Hyatt has just announced a new strategic joint venture with Homeinns Hotel Group in China. The intent is that these two companies will create a new hospitality brand in China, to be named later, which is intended to be in the upper-midscale segment.
For some context, Hyatt currently has around 70 hotels in China, with dozens more in the pipeline. Meanwhile Homeinns, which is owned by Beijing Tourism Group (BTG), is one of China’s largest and fastest growing hotel chains, though mostly in the economy market.
BTG has about 3,900 hotels in more than 400 cities. While Homeinns is an economy brand, over the past few years they’ve opened around 600 midscale hotels in China, with their expansion of Yitel Premium, Homeinnplus, and Homeinn Selected.
The intent with this joint venture is to take advantage of Hyatt’s global experience in premium hospitality, and Homeinns’ scale as one of China’s largest hotel groups. This hotel group is targeted mostly at the domestic market, rather than at international travelers coming to China.
Here’s what we should expect from this joint venture:
Under the joint venture, Hyatt and BTG Homeinns will create and launch a new hospitality brand positioned to compete in the currently underserved upper-midscale segment. In a bid to better serve the unique needs of Chinese consumers, the new and entirely homegrown hotel brand will be built specifically to meet Chinese travelers’ preferences and growing expectations for a seamless, comfortable and convenient travel experience.
BTG Homeinns’ CEO had the following to say:
“There is a definite opportunity for us to make a mark in the growing upper-midscale segment. The combination of Hyatt’s expertise in premium hospitality with our local insight and vast network will ensure our collaboration will create opportunities and benefits for Chinese travelers as well as the overall hospitality industry.”
Meanwhile Hyatt’s President of Greater China had the following to say:
“With 70 iconic hotels and a pipeline of more than 100 properties in Greater China, Hyatt is committed to a long-term strategy of purposeful growth in the region. This collaboration is expected to provide Hyatt with deep China insights, build brand awareness and grow loyalty with a new set of travelers.”
The plan is that the joint venture will unveil hotels under the new brand across major cities like Beijing, Guangzhou, Shanghai, and Shenzhen, in the next five years. The new brand will be managed independently.
We don’t yet know the full implications of this for World of Hyatt. The hotels won’t be branded as a Hyatts. My initial instinct is that they’ll nonetheless participate in World of Hyatt, but maybe that’s not the case, given that Homeinns likely has more brand recognition in China than Hyatt does, and also given that they seem to be building on the Homeinns brand more than the Hyatt brand.
Then again, historically Hyatt’s biggest issue has been that they’ve had a smaller global footprint than their competitors, though they’ve been countering that through some unique partnerships, and it seems to me like this could be one of those.
It is interesting to me that Homeinns has already been expanding in the midscale market, but now is partnering with Hyatt in the upper-midscale market.
I’ll be curious to see how this plays out.
What do you make of the new Hyatt & Homeinns joint venture?
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