U.S. Hotel Companies Finding Room in China : Holiday Inns Adds to Its 30 in Region With Trek to Tibet

When weary U.S. travelers make their way up 12,000 feet to Lhasa, Tibet, they come upon the Lhasa Hotel. Holiday Inns manages the lodging facility, but it’s hardly a typical Holiday Inn.

Guests can ask for oxygen masks if they have difficulty with the high altitude. Then there is the resident farmer who raises pigs, chickens, rabbits and vegetables because the local menu of yak meat and barley is not palatable to many visitors.

Meanwhile, the hotel staff is planning endlessly. They take care to make sure the hotel, which officially takes the Holiday Inn name in January, doesn’t run out of supplies. A huge semi truck makes deliveries only every three days, and half its load is fuel because there are no gasoline stations along the route.

Patience is the key to doing business in China, according to Holiday Inns Hotel group President and Chief Executive Kenneth B. Hamlet. “It took us nine years of many, many trips to break our first international hotel there.”

The Memphis, Tenn., chain was the first international hotel operator to move into Beijing. But other U.S. operators are moving aggressively into China and the rest of Asia.

Hilton International, for example, is opening its first hotel--800 rooms--in Shanghai on Dec. 11. The company, which was recently acquired by Ladbroke Group PLC of Britain, will open a second hotel in Beijing in 1989. Hilton International also plans new hotels in Tokyo, Nagoya and Malaysia. It operates 20 hotels in the Asia-Pacific area.

Chicago-based Hyatt International Corp. will add its second Chinese facility next year, with a 420-room hotel in Shanghai. The chain, which has a hotel in Tianjin, operates 21 others in the Asia-Pacific area. It will expand into Australia; Hong Kong; Pusan, South Korea, and the Indonesian capital of Jakarta next year. And Sheraton Corp. operates in five Chinese cities.

But Holiday Inns is the most aggressive to date. The chain plans to build 20 hotels in China by the year 1995. Plans call for a total of 45 new Holiday Inns in the Asia-Pacific area in the next seven years. Today, the chain operates 30 hotels in the area encompassing China, Hong Kong, Japan, Australia, Thailand and India.

The company’s international division operates a total of 201 hotels in 50 countries. Holiday Inns recently reached an agreement to sell its international properties, except in Canada and Mexico, to Bass PLC, a British brewer, for $475 million. Bass will become the largest franchisee of Holiday Inns when the deal is completed in January, according to Hamlet.

Holiday Inns is moving aggressively into China because tourism is expected to flourish and quality international hotels are needed, says Hamlet, who has managed a hotel in Korea. But he admits that doing business as a hotel in the newly developing China is quite an experience.

“Operating in China is not typical of any operation,” he said in a recent interview. “To be successful, you have to be a great planner. We’ve spent thousands of dollars in training.”

When Holiday Inns began preparing its workers in Beijing, it quickly learned that the majority had never been in a hotel. “We had to teach them how to serve, how to use a knife and fork, how to use vacuum cleaners and elevators and how to wash a bathtub.”

He says the key to success in China is patience, dedication, training and quality management. “You need to be highly disciplined with planning and forethought so you’re always ahead.”

The company’s operations incorporate other cultural considerations. Every Holiday Inn in China is staffed by a local Chinese manager and an international manager. “They operate on sort of a shadow system.”

Each hotel, for example, has a board of directors that is half Chinese and half international. “While there is a manager of record, the board makes decisions by consensus.” In Europe and the United States, the in-house management typically makes decisions.

Hamlet says the aim is to provide an international standard of service. Some Chinese workers are attending its Holiday Inn University in Memphis.

He says the Holiday Inn in Beijing has a French restaurant and a European deli that smokes its own meats and makes sausages, breads and chocolate. It also provides dry cleaning and laundry services for the foreign community.

“Beijing is on its way to becoming a truly international city,” he says.