I heard the story of Intohotel for the first time at Hangzhou Gonghe Park one year ago.

I was suspicious in the first two minutes: is it too late to copy Ctrip now? Five minutes later, I felt encouraged: isn't this a Chinese version of American Express£¿After cooling myself down, I was suspicious again: such a complex model requires coordination of so many cooperators and is really a tough test of the execution power.

The organization structure of the company is being built, the business model is being tested, the IT system is being developed, and negotiation with strategic partners is underway¡­¡­at that time, everything about Intohotel is unknown.

One year later, nearly all stories become realities. As the first B2B travel management service provider in China, Intohotel has won more than 5000 corporate/government customers and announced recently that it has received a US$30 million from KPCB and Zero2IPO Group.

The "rise" of Intohotel seems to be very quick. Then, an interesting question is: what is the secret behind the "rise"?

Model: Beyond American Express + Ctrip

Possibly "American Express + Ctrip" may be used to explain the business model of Intohotel. American Express is the world's largest travel management service provider and third largest bank card issuer while Ctrip is China's largest individual travel service provider. The former (travel management service) adopts the "to B" model, charging service fees to the corporate customers and acts more like a management consultancy institution while the latter adopts the "to C" model, making profits from differences in the wholesale and retailing price of the hotels and airlines, and acting more like a guest room and ticket distributor.

Intohotel provides services through the American Express model but makes profits through the Ctrip model.

For the customers, the value of Intohotel lies in: 1) reducing the overall travel expenditures/expenses through collective booking of professional purchasers; 2) simplifying the travel process and reducing the travel management cost(s) through third party service outsourcing and IT platform that can be connected to the internal IT system of the enterprise(s); 3). reducing the cash advanced for travels and saving the cash flow through the travel loan service. In the end, the enterprises can improve their travel management, eliminate the loopholes in the travel process and develop a healthy enterprise culture so as to focus themselves more on their core business.

For the hotels and airlines, the value of Intohotel lies in bringing them plenty of stable business guests.

For the banks cooperating with Intohotel, the value of Intohotel lies in: 1) helping business innovation and exploring new profit growth points; 2) expanding the base of high quality card users by a large scale.

An important reason that Intohotel's business model can be recognized by different parties from the society rapidly is that the model can contribute material values to the stakeholders.

However, although a fine model is important, the fundamental reason that Intohotel can rise rapidly is that it meets the great trend of fine management of the Chinese enterprises.

Opportunity: Trend of Management Upgrade

In most of the industries of China presently, the average management level of the enterprises is at the turning point whereby the "rough era" shifts toward "fine operations".

"It is easy to make money" - this is the common exclamation of the Taiwanese entrepreneurs who first came to explore business in the Mainland. Over the past two decades, the growth rate of demands of the Chinese market far exceeded that of the productivity of the enterprises, leading to a group of "greenwood heroes" that are financially highly money-making on the basis of rough management, and the negligence of the "greenwood heroes" about "management".

However, good days seem to have gone away. Since 2005, some fundamental adverse changes have taken place to the market environment; multiple statistics and studies show that: 1) global prices of energy, mineral resources and primary products have stepped into a period of continuous rise; 2) with the implementation of the new "Labor Law", the labor cost keeps increasing irreversibly; 3) The expansion of the demands of the consumers market has entered the marginal descending stage and the output capacity is less likely to shrink, leading to deterioration of the market competition status; 4) the growth rate of market demands will be significantly lower than that of the costs of the enterprises.

Hence, it can be predicted that the entrepreneurs will face an unprecedented difficult business environment inevitably in which the profits are derived primarily from improvement in management efficiency rather than expansion of the market scale.

Fortunately, many entrepreneurs have realized the importance of improving the management level constantly. An evidencing reference is that China's management software market grew steadily in 2007, up by approximately 18.50% over the same period, and ERP software became the main management software demanded in the market. In general, the use of IT tools is the first key step for a standardized corporate management. The extent and effects in using IT tools may serve as a reference, based on which the entrepreneur¡¯s management concept and capability can be evaluated.

Find Out Dark Horse

Bad things may turn into good things and this turn implies us at least two investment opportunities: 1) enterprises obviously ahead of the competitors in terms of fine management; 2) enterprises assisting others in achieving fine management.

1. Leader of Fine Management

Difficulties give birth to heroes. Whoever first realizes the importance of improving management efficiency and has the ideal and capability to improve management and efficiency constantly will have the opportunity to win out of the increasingly radical competition. Through careful observation, we may easily find that there are many pioneers in the industries.

From the average management level, the Chinese real estate enterprises are a backward in management. However, some people have realized the importance of improving management efficiency first and drawn on the process concept and management tools of industrial control so that process management of development of real estate projects can be as accurate and controllable as in industrial manufacturing and the management cost is reduced by half.

When the understanding of most of the Chinese retailing and catering enterprises remains on the cashier system, it appears too sudden to them that Dio Coffee devotes plenty of resources to introducing the ERP system of Oracle.

The average labor cost of the catering enterprises ranges between 15% and 25%, but some people have managed to maintain it within 10% without sacrificing the service level and salaries of the employees. Furthermore, through design of the product portfolio and business model, the rental cost can be maintained far below the average rental level of the industry.

When most photographers are engrossed in ¡°personal art¡±, some persons have taken one stride in advance by establishing the standard photographing process and quality system and attempting to expand the business in other places through chain operation.

When 90% of the retailers are indulged in their small closed kingdoms, some people have turned a seemingly tiny snack food business into a franchise empire of recreational food through successful product planning and brand marketing.

When the peddlers are selling self-made drink made of aromatic essence, sweetening agent, alcohol and water to thirsty passengers on the way, some people are striving to build a nation-wide influential chain brand with delicious and healthy recreational beverage and take one stride ahead of others in standardization and expansion capability.

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2. Supporter of Fine Management

It has become common practice among the Chinese enterprises to be focused on core capabilities by outsourcing non-core business. ¡°To B¡± business resulting from enterprise consumption may be out next opportunity. Among these, service providers that may assist in achieving fine management may have particularly bright prospects.

Take Intohotel for example, when visiting its corporate customers, what the customers talk about most is not how much Intohotel has saved for the enterprises in booking hotels and tickets, but it can actually assist the enterprises in simplifying the travel management process, improving the efficiency and eliminating the loopholes in management.

In the capital market, many industries have received considerable attention recently, including group food supply, group logistics, publicity services, human resource outsourcing, call center outsourcing, financial information service, after-sales service outsourcing¡­¡­

Shiji Information Technology Co., Ltd (2153.SZ), a provider of overall hotel information system solution, accounts for more than 80% of China's five-star hotels. Its total revenue reached RMB280 million in 2007 with net profit exceeding RMB100 million. As a return, the market performance of the company since it was listed one year ago is far better than that of the stock market during the same period.

Wind Information, a financial information service provider, boasts customers covering all Chinese securities companies and fund management companies as well as 60% of the QFII institutions. After receiving the investment of Sino-Century in 2006, Wind Information has initiated the plan to get listed in the A-share market. Wind Information itself is not engaged in any research service; the biggest value that it brings to the professional researchers is that plenty of macro and industry specific economic data as well as operating data of the listed companies are presented to the users in a convenient manner so that the researchers can save the plenty of time wasted on data collection and spend it on more valuable analysis and research work.

Inxite whose main customers are also the institutions and which adopts a business model slightly different from that of Wind Information was controlled by Xinhuadu Group run by Tang Jun recently and determined to become China's Bloomberg.

The total retail sale of consumer goods reached nearly RMB9,000 billion in 2007 in China.  Analysys predicts that the total annual investment of the retail industry in IT will exceed RMB10 billion. To explore this market, Efuture (NASDAQ: EFUT) has taken the lead to get listed in the capital market and it is predicted that more enterprises will follow Efuture to get listed: enterprises specialized in high-end consumer goods, specialized in catering, hospitals, education¡­

When the entrepreneurs do not know where half of the advertisement expenses are wasted, some people have developed a direct marketing system where the advertisements can be launched accurately and can be tracked lifelong.

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Find out such an entrepreneur, and help him get success.

Pls email to emilylin@zero2ipo.com.cn for communicating with the writer