H World Group is a hotel company that has built a massive empire, bigger than any major Western hotel chain in terms of hotel count and loyalty members. And it’s growing quickly.
In the 20 years that have passed since our foundation, we’ve grown from nothing to more than a million rooms. Jihong HeChief Strategy Officer of H World Group Exclusive interview with the executive chairman of H World International. “That proves we’re doing it right. “We aim to reach 20,000 hotel rooms within five years.”
Shanghai-based hotel company will focus on opening budget and limited service properties in China’s less-served small cities. It also hopes to grow overseas with international brands such as Steigenberger Intercity Zleep.
H World generated $3.3 billion of revenue last year, despite having only 1.08 million hotel rooms in December. This was more than Wyndham, which had 893,000 rooms with $1.4 billion of revenue. Marriott and Hilton exceeded H World both in terms of revenue and rooms.
H World had expected that revenue from its Chinese hotel would grow between 5% and 9% in this year before President Trump announced the high tariffs against China.
Pre-Paid Cards and Loyalty Program
H World’s loyalty program has 267 million members — surpassing Marriott Bonvoy’s 228 million As well as Chinese competitors Jin Jiang Homeinns and BTG Homeinns.
The use of stored-value cards, which offer discounts, is a key factor in the Chinese market.
“It’s like Costco,” said He. “Guests who are members of our loyalty program can use pre-paid card to book future accommodations at discounted prices.”
“We reward our general managers for meeting KPIs [targets] “They can only sell so many pre-paid cards,” He said. He said that sometimes they are paid on commission and so successful in selling the prepaid cards, their salaries can exceed what they usually earn.
H World’s rewards program is based on points, just like the western counterparts. There are no pre-paid cards. The company is trying to unify its programs. It has already started unifying the databases.
Tech Advantages
H World is responsible for about three of every four direct bookings, which means that online travel agencies are not charged.
H World has built its entire operational software in a single system, unlike many Western hotel groups that operate on fragmented systems acquired over decades of mergers.
He said that our founder Mr. Qi Ji was determined to create our own technology stack from the very beginning. This integration allows the company’s properties to instantly recognize and provide personalized services for members.
The company optimized its digital presence in China’s unique digital ecosystem by focusing on WeChat Mini Programs and platforms such as Douyin (TikTok).
Low-Cost Development
H World innovated hotel construction in China with pre-fabricated or modular construction methods. These reduce costs by a significant amount.
Even light fixtures are included in the modular systems. He explained that pre-made modules are brought directly from factory to site, which reduces construction time and eliminates mistakes.
It is now more affordable to build hotels and renovate them, which has drawn in small investors and family-owned businesses.
Switch to Asset-Light
H World, like most Western hotel groups has shifted to a business model that is asset-light. It used to lease or own most of its properties. In December, the company owned or leased 663 of its 11,147 hotels worldwide.
He said, “We have introduced the ‘manchising’ business model which is a combination between management contract and franchise.”
He said. “She is relatively wealthy… and wants the word to be spread.”
Underpenetrated markets
H World sees huge potential for growth in China, where the hotel penetration rate of all branded hotel chains is just 30%. This compares to 70% or more of U.S. hotel chains.
“We would like to conquer about 2,000 cities that are on our map,” He said. There were significant opportunities for central, southern and western China.
International Ambitions
In February 2020, the firm began to expand outside of China after completing its purchase of Deutsche Hospitality – a collection brands such as Steigenberger – in Europe for around 440 million euros.
“It’s really bad timing,” he said. The pandemic impacted demand and financials.
She said, “But we are quite confident that we will stabilize the business and grow the business.”
H World has opened Steigenberger InterCity Montien as well as other international brands in Singapore and China. They plan to expand these, particularly in Southeast Asia and also in Europe and Middle East.
The Oyo Rivalry
Oyo, an Indian hotel startup, tried to enter the Chinese market before the pandemic. Oyo’s scaling model required very little from owners, other than to display Oyo signs in their hotels and begin using the booking software.
H World, formerly known as Huazhu, invested $10 Million in Oyo. It also started competing with Oyo by launching a soft-branded conversion, H Hotel. (H Hotel has now been merged with its Elan brand).
We found that [H Hotel] “It didn’t work out,” she said. “The quality of the products was usually poor, damaging our brand.”
Oyo left China because of the pandemic in China and the intense competition. having claimed to be operating 450,000 rooms in the country You can also find out more about 12,000 employees.
H World has ceased to use this soft-branded approach. it sold part of its stake in Oyo at a handsome profit.
Accor Partners
Accor and H World have a joint venture. The company is Accor’s franchisee for ibis Styles and Mercure, as well as a codeveloper of the Grand Mercure, Novotel, and Mercure brand names.
He, who is on the board for the Accor joint-venture, said the deal was mutually advantageous and that both parties had helped eachother. (Accor’s deal with Jin Jiang is similar, where the Chinese hotel chain owns a 10% stake in Accor.
“They wouldn’t be able to have as many Mercure in China if we weren’t there,” she said. “We have learned a great deal from them, we value this relationship.”
Concentrate on Quality Control
It’s harder to make money with hotels in China than it is in the U.S., because of lower construction costs and fewer restrictions. The excess supply puts downward pressure on the prices, he said.
H World does charge a premium for the same amenities and a similar quality experience.
H World will open at least 2,300 new hotels this year. It also plans to close 600. Property that doesn’t meet standard or needs renovations is evicted.
H World, unlike Western hotel groups requires that franchisees use the general managers it selects. It trains almost 1,000 GMs a yearly at regional flagship properties, academies and in 8-day-long in-person or month-long online training courses.
H World is the first Chinese company to have implemented a similar career progression process for hotel housekeepers. The goal was to increase cleanliness through a combination of recognition, rewards and promotions.
He said, “We are obsessed by maintaining quality at a large scale.” It’s a key differentiator on the market.
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