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Interview With Jin Hui, President Of Huazhu Group: The Domestic Hotel Industry Is Slowly Recovering, And 90% Of The Hotels In The Future May Be Chained

2020/7/29 9:36:00 4

Exclusive InterviewPresidentJinhuiDomesticHotelIndustryHotelChain

The gradual recovery of cross provincial tourism has injected a "booster" into the recovery of the hotel industry. However, the expected retaliatory rebound in the industry does not seem to have arrived. Since then, the CEO of Jinhua Group has been slow to recover in the 21st century.

After this "epidemic", the hotel industry is undergoing changes. On the one hand, the hotel industry has accelerated the application of intelligence and technology; on the other hand, chain has become an irreversible trend.

As a leading enterprise in China's hotel industry, Huazhu group reiterated its concern for the domestic market this year and adjusted its organizational structure to set up Huazhu China to penetrate into the sinking market. According to Jin Hui, the scale of Huazhu's stores will be tripled on the basis of the existing one, and the space for chain penetration of China's hotel market is very broad.

"Sinking the third and fourth line" and "breaking through the middle and high end" in parallel

21st century: with the domestic epidemic situation entering the stage of normalization prevention and control, what is the overall situation of returning to production and work? How about occupancy recovery?

Since 2003, the outbreak of SARS in hotel industry was the most serious.

Hua lived in February when the epidemic was most serious. In order to cooperate with the government's notice on the closure of some hotels, the periodical epidemic prevention work was carried out. By March, its stores basically returned to normal production.

Up to now, 99% of Huazhu's stores have been opened, and the rental rate has indeed shown a "√" recovery as described in the company's financial report. The overall rental rate has recovered to about 85% of the same period in history.

In particular, we have seen a large number of resiliency and resiliency in China's four major regions, especially the resilience of the local economy.

21st century: it is an important market strategy of Huazhu this year to restate its attention to the Chinese market. This year, Huazhu has also made a major adjustment to its organizational structure, setting up Huazhu China and taking you as the CEO. So, does Huazhu have any expansion plans in the domestic market in the future?

Jin Hui: we have sent a very important signal through the establishment of Huazhu China: to cultivate China deeply.

China is the largest single market in the world, and the overall economic development is rapid. Therefore, we have a very important thinking - how to treat China as the world? How to deeply cultivate the Chinese market and rely on the rapid development of the Chinese market? Therefore, we should ensure that the organizational structure can meet the needs of deepening the cultivation of China, make the Chinese market into a world scale, and take the world's good hotel brands, management and technology into the Chinese market. This is also a disguised internationalization.

In order to meet the needs of China's "three line and four line" epidemic prevention and control, we have put forward the idea of "catching a large number of county-level and deep-rooted cities" to meet the needs of China's "three lines and four cities". Our goal is to open Huazhu's stores in every county.

21st century: as you said, Huazhu's future goal is to sink to the third and fourth tier cities. So, does Huazhu's emphasis on the third and fourth tier markets mean slowing down the pace of high-end market development? 3、 What is the market space of the fourth tier cities?

Jinhui: first, Huazhu will become a world-class hotel group in the future. We have decided that there are several "mountains" that we must cross over: first, we should deeply plough into China to realize the goal of "thousands of cities and thousands of stores", that is, in the Chinese market, we must take advantage of our own capabilities and advantages to take root in China, go to the third and fourth tier, and to every county and town.

There is still a big breakthrough for us. As you can see, in the past, Huazhu was very determined to break through the middle and high-end brands. We acquired high-end brands through acquisition, such as huajiantang and Deutsche hotel group, in order to meet the needs of our medium and high-end brand breakthrough. At the same time, we have spared no effort to build our own medium and high-end brands, such as Xiyue. We are about to launch a flagship store and have achieved very good performance during the trial operation.

Therefore, living on these two fronts, China will actively seize market opportunities with a deep ploughing attitude. 3、 Huazhu should grasp the four lines and medium and high-end products together.

The second problem is that there are many people in China. In the past few years, we have visited a large number of third and fourth tier cities, and we see that China's urbanization is progressing very fast. This is my first experience. The second feeling is that the consumption power of the whole Chinese people is also increasing. Under the upgrading of consumption, we think that as long as there is demand, our hotel should be opened. Therefore, based on these considerations and the rapid development of urbanization, we believe that China's third and fourth tier cities have broad space.

It turns out that Huazhu may meet the needs of 3.4 billion people in the first and second tier cities. In the future, Huazhu will meet the needs of all Chinese people for travel and accommodation. This is what Huazhu people will do next.

Hotel chain is irreversible

21st century: what are the advantages of chain hotel group? How much room do you think there is for chain hotels to penetrate the domestic market?

Jinhui: the hotel industry has experienced the changes of the times, and the advantages of chain operation have become increasingly prominent. If the development of the hotel industry is divided into several times, the development of Chinese hotels in the past 15 years is a chain process. Compared with the single hotel, the role of chain is very big, it emphasizes open source and saving money.

Chain brand, for customers and bargaining has a great help. Only when the popularity of hotel brand is high can the conversion rate be high. For example, the safe and clean service promise brought by the brand is hard to compare with that of a single store. Only when the chain trade is large enough can the cost of sales in China be raised.

Single hotel is faced with higher operating costs, for example, you need to send finance, sales, operation and procurement. Through the chain, large-scale and technical empowerment, the original high-cost operation of single store can be shared, improve the operation efficiency, and correspondingly its cost will be reduced. This benefit is bound to be a substantial improvement in business performance.

Linkage is an irreversible trend. In the past 15 years, we can see that chain hotels have eliminated all three-star hotels. In the future, more than 90% of the hotels in China will be chained.

At present, the chain of China's market, in terms of the whole category, the coverage is about 20%. Therefore, the future of China's chain, if I expect to achieve 80% - 90%, the chain of space is still very large.

Huazhu also boldly proposed that there should be more than 15000-20000 stores in China, that is to say, more than three times more than the current level. Therefore, for the domestic market, we are still very confident.

21st century: after this epidemic, people pay more attention to public health and safety incidents. Will it also increase their trust in chain brands?

Jinhui: it should be said that under the epidemic situation, the high standard and systematic operation capability brought about by the chain operation, including the promise of safety and cleanliness to consumers, has become more and more recognized by consumers. For example, after the outbreak of the epidemic, Huashi actively launched the "Anxin 360" check-in and non-contact service to meet the requirements of the guests in each of the most severe environment. We are able to build a strong chain of supply chain and realize the largest scale of operation.

The hotel industry is recovering in the shape of "√"

The 21st century: some time ago, domestic cross provincial tourism has gradually opened up. Both the tourism market and the hotel industry are looking forward to a retaliatory rebound, but the situation is not as optimistic as expected. What is your judgment on the recovery of the hotel industry?

Jin Hui: I also predicted at that time that there would be a retaliatory rebound after the outbreak of SARS in 2003.

We can see that today's market structure should be divided into two categories, one of which is local tourists and the surrounding self driving tourists. At this level, we do see some retaliatory backlash. In fact, in the local and short distance travel market, some areas have even exceeded the level of the same period last year.

But it is a pity that due to the recurrence of the epidemic, our original large part of the main source business sector has not been synchronized growth, and has been suppressed.

In conclusion, from February to the present, the local travel and self driving short distance market has gained retaliatory growth. But the recovery of the mainstream business market is very slow. When the two are superimposed, the hotel industry shows a slow recovery in the shape of "√".

Based on the analysis of historical and professional data, my judgment is that the hotel market in China is expected to recover to 70% of the revenue in the same period in the third quarter and fourth quarter of this year. Huazhu will be 15% - 20% ahead of the whole industry.

21st century: the epidemic has brought significant changes to the hotel industry, such as the acceleration of intelligent trend. In your opinion, what are the changes brought about by the epidemic to the hotel industry? How will Huazhu seize the opportunity?

Jinhui: the biggest opportunity is, as you said, because of the safety requirements during the epidemic prevention period, contactless services and intelligent devices have been recognized and used by more consumers.

This outbreak provides this opportunity. It turns out that we may have this awareness, but we have not acted. On the other hand, through the systematic management of the epidemic situation, the government can meet the requirements of the public security system.

Intelligent hotel industry, the application of technology needs time reserve. As a matter of fact, the reason why Hua lived in this epidemic situation has such a rapid application of intelligence in various links has a great relationship with our technical reserves in the past 30 years. Today, a single device of Huazhu is not a single existence. It must be highly embedded in the information system and cloud service platform built by Huazhu.

 

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