Narrator of this issue: Baima Dorji
Position: Founder of Songtsam series boutique hotels
This is the third issue of TBO Big Coffee, which mainly shares the following:
For the domestic non-standard accommodation industry, the Songzan Mountain Residence series dotted along the Yunnan-Tibet line is to some extent an industry legend. A filmmaker who crossed over the border and designed a hotel accidentally captured a large number of "pilgrims".
Songzan Ring Line products, priced at more than 10,000 yuan, sold nearly 2,000 copies in 2015, and as of December of that year, the travel-driven room revenue contribution had accounted for 70% of the total revenue; TripAdvisor named it "China's Best 25 Hotels" for 9 consecutive years; the British aristocratic magazine "Tatler" listed it as "101 Best Hotels in the World"; CNN listed it as one of the 9 best hotels in China...
Although there are many questions about it in the industry, on most occasions, the speeches of founder Baima Dorji revolve around architectural art, service concepts, cultural beliefs, etc., and rarely involve commercial analysis. However, from the very beginning of the "selling rooms" successfully transformed into "selling travel", and gradually became the focus of attention and topic of the entire industry, it is obvious that a simple sentence of "heart" can be brought over.
How exactly did it get to where it is today? What are the future plans? And what value reference will it bring to the industry?
Founder of Songtsam Hotel, Baima Dorji
From our conception and planning in 1999 to the opening of the first store Songzan Green Valley in 2001, and then to the formation of the mountain house series, compared with the current rise of the homestay fever, Songzan actually started very early in the field of non-standard accommodation.
But because the whole industry does not have a very clear concept, we have been groping and nurturing our own business model, which is bigger, I think it is a quality lifestyle; and specifically, it is boutique hotels + travel.
Many people say that we are more cautious in development, but in fact, Songzan's location along the line was basically determined as early as 2004. Including the overall advancement is actually very fast.
Songzan plans to deploy points along the Yunnan-Tibet Line
From the opening of the first Shangri-La Green Valley store to the completion of the Linka store in 2007, and then to the 3rd to 6th stores along the line, including Benzilan, Merry, Cizhong and Tacheng, construction actually started in 2007, was completed in 2008, and all were renovated in 2009 except for Cizhong. The model cultivation and rhythm grasp involved in this are discussed in detail from several aspects.
The first is the market cultivation of products. When the first store, Shangri-La Songzan Green Valley, opened, we were not sure at the time, through the operation of Shangri-La Songzan Green Valley single store, can support the created market (several hotels in the back end)? Because at that time, the site selection along the route did not have any outsiders to understand, and it was basically not a tourist destination.
If you are too reckless to deploy points inside, it may be difficult to maintain operations in case your own traffic cannot keep up.
Songzan Green Valley
At that time, from the perspective of the market, it was necessary to first make the most easy part of the scale larger, and only when the own traffic was cultivated to a certain extent, it would be easier to support the supply behind. So we decided to strengthen it in Shangri-La and started building Zanrinka in 2004.
However, during the construction of Songzan Linka, we found that the complementarity of these two products was not necessarily so strong; and at that time, the market support performance of the Green Valley store was getting better and better, so we actually did not wait for the opening of the Linka and began to continue to invest in the construction of the remaining distribution points in 2007.
Exterior view of Songzan Tower
The second is team operations. Although Green Valley's traffic at that time was considerable and it was able to support the sales of Linka, we had a big concern that the Green Valley team managed only a 20-room hotel - now to take over an 80-room hotel, and from a travel hotel to a resort hotel, can this change be adapted?
Lacking sufficient preparation and confidence, we began looking for a management company to operate on our behalf since 2006. Large to four seasons, small to all kinds of management companies have contact, but found that the management and operation concept, including four seasons and other brands, and Songzan Linka is still relatively far away, so it is impossible to find a suitable operator.
Songzan Benzilan Hotel is located
Six months after the Green Valley team operated 40 rooms (half of the rooms) in Linka, in 2009 we chose Accor to do the operation. In fact, we felt that there was nothing wrong with our team operation, and it didn't take long to work with Accor to find that it was really unsatisfactory to hand over to an international brand to operate.
After the two sides negotiated amicably to terminate the contract, we quickly took it back and handed it back to the Green Valley team to do, including the operation and management of the next four stores. As the whole team has become more and more organized, now I think if two new companies are opened every year, as long as the scale is not too large, it should be able to cope.
TBO Note: The above is the basic idea of the Songzan series in the early stage of the start, and the next content, Baima Dorjee will analyze the basis for strategy formulation from the aspects of product design, service landing and pricing mechanism.
As mentioned earlier, in 2009, Songzan's several stores along the line had been renovated, and the store teams were also fully configured and ready to be put into operation; but in 2010, just after the policy of 4 trillion yuan of investment, Diqing Prefecture got a rare opportunity to renovate infrastructure, but in order to use this money, it must be completed in 2010, so the local hastily decided to close all roads and start renovation.
Several shops that were renovated behind Songzan were forced to be vacant for a whole year, which made us feel worse.
In fact, the road was still not built until 2011, but we can't wait. Different from the previous simple room sales, Songzan began to string the entire loop together and designed it as a boutique hotel + travel package product to push out.
Under the harsh conditions of intermittent passage of the road, we continuously accompanied the tourists to complete the entire experience in the way of docking the drivers at both ends and walking with the tourists in the middle. Although the guests were really hard, we sold 108 products that year; in 2012, this product went more than 800 people, an increase of more than 800%, and the next year it was more than 1300 people, an increase of more than 100%.
Exterior view of Songzan Meri
Judging from the demands of the consumer side at that time, the whole country really needed such products too much.
Among these guests in Songzan, 90% are from abroad, and many of the 10% are returnees; many guests feel very strange after finding us on the Internet, saying how can there be such a product in China, and they come to experience it with a kind of trying psychology, saying that they have to talk to me. And the feedback I got was that even in such awkward road conditions, they still felt that the experience was better than most foreign resorts.
At this stage, many of the guests I had direct contact with, and they raised a common problem, saying that our price was too low - including the two families of the Director of the National Library of Singapore and the Director of the Museum that I met in Tacheng, who gave me a request to raise the price, saying that the price would increase and they would fight for it every year; but if Songzan continued to operate at this price, they would not necessarily come.
Songzantz
Why do you feel this way? In fact, they are comparing the Songzan series with Bhutan's Amman.
Taking the loop product as an example, the price of the loop product we made in the peak season that year was 10,003/person for 7 nights and 8 days; and even in the low season in November, the product of Bhutan's 10 days and 9 nights was almost 18,000 US dollars per person. There is a problem implied here, tourists are not sure that Songzan can ensure quality at this price, because many people have the corresponding spending power, which may destroy the original local experience and vacation atmosphere.
Songtsen Lhasa
But I and my team insist that high prices are not Songzan's goal. At least for this time, winning more customer trust is the core strategy.
With the increasing proportion of sales, the number of guests currently booking travel products has reached 70% of the guests in the room, and more and more guests are converting to new products with higher prices (with butlers throughout the journey). As long as the operation can be supported, Songzan can achieve steady development, which I think is more critical. In fact, we really did not change the pricing strategy after this.
TBO Note: After the business model is explored and nurtured to a certain mature stage, it has the foundation for safe expansion, but if it wants to be quickly copied, it needs the help of capital, how does Baima Dorji think about this multiple choice?
Next, talking about capital, Songzan has become famous as early as 2008, for example, the annual Bund Pictorial Best Design Hotel Selection invited us to participate in the exhibition; but it was not until 2013 that we thought that the team and the entire business model were formed, that we began to actively accept media coverage.
With the continuous expansion of brand exposure, including the southwest and Jiangsu and Zhejiang and other regions, many places have given a variety of preferential policies, I hope we can pass, for example, if Songzan is stationed, you can directly call the local tourism development fund.
Frankly speaking, this is a very rare period of opportunity, if you do not try to seize at this time, continue to stay in the scale of such 5 or 6 stores to operate, in fact, the development of Songzan itself will not be particularly good.
Therefore, since 2014, we have begun to plan to take Lijiang and Lhasa as the starting point, layout along the Tea Horse Ancient Road, build 8 new boutique mountain residences in Qamdo and Nyingchi areas of Tibet, and plan to officially open the Yunnan-Tibet Line in 2018 and operate the Yunnan-Tibet Line travel products.
Songzan Lijiang
But Songzan's choice of expansion also has its own principles, for example, many local governments are particularly enthusiastic about us in the past, saying that they can make a 100 or even 200-room hotel for free. But this is not possible for Songzan, because now my principle is not to do more than 50 rooms in the hotel, especially in the first phase; unless in the future this destination is really very functional, we may consider.
Including in equity financing, it may be said that Songzan is now gradually taking shape in product and business model exploration, to the stage of capital to accelerate expansion, but I will not open up too much equity financing, although there are many investors who want to come in so many years, I still only open a small window, and will do my own screening one by one.
Merry Snow Mountain
So from the perspective of Songzan's whole development idea, I think we are neither rigid nor blind, and should be natural or completely controlled by the rhythm.
Finally, let's talk about the cognitive "shackles" of Songzan's expansion. Many people have talked to me and said that Songzan this product has a strong regionality, if you choose to go out, Songzan will no longer be Songzan. But I don't think that's the case.
Maybe because Songzan's products were made in Tibet from the beginning, and there are indeed many endorsements of Tibetan culture behind it; but the Songzan brand conveys a deep cultural connotation, rather than a single cultural attribute.
Songzan
He can integrate with the most core elements of Chinese culture, especially the handicrafts of the earth. In fact, a foreign hotel brand may also originate from a specific cultural group, but it does not prevent it from expanding globally. Otherwise, if you follow this mindset, you can deduce: Why did the Summer Palace choose Amman, and how can Banyan Tree be next to the Yulong Snow Mountain?
Songzan is going down the mountain after all, it only depends on whether it is ready or not. I've been saying that what we're going to do is "find the path to Shambhala." In the end, Shambhala is actually the ideal country in everyone's heart. So it's not just Tibet that has Shambhala, anywhere in the world, where you are, the path is where it is.