The Chinese hotel business is still booming despite economic slowdown, IHG CEO says

Key Points
  • IHG has added 100 new hotels in China in the last 12 months.
  • The chief executive said the country's middle class is now replacing inbound travelers as the typical customer.
  • Keith Barr said Airbnb had not proven to be a threat to the hotel industry.
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IHG sees 'fantastic results' from its Chinese hotel business

The boss of hotel group IHG has downplayed the effect of a Chinese economic slowdown on his business activities in the country.

Official data published Monday said China's gross domestic product (GDP) in 2018 grew 6.6 percent from the previous year, in line with analyst expectations but at its most sluggish rate in almost three decades.

Speaking in Davos, Switzerland, where the World Economic Forum (WEF) is being held, the chief executive of IHG, Keith Barr told CNBC, that while a headline slowdown was in play, his firm had added 100 new locations and inked record levels of Chinese business during 2018.

He added that while he expected to see some form of government intervention to aid the wider Chinese economy, the rise of the middle class meant it should continue to bring "really strong momentum" for the hotel and leisure sector.

"Twenty years ago, international hotel companies were dependent on inbound travelers. Now we are basically a Chinese business with local travelers across all the segments," Barr said Monday.

Outside China, Barr said expansion plans were currently focused on southern Asia, Mexico, as well as Germany.

Airbnb threat

The rise of online hospitality service Airbnb has long been touted as a threat to the traditional hotel business model but Barr said that fear had filed to materialize and Airbnb had in fact removed some competition.

"Airbnb has taken a highly fragmented market and rationalized it quite a bit. That has taken out quite a few players from the industry. We don't see it as a significant threat going forward or today," he added.

IHG has a market capitalization of around $8.3 billion. Last week, Goldman Sachs cut IHG's stock to a 'neutral' rating from its previous 'buy' assessment.

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