InterContinental Plans China Hotels as Government Curbs Spending

InterContinental Hotels Group Plc (IHG), the world’s largest provider of hotel accommodation, plans to open “at least the same” number of hotels in China next year as 2013, even as growth in room revenue slows.

The hotel operator, which also runs the Holiday Inn and Crowne Plaza brands in Greater China, opened 17 hotels this year to the end of the third quarter in China, Hong Kong, Macau and Taiwan, which together are its second-largest market outside the U.S., said Chief Executive Officer Richard Solomons.

China’s hotel market slowed after the government banned officials from spending money reserved for meetings on banquets or luxury accommodation, as the Communist Party battles public discontent over wasting of government funds. The company, which first entered China in 1984, plans to hire staff and open more than 170 new hotels in the world’s second-largest economy that is heading for the weakest expansion since 1999.

“We are not cutting back at all in terms of what we are doing here,” Solomons said in an interview in Shanghai yesterday. “Government is not a huge piece of our business. As a good operator, if one piece of business is less, you go for another piece.”

The group, known as IHG, didn’t raise room charges much in China this year, Solomons said. Revenue per available room, a measure of occupancy and rates known as RevPAR, rose 0.7 percent in Greater China in the third quarter from a year earlier, slowing from 4 percent growth in the same period a year earlier, according to company filings.

Source: InterContinental Hotels Group Plc via Bloomberg

Richard Solomons, chief executive officer of InterContinental Hotels Group Plc. speaks at a business luncheon in Shanghai, China, in this handout image taken on Dec. 3, 2013. Close

Richard Solomons, chief executive officer of InterContinental Hotels Group Plc. speaks... Read More

Close
Open
Source: InterContinental Hotels Group Plc via Bloomberg

Richard Solomons, chief executive officer of InterContinental Hotels Group Plc. speaks at a business luncheon in Shanghai, China, in this handout image taken on Dec. 3, 2013.

Hiring Staff

The Denham, England-based company said yesterday that it plans to hire 110,000 staff in Greater China by 2015 to support its growth, adding to the 60,000 staff it already has. It has plans to open a further 179 hotels in China, according to the company, which didn’t specify over what period.

“We are bullish about China,” said Solomons, traveling on a trade mission to the country with U.K. Prime Minister David Cameron. “Our industry has always been cyclical. You shouldn’t worry about it. In the long term it’s a very attractive market.”

The company’s first hotel under new brand Hualuxe will open at the end of next year and it has signed 21 deals with local Chinese developers for these hotels, Solomons said, declining to say in which city the first hotel would be located.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

Source: InterContinental Hotels Group Plc via Bloomberg

The InterContinental Century City Chengdu hotel stands in Chengdu in this undated handout photograph released to the media on Dec. 4, 2013. Close

The InterContinental Century City Chengdu hotel stands in Chengdu in this undated... Read More

Close
Open
Source: InterContinental Hotels Group Plc via Bloomberg

The InterContinental Century City Chengdu hotel stands in Chengdu in this undated handout photograph released to the media on Dec. 4, 2013.

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.