From scale profit to service profit, the logic of hotel business has really changed

The hotel industry is shifting from "waiting for guests to come" to proactive service profit. Driven by brand reshaping, service upgrades and technological innovation, Jinjiang Hotels is leading the transformation from scale profit to service profit. This article will analyze how Jinjiang Hotels consolidates its position in the new market, opens a new chapter in the industry, and demonstrates its self-transcendence and leadership in the era of service being king.

From "waiting for guests to come" to attracting and retaining guests, the logic of hotel business has completely changed.

For most travelers, the most important thing they want is to have a good night's sleep in a hotel with a clean room, comfortable bedding, quiet and undisturbed rooms, and a delicious and filling breakfast.

It sounds like these are already standard features of every hotel today, but when consumers with limited options and limited choices hope to choose the right hotel to avoid disappointment no matter where they go, it becomes a bit difficult.

This is also the fundamental reason why people prefer brand chain hotels. If for no other reason, it is because the environment and services of brand hotels are basically guaranteed.

Young people in particular pay more attention to personalized and quality consumption, pursue unique travel and accommodation experiences, and are more willing to "pay" for emotional value, pursue their passions, and realize their self-definition.

This seems to be an opportunity for more hotels, and many new brands can get in front of consumers, but from an operational perspective, it poses greater challenges to operators.

Because the experience is a very subjective judgment, it also tests the hotel's comprehensive service capabilities. The accommodation, food, environment and service attitude must be good. If any link makes consumers dissatisfied, the hotel is likely to be put on the permanent "blacklist".

From the supply side, even with price levels, consumers can still choose from a wide variety of hotel brands. Operating a hotel is no longer a "lay-and-win" business where you just open the door and wait to make money.

As Wang Wei, CEO of Jin Jiang Hotels (China), mentioned at the recent 2024 Jin Jiang Hotels Partner Success Conference, the era of incremental profits relying on scale growth has passed. Hotels also need to think from the perspective of others, continuously improve their products and services based on consumer demand, market themselves, and pay more attention to operating and maintaining old customers.

Combined with a series of major initiatives taken by Jinjiang Hotels this year, it is not difficult to see that this leading enterprise is adapting to the situation and making forward-looking arrangements.

1. Brand is both an image and a label

The key is to identify the advantages and highlight the differences.

A brand is not only a logo or symbol of a company or product, it also contains rich culture, personality and service commitment. It represents the image of the company in the market and is also a collection of consumers' cognition and association with the brand. When consumers buy products or services, they often choose brands they trust to get better quality and service experience.

Hotel brands need to establish a deeper emotional connection with consumers, so as to form a broader brand consensus in the market, which can eventually be transformed into a steady stream of good business for the hotel. Recently, Jinjiang Hotels’ brand proposition, “A place where the heart is at peace, Jinjiang Hotels”, was newly released, which attracted widespread attention in the industry.

Looking at the current hotel market, most hotel groups that want to build deeper connections with consumers by strengthening brand awareness are "shouting" to the market based on their own growth characteristics and differentiation. However, there are probably not many that focus on "sense of belonging" and can use this to build a deep connection with consumers.

One of the reasons is that corporate brands that give people a sense of belonging need to accompany them for a long enough time, and some have even become part of consumers' life memories. For example, the "Jinjiang" brand originated in 1935 and has a history of nearly 90 years. From witnessing the start of the hotel industry in China to the diversified brand matrix that now spreads all over the world, from raising industry standards to assuming social responsibilities, Jinjiang Hotels has always been a microcosm of the booming development of China's hotel industry. It has also accompanied generations of people in their growth and is known as the "cradle of Chinese hotels." The beautiful memories and emotional ties that it has accumulated while accompanying consumers are its unique advantages.

Another major support for the "sense of belonging" lies in the scale effect formed so far. Data shows that by the end of December 2023, Jinjiang Hotels has signed contracts with more than 16,600 hotels and more than 1.58 million rooms, distributed in 31 provinces, autonomous regions and municipalities in mainland China and 58 countries or regions outside mainland China. No matter where consumers go, they can find Jinjiang hotels.

From companionship to omnipresence, this is one of the keys to building trust and brand recognition between Jinjiang Hotels and consumers.

2. Products and services are the only carriers of brands

We need to build the ability to serve consumers well.

For more small and medium-sized hotel companies, it is difficult, time-consuming and costly to gain similar brand trust and recognition, so joining a large hotel group has become a shortcut. This has also enabled my country's hotel brand chain rate to grow rapidly in recent years, and continue to move towards a "stronger and stronger" development situation.

According to the 2024 China Hotel Industry Development Report, the hotel chain rate in my country has increased to 40.95% based on the number of chain rooms, while in 2019, this ratio was only 26%. By the end of 2023, there will be about 90,600 chain hotels in my country, with Jinjiang Hotels ranking first with a share of over 12%.

The higher the chain rate, the greater the competitive pressure faced by the brand. How to maintain scale growth is one aspect, but more important is the brand identity and quality control of franchised stores. It is particularly important to maintain a consistent pace, consistent goals, and efficient collaboration.

If management is not good enough, consumers will first "vote with their feet", and those investors who have already "got on board" will also "get off" at any time because the return rate is not good enough. According to the "China Hotel Market Brand Change Insight Report" from Houhai Data Platform, the number of high-star hotel brand changes (brand change, crown brand, delisting) in 2023 will nearly double year-on-year, of which about 42% of brand changes are delisting, and relisting accounts for about 33%.

This also indirectly shows that the market has entered the inventory era, and the hotel business landscape may undergo a major reshuffle. It is particularly important and timely to strengthen brand advantages, enhance brand awareness and penetration, and maintain competitiveness.

"With the continuous emergence of new business models and new products, competing based on capabilities is the way of the future." At the conference, Wang Wei used the service profit chain of Harvard Business School as an example, calling on the majority of hotel franchise partners to build the ability to serve consumers well and continue to provide them with better experiences with higher-quality products and services.

Wang Wei said that since March this year, Jinjiang Hotels (China) has been promoting the "Old Friend Plan" and "Fitness Plan" in its hotels nationwide, both of which are centered on helping hotels create excellent services. The former focuses on the dual upgrade of products and services, emphasizing that the hotel should welcome every guest like an old friend, so that every "old friend" can always feel the quality facilities and services, and comprehensively improve the consumer experience; the latter focuses on establishing a good reputation in the living circle, and establishes a good image of the hotel in the living circle through actions such as neighborhood cooperation, public welfare activities, community building, deep links, and mutual support.

At the same time, Jinjiang has continued to increase its investment in platform system optimization, member rights enhancement, AI intelligent numerical control, etc., all of which are based on building its core competitiveness of "the ability to serve consumers well."

3. Technology-driven efficiency improvement

Win-win situations with consistent cognition and goals are the future.

For large hotel groups, the advantages in facing market competition have been analyzed a lot. However, it should also be noted that the challenge of large scale is that management is difficult, and the challenge of having many brands is how to balance and control.

Not long ago, Jinjiang Hotels (China) analyzed its new "12+3+1" brand strategy plan for the first time, proposing to build 12 brands with 1,000 stores by 2028 (including five major brands that have already exceeded 1,000 stores, namely Vienna International, Lavande, Vienna, Jinjiang Inn, and 7 Days, as well as seven high-growth potential brands, namely Xi'an, James Joyce Coffetel, Kyriad, Liyi, Campanile, Magnolia, and IU), three core mid-to-high-end brands with great market competitiveness (Jinjiang Metropolo, Li RED, and Li Bai), and explore one resort track. The layout focus was drawn from the brand perspective.

In addition, Jinjiang Hotels (China) has also truly achieved "three-in-one" in terms of organizational structure this year: the management level has been merged into one headquarters, 11 regions + 7 centers have been established, and a management hierarchy of "stores-provinces-regions-headquarters" has been formed, which continues to promote the localization of development and operations. The streamlined communication process is to respond to investors and operating stores in a timely and efficient manner.

In addition, it is more important to improve operational efficiency with technology. The technology here is not only hotel management systems and hotel robots, but also insights into digital trends and advanced layout of AI big models. At the Partner Success Conference, Jinjiang officially released the industry's first AI super employee JINTELL, which can not only realize intelligent recognition and automatic processing of work orders, but also continuously optimize service processes through deep learning and comprehensive perception. In scenarios such as smart room management, personalized customer service, virtual concierge services, and smart security monitoring, AI drives continuous positive feedback to achieve intelligent service throughout the entire process.

These are the proactive changes made by Jinjiang Hotels (China) in the face of the new market environment and new trends in hotel operations. As industry insiders have interpreted Jinjiang's series of actions, established hotel companies are not synonymous with "conservative", but should become the backbone and pioneers leading industry development and innovation based on their capabilities and experience.

According to official data released by Jinjiang Hotels (China), its reinvestment rate in the first half of this year increased by 38% year-on-year, and the proportion of investors' self-owned properties also increased by 10% year-on-year. This is undoubtedly the best proof.

Wang Wei has mentioned a point many times that consumers will "vote with their feet". When they are dissatisfied with products and services, they will not distinguish whether it is the fault of the hotel management company or a certain hotel. This requires hotel investors and brand owners to have consistent goals, work together, and continuously optimize products and services as the times and competitive environment change.

Just as Zhang Lei of Hillhouse Capital said in his book "Value", "The rise and fall of everything depends on the pattern. If the pattern is big, it will come even if it is far away, and if the pattern is small, it will be blocked even if it is close." The consistency of values ​​and goals is the premise for both parties to move forward steadily and seek good results. The essence of a hotel is service. Whether it is the brand or the investor, only by working together to provide good service can we truly achieve "let the customer win", consumers will gain a very cost-effective experience, and investors and managers will also get the profit returns they deserve.