Intercontinental Hotels Group (IHG) has revealed plans to double its Asia-Pacific portfolio within the next five years.
Business Traveller Asia-Pacific met with Karin Sheppard, IHG chief commercial officer Asia, Middle East & Africa, who was among the session panelists at Hotel Investment Conference Asia Pacific (HICAP) taking place in Hong Kong this week, to talk about the group’s strategy for the region.
Like many other hospitality groups, IHG intends on tapping into the economic potential of emerging markets by expanding its presence in countries such as China, India, Indonesia and Thailand. In particular, she said, the group believes that its select-service brand Holiday Inn Express will thrive in these places.
Sheppard revealed that the budget-friendly brand would soon be entering the Indonesian market, having proven successful in developed markets such as Singapore and Hong Kong. In addition, the brand will also be expanding its presence in Australia with 15 new properties.
The reason behind the success of Holiday Inn Express is due to, according to Sheppard, an increased number of travellers who are "self sufficient" and "confident". “There is a group of travellers that know exactly what they want,” said Sheppard. “These include excellent shower facilities, comfortable beds, free breakfast and wifi.” By providing a concentrated offering developers can save costs and offer competitive rates.
Sheppard also touched upon the results of The new kinship economy: from travel experiences to travel relationships, a report IHG conducted earlier this year in collaboration with The Futures Company (see here). According to the findings, Asian travellers are expected to account for a third of the world’s travel spend by 2020. Thus, it makes sense that IHG would be eager to expand its brand in the region in order to raise brand recognition among these “new explorers” — travellers from high-growth countries such as China and India.
China represents the most lucrative market which the group is targeting in Asia. To that end, IHG has launched an upscale concept called “Hualuxe Hotels and Resorts” last year (see here). Designed specifically for Chinese consumers, the brand features elements believed to suit the needs of this market segment, such as food and beverage outlets with private meeting spaces, nature-inspired designs and traditional tea ceremonies.
Sheppard stated that 19 management agreements had been signed for the brand, with the first property expected to open next year. The group hopes to make the brand available in 100 Chinese cities within the next decade.
According to Sheppard, the growth seen in emerging markets mean that there is an expanding middle class within the countries. Along with the highly competitive rates offered by low-cost carriers nowadays, travelling is becoming easier and more accessible to this demographic.
This is leading to a growing segmentation within the market. Travellers today are more sophisticated and understand the value offered by various brands. Such individuals are likely to use different brands depending on their respective needs. "They may want to conduct their business and meetings at an Intercontinental because of a good lounge facility, then have a quick stopover at a Holiday Inn Express, and when they go on holiday with family, they might choose one of the Holiday Inn Resorts," she said.
In terms of the group’s luxury brand, Intercontinental, it continues to see growth in financial cities. The group launched its 200th property in Greater China – Intercontinental Shanghai Ruijin – in May (see here), as well as the Intercontinental Osaka in June (see here).
However, Sheppard also noted that the brand is also seeing positive traction at leisure destinations such as Phuket, where an Intercontinental resort is set to open.
Crowne Plaza is also proving to be a significant success for the group, as it is the fastest-growing global upscale brand. IHG expects to open a further 64 more Crowne Plaza properties on top of the 102 they currently have.
With the group's new brand Hotel Indigo, Sheppard believes that it will continue to attract young entrepreneurs and those in creative industries such as design and architecture. "It's a simple proposition: there is one restaurant, often with a cool bar, and a small gym. It offers a sense of personal experience," she said. Every Hotel Indigo property is designed differently based on the culture and traditions of the locality.
Finally, Sheppard touched upon the importance of technology. In particular, a humorous finding from IHG's global survey indicated that the majority of female travellers believed that wifi was more essential than hairdryers.
The group currently offers complimentary wifi to all elite members of the IHG Rewards Club programme. From 2014 onwards, this will be extended to all 74 million members of the loyalty scheme (see here).
For more information, visit www.ihg.com
Clement Huang
