State-owned economy and budget hotels in China – from commodity to brand

This article identifies China's state-owned economy and budget hotels as the most troubling segment of the country's hotel industry. Based on personal interviews with operators and experts, the article examines the segment-wide problems and property-level symptoms, and attributes the segment's failure to the state ownership. Through analyzing five key characteristics on a commodity-brand continuum, the article reveals the segment's three critical issues of product differentiation, market segmentation, and brand development. Eight factors are determined that affect hotel operators' preference towards various network forms for brand affiliation. The article concludes with the proposal for a three-stream research agenda.