At the beginning of this year, InterContinental reached a milestone of opening 700 hotels in China. Whether in first and second tier cities or in lower tier markets, the InterContinental hotel brand can be seen.
According to the financial report released by InterContinental Hotels Group in the third quarter of this year, InterContinental Hotels' global RevPAR increased by 1.5% year-on-year. In the third quarter, 17500 new guest rooms (98 hotels) were added, a significant increase from the opening of 7700 rooms in the same period last year. Although RevPAR in Greater China decreased by 10.3% in the third quarter, InterContinental Hotels Group revealed that due to the attractiveness of long-term demand drivers in the region, the development momentum is actually very strong, and it is expected that 2024 will become one of the years with the highest number of hotel openings and signings in the region.
During the CIIE, Qiu You, Chief Operating Officer of InterContinental Hotels Group in Greater China, stated in an interview with 21st Century Business Herald that by the first three quarters of 2024, InterContinental Hotels Group had opened over 60 new hotels in Greater China and signed approximately 120 new contracts. Additionally, the brand's localized products have become increasingly sophisticated.
Qiu You stated that the cultural and tourism market is constantly changing, and the hotel industry also needs to constantly adjust its business model. He emphasized that the franchise model launched by InterContinental not only enables sustained brand operation and expansion in first and second tier cities, but also allows for deeper embedding in lower tier markets. In the future, InterContinental Hotels Group will better balance two urban expansion strategies.
Localization layout acceleration
21st Century: As a long-time "old friend" of the China International Import Expo, could you share the innovative content, highlights, and unique features of this year's exhibition area theme and display content? Last year, the group showcased three high-end and mid to high end brands. Do you think there have been any changes or upgrades in this year's brand display?
Qiu You: This time our exhibition has set up a very special display of three hotel brands, including InterContinental's mid to high end brands - Holiday Inn and Smart Choice Holiday Inn, as well as the high-end brand - Yiheng Hotel. Each of these three brands has its own characteristics, and their development time and history in Greater China are actually different, but they have all entered the Greater China region for a considerable period of time. At this CIIE, we will showcase the design concepts and spaces of these three hotel brands. Not only is there a comprehensive display from design to product, but there are also many innovations in service support.
21st century: Some reviews say that InterContinental Hotels Group is the most localized international hotel group in China. Which measures do you think are most effective in the localization operation strategy? Some products have shown excellent localization performance, such as Huayi and Yiheng brands. How do you view the performance and future development of these brands among Chinese consumers?
Qiu You: Concentrating our strategy in the Greater China region is "serving China in China." In my opinion, the most decisive strategy is the development of local talents.
Our localization rate is very high, from the hotel decision-making level to the hotel management level to the hotel employment level, it is basically over 90%. And precisely because of such a talent reserve, based on the long-term development strategy of Greater China, it actually gives us a good opportunity to be closer to the market, our users, and our owners.
Based on this, we have actually demonstrated many localized achievements in many aspects. We have developed a WeChat mini program for our business travel platform, as well as a mini program for meeting reservations. Going further, we have also created a unique intercontinental mall. It is precisely because the team is based on localization and the connection with local owners that we have created a very distinctive franchising model. Unlike the franchising that is more commonly used in the international market, we have benefited from this model by empowering the general manager to support service and sales to owners. We not only have sustained brand operations and expansion in first - and second tier cities, but also have an embedded presence in lower tier markets, so all of them are summarized together. These are indeed the leading aspects of our localization strategy.
Both core cities and lower tier markets are indispensable
21st century: You have repeatedly mentioned and valued the sinking market. At the beginning of this year, InterContinental achieved a milestone of opening 700 hotels in China. Will the future expansion in the Chinese market continue to focus on sinking markets, or will the focus shift to core hub cities?
Qiu You: In my opinion, both strategies are very important. We need to promote or operate different brands according to different cities. For example, in first and second tier cities, we have many brands that have landed, such as the luxurious Shanghai Seagull Lijing Hotel and the Kimpton Front Beach Hotel. But at the same time, we also see a huge growth in the sinking market. At the end of September this year, a Smart Holiday Inn opened in Datong, Shanxi, coinciding with the Golden Week and the popularity of the Black Monkey King game. We need to rely on our brand to expand to more cities and bring more choices to our customers. So these demonstrate that we will still develop with first and second tier cities as our core, while the sinking market also brings us great opportunities.
In the 21st century, the number of InterContinental's Holiday Inn Express hotels that opened and are currently under construction exceeded 500 at the end of last year. Are there any latest developments or plans for this year? As an important brand in the mid to high end market, how do you view its future development and market positioning?
Qiu You: Zhixuan Holiday has a franchise model, and we will continue to iterate its design and functions to meet market demand and ensure a leading position in the consumer market. Its layout will still meet the needs of the current cultural and tourism market, and it can be dedicated to business and popular tourist destinations in first and second tier cities. In the sinking market, we will go to more niche or emerging transportation hub cities.
I have always believed that as a hotel management company, it is especially important to have a clear understanding of the overall situation in the region. I believe that following the trend is the core grasp of our hotel development and operation.
In terms of the trend, the rapid recovery of the leisure tourism market, especially with the performance of some major festivals this year, some have already surpassed 2019, which is a strong and powerful signal. Upon closer examination of the data, it can be seen that self driving tours are becoming increasingly popular, with more and more people choosing to take 2-3 hour self driving tours around their city, even closer to some 5A scenic spots, ancient towns, and leisure tours. I think this is a good guide for what kind of brands we should arrange and how they should appear in the market. We also see the huge potential of the silver haired tourism market, and I believe it is a very strong signal for all hotel management companies and even other consumers.
In the 21st century, what development plans or adjustments does InterContinental Group have for its hotel brand layout system and strategy in China?
Qiu You: I think the key is that as a local hotel operation team, after a deep understanding of the market, we have indeed found that more digital solutions are needed to help hotels improve operational efficiency. This is something we are working hard on from all aspects, including upgrading and transforming some of the hotel's operation systems, as well as daily operation management, especially conducting more electronic operations in the background, to ensure that hotels can take on this aspect lightly, obtain greater profits to repay our hotel owners, and also enable our group to have stronger combat effectiveness and vitality.
21st century: InterContinental Hotels Group has been deeply involved in the Chinese cultural and tourism market for many years. How do you view the current and future development situation and prospects of the group? And how to evaluate the potential and development trends of the future Chinese cultural and tourism market?
Qiu You: Based on the figures for the third quarter of 2024, the group has opened over 60 new hotels and signed approximately 120 new contracts in the Greater China region. These two numbers should set a new record in the history of InterContinental Hotels Group's Greater China region. I think this is a symbol that tells us how dynamic and promising this market is.