How big is the profit of budget hotels in price war?

First of all, there are huge competitive risks in budget hotels. The extreme competitiveness of budget hotels is relative to that of star-rated hotels. Although the profitability of budget hotels is very strong, once a large number of budget hotels appear in the market, no matter how big the cake is, it will be a piece of cake. If there are too many people sharing, everyone will get very little "cake", so the problem facing domestic budget hotels now is that the competition is too fierce. In order to attract many consumers, many investors have to fight a "price war", but the price of doing so is less and less profits, and now the cost of budget hotels is not low. If it develops for a long time, the result can be imagined.

Secondly, the higher profit rate of budget hotels can't hide the fact that the profit amount is not high. Why do budget hotels have high profit margins? Because compared with mid-range or high-end and star-rated hotels, the labor cost of budget hotels is not high, and because of its small scale and few employees, the profit rate of budget hotels is naturally much higher under a certain occupancy rate. However, the profit is not high because the budget hotel is small in scale and has few rooms, so the profit will naturally not be high.

Finally, the hygiene and service quality of budget hotels are not as good as those of middle and high-end hotels. With the change of consumption structure and the improvement of economic level, the demand for accommodation will naturally be higher and higher. Judging from the occupancy rate of hotels in China in recent years, it is obvious that the occupancy rate of budget hotels has dropped a lot, while the occupancy rate of boutique hotels or high-end hotels has increased a lot, which shows that high-end or boutique hotels will become the new favorite of the public in the future.