By James Wilkinson in London
InterContinental Hotels Group (IHG) continues to grow at a rapid pace across the world through both the company’s legacy brands and recent acquisitions. It’s an exciting time for the chain and alongside expansion, the company has a number of major initiatives – including a relaunch of the Crowne Plaza brand – which are boosting the business’ stocks to attract travellers across every major segment, IHG’s Chief Executive Officer Keith Barr tells HM Editor-in-Chief, James Wilkinson, in London.
Keith, how is Australasia and the greater Asia-Pacific region performing for IHG?
Our Europe, Middle East, Asia and Africa (EMEAA) region, which includes our business in Australasia and Asia-Pacific, is such a diverse and dynamic region, not just in make-up of markets, but also in terms of our owners, guests and colleagues.
Across EMEAA, we’ve seen a really strong signings and openings pace – this year alone we’ve opened a series of landmark resort properties for our InterContinental Hotels and Resorts brand including InterContinental Hayman Island in Australia, ANA InterContinental Beppu in Japan, InterContinental Maldives Maamunagau Resort and the soon to open InterContinental Phuket Resort in Thailand.
One of the newest additions to our brand portfolio, voco, has had some great early success. We’ve got two voco hotels already open in Australia – on the Gold Coast and in the Hunter Valley – and we’ve got another three signed, including for Sydney and Melbourne. We’ve also signed one for Bangkok, our first to be announced for South East Asia – and this builds on the other new brands we’ll be bringing to Thailand over the next 3-5 years, including Kimpton and Staybridge Suites.
We’re also really excited about the properties we’ve taken on as part of the Six Senses acquisition in February – destinations where everyone wants to go, like the Seychelles, Fiji, Thailand, the Maldives, Bali and Vietnam. We’ve also had our first signings for Regent since acquiring that brand last year – in Kuala Lumpur and Bali, so we’re building out an exciting luxury portfolio in that part of the world.
You have a huge growth trajectory in China that started back when you were running IHG in that country. Tell us about IHG’s growth over that time and how you see the market going forward.
Greater China is our second-largest market and we’re realising the great potential we saw there than 35 years ago when we opened our first Holiday Inn in Beijing. Since then, we’ve deliberately built a sustainable domestic business, identifying early on the potential to expand in anticipation of increased demand outside of Tier 1 cities. Our approach is really paying off – we continue to outperform the industry and we saw record openings and signings in the first half this year, with 18% net system size growth.
To put in it in context, IHG had 100 open hotels in Greater China when I became CEO for that region back in 2009. When I left in 2013, we had doubled our footprint to 200. We’re now well past 400, with nearly the same number of hotels in our development pipeline. The tailored franchise offer we developed for Holiday Inn Express has been a real catalyst and we recently celebrated 150 hotels for the brand in the region.
Our 200th InterContinental opened last year – the InterContinental Shanghai Wonderland. And if you haven’t seen it until now, it’s an architectural and experiential masterpiece, built right into the side of a disused quarry. We also have some landmark signings in the pipeline, particularly for Kimpton, which now has five hotels in development across Greater China, all located in Tier one cities and popular travel destinations.
IHG is seeing strong growth in the luxury segment, with your key brands InterContinental, Kimpton, Six Senses and Regent all in demand. How do you see the segment at present and what are your expectations?
Luxury is a very important area for us. It’s a USD$60 billion global segment with USD$35 billion growth potential to 2025 and one of our key priorities has been to build out our luxury portfolio. Over the past 18 months or so that’s exactly what we’ve done. We acquired Six Senses Hotels Resorts Spas in February, which sits at the top-end of our luxury portfolio and we’ve signed five new properties since, including properties in Iceland and the Loire Valley [in France].
Six Senses provides a great fit with InterContinental Hotels and Resorts, already the world’s largest luxury hotel brand. We’ve strengthened the offering of our established brands within luxury significantly in the past eighteen months. A number of our more iconic properties are also currently under or soon to enter refurbishment, demonstrating our owners’ long-term commitment to the brand.
We’ve also expanded Kimpton globally with the opening of two further properties in the UK and 5 signings this year.
Crowne Plaza has just done a major rollout of new rooms, lobby, F&B and co-working spaces. This is something you started in your former role and it’s an exciting time for the brand isn’t it?
In 2016, we kicked off our plans to reinvent the brand in the Americas, with a USD$200 million investment in the estate. We did a lot of research into the most important things that guests would expect to see from the Crowne Plaza estate, and they came back as WiFi connectivity, a great night’s sleep, service, food and beverage, and making first impressions count.
We have invested heavily in improving the quality in each of these areas and installed over 6,900 new rooms within the Americas and are on track to install over 35 Crowne Plaza workspaces by the end of 2019, which has led to increased RevPAR and great guest feedback.
We’re now expanding this roll-out to EMEAA and Greater China, and we recently announced that we will be opening six flagship hotels in the US, Europe and China by early 2020 that will bear the new brand hallmarks, including new designs for public spaces and guestrooms that are inspired by the continued guest demand for flexible spaces.
IHG is taking sustainability to a new level at present through the banning of single-use bathroom amenities. Tell us about that initiative.
We announced at the end of July that our entire estate of nearly 856,000 guest rooms across more than 5,700 hotels will be switching to bulk-size bathroom amenities. I’ve been really happy with the huge amount of positive feedback we’ve had from customers and colleagues around this – it was one of those things that I’d spoken to the team about and just wanted to get done. So, we were excited to be the first in our industry to announce it and we’re aiming to get there during 2021.
It’s a big step in the right direction and it’ll allow us to significantly reduce our waste footprint and environmental impact as we make the change – we worked out it’ll eliminate an average of 200 million bathroom miniatures in use across its entire hotel estate every year. It’s more important than ever that companies challenge themselves to operate responsibly – we know it’s what our guests, owners, colleagues, investors and suppliers rightly expect – and we’ll continue to explore ways to make a positive difference to the environment and our local communities.
IHG is well known for having strong community service initiatives globally. How important is it for a company the size of IHG to be able to give back to communities across the world?
It’s really important – we operate in more than 100 countries and understand that our success and the wellbeing of those who work in and around our hotels go hand in hand. We’re always looking at how to make a meaningful impact in the communities where our hotels operate – this can be anything from providing opportunities for local people to work in our industry, to providing local disaster relief to communities through NGO partners such as the Red Cross.
We also want to empower our colleagues to feel that they have the time to give back – every year we run Giving for Good month, which gives people the opportunity to volunteer their time for causes they care about. Last year, nearly 130,000 IHG colleagues took part and spent more than 125,000 hours of their time supporting causes that matter to them.
The company has made a number of key acquisitions and investments over the past couple of years. Is IHG looking at acquiring more businesses or looking at creating more brands like you have done recently with avid and voco?
When it comes to our brand portfolio, it is important to ensure that IHG always remains more than just a collection of brands with our flag on the building. Having individual brands that stand for something and are real market differentiators is vital. All of the work we do to evolve and grow is driven by keeping close to guest expectations and talking to our owners about their needs.
There is real momentum within IHG right now – both with established brands and with new ones. The investments we’re making in our existing portfolio is really paying off, with our Holiday Inn Brand Family growing at real pace, and InterContinental Hotels and Resorts, the largest luxury hotel brand in the world, with more than 200 open hotels and fantastic new properties coming to market all the time. We’ve also added five new hotel brands over the last two years; launching avid, voco, and most recently Atwell Suites, and acquiring Regent and Six Senses in the luxury space.
Whenever we add to our portfolio, it’s because we’ve seen a chance to bring something new to the market in high growth, high-value segments. I think we have an incredibly powerful portfolio of brands to be concentrating on now, but we will always keep listening to what our guests and owners tell us they want, and assessing any potential gaps in our offer.
What are you expecting the impact of Brexit to be in IHG’s global base, the UK?
From our perspective, we’re a global business, so while the UK is an important market for us, it accounts for a smaller proportion of our global business overall. The UK is a fundamentally strong market which will continue to grow, so our focus has been on encouraging the UK government and private sector to work together to ensure we have access to the talent we need to support the industry. Hospitality and tourism are responsible for 1 in 10 jobs globally and I fundamentally believe that it’s one of the most rewarding industries you can work in. It’s crucial we maintain that position as an employer, but this can only be done with a collaborative effort from all sides.