JunTing Hotels’ Gan Shenghong: The Mid-Scale Market Will Be a Big Stage for Local Brands

Shanghai, June 5, 2015 /PRNewswire/ -- In recent years, a series of news stories about major domestic hotel groups launching new brands to enter the mid-scale market and various capital sources chasing investments have once again made the topic of "how the mid-scale hotel market will develop and how to cultivate it well" a hot issue in the industry. Recently, at the "2015 China Hotel Marketing Summit" hosted by TravelDaily, Gan Shenghong, Executive President of JunTing Hotel Management Co., Ltd., shared his in-depth insights on the development of the mid-scale hotel market, revealed the operational secrets behind JunTing’s outstanding performance and good reputation, and analyzed the promising future where the mid-scale market will offer great opportunities for local brands.

Lobby entrance of JunTing Hotel in Perth, Australia

Video: http://static.prnasia.com/pro/media/201506/junting/junting0605.mp4

In 2005, the mid-scale boutique brand JunTing Hotel opened its first store in Hangzhou. While major hotel groups such as Jinjiang, Huazhu, and Plateno were competing to layout in the mid-scale hotel market, JunTing had already opened several hotels in the Yangtze River Delta region. When the industry was discussing how to develop quality mid-scale products, JunTing had already “meticulously cultivated” impressive performance and excellent reputation. Though the number of hotels is not large, it is enough to earn the industry's thumbs up when mentioned. “The JunTing brand was born out of customer demand,” said Gan Shenghong. He believes that the vigorous development of China’s economy has rapidly increased the number of a rational and economically capable consumer class who value quality and personal experience. The gradual expansion of this class paints a bright future for the mid-scale market.

Over the past decade, JunTing Hotels has expanded steadily with a prudent approach. In the process of development, JunTing has adhered to the principle of “product quality first, guest experience paramount, and adapting to customer needs,” which has given rise to five distinctive features — “creating a private, leisurely, tranquil, and relaxing business travel environment in city centers,” “emphasizing the use of design elements to highlight a casual and fashionable atmosphere,” “enhancing the quality and individuality of core products, meeting luxury five-star standards in key offerings,” “providing warm and convenient humanized services,” and “offering high cost-performance for customers while ensuring strong profitability for owners.” These have consistently earned praise in the industry. Currently, JunTing Hotels has 16 operating properties in China and Australia, with an average annual occupancy rate of 80%–93%, RevPAR (revenue per available room) of 300–480 RMB, and single-room renovation costs of only 120,000–150,000 RMB.

With the development of China’s economy, the consumer base of the mid-scale market has been gradually expanding. Currently, this market includes not only local hotel group brands such as Jinjiang Metropolo and All Seasons, but also international brands such as Holiday Inn Express, ALOFT, Hilton Garden Inn, and Traders Hotel by Shangri-La. Gan Shenghong believes that unlike previous years when international brands developed first and local brands learned from them, today local hotel groups and international brands are starting from the same line. Some local hotel groups may even have the advantage of “getting a head start.” From this perspective, the mid-scale market offers excellent development opportunities and great potential for local Chinese hotel brands.

“The next 10 years will be the most imaginative period for the mid-scale market,” said Gan Shenghong. He believes that various customer demands — such as new lifestyles, the pursuit of rationality and quality, enjoyment of community living, and sharing of local culture — will give rise to diverse formats like homestays, Airbnb, guesthouses, and boutique hotels. The traditional, non-specialized product portfolios of conventional hotels will be increasingly replaced by richer social business formats, and the isolated, standalone models of traditional hotel planning and positioning will be rewritten by new community and commercial ecosystems. “In the future, it is very likely that non-core hotel revenue streams (such as online shopping, coffee lifestyle, tea art, health, and wellness) may surpass core income (from food and beverage and rooms). Hotels might become new commercial carriers and living spaces. What hotels sell will no longer be just beds and rooms. Mobile business, living spaces, gathering areas, and online shopping will all generate value.”

Recently, while various capital sources and hotel groups are aggressively expanding “like wolves,” JunTing Hotels, which has been deeply cultivating the mid-scale market for 10 years, has not been wildly “conquering territory.” Gan Shenghong stated, “When balancing quantity and quality, quality control must always come first.” In 2014, based on data from five major OTA platforms — Ctrip, Qunar, Meituan, Dianping, and eLong — HuiPing Network showed that JunTing ranked second in a competitive score comparison with other groups such as Atour, All Seasons, Holiday Inn Express, Kaiyuan Manor, and ALOFT. The reason for such high reputation is its unwavering commitment to the quality of core products. “The industry should return to its essence and truly treat mid-scale hotels as hotels. The sector should not lose itself under the impulse of chasing capital or watching internet companies engage in capital operations and dramatic moves,” emphasized Gan Shenghong. “Going against the essence of the industry will definitely not lead to long-term success. It will be neither rational nor healthy.”