InterContinental Hotels Group (IHG) has taken several online initiatives, including an end-to-end Chinese language website in early 2004 and localizing its online advertising efforts by working with all the key Chinese portals and search engines, for expa

Published: 18 Jul 2005

InterContinental Hotels Group (IHG) has taken several online initiatives, including an end-to-end Chinese language website in early 2004 and localizing its online advertising efforts by working with all the key Chinese portals and search engines, for expa

Craig Hewett, Director e-Commerce AP, IHG feels the concerns of consumers in China include best rate guarantees as Chinese consumers still believe that they can negotiate a better deal direct with hotel. “Comfort and familiarity as people feel comfortable going to the travel agencies they have used in the past (relationship) and not all people are familiar with making online purchases and reservations,” says Hewett.

Hewett says the group is bullish about China’s sustainable growth, and this is reflected in its China growth strategy both in China’s gateway cities of Shanghai and Beijing and as well as the secondary cites.

Hewett spoke to Eyefortravel.com on IHG’s operations in China. Excerpts:

InterContinental Hotels Group currently has 48 hotels across its brands, in major gateway and secondary cities in Greater China. How has the group localized its online operations in China? What would you consider as the highlights of your online initiatives in China?

IHG launched the world’s first end-to-end Chinese language website back in February 2004 which provides Chinese users the convenience of booking any one of our 3500 hotels globally in the comfort of their local language. And shortly after we provided our Chinese Priority Club members users the added convenience of checking account information, choosing their preferred communication (like receiving our monthly E-Statement and monthly newsletter in simplified Chinese), capturing their favorite destinations or hotels in their member’s profile, redeeming free room nights online, etc.

We have also been localizing our online advertising efforts by working with all the key Chinese portals and search engines.

What were the major considerations as part of localization strategy of group’s web sites in China? (For example of speed of transaction etc)?

Providing alternative payment options as credit cards are still not widely used. Simplifying the reservation process and required information as Chinese users do not always value the internet as convenient. Strong integration of our dedicated Chinese call centre so that users have option of completed booking offline.

What do you think are the major concerns of consumers in China when they book hotel accommodation or other travel plans online?

Best Rate Guarantees as Chinese consumers still believe that they can negotiate a better deal direct with hotel. Comfort and familiarity as people feel comfortable going to the travel agencies they have used in the past (Relationship) and not all people are familiar with making online purchases and reservations.

InterContinental Hotels Group is the world’s first hotel company to simultaneously launch guaranteed reservations on the website even if the customer does not use a credit card. What unique initiatives has the group taken in China to promote its own online information and booking services?

Our non guarantee has worked well when users do not need to guarantee the room until 6pm day of arrival. We are currently exploring alternative payment options which our users can use to make payment before they arrive so that their rooms are guaranteed past 6pm.

We also focus on communicating the benefits of booking online to our Priority Club Rewards members via regular email communication. We deliver dynamically generated content email to those members who had opted-in to receive email in their preferred language (e.g. Simplified Chinese). Through this email initiative, we ensure that our members are the first to learn about our new online feature and booking services.

As per the first quarter results for 2005, in Asia Pacific region, RevPAR grew 8.0%, driven by rate. A strong demand in China and Hong Kong was a major driver of the growth. How is RevPar from China growing? Is it outpacing the other markets in Asia?

We are the largest international hotel operator in China and still we need more rooms in key cities of Shanghai, Beijing and Hong Kong, as our hotels are over capacity.

As per the industry estimates, revenue per available room (revPAR) across China increased by 18% to US$70 during the first quarter of 2005. How do you expect this to shape up in future?

We are very bullish about China’s sustainable growth, and this is reflected in our China growth strategy both in China’s gateway cities of Shanghai and Beijing and as well as the secondary cites. Our localization efforts in e-commerce will allow us to service the growing domestic Chinese traveler.

InterContinental Hotels Group has seen its online bookings grow worldwide from 1,800 transactions in 1995 to more than 5.2 million in 2004. What was the total share of Asia?

Since we launched our Asia Pacific E-commerce strategy back in 2002 and invested heavily both in terms of technology and staff, we have enjoyed tremendous growth where our revenues have doubled year on year.

How many online transactions do you expect from China in 2005? What would you recommend for growth of online transactions in China (regulatory changes etc)?

We are confident that our alternative payment solution will allow us to tap into the domestic travel market. China’s strict Visa policy and travel restrictions has a limiting factor to Chinese users booking international hotels online as they are still required to go offline to an approved travel service to apply for travel visa. This restricts the convenience of booking online, however the Chinese government are easing the visa restrictions which will help the growth of our China outbound business.

What are the new trends as far as other external online channels are concerned in China? What do you think are the challenges for suppliers with establishment of online travel agents and now travel search engines in Asia?

IHG has enjoyed sustainable partnerships through our certification program for third party distributors where we are committed to only working with distributors and their affiliates that do not engage in confusing and potentially unclear marketing practices, respect IHG’s trademarks, ensure reservations are guaranteed through an automated and common confirmation process, and clearly present fees to consumers. These are fundamental issues that we believe need to be addressed by our Chinese online third party distributors in order for us to protect our customers,

Hotelzon had stated in March that a price comparison between Hotelzon and its global and domestic competitors such as HRS and elong, Hotelzon had the cheapest rates in all of the twenty surveyed hotels. What’s your viewpoint on this?

Our certification programme certainly ensures that all our third party distributors have parity pricing, so the example which you describe would certainly not be applicable to one of our hotels.

How have consumers responded to group’s 10-year anniversary promotion (for online services) in China?

The promotion was successful in both creating awareness of our online leadership position, as well as promoting our global hotel portfolio which can be booked conveniently online.