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Hotel chain looks for franchisees

By Wang Zhenghua (China Daily)
Updated: 2007-04-20 08:45

SHANGHAI: InterContinental Hotel Group (IHG) is offering franchise opportunities to domestic investors under its Holiday Inn Express brand as the UK-based company makes further inroads into the emerging market for business travel in China.

The world's leading hotel group by number of rooms said Holiday Inn Express has created a market between full-service four-star properties and branded budget hotels, targeting predominantly domestic business travelers.

The company, one of the pioneers of the franchising business model, expects to gain a larger share in the fastest growing segment of China's hotel market, planning to open 125 hotels by 2008.

Kieron Ritchard, vice-president (strategy) of the group's China business, said the company is filling the gap between four-star and budget hotels.

"The service provided by a four-star hotel could be compared to a reasonably flat and long curve as it does lots of things and focuses on one thing in particular, while budget hotels have a value curve that is flat but shorter because they don't have a gym, full-service restaurants or room service," Ritchard said.

In comparison, Holiday Inn Express has tried to build a fluctuating curve with a number of peaks. For instance, the hotel will have luxury features including bathrooms with slick glass walls and superior tiling. All rooms will be provided with wireless and cable networks free of charge, and guests are treated to the hotel's special brand, Senses Tea.

"Research tells us that business travelers are demanding a more focused range of services and facilities," Ritchard said.

In Shanghai alone, the number of budget hotels has increased from almost zero five years ago to more than 200, concentrated mainly on the outskirts of the central business district, with famous brands including Jinjiang Inn, Motel 168 and Home Inn.

But Ritchard said there's no competition with domestic rivals as "our brand is positioned at a quality level above most budget hotels".

To extend the network of IHG, which has brought four of its seven hotel brands to China, the company is in talks with some partners and is looking to promote the franchising model to investors with skills and experience in developing real estate as well as operating service businesses.

"The franchising model is a logical extension of our growth strategy," said Ritchard, adding that IHG will continue to offer its management services to investors who prefer not to operate hotels themselves.

(China Daily 04/20/2007 page14)