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Intercontinental and Hong Kong China Travel in hand high-end hotel franchise will become a trend

With the growing strength of local Chinese hotel groups, international hotel groups in China to seek partners to open high-end hotel brand franchising cases will be more and more, the franchise is about to shine.

November 27,intercontinentalWith heavy news from Hong Kong China Travel Service, the two sides will launch a new franchise + third-party management mode for high-end brands such as Crowne Plaza Hotels and Resorts and mid-range brands Holiday Inn and Holiday Resort, The precedent of franchising and managing the international hotel group's high-end and mid-end brands by Chinese-funded hotel groups is expected to be followed by 20 high-end and mid-end hotels by 2020.

This model of franchising is very popular overseas and has made a lot of contribution to the globalization of many hotel groups. Compared with the entrusted management mode, the owners who take the franchise mode have more control and control over the management team, financial rights and real right in the hotel's daily management. The cost to the brand side is the entrusted management fee Half or even less. However, in China, most international hotel groups are cautious about opening up concessions. There are a handful of international hotel brands to choose from, but this situation is gradually being broken down. 

As the brand expands, the soil in China's franchise is getting rich
Under the franchise model, the proprietor has better control over operating costs, saves unnecessary expenses, but also imposes requirements on the management ability of the owners. In the past, international hotel franchise brands in China were mostly open to low and medium-end the Lord. For example, Hilton handed over the operation rights of its brand Hilton in Greater China to Platinum Group, one of the Chinese domestic hotel group giants. Accor's Mercure, Novotel, ibis products are taken franchise model, and China live "marriage" to develop China's hotel market.

With the liberalization of franchise by HIPC, the cooperation between Chinese and foreign hotel management companies is getting closer. In February 2016, Marriott International Group reached an agreement with Doncaster International to authorize the mid-range hotel brand "Wanfeng" Following the concession, Intercontinental Group subsequently announced in the second quarter that it will open its franchise business model in China for its Holiday Inn Express brand. As of September 2017, 62 franchise holidays in Greater China had been signed under the franchise model Hotel, expansion momentum is quite strong.

In the Asia-Pacific region, the concession of local enterprises in monopolies in Japan, South Korea and Taiwan is more prevalent. Local enterprises in these regions have strong hotel operation and management capabilities and can effectively support the franchise model. In recent years, the competition in China's hotel market has become more and more fierce. With the sudden emergence of local hotel groups and the flourishing of their brands, International Hotels Group has become more and more difficult to seize the Chinese market. It has to take a more asset-light model to achieve rapid expansion. With the gradual maturation of related commercial, legal and credit conditions in China, the management ability of homeowners has been continuously improved, and the high-end hotels have also established a solid foundation for opening up franchises in China. Intercontinental Hotels Group CEO Greater China Zhouzhuo Zhu said that the intercontinental franchise granted to China Travel Hotel Co., Ltd. for the first time, it is fancy HK CTS Hotel Co., Ltd. international management level, to create more value for hotel owners.

It is reported that InterContinental Hotels & Cotai's first batch of hotels include Harbor View Travel under its own brand of Metropark Hotel Lido Beijing, the hotel will be the end of 2018, the Lido Holiday Inn Beijing, while the Crowne Plaza Lido Beijing will be at In early 2018, the company switched from the existing management mode to the franchise mode. In addition, InterContinental Hotels Group also awarded the franchise to Holiday Inn Shanghai Pudong to Shanghai China Coal Building Co., Ltd. The Holiday Inn Pudong Shanghai is expected to switch from the current management mode of operation to the franchise mode in early 2018.

Achieve a win-win situation, high-end hotel franchise will become a trend
Zhao Huayan, chief knowledge officer and senior economist of China and the United States Consultants Group, said that franchising of high-end hotels is the common choice of hotel owners and management companies as well as the future trend of development.

Franchise-related expenses are usually a percentage of revenue, the most common being room revenue. About 90% of the Wyndham Hotel Group's hotel projects are operated in partnership with both the owner and the owner of the franchise. The 85 Ramada hotels in China that have opened their business in China are all operating in the form of franchises. "The luxury franchise fee is 5% of room revenue, not the hotel's total operating income, so the brand's franchise in China has an advantage."CB Richard Ellis survey data show that in 2010, the United States franchise fee on average 6.8% of room revenue, available room (PAR) was 2,326 US dollars. This target increased to 7.2% in 2016 with a total of 3,381 USD per available room. In 2016, the median franchise fee per available room for mid-range hotels averaged $ 1,897 and for luxury hotels was $ 3,970. In addition, franchise fees are charged as a percentage of revenue, luxury mid-end hotels charge 9.6% of room revenue, and luxury hotels charge 5.2% of room revenue.


Although the franchising model fees and discretionary management mode compared to no significant decline, but this model can effectively reduce the hotel's actual operating costs, and investment in high-end hotel market in recent years, the meager also prompted the owners strongly involved in the intervention The day-to-day operations of the hotel take control of various costs and expenses. For the owners who desire to enhance their investment returns, the franchise is a good medicine.

Xia Min, vice president of Shanghai Jin Jiang International Hotel Development Co., Ltd. believes that franchising is a trend in China. As for how fast the development is, the ultimate right of speech depends on the market. "The flexibility of the brand, the return on investment (ROI) to the satisfaction of property owners, and the fact that data from the owners and brand companies are all doing well will work well."

Everything in order to win a higher return on investment, with the growing strength of local Chinese hotel groups, International Hotels Group in China to seek partners to open high-end hotel brand franchising will be more and more cases, the franchise is about to shine , The benign communication between the management company and the owners will also help the brand achieve a new leap forward.