China’s growth as a world destination and as a visitor source for the world has ignited a feeding frenzy among international hotel chains to localise their brands and even launch new Chinese brands
Hualuxe Hotels & Resorts
A MOVE by a slew of hotel chains to have their brand names and products sing to the tune of Chinese guests, with two well-known players even launching new Chinese brands, raises interesting questions:
Aren’t great brands supposed to be aspirational across geographical boundaries – ever seen the LVMH conglomerate launching Chinese-specific brands?
Do Chinese consumers want a new Chinese hotel brand?
After all, a May 2012 report by CAP Strategic Research shows the top 10 hotel brands – as rated by 300 ‘super-rich’ Chinese consumers (average annual household income of US$136,000) and 330 ‘affluent’ consumers (average annual household income of US$67,000) in Beijing, Shanghai and Guangzhou – are international names such as Shangri-La, Hilton, Ritz-Carlton and Sheraton. None of the homegrowns made it to the list.
Are some hotel chains pandering too much to China that they have to launch Chinese brands? Does it mean then that there is a need for Indian, Indonesian, etc, brands? Will international guests feel comfortable staying with brands specifically designed for Chinese guests?
The race to capture the vast China opportunity has had chains carving out two different strategies.
One camp, which includes Mövenpick Hotels & Resorts and Accor (see box, Who does what), stops at localising the name and product to suit Chinese clientele.
The other, which includes InterContinental Hotels Group (IHG) and General Hotel Management (GHM), believes China and Chinese hospitality can spawn new hotel brands, with IHG even envisioning its Hualuxe can go outside China and be a global brand one day, the way its Holiday Inn, which originated in the US, has travelled far and wide.
But Giovanni Angelini, former Shangri-La Hotels & Resorts’ CEO who led the chain’s expansion in China, is puzzled by the need to localise one’s brand in China, let alone launch a Chinese brand.
He recalled: “From my experience, we never encountered difficulties with this in the past. In most cases, the local authorities and local developers in China were proud to have a recognised, international brand name in their area and always preferred an international brand versus a local brand name.
“Has the market demand changed so much in the past couple of years? I don’t think so.”
Asked what he’d do today, Angelini said: “I would use the same brand or brands that the company uses all over the world. The location’s potential and the local spending power dictate if it would be a five star product or three or four stars based on the brands I have.”
Similarly, Starwood Hotels & Resorts Worldwide president and CEO, Frits van Paasschen, pooh-poohs the need for a Chinese brand, even though he is smittened by Asia, China in particular, which helps Starwood build better hotels.
“I don’t think of our brands as being Western brands, but global brands,” said van Paasschen.
“The key to having a global brand is to appeal to basic human needs that cut across cultures, ages, generations and incomes. So a desire to have a sense of wellness and refuge in a hotel, a desire to be extravagant, to feel like you are in a creative atmosphere – those things cut across cultures.
“The more important thing is not having a Chinese brand, or Japanese or French. It is having global brands that work anywhere in the world,” he said.
Interpret, not replace
Mövenpick Hotels & Resorts president and CEO, Jean-Gabriel Pérès, told TTG Asia “there is just one brand – Mövenpick”, despite localising the name to Rui Xiang and adapting the product to Chinese guests.
“We know that to do business effectively in the Chinese market, we need to interpret the brand and provide Chinese guests with the aspirational experience they would expect from a country such as Switzerland,” said Pérès.
The chain is talking to a “growing number” of Chinese guests in its Swiss hotels to understand, for example, what they enjoy about Swiss cuisine – “but more importantly how they would like to see it interpreted at home”.
It expects business at its three upcoming hotels in China to be majority Chinese initially but to “over time encourage our broad mix of international customers to explore some of China’s more interesting destinations”.
Asked if non-Chinese guests would be happy at Rui Xiang, Pérès said: “The Swiss are famous for their ability to work across cultural borders, and we bring this skill to the way in which we operate our hotels. For Western guests visiting Mövenpick properties in China, the traditional Swiss expertise will be evident to help make their stay as pleasurable in the way they have come to expect.”
Fairmont Hotels & Resorts’ president, Jennifer Fox, said sister brands Raffles Hotels & Resorts and Swissôtel were well-positioned in China. “We (Fairmont) are not currently thinking of any separate brands, especially when we hope to tap the China outbound market to stay in our properties worldwide. But who knows.
“At this stage we hope to maximise our brand’s potential. Compared to other hotel brands, we are a latecomer. The Chinese luxury travel market continues to grow and we have to compete by offering new experiences they can’t get from the domestic market.”
IHG, in comparison, is in a different position, already the largest international hotel group in China operating more than 160 hotels across 60 cities with five brands.
With China’s insatiable hotel development, it believes there is room for another brand. With Hualuxe, IHG is the first global chain to seed a brand in Asia, a prospect seen a long time coming, since most international brands had originated from the West and transported to the booming East.
So why China and not, say, India?
Explained Jan Smits, IHG’s CEO for Asia, the Middle East & Africa: “India is a slightly different market. The whole of India has only 150,000 branded rooms today; compare that to 100,000 branded rooms in New York city alone. India has a long way to go yet to get scale. I’m just opening my first Holiday Inn Express in India in September; a lot of my brands are not deployed yet.
“China on the other hand is in a different stage of growth. We honestly see an opportunity for a new upscale brand to service the scale in China, where the domestic market is expected to reach 3.3 billion people in 2015, and to service Chinese consumers wherever they go. Outbound trips from China are projected to grow from 10 million to more than 100 million in the next 10-15 years (citing UNWTO predictions).
“I see a huge opportunity for Hualuxe in South-east Asia, for example, which gets a lot of Chinese visitors. Over time, I believe Hualuxe can become an international brand. Look at Taj or Oberoi – they originated from India but became global brands.”
Added Smits: “We don’t develop brands very often. The last, Indigo, was 10 years ago. When we develop one, it’s for good reason and we do enormous amounts of research and consumer insights before we do it.”
GHM’s Ahn Luh joint venture, meanwhile, is strategic in giving it access to funds and special locations in China, where it can continue to create destinations in themselves rather than hotels, according to observers (GHM’s president Hans R Jenni is not available for comment at press time).
Its partner, Beijing Tourism Group, is China’s first provincial-level, wholly state-owned tourism enterprise. The other, Great Ocean Group is a Beijing-based private holding company which invests in real estate projects in China that are respectful and responsible towards the environment and history.
Ahn Luh banks on UNWTO predictions that China will become the world’s most visited country and caters to both the world’s “most discerning” travellers and Chinese guests.
China makes the world go round.
Who does what
General Hotel Management: Ahn Luh
This is an entirely new brand, created by Beijing Tourism Group chairman Duan Qiang, Great Ocean Group founder Whitney Duan and Amanresorts founder Adrian Zecha, who co-founded GHM with Hans R Jenni.
Positioned as an upscale brand, Ahn Luh will cater “to the world’s most discerning travellers, as well as the growing Chinese tourism market”, said the partners.
The Ahn Luh group’s first project is Ahn Luh Dujiangyan in Chengdu. The Dujiangyan Irrigation System, along with Mount Qingcheng, are on the UNESCO World Heritage List.
Ahn Luh resorts will be a fusion of old-world Chinese hospitality with contemporary elegance while contributing to an eco-friendly environment. Each is “handcrafted” to incorporate the arts and culture of its particular locale.
The resorts typically have 50 to 100 rooms and villas, with room sizes from 60m2 to 120m2. There are private villas and residences.
Features include ‘dian xin’ breakfast, all-day Chinese-style tapas bar, indoor and outdoor pools, a library and cigar lounge, airport concierge and a fleet of Wi-Fi-enabled cars. Each hotel will also house a retail shop selling regional goods and traditional Chinese medicine, a spa, a tai chi centre and meeting facilities for executive retreats.
Future developments are in major cities and tourism destinations throughout China. In the pipeline are hotels in Beijing, the Pearl River Delta and south-west China.
Ahn Luh literally means ‘a peaceful and tranquil forest setting at the foothill of a mountain’.
InterContinental Hotels Group (IHG): Hualuxe Hotels & Resorts
This is an entirely new brand designed specifically for the Chinese traveller.
Hualuxe means ‘majestic China and luxe’. It will offer what IHG believes, through research, are the four priorities for Chinese guests: tradition (reflected in hotel design, welcome experience, tea culture, F&B, etc); rejuvenation (natural surroundings – think lobby gardens and resort bathrooms even); status (VIP arrival, unique Club Lounge, specialty F&B hosts, etc); and familiar spaces (multi-function suites, rejuvenation centre, tea house, etc that are conducive for social interactions and business meetings).
Hualuxe will launch initially in tier one, two and three cities and resort locations in China. In time, it will open in major cities elsewhere in the world so Chinese travellers can have the same experience abroad.
The first Hualuxe is expected to be open in late 2013/early 2014. IHG expects the brand to be in over 100 cities in China in the next 10-15 years.
Mövenpick Hotels & Resorts: Rui Xiang
Integrated a Chinese name, Rui Xiang, into the Mövenpick brand, which remains prominent.
Rui Xiang is feng shui-checked and literally means ‘brings you enjoyment and luck with Swiss quality’.
Hotels in China will adapt to Chinese guests’ tastes. Cuisine for example, is a fusion of Chinese, international and specifically, Swiss-inspired touches. Lobbies, public spaces for entertaining and room design will have Chinese sense of place.
The chain’s first opening will be a 380-room resort in Sanya next year, followed by a 300-room hotel in Jiading, a rapidly growing business hub of greater Shanghai. In 2015, it anticipates a unique offering in Chifeng, gateway to Inner Mongolia, where it will operate not only a hotel but a rest state guesthouse with a Chinese restaurant and VIP Club.
Mövenpick has also unveiled a Mandarin website and appointed a vice president development, Sunny Li, based in Shanghai.
Accor: Grand Mercure (Mei Jue)
Tweaked its Grand Mercure logo, incorporating the Chinese name, Mei Jue, and Grand Mercure underneath it.
Sticks to the Grand Mercure proposition as an upscale brand anchored around connection to local area through relationship with local art and culture and walking tours. In China, this is enhanced. The first hotel adapted to the new positioning, Grand Mercure Shanghai Zhongya, has employees conversant in Shanghainese.
Name badges bear Chinese characters, followed by a pinyin translation, enabling staff to use their given names. Guests are welcomed by staff wearing qipao, a traditional evening dress. Signature services include daily tai chi lessons, and free head and shoulder massages for guests staying on premium floors.
Accor’s nine other Grand Mercure hotels in China are due to adopt the new identity. The chain plans to have 65 Mei Jue hotels by 2015.
Starwood Hotels & Resorts Worldwide
Launched a Starwood Personalized Travel programme to cater to the unique needs of Chinese guests traveling abroad.
The programme, which has debuted in some 20 Starwood hotels worldwide to date, features teapots for brewing Chinese tea, packets of instant noodles, translated welcome materials and travel guides, on-site translation services, Mandarin-language restaurant menus and familiar favourites such as congee, a staple in Chinese breakfast.
Programme is communicated to guests upon check-in.
Hilton International’s Huanying, which means ‘welcome’, debuting in San Francisco on August 16, will provide have a front desk staff fluent in Mandarin, a dedicated Chinese television channel and an extensive selection of Chinese breakfast dishes. Some 30 Hilton properties have enrolled in the programme.
This article was first published in TTG Asia, June 15 issue, on page 12. To read more, please view our digital edition or click here to subscribe.