China's Sunmei Group Pivots from Scale to Brand, CEO Prioritizes Market Segments Over IPO

Sunmei Digital Intelligence Hotel Group, a dominant force in China's smaller-city hotel market, is fundamentally shifting its strategy from rapid expansion to brand-centric growth, prioritizing consumer preference in niche segments over sheer hotel count, according to founder and CEO Ma Yingyao in a recent interview with Time Finance.

Known as the "King of County-level Cities," Sunmei grew to 4,300 hotels across 1,884 districts by focusing on underserved markets. However, Ma stated the era of growth through sheer volume is over in China's saturated hospitality sector, where nearly 60% of non-chain hotels face customer loss and profit pressure, according to the China Hotel Association.

A Strategic Shift from Scale to Scene

The company's new focus is on becoming the "user's first choice" within specific market segments, or "scenes," rather than competing broadly on price. Ma explained that the key question has shifted from "how many more hotels can we open?" to "why do consumers choose you?" This has led to a strategic pruning of the company's portfolio to strengthen its core brands.

"We would rather reduce a thousand hotels... to become the user's first choice in three to four segments," Ma said, adding that executive performance is now tied to brand-building metrics. Instead of classifying the market by price tiers, Sunmei is targeting consumer needs like esports, social travel, and short-term resort stays with dedicated brands like its Leishen E-sports Hotel.

Partnering and Investing in a Saturated Market

A cornerstone of this strategy is a deepened partnership with global hospitality giant Accor. Sunmei is introducing several Accor brands to China to target distinct consumer profiles:

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• Mövenpick by Accor: High-end resorts
• The Sebel by Accor: High-end hotels and serviced apartments
• JO&JOE by Accor: Mid-range lifestyle and social-focused hotels
• greet by Accor: Mid-range light-resort hotels

Counter to the industry's asset-light trend, Sunmei is also investing in 100 directly-operated hotels in key cities. Ma justified the move by pointing to more favorable real estate conditions, noting that prime property rents have fallen by as much as half, increasing the potential return on investment. As an example, he cited the Shanghai People's Square Mövenpick, which has maintained an average occupancy rate above 92% since its opening.

Global Ambitions and a Patient Approach to IPO

Sunmei is also expanding its own brands, like Shangkeyou, into international markets, initially focusing on Southeast Asia and the Middle East. Ma views this, along with the Accor partnership, as a step toward becoming a global, multi-brand operator akin to Marriott or Hilton.

Regarding a potential public listing, Ma stated the company is not in a hurry. He emphasized that the current priority is establishing strong brand equity and operational excellence across its portfolio. An IPO, he believes, will be a natural consequence of building long-term, stable value, a characteristic of the world's most successful century-old hotel groups.