InterContinental Hotels Group Plc is switching 25,000 of its employees and hotel managers onto an email system managed by Google Inc in place of Microsoft's Corp's Outlook.

The move is a significant but rare victory for Google, which has been trying for several years to break Microsoft's dominance in the market for corporate software and communication applications.

The new email system, part of the Google Apps suite of products being used by IHG, will be entirely in the cloud -- meaning it will be run on servers managed by Google and accessed by users via the Internet, IHG said.

A representative for Google confirmed the contract and said the company was pleased to work with IHG.

The world's largest hotel company -- which runs the Holiday Inn and Crowne Plaza hotel chains, among others -- is saving about 30 percent off the cost of running equivalent Microsoft products, said Gustaaf Schrils, IHG's vice president of technology in the Americas, though he said he could not divulge exact figures.

Google charges a flat subscription of $50 per user per year for Google Apps for big customers like IHG. Microsoft has said its competing Office 365 cloud-based suite of applications -- set for launch later this month -- will cost between $25 and $325 per user per year.

Microsoft did not immediately return a call for comment.

The savings are pretty significant, said IHG's Schrils, in a telephone interview. The initial reaction is people are a little bit skeptical of change, but the amount of enthusiasm is pretty amazing and the results are definitely exceeding expectations.

IHG was attracted to cheaper storage space for email, collaboration on documents, and the calendar functions in Google Apps, said Schrils. The service will allow users to keep their existing email addresses.

IHG was previously using the version of Outlook in Microsoft's 2003 version of Office. He said a cloud-based version of Office was not available at the time it was considering the Google service.

Microsoft is looking to ramp up its cloud-based email and applications with Office 365, as the market for such services explodes.

Microsoft is still by far the dominant provider of email and office applications around the world, but Google has made inroads with customers such as Virgin America, Genentech and National Geographic.

IHG has been running a beta test for some weeks and has already introduced the new service for its reservations staff. It is rolling out Google mail in the Americas this week, in Europe in coming months and is aiming for full implementation by the end of this year.

20,000 of IHG's users work at the 650 hotels that it manages itself worldwide, with the other 5,000 in IHG's corporate offices. Overall, IHG has about 4,400 hotels in its network, but most are managed independently.

(Reporting by Bill Rigby in Seattle, Helen Chernikoff in New York; editing by Carol Bishopric)

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