InterContinental Hotels Group has launched a new franchise model for its Holiday Inn Express brand in China.
The new model, called Franchise Plus, has been specifically tailored for the Chinese market and, the company claims, "provides owners with all of the benefits of operating a franchise model, but with additional benefits and features from IHG’s managed model."
This announcement comes as IHG signs its first Franchise Plus agreement with Shanghai Yaqi Business Hotel Company for a 260-room Holiday Inn Express hotel in the Hongqiao area of Shanghai.
Significantly, the new model also reflects the local dynamics of the Chinese economy, which has seen a rapid rise of the middle class in recent years, leading to significant demand for midscale hotels in tier 1, 2, 3 and 4 cities.
“IHG has over 30 years’ experience of operating in China and working closely with our hotel owners,” said Kenneth Macpherson, CEO of IHG in Greater China. “The launch of Franchise Plus for our Holiday Inn Express brand is an important milestone for our business and for the accommodation landscape in China.”
Since its arrival in Greater China in 2004, Holiday Inn Express has built a presence in more than 30 provinces and cities across the region with 66 hotels open and operating and another 67 in the pipeline.
In its Q1 call last week, IHG said that RevPAR in Greater China was up 2.2 percent in aggregate. In Mainland China, RevPAR growth was 6.2 percent. "This was driven by tier-1 cities up 8.3 percent and tier-2 and -3 cities also delivering mid-single-digit growth aided by strong business demand and greater leisure travel," CFO Paul Edgecliffe-Johnson said. "Hong Kong and Macau continued to be impacted by market-specific issues and was down 12 percent, creating a drag on RevPAR for the region as a whole."