Franchise chain brands: how to choose a brand and how to measure brand value? How to control investment risk

Original: Li Sheng

Internal

Over past two years, number of chain hotels has grown by an average of 10,000 per year, distributed among hundreds of domestic brands

In addition, new brands are constantly emerging, confusion and selective barriers on part of ten thousand hotel franchisees when choosing a chain brand

here

I use my experience to give you advice and guidance. In end, choosing wrong step can lead to millions or even tens of millions of financial losses

Recently while talking to several investors who are preparing to enter hospitality business from different industries

I found it

In fact, many investors have no idea about positioning of project, amount of investment and respective brands of hotel they need

Old proverb cloud

Know yourself and know your enemy and you will win a hundred battles, so today we will discuss how to find best intersection of project positioning, brand choice and overall investment

For cities of all levels across country, there are hotel property projects suitable for different categories and brands

However, project can be implemented gradually in accordance with expected objectives from acquisition of ownership to normal period of operation

But it's a complex project that combines professional ability, execution ability and coordination ability; key to success of project is recommendations for positioning project

Use my professional experience for analysis

First

Project positioning can be analyzed in following ways

First

Project location

Location is influenced by factors such as business, traffic, and nearby tourist sources; first level location is adjacent major business district

For example

Chengdu Chunxi Road - Taikoo Li commercial area, Chongqing Jiefangbei commercial area, Guiyang Huaguoyuan commercial area, etc. These commercial areas combine shopping, tourism, catering, leisure, entertainment and other traffic sources. This is main symbol of traffic< /p>

What is a secondary business district?

For example

Second-level place is a small business area or a collection area of ​​administrative units, such as neighborhood of Wanda Plaza, provincial government, municipal government, etc., where offices, shopping malls and medium-sized high-end residential buildings and related ancillary buildings are located objects are easily accessible; location of third level - Transport hub

Express Hotel Era's location benefits from its proximity to bus and train stations as high-speed rail and aviation are becoming more and more preferred travel options

High-speed rail terminals and areas around airport have also become hotel-hot areas; in addition, in first and second tier cities and provincial capitals, distance from subway entrances has also become an important factor in location of hotel

The fourth level location is located near industrial clusters or professional markets, usually away from bustling commercial areas of city, and source of tourists is relatively lonely

Sure

It is difficult to determine location, that is, hotel is in a picturesque place

The ideal location is a scenic location in city, such as Forbidden City in Beijing.

The Leshan Giant Buddha is located in Leshan City, but in reality there are relatively few such cities and hotel projects, and tourism market in clean scenic areas (especially far from urban areas) will have off-season and peak season

The main thing to consider is that peak season can bring several times more traffic and revenue compared to off-season to compensate for back-season performance gap; must be closed to stop losses

The order of above positions is not absolute, in fact often several situations go together

Combined with principle of "golden horn and silver edge" when choosing a place, generally speaking, better place, richer source of tourists and higher quality of hotel, and vice versa

Second

Basic ConditionsOvia Accommodation

This is mainly judged by appearance of building, area of ​​the lobby, depth and bay of guest rooms, as well as volume of rooms

The higher hotel building, better view; if facade is made of dry stone or glass curtain wall, it is more suitable for middle, middle and high class hotels or high-end hotels

The higher level of hotel, more lobby area is required and higher height of floor (even if partially empty)

In general terms, area of ​​express hotel rooms is 18-22 square meters (3.2 meters * 6 meters or more)

A mid-range hotel requires an area of ​​about 23-30 square meters (3.6 meters * 7 meters or more); a mid-range hotel requires about 26-35 square meters (3.6 meters * 7.5 meters or more)

High volume space can split pre-construction costs and later operating costs

Third

Rent level

The level of rent should be assessed from two sides

One of them is absolute value of rent, that is, level of rent per square meter per month (or per day), for example, rent of Chunxi Road business district in Chengdu is 70-80 yuan / month / square meter

The second is cost of renting a single room, which is related to absolute cost of rent and total area of ​​a single room

Cross combination of above three factors

Comprehensively consider wealth of surrounding tourism sources, consumption capacity, room area, room rate, rental cost, etc.

Define project positioning (economy hotel, mid-range hotel, mid-high class hotel, high-end hotel)

I want to emphasize one point here

Many people see active development of middle-class hotels and believe that budget hotels have nowhere to develop

This is not actually case, in terms of relatively weak consumer power, low network operations, low degree of market competition, and few branded hotels

In areas where property rents are low, budget hotels still have room to grow and are still very profitable in some markets

Fourth

Upcoming competing products

Now many people are talking about topic of "saturation of hotel market"

I think this is a false statement

Not to mention domestic product and brand renewal in hospitality industry, some cities (states) in east, center and west

The development of regional market in district is inherently uneven, and so far there are only a few economical hotels or hotels of “middle price category”

Or there are only one or two chain brands. Therefore, hotel industry is still in a growing market.in last three to five years, and there is always "survival of fittest".

The key to project positioning is finding a product that can compete with itself in terms of location, image, lobby, restaurant, space, management

Conduct a comprehensive comparison of brands and other aspects to find brand and price range that suits you

In addition to project positioning, as a rule, individual needs of investors are also taken into account

In terms of business logic, investments are mainly intended to generate profit, but in reality

We often see many hotel projects scale up. A market that should be a mid-range hotel is positioned as a mid-high class hotel, and a market that should be a mid-high class hotel is positioned as a high-class hotel

On one hand, it may be that investors do not pay much attention to return on investment, but pay more attention to added value of a hotel class to a real estate project

Or make hotel a hallmark of personal strength of company and owner, on other hand, it can be a strict requirement of local government or state-owned enterprise to improve throughput.

In short, ROI or profitability is not only thing investors look at

Sure

When positioning a project, we must also learn to flip our thinking and overcome limitations of stereotyped thinking

Don't think one-sidedly and subjectively that profitability of mid-range and high-end hotels or high-end hotels should be low; it's actually related to location< /p>

Close passenger traffic, hotel quality, brand, management, marketing, etc. are closely related to each other. A well-managed mid-to-high-end hotel is an asset that can be passed down through generations.

The failure of project is mainly caused by a misunderstanding of choice of city level and power consumption

After a comprehensive analysis of project from above points of view

The final positioning is mainly reflected in valuation level, which will affect amount of investment in hotel and price after opening

The next thing to decide is whether to be an independent brand or a franchise brand; many investors choose brands mostly blindly or based on intuition,

However

If you want to join a reliable and suitable brand, you need to do some extra homework. After all, once you decide to join

It will take ten years or more to find common ground. The choice of brand can be studied by following parameters

First

Understand context of brand positioning and development

The easiest way to assess level of a brand is to look at investment cost of decorating one room

60,000-80,000 is an economy hotel, 80,000-100,000 is an average mid-range hotel, 100-130,000 is an average hotel.

Hotels from 150,000 to 300,000 are usually medium and high class hotels; high-end hotels are a different matter due to their larger sizeand more amenities.

More than that

This is mental positioning of brand left to consumer: Lifeng and lavender, Atour and photography, Vienna and simple European style, etc.

This impression on consumers automatically classifies brands into three, six or nine classes. For example, price range of Hanting hotel in minds of most consumers is 100-200 yuan per room per night (excluding first-tier cities).

Even if Hanting switches to so-called 3.5 generation products, investment in a single room will be 80,000-90,000 yuan, but in minds of consumers

Hanting is still a budget hotel, which is a long-term "mental attitude" for consumers, and it's hard to change that completely. Therefore

When choosing a brand, you need to understand what place it occupies in minds of consumers in order to better suit your own projects

Second

Learn more about brand strength

Strength is formed by superposition of many factors: most direct manifestation is number of branches

Especially number of open stores and regional distribution, if your project is in a strong brand area, then you can give priority to this brand

After all, opened stores advertise your project in advance, if you are in a disadvantaged area, you can choose?

This should be considered in conjunction with other factors. If you want to make a choice, you should take opportunity and strive for best conditions from brand

For example, regional exclusivity policies, lower associated cost standards, dispatch of experienced senior managers, lower uniform procurement requirements, etc.

This does not mean that regional chain brands with a small number of stores cannot be selected. Currently, there are some brands that are developing rapidly within province

Their advantages are low standard brand requirements, low unified purchasing requirements, low associated costs, etc., relatively economical and affordable, but there are also low-profile ones outside region

Weak brand premium ability, unimpressive product design and other issues, but if your project is in a strong area, especially in a market with few other brands

As long as amount of investment is not too high and size of hotel is small, ROI of small brands can be quite good, and sometimes there may be some surprises

In addition

In current era of digital economy, number of participants is also an important indicator of a company's strength

Although quality of membership (age stage, purchasing power, regional distribution, etc.) differs for each brand

However, a brand with a large number of members is an advantage. At presentthe current era of OTA "overtaxation"

A high proportion of direct brand sales is an effective deterrent to OTAs. A high occupancy rate is also a performance stabilizer for a hotel.

Third

Full understanding of brand headquarters and regional governance structure

If conditions permit, investors can apply to visit brand's headquarters

Understanding setting of brand's top-level management structure and staffing of professional departments, more complete departments and staff

The referral to branch will be more professional and timely. All major brands will divide territory of management by number of branches

The more government areas in each province, stronger brand in province and better governance

On contrary

If in one or two provinces, or even more provinces, there is only one area of ​​​​management, this means that brand is still in point distribution development trend

Regional management is still relatively extensive, and directives from district general manager and individual store visits are not enough

Fourth

When investors choose a brand, they have to go to open stores for inspection and communication

First, you need to understand details of product, and second, you need to follow brand standards at management level.

Is learning mechanism, employee status, management level, etc. standardized and rigorous, and is there a service

Go to OTA platform to check online rankings of other franchise stores. Good management must be reflected in all aspects, and loopholes in management can also appear unintentionally

Fifth

The professionalism and all-round quality of brand developers are most criticized by investors for many brands

Skilled hotel brand development should be a collaborative talent

He must understand both site selection and operation, political and economic planning, and market conditions

A person who speaks eloquently, only talks about how good a superficial brand is, and has little understanding of hotel market, operations management and competing products, is just a wanderer at best

Not a professional in hospitality industry, so how can you trust him to be a professional consultant on an investment project worth tens of millions?

So

To join a brand, you must find a developer with excellent professionalism, character and ability, otherwise you will be trapped

After more than 20 years of rapid development of China's hotel industry

He switched to multi-category, multi-brandsingle and layered stage

Professionalism in industry is getting higher and higher and competition is getting tougher. Chaining has become a recognized industry trend

In order to find right brand for you in starry sea of ​​brands, investors must also constantly raise their awareness of industry

Based on above aspects of study, self-own projects and preferred brands

Only with enough patience and wisdom can you find best brand for you