2020 is a turbulent and magical year for the world, but for the hotel industry, in the words of Ji Qi, founder and chairman of Huazhu Group, it is an indiscriminate "stress test."

In this test, whether it is a single model or a chain model, an international brand or a local brand, under the same conditions that last for nearly a year and how long it will last, everyone will work together to resist pressure, recover, transform, and seek change. Who can recover faster, persist for longer, and deliver better results will also prompt the hotel industry to usher in a new change.

Not long ago, Huazhu announced its third-quarter financial report. Relevant data shows that its business is recovering rapidly. Especially since the third quarter, excluding the requisitioned hotels, the overall ADR of Huazhu Hotel in Q3 2020 was 218 yuan., compared with the same period last year, there is still a certain gap, but it increased by 17.82% from the second quarter. Among them, the occupancy rate of mid-range and high-end hotels recovered to 80.1%. Although it was less than 86.1% in the same period last year, it also continued to recover.

According to the information disclosed by Ji Qi during his speech at the "2020 China Living World Congress Beijing Station" on November 13, China Living will not slow down its development due to the impact of the epidemic in the future. The overall strategy of "thousands of cities, thousands of stores" and "sinking into third-and fourth-tier cities" will not change. Moreover, he also specifically stated that China Living will "re-enter China" in the next step and treat the Chinese market as the world. What China Living will do in the future is to become a benchmark for China's services.

01、

The "Five Major Trends" and "Eight Dividends" in the hotel industry that the market needs to see clearly

The hotel industry will not be destroyed by the epidemic. Although it seems that global markets other than China are facing a new round of impact caused by the second counterattack of the epidemic, such an impact will also be temporary.

So what may lead to the end of the hotel industry? Ji Qi said half-jokingly. One may be the prevalence of video conferencing, where people can solve work problems by staying at home and no longer have the need for business travel; the other is the advancement of biotechnology. People can never have to sleep. But as long as these two situations fail to come true, travel will still be a necessity for human survival and reproduction, and the hotel market will have room for continuous improvement and progress.

However, when the hotel industry has experienced the "black swan" of the epidemic and recovered from a trough, some new changes and trends are also taking place. Ji Qi gave five predictions:

First, the hotel industry will move from single development to chain development. Relevant data shows that in 2020, 150,000 hotels were closed on the Ctrip platform, 98% of which were single ones. This also proves that chain hotels have stronger ability to resist risks. In the future, the transformation speed of existing properties of single hotels in the market will be further accelerated and the industry's chain rate will increase.

Second, hotel services will move from full-service to selected services. From the perspective of demand, there is still market space for full-service hotels, but there may be only a few or very few hotel brands that can provide full-service services. Most hotels will become boutique hotels or select service hotels like London, New York, Tokyo and Hong Kong.

Third, hotel standards will shift from star rating to branding. Star-rated hotels are an important criterion for distinguishing hotel quality levels in the past and current industries. They are also an important reference for guests to choose what level of hotel to stay in. However, in the future, guests will be more accustomed to choosing familiar or recognized brands, and brands will replace star ratings as Chinese hotels. More important label.

Fourth, local hotel brands will gradually rise. More and more guests will choose China's local hotel brands. Currently, the mid-end and budget hotels with high market share are basically domestic brands. As the self-confidence of Chinese people increases, the trust of local brands increases. In the future, local brands in the high-end and even luxury hotel market will also grow faster, which is a major trend in the industry.

Fifth, hotels will move from real estate supporting facilities to investment instrumentalization. As an asset, the value of hotels is becoming more and more clear. They are no longer built for real estate development and construction, but focus on the rate of return. Hotels will be separated from their role as vassals of real estate support and become an investment tool.

In addition, Ji Qi also shared the eight major dividends that the hotel industry is about to usher in, which are investment dividends, branding dividends, internal circulation dividends, growth dividends, liquidity dividends, urbanization dividends, sinking dividends and demographic dividends. Especially for sinking dividends and growth dividends, China has about 400 million new middle class and about 1 billion sinking markets. Whether in terms of consumption capacity or consumption growth potential, there is great room for expansion.

Qin Shuo, a humanities and financial observer/founder of Qin Shuo's circle of friends, also said that the proportion of young people in China's consumer group is increasing, and their desire to consume and willingness to consume are becoming stronger. This is for companies that keep up with changes in consumer demand., it is a good opportunity, and the key to seizing this opportunity is innovation. In the past, the hotel industry was very traditional, but now it is becoming more and more mature in terms of management operations, service awareness, and Internet digitalization. Companies that can see trends clearly, seize dividends, and run at the forefront are companies that can break out of fixed thinking in this new era of creativity and have a better chance of success. For the hotel industry, thinking must also change.

02、

Behind Huazhu's "thousands of cities and thousands of stores" are new opportunities emerging in the sinking market

While seeing clearly the trends and dividends, how to accurately grasp them will test the judgment of the person at the helm. When Ji Qi talked about the future of Huazhu, in addition to the constant emphasis on the "thousands of cities and thousands of stores" strategy, the word "heavy position China" was also frequently mentioned. Huazhu would regard the Chinese market as the world.

Jin Hui, president of Huazhu Group and CEO of Huazhu China, once explained how to understand this strategy in detail when accepting the media. He said that Huashi is located in China's largest service market, and there is potential and market space for deep cultivation, whether in economic, mid-range or high-end. For Huazhu, it is not only necessary to be a "thousands of stores" in terms of the scale of hotel stores, but also to be a benchmark for corporate profitability and become the best profitable hotel in China and even the most profitable hotel in the world.

In fact,"heavy position in China" is not just a strategy implemented by China. Leaders of companies in many fields are raising this goal in 2020. Zhang Lei, founder and CEO of Hillhouse Capital, and Su Shimin, chairman and CEO of Blackstone Group, have both mentioned that now is "the best opportunity for a strong position in China" and said that the penetration of the consumer Internet has generally been basically over. Future opportunities lie in service companies, and the hotel industry is just a typical representative of the service industry.

For Huazhu,"thousands of cities and thousands of stores" is also the most important starting point for its "heavy position in China" strategy. In the process of achieving the goal of "thousands of cities and thousands of stores", the risks it faces are also ubiquitous, especially due to the possible dilemma of quality control and speed due to the expansion of scale. Jinhui said in this regard: "Ji Qi and I have repeatedly emphasized that our scale expansion must be centered on customers and customer-centered to open qualified stores. Controlling the quality of stores, whether customers are satisfied, and whether franchisees can make money are crucial to the success of Huazhu's sinking."

He further explained that in order to achieve scale while ensuring quality, Huazhu has focused on four aspects of work:

The first aspect is to manage and organize the settlement of Chinese residences, rather than the original simple and mechanical mobile management. Because hotel management relies heavily on on-site management, after the management organization sinks, it can be better close to guests and franchisees.

The second aspect is to make the product and service supply chain very standardized through strong supply chain capabilities. Through such supply chain capabilities, everything from general contracting construction to materials, design, and services can be unified and integrated, thus solving the problem of Huazhu's management radius.

Third, Huazhu has built a complete set of digital sensors. Simply put, it collects guest feedback by capturing customer reviews and Huazhu's experience officer system, and synchronizes it to hotel employees in a timely manner. A large number of sensors enable Huazhu to maintain service and quality through customer reviews in a timely manner.

The fourth aspect is to achieve systematic empowerment of the overall industry, such as management empowerment, financial data empowerment, and industry-related empowerment, so that Huazhu employees and franchisees can do better and ensure the reliability of service and quality. Sex ensures that customers feel the same service whether they are on the front line or on the third and fourth lines.

It is understood that mid-range hotels and budget hotels will still occupy the dominant position in the process of sinking Huazhu, and 85% of new stores will be mid-range and budget oriented. This also means that Hanting and Quanji brands have become the vanguard of the sinking strategy. Hanting brand Huazhu has long stated that it would open Hanting to every county in China, while Quanji Hotel welcomed its thousandth store in Nanning, Guangxi in September this year, achieving a zero breakthrough in Guangxi and achieving the goal of full coverage in 31 provinces except Hong Kong, Macao and Taiwan.

In addition, Huazhu has also established strict review standards for controlling the quality of stores. A very large proportion of its old hotels have been renovated into new hotels, accounting for more than 50% in the future. It has also launched a GOP management system to help stores optimize operations. Cost management, if they still fail to pass the assessment of qualified stores, they will be eliminated. According to relevant data disclosed in its latest financial report, the annual closure target of Huazhu in 2020 has increased from the initial forecast of 350 to 450 to 550 to 600. An important reason for this is to "continue to evaluate its hotels in order to ensure the quality of guest accommodation and exclude hotels with poor product quality or inconsistent with Huazhu's long-term development strategy."

03、

Becoming a traditional hotel group is not the ultimate goal of Huazhu, but a "super" hotel group is

In Ji Qi's speech, he also made a clear positioning and description of Huasu's future goals. In his view, becoming a traditional hotel group is not Huazhu's goal. What Huazhu wants to become is a "super" hotel group built with composite materials.

What kind of hotel group is a "super"? He further explained that looking back at the development history of the hotel industry, it has roughly gone through three stages: the first is the "reinforced concrete" stage, when hotel owners all pursued buildings and beautiful houses, and staying in hotels became a luxury consumption behavior; The second stage is the "steel structure" stage. This stage is not aimed at the hotel itself, but at the company's form. The hotel industry has begun to use systems, brands, and chain systems to expand its scale through franchises. It needs to have a more stable structure. Supporting the structure is also the stage where hotel companies are currently at; for Huazhu, they hope to become the leading company in the next stage, that is, the "three-in-one" super hotel group built with composite materials.

The "three-in-one" here refers to technology + traffic + brand respectively. Corresponding to the three capabilities that an enterprise should have, namely product power, reward power and innovation power. Huazhu hopes to achieve a "three-in-one" approach. It must be fully digital in technology and build a member-led reservation system in traffic. In the end, the hotel's brand power still depends on stores and services, so Huazhu must become an offline king. Today, Huazhu is also implementing this goal step by step. As of September 30, 2020, Huazhu Group has 6390 hotels, including 687 rented and owned hotels, and 5703 managed and franchised hotels; At the same time, Huazhu still has 2272 hotels to open.

When talking about his views on the future of the Chinese market, Ji Qi said that he had proposed a long time ago that Chinese services would replace Made in China as the main growth point of China's economy in the future. Now it seems that such an assessment is still not accurate enough and should be adjusted to China. Service is the second growth curve of the future economy after Made in China. "Huazhu has the honor to be included in this second growth curve industry and is doing a good job. This will also be the second growth curve for Huazhu's own performance. I believe that China's services will become China's development in the next few decades. a main melody."

He also emphasized that based on the domestic market and treating China as the world does not mean that the internationalization of Huaju will be shelved. Globalization is a trend, and going abroad to the world is also a trend for Chinese hotel companies. The rise of Chinese cultural confidence and Chinese service confidence will give Chinese hotel brands more opportunities to become world-class, because Oriental services led by Oriental civilization are inherently world-class. Oriental culture has world-class soil and genes. Focusing on such a possibility, Huaju will surely achieve some internationalization at the right time and through the right method in the future.