InterContinental Hotel Group (IHG) is offering franchise
opportunities to domestic investors under its Holiday Inn Express
brand as the UK-based company makes further inroads into the
emerging market for business travel in China.
The world's leading hotel group by number of rooms said Holiday
Inn Express has created a market between full-service four-star
properties and branded budget hotels, targeting predominantly
domestic business travelers.
The company, one of the pioneers of the franchising business
model, expects to gain a larger share in the fastest growing
segment of China's hotel market, planning to open 125 hotels by
2008.
Kieron Ritchard, vice-president (strategy) of the group's China
business, said the company is filling the gap between four-star and
budget hotels.
"The service provided by a four-star hotel could be compared to
a reasonably flat and long curve as it does lots of things and
focuses on one thing in particular, while budget hotels have a
value curve that is flat but shorter because they don't have a gym,
full-service restaurants or room service," Ritchard said.
In comparison, Holiday Inn Express has tried to build a
fluctuating curve with a number of peaks. For instance, the hotel
will have luxury features including bathrooms with slick glass
walls and superior tiling. All rooms will be provided with wireless
and cable networks free of charge, and guests are treated to the
hotel's special brand, Senses Tea.
"Research tells us that business travelers are demanding a more
focused range of services and facilities," Ritchard said.
In Shanghai alone, the number of budget hotels has increased
from almost zero five years ago to more than 200, concentrated
mainly on the outskirts of the central business district, with
famous brands including Jinjiang Inn, Motel 168 and Home Inn.
But Ritchard said there's no competition with domestic rivals as
"our brand is positioned at a quality level above most budget
hotels".
To extend the network of IHG, which has brought four of its
seven hotel brands to China, the company is in talks with some
partners and is looking to promote the franchising model to
investors with skills and experience in developing real estate as
well as operating service businesses.
"The franchising model is a logical extension of our growth
strategy," said Ritchard, adding that IHG will continue to offer
its management services to investors who prefer not to operate
hotels themselves.
(China Daily April 20, 2007)