The challenges and opportunities of franchising in China’s hotel industry

Abstract

Franchising develops quickly in the hotel industry with the expansion and globalization of hotel chains, as it brings about advantages and sets up a very good leverage between two parties – franchisor and franchisee. Major multinational hotel corporations have entered China, but franchising is seldom used as a tool of expansion there. The continuous increase in tourism and the structural change in the hotel industry in China afford more opportunities for the growth of franchising operations and also of indigenous hotel chains. When franchising in this specific market, quality control, ownership, connection, business tradition and franchisor‐franchisee relationships should be examined carefully in order to ensure success. A full understanding of China’s peculiar social, cultural, economic and political context is essential for foreign companies, whilst existing and new indigenous companies require greater technical and operating expertise along with the necessary business acumen to operate hotel chains.

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