InterContinental Launches Upscale Chinese Hotel Chain

　　InterContinental Hotels Group PLC (IHG.LN) Monday said it"s launching a new upscale hotel chain in China, as the world"s biggest hotelier by number of rooms strives to become the operator of choice for increasingly-wealthy Chinese travellers at home and abroad.

　　IHG said the chain, named Hualuxe Hotels and Resorts, taps into the growth of domestic travellers within China, the increase in outbound international travel by Chinese people and growing consumer demand for an upscale international hotel brand.

　　It expects the first hotel to open in late 2013 or early 2014 and is in contract negotiations on over 20 sites, starting in major cities such as Beijing and Shanghai and then rolling out across second- and third-tier cities. IHG believes the brand can reach over 100 cities in China in the next 15 to 20 years.

　　The hotelier then plans to eventually export the chain-- which will showcase tea houses, Chinese gardens, noodle bars and VIP lounges for business travellers -- across the booming economies of Asia Pacific. Singapore and Hong Kong are mooted as possible target destinations.

　　"We are filling the gap and providing [Chinese travellers] with an environment to conduct business and socialize in a way that is tailored specifically for them," Chief Executive Richard Solomons said.

　　The chain will follow IHG"s managed operating model, similar to its other brands currently operating in China, it said.

　　Last month, IHG sounded an upbeat tone as it recorded a rise in profit, driven by revenue growth in the U.S -- its largest market -- and in China. It"s already a market leader in China with around 160 hotels, including Crowne Plaza and the luxury InterContinental brands, and a further 160 in the pipeline, with 70% of rooms under construction.

　　Still, it sees a further gap in the market.

　　According to United Nations World Travel Organization data, China"s hotel market will overtake the U.S. by 2025 and be almost double it by 2039.

　　Moreover, the numbers of outbound Chinese tourists are expected to rise fivefold to 100 million a year in the next decade.

　　The company also believes it"s unlikely the economic woes in the West will hit room occupancy and put downward pressure on room rates in emerging markets, which are the engines of growth in global retail and leisure.

　　China is only one plank in IHG"s overall global growth strategy.

　　The U.K.-based company, which has around 4,500 hotels and a further 1,200 in the pipeline, plans to more than double the size of its operations in fast-growing economies like China, India and the Middle East in the next few years as rising middle-class populations boost traveller numbers.

　　IHG, which operates InterContinental, Crowne Plaza, Holiday Inn, Hotel Indigo, Staybridge and Candlewood hotel chains, has said it has scope to expand, noting that larger portfolios are held by U.S.-based rivals, such as Wyndham Worldwide Corp. (WYN), which owns the Ramada chain, Ritz-Carlton owner Marriott International Inc. (MAR) and Hilton Worldwide (HLT.XX).

　　It has also added a new brand in the U.S. called Even, focused on wellness and fitness, which is expected to open in 2013. It already dominates the mid-market category in the country with Holiday Inn and Holiday Inn Express.

　　The group largely operates a franchise and managed model in partnership with hotel owners rather than owning them directly, but still owns a handful of assets across the world.

　　At 1235 GMT, IHG shares were down 12 pence, or 0.8%, at 1456 pence, in a lower London market. Analysts are positive on the play.

　　"The strategy of a new Chinese brand makes sense and will benefit the group in capturing Chinese interest," Raymond James analyst Julien Richer said in a recent note.