InterContinental Hotel Group (IHG), the world's largest hotel group by room number, is shifting its China business focus from expansion to repositioning its Holiday Inn as a low-budget option.

IHG aggressively enlarged its network in China over the past three years, especially around the Olympics, cashing in on a ballooning economy and becoming the country's largest hotel group, with 112 operating hotels and around 100 more under construction. The group operated just 40-odd hotels in 2005.

But the UK-based hotel giant is adjusting its business strategy as China's tourism industry slackens amid the global economic downturn.

"We are focusing on the lower-end Holiday Inn chain," said Sharona Tao, brand public relations and communications manage of IHG China.

The Holiday Inn chain includes two brands: the mid-scale Holiday Inn and the budget Holiday Inn Express. The group operates 48 Holiday Inn hotels and 22 Holiday Inn Express hotels in China and has another 60 Holiday Inn and Holiday Inn Express hotels under development.

China is Holiday Inn's largest market.

The number of visitor to the Chinese mainland fell to 130 million last year, the first drop since 2003, according to statistics from the China National Tourism Administration (CNTA).

The number of travelers is expected to grow just 1.5 percent this year, to 132 million, equivalent to the 2007 level, the CNTA predicted.

Many five-star hotel rooms are empty and the occupancy rate of some five-star hotels in Beijing has decreased by as much as 30 percent, said an industrial insider.

Lower-end hotels are losing business but not as drastically. "Holiday Inn and Holiday Inn Express hotels are currently more popular than the other brands under the IHG," said Tao.

The IHG operates 12 InterContinental hotels and 28 Crown Plaza hotels in China.

IHG started a US$1 billion relaunch campaign early last year, after a two-year survey of 18,000 guests across the globe. The Holiday Inn Central Plaza Beijing was the first hotel in China to showcase the results, launching its new design in July 2008.

"The feedback from travelers has been positive. The program created a lot of wows," said Russell Birch, the hotel's general manager.

The re-launch in China will wrap up by 2011, said Tao.

(China Daily February 23, 2009)