IHG is the second-largest globally branded hotel company in China
04/04/2019|9:21:47 AM|HotelManagement

Just a few weeks ago, analysts at Lodging Econometrics called China’s hotel pipeline “booming” with 2,044 hotels and 411,032 rooms under construction, up 17% and 10% year over year, respectively. Of that total, LE calculated that IHG had more than 300 hotels with more than 70,000 rooms coming online, making the company the second-largest globally branded hotel company in the region.

In 2018, IHG opened and signed a record number of hotels, with 77 openings increasing its Greater China system size to 391 open hotels (115,000 rooms) and 142 signings for 29,000 rooms, taking the pipeline for the region to 341 hotels and 78,000 rooms. Recent regional growth has focused on tier-2 and -3 cities, which represented approximately two-thirds of IHG’s open rooms in the region.

In Greater China, RevPAR across the region grew 7% in 2018, with growth moderating in the second half. “In Mainland China, RevPAR was up 6% for the year, benefiting from strong transient meetings and corporate demand in tier-1 and tier-2 cities,” said CFO Paul Edgecliffe-Johnson in the company's earnings call for 2018. “Tier-3 and -4 cities saw broadly flat RevPAR due to new supply coming in from Sanya and difficult trading conditions in Changbaishan. Excluding these locations, RevPAR in these cities would have been up mid-single digit.”

With three-fourths of IHG’s open hotels and nearly 90% of its pipeline in tier-2 to -4 locations, Edgecliffe-Johnson predicted the company is well-positioned to capture future growth in these markets. “Whereas other players are using master-franchise agreements, we are able to retain the full economic benefits of the fee stream,” he said in February.

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