فرانچایزینگ بین المللی : فرصت هایی برای هتل های دولتی چین ؟

The hotel industry in China faces global competition. Most of the state-owned hotels have struggled during the period of transition from a planned economy to a market economy. Furthermore, international franchising hotel chains have entered China with their different operation modes. Could the franchising hotels bring opportunities for state-owned hotels? In an attempt to answer this question, the researchers carried out a study of state-owned independent hotels and state-owned franchised hotels to analyze their external and internal business factors, their intentions to join international franchise operations and the international hotel franchisors in China. The research technique used was qualitative. Two rounds of in-depth interviews were conducted. Content analysis was used in the data analysis. Results indicate that the majority of state-owned independent hotels have intentions to join an international franchise operation in the next 5 years. It also identified major factors affecting the franchising of state-owned hotels in China. However, franchising may not be attractive to those hotels that want to keep their management culture and characteristics. Implications of the study were discussed. Recommendations were provided to the state-owned hotels. Future research studies have been suggested to examine the relationships between franchisors and franchisees.

During the transitional period from a planned economy to a market economy, the state-owned hotels in China faced keen competition, mainly from international hotel chains (Pine, 2002). With rapid economic growth, political and social stability, and the abundant supply of human and natural resources, China has attracted multinational hotels including the world's top hotel chains to this potentially huge market. According to the United Nations, World Tourism Organization (UNWTO), it was forecasted that by 2020, China would be the world's number one tourist destination with annual arrivals of 130 million (WTO, 2000). By 2002, the ‘star-rated’ hotels had reached 8880 (Table 1). On the Mainland, foreign and privately owned hotels cropped up, including Hong Kong-, Macau-, and Taiwan-owned hotels, and hotels of other ownership forms. However, state-owned hotels still occupied the largest proportion of the market (Table 2). State-owned hotels are hotel properties owned and managed by various government statuary bodies.Different hotel alliances were formed through direct investment, management contract, merger/acquisition, franchising and consortia in order to make rapid expansion. China's state-owned hotels faced challenges and opportunities in the globally competitive environment. Most state-owned hotels are looking for ways to expand and deal with the increasing competition. One way to survive is to join an international franchise operation. Franchising, which is the focus of this study, is defined by the International Franchise Association as a “continuous relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing, training, merchandising, and management in return for a consideration from the franchisee” (Khan, 2005). The research questions for this study were: (1) What were the state-owned hotel general managers’ views on the external business environment affecting the management of state-owned hotel properties? (2) What were the state-owned hotel general managers’ views on the internal business environment affecting the management of state-owned hotel properties? (3) What were the state-owned hotel general managers’ views on their intentions of joining an international hotel franchise? (4) What could the international hotel franchisors do for state-owned hotels in China? State-owned hotels face both threats and opportunities in a changing economic structure and business globalization. Whether state-owned hotels with poor performance can solve operational difficulties would decide their survival or death (Yi, 2003). The purpose of the study was to investigate the possibilities of state-owned hotels in China joining international hotel franchising. The views of the General Managers (GM) from the state-owned independent and state-owned franchised hotels were compared using external and internal business factors, and the international hotel franchising advantages and disadvantages in China. The findings shed some light on whether international hotel franchising could bring opportunities to state-owned hotels. The organization of the paper is as follows: first, an overview of the hotel industry trends in China was provided; second, literature on hotel expansion strategies and managing change was reviewed; third, the methodology of the study was explained; fourth, findings were presented; and finally, the implications of the study were discussed and conclusions were drawn.

While previous studies described the development models in China's hotel industry (e.g. Pine et al., 2000; Xu, 2003; Zhang, R.G., 2003; Zhang, X.Q., 2003), this study focused on the state-owned hotels and international franchising. It identified major factors affecting franchising of state-owned hotels in China. These factors are profit improvement, market expansion, product/service standardization, professionalism of staff, information sharing and resources integration. The conclusions are based on the findings derived from the general managers’ opinions about the hotels external and internal business factors, their intentions to join international franchise operations, and international hotel franchisors in China. The findings of this study should be of value to state-owned hotels in China and elsewhere, and hotels that are considering franchise operations as one of their competitive strategies. In addition, the results are also useful for international hotel franchisors who seek expansion into China. 5.1. Franchising operating environment In China, the franchising operating environment depends on the hotel system reform as well as the government's laws, policies, regulations and economic growth. With the deepening reform and improvement in the macro-economic environment, the market roles increased and the government roles decreased. Hotel owners began to be aware of the importance of the market and profits, and the hotels made changes to adapt to the competition, although the local government is still putting pressure on the GM in terms of the methods of how to operate a hotel. The reform is a must in order to establish a fairly competitive platform for franchising because the hotels could not choose their management mode freely without acting as commercial firms. The conflict between the operation and ownership was less obvious in the franchised hotels. The constraints of the government's laws, policies and regulations were focused on foreign matters; they were new problems raised in the franchising. Basically speaking, the government's current laws, policies and regulations are in line with the economic changes and the hotels development. The main constraints could be removed. The formation of an alliance is an international trend in hotel development. The forming of an international alliance helped the hotels keep up with the international management and service, and benefits the participating hotels in terms of economy of scale, market expansion, human resources management, product/service standardization, capital pool, information sharing and resources integration. Generally speaking, there was a good environment for the franchising operation in China. 5.2. Franchising advantages and disadvantages In the study, the franchising advantages were reflected in the attractiveness of the brands, accessibility to international markets, guest satisfaction ratings and flexibility in fees structure. The brand was the franchisors most distinct characteristic. The hotel with a famous brand could be recognized and accepted by international and domestic consumers. However, the brand needed upgrading continuously. The main business sources of the independent hotels were domestic conference and business guests. However, the franchised hotels gained access to the international market and distribution channels. In the franchised hotels, general service quality was improved and the language environment for foreigners was upgraded. Although the services were improving in the independent hotels, only the important guests (government officials and related people) received special attention and good services. The franchising played the role mainly in the brand, not interfering in the hotels operation. Although there was confinement in the agreement, there was still some flexibility. Currently, the franchisors fees were reasonable, especially Best Western International's. However, the disadvantages still exist, such as over-dependency. The results showed that franchising could not solve the problems of the hotels capital operation and human resources, and the ineffective reservation system in China could be a disadvantage. The franchised hotels tended to be over dependent on the franchising brand. If the agreement expired, the hotels would have no support. The franchised hotels needed to learn how to sustain operational efficiency. The problem of the human resources exists not only in quantity but also in quality and structure. Complicated personal relations within the current system scarred the professionals away. However, franchising could improve the human resources management. Most of the franchisees were not satisfied with the franchisors global reservation systems because they did not bring the franchisees the expected number of guests. However, the franchisees in metropolitan cities with developed economies benefited from the reservation system. 5.3. Opportunities for state-owned hotels Although international hotel franchising entered China fairly recently, the franchised hotels were perceived to have many advantages. Most of the franchised hotels were likely to keep the brand in the next 5 years. The results indicated that the franchisors favored the independent hotels with good management, professional human resources, high star-ratings and a developed economic environment. The international franchising could bring opportunity for state-owned hotels with China's deepening reform, improving economic environment, availability of professional managers, and franchisors high physical competency and strong brand reputation. However, franchising was not the only single selection for state-owned hotels to form an alliance. The state-owned hotels would not widely join in the international hotel franchising operations. 5.4. Implications 5.4.1. State-owned independent hotels The international franchising operations entry into China would make the hotel industry further develop into multi-forms of alliances and increase the levels of competition. The franchising might bring not only opportunities but also threats. Franchising would provide hotels with one more selection to form an alliance to acquire a famous international brand and take a share in the international market. In short, it would open another door for the hotels to go into the market place with better development prospects. Franchising would favor the hotels with professional managers in the developed economic regions. The well-managed hotels of high star-ratings in the regions might become the franchisors expansion targets. Franchising might not be attractive to the hotels that wanted to keep their culture and management characteristics and to retain a certain degree of autonomy. Franchising was not a panacea to cure all the diseases. The independent hotels would be more careful and sensitive to select their alliances according to their economic environment, industry competitiveness, operation systems, visions and missions, market positions and professionalism in human resources management. 5.4.2. State-owned franchised hotels Franchising would force the franchised hotels to improve their financial performances because they follow market and profit-oriented principles. Franchising would attract domestic guests with the famous brand. The domestic market would become a potential source of business through the brand recognition and promotion. Franchising would improve the franchised hotels guest-satisfaction through quality assurance programs. The franchisors would favor the franchised hotels of high star rating in the developed economic regions through the global reservation system. The franchised hotels might suffer from disadvantages such as loss of independence, over-dependence, other franchisees negative impact, high-income expectations and inelasticity. Dual-brands might be adopted to overcome the disadvantages. The franchised hotels would strengthen their own communications and form their regional sales network with more newcomer participation. 5.5. Recommendations 5.5.1. Establishing a fair competitive platform for franchising It is a way out for state-owned hotels to speed up the ownership system reform. The state-owned hotel reform should be focused on the separation of the ownership from the operation and should realize the hotels complete market status through the establishment of the enterprises shareholder system. The owners should take the building of new hotels as the capital investment and operation, not as the administrative power extension. The government should make a scientific macro-economic adjustment and control to keep general demand and supply balanced. In this way, hotels could independently choose their management models according to their business. The fair competition platform could be established for the international hotel chains, including the hotel franchisors. 5.5.2. Selecting a good hotel alliance The forming of an alliance is the international hotels development trend. The forming of an alliance benefits the independent hotels in terms of market expansion, human resources development, product/service standardization, capital pool, information sharing, and resources integration. The independent hotels should consider forming an alliance in order to survive in a highly competitive environment. Multi-forms of alliances in the hotel industry should be taken into consideration. The independent hotels should make a careful selection according to their economic environment, industry competitiveness, operation systems, visions and missions, market positions, and human resources deployment. While forming an alliance, hotels should keep their own characteristics and cultures. 5.5.3. Best franchising candidates Franchising is not a panacea to cure all the hotels diseases. It could not solve the hotels problems such as capital operation and human resources. The study shows that those four- or five-star franchised hotels that are located in metropolitan cities with a booming economy now have an international market position due to the franchising benefit. Therefore, the independent or franchised hotels should make their assessment on whether they would join or withdraw from the franchising agreement. 5.5.4. Joining hotel franchising The international franchisors allow the state-owned hotels access to the international market, and the franchised hotels could attract international and domestic guests through the famous brand and increase the guests’ recognition and satisfaction. Because of the reasonable franchising fees and non-interference in the hotels’ ownership, management and operation, this type of alliance is easy for state-owned hotels to accept, especially in the transitional period. Before being franchised, hotels should carefully select a partner with a high physical competency, strong brand and good reputation, and assess the disadvantages of the franchising such as inter-relationships among the franchisees, loss of identity, and adherence to agreement. 5.5.5. Improving the human resources environment Franchising depends on the availability of professionally trained managers. The problem of human resources has to be solved not only in quantity, but also in quality and structure. A real “independent” management system should be established and implemented in state-owned hotels; the quality of human resources should be upgraded through professional training. The professionals and the management elite should be attracted from international hotels and other industries. The complicated personal relations system should be changed to a professional management system. 5.5.6. Franchising vista Although international hotel franchisors entered China fairly recently, the study shows that the sales and guest satisfaction of the franchised hotels have improved, compared with the independent hotels. Most of the franchised hotels are likely to keep the brand in the next 5 years. Although the hotels with a famous brand could be recognized and accepted by consumers, guests could not easily be solicited without upgrading the service standard and improving the reputation of the hotels. The franchised hotels should continue to improve their management and services, and also consider adopting a dual-brand development strategy to keep their own management culture and characteristics without losing their identities. 5.6. Future research direction The purpose of this study was to clarify the opportunities for the state-owned hotels to join the international hotel franchising. The research was not involved in the study of the relationships between the franchisors and franchisees, which was an important topic in franchising. Both the franchisors and franchisees needed to know how to handle the relationships. Future research could be conducted on the relationships between franchisors and franchisees.