In 2023, the hotel industry is quietly shuffling. In the chain horse race, BTG felt a strong chill!
In the first quarter of this year, BTG replaced the chairman of the board of directors through the shareholders' meeting, and the former chairman Bai Fan resigned and was succeeded by Li Yun. From the perspective of personnel changes, it is estimated that they want to do something to reverse the company's decline, and the company's status is in jeopardy.
1
There is a risk of falling out of the top three
In 2023, BTG's revenue will be 7.793 billion yuan and its net profit will be 795 million yuan, a decrease of 11.8% from 2019
Jin Jiang Hotel's revenue was 14.649 billion yuan, and its net profit was 1.092 billion yuan, which was the same as in 2019;
Huazhu's revenue was 21.49 billion yuan, and its net profit was 4.131 billion yuan, an increase of 135% over 2019;
Atour's revenue was 4.667 billion and its net profit was 739 million, an increase of 11.1 times over 2019.
If you look at profits and profit growth, BTG will fall out of the top three in 2024.
Of course, in terms of revenue and the number of stores, it can be maintained for a while, but the revenue is also 6.25% lower than in 2019.
In the wave of domestic hotel chain staking and staking of land, there will definitely be laggards, and there will also be black horses. What are the sources of BTG's anxiety?
2
BTG's store expansion fell short of expectations
In 2023, BTG set a plan to open 1,500-1,600 stores, and 1,203 stores were actually completed, which is 80% completed according to the minimum target.
Huazhu plans to open 1,400 stores, but 1,641 have actually completed, and Jin Jiang Hotel has opened 1,200 stores, but 1,407 have actually completed. The completion rate is 117%.
In 2020, BTG set a plan of "10,000 stores in three years". Unfortunately, it will have to add nearly 4,000 stores to this goal. This is probably not easy for BTG, because it is opening stores on one side and closing stores significantly on the other.
In 2024, BTG aims to open 1,200-1,400 new stores. It's up to the new head to lead the team to achieve this goal.
3
Operational metrics are being disclosed
From the perspective of OCC, ADR and RevPAR, BTG is weaker than Huazhu and Jin Jiang Hotels.
In terms of OCC, Huazhu is 81.1%, Jin Jiang Hotel is 66.36%, and BTG is 65.7%.
In terms of ADR, Huazhu is 299 yuan, Jin Jiang Hotel is 251 yuan, and BTG is 235 yuan.
In terms of RevPAR, Huazhu is 242 yuan, Jin Jiang Hotel is 167 yuan, and BTG is 154 yuan.
If you look at the challenger Atour, BTG will be even more anxious. Atour's OCC is 77.8%, ADR is 464 yuan, and RevPAR is 377 yuan.
It is worth noting that BTG's three indicators of lightly managed hotels are seriously lagging behind. OCC is 54.7%, ADR is $163, and RevPAR is $89.
BTG's RevPAR recovered to 106.5% of 2019 levels without lightly managed hotels, but only 97.3% of 2019 levels if lightly managed hotels were included.
It can be seen that BTG has concentrated its firepower on light management in recent years, but it has made the distance between itself and its peers wider and wider.
For BTG's lightly managed hotels, 54.7% OCC is dangerous. This is below the reasonable range of normal operations, and in the long run, BTG will face the risk of more and more hotel closures.
Then its goal of 10,000 stores will be even more difficult to achieve.
4
Run all the way on the road of light management
We all know that China's hotel industry is now facing a stage of a significant increase in the chain rate, which is very critical for brands, but it is also in a prisoner's dilemma. Returning to the origin of hotel management, we should not only focus on quantity and ignore quality, so as to ensure a solid foundation and long-term operation.
But if you don't speed up the city now, the market will be occupied by other brands. Good properties are scarce, the blank market is limited, and if you give it to others, you will make yourself very passive in the future. Therefore, all brands can only be forced to compete with each other for the speed of store expansion.
Speaking of speed, it is natural that the way to join is faster. If it's going to be faster, you'll have to think about it again.
BTG chooses a light management approach!
BTG's light management does not require the franchised hotels to carry out standardized transformation, but only needs to change the brand. Moreover, the management adopts the method of online management empowerment and regional management personnel to patrol the store, and there is no need to send a store manager.
In order to pursue the ultimate speed, the light management method has very low requirements for property area and guest room area, and 40-60 rooms can be joined. The one-time franchise fee is only 2,500 yuan/room, and the continuous franchise fee is not higher than 7% of revenue.
BTG's first headline at the end of the year-end in the annual report is: Scale first, accelerate the development of mid-to-high-end hotels, and fully tap the sinking market space.
When talking about franchising, it is expressed as follows:
In 2023, BTG will open 744 lightly managed hotels, accounting for 61.85% of the newly opened hotels. Among them, 300 new hotels were opened under the cloud brand, accounting for 24.94% of the total number of newly opened hotels, and 444 new hotels were opened by Huayi, accounting for 36.91% of the total number of newly opened hotels.
Although the newly opened stores are mainly lightly managed, the net increase in the number of young management hotels in 2023 is only 194. That is, 550 were closed. This has to raise concerns about the sustainability of this expansion model. Ignoring the quantitative expansion of mass is ultimately difficult to succeed.
For franchisees, if they can't continue to make profits, I'm afraid they will also do something that damages the brand image. Moreover, since it is light management, the constraints of the brand on the franchisee are usually insufficient.
It is said that on the surface, it seems that the franchise fee paid to the brand by light management is not high, but the follow-up CRS order commission, brand promotion fee, system usage fee, financial fee and other expenses are not low.
The franchisee's business ratio is not very optimistic, and in the independent hotel, play light management, beware of being eaten by the franchisee. Judging from the data of the 2023 annual report, BTG is likely to face such a dilemma.
5
BTG's way to break the game
BTG's change of chairman may indicate that they think something should be done now.
In its 2023 annual report, BTG plans as follows:
First, stabilize the speed of store opening, make every effort to develop standard brands, and improve the penetration rate of the sinking market.
In 2024, 1,200-1,400 new hotels are planned.
This is different from last year's annual report, which was described like this: accelerate the speed of store opening, penetrate the sinking market deeply, and plan to open 1,500-1,600 new hotels in 2023. It can be seen that BTG has recognized the problem and is taking the initiative to slow down.
And when it comes to the development of standard brands, it may be that they want to gradually shift the focus from the direction of light management, and at the same time want to be more standardized in management, so as to stabilize quality and enhance brand value.
However, in the expansion plan of 1200-1400 stores, I am afraid that the main force of opening hotels is still lightly managed hotels. More than 50% of its reserve stores are lightly managed.
The reason why it is still based on light management may be because it wants to increase the penetration rate of the sinking market.
The number of hotel rooms in the three major regions of first-tier cities, sub-provincial cities and provincial capitals and other cities is 1.346 million, 4.212 million and 8.705 million respectively, accounting for about 9.44%, 29.53% and 61.03% respectively, and the corresponding chain rate is 60.64%, 48.58% and 30.67% respectively.
Second, we will continue to build our hotel product strength and continue to promote hotel upgrading and brand upgrading.
It can be seen that BTG's grand strategy is, on the one hand, to increase the sinking market, and on the other hand, to advance to the mid-to-high-end market.
From a structural point of view, BTG's proportion of mid-to-high-end hotels is significantly lower than that of other groups, at only 27.5%. (Data from annual reports of each company)
By the end of 2022, the total number of rooms of mid-range and high-end chain hotels in mainland China increased by 26.31% and 9.20% year-on-year respectively, and compared with 2019, the total number of rooms increased by 60.55% and 58.81% respectively.
It is clear that BTG has lost a head start in the mid-to-high-end hotel market. So I want to get back a game as soon as possible.
At present, all groups are desperately rolling in the mid-to-high-end market, after all, the gross profit of the mid-to-high-end market is much higher. However, the capacity of the mid-to-high-end market, then it is conceivable that this market will not be able to play like an oversupply of economy hotels.
Can BTG be the last to come first? I'm afraid it will be quite difficult!
Third, innovate and upgrade the membership system and increase the expansion of core and protocol users.
There is nothing to say about this article, almost every year the annual report is the same, it depends on the final implementation effect.
The test of membership maintenance is the hotel's insight into customer needs and the execution of the plan.
Fourth, we will put operation first, further promote cost reduction and efficiency increase, and increase incentives to empower growth.
This is not available in the 2022 annual report.
It seems that BTG is realizing that quality is also a prerequisite for quantity.
BTG mentioned in its annual report:
Next, it depends on whether BTG can further improve its OCC, ADR and RevPAR this year, especially for lightly managed hotels.
Fifth, technology and management empowerment to improve hotel operation efficiency.
It's a cliché, so let's not talk about it.
6
Can BTG retain its status?
Will BTG be able to successfully break through the tiebreaker and widen the gap between it and its pursuers? To be honest, it will be quite difficult.
1. The tourism and hotel industry has had a bad start this year, with RevPAR lower than the same period in 2019. The situation seems to be worse for mid-to-high-end hotels than for budget hotels.
2. BTG has lost its lead in the mid-to-high-end market, and it is not easy to surpass it.
3. There are still many remaining problems in lightly managed hotels, and this year's hotel net growth target is not so easy to achieve.
4. After the franchisee was educated by the brand, they have now become more refined and not so easy to fool.
In the era of competition in the hotel industry, it is not yet known who will kill the deer!