Hanting Hotels: The innovative traditional business favored by venture capital
Hanting Hotels (Hanting; Company) announced on July 9th, 2007 that the Company has successfully closed the first round of financing. This round, made by five well-known investment organizations, CDH Venture Partners, Chenwei Ventures, IDG -Accel China Growth Fund, Northern Light Venture Capital and Pinpoint Capital recorded the biggest first round of finance in service industry. Ji Qi, the founder, Chairman of the board and CEO of Hanting addressed that the success of Hanting's financing will accelerate the growth of the company.
Ji Qi expressed that what he likes most in this financing is the validation by international capital market upon innovative Chinese corporations in service business, such as Hanting. Through this round of financing, Hanting obtains sufficient capital to support company growth; furthermore, brain-power composed from several distinguished investors will bring more international management experience and capital making expertise to Hanting. All of these factors will help to maintain Hanting's leading position in mid-scale hotel chain market in China.
As companies with "Service by China" concept performing well in capital market, novel brands in traditional service sector continues to draw investor's attention. The investment to Hanting from five experienced investment organizations justified Hanting's unique market position, distinctive managerial team and rich experience of hotel chains development and management. Those advantages will ensure the tremendous growth Hanting.
Wang Gong Quan, the partner of CDH Investments said that the current market potential of mid-scale hotel chain is the reason to invest Hanting, the undoubtedly fastest growing brand. From now on, Hanting will accelerate the expansion and increase market-share. IDG Venture Capital's partner Zhang Su Yang told the correspondent that Hanting's experienced managerial team has a remarkable reputation in capital market. As the co-founder of Ctrip.com (NASDAQ: CTRP) and Home Inns & Hotels (NASDAQ: HMIN), Ji Qi has an unparalleled consecutive start-up ability that is highly rated by IDG. IDG's investment to Hanting is the third co-operation between this famous venture capital and Ji Qi.
Hanting Hotels is the current biggest mid-scale hotel chain in China. Focusing on business travelers characterized as "Knowledge Worker", Hanting offers tailor-made and comfortable accommodation service. Hanting applies the development strategy of brand-building and coverage. At the moment, Hanting has about 100 hotels in nearly 30 business cities national-wide. The trend of growth is phenomenal for a hotel chain brand with only 2-year history.
As the popularity of TMT concept waned, the innovation of traditional service businesses under new market environment has began to receive interest from investment communities. Today, the stage of China's economic and infrastructure development is similar to that of United States in 1970's. At that time, the increasing mobile population ignited the rapid growth of American hotel industry. The era created a number of now renowned hotel management brands. These brands targeted at truck-drivers, family leisure travelers, business people and even senior citizens. Now the lodging industry in China has a similar golden opportunity. Hanting is the first hotel chain in mid-scale sector and focusing on frequent business travelers. Hanting emphasize on rooms and business services while the seldom-used banquet and dining facilities are eliminated. The limited service provided enables Hanting to control the cost while offering high-quality hardware standard and competitive the room rate. To focus on the segment, in addition to the most basic free broadband access, Hanting also offers the customers free business library, free tea and coffee, free meeting room, and free copying & printing. Those services are often demanded by many business travelers but are hardly accessible freely in many hotels. Such features has distinguished Hanting from other players in the limited service hotel industry, generated a royal customer base and raised awareness of mid scale hotel in China.
In mature overseas lodging market, market segmentation and chain network are two important characters However; a great proportion of China's hotels is an individual unit. These hotels face limitations in brand-building and reservation system development. In order to compete, they can only rely on reducing price, resulting in less than satisfactory operation margin. With the fast expansion of the transportation network in China, the demand of lodging has grown every year, grows and hotel chain concept was introduced into the market. A unified brand, centralized purchasing, centralized management, and central reservation system are the characters of hotel chain such as Hanting. The hotel chain presented a consistent brand image, backed by hundreds of hotels across China. With centralized management, the consistency level across all these hotels are fairly is high. Customers' choice of brand is equivalent to the choice of these hundreds of hotels. A well established brand can form a royal customer base whose members are emotionally dependent on this brand, an significant advantage to the chain. For the enormous China consumer market, the one has the most royal customer leading the market.