Tourism Geographies

An International Journal of Tourism Space, Place and Environment

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/rtxg20

Location and regionalization patterns of hotel

chains: evidence from China

Jing Qin, Yu Qin & Chengwei Liu

To cite this article: Jing Qin, Yu Qin & Chengwei Liu (2021): Location and
regionalization patterns of hotel chains: evidence from China, Tourism Geographies, DOI:
10.1080/14616688.2021.1966646

To link to this article: https://doi.org/10.1080/14616688.2021.1966646

Published online: 29 Aug 2021.

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Tourism Geographies
https://doi.org/10.1080/14616688.2021.1966646

Location and regionalization patterns of hotel chains:

evidence from China
Jing Qin , Yu Qin and Chengwei Liu
School of Tourism Sciences, Beijing International Studies University, Beijing, China

ABSTRACT ARTICLE HISTORY

Hotel chains shape the industry’s development and competition by Received 26 April 2020
locating multiple business units in multiple regions. However, how Accepted 25 July 2021
chain hotels are located and regionalized is severely under-researched.
A better understanding of hotel chains’ location and regionalization KEYWORDS
patterns is key to the studies of the hotel industry, which has been Hotel chains; location
increasingly dominated by chains. Six chains from the emerging pattern; geographical
regionalization; hotspot
economy hotel segment in China were selected, and their location
detection method;
patterns from 2004–2019 were explored through the hotspot detec- spatial distribution; China
tion method. Subsequently, a heuristic method for geographic region-
alization based on machine learning was applied to explore the
spatial-temporal heterogeneity in the six chains’ dominant markets. 关键词：
连锁酒店；分布模式；地理
分区；热点探测；空间分
The results showed that (1) hotel chains tended to form different
布；中国
spatial distribution patterns, although they adopted the same location
strategy; (2) each chain, regardless of size, had one or more dominant
market(s); and (3) most chains’ location patterns remained relatively
stable during the study period. Our exploratory study contributes to
the literature by illustrating hotel chains’ location patterns and their
evolution, alongside the development and evolution of their domi-
nant-market regions. It also offers practical contributions by recom-
mending that chain operators develop their location patterns based
on their resources and capabilities and try to foster dominant mar-
ket(s) in which they are absolute leaders.

中文摘要
连锁酒店通过在多区域布局多个业务单位主导着饭店业的发展, 然
而有关连锁酒店布局和市场分区的研究非常不足。 在酒店业发展越
来越多地由连锁品牌主导的背景下, 更好地了解连锁酒店的布局
和分区模式是研究酒店业的关键。 本文选取了中国新兴经济型酒店
领域的 6 个品牌连锁酒店为研究案例, 首先通过热点探测方法探
索了它们在 2004–2019 年的空间分布与演化模式, 然后通过基于
机器学习的地理分区算法分析了6个品牌主导市场的时空异质性。
研究结果表明,（1）采用相同布局战略的连锁酒店品牌往往形成不
同的空间分布格局；(2) 每个连锁酒店品牌, 无论规模大小, 都有
一个或多个主导市场；(3) 在研究期间, 大部分连锁酒店品牌的空
间布局模式保持相对稳定。 本研究的理论贡献在于探索了同一细分
市场中不同连锁酒店品牌的空间布局模式及其主导市场区域的发
展和演变； 实践方面, 本研究提出了根据资源和能力确定布局模式,
努力培育绝对主导市场等建议。

CONTACT Yu Qin [email protected]

Supplemental data for this article is available online at https://doi.org/10.1080/14616688.2021.1966646.
© 2021 Informa UK Limited, trading as Taylor & Francis Group
2 J. QIN ET AL.

Introduction
According to Ellsworth M. Statler, founder of the first modern hotel chain, there are
only three rules for profitable hotel operation: location, location, location (Medlik,
1966). Location has been identified as a key factor for successful hotel investment
and operation (Bull & Church, 1994; Kim & Okamoto, 2006; Newell & Seabrook, 2006),
as it significantly influences leisure and business tourists’ buying decisions (Lewis &
Chambers, 1989; Rivers et  al., 1991), resulting in higher performance (Chung & Kalnins,
2001; Lado-Sestayo et  al., 2016) and a lower failure rate (Baum & Mezias, 1992). More
importantly, as hotel location is a long-term fixed investment, an erroneous choice
of location is difficult to rectify (Song & Ko, 2017). Therefore, there is a persistent
interest in the analysis of decision-making regarding hotel locations both in the
industry and among academicians. Many studies have focused on factors affecting
hotel location (Fang et  al., 2019; Li et  al., 2015) and have used theoretical, empirical,
and operational models for assessing established independent hotels at different
scales (intra-city, regional, and multinational) based on multi-disciplinary perspectives
(Yang et  al., 2014).
Studies on hotel location usually assume a single location for a potential property.
However, as typical multi-unit, multi-market organizations, hotel chains are likely to
utilize different location strategies compared to independent hotels. Their location
choices consider the network construction of units (Greve & Baum, 2001; Korn & Rock,
2001; Woo et  al., 2019). For example, to take full advantage of market penetration and
avoid cannibalizing existing hotels within the chain, executives consider that the loca-
tion choice of a new property is contingent on the location pattern of their established
properties. As chains have hundreds or even thousands of units in multiple sites in
different regions, which is considered their key competitive advantage, it is critical to
decide when and where to locate new units. Extant studies related to chain hotels’
location and distribution mostly focus on the distribution strategies of international
hotel chains (Johnson & Vanetti, 2005; Kundu & Contractor, 1999; Martorell et  al., 2013;
Zhang et  al., 2012) and the multi-unit, multi-market nature of chain locations (Chung
& Kalnins, 2001; Greve & Baum, 2001; Ingram & Baum, 1997, 2001; Kalnins, 2004; Korn
& Rock, 2001). Nevertheless, we know little about how chains locate their hotels (Puciato,
2016; Song & Ko, 2017; Yang et  al., 2014), what their location and regionalization pat-
terns are, and how these patterns evolve. To our knowledge, no studies have attempted
to compare the location patterns of competitors in the same segment market in the
hotel industry, although some studies address the broader retailing industry (Graff,
1998, 2006; Joseph & Kuby, 2016). Filling these gaps would contribute to not only
studies of location but also strategy, competition, and market entry.
Moreover, the Chinese hotel industry has experienced dramatic growth since the
turn of this century. The amazing growth of emerging economy chains such as Hanting
Inn, 7 Days Inn, GreenTree Inn, and many others has become a salient phenomenon.
According to China Hospitality Association’s 2019 China Chain Hotel Investment and
Development Report, newly established chains operated more than 36,000 hotels
across mainland China at the end of 2018, most of which were opened after 2004.
As thousands of new hotels were opened annually across China by these chains and
the distribution of the units’ network has become key for competition, hotel chain
 Tourism Geographies 3

location patterns and their evolution should have been actively researched. However,
extant research on China’s hospitality industry focuses on traditional issues such as
human resource management, marketing, consumer behavior, and information tech-
nology (Gross et  al., 2013; Law et  al., 2014), leaving the location and expansion of
emerging chains understudied.
This study was designed to answer the following two questions: what are the
location and regionalization patterns of hotel chains, and how have these patterns
evolved? We selected six emerging economy hotel chains in China as samples (Hanting
Inn, 7 Days Inn, Green Tree Inn, City Comfort Inn, City Home Inn, and Ekea 365 Inn),
collected the location point data of their newly opened hotels from opening to 2019,
and analyzed the data through the following two steps. First, we applied the hotspot
detection method to explore the spatial distribution patterns and evolution of the
six emerging chains. We then used a comprehensive regionalization method to explore
their regionalization patterns. This study contributes to the literature by illustrating
the location patterns and their evolution for hotel chains in the same segment, as
well as the development and evolution of their dominant regions. It also offers prac-
tical contributions by indicating that chain operators should develop their location
patterns based on their resources and capabilities and attempt fostering dominant
market(s) in which they are the absolute leaders.

Literature review
Hotel chain location and distribution
More than half of the world’s hotel rooms belong to a chain, according to a study
on the geographical distribution of hotel chains worldwide based on STR global data
(Kátay & Rátz, 2016). While substantial efforts have been made to describe single
hotel-location distributions and the possible factors shaping the pattern at metropol-
itan, regional, and international scales (Adam & Amuquandoh, 2014; Ferreira & Boshoff,
2014; Luo & Yang, 2013; Shoval, 2006; Yang et  al., 2012), only a few studies have
considered hotel chains’ location and distribution. These studies can be classified into
two streams. One stream focuses on the distribution strategies of multinationals
(Johnson & Vanetti, 2005; Kundu & Contractor, 1999; Martorell et  al., 2013; Zhang
et  al., 2012). For example, franchising is deemed by many chains as a better mode
to enter a new country. Moreover, the target market’s size and structure, degree of
internationalization, spatial concentration of hotel operators, frequency and importance
of organized events, and tourist attractions and tourism are important considerations
for international hotel chains (Assaf et  al., 2015; Demirbag et  al., 2007). Institutional
differences between home and host country also affect foreign location choice
(Romero-Martínez et  al., 2019). The second stream of literature targets multi-unit,
multi-market chains at different scales. For example, Ingram and Baum (1997) found
that chain affiliation improves the survival odds of new hotels in Manhattan because
the knowledge of chain operators benefits the hotel. Moreover, the relationship
between hotel units and the chain is likely to be stronger when the chain has more
operating experience in the hotel’s local market (Ingram & Baum, 2001). Chung and
Kalnins (2001) explored the hotel location pattern in Texas and found that a higher
4 J. QIN ET AL.

percentage of chain hotels in one location would benefit independent hotels in the
same area. Kalnins (2004) found that a new hotel significantly cannibalizes the revenue
of proximate same-brand hotels in franchised chains but not company-owned chains.
Puciato (2016) assessed the factors determining chain hotel locations and supplied a
list of the most attractive communes in south-western Poland.
However, few studies investigate the location pattern and its evolution based on
the complete portfolio of hotel chains (Yang et  al., 2014). For example, one compre-
hensive study covered 116 countries and found that hotel chains’ market presence
was influenced significantly by the size of the hotel industry, average capacity of
hotels, and the country’s geographic location (Ivanov & Ivanova, 2017). However, to
our knowledge, there is no systematic study addressing hotel chains’ location and
evolution in any of these countries. Although some studies have focused on the
location patterns of retailer chains (Graff, 1998, 2006; Joseph & Kuby, 2016), there is
a severe lack of comparative analysis on the location and regionalization patterns of
different hotel chains in the same segment market. We attempted to reduce these
specific research gaps and thereby facilitate a better understanding of the competition
and development of hotel chains in this study.

Methods employed to study hotel location patterns

Research on hotel spatial distribution patterns is mainly of two types. The first involves
developing a probability density surface map through a density analysis method
(Chica-Olmo, 2020; Li et  al., 2020; Luo & Yang, 2013, 2016). This method can clearly
show the location and range of the hotel hotspot regions. However, we cannot accu-
rately acquire the local extreme values to determine the hierarchical characteristics of
the hotspots, which are significant in interpreting the main market development direc-
tion of chains at different periods. Therefore, this study uses the hotspot detection
method to obtain the hierarchical characteristics of the hotspots based on the kernel
density results. It then accurately locates the main development direction (market) of
different brands in each period. This allows us to clearly describe the diffusion patterns
and paths of chain hotels during the study period. The other type involves using an
exploratory spatial data analysis method to identify the major spatial clusters or outliers
in the hotel spatial distribution pattern (Eugenio-Martin et  al., 2019; Fang et  al., 2021;
Gutiérrez et  al., 2017). These methods are used in the quantitative analysis of univariate
or bivariate values. They can clearly describe the spatial distribution patterns of specific
types of hotels (star-rated or economy hotels) and identify their spatial agglomeration
or diffusion characteristics (Gutiérrez et  al., 2017). However, this method cannot be
used in multiple variables’ analysis: it cannot analyze the spatial distribution pattern
of multiple brands simultaneously; therefore, it cannot be used to study the spatially
heterogeneous pattern of different brands. This heterogeneity often reflects the market
advantages of different hotel chains in different regions and can reflect the strategies
of hotels in spatial competition, which is of great significance to the study of hotel
chains’ location strategy. Recently, a multivariate clustering method based on machine
learning has been introduced into the research on geographical divisions and extended
into a multivariate clustering method with spatial constraint (Gu et  al., 2019; Zhang
et  al., 2021). In addition to its ability to handle a complex geographical division with
 Tourism Geographies 5

multiple variables, the main advantage of this method is that it can be used to study
the spatially heterogeneous pattern of multiple variables. In this study, multivariate
clustering with spatial constraints was adopted to conduct a geographical division of
the dominant markets chosen by hotel chains.

Methodology
Study area and data description
The research area is mainland China. The basic geographic unit in this study was
prefecture-level cities, which is the third-level administrative division after provinces
and autonomous regions. Prefecture-level cities are adopted as the analysis unit
because their population and industrial development have reached a certain scale,
making them important markets for economy hotels in recent years.
We chose six hotel chains as samples: 7 Days Inn, Hanting Inn, Green Tree Inn, City
Comfort Inn, Ekea 365 Inn, and City Home Inn. These six chains were established
between 2004 and 2007, provide highly similar products and services, and face similar
environmental and market factors. These chains were ranked among the top 30 econ-
omy chain brands in the 2019 China Chain Hotel Investment and Development Report.
The data on these brands were derived from a dataset of all economy hotels estab-
lished between 2004 and 2019, provided by the China Hospitality Association. Table 1
presents more information on the sample chains. In addition, we collected secondary
data, mainly archival articles published in newspapers and industry journals about the
location patterns of the six hotel chains, to triangulate the results from location data.

Method
Hotspot detection method
This study uses an analytical method that can detect the maximum local density
of kernel density surfaces; these maximum values are called hotspots. We detected
the local maximum values from the kernel density surface of all hotel points using
the hotspot detection method. As local maximum values have different sizes,
hotspots can be classified based on the Jenks natural breaks classification algorithm
(Rey et  al., 2017). The ranking structure of hotel chains’ hotspots in the analysis
region can then be obtained. The main steps of the algorithm are as follows:

Table 1. Information on sample hotel chains.

Covered
Number of provincial Covered
Year of hotels by the administrative prefecture-level
Hotel chain establishment Headquarters end of 2019 units cities
7 Days Inn 2005 Shenzhena 2,238 31 396
Hanting Inn 2005 Shanghai 2,432 31 268
Green Tree Inn 2004 Shanghai 1,739 31 211
City Comfort 2004 Guangzhoub 1,055 27 171
Inn
Ekea 365 Inn 2007 Shijiazhuang 202 6 18
City Home Inn 2005 Hefei 130 7 26
a
The headquarters of 7 Days Inn was moved from Guangzhou to Shenzhen in 2018.
b
The headquarters of City Comfort Inn was moved from Nanning to Guangzhou in 2013.
6 J. QIN ET AL.

First, a probability density surface is constructed for each hotel chain via the kernel
density method. The obtained probability density surface is matrix A, which can be
expressed as

 a11 a12 … a1n 

 
a21 a21 … a2 n 
A = (aij ) mn = ( i = 1, 2,…, n; j = 1, 2,…, m ) ,
… … … …
 
 am1 am 2 … amn 

where aij represents the probability density value corresponding to the ith row and
jth column in the probability density surface, and m and n represent the total number
of pixels in the rows and columns of the probability density surface, respectively.

1. Second, the local maximum matrix is generated. After the probability density
surface is generated, the neighborhood analysis method in the geographic
information system is used to construct the neighborhood maximum surface.
For any element aij in matrix A, the eight adjacent neighborhood elements
can constitute a subset Wij , where Wij ∈ A . Subsequently, the maximum value
in Wij is calculated. Finally, all element values in Wij are set as the maximum
value, and a new matrix subset M ij is generated. These steps are performed
for all elements in matrix A to obtain a new local maximum matrix M.
2. Third, the local maximum elements in the maximum matrix are marked. The
difference between the local maximum matrix M and the original probability
density matrix A is calculated, and a non-negative matrix R is obtained. Each
element is reassigned as follows. When the element in the matrix is greater
than 0, the value is 0; when the element is equal to 0, the value is 1. A new
matrix R′ can then be obtained. In matrix R′, elements with a value of 0 are
areas that are lower than the local maximum, and elements with a value of 1
are the hotspots. The calculation formula of R is

R = M − A

If rij is used to represent the element in the ith row and jth column of matrix R,
the assignment rules of the ith row and jth column in R′ can be expressed as

0 ( rij > 0)
rij
'
= .
1 ( rij > 0)

Finally, the hierarchical characteristics of the hotspots are obtained. Multiply the
probability density surface matrix A with matrix R′ to obtain matrix P of the local
maximum density. According to the size of the hotspot value, all hotspots are clas-
sified via Jenks natural breaks classification algorithm. The calculation formula of
matrix P can be expressed as
P = A * R’

 Tourism Geographies 7

Regional preference index

A regional preference index (RPI) refers to the popularity of a hotel chain in a region
(city) when setting up a new hotel. In this study, Ri represents the ith geographical
unit; Ni represents the total number of economy hotels opened in geographical unit
Ri; and Hijrepresents the number of new hotels in chain j and in geographical unit i.
The RPI can then be defined as follows:
Hij
RPI ij = .
N ij

In this study, the value of j represents each hotel chain. We have six hotel chains,
so jє(1,2,3,4,5,6). The geographical unit is a prefecture-level city. A higher RPI of a
hotel chain compared to the others indicates that, when setting up new hotels, this
hotel chain preferred this prefecture-level city more than the other chains did.

Comprehensive regionalization method

Geographic regionalization is a process for the classification of spatial geographical
objects. It merges adjacent regions that are homogeneous across multiple attributes
into the same geographical partition in the form of surface elements to form a
regionalized map composed of multiple regions. This process is significant to better
understand the similarity and heterogeneity between regions. Geographical region-
alization is an effective method to recognize and understand geographical phenomena
with spatial distribution characteristics (Luo et  al., 2008; Niesterowicz et  al., 2016;
Zhao et  al., 2011). Although there are many methods for geographical region division,
clustering methods based on machine learning have attracted significant attention
in recent years (Gu et  al., 2019, Zhang et  al., 2021). This study uses a K-means clus-
tering method with spatial constraints. Its core objective is to divide all elements
into a user-specified number of clusters by considering the similarity and spatial
proximity of multiple attributes of the target elements. Owing to spatial proximity,
the elements of the same cluster are spatially continuous and form a region; thus, a
space division is realized. The specific implementation process is as follows.
The basic geographical units and target variables, which are the basis for the
division, are defined. The basic geographical unit in this study is a prefecture-level
city. If S is the set of basic geographical units, and si is the ith basic geographical
unit (prefecture-level city), then

{ }
S = s1 , s2 , … , si (i = 1, 2, 3, … , n ),

As there are 312 prefecture-level cities in this study, n = 312, meaning there are
312 basic geographical units. The analysis variables are the RPI of the six hotel chains
in each prefecture-level city. They are respectively represented by A, B, C, D, E, and
F and define the set of interest variables Vi of the ith prefecture-level city, as in the
following equation:

{
Vi = Ai , Bi , Ci , Di , Ei , Fi } (i = 1, 2, 3, 4, 5, 6) ,
8 J. QIN ET AL.

where each element in vi represents the RPI of each chain hotel in the
prefecture-level city.
As the geographical units in the same cluster must be continuous during the par-
tition process, it is necessary to (a) determine the constraint rules of geographical units’
adjacency and (b) build a spatial adjacency matrix between the basic geographical
units in S based on these rules. As the geographical unit in set S is a surface, it is
better to construct it using topological rules. Specifically, geographical units with a
common edge or vertex are regarded as adjacent units. As the regionalization method
is implemented by a minimum span tree, the center of each geographical unit is used
as a node, and nodes that are adjacent to each other are connected by lines. If the
ith and jth nodes are represented by vi and v j , respectively, the edges between the
nodes can be represented by Lij . Subsequently, the adjacency relation can be expressed
as G = (V, L), where V and L are the sets of nodes and edges of the topological tree,
respectively. For nodes vi and v j with adjacent relations, the attribute vectors of the
geographical units in S corresponding to them are xi and xj, respectively. The cost
distance between the objects represented by vi and v j is defined as d (vi, vj); then,

n
d ( vi , v j ) = ∑( xil − x jl ) ,
2

l =1

where xil and x jl are the lth attributes of nodes vi and , v j respectively,
l = 1,2,3,4,5,6. The sum of all the differences between the attributes of the two nodes
is the cost distance in this study. Therefore, there is a cost distance between any two
nodes. Based on this cost distance, the whole tree G is divided into m node clusters
C1, C2,…, Cm(Assunção et  al., 2006).
As this method is implemented based on K-means, it inherits its basic character-
istics, and the number of clusters needs to be specified. In this study, we use the
Calinski-Harabasz pseudo-F test to automatically evaluate the optimal number of
clusters (Calinski & Harabasz, 1974).

Results
Location pattern and evolution of the six hotel chains
In order to objectively divide the time period and better explore the location and
regionalization patterns of the hotel chains and their evolution, we conducted the
piecewise linear regression on the opening data of China’s economic hotels from 2004
to 2019. Setting the conditions that the overall error is the smallest and the regression
results of each segment are significant, the segmentation breakpoints—2007 and
2015—are automatically obtained. Therefore, we get the three-stage division results,
2004–2007, 2008–2015, and 2016–2019. See Table 2.
However, there is a fundamental difference in industry growth between the first
half and second half of the growth period from 2008 to 2015. In the first four years
(2008–2011), the growth fluctuates greatly. The growth rate dropped from 45.6% in
2008 to 33.4% in 2009, accelerated to 56.5% in 2010, and then significantly dropped
 Tourism Geographies 9

Table 2. Piecewise regression results of opening China’s economic hotels from 2004 to 2019.
Regression Regression Significance
Time period coefficient 1 coefficient 2 (P-value) Overall error
2004–2007 0.05 −99.07 0.01 0.33
2008–2015 0.31 −614.36 0.00
2016–2019 0.20 −402.04 0.03

to 31.4% in 2011. In the following four years (2012–2015), the growth shows a steady
downward trend and was 39.2%, 31.5%, 29.2%, and 27.7%, respectively. Similarly, the
growth rate of the six brands we studied was not stable from 2008 to 2011. In addi-
tion, the net growth of the six brands from 2012 to 2015 is 3,638, which is about
three times the net growth from 2008 to 2011, showing that the amount of hotel
opening in the 8 years is significant uneven. It seems to us that the period automat-
ically divided by the piecewise linear regression analysis is too long and, thus, inca-
pable to reveal the uneven growth during the 8 years. Therefore, we believe that
further dividing the period from 2008 to 2015 can help readers grasp the changes
in the location patterns of these brands and we choose 2011 as the discontinuity
point. Based on the above considerations, we finally divided the study period into
four four-year stages: 2004–2007, 2008–2011, 2012–2015, and 2016–2019. The number
of hotels is considerably small in the first stage for three small chains—City Home
Inn, Ekea 365 Inn, and City Comfort Inn—making it difficult to analyze the data.
Therefore, we merged the first-stage data of these three chains with data from the
second stage. By applying the hotspot detection method, a hotspot hierarchical
structure of hotel location is obtained (see Appendix Figure 1).
As shown in Appendix Figure 1(a)–(d), 7 Days Inn adopted a national comprehen-
sive location strategy with a balanced and hierarchical diffusion in all four stages. In
the first stage, the gateway cities in east and central China—Beijing, Guangzhou, and
Wuhan—were the key located cities and the first-level hotspots. They are set as the
center to connect the first- and second-level hotspots, and from this, a ‘cross’ structure
is formed. In the second, third, and fourth stages, 7 Days Inn followed the hierarchical
diffusion principle based on the abovementioned hotspot cities, and it expanded to
provincial capital cities and major prefecture-level cities in the ‘cross’ area. It then
entered northeast and northwest China beyond the cross area in the third and fourth
stages, thereby broadening its national market. According to a report, 7 Days Inn
entered dispersed large cities, including Guangzhou, Shenzhen, Beijing, and Changsha,
when it was only one and a half years old with a portfolio of 18 open hotels. Zheng
Nanyan, then Co-Chairman and CEO, told reporters that the company would aggres-
sively pursue its national expansion strategy.1 About three years later, Mr. Zheng
claimed that with the help of venture capital, 7 Days Inn successfully entered all
first- and second-tier cities across China.2 This evidence indicates that 7 Days Inn
established its location and expansion direction as a national player early on.
Similarly, Hanting Inn, also financed by venture capital, adopted a national location
strategy in all four stages. The difference is that this chain focused on the Yangtze
River Delta and Beijing–Tianjin–Hebei region. Appendix Figure 1(e)–(h) show that from
the first to the fourth stage, Hanting Inn focused on Shanghai, Jiangsu, Beijing, and
their adjacent areas in eastern China. It also entered areas outside eastern China
10 J. QIN ET AL.

during the first and second stages; however, there are just 2-, 3-, or 4-level hotspots
in a few provincial capital cities. It was not until the third stage that the chain
expanded to the southwest, northwest, and northeast regions and formed new dense
distribution areas in the Pearl River Delta region and Chengdu-Chongqing region in
the third and fourth stages. In February 2007, less than two years after the company
was founded, Ji Qi, Hanting Inn’s Chairman and CEO, told reporters that the company
was to soon embark on national expansion.3 In 2011, Mr. Ji indicated that the Yangtze
River Delta would be the main area for development, and the company would grad-
ually expand to Bohai Bay and the Pearl River Delta.4 These stated plans coincide
with the findings from the data.
Green Tree Inn also adopted a national strategy with a regional focus during its
four stages, concentrating mainly on the Yangtze River Delta and Beijing–Tianjin–Hebei
region. As shown in Appendix Figure 1(i)–(l), although Green Tree Inn had second-level
hotspots in central and western China, most of the first-, second-, and third-level
hotspots were located in the Yangtze River Delta region and Beijing–Tianjin–Hebei
region, and its regional agglomeration was much higher than that of Hanting Inn
in these regions. In 2008, when interviewed by reporters, Mr. Xu Shuguang, the
Chairman and President of Green Tree Inn, pointed out that the company’s hotels
would be located in the Yangtze River Delta, South China, Tianjin, Beijing, and other
economically developed areas and expand to other large and medium-sized cities
in other regions of the country.5 In 2011, Xu pointed out that the focus was on hotel
distribution in first- and second-tier cities with frequent business activities. In the
future, their presence in second- and third-tier cities would appropriately increase.6
Ekea 365 and City Home Inn adopted a dense single-region distribution. These
two hotel chains have deeply cultivated the markets where their headquarters are
located—Hebei and Anhui province, respectively. Although they have entered other
markets, most of their hotels are located in a single provincial administrative region,
even at the fourth stage. In an interview with the Anhui Business Daily, Gan Jiahan,
Chairman of City Home Inn, pointed out that the company plans on steady expansion
and will continue to focus on the Anhui market in the future.7 In an interview, Gao
Shujun, Chairman and CEO of Ekea 365 Inn, stated that Ekea 365 was the most locally
knowledgeable hotel company in the Hebei market. The company would further
penetrate its home market and expand into neighboring provinces.8
The early location pattern of City Comfort Inn is similar to that of Ekea 365 Inn
and City Home Inn. However, in its later stages, the dense single-region distribution
was expanded to more regional markets, and a jump-type, multi-region dense dis-
tribution was adopted. Specifically, in its early stage, a dense distribution was formed
in Guangxi province, forming five levels of hotspots, and the market continued to
be strengthened. In the third stage, City Comfort Inn expanded to Guangdong and
Hubei with dense distribution in these two regions and also began to expand into
the eastern, northern, and southwest regions of China. In the fourth stage, City
Comfort Inn continued its expansion by entering markets in the Yangtze River Delta,
Chengdu-Chongqing, and Beijing–Tianjin–Hebei regions, gradually transforming from
a regional market distribution to a national market distribution. This is reflected in
the secondary data, in which the company positioned itself as a ‘regional brand
focused on the economy segment’ at an early stage.9 Later, the company extended
 Tourism Geographies 11

both its product line and market presence. In 2012, the Chairman of City Comfort
Inn, Cheng Xinhua, explained that the brand’s location patterns differed from the
others’ as they applied the ‘deep penetration strategy’. This strategy involved (i)
building on strengths to develop one strategic provincial market, (ii) duplicating deep
penetration in neighboring provincial markets, and (iii) combining them into a bigger
geographic market. This is followed by entering more provincial markets across the
country. Mr. Cheng predicts that the brand will reach national distribution in 5 years.10
In general, the six chains have basically adopted two different spatial location
strategies—national and provincial. However, hotel chains can form different spatial
distribution patterns, although they adopt the same location strategies. For example,
7 Days Inn, Hanting Inn, and Green Tree Inn have all adopted national location strat-
egies, but their distribution patterns are extremely different in all four stages.
Additionally, the location strategies of these hotel chains are highly stable. The location
strategies of 7 Days Inn, Hanging Inn, Green Tree Inn, Ekea 365 Inn, and City Home
Inn did not change during the study period. The only exception is City Comfort Inn,
which adopted a single province location strategy in its early stages and then changed
to a national location strategy in the later stages.

Regionalization differentiation pattern of the six hotel chains

Through the regionalization method, we can further explore the market expansion
rate and evolution characteristics of the hotel chains’ share structure in different
regions over time. To further illustrate the regional distribution characteristics in the
four stages, geographical regionalization maps of the six hotel chains at the prefecture
level and their corresponding parallel coordinate plots are drawn in Appendix
Figure 2–5.
In the 2004–2007 stage, these hotel chains were in their embryonic stages: their
respective dominant regions were relatively scattered and independent (Appendix
Figure 2). Among them, 7 Days Inn had relatively prominent advantages in regions
such as Hubei, Hunan, and Jiangxi (Regions 5, 9, and 11), and Hanting Inn and Green
Tree Inn had the most prominent advantage in the Jiangsu market (Region 3). In
addition, compared with other brands, Hanting Inn had a higher market share in
Zhejiang (Region 7), while Green Tree Inn had the highest market preference in Jilin
and Liaoning’s eastern region (Region 4). As the hotel chains were in their early stages
of development, there was not much difference between brands, and no dominant
market had formed in most regions of the country. The distribution of the existing
dominant regions shows that, except for Hanting Inn and Green Tree Inn in Jiangsu,
other brands did not face fierce local market competition, and the dominant regions
of each brand were relatively scattered and independent.
In the 2007–2011 stage, these hotel chains had developed rapidly, and each chain
had comparative dominant region(s) (Appendix Figure 3). Among them, the market
distribution of 7 Days Inn was more uniform than those of other chains with relatively
large markets in Fujian, Beijing-Tianjin-Hebei Region, Shanxi, Inner Mongolia, and
Guangdong (Regions 6, 7, 12, 10, and 11). The dominant regions of Hanting Inn were
mainly in Jiangsu, Shandong, and Beijing-Tianjin-Hebei Region (Regions 5, 4, and 7).
The comparative advantage of Green Tree Inn in Jiangsu (Region 5) was lower than
12 J. QIN ET AL.

that of Hanting Inn, but it was significantly stronger than those of other chains. In
addition, its comparative advantage in Beijing-Tianjin-Hebei Region (Region 7) was
also significant. The main dominant areas for City Comfort Inn, City Home Inn, and
Ekea 365 Inn were in Guangxi (Region 3), Anhui (Region 8), and Hebei (Region 7),
respectively.
In the 2012–2015 stage, 4 of the six chains had developed several major region
markets except City Home Inn and Ekea 365 Inn (Appendix Figure 4). The 7 Days Inn
had a more balanced development, and its preference for different regions was further
reduced. Compared with other chains, it had the largest new market in Guangdong,
Chengdu-Chongqing Region, and Xinjiang (Regions 11, 12, and 13). Alongside main-
taining its comparative advantages in Jiangsu, Liaoning, and Shandong (Regions 8,
9, and 10), Hanting Inn was constantly developing new dominant regions to create
a more balanced growth. The regional agglomeration degree of the Green Tree Inn
was more obvious, showing an overall polarized model. It had prominent comparative
advantages in Jiangsu, Anhui, and Shandong (Regions 8, 13, 7, and 10) but had no
obvious advantages in other regions. City Comfort Inn still maintained its absolute
dominance in Guangxi (Region 4) and developed new dominant regions such as
Hubei, Hunan, and Guangdong (Regions 6, 17, and 11). City Home Inn and Ekea 365
Inn maintained their absolute dominance in their local markets, Anhui (Region 3) and
Hebei (Region 12), and did not expand extensively into other regional markets.
In the 2016–2019 stage, each hotel chain entered a period of stable and bal-
anced development (Appendix Figure 5). The 7 Days Inn continued to maintain
balanced development in various regions. Alongside strengthening the dominant
market in Jiangsu (Region 11), Hanting began to adopt a balanced development
in other regions. The Green Tree Inn further strengthened its Jiangsu and Anhui
markets (Regions 11, 3, and 4) and had a balanced development in the remaining
regions. The City Comfort Inn maintained its advantages in Guangxi and Wuhan
(Regions 5 and 6) and started a balanced development in other regions. City
Home Inn and Ekea 365 Inn maintained their absolute dominance in their local
markets, Anhui (Region 4) and Hebei (Region 8), and began to expand to the
surrounding regions.

Discussion
Despite the scarcity of research on the location patterns of hotel chains, our findings
can be better understood based on the following three streams of literature. First,
we found that the six chains’ location patterns can be explained by the contagious
model and hierarchical model based on spatial diffusion research (Graff & Ashton,
1994; Sugiura, 1986). Both hierarchical diffusion (diffused from higher-tier cities to
lower-tier ones) and contagious diffusion (diffusion from nearby cities to distant cities)
were applied by the hotel chains simultaneously. However, their approach to com-
bining the two models was considerably different. For example, for 7 Days Inn, Hanting
Inn, and Green Tree Inn, hierarchical diffusion was the dominant model. However, for
Ekea 365 Inn, City Home Inn, and the early stages of City Comfort Inn, the contagious
diffusion was dominant. The latter three chains also applied location patterns similar
 Tourism Geographies 13

to Wal-Mart’s high store density and neighborhood contiguous location patterns

(Holmes, 2011; Rice et  al., 2016). However, we found that no hotel chains applied the
inverse hierarchical diffusion model found in Wal-Mart (Graff & Ashton, 1994).
Furthermore, although hierarchical diffusion is the dominant model for 7 Days Inn,
Hanting Inn, and Green Tree Inn, the three chains’ distribution patterns varied (see
Appendix Figure 1d, 1h, and 1l). Further research would be needed to explore the
reason. The deeper exploration and comparison of location patterns between the six
chains, on the lines of Graff’s (1998) comparison between Wal-Mart and Kmart, might
uncover interesting findings.
Second, our research shows that although the hotel chains face strong compe-
tition in some markets, they all developed and maintained their own dominant
market(s). This is because the location decision of a chain reflects its nature of
multi-unit, multi-market organization. As different business units of a chain compete
with units from other chains in different markets, the competition among various
markets is interrelated and affects the location of the units. Hotel chains must
assume that competitors already in a place will react to new entries (Godinho et  al.,
2018). Researches on airlines and chain retailers show that multi-market entry
facilitates mutual forbearance and tacit collusion on quality and price (Prince &
Simon, 2009; Yu & Cannella, 2013). The existence of those dominant markets may
indicate a mutual forbearance between these chains. As the presence of network
ties between multipoint competitors is frequently assumed but rarely directly exam-
ined (Lomi & Pallotti, 2012), analyzing the relationship between market competition
and location (market entry) pattern will become a promising field that would be
helpful in uncovering a fundamental issue in multi-unit, multi-market research (Korn
& Rock, 2001).
Third, whereas the location decision is based on a hotel chain’s strategies, few
researchers have studied the relationship between chain strategies and the location
of their hotels (Enz, 2009; Kalnins & Chung, 2006). Our findings confirm that chains
in the same segment may apply distinct spatial expansion strategies (Graff, 1998,
2006). 7 Days Inn, Hanting Inn, and Green Tree Inn adopted the national location
strategy, while Ekea 365 Inn, City Home Inn, and City Comfort Inn adopted the
regional location strategy. The reason for these different location strategies could
be that the hotels have different resources and capabilities. Since larger chains have
better management, reservation systems, and brand images (Dunning & Kundu,
1995; Dunning & McQueen, 1982), it is easier for them to penetrate markets
(Litteljohn, 1985), like in the cases of 7 Days Inn, Hanting Inn, and Green Tree Inn.
Therefore, some locations that are good for established companies might not be
good for smaller firms because they do not have the necessary resources to cope
with risks (Aliouche & Schlentrich, 2011). Smaller chains realize their disadvantages
and concentrate their resources in a small region. This is because locating most of
their hotels geographically close could realize a greater degree of strategic related-
ness in activities and coordination of units (Greve & Baum, 2001), enhance scale
economies, and facilitate organizational learning (Audia et  al., 2001). For example,
Ekea 365 Inn and City Home Inn, the two smallest chains in our study, developed
the province where their headquarters were located as their only key market. Their
density patterns may reflect the resource gap compared to bigger chains. However,
14 J. QIN ET AL.

this discussion cannot explain why City Comfort Inn successfully changed its strategic
positioning from a regional player to a national player, which is a fascinating case
for further investigation.
In short, we identified the rudimentary characteristics of hotel chains’ location and
regionalization pattern and related them to extant literature, but more questions
emerged, especially those regarding how and why.

Conclusion
Hotel location has been studied extensively since the 1970s when chains began to dom-
inate the industry. However, few studies have specifically examined their location
patterns. In response to the call for more research in this area (Puciato, 2016;
Song & Ko, 2017; Yang et  al., 2014), this study explores the location and region-
alization patterns and evolution of six Chinese economy hotel chains from 2005
to 2019. Our research shows that hotel chains tend to form different location
patterns, although they adopt the same location strategies. In addition, each
hotel chain has fostered one or more dominant market(s). Furthermore, the loca-
tion strategies of most chains remained relatively stable during the study period.
One limitation of this paper may relate to the relatively small and unique sample
of only six emerging economy hotel chains. Not only are these relatively few
hotel chains, but also the location choices of luxury and upscale chains are sig-
nificantly different from economy chains. Another limitation is that all hotel chains
in the sample are from China, which may limit the generalizability of the results.
The institutional factors and market conditions impacting hotel location in devel-
oped countries such as the United States are considerably different from those
in developing countries like China. Therefore, the findings should be understood with
caution, and more studies with larger, more diversified samples are needed to verify or
falsify the findings.
Our exploratory study contributes to the literature by revealing the rudimentary
location and regionalization patterns of hotel chains. Our findings contribute to
hotel practices in two ways. First, chain operators should develop their location
patterns based on their resources and capabilities. Second, irrespective of the
size of a hotel chain, it should try to foster dominant market(s) in which it is
the absolute leader.
As mentioned in the previous discussion, several questions emerged and three
directions are more likely to produce promising results: first, scrutinizing the location
pattern of each of the six chains, including their differences and their evolution, in
combining the hierarchical and contagious models under the diffusion perspective.
Second, investigating the relationship between market competition and location
under the multi-unit, multi-market perspective. Third, examining the impact of
strategy on location and regionalization patterns under the strategic management
perspective. Econometric models and the case study method can be applied to
identify the influencing factors, examine the underlying mechanism, and investigate
the strategic process. We call for more research following these threads and believe
they would provide insights into both location research and chain research in the
hospitality field.
 Tourism Geographies 15

Notes
1. Ge Chen and Bangqin Sun, “7 Days Inn to Accelerate Expansion and have 300 locations,”
The Nanfang Daily (南方日报) (November 15, 2006).
2. Maolin Zou, “From IT Elite to Economy Hotel Boss, 7 Days Inn CEO Recalled the Start-up
Process,” The Changjiang Times (长江商报) (July 6, 2009).
3. Jianyue Zhang, “The Funder of Home Inn Established Hanting Inn,” The Beijing Times (京
华时报) (March, 5, 2007).
4. Shanfeng Zhang, “Founder of Hanting Inn: the Passion for Entrepreneurship,” Southern
People Weekly (南方人物周刊) (November 4, 2011), pp. 62–63.
5. Si, “Green Tree Inn Entered Beijing Market: An Interview with its Chairmen and President,
Mr. Xu Shuguang,” China Business Update (中国经贸杂志) (September 15, 2007), pp. 30–32.
6. Caixia Wang, “Xu Shuguang: I Enjoy to Be an Entrepreneur,” China Chain Store (中国连锁)
(November 1, 2011), pp. 59–63.
7. “City Home Inn’s Expansion Approach,” Anhui Business Daily (安徽商报) (December 12, 2013).
8. Caixia Wang, “Ekea 365 Inn: Dancing in the Market,” China Chain Store (中国连锁)
(September 1, 2012), pp. 42–44.
9. “City Comfort Inn: In a Fast Development Track,” Renshi Tiandi (人事天地) (May 15, 2009),
p. 11.
10. Caizhou Yue, “City Comfort Inn, the Pioneer in Quality Sleep,” China Chain Store (中国连
锁) (September 1, 2012), pp. 52–54.

Acknowledgements

The authors would like to thank Alan Lew and three reviewers for their helpful comments.

Funding

This work was supported by the National Natural Science Foundation of China (No. 41801168),
Beijing Social Science Fund (No. 20ZDA06) and National Social Science Fund of China
(No.  20ZDA067).

Notes on contributors
Jing Qin is an Associate Professor of Tourism Management at School of Tourism Sciences in
Beijing International Studies University. She graduated from Wuhan University (China) in 2008.
From 2008 to 2014, she got master degree of Cartography and Geography Information System
and Ph.D. in the field of Human Geography from University of Chinese Academy of Sciences.
Her current research interests focus on spatio-temporal data mining algorithm and its appli-
cation in tourism and hospitality research.
Yu Qin is Professor of Management at School of Tourism Sciences in Beijing International Studies
University and the Editor of Tourism and Hospitality Prospects. He obtained his Ph.D. in Economics
from the School of Graduate at China Academy of Social Science in 2005. His current research
focuses on the evolution of Chinese tourism and hospitality industry.
Chengwei Liu is a Master Degree Candidate of Hotel Management at Beijing International
Studies University. He graduated from Guilin University of Technology in 2014. His current
research interests focus on spatial analysis, GIS, and hospitality organizational change.

ORCID
Jing Qin http://orcid.org/0000-0002-3293-0929
16 J. QIN ET AL.

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Appendix A

Figure 1. Spatial-temporal hotspot hierarchical structures of six hotel brands.

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22 J. QIN ET AL.
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24 J. QIN ET AL.

Appendix B

Figure 2. Regionalization patterns of six hotel brands during 2004–2007.

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Appendix C

Figure 3. Regionalization patterns of six hotel brands during 2008–2011.

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Appendix D

Figure 4. Regionalization patterns of six hotel brands during 2012–2015.

 Tourism Geographies 27

Appendix E

Figure 5. Regionalization patterns of six hotel brands during 2016–2019.