Holiday Inn Express is upgrading its image by announcing its new Chinese name to further boost its presence and competitiveness in the country's mid-scale market as the territory of economy hotels is mostly dominated by domestic brands.

With its English name unchanged, the hotel chain's new Chinese name - Zhi Xuan Jia Ri, which translates to English as "Smart Choice" - takes out the Chinese words Kuai Jie, which means "Express", in a move to differentiate the brand from the low-budget hotels in the country.

"The name of Kuai Jie or 'Express' has been adopted as a category by many economy hotels," said Nick Barton, vice-president of sales and marketing of InterContinental Hotels Group PLC (IHG) in China, on what motivated the name change in mid-January. "Our new brand is a more accurate reflection of the fact that we compete with local four- or five-star hotels, or the mid-scale hotel market."

With 29 facilities in operation and nearly 30 in the pipeline, Holiday Inn Express' room rates generally range from 400 yuan ($61) to 500 yuan - a price considered to be within the mid-scale market.

The mid-scale market is a big opportunity for rapid growth in the next five to 10 years, Barton said, adding that despite the presence of local independent mid-scale hotels, there are only a few brands that offer consistent service to customers.

According to the China Tourism Academy, China has about 15,000 budget hotels and roughly about 30,000 to 50,000 hotels at the mid-scale level, including 7,000 three-star and 2,000 four-star hotels.

Tourism experts said the renaming of the Holiday Inn Express' Chinese brand is a result of IHG's efforts to retreat from the budget hotel market and strengthen its presence in the mid-end market.

In 2010, the revenue of IHG's China operation reached more than 1 billion yuan. Its third quarter revenue increased 24.4 percent year-on-year. However, Holiday Inn Express figures have not been disclosed.

Holiday Inn Express, originally a budget-hotel concept in Western countries, is losing its price edge to local competitors who offer room rates of around 200 yuan, said Dai Bin, director of the China Tourism Academy.
Because they are less familiar with international brands, Chinese customers visit them in insufficient numbers to support the growth of the chain, he added.

Dai said domestic players, with their better understanding of local customers and the business environment, have come to dominate the budget-hotel market.

Local budget-hotel chains, such as Home Inns and Hanting Inns & Hotels, have rapidly opened new locations as they quickly refurnish rented property.

Home Inns & Hotels plans to open 260 to 280 new locations in 2011, of which 100 to 110 will be leased-and-operated and 160 to 170 will be franchised-and-managed, bringing the hotel chain's total number of operations to 1,100 by the end of 2011.

Dai said foreign brands might have a bigger advantage in the mid-scale market, but that does not necessarily translate into an easy victory, since customers in that market are fickle and have limited spending power.