To be the "MUJI" of China's hotel industry, and to fight a tough battle with "focus× efficiency, × culture".
In the new era of economic development momentum transformation and more pragmatic travel consumption, public hotels have once again become the theme of industry recovery and future prosperity.
On March 20th, the largest franchise partner conference since the establishment of Dongcheng 18 years ago, the "Our Era" Dongcheng Business Co-creation Conference was held in Guangzhou, bringing together all walks of life in the industry. Cheng Xinhua, founder and chairman of Dongcheng Group, expressed his unique views on the development of Dazhong Hotel on the spot, and at the same time interpreted the competitiveness and product building direction of Dongsheng's hotels with the "bow and crossbow model" and "Muji", and systematically described the future and values of Dongcheng with "long-termism" as the center.
This conference is also the first 1,000-person chain hotel industry franchise ecological conference in China since the epidemic. Dai Bin, President of China Tourism Academy, Han Ming, Senior President of China Hotel Association, and other industry leaders delivered speeches on the current new normal and future opportunities of China's cultural tourism and hotel industry, providing new ideas and solutions for the whole industry.
01
Long-termists of mass accommodation
"We need hotels that Chinese people can afford to live in. We provide a high level of accommodation for the general public, so that the public can have a good experience of life, this is our growth. Some people have fallen behind, some have left, and some are still starting businesses and getting results. Dai Bin described China's mass hotel industry at the conference.
Eighteen years ago, the first city convenience hotel landed in Shenzhen. At that time, it was the beginning of the "golden decade" of economy hotels, with the first 7 days, the first Hanting officially opened the year before, and the Jin Jiang Inn and Home Inn earlier, the speed of Dongcheng Group seemed to have been "a little slower".
However, Cheng Xinhua said in an interview with ChinaTravelDaily 10 years ago that China's hotel industry is generally too impetuous and irresponsible to the times. He used "farming" to describe his career: "The hotel should treat products and services with the spirit of craftsmanship and long-distance running. ”
These seemingly slightly "metaphysical" views, along with Dongcheng climbing one higher mountain after another, are actually Cheng Xinhua's feelings for the hotel industry, public accommodation, and intensive cultivation of products and services.
From more than 100 stores when Dongcheng moved from Guangxi to Guangzhou in 2013, to 2,411 stores in 2019, and then to more than 3,500 stores in 2023. At the age of 18, Dongcheng not only practiced his role as one of the leaders of the mass market, but also handed over an answer sheet entitled "How to Achieve Long-termism" for the "Next Era".
In Cheng Xinhua's eyes, the large market based on the "normalized consumption" of the general population is the foundation of China's hotel industry. Cheng believes that the consumption of the mass market has reached 2.5 billion room nights per year, and the normalized demand of the mass population supports the huge demand for hotel consumption.
Returning to the supply side, in the past Spring Festival, the county hotel was on the hot search because of the "explosive order". Dai Bin revealed that the occupancy rate of hotels in the county during the Spring Festival this year saw double-digit growth. This shows that the supply potential of hotels in the sinking market is increasing day by day.
Cheng Xinhua cited data to point out that from the data of China's hotel chain rate, the penetration rate of brand hotels in China's first-, second-, third-tier and fourth-tier cities is 56%, 42%, 33% and 25% respectively, and there is no doubt that hotels in third- and fourth-tier cities in mainland China still have huge room for growth.
There is no doubt that the hotel chain space in the sinking market is huge. Cheng Xinhua gave two data: "The stock of hotels has entered the upgrade cycle, there are 2.4 million economic hotels for more than 5 years in the country, and more than 740,000 rooms for more than 5 years, and these more than 3 million will soon enter the stock upgrading market." ”
For businesses in lower-tier cities, mid-tier and lower-tier hotels still have a deep moat from a service and price balance perspective.
Even in a second-tier city like Harbin, which has just exploded, Pengrun Hotel Consulting data shows that the hotel market in Northeast China is dominated by economy and mid-range hotels, and the higher the grade of hotel products in Northeast China, the lower the proportion of hotel products in Northeast China, and the number of high-end and above brand hotels accounts for only 16%. Even in the main economic cities in Northeast China (Dalian, Shenyang, Changchun, Harbin, etc.), the scale of the chain brand hotel market with high-end and above positioning is still in a relatively early stage of development.
Once, the call for the rise of the mid-range has not been long ago, and the rise of the mid-to-high-end has begun to become a new topic in the hotel industry.
However, according to data from the China Institute of Income Distribution, in 2019, about 39% of mainland households had a per capita monthly income of less than 1,000 yuan, and the income distribution structure was "pyramid-shaped", which made the market structure of mass consumer goods also present a pyramid structure.
Under this premise, let's look at the so-called "consumption upgrade" in recent years. In fact, consumption upgrading and consumption downgrading are not relative concepts. The so-called consumption upgrade of the new generation of consumers is actually to pay for the high-quality experience while wanting "cheap and good goods".
Young people are also voting yes for "good but not expensive". While mid-to-high-end hotels in the market are benchmarking against Generation Z, young people's consumption is still "staying" in affordable economy or mid-range hotels. According to data from the Tongcheng Research Institute, the average accommodation consumption level of Generation Z youth is only 175 yuan per room, and that of Generation Y is only 196 yuan per room.
Cheng Xinhua also said that among the per capita travel consumption intentions of young people, spending 500 to 2,000 yuan per trip accounts for the majority, of which in terms of hotel choice, 60% are economic hotels and 54% are comfortable hotels.
How to really get close to consumers and provide the best quality and low-cost products is the first constant in Dongcheng for so many years.
02
The change and unchanged of the east
In ancient times, the age of 15-20 was called the year of the elephant dance.
As Dai Bin said, in any industry, with the intensification of iteration speed, it is inevitable that the price of existing products will be lowered, and it depends on whether there are new products leading the way and whether the range of consumers has changed.
The gears of the times are moving forward steadily, and they will never stop because of those who are lagging behind.
Even after three years of the epidemic, Dongcheng has never stopped.
In the past 4 years, Dongcheng has undergone internal organizational changes. "The biggest change is to let each brand set up a business group to operate independently, that is, brand management, so that Dongcheng's 14 brands can be empowered by the platform, including regional expansion, these core keywords constitute a new organizational structure change, and each brand begins to have its own independent personality and value needs." Cheng Xinhua said.
At the same time, in 2021, Dongcheng introduced strategic investments, including Meituan, and began to fully embrace the Internet. In Cheng Xinhua's view, the fundamental purpose of introducing cooperation is to innovate and help traditional hotel groups, so that Dongcheng can become a group with Internet temperament.
In 2023, Dongcheng's new brand image "Green Cat" super IP will be unveiled. In Cheng Xinhua's view, when traditional hotel brands embrace the Internet, interacting with Gen Z's familiar language symbols is the easiest way to reach users.
This is the "change" of Dongcheng.
What remains unchanged is Dongcheng's long-standing mission: "to let mass travelers spend less money and live better".
"The core appeal of the mass market is nothing more than two points: the first is a little more at a reasonable price. The second is to require stable and consistent quality. "After 18 years of training, Cheng Xinhua's demand for the mass hotel market has become more and more refined.
From this point of view, Cheng Xinhua condensed his strategy into two "234s": mainly in 234-tier cities, and mainly at prices of 200, 300, and 400 yuan. Dongcheng's strategy is concentrated here.
03
MUJI in China's hospitality industry
"What kind of company does Dongcheng want to become, where do our partners go with us, and what should Dongcheng look like among hotel groups?"
"I hope that Dongcheng is a company that deeply understands users and is a company with a reasonable low price. I hope that Dongcheng can provide quality products that exceed expectations, and I hope that we can create products that are reasonably low-priced, natural and natural through in-depth insight into the user experience, and exceed user expectations. ”
At a time when the logic of the mass hotel market is gradually changing, Cheng Xinhua thinks more.
"If I had to use an analogy, I would say that Dongcheng is the Muji of China's hospitality industry. A lot of people are interested in Muji's companies, and I have talked to their founding team, and their philosophy is also very much in line with ours, and we hope to work in this direction. ”
In the actual market environment, these concepts have also been practiced in Dongcheng. One of the concerns of investors is how to quickly upgrade the old store and renovate the brand of the original economy hotel in the era of stock game.
In Cheng Xinhua's view, high cost performance includes consumption cost performance and investment cost performance, which means that consumers can buy high-quality products at a reasonable price. "But the real high cost performance is not saved, but through the optimization of design, the study of users, through the optimization of production processes, and through the transformation and innovation of materials. Cheng Xinhua said.
In fact, as early as 2019, Dongcheng began to explore the assembly.
Song Yan, head of Dongcheng Product Research Institute, said that in the past, hotel renovations often had the following pain points: total project delays, opacity everywhere, uncontrollable total price, and poor guest experience.
How to renovate with the fastest efficiency without changing the room structure, prefabricated type has become a more efficient choice, through modular design, standardized production, prefabricated construction and supply chain centralized procurement, etc., under the premise of ensuring quality and experience, reduce investment costs and shorten the construction period.
To put it simply, it is to split the guest room into "modules", which are customized by the factory, and only Lego-style installation is carried out on site, and the matching modules are selected for assembly according to different properties and room sizes.
"Through the research of prefabricated products, the traditional production method of furniture is dismantled with very small granularity, so that we have the possibility of standardized production, control the cost, and stabilize the price. Our goal is to reduce costs and increase efficiency by 20%, and the current City Convenience 4.0 products have achieved such results. Song Yan said.
For example, Song Yan said that with the support of prefabricated and digital algorithm capabilities, the bidding price of the City Convenience Hotel 2.0 to 4.0 has been reduced by nearly 11%, and the construction period has been reduced by 40%.
For Dongcheng's products, Cheng Xinhua also hopes to achieve natural nature like Muji, and green and sustainable development has become the direction of Dongcheng's efforts this year. Specifically, it participated in the construction of hotel ESG standards, established a green strategy research institute, issued a green development proposal, and promoted the green transformation of the industry.
04
Make good use of your tools and fight tough battles
Another new manifestation of Cheng Xinhua's long-termism is his summary of the competitiveness of Dongcheng in the future. In Dongcheng's unique competitive "bow and crossbow model", focusing on this element ranks first.
Cheng Xinhua described that in order to ensure the long-term growth of the high-quality hotel business, Dongcheng has a competitive bow and crossbow model that closely combines three cores, that is, focusing on × efficiency × culture.
In this model, the hand representing culture is the traction force that pulls the trigger of the crossbow and crossbow, which is the original force of the company, the arrow groove of the crossbow machine allows the arrow to be more focused and more precise in flight, and the bowstring can fill the pulling force and stabilize it on the wrench before each exertion to achieve the maximum firing energy.
"Adults at the age of 18 think more about doing simple, essential things. Dongcheng's competitiveness is to focus, the first is to focus, and really serve the core products, core experience, core market, and core customer service; the second is efficiency, to be efficient, and work efficiency; the third is to have a hand to lead, that is, culture; Dongcheng's core competitiveness is focus, efficiency, and culture. Cheng Xinhua said.
Dongcheng is even the first in the industry to use the "Basic Law" to provide multi-dimensional guidance for all aspects of the group. "I believe that with the drive of values, no difficulty can overcome us, and we firmly want us to be a world-class hotel group. ”
In addition, in order to achieve the long-term healthy development of the popular hotel business, Dongcheng has also released the "Peak Plan" for business partners and investment ecology, with a total amount of up to 1.2 billion yuan, which will be used to build benchmark hotels with business partners. Lei Zhenbing, head of the development and marketing department of Dongcheng Business Development Business Group, described that Dongcheng will want to build 10,000 good stores in the future, and how to define "good stores" has three dimensions, namely public good stores, manufacturing good stores and greener low-carbon hotels.
Among them, Volkswagen Good Store quickly completed the ramp-up after opening, quickly providing a better occupancy rate and better performance. From the perspective of preparation, the manufacturing of good stores will add new scientific and technological forces of intelligence and digitalization, including assembly, to the process of preparation.
Overall, Cheng Xinhua's long-termism for the mass market may be summarized by the three books he recommended to the internal: "Long-termism", "Minimalist Law", "Common Sense Work Method" - in the current era, while the market is on the rise, the overall economic environment is still difficult to recover quickly in the short term, and an enterprise wants to go through the cycle and build the ability to cross the long cycle, "The most important thing is to be user-centric, the product is minimalist, and the cost performance is high." ”
Dean Dai Bin summed it up like this: All respected companies are oriented to the end market, and they all rely on business technology and product innovation to become market leaders, so as to have a wide reputation in the society. "Economic hotels, including Dongcheng, were, are, and will always be the most trustworthy and trustworthy force for the high-quality development of the tourism industry. ”