July 22, 2019
Strategic Joint Venture: A New Strategy to Expand Footprints in China
Written By: Evita Ma
...Many surveys show that the mid- to high-end hotel market is booming in China. However, the corresponding services are still insufficient....To expand the footprints, the Hyatt Hotel Corporation and BTG Homeinns Hotels Group announced their intent to establish a joint venture in February of this year; and in June, they released a new hospitality brand, UrCove. The brand was positioned to seize the "currently underserved, upper-mid-scale segment"....Stephen Ho, president of Hyatt Greater China and David Sun, general manager of BTG shared their views on this strategic partnership....Hyatt is a leading global hospitality company with more than 850 properties in 60 countries. BTG Homeinns is a local, well-known hotel group with 3,900 hotels in more than 400 cities in China and is one of the largest and fastest growing hotel chains, as well....As Ho explained, Hyatt would like to make the brand well-known in China, and BTG knows the local market best, with its strong connections and database. In return, BTG can learn from Hyatt's world-class operations and service standards to better serve guests....Summarized by Sun, this is a collaboration of two industry giants equipped with the best quality and fastest speed to open up the new market — making up for each other's deficiencies....UrCove (pronounced as "your cove") will provide a reliable and comfortable sanctuary on a voyage. Located in this highly accessible gateway, road warriors can enjoy a seamless, comfortable and premium experience in a cozy shelter....Equipped with functional business space and facilities, hotels will also offer delightful cuisines in multifarious options such as nutritious breakfast and group dinner options — leveraging Hyatt's highly renowned food and beverage excellence....The first properties are expected to open in Shanghai and Beijing by late 2020....Domestic tourism in China brings in a solid revenue of RMB 5.13 trillion in 2018, with a 12.3 percent increase, according to the research (Travel China Guide, 2018
). Given the growing potential of the upper-mid-scale market, the locally developed brand will advance the commitment to this important market....Except for the hackneyed strategies like mergers and acquisitions in the hospitality business, this strategic joint venture and UrCove is forging a new path to expand the footprints in China. We will see if this new joint strategy works next year....Reference:
Evita Ma is director at the HFTP Asia Research Center. Contact Evita at [email protected] or +1 (512) 220-4039.