Chinese tech giant Alibaba Group is now actively trying to form an alliance of budget hotels and inns across China through its online travel subsidiary Fliggy.
The company announced on Tuesday that Fliggy is slowing bringing together independent budget hotels across the country and supplying them with technologies and management strategies to develop their business and streamline their operations.
Alibaba is aiming to gather together as many as 40,000 independent hotels across China in the next twelve months. The company is mainly targeting hotels that do not belong to any proprietors or parent companies and are independently run by its owners.
Hotel operators that join the company's drive will essentially receive a uniform digital makeover that will include access to Alibaba suite of online platforms. The company stated that it has already concluded its three-month trial that saw the recruitment of over 15,000 hotels to the alliance.
Alibaba, through Fliggy, aims to boost its participating hotel's average occupancy rate by as much as 10 percent. Zhuang Hai, head of Alibaba's tech-driven hospitality platform prototype called FlyZoo Future Hotel, mentioned that the goal of the alliance will be to empower independent hotel operators by giving them access to a shares client pool and providing them with the necessary tools to increase their online and offline traffic.
Small to medium Independent hotels, which typically offer 80 rooms and below, account for over 85 percent of China's overall hospitality market. According to a report published by the China Hotel Industry, smaller independent hotels in the country have a market value of around $142.7 billion.
These types of hotels typically have a hard time competing with well-known brands and larger operators. The report from the China Hotel Industry points out that the weak points of these businesses are a lack of brand power, deficiencies in services standardization, and a lack of a comprehensive membership system.
Through Alibaba's program, independent hotels will have prioritized positions on the company's online search page. The hotels will also be granted the right to bear the company's alliance logo.
Other incentives that will be given include a performance-based commission rebate system and an out-of-the-box membership card system that will give frequent users a fixed discount and personalized marketing based on their preferences.
Alibaba's strategy is somewhat similar to the strategy used by Indian hospitality company Oyo. Since the Indian company's entry into China two years ago, it has managed to recruit more than 19,000 hotels under its banner. The company has so far penetrated into more than 2,000 Chinese cities and townships.
