(Yicai Global) June 21 -- InterContinental Hotels Group will accelerate expansion of its hotel chains in China as the British multinational hospitality company plans to open hundreds of more hotels in the country, IHG senior executives told Yicai Global in an exclusive interview.
The Denham-based hotel group, which has thousands of hotels all around the world, is currently in the preparatory process to open at least 300 more hotels in China, which means that in the next three to five years, the number of hotels run by IHG in the world's most populous country will nearly double, Kent Sun, chief development officer of IHG China revealed during the interview.
At present, IHG operates more than 330 hotels in the Chinese market. The group's mid-range brand Holiday Inn Express will be the core of new hotel projects. The firm hopes to build the brand into IHG's "Starbucks," said Sun.
In the five years through 2017, the hotel sector in China has been growing nearly 10 percent on average to an estimated about USD65 billion, said an industry report. Foreign enterprises, which hold a dominant position in the high-end market, have recently shifted their focus on the lower-star rated segments. Many foreign hotel management companies have started developing four- and three-star hotels to capture a larger spectrum of customers and strengthen market positions, the report added.
"IHG previously focused more on high-end hotel market in China. However, with the rise of business travel and younger generation leisure travel market in recent years, mid-range hotels have begun to attract attention," Sun told Yicai Global. "Against such a backdrop, we plan to substantially expand the Holiday Inn Express brand in the midmarket. About 50 percent of the new hotels will open under the Holiday Inn Express brand."
Relatively blank mid-range hotel market in the past has now been favored by many hoteliers. Hospitality firms such as Shanghai-based Huazhu Hotel Group, French multinational hospitality company Accor and global brand Hilton Hotels & Resorts are currently expanding their mid-range hotels. Among them, international hotel giants such as Accor and Hilton have partnered with local companies such as Huazhu and Plateno Group to expand the mid-range hotel market, Yicai Global learned.
Sun said that Holiday Inn Express will adopt a franchise model to accelerate expansion, Sun added. However, to ensure quality, it will not work with local agencies for the time being. IHG will directly run the model itself.
"IHG pays great attention to the development of localization. About half of the executives in IHG China are Chinese. More than 70 percent of the general managers of the more than 330 hotels in operation now are also Chinese. Therefore, we can rely on our own capabilities and localization strategies to develop new hotels in the Chinese market," he added.
"Moreover, we did not introduce venture capital, so we will not expand blindly. For unsuitable projects, we will not develop unsuitable projects to reduce risks. We may end up signing only one out of 10 projects we may examine. At present, 42 percent of our hotel owners are mature partners with more than two hotel cooperation projects with IHG," Sun told Yicai Global.
Apart from Holiday Inn Express, IHG's other brands also have expansion plans.
"China is one of IHG's fastest-growing markets in the world and is also the focus of our global strategic layout. In November, the group authorized its Crowne Plaza brand franchise in China," Jolyon Bulley, chief executive officer of IHG China, told Yicai Global.
However, the issue of talent shortage may complicate the opening of more new hotels. To tackle this problem, the company will train and promote talents from its existing hotels to create a general manager candidate pool for the new hotels, and also nurture multi-skilled personnel. It also considers using artificial intelligence equipment to cut down on personnel investment in the new hotels.
Editor: Mevlut Katik