Jin Jiang Hotels was hovering on the verge of losing money in Q4 last year

Visual China.

Literature: Wine management and finance.

In addition to the fundamental state of A-shares, the above announcement faintly released a signal that "the fourth quarter may face losses", which is very likely to become one of the main reasons for Jin Jiang Hotel to be green.

According to the announcement, Jin Jiang Hotel's net profit in the fourth quarter of 2023 was -0300 million - 0800 million yuan, the performance was lower than expected, and the loss and financial expenses of the overseas entity Louvre Group dragged down the profit performance.

However, "Wine Management Finance" noticed that compared with competing hotel groups, Jin Jiang Hotel's profitability and core operating data in the fourth quarter did not reflect the strength of the local hotel group boss. It may need to further speed up the internal sorting and integration.

According to Jin Jiang Hotel's performance forecast, it is expected that the net profit attributable to shareholders of the listed company in 2023 will be 9500 million to 10500 million yuan, compared with the same period last year (statutory disclosure data), will increase by 836.51 million yuan to 936.51 million yuan, a year-on-year increase of 737% to 825%.

Looking at this data alone, the performance of Jin Jiang Hotel has indeed ushered in a surge. However, compared with the data of Jin Jiang Hotels in the first three quarters, its profitability in the fourth quarter is slightly ugly.

In the first three quarters of 2023, Jin Jiang Hotels' net profit attributable to shareholders of listed companies was 97.5 billion yuan. Compared with the annual performance forecast, it can be seen that the net profit of Jin Jiang Hotel in the fourth quarter is about -0300 million - 0$800 million. It is not an exaggeration to say that it is teetering on the brink of loss.

Normally, the fourth quarter is the off-season for travel, especially after the Mid-Autumn Festival and National Day, and leisure demand drops significantly. It is also normal for hotel groups to experience profit fluctuations during this period. However, in the context of the explosion of the wine and tourism industry in 2023, Jin Jiang Hotel's Q4 "losing money and making money" is somewhat unacceptable.

or as a result, on January 31, 2024 (the first trading day after the release of the earnings forecast), the share price of Jin Jiang Hotels is 810% to close at 2529 yuan.

Standing in the position of the industry, we may be able to see the location of Jin Jiang Hotel more clearly.

In horizontal comparison,Unlike Jin Jiang Hotels, which was hovering on the verge of loss, BTG Hotels Group's net profit attributable to shareholders of listed companies in the fourth quarter was 0900 million-1500 million, the profitability is far higher than that of Jin Jiang Hotel. Huazhu Group has not disclosed relevant data.

In terms of core operating indicators, the RevPAR of Jin Jiang Hotels' domestic hotels in the fourth quarter of 2023 recovered to 100% of the same period in 2019. Huazhu China is back to 120% of 2019 levels. BTG (excluding lightly managed hotels) recovered to 100. in the same period in 20193%。

It is not difficult to see that in the same fourth quarter, Jin Jiang Hotel's RevPAR recovery is still not as good as that of its competitors.

What is it that is dragging down Jin Jiang Hotel?

IFC** mentioned in a research report that Q4 is the off-season for operation, and the performance growth rate is more affected than the revenue growth rate under the effect of operating leverage. The interest rate hike in the euro has led to a significant increase in interest on the company's overseas debt, which is expected to increase by nearly 30 million euros compared to 2022. In addition, the labor and office expenses of overseas business also increased, which had a negative impact on the company's full-year results.

The research report of Soochow ** is more direct"Q4 performance was lower than expected, and losses and financial expenses of Louvre Group, an overseas entity, dragged down profit performance. ”

Jin Jiang Hotels also cited similar reasons in response to investors' questions. "In 2023, due to the Euro Interbank Offered Rate**, the borrowing interest expense of foreign enterprises will increase compared with the same period last year. Jin Jiang Hotel said.

Overseas enterprises mainly refer to the Louvre Group.

Since its acquisition by Jin Jiang in 2015, Louvre's operating income and net profit attributable to the parent company from 2017 to 2019 have remained above 500 million euros and 30 million euros, respectively.

However, after the emergence of the epidemic, Louvre Group was greatly affected, with a loss of nearly 100 million euros in 2020. Combined with the impact of rising inflation in Europe and the European Central Bank's interest rate hike, Louvre's financial expenses and labor costs have been significantly **, until the first three quarters of 2023, Louvre Group has accumulated a loss of 20.42 million euros during the year, but it has achieved a profit in the third quarter.

To a large extent, the Louvre Group has become the "oil bottle" of Jin Jiang Hotels' performance.

In terms of the number of hotels and the number of rooms, Jin Jiang Hotels ranks first among local hotel groups. Therefore, the outside world is always accustomed to calling Jin Jiang Hotel the industry leader.

If we look back at the growth history of Jin Jiang Hotels, acquisition is a key word that cannot be avoided. Since 2015, Jin Jiang Hotels has successively acquired Louvre Hotels Group, Vienna Hotel, Baisui Village Catering, Radisson Blu Hotel, Dahua Hotel, Shanghai Qicheng Network Technology, etc.

In the process of acquisitions, Jin Jiang Hotels has grown rapidly in size, and its ranking among global hotel groups has continued to rise. However, with it came a surge in the company's goodwill.

Wine Management Finance noted that at the end of 2015, the goodwill of Jin Jiang Hotel was 421.6 billion yuan. When the time comes to the end of September 2023, the goodwill of Jin Jiang Hotel is 116$8.4 billion.

116.What is the concept of 8.4 billion yuan? As of the end of September 2023, Jin Jiang Hotels' total assets were 4992.5 billion yuan, net assets of 1759.1 billion yuan, goodwill accounted for 23 percent of total assets4%, which is 6642%。

Data**: Oriental Fortune Choice data.

Normally, if the proportion of goodwill (net assets of the company) exceeds 30%, it is necessary to pay attention to the risk of goodwill. And Jin Jiang Hotel has exceeded 66%.

In fact, without talking about the capital dimension and returning to the business indicators, it can be found behind a lot of data that this "hotel boss" still has a lot of room for improvement.

From the perspective of revenue, Huazhu has been above Jin Jiang Hotel for many years, and the revenue gap is getting wider and wider.

According to the statistics of Wine Management Finance and Economics, in 2021, Huazhu's revenue will be 127800 million yuan, Jin Jiang Hotel is 11.4 billion yuan, and the difference in revenue between the two sides is 13$800 million.

In 2022, Huazhu's revenue will be 138600 million yuan, Jinjiang is 110100 million yuan, the revenue gap between the two sides is 28500 million yuan.

In the first three quarters of 2023, Huazhu's revenue was 1629.8 billion yuan, Jin Jiang Hotel revenue of 1096.2 billion yuan, and the revenue gap between the two sides is 533.6 billion yuan. BTG Hotel's revenue for the same period was 591.1 billion yuan.

In other words, in the first nine months of 2023, Huazhu's revenue is almost equal to that of Jinjiang and BTG combined.

If we compare the core operating data,In FY2023, Jin Jiang Hotels has an overall RevPAR of 16714 yuan, Huazhu China's hotels revpar is 242 yuan, BTG hotels (all hotels excluding light management) revpar is 173 yuan. Huazhu is in a leading position, and Jin Jiang Hotels and BTG are roughly on the same level.

In terms of ADR and OCC, the latest data available for comparison is Q3 2023.

In the reporting period, the number of hotels in mainland China was 7167%, and 71 for all BTG hotels50%, and 85 for Huazhu hotels in China90%。It is not difficult to see that Huazhu is the first gear, and Jinjiang and BTG are roughly at the same level.

In the reporting period, the ADR of Jin Jiang Hotels in mainland China was 2656 yuan, 258 yuan for all BTG hotels, and 324 yuan for Huazhu hotels in China. Huazhu is the first gear, and Jinjiang and BTG are almost at the same level.

In addition, in terms of members, which everyone is paying more and more attention to, as of the end of 2022, the number of effective members of Jin Jiang Hotels is 18.2 billion, Huazhu has 200 million members, BTG Hotel is 13.8 billion yuan.

In the view of "Wine Management Finance", the core element to define the industry leader is quantifiable data indicators, such as the number of rooms and hotels. At the same time, such indicators should be more pluralistic and multi-dimensional. In addition, it is necessary to take into account the "universal contribution" made by the enterprise to the entire industry, such as technology output, management experience output, etc.

From the above perspective, Jin Jiang Hotel does have a lot of homework to complete.

Jin Jiang Hotels itself has taken note of this problem. The company's leaders have repeatedly mentioned in public that they "want to be stronger".

Chang Chuanghuang, former CEO of Jin Jiang Hotel, once said, "We no longer pursue to become bigger and stronger, but are committed to becoming better and stronger, and achieving high-quality development in an all-round way." In the early days, Jinjiang has always maintained rapid development, advocating to become bigger first, and then better and stronger. At this stage, we must adhere to high-quality development, and be better and stronger in terms of operation, brand, platform, technology, and talent. ”

Wine Management Finance noticed that Jin Jiang Hotel, which has been acquired many times, has been sorting out its brands. This kind of integration and integration between brands and teams is a problem that every group that starts with acquisitions must face. For assets to work together, it takes a strong leadership to think holistically.

A few days ago, Wang Wei, a veteran of the "Plateno Department", succeeded Chang Chuang, a veteran of the "Vienna Department", and became the new CEO of Jin Jiang Hotels in China. This was stated in an open letter released shortly after her appointment (December 14, 2023):

The past four years have not been easy for us. From the integration of three completely different cultures, coupled with the impact of three years on the industry, from top to bottom and from the inside to the outside, it is facing huge challenges...

On November 28 (2023, editor's note), the Reform Leading Group was established, and everyone set a common goal:On the premise of giving full play to people's subjective initiative, we will strengthen digital capacity building and become a Jin Jiang Hotel (China) with a strong brand, strong membership and strong operation'.

Wine Management Finance highly agrees with the above "three strong" (brand, membership, operation) remarks, and believes that if Jin Jiang Hotel wants to become stronger from a bigger point of view, it can have the following starting points:

1. The product structure needs to be added.

The upgrading of the structure is reflected in the fact that the proportion of the middle and high-end should be increased. The optimization of products is reflected in each product, from economic to mid-range and high-end products. Behind this, it requires the joint efforts of operation, management, and development to achieve this.

2. The number of brands needs to be subtracted.

According to incomplete statistics from Wine Management Finance, there are about 30 hotel brands under Jin Jiang Hotels in China. This number is close to the number of all Marriott brands and far exceeds the number of brands on Intercontinental.

The combing and integration of the brand is reflected in the team, tonality, core market, development rhythm, etc., on the one hand, and the streamlining of the quantity on the other hand. Some brands with weak competitiveness are completely necessary to cut them directly. Focus its efforts on more core products.

3. Store empowerment needs to be multiplied.

This piece has high requirements for software, hardware and people, which is actually the "strong operation" mentioned by Wang Wei above. Especially for asset-light hotel groups, the operation will directly affect the operating level of first-line stores. Here, Jin Jiang's franchisees and front-line workers may have more say.