A deal to develop, franchise and manage Hampton by Hilton hotels in China is the latest way for Plateno Group to add to its vast exposure in the hotel industry.
GUANGZHOU, China—Plateno Hotels Group, a technology-driven company that ventured into the hotel space a little over a decade ago, is using Hampton by Hilton as one of its springboards to grow in China's midscale segment.
The strategy for Jakarta-based Plateno Hotels Group and China-based parent Plateno Group is to develop domestic, regional and global networks of hotels and resorts, providing economies of scale that can be passed onto its owners and guests.
At the recent opening of the Hampton by Hilton Guangzhou Zhujiang New Town, Gloria Wang, Plateno’s president of Hampton by Hilton China—who started at the company as a property GM in 2005—said through an interpreter that Plateno’s mission is all about opportunity.
“Innovative and also providing a good platform for those young, innovative people who have their own dreams,” Wang said.
After Jin Jiang International Holdings Company Limited purchased an 81% share of Plateno in September 2015, the company became part of a hotel conglomerate that has a portfolio of more than 6,000 hotels comprising more than 640,000 guestrooms.
“Jin Jiang is also one of the best hotel groups in China and has strong expertise,” Wang said. “The cooperation philosophy is to retain the DNA of Plateno and share resources. It’s the early stages of cooperation. I’m confident this will lead us to our greater goal of accomplishing more midscale hotels.”
Plateno, which focuses on developing and operating hotels, brought its loyalty-club expertise to the table. The combined company’s loyalty program has more than 80 million members.
“The reason we developed such a strong and large (loyalty) base is because of our strong technology,” Wang said. “We make it very convenient for our guests and consumers to book, check in and check out.”
Wang said the technological expertise that Plateno Co-chairman Alex Zheng—who began his career in software development—brings to the table filters throughout the company. That is a major reason Plateno was able to develop 2,000 7 Days Inns properties in just 10 years.
The 7 Days Inn and 7 Days Premium budget brands are the company’s core offerings, but Plateno has other brands, including:
- Maison Albar, Portofino and H12 Hotels in the full-service luxury space; and
- ZMax, James Joyce Coffetel, Lavande Hotels and Xana Hotelle in the midscale select-service space.
In addition, Jin Jiang’s brands that participate on the loyalty platform include J Hotel, Jin Jiang, Kunlun, Rock Garden (Yan Hua Yuan), Jin Jiang Inn, Golden Tulip, Premiere Classe and Campanile.
Plateno’s 2005 launch of 7 Days Inn coincided with the rise of budget hotels in China as consumers were looking for clean accommodations and guaranteed basic amenities such as hot water, said Phil Cordell, Hilton Worldwide Holdings’ global head of focused service and Hampton brand management.
“At that time the consumers either couldn’t afford to stay in a 4- or 5-star hotel or they could not tolerate cheesy, low-end hotels,” Wang said. “This is why the budget franchise hotel became popular among the people. The consistency of the product is why it became attractive 10 years ago.”
Plateno plans to use the expertise gained in the budget sector to be a major force in the midscale segment, Wang said. The plan includes being the master developer in China for the Hampton brand, and Plateno has agreed to develop 400 Hampton properties during the next eight years.
A focus on service ensures guests’ expectations are met is the core of Plateno’s strategy, Wang said. The company has a system in place to respond to guest feedback and requests within two hours.
“Since we started with 7 Days Inn, Plateno has been focused on and advocating customer service and satisfaction,” Wang said.
Growth through franchising and management
While the company does own some of its hotels, the deal with Hilton calls for Plateno to develop and operate the Hampton properties. The growth will come through franchising and management agreements, which are gaining momentum in China, according to Wang.
“The growing population of the wealthy class in China is now turning more attention to these kinds of (franchising and managing) models,” Wang said. “It is helpful for their return on investment.”
Cordell said putting all of Hampton’s eggs in the Plateno basket through a master development arrangement could be considered a risk, but the comfort level with the company’s executives from Day One gives Hilton confidence.
“It’s a very different world, so unless you have a partner who is accustomed to operating in that environment, growth can be slow,” Cordell said.
Plateno’s network of business and investment contacts will help speed up Hampton’s growth process in China, he said.
“They will find individual investors and groups of investors—they have a full business development team focused on Hampton,” Cordell said.
Plateno’s expertise in China is what drew Hilton’s attention to the company, according to Lee Wee-Hau, Hilton’s SVP of development in Greater China, who brought the two sides together in 2013.
“We wanted to identify a partner with a strong infrastructure we could build on in everything from recruitment to management,” Wee-Hau said.
That type of platform is essential to the brand’s grand plan in China, according to Jim Holthouser, Hilton’s EVP of global brands.
“The reason Plateno is so important is the speed at which this country changes, and there are so many differences if you don’t have a local partner dialed in and connected—you just don’t get very far very fast,” he said.
Editor’s note: Hilton Worldwide Holdings paid for all travel expenses for the opening of the Hampton by Hilton Guangzhou Zhujiang New Town, where the interviews for this article were conducted. Complete editorial control was at the discretion of the Hotel News Now editorial team; Hilton had no influence on the coverage provided.