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Huazhu Hotels plan - future is digital, but all stakeholders need to benefit

03/12/2015| 9:30:25 AM| ChinaTravelNews

China Lodgings Group is eyeing major expansion and strengthening of its digital capabilities to benefits stakeholders in 2015 .

ChinaTravelNews - China Lodging Group (also known as HUAZHU Hotels Group, Nasdaq: HTHT)has major plans to sharpen its digital initiatives, counting on data analytics and business intelligence, for gaining operational efficiency in 2015.

The group shared the same as it disclosed its financial results for the fourth quarter and full year. Net revenues increased 15.7% year-over-year to US$208.9 million for the fourth quarter and 19.1% to US$800.2 million for 2014.

At a time when the hospitality industry is looking at an apt blend of human touch and technology, the group’s move is showing that hotels are looking at optimizing their staff-to-room ratio. The Chinese hotel group, which ended 2014 with a total of 1,995 hotels in operation, brought down its staff-to-room ratio from 0.20 in 2013 to 0.18 in 2014. Also, the group is diligently looking at serving various stakeholders – guests, employees and business associates – via its enhanced digital platform in the future.

From operation’s perspective, the team at China Lodgings Group is refining its expertise in digital initiatives. 

Qi Ji, founder, executive chairman and chief executive officer of China Lodgings Group , during the group’s Q4 results earnings call, mentioned that partners will benefit from a digital interactive system and self-service tools will be in place to improve hotel operational effectiveness. The group is attempting to streamline every component of a guest’s planning and booking journey, including online booking, payment, room selection, self-service check-in and check-out, one-touch to extend nights etc. to enhance the overall guest experience.

Through digital interactive system, the entire group and hotels will have access to online centralized procurement system as well as real-time operational data feed. The properties are going to run on proprietary Cloud-based HPMS system. Such initiatives are gaining prominence as hotel organizations aren’t leaving anything to chance, and trying to be in control – say gaining a precise view of last minute room availability. This also means that guests would be able to interact with the system directly from checking in and out via a smartphone. Also, personalization comes to the fore. A customer may be planning to stay in Shanghai for the first time but has stayed at different group hotels in the past. With improved infrastructure, their preferences will be recognized and would be enticed with relevant offers.  

From distribution’s perspective, as also reported by ChinaTravelNews recently, more than 90% of room nights were sold through the company’s own channels. The group intends to sustain this figure, and has introduced new functionalities on Huazhu.com and China Lodgings mobile apps. Also, considering the fact that the group’s loyalty program (31m members) contributed more than 85% of room nights sold during 2014, the brand direct channels need to be top-notch. More usage of the company-owned channels would give it more personal data, and hence the chances of retention are higher.

Expansion plans  

China Lodgings Group is planning rapid expansion of its brand portfolio, plus it intends to leverage scalable hotel network to generate incremental revenues and profits in 2015. The impetus is going to be on sustaining growth via the franchised-and-managed hotels business, plus making steady progress with the alliance finalized with Accor last year.  

“In 2015, we plan to add 680 to 730 leased and manachised hotels, with 20 to 30 leased hotels and 660 to 700 manachised (franchised-and-managed) and franchised hotels. Among these new hotels, 80% will be economy hotels, and 20% will be midscale and upscale hotels,” shared Ji.

For all the hotels which had been in operation for at least 18 months, excluding franchised Starway hotels, the same-hotel RevPAR was RMB170 in 2014, a 1% decrease from RMB171 in 2013.

Jenny Zhang, president and CFO shared that the group has witnessed a  “serious tightening up in the overall macro-economy”.

The group has observed a 5.4% same-hotel RevPAR decrease in January and February this year.

“It’s likely that we're going to see a mid-single-digit decrease in that matrix. That has never happened before, except for the post-expo year. So we are prepared to face a very challenging operational environment,” said Zhang during the earning’s call. She added that the outlook is positive for the long-term, and there is no plan to slow down the expansion.

“This year is going to be particularly challenging for us, with the same hotel RevPAR change. And we're making a lot of effort to try to expand the services to our customers, to generate more non-room revenue. So it's possible that we may see a moderate decrease in our margin,” shared Zhang.

(Report by Ritesh Gupta)

TAGS: Qi Ji | China Lodging |
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