Chinese travelers have long been a coveted group for hoteliers striving to capture high-spend demand both domestically and abroad. It’s no surprise, considering China’s domestic tourism revenue experienced a 13% increase last year, amounting to 5.05 trillion Chinese Yuan (USD$706.5 billion) in revenue, according to the Ministry of Culture and Tourism of The People’s Republic of China. Additionally, economic status in China continues to transform. By 2030, mainland China’s middle class will comprise more than a third of its population, reports research firm The Economist Intelligence Unit. Just three years ago, that figure stood at about 10% of the population.
That means hotels will need to adapt to meet this growing demographic’s needs. Enter a joint venture between Hyatt Hotels Corp. and BTG Hotels Group. The two hotel companies have teamed up to launch UrCove, a brand specifically designed to cater to domestic Chinese travelers’ preferences in the underserved upper-midscale segment, according to company executives.
Contributed by Alicia Hoisington
“Through market research and industry insights, we know there is a gap in the upper-midscale segment (in China). This segment is fairly new, and it continues to evolve as Chinese consumers start to look for new upgraded offerings,” Stephen Ho, Hyatt’s president of Greater China, global operations, told HOTELS.
Ho said the goal is to provide “innovative” new offerings without encroaching on the existing brands and assets. Honing in on the details that young and frequent travelers would appreciate was critical in the brand’s development. Take, for instance, the brand’s name. Pronounced “your cove,” the moniker is a metaphorical reference to having a safe harbor for a boat while on a journey at sea.
“The Chinese name, pronounced as Yifei, also takes on the same concept of providing comfort, assurance and an overall feeling of being at home for mobile travelers,” Ho said. “UrCove hotels will be tailor-made to meet the demands of young and frequent travelers in China who often seek out efficiency and comfort but might be hampered by resources and opportunities to get the best out of their travel experience.”
To do so, food and beverage will be at the heart of the hotels, targeting these travelers’ demands with comfort food offerings, a healthy breakfast and other options that promote well-being, Ho said. Modern design elements will be paired with functional working spaces to appeal to business travelers. And that points to a key aspect of the brand: While it targets mobile workers, UrCove also seeks to suit the leisure set. That’s why hotels will be located in highly accessible locations in gateway cities that appeal to both traveler segments, Ho added. The first two UrCove hotels are expected to open in Beijing and Shanghai next year.
Beyond those, David Sun, general manager of BTG Homeinns Hotels Group and chairman and CEO of Homeinns Hotel Group, said plans are in the works for additional hotels in Shanghai, Beijing, Guangzhou and Shenzhen over the next five years.
“We believe that the market for the segment will fit many market characteristics. Any locations with a current robust demand and supply for budget to mid-tier segments could be ideal for upgrading to our new brand,” Sun said. “Ultimately, we want to be where our consumers are traveling to.”
The brand won’t be strictly new-build, as Ho expects conversions to be part of UrCove’s growth. “We have committed to develop a series of new and converted flagship properties in gateway cities to demonstrate the viability of this new brand,” he said.
Perfect Marriage
Ho and Sun said the two companies are the ideal pair to bring UrCove online. And for a brand that fills a gap in a highly competitive market, strategic collaboration gives both companies a much-needed boost right out the gate.
“In a market as lucrative and competitive as China, possibilities of collaboration and partnerships remain a constant,” Sun said. “It is important to work with partners that are experienced industry experts in their respective field and segment, and share the same vision.” Homeinns Hotel Group is no stranger to the Chinese market, but it is new to the upper-midscale game in the country. The group operates one of China’s largest economy chains and counts more than 3,000 hotels in its portfolio.
“This joint venture will enable BTG Homeinns to scale up its offerings and learn the best practices of premium hospitality from a global leader,” Sun added.
While Hyatt has a presence in China—the hotelier counts at least seven brands in the country—this is its first brand that specifically targets the Chinese traveler. “We are focusing on building strong relationships with high-quality partners with shared visions to accelerate our growth in the Greater China region,” Ho said, adding that a joint-venture relationship where both parties are equally invested serves as the most strategic model for an undertaking in such a complex and competitive market.
“We will incorporate our knowledge of the needs of higher tier customers and best practices in premium guest experiences while BTG Homeinns will bring its local insights, scale and experience to this partnership,” Ho said. “We both believe that this partnership will set a new benchmark in this important market.”
This joint brand venture was created with its own management team to lead it. “Starting a new brand with a separate management team is a challenge but also an opportunity for the JV partners as we embark on this journey,” Ho said. “We are going in with our eyes wide open as we strongly believe in the opportunities ahead for this new brand.”
But, while UrCove was created with domestic Chinese travelers in mind, Sun said its draw has the potential to be far-reaching. “We are expecting this new brand not only to be a home-grown brand or a joint-venture brand to only cater to consumers in China but to become an international brand to care for consumers worldwide,” he said.