After a strong 2018, Huazhu Group plans to launch a new brand “in the next couple of weeks,” CEO Jenny Zhang told analysts on the company’s fourth-quarter and full-year 2018 earnings call.
The new brand, called Madison, is expected “to accelerate our growth in the upscale segment,” Zhang said. No other details about the brand were discussed on the call.
Zhang said she is pleased with the company’s soft-brand acceleration program, which launched recently and consists of brands such as Starway, Elan and Hi Inn that have been on the market for a few years.
The company also introduced hotel turnover as a new metric in 2018, which Zhang said reflects a different way of handling the scale of the business in “different off-lease and manachised models.” The metric measures “total revenue captured at the hotel level instead of fees charged by Huazhu” for franchised and managed hotels, she said.
A presentation from the company shows that 79% of rooms in operation are franchised and manachised models, up 1% from 2017.
“About 72% of these rooms are in tier-one and tier-two cities, where we believe there is more sustainable demand for both business and leisure travel purpose, and thus (are) more resilient in performance,” Zhang said on the call. “The asset-light model has also reduced our business volatility and helped Huazhu sail through the changing economic environment.”
The company is also focused on innovations in the upscale segment, which was helped by the acquisition of the Blossom Hill brand late last year, Zhang said.
“In 2019, we are going to showcase (Blossom Hill’s) new urban hotel at downtown landmark in Shanghai,” she said. “We also decided to convert Vue Hotel in Beijing Hou Hai, center of the city, into a Blossom Hill Hotel. This includes a conversion from Vue Hotel that will be done near term.”
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