Economy

From China To The World, Wanda Hotels' Rising Ambitions

Wanda, rising in the world's skyline
Wanda, rising in the world's skyline
Li Juan

BEIJING — With a generous chin and a rich voice, the German vice president of Wanda Hotels & Resorts also speaks fluent Chinese.

Ilja Poepper is one of several top foreign managers of Wanda — a Chinese conglomerate with various interests, including commercial properties, entertainment and hotels — who were specially recruited over the past two years in an effort to rapidly become a high-end global hotel brand.

This is a whole new strategy after having employed the model typically used by China's other high-end hotels: to build new properties, and then just entrust them to international hotel management companies to run them with their names.

Wanda now hopes to become entirely responsible for all its own hotels, from construction to operation. According to the current plan, Wanda group will own more than 100 hotels by 2015, half of which will be the group's own brand.

"Wanda has the best chance to become China's high-star hotel "standard-bearer,"" says Zhao Huan Yan, a Ramada hotel consultant.

But Wanda's ambition doesn't stop here. Wang Jianlin, Wanda Group chairman, Wanda wants it to become one of the world's leading luxury hotel management companies over the next three to five years. Last June, Wanda invested nearly 700 million pounds ($1 billion) to build a five-star hotel under its own brand in central London. Rumors have been circulating that Wanda is looking for an international hotel brand acquisition opportunity.

Wang isn't looking back — Photo: WEF

A map of China in Ilja Poepper’s office is dotted with lots of colorful pins. Each pin represents a Wanda Hotels & Resorts brand hotel. "My pins are going to run out soon," he says with a smile. Since the hotel's new brand-focused management was established in July 2012, it has continued to grow with hurricane speed — six branded hotels were opened in that first year, followed by another 15 in 2013.

Of the 18 hotels Wanda is building this year, all but one will also be operated by the company itself. For this, Wanda didn't hesitate to poach talent with high salaries from other hotel chains. Many of them are senior foreign managers who have years of experience working for renowned international chains.

As Wanda group's data shows, it will own 71 hotels by the end of this year, including 34 with its own brand. Chairman Wang Jianlin"s stated aim is to open about 20 new Wanda brand hotels per year, and to make it the largest five-star hotel chain in the world over the next few years.

While other Chinese commercial properties owners usually only work with one or two international hotel management companies, Wanda chooses to cooperate with several at the same time. Of the world’s six leading hotel chains, Wanda has established collaboration with Accor, Intercontinental, Hyatt, Hilton and Starwood.

This strategy has paid off. Not only does it help teach Wanda the pros and cons of each group, as well as their pricing policies, it also gives the Chinese company the opportunity to choose the most favorable partnership requirements.

And the most far-reaching gain is that through these interactions and deals, Wanda had the opportunity of comparing and learning the different management models and styles of these global leaders.

Marriot is the only major hotel chain which hasn't cooperated with Wanda. "Because we saw very clearly right from the start that Wanda's aim is to get married so as to get divorced. All it wants is to obtain your experience," a Marriot senior manager told Economic Observer.

For Ilja Poepper, the biggest advantage of having Wanda's own brand is in the execution. Being the hotel owner and management company at the same time means that "after a meeting of a few executive officers or several telephone calls things can be put forward and executed right away," instead of going through several layers of hierarchy before reaching the headquarters like in the multinationals.

The challenges

Wanda's challenges lie in software rather than hardware. "The hotel industry is a service industry," says Wang Rong, Roland Berger Strategy Consultants partner and vice president for the Greater China region. "Chinese hotel support hardware can be grandiose, and individually some of them are even comparable with foreign brand hotels. However, at the brand management and operation management level, Chinese hotels are still a long way behind the international leaders."

Wanda must also figure out how to find its own customer base without support from the international hotel groups. Apart from launching its own central reservation system (CRM), setting up its global sales offices and establishing a global distribution system (GDS), it also needs to come up with a concrete sales strategy to obtain and retain key customers.

In China catering usually makes up an important part of increasing a hotel’s revenue. In the second and third-tier cities, room booking is usually driven by food and beverage consumption. Catering revenue can account for more than 60% of a hotel’s total turnover.

The comprehensive resources of the Wanda group also offer its own hotel brand some strong backing since these hotels are usually located around a Wanda Plaza, and can form complementary linkage effect with the group’s department stores and cinema chain.

Still, there are serious concerns about the ambitious pace of Wanda’s expansion. The company likes to compare itself with the Shangri-La group because the latter is not only an owner and management company, it is also the most outstanding among its peers for its catering department.

However Shangri-La has had some 50 years of history, and has just over 70 branches in the world. In China it owns fewer than 50 hotels with an average increase of only 1.6 hotels per year. Meanwhile Wanda’s current plan has a development speed 10 times that of Shangri-La.

As an example, it took only five months for Taiyuan Wanda Wenhua hotel to be ready for business, including the recruitment of the 500 personnel. This would have usually taken another hotel one to two years.

Such speed is likely to come at the expense of quality. In November 2012 Wanda Changbaishan Resort Hotel opened on schedule. But when the first batch of customers arrived they found that the smell of the furnishing materials was still lingering.

“High-end hotels make the difference with their management and services. It’s impossible to develop a brand without spending eight to ten years," said industry expert Wang Rong. "If you want to be good, the most common approach is to go a bit deeper and slower."

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Geopolitics

How Thailand's Lèse-Majesté Law Is Used To Stifle All Protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

Pro-Democracy protest at The Criminal Court in Bangkok, Thailand

"We need to reform the institution of the monarchy in Thailand. It is the root of the problem." Those words, from Thai student activist Juthatip Sirikan, are a clear expression of the growing youth-led movement that is challenging the legitimacy of the government and demanding deep political changes in the Southeast Asian nation. Yet those very same words could also send Sirikan to jail.

Thailand's Criminal Code 'Lèse-Majesté' Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family.


But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

The recent report 'Second Wave: The Return of Lèse-Majesté in Thailand', documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations."

Criticism of any 'royal project'

The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. Nineteen of them served jail time. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

Juthatip Sirikan explains that the law is now being applied in such a broad way that people are not allowed to question government budgets and expenditure if they have any relationship with the royal family, which stifles criticism of the most basic government decision-making since there are an estimated 5,000 ongoing "royal" projects. "Article 112 of lèse-majesté could be the key (factor) in Thailand's political problems" the young activist argues.

In 2020 the Move Forward opposition party questioned royal spending paid by government departments, including nearly 3 billion baht (89,874,174 USD) from the Defense Ministry and Thai police for royal security, and 7 billion baht budgeted for royal development projects, as well as 38 planes and helicopters for the monarchy. Previously, on June 16, 2018, it was revealed that Thailand's Crown Property Bureau transferred its entire portfolio to the new King Maha Vajiralongkorn.

photo of graffiti of 112 crossed out on sidewalk

Protestors In Bangkok Call For Political Prisoner Release

Peerapon Boonyakiat/SOPA Images via ZUMA Wire

Freedom of speech at stake

"Article 112 shuts down all freedom of speech in this country", says Sirikan. "Even the political parties fear to touch the subject, so it blocks most things. This country cannot move anywhere if we still have this law."

The student activist herself was charged with lèse-majesté in September 2020, after simply citing a list of public documents that refer to royal family expenditure. Sirikan comes from a family that has faced the consequences of decades of political repression. Her grandfather, Tiang Sirikhan was a journalist and politician who openly protested against Thailand's involvement in World War II. He was accused of being a Communist and abducted in 1952. According to Sirikhan's family, he was killed by the state.

The new report was conducted by The International Federation for Human Rights (FIDH), Thai Lawyer for Human Rights (TLHR), and Internet Law Reform Dialogue (iLaw). It accuses Thai authorities of an increasingly broad interpretation of Article 112, to the point of "absurdity," including charges against people for criticizing the government's COVID-19 vaccine management, wearing crop tops, insulting the previous monarch, or quoting a United Nations statement about Article 112.

Activist in front of democracy monument in Thailand.

Shift to social media

While in the past the Article was only used against people who spoke about the royals, it's now being used as an alibi for more general political repression — which has also spurred more open campaigning to abolish it. Sirikan recounts recent cases of police charging people for spreading paint near the picture of the king during a protest, or even just for having a picture of the king as phone wallpaper.

The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them.

Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind. In October 2020, Twitter took down 926 accounts, linked to the army and the government, which promoted themselves and attacked political opposition, and this June, Google removed two Maps with pictures, names, and addresses, of more than 400 people who were accused of insulting the Thai monarchy. "They are trying to control the internet as well," Sirikan says. "They are trying to censor every content that they find a threat".

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