Recently InterContinental Hotels Group (IHG) announced a $1 billion global relaunch plan. A huge part of this project aims at expanding its mid scale brands all around the world and especially in India. IHG’s expansion strategy for the future is to capture the growing demand of the domestic travellers and widening its reach to new regions and destinations. The group plans to add 135 new hotels in the country in the next 10 to 15 years out of which 57 hotels will start in the next five years.
IHG’s Vice President (Operations), South West Asia, Douglas Martell pointed out that the global hospitality major’s focus is now fixed on India which is currently the third fastest growing market for them. He said, “Our focus has always been on emerging markets. First it was China and now it has shifted to India. We are investing heavily in the country and expect huge revenues in the coming year. With demand picking up in the country, in the next 15 years, we expect India to become our largest market.”
Globally, IHG operates nine hotel brands out of which InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express are currently present in the country. While InterContinental and Crowne Plaza brands are in the higher segment, IGH plans to expand its mid segment brands of Holiday Inn and Holiday Inn Express. “Eighty-eight per cent of the future hotels growth in India will be under Holiday Inn and Holiday Inn Express brands which are mid-scale brands. We currently have 57 hotels in the pipeline which will be finished in the next five years,” Martell said.
The group has created a 2030 growth plan for itself under which they plan to launch Holiday Inn and Holiday Inn Express brands in 25 cities by 2020. Along with that they would also focus on becoming the biggest player in the domestic mid scale segment. From the business point, the group is currently working on management model under which they are reaching out hotel owners and collaborating with them and taking care of all management process for the owners.
Going forward, Martell said, “Though we are open to investments, our model is that we manage the hotels on behalf of the property owners. But if there is a strong opportunity we are open to investments. Also in some key regions we might even opt to convert our management model into a franchise model.”
The group is also about to announce the launch of its new Holiday Inn Express in Chennai in the December followed by Holiday Express Aerocity Delhi by the end of 2013. A total of 6 new hotels are going to be launched in 2014 off which the Holiday Inn Express & Suits in Hyderabad will start early next year. The group also is planning to launch Holiday Inn brand in Kolkata and Siliguri soon.
In a bid to scale up Holiday Inn Express brand, it has signed a joint venture agreement with Duet India Hotels under which IHG holds 24 per cent stake. While Duet India would take care of building the properties, IHG would the necessary management staff. The group has also recently signed a 10-hotel management deal with Bangalore-based real estate developer Brigade.
Talking about the current revenue scenarios, Martel said, “This year the growth in occupancy has been flat majorly due to the launch of many new hotels. Currently, 75 per cent of our total revenue is generated by business travelers hence we a strategy to focus more on them.” With corporate contribution so high, IHG has already started discussions with over 600 companies to align them with the group.
Since the group has deployed its management business model, the major portion of their investments is being made towards the area of extensive employee training and upgrading their existing technologies. IHG’s Regional Vice President (Sales & Marketing), South West Asia said, “We are investing on upgrading our technologies since 35 per cent of our revenue comes from online sales which have been growing by 2.5 per cent every year. Nearly 80 per cent of our advertisement spending now is on online medium as we expect sharp increase in our online sales.”
Apart from that, the group is also revamping its online platform inorder to make it more customer friendly. With over 4,600 hotels and nearly 6,79,000 rooms in nearly 100 countries, the group would require nearly 10,000 skilled staff in the coming five years. For this purpose the group is banking hugely on the talent pool from the country’s large population.
“We are open for such opportunities in the form of joint ventures or multiple hotel management deals with strong partners. Multiple hotel management deals gives us access to land parcels which are being developed into mixed land use projects by real estate developers,” said Martell.