The big wine management is empowered, and the small wine management can be expected in the future.
On June 18, Guangxi Dongcheng Hotel Management Group Co., Ltd. and Shandong Baizhai Life Hotel Management Co., Ltd. officially signed an equity cooperation agreement, Dongcheng Group acquired 30% of the latter's equity, and the two sides will carry out all-round in-depth strategic cooperation in the fields of development, operation, membership, marketing, supply chain, and digitalization around the "George Morandi" (hereinafter referred to as Morandi) chain hotel product brand.
This strategic investment cooperation is another story of a leading chain group holding hands with a regional small and medium-sized wine management company.
The first foreign strategic investment, aiming at the "small but beautiful" brand
Since 2014, Dongcheng Hotel Group has established a number of well-known hotel product brands such as City Convenience, Eshan, Berman, Yicheng, etc., with more than 3,500 hotels (including those under construction) covering 31 provinces, municipalities and autonomous regions across the country, with more than 88 million members. Since Meituan's strategic investment in Dongcheng at the end of 2020, Dongcheng has more abundant cash reserves, a more standardized corporate governance system, and a significant improvement in the efficiency of platform empowerment.
In March this year, at the "Our Times" Dongcheng Business Co-creation Conference, Cheng Xinhua, founder, chairman and CEO of Dongcheng Group, mentioned "brand cooperation" when describing the group's future development strategy, hoping that those small and beautiful local native brands and products in the market with brand creativity will cooperate with Dongcheng; Dongcheng uses its own platform to empower cooperation.
Just three months later, Dongcheng officially announced that it would join hands with the George Morandi Hotel, which became the first wine management company to be strategically invested and cooperated with by Dongcheng.
Founded in 2018, the Morandi hotel chain is positioned as a new luxury lifestyle brand, mainly concentrated in Shandong, and also has a layout in Jiangsu, Xinjiang, Henan and Hebei, and currently has nearly 100 stores. Despite its small size, it is a popular small but beautiful brand – consumers love this mid-to-high-end business and light luxury hotel that leads the design trend because it is more upscale, more western, and better looking at photos; Investors prefer its "lower investment, higher grade" investment model.
From the perspective of corporate strategic investment, large groups often pay more attention to the business model of small and beautiful companies, especially the business rules of sustainable profitability.
"Morandi has completed the construction of six centers covering development, preparation, preparation, operation, quality inspection, and public relations, and there is no problem in the management of the front and middle offices, and the implementation is very strict." Some industry insiders told Milestone that the current shortcoming may be the backstage construction, which may also be one of the reasons for Dongcheng's strategic investment in Morandi.
The "small but beautiful" Morandi Hotel will strengthen the mid-to-high-end product chain of Dongcheng Group. Dongcheng will gradually open up the company's brand influence in the mid-to-high-end market by creating mid-to-high-end products such as Echarm PLUS, Zhencheng and Jincheng.
How to achieve a win-win strategy for big wine management to empower small wine management?
The strategic investment in Morandi Hotel marks another substantial step forward for Dongsheng Group on the road of enriching the layout of mid-to-high-end products. It is generally believed in the industry that this strategic cooperation means that Dongcheng Group continues to take the initiative in the mass hotel market, hoping to actively respond to market competition by strengthening its own efficiency and foreign investment and development.
However, the mid-to-high-end market has always been highly competitive, with a large number of Chinese and foreign hotel brands competing on the same stage and entering the era of "thousand-store brands". Therefore, the industry is also more concerned about how Dongcheng empowers the development of the Morandi brand and achieves a strategic win-win situation after the strategic cooperation.
"Dongsheng has always been committed to creating high-cost hotel products for the public and supporting the development and growth of high-quality mid-to-high-end hotel brands." Cheng Xinhua, Founder, Chairman and CEO of Dongcheng Group, emphasized that Dongsheng hopes to support Morandi Hotel to improve its operational efficiency and effectively enhance the operating efficiency and influence of China's outstanding mid-to-high-end hotels through the empowerment and output of all elements of Morandi's development, membership, supply chain and IT system on the basis of Morandi's existing product brand.
First, develop synergy and expand the scale of cooperative brands.
With Morandi's Shandong region as the regional center, through inter-provincial replication and regional deep cultivation, the two sides will jointly develop and expand the brand. In this way, Dongcheng Group will further establish an industry radiation circle in North China and accelerate the pace of business expansion; Morandi is expected to further expand the scale of the brand and even go out of the regional market.
It is reported that the two sides have completed the global layout and pilot of Shandong from a new first-tier city to a fourth-tier city.
Second, member IT system + regional operation experience to strengthen the hotel business.
After the strategic cooperation between the two parties, through member connection and system docking, Dongcheng's strong membership system will help Morandi effectively expand marketing channels, reduce the cost of customer expansion, and improve the efficiency of customer expansion. Coupled with Morandi's rich experience in regional market operation, the two-pronged approach will more effectively improve the operating efficiency of stores.
Third, the supply chain is interconnected, complementing each other's advantages, and reducing the cost of preparation.
Thanks to its team's background in the design and engineering industry, Morandi has obvious advantages in product, design, engineering management, etc., and has created a hotel product that "achieves mid-to-high-end market performance through mid-range cost". After the strategic cooperation, relying on the advantages of centralized procurement of high-quality suppliers in Dongcheng's supply chain system, the Morandi brand can support the rapid expansion of the brand with a lower cost and a shorter preparation period.
Fourth, build an efficient organization, pay attention to talent training, and continue to deliver business talents.
Over the past 18 years, Dongcheng Hotel Group has achieved "ten times the speed in five years" by relying on excellent products and services, efficient operation and management, and solid market cultivation, and has become a leader in China's public accommodation market. When Dongcheng began to seek faster and greater development, especially when empowering other wine management companies externally, it was also focusing on efficiency to create higher management efficiency and a stronger organization.
In recent years, Dongsheng has taken the initiative to promote organizational change in order to evolve into a more competitive and efficient organization that satisfies both consumers and investors. With the core goal of improving management efficiency, we will implement the idea of strengthening the first line, refining the middle platform, and light the back office, reducing the hierarchy and simplifying the flat ...... Recently, Dongcheng's official account once again posted "Let cadres at all levels rush to the front line, do things directly, and work down".
"The overall operation level of Morandi Hotel is good, and with the empowerment of Dongcheng Group's platform, it is expected to achieve higher operating efficiency and promote the sustainable and healthy development of its business model." He Bin, co-founder of Morandi Hotel brand, said that Dongcheng's platform-based operation advantages and the continuous improvement of the management and operation level of first-tier hotels have begun to benefit the development of existing small and medium-sized wine management companies.
Flexible, light, complementary, a new paradigm of investment cooperation
In recent years, the development of small and medium-sized wine management companies in China has shown "ice and fire": on the one hand, regional small wine management companies and brands are becoming more and more diverse, for example, from the perspective of regional market performance during the holiday, small chain hotel brands far exceed the brands of the leading groups in the same region; On the other hand, small wine management companies (with less than 50 stores) can no longer open stores quickly by relying on the traditional model, and some may stagnate, or even be flopped out - the three-year game war has begun.
Dongcheng's posture of joining the regional market competition is a flexible, light and complementary capital operation, more strategic complementarity and enabling growth, while retaining the entrepreneurial passion of the founders of small and medium-sized wine management companies. Industry insiders speculate that the current strategic investment method of Dongsheng is a light operation, which not only maintains the innovative spirit and agile organization of start-ups, but also leverages the development of the platform resources that have been formed by the head wine management group, "The current strategic investment may only be a way to explore." With the foundation of cooperation, perhaps there will be more room for collaborative development between the two sides in the future. ”
"We are looking forward to brand cooperation, but the brand is dominated by partners." Cheng Xinhua said when talking about the group's M&A strategy: "We have two standards, one is the entrepreneur and the founder with the same values - respect for common sense, respect for users, respect for products, adhere to long-termism; The second is strategic complementarity, including regional market complementarity, brand strategy complementarity, capability complementarity, and model complementarity. ”
Some executives of the wine management group said that the current merger and acquisition model in the industry has a long investment and financing time, strong uncertainty, financial risks and other problems, if Dongcheng such a flexible and light investment cooperation model runs quickly, because of its strong replicability and demonstration effect, it will have a significant impact on the regional market situation and industry reshuffle.
Chain groups naturally have expansion, and China's chain rate still has huge room for development. It is worth noting that in the layout of the regional market, the chain hotel group is gradually shifting from relying on the early mode of merger and acquisition to land grabbing to the reshaping of the pattern - the overall consideration and comprehensive competition on the development strategy, resource reorganization and implementation is a contest of wisdom.
"Dongcheng and Morandi have similar values, trust each other, and learn from each other's strengths. I believe that on the basis of Morandi's excellent team, products and operations, Dongcheng will do a good job in platform empowerment and back-end support for Morandi in the future, which will definitely promote Morandi to build more good stores and products in the future, and realize the common growth and development of both of us." Cheng Xinhua is full of confidence.