Jolyon Bulley, CEO of IHG Greater China, shares his views on changing trends in the China hospitality industry post-Covid-19. Headquartered in Denham, UK, IHG (InterContinental Hotels Group) is one of the world’s leading hotel companies with a broad portfolio of brands including Six Senses, Regent, InterContinental, Crowne Plaza, Holiday Inn, and Holiday Inn Express.
While nobody can escape the shadow of the Covid-19 pandemic, the tourism and hospitality industry was one of the first – and remains one of the most – affected. Travel is about exploring the world and bringing people together, but in recent months, the majority of travel plans have been placed on hold.
A new normal for the hospitality industry
China is further through COVID-19, and it is clear that demand for hotels are picking up – there is a mild but steady upward curve. Yet consumer behaviours and demand drivers are by no means what they were half a year ago. Short trips to nearby destinations are dominating the market, and only until more recently when air travel started to return. As people tend to be more cautious but then more spontaneous in their travel arrangements, booking lead time, in many instances, has shortened to within a week or even the same day.
This is the most challenging time our industry has ever confronted, but time is the best healer. Occupancy levels have been increasing month on month across IHG hotels in Greater China, particularly in popular 5A tourist and resort locations, across South, the West of China, and the Yangtze River Delta. Business travel, meetings and events are also starting to come back.
Booking lead time has shortened to within a week or even the same day.
Guests: safety and wellness matters
The world is adjusting to new travel norms and expectations. We are attaching more importance to hygiene standards than ever. Responding quickly, IHG is enhancing guest experience with new cleaning protocols, service standards and partners, and launching a Clean Promise to give guests confidence as they re-establish travel norms.
The post Covid-19 era will see an increasing proportion of wellness-minded travellers. Hotel brands that help travellers make healthier choices, such as IHG’s EVEN Hotels, will gain further traction. The EVEN Hotels brand was launched in the US in 2012 as the industry’s pioneering hotel brand created with wellness at its core, empowering guests to maintain their wellness routine while on the road. Earlier this year, the unveiling of EVEN Hotel Nanjing Yangtze River marks the brand’s first property in Greater China and outside of the Americas.
Owners: resilience through the power of brands and systems
Crises like Covid-19 bring serious challenges to hotel owners, hotel operators and smaller hotel companies. Compared with independent hotels, branded hotel groups generally have the advantages in risk management procedures, cost reduction through scale, market analysis and forecasting, and the power of distribution. Therefore, hotel owners will receive guidance and support where they need it the most, all intended to protect their cash flow, guests and employees, and then leverage the power of brands and systems for business recovery.
Data from STR and Accenture show that only 24% of the hotels in China are chain-branded, compared with 71% in the US. There is much space to fill, and Covid-19 might be an accelerator to that process. Surviving from the crisis, more and more independent hotel owners are considering working with a branded hotel company with conversion options and a proven record to move fast and effectively.
Hotel brands that help travellers make healthier choices will gain further traction
IHG has recently introduced voco into Greater China as its 11th brand in the region, with the first project signed in Wuhan, Hubei in June. The brand focuses primarily on conversion opportunities in the upscale segment. Working with high-quality individual and locally-branded hotels, it will offer owners the ability to drive higher returns through delivering a compelling guest experience and leveraging IHG’s powerful systems including access to IHG Rewards Club, one of the world’s largest hotel loyalty programmes. Guests will be able to enjoy the appeal of a more individual hotel, alongside the reassurance of a name above the door that they trust.
Moving forward with confidence
Despite an unexpected beginning, this year will mark some important milestones for IHG in Greater China, including the opening of its 100th Crowne Plaza hotel, 50th InterContinental hotel, 200th Holiday Inn Express hotel, and 500th hotel in the region.
Although the market recovery will take time, the future of China tourism market remains a bright one. Travel demand will be driven by a growing middle class with increasing disposable income as well as government policies on building a consumption-led economy. Brands that can provide unique experiences, great service and reliable safety standards will be valued by consumers.