To avoid being affected by increasing property costs, the 24K International Hotel Group plans to turn some of its 24K hotel chains into 18K budget hotels.
The company said that current 24K hotel chains would retain their original inner structures and business modes for development by franchisees under the brand of 18K budget hotel with pricing of about RMB200 per night.
Moreover, the new hotels built under the 24K brand will be upgraded to medium and high-end business hotels with rates of above RMB300 per night or boutique hotels — both under the direct-run model.
The 24K International Hotel Group explained that this plan is mainly to achieve differentiation in the development of its two brands. Another reason is the excessive property costs in first-tier cities. As a result, some of its properties with high costs can not operate profitably so that they will be upgraded to higher-level hotels; others with lower costs will be developed as budget hotels.