Mitchell Presnick is Chief Executive Officer and founder of Super 8 Hotels (China) Co. Ltd. The company currently has 36 hotels either open or undergoing conversion in the China market, and we asked Mitchell about how he plans to continue to maintain Super 8's momentum.
How long you have worked in China and what positions did you hold prior to becoming the top person for Super 8 in China?
I have worked for 15 years in China and Hong Kong, not including 2 years spent at Peking University where I hold a graduate diploma in Chinese language. Prior to Super 8 China, I served as Managing Director, China Operations for Edelman Public Relations Worldwide. In this position, I provided counsel to leading multinational companies such as Procter and Gamble, Microsoft, M and M Mars, Intel, Wrigley, Anheuser-Busch, GlaxoSmithKline, Fujifilm, Liberty Mutual, Ericsson and Chubb. Before Edelman, I was Managing Director-China for APCO Associates Inc., a Washington DC – based public affairs firm. I also assisted Budweiser with its China market introduction in 1994, where I started and managed its government relations until 2003. Before that, I worked with ABC News in Beijing and American Airlines in Hong Kong.
When did Cendant first decide to bring the Super 8 brand into China, and when did the company finally come into China?
Super 8 monitored the China market for almost one year before opening a provisional office in October 2003. We established the operating office in April, 2004. The first Super 8 hotel opened in Wangfujing, Beijing on June 8, 2004. Currently, there are 36 Super 8 hotels either signed or opened, in over 20 cities across China.
What were the opportunities that Cendant saw in bringing in economy hotels to China?
Super 8 China saw the opportunity to bring a world-class brand to a world class emerging hotel market in one of the largest and fastest growing economy hotel markets. The current Chinese economy hotel market shares, in many ways, many of same characteristics of the US market in the 1970's, when Super 8 was first established in the U.S. At that time, the US budget hotel market was highly fragmented, with many unprofitable hotel properties and few brands, few economies of scale, and competition based mainly on price and not value. Super 8 felt it could take the lessons learned from the US experience and translate these to China. It is the stated objective of the company to run the best and most profitable economy hotels in the market.
What do you see as stumbling blocks for future hotel growth?
We are in the service business, and human resources are always a big challenge. The company needs to locate a large number of talented people, then take them through extensive training. As we are growing very rapidly, this process is very important. We believe that human resources are key to our ability to deliver consistent quality and value.
Where are your franchisees located now and are you purposely choosing geographic locations?
Currently, we will have 10 hotels open and operating in: Beijing, Shanghai, Hangzhou, Wuhan, Suzhou, Zhejiang and Wuxi. By December 8th, we will have new hotels in Chengdu, Sichuan Province and Lijiang in Yunnan Province.
How do you go about training the hotel franchisees?
Within 3 months of the opening of a hotel the owner and GM must attend our required Orientation Training which is conducted in Beijing and lasts for 5 days. The must pass a test, and receive a Certification from Super 8. The training covers many areas including: operational standards, reservations, room sales, pricing, marketing, business plan, quality and assurance and revenue management, among others.
New training programs will be launched in the First Quarter of 2006 including an in-depth GM training program and department manager trainings. We feel that good training enables the high quality and value standards of the Super 8 brand. Training directly relates to our stated objective of operating the best and most profitable economy hotel properties in the PRC.
What type of program do you have to ensure that franchisees maintain the proper level of hospitality once they have purchased a franchise?
The process is quite involved, of course, but to summarize, once the Franchise Agreement is signed, Super 8's pre-opening department starts to work with them to ensure they fully comply with all of Super 8's building, design and safety standards and specifications, whether it be a conversion or a new property. All plans must be approved by Super 8 and all government approvals must be obtained. When the hotel is 70% complete, another inspection is carried out, to identify all that remains to be done, and a timeline will be set for completion. 10 days before opening, a final punch list is carried out which the hotel must pass, before they can open for business.
After an opening, the hotel is assigned to the Franchise Service Team, which is their direct link to Super 8 24 hours a day, 7 days a week. Super 8 carries out 4 unannounced Q and A (quality assurance) inspections per year on each hotel. The results of this inspection are thoroughly explained to the management of the hotel, and a timetable is established for all discrepancies to be resolved.
For Super 8, the above is critically important, we believe that service and quality maintain the integrity of the brand.
How much does a typical franchisee pay to become part of the Super 8 family and how are partners chosen?
All applicants must pay RMB 5,800 application fee. We have very stringent criteria for becoming a Super 8 franchisee, and the fee pays for the evaluation process including our on-site inspection of their property which is carried out by highly trained specialists. The franchise fee is currently set at RMB 380,000, but that fee may increase in the future due to high demand. Ongoing fees and other operating fees must also be paid, some as a percentage of revenue and some fixed.
Super 8's acceptance criteria for franchisees focuses on:
1) Property
2) Background and character of the owner
3) Financial condition of the owner
4) Location
How are you differentiating yourself from the domestic Chinese economy hotel brands?
We are among the first international economy hotel groups to enter China and because of our worldwide commitment to quality and customer service, we have exceeded our development objectives. We bring the benefits of the Cendant Hotel Group, one of the world's largest operators of franchise hotels. We bring 30 years of experience in the economy hotel franchising sector, helping make franchisees more successful by association with the brand. The Chinese customer is becoming more sophisticated and appreciating what we bring: �Clean, Friendly, and Consistent� service and quality.
If you could impart a bit of wisdom about doing business in China's hospitality industry, what would it be?
Be as vigilant as you can be in maintaining world class standards and operating systems, as you would anywhere in the world. At the same time, be as local and flexible as you can in your implementation of those processes, to ensure relevance to the Chinese market.