Hangzhou, China, July 10, 2015 /PRNewswire/ — Recently, six major domestic hotel groups — OpenYuan, City Celebrity, Huatian, New Century, Shuguang, and Yuehai — signed a strategic cooperation agreement at the Beijing OpenYuan Mingdu Hotel, announcing the establishment of a hotel alliance. They will form an independently operated third-party platform to provide comprehensive online and offline services to member hotels within the alliance. This marks a true embrace of the internet by traditional hotels, entering a phase of comprehensive transformation driven by an open and shared user-centric mindset.
Regarding the background of the formation of the hotel alliance, macroscopically, as Zhang Rungang, President of the China Tourism Hotels Association, mentioned in his speech, the old notion of hotel products being composed solely of hardware and software is outdated. Today’s complete hotel product consists of both offline and online components. The offline part refers to the original hardware and software that made up hotel products, while the online part has been quickly dominated by the rapidly rising OTAs. Practically, as Chen Canrong, President, clearly stated in his address, the level of chain operation among high-star hotels in China is very low, with each hotel group exhibiting strong regional development. The coverage of individual hotel groups is far from meeting the travel needs of their members. Only by forming a strategic alliance can these groups achieve resource sharing and attain a combined effect where 1+1>2. Moreover, as a pioneer, OpenYuan has accumulated rich practical experience. In September 2014, OpenYuan and City Celebrity took the lead in initiating their alliance. Leveraging technological integration as a bond, the two sides achieved resource sharing and reaped substantial collaborative benefits.
Unlike previous loose hotel alliances, the alliance formed by the six major hotel groups is inherently infused with the DNA of the internet from its inception. As Chen Miaoqiang, General Manager of OpenYuan Hotel Group, put it, thanks to the rapid development of the internet, information among all parties has become more symmetrical. With the support of big data, cloud computing, smart hotels, and even real-time exchange platforms, the possibility of resource sharing has grown immensely, giving wings to the collaboration of the six groups. The characteristics of the internet are also distinctly reflected in the alliance: First, all members share a sense of value recognition toward the alliance; secondly, it is decentralized — regardless of whether they are state-owned or private, large or small groups, all enjoy equal status and rights; third, the relationship among alliance members is open, cooperative, and collaborative. Each party not only opens up its own membership but also shares its advantageous resources and big data; fourth, the alliance features flexible entry and exit mechanisms, always welcoming new members; fifth, the alliance is highly replicable. Its ecosystem includes not only hotel suppliers but also providers of food, beverage, daily necessities, transportation, financial resources, as well as channel providers, users, customers, and third-party supporters; finally, the alliance extends from offline to online, establishing the so-called concept of an “Alliance Cloud.” It has built an independently operated third-party internet platform, engaging in deep cooperation in the areas of membership sharing and joint room booking.
What changes has the alliance brought to its member hotels? Fu Quanyong, General Manager of Golden Fan Network Technology Co., Ltd., mentioned the following points in his speech: First, the coverage of the six major hotel groups’ outlets is highly complementary. After forming the alliance, they essentially cover China’s major tourism and business cities, meeting the travel and business needs of members from each hotel group. Second, membership and points are mutually recognized across the various hotel groups, solving the problem of fragmented points and effectively enabling the monetization of points. Third, supply chain resources, training resources, and even the traffic resources of all outlets among the hotel groups are shared.
The establishment of the hotel alliance is just the first step in the strategic cooperation of the six major hotel groups. Naturally, there is still much specific work to be done going forward, such as building an independent third-party platform and the subsequent debugging and coordination after the platform is established. Operating a new initiative based on internet elements will undoubtedly encounter many unforeseen difficulties and various issues. However, with solid value alignment, common interests, and shared focus, these challenges are believed to be resolved and overcome one by one.
The formation of the alliance is not to compete with OTAs. As Chen Canrong, President of OpenYuan Tourism Group, said, it is to better coordinate and cooperate with them — retaining the autonomy and voice of our hotels while achieving harmonious and win-win outcomes for all parties. The alliance is fundamentally different from OTAs. It is not just about channels but also involves product planning, package design, and the sharing of training resources, supply chains, and outlet traffic. Zhang Rungang said that he seems to see the silhouette of a new type of hotel group bonded by online customer relationships within the alliance of the six major hotel groups. As Chen Miaolin, Chairman, put it, the hotel alliance has ushered in a brand-new era for China’s hotel industry. Today, we have taken a solid step in the history of China’s hotel industry development — a hopeful step, a historic one, and one that we believe will also be a successful and glorious step.