No-Frills Airline Plans to Open Budget Hotel Chain in Japan

by Josh Lew
Last updated: 11:00 AM ET, Thu November 5, 2015

Spring Airlines is a Shanghai-based budget airline that offers domestic service within China and international flights to Japan and Southeast Asia. It is considered China's only true no-frills carrier, and it has enjoyed a great deal of success. Spring's first flight launched in 2004, and its annual profits had already topped $70 million by 2010.

Now, Spring's owners are making an unusual move. They are planning to open a chain of budget hotels… not in China, but in Japan. After partnering with a Japanese property development firm, the airline's ownership group has made plans to build 15-20 no-frills Spring Sunny Hotels in the most-populous parts of Japan and in major tourist areas. The initial investment for the project is $166 million.

A surprising move for a no-frills airline

The plan came about when Chinese travelers headed to Osaka, Japan started complaining about the lack of hotel rooms and the inability to overcome the language barrier while searching for available space.

Spring has recently expanded its service between China and Japan. The company's founder and chairman, Wang Zhenghua, is known for wanting to build on Spring Group's airline industry success by creating other travel-related services. So even though entering the hotel game seems like an unlikely move for a budget-minded airline that just celebrated its 10th birthday, it is probably not a surprising development for people who are close to the company's inner circle.

Going abroad to tap into the Chinese market

The strategy actually makes a lot of sense. By following in the footsteps of Chinese tourists, Spring Sunny Hotels will have a ready-made pool of potential guests. The hotels will be designed to seem familiar and welcoming to Chinese travelers while also offering a Japanese theme. Rooms rates will be in line with Spring's airfares. This means that the hotels will cater to the exact same demographic that the airline targets.

The strategy also makes sense in the bigger picture. The Chinese government has seen the number of outbound travelers increase over the past decade. Even an economic slowdown isn't stopping the flow. A great deal of money is moving out of the country with these globetrotting citizens. Thus, the shrewder members of China's government have recently spoken about the need to expand tourism and hospitality services overseas. The goal is to recapture some of the money spent by Chinese tourists abroad.

Not as no-frills as you might expect

The hope of the government is probably that developments like Spring Sunny Hotels could start a trend for Chinese tourists. These travelers could go abroad, but they would look for Chinese-centered (preferably Chinese-owned) accommodations and services whenever they did so. These venues would give them a familiar atmosphere and offer services that they could use to get more out of their trip.

The Spring Sunny brand may appeal to travelers from countries besides China. The restaurants will serve Chinese, Japanese and Western dishes, and some rooms at one of the first hotels, in the Nagoya area, will feature traditional tatami mats. This initial property, slated to be a 15-story hotel, will not be completely "no frills." Plans include having an area for soaking in baths drawn from a nearby hot spring.

Time will tell if Spring's shrewd hotel move pays off for its ownership and for China's overseas tourism ambitions. In the nearer future, though, tourists headed to Nagoya and other popular Japanese destinations can expect to have a new budget hotel option.

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