"Fierce Battle" Of Middle End Hotels: Competition And Upgrading Of Quantity, Quality And Flow

On the eve of the National Day golden week, Huazhu group's all season hotel will open its 1000th store in Nanning, Guangxi. This makes the whole season become the second medium end hotel brand after Vienna which breaks through 1000 stores.

In the middle end hotel's war situation, Vienna, all season, Yaduo, Lifeng, Heyi and so on compete endlessly. Behind these brands are the fierce "battle" of domestic leading hotel groups, such as Jinjiang Hotel, Huazhu group and ShouLv Hotel, centering on the middle end market.

While the epidemic has brought negative impact to the hotel industry, it has also greatly opened the window of industry integration. In the view of the industry, the incremental space of the mid end hotel is the most attractive. A hotel industry analyst told the 21st century economic report that the overall growth of domestic mid tier hotels comes from new construction and stock. Among them, the stock transformation is the most important incremental source of mid end hotels, including single hotels, star hotels, as well as the upgrading and transformation of economic chain and middle end chain.

With the support of capital, a fierce battle around the middle end hotel market is upgrading and accelerating.

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The battle of the middle end of capital

After raising about HK $6 billion, Huazhu group, which has recently realized secondary listing in Hong Kong, has greatly eased its cash flow pressure. According to the usage plan, the group will use about 40% of the fund-raising to support the company's capital expenditure and expenses to strengthen the company's hotel network, including the opening of new hotels and the upgrading and continuous maintenance of existing hotels. As the main brand of middle end hotels under Huazhu group, the future expansion of all season hotels will also benefit from this financing.

"The listing and financing of Huazhu group in Hong Kong can also help us develop better in the whole quarter." Talking about the listing of Huazhu group on the Hong Kong stock exchange, Shen Yijun, CEO of the all season hotel, told the 21st century economic report that this will help both the development of Huazhu group and all season hotels.

In fact, the expansion of Hong Kong's capital market as a financing channel will make it more confident for hotels to scale up in the future.

In the first half of this year, affected by the epidemic situation, Huazhu group, which belongs to the hotel, encountered certain operational pressure. Financial data show that in the first half of this year, the group realized 3.966 billion yuan (RMB, the same below), a year-on-year decrease of 24.40%, and a loss of 2.683 billion yuan, from profit to loss over the same period of last year. As of the first half of this year, the balance of cash and cash equivalents held by Huazhu group was 3.699 billion yuan, but it was faced with short-term loans totalling 5.848 billion yuan and liabilities for the current maturity of long-term loans.

Therefore, after successful financing in Hong Kong, Huazhu group's debt repayment pressure has also been reduced, which also ensures the smooth progress of the group's hotel brand expansion plan.

The 21st century economic reporter has noticed that in the field of mid end hotels, the hotel groups behind various hotel brands are increasing their financing efforts.

At the beginning of September this year, Jinjiang Hotel announced that it planned to issue no more than 150 million shares and raise no more than 5 billion yuan to be used for hotel decoration and upgrading projects and repayment of loans from financial institutions. The 21st century business reporter found that about 70% of the fund-raising will be used for the upgrading iteration of its hotel brands to optimize the layout of budget hotels and mid tier hotels.

The renovation plan of Jinjiang hotel is to upgrade some hotels of Jinjiang series to middle end brands such as "Yujinxiang", "Kangpu", "kairiad", "Jinjiang capital", "Vienna" and other economic brands. The group estimates that after the renovation and upgrading, the project's after tax internal rate of return is 13.51%, the tax investment payback period is 5.58 years, and the economic benefits are good.

Jinjiang hotel's mid end hotel renovation plan is based on the transformation of stock assets. Zhao Huanyan, chief knowledge officer and senior economist of Huamei consulting agency, analyzed the 21st century economic reporter that at present, the investment payback period of many budget hotels is more than five years, and many middle end hotels can realize cost recovery in about five years. Therefore, mid end hotel has become one of the most cost-effective hotel investment and development models.

Another domestic hotel head enterprise first travel hotel also reiterated that the development and operation of medium and high-end hotels is the focus of the company's long-term development. Despite a loss of 695 million yuan in the first half of the year, the company said it would keep its plan of opening 800 to 1000 stores throughout the year. The expansion results in the first half of the year showed that the number of new middle and high-end hotels accounted for the highest proportion. Sun Jian, the general manager of the company, said in an interview with the reporter of the 21st century economic report that in the future scale of the first travel hotel, the proportion of the economy hotel will gradually decrease, and it will continue to make efforts in the middle and high-end hotels.

Capital hotel also announced a financing plan in the third quarter.

In mid July this year, the company announced that it plans to register and issue medium-term notes and ultra short-term financing bills in the inter-bank bond market, with a total of no more than 4 billion yuan. This is the first time that capital travel hotel has publicly applied for the registration and issuance of debt financing tools since its listing. The expansion of financing channels and the optimization of financing structure also lay a solid foundation for the company's subsequent expansion.

21st century economic reporter learned that, as the dark horse of domestic middle end hotel, Yaduo hotel is also seeking capital support and launching IPO plan.

With the support of capital, the competition among middle end hotels is heating up.

Key to winning mid tier competition

The 21st century economic report reporter learned that although each hotel has its own strategy in developing the middle end market, it generally agrees with the relationship between the number of stores and the quality of hotel service.

"We can't develop middle end, medium and high-end brands as we used to develop budget hotels." Sun Jian said in an interview with the 21st century economic reporter that the biggest challenge at present is not only the pursuit of quantity, but also the quality of medium and high-end hotels.

According to Sun Jian, the development strategy of the middle end and high-end brands of the first travel hotel is to gather a series of brands in a cluster way, and cover the products through different positioning to form a variety of prices. He believes that in the future, medium and high-end products will hardly have a huge scale of single product. When a hotel group has five or six mid and high-end products, there are no more than two dimensions: first, it can enrich the product positioning and style; second, it can form a "price band".

"Yaduo is developing very fast. The resources we got could develop faster. In fact, we also made subtraction." Yaluyin, founder of Yaduo Hotel, told the 21st century economic report that the development idea of the hotel is "talking about the quantity with quality", "we must develop every hotel with high quality, which is what I want to increase in quantity, not just for quantity".

Shen Yijun put quantity and quality in the development process of middle end hotels. "Quantity and quality are balanced. But first of all, quality is the customer experience. " Shen Yijun told the 21st century economic reporter that without quality, mid end hotels will lose customers; but without scale, mid end hotels will not be able to create a better experience because of uncontrollable costs.

"There are four elements to identify for the development of mid tier hotels." The second is the key elements of the market, such as the first and the second is the matching of the hotel, the hotel and the hotel Third, multi-element humanistic experience, such as design, culture and environment; fourth, the improvement of service quality.

The success of Yaduo hotel benefits from the management of space and crowd, which makes it walk out of a unique way to obtain traffic in the process of quantity and quality competition. The mode of "IP + Hotel" has become one of the development models promoted by Yaduo hotel at present, which opens up the flow of people, data and service. However, this also determines that Yaduo is difficult to sink. In this regard, yeluyin said that Yaduo only does medium and high-end markets, "this is what we are good at.".

Different positioning leads to differentiated competition in the middle end hotel industry.

"All season hotels are positioned to meet the general core needs of the largest number of 400 million middle class people, not just personalized needs. In 2019, the number of guests received by hotels has reached 40 million in the whole season, and according to this growth rate, it may exceed 60 million next year. " It also has the advantage of competing with other hotels in the whole season.

It is understood that relying on the flow contribution of "Huazhu club", a member platform of Huazhu group, the hotel can ensure a certain amount of passenger flow even in the process of product upgrading iteration and new store expansion.

Shen Yijun told the 21st century economic report that the domestic hotel market has a large scale, a low chain rate and a sinking market potential, which has become the future growth space of middle end hotels.

The reporter of 21st century economic report has noticed that there is a strong desire for the market to sink in the whole season. In this regard, after Huazhu announced to settle in pinduoduo and open an official flagship store in August this year, the products of the all season hotel also appeared on this platform, and the ability to obtain traffic was further upgraded.

Full season hotel CEO Shen Yijun: the future of mid market lies in scale, sinking and chain