Hotel group attributes growth to internal commercial system
Print Edition
Over the past decade, H World Group has sharpened its edge in the supply chain, with benefits related to the cost of hotels, their quality and strategic development.
Inside its headquarters in Jiading District, at Lane 1299 Fenghua Highway, Jiangqiao Town, statistics including yearly revenue, purchase amounts and franchisee numbers are shown on a screen. The company now has 31 hotel and apartment brands, 9,394 operating hotels, or 912,444 rooms globally.
Liu Xinxin, its chief executive, attributed this to its vertical supply chain procurement platform, which is almost equivalent to Tmall, the online retail platform of Alibaba.
“It enables hotel franchisees, designers, construction companies and material suppliers to connect and ink deals, while it is responsible for management, monitoring and safeguarding,” Liu said.
It has a total of 3,095 suppliers online, offering 49,055 commodity goods covering six main categories of construction, fresh food, operation, furniture and equipment purchasing, as well as linen rental and cleaning.
In 2015, H World, while accelerating its expansion pace, was still relying on Excel forms to offer information to franchisees about products, prices and contact numbers, which was less efficient and the information it offered was often outdated.
Ji Qi, founder of H World, then decided to empower the traditional service industry by adopting the new approach of Internet thinking. The key to save money in the hotel industry is to save cost. And to save cost, the supply chain is of great importance.
“Our platform now offers the cheapest prices,” Liu said. “Due to our huge scale and robust demand, we have strong bargaining power.”
The company has decided to build up standardized hotels in a similar way of manufacturing automobiles, mainly through standardizing each step including design, construction, operation, maintenance, cleaning and catering.
Meanwhile, it remains focused on new product research and development to better cater to the ever-evolving demand of franchisees.
For instance, green supply concepts, such as using straw stalks to make slippers, recyclable label-less bottled water and furniture made with recyclable bottles, have been applied.
The transaction value registered at the procurement platform surged to 16.9 billion yuan (US$2.33 billion) in 2023, compared with around 200 million yuan in 2015 when it was launched, Liu said.
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