Barriers to hotel chain development in China

Abstract

This paper is based on findings from a two‐year MPhil research project that aimed to examine the development of hotel chains in China since 1978 and to recommend policy and operational guidelines for their further expansion. The study confirmed the unique nature of the hotel industry in China, existing as it does in a country moving from a centrally planned economic system that is strongly influenced by communist dogma towards a Western‐style market economy. This paper identifies and discusses four main categories of barriers to chain development, namely: economic and political systems; hotel ownership; hotel management capability and resources; and competition between local and foreign firms. Massive growth in China’s hotel industry is forecast, and this presents a great attraction for hotel companies. However, the need to understand and appreciate these barriers is recommended to any company, local or foreign, contemplating doing business in this unusual but potentially very large market place.

Towards the Understanding of Chinese Collaboration in Hospitality – The Opinions of Professionals

“…This improvement has also been aided by the economic growth of China and the increasing number of Chinese people travelling to and learning from hotel services abroad (Hung, 2013). Hung (2013) identified as Chinese hoteliers raising capital in the overseas equity markets, the government giving favorable credit opportunities, and ultimately promoting better knowledge of Chinese culture and management practices (Gu et al, 2012;Pine & Qi, 2004).…”

“…The entry in the WTO broke the last boundaries for the entry of international hotel chains, and the rapid growth of domestic hotels has further spurred competition (Chan & Yeung, 2009;Pine & Qi, 2004). In particular, Chinese hoteliers who are running smaller businesses have shown their concern on how they will effectively compete with the more professional, financially stronger, and better-managed foreign hotel chains (Hung, 2013).…”

“…If this understanding is not reached, collaboration in a Chinese context is likely to fail (Gu et al, 2007;Pine & Qi, 2004).…”

“…Previous research has shown various issues related to this fast-paced development, such as persisting problems in hotel management (e.g., Chan & Yeung, 2009;Xu, 2012;Zhang et al, 2005), the use of outdated technology (Kong, 2006), and domestic hotels being constantly outperformed by international chains (Gu et al, 2012;Pine, 2002). China's recent entry in the WTO has largely removed government control on foreign hotel companies (Pine & Qi, 2004) and its power over the entry of international hotel chains in the local market. This development has threatened the domestic hotels because Chinese hotel chains are still significantly weaker than their international counterparts (Pine & Qi, 2004).…”

“…China's recent entry in the WTO has largely removed government control on foreign hotel companies (Pine & Qi, 2004) and its power over the entry of international hotel chains in the local market. This development has threatened the domestic hotels because Chinese hotel chains are still significantly weaker than their international counterparts (Pine & Qi, 2004).…”