OPERATIONAL HIGHLIGHTS FOR

THE FULL YEAR 2017

REASONABLE LAYOUT

WHY HUAZHU

BRAND DEVELOPMENT STRENGTHS

CitiGo

Core Development Strengths of CitiGO

CitiGO is a luxury and social brand owned by HUAZHU Group. Based on the downtown areas of the first- and second- tier cities, CitiGO is created by internationally renowned designer Hank M. Chao. From social contact to smart technology, CitiGO is dedicated to offering local residents and travelers’ new hotel experience through unique architectural styles and scenes, which leads the young people's lifestyle. The brand stands at the forefront of the era and makes continuous innovation, boasting great potentials for development.

Multi-channel Revenues

Making use of intelligent systems to reduce labor costs, the hotel makes profits not only from accommodation but a variety of sources, such as catering, public venue rentals, shared offices, and self-owned gift sales.

Operating Cost Control

CitiGO has attached great importance to control operating costs to keep the cost of necessary items such as design and intelligent product iterations within a reasonable range while enhancing the market competitiveness and sustaining rapid growth. The brand has completed a whole set of process-oriented mechanisms and system control, focusing on fine management, which weakens the individual influence of the hotel manager on the hotel.

Crystal Orange

Diversified Styles

Each hotel has a unique architectural style, from "post-modern", the 1960’s American pop culture, to the Mediterranean Renaissance.

Unique Beauty

Crystal Orange Hotel has rooms of diverse styles. For example, a room with a split-level loft, or a terrace room with a balcony and a parasol. Some are equipped with a bathtub in front of a floor-to-ceiling window. Others have the Japanese-style tatami. There are also movie suites.

Diversified Technology

Crystal Orange Hotel is the world's first hotel that can play audio automatically and support on-demand music playing while opening the door, enabling the guests to listen to their favorite music in the hotel room. There are several modes for touch screen smart light control, such as Paris, London, and New York modes. Curtains can be automatically opened and closed, and the water temperature is maintained at a reasonable level automatically to ensure that customers feel comfortable in an environmentally friendly manner.

Unique Quietness

The soundproofing effect is up to 60 decibels. The Institute of Acoustics in Tsinghua University specializes in acoustic solutions for the Crystal Orange Hotel.

Unique Quality

The international brand sanitary wares (such as Kohler), TVs, and top grade bedding articles chosen by the Hotel have been recognized by five-star hotels.

Grand Mercure

The continuously innovating development strategy

Grand Mercure has been committed to the constant innovation of the hotel. Whether it be innovating hotel products, hotel day-to-day operations, or sales strategy management, Grand Mercure Hotel has been looking for a new breakthrough. As a sophisticated five-star hotel brand, Grand Mercure attracts high-end consumers and high-yield business.The flexibility of the Grand Mercure and the full range of services make the control on costs and expenses possible. A rigorous cost control system and a creative staffing structure can bring significant profits and ROI to the hotel. On this basis, the facilities are constantly under maintenance and upgrade to yield higher returns.

Strong Sales Strategy

Grand Mercure Hotel has a wealth of management experience, especially in the full service hotel operation management. At the same time, the general manager's strong sales strategy can be adapted to each hotel. In order to better support the general manager and their administrative committee team, the headquarters' functional departments will provide the operation team with intensive support and a variety of tools, systems and training, so as to maximize the hotel's revenue management and profitability. Grand Mercure can generate revenue within 2-3 months after opening, with the total operating profits increasing by 5%-6% year on year.

HanTing Premium

Modeled Management

Franchise hotels are operated in accordance with the direct management model to ensure uniform quality.

Benefit Maximization

The principle of benefit maximization in supplies procurement, energy control, hardware maintenance, etc.

Service Systemization

The franchise system has been upgraded to provide all-around service.

Communication Institutionalization

A regular communication mechanism has been established for the franchisee. The branch companies conduct overall management of resources to ensure efficiency.

Hi Inn

"Light" and convenient management and efficient operation

Accurate revenue management capabilitiesEfficient operation management systemIntelligent mobile house-keeping system

"Easy" support byshared resources

Precise creative marketing promotionRich cooperation resources from different industriesStrong hardware sourcing supportLeading IT service support

A budget hotel brand

More than 100 million highly active membersContinuous growth of RevPAR for 12 consecutive yearsCentral reservation rate up to 40%

ibis

The Power of Ibis

Ibis is an international hotel brand with more than 40 years of history under the management of Accor Hotels Group, continuously bringing forth innovations in the development of nearly half a century. After entering the Chinese market, ibis has broken the boundaries between economy and midscale hotels and distinguished itself from other brands of the same type in product design, customer orientation, and market positioning, and boasts great growth potential. The newly-opened ibis hotels across the country are generally welcomed by the market with better-than-expected performance. The brand will target the first-and second-tier cities in the future, and gradually expand to the third- and forth-tier inland cities.

Professional Team

With the rapid growth of the hotel, the training of hotel managers and personnel in key positions will become a priority. The echelon training model will be gradually set up to achieve systemic management.

ibis Styles

Dual-engine Development

The positioning of ibis Styles is a midscale designer hotel. Since its establishment, ibis Styles has rapidly occupied the European hotel market. The "Accor + HUAZHU" dual-engine customer source brings differentiated products and customers to meet the demand for upgrades of the market and consumption. The hotel follows the concept of “one hotel, one design” in the public area, and has standardized products in the rooms, which not only can exert the sense of design of each Ibis Styles, but also uphold the brand style, preserve the brand DNA, and increase the degree of customer adherence. The costs of product design and construction investment have been minimized. Ibis Styles will take a favorable position in the domestic market for midscale hotels.

Professional Team

The training of the managers and key post personnel has been attached great importance. The management pattern of direct-sale hotels will be applied to all hotels under the brand to form a unified standard for future development.

Manxin

Elite Team

From the general manager to directors who are in charge of operations, sales, development, and market, the management team of Manxin consists of a group of young elites with rich management experience, senior industry background, outstanding performance and overseas experience, operating experience of high star-level hotels and a deep knowledge of the application of the Internet. Let the best people refine the best products, and provide the best service to win the praise of the market and customers.

The Power of Manxin

As a new leading midscale hotel, Manxin Hotel has dedicated itself to the upgrading of middle-class consumption and catching market trends. The brand endeavors to dominate the markets in the core areas of the first- and second-tier cities by building 200 new hotels in three years. The profitability of a Manxin Hotel is 30% higher than an economy hotel. The RevPAR is between RMB280-500. And the construction cost for a single room is RMB12-13 million, and the design fee, RMB300,000-450,000. The staff/room ratio is 0.21. The GOP rate is 65-70% with no less than 20% of annual returns.

Franchise Support

With extensive assessment on the project site, property conditions, and investment, Manxin is fully responsible for its franchisees in order to achieve win-win results. At the construction stage, Manxin provides construction standards and instruction services for project managers, which is composed of preliminary on-site surveys, design reviews, disclosure meetings, and on-site guidance once a week after the start of the construction, and completion acceptance and related procurement support. Elite hotel professionals are recruited. The operation team begins to implement uniform management 60 days before the opening of the hotel. The Manxin College holds staff training on a regular basis to build an elite team and ensure the management standards and service quality of all the franchised hotels. B2B platform procurement has been adopted to solve cash flow problems of some franchisees, ensure the quality, provide a variety of options, offer open and transparent prices, as well as professional installation guidance to avoid rework and shorten the project duration.

Mercure

The Best Times for Mercure

Mercure is an international midscale brand from France with over 40 years of brand history. It has an elegant and stylish brand positioning, with romantic French product design, and a brand network of 800 hotels worldwide. Currently, as the midscale hotel market in China has embarked on a fast track, the development of Mercure will usher in its best era. The priority of the brand development lies in the first- and second-tier cities, and gradually expanding to third- and fourth-tier inland cities.

Diversified Design Styles And Cost Control

Mercure retains Accor's quality, elegance and artistic style while absorbing HUAZHU’s excellent cost control management philosophy. The use of modern smart products helps reduce labor costs with a staff/room ratio as low as 0.2, ensuring a higher average room price and significantly reducing the operating cost. Several styles of model rooms are provided for customers to experience. The construction cost and time for each style have been calculated in order to provide the franchisee with better products.

Elite Operation Team

Mercure has excellent technical and product services team from Accor and HUAZHU, which guarantees the most professional guidance and support for each new hotel in the design, construction and decoration stages. Mercure has been working to maintain its fine management and control in the continuous expansion of its domestic hotel network so that the quality of the operation and management of each Mercure hotel stays superior.

The Development Potential in China

The development potential of Mercure in China first benefits from its profound brand history and worldwide distribution, which fosters the rapid expansion of brand awareness in China. Second, the advantages of the dual system stand out in that members can exchange their credits in any Mercure hotel both at home and abroad and receive support from both channels. Mercure's products and services are in line with international standards and under constant upgrades. For every product update and test, the management company will first carry out a pilot program in the direct-sale hotels under Mercure to identify whether the new products can bring benefits to the franchisees.

Novotel

Core Development Strengths

Novotel is committed to the constant innovation of the hotel. Whether it be innovative hotel products, the hotel's day-to-day operating mode, or sales strategy management, Novotel Hotel has been looking for a new breakthrough. As a fully serviced and classy midscale hotel brand, Novotel not only attracts business customers and individual travelers at home, but also international customers with higher room prices. High-margin conference facilities can bring substantial benefits to the hotel. In terms of staffing, the staff/room ratio is lower compared to other international brands of the same range. Therefore, the Novotel Hotel has both competitive cost ratios and a highly efficient service philosophy to generate higher returns and profits. The brand will yield returns within two to three months of its opening, with the total operating profit increasing 5%-6% year on year.

Professional Management Experience

The general manager of Novotel Hotel has extensive management experience, especially in the full-service hotel operation and management. At the same time, the general manager's strong sales strategy can be adapted to each hotel. To better support the general manager and the administrative committee team, various functional departments of the headquarters will provide intensive support and diversified tools, systems and training to the operation team so as to maximize the hotels' management and profitability.

Orange Select

Diversified styles

Each hotel has a unique architectural style, from "post-modern”, the 1960’s American pop culture, to the Mediterranean Renaissance.

Unique beauty

Orange Select has rooms of diverse styles. For example, a room with a split-level loft, or a terrace room with a balcony and a parasol. Some are equipped with a bathtub in front of a floor-to-ceiling window. Others have the Japanese-style tatami. There are also movie suites.

Diversified technology

Orange Select is the world's first hotel that can play audio automatically and support on-demand music playing while opening the door, enabling the guests to listen to their favourite music in the hotel room. There are several modes for touch screen smart light control, such as Paris, London, and New York modes. Curtains can be automatically opened and closed and the water temperature is maintained at a reasonable level automatically to ensure that customers feel comfortable in an environmentally friendly manner.

Unique quietness

The soundproofing effect is up to 60 decibels. The Institute of Acoustics in Tsinghua University specializes in acoustic solutions for the Crystal Orange Hotel.

Ji

The Power of Ji Hotel

Using smart products to reduce costs and achieve efficient management, thus weakening the impacts of individuals on hotels.Confucius rituals are integrated into space design at the very beginning. Thus, aesthetics of design and life etiquette are in harmony in the hotel.Over 70 % of the average GOP in China.Nearly 10% growth of RevPAR for 3 consecutive years.

The Trend of Ji Hotel

The midscale hotel market in China has greater potential than that in the developed countries.The average RevPAR of the programs which have turned into Ji Hotel has increased by RMB100-120.The refurbishment of economy hotels into midscale hotels will become an industry trend.

The Truth of Ji Hotel

Beauty–everything in sight is beautifulFineness–ingenuity and exquisitenessRigor–preciseness, efficiency and devotionLove–dedication, compassion and careIntegrity–virtue, honesty and simplicityWarmth–be patient and meticulous with guests

Starway

Influences of Starway

In the future, Starway will gradually select and upgrade quality downstream hotels with “Star Premium”, and set up flagship hotels in the core areas of the second- and third-tier cities to radiate its brand influences in surrounding areas. It will open 500 new hotels within the next three years and build a classic midscale hotel brand through "Starway Premium" and "Starway Flagship Hotel”. Through fast renovation of the individual hotel, the franchise fee will generate profits more quickly and increase the fund flow of the follow-up franchise management fee. The service items and quality have been improving constantly, which enhances the selling price and RevPAR.

Professional Team

Each Starway hotel’s manager will receive training at the headquarters. They need to work in the brand project department and direct-sale hotels for a one-week internship to learn about the headquarters' structure and system operations from various dimensions, such as brand, operation, and sales. There are two ways to hire a hotel manager: external recruitment + internal promotion. External candidates shall have at least two to three years of work experience in a starred hotel or an economy hotel. Internal candidates shall have at least three to five years of experience in a HanTinghotel.

Since its foundation in July 2015, the Starway brand department has closed the hotels whose products are not up to standard and built a service-centered brand philosophy to enhance the hotel's service quality and operation management.

Joya

Joya's Development Strengths

Joya is an upscale business hotel brand under HUAZHU Group, with its location, hardware, and services concentrating on satisfying the needs of high-end business travelers. Compared with other upscale hotel brands in China, HUAZHU's 100 million membership has provided Joya with strong development space. Joya has prioritized its development in the core business areas of Beijing, Shanghai, Guangzhou and Shenzhen, as well as the first- and second-tier provincial capitals.

Elite Team

Under the leadership of the professional team, Joya has been innovating on the basis of the mature upscale hotel management system and rich experience, and looking for a new breakthrough (including sales, product, and operation).

Franchise Advantages

Joya has Vermilion Zhou Design Group, a well-known design company in Taiwan as its leading designer, with the domestic design institute providing a customized design based on the property conditions. Joya is superior to other upscale international hotel brands with its low-cost, high-yield and profitability. The upgrades of hotel products, customer sources and average prices bring higher returns to Joya. At the same time, the brand upholds HUAZHU's philosophy of cost management and control, and achieves higher returns through its complete return management system.

Elan

The Power of Elan

Elan is positioned as an economy hotel brand with strong distribution capabilities. The high inclusiveness of product design and the demanding hardware standard contributes to strong capacities for rapid development and distribution. The operating team has a wealth of experience in managing personalized products. The service awareness and standard service management will be Elan's strengths in the operational management capabilities. In the future, Elan is expected to become the most popular hotel brand and the best economy hotel that can meet the individual preferences of customers.

Franchise Advantages

Elan's requirements for remarkable quality are reflected in its hardware standards, rather than the single decorative style. Elan Hotel is an easily accessible and preferred brand for individual owners (franchisees) to buy franchise. The franchisee can quickly gain short-term profits after joining. The maintenance of personalized products is conducive to further development of brand personalization and long-term profitability. Owners can continuously improve the competitiveness of their products and break through the competition within the sector through sustained upgrade of product details with low investment in phase costs.

HanTing

Laying a solid foundation for your benefit

HanTing has a mature operating experience and service system, and always adheres to the principle of fairness, justice and openness in the design standards, construction costs, and other information. Each HanTing Hotel’s franchisee is entitled to a sound service system. At the same time, we will actively adopt the reasonable suggestions and needs proposed by franchisees. Through continuous optimization of products and service quality, the overall operating performance has improved gradually with ensured short-term profits and long-term profitability.

Sustainable development brings long-term benefits

HanTing carries out further market segmentation, with HanTing Premium positioning an entry-level midscale hotel brand, and HanTing, a mass consumer hotel. HanTing will conduct innovation on its products and service pattern in order to build a highly cost-effective and graceful hotel. As a preferred brand of the economy hotel industry, HanTing will complete the “de-expressized” upgrading of its hotel products before 2020 and strive to introduce a bold innovation on its hardware products and service quality with an aim to increase our products' added value, optimize accommodation experience, improve customer satisfaction, and create new revenue sources.

One-stop service & a full-fledged elite team

In terms of hiring the hotel manager, both external and internal candidates will be taken into consideration. External candidates are required to have at least two to three years of experience in a starred hotel or an economy hotel. Internal candidates shall have at least three to five years of work experience in HanTing hotels. At present, HanTing is actively promoting the "Elite Hotel Manager" program to inspire the employees' creativity and improve hotel management through the optimization of team resources.