The world's 4th largest hotel group in terms of number of rooms celebrated the opening of its 400th hotel in Greater China (including the People's Republic of China and Taiwan) on June 3, 2019. Since 2013, the deployment of the new rooms has been focused on secondary cities.
Listen to Karin Sheppard, Managing Director Europe for IHG, who will be speaking on Tuesday, April 16 at the upcoming Global Lodging Forum.
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"A long-standing commitment"
IHG developed early and quickly in China. The first hotel under the Holiday Inn brand was opened in 1984, six years after Deng Xiaoping became General Secretary of the Chinese Communist Party and launched the economic reforms that aimed to create a "socialist market economy". In 2008, the British group opened its 100th property and in 2013 its 300th hotel. The 400th hotel opened 5 years later in the coastal city of Zhuhai, on the border with Macao in southern China.
IHG has a long-standing commitment to Greater China and we have been up-scaling rapidly in the region, which is already our second largest market globally. Our long-term strategic focus and ability to adapt to the evolving demands of owners and guests is truly paying off, be it through new operating models, a growing number of preferred brands or cutting-edge technologies.
Jolyon Bulley, Chief Executive Officer, IHG Greater China
Also read: Five actions of global groups in China
The recipe for success
IHG, which claims to be the world's leading franchisor group, has accelerated the deployment of its brands through this management method. In May 2016, the group launched a specific model for its Holiday Inn Express brand in China called "Franchise Plus". This is described in a press release as providing additional support from the group:"[it] offers owners all the advantages of a franchise operation, but also some of the advantages usually associated with hotels directly managed by IHG." This new model would have been decisive in signing contracts for 68 hotels in just over a year and IHG finally extended it to 3 other brands in late 2017: Crowne Plaza Hotels & Resorts, Holiday Inn and Holiday Inn Resorts. In 2019, contracts were signed for a total of 140 hotels under franchise.
HUALUXE, an upscale brand designed for Chinese guests
In addition to the introduction of its traditional brands, IHG has also launched this new brand with an aim to better meet the needs of Chinese customers. 10 hotels are open in 2019.
The adoption of digital technologies has increased significantly in China (210 million Internet users in 2007 to 812 million in 2018, 98% of whom access the Internet mainly with a smartphone according to the China Internet Network Information Centre agency). In this context, IHG hotels have deployed mobile payment solutions such as Alipay and WeChat Pay, integrated services based on artificial intelligence in rooms (so-called "intelligent rooms") or launched a mini-program on WeChat for their IHG Rewards loyalty program.
Growth in "2nd tier" and "3rd tier" cities
Inspired by the official classification of Indian cities, the tier system has been applied informally in China to classify cities according to their importance and economic development. Currently, this classification is based on one by Yicai Global, a media service specialized in finance, created in 2017. The 1st tier includes the main Chinese cities such as Beijing, Shanghai, Guangzhou, Tianjin, and Chongqing, while the following 2nd and 3rd tiers are secondary cities.
In its press release for IHG, it states that development has taken place mainly in this network of secondary cities. Currently, about two thirds of IHG hotels are located in 2nd and 3rd tier cities, reflecting the British group's strong market penetration.
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