China hotel chain H World begins foray into Thailand

H World is set to open fully renovated Montien Hotel Surawong Bangkok, a 475-room luxury hotel in the heart of the Thai capital under the top-end Steigenberger brand in its family of hotels, branching out into Thailand for the first time.

The Bangkok hotel will be H World's second outlet in Southeast Asia, after Ji Hotel in Singapore, opened in 2019.

H World is also building a hotel under the middle-level Maxx brand in Pattaya, a beach resort 100 kilometers southeast of Bangkok. The new hotel will consist of 108 villas and is planned to open at the end of 2025.

Based in Shanghai, H World launched overseas forays in 2019, securing footholds in Europe, the Middle East and Africa with the acquisition of Deutsche Hospitality, a German hotel chain operator, for 700 million euros ($755 million), which it renamed H World International at the end of February.

Using the German chain as a springboard, H World planned to accelerate its internationalization drive but was forced to shelve that because of the COVID-19 pandemic.

Now that the pandemic has waned, H World is poised to resume the drive.

H World will focus on Southeast Asia as having a lot of room for growth due to being a popular destination for tourists from China. The region is effectively an untapped market for the group because Ji Hotel in Singapore is its sole outlet there at present.

Southeast Asia is a frontier ripe with strategic opportunities, Chief Strategy Officer He Jihong said at a hotel investment forum held in Hong Kong in March, according to a press release from the group.

Southeast Asia is a pivotal area given its proximity to H World's home market, she said, and the group is keenly interested in nations such as Vietnam, Indonesia, Cambodia and the Philippines.

H World was founded in 2005 by Ji Qi, a well-known entrepreneur who co-founded the Chinese travel company Ctrip, now known as Trip.com Group. Operating the discount Hanting hotel chain across China, H World has grown in step with China's economic growth and expanding domestic tourism and has now shifted to a multilayer branding strategy such as creating the midclass Ji Hotel brand.

H World's globalization drive is aimed at continuing its growth. While it has rapidly expanded its chains across China through franchising and other operations, hotel markets in urban areas in the country are considered more or less saturated.

Furthermore, H World hopes that by taking advantage of midlevel and high-end brands acquired from Deutsche Hospitality like the Steigenberger and Maxx hotels, it can become a global leader that can compete with major American and European chains.

Streamlined operations made possible by cutting-edge technology are H World's strength, according to He. "We developed a whole suite of operation systems on our own. We have our own reservation system, our customer relation management system based on [our] customer database, our data analytics, our hotel property management system and our app," she told Nikkei. "Some of our administration and supply chain management systems were developed in-house. So, we have a whole closed loop for ourselves."

Hotels usually use operating systems developed by information technology companies, but He said, "I want to emphasize that H World is a different kind of hotel group. ... We are creating better products using technology. The technology generates a traffic to make this hotel industry much more scalable, more efficient and more profitable. That's our vision."

H World's loyalty program app, which gives reward points to customers who make reservations, is popular in China and has more than 200 million members. In February, the group launched the H Rewards app in English to enable users to book rooms at hotels in its chains in Europe and the Middle East.

The active use of advanced technologies by H World can be observed at Ji Hotel Orchard, for example, located near Singapore's bustling Orchard Road. Inside the hotel, robots busily come and go as they deliver towels and other amenities to guest rooms. They enable the hotel to reduce the number of staff members needed per room.

Singapore is the central strategic point for H World's overseas business expansion. The group is planning to establish a research and development center there for computer systems for use overseas.

Along with the opening of hotels overseas, H World will seek opportunities to acquire hotel operators abroad, He said. Asked about target countries for mergers and acquisitions, she said, "We like Southeast Asia, such as Thailand and Vietnam. We love Japan because a lot of Chinese travelers love to go to Japan and it's also close to us. We also like (South) Korea and Singapore. We are quite open-minded to different opportunities."

MAYUKO TANI, Nikkei staff writer