IHG zones in on China

27 Nov 2015 by Tamsin Cocks

Intercontinental Hotel Group (IHG) is set to double its presence in China over the next five years.

Already one of the biggest international hospitality players in the region with 248 hotels, there are a further 209 hotels currently in the pipeline.

More than half of these properties will be the group’s midscale brands, as Kent Sun, chief development officer for IHG explained:

“Mid-scale brands will be one of our priorities going into 2016. As market segmentation continues to mature with the further implementation of China’s new economic policies, the growth potential of mid-scale hotels is higher than that of other segments.

“The foreseeable increase in demand for mid-scale hotels presents a great opportunity for brands such as Holiday Inn and Holiday Inn Express.”

Several luxury brands are also scheduled to open next year, including InterContinental Beijing Sanlitun, Hotel Indigo Kaohsiung Central Park, Hualuxe Haikou West Coast and Crowne Plaza Macau.

Of these brands, Hualuxe is a priority for the group. Billed as the first international hotel that specifically caters to Chinese travellers, IHG sees the relatively young brand as one with the most potential.

“This brand is a powerful example of IHG innovating into the ‘white space’ opportunities in greater China. We see potential to distribute Hualuxe Hotels and Resorts in more than 100 cities in mainland China, including key destinations such as Beijing and Shanghai”, said Sun.

The first two Hualuxe properties were opened in the first half of 2015 (see here for First Look Hualuxue Nanchang High-tech Zone), with 22 more expected over the next few years.

Another key strategy for IHG is to diversify geographically, targeting second, third and even fourth tier cities.

“According to our research, mid-sized cities in emerging markets will generate 40 per cent of global economic growth over the next decade and beyond. Most of these cities will be in China and India. Therefore, we will pay attention to development in Tier 2, Tier 3 and Tier 4 cities, as well as emerging tourism destinations in China, i.e. Yangtze River Delta including cities such as Hangzhou, Yangzhou and Changzhou.

“In addition, with the rise of the middle class in China and the support of government policies, we find that domestic leisure travel demands are rapidly growing in greater China. We have already opened many hotels in popular travel destinations around China, and also led the way in emerging destinations.”

In addition to strengthening its position in the domestic market, IHG has also taken steps to attract outbound Chinese travellers.

“Our research in partnership with Oxford Economics estimates that by 2020, China will overtake the US, UK and Germany to become the largest source market for long-haul travellers.

“IHG is well-placed to meet the growing demand of Chinese outbound travel, with more than 30 years of experience in China, our deep insights into Chinese consumers and travel trends, and our Zhou Dao Programme.”

Launched earlier this year, the Zhou Dao programme offers things like Chinese-speaking staff at the front desk, acceptance of China UnionPay cards, a Chinese welcome pack, Chinese channels on in-room TVs and other amenities.

“To date, we have trained over 8,500 staff worldwide for the programme. By the end of 2016, the number of China Ready hotels is expected to exceed 250”.

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Tamsin Cocks

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