UPDATE 1-IHG hotel room revenue climbs on China demand;

(Adds details, backgound on China expansion)

Oct 19 (Reuters) - InterContinental Hotels Group said on Friday it would pay $500 million to shareholders in a special dividend as it reported a 1 percent rise in revenue per available room for the third quarter, driven by robust demand in China.

The company, whose 13 brands include Crowne Plaza and Holiday Inn, has been focusing on business customers and expanding its luxury offering to help it cushion the impact of competition from online rental marketplaces like Airbnb.

In the Greater China region, revenue per available room (RevPAR) rose 4.8 percent in the third quarter.

IHG, which opened its first hotel in China in 1984, is expanding in the world’s second largest economy in expectation of further rises in spending by middle class and high-end Chinese travelers.

“The fundamentals for our industry remain strong,” chief executive officer Keith Barr said adding that the company is confident in the outlook for the year ahead.

The company said the soccer World Cup had also fueled double digit RevPAR growth in Russia in the third quarter. The company said it would return $500 million to shareholders through the payment of a special dividend with share consolidation by the first-quarter of 2019. (Reporting by Karina Dsouza in Bengaluru; Editing by Patrick Graham)