1.0 Executive Summary
The hospitality is such a key sector in developing a country’s economy. Home Inn Hotel Groups founded in 2002 has set a platform to take hospitality a notch higher throughout China. The group is headquartered in Hong Kong, China and has numerous branches across the cities. Objectively, the hotel group was founded with breaking vision to provide a new kind of lodging and hospitality experience. With skilled expertise and provision of professional services, affordable prices, location convenience and comfortable accommodation, Home Inns has managed to redefine hospitality management in China. Consequently, it has become a number preference hotel for business, corporate and leisure travels due to the courteous services. Home Inns has proceeded to develop an extensive network of the hotels which a competitive advantage and setting a predominating position in the market. As of the moment, the group has managed to spread to about 233 cities across China with a total of 1580 hotel branches under the management of Home Inn Hotel groups. Home Inns Hotel Group executive management has had a key role in contributing to the success of the company. The success of a company is dependent on the leadership management in regards to decision making and implementation of appropriate strategic measures.
2.0 Key Executives for Homeinns Hotel Group
Mr Jian Sun
Chief Executive Officer and Director
Age: 52
Mr Xiangxin Zong
President and Chief Operating Officer
Age: 52
Mr Nanpeng Shen
Co-Founder and Co-Chairman
Age: 49
Ms Xiang Rong Li
Chief Financial Officer
Age: 44
Ms Yihong Wu
Chief Strategy Officer
Age: 50
3.0 Introduction
A definitive focus to persist in expanding the business has made Home Inns remain a hotel of choice especially for the target market; the increasing number of travel consumers making their way in China for business and leisure. Its significance cannot go unnoticed as it is a core aspect of the social and economic development in the nation. A reflection on the 20th century, the accommodation and hospitality industry has witnessed radical changes due to the influence of technology and integration of corporate governance principles. Home Inns and all of its operations and facilities provided to the consumers have maintained quality and leveraging on the brand image as a competitive advantage (Cvelbar, and Dwyer 487-504).
Fronting the huge potential of the extensive market in China and global perspective amid competitors, comprehensive integration of corporate governance offers an opportunity to maximize profit margins and business expansion. Considerably, the hospitality market in China is accorded to many players but to set a difference, the group must remain innovative. Despite the prevalence competition, Home Inns has maintained to be among the top gaining a bigger portion of the market. With the present globalization, phenomenon is identified needful for enterprises to consider and integrate into their business model to succeed in the competitive environment.
Conceptualization of the global development of hotel management is the way to progressive achievement and tapping the international hotel market share. In the case of Home Inns Hotel Group, the management has established a sequence of strategic approaches to improve on the inflow and entry of new markets to take the opportunity of prospects to become prominent in the market struggle.
Financial and accounting management are the effective indicators of a successful business. However, the core objective to ensure properly is not by making just the best decision but the key is by making a good decision. Usually, financial management and organizational management thought of the same functional unit tend to have a complicated relationship, and both must be factored in to make a good decision. In such a case, the decision made through the executive management is highly subjective (Parida et al 2-33). Consequently, in the development of decision‑making, the management must conform to the corporate principles and objectives. For instance, it is the obligation of the management to make decisions on the strategic objectives to be implemented in regards to auxiliary services on offer, pricing strategy, product quality, willingness to assume the prevalent risk, and profit objective. In the development of goals and objectives, it is important that a distinction between strategic and tactical decision be defined (Yu, & Gu 171-190)). Home Inns have implemented the strategic decisions that are broad‑based, a qualitative type with much consideration achieving results that reflect the company’s aspirations and aim.
4.0 Annual Report Analysis
Following the consistent financial performance of the Home Inns Hotel Group, the total revenues continue to record an improvement of 2.6% in 2016 from 2015 financial year. The figure recorded is RMB 1,677.4 million (US$258.9 million) in the fourth quarter of 2016. During the first quarter of 2016, the total revenue had decreased by a 0.2%.The phenomenon can be explained on the basis of administration function before the 100% acquisition of the group in rejoining the cutting expenditures.
A reflection of the total leased-and-operated hotel costs the finances added up to RMB 1.35 billion (US$208.8 million) in the fourth quarter of 2015. This figure represents 96.5% of the leased-and-operated hotel revenues, in comparison to 93.3% in the same duration. To fully understand the financial performance and the profit margin the operating expenditures of the company is factored in. The expenditure costs account for room and house-keeping expenses, labour force, dirty washing, and human resource and front-desk workforce. Other inclusive expenditures are beverages and food items. The remissions for rent, repairs and maintenance, indemnity and asset taxes are also included
5.0 Integration of Corporate Governance Principles
Corporate governance is a set of relationships between firm’s management, its board of members, its shareholders and all its stakeholders (OECD). Effective governance provides a platform through which objectives of a firm are set, outlining the means to meet the set objectives, and monitoring the performance of the entity (Council). The company in question have displayed good corporate governance to take it to the next level thus it has made in the hospitality industry. Though being in business for a short time and make a bust in China, Home Inns Hotel Group has managed to expand its boundaries across cities.
5.1 Principle 1: Lay solid foundations for management and oversight
Corporate governance is essential for every organization. Internal governance is, however, critical to ensure the effectiveness of the organization processes in which the firms control from within all its proceedings. This monitoring system comprises of ownership concentration, a board of directors and executive compensation.
5.2 Principle 2: Structure the board to add value
A Board of Directors in an organization works on behalf of the owners’ interest. Primarily, the board is responsible for monitoring and controlling the organizational management and the top executives. The board has powers to reward and punish managers, focus on protecting the owners’ from managerial opportunism to ensure profitability.
5.3 Principle 3: Act ethically and responsibly
On recommendation, corporate ought to incorporate Stakeholder Management and Ethical Behavior in their internal governance mechanism. The questions of ethics are evidently administered in the case of Home Inns Hotel Group to maintain quality standards and creating a brand for itself. It is a critical aspect of an organization in projecting how the business society perceives the enterprise.
Managing the interaction between stakeholders, executive management, and the workforce is also very essential to the success of a firm. The Home Inns has formulated a code of ethics in the corporate which manifests attitudes more especially to the workforces who look up to their leaders for followership and seek guidance. As such, values become a primary concern for an organization, an issue the executives need to recognize.
5.4 Principle 4: Safeguard integrity in corporate reporting
Corporate reporting is an aspect to help build trust among the stakeholders as a show of transparency. This is an inference to issuance and submission of correct financial statements. It reflects the adequacy of the entity’s to display the true view and financial position of the company which could translate to luring potential investors.
5.5 Principle 5: Make timely and balanced disclosure
Organizational policy development is a process which involves comprehensive engagement. Therefore, to accord an attitude of responsibility to help in successful enforcement, the disclosure is important. Disclosure of policies extends even to the human resource in regards to vetting and process authorization (Frolick, and Ariyachandra, 2006). It must be balanced and expressed precisely to clarify the objective to the investors in a factual manner so as to influence their investment decisions. Seemingly, Home Inns have applied the principle successfully thus the ability to expand its business across the cities without financial constraints.
5.6 Principle 6: Respect the rights of security holders
Ownership concentration defines the effect of diffused proprietorship of shareholder value and their ability to monitor the organizational management effectively for coordination purposes and maximizes the productivity to increase the enterprise’s worth. The governance mechanism outlines the number of large shareholders block. In an organization, large-block of investors is usually focused on profitability and is critical in influencing strategic choice.
5.7 Principle 7: Recognize and manage risk
In any business, risks are involved. The management especially in a sensitive industry as such that Home Inns operates must appreciate a willingness to assume risks. Sufficiently, and amid strong competition and poor workforce relationship, Home Inns have managed the situations adequately through the application of a sound and effective risk management framework (Edwards, and Ewen, 1996).
5.8 Principle 8: Remunerate fairly and responsibly
Executive compensation is a mechanism seeking to align pay-on-performance principle. The mechanisms aim to fulfil the executives’ interests through salaries, stock options, and long-term incentives to ensure total productivity for better returns (Cvelbar, L.K. and Dwyer, L., 2013, 490). Currently, in China, scrutiny of compensation programs has been intense lately though it is agreeable there is no correct approach or formula to determine the deserved compensation.
China-based corporations ought to go a step further in complying with the EEO legislation to ensure an all-inclusive and create global organization. Incorporating virtual teams in provides a platform for diversification and inclusion facilitate ethical decision making.
6.0 Conclusion and Recommendations
Appreciating the dynamics of a business environment in the 21st century will help to improve on the objective of business expansion. The world is slowly adopting the globalization concept; therefore Home Inns needs to incorporate the economic knowledge to seize the opportunity of the rapidly growing wave (Council, 2007 n.p). Utilizing the brand name to explore the global human resources management will lay a solid foundation expansion. As a result, it would lead to promotion workforce and progress organizational performance.
Considering that the business is existing at a critical time, facing the opportunity and threat will develop the resolve to approach with determination to solve the problems prevalent in the management. The objective is to prompt competition advantage and enlarge its market share, in the determination of future prospects. In the case of Home Inns Hotel Group, the firm assets and liabilities rate must be utilized to achieve equity proliferation towards attaining the attention of tax shelters. It will help the management to adequately weigh the eventual results (Feng, Wang & Huang, 869-883).
Proper strategic measures boost the organizational performance and as a result prompt the retaining of a top position in the hospitality sector. Home Inns through the executive management has made steadfast improvement in regards to offering deals, a reasonable stock price and overall efficacy. The approach has prompted the pronunciation of ordinate element the Industry Analysis, Company Analysis, corporate governance and recommendations for Home Inns Hotel Group. The hotel group through its performance record attests to the position of the fastest growing groups in the hospitality industry. Through the able leadership of the executive management, the hotel group will continue to outshine the major competitors in China hospitality industry.
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