With InterContinental Hotels Group's news that it is looking to create new brands in China and the Americas, the latest in a string of such announcements, it was becoming clear last week that the hospitality industry is back in expansion mode.
IHG said it is working on an upscale brand for China and is looking at the potential for a new midscale brand for the Americas.
"Why China?" IHG spokesman Leslie McGibbon wrote in an email. "China is set to become the largest tourism market in the world in the next 10 years. The sheer volume of Chinese travelers, both inbound and outbound, gives us a huge opportunity to build on our leadership position in this market."
He said an example of the need for a new brand in China was in Shanghai, where the company has 24 hotels and will have more than 40 in the next few years.
"There will come a point where we reach market saturation for our existing brands and will need a new brand to satisfy both owner and customer demand," he said.
Bjorn Hanson, dean of New York University's hospitality school, said it was a smart move for IHG to develop a brand just for China.
"Many of the models have been to take a North American or a global brand and develop it in emerging markets like India or China," Hanson said. "The social environments are quite different; the economics are quite different."
For instance, he said, with labor costs so low in China, IHG could develop a three- or four-star brand with a higher level of service than would be expected in other countries.
"That creates new brand opportunities," he said. He also noted that in China there is demand by business travelers for something that is above a midtier product but not quite luxury.
"With IHG being the world's largest hotel brand company, it has the capacity to introduce new brands," he said.
In addition to its namesake luxury brand, IHG's brands include Holiday Inn and Crowne Plaza.
McGibbon said the company has just seven brands, fewer than most competitors, "so we see plenty of scope for new opportunities."
McGibbon said the company likely would not talk more about the brands until later this year.
Acknowledgement of the probable expansions comes on the heels of a growing list of new hotel brand announcements. Earlier this month, Carlson said it would enter the luxury segment with the Hotel Missoni brand, which was developed by its European partner, Rezidor. It said it was also looking to create a new economy brand.
In January, Advaya Hospitality unveiled a global lifestyle hotel brand called Modo that it is developing in India, Brazil and the U.S.
A number of other lifestyle brands are in the works, from new concepts by boutique hotel creator Ian Schrager to an expected entry by Hilton Hotels, which had been barred from entering the space after being accused of stealing trade secrets from Starwood.
That lawsuit has been settled, and while the company is barred from introducing a lifestyle brand for two years, a spokesman emphasized it is not prohibited from internal development of one.
Hanson said the latest announcements are likely just the first of a string of new brands that will be introduced as the industry recovers from the recession and adapts to changing traveler demands.
He said there were a record number of brand introductions between 2005 and 2007, but the timing could not have been worse. Development fell to near record lows during the recession, travel patterns and consumer tastes changed.
"For example, the kind of popular view of many of these developers of new brands was about appealing to younger Gen Xers and older millennials," he said. "Well, their travel has reduced more as a percentage than baby boomers or seniors, for example. But also, those groups aged, and many have children at home now and are taking fewer spontaneous vacations. ... So some of the brands are not as appropriate as they were when they were launched."
The big challenge, he said, lies in trying to desert a brand that didn't fly.
"Whether it's two or 40 franchises, you can't just say, 'By the way, we changed our mind,'" he said. "So they are trying to continue to support those and trying to supplement those brands by responding to the current environment."