Future
The global market has provided Huazhu with a number of challenges and opportunities for the future. By segmenting, targeting, and positioning its products and services through effective marketing, this hotel chain can expect to grow significantly in the future both within China and in the international sector.
The company may face two major challenges in the future. Firstly, the business-to-business (B2B) alliance with Accor, based in Paris, to facilitate multi-brand hotels is currently on a steep decline. Accor has already sold half of its stakes with Huazhu to compensate for the losses it experienced during the Covid-19 pandemic (Spearance, 2021). Secondly, as Huazhu rapidly expands to the international market, with over 250 hotels scheduled to be inaugurated in the next few years (Hamidi, 2019), the management may struggle to keep up with the fast-growing needs of the various hotels. With a carefully planned future strategy, these threats can be overcome.
Despite these threats, there are several opportunities for growing the business and its services in the long and short term. Converting to a smart hotel by using the latest automation technology can be a major opportunity for the future. Smart hotels can lead to a reduction in the need for too many service staff and result in the lowering of operational costs. Even if all services are not automated, the integration of technology to enhance the customer experience can be beneficial for Huazhu. It may be possible to integrate these smart features into the hotel own mobile applications to allow customers to customize their own experience. Simultaneously, increasing the number of high-end services offered in the hotel will appeal to the consumers seeking a luxury experience.
The recruitment of high-quality talent for senior staff roles within the hotel chain and improving the overall services of the hotels are important future goals for Huazhu to retain a competitive advantage in the premium hospitality sector. Improved services through technology can have a positive effect on brand positioning. Marketing the new intelligent services offered in the hotels can have a significant benefit for attracting customers who are seeking an advanced customer experience. This will appeal to the national and international business sector personnel who constitute the target customer segment for mid-high range hotels.
Huazhu’s expansion plans in the future should include the construction of more hotels in the high-end market range both nationally and internationally. Developing a plan for the acquisition of other upcoming hotel chains can also be a major focus in the future, which can be extremely beneficial in accelerating Huazhu’s expansion objectives. These acquisitions will, simultaneously, give Huazhu access to a wider customer base and allow for the expansion of its loyalty program. Through a well-constructed strategy, Huazhu can greatly increase its brand visibility in the acquired hotels. The product lines run by Huazhu through existing hotels should also be expanded in the future. Offering a wide range of luxury products and services, and incentivising loyal customers when accessing these, can lead to the enhancement of the hotel chain’s brand image and revenue. Executing these plans will lead to Huazhu establishing itself as a major contender in the high-end hotel market.
The recent economic effects of the lockdowns due to the Covid-19 pandemic has been felt in all sectors, including hospitality and led to significant financial losses. However, there are some opportunities that Huazhu can utilize to reduce spending, continue its expansion plans, and market to the target customer segment. One major opportunity is to capitalize on the low cost of real estate due to the economic downturn. The cost of constructing high-end hotels can be reduced by acquiring real estate for these projects at the present low prices. As travel around the world along with business activities are resuming after the pandemic, the demand for these high-end hotels is likely to steadily increase in the future. Huazhu can use the increase in demand to its advantage through effectively marketing these luxury hotels to the business sector and luxury holiday sector. Since smart hotels are likely to gain a major competitive advantage in the hospitality sector in the future, equipping Huazhu’s high-end hotels with smart features can go a long way in attracting high-profile customers. Smart features can reduce the need for too many service staff in existing hotels, thus leading to cost savings. Furthermore, the economic changes due to the pandemic have led to the integration of contactless services worldwide. This is another opportunity for Huazhu to capitalize on in the short and long term. Integrating contactless services for payments, access, ordering, etc. can improve customer experience through the increase in convenience and safety. These opportunities can help Huazhu recover and grow consistently over the next several years following the pandemic.
In conclusion, Huazhu has several opportunities and threats in the future. As Huazhu continues to expand to more worldwide locations, with effective marketing and integration of technology, the hotel chain can capture its target customer segment.
References
Hamidi, R. (2019). Accor Sells Half of Its Stake in Huazhu as Chinese Partner Eyes Europe. Skift. Retrieved 11 December 2021, from https://skift.com/2019/12/06/accor-sells-half-of-its-stake-in-huazhu-as-chinese-partner-eyes-europe/
Spearance, C. (2021). Accor Isn’t Ready to Celebrate Just Yet After Surprising Display of Profitability. Skift. Retrieved 11 December 2021, from https://skift.com/2021/07/29/accor-isnt-ready-to-celebrate-despite-surprising-display-of-profitability/
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