Sanya Huayu Tourism Co., Ltd. ("Huayu") has officially started legal proceedings against InterContinental Hotels Group Holiday Hotel (China) Co., Ltd. ("InterContinental Holiday China or InterContinental") for economic losses caused to Huayu due to the latter's failure to fulfill its contractual hotel management obligations and dishonest behaviors. Huayu claims that it suffered more than RMB 200 million in economic losses during the 6 years when InterContinental Holiday China was in charge of Sanya Huayu Crowne Plaza Hotel.
In 2009, InterContinental Holiday China and Huayu appointed a third party auditing company to inventory the assets at the Sanya Crowne Plaza Hotel and found losses up to RMB 5.02 million. Major asset pieces such as red sandalwood furniture, banquet dining cars were found missing. In 2011, Huayu Group discovered that a large refrigeration unit worth RMB 3 million at the hotel was seriously damaged by the low-quality refrigerant used by InterContinental Holiday China and had to be discarded as a result. In the same year, the general manager of the hotel even forbade any repair application of over RMB 10,000. Instead, the hotel simply waited for its assets to deteriorate and then asked the owner to replace them with new equipment (in order not to increase its management expenses). Due to lack of basic maintenance and repair, a RMB 435,000 cooling tower with an expected service life of 20 years had to be discarded after 5 years of use.
Li Tao, Head of Hotel Businesses at Huayu Group, pointed out that during the term of entrusted management, InterContinental Holiday China failed to provide professional hotel management services in accordance with the contract. InterContinental Holiday China, the management company, the sole manager of the hotel with absolute power, was mandated with the following main responsibilities: to decide on the various policies and rules of the hotel, handle the personnel matters of the hotel, select suppliers and procure hotel equipment’s and operation goods, employ the general manager, financial manager, residential manager and other main management personnel, select and train hotel staff, and perform other relevant hotel management responsibilities. Entrusted with these important management responsibilities, InterContinental Holiday China should have dutifully handled the entrusted matters, provides professional management services of an international five-star hotel, boosted hotel business and truthfully reports hotel operation status to Huayu. The management team of InterContinental Holiday China fell far below Huayu’s expectations and its management of the hotel was a complete mess. By all criteria, the management has failed to display the level of professional hotel management which it claimed to possess.
Li Tao noted that in addition to tangible assets, InterContinental Holiday China has caused inestimable losses to Huayu’s customer resources and other intangible assets. While InterContinental Holiday China was in charge of management at the hotel, customers who made reservations through the InterContinental Holiday China’s booking system made up some 2% of all the guests at the hotel. But, InterContinental Holiday China kept all the customer information as its own and took such information away when it left the hotel. Because InterContinental Holiday China long controlled the guest room booking system, customers had to use the system and could not make direct contact with the hotel owner. When it departed, InterContinental Holiday China also took away the customer resources which Huayu had long accumulated.
Trust and honesty are the cornerstone for all enterprises to survive and thrive. A series of dishonest behaviors by InterContinental Holiday China, includes high- price procurements (higher than normal market prices), intentionally concealing information, alteration of hotel RGI data, and deliberately cause damage and losses of large equipment’s. The management team of InterContinental Holiday China have seriously harmed InterContinental’s reputation as an internationally-known hotel management company and forced the hotel owner, Huayu to suspend the contract. The dishonest conduct of InterContinental Holiday China, a representative of internationally-known brands, has resulted in the mistrust of all international brands by local customers and businesses.

About Sanya Huayu Tourism Co Ltd
Sanya Huayu Tourism Co., Ltd. is a subsidiary of Shanxi Huayu Group. The company was established in September 2001, with more than 2,000 employees. Yalong Bay Huayu Holiday Hotel, Yalong Bay Flowers Valley Business Center, Yalong Bay Guest House and Qiongzhong Changxing Ecological Industry Base, etc are projects that have been completed or under construction by the company. Yalong Bay Huayu Holiday Hotel has a total construction area of 80,000 square meters, nearly 600 rooms and the largest and highest-standard international conference center in Sanya. With full business facilities and meeting services, Yalong Bay Huayu Holiday Hotel has become one of the best destinations for business conferences and tourism.
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