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China’s economy slows down but InterContinental’s building increases

Skift Take

The economy may be slowing, but that means real estate prices will be more sensible, allowing IHG to lay solid groundwork from when it picks back up again.

— Jason Clampet

InterContinental Hotels Group Plc, the world’s largest provider of hotel accommodation, plans to almost double the number of hotels it manages in China even as the country’s economy slows.

The owner of the Holiday Inn and Crowne Plaza brands today opened its 200th hotel in Greater China, which takes in China, Hong Kong, Macau and Taiwan. It has 170 hotels in the region, its second-biggest market, Richard Solomons, the company’s chief executive officer, said in a Bloomberg Television interview in Shanghai. The company plans to expand to 100 Chinese cities from 70 cities now in the next three to five years, he said.

“We’ve seen the growth flatten out now, but you have to take a long-term view, which is what we do,” Solomons said, citing China’s urbanization rate and infrastructure development. “It’s going to be a very powerful market for hotels in the long term even if there’s some short-term slowdown.”

Investors soured on China’s outlook in a Bloomberg global poll this month, with the share of respondents who see the economy deteriorating doubling from January. The world’s second- biggest economy grew 7.7 percent in the first quarter, less than the 8 percent median forecast in a survey of 41 economists.

Data earlier this month on fixed-asset investment and factory production missed forecasts and gauges of manufacturing and service industries declined. The economy expanded 7.8 percent in 2012, the slowest pace in 13 years.

Solomons said the company is “well placed” in two key areas of the market in China, with its upscale Intercontinental and mainstream Holiday Inn brands even if there are a lot of new hotel entrants.

The Denham, England-based company that first entered China in 1984, expects the country, already accounting for more than 10 percent of its business, to have as many hotel rooms as in the U.S. by 2025. It will open its first hotel under a new brand designed to appeal to Chinese travelers next year and has already signed 16 deals, Solomons said.

Editors: Andreea Papuc, Tomoko Yamazaki. To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net. To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net. 

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