Dialogue with Zuo Guizhao: Long-term rental operations should be as precise as surgery

Author: Wang Di

Source: Focus Finance

Even if long-term rental apartments have gone through the "gray rhinoceros" stage such as thunderstorms, with the smooth release of the central tone of "renting and selling at the same time", long-term rental apartments are still a potential market for rapid growth. Some experts said that it is expected that the rental apartment will maintain a compound growth rate of 24% by 2025.

The reality is that vanke boyu, Longhu guanyu and other brand products rushed to enter the market growth rate is stable, but the head enterprise has not yet formed a capacity generation gap, the opportunity for late-starters still exists; the level of market institutionalization is low, and long-term rental apartments account for less than 10% of the rental market.

As a quality residential asset operator of Huazhu Group, unlike the business model of decentralized apartments, Chengjia has always focused on the operation and management of large-scale property centralized listings.

Zuo Guiwei, senior director of Chengjia's investment department, believes that the profits of the long-term rental apartment industry are diluted, which requires enterprises to focus on refined services, and operations must be as accurate as surgeon surgery.

There are four major differences between "centralized" apartments and "decentralized" apartments

The operation mode of long-term rental apartments is roughly the same, most of them take the form of long collection and short payment (more than one payment to tenants, one payment to the head of the household in January), high collection and low payment (high price from the owner of the household, and then rent to the tenant at a low price), and then joint rent loan (let the tenant loan to pay the rent), quickly return cash to form a pool of funds, and then put the cash in hand into a new round of scale expansion, constantly snowballing. But the potential danger of this model is that once the capital chain is broken, the capsizing will be in a hurry.

In Zuo Guiwei's view, Zuo Guizhao's "decentralized" and "centralized" apartments have a big difference in profit models, and the different profit models have also led to greater risks in the operation of "decentralized" apartments.

First of all, in terms of rent difference, compared with "centralized" apartments, in terms of rent difference, because most of the "centralized" apartments are leased to private owners, the lease period is generally shorter, mostly between 3-6 years, so the rent difference formed is small, and the "centralized" apartment is leased to large owners or institutional owners, the lease period is long, mostly in 15-20 years, under the influence of long-term inflation, the minimum rent for large owners is increasing and the rent for small tenants is increasing, and the rent difference between the two will be magnified under the accumulation of time.

Secondly, in terms of zero difference, "decentralized" apartments, equivalent to 1 set of 1 set of rent from the owner's hands, are equivalent to retail; "centralized" apartments, equivalent to renting hundreds of apartments at a time, are equivalent to wholesale, and it is easy to get lower discounts.

Third, in terms of product premium, "centralized" apartments mainly improve the ping efficiency by optimizing the area in a building, and "decentralized" is to increase the ping efficiency by adding a room per household through the N+1 model. In terms of the space for improving the efficiency of the ping, the "centralized" re-planning of the function and use of the space can improve the ping effect more extremely, so it can generate a larger product premium.

Finally, in terms of operating premium, in addition to the background of Chengjia Huazhu Group hotels, "centralized" apartments can improve the service experience of tenants through intensive services while ensuring a lower ratio of people to room, providing tenants with a safer rental environment, thereby increasing more operating premiums.

A successful housing rental project not only requires refined operation, but also requires systematic service endorsement.

Zuo Guizhao pointed out that the long-term rental apartment industry is getting bigger and bigger, diversified demand means the complexity of the matching end, if you want to promote a high-quality leasing project, the early stage needs to operate in the front stage to guide planning, positioning and rich operation to do the foundation, the medium term is the supply chain cooperation, in line with the quality requirements, control costs and platform creation.

"The operation period is a chain operation, and under 5, 10, 15, 20 years or even longer, the stability of the operation maintained forms a chain advantage, and the digital empowerment, cultural accumulation, and SOP present a good operating state."

In fact, from the perspective of operating efficiency, only enterprises that respect the market and really sink their hearts to do a good job in operation can stand out and achieve asset preservation and appreciation. Long-term rental apartments have a variety of operating income, for the non-rental income part, Chengjia is also making a variety of attempts. Zuo Guizhao said that at present, chengjia focuses on the main business and core capabilities of the main position of service and living facilities, and manages the room well.

"For example, a bottle of disinfectant can be sprayed several times, how many bottles of actually usable liquid can be turned into after dilution of the original liquid, how many colors of rags need to be equipped in a room, how many steps are required to clean the bathroom, how many safety standards and quality inspection standards need to pass an item, and whether to extinguish the four harms in the summer." For another example, the price of a bottle of mineral water is 19.8% of Jingdong's, the price of the three-piece set of washing and bathing is 1/3 of Tmall's, and the price of mattresses is 16.8% of that of Tmall stores, all of which are part of the refined operation. ”

Refined operation requires "three forces in one"

Market giants are pouring in to share policy dividends, which means that in this track, if you want to achieve a breakthrough, you must have your own set of "no one has me" operating logic.

Zuo Guizhao believes that Chengjia chooses the "trinity of refined operation mode", sales power, product power, technical force is the core content, corresponding to traffic, standardization, digitalization, the organic combination of these three forms the core force of Chengjia apartment.

Product strength means the ability to quickly and accurately judge the value of a property, that is, the ability to choose a house. The second meaning is the ability to transform the house.

From the perspective of Chengjia Apartment, the holding and operation of residential properties is a very meticulous work, and it is very important to have experience in offline specific operations. For example, in the layout, design and equipping of auxiliary facilities in apartments, it is necessary to have experience in order to anticipate the needs of the end consumer. Many times, just a few bottles of mineral water in the room and whether the disinfection room should be equipped with such a very detailed and technical content will have an impact on future operation and maintenance, and inexperienced enterprises are often difficult to think about in advance, and they cannot finally do it.

Zuo Guizhao said that this shows that many enterprises from residential development often face many difficulties when doing property holding operations, essentially because their strengths are to take land to build houses and sell, rather than holding operations, and there is still a long distance between imagination and actual operation.

Secondly, better sales power has a great role in promoting the profitability of long-term rental apartment enterprises. In terms of sales power, because the long-term rental apartment industry itself has thin profits, enterprises often have no more expenses to spend on marketing and customer acquisition, Chengjia Apartment has been relying on its own direct sales system for many years, and the proportion of direct sales customers is as high as 80%, which saves a lot of marketing costs for Chengjia.

Third, in terms of technical strength, the current long-term rental apartment industry has relied on intelligence, data and digitalization to achieve drive, and Chengjia Apartment has also developed its own CAS system, which can support and meet the use of long-term and short-term rental business. It is hoped that users can achieve good linkage with the middle and back office system in the whole cycle of rental housing in the whole cycle of finding a house, staying, staying in, and after checking in.

Based on the repeated understanding of the concept of housing, Chengjia extends Huazhu's accumulated hotel management experience and service advantages to the entire residential leasing field. In order to create a high-quality living environment, with hotel-style service to carefully take care of every guest, is committed to creating a warm, comfortable, warm home away from home. ”

Quality residential asset operators, diversified products match market demand, and the operation and management of large-scale property centralized housing by Chengjia together constitute the "moat" of its scale development.

In addition, Chengjia is also linking a number of market-oriented entities to participate in the construction of long-term rental housing, responding to policy guidance, expanding housing enterprises, state-owned enterprises, and large-scale stock asset holders, and jointly building a diversified entity long-term rental housing supply system.

According to Zuo Guizhao, Founded in 2015, Chengjia is a quality residential asset operator jointly invested and created by Huazhu Group and IDG Capital, with five major residential brands, covering high, medium and mass market long-term rental apartments, new hotels and living services (white-collar apartments, blue-collar apartments, serviced apartments). Chengjia has opened and signed more than 200 properties and more than 30,000 houses nationwide through cooperation methods such as self-sustainment and trusteeship.

In fact, Chengjia has also captured a large number of fans in the capital market. In December 2015, Chengjia received angel investment from Huazhu Group and IDG Capital. In July 2017, Chengjia entered Beijing to complete the Pre-A round of financing, and Huazhu Group and IDG continued to raise. In May 2018, Chengjia and Ascott Singapore reached a strategic cooperation to officially operate and manage the Citadines Residences brand. In September 2019, it completed the A round of financing, introducing top investors and strategic investors: Boyu Capital, Yunfeng Fund, Ascott, CCB International, Singapore GIC, raising nearly 300 million US dollars.

In June 2021, Chengjia joined hands with the "national team" and reached a strategic cooperation with Zhonghuan Group, a subsidiary of the State-owned Assets Supervision and Administration Commission of Shanghai Putuo District. In August 2021, Chengjia linked up with the Greater Bay Area and reached a strategic cooperation with Tongchuang Group to promote the construction and service of housing security systems in key areas, open up the era of high-quality services and refined operation in the field of long-term rental, and expand the field to the Yangtze River Delta, the Greater Bay Area, and the Beijing-Tianjin-Hebei population agglomeration area.

In terms of product creation, Chengjia will continue the advantages of hotel transformation space to the field of long-term rental, efficiently use space resources at the same time, vigorously improve the rental experience through hotel-level facilities, explore and practice the first full digitalization of the research and development industry, covering the management department of all scenes of residence, realize 1 central brain 10+ digital products, and open up the management of all scenes of residence.

"Using intensive control + chain enterprise background, improve management efficiency, strict cost control, and strive to match supply and demand, achieve multi-grade, multi-household, diversified, serve different regions and different industries, accurate matching, so that all kinds of talents can live in peace."

In the face of the different forms of existing properties, when renovating, Chengjia is also adhering to two principles and one goal. Respect the main structure, do not demolish and build, and ensure the safety of the project. According to local conditions, rational and efficient use of space resources, so that more people have a house to live, to create a quality living space, improve the living level of the majority of tenants.

In the application of digital technology, Chengjia accurately locates products, multi-grade, multi-apartment, diversified, and matches the rent-friendly groups; with a full-scenario management and service system, through the central brain + Chengjia digital 10+ product matrix, intensive control + chain enterprise background, to ensure cost reduction and efficiency; coupled with the three-layer residential security guarantee of man-machine collaboration, so that tenants have a safe and secure and settled-in experience, thus realizing the whole life cycle of connecting tenants.

The first layer of perceptible security protection, 365 days of resident personnel shift duty, regular fire training, public area no dead angle monitoring and other basic security systems. The second layer, the perceptible security equipment guards. In terms of IOT intelligent systems, the use of The Internet of Things + big data computing to achieve efficiency improvement. The third layer, the invisible security shield.

"For example, when the energy consumption of the room exceeds the usual amount of the tenant, it is greatly increased, triggering the SOS alarm, and the housekeeper contacts the tenant in real time to check whether the home appliance is normal and eliminate the safety hazards of the water circuit." In the room where the occupancy state is greatly reduced and the tenant has not activated the door lock for more than 2 days, the SOS alarm is triggered, and the housekeeper comes to care for the safety of the tenant. ”

It is understood that last year, Chengjia promoted the "housing + management" model, reached a strategic cooperation with Sino-Ocean Group, launched the membership system, created a private domain traffic pool, realized the release of CAS2020, fully supported business scenarios, supported revenue management, direct sales system, and further improved efficiency. In the same year, Chengjia Apartment joined hands with the TV series "AnJia" to implant marketing and won the 2020 China Innovative Marketing Award.

It is worth mentioning that recently, the industry's first private domain traffic marketing platform independently developed by Chengjia - Orange Xiaotui won the 2021 China Innovative Marketing Product Award.