The Research On Financial Performance Of "Sale-leaseback" Asset-light Business Model Implemented By Huatian Hotel

The development of modern economy has brought the booming of tourismindustry, which also promoted the rapid development of hotel industry. At the sametime, the domestic hotel industry also began to present a rapid developmentmomentum with the rapid development of China’s economy, which resulted inincreasingly fierce competition in the field. Faced with such a tough competitiveenvironment, enterprises in hotel industry must think the important issue that how toachieve stable, high-speed, long-lasting development of their own. Nowadays, thetraditional development model cannot help companies win a favorable position in themarket, asset-light business model has gradually replaced the old competitive strategy.It has become the basis of sustainable competitive advantages. Therefore, in order tomaintain a dominant position in the competitive hotel market, the domestic hotelsneed to learn from successful experiences of western hotels, one way of which is toinnovate the company’s business model. Huatian Hotel is one of the representativeswho has innovated his own business model to asset-light strategy.This paper takes Huatian Hotel as the research case. Firstly, this paper introducesthe entire implementation process of “sale-leaseback” asset-light business model inHuatian Hotel, then we analyzes the reasons for the implementation of asset-lightbusiness model as well as its feasibility. Secondly, this paper analyzes and evaluatesthe financial performance of Huatian Hotel by using methods of financial indicatorsand EVA evaluation system. By analyzing the financial indicators in profitability,solvency, operation capability and development capability, we find that “sale-leaseback”strategy can help the company improve profitability and promote its development.However, it proves that the strategy does create value for shareholders by calculatingthe EVA of the company. Finally, we will discuss the potential problems brought bythe asset-light strategy. Meanwhile, we offer a few suggestions to improve theasset-light business model for Huatian Hotel from the perspective of financialmanagement and development strategy. We hope these measures can promote thelong-term development of the company.