Extraordinary Genius

“Manager Feng, I will get my men to start restructuring our guesthouses. After that, we will use our available funds to acquire the guesthouses from our subsidiaries. Can you help me inform Bing City Machinery Manufacturing Group?”

“Eh... eh... eh... I haven’t finished.” Feng Yu stopped Zhong Qingxian from leaving. “How many guesthouses do we have?”

“Bing City, Shenyang, Beijing, Tianjin, Xianyang, Shanghai, Jinlin, Sichuan, Xiamen, Shenzhen, Guangzhou, Hefei, Ningbo... a total of 24 guesthouses. This is quite a lot, right?”

Feng Yu shook his head. “The scale of this hotel chain should be bigger. Firstly, every Province city and the bigger cities must have our branches. Cities like Beijing and Shanghai should have more than one branch. We must also advertise for Yue Lai Inn. This way, it will be faster for us to set the standards.”

“Can we cope with setting up so many branches at once? We still need to look for suitable locations to set up new hotels. Are you saying that we acquire existing hotels?”

“Acquire and renovate. This will be faster, and these hotels have existing customers. Remember, we must pick the best locations. This way, the occupancy rate will be higher.” Feng Yu reminded.

“This is easy. We will just pick the hotels near our Tai Hua Hypermarkets. There are many small hotels around our Hypermarkets, and it’s not too troublesome. But our investment will be much higher.”

“Don’t worry about this. We can surely get high returns from this investment. Our pricing must be lower. How much are our guesthouses charging for a standard room?”

“Around 60 to 100 RMB. The rates in different cities vary as the standard of living are different.”

Is this cheap? Feng Yu remembers he had stayed in an hourly rated hotel with his wife in his previous life, and it cost around 80 RMB.

The small motels in some cities only charge 20 to 25 RMB for a room now. The rooms do have hot water and a TV. But the TV is not clear, and the hot water is only for specific timing. The rooms are also very small, and some don’t even have windows.

The rates for bigger guesthouses range from 50 RMB to a few hundred RMB, as it is based on the rooms’ facilities.

Some bigger five-stars hotels charges from a few hundred RMB to a few thousand RMB per night. These five-stars hotels are targeting the high-end segment and are very expensive.

“How much do you think we should charge for our rooms based on all the facilities I mentioned earlier? Do you think we can raise the prices slightly?”

“Raise prices? Didn’t you say this budget hotel must be cheap?” Zhong Qingxian is confused.

“But our services and rooms are better. Our rooms might even be better than some hotels with star ratings. If other hotels want to have the same standards as our rooms, their management and other costs will be higher than ours. This way, our profits will be higher than them provided their rates are the same as ours.”

“Alright. Conduct market research and see how much do those normal hotels, guesthouses charge. Also, compare the prices of those three-stars hotels. Oh, conduct a survey for those salespeople to see how much they are willing to pay for a hotel room. As for our prices, I think it should be fine if we raise the prices by 50%.”

“What? We are going to raise the prices by so much?”

“Is it a lot? 60 RMB will be increased to 90 RMB, but our services will be different. We want to be different from those cheap motels. We can’t be charging the same rates as those motels after so many investments, right? Although we will not lose to them when it comes to a price war, it will lower our standards.”

“They might not want to stay with us if we charge high rates. Some existing customers might choose other hotels.”

“Old Zhong, I had used Tai Hua Supermarket as an example earlier. Why are you so slow? Tai Hua Supermarkets have a tactic to attract and maintain their customers. Membership cards!” Feng Yu reminded.

“You are saying this hotel chain can also implement membership cards?”

“Why not?” Feng Yu asked Zhong Qingxian. “The benefits of the members is they can get discounted room rates based on their membership level, make advanced bookings, and get priority for the rooms.”

“Discounted room rates?”

“Of course. It’s fine to charge higher prices during peak season. But during the off-peak season, we must have some promotions, especially for our members. We must let them feel it’s worth being a member of our hotel chain, and they will think of our hotels in the future when they are looking for a place to stay. Also, they will bring their friends to stay with us. Although not everyone will want to become a member, retaining existing customers will be beneficial to our sales.”

“How much discount should we give?” Zhong Qingxian asked.

“The discount will be based on the different membership levels. We can give 5%, 8%, 12%, 15% and even 20% discounts off their room rates. This way, we will only be increasing our room rates by 20 to 30%. With our better rooms, I believe more people will choose to stay with us. Regardless of the membership levels, we will provide breakfast vouchers, and it will be limited to two people per room.”

“Oh... the breakfast menu should not only consist of meat buns, congee, etc. We must give our guests more variety. It will be like those buffets, and the guest can pick what they want. This will make them feel the breakfast is worthwhile, and ordinary guests can buy breakfast vouchers if they want. But the vouchers will cost at least 10 RMB!”

“Breakfast will cost 10 RMB? Is it too expensive?”

“Get them to become a member. Members will enjoy breakfast for free and still get discounted room rates.” Feng Yu replied.

Zhong Qingxian laughed. “You can still think of promoting our memberships through breakfast. Then, how much should we charge for the membership?”

“It should be around our losses from three-room rates. After that, we can introduce some incentive schemes for the members. For example, a free upgrade of membership level after the member had stayed with us for a certain number of nights. Cigarettes and drinks will have discounts, etc. You all can go figure out the rest.” Feng Yu is lazy to think anymore.

Feng Yu only know these and nothing more.

Zhong Qingxian is deeply impressed. Manager Feng is good at any business. I had only made a suggestion, and he can state so many great ideas on improving the business. He is such a genius.