"Home Inn is early, large-scale, and has an extensive network; 7 Days Group is low-cost and affordable; Jinjiang Star Hotel is stable, while the characteristic of Hanting is good," Ji Qi commented on the leading players in the economy hotel sector in this way.
"A good company must be able to endure loneliness," said Ji Qi. In Hanting's new three-year plan, Ji Qi's calmness and steadiness are still evident. From 2010 to 2012, Hanting plans to expand by 80-200 hotels each year. Among them, 60-70 of the newly added hotels this year will be company-owned stores, 80-100 new stores will be company-owned next year, and 100-120 new stores will be company-owned in 2012. This means that company-owned stores will still account for a large proportion of Hanting's total store scale in the future. After Hanting's IPO, Ji Qi also said that the funds raised from this listing would mainly be used to develop company-owned stores.
However, both domestically and internationally, operating company-owned stores requires a large investment, and hotel chains are mainly franchise-based. Including Home Inn which adopted a franchise expansion strategy after its listing to vigorously develop franchise stores, and 7 Days, which was originally mainly company-owned but planned to open mostly franchise stores this year. For Hanting, franchising is undoubtedly the most "economical" and fastest way to catch up with competitors in terms of scale. Why do company-owned stores still account for such a large proportion in Hanting's new plan?
"The economy hotel market still has dozens of times growth potential, and in the future, economy chain hotels of a certain scale will account for 50% of the market share, while now it is less than 1%," Ji Qi stated.
But compared to other competitors, Hanting started the latest. When Ji Qi left Home Inn, he signed a non-compete agreement with Home Inn, promising not to enter the same market as Home Inn within two years. Ji Qi kept his promise, and it wasn't until 2007 that Hanting began large-scale expansion into the economy hotel sector. Among similar competitors, Hanting entered the market the latest.
In 2008, after withstanding the洗礼of the financial crisis, the number of newly opened Hanting hotels was reduced to 100, mainly positioning as standard economy hotels under the Hanting Express brand. In the following year, Hanting maintained such a store-opening speed. Meanwhile, the other big brothers in the economy hotel sector had already been galloping ahead, expanding rapidly. By the end of 2009, Hanting owned 236 hotels. 7 Days had 337 hotels in operation, "the leader" Home Inn had 621 hotels in operation, and Jinjiang Star had 325 hotels in operation. Currently, these numbers are still increasing. Recently, 7 Days indicated that it would accelerate expansion this year, planning to open 170-200 new hotels.
Premised on ensuring store quality
After their IPOs, Home Inn and 7 Days both demonstrated astonishing expansion speeds. Facing such a huge market prospect, will Hanting accelerate its expansion after going public to narrow the gap with its competitors?
At the beginning of 2005, Ji Qi founded the "Hanting" brand, positioning it as a mid-range chain hotel specifically designed for business people. In less than five years, Hanting has developed three major brands: the economy-oriented "Hanting Express", the mid-range business "Hanting Hotel", and the budget "Hanting Haiyou Guesthouse". Its operations have expanded from Shanghai to cities like Suzhou, Wuxi, Nanjing, Hangzhou, Ningbo, etc.
Ji Qi explained that Hanting adopts a balanced development strategy of company-owned plus franchising to consistently ensure store quality. "If all were company-owned or franchised, the quality of the hotel would be affected. We must premise our development on quality assurance."