No slowing down China Lodging’s economy brands
http://www.hotelnewsnow.com/Articles.aspx/10048/No-slowing-down-China-Lodgings-economy-brands
07 March 2013
By Jason Q. Freed
News Editor-Americas
jfreed@HotelNewsNow.com
Story Highlights
- China Lodging has five brands—Joya Hotels, Ji Hotels, Starway Hotels, Hanting Hotels and Hi Inn.
- The majority of China Lodging Group’s robust pipeline comes from the economy segment.
- China Lodging had 1,035 hotels opened in its total portfolio as of 31 December.
SHANGHAI—Fueled by consistent occupancies
in the 90% to 95% range, China Lodging Group has grown from a
relatively small economy hotel chain to a true hotel company with a
suite of brands in the economy, midscale and full-service segments.
The company has five brands—Joya Hotels (full service); Ji Hotels and Starway Hotels (midscale); and Hanting Hotels and Hi Inn (economy). It recently renamed one of its brands—the former Seasons hotel brand became Ji Hotels.
“We are leading in the industry in both growth and profitability,” Founder and CEO Qi Ji said on the company’s fourth-quarter earnings call Wednesday. “We are most excited about the growth of our new brand.”
However, the majority of China Lodging Group’s robust pipeline comes from the economy segment, where Hanting and Hi Inn are poised for tremendous growth over the next three to eight years.
China Lodging had 1,035 hotels open in its total portfolio as of 31 December and expects to more than double that number to 2,500 by 2021.
“We are confident in our multiple brand strategy,” said Qi, who was appointed CEO in January 2012 after founding the company in 2005, serving as CEO for four years and then taking a two-year stint as executive chairman before being reappointed. “We will grow until we are one of the top 10 hotel groups globally by 2021.”
The company has plans to grow its portfolio by 25% each year from now until 2016. After that, each year will see 15% growth through 2021.
The focus is on economy and midscale growth, Qi said, adding that by 2016 the two economy brands are expected to exceed 2,000 properties combined.
“The majority of the pipeline is still in Hanting hotels,” he said. “But we’re quickly growing the pipelines for Seasons (now Ji) and Starway.”
Hanting, a high-end economy brand that targets “quality-conscious travelers,” currently boasts 900 hotels covering 170 cities in China. It’s a “well-trusted brand name” among franchisees, Qi said, and the company will push forward with the focus on “manachised”—or managed and franchised—contracts.
During the fourth quarter, China Lodging opened 50 leased hotels and 70 “manachised” hotels. For the full year 2012, the company opened 121 new leased hotels and 221 new “manachised” hotels, a total of 342 hotels.
Performance
The increased focus on the “manachise” model led to a 1% dip in occupancy from fourth quarter 2011 to fourth quarter 2012, yet portfolio-wide occupancy still rang in at 92% for the quarter.
“The slight year-over-year decrease was mainly because our fast expansion led to a higher percentage of “manachised” hotels at the ramping-up stage during the quarter,” said CFO Min “Jenny” Zhang.
Average daily rate for China Lodging’s portfolio in the fourth quarter was 176 renminbis ($28.30), compared with 179 renminbis ($28.79) in the fourth quarter 2011. Revenue per available room was 162 renminbis ($26.05) in fourth quarter 2012 compared with 167 renminbis ($26.86) in fourth quarter 2011.
For the full year 2012, China Lodging’s occupancy clocked in at 94%, ADR was 178 renminbis ($28.63) and RevPAR was 168 renminbis ($27.02).
China Lodging also reported the company's loyalty program contributed more than 80% of roomnights sold during 2012, and that 96% of roomnights were sold through the company's own channels.
The company has five brands—Joya Hotels (full service); Ji Hotels and Starway Hotels (midscale); and Hanting Hotels and Hi Inn (economy). It recently renamed one of its brands—the former Seasons hotel brand became Ji Hotels.
“We are leading in the industry in both growth and profitability,” Founder and CEO Qi Ji said on the company’s fourth-quarter earnings call Wednesday. “We are most excited about the growth of our new brand.”
However, the majority of China Lodging Group’s robust pipeline comes from the economy segment, where Hanting and Hi Inn are poised for tremendous growth over the next three to eight years.
China Lodging had 1,035 hotels open in its total portfolio as of 31 December and expects to more than double that number to 2,500 by 2021.
“We are confident in our multiple brand strategy,” said Qi, who was appointed CEO in January 2012 after founding the company in 2005, serving as CEO for four years and then taking a two-year stint as executive chairman before being reappointed. “We will grow until we are one of the top 10 hotel groups globally by 2021.”
The company has plans to grow its portfolio by 25% each year from now until 2016. After that, each year will see 15% growth through 2021.
The focus is on economy and midscale growth, Qi said, adding that by 2016 the two economy brands are expected to exceed 2,000 properties combined.
“The majority of the pipeline is still in Hanting hotels,” he said. “But we’re quickly growing the pipelines for Seasons (now Ji) and Starway.”
Hanting, a high-end economy brand that targets “quality-conscious travelers,” currently boasts 900 hotels covering 170 cities in China. It’s a “well-trusted brand name” among franchisees, Qi said, and the company will push forward with the focus on “manachised”—or managed and franchised—contracts.
During the fourth quarter, China Lodging opened 50 leased hotels and 70 “manachised” hotels. For the full year 2012, the company opened 121 new leased hotels and 221 new “manachised” hotels, a total of 342 hotels.
Performance
The increased focus on the “manachise” model led to a 1% dip in occupancy from fourth quarter 2011 to fourth quarter 2012, yet portfolio-wide occupancy still rang in at 92% for the quarter.
“The slight year-over-year decrease was mainly because our fast expansion led to a higher percentage of “manachised” hotels at the ramping-up stage during the quarter,” said CFO Min “Jenny” Zhang.
Average daily rate for China Lodging’s portfolio in the fourth quarter was 176 renminbis ($28.30), compared with 179 renminbis ($28.79) in the fourth quarter 2011. Revenue per available room was 162 renminbis ($26.05) in fourth quarter 2012 compared with 167 renminbis ($26.86) in fourth quarter 2011.
For the full year 2012, China Lodging’s occupancy clocked in at 94%, ADR was 178 renminbis ($28.63) and RevPAR was 168 renminbis ($27.02).
China Lodging also reported the company's loyalty program contributed more than 80% of roomnights sold during 2012, and that 96% of roomnights were sold through the company's own channels.
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