InterContinental Hotels Group (IHG), the world's largest hotel group by number of rooms, recently opened a new outlet in Chengdu, capital of Sichuan province. Two years ago, the hotel giant signed a landmark deal with Chengdu Travel and Exhibition Group to manage six hotels in Chengdu and Jiuzhaigou in the southwestern province, as it quickens its pace to penetrate China's hinterland. It plans to have 125 hotels in China by the end of the year. Andy Cosslett, chief executive of IHG, talked to Wang Zhenghua in Chengdu to share the company's strategy and the secret of IHG's success in China.
Q: Could you share with us your overall China strategy? What opportunities do you see in west China?
A: Our strategy here is based on the fact that we're considerably bigger than any other international competitor, there is an enormous opportunity for us to grow here, we're well spread out, and we have enough talent. Our strategy is to develop on that basis and grow faster than in the past.
Andy Cosslett chief executive of IHG
Obviously west China is going to expand very quickly, partly because the infrastructure is coming up, so people are traveling here more often for business and the exhibition and convention business are booming. Chengdu is a gateway to the rest of west China and our partner has operations in hotels up in the mountains in Jiuzhaigou, a renowned sightseeing spot.
Chengdu is a strategic platform and a gateway for us to think about developing in other parts of the west. I think this area is going to be booming in the future.
Q: What is the biggest challenge when you try to open a hotel in China?
A: I think the beginning is difficult because people don't know who you are and in China it is very important that you have a history and a record of success. You need to be seen as a company that has endurance and stamina and is also committed to investment.
The biggest challenge is probably the people. Finding people is easy. Finding the right people is harder. We work very hard at IHG to try to attract the best. We are lucky because we are a very big global organization so we can provide our hotels with people from overseas, which is good because having English-language speakers is important. We have a lot of Chinese people going to our hotels overseas.
Locally, we have signed up with 10 further education institutes and universities that run hotel training and hotel school programs. IHG sponsors a special academy in some of those institutions in five cities. We're tailoring the programs so that when students graduate from there, they know how we work at IHG and can join us straightaway. We are supporting, training and sponsoring them and will hopefully get some of them overseas.
Q: What is your advantage compared with other luxury hotel groups?
A: Being here the longest from the international point of view, having the widest distribution and maintaining the broadest portfolio is probably our biggest advantage in China. The second is that I think we get more of the best people here. The third advantage is our brands. The way we manage and operate our brands works very well for China.
We have a culture in IHG called "Celebrate Difference" which is one of our "Winning Ways". We do not have what the Americans call a "cookie-cutter approach", which means they are all the same.
For example, this hotel is not the same as other hotel chains around the world. We try to make our brands live in the communities in which they are located. A lot of our competitors want to build a box that is the same in America, the UK, China, Thailand and Australia. And what's more, they want to bring in the guests and shut the door behind them and say "Now you're in our box". But we like to open the door for them to explore the local environment so the hotel feels like it belongs, and that is a big difference.
In China, which has such a distinctive and great culture of its own, it is exactly what we should do because that is what they respect and that is what they would like and feel comfortable with. It is getting the balance in the mix, the yin and yang of international standards with a local touch. But that is not to say there is no consistency. Clearly, you will find the service standards we have at this hotel throughout the InterContinental world.
Q: How do you adapt to the local culture? Do you have a team to do that?
A: It is a combination of things we do. We do not have a corporate dogma that says everything has to look the same, which is very important. We actually have our "Winning Ways" to celebrate difference. We take pride in the fact that we are different. And that is very important because if the top of the organization says, "This is what we want to do", people feel they have no permission to express themselves.
The second is that, for example in China, we have a big office in Shanghai full of designers, engineers, technical and marketing people. More than two-thirds of them are Chinese. Most of our senior managers are Chinese. All the way through it is really a Chinese business, which helps.
Of course, because of the business model we use, we work with owners in any given market and are always talking to owners. On a development project like this, we are talking with the owners from the earliest stages about the concepts so we can see how they see it.
Then we have to bring our understanding of the world, how hotels best work. We bring our knowledge. Together, we create something that is very special.
Q: Everyone is expanding in Beijing very fast because of the Olympics. Do you think the demand will slow down after the Games?
A: We have nine hotels in Beijing now. We'll have 17 by the end of this year. Two of our hotels, a Crowne Plaza and an InterContinental, are right next to the Olympic stadium. We have a very close relationship with the partner.
The inbound traffic in Beijing grew 11 percent last year to a total of 400 million people. It increased by 400,000 people last year. It is going up by 10 or 11 percent every year. For the Olympics, 300,000 or 400,000 spectators and participants might come.
So the Olympics is providing a year of normal growth in Beijing. Even after the Olympic spectators leave, Beijing will grow to meet the current demand.