Mon, Feb 21, 2011 - Page 11 News List

InterContinental Hotels to target Chinese travelers

The Observer, LONDON

Just about every decent hotel in the world offers a succulent hamburger on its room service menu. Before much longer, a Chinese dish could be a similar staple. The world’s largest hotels company, InterContinental, is working on plans for a Chinese-style international brand in another signal of the importance of the yuan to global business.

InterContinental reckons that Chinese demand for hotel rooms will overtake demand from the US by 2025. The Chinese took an estimated 52 million international trips last year and 2.1 billion overnight trips within their own country — a figure likely to rise to 6 billion by 2020.

The British company doesn’t want to divulge details, but perhaps a Chinese brand could look a little bit like the Hong Kong-based Shangri-La chain, which offers Asian flair and is to open a London hotel next year in the capital’s new “shard of glass” skyscraper.

The Chinese public can’t get enough of labels — 49 percent of them believe branded goods are superior to non-branded, compared to just 9 percent of Brits and 16 percent of Americans.

A new chain would have hotels throughout China and in markets where the Chinese travel in numbers. The opportunity looks compelling: The proportion of hotel rooms to people in China is just 0.003, compared with 0.015 in the US.

SUCCESS STORY

Buckinghamshire-based InterContinental, which was once part of the Bass brewing empire, is a curiously unheralded British success story.

It spans 4,400 hotels around the world — including the global Holiday Inn and Crowne Plaza chains — and has enough rooms to accommodate the population of Glasgow without anybody sharing.

However, the company tends not to shout about being British. It’s quite happy for customers at Holiday Inns to sleep soundly in the belief that the brand is as American as apple pie.

Of course, the people in -Buckinghamshire don’t actually manage all those Holiday Inns. The vast majority of the group’s hotels are franchised, run on a largely independent basis by owner-managers who simply pay a fee to use InterContinental’s brands. So InterContinental’s job is largely one of marketing, with a bit of quality control thrown in, and running an all-important global reservations system.

The key to the hotels game is consistency. Wherever they may be, regular visitors who check in at a Holiday Inn or a Crowne Plaza want the same television channels, marble bathroom and room service staples.

EAU D’HOTEL

They can even sniff the same scent (a mixture of ginger, white tea, citrus and musk) in Holiday Inn reception areas.

“The broad standard is that a Holiday Inn in Buenos Aires should look the same as a Holiday Inn in Swindon,” says Robert Barnard, a hotels expert at the consultancy firm PKF.

InterContinental seems to know what it’s doing — its shares have surged 56 percent in a year and profits, announced this week, were up 24 percent to £239 million (US$388.3 million).

VAST MARKET

We’ve heard any number of companies waffling about the fantastic opportunity of China and, indeed the rest of the BRIC nations (Brazil, Russia and India). Everyone from Tesco supermarkets, alcoholic beverage giant Diageo, to Durex wants to get in on the economic boom in Beijing, Shanghai and Guangzhou.

Two decades ago, fewer than 10 percent of people in the US had passports. The proportion has grown to more than 25 percent. Who’s to say that something similar won’t happen in China?

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