"Also, I had to stay in a hotel in Changchun (sort of a local chain version of a Holiday Inn Express that local tourists or business travelers would stay at - not international business travelers with fat expense accounts) as there were no hostels there. The room was up to international standards regarding cleanliness and comfort. However, and when I came back after walking around the city for two hours after checking in, I was greeted by these “room service” calling cards shoved under my doorway:"
[At least they didn't come to my door in person to offer any services and I never answer the phone at a Chinese hotel... normally go for international hostels or guesthouses where this sort of extra service is not available.....]
Appreciate the link! And thanks for sharing your interesting experience. That's the problem with many local independent hotels in China - there is always just something that's not up to par or lacking in professional quality. I am willing to bet what you experienced will not happen on an Atour property.
Hi thanks for the comment! I'm not sure if I understand the question (especially the "non-passthrough royalties part). Are you saying 7-9% royalties seem too high?
I think the fact that 50% of new properties are taken on by existing franchisees means it's not too high; franchisees won't be looking to expand if they aren't making good profit.
Hi, thanks for sharing. May i know do you have any more thoughts on how do they resist from the rise of aggregator? ie. trip.com/Meituan? If their customers book directly from their these aggregators, will them becomes commoditized as a result? appreciate for your thoughts
"direct bookings" refers to those that do not go through OTAs. We estimate that about 80% of Atour's total bookings are direct, which is quite high, and not expecting this to significantly change over time. This is thanks to Atour's loyalty program which gives customers benefits of booking directly. Hope this answers your question.
I linked to this and your other piece in my Emerging Market Links + The Week Ahead (June 17, 2024): https://emergingmarketskeptic.substack.com/p/emerging-markets-week-june-17-2024
I stayed at the Hanting Hotel Changchun Train Station Branch (I think part of H World Group (NASDAQ: HTHT)) maybe several years ago as there were no international hostels there. As I noted last year, there was a little surprise when I came back: (https://emergingmarketskeptic.substack.com/p/em-fund-stock-picks-commentary-august-8-2023):
"Also, I had to stay in a hotel in Changchun (sort of a local chain version of a Holiday Inn Express that local tourists or business travelers would stay at - not international business travelers with fat expense accounts) as there were no hostels there. The room was up to international standards regarding cleanliness and comfort. However, and when I came back after walking around the city for two hours after checking in, I was greeted by these “room service” calling cards shoved under my doorway:"
https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F2a94ea2f-7862-4b8f-ba08-1a7b844b89f0_880x662.png 🤣🤣🤣
[At least they didn't come to my door in person to offer any services and I never answer the phone at a Chinese hotel... normally go for international hostels or guesthouses where this sort of extra service is not available.....]
Appreciate the link! And thanks for sharing your interesting experience. That's the problem with many local independent hotels in China - there is always just something that's not up to par or lacking in professional quality. I am willing to bet what you experienced will not happen on an Atour property.
Excellent write-up! Thanks!
Thank you so much!
Awesome piece!
Their culture seems really unique, very customer-centric. And their complaint-follow up mechanism seems like a great way to constant improvements.
One question though…is a 70% margin on 7-9% royalties too generous? By comparison, I believe Wyndham has a 75% margin on 5% non-passthrough royalties.
Hi thanks for the comment! I'm not sure if I understand the question (especially the "non-passthrough royalties part). Are you saying 7-9% royalties seem too high?
Yep. Are their royalties too high and are they sustainable?
I think the fact that 50% of new properties are taken on by existing franchisees means it's not too high; franchisees won't be looking to expand if they aren't making good profit.
Fair
Hi, thanks for sharing. May i know do you have any more thoughts on how do they resist from the rise of aggregator? ie. trip.com/Meituan? If their customers book directly from their these aggregators, will them becomes commoditized as a result? appreciate for your thoughts
"direct bookings" refers to those that do not go through OTAs. We estimate that about 80% of Atour's total bookings are direct, which is quite high, and not expecting this to significantly change over time. This is thanks to Atour's loyalty program which gives customers benefits of booking directly. Hope this answers your question.