As one of the earliest international hotel chains that entered Chinese market, IHG has been developing for almost 30 years, with 200 hotels opened and another 170 under construction.
SHANGHAI – Along with the opening of InterContinental Shanghai Ruijin, IHG is now possessing two hundred properties in Greater China.And this ranks it first by scale among all the international hotel chains.
Being formerly the State Guest House of Shanghai, InterContinental Shanghai Ruijin hotel has a rich heritage by having served Chinese historical figures such as Chairman Mao Zedong and Premier Zhou Enlai. Now, it becomes IHG’s first in Asia as well as the 6th historical classic hotel throughout the world.
Richard Solomons, CEO of IHG, indicated that “Greater China is one of our most important strategic markets” and “now that it (China) becomes the second largest market of the company, we are glad to show full confidence on our future development”. The company’s expanding strategy has well proven their ambition as within the next two decades, expected by the corporation, the number of IHG’s rooms will be eight times larger.
According to the prediction of UNWTO, by the year 2025, the number of hotel rooms in China will exceed that of USA, being the largest in the world and 14 years later after that in 2039, the scale of Chinese hospitality market will be twice as big as American’s.
This trend has therefore accelerated the expanding pace of both international and domestic hotel companies such as Hilton, who also claims that there are over 115 Hilton hotels under construction in China at the moment. Although being positive, IHG’s Q1 financial report (2013) showed that their income grew only by 3.1% year on year in the first quarter with a lower 1.8% increase of the total business. Apart from external affects such as political issues and natural disaster (i.e. bird flu, earthquake), unsustainable rapid expansion, pointed out by analysts, should be a fundamental reason.
As a matter of fact, under this rapid expansion, the average occupancy rate of IHG’s hotels was only 40-50% and along with it, the lack of qualified managerial team has become increasingly obvious. The CEO of IHG Greater China, Keith Barr admitted once in an interview that human resource had become one of the biggest challenges that IHG had to deal with, and at the same time, the company was also making efforts to train local Chinese managers.
