Holiday Inn brands to drive IHG’s expansion in India, not averse to more JVs

At a time when developed markets are struggling to shrug off the saturation growth trends and scene being no different in some of the emerging economies like Russia and Brazil, China and India have clearly emerged as the favourite turfs for the global hospitality where they are willing to up the ante. India, particularly with its 7 percent plus growth trajectory (China’s GDP growth too is slipping after three decades of fabulous run) is being hailed as more promising than ever before (refer to our story “ Global Hospitality Majors vote for India” on page… in this edition).

Clarence Tan IHG

Global hospitality major InterContinental Hotels Group (IHG) which operates around 5000 units in nearly 100 countries with ten brands too seems to be filled with unbound optimism on the prospects in the Indian market. “India clearly figures in our top ten strategic markets list in the world today. And we are on the course of major expansion here in the next five years,” Clarence Tan, Chief Development Officer (Asia, Middle East & Africa), IHG told TourismFirst in a brief exclusive conversation on the sidelines of an event in Delhi. The company has made two additions to its Indian portfolio recently by opening two new Holiday Inn Express units – in Chennai as well as in Delhi in the Aerocity. Primarily targeting business travellers, while Chennai unit (close to IT corridor in the city) has 136 rooms, the hotel in Delhi has been opened with an inventory base of 93 keys.    

 According to Tan, the recent opening of the two mid-scale units mark beginning of a gradual expansion process which will get increasingly pronounced in the next five years. Presently, IHG has 26 operating properties in India. “We have 42 signed properties in India under various stages of construction and we expect all of them to get commissioned in the next five years.  In terms of near run openings, three more units from Holiday Inn family – Tirupati, Kolkata and Chennai – will be commissioned before this year end and in 2017, we expect six more openings,” informed Tan.

A critical component of IHG growth in India in the recent years has been its concentration specifically in two markets. For instance, it has five Crowne Plaza units – an upscale offering – in Delhi/NCR alone. And in Chennai, the group is presently operating four units. Admitting that IHG today has a strong presence in some select markets in India, Tan asserted that the growth pipeline of the next five years would change the scene. “ Today our 26 hotels cover 12 cities in India. With the opening of another 42 hotels, we will be present in about 25 cities including more emerging destinations in the country. With the sound GDP growth projections and a visible upswing in the domestic tourism, there will be many prominent destinations in India from the standpoint of our business.”

Another significant sub-plot of IHG’s projected growth in the medium run would be its emphasis on the mid-scale segment offerings – Holiday Inn and Holiday Inn Express. Probably, yet another reconfirmation of the fact that Indian hospitality would be largely driven by the mid- market operators. “Holiday Inn and Holiday Inn Express will be in the forefront of our footprint expansion in India. About 88 percent of our new openings in the future will comprise these brands,” said Tan while specifying that the company has no plans to introduce any new brand in India (the four existing brands are InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express). “ Our existing brands are perfect fit for the kind of growth we have planned in India. We will think of introducing the fifth brand only when there is a demand from any specific market within the country.”

Clarence Tan further exuded confidence of IHG meeting its next set of milestones since it has joined hands with serious partners. “ The challenge in developing hospitality units is no different here in India than any other promising market. We are, therefore, very careful in choosing our partners – they should have the capability to raise funds for the project, have development capabilities and land banks. And on that front, we have joined hands with efficient partners,” Tan emphasised. For development of new properties in the country, IHG has partnered with noted realtors Amrapali Group and Jain Group of Bangalore. However, its biggest partnership till date (signed in 2011) in India has been with the Duet India Hotels in the form of a joint-venture entity ( Duet has 76 percent equity and IHG the rest), mandated to develop 19 Holiday Inn Express. So far, this JV has delivered four units while the rest are at the different stages of development. “We are satisfied with the speed of the development and the speed of the delivery of the product,” Tan emphasised. He was quick to point out that the company may sign up for more JV arrangements as its scale expands in the country. “ We will not hesitate in more JVs if there is a right opportunity and right partner. Our ultimate aim is to have 100-150 properties in India in the next 15 years.”

To further consolidate its position in the Indian market in the coming years, IHG is also counting on its technological innovations. “ We are the largest hospitality group in the world in terms of our loyalty programme volume which is close to 92 million. We are also aggressively pushing our book direct functionalities which is more beneficial for the customers. And the app which we had introduced last year has been an instant hit – registering a little less than a million downloads till date. All of these will also help our Indian partners and customers in a big way,” concluded he

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