On May 28th, Huazhu Group's high-end segment "Beautiful Family" held an investment summit in Qingdao. According to the information presented at the meeting, the number of "Beautiful Family" matrix stores is expected to exceed 500 this year. The "Beautiful Family" includes four brands: MaxX, which is positioned as high-end, as well as three mid to high end brands: Meilun International, Meijue, and Meilun.

The size of 500 is not prominent within Huazhu Group. According to Huazhu Group's financial report, as of March 31, it had over 13000 hotels in operation worldwide, including 4626 in Hanting, 3719 throughout the quarter, and 1103 in Orange.

For the 'beautiful family', scale is not the key word for development in the next three years. Huazhu Group held an investment summit and released the above data, which actually conveyed the signal that it will focus on making efforts in the high-end hotel industry. The 'Beautiful Family' has taken on the driving force for the high-end development of Huazhu Group's brand.

Huazhu Group's Chief Growth Officer, Ai Tiecheng, said, "Huazhu understands China better than international brands. With the energy accumulated from economy and mid-range hotels, as well as supply chain and membership operation capabilities, Huazhu has the ability to enter the high-end market

Zhang Shurong, CEO of Huazhu Group's High end Quality Business Unit, said, "Now is a period of rapid growth for mid to high end hotels, and I believe that there are also good opportunities in the high-end market

In addition to high-end development, another key word for the development of the "Beautiful Family" is the transformation of existing hotels, which does not rely on the expansion of new hotels, but rather on the transformation of existing hotels after joining. There is a hidden thread behind this: the increasing trend of industry chain rate.

Ai Tiecheng emphasized the industry background that the Chinese hotel industry is entering a profound K-shaped differentiation era, with chain hotel brands still growing, while a large number of individual hotels are under tremendous pressure. According to Ai Tiecheng, nearly 60% of individual hotels will be in a loss making state by 2025. Consumers are increasingly inclined to choose chain brands they are familiar with and trust when traveling, leading to a continuous increase in chain ownership rates. Compared to mature markets, the chain rate of hotels in the United States is about 70%, while in China it is currently only around 30%, which means there is still huge room for growth.

Zhang Shurong believes that the market logic of high-end hotels has changed, and the era of "face saving projects" driven by real estate in the past has come to an end. At that time, building a five-star hotel was to increase land prices and obtain loans, and the profitability of the hotel itself was not important. But now, with the disappearance of real estate dividends, all hotels must return to their commercial essence and create tangible cash flow and value.

Zhang Shurong provided a set of data: the average RevPAR (revenue per available room) of five-star hotels in the entire industry has fallen to 309 yuan, which is equivalent to a full season hotel in a strong second tier city.

High end hotels should have higher profitability, but the reality is that this profit advantage is disappearing. Zhang Shurong said that species are changing, and times are also changing. This means that the previous logic and blindly "big and comprehensive" hotel model are no longer suitable for the current market environment.

The 'Beautiful Family' targets the renovation and branding operation of existing hotels, especially those individual hotels facing operational difficulties.

The magnificent hotel on the Bund in Shanghai is a benchmark case. This building is located in the heart of the Bund, a ten mile shopping mall surrounded by high-end international hotels. Zhang Shurong said that during the negotiation process between Huazhu and the owner, people within the group went at least thirteen or fourteen rounds. The reason why we are so determined is that once the magnificent building is completed here, it will become one of the starting points for Huazhu Group's high-end transformation.

The building has been taken down, but what's even more difficult is how to renovate it. Is it more luxurious or more complementary? 'Posting gold and silver' is obviously not the direction that Huazhu wants to go. How to implant Huazhu's genes while maintaining its original characteristics? Huazhu decided to return to the starting point first: to interview the founder of the Oriental Business Hotel, the predecessor of this building, and ask him how it was designed and what his original intention was.

Zhang Shurong said that transformation is not about starting over from scratch, but about paying tribute and inheriting. The original lobby was on the third floor, but after renovation, it has been moved to the first floor. The floor was not removed, but re polished. The corridor is adorned with top European porcelain and paintings by renowned artists. In terms of hardware, all mattresses, toilets, and toiletries are equipped with the highest configuration within the Huazhu system; In terms of service, from booking to check-out, we strive for international standards in every aspect. Zhang Shurong revealed that the RevPAR of this store exceeded 3000 yuan on New Year's Day this year.

The Bund project is a benchmark, but more stock renovations require standardized cost control. The "Beautiful Family" renovation will be divided into three levels: "Light renovation" with a single house investment of 10000 to 20000 yuan, "Medium renovation" with 20000 to 80000 yuan, and "Heavy renovation" with 80000 to 120000 yuan. The core principle is to 'stay still if possible, and move precisely if necessary'.

The cost controllable means come from Huazhu's supply chain system. Ai Tiecheng revealed that Huazhu's supply chain procurement has a "pay as you go" commitment, which means that for products of the same quality, if there is a lower price on the market, Huazhu will compensate franchisees.

Meilun Meihuan has only opened 7 stores so far, and will open 5 more this year, located in Xi'an, Chengdu, Shenzhen and other places. Within three years, we won't talk about scale, we'll only talk about value, "Zhang Shurong said." We're talking about the species leading value of Huazhu and the entire high-end hotel industry.