9 Employees Managing 149 Guest Rooms, Ready for IPO: How Can Domestic Hotel Management Learn from This?

What are the market benefits behind small companies going public with AI?

Text | Jiu Guan Finance

First, a disclaimer: today’s article is definitely not clickbait. After reading this company’s prospectus, Lao Sha was truly stunned:

The entire company has only 9 employees, with 4 in management;

They own 5 apartments, offering 149 rooms;

And now, they are preparing to go public on the U.S. stock market!

Honestly, Lao Sha was a bit confused at first, but then he started to think:

If they can do it, maybe I can also set up a company to go public? After all, the two hotels I manage each have over 150 rooms.

So, what’s so special about this company? And how can we learn from it?

Hong Kong Student Dormitory Company Plans to List in the U.S.

Getting a company listed is probably a dream many colleagues share. But this dream is somewhat ambitious.

However, after seeing the prospectus of Hui Shenghuo, Lao Sha felt, “Maybe I can do it too.”

Hui Shenghuo’s full name is “Student Living EduVation,” a Hong Kong-based provider of student accommodation and educational consulting referral services.

In simple terms, they provide dormitory services for students coming to Hong Kong for further studies.

The prospectus shows that Hui Shenghuo has 5 dormitories in Hong Kong, totaling 149 rooms. These dorms are located near major universities and student communities, such as City University of Hong Kong, Hong Kong Polytechnic University, City University of Hong Kong, and the University of Hong Kong.

Lao Sha was genuinely surprised:

5 dormitories? 149 rooms?

Isn’t that just like opening a few small inns in a university town?

Can this really get listed on Nasdaq?

The business model of this company is basically “dorms + educational consulting.”

For example, students studying in Hong Kong can rent dorms from them and also receive educational consulting services through their partners.

Compared to other external housing agencies, Hui Shenghuo’s dorms are closer to universities, offer good services, and are all leased as entire buildings under unified management.

Lao Sha checked, and their dorms have Wi-Fi, public laundry rooms, CCTV systems, rooftop lounges; shared rooms include kitchens, microwaves, refrigerators, etc.

Honestly, Lao Sha didn’t see anything particularly special about these amenities. In mainland China’s long-term hotel and flexible stay hotel brands, these are probably standard features.

In terms of revenue scale, for fiscal year 2024, revenue is $790,000 with a loss of $110,000; for fiscal year 2025, revenue is $2.47 million with a net profit of $750,000.

Organizationally, Hui Shenghuo has 9 employees: 4 in management, 1 sales staff, 2 operations, and 2 administrative staff.

In any case, from any perspective, this is not a large enterprise.

However, behind Hui Shenghuo is a huge benefit from the accommodation industry: the benefits of studying abroad from mainland China to Hong Kong.

It’s worth noting that 95% of Hui Shenghuo’s customers are from mainland China.

The data listed in their prospectus shows that in the 2023/24 academic year, the success rate for local Hong Kong student accommodation applications was only 65%, while for non-local students it was 80%.

[Source: Prospectus]

Additionally, in the 2024/25 academic year, the average student bed ratio at Hong Kong’s eight major universities was 2.55:1, indicating a severe shortage of student dorms.

This shortage has resulted in over 62,500 students unable to get on-campus housing, reflecting an extreme scarcity of student dorm resources in Hong Kong.

Moreover, their business model is quite clever—beyond accommodation, they expand into educational consulting, and the two businesses can complement and convert each other.

The prospectus states that revenue from accommodation services accounts for 60%, while educational consulting has risen to 30%. The two major businesses are entering a healthy, mutually reinforcing stage.

Is Student Dormitory Business a Good Business?

It’s clear that if Hui Shenghuo can list on Nasdaq, it will become the “First Stock of Student Dormitory Apartments.”

But for hotel industry practitioners, is student dormitory a good business?

Let’s focus on Hui Shenghuo and the Hong Kong market.

Hui Shenghuo emphasizes in their prospectus that the Hong Kong student dormitory market is highly fragmented and fiercely competitive.

Competitors include other dorm operators, private landlords, real estate agents, online rental platforms, etc.

Furthermore, the student dormitory business in Hong Kong is more affected by policies.

If Hong Kong narrows admission quotas for mainland students, Hui Shenghuo’s main customer base will also face contraction.

And, student dorms generally have no repeat customers. Hui Shenghuo must constantly find ways to attract new students.

According to their plans, the funds raised from listing will be used for “expanding into Southeast Asian markets” and “developing student apartment and dorm management systems.”

This is also to diversify risks associated with market concentration.

Lao Sha believes Hui Shenghuo should seriously explore the markets of university towns across mainland China, as there are more students there. Many university towns are densely populated with students.

But there’s a very practical issue: having students doesn’t necessarily mean there’s a market for student dorms.

Hui Shenghuo disclosed the market capacity of Hong Kong student dorms.

According to MIGO reports, the Hong Kong student apartment rental market is experiencing rapid expansion, with the total market size expected to grow from HKD 480 million (about USD 61.5 million) in 2020 to HKD 5.7 billion (about USD 731.4 million) by 2030, with a compound annual growth rate close to 24%.

This significant growth is mainly due to ongoing shortages of university campus dorms, increasing numbers of local and international students, and the rise of modern private student apartments offering facilities and flexible leasing options.

As of 2024, occupancy rates for Hong Kong student apartments are as high as 95-100%, with monthly rents ranging from HKD 6,000 (about USD 767) to HKD 15,000 (about USD 1,917).

[Source: Prospectus]

Just looking at the occupancy rate and rent, Lao Sha is quite tempted.

But is this business easy to copy in mainland China? How should mainland competitors learn from it?

Lao Sha has a basic judgment:

The market capacity for student dorms at mainland universities exists but is relatively dispersed.

Industry experts expect that around 2032, the number of university students in mainland China will peak, with the higher education age population reaching 89 million.

However, university dorms are still insufficient.

In recent years, “not enough dorms” has even trended on social media. “No accommodation provided” has become the attitude of many universities toward master’s students, especially professional master’s students.

Many schools have also implemented “4 to 6” reforms, sparking complaints among students.

[Source: Xiaohongshu]

Additionally, many students are dissatisfied with the hardware conditions of university dorms.

The Soft Science China University Student Satisfaction Survey over three years shows that “comfortable dorm conditions” received high attention from undergraduates, with over 67% concern.

However, only about 50% of university students nationwide expressed satisfaction with their campus dorms.

On one hand, dorms are insufficient; on the other, they are unsatisfactory. These market opportunities are right there!

How to Succeed in Student Dorm Business?

Converting existing hotels into apartments is already very common in the domestic market.

But converting hotels into school dorms is still a new concept.

There are several issues to be cautious about.

One is compliance. Hotels and university dorms differ in fire safety, housing use, and other regulations. Investors need to understand these regulations thoroughly.

Another is policy-related.

Investors need to understand national policies on university admissions, especially policy adjustments regarding graduate education.

Many student groups without accommodation are mostly graduate students. Therefore, major policy directions are the foundation of the student dorm business.

Lao Sha believes that after clarifying these two issues, it makes more sense to consider entering the student dorm business.

To succeed, focus on these aspects:

First, location.

Students’ activity radius mainly includes campus and dorms. Being close to the university is the core competitive advantage.

[Source: Xiaohongshu @Hong Kong Expat Senior]

Second, balancing housing prices and costs.

University dorms differ from hotel clientele. They have strong seasonality and stability, with clear windows for attracting customers.

Also, students’ ability to pay for dorms is limited. Investment and returns must be carefully calculated.

Third, operating model.

Lao Sha believes that compared to leasing, self-operated models might be more competitive.

Partnering with universities for dorm operations offers stability. Investors can hire professional management teams.

Lao Sha thinks these teams should have customer acquisition, service, and secondary sales capabilities beyond just accommodation.

If they can effectively target the university student demographic, student dorms could become more diverse and multi-dimensional.

Any brand targeting young people as main customers has the potential to develop specific business relationships with them.

Perhaps in the future, the real profit in student dorm business won’t be in the “dorms” themselves, but in the “students.”