China's budget brands plan global growth

China outbound capital restrictions

While Chinese business have been scooping up high-profile assets across the world, the country's budget chains are also expanding beyond its borders. 

From 2004 to 2014, the number of budget hotels in China grew from fewer than 500 to more than 16,000. But the sector has become less profitable since 2011, according to the Financial Times. As such, the brands are expanding outward

The 7 Days Inn has approximately 2,500 hotels across China, and expanded into Austria last year. A 95-room “7 Days Premium” hotel will this week open in Vienna, while other 7 Days Premium hotels are slated to open in Berlin, Munich, Leipzig and Venice over the next year. The company is owned by Hong Kong-listed Jin Jiang International Hotels Group, which also has a majority stake in Plateno and owns France's Louvre Hotels. Plateno has hotels in Thailand (one of the most popular Chinese tourist destinations) and Malaysia. Jin Jiang has two budget hotels in the Philippines, with more in the pipeline. With all these subsidiaries, Jin Jiang is reportedly the fifth-largest hotel chain in the world.

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But facing overcapacity in recent years, 7 Days put a freeze on new openings in top-tier cities. “The explosive growth period is gone,” Kiki Yang, a Hong Kong-based partner at consultancy Bain, told the FT.

GreenTree Inns, meanwhile, has opened branches in the U.S., Thailand and Vietnam over the last two years, while rival Huazhu Group formed an alliance with French company Accor last year aimed at international expansion.

For the most part, the budget chains are maintaining an asset-light approach as they expand overseas, operating instead of owning. 

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