InterContinental Hotels Group plc (IHG), a leading worldwide hotel company engaged in the ownership, franchising and management of hotels, is set to double the number of hotels it runs in China in about five years.
 
China is Intercontinental Hotels’ largest market outside the United States, where the company plans to open 30 more hotels by the end of the current fiscal year and over 250 in the next five years, making it the second-largest market in terms of the number of hotels. Currently, the company is the largest international hotel chain in China with 131 operational and another 146 in the pipeline. Moreover, the company plans to create 87,000 jobs across China over the next five years.
 
Intercontinental Hotels has benefited from the recovery in business travel, as the company’s Revenue Per Available Room (RevPAR) grew for the first time in 18 months in first quarter 2010. Asia Pacific was the strongest region in first quarter 2010 reporting a RevPAR growth of 10.0%, with China leading the surge.
 
The Chinese government is also taking initiatives to improve the tourism industry. The government plans to invest $120 billion in its railway network and construct 97 new airports to perk up its transport infrastructure and thus encourage more tourist visits.
 
The demand for hotels is greater in the international market than in the U.S., where the pace of economic recovery is particularly fast. Many US-based companies are targeting the fast-growing emerging economies to set up base for the growth opportunities they present. The Asia-Pacific region specifically promises solid growth and countries that are of specific interest include China and India. So its peer companies such as Starwood Hotels and Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) are also increasing their pipeline in this region.
 
Intercontinental Hotels is the world’s largest hotel group with more than 4,470 hotels in 100 countries and territories. The company is headquartered in Denham, the United Kingdom. It operates its hotels under seven brands including InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites and Candlewood Suites. It is listed on the London and New York stock exchanges.
 
We maintain a Zacks #2 Rank on Intercontinental Hotel, which translates into a short-term Buy recommendation.
 
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