In the view of Sun Jian, general manager of BTG Homeinn Hotel Group, if "surprise" is the key word in the tourism market in 2023, then "cautious" is his trend prediction for the tourism market in 2024.
As one of the three major hotel groups in China, BTG Homeinns has turned losses into profits in the first three quarters of 2023, and some operating indicators have even surpassed the same period in 2019. But Sun admits that not all hotels can return to the state of 2019, and 40% of hotels in the domestic market still face challenges. After a three-year downturn, continuing to expand the number of mid-to-high-end hotels is still an important strategy for BTG Homeinns, but in the future, it will no longer blindly pursue quantity, but will instead focus on quality and efficiency.
Operations have basically recovered to 2019
For BTG Homeinns' operation in 2023, Sun Jian gave this summary: basically returning to the level of 2019.
Among them, in the summer, "Eleventh" and other long holidays, the overall level has even caught up with the same period in 2019. According to the data of the China Tourism Academy, the number of domestic tourists in the country reached 1.839 billion this summer, and the domestic tourism revenue reached 1.21 trillion yuan, and the tourism popularity this summer was significantly higher than that of the same period in 2019.
Benefiting from this, BTG Homeinns' performance in the third quarter increased significantly: operating income of 2.303 billion yuan, a year-on-year increase of 52.76%, and net profit of 404 million yuan, a year-on-year increase of 347 million yuan, an increase of 52.6634 million yuan over the same period in 2019.
2023 has come to an end, and BTG Homeinns' operating data continues to rise. Sun Jian also revealed that as of the beginning of December 2023, the average room rate of BTG Homeinns has recovered to 150%-130% of the 2019 level, and the occupancy rate has basically recovered to 80%-90% of 2019.
Although the overall performance has recovered rapidly, the occupancy rate is not as good as in 2019. In this regard, Sun Jian told a reporter from Beijing Business Daily that this phenomenon not only exists in the domestic market, but also the occupancy rate of the global hotel market in the first year of recovery was not satisfactory, and it was not until two years later that it basically returned to the level of 2019.
On the one hand, the current business activities are still limited by some factors, which has led to a decline in the flow of global business people, and on the other hand, in the past three years, with the rapid development of digitalization, most business transactions have shifted online, and travel has gradually decreased, so to a certain extent, the recovery rate of hotel occupancy has been affected to a certain extent.
40% of hotels in China are still struggling
In 2023, even though the performance of the overall domestic hotel industry is on an upward trend, the degree of market recovery is still uneven. "From the perspective of a national chess game, about 60% of hotels are currently performing relatively stable, while for the other 40% of hotels, it is still very challenging to recover to the same level of the same period in 2019. Sun Jian said frankly.
Talking about the reasons for the difference in the level of market recovery, Sun Jian explained that with the liberalization of inter-provincial travel and inbound and outbound tourism, many corporate travel has also restarted, and the first-tier cities that have been very frequent in business exchanges have recovered relatively quickly, and at the same time, the hotel recovery speed in cities with leisure tourism consumption as the main sector is also considerable, while the recovery speed of the third and fourth tier cities and below is relatively slow due to relatively few business activities, so the overall recovery of the hotel market in the country shows an unbalanced trend.
As Sun Jian said, there is indeed an imbalance in the recovery and development of the hotel market. According to the "China Hotel Market Prosperity Survey Report for the Fourth Quarter of 2023" released by Horwath Management Consultants, from the perspective of regional markets, except for Central China and South China, the prosperity index of other regions is generally lower than that of the third quarter. The first-tier market maintained relatively positive market expectations, and Beijing continued to rank first in the national hotel market prosperity index.
The length of stay in the surrounding cities has increased
The recovery of the market has also allowed Sun Jian to see new changes in the hotel market. Sun Jian said that the current boundary between business travel and leisure travel is no longer clear, and leisure travel driven by business travel is increasing, which also makes the prospect of leisure travel in the broad sense infinitely magnified. "In the past, people traveled to one city for business and limited their activities to one city, but now with better transportation, people are spending more time in surrounding cities in addition to business trips. Sun Jian further explained.
Sun Jian judged that when leisure tourism is no longer driven by the so-called localization and localization characteristics, the market will slowly change, and the products and services provided by hotels will also be upgraded accordingly. The change in demand and business environment has made hotels no longer just meet the function of a single accommodation, but also transformed into a life service scene.
According to BTG Homeinns' financial report for the third quarter of 2023, since the beginning of the summer, BTG Homeinns has launched the "Summer Travel Research Institute" interactive marketing campaign, covering iterative theme content such as research, city walks, leisure and vacations, so as to meet the multiple needs of members such as personalized travel, accommodation and local life experience. In Sun Jian's view, on the basis of the current digital business environment, coupled with the fact that functional consumption has become a universal supply in society, the business environment is changing from pure functional satisfaction to life services.
At present, more and more hotel groups in the market are also upgrading their scenes, and some hotel groups are not only selling bedding, but also starting e-commerce. Sensing the changes in the market, Sun Jian and his team also quickly deployed and integrated more commercial consumption formats into the hotel scene.
The proportion of renovation of existing hotels accounts for 10%-15%
Under the changing market, new brands of major hotel groups are emerging in an endless stream, and it seems that "horse racing" will continue to be staged in 2024. At a time when "involution" is intensifying, how to find a high-quality development path is also a topic that Sun Jian and his team are thinking about.
"2023 is a special year for the domestic hotel market, but if hotel groups can see the opportunity and seize it, it will be a big gain. Based on this judgment, Sun Jian believes that the hotel market will continue to grow in 2023 in 2024, but the overall development in the first half of the year is still relatively cautious.
"The leading hotel group will maintain a certain speed of expansion every year, and the number of stores may not increase significantly, but will merge and convert to the existing non-branded and independent individual hotels in the market. In other words, it will seek incremental growth from the existing hotel market. Sun Jian also revealed that BTG Homeinns will account for 10%-15% of the number of renovated stock hotels in the future.
In Sun Jian's view, the first half of hotel competition is mainly about scale, development and quantity, while from the second half, all groups should pursue "specialization, refinement, refinement, specialization, and innovation" to further achieve high-quality development.
In the third quarter of 2023 financial report released by BTG Homeinns, it also mentioned how to develop high-quality in the future, and the financial report shows that it will continue to carry out the transformation and upgrading of core hotel brands and focus on the iteration of mid-to-high-end hotel products. As of the end of the third quarter reporting period, BTG Homeinns had 2,051 contracted reserve projects that had not yet opened or were in the process of being contracted, an increase of 51 from the end of the second quarter, of which the number of mid-to-high-end hotels accounted for 28.4%.
"How to enhance the product power of the product is the problem that the hotel group will continue to explore in the new year, customers have different needs for the ability, appearance, function and experience of the product, and there is no need for each group to blindly squeeze into the same track, the hotel industry needs to pay more attention to the ability of each grade of products to enhance the experience it brings to customers. Sun Jian firmly believes that the hotel industry will definitely develop towards high quality in the future, and healthy competition will continue to exist.
Beijing Business Daily reporter Wu Qiyun