IHG banking on mixed-use projects
InterContinental Hotels Group (IHG) remains unfazed by negative sentiment for Thai tourism as it prepares to double its portfolio in 3-5 years, with mixed-use projects a more popular choice for investors.
"There are headwinds against the tourism business, but we're always mindful that Thailand is resilient and has survived challenging circumstances in the past such as floods and the airport closure during political unrest," said Serena Lim, IHG's vice-president for hotel development for South Asia, East Asia and Korea.
Thailand is a leading market for IHG's footprint in this region, followed by Vietnam, Indonesia and Malaysia.
IHG has 29 hotels in service and 30 hotels in the pipeline slated to open in 3-5 years.
The promising segment for Thailand is mid-market, where Holiday Inn stands the best chance for expansion as it serves middle-income tourists and domestic travellers, the main source for the tourism industry in the country.
Holiday Inn is also the fastest growing brand of IHG, as more than 50% of management agreements in the regions under her remit are under this brand.
However, Ms Lim said hotel investors in Thailand are likely to be more realistic about the ongoing situation affecting business.
Those who are still keen on new investment are owners with prior experience in the hospitality business, she said. This group is the main target with which IHG has partnerships.
"Thai hotel investors are more realistic because of increasing land prices, making them more conscious about budgets," said Ms Lim.
Hotel owners are opting for technology to streamline guest services and hotel functions, which is different from building traditional hotels in the past that typically focused on luxury, she said.
Moreover, they tend to be more careful about choosing locations that have strong travel demand and they want to have a hotel with facilities that can hit target markets.
"When land prices are very expensive, we encourage owners to consider mixed-use development, which will help diversify the source of income from other utilities such as retail spaces and offices," said Ms Lim.
IHG has signed a new hotel management agreement with Elysian Development Co to operate the 61-room InterContinental Khao Yai Swan Lake Resort in Pak Chong district, Nakhon Ratchasima, part of the Swan Lake mixed-use project.
Rena Udomkunnatum, managing director at Elysian Development Co, said IHG is a familiar brand to local tourists. Its reputation as an international hotel chain will help attract more foreign guests, who only account for 10% of the total.
The first 45 rooms are set to open in the last quarter of this year, with 16 in the queue for next year.
Elysian Development has three hotels: Rosewood Luang Prabang in Laos; Burasari Phuket at Patong Beach; and Shanghai Mansion in Bangkok's Chinatown.
Besides InterContinental Khao Yai Swan Lake Resort, the company also has two more hotel projects in the pipeline.