Huazhu's Orange Crystal Trap Marketing Storm: Where to Go for Mid-Range Hotels

Source: China Business Daily

Li Yuan, a reporter of this newspaper, reported from Beijing

The orange hotel, which has always been unusual, stabbed Lou Zi again the day before Women's Day.

On March 7, The Orange Crystal Hotel posted a push article on its WeChat public account titled This session of women can't do it, too long... with a picture of a lying in a bathtub, and the abstract text is Contemporary women are really lawless.

As soon as this advertisement came out, it exploded on social media, causing disgust among many female audiences and a wave of bad comments.

In response to the adverse public opinion reaction caused by this incident, on the evening of March 8, the official Weibo of Orange Crystal Hotel issued a statement apologizing for the discomfort caused by the tweet title of Orange Crystal Hotel's WeChat public account. Immediately after March 10, Huazhu Group, the parent company of Orange Crystal Hotel, also apologized, saying: "The tweet is for marketing purposes, attracting attention in the headline, sensationalizing, hurting the feelings of the public, violating public order and good customs, causing a relatively serious negative impact, and has also been severely criticized by the media and consumers." We are aware of the seriousness of the mistakes we have made, feel deeply remorseful, reflect bitterly, and sincerely apologize to the public. ”

"Behind the aggressive advertising and marketing of Orange Crystal under Huazhu Group, there is actually a hidden fact that the competition in domestic mid-range hotels is intensifying." Jiang Haifeng, director of Horwath Management Consulting Company, told the Reporter of China Business Daily.

The mid-range market is highly competitive

The relevant department of Huazhu Group said in an interview with a reporter from China Business Daily, "The occurrence of this incident shows that we still have traffic-oriented deviations in self-media content, and there are still big loopholes in the audit mechanism." We have carried out a comprehensive and strict internal self-examination at the first time, voluntarily deleting articles that may cause discomfort to consumers; we have dealt with and educated the parties and relevant managers, and asked the entire group to take a warning; we are reformulating the self-media management system and proposing stricter and more detailed regulatory standards to prevent the recurrence of such incidents. In fact, in the domestic hotel market, Orange Hotel has always been an "alternative" existence.

Founded in 2006, Orange Hotel Group focuses on boutique design and operates 56 hotels by the end of 2018, covering Shanghai, Beijing, Tianjin, Hangzhou and other cities. It includes three brands, Orange Crystal Hotel, Orange Hotel Selection and Orange Hotel, which are respectively oriented to the mid-to-high-end market, of which Orange Crystal is mainly focused on the high-end hotel market.

On February 28, 2017, Orange Hotel was acquired by Huazhu Group for 3.65 billion yuan, but after the acquisition was completed, Orange Hotel still operated independently, forming a differentiated operation with Haiyou, Hanting and All Seasons Hotels under Huazhu Group.

In fact, the Orange Crystal Hotel is a typical mid-range hotel.

Industry insiders believe that in the domestic hotel market, the average room rate of the express hotel is about 100 yuan to 200 yuan, and the housing rate of 95% can be profitable; the average room rate of the mid-range hotel is between 300 yuan and 400 yuan, and the occupancy rate cannot be less than 80%; the occupancy rate of high-end hotels cannot be less than 60%, and the average room rate is 450 yuan to 800 yuan; the occupancy rate of luxury hotels cannot be less than 60%, and the room rate is 1500 yuan to 1800 yuan.

"Personally, I feel that the growth of mid-range hotels is currently slowing." Yang Yanfeng, a special researcher at the Tourism Research Center of the Chinese Academy of Social Sciences, told reporters. According to the data provided by Zhao Huanyan, chief knowledge officer and senior economist of Huamei Hotel Consulting Agency, in the third quarter of 2018, the revenue per available room in Jinjiang's mid-range and budget hotels decreased year-on-year, and the average room rate of mid-range hotels in Jinjiang was 268.17 yuan, up 4.81% year-on-year, while the average occupancy rate was 84.40%, down 5.24% year-on-year, and the income per available room was 226.34 yuan, down 0.68% year-on-year.

For example, the average room rate of high-end hotels in the middle and high-end hotels was 319 yuan, down 1.5% year-on-year, the average occupancy rate was 82.5%, down 2.7 percentage points year-on-year, and the income per available room was 263 yuan, down 4.6% year-on-year. "From the data point of view, mid-range hotels are also currently in a state of oversupply." Zhao Huanyan said.

In recent years, as the economy hotel market has been basically saturated, consumer demand is also getting higher and higher, and mid-range hotels have received more and more attention. Budget hotels such as Home Inn and Hanting will launch corresponding mid-range hotels, and many high-end hotels are also extending downwards in order to further occupy the second- and third-tier markets.

In the view of a hotel industry insider who did not want to be named, as more and more mid-range hotels join this camp, such as Atour Hotel, Hilton Jubilant, InterContinental Express Holidays, Hyatt Place, Hyatt House and other mid-to-high-end hotels to join, the competition in mid-range hotels has been very fierce, if the Orange Hotel does not go to the side door, it will not attract attention, it will be submerged in the brand.

The wandering of orange crystals

In the domestic hotel industry, hotels as more alternative as Orange Hotels, although not considered budget hotels, are also different from traditional high-end hotels. Compared to high-end hotels, Orange Hotels lack standard facilities such as luxurious and spacious lobbies, high-end meeting rooms, swimming pools and gyms. Therefore, both the Orange Selection and the Orange Crystal Hotel are still classified as mid-range hotels.

In the view of the above-mentioned hotel industry insiders, mid-range hotels such as Orange Crystal cannot talk about feelings, because they want to save costs and improve efficiency, unlike high-end hotels that talk about "forced grid".

"If the so-called mid-range hotel wants to make a profit, it must find a 'point' between high-end and economical fast, in fact, the mid-range hotel is essentially a fast route." Because there is no banquet hall, Western restaurant, Chinese restaurant, no swimming pool, conference hall and other facilities, but it will also be appropriately exquisite, such as oil paintings, crystal chandeliers, this is called the mid-range hotel. The industry insider also mentioned that in the past many years, the rapid development of budget hotels, luxury hotels to maintain a tall positioning, high and low-grade hotels are developed well, but the mid-range hotels are sandwiched in the middle, high or low, not good development. This is also a factor that orange hotels have not developed rapidly over the years.

"In the local hotel industry, although Huazhu is doing a good job and ranking first in the hotel industry in terms of market capitalization, its number of hotels is too large, mainly in the middle and low end, such as Hanting." Huazhu also acquired some homestays, with a wide range of acquisitions, and wanted to quickly occupy the market. At the same time, the above-mentioned industry insiders believe that squeezed by the low prices of budget hotels and the competition in the image of high-end hotels, mid-range hotels have long been in an awkward position, even the orange hotel is not a very personalized hotel operation. Because it is not a concubine of Huazhu Group, Huazhu has not invested too much in the Orange Hotel after the acquisition, and there is not much control over the Orange Hotel, so in the past two years, the Orange Hotel still continues the previous style, which also leads to the problem of the sword-taking advertisement being accused by consumers.

Some experts pointed out that although the mid-range hotel market continues to be optimistic, it is not positioned as the "mid-range" to do a good job in the mid-range, on the contrary, how to operate the mid-range hotel has a lot of learning, not imagining that attaching some facilities and hanging some oil paintings can be done well. In Zhao Huanyan's view, the first sign that distinguishes high-end hotels from budget hotels is that there is a second space outside the guest room, such as a gym, a book bar, a tea house, and a film and television social area; the second is the second high-quality product element in addition to basic needs, such as innovative catering and health-related additional services; the third is a humanistic experience with multiple elements, such as design, culture, and environment; and the fourth is to improve the quality of service.

In fact, at present, many domestic budget hotels have also made some improvements in services and products to cut into the mid-range field. However, as Sun Jian, general manager of Homeinns Hotel (Group) Co., Ltd., said, if you want to do a good job in the mid-range market, it is important to do more optimization of products, "this optimization requires quality, a sense of experience, and also needs to be recognized by consumers in today's society, the so-called appearance, Internet celebrity, IP, trend and black technology." So it's not a simple so-called mid-to-high-end hotel, because every type of hotel is facing new customer changes. "For the mid-market, consumers are becoming more and more diverse, more and more individual, and the choices will become more and more subjective.

"In the mid-range hotel market, the relationship between supply and demand is gradually changing, the operating level is declining after the supply increases, and there are more opportunities for strong brands such as full season." Zhao Huanyan stressed that if you want to be invincible in the market, its reservation system, historical precipitation, brand maintenance and so on are all important factors. In the future, in the face of market competition, the challenges of mid-range hotels will become increasingly large.