Three Stars and Making a Difference

Article Posted: 03.10.2017
Martin Evan-Jones
Editor-in-Chief



Three-star hotel service covers an extremely wide mid-market that can, in turn, be subdivided into international, regional and local sectors. Each of these is highly dependent on carrying the support of customer familiarity to grow and spread.
 
In the regional sector, Singapore-based
 Park Hotel Group is one such chain with a loyal customer base.  Established in 1963 the group has since developed three hotels in the Lion City under the Park Hotel brand, with other Park locations in Hong Kong, Indonesia and Australia, appealing to business visitors with facilities for meetings and conferences. It has also developed its premium Grand Park brand with its two Singapore properties joined by three in China and one in Japan, aiming to draw on its visitor base with more expensive, luxury facilities. 
 
Park Hotel is described as an upscale brand to distinguish itself from cheaper rivals but still offers reasonably priced accommodation and facilities. It’s latest property, Park Hotel Farrer Road in Singapore’s Little India, opened this year to attract the growing number of regional mid-market customers with its close proximity to the MRT system, shopping and entertainment.    
 
In terms of pure size, China increasingly holds the key to Asia’s mid-range hotel market, both for demand and supply, as mainland middle class tourism takes off. The sector has become intensely competitive under China’s lower economic outlook, with major groups adopting merger and acquisition strategies to build cross-related hotel brands, both in China and by “going out” internationally.
 
This year, Home Inns Group, which aims to offer a consistent product and quality service through more than 2,660 hotels, delisted from the US Nasdaq market and merged with China state-owned BTG Hotels Group (Hong Kong) Holdings. Home Inns, with properties across 338 Chinese cities under its Home Inn and Motel 168 brands made its niche mainly for business travelers to offer average room prices of just US$31.25 per night. Under BTG, the merged group now aims to dispel lower revenues under wholly owned subsidiaries and variable joint venture terms to widen its geographical and price ranges and leverage its marketing thrust, while cutting costs.
 
On a substantially broader scale Chinese conglomerate HNA Group, with its aviation, airports, hotels and development projects portfolio agreed to buy US-based Carlson Hotels, owner of Radisson hotel brands with 1,400 properties across 115 countries and regions and 90,000 staff worldwide. HNA’s mission is to quadruple its hotel interests globally. The deal, which also apparently aims at reversing into the parent Carlson’s sister Rezidor Hotel Group, is among the latest in headline-topping Chinese acquisitions around the world. Earlier, China’s Fosun International purchased France’s Club Mediterranee while Ambang Insurance bought New York’s famous Waldorf Astoria, again aimed at building cross-fertilization between three-star and top-rated properties.
 
The accent on finding better operating models extends to China’s Hanting Inns and Hotels, headquartered in Shanghai with some 1,000 properties: Hanting has aimed at extending its scope at the mid-positioned end of the spectrum, offering comfortable, economy-priced rooms combined with a wake-up service and luggage storage facilities for guests and a 24-hour reception network. It aims to mirror the approach of France’s Accor Hotels as an owner/operator, brand franchisor and investor, closely following Accor’s ibis and mid-end Sofitel brands to provide a “launch pad” for tourists in high-density markets. Some observers predict Hanting will follow Accor’s fast-developing reach into the Asian market outside China to capitalize on rising Chinese tourist interest in the region.
 
If that is the case, Hanting might well study the approach taken by its competitor 7 Days Inn, headquartered in Guangzhou with some 1,300 hotels across China. With large investors such as Warburg Pictus, Bank of America Merrill Lynch and Deutsche Bank, 7 Days Inn made a foray into Thailand with a 75-room, three star hotel in Chiang Mai, aiming to build on tourist attractions such as the Sunday Walking Street market, temples, museums, sports and festival attractions and nearby restaurants, providing comfortable rooms equipped with WiFi access and flat screen satellite TV.

 
The “Chinese wallet” is now a prospect pursued by Hong Kong-based Far East Consortium through Dorset Hospitality International, which operates hotels in Hong Kong, Shanghai, Wuhan, Chengdu and Jiangxi – but also in Kuala Lumpur, Johor Bahru, Labuan and Singapore, with a new regional thrust.
 
All these developments demonstrate how mid-range hotels create cross-labor opportunities, from direct servicing to agency and IT, invariably taking in the gamut of client demands, including airlines, hotels and retail outlets. 

 
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