Hotel Kunlun: Maintaining The Highest Standards In Beijing

Barry Suen, the general manager of the Kunlun Hotel in Beijing, was interviewed recently by China Hospitality news.

How do you differentiate your hotel from others in the same marketplace? What is your strategic plan for achieving your target RevPAR?
Hotel Kunlun is the Beijing flagship hotel of the Jinjiang International Hotel Management Company, which is the largest hotel organization in operation in Asia, in addition to being the largest Chinese-run hotel management company. We are proud to use our Chinese heritage as a unique identity in Beijing's hospitality industry — over the past 20 years, Hotel Kunlun has built and maintained a solid reputation as a hotel which offers services and hardware that are at least as good as the large international brand hotels. With such a level of service, we are able to market ourselves as a hotel that not only provides international levels of service, but that provides it in a uniquely Asian, uniquely Chinese fashion. Hotel Kunlun is one and only in terms of our interior design, which fuses Chinese elements of Feng Shui with western concepts and ideas, as well as in our service, which maintains a distinct flavor of genuineness and sincerity in our services. We like to say, whether you're in China for business or for leisure, capture the uniqueness of this country by experiencing Chinese hospitality through and through, at Hotel Kunlun.

Achieving our target RevPAR means achieving a balance of average room rate and occupancy. However, the high level of supply in relation to demand that the current market is seeing has meant that hotels are lowering ARR in order to increase attract guests and increase occupancy. The honeymoon period for hotels in Beijing is over — it is unrealistic to expect guests to come knocking on your door simply because of your brand, or because of a new product. In this market, more effort has to be made to go out and find guests. Realizing this, in addition to enhancing our guest loyalty program (KPC — Kunlun Prestige Club) to reward to retain corporate and long-time guests, we have made an effort to revisit guests who may have stayed with us before the commencement of our renovations a few years ago. Many of these guests strayed away when our prices began to rise with the market; however with the current drop in prices, we are able to woo them back with more attractive prices, as well as completely renovated facilities and improved services.

Hotel Kunlun has an excellent location, what do you expect the percentage composition of your guests to be?
As a business hotel, we tend to stay away from large travel groups; we would prefer a large production number for large corporate accounts, to make up for their low room rates. Walk-in guests with relatively high room rates are targeted as well. If we were to organize our guests into a pyramid-shape, ideally we would like to have global corporate guests at the top taking up a small corner of our guest composition, followed by small and medium companies with slightly higher room rates. Taking up a larger percentage should be walk-in guests. We also, like many hotels, target MICE guests, as in addition to increasing occupancy, MICE bookings present a great opportunity for hotels since rooms, F&B, and banquet services are commonly combined for one event. The only snag with MICE bookings is that there is often a sudden drop in occupancy after the event concludes, so a hotel's numbers may not look pretty comparatively.

What are you plans for Internet marketing and online promotion of your hotel?
We understand that the Internet and online promotions and marketing are key in the future development of the hotel's markets. In addition to basic features such as the hotel website, online banners and email blasts that directly reach the public's email boxes, we have invested heavily in IDS channels, from large channels such as e-long, to smaller, local channels on the mainland (we currently have about 20 mainland IDS channels) and GDS support is achieved via our partnership with Worldhotels. The more distribution channels, the better. Of particular interest is that China's Internet booking and marketing sector is not yet widely developed compared to many western nations; many times a guest will conduct product searches and research prices and facilities, but when it comes to the actual booking, many people in China will pick up the phone to call a reservations center instead of completing a booking directly online. We do anticipate that this will begin to change eventually, so that the frequency of online reservations in China will soon catch up with their counterparts abroad, and have been working to ensure that we remain competitive on this front. Ideally, we would prefer if the majority of online bookings were done directly on the hotel's website instead of through IDS, since IDS bookings require commission fees to be remitted to the distribution companies. On this end, we are working to gradually increase our presence on search engines such as Baidu and Google; however as these search capabilities are offset by pay-per-click rates, they can end up being quite costly, and at this point, we are able to allocate a small portion of our budget to these engines.

What difficulties do you expect to encounter as a result of the international financial crisis?
The current financial crisis has definitely had an effect on our business. When the financial crisis began at the end of last year, the vast majority of hotels in Beijing had already been experiencing a decline in overseas guests that had resulted from the tighter visa restrictions put in place for Olympic security. When the global economy began to dive, the effect was two-fold for the hotel business. First, companies either suspended or strictly limited travel, so that many would-be business trips were cancelled outright. Second, in cases where travel has been allowed, companies' tight balance sheets have resulted in restrictions on their travel budgets. In addition to lowering corporate room rates, companies have demanded that the minimum number of room nights be lowered as well. Since the financial crisis surfaced, Beijing hotels have been fighting a price war, where rock-bottom prices are the main, if not the only, drawing point for business delegations. Inevitably, such conditions have meant that hotels' GOP rates have suffered.

For many, the first instinct when revenue and GOP begin to decrease is to cut and save costs. However, this would have a domino-effect, in which the hotel's overall standard in service, including hotel hardware and amenities as well as service standards, would likely decrease, resulting in lowered rate of guest satisfaction. Such a decrease would be very difficult to turn around, and may likely end up being the beginning of a downward cycle for the hotel. A coordinated commitment not to let this occur is required of hotel owners and management companies in order to overcome this large hurdle that the current financial situation poses.

At present, many large hotels are focusing on business development in the MICE sector, what special expansion plans does Hotel Kunlun have for targeting the MICE market?
Hotel Kunlun's rear garden will soon house a 1,200 square meter, glass-encased event space which aims to provide a feeling of being immersed in outdoor greenery and nature, while conducting private meetings or events. The space will be separated into three distinct sections, each with a separate theme in it's decor and atmosphere — a traditional Qing/Ming dynasty style Chinese theme, an ultra-modern theme, and one that is a fusion of both of these. Each section will have a central meeting space, with the largest featuring relaxed sofa-style seating for 12 people. A sophisticated bar is also planned in the space, in addition to flexible dining and high-tea options that will be available.

What corporate social responsibility programs does Hotel Kunlun have?
Hotel Kunlun is proud to lend a hand to the greater community. Locally, the hotel regular organizes staff to gather litter along the Liang Ma He River, located adjacent to the hotel, and makes regular donations via the China Red Cross Society to natural disaster areas and events. Additionally every year, in partnership with the Hong Kong Chamber of Commerce, we visit and contribute to retirement homes and assist financially needy primary schools in Hebei Province, by donating food, toys, and other daily items.