the issues that their counterparts consider and encounter will be useful to MHGs when considering expansion plans in China. In addition, this study shows an interesting part of the international expansion that concentrates on the other side of the equation which is what happens once the entry mode choice has been made.
3. Method Zhao and Olsen (1997) and Olsen and Roper (1998) have drawn attention to the lack of theoretical approaches to the
Table 1 Brief description of data sources. Database
Brief description
China InfoBank
A web-based service on China’s news, business, and legal and statistical information. Information available includes business news, business journals, government survey reports, news and reports of publicly listed companies, statistical data from national and provincial statistical yearbooks, China Economic Statistics Bulletin, the People’s Bank of China Quarterly Statistical Bulletin, Custom Statistics, China central and municipal laws and regulations, structure and functions of Chinese government agencies. (China InfoBank website, 2009). A monthly magazine published in Hong Kong covering business, finance, and economics in China. Information available includes reporting, commentary, and analysis on China’s economic affairs (China Economic Review website, 2009). A web-based service on hospitality and travel industry news. Information available includes news, research material, and industry events (Hotel News Resource, 2009). An extensive web-based service that provides a wide range of information on various subjects. EBSCOhost databases used in this research include Business Source Complete, Hospitality & Tourism Complete, and Newspaper Source and Regional Business News (EBSCOhost, 2009).
China Economic Review
Hotel News Resource
EBSCOhost
internationalization of hospitality organizations. On the basis of the arguments of both studies, Mehmetoglu and Altinay (2006) further emphasized the need for qualitative research with theorygenerating approaches. Thus, the qualitative method used in this study involves developing a theoretical framework from a conceptualization of the secondary information sources, and so we employed grounded theory data analysis as an appropriate method. Grounded theory refers to a method of systematic data collection and inductive analytic procedures that clarify the process by which individuals interpret reality, with the ultimate goal of developing a theory (Charmaz, 2006). A grounded theory approach has several advantages in the context of this research. First, it provides an opportunity to gain new insights into hotel developments in China in the near future, with a particular focus on multinational hotel corporations. Second, it allows development of a theoretical framework from secondary information sources with an absence of preconceived biases (Glaser, 2002). We used these secondary information resources, including InfoBank China, China Economic Review, Hotel News Resource, and Ebcohost, to identify multinational firms with new hotel expansion plans for China. These databases include information on China business news and hotel industry developments in China from a variety of sources, including, but not limited to, Western and Chinese newspapers, industry journals, and the Chinese government authority of the Ministry of Foreign Trade and Economic Cooperation. Table 1 presents the information availability through these sites. Although hotel company websites provide information on future development trends of the company, we did not include them as an information source owing to the possibility of information bias. Because companies tend to be overly optimistic in the announcements and news they publish on their websites, it was in the best interest of this study not to include company websites as an information resource. We collected data using keyword research to identify the proposed new hotel developments in China between January 2006 and December 2008. Keyword research involved rationally combining terms related to new hotel investments in China, such as “new hotels,” “hotel developments,” “add new properties,” “plan
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to manage,” “additional properties,” “hotel market,” and “open hotels,” with terms such as “Mainland China” and “Chinese market.” Because we used numerous combinations to retrieve sources pertaining to new hotel developments in China, it is likely we obtained all references and news related to the topic. In addition, the individual hotels and hotels owned by the domestic hotel groups were eliminated as it is the purpose of this study to focus on the MHGs. While the keyword ‘new hotel development’ brought the results of the development of international hotel brands in China which included both equity and non-equity involvement such as management contract and joint venture, the results of this study focused more on hotel group level measure. Moreover, international hotel chains prefer using non-equity forms of organization for their overseas expansions. In this respect, although control is usually perceived as a result of ownership, the managerial control in fact is not weak. This is one of the most important factors to explain MHGs expansion strategy (Chen and Dimou, 2005; Contractor and Kundu, 1998; Dunning and McQueen, 1982). As a result, 336 relevant documents were generated for further analysis. Adopting grounded theory approach, the data analysis and data collection was conducted simultaneously to have a better understanding of the full picture of MHGs expansion plans in China. For instance, at the beginning of the data collection, the focus was given to the existing international hotel chains, but the result of data analysis showed that there were many new international hotel groups entering China market. In addition, data analysis indicated that some MHGs became interested in budget hotel market. These findings led us to the investigation of differences in expansion strategies of existing MHG and new comers in terms of their expansion strategies. We used the Atlas.ti 5 software as a data organizer to help counting word frequency and draw a network among the data. The data analyses were conducted in three steps. First, the contents of documents were analyzed through word occurrence using “word cruncher” function of the software. Words commonly used in constructing sentences such as the, a(n), are or is, to and of were eliminated using the stoplist. Second, the networks were established according to the affiliations of these frequently used words. Third, the researchers got familiar with the contents of the data, the inductive data analysis approach was employed. At the initial stage, data was sorted into different hotel group chains according to the hotel names. Following the initial stage, the data was analyzed phrase by phrase, and sentence by sentence according to the key points made by each hotel group. For example, number of hotels, brand name of hotel, type of hotel, name of cities, opening date, managerial form, reasons for the expansion plan. These codes were then further categorized in order to develop a theoretical framework later. To ensure plausibility and reliability, we conducted three rounds of coding by three researchers. At the beginning, we coded the content of the data independently. Then we compared the coded lists to build a composite master list of categories. Thereafter, we further discussed the composite master list of categories to refine the code list (see Appendix A) to improve interpretive validity and interrater reliability for future coding. Areas of differences or disagreements were used as opportunities to clarify the code list. Random checks conducted on articles on completion of coding pointed to high coding accuracy. At the final stage, a theoretical framework was formed for the study according to the paradigm suggested by Corbin and Strauss (2008). The paradigm helps researchers identify relationships between context and process. We would like to illustrate the paradigm using one of the findings of this study. For instance, MHGs planned to open new hotels before the Olympics in Beijing and World Expo in Shanghai. “Olympics and Expo” is the context and the planning process is the consequence. In other words, the events were the reason caused the decision to open some new hotels. In this respect, the mega
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events influenced the MHGs plans in terms of the locations and time frame.
4. Findings 4.1. Overall outlook of MHGs’ development plans in the near future We identified 29 hotel groups from 336 documents, 15 hotel groups made more than four announcements, and 14 hotel groups made less than three announcements during the study period (2006–2008). Table 2 presents summaries of the announcements and all hotel groups; it further shows that Starwood Hotels and Resorts, Accor Hotel Group, Marriott International, InterContinental Hotels Group, and Hilton Hotels Corporation have all announced aggressive expansion plans. 2008 and 2010 were identified as two significant time frames for these hotel groups because these dates correspond to two mega-events, namely the Olympic Games and the World Expo, which was held and will be held in Beijing and Shanghai, respectively. The key points included in these documents are new hotel developments, new brand expansion in China, locations, target markets, types of hotel, budget hotels, business formats, human resources, and time frame. The data analysis indicates that 11 of the 29 hotel groups are new expansions into the Chinese market. The most popular locations for new expansion properties are Beijing and Shanghai. Target markets for these hotels include MICE (meetings, incentives, conferences, and events), deluxe, and economy. The Banyan Tree Hotels and Resorts, Jumeirah Hotel Group, and Millennium and Copthorne Hotels are rapidly developing new hotel groups in China. Preferred business formats for these hotels are management contracts. The following data better illustrate their intentions: The resort, hotel and spa operator Banyan Tree has signed on a new property in Shanghai. Banyan announced that it had secured the management of a new exclusive waterfront boutique hotel on one of the last available waterfront sites along the Shanghai Bund. The hotel is scheduled to open in 2010. (Banyan Tree, September 28, 2007) As a result, 2681 words were extracted through the frequency analysis. After excluding irrelevant words, such as we, they, and said, the rest of words were categorized into groups based on the context of the words. The context is defined as the sentences or paragraphs where the word occurs. The summary of the frequency analysis is presented in Table 3. We then construct and explain the meanings beyond the surface of the announcements based on summaries of the 336 documents, using the most frequently used key phrases as a guideline. Fig. 1 presents the expansion strategies of the MHGs and future development trends as they emerged from the analysis. The lines drawn between the squares illustrate the proximity of occurrence of the issues analyzed. This diagram provides a visual representation of these strategies and trends. Fig. 1 shows two major clusters of hotel types, namely upscale and budget hotels, identified for MHGs in China. Number of documents that point out MHGs’ investment plans related to the budget hotels and upscale hotels are noted in parenthesis. The upscale type of hotel is the more prominent cluster compared with budget hotels, which can be interpreted as a continuation of upscale hotels as the major type of hotels being developed in China. The information provided in the upscale cluster includes a number of additional properties in China for each hotel group, new brands introduced in the Chinese market in the 2006–2008 period, planned hotels by existing brands by the end of 2011, and newly opened hotels from the existing brands by the end of 2008. This information implies that China remains a major target for the MHGs’ expansion
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Table 2 Expansion plans made by the major hotel groups (2006–2008). Key hotel groups
Announcement 2006
Total 2007
2008
Accor Hotel Group
9
15
5
29
Carlson Hotels Worldwide
3
3
3
9
Hilton Hotels Corporation
4
8
5
17
Hyatt Hotels and Resorts
3
1
4
8
InterContinental Hotels Group
5
7
6
18
Jumeirah Group
1
2
5
8
Kempinski Aktiengesellschaft
2
2
3
7
Kingdom Hotel Investments
3
5
4
12
Langham Hotels International
0
5
1
6
Marriott International Inc.
8
8
6
22
Millennium and Copthorne Hotels
2
0
3
5
JAL Hotels
0
4
0
4
Shangri-la Hotels and Resorts
1
5
1
7
Starwood Hotels and Resorts Worldwide
8
21
8
37
Wyndham Worldwide Corp.
7
8
3
18
Other 14 hotel groups, including: banyan tree, Best Western, Gloria International Hotels, Golden Tulip, JIA, Vantage Hospitality Group, Mandarin Oriental, Marco Polo hotels, Maritm, Swire pacific, Landis, Rendezvous, Peninsula. Budget hotels
7
13
5
25
6
15
2
23
43
35
3
81
112
157
67
336
Data from Chinese version
Total
plans. While the existing MHGs are continuing to expand throughout China, new MHGs are also being attracted to this market and have started their expansion plans in China. The third column in Fig. 1 presents related issues regarding future development planned by upscale MHGs in China. The numbers in parentheses refer to the number of times the phrases are used in the documents in corresponding category. The issues
Key points
New hotel development, new brand expansion in China, locations, target market, type of hotel, budget hotel, business formats, human resources, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, budget hotel, business formats, human resources, time frame First expansion into China, new hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. First expansion into China, new hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. First expansion into China in 2006, new hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. Nikko hotels international development in China. New hotel development, new brand expansion in China, locations, target market, type of hotel, budget hotel, business formats, time frame. New hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. First expansion into China, new hotel development, budget hotel, new brand expansion in China, locations, target market, type of hotel, business formats, time frame. First expansion into China, new hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame.
Opportunity, expansion, numbers of hotels planned to develop, location, top budget hotel groups, time frame. First expansion into China, opportunity, new hotel development, new brand expansion in China, locations, target market, type of hotel, business formats, time frame.
related to planned hotels include the influence of political and macroeconomic factors, planned locations, brand selection, competitors, number of hotels or rooms, time frame of development, and human resource development. There is no question that these issues are considered carefully by MHGs and certainly affect the MHGs’ expansion strategies. For instance, in planning stage, MHGs preliminary step will involve making decisions on planned cities,
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Table 3 The summary of frequency analysis. Themes
Frequency
Example items
Upscale hotel Influencing factors Planned cities Brand selection Competitors Number of hotels Time frame of development Human resource development
134 341 409 23 209 340 19
Business format Service concept and culture Hotels classification Target market Number of rooms Facilities and services Room rates
69 191 285 204 98 148 6
Oil price, economic, partner, Olympic, World Expo. Beijing, Shanghai, Hangzhou Grand Mercure, W hotel New comers, state owned hotels Shangri-la intends to run 38 hotels across China by 2010 Opening in 2011, before Olympics As a result, we have doubled the number of employees based in our corporate offices in Shanghai Joint ventures, management contract Luxury, economic, unique 5 star, conference hotel, resorts Business, leisure, MICE Hyatt to manage a luxurious new 354-room hotel in Chongqing Spa, banquet, restaurant Budget hotel room rates average about RMB200 in China, less than one-quarter those charged by five-star hotels. The Regent Beijing located on Jinbao street in Wangfujing, (the center of CBD)
Locations Budget hotel Investment plans by well-known hotel brands
Opportunities Location distribution
Number of hotels
Business format
22 21
92 6
36
8
brand selection and hotel classification along with time frame for development and intended business format. While making this decision, it is likely that MHGs will consider influencing factors, competitors, number of hotels in the area and the target market. Once the MHGs are convinced that the planned hotel projects are feasible, they can move on to the next stage where they will make decisions regarding number of rooms, facilities and services, service concept and culture, and human resource development. The diagram of Fig. 1 provides an overview of how these MHGs are thinking and planning their expansion plans. For example: Langham Hotels International (LHI) has strengthened its presence in China by sealing a deal with Guangzhou Huihua Hotel Co. Ltd. to manage the new Langham Place, EDZ, Guangzhou. Strategically located in the Guangzhou Economic Development Zone (EDZ) in Luogang District, the new hotel is set to open in 2010. This move marks LHI’s first expansion into South China, following its earlier entry into Shanghai and Beijing where three new hotels are scheduled to open in 2009 under The Langham and Langham Place brands. This new property marks a tactical development to LHI’s portfolio as it now has a presence in China’s three leading cities (Langham, October 22, 2008). The issues that are common to newly opened hotels from existing brands by 2008(9) include business formats, service concept and culture, hotel classification and target market. Given the planning phase is already completed, it is not surprising that the issues
GuestHouse International announced the conversion of 11 franchised hotels to the GuestHouse brand. Earlier this year, the Company announced the opening of the first truly international property in China (GuestHouse International Hotel Sanya) and reported plans to convert another property in Beijing; Ibis Qingdao joins Ibis Tianjin and Ibis Chengdu in China, with 3 additional hotels scheduled to open in Wuhan, Wuxi and Zhongshan during 2006. From 2007 the plan is to open at least 10 new Ibis hotels a year to create a network of over 50 hotels around the country. 90% of Chinese travelers stay at budget inns; China’s budget hotels have a short history and the average age is about five and a half years. Based on our current pipeline of signed deals, our guests will be able to enjoy ‘Clean and Friendly’ Super 8 hotels in China’s east, west, north and south, from Beijing to Urumqi, Hohhot to Shenzhen, Lijiang to Shanghai, Shenyang to Xiamen and many places in between. Tian Rui Hotel Corporation has opened 49 Super 8 hotels in China – 4700 rooms – and has signed agreements to develop an additional 67 hotels; In the year 2000 China had only 23 budget hotels with a total of 3236 guest rooms in 200. Now there are over 1698 hotels with a total of 88,788 guest rooms which give a growth rate of about 85%. The Super 8 brand is operated in China under license agreement with Tian Rui Hotel Investment Corporation, master licensee for the Super 8 brand for the Territory of China, including Hong Kong SAR and Macao SAR; to achieve this goal, Days Inn China is adding a new leasing business to its existing management and franchise model, where leasing and converting existing properties will become a significant part of its growth strategy.
discussed by MHGs for newly opened hotels from existing brands are more related to the operations and managing the company. Business formats mentioned include joint ventures and management contract. Luxury, unique and economic are among the terms included to state service concept and culture of the new hotels. It is interesting that upscale hotels mention the term “economic” to describe “good value” for upscale hotels. Hotel classification refers to the finding that the planned hotels are mostly 5-star hotels, conference hotels and resorts. Hence, the target markets for these hotels are business, leisure and MICE. As some hotels are already open and some are just in the planning process, the issues mentioned differ. For instance, the issues brought up by newly opened hotels from existing brands by 2008(9) are appropriate room rates, number of rooms in operation, facilities and services offered in the hotel and locality of the hotel within the location. It seems that the focus is towards drawing attention to the hotel facts and what the new hotel can offer to the customers. Alternatively, the issues brought up by planned hotels by existing brands by 2011 mainly focus on planned cities for future development along with the time frame of development, brand selection and number of planned hotels. Macroeconomic factors such as oil prices, economy, presence of partners and local entrepreneurs and mega events can be considered as influential factors that affect MHGs’ future expansion plans. A short form of competitor analysis is also included in this section as number of direct and indirect competitors in the form of new comers and state owned hotels will affect the feasibility and
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Multinational Hotel Groups(MHG)
Influencing factors(134) New brands introduced 2006-2008 (21)
Budget Hotels (113)
Planned cities (341) Brand selection(409)
Upscale Hotels (303)
Planned hotels by existing brands by 2011 (172)
Competitors(23) Number of hotels(209)
Newly opened hotels from existing brands by 2008(9)
Time frame of development(340) Human resource development(19) Business format(69)
Investment plans by wellknown hotel brands (21)
Service concept & culture(191) Opportunities (92) Hotel classification(285) Location distribution (6) Target market(204) Number of hotels (36) Number of rooms(98) Business format(8) Facilities & services(148) Room rates(6) Locations(22) Fig. 1. Multinational hotel groups’ future development plans.
profitability of the planned hotels. Thanks to the boost in the number of planned hotels, the need for human resources will increase substantially. The issues identified by the MHGs reflected that the strategies used by MHGs entering China market relied on their brand equity and specific target market. Many deluxe brands and conference hotels were introduced into Chinese market by different hotel groups such as W hotel and Grand Mercure. Moreover, the focus of the MHGs appeared to be the MICE market while they continue to serve the upscale market. The number of hotels these groups intend to manage in the future revealed the brand growth rate of each hotel group in China. In addition, consistent with Chen and Dimou (2005), the business format for these hotels tends to be management contract and joint venture. These expansion plans indicated that Chinese market is becoming a relatively low-risk country. Chen and Dimou (2005, p. 1739) suggest that “the degree of proprietary content and idiosyncratic knowledge embedded in the service provided by the hotel is one of the most important factors to define MHGs expansion strategy”. The findings indicate that the groups also paid attention to the partnership and the level of economic development in each city in China. This point was reflected by the cities they chose to expand their businesses. The other cluster is budget hotels. Key phrases related to this cluster include investment plans by well-known hotels brands, opportunities in investing in limited service hotels, location distribution, number of hotels, and business format. Although the number of planned budget hotels increased substantially, compared to the information provided for upscale hotels, budget hotels are still in the initial phase of development in China. Examples of
well-known hotel brands include Guest House International, Ibis, Super 8 and Days Inn. The findings also revealed that around 90% of the Chinese travelers stay at budget hotels which represent an opportunity to MHGs. To take this opportunity and to enter the market, MHGs such as Ibis, Super 8 and Days Inn planned using leasing to its existing management and franchise model to increase the market share. This finding is consistent with Chen and Dimou’ (2005) argument that expansion strategy of international hotel firms that are budget hotels would be more likely to favor the use of franchising. The locations selected by these MHGs focus on first tier cities in China first, followed by second and third tier cities. Section 4.2 provides a more detailed discussion of these findings. All the issues addressed in this section are important factors MHGs need to consider when they outlay their expansion strategies. In addition, most of these issues are interconnected with each other. For example, if there is lack of human resources in the area, hotels might consider changing the location or look for alternative solutions such as bringing labor from other parts of the country. Another example can be related to the presence of competitors in the area. The extent of competition and number of hotels in the area can make the hotel project less favorable to the investors which can affect the planned location for the new hotel development. Time frame of the development can be affected by influencing factors such as economic condition, oil prices and government policies. Brand selection, hotel classification and target market are interconnected in that the selection of brand, target market and hotel classification selection should be all aligned. For example, it would not make sense to have a Langham Place MICE hotel with a target market of leisure customers. Another influential factor, govern-
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Trends in business formats Mega-events Government policies Local entrepreneurs
The mind of multinational hotel corporations
Direction trends of investments: - Hotel types - Location distribution trends - Differences between strategies of existing hotel groups and newcomers
Market potential
Fig. 2. Theoretical framework of future development trends in China.
ment policies, is critical as the MHG is bounded with the business formats that the government allows. 4.2. MHGs’ development trends and discussion There are in total six categories of hotel development trends emerged from the analysis of the data collected and the previous studies on hotel development (Kivela and Leung, 2005; Li and Park, 2006; Tisdell and Wen, 1991; Xiao et al., 2008; Zhao, 1989), namely (1) the trend of business formats, (2) the direction trends of investments, (3) the impact of mega-events on hotel development, (4) government policies, (5) local entrepreneurs, and (6) the potential of the Chinese market. The first two categories are the consequences of last four categories (see Fig. 2). 4.2.1. Trends in business formats Data analysis indicates that management contracts are still the most evident business formats for upscale hotels while joint ventures and franchising are increasingly becoming more popular. This result is driven from the comparison with a previous study that stated management contract as the major business formats for MHGs (Qiu et al., 2005). In addition, direct investment and franchising appear to be the most popular business formats for budget hotels. This finding is illustrated by following data: In June 2007, a new joint venture company was launched by RREEF (the global alternative investment management arm of Deutsche Bank) and private equity firm H&Q Asia Pacific to develop and manage a portfolio of more than 25 focused service hotels in mainland China under the Hilton Garden Inn brand. (Hilton, April 24, 2008). One plausible explanation of this trend can be related to the government’s policy on hotel projects and development. According to the Guiding Catalogue, hotel projects and hotel development are categorized as restricted projects, meaning that the business forms of joint ventures with foreign majority ownership and wholly foreign-owned subsidiaries were not permitted within four years after China’s entry into the World Trade Organization in 2001 (Kivela and Leung, 2005). In other words, these business forms have only been permitted since 2005. 4.2.2. Direction trends of investments 4.2.2.1. Hotel types. The data analysis revealed five types of hotels, namely (1) deluxe hotels, (2) upscale/unique design hotels, (3) MICE hotels, (4) budget hotels, and (5) 4–5 star hotels. The first three types of hotels can be considered as new trends in the Chinese hotel industry. Jumeirah Hotel Group is well known by its running of the Burj Al Arab in Dubai, the only “7-star” hotel in the world. Its plans are to expand to about five hotels in China over the next several years; its vice president of sales and marketing, David Loiseaum has
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stated that “Jumeirah’s hotel will be priced 15–20% higher than other luxury hotels’ rates around China. Known locations will be Shanghai, Beijing and Guangzhou” (Jumeirah, March 19, 2008). Other hotel groups also seem to be focused on the upscale segment, for example, IHG planed to open its Indigo brand for upscale travelers in Shanghai, Starwood group planed opening St. Regis hotel in Tianjing in 2011. This hotel focuses on MICE industry. While these hotel groups continue their interest in upscale type of hotels, the budget hotel has also caught their attention. According to the data, the French hotel and services group Accor was the first MHGs expanded its budget hotel Ibis in China. Their target market strategy is the full market spectrum. Their aim for budget hotel is to operate over 40 hotels in China by 2008. The Wyndham Worldwide has also continued expanding its economic brand Super 8 and has approximately 130 hotels either open or under construction in more than 70 cities across China since its first Super 8 opened in Beijing in 2004. Shangri-La Hotels and Resorts has also planned to operate a budget brand. According to its chief operating officer, Symon Bridle: Yes, luxury hotels will do very well but if you do not have a midlevel or budget brand you are dipping out of a major market portion. If you can open in time for the Games in Beijing and the Expo two years later in Shanghai you will be doing very well (Shangri-La, November 15, 2006). Budget hotels are a relatively new type of hotel in China, beginning in the late 1990s. A budget hotel refers to a lodging facility with simple accommodations that meet the basic needs of the customers. The first domestic budget hotel chain, Jinjiang, opened its first Jinjiang Inn in Shanghai in 1997 (Zhang, 2004a). MHGs were not allowed to run this type of hotel until 2000 because of government policy. New standards for the operation of economy hotels and their regulation were released in 2007. The China Hotel Association (CHA) estimates that only one third of the existing budget hotels have already achieved the new standard, another third will reach the standard after some necessary reforms, and the rest may need to be fully renovated before they can meet the standard (China Retail News, 2007). By January 2009, China had 2805 budget hotels with a total of 312,930 rooms. The top 10 were Home Inns, Jinjiang Inn, Motel 168, Days Inn, Hanting Hotel, Green Tree Inn, Super 8 Hotel, Ibis Hotel, Vienna Hotel, and WHWH (Wang, 2009). It appears that franchising is the most preferred business format for budget hotels. But the MHGs have been cautious in expanding via franchising since this business format is relatively new in China and there are not many experienced franchises. Although the budget hotel sector is competitive, there seems to be much more room for development in China. 4.2.2.2. Location distribution trends. The location trends of MHGs reveal three characteristics. The first is ongoing development in the capital cities of each province and the developed cities within China. A developed city is defined based on the economic index of each province, such as Guangzhou, Shanghai, Beijing, Suzhou, Shenzhen, Zhejiang, and so forth. The second characteristic is expansion into the second and third tier cities, especially in northern China, such as Luizhou, Qingyuan, Shanxi, Daqing, Sichuan, Tibet, and so forth. And the third characteristic is expansion into 3S (sun, sand, sea) and tourist locations, such as Shanya, Dalian, Qingdao, Guilin, Xian, Jiuzhaigou, and the like. These findings partially match Wang’s (2006) study, which as noted earlier summarized and analyzed the development strategies of international hotel groups in China from 1981 to 2006. Wang (2006) identified two characteristics of location distribution strategies, namely the dot distribution pattern and the axes distribution pattern. The former implies distribution surrounding the first tier cities and some of the capital cities of some provinces, such as Beijing, Shanghai, Guangdong, JiangSu, Zhejiang, and so
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forth. Axes distribution refers to development strategies in the seaside cities and Yangtze River areas. Wang also stated that international hotel groups have not considered Gansu, Ningxia, Qinghai, or Tibet. In this respect, the cities that attract leisure tourists have not been the MHGs’ first choice in terms of location selection. In comparison to Wang’s (2006) study, this study finds that second and third tier cities, along with tourist destinations in China, are the new locations being selected or considered for expansion by MHGs. But it remains unclear from the analysis how MHGs have made their decisions in terms of distribution strategies. Possible explanations include being led by local investors and seeing more opportunities in those locations compared with others. The following example illustrates this argument: Starwood Hotels & Resorts Worldwide, Inc and Inner Mongolian Datang International Tuo Ke Tuo Power Generation Co., Ltd have announced an agreement whereby Starwood will manage the Sheraton Hohhot Hotel in Inner Mongolia in China (Starwood, October 1, 2007). 4.2.2.3. Differences between the strategies of existing hotel groups and newcomers. Constant comparative data analysis further revealed differences in terms of formats and location distribution strategies between existing MHGs in China and those entering the China market for the first time. Existing hotel groups have been gradually seeking joint venture and franchise options as well as expanding into second and third tier cities. Alternatively, newcomers have mostly sought management contracts. It appears that the newcomers intend to establish their reputations in first tier cities before moving into second and third tier cities. This argument seems to be plausible since these hotel companies need time to understand the market and business environment in China. 4.2.3. Impact of mega-events on hotel development Although the impact of mega-events on host cities or regions is still debatable from a macro-perspective, such as their socioeconomic, socio-cultural, and political impacts, their positive impacts on the hospitality and tourism industry are widely accepted (Malfas et al., 2004). Mega-events imply relatively long duration and a large scale of participants; therefore, the enormous demand for accommodations provides immense opportunities to hotel investors. All hotel groups indicated the influence of the Olympic Games in Beijing, the 2010 World Expo in Shanghai, and the 2010 Guangzhou Asian Games on their development and expansion plans in China.
as currency appreciation. Seeing the hotel investment market as an opportunity and being much more experienced in investing in China in comparison to its foreign counterparts, local investors have contributed to the development of hotel investments in China. For example, in 2007 Westin Beijing was acquired by Jin Mao Group (Sinochem website, 2009). 4.4. Market potential China’s economic growth slowed down to 9% in 2008, which is a 3% decrease compared with its 12% growth in 2007 (Bristow, 2009). The World Bank has forecast China’s economic growth in 2009 to be 7.2% (Lin, 2009), which could be interpreted as an indication that China is proving to be relatively more resilient to the ongoing global financial crisis. Comparably stable economic growth, political and social stability, an abundant supply of workers, growing urbanization, and an increase in the wealth of the populace have attracted 17 new MHGs, who have started entering the Chinese market (Table 2). While these new hotel groups have made ambitious plans to expand in China’s market, the existing hotel groups have also strategically continued their own expansion plans. For instance, InterContinental Hotel Group (IHG) announced that “it will open 100 more hotels in China in the coming two-and-a-half years, and also will expand its China staff from 30,000 to 50,000 in the next 18 months” (IHG, June 20, 2008). One new hotel group, Jumeirah Hotel Group, announced that It will open its first hotel in Shanghai this August and plans to expand to about five hotels in China over the next years. This first hotel in China will be called the Jumeirah HanTang Xintiandi and is located in the Xintiandi area and has over 300 guestrooms. Meanwhile, more than 350 employees who were recruited in China have finished their training in the group’s Dubai hotel (Jumeirah, March 19, 2008). There is no question that China will continue to be an attractive platform to many multinational hotel companies. As these companies become familiar with investing in China, they begin to move their investments from main markets like Beijing and Shanghai to other potential markets such as Guilin and Tibet. These location distribution trends will be further discussed in a separate section. 4.5. The theoretical framework of MHGs’ future development trends
4.2.4. Government policies In addition to the impact of mega-events, government policies have also influenced the expansion strategies of MHGs. As a developing country like China where private sectors have not been mature enough to regulate the hotel industry completely by itself, government has to play a more influential role in its hotel development. As an example of direct influence, the government has interfered in the market by adding upscale hotel developments to the restricted list of foreign investments after the booming property market in 2006. As an example of indirect influence, the government has imposed more stringent lending practices owing to problems in the foreign debt market.
A framework of future development trends has emerged based on the data analysis through information in the documents, as presented in Fig. 2. The MHGs’ decisions in terms of business formats and the direction trends of investments, are very much affected by the happening of mega-events, Chinese government policies, the presence of local entrepreneurs, and market potential. As discussed above, the future trends identified based on data were under the context of these four factors. Trends in business formats refer to the various business formats identified in this study and these findings are supported by Heung et al. (2008) and Kivela and Leung (2005). Trends in business formats can be connected to the present government policies, presence of local entrepreneurs and the market potential.
4.3. Local entrepreneurs
5. Management implications
Local entrepreneurs have taken a more proactive role in China’s hotel development. Enthusiastic local investors have taken notice of the publicly listed Chinese companies and high net-worth Chinese businessmen. With the exception of the 2007–2008 period, local investors have enjoyed high stock market returns as well
Today, China has become the paradise of MHGs’s development and expansion given its economic and political favorable conditions for the investors. There are more options in terms of the business formats as the current government policy ensured equal opportunity for both multinational and Chinese companies with the
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admission of China to World Trade Organization (Zhang, 2004b). This implies that the MHGs can apply the hierarchical managerial formats, which refer to ownership, management contract and franchising. The right type of expansion method depends on MHGs strategy. For instance, if a hotel would like to have more control when it transfers its specialized and valuable knowledge to a new property, it would make more sense to own the property instead of using franchising or a management contract. The level of control from the hotel’s perspective would be highest in an ownership, followed by management contract and franchising, respectively. This appears to be the essential strategy of expansion. Direction trends of investments are related to hotel types, location distribution trends and differences between strategies of existing hotel groups and newcomers. For example, Beijing and Shanghai were estimated to have shortages in accommodations due to the mega-events which made these two cities becoming popular destinations for new hotel openings. The conference and deluxe hotels are the main focus of these groups as exhibitions and conferences are emerging industries in China. Another important factor is related to the increasing number of prospective local investors in China (Zhao and Qiu, 2006). Some entrepreneurs in second and third tier cities turned their interests in the hotel industry and invested on hotel properties. However, they do not have hotel management experience. Another plausible explanation can be related to the prestige the local government expects to gain from MHGs’ investments in China. While the local government can enjoy more recognition worldwide by taking advantage of the brand name of MHGs, this situation is an opportunity for MHGs to cooperate with the local entrepreneurs. Attractiveness of the Chinese market refers to the potential of China becoming one of the most promising investment destinations for MHGs from all around the world. There is no question that the mega events such as the Olympic Games in Beijing, the 2010 World Expo in Shanghai, and the 2010 Guangzhou Asian Games increase the attractiveness of the Chinese market. However, MHGs would not be able to invest in China unless the government policies allow them and they are still restricted with government policies when they plan their expansions. In addition, presence of local entrepreneurs that are willing to invest in hotel projects enables MHGs to expand. It appears that the local investors perceive investments in MHGs positive due to their worldwide presence, well established brand equity and their specialized and valuable knowledge of management hospitality businesses. Although China is still a developing country, it appears to be relatively less risky for MHGs and it has huge market potential. These are very important factors that influence the development of hotel groups (Li and Zeng, 2009). Thirty years after the reform, the MHGs have more confidence operating their businesses in China. As an evidence, there are numerous expansion plans into China by existing and new hotel groups. The findings of this study are similar to Newell and Seabrook’s (2006) findings in that financial, location, economic, diversification, and relationship are the major factors influencing hotel investment decision making, except mega-events. The MHGs expansion plan in China was highly influenced by the mega-events that were or will be held in Beijing, Shanghai and Guangzhou. This factor has not been identified and examined in the previous multinational hotel expansion studies. 6. Conclusion and limitations This study provides an updated outlook on the future of the investments proposed by multinational hotel corporations in China. As stated by Kong and Cheung (2009), the research on China’s hotel industry has been dominated by strategy and development-related studies. But it is also evident that strategies and developments change over time. Kong and Cheung (2009)
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and Pine (2002) have drawn attention to the lack of any theory development in the Chinese hotel industry. In addition, they have emphasized the uniqueness of this industry in terms of its multiform ownership, intense competition, management systems, and socio-cultural structure. Besides, Canabal and White (2008) reviewed last three decades of studies on entry mode and found very few studies have discussed post-entry decisions and performance. This study adds value to the existing literature with its own attempt to develop a framework of hotel development trends in China in the context of MHGs based on a qualitative data analysis. But although the framework developed in this study fills a gap in the literature, the findings should be interpreted with caution. The research methodology was initiated from identification of key words in ration to new hotel development which ignores foreign expansion through other mechanisms such as equity acquisition of existing hotels. Previous literature (Dunning and McQueen, 1982; Chen and Dimou, 2005; Contractor and Kundu, 1998) provides evidence that MHGs prefer not using equity forms of organization for their overseas expansion and non-equity modes of development accounted for 66% of foreign operations in 1998. Because the data analyzed are limited to the period of January 2006 to December 2008; future studies should examine a more comprehensive time period to validate the framework developed and proposed in this study. A more comprehensive time period is of great importance, since there are many unpredicted developments that could influence the investment strategies and future development trends of MHGs, such as a flu virus (e.g., the H1N1), the current global economic downturn, or government policies restricting foreign investment. Investment and development plans proposed by MHGs have already been scaled back to some extent. Many MHGs are reevaluating their pipeline projections and revising their short-term and long-term strategies in the new macroeconomic environment. A recent report (Yue, 2009) contained no news releases on the reasons why hotel constructions under the names of Hilton Hotel and Resorts and the Jumeirah Hotel Group have stopped in Shanghai. Furthermore, China is still a developing country with 31 provinces located in different geographical locations with different policies and issues related to the economy. The level of economic and social development varies dramatically from provinces to provinces and cities to cities. For instance, cities located in the coastal areas much more developed than those in the middle and western part of China. As a result, there are three levels development from an economical point of view. The first level includes relatively well-developed provinces and cities such as Beijing, Shanghai, and Guangdong. The second level includes developing provinces and cities such as Liaoning and Heilongjiang. The third level includes underdeveloped cities and provinces such as GanSu and Ningxia. In this respect, the development strategies and future trends are complex in nature. Having said that, the framework that has emerged and developed from this study provides evidence and reference for future studies. Future research can test the theoretical framework of future development trends in China using a quantitative approach. Appendix A. Codebook for content analysis
Code
Definition
Group Year Number Brand Type Location Format Plan Influencing factors
Multinational hotel groups Opening year Number of hotels by hotel groups Brand name of the hotel Hotel type Selected cities for new hotels Business format Expansion plan Competitors, economy, policies, market, partners
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Appendix A (Continued ) Code
Definition
Reasons New entrance
Reasons for expansion or entry The brands that entered China for the first time during the period of data collection Contribute to the society, e.g. providing more job opportunity Target market of the new hotels
Benefits Market
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