Why,Are,Foreign,Companies,Disgraced,in,Hotel,Management|aerin

　　There is no clear definition 　　for the high-end services. Literally, high-end services are the high-end part of the service industry and are featured with high technological contents, high human resource investment, high added value, high related industrial influence, high openness, low resource consumption and low environmental pollution. The related industries include finance, media, hotels, consultancy, and legal affairs.
　　In some of the high-end service fields, Chinese local enterprises have apparent advantages thanks to the strong affinity to localization of these industries. In some industries, local companies are growing in size and can fight against foreign companies to a draw. The only differences are that foreign companies are at the top of the pyramid with higher profit margins while local companies are at the bottom with lower profit margins.
　　Then, in some industries, foreign companies take the dominant places while local companies just started their own business and could act as nothing but omission makers. The high-end hotel management is in this situation.
　　According to the statistical data, presently most of the five-star hotels in China are controlled by most foreign investors. The data shows that multinationals managed 480 hotels in China at the end of 2007. This number increased to 516 in 2008 and then to 1000 in 2010. The major international hotel management brands include InterContinental, Sheraton, Marriott and Hilton, which are all busy acquiring more hotels. Among them, InterContinental got into China in 1984 and now it is the biggest multinational hotel brand in market share with 170 hotels or 12.5% of the total international hotels in China.
　　Recently, the number of disputes between international hotel brands and property owners are growing gradually as well. Some even cancelled their agreements. InterContinental, for example, terminated their contracts with four property owners in Xiamen, Tian’an, Dongguang and Sanya from 2008. When it ended the cooperation with the property owner in Sanya, its Chinese partner, with Hua Yu as its name, revealed to the public the problems of InterContinental in managing the hotel in Sanya within six years, leading to the huge loss of this hotel. The reported malpractices include the costly purchasing with the purposely hidden fact, juggling RGI index, falsely reporting management fees, assets loss, lack of device maintenance, which were hard to be done by the world’s largest professional hotel management group. Though InterContinental later pointed out that some parts of Hua Yu’s report were not true, the underperformance of the hotel leading to the termination of the agreement is an undeniable fact.
　　When responding to Hua Yu’s charge and the questions from media, InterContinental said that if its management level in the world was just like this, it could not earn the current leading position. But why can not the management pattern which was effective in the world function well in China? Is that a problem related with climate or fengshui? Actually, it is not a single accident that multinationals’ management pattern mutated in China. The fundamental reason is that the market situation in China goes through great changes with the continuous changes of the Chinese economy. These changes lead multinational which do not make adjustments timely to their Waterloo or become the strategic turning point for local companies to rise with the situation.
　　Firstly, as more and more highend hotels are built and put into use, the competition among hotels at the same level in the same region cannot be avoided especially in hot tourism areas. For example, Sanya, a southernmost city in China, accommodates international brands including Marriott, Hilton, Sheraton, Holiday Inn and so on. Three of the top four brands of InterContinental in Greater China also set foot in China. The fame of international hotel management companies cannot be the only weapon to attract consumers. Such a situation gives consumers more choices, but also results in a bigger possibility for hotels to suffer failure.
　　Secondly, overspeed expansion leads to the stagnant improvement of management ability in the form of the difficulty for talents and clients resource in catching up with the expansion. The problem is more prudent for the overactive companies like InterContinental. The public documents from Hua Yu revealed that InterContinental changed its general manager six times, financial director five times, marketing director five times and catering director, room management director, engineering director and HR director respectively four times during the six years of running the hotel in Sanya. The positions like inhotel manager and assistant to general manager remained unoccupied for years. An insider from Hua Yu said that the frequent executive changes lead to the impossibility of continuing its operating strategy and the slacking mindset of workers, which were mainly blamed for the unsatisfactory performance.
　　Thirdly, the unfair treaty brought about the lax management. The privileges of brands and systems of famous international hotel management companies give these companies advantageous positions when signing the hotel management contracts with property owners. Thus there are fewer stipulations for the management company. For example, the basic management fees are only related with the hotels’ revenue instead of actual profits. No matter how the performance of the hotels is, the management companies’ management fees are secured. This contract seems to be good for hotel management companies and to some extent they are the rights derived from their brand value and management ability. But without the stress from worrying about loss, the internal management will become lax and inefficient, causing hotel managers to lose crisis sense and motivation of seeking progress positively. For the long term, this will bring negative influence to the brands, fame and influence of the hotel management companies and even forced them to leave the market.
　　Fourthly, the growing number of consumers of high-end hotels and their diversified consumption features bring new issues and problems for the hotel management. With the development of Chinese economy, occupiers of high-end hotels are no longer overseas travelers, senior executives of foreign enterprises or businessmen. Instead, the client sources move from foreign countries to China, from high-end people to commoners and from businessmen to families. The demand of consumers for high-end hotels also goes through great changes. Against this background, the fixed and inflexible international hotel management pattern is hard to cover all the requirements of potential consumers. In addition, the international hotel management companies are haunted by high management extent and the distance from the consumers, as well as the “pride” brought by the political and cultural factors. These stop international hotel management companies from making adjustment quickly and timely. The gap between the market changes and the patterns of foreign hotel management companies give the space and opportunities for the development of Chinese local companies. It is believed that high-end local hotel management companies will rise in the future. The high-end service industry including hotel management is needed by the economic transformation of China and the business opportunities of Chinese companies in the future.
　　In the dispute with Hua Yu, InterContinental was blamed for not living up to its fame as an international hotel management company. It is known that Hua Yu has already filed a lawsuit against InterContinental. This revealed the changes of Chinese business owners in the past 30 years – they are not blinded or scared by the fame and power of multinationals; instead, they know when and how to gain the interest they deserve when it comes to the conflicts with foreign companies. In addition, it is worthwhile to mention that InterContinental, and other multinationals, should be blamed and fined for their malpractice in China.

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