In the past two years, the travel market has been hot, attracting a large number of hotel investors. With the increasing maturity of domestic hotel industrialization and specialization, the threshold for hotel investment has also increased year by year, and the proportion of franchise model is getting higher and higher. According to the "2024 China Hotel Industry Development Report", by the end of 2023, the number of chain hotels in mainland China will be about 90,600, and the hotel chain rate will increase from 38.75% in the same period of 2022 to 40.95% in terms of the number of chain rooms, of which the chain rate of economy hotels will be 32.49%.
Hu Jiwen, the hotel investor, has been engaged in commercial operations for many years, and before 2022, he also invested in the hotel, but did not personally participate in the operation. At the end of 2022, he was determined that Xi'an's hotel accommodation industry would usher in a rapid recovery in 2023, and decisively won a hotel property near the Xi'an Bell and Drum Tower, and joined Echarm and City Convenience Hotel under Dongcheng Group within half a year.
During the Spring Festival in 2024, the City Convenient Xi'an Bell and Drum Tower Muslim Street Store, which was just launched in January of the same year, has a RevPAR of more than 540 yuan, and the highest RevPAR in a single day is close to 800 yuan. In the three months since its opening, the city's convenient performance has been remarkable, with an OTA comprehensive score of 4.9 points, and it is expected to return on investment within three years.
Hu Jiwen said that out of recognition of Dongsheng Group, he recently signed a "summit plan" with Dongsheng Group, and will open six hotels under Dongcheng in the next four years. So why did Hu Jiwen choose to continue to reinvest in Dongcheng, and what successful experiences can be shared in the investment, preparation, and operation of this city?
Brand selection: City Convenience Hotel 4.0, all-round advantages
The city is convenient Xi'an Bell and Drum Tower Muslim Street Store Investor Hu Jiwen
Before entering the hotel investment circle, I was engaged in commercial operations, renting a property or tens of thousands of square meters of property from the owner and renting out the façade layer by layer. If there is a suitable property, it will also be rented to hotel investors or shopping malls.
In 2015, when the hotel industry was in full swing, I took a stake in a mid-range hotel, but I only contributed capital and was not responsible for specific operation and management. In the first year of the hotel's opening, the business was quite rich, and a year later, because of the relationship between the subway repair and municipal renovation, the performance of the hotel was greatly affected, and in 2020, it coincided with the epidemic, and the hotel's operation was stumbling and unsatisfactory.
Because of the poor investment in the first hotel, I temporarily stalled the pace of investing in hotels until 2022. In 2022, I leased a property close to Andingmen, Xi'an, with an area of 20,000+ square meters, a total of 8 floors, and the leased part is 1-4 floors.
At the end of 2022, I noticed that the epidemic prevention policy has been gradually relaxed, and I predict that the hotel industry in Xi'an, as a cultural tourism powerhouse, will usher in the dawn in the near future. Therefore, I plan to take out a part of the property and participate in the investment and operation of the hotel. After learning that I was interested in investing in hotels, I was approached by many mainstream budget and mid-range hotel brands in the market. But in the end, I chose to cooperate with Dongsheng Group, and after years of understanding, I think that Dongsheng Group's hotel products are good, the service is good, and the service team is dedicated, which is exactly the partner I am looking for.
The process of choosing a property: the core area but the difficulty of renovation is high
The property is located in West Street, Lianhu District, Xi'an City. Xi'an takes the bell tower as the center, extends to the four sides of the four streets, only the West Street, is the most prestigious street in the Tang Dynasty, can be described as a flourishing time. Hongfu Anding Square, where the property is located, is close to the Anding Gate of Xi'an City Wall, which belongs to a class of properties in Xi'an City, and the geographical location is not superior.
City Convenience Xi'an Bell and Drum Tower Muslim Street Store Appearance
In addition, the property is 1.4 kilometers away from the Drum Tower, 1.8 kilometers away from the Bell Tower, and within one kilometer of the surrounding area, there are several tourist attractions, colleges and universities, hospitals, institutions, etc., providing a stable source of customers for the hotel's future operation. Downstairs of the property is the bus station and Qiaozikou Station of Xi'an Metro Line 6, and the convenience of transportation is self-evident.
As far as the property itself is concerned, it is an old building. The property is located on the antique street of West Street, and the city government renovated its façade in the Tang style around 2007, with a total of 8 floors, as well as underground parking, and the guest rooms of the hotel are located on the 2nd and 3rd floors.
The process of choosing a brand: choose a professional team and value long-term development value
Since I have already invested in a mid-range hotel Eson, I chose the City Convenience Hotel 4.0, which focuses on "lower cost, more comfortable experience", for the sake of customer group differentiation. In this way, Echarm Hotel can undertake mid-end customers, and City Convenience can undertake mass business travel and mid-end customers, and the suitable consumer grades are relatively wide. In addition to the customer base of high-end hotels, Urban Convenience 4.0 can be covered in the region.
City Convenience Xi'an Bell and Drum Tower Muslim Street Store Multi-functional lobby
When it comes to choosing a hotel brand, what I value most is the prospect of the hotel brand. As a time-honored hotel brand that has been operating for nearly 20 years, City Convenience is relatively mature and perfect in all aspects, and its rich management experience has provided investors with a lot of practical help, and the reliability has been guaranteed after the early cooperation.
In addition, the brand-aligned consumers need to be more inclusive. As a product-first mass accommodation brand, City Convenience is positioned as the preferred business travel hotel brand of the people, and in terms of price, it can adapt to economic and mid-end consumer groups, which is very inclusive and very suitable for the current mass consumption psychology.
In order to seize market opportunities, the ability to build efficiently and open quickly is very important in the early stage of hotel investment. Through contact, Dongcheng Group has begun to explore relevant preparations and assembly several years ago to meet the balance between efficiency and cost. I was greatly impressed by their ability to change lightly and quickly and control costs, and it also became one of the important factors that impressed me to sign the contract. At that time, through clear product standards and construction standards, the general modular design of products and the construction of prefabricated space, Dongcheng greatly shortened the preparation time of the hotel, won valuable time for the critical period of rapid opening of the hotel and customer acquisition, and ushered in the first traffic outlet.
After a period of successful opening and operation, we have observed that as the head brand of the economic hotel chain, the city convenience hotel is more cost-effective in terms of cost, realizing the cost of the economy hotel and the income of the mid-range hotel. From the perspective of business model, City Convenience strives to polish a new business model with high quality, low cost and fast revenue, so as to provide a mid-range entry-level accommodation experience on the consumer side, maintain the golden investment position of economic hotels on the investment side, and achieve ultra-high investment cost performance.
Last but not least, Dongcheng Group has a very complete franchise service for investors, and the company responds quickly to investors' opinions, and at the same time, it will also appoint a professional management team to us to provide comprehensive upstream and downstream empowerment, so that we can have peace of mind in operation.
Review: How to become a benchmark project
In June 2023, we officially joined the City Convenience brand. The part of the property we leased was previously used to operate a shopping mall and supermarket, which is very different from the layout of the hotel, so before the official renovation, we smashed the inside of the property and rebuilt the walls.
In August 2023, the wall building will be completed and the hotel renovation will officially begin. The overall preparation process of this hotel is relatively smooth, which is inseparable from the cost reduction of urban convenient modular design, the improvement of standardized production quality, and the efficiency of prefabricated construction. After joining the two stores of Dongcheng Group, "Dongcheng is not the only platform that adopts prefabricated construction, but it must be the platform that investors consider the most. I also have a practical experience of this sentence.
Because the decoration was during the summer vacation, there was no New Year, and with the help of the city's convenient assembly construction, it was originally expected to be completed in January, but in fact, by the end of December 2023, the hotel was completed.
City Convenience4.0 Rooms
The total investment cost of the hotel is 12 million, and the cost of a single room is 100,000 yuan (including the smashing of the wall and the rebuilding of the wall, the water supply and reconstruction, etc., excluding the demolition of the old part, the cost of a single room is 80,000 yuan), and a total of 106 rooms have been built. This total investment cost is basically the same as the cost given to us by the staff of Dongcheng during the test period, and I am still quite satisfied.
At the beginning of the year, it welcomed a "good start" and became an instant hit
The hotel officially opened on January 23, 2024, with a full OCC of 105%+ on the first day of opening.
During the Spring Festival in 2024, the RevPAR of City Convenience Hotel (Xi'an Zhonggulou Muslim Street Branch) will exceed 540 yuan, and the highest RevPAR in a single day will be close to 800 yuan, which is comparable to mid-range and even mid-to-high-end hotels in the region. In the first four months of 2024, the average monthly RevPAR was 268 yuan, and the average monthly OCC was 84%, which was in the first echelon of hotels of the same grade in the same region.
City Convenience4.0 Rooms
At present, the hotel has a score of 4.8 on Ctrip and 5.0 on Meituan, and the customer experience feedback is very good. According to the current business data, the hotel will be able to return on its investment in about 3 years, and if it develops well, we will strive to recover the investment cost in about 2.5 years.
Core competency: Customize services that exceed expectations based on user insights
In addition to the efficient capabilities demonstrated during the preparation period, in the operation, Dongsheng's professional empowerment also reflects the core competence of a professional hotel management company.
Our hotel is located in the core area of Xi'an's tourist city, with obvious geographical advantages, but also fierce competition. Within a radius of 1 km around City Convenience Hotel (Xi'an Bell and Drum Tower Muslim Street Branch), there are hundreds of hotels of all sizes, including independent hotels operated by owners and chain brands of many other well-known hotel groups.
Aware of the fierce competition and involution in the surrounding area, we also provide value-added services based on the characteristics of the city and the needs of customers. Including the free provision of Hanfu, the gift of Xi'an cultural characteristics of souvenirs, the introduction of local flavor breakfast, through the combination of cultural and tourism elements to highlight the highlights of hotel services, enhance the customer experience, greatly enhance user satisfaction and word-of-mouth effect.
The hotel's Hanfu special service
City Convenience 4.0 Restaurant
The manager has excellent comprehensive ability, which helps the hotel to operate
Wang Li, the manager of this hotel, is the manager of the Echarm Hotel in the same property, and in the six months after the opening of the Echarm Hotel, Mr. Wang and I also had a certain tacit understanding, and after the opening of the city convenience, she undertook the position of the store manager of the city convenience. I think the advantages of the store manager and store are: first, it can achieve the integration of communication, second, it can reduce costs, third, the communication is smooth, and the daily operating costs are controllable.
In general, as a senior manager who has worked in Dongcheng Group's hotels for many years, under the long-term training of a professional team, Mr. Wang has sufficient qualifications and experience and outstanding comprehensive ability, which helps the hotel operation to a certain extent:
First, centralize the deployment of personnel and control operating costs. Because the two hotels are in one building, the advantage is that the hotel staff can be centrally deployed, and one engineering department can serve as two hotels, which saves operating costs to a certain extent.
In terms of staff management, Manager Wang will make reasonable arrangements according to the occupancy rate and customer source situation, specifically, during special periods and periodical labor shortages or surpluses, the two hotels will take mutual secondment of employees in the same position to replace them, so as to effectively reduce labor costs and alleviate the shortage of personnel.
Second, their own ability is excellent and the management is good. As a mature store manager, from the perspective of her own ability, Manager Wang has a wealth of hotel management knowledge and skills, including hotel operations, marketing, human resource management, financial management, etc., after each hotel employee joins, she will also personally train them, especially pay attention to improving the details of the hotel front desk work, advocating humanized service, etc.
Secondly, for the training of store staff or grassroots management, store manager Wang will also conduct on-site training——— and provide guidance at any time and anywhere to improve their service level.
Third, it can complete the performance indicators with quality and quantity. I invest in a lot of sectors, and in the day-to-day management of the hotel, I mainly assist the store manager. After all, investing in a hotel is a long process, everyone has a different way of doing things, and it is good to be personally involved in management, but if you can't put more energy into it, you should choose trust and communicate more with the store manager. The so-called some indicator data, the store manager who can really do things will know how to do it, and will do it with heart. The owner should delegate power and give better trust and treatment to the store manager.
After working with Mr. Wang for a year, I set a performance indicator for her every month, and from the result-oriented point of view, Mr. Wang has done quite well.
Write at the end
After working with Dongcheng Group for two stores, I have a lot of confidence in them. Adhering to the sustainable development concept of "win-win cooperation", Dongsheng is highly consistent with the concept of investing in hotels, and its high-quality hotel products, strong operational capabilities and mature business models can give our hotel investors strong investment confidence.
Out of recognition and trust in Dongsheng Group, I recently signed the "Peak Plan" with Dongsheng Group, and I am ready to invest in 6 hotels under Dongcheng Group in the next 4 years. "Dengfeng Plan" is the industry's first incubator for popular good stores, Dongcheng will want to be 10,000 good stores in the future, to achieve a market value of 100 billion yuan, "Dengfeng Plan" was born for this, "good stores" have three dimensions, namely public good stores, manufacturing good stores and greener low-carbon hotels.
In the future, I also hope to open more hotels with Dongsheng Group, so that mass travelers can spend less money and live better.