This year’s CHAT Shanghai is the session “Industrial Age v.s Internet Age” gave the audience a clearer and better understanding about the transformational developments that have been undergoing in the industry. The lively discussion was between the “Industrial Age” represented by Mr. Colin Lin, SVP of Hotel Development of China in Marriott and Mr. Nong Xia, SVP-Head of Acquisitions and Development of Greater China in Starwood Hotels & Resorts, and the “Internet Age” represented by Mr. Kelvin Chen, CEO & co-founder of Xiaozhu.com, and Mr. Shaohua Li, President of Alitrip.
- Key Words in Industrial Age: Standardization, Replication and Rapid Expansion
The session started off with the sharing from the two representatives of “Industrial Age”, Mr. Colin Lin and Mr. Nong Xia, about their understandings of the “Industrial Age”, standardization with quality assurance, while replication and rapid expansion came along with it.
- What “Internet Age” is all about: Platform, Decentralization, Experience and Sharing
As the representatives for the “Internet Age”, Mr. Li and Mr. Chen summarized the key traits in the “Internet Age” as platform and decentralization. Such platform allows the development of sharing economy with a strong focus on customer experience.
With technology advancement in the “Internet Age”, the efficiency of transactions has also been greatly improved, said Mr. Li. Different from the traditional business model, which establishes connections between people and objects, mobile Internet established direct contacts between people and services, and even among people. Such direct connections have made people’s life much easier and benefited everyone’s social life. A good example is the car-hiring app. Mobile Internet is definitely not only a tool for an enterprise. It should also help the groups to transform from the traditional ways of reaching customers to establishing new concepts, sticky and interactive relationships with the end users.
- How companies in “Industrial Age” adapt to “Internet Age”: People Oriented
Mr. Colin Lin was not too worried about overthrown of great companies in the “Industrial Age” when asked about how they should adapt to the “Internet Age”. Both Marriott and Starwood Hotels & Resorts are actively facing the time of change and making breakthroughs in technology, among which include the mobile check-in app by Marriott and the robot service in Starwood hotels.
In the meantime, Mr. Xia mentioned, traditional companies should change their mindset, from a “hardware oriented” to a “people oriented” model, meaning companies should focus on understanding the needs of the customers, in order to expand their customer and member bases. If the goal in the “Industrial Age” is to be the first company with a million guestrooms, then the goal in the “Internet Age” should be having 100 million members. “Although it may sound a bit exaggerating, a company with 100 million members, could an OTA in itself”, said Mr. Xia.
- Synergy between “online” and “off-line”: Content is the key
Discussion extended to the relationship between Internet business model (online) and the “real” economy (off-line). Their relationship should be based on cooperation rather than competition. The platform on the Internet has to rely on the content from the ‘real’ economy”, said Mr. Lin. Mr. Chen also commented that “management styles and core values in the companies in the ‘Internet age’ have not changed significantly from the ‘Industrial Age’. Companies can only achieve sustainable growth by constantly adjusting mindset and adapting to the current market.
- Learn from Each Other
Mr. Lin said, “The business model in ‘Industrial Age’ is B2C, i.e. enterprises leading customers. However, in ‘Internet Age’, the model has been changed to C2B, meaning systems and structures in the enterprises are all oriented towards customers’ needs.” Mr. Xia also agreed and emphasized, “We should learn from Internet companies, which are more flexible and interactive to establish direct contact with customers, communicate with them and understand their needs. This is quite crucial.”
Mr. Li said, “Traditional companies in ‘Industrial Age’ design their services based on their 10, 50 or even 100 years’ of experience and understanding about customers. While today, the focus of companies in the ‘Internet Age’ has shifted to the future. They focus on what customers will need in the future. This is a fundamental difference that’s worth to be noticed.”
- Regulations in the‘Internet Age’
While approaching the end of this session, Mr. Xia raised two questions: first, when Internet platform is becoming popular, is the Internet business model still competitive? Second, there are still a lot of grey areas in regulations for Internet companies. In the future, will laws and regulations be altered for Internet companies, or will the companies change to adapt to the existing laws?
Mr. Chen believes that the competitive advantages of Internet companies are not only about price and low cost. Variety and personalized experience are the important value that they can create for customers. Industrial design and replicable products in the “Industrial Age” can only create variances in location and quantity, rather than experience.
About regulations, he thinks innovation always proceed the establishment of regulation systems. Thus, when new economic models are created, it is likely that such innovations will be considered as ‘illegal’ by the old, existing legal systems, and there are likely to be grey areas. However, in the long run, he is optimistic and believes legal systems will gradually improve and adapt to new business activities.
Horwath HTL has created a new brand identity – CHAT, tilored for China’s hotel and tourism industry! CHAT, the abbreviation for China Hotels And Tourism, encourages industry people to gather, create dialogue and network through the platform, as well as exchange and share experience and knowledge. CHAT Beijing is an enhancement of the “China Hotel Development and Financing Conference”, which has been held for eleven years in Beijing. We further focus the conference specifically on hotel and tourism development and investment issues. There are 650 delegates attended 2015 CHAT Beijing with the largest segment being domestic hotel and tourism developers and owners. CHAT Shanghai is an upgrade of our annual “China Hotel Market Review and Outlook Seminar”, which has been held over the past six years. CHAT Shanghai focus on hotel asset management and operations. 510 delegates attended CHAT Shanghai in September 2015. CHAT Beijing and CHAT Shanghai held in Spring and Autumn respectively cover the full hotel and tourism business cycle from development and investment to asset management and operations. CHAT will enable you to achieve successful business development through its various powerful platforms!
About Horwath HTL
Horwath HTL is the management consulting of Crowe Horwath International that specializes in hotel, leisure and tourism industries. Established in Asia in 1987, Horwath HTL has consulted about 4,000 hotel and tourism related projects throughout the region (including over 1,200 projects in China) for clients ranging from individually held businesses to the world’s most prominent operators, developers, lenders, investors and industrial corporations. Horwath HTL now operates offices in several key cities throughout the Asia Pacific region, including Auckland, Beijing, Hong Kong, Jakarta, Kuala Lumpur, Mumbai, Shanghai, Singapore, Sydney and Tokyo. Our offices work closely together to ensure that our clients receive a multi-skilled international perspective for their projects. Horwath HTL is also supported by the Horwath database, the largest and most complete hotel and tourism related database in the world. No other firm is better positioned to meet today’s and tomorrow’s industry challenges than Horwath HTL – Experts in the hotel, tourism and leisure industries.