Interview with China’s leading hotel group executive
New CEO sets direction on branding, expansion and distribution for Jin Jiang
As China’s leading hotel group with a sprawling network of 120,000 rooms, Jin Jiang Hotels has yet to develop a brand reputation that matches its size.
The Jin Jiang name, which has been around for over 80 years, should have been widely recognized as China’s national brand, but it is not. German hotelier, Bernold Schroeder, plans to change that since taking over as Jin Jiang International Hotel Management Company’s Chief Executive Officer last August.
Rationalizing Jin Jiang’s four categories of properties into four distinct sub-brands, Mr. Schroeder aims to turn Jin Jiang into a brand that will make the ever-growing cohort of sophisticated Chinese travelers feel most at home with and feel proud of.
Ahead of the China Hotel Marketing Summit scheduled for May 15 in Shanghai, Mr. Schroeder, a speaker of the event, shared his vision with TravelDaily and how he meets the challenges of building a national hotel brand for China.
Why hasn’t Jin Jiang become a global brand sooner?
Jin Jiang has been the largest hotel group in China. When you're the largest, you slow down. You come to a certain comfort zone. Naturally, Jin Jiang has slightly slipped into this comfort zone. But because the group’s properties are in great locations, they do relatively well nonetheless.
What is your vision for Jin Jiang?
When I traveled to China before, I found that China is the only world power that doesn’t have a globally-recognized national hotel or airline brand. Yet, Chinese firms are among the Global Fortune 500 – 3 of the 10 largest companies in the world are in China, and 15 of the 100 largest are Chinese. Amongst the 100 best-known global brands ranked by Interbrand or Millward Brown, there isn’t a single Chinese brand.
In Jin Jiang’s portfolio, all the beautiful hotels are handed to well-known international hotel brands to manage. My pitch to Jin Jiang is that the group should develop its own global brand that is as well known as China Mobile, Baidu, or Lenovo.
As the number of China’s outbound travelers will grow to 100 million in the next 7 to 8 years, I envision a 10-year plan to develop this for China and to give China its own home-grown hotel brand. This is fully supported by the great leadership of Jin Jiang.
How will you structure the Jin Jiang brands?
Within the Jin Jiang portfolio are two major categories of hotels – the budget Jin Jiang Inn with 75,000 rooms and star-rated hotels with 35,000 rooms. (The hotels under the Interstate banner are in yet another category. Taking into account those hotels, Jin Jiang has an inventory of 180,000 rooms.)
The star-rated hotels are my focus. Within this category, there are 4 major types of properties – Jin Jiang owned but managed by other hotel brands; Jin Jiang owned and managed (there are 19 of these, and they are important to us); new 5-star properties (not necessarily owned by Jin Jiang) opening this year in secondary cities (there are 12 of these); and non-Jin Jiang-owned properties managed by the group or by franchise.
My focus is the 19 properties we own and manage, because they are representative of Jin Jiang, the new openings and, of course, close owner relations. These will be rebranded under a brand architecture with four brands –The J brand at the super high-end, the 5-star Jin Jiang brand, the 4-star Jin Jiang brand distinguished with its own identity, and the 3-star Marvel brand.
Within the 5-star category will be a “heritage collection” featuring our heritage hotels such as Peace, Metropole, and Pacific Hotel. Some will have an overhaul within 9 months. The first to complete will be the Jin Jiang Hotel by early 2013. This hotel is our flagship in terms of location and real estate – it boasts 500 hectare of estate and was the location for the signing of the Sino-US trade agreement by (form US President Richard) Nixon. This will be the Raffles of Shanghai.
We want to make Jin Jiang a brand that China’s outbound travelers will feel at home with and international travelers will perceive as quality.
How do you go about the branding exercise?
We will do our homework this year and raise first the “bread and butter” standard of the hotels. We will spend 5 percent of our payroll on training. We are sending 25 staff to Interstate for 4-month training and then to Cornell University. As we have a 50 percent stake in Les Roches Jin Jiang International Hotel Management College, this, too, will be integrated with our training.
We will launch our new brand within this year. By the end of the year, we will sign our first international management contract. This will help fast track our work as we will be in a position to move faster when we get new international properties.
Are you getting high-level support and buy in?
The Chinese government’s 2030 think tank plan states that state-owned enterprises have to be financially driven. Our group has a strong balance sheet with strong return on investment, because we owned the buildings for a long time. We anticipate the investment in renovation and rebranding will have relatively short pay-back time.
I’m getting fantastic support from the leaders and board. The company wants to make the changes. It’s important everyone understands what has to be done.
Now we are hiring carefully. I need people who will stay with me for the next 5 to 10 years to make this work. I need people with different skills sets and passion.
What's Jin Jiang’s expansion plan following the branding exercise?
Our focus is to start in Asia. The China outbound market presents huge opportunities in this part of the world. China’s neighboring cities, such as Japan, Korea, are seeing strong Chinese retail business. I would like to stay in the region, as well as cover the resort destinations such as Maldives and Thailand, where we look to manage properties owned by others. We can fill their hotels, because we have our own travel agents.
China is 4 times larger than the US in terms of total population, but we have less than 50 percent of the US room inventory. At the same time, all the cities in China need more hotels. There are also big opportunities in branding hotels in China as only 20 percent of the rooms are branded, whereas in the US, the ratio is 70 percent, and even one-star hotels are branded. We need to convince people they need a brand, because it brings higher rates.
Domestically, we’ll look at opportunities in Western China, in cities like Kashi where luxury travel is growing. There is also much room for developing resorts domestically.
How would you leverage online travel distribution and social media?
In China, most hotels are totally dependent on online travel agents (OTA). It’s a relatively easy way to fill hotel, but at high cost. OTAs bring in a lot of business and we all need them, but at the moment, we intend to drive our own distribution.
We will segment corporate and leisure groups and make more efforts marketing to MICE groups. We will revamp our website to bring in more traffic and boost our own sales offices. We will also speak to travel agents and wholesalers. At the same time, we have a good in-house reservation system that we control and we plan to fine-tune it.
Mr. Bernold Schroeder will speak on the upcoming TravelDaily China Hotel Marketing Summit, which will take place at Shanghai on May 15, 2012. For more information, please visit the event website at http://summit.traveldaily.cn/17/index.aspx .