Recently, NASDAQ: ATAT Group released its second annual financial report since its listing on the US stock market. With the release of financial reports, many hotel professionals have raised a question: Is retail the second growth point of hotels?
In 2023, Yaduo Group's revenue reached 4.666 billion yuan, a year-on-year increase of 106.2%, and its net profit reached 739 million yuan, achieving a growth of 669.2%. The adjusted net profit was 903 million yuan, a year-on-year increase of 248.3%. A reporter from China Business Daily noticed that this marks the fifth consecutive year of profitability for Yaduo and the fourth consecutive quarter of revenue growth.
The most eye-catching is the retail business of Yaduo Group. In 2023, the retail business revenue increased to 972 million yuan, accounting for 20.81% of the total revenue, which even exceeded the revenue proportion of Yaduo's self operated hotels. Scene retail may gradually become Yaduo's second growth curve. Regarding issues such as the retail business model, growth, and challenges, the reporter contacted Yaduo Group for an interview, but as of the time of publication, no response has been received.
It can be seen that various hotel brands are now focusing on the mid to high end hotel track where Yaduo Group is located. Can Yaduo's "hotel+" approach become the optimal solution for hotel transformation?
Retail business becomes a new growth point
In 2023, Yaduo Group's retail business contributed 972 million yuan in revenue, of which 412 million yuan was contributed in the fourth quarter, nearly half of the full year.
This is a number that has sparked intense discussions in the industry. On the one hand, some argue that Yaduo is "not doing its job", and on the other hand, related topics such as why Yaduo's retail business has such impressive performance, whether it has sustainability, and industry universality have been hotly discussed. The reporter noticed that to answer these questions, we need to look at Yaduo's retail business model.
It is understood that Yaduo has closely integrated retail business with hotel services by creating a "lifestyle platform", forming a "scene retail" model.
Yaduo has established a multi-dimensional self operated retail platform by setting up a lifestyle center within the hotel and opening official flagship stores through online channels such as Tmall, JD.com, and self operated mini programs. Users can have a more intuitive understanding of the product through their experience in the hotel. At present, Yaduo's retail business covers multiple series such as sleep, travel, daily necessities, furniture, gifts, etc., with a total of 700 self operated products.
At the same time, Yaduo established its own IT team, developed backend ERP, front-end distribution, member CRM and other systems, connected the data of hotel and retail members, and achieved online and offline integration.
In addition, continuously upgrading retail brands, such as upgrading "Atour Market" to "Atour Market", and incubating three major brands, further enriching the product line and enhancing brand image.
Jiang Changcheng, Deputy General Manager and Partner of Beijing Shuyuan Education Technology Co., Ltd., who has many years of experience in the cultural and tourism industry, analyzed the underlying logic of the growth of Yaduo Hotel's retail business. The core of hotel operation and retail industry are both traffic, and the compound operation of traffic to maximize customer value is the key to the growth of the hotel industry. A good customer experience will bring a good reputation with trust as the core, promoting further high-quality growth of traffic, which is the basic plan.
Jiang Changcheng believes that "the experience of the hotel industry is all in service scenarios, involving catering, alcohol, entertainment, guest rooms, fitness, leisure, body care, etc. These scenarios are like a sales field centered on experience and trial. If the things are good, the experience is good, and there is sales supply, then it is a natural strict selection of supermarkets endorsed by brand culture and management. From this perspective, hotels are no different from IKEA. Yaduo has selected high profit and high demand sleep series products as the retail opening, creating a new growth line for the enterprise."
The reporter noticed that there are many explosive products in Yaduo's products. For example, the pillow on the planet Ado once made it to the hot search. Among the top 5 best-selling pillows on Tmall, Yaduo's pillows account for 3.
In its 2023 financial report, Yaduo also specifically disclosed its results during the "Double 11" period: the GMV of the pillow brand on third-party e-commerce platforms exceeded 250 million yuan, which is six times the transaction volume of the "Double 11" in 2022.
However, there are also doubts in the industry, with some believing that Yaduo's retail business is seriously "biased", and sales of other products, except for pillows, are lackluster. From a product perspective alone, as a standard product, pillows do not have strong barriers or core product competitiveness. It is still too early for retail business to become its second growth curve.
But for Ado, the determination to develop retail seems great. Wang Haijun, founder and CEO of Yaduo Group, emphasized in his financial report that "in 2024, Yaduo will further unleash the synergy between retail and accommodation businesses," continuously enhance brand value, and promote the Chinese experience to new heights.
"Hotel+" new sample?
In fact, with the intensification of market competition and the diversification of consumer demand, traditional hotel services are no longer able to meet all market demands. Through the "hotel+" model, hotels can help create a unique brand image and provide differentiated services. Therefore, doing addition in the accommodation industry has become an industry trend.
In addition to Yaduo's "hotel+retail" strategy, there are also hotels that combine local cultural and tourism resources to explore their own development paths. In Luoyang, many hotels have explored the concept of "hotels+Hanfu", providing guests with free Hanfu services during their stay, and offering makeup services at prices lower than market standards.
According to Meituan data, in 2023, the number of themed hotels providing Hanfu services in Luoyang increased by five times year-on-year, which is much higher than the national double growth.
In addition, hotels have launched explorations of "hotels+intangible cultural heritage". For example, during the Spring Festival, Hilton Group combines intangible cultural heritage culture with the Chinese New Year holiday, providing a series of experiences full of New Year flavor, including "intangible cultural heritage flavor" buns, red envelope electronic room cards, and intangible cultural heritage project experiences.
According to incomplete statistics by reporters, Yaduo's exploration of "hotel+retail" has achieved outstanding performance. Regarding the universality and sustainability of this model, Jiang Changcheng believes that any hotel or homestay brand that has confidence in its own brand, service, experience, reputation, and traffic, as well as objective support, can extend its business in this direction.
Business expert Chao Chenglin, director of the Industrial Space Research Institute, told reporters that it is expected that the popularity of this model in the hotel industry will gradually increase. However, its sustainability will depend on various factors, including but not limited to market environment, consumer demand, and operational efficiency.
However, Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, mentioned that Yaduo has provided consumers with a richer experience by deeply integrating hotel services and retail business, and this innovative model may become an industry trend. But in order to popularize and sustain, multiple factors such as supply chain, inventory management, and consumer acceptance need to be considered.
"The growth of Yaduo Hotel's retail business has had a profound impact on the business model and competitive landscape of the entire hotel industry. On the one hand, it has driven the hotel industry towards diversification and comprehensiveness; on the other hand, it has also intensified competition within the industry. Yaduo's model may indeed trigger a phenomenon of following the trend within the industry, leading more hotel companies to try to enter the retail field. However, following the trend does not necessarily mean success, the key is whether the enterprise can find a suitable development path and competitive strategy for itself." Zhan Junhao said.
Pressure beyond highlights
The reporter noticed that Yaduo's retail business is built on the foundation of hotel accommodation business. In terms of scale, Yaduo's expansion pace has also accelerated in the past year. In 2023, Yaduo Group opened a total of 289 new hotels and signed 576 new contracts, exceeding the target set at the beginning of the year.
As of the end of 2023, the number of hotels operated by Yaduo reached 1210, a year-on-year increase of 30%, with franchise stores accounting for 97%. However, in terms of the layout of direct operated hotels, from 2020 to the end of 2022, the number of self operated hotels in Yaduo remained at 33, but by the end of 2023, it had decreased to 32 compared to the previous year.
Some argue that the role of self operated hotels cannot be completely ignored. Direct operated hotels are not only a reflection of brand image, but also a symbol of group strength.
Meanwhile, although Yaduo's retail business contributed 972 million yuan in revenue in 2023, its debt and operating costs cannot be ignored. Yaduo's total liabilities increased from 1.681 billion yuan in 2021 to 4.527 billion yuan in 2023, while the total operating costs and expenses in 2023 reached 3.8 billion yuan, accounting for over 80% of the total revenue.
In addition, Yaduo also faces certain external pressures. According to Frost Sullivan's statistics, from 2021 to 2025, mid to high end chain hotels will become the fastest-growing segment market in the entire industry, and from 2017 to 2021, Yaduo has been ranked first in the scale of mid to high end chain hotels in China for five consecutive years.
But major hotel brands are also making efforts in this field, upgrading their products and innovating their brands, such as Huazhu Group launching a full season 5.0 product; The First Journey Home has launched the Home Selection Hotel 4.0 version; Jin Jiang Hotel CEO Shen Li also stated that the future will accelerate the layout of mid to high end and above brands.
Whether Yaduo's "hotel+retail" can break through the "encirclement" of the industry's three giants is full of expectations.
Jiang Changcheng believes that in order for Yaduo to maintain or even amplify this growth pole, it is necessary to reposition and construct a collaborative and mutual aid structure between the hotel and retail industries. Based on the new enterprise positioning, it is necessary to reconstruct the business system of traffic management, scene innovation, integrated marketing, and user coordination, and restructure the weight of business modules according to future development strategies to better adapt to and lead the market. This is also the direction that other hotels need to consider and learn from.