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Hotel industry eager to expand

By Yuwei Zhang (China Daily)
Updated: 2009-09-28 09:00

While the hospitality industry has suffered along with the rest of the economy in most countries, China remains one of the few places that are ripe for hotel expansion.

"The economic environment, the increasing middle-income population in China, the increase in disposable incomes and the fast development of infrastructure: All indicate the growth of China's travel and tourism development in the years to come," said Zhao Jinlin, a professor of hospitality and tourism management at Florida International University.

It was with this in mind that several foreign hotel chains have decided to expand in China by way of rebranding.

Holiday Inn, a subsidiary of the InterContinental Hotel Group (IHG), started a $1 billion relaunch campaign last year in China.

The number of visitors to the Chinese mainland fell this year for the first time since 2003, an expected result following the 2008 Beijing Olympics. But the numbers are expected to rebound in coming years.

"China has (surpassing the United Kingdom) become IHG's largest market outside of the United States," said Keith Barr, regional managing director of IHG for China.

With more than 90 percent of its customers coming from within China, the importance of the country's emerging middle class makes Holiday Inn confident about its continuing investments in the country," Barr said.

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The group operates 48 Holiday Inn hotels and 22 Holiday Inn Express hotels in China, with many concentrated in cities such as Beijing and Shanghai.

There are also another 60 Holiday Inn and Holiday Inn Express hotels under development.

In addition to Holiday Inn, Hilton also plans to add another 33 hotels in China.

And earlier this year, Ramada Worldwide, part of the Wyndham Hotel Group, announced its continued expansion with two new hotels in China.

One of its two new hotels will be the world's largest Ramada, with 1,000 rooms, and be located in Hainan province.

"Rebranding is often not only economically rewarding, but also economically required," said Robert J. Kwortnik, a professor at Cornell University's School of Hotel Administration.

"The lodging industry is incredibly dynamic. Consumers need to be reminded why - and how - certain brands offer value, and also how brands have evolved with new design and service features," Kwortnik said.

As part of their rebranding efforts, foreign-owned hotel chains in particular are trying for a more localized appeal.

IHG, for example, has become the first international hotel group to enter the Beijing suburbs with the rebranded Holiday Inn Beijing Moon River earlier this year.

This kind of idea might make some difference to local customers, but Kwortnik said the challenge is how to convince the Chinese market that the hotel brands are not essentially interchangeable.

"The challenges they are facing are the competition among themselves and competition from Chinese local brands," Zhao said.

"Whoever provides the best products and services will win Chinese and world travelers," Zhao said.