Intercontinental Hotels Group (IHG), the world’s biggest hotel company, has an aggressive strategy for the Indian market. It believes the Asia-Pacific region will be responsible for growth, with China and India leading. Richard Solomon, chief financial officer and head of commercial development, explained the strategy for the Indian market to Swaraj Baggonkar. Edited excerpts:

How does IHG look at the Indian market, compared to other markets?
We have 12 hotels now and 41 signed deals and a majority of it are under construction. The fact that India is a very fast growing economy means it is a very attractive market. We do see mid-market as one of the core areas of growth here, as most of the travel in India is domestic. There are 500 million trips in India per year and only five million is international. We see a big opportunity, having a big mainstream business which is largely domestic.

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How many hotels are you planning and what is the distribution amongst the brands?
We are opening 41 new hotels in India. About 29 of this will be Holiday Inn’s and 11 Crowne Plaza’s and one Intercontinental. We have over 2,000 rooms currently and over 9,000 are in the pipeline. We are not an international company looking for international travellers. This is no harm in our line of business, which is focusing predominantly on the domestic market. About 75 per cent of hotels we have in China are from the Holiday Inn brand.

How many hotels are you adding overseas?
We have 4,400 now and about 1,400 signed deals. We do not have any owned hotels here; they are all managed. We opened 439 hotels last year, globally. About 65 per cent of our business comes from the US. But, the fastest growing market is Asia-Pacific, with China growing the fastest. We recently separated our Asia business. Like China, India will also be independent, with a standalone business operation.

What are the challenges you have to face in expansion in India?
There are no challenges on the demand front, as the market is under-developed and needs more hotels. But, it takes longer to open a hotel in India than it does in other parts of the world. On an average, it takes 43 months from signing a contract to opening a hotel. We have lots of first-time owners now. The important thing for us is to work with the right owner and developers.

You had been in business with the Lalit Suri Hospitality Group, which was called off abruptly What is your take on that?
They decided they wanted to go with their own brands and we had no problems on that. As and when agreements expire, many get renewed but some don’t. They believe they can go on their own with their brand. We have a big business now. The end of the partnership was not sudden but was planned over a period of time. We are opening five to eight hotels this year.

The Indian market is dominated by strong local players. Do you see them as a threat?
We have strong domestic players but there is room for everyone to grow. Over time, we will see some of the bigger brands growing stronger because they deliver value. We are operating in every part of the world and are not afraid of competition. Our hotels run at a premium than the market but grow faster than the market. Our share will be bigger than what is available.

Will you look to introduce more brands here?
We have three brands in India now and seven brands internationally. As we see consumer demand, we will look at it (bringing brands in). It’s part of the strategy. We will bring them here at the right time. We need to tweak the existing brands to suit the local market before launching more here. We can look to add the Holiday Inn Express brand here.

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