IHG targets China

05 January 2012

BEIJING: InterContinental Hotels Group is ramping up its focus on China, where the company will soon launch a new brand which it hopes to roll out across Asia more broadly in the future.

IHG operates hotels under seven banners – including Crowne Plaza, Holiday Inn and Candlewood – and currently runs 4,500 sites globally, with 1,200 in development.

As part of this process, the hotel owner intends to double the scale of its activities in China, India and the Middle East, tapping into rising levels of consumer wealth in these areas.

More specifically, the United Nations World Travel Organisation has suggested that China will leapfrog the US to become the world's largest hotel market in 2025.

IHG already has 160 hotels in China, making it the largest foreign player in the country, and another 140 are in development.

The new brand the firm is to unveil in China does not yet have a name, but will boast outlets in Shanghai and Beijing, as well as numerous second and third tier cities.

"We have spent quite a long time trying to understand what the domestic Chinese traveller wanted," Jan Smits, IHG's CEO for Asia, the Middle East and Africa, told Dow Jones Newswires.

"There's obviously a lot of interest in a domestically-grown brand that has got the benefit of a large international system behind it. Owners have shown significant interest."

Looking ahead, IHG plans to introduce this new brand into other Asian markets, reflecting the fact 100m Chinese consumers are likely to travel abroad in ten year's time, a fivefold increase on today's total.

"It makes a lot of sense to go to Singapore and Hong Kong and even further afield," Smits said.

Despite the contemporary trends of high inflation, fluctuating exports and an ailing real estate sector, China is still considered to represent an extremely appealing destination for hotel operators.

"The economic development of China makes it an attractive hotel development market as more hotel rooms are needed," said Konstanze Auernheimer, director of marketing and analysis at STR Global, the consultancy. "The long-term prospects are good for luxury and other hotels."

Data sourced from Dow Jones Newswires/Marketwatch; additional content by Warc staff