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Huazhu Hotels Group and Accorhotels expand in China's midscale and upscale hotel market.
Wednesday, 28th December 2016
Source : Huazhu Hotels Group

Huazhu Hotels Group's wholly-owned subsidiary Yagao Meihua Hotel Management held a launch event announcing the subsidiary's development strategy in tandem with a signing ceremony at the Novotel Shanghai Clover in early December.

At the event, the team from Yagao Meihua, led by Sun Wu, executive vice president and CEO of Upscale Brands Unit at Huazhu Hotels Group, gave a presentation on the latest achievements and updates on Yagao Meihua's portfolio comprising the group's four mid- and high-end brands, Grand Mercure, Joya, Novotel and Mercure.

The event marked a new milestone for the group, coming on the heels of the previous signing ceremony held in May 2016, at which agreements for 14 new projects were signed. As a testament to the strong relationship, the Yagao Meihua team has signed agreements for nearly 40 new projects in more than ten months since Huazhu Hotels Group and Accorhotels formally announced the signing of a long-term strategic alliance agreement. The majority of the new projects under Yagao Meihua's management as a result of the alliance are located in China's first- and second-tier cities, including over 10 located in Shanghai. Six new Mercure hotels and one new Novotel hotel have been opened so far.

The strong partnership leverages each partner's advantages, giving rise to an effective "dual-platform distribution model"

The dual-platform distribution model put in place as a result of the cooperation between Accorhotels and Huazhu provides the brand owners with more international guests and sustainable income. 

Huazhu's and Accorhotels's loyalty programs together have a combined membership base exceeding 100 million. Their respective central reservation systems (CRSs) have been fully integrated, helping the two hotel groups achieve initial success with their cross-selling approach. The Mercure Shanghai Royalton is the first Mercure hotel to be taken over by Huazhu. In the more than one year since being taken over, the hotel's average revenue per available room (RevPAR) has increased by 150 yuan, while the occupancy rate has improved from 65 to almost 90 percent. The gross operating profit (GOP) has jumped to over 60 percent. 

The Mercure Shanghai Hongqiao Airport, which opened in September 2016, began to run at full occupancy within one month of opening, thanks to the two group's dual-platform distribution model. Currently, Chinese guests make up nearly 70 percent of the hotel's occupancy, with guests from abroad accounting for the remaining 30 percent. An analysis of the booking patterns of the domestic guests shows that 40 percent of them reserved through Huazhu's official reservation platform while 30 percent of the bookings were generated from Accor's official reservation channel.

The Sino-French cooperation creates highly acclaimed midscale and upscale hotels

Founded in 1973, Mercure is a mid- to high-end hotel brand owned by Accorhotels and is the world's second largest midscale brand. Mercure adheres to the Glocal product design standard which calls for local characteristics to be integrated into the design of each hotel, an aspect of the hotel's strategy that is appreciated by global business travelers who have taken notice of the combination of a French design with locally inspired details.

On the heels of the tie-up with Mercure, Huazhu Hotels Group has made sure the high-quality service standards of Yagao Meihua are maintained, while it continues to exhibit its strong management competence in the role of a high-end hotel group in the local market. Guests who choose Mercure hotels in China enjoy an authentic warm atmosphere in a French setting, the result of Mercure having successfully transplanted the elegant French lifestyle and feeling of romance that the hotel chain is known for to China, creating a delightful social networking space for its guests. As an illustration, Mercure fragrance is inspired by perfume designer Jacques Polgewho created Coco Mademoiselle  as the exclusive French fragrance available in hotel public area. The fragrance is known for its two characteristic ingredients -- pure white jasmine absolute and May rose absolute. The mix of the two ingredients is akin to the meeting of Oriental elegance and reserve with Western zeal and courage. Mercure's hotels in China embody the perfect balance between the Orient and the Occident. The brand's high-end hotels have received wide praise from guests. Its hotels recorded an average hotel guest satisfaction rate of 84 percent in a survey conducted by a third-party survey firm. Mercure has also drawn the attention of large real estate developers in China.

Mr. Sun, said: "Thanks to the international image, high quality and brand French DNAs that are known for, in concert with Huazhu Hotels Group's strong competence in development and management, Mercure has a three-year plan to open around 200 hotels in China, offering a comfortable and elegant accommodation experience for both business and leisure travelers."

Up to 15 percent, or more than 200 million people, of China's population is predicted to become high-income consumers each with annual income of more than 200,000 yuan by 2030, according to the Economist Intelligence Unit's (EIU) recently released report, The Chinese Consumer in 2030. As a result, high-end hotels can look forward to huge development opportunities. In addition to the management of Mercure hotels in China, Yagao Meihua Hotel Management also plans to focus on the expansion and growth of the Novotel, Grand Mercure and Joya Hotel brands. The group expects to open more mid- and upscale hotels next year.

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