Forbes Asia

September 5, 2005

The Bed Business - p.32

By Russell Flannery


Cendant's Super 8 budget entry knows that it, too, needs local know-how in China and figures its franchising model is the way to get it.

Zhang Feng, 47, made his money in fuel distribution in Shanghai and decided he didn't want to spend the rest of his life in the business. Last year he rented a factory in the city's up-and-coming North Bund area and turned it into a hotel and this year decided to adopt the Super 8 brand for marketability. He recalls how the fast-food business took off. "At one time no one in China knew KFC or McDonald's, but now everyone does," he says. "At some point I think everyone will know Super 8 to be a good brand." He's signed up for two other inns not far away.

Zhang says he's optimistic because the U.S. company's management approach differs from China's biggest homegrown chains'. For instance, management rules and training practices are better, he says.

But not everyone is convinced that foreign brands will dominate in the long haul. Shen Feiyu runs one of Shanghai's largest restaurant chains and is dabbling in economy hotels. "We don't have enough management skills just yet but understand local people," he says. His chain, Motel 168 (so named because the lowest price per night is 168 yuan, or about $20), has ten locations, each hosting one of his eateries. Shen expects to double the number of inns he runs next year and is exploring a new chain of hotels with even smaller, cheaper rooms.