How Big Can a Literary Youth's Hotel Business Get?

Huajiantang, which began as an inn in Lijiang, now has 17 locations across China. Its hotels are not cheap, and not always the most comfortable, but guests find in them a certain "petit-bourgeois charm."

If you heard of Lijiang before 2009, chances are you heard it from a literary youth. In those years they could not stop talking about this ancient town in southwest China. But you could just as easily have heard it from a businessperson. Business people saw the opportunity at the same time, and some rented old houses in the town and turned them into inns. Zhang Bei had just graduated from CEIBS (China Europe International Business School) when she noticed this on holiday at Lion Hill in Lijiang's Dayan Old Town. Halfway up the hill, someone had opened a proper inn that offered a way of life "long lost in the city": reading, playing chess, wandering the residential lanes to buy vegetables. Locals ran many of the shops in the old town, and they all knew one another.

Not long after the trip, Zhang Bei went into the inn business in Lijiang herself. She renovated several old courtyard compounds and opened a boutique hotel called Huajiantang. By last October the brand had 17 locations across the country: 9 in Lijiang and 8 in well-known destinations such as Shangri-La, Zhouzhuang, Suzhou, Xixi, Langzhong, Wuxi and Tongli.

Zhang Bei was invited to speak at YHPS, an industry forum that drew a large crowd of hotel managers. The founder, a former radio host, looked more confident than most of the room. "Sometimes I tell people I run a farmhouse inn," she said, "because Huajiantang is a hotel that looks nothing like a hotel." This "farmhouse inn" is not cheap: rooms start at more than 600 yuan a night, and family rooms cost twice that.

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The first Huajiantang opened in April 2009 in the old house of the He family, a Naxi family of traditional Chinese medicine doctors. It had 16 rooms and charged about 600 yuan a night, which made it the most expensive inn in Lijiang's old town at the time. Lijiang's hotels then came in roughly two types: ordinary inns at about 100 to 200 yuan, and high-end boutique hotels of five-star level or above, led by Banyan Tree, which usually stood outside the old town.

When Zhang Bei found the He family compound, a courtyard big enough to house seven families, she resolved to turn it into a "cultural project." She brought in designers from Shanghai to renovate the house, and they studied Lijiang's climate, local produce and the layout of its waterways.

Lijiang is also known for what people call "proprietress culture." The old town was once fairly closed off, and inn owners who had lived there for years knew everything about it. If they were willing to point visitors to authentic snacks and shortcuts to nearby sights, everything became easier. Huajiantang adopted this model. Its managers are called "tangzhu" (hall masters). Besides running the inn, they plant flowers in the courtyard and lead guests in handicrafts, tea brewing, talks and bonfire parties. These side activities later became the model for the brand's own restaurants, book bars and other in-house businesses.

Huajiantang "Zhimeng" (Dream Planting) in Lijiang

At first Huajiantang was where Zhang Bei's CEIBS classmates got together, and they were its earliest and most active loyal customers. But soon more guests willing to spend money arrived. Two years after the first inn opened, Huajiantang opened a second in Lijiang, and by 2013 there were 9 Huajiantang inns across Lijiang's Dayan and Shuhe old towns, about 10 minutes' walk from one another. Zhang Bei and her team call this "cluster-style development": nearly 200 rooms, the size of one hotel, scattered across the old towns.

Li Meng, senior vice president of the hotel and real estate investment advisory department at JLL, believes Huajiantang entered the market at just the right time. It has the traits of a boutique hotel, with an eye for design and attention to service, but costs less than a luxury hotel. It filled a gap: people wanted hotels with some cultural depth at fairly ordinary prices. And with economic growth slowing and luxury spending curbed, mid-range hotels had a bigger opening.

Zhang Bei once drew a price pyramid that bore this out: 1,000 yuan at the top, 100 yuan at the bottom, and Huajiantang taking the slice between 600 and 800 yuan. But next to hotels at the same price, the Lijiang Huajiantang inns fall clearly short on facilities. Users on online travel sites keep pointing out that some rooms have no windows and no air conditioning, and that the soundproofing is poor.

Zhang Bei prefers to stress the other side: "Huajiantang is the place in Lijiang where you're most likely to find a romantic encounter." Her guests agree. A Weibo user called "Tu Xiaodou by the Window" Photoshopped pictures of Huajiantang into a single image and summed up his feelings in four characters: "petit-bourgeois charm." He is not the only one. The literary mood and romance of Lijiang's old town find their fullest expression at Huajiantang. The names alone tell you as much: Zhimeng (Dream Planting), Qingchen (Green Dust), Tinghe (Listening to Lotus), Wenyun Villa (Asking the Clouds).

All these inns are rented local courtyard houses in a highly uniform Lijiang style, but Huajiantang gave each one its own character, drawn from the history and setting of the house. "Yinquan" (Hidden Spring), for instance, is named for the Lion's Milk Spring of Lion Hill in its courtyard; halfway up the hill, it overlooks the whole old town. "Bianzhi Renjia" (Weavers' Home) plays on its location on the route between Lijiang Garden and the Dongba Paper Workshop, and is furnished with traditional Naxi antique furniture, looms and handwoven goods. Even "Yichi," which has little to set it apart, gained a distinction by hosting a teaching site of the "Manager Academy."

"After all, it's an inn, so you can't judge it by hotel standards for facilities," wrote a user called "Danchasisi" on Trip.com Group's travel site. She recommended one of Huajiantang's Lijiang inns, but attached a clear caveat.

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If Huajiantang now seems like more than an inn, the credit goes to Zhang Bei, who quickly realized that the Lijiang model could be copied elsewhere, in East and Southwest China. Li Meng thinks this was a good choice, since these places, like Lijiang, have plenty of cultural resources to draw on. "The brand will certainly have to leave Lijiang to grow." But she added: "When the market is different, and the customers and their spending habits are different, that is a big challenge for the brand."

In April 2012 the Zhouzhuang Huajiantang opened, followed by locations in central Suzhou, Xixi, Wuxi and Tongli. In August 2014 an inn called "Langyuan" opened in the ancient town of Langzhong in Sichuan. Apart from the ones at Xixi Wetland and Wuxi's Yangshan, these also rent old courtyard houses with about 20 rooms each and keep the courtyard form. The operating model is similar too: in the fairly enclosed setting of an ancient town or scenic area, "tangzhu" take guests out to eat, drink and have fun.

But the copies departed a good deal from the Lijiang original. The 7 branches are spread across 6 places, mostly one to a place, rather than clustered together as in Lijiang. The design also dropped Lijiang's bright colors entirely and adapted to local conditions.

Jiangsu and Zhejiang were already wealthy, with no shortage of heavily funded guesthouses, and travelers there had plenty of choice. Huajiantang was entering a more competitive market where opening a property cost more, and Zhang Bei's team seemed cautious about where to go. In Suzhou they built "Tanhua Fu" (Mansion of the Third-Place Scholar) one street away from the Lion Grove Garden. It is built around garden culture, with rockeries and stone forests in the courtyard and a lobby furnished in antique-style traditional Chinese furniture. The Tongli Huajiantang occupies the former Lize Girls' School from the Republican era, where guests can sample the culture of that period.

Zhang Bei began to describe Huajiantang with a broader label, "aesthetic humanistic hotel." She hired different designers in different places, who chose different themes for their hotels and furnished them with different objects. Huajiantang's fans are called "Huafen" (flower fans), and this was surely the best test of their loyalty. Every day the brand's official Weibo account reposts guests' praise. After staying at the Wuxi Huajiantang, a traveler who goes by "Hepburn LXC" on Weibo wrote a poem: "Jiangnan is fair, late autumn among the flowers. Garden light slants, carrying an ancient air; screens and curtains half-drawn, the sparse windows closed. In the pavilion, footsteps echo long." Another guest, after visiting the Hangzhou and Suzhou locations, said: "I'm determined to stay at every Huajiantang!"

The fresh approach won people over. According to 2015 figures from Huajiantang, average occupancy in Suzhou and Hangzhou was 80% and 90% respectively, both higher than Lijiang's 75%.

In the new Huajiantang hotels you will also find some hotel-related brands: Jugeng (Bellflower) Restaurant, Huixiang Xiaochu (Fennel Kitchen), Duoduo's Breadfruit Tree, Huakai Cinema and Ziyu Library. In practice these are a restaurant, a screening room and a reading room. Huajiantang is relying less on scenic spots. It now speaks of being "a destination within a destination": the hotel itself becomes the reason to travel, and the sights become add-ons to the hotel. This is the kind of leisure that upscale resorts usually sell.

Huajiantang "Jixiang" in Zhouzhuang

Huajiantang "Tanhua Fu" in Suzhou

"Duoduo's Breadfruit Tree" in Langzhong

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The Xixi Wetland branch, which opened in May 2014, is one example. Its lead architect, Fang Qinzheng, director of the Shanghai office of the French architecture firm Nasso, had taken part in design discussions for the Zhouzhuang Huajiantang two years earlier. "Back then it felt like a completely new experiment. Converting old houses is very hard, and we talked a lot about how guests would play there, rather than what style to give the interiors."

The Xixi Huajiantang ended up very different from the earlier ones. It is a resort covering 7,200 square meters with 66 rooms. The buildings are not converted old houses; they were adapted from part of the premises of the Xixi Wetland administrative committee in Yuhang District. The cultural content is lighter, and the hotel leans instead on its scenic setting and stronger design. In 2015 it took second place in Wallpaper's Best City Hotel awards (Aman Tokyo came first), and it had already had its moment as an online sensation.

The idea might have been realized earlier in Zhouzhuang, but Zhang Bei's team did not then have the budget Fang Qinzheng had hoped for. Over the next two years Huajiantang raised money from Vision Knight Capital, Guotai Junan and other investors, and made plans to go public. Only after it secured a larger site at Xixi in Hangzhou did Fang Qinzheng sign on to the Xixi Wetland project.

Zhang Bei sees this resort-like hotel as an exploration. "We are searching for the true form of the product. Xixi is our first attempt to grow from small, single-building guesthouses into a village-style development. We gave it a definition: going from a life that is meaningful to a life that is interesting."

It is hard to say what real difference those two words make to Huajiantang's development. But at the Xixi resort, "interesting" takes concrete form. To suit the wetland landscape, the hotel kept the wetland plants and deliberately cultivated a "wild" feel. The weed-covered ground is in fact carefully arranged, with wooden boardwalks running over it. The landscaping, the hotel's signature feature, was done by the American landscape designer Donald Sharp, brought in specially for the job.

The hotel spreads over a large area. Most buildings are one or two stories, with sloping roofs of gray tiles, like courtyard houses. The walls use a great deal of floor-to-ceiling glass to let sunlight in, which makes the spaces feel open and airy. The hotel holds several public areas, including the Maokong Bookstore, a spa and a swimming pool, while the guest quarters are not large. Rooms are often suites with a sitting room and a small courtyard, all open for guests to move around freely, which makes for a relaxed atmosphere. Some rooms even allow pets.

Besides the rooms, Fang Qinzheng also designed what guests do in them. The rooms have no ready-made furniture, for example; guests choose their own and can move it around as they like. The bedside tables have a space made specially for books, a hint that guests should read a little, use their phones less and unwind. Zhang Bei once regretted that the railings were set too far apart, but the gaps became a spot where guests stick their feet out while they read.

The value the architecture adds is especially clear: the place has become a favorite photo-shoot location for Taobao shops. As word spread, it also became a backdrop for wedding photos. Huajiantang turned this into a new line of business, converting the second-floor meeting room into a wedding hall.

This hotel business, which first made its name on literary charm, has won over more and more people. Many guesthouses have opened lately in Hangzhou and the wider Jiangsu-Zhejiang region (more than 200 in the West Lake scenic area alone), and they too promise "a life that is interesting." Yet Xixi Wetland is still the Huajiantang hotel with the highest occupancy rate.

Huajiantang at Xixi Wetland

Bamboo house

Infinity pool

Restaurant

Spa

Lobby

Suite

Guest room

Guest room

Zhang Bei says Huajiantang will soon open resorts like the Xixi Wetland one in Changxing and Anji, in Huzhou, as part of a "Jiangnan cluster" plan. Many people know little about these places, but they are more rustic and unspoiled, and could offer the kind of rural experiences that variety shows have recently made popular. They are all part of Huajiantang's short-haul plan: "The rule is that they can be reached within a 3-hour drive from densely populated areas, whether it's a tourist area or natural scenery."

Investors naturally want the business to grow as fast as possible. In November 2015 Huajiantang also opened a retail store, "Huajian Market," in Eslite in Suzhou, selling Lijiang-style clothing and the literary knickknacks found in its hotels. Chen Peixin, the brand's director, told QDaily that the hotel brand will do more retail collaborations with designers in the future to extend its reach beyond the hotels.

Back to the hotel business itself. Huajiantang's personalized service and design have helped it draw a customer base well beyond Lijiang's literary youth, but in the future they may also become a challenge for this small company. "Standardized hotel design and service mean lower costs. Personalized service and distinctive design, on the other hand, demand a lot in cost and management," Li Meng said.